When a soybean plant came to this South Dakota town, other businesses followed
In 1996, the first soybean processing facility in South Dakota opened in Volga. With the company behind the plant looking to expand to Mitchell, the benefit of hindsight shows the growth that came from the facility, from more money for farmers to the advent of spinoff businesses.
VOLGA, S.D. — If you drive west on Highway 14 toward Volga, South Dakota, the plant seems to appear out of nowhere. Several massive, silver bins of soybeans and tanks full of finished products make the processing facility look like a castle on the prairie.
Not too long ago, the plot of land was empty. But since 1996, when the South Dakota Soybean Processors opened the facility, it’s been a major agricultural hub in the Brookings area, purchasing and processing millions of bushels of locally grown soybeans each year.
More than 25 years later, the company plans to expand its operations with an even larger one in Mitchell, South Dakota, that could be completed as early as 2025.
Though the construction plans in Mitchell have been accompanied by some local concern over traffic and utility usage , Ken Fideler, a longtime city council member in Volga, said similar questions around the plant more than two decades ago were figured out relatively successfully.
“It's been great, it's brought a lot to the community,” Fideler said.
‘Let’s do it ourselves’
Paul Casper, a soybean and corn farmer in nearby Lake Preston, was at the 1992 meeting that birthed the idea for the Volga plant, which was the first soybean processing facility in the state.
“No companies wanted to build a plant because we were bringing the beans to them anyway, and it was being shipped out of here by either rail or truck,” Casper told Forum News Service. “We wanted to create a market locally, and whenever you do that you narrow your basis, which means more money in the farmers pocket. So we thought, well, nobody else wants to do it, let's do it ourselves.”
On the eve of the plant’s opening, about 90 million bushels of soybeans were shipped out of state for processing annually in Iowa or Minnesota, with 40% shipped back to South Dakota in the form of soybean meal for feed, according to the Federal Reserve Bank of Minneapolis .
Bill Riechers, a former mayor of Volga who died in 2011 but was instrumental in helping build the plant, told the Minneapolis Fed in 1995 that farmers would gain from the plant in several ways, including a higher take-home price for soybeans due to lower shipping costs and the ability to purchase animal feed without additional freight costs.
The plant, which was created as a co-op owned by producers, was also an investment vehicle for the more than 2,000 growers who bought into the project for a minimum of $5,000 each.
Growing from 16 million bushels processed per year at its opening to the current number of 35 million annual bushels between the Volga plant and a specialized, non-GMO facility in St. Lawrence, the company’s profits have been a small but stable income source to these investors.
“They’ve grown really steadily, it’s impressive” Tom Murphy, a Volga resident whose parents bought into the plant at its inception, told Forum News Service. “And my parents still get that check in the mail every year, so they’re happy with it.”
Recently, the plant’s growth has been led by a focus on renewable diesel, which substitutes refined soybean and other vegetable oils for crude oil in the diesel-making process and results in lowered carbon emissions.
“Renewable diesel is the latest craze, and that's really what's driving the project in Mitchell,” South Dakota Soybean Processors CEO Tom Kersting said. “Instead of a petroleum company taking crude oil out of the ground, and hydrocracking it they take soybean oil and hydrocrack it and they make the same exact products.”
Soybeans build a spillover economy
As recently as 2015, Erik Schlimmer was still growing soybeans and corn on an empty plot of land a few hundred feet southwest of the plant. Since then, rows of housing have replaced rows of crops all the way up to Caspian Avenue, a visual marker of the growth that has occurred in Volga partially as a result of the plant just outside the city limits.
“It's not necessarily that people get a job at the bean plant and then build a new house or anything like that,” Schlimmer said. “It just creates that really solid housing demand that allows myself and other developers to develop more lots, and people just keep moving up.”
In a direct economic sense, the processing plant provides approximately 100 local jobs and countless more through its purchasing of soybeans from farmers in the area. But it’s also had a ripple effect on the area at large, increasing housing and service demand and leading to spin off industries.
Just south of the plant is Prairie AquaTech, a fish feed company that purchases soybean meal from the plant and ferments it to achieve a product with higher protein content. Accommodating the daily traffic of trucks that move the plant’s soybean oil and meal is Valley Mart, a full-service truck stop just across the street.
Schlimmer, a lifelong Volga resident, says while the plant has led to growth, it also meshes well with the town’s economy.
“It's like anything else a large business would do for any town, but it hits close to home for us because it's agriculturally based,” Schlimmer said. “And that's what the root of our economy is out here in South Dakota. It's just extra trucks coming into town. It's extra fuel, the truck stop can sell more fuel and food. And then all of that trickles down to the whole town.”