Fields of Power; Farming Co-Ops & the Future of Biodiesel
One of the basic tenets of success is to believe in oneself. And that’s exactly what America’s farmers are doing in this petroleum-hungry nation: For not only are farmers across the nation using alternative fuels like biodiesel, they are also building a strong foundation for a long-term relationship that will boost their livelihood, build the biodiesel industry, and help keep America cleaner and safer. How are they doing it? First and foremost by believing in themselves and their livelihood with the most basic form of mutual business collaboration: the farming cooperative.
When the National Council of Farmer Cooperatives organized in the early 1930’s, farmers joined in the hopes that member-owned and operated cooperatives would provide them with opportunities to capitalize on market opportunities and strengthen bargaining power, in addition to maintaining access to competitive markets while reducing and managing risk. With over 3,000 successful agricultural cooperatives in the country, farmers are tapping into the biodiesel market to advocate the homegrown success of fuels—expanding the products that they can grow, produce and market right in their fields. Cooperatives range in size from very large—for example, Ocean Spray and Sunkist—to smaller groups, such as a local group of farmers banding together to purchase or sell at a better rate.
“Coops can allow people who want to remain independent to have part-ownership and contribute to a business,” says Monty Rohrbeck, Regional Manager for West Central. “They can enable people with similar wants and needs to combine their resources into a business or service that offers mutual benefits.”
West Central Cooperative
Founded in 1933, West Central Cooperative in Ralston, Iowa, is one such example. According to Alicia Clancy, Communications Specialist at West Central, “West Central Coop currently has 3,500 members . . . we employ over 200 people in a ten county area.”
Members pay a one-time $100 membership fee to own stock in the cooperative. Earnings are distributed annually via dividends and are based on the amount of business conducted with West Central. “Any farmer in the area can sell their grain here,” says Clancy. Other services to members include manure management consultation, seed sales, agronomy, agronomists, chemical sales, fertilizer, chemical application, fertilizer application, GPS mapping, marketing contracts, grain storage, grain drying and more.
In a commitment to the continued use of innovative processes and products, West Central has led the way with Iowa’s first biodiesel manufacturing facility, first producing biodiesel in 1996, followed by the SoyPOWER brand in 1997. The Ralston plant now processes 8-9 million bushels of soybeans each year, producing about 12 million gallons of biodiesel annually. Centrally located in the United States, West Central distributes biodiesel to distributors and petroleum blenders. “Biodiesel is a way to add value to the members’ soybeans,” says Clancy.
West Central is also the nation’s largest marketer of biodiesel. In 2005, 75 million gallons of biodiesel were sold, of which West Central Soy marketed and sold over half.
“We also own a commercial scale biodiesel construction LLC called Renewable Energy Group (REG),” says Clancy. “That group builds 30-100 million gallon per year biodiesel plants. REG has two completed plants in operations and contracts to build several more.”
A Time of Change
“I think the days of $40 a barrel oil prices are behind us,” says Griffin, chairman of the Board of Managers for the Heartland LLC, a dedicated group in Rock Port, MO, working on building a new biodiesel plant. “We are importing 55 percent of our oil . . . we need to do something to wean ourselves away from foreign oil.”
And indeed, Griffin and the Heartland Board of Managers are doing something, as their Heartland plant will also have farmers as investor-owners. Griffin says, “With more biodiesel plants coming on line, the farmer will net out more money for the soybeans he’s growing. He’s created a higher demand for the raw soybean . . . this country has exported two out of five soybeans we’ve produced, now we’ve added value to that product . . . more jobs locally, more commodity locally, instead of exporting product locally.” Griffin said that 60 pounds of soybeans nets eleven pounds of oil, with the rest going to meal, which is used for feeding livestock. With the demand for cooking and salad dressing oils moving to non-saturated fats, the market for soybean oil is dropping off.
With plans for the Heartland biodiesel plant to be up and running in 2008, they have completed a phase one environmental study, a topographical study and are lining up financing and planning an equity drive. Griffin is optimistic about the upcoming $25 million equity drive, which is open exclusively to Missouri residents. The state of Missouri provides very lucrative incentives to build biodiesel plants if certain conditions are met, one of which involves 51 percent ownership by Missouri residents.
“Alternative fuels provide tremendous opportunities for family farms,” says Griffin. “I’ve been in farming over thirty years and have never seen so many opportunities for American farmers to become involved in alternative fuels.”
Indeed, according to the National Biodiesel Board website, “Biodiesel is a perfect opportunity for farmers to create demand for the crops they grow through on-farm use . . . Soybean demand is key to increasing soybean prices, and the United Soybean Board says biodiesel represents the largest potential industrial use of soybeans.”
As Griffin succinctly concludes: “Would you rather buy oil from a Missouri farmer or from someone in Iraq?”
Note: Farmers’ coops have been created across the country, and local coops are a great place to get information in becoming involved in the solution. Contact your State Department of Agriculture for more information.