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[MUSIC PLAYING] TODD SCHMIT: So we're going to bring the grad student team up. They were a team of seven but split into two subgroups, so they're going to do a combined pitch of their efforts. I've got six of them here, anyways, so I will open this up. And let's hear about another co-op development opportunity.
SPEAKER 1: Hi, so we will be presenting about solar-grazing sheep covered in this assessment. We are two teams-- needs assessments and financial feasibility [INAUDIBLE] space, so this is our team. [INAUDIBLE]
We'll be talking about the project overview and then needs assessment part, and then the financial feasibility part. And then we combined the insights together and what we found while doing this assessment, and then the next steps.
SPEAKER 2: Sorry this didn't get updated for this by the time it was downloaded. We'll send you an updated one. But just as a quick background-- and I think EDF Renewables did a nice job giving context to this. But the US wants 30% of its electricity generation to be solar powered by 2030, and New York City, specifically, has agreed to make it 50% of its electricity generation. So that's one of the reasons you'll see a lot more solar installations, even around here.
In order to have that, you have, now, thousands of acres that are becoming solar sites, but you have to maintain those sites. And so the more vegetation grows, the more shadowed they get, the less efficient it is. And right now, people are paying anywhere from $500 to $1,000 an acre for someone to come in and mow it.
And so it makes a nice market opportunity for people. I think EDF Renewables mentioned sheep and vegetation-- vegetable production, and also cattle. And this one focuses on sheep because a lot of these solar arrays are mounted lower to the ground. And so they're harder to reach for machinery, but also, makes sheep a perfect option for grazing it. And it's also-- instead of paying someone for your sheep to graze on their land, you're getting paid to bring your sheep to them.
SPEAKER 1: So there's a lot of hype in the industry on the solar panel side, and also to the sheep-- the shepherd side. And this is where Cornell comes in. Cornell received a New Dawn for Shepherds-- Grazing Sheep Under Its Utility Solar Arrays. This is the title of the grant.
SPEAKER 3: That's Bobby's title.
SPEAKER 1: Thank you, Bobby, for a wonderful title. So this is a USDA federal state marketing [INAUDIBLE] program grant. And it's a three-year project, and this is the first year of the project. The objective is to explore the development of solar arrays cooperatives that meet emerging energy needs, while optimizing agricultural benefits for local farmers in New York State and the surrounding area.
Like I said, there's two graduate research team-- the needs assessment team and the financial feasibility team. Supervisor-- both Todd and Bobby helped us out. And then the project advisory team of the project is the ASGA-- American Sheep Grazers Association.
To do this assessment, we considered several models-- what the co-op could [? be. ?] And there are variety of ways to do this, starting from contract negotiations. Shepherds have difficult times negotiating with solar array companies-- what would be in the contract, what should the outline look like. So if a co-op could help that out, it could be helpful.
Another one is [? modelization ?] model. So if the trucks to transport the sheep can be shared within the cooperative members, it could be helpful. And another one is shepherding and site development model, which is having shepherding services-- so having someone watch over the sheep while the sheep are grazing the sites could be helpful to make it into a cooperative. So those are the three models that we looked into for this model.
But there could be, also, in the future, processing and coordination, having marketing together, and also, doing both processing and marketing within this cooperative. So these are the models that could evolve into. But for now, we chose the first three because this is the ones that we will-- the shepherds will need in the beginning of their business.
SPEAKER 2: So that takes us over to the needs assessment team, which was to [? Sumiere ?] Teddy, [? Joseph, ?] and myself. And our main deliverable was developing a survey that could hit those three models that [? Sumi ?] just talked about, but also give a little bit of an inclination as to what potential needs or interests might be so that it can be accounted for in the structure. Thank you, [? Sumi. ?]
So we started with some background. Who's doing this? Where are they doing it? How is it working?
There's three case studies specifically that we looked at-- two that are happening in New York State on large-scale utility solar sites that are over 1,000 acres each. And also, we looked in Colorado, where sheep farming looks quite a bit different but where they also have a cooperative to do something, to see what similarities were between the two.
After we did more of our literature review and looking at case studies, we started talking to sheep farmers and people in the area who are interested in this or are already doing this. And so, in this case, the advisory team, as a part of the grant, which is made up of extension associates as well as people in the industry now-- for solar grazing right here in New York State, they were super integral to understanding these nuances more.
And they also made us very aware of the heterogeneity we were entering in on before a cooperative was even developed. And so that was a challenge from a survey design perspective to be able to capture all of that in a single survey or even a few simple questions. And it really, I would say, made us aware of more of the needs and the diversity of needs than we were anticipating.
And so, if we go to the next slide, this is an overview of all the categories that are actually in the survey. We have the disclosure and then more of the demographics to get an idea, because this would be going to current and potential farmers-- potential sheep farmers, but also people who might already have sheep but are interested in expanding their enterprise and doing more with solar grazing, specifically.
So I think I mentioned, previously, that there will be thousands more acres of solar site installations going up. You need about three sheep per acre. And so I think one of the researchers found we're going to need more than 200,000 sheep if we want to transition these sites to solar arrays, which means we need these farmers to expand, and we need to know what that will look like to help them make that happen.
And so these are more of the issues that [? Sumi ?] talked about, too, that are included in those three models, but also that we're pulled apart further through the literature review process and our personal interviews with farmers in the area. So here's a quick capture of the who, what, where, when, which I briefly mentioned and [? Sumi ?] also talked about.
So I think I'll skim over this to the next one, which is-- originally, this was meant to be designed as a purely electronic survey. It's supposed to be 15 to 20 minutes. Our testing shows it's sitting right at 15 to 20, which is perfect.
All the questions are optional because this helped us streamline IRB approval just a little bit. And then, also, there's a lot of multiple choice in it because it's much more click-friendly and it reduces the chance of survey fatigue. So there are a variety in here, but it emphasizes that and then sets us up, hopefully, for focus group discussions in the future.
This is a bit of an overview of our process. And the thing I'd like to highlight with the development is this was a highly interactive and iterative process. And the entire grant and project itself is built around a lot of participatory research methods. And this is a great example of that at play, where we were working with both Todd and Bobby and other people in our group, but also people on the advisory team to get their feedback and troubleshoot it, redo it, send it back, and update it, and then, ultimately, test it.
It's close to ready for being delivered. And so I won't spend a lot of time on this because that would be this summer, hopefully. But-- sorry, one final note on the delivery and feedback we received from stakeholders was that it's not enough to just have electronic. There are a lot of farmers in this area who are not necessarily super connected, whether through email, or they might be part of communities that don't use technology but also are sheep farmers. And so we're proposing an alternative method and delivery mode for that as well in our final report.
SPEAKER 4: So in this part, we are going to show you the financial feasibility of forming a cooperative. Especially, we'll show you the cost-- transaction cost saving function of cooperative. And in this agenda, we will show you the underlying market assumption first, and then we'll show you the three models we focus on. And then we will show you the components of each model.
[? I make ?] this assumption-- including solar farm market, solar grazing, market and marketing segmentation. So in the solar farm market, the capacity is steady to grow 20% CAGR over the next five years and 40% CAGR over the next nine years. The project date New York state's solar capacity in 2030 is 10.6 [INAUDIBLE].
And only 8.4% of New York state's solar farmland is currently sheep grazed, so it's quite low, currently. And the projected solar farm land area graze in 2021 is 1,700 acres. And in the New York state solar sheep grazing industrial value-- at $765,000, reaching over a $1 million value in three years and over $8 million in 15 years. And based on the meeting with our clients and based on the data [INAUDIBLE], we are still-- that the average price for solar sheep grazing is $400 per, acre and the stocking rate is three sheep per acre.
And here is the contract negotiations scenario. We know that the contract negotiation is a long process. So we need to divide it into several stages.
So in the business operation foundation, the back office labor support, including for [? formation ?] and operation of co-op-- we know that, when we try to negotiate with each other, we need to know who to negotiate and what is the goal. So we need to-- the labor and personnel includes logistics supervisors, member relation representative, contract specialist, and so on.
And when we prepare for the negotiation, to come up, we will have economies of scale with complicated sheep farmers reducing time investment, including time spent searching for a solar farm and time spent serving solar farmland. And in the negotiation stage, there is significant opportunity cost to farmers because co-op will reduce [? back-and-forth ?] harvest of solar farms. And also, a major competitive advantage to farmers joining the co-op is liability insurance-- [INAUDIBLE] the reduction by 25%.
SPEAKER 5: And for mobilization, the most instrumental part would be the actual strategy that take the sheep from farms to solar sites and back. And we have developed three options for it. The first one would be just to outsource it to a third party livestock hauling service. And the benefit of doing that is that we do not really require a really large cash flow or a large capital in front.
And there are some risks related to that. First of all, it could be potentially high cost. And also there would be some uncertain availability since it's not within the co-op. And also, there was just some general risks associated with doing partnership with a [INAUDIBLE] company.
And our second option would be to create a co-op sharing system to allow farmers who already have trucks and trailers to help those who does not, and they could actually gain some compensation profit. And the benefit from that would be that we would utilize the existing sheep' farmers' assets-- their avail abilities and also their expertise. And also, they can actually gain some benefits money-wise. So it's a win-win situation for them.
And the risks would be that, since we're using the trucks and trailers that already existed in farms, we have a really limited quantity of them so that, whenever there are peak seasons and stuff, we probably won't have enough capital to transport those sheep as we needed.
And our third option would be just simply purchase construction trailers as needed. The benefit would obviously be that we already know the demands for trucks and trailers-- that we can purchase the exact amount. And the risk would be-- first of all, we need a huge capital CapEx. We need a lot of investment.
And also, we would need to consider the storage costs in order to have the most balanced cost-benefit. And also, we would add our liabilities as a co-op. So that's a lot of risk associated with that option.
And other major expenses include, first of all-- include labors, gas, maintenance, and capital reinvestment, as well as depreciation. So we have a few assumptions. First of all, all of the fuel expenses are on a per-mileage base. And also, since there are some fluctuations with fuel, especially these days, we need to really consider the risks associated with that for future accurate estimation.
And also, we assume that the costs calculated-- assume some members will have their own transportation, so they really don't need that service from our co-op. And also, we assumed that there would be a peak transportation in the beginning and in the end of the grazing season.
Also, we assume the depreciation rate for all our assets to be eight years, and we use a straight-line method. Last but not least, we do need to consider the storage of purchased trucks and trailers, and that could be done in the future for better accuracy.
For Shepherding Insights Development, there's three major components. First of all is fencing, and we calculated that by an average of three scenarios. The major expenses would be electric fencing and depreciations. And the three scenarios are modeled on a one-acre, two-acre, and five-acre per farm. And the depreciation is mentioned as before.
The current market would-- requires it around $16,000 initial investment. And for shepherding costs, the major expenses would be laborers, travel times, equipment, and depreciation. And since we found out that the farms with lambs is probably twice the cost of the farm without, the shepherding costs would break them down by the presence of lambs and solar farms and the depreciation as before.
So since we can't outsource a lot of the mowing and trimming assumed, we did do some internal analysis for our co-op itself. So the mowing expenses really depends on the numbers and sizes of the farms. Our assumptions include that the rate of mowing would be $60 per hour, and it would need once per grazing season. Also, it would take one hour per acre for the service to be done.
SPEAKER 6: Coming to Insights, the basic idea would be how the farmer or the customer will buy it. So the communication would be crucial to engage with the farmer and make them come to our point.
The second aspect is the biosecurity since there is a chance that different plots of different farmers will be mixed in the grazing area. So what biosecurity protocols you need to follow will be of crucial importance. And even when the transportation services are being shared, there can be a chance of biosecurity breach. And even in the farming area, what time-- how much time should you keep the grazing area free so that the [? parasitic ?] load and other conditions are neutralized that need to be accounted for?
Then come to the balance point-- what are services can be offered by the cooperative at a convenient rate? If there is a bulk of options which can be offered, and if it is going to be on a service subscription-fee basis-- how much can the consumer afford it? So this has to be worked out.
SPEAKER 5: So for the [INAUDIBLE] feasibility team, our first insight is about the market capture. So we've dedicated significant time to marketing grazing benefits and to see how to increase the market capture.
And also, the major expenses is labor. It's a really very intensive service as. So it's really important for us to best size the workforce to have more accuracy assessment. And also, we think it would be really beneficial for the co-op to utilize the assets that the members already have so that we have a really beneficial model for all.
SPEAKER 6: The next steps for the needs assessment will be the distribution of the survey. And once the survey is distributed, we'll be collecting and [? cleaning ?] the data and analyzing the results. Then there will be focus group discussions to develop the action plan and timeline, then the draft questions, and we talk to the potential participants, and collect and synthesize the data. Then, once this is done, we'll do the needs assessment, compare the draft survey to [INAUDIBLE] and compare the [INAUDIBLE] and make the next steps for the cooperative to go ahead.
SPEAKER 5: And for our financial feasibility group, first of all, we need to verify the accuracy of the data that we use for pipelines so we have a more informed and accurate baseline for us to do our prediction. Also, we need to compare the line profits for individual members, rather than the whole co-op. And also, we need to implement some risk analysis for different investments, especially fuels and [INAUDIBLE] materials and stuff.
And we also need to analyze-- better analyze the investment needs for internal mechanical [? training, ?] as well as the investment contributions and the payoff strategy for future. Last but not least, we need to expand the models for the remaining co-op scenarios, as we discussed before, that we have [INAUDIBLE].
SPEAKER 7: OK, one of our deliverable is the communication tool. We have developed a tool to communicate our-- to help achieve our next steps. We developed this tool using ArcGIS Story Maps. So I would ask everyone to scan this code using your phone and see the material before we're going to further documents.
It's coming?
SPEAKER 1: Mm-hmm.
SPEAKER 7: OK, so this is the communication tool the team developed. So the idea is most farmers do not have the time to browse websites or web pages that are overburdened with a lot of information, a lot of text, and even some jargon. So we try to simplify the materials with some key facts and some quotations.
So you have the federal and state level issues. We have why solar grazing is important. This map also shows the areas where the utility scale solar energy is currently developed in the country.
And here comes the projects and the project owners, and then what exactly solar grazing is so the farmer or any audience can easily understand. And this picture is from Caleb's farm-- our previous visit.
So these are some concrete, impact-related information so everybody can understand, for example, the economic and environmental benefits of the grazing. This is a current study regarding the net benefits of grazing sheep under solar panels.
And the need assessment-- this is a major part of our next steps. So this is the entire process. So we ask farmers-- are you a farmer or a potential farmer willing to participate in this process? So if you are so, we value your experience and perspective. So please connect to ASGA and other local resources by sharing information, participating in the surveys and in the focus group discussions. These are the areas that we require key information through the surveys and assessments.
And this is the perceived benefits of establishing solar sheep grazing cooperative. So we have the Finger Lakes region map. And we have put, also, useful links and resources, as the home page can be easily accessed here. This is a [INAUDIBLE] solar grazing plot, and this is a 20-minute YouTube video, which is technically training video of course our grazing farmers. So it's for beginners.
So this, in brief, is our communication tool that we use in the future-- especially our partners. Yeah. Thanks.
TODD SCHMIT: All right.
[APPLAUSE]
Can I talk to you soon? Oh, OK, all right. Is Judy on? Did we lose her?
SPEAKER 5: Yes, she's not here.
TODD SCHMIT: So given the time of the presentation, there is a ton of work. And I don't think they did it justice, as far as how they developed this very comprehensive survey. And one of those things-- if you answer a certain way, you get routed here or routed there, depending on who you are.
Ton of work, vetted with the project advisory team. The financial modeling results are amazing. And it's a template and tool that's going to be used and expanded on after the project. So it was great to work with you guys. So let's give them another hand. Thank you.
[APPLAUSE]
I think I should implement more of my applied research projects into the class and have you guys work on them because those are-- that was great.
OK, wow, well, we have five minutes left. So first of all, thank you all. This was amazing. I know it's a long time to sit through, but you really wowed me with what you presented, particularly in terms of stuff I haven't seen before, since your last progress report.
So really, really great job, everybody. You really pulled together. You worked with your clients. We have somebody who'd like to say something in the back.
SPEAKER 8: Sorry. [INAUDIBLE] me. I'm Linda Barrington. I'm Associate Dean of the College for External Relations. And Todd got me to come to this for the first time. I've learned so much.
But I was taking notes the whole time about how what you guys are doing connects to so many other fascinating parts of our college. So I'm thinking about all this cooperative knowledge-- how do we connect that to our real estate program, where we have cooperative real estate in New York City-- a whole different kind of co-op? Thinking about the [? oyster ?] cooperatives-- how do we connect what that study and what happens is this class to our Food and Beverage Institute and those connections?
So I just am so thrilled to be here, and this was really impressive. So thank you for giving me lots of ideas to take back to the College. And thank you, Todd, for [INAUDIBLE]
TODD SCHMIT: Let's give yourselves on that one.
[APPLAUSE]
Seriously. So before we close, I have some, thank yous, I want to lay out. Bobbie Severson-- my extension associate in the Cooperative Enterprise Program-- was involved with many of you on your project. So we want to thank Bobby for helping us with all of that.
[APPLAUSE]
We also had two fantastic TAs for the semester. We've never done this many projects in a semester. So they were kept busy as well. So I'd like us to give a hand for [? Anastasia ?] and Connor.
[APPLAUSE]
And certainly a big round of applause for all of the clients that worked with you that are still online-- hopefully some of them-- to give them a really big round of, thanks, for all of them.
[APPLAUSE]
So finally, I just want to thank all of you. As I said on day one, I like teaching this class, so I get to learn, as well as, hopefully, I teach you a few things. I certainly learned a lot in your interactions in class, and particularly with these engaged learning projects with clients.
So it was an honor to work with all of you this semester. For those that are graduating, good luck. For those that aren't graduating and you want to be a teaching assistant for engaged learning projects, let me know. All right, so big round of applause for all of you.
[APPLAUSE]
You are released. Thank you.
[MUSIC PLAYING]
Part of the Grand Challenges curriculum, Cooperative Business Management (AEM3260/5260) focuses on engaged learning with community and cooperative clients.
In May of 2022, ten student project teams presented the results of their semester-long work with community partners. Professor Todd Schmit evaluates.
Project title : Solar sheep cooperative developmentCommunity Partner : Teddy Abera, Michelle Corio, Sumire Doit, Jyothis Joy MazhuvancheryStudent Team : Jessica Felde, Bin Huang, Summer Li
