July 5, 2005
I am writing to give my views on bringing a potential pulp mill into Marengo County. First, I would like to say that as a landowner who spends more than half his time in Marengo County year around, I would love to see an industry with an investment of $500 million and 350 to 500 jobs come to Linden. This would be a big boost to a county that very badly needs more high paying jobs.
After saying this, I feel that it is very important to get the right industry. This is an industry that is experimental, uses a form of bamboo (which is an invasive plant) and could be very detrimental to the landowner, the farmer, and the forest industry.
First, let's start with the landowner. The landowner has been promised $400/acre for the first two years while the bamboo-like plant gets into production. The Company could just as easily have offered the landowner $1,000/acre because they put up nothing and it is up to the farmers to establish a co-op which would borrow the money and then as a member of the co-op, the landowner would have to pay back all the money he has borrowed. Good deal for the Company -very bad deal for the landowner.
Not only does he go into very large debt very early, he stands to lose his property from two ways. The industry is not going to guarantee any lease payments, only 50% of the profits -- so no profits no money. Remember, this is experimental and uses an invasive plant for its product to make pulp. Now we get to the most dangerous part of the puzzle. What happens if this plant moves all over the place as an invasive plant will do? It's not like [kudzu] or [cogon] grass. The landowner has made a considered choice to plant the crop. Once you have done this, then you are responsible for its effect on your neighbors and anywhere else it invades. The bamboo industry has said they will not indemnify the landowner so there you stand left out in the cold. Remember, the tobacco and asbestos and lead paint industries. Remember the class action lawsuits that came out of those products? It should start dawning on the landowner why the bamboo industry will not indemnify. The reason is, such a happening could bankrupt even the largest landowner in Marengo.
Now lets talk about the profits. At its second meeting, they had a pro forma chart that showed the landowner could make $200/acre. One of the items was planting costs. The chart showed those costs to be $20/acre. Well, a farmer stood up and stated that a farmer could not move his equipment onto the property for $20/acre. I plant fields for hunting and they cannot be planted for less than $100/acre on the conservative side. Transportation costs were listed for $20/acre. This was also stated to be grossly understated. It was interesting to note that the highest cost of $75/acre was a reserve for removing the plant after the 30 year period which was the length of time the landowner was going to tie up his land with no assurance that he would receive one dollar during that period. If you figure $75/acre for 30,000 acres at 5%, they will have amassed $160 million to get rid of a crop that they say can be sprayed away with Round-up. This should cost less than $100/acre. If you take 30,000 times $100 you get $3,000,000. I seem to have gotten lost here.
On the income side, they stated that the cousins of bamboo would produce 40 dry tons/acre. Well, a gentleman representing Auburn stated they have been growing the same product for six years and the yield went from 2½%, 6, 16 to a high of 26 tons/acre. They also said they would discount it 30% if it was not grown in controlled condition, as was done at Auburn. This puts the best year at about 20 tons/acre which is half of the 40 tons/acre which they represent is a reasonable production yield. So, you can see if you understate your costs by possibly 5 times and you overstate your income by more than double you are probably not going to make a profit.
Oh, by the way, I forgot to mention that this group also plans to get grants of $200 million from the taxpayer for funding this experiment with an invasive crop. The company says it is not invasive. The State Forester, a spokesman for a state regulatory agency and a lady in the audience had reams of information that called it one of the ten most invasive plants listed. Some others in this category include [kudzu] and [cogon] grass and they are not planted as crops of 30,000 acres. One state employee went so far as to remind them that they should not go to just ADEM but to the Conservation Department and other agencies that I do not recall.
They also stated that all their product was going to China. I would certainly like to ask them why they don't build the plant over there and save the shipping costs, cheaper labor and save us all the heartaches. What could be better than that? What about all the farmers that are going to be put out of business? They said it would take specialized and very expensive equipment to harvest the bamboo. I would suggest that they would pick two or three real strong farmers and the rest would go by the way side.
Now let's talk about the tree farmers. They stated about 10% could probably be used by present chip mills and their pulp would cost approximately 25% less than tree pulp. If this is the case, then it is surely possible that they could re-tool and use it exclusively. If this happens and trees are no longer needed, then what happens to the timber industry? I would suggest that all thinning would become a liability and the cost of removing them would put the forest industry in a tail spin. You can't grow saw timber and poles without going through the thinning process.
This is going to become a political issue and I hope I have given Marengo county landowners something to think about. Remember, I am one of you but I see no guarantees from industry and all the risk on us. Plus, the taxpayer is getting taken to the tune of $200 million! Let's get the right industry.
James R. Delaney