Farmers are risk-takers. Each year they gamble big that the cost of input and production will be less than their crop earnings, providing a profit margin to sustain their families into the next growing season.
In dryland farming areas, the margin is pencil-thin; with every passing drought it diminishes further. So the prospect of doubling or even tripling gross per-acre incomes glints like a one-eyed jack in a poker game. But that prospect is exactly what promoters of growing oil-seed crops to produce biodiesel fuel outlined at a conference Feb. 23 in Arriola.
“If we let this thing go, we’re all gonna be sorry,” said farmer Doug Stowe, who encouraged other farmers to join in the biodiesel experiment.
Biodiesel is a clean-burning alternative fuel, produced from domestic, renewable resources. For various reasons it is usually mixed with fossil diesel to create “B20,” a mixture of 20 percent biodiesel and 80 percent fossil diesel that is sold at the gas pump.
Biodiesel is derived mostly from plant seeds that are pressed into oil and then sent through a process that transforms the oil into biodiesel. The process generates a few by-products, including seed hulls, seed meal and glycerin, all of which are non-toxic and have alternate uses.
The alternative fuel is generating excitement around the United States. In Southwest Colorado, the San Juan Biodiesel Cooperative — formed about a year ago — is gauging farmers’ interest in growing oil-seed crops that can be used to produce biodiesel.
“We completed our feasibility study in October and did some additional analysis, and the outlook is very encouraging,” said project manager Jeff Berman.
He said the benefits would be numerous. “By growing our own, locally made renewable fuel, we can help offset some imports of fossil fuels from unstable regions of the world. We would help improve national security by being less reliant on those imports. We would create 15 to 17 jobs directly and help support the local ag community by creating a more diversified crop rotation and a value-added local market.”
In addition, biodiesel is cleaner burning than regular diesel fuel.
The idea is nothing short of revolutionary. The completed project would comprise a locally owned and operated fuel-producing facility along with a oil-extrusion facility, and selling the competitively priced biodiesel fuel to local fleets.
The co-op’s feasibility study determined that economies of scale exist to support this venture. Members have targeted a site in the Dove Creek Industrial Park for the construction of the plant. The plant would process between 2.5 and 3 million gallons of biodiesel each year from oil-seed crops produced by farmers within a 100- to 200-mile radius.
According to Berman, a comprehensive study in 1998 found that biodiesel has an energy balance of 3.2, meaning producers get 3.2 units of energy out of biodiesel crops for every 1 unit put in. That’s compared to 1.3 or 1.4 at the most for ethanol.
“We hope, with the plant we’re looking at, to achieve a much better energy balance by having a number of efficiencies built in,” Berman said. “We plan on dehulling sunflower seeds and using those hulls in a biomass-based boiler unit that would create the steam we need for our process, rather than relying on natural gas.”
At the Feb. 23 biodiesel conference, presenters went into detail about the project and its implications for farmers. The presenters included Berman; Denise McWilliams, agronomist with the New Mexico State University Cooperative Extension; Jay Allen, Dove Creek farmer; and Mark Stack, manager of the Southwest Colorado Research Center in Yellow Jacket.
A motley crew of farmers, agricultural researchers, and representatives for U.S. Sen. Ken Salazar and U.S. Rep. John Salazar attended. To make a realistic projection for profits from oil-seed crops, one has to examine cost of production and market opportunities.
Dove Creek’s Allen did that in a 2005 trial of sunflowers on 84 acres of non-irrigated cropland. Allen trailed three varieties of sunflower in 2005, with an average total cost per acre of around $53. He also had a one-time cost of $669 to modify some seeding and harvesting equipment.
Yields averaged 1,280 pounds per acre, with a minimum of 1,071 and a maximum of 1,401. With a projected purchase price at 11 cents per pound, Allen’s harvest would net him on average a profit of $88 per acre.
Not bad considering that gross incomes on wheat and beans average around $50 per acre or less. Plus, as Allen says, “They’re a lot of fun to grow, and they’re real pretty to grow.”
Without getting too technical, producers should know that a lot of research has been done locally and in other parts of the United States regarding oil-seed crops. Stack presented findings of 2005 trials performed at the Southwest Colorado Research Center, all of which point to the viability of various oil-seed crops both from production and marketing standpoints.
McWilliams presented detailed specifications for oil-seed crops, with emphasis on canola and sunflower. These are the top two producers of oil per acre, and both are suitable for dryland and irrigated production on the Colorado Plateau.
McWilliams claims biodiesel is “good for rural economics, good for the environment, and good for engines and equipment.” In winter, biodiesel helps prevent condensation from forming in gas tanks, even in the freezing cold of North Dakota.
She cautioned that for producers, of course, “input costs make or break the end result,” and that growers here have to factor in the cost of water over and above traditional inputs to agriculture. “It’s a short season, but an intense season,” she said, but “biofuels have potential in the Four Corners region.”
While production of oil-seed crops may bring local ag producers into the 21st Century in terms of income, the more radical prospect comes with the proposed structuring of the processing plant’s ownership and management.
The current nine-member board of the San Juan Biodiesel Co-op consists of producers, diesel-fleet owners, and community members. The members have a business outline for 2006 that charges them with raising capital, developing a prospectus, and creating a type of cooperative membership structure. The co-op is set to sunset at the end of this year.
Berman said they want to avoid the venture-capital model because “we want to have this production facility locally owned for the benefit of the community.”
Even at maximum production capacity, the proposed facility will produce a literal drop in the bucket of the 56 billion gallons of diesel fuel consumed in the United States each year, half of which comes from foreign sources. But closing the loop between local production and local consumption creates a tremendous advantage for a region historically neglected by politicians and struggling for economic prosperity.
The actual structure of the ownership and management entity remains to be decided. Options may include a formal incorporated cooperative, or a corporation with real participation by the producers in the decision-making process. Regardless, it will likely include a shareholder model with representation of and control by shareholders, ag community members, and biodiesel consumers. The current board of the co-op will spend the next six months on research and recommendations to develop this model.
The project won’t come cheap. Berman estimates $7 million to $8 million for construction, plus additional funds to continue planning. But the coop has already received a commitment of support from a variety of sources including La Plata, San Miguel, and Dolores counties.
The town of Dove Creek recently chipped in $5,000 toward the effort. Town-board member Arlen Bock commented, “We need to show that the town is committed to this thing,” according to the Dove Creek Press.
Noticeably absent so far is Montezuma County, though Berman noted that the commissioners have asked for more information.
One piece of the puzzle will come with the completion of crop surveys recently sent into the community of ag producers. Working with the CSU extension offices, Berman said, the coop has mailed about 1,000 letters to farmers along with a survey asking how much acreage they are willing to use to grow seed crops for a certain price this year and in years to come.
“The big question now is not theoretical, it’s reality,” Berman said. “Now its up to the ag community to step up and say ‘we want to make this happen’ and let us know how many acres out there they want to put into production. “Without sufficient interest here, there’s no point in doing (this).”
The co-op wants to be able to contract out for one-quarter of the estimated acreage needed for full production. This equates to roughly 7,000 dry-farmed acres and 3,000 irrigated acres in the 2006 season. Rep. Salazar and his brother, Sen. Salazar, have both expressed an interest in the project.
The West has always been fueled by independent spirit and wild ideas. The biodiesel idea carries on this tradition. In the words of farmer Stowe, “Farmers are hard-headed, or we wouldn’t be farmers, but I suggest that we support this in any way we can.”
For more information on the San Juan Biodiesel Cooperative, or to get a survey, contact Greg Vlaming, board chair, 970-247-4355, or Jeff Berman, project manager, 970- 946-3967.
Gail Binkly contributed to this article.
