The Manure Management Challenge

Remarks by Bruce I. Knight, Chief Natural Resources Conservation Service,
at “Anaerobic Digester Technology Applications in Animal Agriculture – A National Summit”
Raleigh, NC, June 3, 2003


Thank you, and good morning.

I’m here today for the same reason most of you are: the traditional ways of handling manure simply aren’t enough any more.

I am a second generation livestock operator from South Dakota. I grew up knowing about manure from our cow-calf operations. I remember the days when most of us could just pile up the manure in some convenient spot and spread it on the land when it was convenient.

But, for most of the industry, those days were gone decades ago. Nutrient loads in our nation’s waters began to climb. People around the country started to demand cleaner water. Industries weren’t doing enough to meet people’s expectations, so the Federal government stepped in with clean water regulations.

These regulations, coupled with larger feeding operations, mean that a lot of us have more manure than we can put on the land.

Today, manure management is a challenge. We can’t just pile it up and store it the way my Dad did. We have to build and manage a proper facility. And we have to be on the look-out for ways to maximize the value of manure as a source of fertilizer, energy, and other value-added products.

Most of us believe in doing the job right to protect our natural resources. The challenge is to get the job done in the context of maintaining our profitability. For many of us, the water quality problem has been pretty much under control for quite a while now. Success with regard to water quality may have led us to think we had solved the manure management challenge.

But as Bob Dylan wrote 40 years ago – “The times they are a-changin’.” The sons -- and the daughters -- of the folks who expected cleaner water now expect cleaner air as well.

Heavy industry had to start making its contribution to cleaner air long ago. The effects of industrial production were largely urban and obvious to everyone. But voluntary actions in heavy industry did not meet people’s expectations, and regulations followed.

Now, attention is moving to agriculture and other diffuse sources. People expect more of agriculture, including livestock and poultry operations, all the time.

Some of these expectations are related to odor. People who live downwind from us want cleaner smelling air and there are more of those people every year as our cities and suburbs grow outward from city centers to meet our farms and ranches. In real estate they say only three things matter: location, location, and location. The same can be said for living downwind of an improperly managed livestock or poultry operation.

Other expectations are related to greenhouse gases and climate change. People want all industries, including agriculture, to do their part to limit greenhouse gas emissions. In some cases, agriculture has not taken action fast enough, and regulation remains a possibility.

Indeed, some regulation is already here, for example, EPA’s Revised CAFO Rule that addresses water quality.

And, some regulation is being considered. Based on a 2003 National Academy of Sciences report, EPA is looking to define feasible regulations on air emissions from animal feeding operations.

These new and potential regulations are ways we can see that the old methods for handling manure aren’t enough. That’s why it’s time to look at additional technologies, such as anaerobic digesters.

And what a great alternative digesters are -- a relatively efficient way to treat manure, while virtually eliminating objectionable odors and the loss of greenhouse gases.


Voluntary Versus Regulatory

You probably noticed that I have described a recurring scenario: people develop expectations, voluntary action does not keep pace, and regulation follows. But that is not the only possible scenario – nor do I think it is the best one.

Regulation is not the best scenario because it can have unintended consequences: compliance raises the cost of production; production moves state-to-state, region-to-region, or country-to-country to avoid these costs; geographic areas with lots of regulation lose economically, the environment loses because production takes place in localities with lower standards.

We have already seen some of these results in the livestock and poultry industries.
I don’t like these results, and I’m sure most of you don’t, either.

I’m in the livestock business to make money. I stay in the livestock business because I love it. I also love South Dakota. Losing my business to another country or moving my business to another country are not options I want to contemplate.

So, what is the other scenario? People develop an expectation, industry, government, and others develop market-based incentives for voluntary action, America has cleaner water and cleaner air, producers earn a profit, production stays in America, and everybody wins.
In the regulatory scenario, society demands environmental improvements, and the producer bears the costs.

In the voluntary scenario, the market helps the producer recoup his or her costs.

Anaerobic digesters can play a role in either scenario. Either way, digesters help to control odors, reduce greenhouse gas emissions, and provide a rich nutrient source with reduced pathogens.

I hope that today and tomorrow we will see ways in which anaerobic digesters can provide these benefits within the context of an overall comprehensive nutrient management plan, supported by a system of market-based voluntary incentives for reaching our nation’s conservation goals.


Making Digesters Viable

Digester technology is not new. Digesters have been around for decades, and several countries in Europe are making extensive use of them. In this country, installation of on-farm digesters is not generally accepted as being economically feasible.

What is relatively new, is the idea that America needs to rely more on digester technology to reach its environmental goals. For this idea to become a reality, we must meet three conditions:

1. Digesters must be inexpensive and reliable enough to make economic sense in more operations.

2. We must have viable markets for the products of digestion.

3. We must have incentives to bring down the cost to producers and to launch the technology.


Incentives

First, let’s look at incentives. One thing NRCS does is administer USDA’s incentive programs for conservation. As you know, the 2002 farm bill includes an increase of $18.5 billion for conservation, which opens up many more options for many more producers. The farm bill also places more emphasis on livestock and poultry operations, which is good news for all of you.

Our single largest program for conservation on working lands is the Environmental Quality Incentives Program, or EQIP, with $9 billion to invest over ten years. Sixty percent of this investment is designated for livestock and poultry environmental stewardship. You might say we are well EQUIPPED to offer incentives.

There are a few instances where we’ve used EQIP or other programs over the past several years to help producers with part of the costs of digesters, but we’ve had to use fairly general conservation practice standards to cover this kind of work.

Today, during our lunch break, we will unveil three new conservation practice standards specifically for digesters. These are performance standards that lay out expectations for the performance of the technology but do not prescribe or endorse a particular vendor’s product.

One of the standards is for manure facility covers for new lagoons and to retrofit existing lagoons. The second standard is to build new ambient temperature digesters. The third standard is to build new controlled temperature digesters.

These standards were published April 29 in the Federal Register. The comment period ended on May 29. I hope many of you took the opportunity to make your views known. We will incorporate the comments and publish final conservation practice standards as soon as we can. Then they will be available on-line in our electronic Field Office Technical Guide.

These new standards will have two major benefits. They will make it easier for producers to fit anaerobic digesters into their EQIP contracts as part of a comprehensive nutrient management plan. And, they will make it easier for producers to use technical service providers to plan and construct digesters.

As you may know, NRCS will be working much more with technical service providers to deliver conservation assistance to producers. For digesters, this means engineering consultants and consulting firms. We are talking with some of the professional engineering societies about memorandums of understanding that will allow us to certify members of these societies as technical service providers.

We have set aside $20 million this year for the use of technical service providers. With these technical standards in place, digesters will be an ideal practice for technical service providers with this expertise.

We weigh EQIP applications against national, State, and local priorities. The good news for potential digester builders is that both air quality and water quality are national priorities.

States also set priorities, so the priority for digesters may vary from State to State. I hope some of you have been involved with your State Technical Committee to make sure digesters received adequate consideration in setting State priorities. If you don’t think your State priorities reflect the resource needs in your State, you should work more closely with the State Technical Committee to make sure your views are known.

Another way to make your views known is to comment on our National Animal Agriculture Conservation Framework. The National Framework is based on State Frameworks developed earlier this year. The national Framework will help livestock and poultry industries meet their regulatory challenges, improve environmental performance, and maintain economically viable operations. We will be publishing the national Framework within a few weeks and soliciting public comments.

State Conservationists also set the cost-share rates within their states. We have a backlog of applications for all our major conservation programs, so it is important that we use cost-share rates properly as incentives, not as entitlements.

To promote equity across States and regions, we are requiring that State Conservationists sign off on cost share lists that include practices with rates of over 50 percent and Regional Conservationists sign off on contracts larger than $100,000. These policies are not intended to prohibit higher cost-share rates or larger contracts. Only to give everyone a chance at participating and encourage fiscal responsibility.

Again, if you think the cost-share rates and contract sizes are not conducive to meeting the needs in your State, you should work closely with the State Technical Committee to make sure your views receive full consideration.

USDA also is supporting activities in the areas of biomass and bioenergy. Farmers and ranchers are eligible for loan guarantees for renewable energy systems, including anaerobic digesters under the Rural Business and Industry Programs administered by Rural Development. Loans can be for farm- or ranch-level systems or to buy stock in cooperatives established to process agricultural commodities.

Also, USDA is funding Biomass Research and Development, including demonstration projects, with $14 million this year through 2007. A request for proposals was published in March, with proposals due the middle of May.

So, we are in pretty good shape for incentives. One of the three conditions for widespread use of digesters is being met. But incentives would go farther if the other two conditions were being met: if digesters cost less and if there was a better market for the products of digestion.


Costs

Now, let’s look at cost issues. Digesters are not cheap, and the technology needed to capture the energy from a digester drives up the cost even more.

EQIP can help meet these costs. Our maximum contract size under EQIP is $450,000, but we cannot offer many contracts that large and still meet the needs of enough producers. The sale or use of value-added products from digestion also can help producers cover the costs of installing digesters.

But helping meet the costs is not enough. We also need to bring down the total cost of digesters, both large and small, to make this technology affordable for more and more producers. The cost and efficiency of digesters reminds me of the ethanol industry 20 years ago.

Bringing down the cost involves technology, production, experience, and installation variables, which are things entrepreneurs, universities, and corporations can help with. We are relying on you. I know that the formula that made ethanol cost competitive can do the same for digesters.


Markets

In terms of markets, there is much to be done. The fact is, there are fewer than 300 digesters now being used in agriculture in this country to produce usable energy – as opposed to burning off gases. If there were better markets, that number could be in the tens of thousands.

The collected biogas from anaerobic digesters is typically 60-70 percent methane, which is a valuable energy resource. The challenge is to build a market for this methane.

We are not far enough along in being able to market the effluent from digesters. Effluent from the digester process is a valuable source of nitrogen that can improve our agricultural productivity. It also is low in pathogens.

To maximize this market, we need to do two things.

The first is feed management -- particularly in the beef and dairy industries -- to produce a product that is better balanced in nutrients. For example, many farms that fertilize with today’s manure are maxing out on phosphorus, limiting the amount of manure they can apply. Feed management will produce effluent that is more useful on-farm.

The second is to improve the economics of manure management in holistic ways that take into account all costs, including production, storage, and transportation of the marketable products of digestion, be they methane or effluent.

Developments in all these areas will help make it profitable to manage manure.

Producers need to work closely with their local utility regulators to make them aware of barriers to creating markets for electricity generated using products of digestion. Working together with utility companies themselves also can build markets. One example is the plan in Oregon to build centrally located generators, with the utility company brokering the hauling and disposal of solids.

Today, we have a new era of cooperation between EPA, USDA, and others to create a Federal regulatory environment that takes into account both environmental needs and the economic realities of agricultural production. The new CAFO rule is an example of this cooperation.

Producers and producer organizations need to work at the State level to help create this same kind of cooperation.


Conclusion

This summit is going to be exciting.

I am sure we will hear a lot about what the various presenters are doing to help anaerobic digester technology take its place in the conservation arena, including
• Developments in digester technology that will bring down both the cost of digesters and the cost of associated technologies to capture and use the products of digestion.

• Development of markets for these products of digestion, through development of private sector partnerships,
•
• Creation of a flexible, business friendly regulatory environment and closer cooperation between government and the private sector.

• And, finally, appropriate use of incentives, direct and indirect, to help producers recoup some of the costs of producing clean air and clean water.

Success in these areas is not just desirable, it is essential. Essential to creating the kind of voluntary, market-based approach to air and water quality that we need.

We have 250 million dry tons of manure a year out there to use properly, and a public that is increasingly intolerant of degraded air and water quality. If we producers and others don’t put our heads together and manage manure through the voluntary approach, then we will have to live with the possibility of greater regulatory influence. And that is a future I think we would all like to avoid.

Thank you.