By Ron VandenBoom
After almost four years of trying to get a manufacturing facility off the ground that could convert straw into strawboard, BioGold is turning to the Federal Government for help.
Dick King, executive director of Bear Paw Development Corporation, said the plan would ask Congress to legislate a CRP like program that would pay farmers to produce wheat for the strawboard plant. The plan would also make the government an equity partner in the construction and running of the plant for a 10-year period while BioGold becomes successful.
Biogold has not been able to raise the necessary funds to get the plant off the ground, King said. Of the $25 million price tag investors needed to raise more than $6 million.
"They managed to raise only about $260,000 and hit a brick wall," King said.
This led BioGold to seek out The Management Group (TMG), a consulting firm locted north of Billings run by Paul Gatzemeier, a former Montana Power vice president. Gatzemeier reassessed BioGold's financial model and made several needed changes before putting a new plan together.
The price tag is also new and has now gone up to a hefty $35 million for all new presses and equipment, .2 percent more straw, and more than 60 employees.
Under the new plan, the government would pay half of the development cost, and 25 percent of the operating cost for 10 years and provide the straw, King said. "BioGold would then repay the government when the plant is successful."
The remainder of the plant's costs would, according to King, be covered by investors and by the foundations of some major industries that are involved in agriculture. He declined to say at this time who the major industries might be.
King said the plan, known as the "Proposal for Cooperative Effort to Convert Agricultural Waste Into Value Added Building Materials," has the support of Montana Sen. Conrad Burns (R. Mont) and Sen. Max Baucus (D. Mont.).
According to King, about 300,000 acres of farm land will be needed to produce the necessary straw.
The proposal would take the 300,000 acres and designate it for straw production in the same way it would be used for CRP, he said. Right now, King said, Hill County alone has about 270,000 acres in the CRP.
King went on to explain that if 300,000 acres were put in CRP today it would cost the Federal Government $105 million. The projected benefit to the economy of the Hi-Line according to King would be $49 million over the life of the contract because farmers still will need to buy some seed and some equipment even to maintain land that is not being farmed.
"But the net present cost to the government for the proposed BioGold project is $77 million while the net present value for farming the same acreage and putting the straw into BioGold is $433 million," he said.
King went on to explain that if the BioGold plan is accepted, the acreage would now be made productive and farmers would need to buy seed and equipment to harvest the straw. They could then provide the straw to Biogold thereby creating jobs and wealth.
"There's our case," he said. "Not only is it cheaper to the government, but this is clearly the kind of thinking that we need to do in rural America about economic development."
King said that in producing a product BioGold is hiring people, creating tax base, and getting significantly more economic benefit to keep places like Chester, Chinook, and Malta from going under.
King acknowledges the plan as a bold and unconventional proposal and he said he knows that people are going to have a lot of questions.
He said a slide-show has been developed on the project and he is available to answer questions. A public presentation of the project and the logic behind it are planned for sometime this spring.
