Wisconsin
Soybean News
Study Shows Wisconsin Ready for Soybean Processing
MADISON,
Wis. – August 8, 2006 – A soybean processing
plant in Wisconsin could successfully compete in today’s
U.S. soybean crushing industry and would add substantial
value to the state’s agricultural endeavors, a feasibility
study released today by the Wisconsin Soybean Marketing
Board (WSMB) concludes.
“We’ve
realized for some time that we produce enough soybeans in
Wisconsin to supply such a plant,” relates Keith Ripp,
president of the Wisconsin Soybean Marketing Board. “Now
we also know that we have sufficient demand for the resulting
products and considerable freight advantages that can make
a soybean processing enterprise attractive to businesses
here in Wisconsin.”
According
to the study, Wisconsin grows enough soybeans to support
an 80,000 bushel per day, or 26.4 million bushel per year,
soybean crush facility and having a plant here should encourage
additional soybean production. A plant this size produces
nearly 580,000 tons of soybean meal and 45 million gallons
of soybean oil annually. A lesser co-product, soybean hulls,
typically is blended with meal as a source of roughage in
dairy rations.
Wisconsin
and nearby northern Illinois markets can absorb the plant’s
soybean meal production the feasibility report concludes,
which is a rather unique situation for a soybean processor.
Soybean meal is the high-quality protein feed of choice
for dairy producers and Wisconsin uses an estimated one
million tons of soybean meal annually. All of this meal
presently comes from out-of-state processors; the nearest
processing plant to Madison being a Cargill plant at Cedar
Rapids, Iowa, some 165 miles away.
“The
study notes that virtually all of Wisconsin’s soybean
production leaves the state and virtually all of the soybean
meal fed by dairy and other livestock producers is imported
from other states. With so many soybeans leaving Wisconsin
and going a great distance to find markets, and so much
meal coming into the state from so far away, our state offers
significant freight advantages for a processor,” Ripp
says.
The
growing demand for soybean oil to make biodiesel is another
beneficial development for state soybean processing. The
report notes that five stand-alone biodiesel plants exist,
or are planned, in the southern Wisconsin area with enough
capacity to use twice the amount of soybean oil that would
be produced by such a crush plant.
A Wisconsin
soybean processing plant can expect stiff competition from
existing crush facilities that sell here, most notably ADM
and CHS at Mankato, Minnesota; Cargill at Cedar Rapids,
Iowa, and; ADM at Galesburg, Illinois, according to the
study. The “localness” of such a plant, however,
makes siting it in south-central Wisconsin attractive today,
and this advantage should only increase over time as freight
costs increase, the study concludes.
Using
conservative prices, the feasibility report projects after
tax returns of 6-10 cents per bushel; after-tax returns
on investment of at least 6.4% to 10.8%, and; after tax
return on equity averages of 7.7 percent to 11.4 percent.
“This
study presents a reasonably compelling case for a group
of investors to take a serious look at the specific business
aspects of a soybean crush facility,” says Ripp. “We
invite any and all interested parties, and especially those
representing soybean producer interests, to contact the
Wisconsin Soybean Marketing Board so that we can provide
technical assistance and help lead them to the next step
of business planning.”
The
WSMB administers the soybean grower checkoff statewide and
is dedicated to maximizing profitability of Wisconsin soybean
producers via research, education and outreach initiatives.
Working together with the national United Soybean Board,
WSMB directs state soybean funds to statewide, national
and international projects as part of the Soybean Promotion
and Research Checkoff program.
To
contact the WSMB e-mail Executive Director Robert Karls
at Karls@wisoybean.org or call the Wisconsin Soybean Program
office in Madison at 608-274-7522.
The
Wisconsin soybean processing plant feasibility study is
available online in PDF form at www.wisoybean.org.
Results
of 2006 Feasibility Study |
