6 minute read
Illinois Celebrates Incobrasa's Expansion
By Joli A. Hohenstein
A $250 million expansion announcement sparks excitement, especially in the heart of soybean country. With Incobrasa currently processing 10 percent of the state’s soybeans, the ag industry certainly took notice. But when the dust settled (pun intended), and the coffee shop talk commenced, one question made the rounds the most: What's it mean for us?
It’s a fair question, so we thought we’d break it down.
First, a bit on where we are now. Incobrasa is one of the few family owned, privately held soybean crushers in the industry. Early adopters of biodiesel, they both crush and produce biodiesel at the same location, something fairly unusual in the industry.
But what’s even more unusual is the incredible integration that goes on at the site. They crush and refine on-site, and the oil can be used in biodiesel and bottled for commercial and retail use, also on-site. They built their own bottling plant, and their primary contract is supplying vegetable oil to Dollar General. “So if you’re buying that, you’re buying Illinois soybeans,” says Andrew Larson, ISA Director of Government Relations & Strategy.
The plant has created another competitive advantage for Illinois to add to its belt. With Incobrasa, Illinois is able to create a closedloop system for soybean oil that most states can’t, explains David Kubik, ISA Public Policy Manager.
“Soybeans come to the plant. They’re crushed and refined into oil, then shipped out to truck stops like Love's. The oil never travels more than 50 miles, so we have a lower carbon impact,” says Kubik. “That’s good for the environment and good for Illinois farmers.”
Incobrasa is also one of the few biodiesel plants that exclusively uses soybeans for feedstock. And for the expansion, they’re also solely using soybean-based feedstock.
More competitive advantages:
“It shows our industry continues to grow,” Kubik says. It also shows Incobrasa is a company of innovators, and they’re using Illinois competitive innovations to grow their own.
Market Certainty & Stability
Along with the massive soybean processing capacity it brings, the Incobrasa expansion also creates stronger markets for Illinois farmers’ soybeans.
“What the plant provides is a more stable market for those soybeans,” says Kerry Fogarty, Incobrasa Quality Control Manager, who points out that currently 50 percent of soybeans in the U.S. head down the river and go overseas. “Foreign policy isn’t predictable. There are less transportation costs if you aren’t shipping, and farmers can expect more for a bushel of beans.”
In turn, this is an opportunity to raise the basis, and farmers really benefit from that. “Basis has a huge impact on the amount farmers can sell their soybeans for at the elevator,” Larson says. “Having Incobrasa makes an impact.”
Consistently, Illinois has a competitive advantage over other states, he says, and Incobrasa adds to it. Illinois exports more beans than it crushes and can easily export soybean meal. One of the real advantages of Illinois is having a good balance of crush, river and rail, with most of the Class 1 railroads having track in the state, and near Incobrasa.
Added to that: “Incobrasa is a creative industry partner who is looking to always maximize the products that come off the soybeans. They are a huge asset for the soybean complex and soybean industry in Illinois,” says Larson. “Having domestic crush and export provides market options for growers and helps their products compete on the global market.”
This, in turn, also helps farmers for the long term, and the Incobrasa expansion raises the profile of Illinois soybeans at a key time. “We’re supporting soybean farmers and making sure markets will be there in the long term,” says Kubik. That includes working to open up new trade segments and develop emerging markets in Africa and in India, where ISA has also partnered to develop a new Soy Excellence Center.
Local Benefits
Closer to home, Incobrasa’s expansion will have ramifications for the local Gilman and Iroquois County economies, as well.
The company is projecting an increase of 200 to 250 jobs during construction and plans to add an additional 50 full-time jobs at the plant.
“This is an advantage to the local worker, that we’re increasing the local workforce,” says Fogarty. “We’re doubling our revenues, which means we can pay better wages for people.”
More high-paying jobs will strengthen employee retention. “This is important because Incobrasa will bring in high-paying jobs and recruit more specialty roles as they get the expansion rolled out,” says Kubik.
Fueling More Advantages
The state’s biodiesel incentive played a key role in Incobrasa expanding the Gilman location. As a result, farmers will see benefits not only on their bottom lines but also at the pump.
“The future for biodiesel looks very bright in the state of Illinois,” says Fogarty. “The legislature has incentivized biodiesel at the pumps. Demand is going up.”
The most recent biodiesel tax exemption, extended for seven more years, is poised to drive that demand even higher. For the past decade, the incentive has been at 11 percent, but in the next three years, it will slowly move from 11 percent to 20 percent.
“We expect biodiesel usage to track with that incentive because it’s very lucrative for people. Fuel retailers and others will pass that on to consumers,” Kubik says. “We expect about 50 percent to 80 percent more biodiesel sold. The biodiesel tax credit has helped make Illinois a place where companies are looking to invest.”
Incobrasa and Fogarty agree. “We need to have oil to supply that biodiesel plant, which we are also expanding,” he says. “The beans are available, and we have a market for the ongoing production.”
It’s impossible to overstate the importance of biodiesel, he says. “Without an outlet for the oil, I doubt this expansion would be happening.”
Incobrasa has laid out the plan for expansion at Gilman in three phases, with the first phase operational in 2025 and the final phase online in 2030.
Currently, the plant crushes 40 million soybeans a year. By 2025, Incobrasa expects to be crushing 60 million; by 2030, 80 million soybeans annually.
Along with that, the company will increase its biodiesel production at Gilman. Currently, they are permitted for 75 million gallons of biodiesel. Fogarty expects that to ramp up to 150 million by the end of the decade or even sooner.
These are big numbers, to be sure, but Kubik and Larson expect those very large numbers to translate directly into significant benefits for Illinois soybean farmers.
And Fogarty says the same: “It’s a result of the efforts of the people who represent the farmer in Illinois and the country, so that’s paying dividends.”
