Instead of trucking soybeans out of state for processing and then trucking soybean meal back in to feed Michigan livestock, a new soybean processing facility will cut those transportation costs and help grow Michigan’s $101.2 billion agriculture and food processing industry.

The new processing facility, ZFS Ithaca LLC, 45 miles north of Lansing, is an affiliate of the only soybean processing plant in the state, Zeeland Farm Services Inc. in Zeeland, which processes about 10 million bushels of soybeans a year.

When the new plant comes on line in September, the total processing capacity will rise to 50 million bushels a year — that’s more than half of the state’s 2017 soybean production.

ZFS Ithaca will produce protein (soybean meal), fiber (hulls) and oil using an industry-standard solvent extraction process to accommodate any type of soybean. The facility is being built on a 435-acre site in Ithaca that was abandoned in 2008 by Liberty Renewable Fuels LLC when it failed to pull together the needed financing.

The new facility, a $130 million investment, will initially include grain receiving and storage, soybean processing, and a feed-ingredient transfer facility. It was awarded tax breaks worth $14.8 million over the next 25 years when the Michigan Strategic Fund approved an Agricultural Processing Renaissance Zone.

Also, the Michigan Strategic Fund approved $12.2 million worth of local and school tax capture breaks for ZFS Ithaca, which will begin in 2029 after the renaissance zone benefit ends.

After purchasing the property in 2014 and breaking ground in 2016, the company has connected and finished the adjoining railway operated by Great Lakes Central Railroad. As of early November, about 85% of the grain elevator was complete, according to ZFS President Cliff Meeuwsen. “About 50% of the storage for protein is finished and about 35% of the plant is done,” he adds. “We plan to begin taking beans in the spring of 2019.”

Originally, the plant was expected to be operational by early 2019. Construction progress has been steady, Meeuwsen says, but it’s not been without its issues. “We had a water issue. A lot of rain really slowed things down,” he explains.

When asked what producers might expect, he says: “It’s really dependent on supply and demand. This year the basis might be 20 cents better; next year it could be 40 cents.”

The plant will create about 74 jobs and is expected to raise the value of soybeans for producers, while reducing the cost of soybean meal, a primary feed ingredient for livestock herds, aquaculture and poultry flocks. 

That’s a win-win the soybean industry could really use right now, according to Gail Frahm, executive director of the Michigan Soybean Promotion Committee.

Offsetting trade war
China had been importing over 60% of U.S. soybeans before the trade war. “Soybean prices have gone down $2 a bushel since China has essentially stopped taking them,” she says, noting one of China’s moves in the trade war was to put a 25% tariff on U.S. soybeans that started in July.

According to federal data, U.S. soybean exports to China are down by 94%. China, which imports 87% of its soybean needs, is now sourcing them mainly from Brazil, as well as Argentina.

To compound the tariff effects, Michigan and the nation are looking at bumper crops.

“If our expected acres [2.29 million] and yield [49 bushels per acre] are on point for 2018, we will have production of 112,210,000 bushels, which will be a new record for our state,” Frahm says. “With China not taking beans, it’s creating a backlog down the pipeline and huge piles across the country.”

A new processing plant will not fix those woes, but “having an opportunity down the road with the Ithaca plant to keep those beans in state is very exciting,” she says. “With the new hog processing facility in Coldwater, there is great opportunity for soybeans in the state. There is a lot of good happening with ag in Michigan.”

Meeuwsen says he’s not worried about markets as the soy crushing business is in good demand, especially since the world’s population is increasing its middle class. “People are eating better, and there’s more demand for protein,” he says. “People may opt not to buy a new car, but there will always be a need for people to eat. We look forward to providing an economic boost for farmers and to the area, while providing good jobs for the long term.”

Change coming
Having a major soybean processing plant in Michigan will change the flow of soybeans. ZFS Ithaca has 4 million bushels of storage on-site.

“Everything will need to adjust,” Frahm says. “There’s a lot of interest from other grain dealers on just how beans will move and the agreements that will need to be made. And how farmers will deliver. I encourage farmers to keep their marketing options open, do their homework and come to one of our events."

RENEWABLE ENERGY: In 2006, a six-mile pipeline was constructed between the Zeeland facility and the Autumn Hills Landfill to transport methane gas. The gas runs two Caterpillar engines, which generate electricity and steam to operate the facility and process soybeans. Breaking ground on the underground pipeline are the Meeuwsens (from left) — Arlen, Cliff, Bob and Robb. 

Bruce Sutherland, president of Michigan Agricultural Commodities, agrees, saying it will challenge the trucking industry in the state. MAC buys, sells and stores ag commodities throughout the U.S. and Canada, and is Michigan’s largest grain handler, with seven elevators, almost 43 million bushels of storage and about 100 employees.

“This will spread out the marketing more than ever, and we’ll be shipping more often — likely shipping to them [ZFS Ithaca]year-round,” he says.

Although the new plant brings competition, Sutherland says it will just require some adapting. “When the ethanol industry located in the state — we have five plants now — some thought it was going to be the demise of grain elevators, but we’ve grown since then,” he says. “What it will mean is instead of loading trains and shipping to the southeast part of the country to support poultry and hogs, we will be loading double trucks and shipping in state.”

For growers, some may add livestock and shift crops to favor soybeans, especially if the tariff situation is resolved. “We might see more northern production,” Frahm says. “However, we still need to rotate crops because of diseases and insects. And with a lot of dairy in the north, there’s a need for corn silage.”

For the additional beans, Frahm is pushing for new uses for soybeans. “We’re hoping this spurs new interest and opportunities for businesspeople in Michigan to take a look at what some of those new uses could be,” she says. “We’ve already seen it in cosmetics and soy foam seating in cars to paint balls and the soy wheels on skateboards. New opportunities are just waiting for someone to take the reins.”

A family business
In 1950, Cliff Meeuwsen’s father, Bob, started buying and reselling produce and grain from local farmers, establishing Meeuwsen Produce and Grain. He established a grain elevator in Zeeland in 1974, and three years later, the company was reorganized as Zeeland Farm Services to closer reflect all the services it offered west Michigan producers. “I was his first employee,” Cliff says.

By 1992, the second generation was ready to take the reins, and Cliff, along with brothers Arlen and Robb, bought out the grain elevator business, while Bob continued with the freight business.

The elevator and grain transportation business continued to expand, and by 1996, after years of trucking grain out of state for processing, the family started construction on a soy processing plant. The soy crushing business expanded substantially, from 300 to 1,000 tons daily over the years.

In 2000, an oil refinery was constructed next to the crushing plant, producing 100 million pounds of food-grade oil, sold under the brand name Zoye.

The business also supplies non-GMO food-grade protein, which goes into everything from soy sauce to miso soup.

Cliff runs the operation with his brothers. His sons Eric (ZFS Ithaca plant manager) and Brian are now in management roles, along with Arlen’s sons, Kurt, Daniel and Mike.

In recent years, ZFS has expanded into the energy industry, acquiring its first ethanol plant in Nebraska in 2009 and another in Pennsylvania three years later.

“We call it our corn processing business that not only produces ethanol, but also distillers grains. And during the process of crushing corn, a byproduct is CO2,” says Cliff, who noted that carbon dioxide is then converted to a solid form to make dry ice. “It is shipped all over the world to areas that don’t have good refrigeration.”

This year, ZFS acquired a food-grade soy crushing plant in Iowa, which produces 800 tons a day.

“It produces both feed- and food-grade protein, soy oil, and soy fiber — white flakes for flour for both GMO and non-GMO products,” Cliff says.

No additional expansions are on the table, but Cliff says ZFS Ithaca is sized to meet the soy processing and soybean meal needs in Michigan for years to come. “This plant is being built with expansion in mind because it’s too expensive to go back later and try to expand,” he says.

Zeeland Farm Services, with 430 employees, remains a family-owned and operated business. “We needed to expand to make sure everyone has a job to do,” Cliff says. “The third generation is really beginning to take hold of the business, and they are doing it well. We look forward to providing our customers with a good market, while our business maintains its generational longevity.”