Three months after Governor Jennifer M. Granholm vetoed it, state Republicans are reviving legislation that would subsidize the high cost of handling massive amounts of manure and air pollution generated by concentrated animal feeding operations, also known as CAFOs or livestock factories. Senate Republicans are readying the subsidy proposal as part of a package of measures they unveiled on Feb. 14 that they claim will help revive Michigan’s rural economy.

In her veto message last November, Governor Granholm, a Democrat, said the subsidy was a tax giveaway to CAFOs, which often damage the state’s waterways with toxic concentrations of manure waste and frequently violate state environmental laws. Like last year’s legislation, the new package’s waste management subsidy would extend low-interest loans and property tax breaks to livestock operations that install methane digester systems. These systems turn liquefied manure into electricity, bedding for dairy cows, gardening compost, and other products. CAFOs typically generate 10,000 to 90,000 gallons of liquified manure per day.

Industrial-scale farmers and many Republican lawmakers support the subsidy for methane digesters, arguing that the technology can address environmental consequences of CAFOs while saving farms and farmland by lowering business costs and possibly generating new revenue streams. But some observers say the real question the revived subsidy proposal raises is how best to encourage both proper manure disposal methods and increased renewable energy production without further tilting the playing field toward these large-scale factory farms. CAFOs, they say, cause economic problems in rural areas by elbowing smaller family farms out of the market and saddling rural communities with industrial-scale odor and pollution problems.

Jeff Cobb, legislative aide to Senator Gerald Van Woerkom, a Republican from Norton Shores who helped develop the rural jobs package, described the proposed subsidy’s effects in straightforward terms.

“Giving farms technology to manage their manure will be an economic incentive for them and be an environmental benefit as well,” he told the Great Lakes Bulletin News Service.

Rewarding Poor Planning?
Opponents of the subsidies say they have little quarrel with the potential benefits of methane digesters. But they insist that taxpayers, rightly concerned about water and air quality, should not be forced to subsidize the poor planning of factory farmers who expanded their herds significantly without simultaneously expanding environmental protections. They fear that Michigan will use public money to enhance the profits of these highly polluting industrial operations, something they assert the federal government did last September when it made a $500,000 grant to Vreba-Hoff Dairy Farms to build a methane digester. According to state records, Vreba-Hoff, which operates two dairy CAFOs in Hillsdale and Lenawee Counties, just south of Jackson, is one of the farming community’s most frequent violators of pollution-protection laws.

“It could be that methane digesters offer some benefits, but they should not be subsidized,” said Anne Woiwode, executive director of the state’s Sierra Club chapter. “We’re very concerned about the potential they will be used to help justify further expansion of concentrated animal feeding operations in Michigan.”

The state’s job instead is to keep polluters from proliferating by requiring them to plan for and take responsibility for their wastes, Ms. Woiwode said. She pointed to a recent state settlement with Vreba-Hoff Dairy Farms as an example: After the Michigan Department of Environmental Quality cited the company for 25 separate pollution incidents over 16 months, Vreba-Hoff agreed to install an on-site wastewater treatment facility at an estimated cost of $1 million.

The State-Assisted CAFO Boom
Concerns about Michigan streams and lakes choked with liquified manure from factory farms are helping to portray the methane digester proposal as a “win-win” solution to agriculture’s environmental and economic challenges.  But many view the subsidy to the farms’ basic waste disposal costs as just the latest in a 20-plus-year effort by some state officials to support the expansion of large-scale livestock agriculture in Michigan at the expense of the environment and neighbors’ quality of life.

In 1999, for example, the state Legislature gave CAFOs a major boost by widening “Right to Farm” protections to specifically deny local governments the right to manage their noxious effects. Until then, local governments had as much right to put conditions on factory farms as they do other industries that bring new water supply demands, heavy traffic, pollution, and other potential nuisances to their communities.

Those state favors worked; they triggered a boom in factory farming in Michigan, which in turn has brought severe air and water pollution problems to some rural areas of the state. The pollution problems continue today, despite marked improvements at livestock farms due to recent efforts by state regulators and the agriculture industry to establish and enforce manure management rules.

For example, in a nine-township area south of Jackson where two Vreba-Hoff operations are located, the Michigan Department of Environmental Quality cited 18 livestock factories for a total of 116 water quality violations between 2000 and 2004. That is the same timeframe in which most of the cited operations in that area either started or expanded.

There are other “hot spots” for new and greatly expanded livestock factories in the Thumb area and parts of mid- and southwest Michigan. In all, the DEQ estimates, Michigan is home to some 250 large-scale livestock factories. A large number of the new factory farms are operations that a company called Vreba-Hoff Dairy Development has helped start. The company helps immigrant farmers from the Netherlands, Germany, and other countries set up shop in Michigan, where, compared to their homelands, land is relatively cheap and regulations are dramatically less stringent. Vreba-Hoff Dairy Development has helped set up 57 dairy factories since 2000 in Michigan, Indiana, and Ohio. Forty-one are now operational; the others will be soon.

A Question of Priorities
Ottawa County Extension agent Charles Gould believes methane digesters are important tools for medium and large livestock farms, many of which are operated by long-time local families, who are trying to meet new manure management requirements from the state. They must now submit certified plans that show how they will avoid the industry’s common problem of putting too much manure on too little land that is too close to waterways.

Mr. Gould is working on a project, which recently received a $30,000 federal feasibility-study grant through the Michigan Biomass Energy Program, to develop a regional cooperative of farms that would send manure to a central methane digester facility. “The intent of this project is to keep our swine and dairy producers in business and provide another manure management option to producers, regardless of their size of operation.”

When asked why farms would expand their operations without having enough land or other options for the resulting manure, Mr. Gould says it is no mystery: “When milk or pork prices are good, people increase their herds, and manure management isn’t always in the forefront of what people think about. It’s unfortunate, but it’s reality.”

But proper handling of manure is quite high on the list of concerns for people living around Hudson, south of Jackson. Streams in three of that area’s watersheds are suffering severe pollution from livestock factory wastes. The fact that livestock factories, which harm their community’s environment, are now turning to taxpayers for help in paying waste disposal costs is the most troubling issue for them, according to Ms. Woiwode, not whether the digesters can help the operations become more profitable.

It is also the issue for David Morris, executive director of the Minneapolis-based Institute for Local Self Reliance, who was recently reappointed by Bush administration’s energy department to advise both the U.S. Department of Agriculture and U.S. Department of Energy on biomass energy issues.

“Subsidizing waste disposal costs is something we really haven’t done in other sectors of the economy,” Mr. Morris said. “It’s an unusual situation where we are saying we are going to intervene in a commercial operation, an industry, on behalf of those who have chosen a certain structure where they have increased their cost of waste disposal.”

Wanted: Fair Subsidies
If lawmakers are determined to violate the general principle of not subsidizing waste disposal costs, Mr. Morris said, there are better ways to do it than to simply anoint one particular method or end product, such as installing methane-digesting electricity generation on large factory farms, with public dollars. Treating all farmers and methods of dealing with the manure problem equally should be the goal, he said. That means designing any subsidies around the amount of manure produced rather than the kilowatt-hours of energy it produces.

As an example, Mr. Morris points to the Chesapeake Bay area of Maryland, where runoff mainly from poultry factories has caused tremendous pollution problems. Maryland has encouraged farms to transport the manure out of the area to places where other farms can use it for fertilizer by offering a subsidy based on manure tonnage. The subsidy reduces transportation costs that stood in the way of this removal solution. If Maryland had only subsidized electricity generation, it might have only helped farms large enough to afford installing and operating the expensive equipment.

The other strategy for achieving real support for family farm operations, versus a giveaway to Wall Street investors in livestock factories, is to offer a subsidy that helps those that need it most, he added. Smaller farms are likely to have the most trouble installing methane digesters because they have more difficulty qualifying for loans and they do not have as much manure to run through the process. Their lower manure flow makes the payback on a smaller farm’s investment in a methane digester longer than the seven to 10 years that larger operations can expect.

To support smaller farms, Mr. Morris said subsidies should target those with projected paybacks of 10 or more years.

“You have to remember” he said, “that a 10-year payback is a 10 percent rate of return on the investment.” Helping factory farms reduce the payback to 2 years, as some proposals do, is like handing them a 50 percent rate of return: “Why should taxpayers be asked to do that when they’re only earning two to three percent on their own savings accounts?”

Dulcey Simpkins, coordinator of the Michigan Biomass Energy Program, said such adjustments for making the subsidy more equitable are important in any proposal that encourages using methane digesters to support family farms. “This is why we’re excited about the Ottawa County project, which would involve a shared investment among many farms,” she said. “We see digesters as potential tools not only for solving pollution problems, but also for helping many sizes of farms develop value-added products while operating in a more sustainable way.”

---------------------------------------------

WHAT HAPPENED

LANSING--Senator Cameron Brown (R-Sturgis) has introduced Senate Bill 227. The bill would provide low-interest, state government loans to farms for energy production from manure waste and other materials. The bill was referred to the Senate Committee on Agriculture, Forestry, and Tourism. SB 227 can be read as originally introduced here:
http:www.legislature.mi.gov/documents/2005-2006/billintroduced/senate/pdf/2005-SIB-0227.pdf

Patty Cantrell directs the Michigan Land Use Institute’s Entrepreneurial Agriculture project. Reach her at patty@mlui.org.