Why Cooperatives?

Vegetable oil conversions have developed incredibly in the past few years: the sophistication of technology, the number of people burning vegetable oil, the variety of businesses that have sprung up, and the level of general interest and knowledge. About the only thing that hasn't changed all that much has been how we fuel our vehicles. Even with the plans available for free or for a fee, collecting and processing waste vegetable oil are still are still time consuming and messy operations that can become an expensive initial outlay of cash. While this field was smaller, everybody pretty much had to just accept that this is what was necessary.

However, the field has now developed where in any given locale, there is likely to be a number of people already burning vegetable oil or interested in doing so, and this represents a real opportunity to spread out the time and expense of collection and processing vegetable oil and in pooling enough resources to develop systems that are faster and cleaner. Cooperative efforts are now possible.

And, as interest in straight vegetable has grown, demand for biodiesel has grown even faster. In some small cities, the old reliable supplies of waste vegetable oil have dried up as local biodiesel plants have locked in the supply from area restaurants, in California renderers have had legislation passed to protect their supply of waste oil, and renderers everywhere are responding to the higher commodity prices of waste oil. In order to secure our sources of fuel, we need to form more formal relationships with the restaurants we collect from and have an eye to expanding our base of suppliers. Cooperative efforts are becoming necessary.

What is a cooperative?

Basically, a cooperative is a collection of people who pool their time and money to accomplish something that would not be as economical to do by themselves. Usually, each member enjoys the benefit of the collective effort in proportion to how much they contributed. A cooperative can be as simple as three friends informally exchanging complementary abilities and skills. It can be six people pooling money to build and buy filters for a filtration system they all use to filter oil they individually collect. Or it can be 60 plus member organization with written by-laws, dues, and timesheets.

Case 1: The small

After Hurricane Katrina, two friends in a Mountain state, one a banker who grew up on a farm and had diesel mechanic experience and the other a restaurant owner were talking about the high price of fuel and the political ramifications and what they could do about getting out from underneath energy dependence. The restaurant owner brought up straight vegetable oil, which he had a good supply of from his restaurants. The mechanic was pretty interested and he started doing research online and came across the Frybrid forums where he found someone in his city who was also interested in converting his vehicle and coincidentally had just gotten into the oil-collecting business and had bought a waste-oil collection truck. Pretty soon the relation was set, each of the three contributed their skills and resources. The mechanic contributed his labor to converting and maintaining the vegetable oil system. The restaurant owner contributed his oil. The oil collector collected and filtered the oil. They are talking about expanding the co-op, but only to folks who could really contribute something to the mix. For now, this sized co-op fits perfectly for the three.

Case 2: And the big of it

In 2002, a handful of farmers in northern California became interested in running vegetable oil in their tractors. They were fortunate in finding an excellent source of oil in local bottling plant that had a large amount of drippings; basically unused oil that was commercially unusable because it was an uncontrolled mixture of various vegetable oils. The farmers formed the Biofuels Research Cooperative that eventually grew to over 60 members who buy shares and put in sweat equity. The cooperative has written by-laws that are reproduced below and hold regular meetings. Recently, the cooperatives main source of oil has become unreliable, and they are deciding if they need to shrink in size or reorganize.

Starting out

When you are first starting a co-op, you need to figure out:

You may not need to write up a full set of by-laws, but it is important that these questions are settled and agreed upon before you go too far. It is also a good idea to plan on revising your arrangements after a month of so of operating, and you have sense of what is working and what is not. I would also advise you to start with as compact a number as you can.

Legal concerns

Unless the EPA has certified the fuel as passing stringent emissions standards, it is illegal to sell that fuel for use in an on-the-road vehicle. As vegetable has not been certified, it is illegal to sell it as a fuel for an on-the road-vehicle. Further, if vegetable oil was sold as fuel for on-the-road vehicles, your co-op would be required to collect federal and state road tax for every gallon of fuel dispensed. Therefore, you need to make it clear that your co-op is not in the business of selling fuel either to the public or to its members. If you have written by-laws, they should not be interpretable as indicating that your members are buying a given amount of fuel for any dues they may pay.

Resources

Below you will find an links to example of bylaws, a template for an timesheet, a free plans for and filtering and dewatering set-up, a template of a letter you can provide to restaurant owners you want to build a relationship with, and a mailing list devoted to discussing vegetable oil co-ops.

Acknowledgements

Thanks to Edward Mendoza of the Biofuels Research Cooperative and the Boise Vegetable Oil Mafia for sharing their experiences.