One Man’s Trash is Another’s Profit Center
By Joseph O’Donnell, CDRF Executive Director

California is more than the land of sunshine and happy cows. Over the last 30 years, it has become the number one milk producer in the U.S. (responsible for 21 percent of the supply) and one of the top milk-producing regions in the world. While the secret to this success has many facets, one of the overriding elements is the low cost of milk production.

California leads the country in many things—some good, some bad and some just plain goofy. Two claims to fame include being the state with the largest population and our status as the number one agricultural producer. Can these two coexist? The fact is, California is a desirable place to live and the population won’t be reducing any time soon. All of these residents want clean air, clear water and clean food. Overall, in fact, this interest in Clean and Green is at an all-time high and shows no sign of abating, regardless of the region. In California, we just got a head start on everyone else. Currently we have the toughest air and water regulations in the country. While that is positive for the environment, it can and will have a serious effect on California’s traditionally low cost of production. Accommodating environmental regulations takes money, lots of it. Most of that money will be spent managing one of the byproducts of our dairy success—manure.

How have others dealt with this situation? Years ago, the cheese industry faced a similar problem when new regulations were put in place for the disposal of whey. As they say, necessity is the mother of invention. Cheesemakers looked at it as a business opportunity. They put whey under the microscope of scientific study to better understand what it was and, more importantly, what it was good for. The functional properties and nutritional value of whey as a food ingredient, which came from this research, created the market. Now, instead of being a disposal expense, whey is a profit center.
Whey can serve as a model for the milk producer. Manure must be handled to minimize its impact on air or water quality. This could present an enormous cost, which will trickle down to the cost of milk production. With each increase in production costs, our competitive edge slips. The way out is to design a business plan using manure as the raw material for a profitable business. To do so we need to better understand the properties of manure so we can identify targets for commercial venture. Some of this has already been done; for example, the commercial value of the components fermented to make methane.

Crops capture the energy of sunlight. When cows consume crops, much of this energy is transferred to the milk and meat. Energy not captured by the cow goes out with the manure. This energy is now being tapped through fermentation to generate methane (natural gas). Methane finds a market either directly into the pipeline or to a diesel generator that can put the electrical energy back into the dairy or to the grid. The now-composted manure can in turn be sold into other money-making markets. This translates to real dollars. And the best thing is, it’s renewable. The timing has never been more critical.
This is far from a pipe dream. With the proper business plan, the processing of manure can become a profit center for dairy producers. As technology improves, systems will become available for all sizes of dairy operations and they won’t always need to use a digester. With manure generating profits rather than incurring expenses, the cost of production can remain reasonable and California producers will remain competitive. The research is under way throughout the country. As far away as New York, Clarkson University received a large project from the state to look at biogas from dairy waste products. The University of California, Davis, also has a research group looking for solutions. Consistent with that are restructuring efforts of our energy suppliers to accommodate this new resource.

The answer lies in looking at manure as an opportunity rather than a challenge. Given the keen nationwide interest in environmental stewardship and the urgent need to decrease our dependence on foreign energy sources, the time is ripe (pardon the pun) for a manure management business plan that will keep the cost of production for all dairy producers as low and competitive as possible.

This article appeared first in the Feb. 2007 issue of Western DairyBusiness.