Value-added farming - German-style

Monday, October 3, 2011

This south German hog farmer is making more money turning manure in to biogas, heat and pelleted compost than he is producing pigs

by NORMAN DUNN

People say it's a sign of the time in European livestock farming that chronically low margins are forcing farmers to look for added-value opportunities. That's the reason why farm gate stores and snack bars are sprouting along just about every main road.

But the urge to make more out of normal output has always been with us. Nearly 50 years ago, I worked on a large farm in Scotland with swine and dairy cows. The farmer resolutely believed that there was no real future in producing for the markets traditionally open to farmers, such as milk processors, slaughterhouses and especially grain buyers.

This man's Holy Grail, from the moment he took over the family farm, was a value-adding enterprise that would earn real money with a product that was ideally unique, but anyway very profitable. He didn't expect to find the solution in simply producing more from the same fields, rightly reasoning that there were thousands of farmers chasing that goal. The business did develop a retail market for milk. That was a step in the right direction. But that market was pretty full up, too.

An interesting diversion featured merino sheep imported with the aim of developing and supplying a market for luxury woollen articles. But the raw Scottish climate wasn't to the taste of the foreign sheep, and so this idea didn't really take off.

Then came the brainwave that changed the provincial livestock farm into an international luxury food supplier. What dairy product always sold well? Ice cream. Why not develop a market for a homemade luxury item along these lines? This proved to be the solution. From simple beginnings, the enterprise has developed into a business selling high quality ice cream to premium outlets as far away as Japan.

Since then, I've always had a special interest in farmers with concepts for added-value production and have discovered an interesting similarity amongst these entrepreneurs.

Once they've hit on a paying idea, they very rarely stop there. My Scottish example branched into other quality farm foods. Others have started with a farm gate store and added a restaurant, and then trailer parks and campsites for the holiday trade.

But let me tell you about Thomas Karle in the Hohenloher region of south Germany.

Thomas started farming 20 years ago, taking over a 900-place hog-feeding barn from his father along with 200 acres of cropland. Long years of struggling with hog prices left him with more than a passing interest in anything that might add value to the enterprise.

In 2001, he was one of the first in the area to built a biogas production plant utilizing the manure from his hog barn to produce gas that, in turn, fuelled a 50 kWh generator. The resultant electricity was fed into the local supply network for a return of around C$0.16/kWh. This was soon earning more than his hogs. Within nine years, he had increased the size of his generator to 500 kWh and was buying-in waste organic material to make more biogas.

Thomas then discovered that, by utilizing the heat produced by the generator, he could earn even more. Just at that time, the streets in his village were being dug up for a new sewage system. He took the chance of polling the house owners being connected to the new sewage system. Would they be interested in buying their household heating from his farm?

Twenty households said yes (mainly because the farmer offered the first four years' supply at 20 per cent less than the average cost of oil heating). With the permission of the authorities, Thomas slipped 90-millimetre insulated hot water piping into the sewage trenches and, through them, into his future customers' cellars. He established a reservoir of hot water continually heated by the generator on his farm.  All his customers had to do was link the hot water pipeline to a heat exchanger in their cellars, which serviced the respective central heating systems.

But then Thomas Karle found he was producing too much heat. His next value-adding idea was to dry the fermentation residue from his biogas plant with the surplus heat. Result: a 10 per cent moisture content natural fertiliser.

How to sell it though? The market for loose biogas compost was booming, but very competitive indeed. Had anyone tried pelleting the compost, packaging it in attractive bags and then retailing the result?

No one had. Thomas Karle went ahead and is now selling the pellets – brand named NADU (natural dung) – through garden and farmer stores in packets and buckets ranging from 250 grams to nine kilograms. Production is around five tonnes a week and the retail price is the equivalent of C$3,100 for every ton. Now, that's what I call adding value! BF

Norman Dunn writes about European agriculture from Germany.