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Mendocino County’s Own Local Yokayo Biofuels

 

Back in 2001 Yokayo Biofuels has been supplying high quality biodiesel to Northern California. They are committed to ecological, social and economic sustainability. The most sustainable biodiesel source available is locally collected used restaurant fryer oil, which Yokayo Biofuels collect and produce their biofuels in Ukiah, which is the county seat for Mendocino. Their biodiesel production facility sits on 1.5 acres which looks out upon acres and acres of wine grapes.

History: Kumar Plocher is the company founder and president. He is an idealist, an ecologist and is passionate about changing the world for the better. So in September 2001, he quit his job in a high tech company in order to persue this new occupation. While in Berkeley he learned about biodiesel and with many hours of study and research he decided to start a biodiesel company. Mendocino county, with its organic farming and environmental attitudes would prove to be the best place to sell this new alternative fuel.

 No one had tried to make a living distributing 100% biodiesel to end users. Kumar made a flyer with a survey on the back and distributed them around town. When he received enough positive responses, he decided to go for it. He enlisted an acquaintance, Andrew Daunis who had made some biodiesel on his own and he also had a commercial drivers license. They named the company Yokayo Biofuels, after the Pomo Indian work “yokayo”, which means “deep valley”, and is the basis for the modern name Ukiah. 

So in November 2001, they took their first delivery of 2,800 gallons at a cost of $1.37 a gallon. It took eight weeks to sell it all using a pickup with a 200 gallon tank and a little 12 gallons per minute pump. They gave away samples and went on the local radio, taking calls and spreading the word through the farming community. There first big brake happened in March 2002 when they had a commitment from Fetzer Vineyards to purchase 1,000 gallons of biodiesel, to use in their organic operations. 

By the end of 2002 they were selling to the Thanksgiving Coffee Company, who ran its entire fleet on biodiesel and had over 100 regular delivery customers making sales for the year 2002 were about 40,000 gallons. The company moved twice that year, and ended up at 150 Perry Street, Ukiah.

 They had acquired two new custom-outfitted delivery trucks with 1,000 gallons capacity each, and they also began selling fuel to drive-up customers with a makeshift pumping setup. With the whole sale price of fuel going up to $1.74 per gallon, they figured they needed to sell 12,000 gallons per month to make a profit. In mid 2002 when Andrew left the company, Kumar hired Sunny Beaver to run the office, manage ordering and dispatching, deliveries, and do the bookkeeping. He also hired a commercial driver and Kumar’s father Steve Plocher, a CPA became the company controller.

In 2003 the company was starting to show profits. In July 2003, they purchased a 4,500 gallon commercial fuel truck for their growing business and by the end of 2003, monthly sales were around 15,000 gallons per month. But wholesale prices had risen to the point that being a middleman distributor was no longer financially feasible. It was clear that they needed to produce their own fuel to be a profitable business.

Between the fall of 2003 through the spring of 2004 they sought to raise funds by selling shares in the corporation via a private placement offering to construct their biodiesel plant in the Ukiah area. They achieved about 2/3 of the money they were seeking, which was just over $300,000. Tom Brewer, Yakoyo’s subcontracted chemical engineer, had designed a relatively small commercial production plant, they leased a shop, and Yokayo Biofuels was ready to order equipment.

 Problems occurred and they discovered that building the plant would have more issues and would cost more than they expected. Worse yet the wholesale cost of fuel increased to $2.59 per gallon. It was more imperative than ever for Yakayo Biofuels to produce its own fuel. By July the restaurant oil collection business was having a great success. By the end of November 2004 they were collecting used fryer oil from over 200 restaurants in Mendocino, Sonoma, and Marin counties, which added up to 10,000 gallons per month. But with no plant, and oil piling up in storage tanks, Yokayo Diesel found themselves in quite a predicament. 

At the end of 2004, Kumar started discussions with the operators of a large biodiesel plant in central California that was interested in making biodiesel from there used fryer oil for about $1.00 per gallon. But it turned out that the plant had been designed to make biodiesel from only virgin soybean oil. But after multiple attempts they were not able to adjust the machines to use the used fryer oil. So in January 2005 they continued with the effort to create their own production plant. 

With funds low Kumar met in late January with Maria Alovert with experience which included mechanic work, plumbing construction, welding and electrical wiring. She could do much of the work herself setting up the new production plant. The plant would start out making 200 gallons of biodiesel per day and be expandable to 1,000 gallons per day. Total projected cost should be under $50,000.

But they still needed money! Kumar and Steve every 6 months was meeting a specific individual about biodiesel and how the company was doing. In late January this person contacted Kumar to continue there ongoing conversation. Kumar shared with him the desperate status of Yokayo Biofuels. This individual promptly called Steve and pledged to invest $100,000 to make the plant happen. The first $25,000 arrived the very next day.

They were making progress, but still needed a properly zoned site to legally make biodiesel. On February 9, when having a management meeting they thought of the old Georgia Pacific chemical plant was the perfect site, as it had liquid containment, a network of racks for overhead plumbing, fire water cannons, compressed air, and buildings designed to hold industrial chemicals. So Kumar called the owner and arranged a tour and by March 1, 2005 they signed the lease.

At the end of December 2005, they finished assembling the elements of the biodiesel plant and by mid January 2006, they were making regular batches of 180 gallons of top quality biodiesel. With the ability to do multiple batches per day, they were able to make up to 5,000 gallons a month. With production picking up the they began distributing their own fuel by May 2006. In July 2006 they built a new larger processor, capable of 1,000 gallon batches. Production doubled to 10,000 gallons per month. 

Yokayo Biofuel’s Fleet

With upgrades in equipment leading up to March 2007, they increased production to 20,000 gallons per month of biodiesel. But now a new circumstance arose. The land lord had been building his operation all around them, and there was sawdust everywhere. He offered them the opportunity to move to another industrial site he owned. It was over an acre, with a large concrete building, a lot of extra covered space, offices, bathrooms and 600 amps of 3 phase power. It turned out to be just what they needed, so they moved in July. By August 2007, they collected 30,000 gallons of restaurant oil from over 500 restaurants and produced 26,000 gallons of biodiesel.

But in 2008 after the summer fuel prices crashed and they had to lower their price down, just to move their product. Their financial struggle resumed. It was the beginning of the recession. In addition restaurants were using less oil, but they found other oil collectors in the San Francisco area which they were able to purchase extra waste oil at a reasonable price. So they expanded there wholesale fuel operations and was selling half their fuel to Biofuels Oasis in Berkeley, a retail biodiesel station with thousands of customers.

In 2009 they hired a full time chemical engineer and a part time mechanical engineer, to make daily operations more professional and to design a larger more efficient plant. At the end of the year they also added a project manager to prepare proposals, plans, and budgets for the future plant. By the end of the year they were making biodiesel every single day, except for holidays.

With expectations of a great 2010 year, where they would achieve a level of profits such that they could qualify for a big SBA loan, turned out to be the most difficult year ever, financially speaking. Congress failed to renew the $1.00 gallon biodiesel tax incentive that they got from the IRS, like they did that last four years. Each month they would receive a check for about $30,000 which was a large portion of there income. That stopped on January 1, 2010.

They needed to pull out all the stops to survive. Steve drew up budgets for various levels of production, fuel prices, and expenses that they had some control over. They pushed production to the max and managed to increase the size of their daily batches by increasing the speed of the mixer. Also Evan, the project manager helped institute a new step to their biodiesel process that saved ingredients and yielded more fuel. Then the shareholders came to the rescue more than once that year, with additional equity contributions and many loans, large and small. They had to string out many of their creditors and taxing agencies, knowing that they would become financially stronger and catch up with payments later on. Toward the end of the year they actually appealed to a number of banks and leasing companies, to whom they made monthly payments, to get the payments waived temporarily or reduced. They were all very accommodating and they lowered their monthly cash disbursements by over $6,000.

Then there were the Renewable Identification Numbers (RINs). The EPA created the Renewable Fuel Standard, which requires petroleum companies to include an ever-increasing percentage of alternative fuel in their gasoline and diesel. Companies like Yokayo Biofuels got credits for every gallon of biodiesel they would sell or use. Early in 2010 those credits were worth about 14 cents each. However, as the biodiesel supply began to dwindle and the petroleum companies were having a very hard time fulfilling their quotas, that value rose. Toward the end of the year they were worth 50 cents. They were making over $25,000 per month selling their RINs to petroleum companies. Their first step in surviving was in place.

With all that was bad happening in 2010, they never stopped making fuel. On the contrary, they never stopped trying to make and sell more than they ever had before. This would become very important distinguishing factor for Yokayo Biofuels when, on December 17th, after 12 months of failing to address the fate of the biodiesel industry, Congress reinstated the biodiesel tax incentive. The fact that they made it retroactive to January 1, 2010 meant that companies like Yokayo Biofuels would come out on top over all the high-capacity big industry players who had either shut down or greatly diminished production. After getting nothing for 12 months, the IRS was going to owe them over $400,000. So on April 19, 2011 the check arrived. It is said that the bookkeeper, Sunny, walked to the bank to deposit it, that a rare circumhorizontal arc” “rainbow across the sky” appeared. Their old debts would be paid, and the remainder would go into the savings. Congratulations to Yokayo Biofuels for reaching for and conquering the American Dream.

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