The Western Opportunities Leadership Group (WOLG) says Manitoba’s explosive soybean-acre growth makes a processing plant viable. The crop has spread rapidly west and north over the last 10 years, into regions traditionally considered too cold.
The potential facility drew industry, university researchers, local farmers and community leaders to Brandon University Nov. 16 for a day-long conference outlining the project’s possible impact, considerations and next steps.
“We’re seeking to provide understanding of what the opportunity is,” WOLG chair Ray Redfern said. “Which, in its own right, validates that there is an opportunity — and not just a business proposition, but community interest and support for it and, shall we even use the word, industry support for it.”
Redfern said WOLG would prefer a facility in its home region, but would support any new plant in the province.
WOLG hopes the eventual plant will handle around 2,500 tonnes of soybeans a day and employ 40-80 people on top of over 640 jobs expected to appear in the larger community as economic benefits from the plant trickle down. At current farm production, Redfern estimated the plant would account for 800,000-850,000 acres of Manitoba’s soybeans.
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The group has set a broad cost range of $200 million to $450 million, or $330 million without a biodiesel plant. Likewise, a plant might take up between 40 and over 200 acres and take three to four years to build once a company has committed to the project.
At least five communities in western Manitoba have expressed interest in drawing the plant to their community — Brandon, Virden, Carberry, Neepawa and Russell/Binscarth.
“A world-scale plant of this nature, there’s really only room for one right now,” Richard Pauls of the Integral Strategy Network told the room Nov. 16. “So we believe that the first mover will have the advantage and the sooner they get in and get doing their due diligence, the more likely we are to have them located here as opposed to somewhere else.”
Soybean production key
This year was another record-breaking season for soybean acres in Manitoba, with 2.3 million acres planted in 2017.
The growth has given life to the idea that soybean acres might eventually break three million acres, although Manitoba Agriculture pulse expert Dennis Lange says acres may level off before hitting that level. The pulse specialist anticipates acres will reach 2.5 million acres, but may then plateau.
“We might hit the three million acres,” he said. “That’s a good possibility to hit that, but what we also have to keep in mind is the other crops that we’re competing with.”
Acres next year may also dip, he noted, driven by abnormally dry conditions that hurt soybean harvest in some parts of the province this year.
Lange added that, as of yet, soybeans have not faced major production issues or disease threats, both things that might curb soybean appeal if those issues catch up to the exponential growth of the crop.
Any plant will also have to nail down soybean supply or risk shortage, guest speaker Bob Stroup, an engineering expert on soybean processing, said, and a plant of WOLG’s target size should come with 50,000 tonnes of storage to buffer against that risk.
Unlike some processing plants, a soybean plant like WOLG is suggesting will run 24 hours a day, most days out of the year, and will requiring a near-constant supply of source material, according to Stroup.
“How do you do that? Well, you could set up import channels from the United States, but you’re not going to make any money doing that,” he said. “You’re going to make the best money, the best return on the investment, by controlling the bean supply.”
A farmer-led co-op might help avoid supply issues, he added.
Also, while Manitoba’s growing acres may form baseline supply, Stroup warned that WOLG must not ignore the demand side of the equation.
“On a project like this, there has to be something that drives this more than just the desire of farmers to raise soybeans,” he said. “You need some other driver, and that driver is the increase in the hog production in Manitoba, and that should carry over into Saskatchewan.”
Soy is among the most important vegetable proteins in hog feed. The average pig will eat 105 to 150 pounds of soymeal in its lifetime, according to Manitoba Pork Council general manager Andrew Dickson. Producers in Canada are not as reliant on added protein as the U.S., he added Nov. 16, citing higher protein contents in pig-feed cereals.
The pork industry produces 4.8 million finisher pigs and three million piglets each year, Dickson said, and that looks set to rise with the recent legislative changes.
“Are you going to see more barn development? Yes, you’re going to see them around feed mills,” Dickson told the room.
Transporting feed is among the largest regular costs for the pork sector, making proximity to feed supply a priority, he added.
Dickson said Brandon’s pig-processing facility could take on anther 20,000 to 25,000 animals per week at peak efficiency, while plants in Neepawa may be able to take an extra 1.0 million to 1.2 million pigs.
The hog market may become a key element for any new soybean facility, Dickson said, although he warned that the product must come with cost incentive to lure producers away from their current feed providers.
“They need a guarantee of supply, a guarantee of quality. (That’s) the big one,” he said. “We can’t have hog rations changing up and down like a yo-yo. It’s not like it was 30 years ago. We have very precise nutrient requirements now that have to go into these pigs because it affects the quality of the meat and we’re trying to differentiate ourselves in the marketplace.”
WOLG also pointed to the province’s recently announced climate and green plan, which includes a five per cent biodiesel mandate. Biodiesel has been eyed as a secondary market for soybeans and a use for oil that is extracted during processing.
Stroup, however, is wary. The protein market has more potential for profit while coming with less risk, he warned. Should biodiesel eventually enter the equation, he stressed, plants should take pains to guarantee oil supply.
Soybean oil has, likewise, been used as an agri-food product, although Stroup warned that might be hard to break into, given the ready availability and quality of canola oil.
“It’s another hill to climb,” Redfern said of Stroup’s comments. “We know that there’s a number of the pieces that are not in place in Canada today to allow a traditional biodiesel plant to function effectively. We think there might be signs on the horizon that, that might be changed, whether it’s the carbon tax matter or the recognition that Canada believes in this question about the environment and global warming.”
WOLG is looking at a number of uses for extracted oil, Redfern said, including local efforts to use the oil in the paint industry.
WOLG has begun writing up its wish list of companies it plans to approach and hopefully entice into the area.
Redfern says they plan to revisit their initial mercantile study and get a professional review to validate their findings and market assessments.
“We believe that there is an opportunity or a need to update, again, even the validity of the existing size of the soybean market in what we’re going to call Western Canada,” Redfern said.
The northern U.S. states may also enter into that reassessment.
Stroup, meanwhile, advised the group to explore a feasibility study, but added that a southwestern soybean-processing plant is very possible from what he’s seen.
“Every time I do a number, it looks more positive,” he said.