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Published March 29, 2013, 08:57 AM

Agricultural commission works to boost businesses

BISMARCK, N.D. (AP) — The state spends up to $3 million per year on project ideas that add value to North Dakota agricultural products. Of the 30 to 40 projects that receive grants, about 50 percent become successful business ventures, like Ole Johnson's compost business in Stanton.

By: JESSICA HOLDMAN,Bismarck Tribune , Associated Press

BISMARCK, N.D. (AP) — The state spends up to $3 million per year on project ideas that add value to North Dakota agricultural products. Of the 30 to 40 projects that receive grants, about 50 percent become successful business ventures, like Ole Johnson's compost business in Stanton.

Johnson said he has been composting manure and other waste from his dairy operation for about three years. His farm, Destiny Dairy, received a $45,000 grant to help him market his product. He has already had several requests from people wanting it for their garden and has delivered loads to stores to sell.

The Agricultural Products Utilization Commission started in 1979 as an ethanol incentive plan, said the program's executive director, John Schneider. There were two ethanol plants in the state at the time. Over time, legislators thought it would be the perfect program to promote value-added agriculture, he said. The Dakota Growers Pasta Co. in Carrington was among the early recipients of funding.

Schneider defined value-added agriculture as increasing the value of a raw agricultural product. So many products are shipped out of state for processing, he said. In-state processing keeps more money from crossing state lines.

"When times in agriculture get tougher, we look for ways to increase the bottom line," Schneider told the Bismarck Tribune (http://bit.ly/WRmB17 ).

Common Enterprise Development Corp. is trying to increase the profitability of locally grown products by starting a food co-op in Bismarck. The project's leader, Tyler DeMars, said the group received $10,500 of APUC funding in June 2012 to conduct a feasibility study for the co-op.

DeMars said collaborators from Bismarck State College and North Dakota State University helped with the market research to determine availability of distributors, competition and if Bismarck is an attractive market for a co-op model. He said there is a gap in service for distribution but the group is going to continue with its plan anyway.

DeMars said the co-op will be incorporating at the end of March and selling memberships in April.

"It (APUC funding) helped us move forward. It would have definitely gone slower," he said. "I think it's great we're investing in innovation. We need to do that."

Schneider said the APUC program has evolved with the times since its inception. There are six areas that grants may fall under: basic and applied research, marketing and utilization, technical assistance, farm diversification, prototypes and technology and nature-based agritourism.

Relating to technology, APUC has funded projects like sensors telling farmers when to spray their field with fertilizer and insecticides and tracking devices for sugar beets from harvest to grocery store.

Mary Fletcher of Carbontec said her family's company is studying the feasibility of using biomass as an alternative to iron. She said the company had never worked with biomass before but became interested in it because of the high price of iron. She said it also will help the company with its commitment to reducing its carbon footprint.

The $63,000 for the study was awarded in August and the study will be complete in June.

"It was incredibly helpful to receive (the money)," Fletcher said. "We're a small business and not large enough to do a study on our own time."

The APUC grants were originally funded from a 1 cent gas tax refund, Schneider said. As the funding from the gas tax was reduced, the program began receiving a general fund appropriation and 5 percent of state mill and elevator profits.

Schneider said most of the grant money goes to private companies because universities have other sources, but the universities can get funding if they have a private partner.

The grants average between $50,000 and $70,000. Schneider said the most ever given out was about $85,000. The state requires reporting on all of the projects and proof of how the money is spent. Half of the funds are held back until proof is submitted. If the money isn't used for requested purposes, it must be refunded.

Schneider said his favorite category of grant is farm diversification.

"I've seen some really cool projects materialize," he said. "It's fun to see people be creative."

One example of creativity is a packet of flower and herbs originally designed to be an air freshener by a New Town woman. She ended up turning it into a product to keep mice out of tractor and vehicle cabs.

Schneider said even though not every idea will turn into a business, APUC sees value in a company learning something isn't going to work, too. If companies do develop, it's an asset to the state because it adds to the tax base, employment and employees spending their money.

"It does put more money on Main Street," said Agriculture Commissioner Doug Goehring.

"It puts money into the economy. It puts jobs into the economy and it puts more money at the farm gate."

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Information from: Bismarck Tribune, http://www.bismarcktribune.com

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