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Overview

Opportunities and Challenges of Marketing FGD - Gypsum to Agriculture David Flack Marketing Director Ag Spectrum Company. Overview. Market size in acres by major row crop Value of FGD-Gypsum in Agriculture Barriers to Adoption Benefits to Agriculture Benefits to Industry

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Overview

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  1. Opportunities and Challenges of Marketing FGD - Gypsum to AgricultureDavid FlackMarketing Director Ag Spectrum Company

  2. 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

  3. Market SizeCorn – 68,000,000 Harvested Acres

  4. Market SizeSoybeans – 72,400,000 Harvested Acres

  5. Market SizeWheat – 45,500,000 Harvested Acres

  6. Market SizeCotton – 12,200,000 Harvested Acres

  7. Market SizeTotal Harvested Acres – 302,700,000 Acres

  8. 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

  9. The Real Value of FGD – Gypsum in Row Crop Agriculture • 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

  10. 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 ??

  11. 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

  12. 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

  13. 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!

  14. 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

  15. 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

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