A loud noise is coming from Arborg, Man., these days.
It’s the sound of a group of local farmers and investors banging their heads against a wall of difficulties standing in the way of a biodiesel plant.
“It’s a real frustrating experience,” said Dennis Kaprawy, president of Bifrost Biodiesel, when visited recently by a group of farm journalists.
Local entrepreneur Paul Bobbee, who set up and ran his own biodiesel plant a year ago and burned the fuel in his tractors and car, shared the feeling.
Read Also
Canola oil transloading facility opens
DP World just opened its new canola oil transload facility at the Port of Vancouver. It can ship one million tonnes of the commodity per year.
“It’s kind of frustrating. We’ve got everything in place. We’ve got land. Environmental licences are all coming through. With 23 investors we’ve got at least $300,000 of assets, of money.”
But the group can’t persuade financial institutions to kick in the rest of the capital needed to establish the approximately $1.2 million operation. It hasn’t even been able to get its hands on the $250,000 that the Manitoba government has offered to each of the first four biodiesel plants set up in the province.
“Financially, it’s just a real issue with biodiesel,” Kaprawy said.
Farmer-led ventures often face a chicken-or-the-egg dilemma when trying to establish. It’s hard to get financing until a plant is built, a product is made and supply contracts are in place. But it’s hard to do all that until financing is in place.
Bobbee said diesel users such as Manitoba Hydro have said they want to buy Manitoba-produced biodiesel, but that’s not enough for lenders.
“Letters of intent is what we have from, say, 10 different groups, but not a commitment,” Bobbee said. “That’s what the bank wants. Everyone is waiting.”
Bobbee said an Alberta investor offered to provide capital for the proposed facility, but the group would have had to supply all the biodiesel to Calgary.
“We wanted to keep it local,” he said.
Farm groups have been trying to establish biodiesel plants across North America, and some have succeeded.
But the giant agricultural multinationals such as Archer Daniels Midland have also entered the industry and observers believe farmer-led groups will have trouble competing with the giants.
Kaprawy said Bifrost Biodiesel believes it can viably produce and locally sell biodiesel because it will be based in a region where competitors are unlikely to settle.
Arborg is in the middle of the Interlake: between Lake Winnipeg and Lake Manitoba, with forests bordering on the north and Winnipeg on the south.
Kaprawy said the challenge will be to find enough local canola to produce 10 to 15 million litres of biodiesel per year.
While the group has faced unexpected difficulties, it isn’t about to give up. Kaprawy said he expects to be able to begin construction on the plant in late winter.
