WEST FARGO, N.D. - As the market for high-fructose corn sweetener faces the headwinds of declining demand and soda taxes, companies like Cargill Inc., are diversifying corn wet milling plants.
Jon Veldhouse, development manager for Cargill Starches & Sweeteners Bio-Industrial Segment, spoke March 23 at the Golden Growers Cooperative's 23rd annual meeting at the Doubletree Conference Center in West Fargo. Cargill leases the ProGold LLC plant at Wahpeton, N.D., in which Golden Growers is an owner.
Companywide, Cargill processes some 1.2 million bushels of corn per day. Veldhouse's segment is made up of high-fructose corn syrups, including corn syrups, high-intensity sweeteners and texturizing products. He didn't make any predictions for the Wahpeton plant, but he described the operations at Cargill's Blair, Neb., plant, and the variety of products being made there, including enzymes, low-calorie sweeteners and food-grade lysine products. The plant makes polylactic acid, aided by biotechnology, which competes with petroleum-based products.
Future shift?
The basis for the bio-industrial strategy is to replicate technologies to "build out campuses like Blair, like Wahpeton, going forward," Veldhouse said, but he stopped short of describing any plans and declined interview questions.
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Mark Harless, of Borup, Minn., chairman of the board for Golden Growers, said he'd "like to hope" that a Wahpeton plant might add some of the capabilities the Blair plant has.
"The future of the corn wet milling industry is very bright because of the diversification of the grind going to some of these bioproducts," Harless said. Some companies are using corn to make synthetic spider threads, he said. "There's a lot of products in the hopper they need to get to the commercialization phase."
Golden Growers is the corn cooperative of 1,600 members that owns 49 percent of the ProGold LLC corn fructose factory, completed in late 1996 for $260 million. The plant initially accounted for 4 percent of national HFC capacity and was leased to Cargill after losing money in its first few months of operation.
ProGold is now 51 percent owned by American Crystal Sugar Co. of Moorhead, Minn., which also owns five beet sugar factories in the Red River Valley of North Dakota and Minnesota. The co-op celebrated the end of ProGold's first 10-year lease with Cargill in January 2007 and coincidentally paid off its debts in January 2008. Golden Growers switched from its North Dakota organization to being a Minnesota-based 308B cooperative in September 2011, making it taxed as a limited liability company rather than as a traditional cooperative, and it operates as a "foreign corporation" in North Dakota.
As original
The co-op was formed in July 1993 and included a 1994 equity drive that raised $52 million for a $260 million plant. The co-op has paid out 170 percent of the original investment, using the lease arrangement, over 23 years. In recent history, the company makes three distributions a year, a total of about $5 million per year.
The ProGold LLC lease with Cargill expires Dec. 31, 2017. Harless acknowledged that parties have been talking about another renewal for the past two years.
"We believe we're on the right path, and hopefully we'll have an announcement soon," he said.
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Harless said the Wahpeton plant is much like it was originally built. If changes are made, he said he didn't know whether there would be opportunities for Golden Growers to invest in.
"We'd like to think so," he said. "It's a possibility."
