ABERDEEN, S.D. - Citing good timing for the region's soybean growers, Ag Processing Inc. held the grand opening for its soybean processing plant in Aberdeen on July 17.
The $300 million facility is AGP's 10th location and represents the largest investment in the Omaha-based cooperative's history. Its scheduled to begin commercial operations by the end of July. AGP Chief Executive Officer Keith Spackler stated they'll crush soybeans from farmers within a 100-mile radius.
"This plant should process somewhere between 50 and 60 million bushels per year. By reference, South Dakota produces approximately 250 million bushels per year," he says.
AGP selected the site in Aberdeen based on numerous factors, including a readily available supply of soybeans, a stable workforce, solid infrastructure, and transportation capabilities. Brad Davis, chairman of the AGP board of directors, says they had been strategically looking at Aberdeen for nearly 20 years as soybean production has expanded in the northwestern Corn Belt. "It's an area where basis levels were really quite advantageous to locate a plant here to begin with, but also our opportunity on one of the most westerly soybean processing plants in the U.S. and the proximity that we have to Aberdeen, Washington," he said, referring to the site where AGP has a port facility and can easily ship soybean meal out the Pacific Northwest to customers in the Pacific Rim.
Spackler says the timing of the project is perfect. With China purchasing substantially less whole soybeans from the United States because of the trade war, the plant will provide new export opportunities for customers that take processed products such as soybean meal.
"That opportunity then is to load a significant amount of the meal on unit trains that will move from Aberdeen, South Dakota, to Aberdeen, Washington, be loaded on vessels that are hitting the Pacific Rim," Spackler says. "We're talking the Philippines, Vietnam, Malaysia, Indonesia, all the countries all around there."
The AGP plant will bring great benefits to the state's soybean farmers as well as the state economy. South Dakota Gov. Kristi Noem says it is a positive economic development and will provide good paying jobs for more than 60 families in the Aberdeen community. "As a farmer, I understand that this is not only good for farmers and for the local economy, it's good for our state and our entire country," Noem says.
She says processing at home also promotes national and food security.
"Agriculture ensures that we remain a strong country," Noem says. "We should grow our own food in the country, we should grow our own fuel in this country. Entities like this allow that to happen."
The facility will also add value to the state's soybeans and improve prices. Claremont farmer Mike McCranie, who serves on the South Dakota Soybean Research and Promotion Council, says the AGP plant is the single largest event to happen to him in his 40-plus years of farming. "I already see the basis has gone up and they're not even in the processing mode yet," he says. He is hopeful that this signals better prices for soybeans in his area, which has typically struggled with a very wide basis.
"Nobody knows for sure exactly what the basis level, you know, improvement will be," South Dakota Soybean Association President Jeff Thompson says. "Obviously it should be an improvement over what it was. It just depends, you know, what the competition in other facilities drives."
The Aberdeen soybean plant is likely to spur livestock development. Spackler says there's great potential with South Dakota producing approximately 1.3 million turkeys and 1.7 million hogs annually. The plant will produce eight-unit trains of soybean meal every week.
"There is a significant amount of meal demand that will be local as well," Spackler says. "We talked earlier about the number of turkeys, hogs and poultry in the area and we think that represents a tremendous amount of opportunity to improve the cost of feed for people in that area," he says. McCranie adds, "I'm not a livestock producer, I'm strictly a grain farmer, but I have a lot of neighbors who are looking forward to buying meal here."
Down the road, there is also optimism about a biodiesel facility being added to the plant site as AGP is a leading producer of the advanced biofuel at other locations.
"The possibilities are quite distinct, at the same we need to make sure that the (federal Renewable Fuel Standard) stays in good standing and that we don't have some type of disadvantage in the marketing of the biodiesel," Davis says.
He added if South Dakota would pass a biodiesel mandate similar to Minnesota's, that would also justify a plant.