In Crookston, a proposed biodiesel plant would create local demand for soybeans

A soybean-crushing facility slated for construction in 2021 near Crookston will help farmers in northern Minnesota who are now being paid less for soybeans because of their distance from customers.

Soybeans will be crushed into biodiesel fuel at the $150 million plant, creating local demand for soybeans in an 11-county area around Crookston. The plant will also create 100 jobs, and part of the project is a smaller specialty soybean-crushing facility that would be used to process non-GMO or organic soybeans.

The man behind the proposal is Dennis Egan, the former mayor of Red Wing, Minn., who now runs a company called Epitome Energy. He said the $150 million needed for the project will be half debt and half equity. He's now trying to raise $10 million in initial funding and secure an air permit for the project, which could take 18 months.

Groundbreaking won't take place for two years, at least, but the project meets a need in northwest Minnesota, where soybeans are grown mostly for export to China and the nearest processing plants are in Aberdeen, S.D., and Mankato.

"Soybeans in that region are some of the lowest-priced soybeans in the entire United States and our operational costs aren't really that much lower than anywhere else," Tom Slunecka, chief executive of the Minnesota Soybean Research & Promotion Council, said. "So our profit margins are lower."

Soybeans are even less profitable in northwest Minnesota than usual because of Chinese tariffs that emerged last year in response to U.S. tariffs. Though the processing plant will do nothing to help in the near term, it's a positive sign for farmers, said Slunecka.

"It's a bright spot in a very dark world," Slunecka said. "We hope that the project can get off the ground. Investments into the plant, because it is a down economy, will be challenging, but there's a lot of places to find funding."

The plant would crush 21 million bushels of soybeans per year, about 25 percent of the crop grown in the region. The plant would produce oil for biodiesel fuel, and soybean meal for livestock in the area.

Egan said Minnesota's 20 percent biodiesel mandate, which went into effect in 2018, and the fact that Minnesota is a net importer of biodiesel fuel, helped persuade him to pursue the project.

"Even prior to what happened with China we looked at this and said how can we enhance the soybean grower's profitability, how can we reduce the volatility in markets, and then how can we bring economic development to a rural community?" he said. "It really made sense to pursue northwest Minnesota and Crookston."

Crookston has good rail and road access and utilities in place on the land the soybean crushing plant is slated for. It'll be on the southwest edge of Crookston, across a road from an American Crystal Sugar Co. plant.

The smaller facility that will be part of the project will crush about 8,500 bushels of soybeans per day and allow for experimentation with new varieties of soybeans and organic and non-GMO soybeans.

Egan said farmers he has met with have been "overwhelmingly positive" about the project.

"It gives them another option, and allows them some choice," Egan said.

A University of Minnesota study indicated that a local buyer for soybeans in Crookston will improve prices for locally grown soybeans by up to 20 cents a bushel. The cash bid for soybeans in Crookston on Wednesday was 7.80 per bushel, $1.35 less than the January price on the Chicago Board of Trade.

Adam Belz • 612-673-4405 Twitter: @adambelz