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Small Investment Big Impacts

USDA Grant to AURI Yields Impressive Returns

Sound investments should generate a positive return, and a federal program providing support for rural economic development through AURI is producing returns most investors could only imagine.

AURI was recently awarded a 2018 U.S. Department of Agriculture (USDA) Rural Cooperative Development Grant (RCDG) through a nationwide, competitive application process. It’s the fifth time
AURI successfully accessed funds through the program.

The RCDG program works to improve rural economic conditions by helping individuals and businesses start, expand or improve rural cooperatives and other mutually-owned businesses through Cooperative Development Centers. AURI began operating its Rural Cooperative Development Center in 2010.

“Overall, the RCDG aligns well with AURI’s mission of adding value to crops and livestock and fostering long-term economic benefit to rural Minnesota,” says AURI Senior Project Strategist Michael Sparby.

“The RCDG program lies in the sweet spot between the missions of AURI and USDA Rural Development; to create and to support existing rural businesses and cooperatives, resulting in economic impact,” says Lisa Gjersvik, AURI senior director of strategy management.

AURI uses the USDA funds through the Cooperative Development Center to provide business development support, technical assistance, coordination of local and state rural development activities, due diligence assessments, technical and economic feasibility analysis, cooperative development strategies, and strategic networking opportunities. These services are offered in the areas of local foods marketing and distribution, coproduct utilization, biobased product development, feed processing, food processing, sustainable crop value chain development and renewable energy.

“It’s been an extremely good partnership with the USDA given the outcomes we’ve been able to generate while leveraging the funds from the award,” Sparby says.

Big Bang

AURI was also selected as an RCDG recipient in 2017. The USDA award was $200,000 to which AURI added another $70,000. The grant awarded in 2016, and implemented in 2017, provided technical assistance in product and process development to 22 entities across 23 different projects.

Businesses assisted during 2017 reported many positive impacts, which are sizeable as shown in the 2017 RCDG Project Outcomes figure.

“It’s hard to find other programs that would see that kind of return from a $270,000 investment,” Sparby contends. “Job creation, business development and cooperative formation are important, but wealth creation also has a major impact on the economy and rural communities.”

The Center’s first three completed RCDG grants led to the development of 30 projects with 21 separate rural business entities, including 10 producer cooperatives representing a total of 11,134 producer members and nearly a dozen other businesses. The previous projects also created or retained dozens of rural Minnesota jobs.

Creating Value

Among the rural entities receiving assistance through the RCDG program is the Valley Organic Beet Growers, a farmer group headed by Lynn Brakke. The farmers from the Moorhead, Minnesota area have worked for several years on a value-added feed product for organic dairies. The growers are researching ways to better utilize whole organic sugar beets that create new market opportunities.

Sugar beet coproducts are often fed to livestock, but the Valley Organic Beet Growers are investigating ways to dehydrate and process whole sugar beets, so the beets can be stored, shipped and mixed into livestock rations.

“Once we perfect the product, we know the market is there,” Brakke says. “We need to find the right process for slicing, shredding and drying the beets so that we don’t diminish their feed value.”

Brakke says sugar beets are a common livestock feed in Europe and in some southern states where beets can be harvested daily. That’s not possible in northern climates where beets freeze and thaw, making them unusable for feed. However, dehydrating beets from 70 percent moisture to 20 percent moisture, so they can be stored and shipped, opens a whole world of opportunity.

“We will be attacking regional markets first,” Brakke says, “but there is potential nationally and even overseas.”

Organic dairies need organic feed options. Those that produce grass milk, or milk from cows on non-grain diets, struggle with lower milk production because grains typically provide added energy cows need to produce milk. Although the farmers are paid a premium for grass milk, those premiums don’t always offset losses due to lower production. Sugar beets provide the necessary energy to boost milk production and can be fed as part of a non-grain diet.

In 2017, AURI assisted the Valley Organic Beet Growers with product and process testing. AURI also connected the farmers to necessary resources to shepherd their idea forward.

“If we didn’t have the RCDG funding, as farmers, we probably wouldn’t have pursued this as quickly. We don’t have line items in our farm budgets for this sort of testing,” Brakke says. “Because of the funding and AURI’s expertise in connecting the dots, we’re creating a whole new market because this is a product that doesn’t currently exist.”

Brakke says once the dehydrating process is perfected and the process ramps up, it’s likely they’ll need more organic beet growers to fill demand.

“We want to include beets in our rotation,” Brakke says. “Once we have the process perfected, we want a marketing company to take over the marketing, packaging and shipping. We see this as an opportunity for us and for others.”

Work on the Valley Organic Beet Growers project is continuing as part of the 2018 RCDG grant.

Birds on Grass Beds

Minnesota has a thriving turf grass seed industry with dozens of growers producing varieties like Kentucky bluegrass, ryegrass, timothy and other specialty grass seeds, primarily in northern Minnesota. Northern Excellence Seed is a farmer-owned cooperative that produces and processes a variety of grass seeds. They also generate substantial amounts of coproducts during the cleaning process at their conditioning plant in Williams, Minnesota.

Conditioning the seed separates the hulls, chaff and stems from the desired grass seed that is then bagged and sold. About 20 percent of what the farmers capture in the harvest process is removed as screenings during the conditioning process. The screenings have little value and are often burned as a method of disposal.

Northern Excellence worked with AURI through the RCDG program to identify potential uses for the screenings. While they work as a biomass fuel, both parties thought there may be higher potential using the screenings as poultry bedding.

Research at AURI’s Coproduct Utilization Lab in Waseca, Minnesota found the screenings substantially reduced the release of ammonia. This is important because high levels of ammonia in barns can have a negative impact on the performance of birds including turkeys and laying hens. Because Minnesota is such a large poultry producing state, there is tremendous potential for using the grass processing coproduct as bird bedding.

“This opportunity is very exciting for us because we are always on the lookout for ways to add value to our products, including the screenings,” says Northern Excellence Seed General Manager Brent Benike. “For us, the screenings really have no other use. It can be a nuisance and a cost to dispose of the screenings. To potentially turn them into a revenue stream is exciting.”

Benike says his company and several other seed conditioners in the region collectively produce about 10 million pounds of screenings annually.

Alan Doering, AURI senior scientist for coproducts, tested multiple poultry bedding materials including wood shavings, sunflower hulls, corn cobs, barley hulls and grass seed screenings. Doering says the grass seed screenings controlled ammonia release better than anything currently used as poultry bedding.

“The screenings show excellent potential as bedding for poultry,” Doering says. “It also shows that by being resourceful, Northern Excellence may have a new market for their coproducts.”