Mark Stoermann, chief operating officer for Newtrient, gave farmers at the Dairy Business Association’s Dairy Strong conference in January plenty of areas to consider, from manure management to energy efficiency, cow care efficiency and feed production practices. Stoermann suggested farmers consider solar, digestion and renewable energy and ecosystem services markets. Small, easily implemented changes around the farm can cut costs, but Stoermann said there’s also money to be saved by investing in these sorts of new opportunities that could benefit the farm, animals, environment and neighbors.
“Avoided costs are another form of revenue,” Stoermann said. “One puts money in your bank account and the other keeps it there.” He mentioned that various modifications can significantly reduce energy use, such as refrigeration heat recovery, high-efficiency scroll compressors and variable-speed vacuum pumps.
Solar energy is a growing industry and can provide substantial revenue for farmers willing to invest, Stoermann said. By 2023, commercial and residential solar panel projects will receive a 22% tax credit. There are also benefits coming for new solar power projects for commercial owners allowing them to deduct 10% of installation costs.
Digestion and renewable energy are quickly creating ample revenue streams for many dairy farmers as well. State and national incentive programs, consumer demand, utility company goals and the interest of dairy farmers are all reasons for the exponential growth in those innovations, Stoermann said. “Currently, farmers have the potential to get a revenue kickback of nearly 2,000 dollars per cow per year when they start to act on the value of their manure,” he said.
Stoermann has experience creating contracts between farmers and companies to make the most of manure commodities. He recommends plans that cover both the developer’s and farmer’s costs, provide reasonable returns for both parties, are easy to understand and calculate, are fair to both parties, adjust to the changing market and are subject to review.
“It’s important to have a good, clear understanding of exactly how much you’re spending on manure management and then create a plan that provides a way out for dairies,” he said. “Nobody enters into a contract expecting to get out before the timeline is done, but we all need to be realistic and protect ourselves.”
Farmers need to put some thought into diversifying before jumping in, Stoermann warned. Making informed decisions, setting up good financials, analyzing costs, monitoring and checking trash for loss, benchmarking, prioritizing and executing plans, and doing risk mitigation are all factors to consider.
“This stuff is evolving very quickly, and there’s not always a lot of agreement on how things are done,” he said. “Be prudent and move cautiously to protect yourself.”
This series is brought to you by the Dairy Business Association on behalf of the Dairy Strong conference, Jan. 18-19, 2023. This event focuses on cutting-edge technology, cultural trends and the future of the dairy community. Learn more about Dairy Strong here.
PHOTO: Mark Stoermann presents at the Dairy Strong conference in January. Photo courtesy of the Dairy Business Association.
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