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2Copyright © 2006. Renewable Energy Group, Inc.

Ninth Annual Farmer Cooperatives Conference

Bioenergy: Opportunities for Cooperatives in Marketing Ethanol, Biodiesel, and Byproducts

Gary Haer

Vice President Sales and Marketing

Renewable Energy Group

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Welcome to Renewable Energy Group, Inc.

• Biodiesel history

– Farmers cooperative began in early 1900s to add value to farmers grain

– Soybeans crushed for patented soybean meal; SoyPLUS

– Methyl ester production as a way to add value to soybean oil

– West Central began producing and marketing biodiesel in 1996

– Began designing and building plants for others

– West Central invested biodiesel into Renewable Energy Group, Inc. in 2006

• Renewable Energy Group, Inc. is only full-service biodiesel company

– Construction

– Production

– Management/Marketing

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U.S. Industry Biodiesel Sales

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

160,000,000

180,000,000

200,000,000

1999 2000 2001 2002 2003 2004 2005 2006

Gallons

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Assessing the Market

• Considerations

– What feedstocks are to be used and where is supply

– Proximity to other biodiesel producers

– Where will biodiesel be marketed

– What transportation systems are available

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Transportation/Logistics Mix

• What percentage of plant production will be shipped by truck?

• By rail?

• Barge?

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Rail car numbers

• External rail factors

– Current rail situation

– Improvements needed

– Tank car suppliers

– Lead time required for acquisition of railcars

– Lease terms

• Internal factors

– How many cars will be used based on production

– Percentage of product being shipped by rail

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Trucking

• External considerations– Local highway systems

– Weight restrictions on that system

– Local ordinances on traffic

– Will road improvements be required? Who will pay for those?

• Internal Considerations – Ease of backing, moving semis on the premises

– Load-out schedule

– Tank truck cleaning

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Freight costs

• Procurement of feedstocks accounts for more than 80% of cost of biodiesel production

• How much does it cost to move from production plant to the targeted markets? 

• Who is responsible for the payment of freight bills

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REG biodiesel supply chain overview

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Sales & Marketing

REG Has Built A National Distribution System

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Maintaining quality through the structure

• BQ-9000 Accreditation

• Heat tracing

• Certified Marketer

13Copyright © 2006. Renewable Energy Group, Inc.