Is Carbon the New Cash Cow? Elanco CEO Thinks Dairy Farmers Could Make More Money Off Carbon Than Milk
U.S. Farm Report 10/08/22 - Farm Journal Report
Work on Vir-Clar Farm this time of year is in constant motion. A dairy doesn’t have a day off—but fall manure applications means the rhythm is even faster than normal, even with supply chain headaches.
“We've had problems getting some supplies, we've had problems getting parts and products like milking gloves and blood tubes, penicillin now has been a problem; products that I could have never even imagined being a problem getting,” says Katie Grinstead with Vir Clar Farm in Fond du Lac County, Wisc.
Grinsted admits she’s seen a lot of firsts since 2020, but what may be one of the most challenging pieces is the amount of money she’s had to pay up front in order to secure parts and other products she needs on the farm. Another heavy weight isn’t just the availability of feed for dairies out West, but the cost of feed products across the U.S.
“Feed costs continue to be our number one expense here at the dairy. Some ingredients have been up as much as 50%,” she adds.
Grinstead says across the board, most costs are 30% higher today, forcing the dairy to become even more efficient.
“We've embraced automation in our feed center,” she explains. “All of our expensive ingredients are put in bins. We utilize augers and the computer to really only use the precise amount of each ingredient that we need.”
Move to Automation
She says the move to more automation has helped produce higher accuracy on the farm, now achieving 98% accuracy every time they make a batch of feed. That efficiency is helping not only in terms of money savings, but also with their cattle.
Automation is helping address the second biggest cost on their farm today – labor. The dairy is an industry that’s been labor tight, even before the pandemic. That’s why Vir-Clar Farm has made employee retention a top priority.
“We started a few years ago really focusing on our employees and which employees maybe want to learn and grow and maybe go from being a milker to then grow into being somebody who's in the maternity barn, who then might be the next assistant herdsman,” says Grinstead. “That's really helped us maintain employees that have the drive to want to do more.”
The dairy also offers a ride service to and from work, as well as a uniform program.
“We like to have fun,” she says. “We try to have fun parties, whether it's Christmas or a summer party. We recently had a pizza party to celebrate being done with corn silage. I cook when they're in the fields late, just whatever we can do to try to make it a good work environment for them.”
Powering a Community Via Waste
What also makes this dairy farm a leader is how they continue to embrace technology. The farm put in a methane digester in 2004.
“We've been producing electricity for roughly 800 homes a day here utilizing the manure as a fuel source,” she says.
Powering a community by what was once considered waste is not only helping the farm’s sustainability efforts, but it’s also generating additional income.
“We're actually taking something that is considered a waste product to most by producing electricity, separating bedding, the dry solids off for bedding, reducing the odor. We've been doing that already and we're going to take it to the next step and produce renewable natural energy,” Grinstead says.
Strong Vision for the Future
Dairy’s ability to turn waste into an energy source, is something Elanco, the world’s second largest animal health company, sees as an opportunity.
“There are numerous countries, all parts of the value chain governments that are saying we are going to do something about the climate,” says Jeff Simmons, president and CEO of Elanco.
Simmons not only thinks climate neutrality is possible for the livestock industry, he believes the industry is already well on its way. Simmons says there are four ways farmers can look at not only reducing their environmental footprint, but also cashing in on carbon.
“There's on the land, what are you doing on the land; no- till, all the different things that are done the land,” he says. “Second, what you do in the animal. That's where Elanco comes in; the ruminant of the cow. How do we create less methane coming out of that cow by what we do in the cow with nutrition with other things. Third is out in the land is digesters, it's saying what are we doing with the manure in the waste? And lastly, is what are you doing in the value chain with ESG? Whether that's purifying water and getting credits from a nestle, or whether that's some you know, someone that's trying to target and want that.”
Dairy is the Part of the Climate Solution
Simmons is so confident in livestock’s ability to be part of the climate solution, he thinks dairy farmers could soon make more money off carbon credits than they do off the dairy products they sell.
“It starts when you look at what your is footprint today? How much greenhouse gas are you creating? What are you doing to reduce that? And can you get to a state where you’re actually taking care of all the gas you create where you’re not making any footprint? And that comes from methane to carbon, etc. So, it is possible because people are getting closer and closer,” says Simmons.
Simmons’ statements aren’t just bold, he says he’s seeing some of the most innovative dairy producers across the country who are less than two years away from making more money off the carbon contracts they sell than the dairy products they produce.
Hungry for Animal Protein
It comes at a time when protein is in high demand, which is a fact Simmons says is often overlooked and under celebrated.
“Animal protein demand continues to grow,” he says. “It's probably the biggest misnomer, even inside our industry, sometimes. The last 10 years, we have increased 60 million metric tons, the prediction is the next 10 years, we’ll need to get to 90 million, another 50% more growth. Why? There are people in other continents that are increasing their GDP. But the second is, you're seeing this Western diet, more protein, less carbs. What we produce is under tremendous demand, the fastest growing food segment today is animal protein. When demand is up, you turn and say, ‘Hey, there's real opportunity here for the farmer to play a role.’”
Supply Chain Impacting Timeline
While dairy leaders like Simmons say livestock producers are part of the climate solution, those on the farm level says supply chain issue are also impacting the timeline to grow renewable natural energy.
“The supply chain has actually slowed that whole process down, that should be up and running,” says Grinstead. “We had equipment and parts and stuff sitting on ships that we couldn't get here. We're very anxiously waiting for that project to be done.”
A project driving diversity on Vir Clar Farm could finally cross the finish line in 2023, at a time when livestock producers could be the climate solution.
