Minnesota Soybean Processors (MnSP) is a new start up company. A group of farmers conceived the idea of a farmer owned and controlled soybean plant while waiting in elevator lines to deliver grain. The group expanded over the winter of 1998, formally organized and incorporated as a 308A cooperative on May 3, 1999. We received our federal 521 registration July 24, 2000. We have registered to sell stock in South Dakota, Minnesota, and Iowa. A limited number of memberships will be available in other states.

MnSP is a farmer owned, new generation, value-added, closed cooperative, which will take soybeans to the next level of value. This proposed project will process 100,000 bushels of soybeans per day. We are currently selling membership to farmers interested in moving to the next step beyond just growing the crop. To become a member you need to purchase two different stocks. The first one is a Common Stock for $250.00. This is your voting share. Everybody gets one vote no matter how many shares of equity you invest in. The second type of stock is the Equity Stock; this equals the number of bushels you desire to deliver. The Equity Shares sell for $2.00 per share or bushel until January 10, 2001 when the board has the option to increase the price of the Equity Stock.

MnSP plans to process soybeans into soybean oil, soybean meal and soybean hulls. A large portion of the soybean meal will be consumed locally for use as a feed ingredient. Pork and poultry are the major users of soybean meal as a protein source in their feed rations. Many of the counties located within MnSP's marketing area are among the most concentrated in swine production in the nation.

MnSP will be a major player in the tri-state soybean market. The membership will be based on area grain and livestock producers who are willing to invest in a value-added cooperative. If more soybeans are needed than are covered by producer contracts, the soybeans will be bought on the open market. The plant will have a daily posted price much like the local elevators. The soybeans bought will be paid for within 10 marketing days. If you decide not to deliver soybeans to fulfill your delivery agreement, these soybeans purchased on the open market can be purchased for members, at $.02 a bushel fee, to fulfill their delivery agreements with MnSP. At the end of the year coop members will be compensated with profits of the company in the form of dividends, according to the equity units of ownership.

The membership drive started September 5, 2000. The Board of Directors held 10 meetings in southwest Minnesota, northwest Iowa, and southeast South Dakota. The message presented to the farmers was well received and many signed up at the meetings. We learned a lot by holding this first round of meetings before harvest, and are in the process of planning the next round of meetings following a harvest break.

The prime motivation for this project is to pass as much soybean processing profits directly to the farmers as possible. The long term average net processing margins of plants in the U.S. is over $.42 a bushel. We believe our project should be in a strong competitive position to achieve similar results.