Wisconsin
Soybean News
Large Crop Shows Need for State Soybean Processing
MADISON,
Wis. – August 14, 2006 – Wisconsin’s expected
large soybean crop and the state’s high cow numbers
underscore the economic importance of establishing a soybean
processing facility in the state, according to Bob Derr,
Marshall-area soybean producer and president of the Wisconsin
Soybean Association (WSA).
“Wisconsin
is the only high-level soybean producing state that doesn’t
have a plant to process their soybeans, and that’s
especially disappointing considering our strong livestock
industry,” Derr says. “Basically all of the
soybeans we grow here leave the state for processing elsewhere.
Then, our dairy, hog and poultry producers turn around and
bring large quantities of soybean meal back into the state
for feeding. That just doesn’t make economic sense.”
A recently
released USDA report shows that Wisconsin is on tract to
record its third highest annual soybean crop ever, at a
projected 66.4 million bushels. And, a feasibility report
recently prepared by the Wisconsin Soybean Marketing Board
(WSMB) concludes that the state has adequate production
and consumption to support a soybean processing plant.
According
to the study, Wisconsin grows enough soybeans annually 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 annually produces nearly 580,000 tons of soybean
meal and 45 million gallons of soybean oil. A lesser co-product,
soybean hulls, are used use 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.
“We
should be the ones capturing the added value of processing
soybeans into meal for livestock feed and oil for the biodiesel
market. This type of venture will benefit both our crop
producers and our livestock producers by at least saving
transportation costs,” Derr suggests.
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 that would
use twice the amount of soybean oil 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 price forecasts, 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,
for a soybean processing plant in Wisconsin.
For
over 30 years, the WSA has been working to build valuable
relationships between growers throughout Wisconsin while
focusing on the promotion of Wisconsin soybeans. Formed
in 1972 with 200 members, the WSA currently has over 1,200
members.
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.
The
Wisconsin soybean processing plant feasibility study is
available online in PDF form at www.wisoybean.org .
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