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Helping the family-owned wind farm find its niche

by Dan McGuire
American Corn Growers Foundation CEO

(Tuesday, July 13, 2004 -- CropChoice news) -- Dan McGuire gave the following presentation yesterday at the SOLAR 2004 Conference in Portland.

It's a real pleasure to be here today with all of you renewable energy champions. Our moderator Harvey Wasserman and panel member Bill Spratley are certainly genuine leaders in this wind energy arena. Dan Juhl who was scheduled on the program but is not here is absolutely the pioneer in wind energy, particularly community-based wind projects. It's an honor to be on this panel and to participate in SOLAR 2004. The American Corn Growers Foundation thanks you for the opportunity.

Most of my message will be delivered through the use of a power point presentation. But first I want to make a few comments regarding why farmers and rural America are becoming more and more interested in wind farming as a new income stream and why they need to be actively pursuing wind energy as a rural economic development engine.

Corn and soybean farmers have just seen a very unusual period where grain prices have been relatively strong. Because of reduced grain and oilseed production around the world, prices were considerably higher than they normally are under current farm policy. Cash corn prices in recent months were over $3.00 and soybean prices are currently over $9.00 per bushel for old crop delivery. However, last week USDA forecast a record 10.5 billion bushel corn crop for 2004. While that might sound great for all involved, consider that such forecasts help drive down the price of corn that farmers receive. Last Friday, the price of corn in Sisseton, South Dakota was down to only $2.21 per bushel and as low as $2.30 in Wayne, Nebraska. New crop corn prices at harvest can easily be $1 per bushel less than this past spring, reducing the farm value of the nation's largest crop by $10 billion. Consider that corn costs farmers about $3.00 per bushel to raise given the high price of fertilizer, herbicide and other input costs that are directly tied to natural gas, oil and other fossil fuels, not to mention the continually escalating cost of new seed varieties which are patented.

Given today's so-called "globalized" farm and trade policy, which is tied to agribusiness-driven rules coming out of the World Trade Organization (WTO) farmers no longer have the orderly marketing tools that used to exist with U.S. federal farm programs. That marketing "toolbox" has been dismantled. Think of current farm policy in terms of eliminating the minimum wage for U.S. workers and you have a picture of current farm policy. Unlike the minimum wage, there is no floor under the price of corn. That might be an economic bonanza for multinational grain processors and exporters but it spells economic disaster for farmers and rural America.

Add in the fact that U.S. borders are now wide open to imports from all over the world and you see the kind of challenges faced by farmers. Worldwide inventories, of everything from beef to grain are "on the market" 24-7, pressuring U.S. prices. News reports last week even indicate that Minnesota-based Cargill, the world's largest multinational grain trading company plans to reformulate Brazilian ethanol in El Salvador and bring it into the U.S. market duty-free in direct competition with U.S. ethanol, a renewable fuel that corn farmers have paid to develop for years. The same company imported a couple of cargoes of soybeans from Brazil a few years ago and busted the U.S. price of soybeans for years to follow. The American Corn Growers are obviously opposed to such negative market and price maneuvering.

The examples I just used demonstrate the real world market in which farmers live. These realities are why we're so enthused about wind energy as a new income stream and why we see it as our role to provide as much information as possible to farmers and rural America on the various economic opportunities that wind farming provides. Indeed wind energy provides a wealth of tremendous opportunity, not just for farmers, but for U.S. consumers and for the future energy self-sufficiency and security of our nation. Wind energy offers a source of diverse and dispersed electricity generation and takes the pressure of load centers by sending electricity back into the grid system from "the end of the line" so to speak. So we see a number of models in which farmers, landowners and rural communities can benefit from wind farms:

  • They can invest in and own either small or large turbines, using net metering or selling electricity to utilities or doing both
  • They can lease their land to wind developers if they choose
  • They can form wind cooperatives or limited liability corporations (LLCs)

Obviously, the really large, commercial wind farms provide large amounts of clean energy and that's great for our environment and society as a whole. The big utility-owned projects also provide a level of economic development during the construction phase and pay local property taxes on the turbines thereafter. But locally-owned, community-based wind farms in rural areas offer so much more opportunity than clean energy alone. When those wind projects are locally-owned, whether the owners are farmers or a combination of local investors, landowners and farmers the income from the electricity generated and sold stays in the rural community and local or regional economy. Consider the difference in this way. One 1.650 MW wind turbine can generate $3,000 per year in a lease payment if the farmer leases his land to a large out-of-state utility, or that same wind turbine can generate about $25,000 per year for the first ten years of operation until it's paid for and then about $130,000 per year after that, depending on the wind resource and price per kilowatt of electricity sold. Additionally, of course there are property taxes on the turbines, a very important factor for schools and county budgets, but when local contractors are used in the construction phase and local banks are used in the financing it's an economic win-win all the way around and just like the wind, the income stream is renewable every year and continues to be available to the benefit of the community as a whole. You can see why we're so enthusiastic about farmer and locally-owned wind energy and why we named our educational program Wealth From The Wind. Our program is funded by the W.K. Kellogg Foundation, The Energy Foundation, Whole Systems Foundation, the Wind Power Powering America program of the U.S. Department of Energy and National Renewable Energy Laboratory (NREL) and others. We thank all of our funders for making our work possible. Now I'm going to use a power point to show you how the nation's corn farmers feel about wind energy and the state and federal policies they support.

Again, thank you for this opportunity. It's a real pleasure working with all of you at SOLAR 2004.