Opportunities and Challenges

of Marketing FGD - Gypsum to Agriculture

David FlackMarketing Director

Ag Spectrum Company

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Overview

• Market size in acres by major row crop

• Value of FGD-Gypsum in Agriculture

• Barriers to Adoption

• Benefits to Agriculture

• Benefits to Industry

• Key Elements of Marketing to Farmers

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Market SizeCorn – 68,000,000 Harvested Acres

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Market SizeSoybeans – 72,400,000 Harvested Acres

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Market SizeWheat – 45,500,000 Harvested Acres

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Market SizeCotton – 12,200,000 Harvested Acres

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Market SizeTotal Harvested Acres – 302,700,000 Acres

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Market Size Summary

• Row Crop Agriculture is HUGE!– 200,000,000 + acres of major row crops alone!

• Row Crop Agriculture is CONSTANT!– Total production acres of major row crops does not change

drastically year to year

• Row Crop Agriculture is PREDICTABLE! – Planting intentions are accurately forecasted short and long term

• Row Crop Agriculture is RELIABLE!– Once a production practice is proven and adopted there is high

resistance to change

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• Most farmers utilize tillage to prepare soils for planting

– Tillage releases carbon from the soil into the atmosphere

– Expensive in the face of high fuel, labor and equipment costs

The Real Value of FGD – Gypsum in Row Crop Agriculture

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The Real Value of FGD – Gypsum in Agriculture

• FGD – Gypsum allows farmers to reduce or eliminate tillage– Carbon is accumulated in soils when tillage is

reduced – ½ ton per acre per year in a corn/soybean rotation

• Carbon credits generated by reducing tillage are worth $4.00 - $4.10/ton on the Chicago Carbon Exchange (CCE)

• Future value of Carbon Credits $12, $17, $20 per Ton ??

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Barriers To Adoption• Cost

• Most growers are located $20/ton transportation from sources• There is a cap to cost for the farmer

• Dependable supply• Developing a cropping system involving FGD-Gypsum

• Misinformed Agriculture Industry leadership• Current failure to understand the value

• Material characteristics• 8-12% moisture• No adverse crop production effect• Heavy metals meet regulated standards

• Regulations• EPA – Each state has to approve land applications• Agriculture – farm use subject to oversight of Department of Agriculture

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Benefits to Agriculture• Lowered capital requirement for equipment

– Opportunity to invest equipment capital in technology and land for growth

• Lowered fuel costs– Environmental Stewardship Bonus

• Lowered labor costs– At the very least, opportunity to re-allocate labor

• Improved soil quality– Better air and water management equals better yields– Better soils erode less and require less applied fertilizer– Environmental Stewardship Bonus

• Government regulation/compliance payments

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Benefits to Industry• Long term low cost disposal

– Dependable market year to year

• Potential carbon credit accumulation– December 2005 – Two dairyman receive first carbon credit

payments in excess of $26,000– Trade Carbon Credit Value for FGD-Gypsum Value??

• Environmental Stewardship– At the plant– On the farm

• Public Relations– EVERYBODY WINS!

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Key Elements of Marketing FGD- Gypsum to Farmers

• Limitations to marketing in Agriculture• No T.V. or effective radio • Limited publications and newspapers• Farmers require “Proof” of concept before purchasing• Market “Noise” obscures the truths of nature• Every farmer has an “Expert” that already influences their buying decisions

• Successful marketing of FGD-Gypsum will occur through the “Right” local experts

• Technically competent to integrate FGD – Gypsum into a complete production plan

• Established farmer relationships and historical reputation of improving production results

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Key Elements of Marketing FGD- Gypsum to Farmers

• Establish supply and logistics to meet current demand• Direct sales transaction between the utility and the farmer

• Establish value equation for new farmers• FGD-Gypsum as a component to a production plan that lowers cost, improves soil

quality and increases yield potential• Low cost, dependable supply of FGD-Gypsum available via carbon credit accumulation

as a result of tillage reduction

• Expand demand• Trial Use – Early Adopters• Service – Educate the farmer in-season• Monitor and Measure Results – Link role of FGD-Gypsum in the farmers mind to

specific results i.e. crop emergence, crop health, air and water management, fertility management, cost reduction etc.

• Establish adoption via proof of local results