Value-added ag is the future

By Edgar Olson
Executive Director

Lots of attention was paid to the recent World Trade Organization talks in Seattle. Minnesota farmers were among those watching with interest because of international trade’s impact on agricultural goods.

But what is happening at home is impacting producers, too. At AURI we believe value-added agriculture is a key component to the long-term health of Minnesota agriculture.

Several exciting AURI-sponsored efforts are underway.

• An expert analysis of the market potential and processing needs for industrial hemp in Minnesota.

• A careful review of the state’s meat processing industry.

• A study on needs and opportunities for Minnesota soybeans.

• An examination of potential product "side streams" from ethanol production to           identify what else these value-added powerhouses could produce.

• Identification of the technical and economic feasibility of ethanol production from wheat.

• Research into using Minnesota-grown crops for our state and region’s growing fiber industry.

The Minnesota Department of Agriculture estimates that value-added agriculture in this state generates $22 billion a year. Adding value to a raw commodity such as corn or soybeans includes livestock and ethanol production as well as innovative ag-based products such as soybean-based hand lotions, household cleaning products from corn, biodiesel and new consumer food items.

Shipping bulk commodities to another state or country for further processing and then buying it back at a higher price is not the desired goal. We want to create jobs and increase farmers’ profit by helping them capture more of the processing and market value.

AURI was formed 10 years ago as a nonprofit organization, and is funded by the State Legislature with a mission of adding value to Minnesota's abundant ag commodities. Through processing and product development, producers can stay viable, even in the face of today’s low commodity prices, as new uses and opportunities impact the demand for farm commodities.

AURI-funded studies, done in conjunction with the Minnesota Department of Agriculture, University of Minnesota, farm organizations and commodity groups, give us a better sense of where real value-added opportunities are and where we may need additional policy or financial support.

AURI also helps individual entrepreneurs, businesses and farmer-owned cooperatives add value to commodities. In the past year, more than 125 projects across the state received AURI technical and scientific assistance, feasibility testing, product development work, market analysis or other assistance. This type of support sets Minnesota apart from other states.

Consider the case of soybean farmer Howard Hamilton and his southwest Minnesota business partners. Recognizing a need to diversify their farm operations, they figured out a solution to a common rural problem -- dust control. Using a soybean byproduct and lots of ingenuity, Environmental Dust Control, Inc. is successfully treating gravel roads, construction sites and indoor arenas.   Hamilton will be the first to tell you they could not have done it alone.

Even after 10 years of working with entrepreneurs, it never ceases to amaze us how many new ideas are generated across Minnesota from both rural and urban areas. Not all ideas stand up to due diligence and technical and financial feasibility. But that doesn't mean we quit trying or pull back our support in exploring new opportunities.

The current agricultural crisis is serious. Producers can’t continue to simply grow crops and take what they get for them, rather they need to control their destiny. Many are already involved in ethanol plants, livestock operations, cooperative processing facilities and other ventures that provide hope and opportunity. There is no easy or single answer that will turn around the current crisis in agriculture. However, there is little doubt that Minnesota's continuing investment in value-added agriculture is a key part of the equation.