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State adds seed money for Kentucky biodiesel facility
Kentucky Correspondent

OWENSBORO, Ky. — State officials attended the May 18 ground-breaking ceremony for Owensboro Grain Biodiesel, LLC, and to present two checks totaling more than $6 million for the construction and equipping of a new biodiesel production facility.

Keith Rogers, executive director of the Governor’s Office of Agricultural Policy (GOAP) made the presentation on behalf of Kentucky Gov. Ernie Fletcher.

The plant will have the capability to produce as much as 45 million gallons of biodiesel fuel annually using vegetable oil from soybeans produced in Kentucky and Indiana.

“I applaud the Owensboro Grain Co. (OGC) in their leadership to make this facility a reality,” Fletcher said of the new venture. “From my efforts in Washington to create incentives for renewable fuels, to the assistance of my administration with the capital needs to construct this plant, we are making great strides in creating value added markets for our farmers and reducing our dependence on foreign oil.”

State funds used to help finance the project came by way of a $1.1 million check from the Kentucky Ag Development Board and a $5 million loan from the Kentucky Ag Finance Corp. (KAFC), which is chaired by state Ag Commissioner Richie Farmer. The total cost of the facility is estimated at $22 million.

“Biodiesel gives Kentucky soybean growers a new market for their product,” said Farmer. “They’ll get more for their soybeans, and they’ll spend some of that new income in their local communities. This plant will have far-reaching economic benefits for this area. I congratulate Owensboro Grain on this momentous occasion and pledge my support for this important project.”

KAFC has been able to help with the up-front money for the project so that once the facility is in operation, the company will be able to take advantage of federal excise rebates being offered to expand biodiesel production. As the company receives these rebates, the money will be repaid to KAFC for future projects.

OGC is a family-owned business started in 1906 by Henry E. O’Bryan. The company originally bought corn to process for the distilling industry. In 1950, O’Bryan’s son William, introduced soybeans into the company seeing the crop’s importance in the food industry. Since 1995 the company has refined soybean oil as a way to sustain the soybean market in the state.

OGC purchases approximately 30 million bushels of soybeans each year with 14 million bushels or 26 percent of the state’s total production, supplied by 30 Kentucky counties. State soybean growers raise about 54 million bushels each year.

John Wright is OGC’s vice-president of strategic planning and development and the fourth generation of the family to work in the company. He sees this as an opportunity for agriculture to play an important role in the energy field.

“As a family owned business, we make decisions for the long-term,” said Wright.

“American farmers have been feeding the world, now they’re going to help fuel the world. A facility like this will mean a sustainable market for producers and it could improve the price of soybeans. What has been most important, is the widespread support from across the state and the potential for Kentucky in the bioenergy field.”

Biodiesel is a renewable fuel source produced from vegetable oil and/or animal fats and is generally used as a blend in diesel fuel. The facility is expected to be in full operation by mid-2007.

This farm news was published in the May 24, 2006 issue of Farm World.