The first step in the production of biodiesel is obtaining a suitable vegetable oil or animal fat (feedstock). The potential sources are:

• Collection of used oil commonly called yellow grease from restaurants and/or households;
• Collection of animal fat from slaughter houses and packing sheds; 
• Purchasing yellow grease or tallow from an existing renderer;
• Contracting production of vegetable oil seeds from local farmers or processors;
• Purchasing clean seed from an existing warehouse or seedsman; and
• Purchasing vegetable oil from an existing crushing plant.

Municipal biodiesel producers generally use the potential source as the first option to produce the alternative fuel. If a city collects 1,000 gallons of used cooking oil then 1,000 gallons of biodiesel will be produced. The typical biodiesel production formula is as follows:

100 lbs. of used vegetable oil or other feedstock
+ 20 lbs. of methanol =
100 lbs. biodiesel + 20 lbs. glycerin