Tyson Foods “conflicted” over biofuels policies: supports ethanol mandate waiver, wants biodiesel tax incentives

In Texas, Tyson Foods is said to be “conflicted” over the request by Governor Rick Perry to waive or reduce the Renewable Fuel Standard. Tyson is supporting the waiver request, but requesting that its $1 per gallons tax credit for producing biodiesel from animal fat be retained. The Governor also supports biodiesel incentives for Tyson while opposing the ethanol mandate.

A spokeswoman for the Environmental Working Group, supporting the waiver request on the grounds that ethanol contributes to global warming, told the Dallas News that  “Governor Perry may be more concerned about the economic impact to his state. We are very concerned about the food crisis and environmental impacts to his state.”

Tyson Foods background

The joint venture between Tyson Foods and ConocoPhillips to produce biodiesel from beef tallow has increased capacity from an initial 1.5 Mgy to 7.6 Mgy.

Tyson Foods recently blamed ethanol for a drop in profits of 10 cents a share, or $23 million, in its first fiscal quarter, and the company said that uncertainty over grain prices made it impossible for the company to issue earnings guidance to analysts. Tyson said that its costs rose 3.9 percent in the first quarter compared to the same period last year, while sales increased 3.2 percent.

Tyson’s alternative fuel joint venture, Dynamic Fuels, which will convert Tyson byproducts into renewable synthetic jet fuel, is schedule to commence production in 2010 in Louisiana. The state of Louisiana recently pledged $400,000 towards construction of a rail spur serving the $150 million plant, a joint venture between Tyson Foods and Syntroleum.

Earlier this year,  the founder and CEO of Syntroleum announced their resignations, as the company also announced 16 layoffs aimed at improving the company’s bottom line. The company, founded in 1984, has never recorded a profit.

Syntroleum formed a joint venture company, Dynamic Fuels, in partnership with Tyson Foods, which will build and operate a biodiesel plant in Geismar, Louisiana using Tyson’s animal wastes as feedstock. The Dynamic Fuels plant is scheduled to open in 2010 with an initial capacity of 76 Mgy. Concurrent with the layoffs and management changes, the company announced that it will raise $12 million in new equity from Fletcher Asset Management of New York.

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