SD farmers learn how soybeans get to Asian markets

As soybeans transform from flowers on plants to plump pods, farmers agonize about the fluctuations in the market. This fall they face the dilemma of keeping or selling the resulting crop.

Significant to the determination of price will be how many bushels are loaded onto rail cars and sent to the Pacific Northwest to be transferred onto ships, bound for markets in China, Japan, Korea and the Philippines. In 2014, sales to foreign markets reached a record $1.5 billion according to South Dakota’s Research and Promotion Council.

For 15 South Dakota farmers, traveling to the Pacific Northwest in June was intriguing as they learned what happens to their soybeans. Sixty percent of the soybeans raised in South Dakota travel the rails to end up at the ports in the Pacific Northwest, heading to Asian markets. South Dakota’s Soybean Research and Promotion Council organized the See for Yourself Pacific Northwest mission as a way to educate farmers about international marketing and projects funded through the soybean checkoff.

Connection to Aberdeen

At Grays Harbor near Aberdeen, Wash., Ag Processors, Inc. dominates the traffic, according to port officials. The grower-owned cooperative plans to build a plant in Aberdeen, S.D., and the producers on the tour eagerly learned how soybean meal is processed and sent to markets in Japan and the Philippines. The facility includes enclosed conveyers that transport product from the receiving building through a sampler and inline scales into the vessel. It is 12 nautical miles from the Pacific Ocean or one and a half hours from open ocean.

In an area that used to primarily ship lumber, Grays Harbor has become the no. 1 exporter of soybean meal on the west coast according to Leonard Barnes, deputy executive director of Grays Harbor. He said $220 million in private investments has been made since 2008. In 2011, new rail turnouts were added to the area to encourage development.

“AGP is here because of our location,” Barnes said. “Time is money and AGP is critical to us, as we deal with the rail dependent cargo. We own the land, and AGP owns the building and the equipment.”

Jim Berreth of Eureka was impressed with the emphasis on product integrity during the trip. AGP officials said that if a rail car arrived that had been opened up or has a seal that is cracked; those cars are pulled off to the side. “They don’t just ignore quality issues.”

Berreth said he was really glad to see the export facility, and he’s excited that the planned soybean processing plant in Aberdeen, S.D., will potentially help area basis as well as provide a good place to haul product locally. Chris Schaffer of AGP said that it’s planned for the soybeans processed at the South Dakota plant to be shipped through the Grays Harbor facility.

The logistics involved as the soy meal is loaded directly from train to the ship impressed Berreth. He said, “I didn’t think about that when my grain leaves Selby, the trains have to match up with the ships. Now I know that within one month, the beans that leave my farm will be in the hands of people in China.”

Tacoma business booming

As the group arrived at the TEMCO terminal at Tacoma, Wash., a ship was being loaded with 2 million bushels of soybeans. After two and a half days, the ship would head to Japan.

TEMCO, owned jointly by Cargill and CHS, is located at the port of Tacoma. A constant stream of 110-shuttle trains arrives from South Dakota, North Dakota and Minnesota, according to Jerry Johnson, manager for TEMCO. The Midwest trains take four days to reach the port facility. Within 15 hours, the shuttle trains are unloaded directly onto the ships. Each ship can hold about three 110-car shuttle trains. And then the ships head out to their destinations of Korea, Japan or China.

“This year, business is very good,” Johnson said. “We plan to handle about 5 million metric tons each year. But there are no margins in shipping. We handle only corn and beans. Wheat is handled by those with berths on the Columbia River.” When bean harvest begins at the end of September, the activity will be frantic through October and November. During harvest season, Johnson said they will have 1,200 to 1,300 train cars in the pipeline.

Johnson said the grain that comes from the Midwest is of good quality. Most of the beans test around 19 percent oil and 34 percent protein. The Chinese are eager to crush the beans for oil and meal, Johnson said.

In an area that receives about 40 inches of rain each year, those running the facilities devise ways to work around weather events. Johnson said, “We have 25 to 35 days of rain. That’s a whole month. Every captain is very worried about mixing soybeans and rain. In 2006, we added an anchored one-acre roof over our berth. That covers three and a half of the hatches on a ship. The roof cost $7.5 million to build, and it paid for itself in one year.”

“We may not be the fastest, but we’re steady, kind of like the tortoise,” Johnson said. Last year, the facility had five months when no ships were loaded, due to the downturn in the market. Johnson worried that this year would be slow, but demand perked up, keeping them busy loading ships.

“Being able to get into the loadout facilities such as Export Grain Terminal (EGT) and TEMCO was amazing,” Dan Piotter of New Effington said. “The boards in the control rooms at those companies list the shuttle trains that come in from all over, including Graceville, Minn., and Selby, S.D. That’s our area and potentially my grain. The boards list the schedule for when the trains will arrive, when they will be unloaded and then when our beans are put on ships to China. That really brought home to me that my beans are ending up in China where they are used to feed their poultry and hogs.”

In addition to working to increase exports, soybean checkoff dollars invest in research to increase usage of the commodity. The group also visited facilities researching uses for soybeans to use in aquaculture. Berreth said before going on this trip he had no idea what was done with the checkoff money. Now, he understands better the work the group does with companies to increase demand and help with export business. “I always thought checkoff dollars were good but didn’t realize some of the places they went,” he said.

Newest grain terminal

Export Grain Terminal operates the first export grain terminal built in the United States in over 25 years, a state-of-the-art facility that is redefining the speed, flexibility and efficiency of Pacific Northwest grain exports, according to David Jenkins of EGT. The location at Longview is important, he said, as there are not very many places with a deep-access port that also has access to three rail lines. The location has four shuttle tracks and five shipping bins.

David Kim, BNSF, said that the rail line has a long history of hauling grain, and working with the export elevators on the West Coast. The rail line partnered with EGT to increase the export capacity of soybeans as a whole.

Kim told the group, “What you do as farmers is critical to the balance of trade, especially with China. We are nothing without the stuff you grow and produce.” Since 2013, BNSF has invested more than $3.5 billion to maintain and expand the Northern Corridor of BNSF.

The EGT facility opened in 2012 and is owned by Bunge and ITOCHU, a U.S. subsidiary of a Japanese trading company and South Korea-based STX Pan Ocean. Jenkins said it cost more than $200 million to build the facilities which feature three rows of silos along the waterfront. As the rail cars roll over the grain pit, robotic openers quickly insert keys and release the grain inside and then it flows within two minutes into the pits and rides air conveyors to storage or ships. The system can handle 120,000 bushels an hour. The terminal is expected to handle as many as 200 ships per year, with an annual throughput capacity of 8 million metric tons. It costs on average $4,000-$6,000 per car (or on average $1 per bushel) to transport a shuttle car with grain from South Dakota to the port.

As a farewell, Jenkins requested, “Send us soybeans!”

The takeaway

Tara Parmely of Miller is an agronomy student at South Dakota State University and works with her family farm operation

“I now have a better understanding of how the ports and railroad are intertwined and connected to create efficient travel for our products to be competitive in the world market,” Parmely said. “Being able to see where our grain goes is important for us to be able to tell the consumer about how we are producing their food. It was a good experience and will help me relate to consumers about agriculture.”

Also interested in ag marketing and ag business, Parmely said, “I knew the soybean checkoff put money towards promotion but did not know what exactly they did. After this trip, I know the checkoff invests money in consumer education. It also invests in developing new markets for our soybeans and soybean meal, such as by developing a market for our Midwest soybean meal for aquaculture.”

Connie Sieh Groop is a freelance journalist who wants to share the story of agriculture. If you have any suggestions, email her at conniegroop19@gmail.com. Check out her blog at inkaboutag.com.