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Dairy Diversification

A five-farm digester venture in Massachusetts could be a game-changer for struggling dairy farmers.
By Anna Austin | July 28, 2011

In Massachusetts today, dairy farming circulates about $40 million through the state economy. While that is a hefty chunk of change, the number of dairy farms in the state has been rapidly declining.
In the past 25 years, Massachusetts has experienced the closure of more than 600 dairy farms and is currently home to less than 200. Low farm milk prices combined with the rising costs of production and energy continue to force family farms out of business.


Fourth-generation dairy farmer Peter Melnik of Deerfield, Mass., is determined to keep the family business profitable, and has joined a uniquely modeled project to build anaerobic digesters on five Massachusetts dairy farms. Along with his fellow dairy farmers, Melnik and long-time renewable energy consultant Bill Jorgensen have formed a new company, AGreen Energy LLC, and have partnered with biogas plant technology provider quasar energy and food waste management company Casella Waste Systems.


“One of the biggest challenges for dairy farmers in Massachusetts is that we have limited land resources, so as the cost of living and the cost of doing business increases, we have to find other income sources on our dairy farms so we can survive,” Melnik says. He points out that the five farmers involved have diverse operations, but expanding to generate more income isn’t as easy as it sounds. “It’s not really possible to go from milking 500 cows and then buy the farm next to you to milk 1,000 instead,” he says. “There is too much development in the urban society where we live.”


Instead, most farmers will try to grow different crops so that when dairy prices aren’t as profitable, they still have another source of income. Melnik says he and the other farmers involved looked at manure digestion as another income stream. “It’s something we have to deal with anyway,” he says. “A positive cash flow and long-term benefits just made sense.”


Currently, Melnik is field-spreading the manure from his 250-head farm. While this limits the purchasing of fertilizer, the new project will generate an organic fertilizer that Melnik and the other farmers will use, and it will likely eliminate the need to buy any additional fertilizer. The partnership also has ensured each farm a fixed electricity cost for 10 years, a stable supply of animal bedding and free heat generated by the digester. Melnik and the other farmers are also investors in the project and will gain some income from the electricity that will be generated and sold to the grid. “Once the digester is paid for, there should be a pretty good return on investment,” he says.


While AGreen Energy’s first anaerobic digester at Jordan Dairy Farm in Rutland is complete and operating, work on the digester at Melnik’s Barway Farm should begin by September, with a four- to six-month development frame. The others involved are Barstow Long View Farm in Hadley, Hager Brothers Farm in Colrain and Rockwood Farm in Granville. 


Bill Jorgensen, who pulled together the pieces of the project puzzle and owns half of AGreen Energy, says the farmers involved were not selected at random; rather, they were specifically sought out as good potential candidates for involvement in the project.


Developing the Project


Jorgenson, who has owned an agribusiness and renewable energy consulting firm for the past 20 years, says the farmers involved in the AGreen Energy venture emerged out of a group that he put together using a list obtained from the Farm Credit Bank and a former Massachusetts commissioner of agriculture. “I asked them for some names of dairy farmers who they thought would be innovative—regardless of age—who were also good operators and multigenerational farmers probably interested in passing their farms on to the next generation,” Jorgenson says. “It wasn’t random; it was a very specific plan.”


Once the farmers were onboard, the group worked to solve the issues that have kept other U.S. digester projects from succeeding. “The main reason for failure was that once they were built the farmer was given the keys, and since they are modestly complex, when something went wrong they didn’t know how to fix it,” Jorgenson explains. “Or, the farmer would be in the middle of harvest and had to worry about other things.”


To solve that problem, it was decided that the digesters would employ remote operating systems. “When we evaluated technologies, if they said they didn’t have process controls, we moved on,” Jorgenson says.


 That’s where Ohio-based quasar energy entered the picture. Quasar, the technology provider, designs and builds digesters, and also trains on-site operators, who are employees of Casella Waste Systems division New England Organics. “By providing remote monitoring and maintenance, if there is a biological issue at one of the digesters, quasar will be able to solve the problem at its laboratory in Ohio,” explains Caroline Henry, marketing manager for quaser.


In fact, the company’s engineers have developed an application that allows a plant manager to monitor a digester from an iPhone, according to Henry. She says the company won’t build a project without monitoring agreements.


One particular component that is monitored by quasar is the equalization or storage tank, a smaller tank into which the feedstock is pumped before the digestion process. “Because some of the feedstocks we accept are higher solids content and some lower solids content, we need to make sure a healthy recipe goes into the digester,” Henry says. “The equalization tank mixes and equalizes a variety of waste streams accepted during a three-day period, so that there is a consistent feeding going into the main digester.”


Casella Waste Systems is responsible for procuring the feedstock from contracted companies, and making sure it’s prepared to meet digester specifications. The company, which is also an investor in the venture, has several other roles, according to Jay Kilbourne, Casella director of business development. “We provide day-to-day operations of the facilities,” he says. “We have an employee right there if there is ever a problem.”


Another role Casella plays, is to make sure that the feedstock complies with permits and regulations, mainly that it is separated from other waste and never comingled. “We audit the plants and customers to verify there’s a source separation system in place,” Kilbourne says. “What we take has to be a byproduct of whatever they do. For example, one customer makes mayonnaise and salad dressings and sometimes they’ll have a product that just doesn’t meet their standards, or they have fat and oil byproducts that are washed down from the equipment.”


When delivered to the digester via an 8,000-gallon tanker truck—usually about one to one-and-a-half tanker loads per day from customers two hours away or less—the feedstock slurry must be of the right thickness—not too rich or too thin—for the microbes. Since Casella currently does not have a blending facility, although a plan for one is in the works, Kilbourne points out that it is essential to select just the right byproducts from the right customers. “It’s quite a trick,” he says. “The strategy of the whole venture is to diversify the materials we bring in over time, such as food scraps separated from the waste, but we’ll need to be able to pulp and liquefy the scraps before they’re delivered to the digester. We’re moving toward opening an organics recycling facility where we can do that.”


While Casella, the dairy farmers/AGreen Energy and quasar are the obvious project pillars, Jorgenson points out that there was also involvement from outside parties to get the project off the ground.


Strategic Planning


“As it happens, Massachusetts has a long-term plan for solid waste management and eventually wants to eliminate organic waste in landfills,” Jorgenson says. “So what the state wants to do and what we want to do is aligned.”


For optimal communication, all parties involved sat down with relevant state agencies and discussed how the venture would work, that’s when they found out that current regulations wouldn’t allow the project to happen. “The regulations were written 25 or 30 years ago when digesters weren’t a technology [in the state], so we asked if the regulations could be modified to permit the new technology, and they said yes. We found out what the issues and restrictions were, and were told that since we were composting, we wouldn’t be considered a solid waste hauler. That brings us back to the tanker trucks, which aren’t handling solid waste, but rather recycled material. This was the state teaching us; not us teaching the state.”


The in-depth planning process for Jordan Dairy Farm fast-tracked permitting for the farms that followed. While it took four years to get the first digester permitted, the process took only 60 days for the next two farms, Jorgenson says.


Much like permitting, financing was another hurdle to clear, requiring cooperation amongst many different parties. “We were fortunate that we had a group of people from the USDA and the state who helped,” Jorgenson says. “There are a series of incentives out there and we used all of them, including loan guarantees. The Farm Credit System has banked this project, and it’s more or less 50 percent equity, 50 percent debt.”


In addition, some of the farmers’ equity contributions came in the form of nutrient management incentives that they were eligible for. In total, the cost for each digester project is from $2.5 to $3 million.


Although the project is environmentally friendly, it is definitely a money-making venture. “There are no two ways about it,” Jorgenson says. He also believes this type of venture will be applicable in other regions, and is working with the dairy checkoff (a dairy producer funded program that is designed to increase sales of and demand for dairy products and ingredients) to be able to share information about how the project was implemented so farmers elsewhere can use it.


“Methane digestion has been difficult for farmers to get into on their own,” Melnik says. “This unique collaboration between farmers and industry experts lets us do what we do instead of us trying to go out and collect waste and run a digester. We’re smaller family businesses that have to worry about milking cows and growing crops, and to have to manage a complex process like methane digestion—a $3 million project in our backyards—would be overwhelming. The partnership is a good balance.” 


U.S. farmland is dwindling, Henry adds. “For multigenerational farming families  like the ones involved in AGreen, innovation and progressive thinking—as is required with a digester—is the means in which they can position themselves for continued growth and prosperity in a changing environment.”

Author: Anna Austin
Associate Editor, Biomass Power & Thermal
(701) 738-4968
aaustin@bbiinternational.com

 

Jordan Dairy Farm Anaerobic Digester Quick Facts

• Construction of the Jordan Dairy Farm digester began in October 2010 and it began operating in April.

• The Jordan Dairy Farm plant generates enough biogas to produce 3.7 million kilowatts of electricity per year—enough power for about 300 homes.

• The Jordan Dairy Farm digester is the first plant of its kind in Massachusetts.

• Four major food companies—HP Hood & Sons, Cabot Creamery, Kayem Foods and Cains Foods—have agreed to provide the farm with food scraps and byproducts instead of sending it to a landfill for disposal.

• All the equipment and services used to build the digester facility were made in the U.S., keeping manufacturing and construction jobs here.

• One cow produces enough electricity to power one average Massachusetts home and removes the equivalent greenhouse gas emissions of two cars from the atmosphere.

 

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