In the heart of Illinois sits a major soybean processing and biodiesel manufacturing company—Incobrasa Industries Ltd. Located in Gilman, Incobrasa is in the process of expanding and effectively doubling its biodiesel production capacity, up to 150 million gallons per year. Reaching that number is contingent on demand.

EXPORT OUTLOOK

Is China purchasing U.S. soybeans? What’s going on with tariffs? What’s the status of overall U.S. soybean export levels? These are all valid questions that have been top of mind for many people this past year. But Joe Waldbusser, Head of Trading at Incobrasa, noted there’s something else going on that producers should be aware of.

“The bigger picture is we’re slowly losing our soybean export market everywhere because of Brazil,” said Waldbusser. “To compensate for that, we need to have a domestic soy processing industry to pick up the slack.”

In the current political environment, U.S. soybean farmers have access to China as an export market sometimes and other times not. In reality, China’s demand is not growing to meet the growing soy production in Brazil—a trend that’s expected to continue.

Brazil has even begun tapping into other U.S. historical-export markets including, most recently, Mexico. Brazil is expected to continue to increase its soybean and corn production area for the foreseeable future, adding to the competition.

A growing U.S. domestic soybean market could help offset declining exports, something Incobrasa is responding to via its expansion efforts.

INCOBRASA’S EXPANSION

Incobrasa’s overall expansion investment of more than $300 million will increase its vegetable oil and animal feed production capabilities. Overall, the growth will more than double its soybean crushing production, up to 98 million bushels per year. The rest of the expansion includes:

• Upgrading the soybean oil refinery from 40 million to 98 million pounds per month
• Building a new biodiesel plant, which can produce up to 240,000 gallons per day
• Building a new soybean oil extraction plant, which can process up to 300,000 bushels per day
• Building a new soybean preparation plant, which can process up to 300,000 bushels per day
• Adding a new grain receiving and storage facility, with capacity for up to 90,000 bushels per hour
• Building a new rail loop with capacity for 400 railcars
• Adding a new electrical substation
• Adding a new solar array

To meet the increased production capacity, Incobrasa will also expand its soybean supply radius from 50 miles to 80 miles. This increased radius will reach to the Illinois River to allow access to more beans and meet the demands of the market. The vast majority of soybeans will still be sourced from Illinois.

The first phase of the project, which includes the new soybean oil extraction plant, will be fully operational this spring, while the biodiesel plant, depending on demand, will be operational this fall. The rest of the project is targeted to be finished by 2030.

“We always get questions about the food versus fuel argument,” said Kerry Fogarty, Quality Manager at Incobrasa. “We are not taking oil away from the food industry. Biodiesel was developed as a use for excess soybean oil from crushing beans. And when soybeans are crushed, we add animal feed to the market that ultimately lowers the cost of meat on the store shelf. In the end, biodiesel increases domestic markets for U.S. soybeans and lowers food costs.”

MOVING FORWARD

Since expanding from Brazil to the U.S. in 1995, Incobrasa has built up its Gilman site from a facility strictly focused on soybean crushing to the major soybean processing and biodiesel manufacturing facility that it is today.

“It’s important that we have a strong biofuels market and overall market for soybean oil in the U.S. so that we can guarantee a better price for U.S soybean farmers,” said Aluizio Ribeiro, Chief Executive Officer of Incobrasa.

Ribeiro emphasized that a strong biofuels policy is needed to support the continuance and expansion of the market.

“Incobrasa is going to be ready for more expansion if the market still exists,” said Ribeiro. “If the state of Illinois and the federal government keep incentivizing biofuels, especially soybean oil-based biofuels, we should be able to keep growing. It will be a big win for the farmers in our area because that will keep growing the demand.”

BIOFUELS IN ILLINOIS

In 2022, Illinois passed a historic B20 incentive — the first policy in the nation designed to encourage fuel retailers to blend diesel with 20% biodiesel. This built on the state’s earlier B11 incentive and gradually increased over time. As of April 1, B20 blends are now available, with a carve-out in place that allows for B11 blends in the winter.

“Under the new B20 incentive, Illinois farmers could help supply up to 255 million gallons of biodiesel — a significant increase from the 165 million gallons supported under the previous B11 incentive,” said David Kubik, Biofuels and Trade Policy Manager, Illinois Soybean Association.

Illinois applies several taxes to diesel fuel, including a $0.558 per gallon Motor Fuel Tax that supports the Road Fund for infrastructure improvements. The state also charges a 6.25% sales tax that helps fund the General Revenue Fund, the Road Fund and local governments. Plus, state sales taxes add about add about $0.25 per gallon of fuel.

In total, Illinois consumes roughly 1.5 billion gallons of diesel each year.

Under the B20 incentive, retailers who blend diesel with 20% biodiesel are exempt from the state sales tax and any applicable local sales taxes. For companies purchasing fuel in bulk, these savings can add up quickly. The policy also supports corporate decarbonization goals, making Illinois a “stop state” and more attractive to companies seeking reliable access to lower-carbon diesel blends.

“With soybean oil and corn oil being the biggest feedstock of biodiesel, this new B20 law will pay dividends to farmers by creating markets for their crops and lowering input prices,” added Kubik.