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0109 PD: Think green when you go green

Jim Gage Published on 29 December 2008

For anyone involved in dairy these days, there are an increasing number of options to “go green.”

There are more manure digesters across the country, new equipment and processes that consider electricity and heat savings and new construction is designed to maximize energy savings.

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When I think green, I think about two things: the environmental issues and the potential profitability of the project.

Although this sounds contradictory, there are programs and ideas to make sure that you are green.

A few ideas to consider: When a green opportunity presents itself, do your business homework and make sure that the return on your investment makes sense to your business. Look at all of the grants, low-interest loans and tax breaks (some described below) and your investment, compare it to the amount of energy that you will save and then calculate how long that it will take to cover your costs.

If, for instance, energy efficient windows or lighting or a solar water heating project costs you $50,000 but will fully pay back the investment in two to three years and then last for another 10 years, that’s money in the bank.

The USDA and Rural Development Office has recently combined programs to create the “Rural Energy for America” program. All rural businesses, dairy producers and processors included, are eligible for the program.

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There are grants and low-interest loans for both energy efficiency and alternative energy projects that can cover up to 75 percent of the initial investment (25 percent grant and 50 percent loan).

From my conversations with the Wisconsin USDA office, it is assumed that the rules and proposals will be finalized by the end of December. The first call for anyone considering an energy-efficiency program should be to their utility company to understand what grant or in-kind programs are available to them in their area.

In Wisconsin, many utilities work with Focus on Energy – this organization can advise on planning, energy audits, small grants, etc.

There are state and federal tax breaks for companies involved with energy projects. As I understand the Department of Commerce rules, the Dairy Manufacturing Facility Investment Tax Credit can also be applied to investments made on new construction and equipment that are energy efficient.

One consideration that all companies must make is whether the green technology is proven or whether it is still in the research and development phase. Proven technologies, and stable companies that install and service the systems, often provide a lower-risk investment option than new technologies.

However, being part of a research and development system that is new and exciting often garners media attention and may be supported through outside grants or in-kind expertise from the company or through a university.

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As in all business decisions, the amount of tolerable risk of a company’s owner comes into play.

Lastly, adding green technologies to your company’s story can often have a very positive effect on your brand and provide a new and attractive story for retailers and consumers alike.

Similar to when a new product is released, it is important that you create an appropriate press release or add a page to your website when the project is operational so that your story is well communicated to one and all.

The take-home message is that energy savings have an immediate effect on your bottom-line profitability. And more money in the business allows you to be more innovative. Go green. PD

—Excerpts from Dairy Business Innovation Center newsletter, November 2008

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