Organic Valley lends funds to dairy farmers for renewable energy
Improvements in the sustainability of agriculture have long-term positive results for both the planet and the farmer’s wallet, but start-up costs can be a preventative hurdle. Some large food companies trying to reduce their Scope 3 emissions have started working to break down these barriers for farmers.
In 2018, the Land O’Lakes Sustain program, now part of Truterra, provided loans to farmers in the cooperative to adopt sustainable methods such as water reuse systems and separation technologies. manure. Last year, Danone announced a partnership with rePlant Capital that would donate up to 40% of its $ 50 million impact fund to Danone’s agricultural partners, with the aim of supporting the conversion to farming methods. regenerative or biological. RePlant’s first loan in January 2020 was given to a Kansas family farm to install humidity probes to reduce water consumption.
Organic Valley, the cooperative owned primarily by organic dairy producers, is the latest to join this growing trend. Farmers in Organic Valley are already practicing many regenerative practices such as rotational grazing. The new loan fund created in collaboration with Clean Energy Credit Union, Powering the Good, is specially designed to help farms reduce their dependence on fossil fuels.
“The vast majority of [our farmers] need to get loans to do [renewable energy] projects happen, and sometimes they are not able to get those loans, “said Nicole Rakobitsch, director of sustainability at Organic Valley.” Our loan fund provides equal access across the country to funding for the ‘clean energy. Not all members have access to a loan for this type of technology. And not all lenders are comfortable lending for solar power. “
According to Organic Valley, the fund is the first of its kind in the industry to focus solely on renewables and energy efficiency. The money will be used to help farmers install solar panels, LED lighting, efficient ventilation, plate coolers that reduce refrigeration costs, insulation and geothermal systems such as ground source heat pumps.
“When farmers look at their monthly expenses, there are often competing needs on a farm for capital projects,” Rakobitsch said. “And so, when a farmer has to choose between projects to carry out, sometimes solar power is not on the list.”
Organic Valley loans will have longer terms and lower interest rates that will allow monthly loan payments to match lower electricity costs – so farmers will not add more expenses to the loan. their monthly bills.
The vast majority of our farmers need loans to carry out renewable energy projects.
Loans for energy efficiency projects will have an interest rate of between 2.275 and 4.25 percent interest payable over 10 years. Loans for renewable energy will have slightly longer terms and higher interest rates – between 12 and 20 years and between 4.5 and 5%. Rakobitsch believes that a traditional loan from a bank would be shorter and have a higher interest rate. This would make monthly loan payments higher than the decrease farmers would see in the electricity bill, she said. A bank would also require collateral from the farm.
This is not Organic Valley’s first sustainable innovation. The cooperative recently upgraded all of its own facilities to 100% renewable energy to flatten its Scope 2 emissions and is in the process of building a fully biodiesel truck fleet. All Organic Valley trucks in southwestern Wisconsin run on biodiesel. The company is starting to work on a Scope 3 emissions target, and this new fund is part of that process.
Working with the University of Wisconsin-Madison to conduct a life cycle assessment of its member dairy farms, Organic Valley found that by switching to solar power and other energy savings, the company could reduce an individual farm’s carbon footprint (from ground to farm gate) between 5 and 15 percent.
The loan fund has enough money to fund 15 projects, and any organic valley farmer in the United States can apply. Organic Valley farmers are found primarily in Wisconsin and other parts of the Great Lakes, California, and the Northeast. With 1,800 farmers in the cooperative, it’s a small fraction of the projects that should be funded to make a real difference. But Organic Valley is hoping that’s just the start. If there is a strong demand from farmers, he plans to expand the program.