HarvestLand Cooperative - Morgan, MN
Product: wind generation of electricity
Began Operations: September 2005
Current Production Capacity: 55 million kilowatts annually
Annual Sales: $1.8 million
Jobs Created: 1 professional FTE Several maintenance positions
2006 Equity retired to members: $782,472
HarvestLand’s location near the windy Buffalo Ridge region of southwestern Minnesota led Grain Merchandiser Kevin DeBerg to look for ways to capture that power and add this renewable energy component to the cooperative’s revenue streams.
“I contacted Cooperative Development Services in 2003 to see if they could help us with this project,” DeBerg says, “and it was clear that they had the knowledge, industry contacts, and personnel to make this work.” With help from CDS, the cooperative originally applied for a USDA Planning Grant in 2003. The $148,000 planning grant was finally received in 2005, as the fast pace of changing technology in this industry required the cooperative to update their grant request to reflect current conditions.
The grant funded a feasibility study and business plan for HarvestLand to develop a wind generation facility to be owned by the co-op. “Our financial projections were based on CDS input. They taught us how to look at building a wind project,” DeBerg says. “It was quite an educational process.”
The cooperative installed an anemometer in April 2003 to measure wind speeds in the area to provide a base of accurate data. In December 2004, the Tholen/Peterson group approached HarvestLand with a proposition to partner in the project. Based on information gained through CDS, HarvestLand became an investor in this project, rather than acting as the developer. Their participation allowed them to use their tax liabilities and qualify for tax credits, providing a non-patronage income mechanism to fund the retirement of equities at a faster pace.
DeBerg credits CDS with providing the knowledge and expertise they needed to take advantage of that opportunity. “At the time the Tholen/Peterson project came our way, we were able to switch gears and take advantage of this new opportunity. If we hadn’t had CDS’s help early on in the process, we wouldn’t have been as well educated or prepared to do that,” DeBerg says.
The Tholen/Peterson project has eight wind towers generating 55 million kilowatts of electricity annually. Energy sales in 2006 were $1.8 million. This new revenue stream played a role in allowing HarvestLand to return $782,472 in equities back to its member-owners in 2006. “We have an aggressive equity retirement program,” DeBerg explains. “We start retiring equities back to farmers at age 65, allowing them to receive a return at an earlier age while still being able to grow our business and provide the services our members expect.”
“We absolutely recommend CDS as a resource,” DeBerg says. “They have the industry contacts and knowledgeable personnel that helped us take advantage of an opportunity for which we wouldn’t have otherwise been prepared.”
With the success of the Tholen/Peterson project, HarvestLand is looking at developing their own eight to 15 tower project over the next several years. HarvestLand has facilities in Morton, Springfield, Comfrey, and Wabasso, Minnesota.
CDS Project Consultants
Kevin Edberg – Business Consulting & Planning
Ken Campbell – Business Consulting & Feasibility Study
Thekla Fagerlie-Madsen – Grant Writing