FALL 2020 ISSUE


New collaboration could be ‘watershed moment’ for biofuels






Significant movements in agriculture typically start small. They can begin with just one farmer with one big idea.


But big ideas that are implemented well can spread quickly – locally, at first, then regionally, nationally and beyond. They can change the world for the better.


That’s the sense of opportunity and optimism reflected in a new collaboration between two trailblazers in national agricultural development: POET, the world’s largest producer of biofuels, and Farmers Business Network, or FBN, an emerging business organization that collects useful data for member farmers.


FBN has created a company called Gradable to track and score the carbon footprint of farmers’ production methods for POET, one of the company’s first customers. The goal for the program is to eventually create a premium for farmers for producing corn with a lower carbon score. A carbon score is generally used to measure the total greenhouse gases, or “lifecycle” emissions, generated from power plants, factories, farms, vehicles or other processes. 


In addition to helping farmers earn more for their crops, carbon scoring will help POET accurately track and incentivize the production of lower-carbon biofuels for California and Oregon’s fuel markets, which continue to tighten their carbon intensity standards to reduce transportation emissions. A number of other states, including Washington, Colorado and New York, are currently considering adopting similar carbon reduction policies to address climate change. POET believes the Gradable program could better position the biofuels industry and growers in the Midwest to supply low-carbon fuel markets with ever-cleaner renewable fuels. 


FBN uses world-class data-management technology to produce specific information. The company’s neutrality in collecting sensitive information allows it to manage and score data in a way that POET would not otherwise have access to use, said Dean Watson, president of POET Grain.


The collaboration is intended to incentivize farmers to produce their crops in environmentally friendly ways by offering premiums for low-carbon grain. But the ultimate objective is to reduce emissions from cars, trucks and SUVs by growing the supply of low-carbon, plant-based biofuels. 


That’s what led POET on the path to collaborating with FBN, says Bob Whiteman, CFO for POET Ethanol Products.


POET’s focus was developing market-based opportunities to incentivize sustainable farming practices, Whiteman said. The search led POET to California, home of the nation’s very first low-carbon fuel standard, and into a sustainability working agreement with FBN. 


Greenhouse gases from the combustion of fossil fuels – like carbon dioxide – contribute to climate change, resulting in problems such as droughts and forest fires, according to scientists. POET and FBN want to reward farmers for using practices that reduce the production of those emissions. 


Normally FBN collects detailed production information from its members, assembles the data in meaningful ways, and shares the information back to its members to help them make good farming decisions. In its venture with POET, FBN will not share detailed production information about individual members; however, POET is provided with scores that will enable producers who elect sustainable practices the potential to earn premiums when new biofuel markets are established.


Everyone stands to benefit from the increased production of lower-carbon biofuel – fuel that will be even more sustainable and Earth-friendly than what POET already produces. 


The Gradable program is a prime example of how the different sectors of agriculture can work together to solve global problems, executives with the two companies said.


“I really think it has local, national and global significance,” said Doug Berven, Vice President of Corporate Affairs for POET. “Our society is looking for climate solutions. Agriculture and transportation are the onramp to answering the climate challenge. That road not only takes us to a healthier planet, it also helps deliver sustainable solutions to poverty, hunger and disease.”


Small, incremental changes can spread gradually then take root around the world. “It starts locally with a plant, with a farmer, with an acre, and it can grow exponentially to solve a global problem,” Berven said.


‘Farmers are excited about this’


A pilot project to test the approach has been underway at Sioux Falls-based POET’s biorefinery in Chancellor, South Dakota for more than a year, and the results have been exciting. The partners could extend similar demonstration projects to other POET biorefineries in the near future. 


POET and FBN recently started promoting the collaboration with growers across the Midwest.


“After doing it for a while, it seems like a very common-sense solution, but this is the first time it’s really been done like this,” Berven said. “It’s a novel idea that can be applied to so many different things, and I think it really will be a game-changer for agriculture, for the environment, for biofuels, for consumers and for transportation.”


The Gradable initiative was the result of farmers wanting to capture information about their growing practices to show their concern for the environment, said Steele Lorenz, Head of Sustainable Business for FBN. The company is based in San Carlos, California and has offices in Sioux Falls and Chicago. The organization also has foreign offices in Canada and Australia.


“As we looked around for potential customers who were looking for low-carbon grain, low-carbon corn, POET really was one of the instrumental players because of the work they’ve been doing for quite some time,” Lorenz said. “They have a very strong reputation within the farm community, and they are a premier destination of picked grain. So, growers were looking for ways to develop closer relationships with them.”


Many growers have also been trying for quite some time to lower their carbon footprint, and they haven’t gotten credit for some their work, Lorenz said. That might be because they were just trying to protect the health of their soil by minimizing input while maximizing output. Now there’s a way for farmers’ conservation efforts to be tracked and potentially rewarded.


“I can’t emphasize enough that farmers are excited about this,” Lorenz said.


The opportunity to earn more for their corn is especially welcome now because many farmers are contending with challenging economic conditions and problems related to lingering global disagreements over trade. 


“We welcome the creation of good, new markets. They are needed,” said Jake Reiners, a corn producer from Hurley, South Dakota. “We want to be part of the solution to global problems, even if it requires more diligence at the production level.”


Of course, farmers should be compensated fairly for their efforts, too, Reiners said.


“This is the type of reward-based system that has strong possibilities. It makes sense for everyone in the production-consumption chain - from the grower to the processor to the consumer. I hope it takes hold and expands quickly,” he said.


A ‘watershed moment’ in agriculture


Leaders of POET and FBN expect other companies to gradually join the movement the two companies have initiated.


“Because of the strong convictions that POET has – they’ve stepped up and they’ve made an incredible commitment – we really see it as a watershed moment. I think it’s going to be a very short matter of time until many other companies are getting on board, and not just in biofuel. We’re seeing strong demand start to build up around animal feed and grain as well,” said Lorenz, of FBN.


POET has a responsibility to explore alternatives to add value and marketing alternatives for producers, Watson said. In addressing environmental challenges, farmers prefer long-term, market-based solutions that incentivize healthy production to government subsidies, he added.


From POET’s perspective, participation in the Gradable platform is just a natural extension of the company’s mission to be a good steward of the environment and their work to fight climate change.


“At POET, we strive to be good stewards of the earth, and we’re always in search of new ways to harness the regenerative power of agriculture. The further we go with Gradable, we believe it’s very much in line with that mission, and can deliver results far greater than what we initially envisioned,” Whiteman said.





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