Minnesota Soybean Business

The big bean on campus

March-April 2019

As soybean acreage has continued increasing in northwest Minnesota, farmers and agribusinesses have been brainstorming for avenues to bring a soybean processing plant to the region.

“Growers are always looking at value-added products for our crops and our communities,” says Mike Skaug, a Polk County soybean farmers and director with the Minnesota Soybean Growers Association (MSGA). “There’s so much untapped potential for growth up here in northwest Minnesota.”

The long wait for northern growers could be over in the coming years, and the projected location is right in Skaug’s backyard. In 2019, MSGA and the Minnesota Soybean Research & Promotion Council (MSR&PC), in cooperation with Epitome Energy and other strategic partners, are ramping up efforts – and raising funds – to build a soybean crush and biodiesel facility as part of a proposed “Soy Innovation Campus” at the University of Minnesota Crookston.

“This is all about the future,” says MSR&PC CEO Tom Slunecka. “The Council’s vision for the Crookston plant is about giving farmers in this area the same type of opportunities that exist with the many crush and biodiesel plants in southern Minnesota.”

Epitome Energy is a developer focusing on renewable energy and soybean processing opportunities in Minnesota. Epitome President Dennis Egan says Crookston emerged as the ideal location after a long search and two feasibility studies funded in part by MSR&PC. Last summer, MSR&PC, along with the Agriculture Utilization Research Institute (AURI), met with officials from 10 northern Minnesota towns to determine the best fit for the SI Campus.

Crookston has a solid foundation of specialty soy and grains and has been an eager community partner. It has a close proximity to U.S. Highway 75 and Interstate 29. They also have several distinct attributes: an affiliation with the University of Minnesota, access to specialty grain farmers and an emerging pipeline of new technology that will make this plant the first and only soybean innovation campus that creates tangible results from decades of development.

“Crookston came to the top, not only because of a growing supply of high-quality soybeans in northern Minnesota, but they also have a great road system and infrastructure,” Egan says. “We’ve received welcoming arms from the city.”

Crookston’s biofuels program would be a large beneficiary from a crush and processing facility. In turn, with a cutting-edge education, these students will become the next pool of process engineering professionals.

“With this plan, students will get hands-on experience and they’ll be leaving the program not only knowing about soybeans, but also about process engineering,” Slunecka says. “That’ll put them in demand and they’ll be able to be hired by a myriad of processors in Minnesota and across the nation.”

Dollars and cents

The University of Minnesota Extension recently conducted an economic impact study of a soybean crush and biodiesel facility that aligns with MSR&PC’s feasibility study. The numbers paint a picture of a Soy Innovation Campus that could transform the agriculture economy in northern Minnesota, where 1.8 million acres of soybeans were planted in 2017. Polk County planted more acres of soybeans (326,000) than any other Minnesota county. Soybean production throughout northwest Minnesota has increased by more than 300 percent in the past 20 years; the 11 counties that would benefit from the SI Campus produced more than 58 million bushels of soybeans in 2017. That production size is roughly four times the amount of soybeans required for a crush facility of this scope and size.

“It’s an exciting opportunity for companies and investors,” says MSR&PC Director Kris Folland, a Kittson County farmer. “The northwest Minnesota region is a very innovative area, full of industry and manufacturing and hardworking people.”

According to the U of M study, the construction of the soybean and crush facilities would generate $134 million in economic activity and support an estimated 820 jobs, and contribute nearly $324 million in new economic activity across the 11-county region in northwest Minnesota. The plant would create 80 to 100 direct jobs and have an estimated payroll and benefits of more than $5 million.

The SI Campus will have a specialty crush facility and as this 3D model suggests, will be home to a viewing area conducive to teaching classes or hosting tours.

“Our larger goal has always been: How do we enhance a community from an economic development standpoint?” Egan says. “So far, everything has fallen into place.”

When operating, the facility will increase the take home amount northern Minnesota farmers receive from the sale of soybeans by an estimated 10 to 20 cents per bushel.

“It’s going to add value to soybeans and it’s going to add to the community,” says MSR&PC Director Bill Zurn, who farms in Becker County. “With something like the Soy Innovation Campus, think of the potential for new products, new research while creating awareness and a platform for younger people to be in that field.”

Demand, demand, demand

The latest Minnesota Department of Agriculture (MDA) numbers estimate that current biofuels production will only provide 53 percent of the biodiesel required to meet the state’s B20 market demand. Thus, Crookston is the ideal site for the Innovation Campus, with both supply for the crush and biodiesel plant and demand for its product, in addition to a huge demand for livestock feed in the region.

“We went from selling 100 percent of our crop to storing almost of all of it this year because of the trade dispute with China and other factors,” Zurn says. “We have a long way to go, but this is a perfect fit, because people are realizing – hopefully the elevators are, too – that if we had another facility to process part of our soybeans, that will help with the basis and shipping and allow us to not put all of our eggs into the export basket.”

The soybean-solvent extraction facility in Crookston would hold up to 21 million bushels, along with a 30-million gallon biodiesel facility and a specialty soybean mechanical extraction plant that will include a specialty oil refining operation. Because most of the soybeans grown in the area are exported via the Pacific Northwest, Folland says his fellow farmers are eager to find value-added soybeans for local uses.

“Farmers are very excited,” Folland says. “You can draw from a long area here – you can easily draw soybeans from over 100 miles away. So this is a way to process high quality soybean products locally, rather than shipping them overseas.”

Epitome Energy hopes to raise $150 million in private funding – $75 million in equity and the other $75 will be debt financed – and will break ground on the facilities in 2020, with an eye toward a 2021 operational launch.

“We’re hopeful that as we’re in our equity drive, that growers will help ensure this gets done while giving themselves the opportunity to get some local control and help shape this project,” says Egan, who also breeds horses on his farm in Red Wing, Minn. “This is aimed squarely at enhancing growers profitability.”

Egan says working with MSR&PC and MSGA directors, and alongside Minnesota Soybean, has exceeded expectations.

“I can’t say enough about the relationship with the farmers and Minnesota Soybean staff. We’re in this as a partnership, and it really has been nothing short of fantastic,” he says. “You combine the entrepreneurial spirit of Tom (Slunecka) with the energy of the farmer leaders, and that’s a big reason why we’ve been able to make big strides with this endeavor.”

Slunecka says he believes the hard work of the farmer leaders and his staff pays off for farmers in the long run. If so, he envisions the SI Campus could be a game changer for Minnesota soybean farmers.

“This is a big bang for our farmers and this organization,” Slunecka says. “The project in Crookston has the promise of developing Minnesota soybeans in so many ways. Ultimately, the Council’s goal is to develop new markets via new uses in a way that’s never been done quite this before.”

Building a coalition

The SI Campus has, thus far, received broad support from Minnesota legislators, from local officials in Crookston all the way up to Gov. Tim Walz’s administration. Skaug reports he’s received positive feedback from his area legislators, state Rep. Deb Kiehl (R-Crookston) and Sen. Mark Johnson (R-East Grand Forks).

“They are both well-aware and engaged on this issue,” Skaug says. “This will also give us another avenue to discuss issues with legislators in St. Paul.”

MSGA Director Mike Skaug hopes legislators like Deb Kiehl will support the Soy Innovation Campus in Crookston.

MDA Commissioner Thom Petersen says he endorses the SI Campus concept and initiatives that buoy value-added and locally-sourced products.

“It’s as simple as adding value to farmers, putting additional dollars in farmer’s pockets, as well as the economic development,” he says. “I look at the basis issues that farmers always talk about in northern Minnesota. The more we can do in that area is exciting. … I’m ready to do what it takes to get projects like this and keep it in the state.”

In January, the Minnesota Department of Transportation awarded Epitome a $450,000 grant for new rail infrastructure in Crookston. During the current legislative session, MSGA has been advocating the Minnesota legislature for $15 million in funding – $10 million in 2019 for infrastructure and another $5 million in 2020 for equipment for the crush facility.

“A lot of people throughout the local and state governments are on board with this projects,” says MSGA President Joe Smentek. “Our job is to advance the value of Minnesota soybeans, and our farmers’ relationships with the legislators puts us in a unique position to get the SI Campus off the ground. This type of big idea is why farmers should join MSGA.”

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