Monday, March 5th, 2001

MnSP hopes to reach equity goal this week

Minnesota Soybean Processors is hoping the power of deadlines will help the co-op reach its goal of $18.7 million in farmer equity this week.

MnSP, which had 937 members at last count, needs the equity to build an 80,000-bushel-a-day soybean processing plant near Brewster. The co-op has raised nearly $11 million so far, MnSP chairman Bob Kirchner said.

This week is a crucial time in the equity drive, because the price of MnSP stock will rise from $2.25 to $2.50 after Saturday.

In the week before Jan. 10, when the stock price increased from $2 to $2.25, MnSP took in more than $7 million in equity - proof that farmers are holding on to their checkbooks until the last possible minute.

"We're optimistic that this March 10 deadline ... will bring in enough to reach our minimal goal," Bob Kirchner said.

MnSP has submitted applications to the Minnesota Pollution Control Agency for the first stage of air quality permits, Kirchner said. The permitting process can take up to a year, and no groundwork or construction will begin until all permits are approved, he said.

Meantime, officials from MnSP and the city of Brewster have been working at the state level to advance the project.

Brewster Mayor Randy Schmitz recently gave testimony before a legislative tax committee, asking the state to abate the sales tax on equipment for the soybean crush. Later, he met with local legislators Sen. Jim Vickerman, DFL-Tracy, Rep. Ted Winter, DFL-Fulda, and Rep. Elaine Harder, R-Jackson, to discuss possible grant funding for Brewster. The money would be used for infrastructure improvements, such as water and sewer, to accommodate the soybean plant.

"That's what they want to know first is if there's water," Schmitz said. "But we're pretty sure we can find that."

Brewster officials are also working with the city of Worthington and the Worthington Regional Economic Development Corp., which set up the meetings in St. Paul.

"It looks like a very cooperative project," Kirchner said.

MnSP has a three-year option to purchase an 81-acre tract of land just north of Brewster, which leaves plenty of room for a soybean oil refinery in the future, Kirchner said.

The price of soybean oil is currently around 11 cents a pound - about half the historical long-term average of 22 cents a pound. The problem, Kirchner said, is not enough demand.

So, it's understandable that Kirchner was pleased when a biodiesel bill recently passed though a key Senate committee. The bill, authored by Vickerman, would require diesel fuel sold in Minnesota to contain a 2-percent blend of soybean oil by 2002, and a 5-percent blend by 2006. Biodiesel is a clean-burning alternative fuel made from renewable fats or oils, such as soybean oil.

"If that (bill) could be passed, that opens up the opportunity at some point and time to do a biodiesel refinery at our plant in Brewster," Kirchner said.

His hope is that other states would follow Minnesota's lead, thus reducing the oversupply of soybean oil. Returning the price of soybean oil to 22 cents a pound would raise soybean prices by $1.20 a bushel, he said.

For now, though, MnSP's focus is on wrapping up the equity drive. Kirchner said he doesn't anticipate the MnSP stock price to rise above $2.50.

"I think this is as high as we're going, because if we're not closing by the 10th (of March), we'll be so close that we don't see a need to go higher," he said.

To join MnSP, producers must buy one share of common stock for $250 and commit to the purchase of 2,500 equity shares. At $2.25 per share, that comes to a total of $5,625 in equity, with 10 percent down payment required when the investor joins.