Processing plant keeps soybeans in South Dakota

South Dakota State Roundup

Published July 1, 1995  | July 1995 issue

A new era in soybean growing began when the South Dakota Soybean Processors (SDSP) co-op enrolled 2,308 growers, who pledged some of their crop and invested more than $5,000 each toward construction of the state's first soybean processing plant.

The SDSP will build the nation's first new soybean crushing plant since 1978 in Volga, eight miles west of Brookings. The co-op, which includes growers from Minnesota and South Dakota, is ignoring conventional wisdom. Roughly half of small processing operations have either folded or been swallowed up by large processors over the past 15 years. But according to Bill Riechers, the administrative assistant for the co-op and the mayor of Volga, building a plant was the only way to guarantee farmers a decent return on their crop. "We're the first to challenge the status quo," Riechers says.

About 90 million bushels of the state's beans are shipped out of state for processing annually, with 40 percent shipped back for feed. The state's soybeans are sold to processors in Minnesota, Iowa, Nebraska and other neighboring states. Farmers stand to gain in a couple of ways from building the plant: With lower shipping costs, prices will be higher for beans because the market is local, and farmers can purchase soybean meal without paying the added freight charges, Riechers says.

The SDSP is also banking on a growing demand for soybean products. The market to China is expanding, Riechers says. And if the federal government mandates clean-burning fuel for mass transit equipment, soy fuel will be in greater demand.

Interest in growing soybeans has heightened in South Dakota over recent years, Riechers says. "Eastern Dakota used to be pretty yellow with sunflowers." But that crop and other small-grain acres are increasingly being replaced with soybeans, which are easier to grow and give more yield per acre, Riechers says.

Construction is set to begin in late summer, and the $32.5 million plant is expected to process about 50,000 bushels per day when it opens in fall 1996. Soybean oil will be shipped to a refinery, and the meal will go for livestock feed. It is expected that the plant will generate 11 pounds of oil and 49 pounds of feed per bushel.

Volga's 1,350 townspeople are gearing up for the effects of 70 to 75 new permanent jobs. And with an anticipated 16 million bushels of soybeans making their way to the plant each year, it is expected that about 300 trucks will drive through Volga daily. To meet the needs of those drivers, the Volga Co-op Oil Co. is planning to build a full-service truck stop with a restaurant and showers.

Kathy Cobb

Resource: South Dakota Soybean Council