New Programs in Biomass Marketing, Cooperative Entrepreneurship, and Supply Chain Clusters

Darren Jarboe, Program Manager, Iowa Alliance for Cooperative Business Development

This year the Iowa Alliance for Cooperative Business Development at Iowa State University has initiated new programs in biomass marketing for biofuels, agricultural cooperative entrepreneurship, and supply chain cluster analysis.

Biomass Marketing for Biofuels

Several factors are important to producers for evaluating opportunities to grow and harvest cellulosic biomass for rapidly emerging biofuels markets. However, little information is currently available to assist producers in evaluating these factors or alternative biomass marketing systems. In response to this need, a survey of 2,200 Iowa producers, sponsored by the Iowa State Biobased Industry Center, is being conducted to identify essential elements for producer participation in cellulosic biomass production for biofuels markets.

The survey results are expected to identify cellulosic biomass marketing options that meet the needs of producers. Given the required investments in specialized equipment, the perishability of feedstocks, high transportation costs (low energy density), and a lack of alternative markets, vertical coordination (contracting) or vertical integration (e.g., producer-owned bargaining, marketing, or processing cooperatives) will likely be needed to ensure a sufficient feedstock supply to cellulosic ethanol plants. The pros and cons of various potential cellulosic biomass marketing structures (e.g., organizational, contracts) will be studied. Based on this research, center staff will develop educational materials describing various options for contracting in biomass markets as well as the risks and benefits to producers of various contract specifications.  The goal in providing this information is to help both producers and cellulosic ethanol processers make more informed business decisions.

Agricultural Cooperative Entrepreneurship

Iowa State and Farmers Cooperative Company at Afton, Iowa are partners in a pilot program to develop a new experiential learning opportunity for Iowa State students. A team of three student interns has been formed that will evaluate a new agricultural business of strategic interest to Farmers Cooperative and work with the cooperative to develop a business plan this summer. The student team will present the business plan to the board of directors and the management team.  The students will gain hands-on experience in cooperative business development, while Farmers Cooperative will benefit from the students fresh perspective on a business opportunity. Long-term expansion of this internship program will help strengthen the agricultural cooperatives industry by exposing college students to career opportunities in cooperatives, helping cooperatives recruit knowledgeable, talented employees and managers in the future. In addition, it will generate new possibilities for rural economic development through ties between institutions of higher education and agricultural cooperatives.

Supply Chain Cluster Analysis

There is a need to understand and support cluster-based economic development initiatives related to current or emerging areas of comparative advantage in rural Iowa (e.g., the ethanol and biofuels industry, poultry and egg production and processing). Research suggests that new business formation occurs more readily within a cluster because entrepreneurs have better information about opportunities. Barriers to entry are lower due to existing assets, skills, and available inputs. Natural catalysts in Iowa for organizing cluster-based rural economic development initiatives are Rural Electric Cooperatives (RECs).

Two in-depth case studies of local supply chain clusters in Iowa are being developed in cooperation with RECs and their economic development arm, the Iowa Area Development Group. The case studies will document the firms, industries, and institutions involved, as well as the key relationships among cluster participants, helping rural economic developers identify local supply chain clusters and understand how supply chain clusters can be leveraged for rural economic development.