Minnesota Soybean Processors
Although large-scale soybean production did not begin until the 20th century in the U.S., the area devoted to the crop has expanded rapidly. Second to corn, soybeans are the most planted field crop in the country. In 2014, soybean producers had one of the largest crops on record with more than 375 million bushels. With this ample supply, farmer-owned Minnesota Soybean Producers (MnSP) is on a mission to provide value-added returns to its 2,300-plus members through the latest in soybean processing technologies. Using a variety of in-house processing, MnSP effectively turns soybeans into soybean oil, soybean meal and soybean hulls.
Based in Brewster, Minnesota, MnSP started processing soybeans in its crushing facility in 2003, followed by the addition of a biodiesel refining facility in 2005. The MnSP cooperative started with area farmers in an effort to pass as much soybean processing profits directly back to the farm as possible.
By and for producers
MnSP originated with farmers, who use natural processes to produce beans that are high in oil and protein content. A group of farmers first conceived the idea for MnSP while waiting in elevator lines to deliver grain in 1998. The group began to expand and formally organized and incorporated as a 308A cooperative in May 1999.
The membership drive launched in September 2000 and MnSP’s board of directors held 10 meetings in southwest Minnesota, northwest Iowa and southeast South Dakota. The cooperative’s mission was well received by regional producers and many signed up to join in the first round of meetings. Slowly but surely over the last 15 years, MnSP’s membership has climbed to more than 2,300.
“We’ve grown through the difficult startup phase,” says Scott Austin, general manager of MnSP. “For the first time in about a decade, we have the opportunity to look further down the road and it’s a very exciting time for us; we see great opportunity in this business. The prime motivation of the MnSP project is to pass as much soybean processing profits as possible directly to our members.”
Feed and fuel
At its crushing facility in Brewster, MnSP produces soybean meal, which is dried and converted into a high-quality livestock feed. At the same site, the cooperative also runs a bio-refinery where soybean oil is processed and sold to be refined for food-grade oils or high-quality, renewable biodiesel. “We also process soybean hulls, for feed and produce a glycerin byproduct; the goal is to get the maximum amount out of every bean,” explains Austin.
This in-house versatility allows for some flexibility in MnSP’s model within the volatile commodity market. “We purchase soybeans from the farm and various elevators and process into multiple products, this model allows for flexibility,” says Austin. “It allows us to take advantage of the different parts of the soybean market when they’re the most profitable, to lessen the impact if any one part is not so good.”
“This also hedges the farmers earning capability, especially when we can take advantage of times when soybean prices are low,” adds Austin. “Buying beans is our largest expense, which now is 30 percent less than it was three years ago. Not many businesses can say their largest expense went down by 30 percent, but that’s not to say it couldn’t be 30 percent more in three years; that’s the nature of the commodity market. But overall, our capability to do everything in-house gives us a nice position and has allowed us to operate independently.”
Shipping on a global scale
In MnSP’s backyard in the Midwest, the soybean market is saturated with much larger competitors, so to leverage a competitive advantage outside of its home landscape the company has positioned itself to ship to a global consumer base. “We have more than 20 elevators and processing facilities in our draw area,” says Austin. “We’re currently crushing 36 million bushels a year; this makes for a very crowded and competitive local market.”
MnSP has 85 employees, including plant staff to operate the production facility, which runs 24/7, as well as a robust merchandizing staff. “We have increased our rail shipping capacity to include 110 car unit trains in an effort to hit export markets beyond the U.S. for soybean meal,” notes Austin. “At home, we can’t compete with the bigger companies in the industry, so we’ve had to find our own niche markets in Mexico, Europe and Asia for our high-protein soybean meal.”
Starting in 2014, MnSP was loading about two unit trains a month,. That number has now ramped up to four or more in the first quarter of 2015. “The cars ship straight down to Mexico or to Mississippi River ports and on global markets,” says Austin. “Having our own trains also gives us better freight rates and creates quicker turnaround times for empty cars to come back, which helps us put out more product.”
As the global economy improves, Austin says MnSP is well-positioned to take advantage of high soybean meal demand. “The global economy is continuing to improve and many parts of the world and people are including more meat in their diet,” he explains. “This increase means more livestock and these animals need to be fed somehow.”
With the fluctuating price of oil sure to climb again, MnSP is also prepared to take full advantage of the biodiesel market. “If oil goes back to $100 a barrel that really helps bring the biodiesel fuel market up and in our model, we are set to take full advantage.” says Austin.
Now past the growing pains of startup, the company has emerged as a major player in the soybean market. With diverse in-house processing capabilities Minnesota Soybean Processors is delivering more value to producers and driving profits back to the farm.