The bus carrying the nation toward less reliance on petroleum-based diesel appears to have hit a bump in the road due to rising soy oil prices.

Some biodiesel refineries in the United Sates have suspended operations and others have curtailed production in recent months.

The initial flurry of excitement over biodiesel and the lack of soybean crushing plants still operating in the United States have pushed soy oil to 40 cents per pound. Once-refined cottonseed oil, which sells at a premium to soy oil, has been bringing 40 to 45 cents per pound.

But what if farmers and cotton ginners could “have their cake and eat it, too,” so to speak: they benefit from the biodiesel boom without lowering the price of cottonseed oil. Cotton Incorporated's Thomas Wedegaertner thinks there may be a way to accomplish that.

“Cottonseed oil has good lubricating properties and works well in low sulfur diesel,” says Wedergaertner, director of cottonseed research at Cotton Incorporated. “It's also in demand for potato chips and other snack food products. It's a very good oil, which is why it typically commands a premium.”

Wedegaertner believes one way to render cottonseed oil a more economical input for biodiesel could be placing mini-mills for crushing cottonseed into oil and meal next to cotton gins.

“There's a tremendous amount of interest in gins putting these in for producing crude cottonseed oil for biodiesel,” he says. “We think there could be as many as 100 biodiesel plants, either soon to be operating or on the drawing board, potentially spurring more demand for oil.”

Most of the biodiesel plants that have come on line in recent years are large and can produce in excess of 50 million gallons of biodiesel a year, says Wedegaertner. The minimum capacity for a plant to be economical would be 10 million to 15 million gallons.”

The idea of building mini-mills next to cotton gins is not a new one, he says. “About 10 years ago, several gins tried to put in mini-mills to turn out cottonseed oil for food uses. But they went out of business because of the low price of crude cottonseed oil.”

Most cotton gins either ship cottonseed to crushing plants or to dairies for use as a high quality feed. Even with the mini-mills, gins could continue to supply the dairy industry.

“Gins currently have to deal with mounds of cottonseed,” says Wedegaertner. “If they began crushing cottonseed, the meal would become our distillers dry grain (what's left of corn after the ethanol feedstock is removed). There have always been trade-offs and challenges in dealing with cottonseed. This could be one more solution.”

Currently, three to four biodiesel refineries are using cottonseed oil as a feedstock. The plants, located in such diverse areas as California and Texas, seem to be doing well.

Many of the mini-mills that were mothballed a decade ago could be refurbished and put back on line. “Once a plant goes down, it's difficult to restart it. But with the real interest in mini-mills, we may see more of those put back into operation.”

Sourcing vegetable oil for refining into biodiesel has become a challenge for the start-up companies that have opened refineries. The Milagro plant in downtown Memphis, Tenn., had only one supplier of soybean oil — a facility in Hopkinsville, Ky., when it began operation last winter.

Could farmers be buying biodiesel blends from their local gins a year or two from now? It's certainly a possibility, says Wedegaertner.

“The module trucks and over-the road trucks could fill up at the gin's pumps probably at a savings over what they would pay to a distributor.

“This is a local thing that I'm talking about with biodiesel. The best economy is for production and consumption to occur locally. Ethanol is different because of the complications of distribution.”

Wedegaertner acknowledges that if the gins crushed all the cottonseed in the United States, the result would supply only a small portion of the nation's energy needs. “But it could be a very significant development for farmers and ginners.”

The outlook for cotton ginners has been improving because of higher prices. With USDA forecasting a 2007 cotton crop of only 17 million bales, cottonseed is enjoying a seller's market for the first time in several years.

“Cottonseed is selling for more than $200 a ton on the West Coast — where most of the seed goes to dairy operations — and could break $250 per ton this year,” says Wedegaertner. “Normally, dairymen would not be happy with the price of feed going higher, but milk prices are going up as well.”

Cotton Incorporated researchers and other scientists are also looking at other ways to use byproducts of the ginning process, including such esoteric items as gin trash.

“We're focusing on uses that could help increase the value of such materials,” Wedegaertner says. “We're also monitoring the progress of USDA and others who are diligently working on producing cellulosic ethanol.”

One area being explored is bathtubs reinforced with about 35 percent ground cotton boll burrs.

“That has way more value than burning it,” he notes. Another possibility: Using cotton burrs to make particle board and plastic decking boards.”

U.S. cotton gins produce about 2.5 million tons of gin trash annually, according to estimates. “If we can develop some new uses for those materials, it will benefit growers and ginners alike.”

Despite the improving price outlook for cottonseed, many ginners remain in an economic bind, he notes. “Most ginners have reduced their costs as much as they can. The way out of the trap is to increase the value of the byproducts.”