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Collaborative Growth Platform

Submitted by on May 13, 2014 – 3:09 pmNo Comment

by Susanne Retka Schill (Ethanol Producer Magazine) Guardian Energy intends to keep local ownership a viable part of the ethanol industry, building on the success of the Renewable Products Marketing Group, another collaborative effort of a group of ethanol companies.

Some Guardian member companies are organized as farmer cooperatives and others are LLCs, but they share a common understanding of how a farmer and locally owned company does business.

The marketing structure has given individual, locally owned ethanol companies a means to achieve economies of scale in marketing their products.

It is known as the Minnesota model. Value-added agriculture built around cooperative principles. Farmers invest in their local ethanol companies and make commitments to deliver a set number of bushels to the plants with the idea that when corn is cheap, they’ll make their money from the value added through the ethanol plant. When corn prices are high, the farmers get their returns directly from corn, lessening the need for returns from the ethanol plant, in turn insuring the plant survives downturns.

Back in 1996, two Minnesota farmer-owned cooperative ethanol companies wanted to take that philosophy the next step and pool their production to improve their position in the ethanol market, creating Renewable Products Marketing Group LLC. Distillers grains marketing soon followed.  As the industry grew, a hybrid business model emerged with development groups turning to limited liability corporate structures (LLCs) to allow nonfarmer investments, bringing local business owners into the growing number of ethanol companies. RPMG’s two companies grew to a half a dozen, both farmer-owned cooperatives and locally owned LLCs.  READ MORE

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