Study Shows Wisconsin Ready for Soybean Processing
Wisconsin Soybean Marketing Board Release

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