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Sustainable Plant of the Year: Stahlbush Island Farms - A model of self-sufficiency

November 7, 2012
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A biogas system has transformed Stahlbush Island farms into a carbon negative operation, removing more carbon dioxide from the atmosphere than it is responsible for creating.
 
Anyone who questions the ROI or business case for sustainable food production should direct their doubts to Bill and Karla Chambers.
 
The husband-wife owners of Stahlbush Island Farms are economists by training and, in Karla’s case, profession. They are staunch fiscal conservatives with a shrewd eye for business opportunity, fundamental factors in the steady parade of double-digit sales growth they have maintained since 1990 (2011’s growth was 18 percent). The Chambers also are environmentalists committed to the sustainability of their food company, and while some of the projects they undertake contain an element of risk, the odds of failure are always long and carefully calculated.
 
Sustainable food production has informed the operation of Stahlbush Island since the first acre of soil was tilled in 1985. Four years later, the couple began building a vertically integrated food company and talking about sustainable agriculture, long before sustainability entered the corporate lexicon. The most conspicuous achievement is a biogas system that has transformed Stahlbush Island into a carbon negative operation, removing more carbon dioxide from the atmosphere than Stahlbush is responsible for creating. That system, along with a holistic approach to food production, earned Stahlbush the distinction of Food Engineering’s 2012 Sustainable Plant of the Year.
 
Karla and Bill were newlyweds when they planted their first 352 acres of wheat and sugar beets for seed in the Willamette River floodplain East of Corvallis, OR. When the heavy rains come, an island forms, a hazard blunted by the earthen dykes that protect the processing facility, machinery shops and the Chambers’ home from floodwaters. Bill and Karla come from farming families, and both studied economics, with Karla earning a master’s degree in agricultural and resource economics and finance and Bill a master’s in agricultural economics. “I recognized the early operation wasn’t sustainable for the long haul,” says Bill Chambers. “That led us into pumpkins and then to the processing facility, which led us to additional crops and finally the biogas plant.”
 
A daily diet of 75-80 metric tons (83-88 US tons) of processing waste and crop silage is chopped, mixed and pumped into anaerobic digesters. Methane from the process powers a 20-cylinder, 2,200hp Caterpillar engine that feeds twice as much electricity to PacifiCorp’s Peoria Circuit than Stahlbush Island can consume. After the gas is harvested, the remaining solids—“nutrients” in Stahlbush parlance, sludge in the eyes of other digester operators—qualify as organic fertilizer. There is enough fertilizer to nurture the next crops on Stahlbush’s 5,000 owned and managed acres, though the conversion from commercial nitrogen, potassium and phosphorous is occurring gradually.
 
Energy reclamation doesn’t end there, however. Engine coolant is routed to an economizer—a boneyard boiler, retrofitted with a heat exchanger—where the heat produces steam for the plant’s thermal processes and hot water for the mix tank and digesters. Besides electricity and noise, the Cat engine also produces enough latent heat to raise the building temperature sufficiently to allow the room to be used for tempering and as a drying facility for the next season’s pumpkin seeds.
 
If that were the sum of Stahlbush’s sustainability loop, it would be remarkable. Instead, it is only one element in a cycle that includes advanced technology, packaging, green jobs, nutritious food and America’s ability to feed itself. Half of the nation’s fruits and vegetables are imported, Karla Chambers points out. Instead of harvesting strawberries at their peak and either freezing or distributing them to fresh markets, a skeleton crew could profitably import blueberries from Chile. The Chambers household would be sustained but not those of the 250 full-time and 350 additional harvest-time workers from every strata of the socioeconomic landscape. Lost, too, would be the productive use of land once lionized for its amber waves of grain.
 

Tight fiscal ship

In January, Karla Chambers completed a 20-year career with the Portland office of the Federal Reserve Board of San Francisco and its Portland branch. Now she focuses her full attention on the finances and operations of Stahlbush. Not that the company suffered before: A top-tier credit rating has been maintained since the early days, and leveraged debt is as foreign as Chilean blueberries. “We service debt in real time,” she says, “and we don’t want to be over-leveraged when the cycle turns down. The operational rule of thumb is the ability to pay back all debt in no more than three years.”
 
Fiscal caution doesn’t hamper product innovation, though risk is hedged by the pre-sale of most crops before seed is in the ground. “Good fiscal management is really important, but you have to be about change and flexibility,” Karla Chambers emphasizes. “You have to be willing to try new products, new technology. Doing things the same locks you into a commodity mindset.”
 
Listening to what people are saying, regardless of where they are saying it, has expanded the business in many ways. Karla Chambers recalls the staff’s surprise when a participant in a Martha Stewart demonstration using Stahlbush’s pumpkin sweet potato purée pointed out the ingredients are excellent for canine digestion. Soon after, Nummy Tum-Tum organic dog food became the firm’s third brand, joining Farmers Market organic purées and the namesake line.
 
Accepting and soliciting feedback is an ongoing pursuit. Stahlbush cultivates dialogue with social media. A Facebook posting of a new recipe will reach 113,000 virtual friends who are not shy about posting their likes and dislikes. That network has helped shape a business model that taps into growing demand for better products for human health and brands people feel they can trust. “All income groups want better quality food,” she says, “and all segments associate better quality with better products for human health. ‘Where was this grown?’ is the question we’re most frequently asked.”
 
Organic farming is part of that, and the amount of Stahlbush’s certified organic acreage has grown to 30 percent. But management believes sustainability resonates even more strongly, which is why Stahlbush was one of the first operations certified as sustainable in 1997 by the Food Alliance, a program started by Oregon State and Washington State Universities and seeded by funds from the W.K. Kellogg Foundation. Certification extends beyond crop inputs to include soil and water management, labor practices, wildlife habitats and other elements of a farm system. (Two pairs of nesting eagles and 65 blue heron couples are counted in Stahlbush’s birds of prey program, which controls pests the natural way.)
 
A stubborn streak helps when developing improvements people didn’t know they wanted, as was the case with a 100 percent biodegradable freezer bag. The company pursued such a package for many years before Cadillac Products Packaging Co. developed a film that provided a polyethylene bag’s protection and would decompose in a landfill within 18 months. Stahlbush trademarked the outer craft paper that supports package graphics, but a conscious decision was made not to patent the film itself “because we want others to use it, too,” says Karla Chambers.
 

Elegant design

Compared to biodegradable bags, biogas was a fast-track project. Energy independence as a long-time aspiration, and as petroleum and natural gas prices began spiking in 2006, talk turned serious. “We wanted to be energy independent,” explains Bill Chambers. “At the time, alternative energy was a big focus. A perfect storm of everything aligning at once allowed us to do this.”
 
The perfect storm could have turned into a tsunami of red ink when natural gas prices began their descent, but Stahlbush is insulated from pricing elasticity. Oregon state law provides a floor of 5 cents per kWh for the price paid by utilities to alternative energy producers like Stahlbush. Energy Trust of Oregon paid half the cost of engineering work on the project. State tax credits worth up to half the project’s cost, along with federal tax credits and a supportive local banker, also helped put biogas on solid fiscal footing. “Our banker is a mechanical engineer with an appetite for energy lending,” says Bill Chambers. If subsidies had not been available, he estimates the ROI on the $10 million project would be seven to 10 years. With them, it is closer to four years.
 
Two 900,000-gallon concrete digesters are the heart of the system, backed by a somewhat smaller digester with a hemispheric roof. This post digester, at 3,000 cubic meters, is four-fifths the size of the larger digesters and doubles as a gas storage facility. The system was designed by AAT Abwasser, a Wolfurt, Austria, firm that engineered 100 biomass systems in Europe. The Stahlbush installation features a hydraulic fermenter with an alternating pressure system. There are no agitators or other mechanical components. Instead, the biogas drives mixing. Feedstock enters an outer tank in the silo and slowly makes its way to the base, where it is transferred to an inner tank. Temperature variations and the opening and closing of vents to alter pressure cause the fluid to stir itself, Rainer Greve, vice president of Covert Engineers, notes. “Concrete construction meant higher upfront costs, but it’s a very sophisticated system that will address a lot of issues for many years to come.” Besides generating electricity, the system also treats wastewater that otherwise could run off to the Willamette River, creating pollution problems, Greve says.
 
 “It’s like opening a pop bottle” when the gas bubbles percolate to the top of the inner tank, says Bill Chambers. “It’s a very elegant design.” With proper maintenance, he expects the digesters to perform for the next 100 years.
 
Solid-waste handlers besieged Stahlbush with calls when the system came online in June 2009, offering to augment the farm’s feed stock. Those offers were rejected, despite the tipping fees they would generate. System optimization requires strict control of the feedstock. “It’s pretty much like feeding cattle,” says Bill Chambers, who holds a bachelor’s degree in animal science. “With low-quality feed, you don’t get a lot of gas.” The biology of digestion changes when pumpkin silage replaces corn silage. To avoid upsets, the change is made gradually. Feedstock management is an exercise in recipe-management, and adjustments in pH, temperature and other variables are made slowly.
 
In its first 26 months of operation, the system generated 18 gigawatts. In 2012, it is expected to produce 11,000 MWh. “There is a lot more art to biogas than we imagined,” he reflects. A staff of five has improved performance to the point where 70 percent of the potential energy in the raw materials is being recovered. “We think we can get it to 100 percent, but we’re still learning,” says Bill Chambers, who takes a data-driven continuous improvement approach to the digester and other aspects of the business.
 

Four-part harmony

Four distinct businesses operate under the Stahlbush banner. Farming is the principal activity, feeding both the anaerobic digesters and food processing. Supporting those three activities is a fabrication shop, where much of the machinery and equipment used in farming and processing is built.
 
“One of the big issues we face is availability of labor,” acknowledges Karla Chambers. “We have to keep substituting technology for labor to sustain the business.” The ability to build customized equipment gives Stahlbush great flexibility. It also can save big money: Farm Manager David Sieperda estimates the company saved more than $1 million by building 16 berry harvesters in house. The harvesters incorporate real-time kinematic satellite navigation, an advanced form of GPS that has not yet penetrated the mainstream in American agriculture. Hydraulic and motor shops support the fab shop’s 20 workers, who have CNC machines and other tools at their disposal.
 
“We can’t compete in the manufacture of a highly engineered piece of equipment like an Urschel slicer; it’s the best,” Bill Chambers reflects. “But equipment like conveyors is our sweet spot.” Plant Engineer Tom Rabe designs much of the equipment. He also wrote the SCADA program that manages the biodigester.
Biogas production is an entity unto itself, and the expertise being developed in that area is in demand. Requests for consulting support on other projects are viewed as a distraction from Stahlbush’s core business and are rebuffed. “We’re a food business,” Bill Chamber says. “We don’t want the tail wagging the dog.” Nonetheless, Stahlbush regularly hosts groups of engineers and business people interested in biogas. “I feel it’s part of the deal in accepting the tax credits,” he says.
 
But a closed door policy applies to processing operations. More than 140 SKUs were produced last year, with any given crop being sliced, diced or otherwise processed eight different ways. Frozen retail items undergo IQF processing. An aseptic system with dual bulk loaders from Tetra Pak is used with 2,000-lb. totes to get purées to copackers. Plastic pails are used to transport finished goods for foodservice. The processing operation recently attained SQF Level III certification.
 
The centerpiece of Stahlbush’s community outreach is the donation of 1 million servings of fruits and vegetables to Oregon food banks. “Sustainability also is about sustaining your community,” Karla Chambers believes.
 
The four business operations are codependent, and the interrelationships are central to the Chambers’ view of economic sustainability. “Six buckets compete for profits in this business,” explains Karla: capital expenditures, inventory growth, debt payment, federal taxes, state taxes and prepayment of estate taxes. Her ancestors arrived in central Oregon 130 years ago. She represents the fifth generation of the Von Borstel family to till Pacific Northwest land, and she does not intend to be the last. Stahlbush is a family business, and the next generation already is involved.
 
Cultivation of fruits and vegetables is the predominant activity at Stahlbush, but the company’s view of sustainability is much broader. It also is a machine builder, food processor and  energy producer. Downsizing to a service provider would simplify operations, but that would not fit with management’s view of sustainability. Opaque financial structures and real estate bubbles created fortunes for some in the last decade, but a community and a nation need to produce to sustain themselves. Agriculture and the manufacture of food are essential elements of sustainability, the Chambers argue. 
 
Management is proud of Stahlbush’s status as an early practitioner of sustainable agricultural practices. It is sincere in wanting to maintain good-paying jobs and America’s ability to feed itself. And while energy independence is a goal for many forward-thinking organizations, it is only part of this food company’s conception of sustainability.
 

In pursuit of earth-friendly bags

Animal husbandry is child’s play compared to some food package challenges, such as Stahlbush Island Farms’ 100 percent biodegradable freezer bag.
 
Graphics printed on craft paper give the company’s frozen fruits and vegetables an earth-friendly look, but Vice President Karla Chambers was determined to replace the inner polyethylene film with a structure that would break down in a landfill. After six years of searching, she connected with James Clark, business development manager at Cadillac Products Packaging Co., Troy, MI. “Our water-based adhesives and inks fit with Stahlbush’s biodegradable objectives,” says Clark, who calls Cadillac “an engineering solutions company.” Another year of joint development work was needed to devise a liner with sufficient barrier properties and compatibility with the craft paper and sealant film to deliver a solution.
 
“We’re early adopters of technology,” says Karla Chambers, though in this case the pursuit began before the technology existed. Besides the use of bags that break down in 16-18 months in a landfill, the company was in the first wave of processors to use BPA-free liners in the plastic pails used for foodservice orders.
 
Stahlbush’s packaging focus now has shifted to aesthetics. New graphics replicate vibrant landscapes painted by Chambers, such as a depiction of Mary’s Peak and other topographical features of the Corvallis skyline, on bags of butternut squash.
 
 
For more information:
Rainer Greve, Covert Engineers, 503-603-0995, rainerg@cei-engineers.com
James Clark, Cadillac Products Packaging Co., 248-709-6752

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