MnSP breaks ground on unit train project
BREWSTER -- Members of the Minnesota Soybean Processors board of directors broke ground Monday afternoon on a unit train project that will allow them to capitalize on customer demand for more soybean meal.
After nearly three years of planning, the $8- to $10 million project is anticipated to be completed by the end of the year. It will include the addition of two new rail tracks along the current Union Pacific rail line between Zeh Avenue and Jackson County Road 20, two miles northeast of the soy processing facility.
Each of the two new tracks will hold approximately 110 hopper cars. Each car can carry 100 tons of soybean meal. It takes approximately 500,000 bushels of processed soybeans to fill one unit train.
"The intent will be that Union Pacific will bring 110 empty cars in, put them on one track and pull out 110 full cars," said MnSP board president Mike Zins, Fulda.
In recent years, the soybean processor has had an increasing number of requests for larger shipments of soybean meal.
"More than a few people that we could ship to don't want to deal with anything less than 100 cars at a time ... especially if you're going all the way to Texas, Oklahoma, Mexico or the Pacific Northwest," Zins explained. "Right now, we're sending out 25 cars at a time."
While being able to send out more cars at one time will meet customer needs, Zins said it also saves the 2,500-member cooperative on freight rates.
"The advantage to us is the freight rate is considerably less with the Union Pacific if we're running 110-car trains," he said. "If we're running 25 cars it's one price; and if we're running 110, it's a whole lot less.
"It improves the margins," he added. "We can ship to more customers in more ways and at a better freight rate. If the freight rate is better, we can bring the price of the meal down and still have the same margin."
While being able to better meet customer demand and do it at a lower cost, the farmer-members will also benefit from the project.
"It will help us keep our plant operating at full capacity," said MnSP general manager Taryl Enderson. "Right now we're at 90,000 bushels and we can do 115,000."
"If we're able to crush more, that's more money for the farmers," added Zins. "It gives shareholders a value ... in increased stock prices. They're the ones that built the plant."
Zins said the cooperative will continue "to protect" its truck market, which accounts for approximately 45 percent of MnSP's market. That business comes from local farmers who feed meal to cattle and hogs.
"That's the best margin anyway, but we want to be able to move the rest of it into the markets -- clear out to California if need be," Zins said.
The ability to push more product out of the plant also creates an ability to bring more product in for processing.
"There are so many good soybean fields that we can pull from, and if we can't crush them, they go somewhere else," said Zins.
With dirt work already started on the 75-foot-wide by 2-mile-long area where the tracks will be placed, the hope is to complete all of the dirt work before the ground freezes. The rail line can be laid after freeze-up.
Once it is completed, there will be two railroad tracks crossing Zeh Avenue, adjacent to MnSP. To improve safety at the crossing, both lights and cross-arms will be installed on the county road. The same features will be added at the crossing of Jackson County 20.
"It should improve safety," Enderson said.
MnSP does not plan to add any additional rail cars to its fleet at this time, anticipating instead that they'll be able to move cars in and out quicker.
"Using this system with the 110-car unit trains, we get the cars turned around in about two weeks less time," Zins said. "When you send 25 cars out, sometimes they don't come back very fast."
Projections are to load between one and two unit trains per month initially, with plans to grow shipments over time.
Enderson said that without the unit train project, the plant would not be able to expand.
MnSP processes soybeans grown on approximately 800,000 acres of farmland in Minnesota, Iowa and South Dakota. In addition to processing soybeans into meal, the cooperative has value-added ventures in soy oil refining and biodiesel production.