Farmers’ windfall is breath of fresh air

Standing atop the sweeping farm ridge 70 miles north of Berlin, the stiff wind off the Baltic Sea painted my cheeks apple red in minutes.
Then, silent as a cat, the wind moved on to turn giant, triple blades of 20 or so wind turbines at a graceful 60 to 70 revs a minute.
Each soft swoosh of each blade, said the farm’s manager in passable English, is the “sound of money. I own the wind. Wind is good crop.”
Wind is good crop. American farmers are beginning to discover that indeed wind is a good crop. It’s a reliable, sustainable cash generator waiting to be harvested. And, like the German manager noted, they already own it.
It’s also nothing new; what American farm didn’t sport a windmill a century ago? Now, however, wind drives more than water pumps. Now it drives electric generators that supply energy to 1.6 million American households.
That number will grow in 2005, according to the American Wind Energy Association (www.awea.org), which estimates over 2,000 megawatts of generating capacity – enough to supply 540,000 more households – will be added this year.
Taking notice. The growth, and the fat profits wind can generate for farmers and investors alike, has caught the attention of big boys like GE, Siemens, and Mitsubishi.
Deere & Co., already an investment partner in several U.S. wind farms, will likely invest $100 to $200 million in community-based wind energy projects in the coming years.
The reasons are simple, said Dan McGuire, CEO of the American Corn Growers Association, which, along with the National Farmers Union, the National Family Farm Coalition and the National Grange, strongly supports farm-based wind energy.
Low-cost, available. “Wind energy is the lowest cost, completely sustainable energy form there is,” he said, “and it’s already on the farm. But unlike other farm commodities, you don’t have to add on one acre, buy another tractor or wait for rain to become part of the $300 billion a year American electric market.”
Currently, explains McGuire, farmers have two basic “models” to follow when investing in wind energy.
“The first is to become landlords for outside investors who simply rent the land where the generation unit is built,” he said.
While that’s profitable – some rent payments are as high as $1,500 per acre per year – the second model, where farmers become partners with investors, often is 10-times more lucrative, said Dan Juhl, a wind energy pioneer in Pipestone, Minn.
Teaming up. Juhl’s small company, DanMar & Associates, teamed 250 farmers with nonfarming investors (one is Deere), local banks and businesses to build a $13 million wind farm near Woodstock, Minn.
The goal – now a reality – was what Juhl calls C-BED, Community-Based Energy Development. Its bedrock principle uses locally-created wind energy locally, not sell it to a grid-based major utility.
In C-BED, he explains, a typical farmer invested $10,000 to $15,000 in the project to become an equity player. Other nonag investors put up the rest of the money.
“The farmers receive about $30,000 per year in management fees to supply the site, read the electric meters and keep the roads to the sites in shape,” Juhl notes.
Farmers strike it big. Then, beginning Year 11 of the project, “the ownership flips, the farmers become the only owners; the investors are out,” solely because the federal tax benefits of wind energy, currently 1.5-cents per kilowatt hour, expire.
“That means the farmer-owners can make $30,000 to $50,000 per year on their initial investment for the following 10 years.” And it’s locked in. “All the loans are non-recourse,” he notes.
It also means new jobs, new rural development and a new cash-generating, sustainable crop for a community pinched by $1.80-bu. corn today and the likelihood of falling farm program payments tomorrow.
Will it last? The key to the future of wind energy and Juhl’s hope to see his C-BED idea take root throughout rural America is the tiny federal 1.5-cent per kilowatt tax credit. It expires at the end of this year.
“It’s crucial for Congress to renew it – and they should – because wind energy is the best farm program there was or will be.”
(Alan Guebert’s Farm and Food File is published weekly in more than 75 newspapers in North America. He can be contacted at agcomm@sbcglobal.net.)

About the Author

Alan Guebert was raised on an 800-acre, 100-cow southern Illinois dairy farm. After graduation from the University of Illinois in 1980, he served as a writer and editor at Professional Farmers of America, Successful Farming magazine and Farm Journal magazine. His syndicated agricultural column, The Farm and Food File, began in June, 1993, and now appears weekly in more than 70 publications throughout the U.S. and Canada. He and spouse Catherine, a social worker, have two adult children. farmandfoodfile.com More Stories by Alan Guebert

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