Having grown up in the late 60's and early 70's, the phrase “classical gas” reminds me of the song by Mason Williams, protest demonstrations and Woodstock. Thirty years later, the dairy industry hears “classical gas” and thinks of air emissions and the other concerns that people have about permits, nutrient management, ground water and land use.
How important are these issues? Where is the industry in terms of satisfying public concern? The answers to these questions will be instrumental in shaping our industry’s future.
More immediately, these questions affect producers when they go through the permit process to expand existing dairies or start new ones.
Federal and state involvement in the permitting process seems to be increasing. In counties with increasing dairy concentration, the qualification process has become tougher. In the past, the amount of money needed to permit a new facility was minimal. Now, it can take anywhere from $25,000 to $100,000 to perform the needed studies and tests to obtain a permit. This money is then added to the loan amount needed for new dairies or expansions.
The cost goes up when the project is delayed by ongoing environmental questions posed by citizen groups.
A perfect example of this occurred in California recently. After the initial application, the producers received a complaint about potential water pollution. Once that concern was addressed, questions arose about the potential for dust. Next, concerns surfaced about air emissions. I’m afraid someone else may be in the wings with another issue.
As I travel throughout the country, I see the same issues popping up everywhere.
Dotted and crossed
The public concern in environmental matters and increased regulations has raised its importance in financing as well. Proper evidence of approved permits and full understanding of this issue by both bankers and producers is an absolute requirement for financing.
Expect your lender to ask about the permitting process, especially when seeking long-term financing. In addition to having your “i”s dotted and “t”s crossed, lenders will look positively on the following:
- A good understanding of your community and its environmental condition. Do you reside in a particularly sensitive watershed area? What future concerns might you have to face?
- No previous EPA or state environmental violations.
- Ability to interact with the community and news media. As a business owner, you must be able to articulate how your business will create jobs, safeguard the environment, provide proper care for animals, and produce a safe, wholesome food product. Bottom-line: You must be a positive spokesperson for the dairy industry.
Finally, make an effort to explore environmentally-friendly alternatives. Many new technologies are being developed to alleviate environmental pressures, such as energy systems that capture methane from manure.
The environmental issues we face today will not go away. Rather, they will bring new challenges to the industry. Be ready to face them head-on.
Anthony DeRose is a senior vice president of Wells Fargo Bank in Tulare, Calif.