Development of New Generation
Cooperatives in Agriculture for Renewable
Energy Research, Development, and
Demonstration Projects
Mark Downing
Agricultural Economist
Oak Ridge National Laboratory
OAK
OAK
RIDGE
RIDGE
NATIONAL
NATIONAL
LABORATORY
LABORATORY
U.U.
S. S.
DEPARTMENT
DEPARTMENT
OFOF
ENERGY
ENERGY
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Acknowledgements
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A diverse presentation such as this one benefits from years of on-going
collaboration with a variety of backgrounds and disciplines and circumstances. I
would like to thank:
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Chris Demeter, Janet Cushman, Lynn Wright, Anthony Turhollow, Lynn Kszos,
Marie Walsh, Bob Perlack, Rich Bain, Rick Freeman, Gregg Marland, Robin
Graham, Ken Campbell, Chris Hanson, Robert Hanson, Bob Hansen, Ralph
Overend, Greg Larson, Jerry Tuskan, Tom Kroll, Bill Bergusen, Don
Riemenschneider, Dan Langseth, Dan Netzer, Sarah Rensink, Sheila Faber,
Michele Bielik, David Cobia, Jim Cooper, C. Philip Baumol, John Ferrell, Steve
Hanson, Marvin Duncan, Randall Torgerson, Jerry Nadeau, David Barton, Ralph
Groschen.
•
Notwithstanding their invaluable contributions, any mistakes or errors within this
presentation remain my own responsibility. The views necessarily reflect those of
the U.S. Department of Energy, the U.S. Government, Oak Ridge National
Laboratory, and UT-Battelle.
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Introduction
• New Generation Cooperatives
• Bioenergy cooperatives
– Data
– Methods
– Results
• Discussion
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Assumptions
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Closed membership
Initial investment equity level high
Have the right to deliver
Value of delivery rights can appreciate
or depreciate
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Agriculture and Energy
• Commodity production
• Co-product or bio-refinery approach
• Biomass Power for Rural Development
Initiative
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Agriculture and Energy
• Commodity production
– Alfalfa stems for power and leaves for meal
– Hybrid poplar for co-firing and for wood
fiber
– Switchgrass for co-firing and as a perennial
crop
– Willow on non-CRP land and for co-firing
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Agriculture and Energy
• Biomass Power for Rural Development
– Power
– Rural development
– USDA and DOE joint solicitation
– Preceded by 12 paper feasibility studies
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MnVAP
• Minnesota Valley Alfalfa Producers
Cooperative
– Duality of alfalfa commodity
– Gasification and high-protein leaf-meal
– Cooperation with an electric utility –
confounded by a state mandate
– Production, processing, and marketing
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Prairie Lands Bio-products
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Market grass crops in southern Iowa
Value-added role for switchgrass
Ethanol, co-firing with electric, plastics
Deal with production, harvesting, and
storage
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Willow Bioenergy
Producer’s Cooperative
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Salix Consortium
Co-firing option
Non-CRP land in New York State
Planting, harvesting, storage, marketing
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Minnesota Agro-Forestry
Cooperative
• Not a Biomass Power for Rural
Development offspring
– From DOE Feedstock Development
Program at ORNL
– Fiber commodity, co-firing option second
– Compounded issues with electric location
– Historical research was tremendous
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Necessary conditions
• Legislative
• Long term corporate strategy
– Business viability
– Economic sustainability
• Public sector efforts
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Sufficient conditions
• Specify plant and construction oversight
goals
• Develop a mutually agreeable and
defensible mission statement and vision
• Incorporate planning advisors and
consultants
• Leadership development by producers
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Sufficiency…
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Commitment by owners
Error recognition by management
Identification and management of risk
Assumption of options
Sufficiency of capital
Communication in management
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Sufficiency…
• Securing an appropriate business
location
• Projecting the market(s) accurately
• Projecting operating costs accurately
• Assumed reliance on government-based
marketing
• Excessive debt/equity ratio
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Discussion
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How you set up a cooperative
Ability to control production
Stock vs non-stock form of business
Exclusivity in the farming community
Plant and social science research
Business culture
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