Hallock, Minn., canola plant applies for permits, but has no immediate plans

A canola processing plant in Hallock, Minn., is finishing up its first year of operation -- and laying the regulatory foundation for possible expansion.

The Northstar Agri Industries plant, which began operations in May 2012, now processes 1,000 tons of canola daily. It has submitted applications for air and water permits that would allow it to process up to 2,000 tons daily.

"We don't have any specific near-term plans to do anything significant at the plant," says Neil Juhnke, president and chief operating officer of Fargo, N.D.-based Northstar Agri Industries.

"However, I will say the plant has proven itself capable of running at 1,200 tons per day," he says.

The company needed to renew its permits this year anyway, and decided to include applications for expansion along with its renewal applications. State regulators appreciate when such applications are combined, Juhnke says.

In its first year, the plant met, and in some cases exceeded, its goals for operations, production and product quality, Juhnke says.

In the past year, however, market prices for canola "have been historically high, and that has had a negative impact on margins," he says.

Juhnke says he can't comment on the company's profitability or cash flow, but that demand for its products remains strong.

Healthy product

Canola seeds -- similar in size to poppy seeds -- are crushed to produce oil, which has a reputation for being healthy, and meal, generally fed to cattle and pigs.

Canada is the world's leading producer of canola. North Dakota is the dominant U.S. producer of the crop, which also is grown in northwest Minnesota. The Northstar plant is two miles south of Hallock, a farm town of 980 in extreme northwest Minnesota, near both Canada and North Dakota.

The Hallock plant gets about half of its canola from Canada and about half from the U.S., primarily North Dakota.

Canola production in northwest Minnesota, though relatively small, is expected to increase, in part because of the Hallock plant's presence, Juhnke says.

Additional funding for canola research in northwest Minnesota also is expected to increase canola acreage there, he says.

Northstar Agri Industries is promoting canola as a crop that can be grown in rotation with other crops, particularly winter wheat, he says.

Last June and July, the Hallock plant received so-called winter canola by rail car from Oklahoma. Winter canola typically is planted in late summer or early fall and harvested the next spring.

More winter canola is expected to arrive at the Hallock plant this summer, Juhnke says.

"It's a classic case of buying what for them is new-crop canola during a time when we're in old-crop processing. We're going to be procuring it (winter canola) under harvest conditions at very advantageous prices. That's really what makes it possible," Juhnke says of bringing the crop to Minnesota for processing.

Information: www.northstaragri.com .