In her letter of resignation last week, outgoing Secretary of Agriculture Ann Veneman cited record farm income as part of her legacy. There was no mention, however, of rising farm input costs.
According to a Purdue University study, farm production expenses increased an average of 2.1 percent between 1995 and 2004. Those input costs are expected to rise again in 2005. The study says in the coming year the per acre cost of growing crops on average quality land will rise about $16 for continuous corn, $12 for rotation beans, and $11 for second-year beans and double-crop wheat.
Finding ways to cut those costs is an exercise as old as growing the crop itself. For one Minnesota farmer that effort starts in the dairy barn, where he's found an asset that he defies anyone to call waste. John Nichols explains.
Located about 90 miles North of Minneapolis, Haubenschild Farms is similar to most Midwestern dairies: Its 1,000 Holsteins consume tons and tons of hay and produce more than 2 million gallons of milk annually. The cows also produce something else -- manure -- lots and lots of manure. And it's what Haubenschild Farms does with the nutrient-rich material that really sets it apart.
By capturing the methane gas in the manure, the system generates about 3,000 kilowatt hours of electricity daily - enough energy to power Haubenschild Farms and about 75 other nearby homes.
Dennis Haubenschild: "If you're going to have animals, you know, we've got to consider that byproduct manure as of value and not of waste. And actually not only can you be environmentally sound but you can make money by being environmentally sound and being sustainable. What is kind of nice about it is we're doing this in a 21-day period. You know, your natural gases and coals it takes 21 million years. So, you know, it's kind of exciting."
Here's how Haubenschild turns manure into money. Manure from the cows is fed into a digester where it decomposes over a 3-week period. Bacteria in the digester break down the manure and release biogas, which is about 60 percent methane. The fuel is then burned in a Caterpillar generator which provides electricity for the farm. Waste heat from the generator is recovered and is the sole source of heating free-stall buildings in the unforgiving Minnesota winters.
Since Haubenschild Farms can't use all the power it produces, surplus electricity is sold to the local electrical cooperative, East Central Energy.
Marty Kramer, East Central Energy: "We agreed to buy his power at retail which is called net metering. We have two meters -- one measures up how much power he is using and the other one how much power he is sending into the grid. And at the end of the month we settle up and we've been settling up owing him about $3000 a month."
East Central Energy reports that electricity produced by Haubenschild Farms has enabled it to reduce coal burning by 50 tons per month -- about half of a railroad car. Consequently, the utility also has cut its carbon dioxide emissions by 5,000 to 7,000 tons per year. And Kramer claims there are other reasons to embrace "cow power."
Marty Kramer: "It's been very reliable. The digester, for us, has been better than expected. The availability has been 98%, better than 98% as opposed to wind, which is also clean energy, but it's not dispatchable and you get maybe 30% efficiency. This one is up 98% of the time. We're a co-op, that's where our roots are, he provides about 20 full-time jobs out here on the, in our rural areas and being a rural co-op that's important to us to have jobs out on our dirt."
Haubenschild Farms received a zero-interest loan from the Minnesota Department of Agriculture as well as grants from the U.S. Departments of Agriculture and Energy. Nevertheless, Haubenschild insists that the system is replicable in other livestock operations and the break-even point is sooner than you might think.
Dennis Haubenschild: "Basically we've got $350,000 invested in our manure system and by doing so we were hoping for a five year payoff to make it a good business decision and we've met our goals and then some on that. So, it has been an economically correct decision to do."
Finances aside, Haubenschild says it just makes sense to capitalize on readily available resources. Twenty years ago he implemented a solar power system. Today, he gets better efficiency with his aerobic digester.
Haubenschild claims the process also removes about 90 percent of the odor from the manure and kills many of the weed seeds.
Dennis Haubenschild: " We've cut back, you know, close to half the cost on our herbicides, we don't have to go to that two time program concept because a lot of the weed seeds are killed or don't germinate So, you know, your first pass of herbicide basically is doing the job now with very little secondary treatment if at all. So, that is a big savings and if you can save $40,000-60,000 on commercial fertilizer that helps pay bills too."
After every cutting of hay, Haubenschild applies manure that has been through the digester, known as digestate, back to the fields. An agronomic application rate of 2,000 gallons per acre ensures that the nutrients removed by harvesting alfalfa are replaced and ready for the next crop.
Manure directly or indirectly provides the farm with electricity, cash and heat. Given the volatility of dairy prices over the past decade one might ask the question -- which is more valuable the milk or the manure?
Dennis Haubenschild: "Oh, there was a point there that the cows were producing about 30 cents per cow of electricity a day and there was a while there where it was barely 40 cents profit on milk per day. So, it was getting real close but there again it's telling you, you know, that byproduct does have value."
So much value, in fact, that Haubenschild carries the nutrients on his short-term assets list at $12 per thousand gallons.
While capitalizing on all of his farm's resources yields benefits on the bottom line, he cites philosophical reasons for farming sustainably.
Dennis Haubenschild: "Agriculture as a whole, livestock agriculture, can work with our neighbors and be part of the society and I'm trying to eliminate this 'not in my backyard' philosophy and trying to say we need the dairy, we need our livestock industry in our community to maintain sustainability. And that has been kind of my whole goal is sustainability for everything."
For Market to Market, I'm John Nichols.