Ep #01: Finding Success with Renewable Energy in Agriculture with Bruce Rastetter
What does it take to build a large-scale farming operation in today’s world of constant challenges and shifting policies? Bruce Rastetter, farmer and founder of Summit Agricultural Group and Summit Carbon Solutions, joins us today to talk about his hands-on experience in this area and more. From his farming ventures and the policy battles he’s tackling to safety issues and pipelines, you’ll get powerful insight into improving agriculture in the U.S.
Listen in to get a glimpse into Bruce’s Iowa farm roots and discover why he returned to the tough world of agriculture after college. He also opens up about his career shifts, his focus on tackling the key issues holding back successful farming, and his drive to improve the future of U.S. agriculture. You’ll get insight into investing in farmland, as well as projects that are shaping the future of farming in America and beyond.
Listen to the Full Episode:
What You’ll Hear About in This Episode:
How farm income has been changed over the past few years and what needs to be done.
The life-changing moment that affected Bruce’s career and business.
What eventually freed him up to pursue other endeavors and solutions.
The benefits of gas lines to farmers.
How to succeed in raising pigs and pig farming.
The process of achieving carbon sustainability in farming and production.
Misconceptions around Chinese ownership.
Where Bruce’s focus is now and what projects might be coming up next.
Ideas Worth Sharing:
“Brazil and the U.S. will supply the majority of the world’s food and energy going forward.” - Bruce Rastetter
“I want farmers knowing that we did the best job possible and treated their land well and with respect—and we’re doing that.” - Bruce Rastetter
“Be open and transparent with everyone you work with. You become who you hang around, so be with people who want to make a difference.” - Bruce Rastetter
Resources:
Bruce Rastetter: LinkedIn
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Read the Transcript:
Bruce Rastetter: It was clear to me that Mato Grosso would outpace the U.S. and not only soybean production like they have. I saw a graph yesterday that Mato Grosso produces more soybeans in Iowa, Illinois, and Indiana, and produced more second-crop corn than Nebraska last year. They will produce more second-crop corn in the future than Minnesota and soon to be than Iowa.
Welcome to The Land Ledger podcast, where investing in farmland meets the future of finance. I’m your host, Brian Kearney, here to guide you through the untapped potential of farmland as an asset.
Whether you’re already investing in farmland, want to invest in farmland, or you’re just curious about safe alternatives to stocks and bonds, this is your space to learn, explore, and be inspired.
Your journey to farmland investing starts now.
Brian Kearney: My guest today is Bruce Rastetter. Firstly, he's a farmer from Central Iowa, but he's also the founder of Summit Ag and Summit Ag Solutions, Summit Carbon Solutions. And I'm really excited to dive into his past business endeavors, his current business endeavors and learn a little bit about you, Bruce. So thank you for jumping on the show. We really appreciate it.
Bruce Rastetter: Great. Happy to be here, Brian, and I look forward to the discussion.
Brian Kearney: Perfect. Well, I think where I want to start is growing up in Central Iowa. You grew up on your family farm, correct?
Bruce Rastetter: Yep, I grew up right near where I'm at today, just south of Alden, Iowa, and I grew up on a 300-acre farm, and parents had 5 kids. Agriculture was tough when family was growing up, and so I encouraged all of us to get an education, leave, and not come back to Ag and stay involved. And I was one that I didn't either like the challenge or the punishment of ag and the commodity swing, so I went to the University of Iowa, was a political science major, always intended to become an attorney. I decided after graduating from Iowa and starting law school, I didn't want to do that. I wanted to come back, be involved in ag. So, got a job in town actually. Farmed part-time, raised some pigs. I got a job in town at the post office, get up early in the morning, work three hours late in the afternoon, and then in between time got a chance to sell feed for Moorman Manufacturing.
And it's today owned by ADM. And as Iowa, it was right after the farm crisis was getting in full vogue and land values were dropping dramatically, high interest rates when I got started. And so farmers struggled to own their own pigs because of the liquidity situation of farmland values going down. So we began contract feeding and working with a group out of Ames, Iowa, and went from 500 head to 100,000 pigs on feed of those farmers. And I additionally sold livestock feed on a retail basis to other producers. And continued doing that during the 80s. And the 1990 began building our own confinements. As Iowa was taking pigs from outside or older facilities to confinement facilities that exist today across the state. And I always say kind of a life-changing event for me personally was in 1994. I met investment bankers from J.H. Whitney & Company, and three other investment banks, they owned Golden Sun Feeds at the time, that's owned by Perina Mills. They wanted to do the typical private equity. They did merge the companies that I had into a company called Heartland Pork, and we grew to 1.2 million pigs a year in Indiana, Illinois, and Iowa with genetic units in the Cotswold system in Indiana, sow units down by Parris, Illinois. And then bringing those pigs back to North Central Iowa in a contract with Tyson.
Brian Kearney: Wow.
Bruce Rastetter: We’re growing quickly in 1998 when hogs went to the lowest level in 50 years, went to 9 cents. You probably have seen the charts. I'm not sure you were running around then, Brian.
Brian Kearney: Wasn't running around, but that's actually exactly what I wanted to get into. I wanted to dive into that period and how you made it work during 9 cent pigs. I can't even imagine.
Bruce Rastetter: You know, at the time we were the fastest growing hog company in the U.S. at the time that hogs went to a 50-year low. And I just actually spoke at a class at Iowa State of Entrepreneurship students yesterday that were helpful with and they asked about the good times and the tough times.
And so we did a 20-year business plan on what the quantity swings looked like in our business. So what's the price of corn? What's the lowest, highest soybean meal? Building costs, productivity. And then, of course, hog price. So we did a 20-year look back as to what those were, not a 50. So for 65 days in a row, in 2000, or in ‘98, hogs went down every single day. And so you got to go to work knowing that. And so we stopped growing, worked hard to get more efficient.
We had about 500 total employees at the time between employees and contract growers for us, and raised more capital, tried to survive and get through it. And then after that went through 5 years of break even.
And so we decided at that point that it made sense to sell the company. And did that and ended up selling it to Christensen Farms, that was integrated in the Triumph system. And on, frankly, we were not, which I think is one of the lessons learned on the hog industry that vertical integration helps survive those commodity swings that can be pretty brutal on you. So got to meet a number of people in that industry in Illinois, Indiana, Illinois, and Iowa, and really have great respect for people that raise pigs today. It's a hard business. There's so many moving parts. It's a diverse workforce. And you have not only the commodity swings that agriculture can, we know happens in the commodity world, but you also then have the health issues that go with raising living, breathing animals and transporting them and trying to be good at it.
So we continue today in our existing business to build a number of hog buildings with some of the nation's leading pork producers. So Christensen Farms, Smithfield, Hunnor, Mashoff's, companies like that, that we try to do the right thing for quality buildings and take care of that facility so that they don't have to worry about production issues emulating from the buildings.
But so that right after selling Heartland Pork in 2004, worked at the same investment bank to build an ethanol plant in Iowa Falls, one of the early ones, an ICM plant, a 50 million gallon plant that as the U.S. was embracing biofuels, ethanol. Went ahead and raised the capital to double that plant in Iowa Falls and build a 120 million gallon plant at Fairbank, Iowa, east of Waterloo. Decided it made sense to sell the company when the market told us. We never got that chance with the hog company because it became a 10-year investment instead of the typical 3 to 5 years.
And obviously, the market in ‘98 didn't allow us to have, be able to do that. And then they continued challenges in the industry right after that, so we sold the company to the folks at Thomas H. Lee in Boston. I stayed on as CEO. We built 2 more large plants to become the nation's 3rd largest ethanol producer, producing about 450M gallons at the time. Another plant north of Waterloo at Shell Rock, and one at Menlo. Today, those four plants are owned by Poet, and that ironically, we're working back with those plants on the Summit Carbon Pipeline to do that.
So, when we sold Hawkeye to Koch Industries Flint Hills, whom Poet bought those plants from, that freed me up for the first time to do other things outside of being responsible for a larger company. And started traveling to Brazil. Believing Brazil is the other country in the world going to produce the majority of the world's food.
And that they clearly embrace U.S. technology, and in a greater way, in a great way. And, so the same, John Deere high speed miners we have, they have seed companies growing there. And ADM Cargo Bungie, all the U.S. companies have done business, as you know, in Brazil for a long time. We believed Brazil was going to raise a significant amount of second-crop corn.
At the time, it was smaller corn crop in 2011, and second crop hadn't caught on. It was sunflowers and cotton. But it was clear to me that Mato Grosso would outpace the U.S. and not only soybean production like they have. I saw a graph yesterday that Mato Grosso produces more soybeans in Iowa, Illinois, and Indiana, and produced more second-crop corn than Nebraska last year. They will produce more second-crop corn in the future than Minnesota and soon to be than Iowa.
And so we believed it was a good spot to build a corn ethanol plant. So we built Brazil's first modern corn ethanol plant. Have a company down there called FS, Fueling Sustainability or FS Bioenergy is the official company name. Three plants, 900 employees. Hired employee number one, took ICM with us to build our U.S. plants, and built the plant. And that's really where we understood better what the opportunity for low carbon markets.
Brian Kearney: Right.
Bruce Rastetter: That has led to some of the projects we've done in the U.S. And so Brazil remained part of the Paris Climate Accord in 2016. And so our company there had to go through and get a carbon sustainability score on the gallon of ethanol that we produce, is that every energy company in Brazil, all the sugar cane plants and so forth so, we went through that and because we burned biomass, not natural gas, and second crop corn, we have the lowest carbon score of any liquid fuel in the world in FS. And [...] just solidified that here in the last few weeks. But that's where really what led us to how can we ensure that the U.S. ethanol industry is responding to world markets that are demanding more sustainability. And so, Justin Kirkhoff, who's our CEO here had come in the office one day and said, “Hey, I think we could go out to the ethanol plants and the relationships that I previously had.” And the government gave clarity around 45Q tax credits.
And now 45Z that we didn't know of then, but signing up those plants as partners, and so we did 4 years ago, signed up 34 plants, 20 companies from Iowa to North Dakota, and have an agreement to capture their CO2, compress it, put it underground, take it to safe geology in North Dakota.
And what it does is it lowers their carbon score, as you're aware, by 32 points. So it takes them from mid-50s to mid-20s and allows them to today qualify for sustainable aviation fuel once we get the pipe in the ground that they cannot today, nor will if we can't do this. So as our competitor failed, Navigator, we acquired agreements or we gained agreements with Poet, Valero, some other plants.
So today we have about half the U.S. industry, 57 plants that are partnering with us on the Summit Carbon Solutions Project. So what we do today is we raise capital. So we, first of all, we have a production ag business. We farm corn, soybeans, and on about 12,000 acres, we have hog buildings with the number of the U.S.'s leading hog companies. And then we feed some cattle with a partnership with Barkay in Northwest Iowa.
Today we're custom feeding those cattle with, for them. And then separately we do the private equity, both in Brazil and the U.S. We believe that the supply chain will come back to the U.S. so we built a vital wheat gluten plant in Kansas called Amber Wave and it was an ethanol plant, but it's in wheat country.
U.S. imports 80% of its vital wheat gluten from Europe and Australia. We thought it made sense to bring that supply chain back. So that plant's up and running a year ago, doing a nice job, supplying vital wheat gluten to bakery and pet food companies in the U.S. And additionally, we have Summit Carbon Solutions, our largest pipeline project that we raised a little over a billion dollars of equity. It's a really important project and we certainly can talk about that, Brian, on for agriculture, for the transformation, for attaining new markets, adding value to corn produced in the U.S., and driving commodity prices back to where I think they should be, but on-demand basis.
So that's what we do today. We have a small group, about 140 employees. We have about 45 on our investment side and work with a number of individuals in the Midwest, typically high net-worth individuals or people that work for them or meet along the way that invest with us. And then also have broadened that with the Summit Carbon Project to TPG, the Sustainability Fund, the Continental Resources, Harold Ham's group, that is a terrific, forward-thinking individual in the oil gas industry, and SK, the South Korean company, and then Tiger in New York that we've worked with for a while, and then our 600 investors are part of that company, including a number of plants and individuals in the Midwest. So, that's what we do. Happy to take any questions. That's kind of my story
And I have a terrific group here. We have employees from a year to 34 years. So we span the generations and we actually have millennials with the work ethic and a great value system that work really hard. I tell them that it's great to find a few of them. And so I think you're a millennial that works hard. So that's good.
Brian Kearney: You find more of them in the Midwest, that's for sure. So yeah, no, this is great. I have a lot of questions. The one I want to dive into first, it was not a question I expected going into this, but how did you initially see before anyone else The idea of second-crop corn in Brazil because that's so impactful to the markets now and that was not something people were talking about at that time?
Bruce Rastetter: Yeah, so in 2011, after we sold Hawkeye, I had a group in New York that was wanting to build a sunflower oil processing plant, small plant in Tampanovo, actually, just west of Lucas, Rio Verde. It's kind of central Mato Grosso, so I hadn't been to Brazil since before, you know, selling Hawkeye.
So just hadn't traveled a lot and wanted to do that, back to seeing the egg there. So we made 11 trips down there ahead of this trip that I think was really beneficial and in the thought process. So we met with a lot of larger farmers, went from Bahia to Tocatins to Mato Grosso, and Had a couple of people that I respected. One was Dave Vandegren from ICM. He said, “Go to Double Crop Area Mato Grosso, and I'll build an ethanol plant with you guys down there. It's gonna happen.” I asked Sam Allen from John Deere one night, evening, at an event, I saw him. “So if you're gonna invest in the world, where would you invest?” And he talked about Brazil, an area of Mexico, high plateau that raises corn, or the U.S. and then he talked about Brazil and actually named Lucas Real Verde that I had never heard of when he said that, that they embrace U.S. technology and can do it over a large scale and believe second crop was going to grow. So when we went there to give some advice or look at investing on sunflower oil processing because there were sunflowers being raised in that area now where corn is. When I saw the sunflowers and, you know, I'm not a genius on genetics, but it's like, why wouldn't they raise corn? It doesn't quit raining until early May. Why aren't they raising second-crop corn?
And so on one of those trips, met Marino Franz, him and his brother had owned a small, or they would turn into a large ag supply company called Fia Grill. And they had traveled the U.S. as so many Brazilians had. And I kept saying, “Has anybody thought about a corn ethanol plant?”
And literally, I had people tell me, “Quit talking about that. That's crazy.” And I met Marino's brother, Paul, and Paul says, “You need to meet Marino. He's gone to the US. He believes second crop corn is going to grow here and corn ethanol works here,” because they had toured corn ethanol plants.
So Matt Marino, We partnered with them. We're the 75 percent owner of FS in our fund. They own 25%. It's very forward-thinking. He was mayor of the year in Brazil for Lucas Growing. Get this, a town of 500 in 1981. It's 90,000 today.
Brian Kearney: Geez.
Bruce Rastetter: It's one of the ag boom towns. So they brought like Brazil foods there. South America's largest feed mill is there. They have a chicken pork plant. ADM, Cargobungi, John Deere, everybody is there and when 2017, they raised about 12 million metric tons of corn in Mato Grosso. Last year, they raised 55 million metric tons of corn.
Brian Kearney: Wow.
Bruce Rastetter: And so clearly the genetics getting shorter from days to harvest, from planting to harvest. Soybeans has allowed them to do that. And they raise the same soybean yields that we do are better at Summit. Today, they're raising 110, 120 bushel corn. I believe they'll raise 180 in a few years. And it's the cheapest corn on the planet. And what worries me for the U.S. and did at the time is they can produce corn $2 a bushel cheaper than we can at Summit.
Brian Kearney: Wow.
Bruce Rastetter: So, when I talk to farmer groups and talking to you now, I'd suggest that the way we compete in the U.S. is with value-added, processing more of what we have, and the best way to do that is through biofuels because corn drives all commodity prices. And it's driven all farm income because of ethanol.
And we can continue that with the efficiency of these plants, with the U.S. farmer doesn't have a problem anymore producing enough corn. We don't have to worry about shortages. We have to worry about what we're going to do with it. In particular, Brian, when Brazil surpassed the U.S. in corn exports last year, like more than a decade ago they did in soybeans, never to be recaptured. And I personally believe that we will never recapture either one of these going forward because of Brazil's ability to produce. So we need to create value-added here, our farm economies to be better. That's why we're so serious and intent on Summit Carbon Solutions.
Every 1 of our 57 ethanol plants on the average will grow 25% when we get this pipe in the ground, and corn below the cost of production in the Midwest with John Deere, Kinsey, others laying people off because farmers aren't buying tractors and combines and everything else. We need more domestic demand as we have larger and larger carry-outs each year. So that's kind of the view on, you know, we stumbled on the right guy. I didn't go to Iowa State. I went to Iowa. So I always say that on the ag side. But it was clear. If they can raise second crop cotton and second crop corn, and I stood in a bean field, there was 120 some days planning to harvest hybrid, 5 years before that was 90 days that when I'm standing there watching combines. So, if you cut 30 days off that, and you can cut days off the corn varieties, it was just natural. They're going to produce a lot of corn. And they will become better and better corn farmers, just like the U.S. loves producing corn, right? It's much more fun than soybeans and it's more profitable long term.
And we've gotten really good at it. Well, all those genetic companies are in Brazil. The same planter that we use from John Deere, the high-speed planter, that can plant 75 acres an hour, can plant a whole lot more than that in fields that are three miles long.
And so the opportunity for them to continue to grow is there. So the Brazil and the U.S. will supply the majority of the world's food going forward, in my view, and energy produced through crops.
Brian Kearney: Yeah. But it sounds like even with all of that, you still believe supply chain will come back and you still seem pretty bullish on U.S. agriculture. Is part of that the sustainable jet fuels and that side or what plays into that?
Bruce Rastetter: Yeah, it is. And I think, clearly, you know, sometimes in ag, and in particular in the U.S., we resist change. And because we have that generational issue for new things. And frankly, we entered the market in working with farmers on the pipeline easements at probably the worst time in the world for going out and wanting to give farmers checks because we had 620 corn and we had record land values and everybody was feeling pretty good. Now, we have 380 corn when it costs most people around 5 bucks to produce it. We have larger carry-outs and we have an ethanol industry that's not growing, but we're raising more corn and Brazil overtook us on exports. So my worry is really twofold. We are on the edge in the U.S. of going to another farm crisis if we don't expand value-added markets. So Brazil is going to keep producing more corn.
And they're, you know, in particular with some of the world situations with China, China continues to go there for corn and soybeans. So, in a greater way, still buy stuff from the U.S., but we know Brazil has filled that production ability. So, when the IRA came out, it incentivized SAF, Sustainable Aviation Fuel, and you have every major airline in the world say that they want to go to 50% SAF, and they want to lower their carbon scores in jet fuel. And we have a 15 billion gallon U.S. ethanol market, but we'd have an 88 billion gallon potential SAAF market. The opportunity is there, but not a single gallon of ethanol other than a couple of small plants, a small plant in North Dakota, can qualify today for sustainable aviation fuel. If our pipeline succeeds, and it will, we will have 8 billion gallons of U.S. ethanol qualified for jet fuel that those plants will grow because it's a higher value market, as we have a shrinking combustion engine market. And we will export U.S. ethanol around the world to countries that are demanding sustainability. So one of the challenges and frustrations I have is we have the Sierra Club oppose us and we have farmers that don't like government tax credit programs or climate change fighting us. It's like this isn't about climate change, although I think it will help.
Brian Kearney: Yeah.
Bruce Rastetter: It is about creating new markets in agriculture like we always have. It is about lowering carbon scores so those ethanol plants can sell to high-value markets and in low oil prices, make an extra 30, 40 cents a gallon and pay farmers an extra dollar bushel of corn and keep those plants running. So today I'd love to have an extra dollar a bushel of corn, the corn that I didn't market very well at Summit.
But we have to embrace new markets. And the thing, Brian, just a little philosophy of mine, when we try to articulate this, it's no different than what Ag has always done. And how do you produce more with less? So how do you produce more bushels of corn per acre with less inputs? How do you produce more pork at a two and a half to one feed conversion instead of five pounds of grain to one? How do you–same thing on beef, chicken. We know that American agriculture has done that through embracing science technology, lowering our costs. Ultimately, the world consumers have benefited at an abundance of food, now energy, and we're not any longer dependent upon government subsidies other than crop insurance. Because the free market has driven farm profitability because of actual farm income.
And this year we don't have farm income like where anyone would want it compared to two years ago. We have an industry on the edge if we don't develop new markets, but to me, that whole producing more with less, they call it reducing today, you know, some genius. I always give credit to Harvard, had to be somebody from there, calling the word carbon reduction. It's not, yeah, we've been doing carbon reduction in agriculture since we threw the horses out. The horses used to eat a third of the crop to produce the energy to do the crop, right, to plant it and harvest it. And so farmers through new genetics, new technology, new farming practices, through all the efforts over the decades have produced more with glass and lowered carbon scores, but they did it because it cost less and they made more money and the outgrowth of that was sustainability. This Summit Carbon Solution project is taking and increasing the value of the corn kernel by capturing CO2 that's being emitted in the atmosphere, lowering the carbon score of the biofuel that allows higher blends in the combustion engine, allows exports, and allows jet fuel to happen that won't happen. So, to me, we haven't done as good a job as articulating that, and frankly, should have been talking to more guys like you that want to hear the story and have an audience that does, and so we're working hard to do that.
But the U. S. agriculture, I think, depends upon responding to world markets. We can have all these people, the Soybean Association, corn growers, take junkets everywhere around the world, trying to market a little more bushels, or we can add value to the existing product that we have and create high-quality jobs in the U.S. So that's what we're trying to do, and that's what we intend to do.
Brian Kearney: Yeah, and there's a lot of negative press, but I don't see as much about the actual–yeah, yeah, I'm sure you've heard a little bit about it. But you don't actually hear about, really, the leases seem, from my research, very farmer-friendly. It seems like there's actually been a lot of buy-in from the industry. It's just a vocal minority that does not like it. Can you talk a little bit more about that side as well?
Bruce Rastetter: Yeah, I think, and that's been the unfortunate part, and I think it always is sometimes in rural America. Where the negative minority stops good projects. So, we've seen it in growing up here on, you know, hog buildings were controversial for a while. You don't hear a lot about them. It's a good thing those
people didn't win, that wanted to stop all that, in particular in Iowa. But I think when we think about this project, the untold story is we have 75% voluntary easements on 2,000, 2,200 miles of pipeline. In North Dakota, we have approaching 85% voluntary easements, but across the system, it's 75. In Iowa, there are 44,000 miles of pipeline under this state, all privately owned, for profit pipelines that operated under the law we're operating under that allows eminent domain. But we have more voluntary easements working with farmers than any other pipeline has in history. And that 75% number and also we have a farmer-friendly easement because we farm. We understand tile. There's a lot of tile throughout the system and there's more and more happening in South Dakota and North Dakota as well and so, pretty simple things and that we ensure that tile for the life of the project within that easement that we'll come and fix. Most pipeline companies have three to five years. If we do this right, why wouldn't we just say we'll fix it forever?
So we put that in our easement. When Dakota Access came through, it was a wet fall, challenging on going through Central Iowa, North Central Iowa in wet weather, and so Iowa passed the soil restoration law that Iowa State helps with, that the utility board can require pipeline companies to do. But we put it in our easement day one.
Basically, what it is, you push the black to one side, the clay to the other, you put them back as you found them, and you make sure that you chisel plow so there's no soil compaction until there is none, and you test for it. And the majority of our system is going to be a 6, 8, and 10-inch pipe. Dakota Access was a 30-inch pipe. In Northwest Iowa, we have a 23-inch mainline pipe that goes up through South Dakota and North Dakota as it captures Iowa's volume, but the lines, you know, we had some and a lot of farmers put in 10, 12-inch county–
Brian Kearney: Right.
Bruce Rastetter: Pile [...] right? But this is smaller than that. And so that part, the story doesn't get told. Some of the politicians that oppose us, I'm like, “If you had a 75% vote of everyone agreeing with you,” you know, we write checks to these people, right?
And we're not stealing any property, which is getting stalled. Even if we have to use eminent domain, which we're going to try really hard not to, it's going to be the same easement. We're going to pay farmers well, like we have.
Brian Kearney: Mm-Hmm.
Bruce Rastetter: And we're going to treat their land with respect. And we're going to increase the value of the corn and soybeans that they're raising above that pipe because they won't even know it's there a few years later. So, to me, and it's the only pipeline built in the history of the Midwest that's going to directly benefit agriculture. There's a lot of indirect benefits of the oil gas pipeline, right? We believe in infrastructure in this state. The natural gas lines, our cities, communities need it, but it's an indirect benefit. A gas line that's under some of the property we own hauling gasoline is indirect benefit, but we need that infrastructure.
So this pipeline will help improve the local market of every ethanol plant. And allow them to grow and respond to world markets. So that part gets a little frustrating for us, but we've worked really hard at telling that number because it's important. It's back to if a politician had 75% in favor, 25% he hadn't signed, he'd feel a pretty successful day. And also putting in those same easements of what I've signed. Because I'm going to live here. I want farmers knowing that we did the best job possible and treated their land well, and with respect, and we're doing that. The other part that we get beat up on is we have Chinese ownership, and no, we do not. We do have an investment from SK, South Korean public company, who's well respected. And last I looked, the U.S. Like South Korea, we, a lot of Iowans have sacrificed, you know, uncles and aunts and family members to make that one of the great democracies in the world. So, those are some of the things that get frustrating.
The safety side, just to address that while we're talking, is that there has never been a death or anyone ever been admitted to the hospital from a CO2 leak. And that story gets told in a much different way by the detractors at the Tarsus Mississippi accident in which there were 33 people went to the hospital.
They said, okay, you know, checked them out. They didn't get admitted. No one died. And it was an old pipe and it was also carrying sulfur dioxide as well. So, it wasn't pure CO2 like what we have. We know that if there's an accident, what happens on the dispersion, if there's a total break, you could stand within that 150 foot for 8 hours and survive, and it's not going to be happening that way because the pipeline would be shut down with all the technology on it.
But today that CO2 is being released into the atmosphere and the safety precautions, the heavy wall pipe, you know, all ensure safety. North Dakota has a CO2 pipeline that's been there for 25 years.
Never a problem. So those examples exist. It's the safest form of transportation, and so that's some of the also random views. You didn't ask that question on safety, but we might as well talk about it because we need to
Brian Kearney: That was next. Yeah, I appreciate you diving into that. I also have a few questions about starting out cold calling. And then I want to know a little bit about what you see is next after ethanol because you've kind of been at the front end of a few of these different transitions, but before we get to that, can we talk a little bit, for our farmer audience, about the 45Q, 45Z? Those are very important for farmers to know about.
Bruce Rastetter: Yeah, so the 45Q is a tax credit that pays 85 a ton for each ton of CO2 directly sequestered. And we're going to do direct sequestration, not enhanced oil recovery sequestration. We have currently partnered with Minn Kota, the large coal energy plant in the, just short of the Balkans area near Bismarck to develop their class 6 well, it's one of three or four in the U.S., to directly sequester. We have 200,000 acres signed up with ranchers and farmers in that area. In which our CO2 will be stored underground 5- 6,000 feet beneath their ground that we pay them a lease arrangement on so that that part is, you know, it's one of the untold stories of, you know, literally hundreds of farmers ranchers that have signed that those easements with us in North Dakota, and North Dakota has studied that geology for decades and know it's safely safe to do. So that's where it ends up at, and what it does then is the 45Q tax credit helps pay for the infrastructure to make that happen. So it's a tax credit. So you actually have to spend the money on the project to get the tax credit compared to Europe has a carbon tax that penalizes you if you don't lower the carbon score. So I think, when I think about whether historically the wind tax credit, the blenders credit that helped develop ethanol, you know, this is no different and we would be planning our financing around that that's 12 years and wouldn't be extended at the end. It may be, but our view is that's helped build an industry and get this done. And the 45Z tax credit that came later incentivizes on a per-point basis, lowering carbon scores like with biofuels and also on farm. The rules are yet to be decided.
So my view of what is really important for farmers is local expansion of value added. We know our ethanol plants will make more money, they have a history of expanding, and they are asking for space in the pipeline to expand so that they can invest those dollars, grow their plant, consume more corn. Pine Lake Processors, near where I'm sitting, has announced they will double a 90 million-gallon plant the day we get our permits. They will begin that process. They're already doing some work, dirtwork engineering, but that single plant will consume 33 more million bushel of corn than they do today when that happens. So that's real and creates a local market and then the 45Z on farm that incentivizes practices, as you're aware, on planting cover crops or injecting manure or minimum till and then rewards higher yield with lower nitrogen use. And those basic four or five practices would allow farmers to get credit for practice that it improves soil health, the environment, and lower the carbon score and we've looked at it with some of the companies that are out there for our farming operation. If you did a number of those and you had high yields, you could actually gain up to 75 cents a bushel.
That could be split with the ethanol plant. So my vision of ag would be once the pipelines in the ground and the ethanol plants lower their carbon score to qualify for sustainable aviation fuel. They're all, they all and they're already talking about it and working on it, would have programs for their farmers that are currently selling them corn, keep track of your carbon score.
We'll pay you more for lower carbon score. So we can take these plants to a 20, 15, 20, 25, 15 to 25, depending on the plant. And the farmers working and getting incentivized on that can take those plants to net zero. So it doesn't have to be life after biofuels, life after ethanol. You can go to net zero, even net negative liquid fuels, that there's no reason to go to electric vehicles.
Because we'll have a lower carbon score in agriculture than electric vehicles do. And, but that's the opportunity for more farm income. If you think about 30 cents a bushel to a farmer on 200 bushel corn, it's an extra 60 bucks an acre. How great would that be? Plus, his local basis changes because that ethanol plant has grown. It's like Pine Lake. Hardin County only produces 47 million bushel that's already being consumed by the ethanol plants here. They're going to add another 33 million to it. So that part is pretty exciting to me. It allow the plants to continue and invest in technology, whether it's corn oil, having a lower carbon score to go into renewable diesel, or their DDGs having lower carbon scores that can help make a net zero pork product.
I mean, the opportunity for all the auxiliary industries to meet new markets around the world. Will be accelerated if these things happen. If they don't, the worry is we have a shrinking market, increasing corn production. That's not any fun.
Brian Kearney: Right. This has been a really great conversation, Bruce. I appreciate the time. I do want to be very aware of your time. You've got a lot going on with everything you're managing. But I do want to ask you two last final questions. And the first one is, after this, ethanol market and sustainable jet fuels and low-carbon fuels, what do you see as the next big thing? Or are you just focusing on this? And you'll think about that after this pipeline's done?
Bruce Rastetter: Yeah, I would not have thought when we had the hog company that we build an ethanol plant and [...] And I think life is really interesting if you surround yourself with good people and your network is with people that are best in industry. And, whether it's ICM or, you know, a good friend is Harry Stein that has done pretty well in genetics and help and expand that world for everyone.
So I think the going from pigs to ethanol to Brazil to a vital wheat gluten plant in Kansas, it took five years to try and find the location and develop that. And we don't do a lot of projects. We try to do these that we believe will make a difference and proven technology. We don't believe in trying to be an early edge on projects, but believe in proven technology and then putting capital around it and hiring good management teams. So we've got a lot in front of us on the pipeline and the importance of that tag can't be understated. And we will continue to have a terrific company in Brazil, and we announced an SAF Plant Summit Next Gen in Houston in partnership with Honeywell on their technology. So the opportunity in that industry will continue to grow.
So we'll just see, Brian, not to make a long answer out of that. I don't know. I've never known. And, to me, that's one of the neat things about life. You know, tell young people, go to a lot of dinners, talk to a lot of people, meet new people, and you'll learn new things, and someone will have a great idea that you can partner with, and so we try and live by that and do that. So, I wish I knew, and hopefully, it won't be as many headaches as on the carbon project is.
Brian Kearney: Yeah. And then the last question, and then I'll let you get back to all of the work getting this pipeline in for all of our farmers. But last question is, very selfish question personally, is if you were a young entrepreneur again, what advice would you want to be given that you know now and you didn't know then?
Bruce Rastetter: Yeah, I think one of the challenge for young entrepreneurs is to be patient and because it, you know, people want to have success right away. And I think we all do and you. You want to continue to believe your next project will be a better project and make an impact more than your last one. But I think the advice I give is just be really open and transparent with everyone you work with. And whether it's lenders, your partners, and it's kind of like young people, you become whom you hang around, and be with people that want to make a difference. And then, don't get greedy, but partner with them to help develop things, and do that.
And I think along the way, if you sort through people, it just becomes a wonderful world. It really does. It's not perfect, and there's, you're not going to be happy every day, and there's going to be headaches. But especially in ag, you need that because the commodity swings and the challenge is so much harder.
And whether it's weather or crops or tariffs or technology that doesn't work, we've got to be careful with that. But the opportunity there is for young entrepreneurs that are smarter, better, more technically savvy than I've ever been to surround themselves with common sense business people that wanna do things. So that would be my advice. Go to a lot of dinners, meet a lot of people, and don't become a professional conference goer. Meet with people that are actually doing things, and you'll pick up so many things when that happens.
Brian Kearney: Well, Bruce, thank you for the time. It has been a great conversation. I loved learning a little bit more about what you're doing. And if there's ever anything we can do to help you, let me know. I'll be telling every farmer I know about the pipeline.
Bruce Rastetter: Alright, and happy to have another segment with you, and good luck with everything you're doing, Brian.
Brian Kearney: Thank you.
And that’s a wrap on this episode of The Land Ledger.
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