FarmConnect sees opportunity in food-grade soybeans
By Jean Caspers-Simmet
simmet@agrinews.com
NEW HAMPTON, Iowa -- FarmConnect, a 650-member Minnesota cooperative, is looking for farmers to invest in its new company SoyLink, a joint venture with Soy-Driven Enterprises.
Farmers learned about the investment opportunity in the burgeoning soy foods market during a meeting last week in New Hampton.
ADVERTISEMENT
SoyLink will process food-grade soybeans into fine soybean powder. The patented product will be manufactured at an existing plant in Oskaloosa.
Gary Sabolik, president of FarmConnect, told farmers the soy food industry has U.S. sales of $3 billion and is growing at about 20 percent annually. Soy foods have been credited with having positive effects on everything from menopausal symptoms to cancer, osteoporosis and heart disease.
SoyLink will own 65 percent of the business, and Soy-Driven Enterprises, which is made up of Minnesota and Iowa farmers and agribusinesses, will own the other 35 percent.
FarmConnect presents farmers with opportunities to invest in value-added ventures, Sabolik said. The cooperative has an identity-preserved spring wheat procurement program, a retail meats project, and food grade soybean production with traceability.
Shares offered
To invest in the project, farmers must buy a share of FarmConnect common stock for $1,000. They must invest a minimum of $10,000 in SoyLink, which is tied to soybean bushels at $5 per bushel for a minimum of 2,000 bushels. Farmer investors can grow food-grade soybeans for use in the plant. They will receive a negotiated price of $1 to $1.50 above the Chicago Board of Trade price.
USDA Rural Development lending offers a loan guarantee on their investment in Soy-Link, said Norman Brus, USDA business and cooperative specialist in Waverly. Farm Credit Services in Minnesota also offers financing.
Steve Ladlie, an Albert Lea farmer, invested in Soy-Driven Enterprises four years ago and has raised food-grade soybeans for the business.
ADVERTISEMENT
"We need to get our share out of the food dollar,'' Ladlie said. "This is a way to do it.''
Joel Meirick, owns the Mill in Protivin with his brothers and also raises corn, soybeans and hogs. He also invested in Soy-Driven Enterprises. He and his customers have raised food-grade beans for four years.
"My goal has been to bring more value to the grower and keep guys locally making money,'' Meirick said. "We never envisioned that we would get the opportunity to own a plant. A lot of times the second owner is the winner and that's what happened here.''
A Japanese businessman developed the process to manufacture Fine Soy Powder and built the Oskaloosa soy processing facility, but lacked the cash to get it running, Meirick said.
Expanding demand
Sabolik said SoyLink will focus on the mushrooming domestic soy beverage industry. Soy cheese, ice cream, tofu and meat alternative manufacturers also hold potential.
The Oskaloosa plant has two production lines with room for expansion.
SoyLink holds exclusive rights to process, produce and sell fine soy powder in North America.
ADVERTISEMENT
Currently, soy milk is made by grinding and squeezing a soluble protein slurry from beans, Sabolik said. Seventy percent of the bean is wasted. Fine soy powder uses the whole bean. The process removes the soy flavor Americans find unpalatable and makes the powder able to absorb the flavor of anything mixed with it.
SoyLink is working with The Hale Group, which represents many food industry giants, in marketing the product. A large East Coast dairy is interested in producing flavored soy beverages to compete with the soft drink market.
Financial projections show investors can anticipate a 20 percent to 27 percent return on investment.
Ladlie and the other investors want the venture to be farmer owned, but if farmers don't step forward, several large investors are ready to fund the project.
SoyLink has a minimum offering amount of $8 million and a maximum of $13 million. The stock offering closes April 12.
