Online extra: Lawn care, weed control among trendiest ag propane opportunities

July 3, 2012 By    

From grain drying and space heating to waste burning and floor sanitizing, propane’s role on the farm is vital. But what other opportunities exist to expand propane’s agricultural use, and what role do farmers cooperatives play in leveraging the fuel to the ag community?

LP Gas Magazine Managing Editor Kevin Yanik caught up with MFA Oil Marketing Director Tom May for some perspective on those topics and more in conjunction with the magazine’s agriculture-focused July issue.

How does MFA Oil’s propane division function in relation to the cooperative as a whole?
MAY: MFA Oil is made up of the propane and refined fuels business units on the cooperative side of the business. MFA Oil has member business in Missouri, Iowa, Arkansas, Oklahoma, Kansas, Indiana and Kentucky. The non-member business units include Break Time convenience stores in Missouri and Arkansas and Jiffy Lube and Big O Tires franchises in central Missouri.

A propane customer can become a member by meeting certain criteria and, in return, the member receives patronage earnings back based on the amount of business they do with MFA Oil during the year.

How many farmer owners are there in the co-op and how many have a stake in the propane business?
MAY: Approximately 40,000.

What advantages do these farmers see as a result of teaming up in co-op fashion?
MAY: For most of our farmer members, they are pooling their refined fuel, lubricant and propane business through the MFA Oil cooperative. We utilize our buying power, infrastructure and logistics technology to provide the best value for our farmer members. Farmer members build equity in the company based on their usage, and a percentage of the equity is paid out each year as patronage. Because our members are our owners, they have a voice in the direction of the cooperative.

How much opportunity is there to make propane even more prevalent on the farm?
MAY: Through our relationships and the trust MFA Oil has with our farmer members, we are always looking for any opportunities to bring value back. We have meetings several times per year with our local delegates – representatives of our membership who are elected each year – to discuss the financial results of the company, current trends in the energy markets and any emerging opportunities that will benefit our membership.

Farmers are not new to using [propane as] a motor fuel for their tractors or for grain drying, but now there are opportunities for propane to be a cost-effective alternative for weed control, barn sanitation and lawn care.

What’s the opportunity MFA Oil sees in lawn care?
MAY: Lawn care is one of those things – it’s a farm-related, non-farm-related  thing. If you’ve ever been on a farmer’s property, typically they have a pretty big yard they’re taking care of, as well. Here in Missouri with the Missouri Propane Education & Research Council (MO-PERC), we’ve really been working to expand into lawn care because the high price of gasoline provides an opportunity to use propane and expand that market.

How about weed control as an agricultural opportunity?
MAY: That’s an evolving process that’s an opportunity either at the expense of chemicals that continue to go up [in price], or as farmers continue to evaluate the safety and long-term effects of chemicals. I think [weed control] is a portion of the business that has more opportunity. It’s kind of going through the knothole right now because there are a lot of organic folks who don’t have the acreage to make it worth investing in that sort of equipment.

Down the road, depending on the cost of propane and the cost of chemicals, I think there’s still the opportunity to grow that portion of the business. As diesel fuel continues to be very high priced in farmers’ budgets, there will be a lot of folks converting tractors back to propane – not the bigger farmers, but the smaller farmers. They’re going to look back to propane as auto fuel.

MFA Oil is also exploring an opportunity in biomass. What can you tell us about this development and how it fits alongside the cooperative’s propane business?
MAY: It’s interesting because we’ve been into [biomass] for about 18 months. What’s helped is we’ve utilized the Biomass Crop Assistance Program (BCAP). That was put in place in the Farm Bill, and it wasn’t really getting utilized. Last year, we received assistance for [our investment].

We have three project areas in which we’re growing Miscanthus giganteus. It’s a crop that produces a lot of tonnage per acre – 12 to 15 tons per acre. It produces more tonnage than most biomass crops. It’s a sterile plant, so it’s not going to spread all over creation.

On the flip side, we have found there are opportunities on the market side where there are power plants that want to make it into pellets and burn it. [Miscanthus giganteus] has a really deep root system, so it provides some interesting opportunities because it puts carbon back into the ground.

Does MFA Oil see an investment in another energy, like biomass, as competitive to its other fuels, including propane?
MAY: In a way it is, but in a way it’s not. Here’s the difference: You have customers who’ve switched to burning wood pellets. They’ve already made the decision that they can cost-effectively use another energy source other than what we’re providing. Now, what we’re doing is providing the opportunity to sell the miscanthus on the farm to the guy who was using propane as a backup to his wood heat.

About the Author:

Kevin Yanik was a senior editor at LP Gas Magazine.

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