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Plop Swap

A fledgling Vermont company strikes a deal between ag and the environment


Published November 29, 2006 at 2:48 p.m.

To hear Jeffrey Frost tell it, AgRefresh is one of those can't-fail business concepts that's also perfectly congruent with Vermont values and traditions. An entrepreneur who arrived in Burlington from Los Angeles nearly 20 years ago, Frost came equipped with a repertoire of stylish marketing moves. For example, he dubs himself a "farm ecology broker," although his actual title is general manager of AgRefresh, the latest in a long line of companies he has sired.

Frost's big idea this time around is to "monetize the environmental benefits of farm-based renewable energy." AgRefresh aims to achieve that outcome by selling shares in manure-to-electricity projects on farms in Vermont and around the country. In accordance with its ambitious mission, AgRefresh simultaneously hopes to leverage incremental reductions in the greenhouse gases that cause global warming.

Oh, and by the way, it also seeks to resuscitate Vermont's agriculture economy, thereby saving the state from the ravages of suburban development.

AgRefresh was founded two years ago as an expression of Frost's "passion in life," which is to help ensure that planetary meltdown does not become an inevitability. In a strategic move, he selected two Vermont dairy farms - Foster Brothers in Middlebury and Jasper Hill in Greensboro - to be the company's owners. Because AgRefresh packages a product that Frost has trademarked "Pure Farm Energy," it seemed smart, he says, for the company to be controlled and promoted by real-live dairy farmers rather than by a suit from the Coast.

Finding partners - who could potentially receive up to $50,000 or more a year from share sales - has been a focus of the firm's initial efforts. To qualify for proceeds, farms have to be equipped with anaerobic digesters, the gizmo that converts cow plop into kilowatts. Besides producing a renewable form of energy, the digesters reduce the amount of methane discharged from manure pits. Methane ranks as the second leading greenhouse gas, after carbon dioxide, and has 23 times the potency of CO2 as a contributor to the warming effect, Frost says.

AgRefresh currently has partner arrangements with two farms in Washington State, one in Wisconsin and one in Vermont - Clark Hinsdale Jr.'s Nordic Farms in Charlotte. Frost says another Vermont dairy operation is about to sign up. And several more will follow, he predicts, as the bio-digester technology becomes more affordable for smaller-scale farms.

Where does the money come from? The firm is selling shares of Pure Farm Energy to companies interested in compensating for their own "carbon footprint." By paying to help sustain manure-to-power projects on dairy farms, which account for about a third of methane emissions in the United States, corporations can, in effect, offset the discharges from their own heating, cooling and transportation systems, Frost explains.

That amounts to a double whammy of environmental benefits.

Buyers of shares in Pure Farm Energy will come in two varieties, Frost says - "those who want to change the world and those who want a good public profile."

Both kinds of businesses will prove increasingly responsive when AgRefresh presents them with its prospectus, suggests Mateo Kehler, co-owner of Jasper Hill Farm and of AgRefresh. "Particularly with the geopolitical reality we've been seeing develop in the last few years, more and more people are willing to invest in farm-based energy," Kehler observes.

In countries that have signed the Kyoto Accord to combat global warming, eco-exchanges of the kind AgRefresh envisions are already taking shape, Frost points out. With 23,000 bio-digesters operating today in Germany- compared to about 150 in the United States - farmers and investors in some parts of Europe are building a model that many more Americans will eventually be compelled to adopt, Frost asserts. The United States, virtually alone among rich countries, has refused to sign the Kyoto agreement.

"There's getting to be a lot of pressure on polluters in this country," Frost says. "The tradeoffs we're promoting are voluntary today, but they could become mandatory tomorrow." Indeed, Frost foresees that "in five to 10 years, energy will be as big a source of cash flow for the ag sector as food production."

That's hundreds of billions of dollars?

"That's right," Frost affirms.

AgRefresh would thus appear to be setting a course toward a greener future. Trouble is, Frost has yet to sell any shares in Pure Farm Energy.

AgRefresh initially approached the academic market, thinking it could capitalize on the growing movement on some campuses to lessen the impact of global warming. That tack didn't succeed, says Kyle Jongerden, AgRefresh's marketing maven.

Jongerden has since been "cold-calling" companies in Vermont and other states, but none of these solicitations has yielded a positive result. A 22-year-old graduate of the University of Vermont, Jongerden recently switched from a salaried to a commissioned basis with AgRefresh. A U.S. Department of Agriculture grant that helped launch the business is about to expire. "The well is dry," Jongerden noted in a telephone interview from Utah, where he is working as a bellhop at a ski resort.

While insisting that AgRefresh is sure to succeed, Frost acknowledges that his startups have all "crashed" in the past. This latest venture faces competition from what Frost estimates are half a dozen better-established organizations around the country selling "renewable energy certificates" and similar investment instruments. His own company's approach will prove far more effective in reducing greenhouse gas emissions, Frost maintains - though it's not clear that the world will get to find out whether he's right.

On the upside, AgRefresh has situated itself in a business environment where companies of its kind typically enjoy favored treatment. "It's just so easy to operate in Vermont," Frost says. "The utilities are receptive, and the regulatory community is doing everything it can to support this kind of thing."

For example, Vermont has established a Clean Energy Development Fund that is making hundreds of thousands of dollars available to farms which lack the capital to install bio-digesters and similar technologies. Central Vermont Public Service, the state's largest utility, has meanwhile pioneered a way of rewarding farmers for producing power from renewable sources. Hundreds of Central Vermont's customers have been paying a premium for their electricity through the utility's 2-year-old Cow Power program.

AgRefresh isn't only about altruism, says Kehler, who with his brother Andy makes five varieties of cheeses from the milk produced by their 40 Ayreshires. "Our mission is to create models that will help farms retain value at the farm gate," Kehler says. "Energy fits into that model."

Kehler says he views AgRe- fresh as just as important in its economic aspects as in its environmental aims. "I see this as a way of responding to the threat facing Vermont's agricultural economy," Kehler says. "The commodity milk pricing system will no longer support a working landscape in our state. And in order to save what I consider the most beautiful place on the planet from suburban development, we need a viable agricultural economy. AgRefresh can contribute to that - maybe in a big way."