Value of county farm products has risen

November 21, 2010
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Despite a bad economy, the market value of Kent County agricultural products apparently rose significantly during the recession.

Betty Blasé, district coordinator of the Kent/MSU Cooperative Extension, recently said the market value of county crops is now $195 million. A report from the West Michigan Strategic Alliance and the Land Policy Institute pegged that annual figure at $114 million in 2007, the year the Great Recession began. The latest market value marks an increase of $81 million, or 71 percent, over two years.

And the Kent/MSU Cooperative Extension has its mind set on pushing that sales figure even higher. As part of its overall strategic plan, it wants to expand the sales of locally grown crops for the production of ethanol, which is made from annual crops such as corn and soybeans and perennial plants like switchgrass. Switchgrass isn’t planted here as a crop, but it does grow in the county.

“Switchgrass is commonly planted in a conservation setting,” said Dennis Pennington, a bioenergy educator at the W.K. Kellogg Biological Station in Hickory Corners, part of the Michigan State University agricultural research program. “If you’re looking only at cellulosic ethanol or biomass-based fuels, then I think switchgrass certainly has a chance of success.”

But Pennington pointed out that the infrastructure already is in place locally to transfer corn to a refinery to turn its starch into ethanol, which currently makes the crop the most economical source on a per-acre basis to be developed into ethanol that is sold as E85.

Today, 12.5 billon gallons of ethanol is produced from corn annually nationwide. In the future, though, Pennington said, cellulose-based plants like switchgrass will play a greater role in the production of fuel because of an act passed by Congress.

“The Energy Independence Security Act caps the renewable fuel mandate at 15 billion gallons, so we’re within 2 billion gallons right now. The future growth will be in biomass-based fuels, and that amounts to 16 billion gallons down the road — more than what we’re already producing — will have to come from cellulose,” said Pennington.

“That’s why crops like switchgrass are being looked at as a certain contender because it’s relatively cheap to establish; you get relatively decent dry-matter yields per acre;  it’s a low-input crop that doesn’t require huge amounts of fertilizer; and long term it’s more sustainable. It also has lower greenhouse gas emissions compared to corn ethanol,” he added.

Although switchgrass may be the future, corn is still the present. In its report on Michigan Agricultural Statistics for 2009-2010, the U.S. Department of Agriculture estimated that Kent County farmers planted 43,000 acres for corn production, harvested 34,500 of those acres, and produced 4.95 million bushels of corn grain in 2009. That number was up from 2008, when 4.6 million bushels were produced in the county.

According to the Michigan Department of Energy, Labor and Economic Growth, four plants in the state are producing more than 200 million gallons of corn-based ethanol per year. The corn sold from Kent County is processed at U.S. Bio Waterbury, which is owned by Carbon Green Bioenergy LLC in Lake Odessa, halfway between Grand Rapids and Lansing. The Woodbury plant is licensed to produce 53 million gallons of ethanol annually from 19.2 million bushels of corn.

“We purchase about 17 to 18 million bushels per year. To nail down exactly what is derived from Kent County isn’t that easy, but we have a fair idea. We believe it is over 500,000 bushels but likely less than 1 million bushels a year,” said Mitch Miller, CEO of Carbon Green Bioenergy.

Miller said his plant converts No. 2 whole kernel corn grain into ethanol, instead of using the cob and stover in production, which he added was a rare thing to do now. The day the Business Journal spoke with Miller he said his firm was paying $5.26 for a bushel, while the futures price was at $5.56. “So we are 30 cents under the Chicago Board of Trade, and that’s for grain per bushel delivered to the plant,” he said.

Miller said he is interested in buying more corn from county farmers. “Absolutely. We are making a very conscious effort to purchase grain direct from farmers in Kent County and from all of the surrounding counties. We have increased our suppliers from 250 to over 500 in the last year, and we added 1.1 million bushels of storage at our facility in order to purchase grain when a farmer wants to sell grain. So we now have a total of 1.5 million bushels of on-site storage. We just finished that bin around Oct. 1,” he said.

Miller said business has been good but a bit volatile at times. Carbon Green Bioenergy bought the Woodbury plant at a bankruptcy sales in June 2009, and Miller said the facility is running at about 125 percent of capacity.

“We hired about 30 of the employees that were here with the existing facility and we’ve added about 10 new positions since we started up last June. So we’re at about 40 employees,” he said. “Business has been good.”

Miller said county farmers should call (616) 374-4000 if they are interested in selling corn. The price of corn has been rising this year and is nearing $6 a bushel. Corn prices reached a peak in 2007, just before the recession officially began, when a bushel topped out at $7.78.

Pennington said more ethanol plants in Michigan could result in higher corn sales for county farmers. The Michigan Department of Agriculture reported that four more have been proposed in the state, with the closest likely being in Watervliet. MDA also reported that one plant was under construction and another was granted a permit. There isn’t a plant in Michigan that currently refines switchgrass into ethanol.

Researchers at the Kellogg Biological Station also are looking at the oilseed that comes from soybeans and canola as possible sources for biodiesel. The USDA estimated Kent County farms produced 935,000 bushels of soybeans last year, up from the 820,000 bushels in 2008.

Michigan BioDiesel LLC owns a 10-million gallon biodiesel processing plant in Bangor.

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