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Wealth from the wind

(Feb. 12, 2002 – CropChoice news) -- Dan McGuire, director of the Farmer Choice-Customer First program of the American Corn Growers Association (http://www.acga.org), gave the following presentation to the Upper Midwest Renewable Energy and Agriculture Summit last week.

By Dan McGuire

It is a real pleasure to be here today as Program Director of the American Corn Growers Association. Our Wealth From the Wind program was developed by the American Corn Growers Foundation and is being implemented by the 14,000 member American Corn Growers Association. The mission statement of the American Corn Growers Foundation is to develop educational and informational programs that serve the needs of family farmers and rural citizens. These programs are geared toward increasing farm income, promoting sustainable farming practices and protecting the environment. Wealth From the Wind certainly fits into that mission.

The Wealth From the Wind program was made possible with initial funding from the W.K. Kellogg Foundation and the Energy Foundation. We also work collaboratively with the Windustry Project and the Wind Powering America programs of the U.S. Department of Energy.

This innovative and unique program recognizes the financial and environmental benefits of wind power generation for small and mid-sized farmers and rural communities and is a positive, proactive measure to help reduce greenhouse gas emissions for all Americans.

In developing the program, the ACGF realized that for farmers and rural citizens to become involved with wind development and feel confident in its potential, there needed to be a national agricultural presence moving this industry forward and uniting all agricultural interests in supporting this new energy and income source. Our goal was not to build the turbines or transmit the electricity, but to facilitate the development of wind generation by bringing all the different players together, with the goal of providing increased opportunities for the nation’s agricultural producers and helping to develop a clean, green, renewable energy source.

The Midwest, which comprises most of the membership of the ACGA, has the potential to help move the United States closer to energy independence. Six of the top ten wind-producing states lie in the Midwest, including North Dakota, Kansas, South Dakota, Nebraska, Minnesota and Iowa. North Dakota winds alone can generate enough energy to supply 36% of the electricity of the lower 48 states. Our goal is to see wind development move forward, but with the economic fruits of that development going to farmers and rural communities.

Farmers can benefit from wind power generation in primarily three ways. The first way, and the way that is being utilized the most, is for farmers to lease their lands to wind developers for either a set rental per turbine or for a small percentage of gross annual revenue from the project.

The second way is to develop farmer-owned wind cooperatives, whereby farmers will actually own the development projects and the electricity. This method would be somewhat parallel to the many farmer-owned ethanol plants that have brought economic development to the rural Midwest.

The third opportunity presenting itself to farmers through wind development is the placement of small-scale wind turbines on their farms for their own use. In addition, it can also provide the economic benefit of net metering, which allows a farmer or homeowner to turn their meter backwards when generating more electricity than they are consuming. Rural Communities benefit through job creation during construction, permanent maintenance jobs following construction and increased tax revenue.

For the American Corn Growers Association embracing and encouraging wind generation was an easy step, since we have been leaders in the commercialization of other alternative, renewable energy sources, specifically ETBE. ETBE or ethyl tertiary butyl ether is the logical extension of the use of corn for ethanol production. ETBE has a lower volatility rating thus a lower Reid Vapor Pressure, has a higher octane rating, it can be blended right at the refinery gate and can be shipped through the vast underground pipeline system and get into markets now inaccessible to ethanol blends.

And, just as farmers support ethanol, soy-diesel and other bio-fuels as environmentally friendly uses for their commodities, farmers also support wind energy development. As part of our Wealth From The Wind program the ACGA conducted a random, scientific survey of over 500 corn farmers in the top 14 corn producing states last year to gauge their interest in wind energy. 88% said they support the development of wind energy; 76% said they are more inclined to invest in wind power generation if they knew it produces no harmful emissions and helps clean the environment; 62% believe the government should provide financial incentives to allow farmers to become involved in the wind industry; 50% believe that wind energy can provide additional farm income to their operation; and 47% said they are willing to invest in wind power projects. That shows positive support for wind power.

Following on the point of farmers investing in wind power projects and generating additional farm income, on my drive from Nebraska to the Twin Cities over the weekend I stopped and had a meeting with Dan Juhl in southwestern Minnesota to learn more about his wind energy project. He was kind enough to share his projected proforma information with me to give me a specific example of the income possibilities for farmers. His information shows that the actual income stream for farmers comes from three sources. For a two-turbine wind project of 750 kilowatts each, those three income streams are: the management fee of $5,156; farmer participation (land lease, wind rights and on-site management) of $15,468 and the project reserve of $26,455. Those three line items total $47,079 as an annual cash flow.

It is no secret that family farm agriculture is facing serious economic problems. Many of those who develop and influence federal farm policy, especially within some sectors of agribusiness, have economic interests other than those of America’s small and mid-sized farmers as their priority. The American Corn Growers Association was formed in 1987 to provide a strong farmer-oriented voice for shaping government farm policy and for the development of programs that meet their primary economic interest and needs. Therefore, finding ways to increase profit opportunities for producers while protecting the environment has been a priority for the ACGA from the beginning. Wind development falls squarely into our agenda to serve family farmers and the rural communities that depend upon them. We cannot ignore the fact that farming contributes to greenhouse gas emissions. The ACGA recognizes that the responsibility to reduce global warming falls on all of us without passing the buck or burying our heads in the sand. Consequently, it is our responsibility to develop ways to involve the farming sector in making a positive contribution towards reducing greenhouse gas emissions, and wind power is a logical, sensible method to achieve this important goal.

Many obstacles for wide-scale wind development remain and need to be removed. The wind energy Production Tax Credit expired on December 31st of last year. The ACGA is leading the educational effort to reinstate the credit for a period of at least five years with its enactment retroactive back to the first of the year. Last year we provided important information to the U.S. House on the advantages of allowing wind development on Conservation Reserve Program (CRP) acres without any loss of contract benefits. The House Agriculture Committee included this language and we are confident that the final farm bill will retain it as well. Other obstacles are the lack of transmission lines, lack of long-term energy contracts, farmers being encouraged to sell wind rights for a pittance of their fair market value and the lack of full support from rural electric cooperatives.

The ACGA is working on all these obstacles. We are working closely with the National Rural Electric Cooperative Association to support and advocate for wind development. Not only do they hold the potential for increased wind development through their bonding authority, but they also own and maintain the very transmission lines that can bring wind power from the farm to the city. We are encouraging farmers to consult an attorney before they sign over their wind rights and we are even working with the American Bar Association to make sure rural attorneys understand wind rights and wind contracts. And we are working with power utilities to better understand the importance of long-term wind contracts that allow farmers to sell their wind power for fair prices.

Wind power generation holds tremendous potential, and it must be capitalized upon for the future of our country. For agriculture, that potential lies in increased land use diversity and the opportunity for increased farm income. For all Americans, wind power generation helps clean the air by reducing greenhouse gas emissions and through the development of homegrown alternatives and environmentally friendly energy sources. The American Corn Growers Foundation and the American Corn Growers Association will continue our commitment and leadership on this important energy issue. As you can tell, the ACGF and the ACGA are full of enthusiasm for wind power. We look forward to working as a team with all of you to maximize the possibilities. Thank you.