ARMSTRONG, Iowa - Larry Sterk says StateLine Cooperative had no intention of building in Minnesota when the new year rolled around, but in January, WFS announced it would shut down its site in Blue Earth at the end of February. That's when StateLine got a call.
The company from Burt, Iowa, recently gained approval to build a $7 million, 1.7 million bushel facility on 30 acres just east of Guckeen on Highway 16. The Faribault County Commissioners OK'd a 12-year property tax abatement last month. Then this week, the county commissioners approved a conditional use permit.
"Everything is in place with the county and township," Sterk said.
Right now, the company is testing the soil on the 30 acres for which they have a purchase agreement. Sterk said the type of soil will determine what kind of foundation they use for the grain bins.
"We've taken some (tests), but the results were less than desirable," Sterk said. "We'll take some more to the west (on the 30 acres). Hoping we can get into better soil conditions for the foundation."
No matter what the soil tests say, the project will go ahead.
"We're committed to putting it together up there," Sterk said. "We're excited about it."
The company StateLine is a farmer-owned cooperative and has a board of directors elected by the farmers StateLine serves.
Minnesota is not unfamiliar territory for StateLine.
Sterk said a fair amount of farmers from Minnesota haul grain into StateLine's facilities in Ledyard and Swea City, Iowa.
"The farmers know how we operate," he said. "I think that's why they thought they'd call our farmer directors."
At that time, the StateLine board charged Sterk with finding out more about the situation. He called a meeting and sent out around 140 invitations to farmers in the Blue Earth area. He estimated StateLine already did business with about 30 of them.
"I wanted to know if it was a small group of farmers who wanted service or a larger group," he said.
Sterk got his answer at the meeting.
"Typically, meetings are very poorly attended," he said. "We had 60 farmers attend that meeting."
Sterk got the feeling the farmers weren't upset that the Blue Earth facility had been closed. Some parts of it were at least 50-60 years old, according to WFS.
"What (the farmers) were upset about was that was all they had," Sterk said.
Sterk decided there was enough interest to look into it further.
Using a website to isolate a 12-mile radius, with a mid-point just south of Guckeen, Sterk found that in 2012, the area had 157,708 acres planted in corn, and 103,507 acres planted in soybeans.
He figured at 170 bushels of corn per acre, it would add up to 26,810,360 bushels total. At 45 bushels of soybeans per acre, it adds up to 4,657,815 bushels.
"That's over 30 million bushels," Sterk said.
"They grow a lot of grain," he said. "The best soils in the world are in southern Minnesota."
In that same 12-mile radius, Sterk also looked at the number of facilities where farmers could deliver grain.
"One place in the center (Guckeen), and two on the eastern fringe areas (Marna and Delavan)," Sterk said.
Using that same 12-mile radius, Sterk found nine StateLine facilities south of the border, including Armstrong, Ringsted, north and south Burt and Swea City. Those nine have a combined 14 million bushel storage capacity, he said.
He also noted the bushel capacity of the three Faribault County locations: Guckeen can handle about 200,000 to 300,000 bushels; Marna between 3-4 million bushels; and Delavan around 4 million bushels.
"(The Iowa circle) has double the capacity and is spread throughout the area," he pointed out.
Because of the shortage of available grain bins, Sterk noted that Minnesota farms have more on-site storage.
"Farmers are very adaptive," Sterk said. "If they are not serviced, they will do it themselves. They are independent and very resourceful."
But they might be stretched trying to keep up.
"Yields will continue to go up every year," predicted Sterk. "Demands in storage will continue to increase as well."
He knows another fact too.
"Farmers don't want to spend a lot of time in the fall of the year traveling to get their vehicle emptied and get back to the combine," Sterk said.
"The facility we're proposing will be modern and high capacity," he said. "We should be able to get semis out of there in less than 10 minutes. Convenience and speed will be the assets of the facility we are proposing."
The location was carefully selected, as well.
In the spring, Minnesota embargoes certain roads, placing weight restrictions on them.
"Highway 1 and Highway 16, they do not put any additional weight restrictions on those two," Sterk said, so StateLine can move grain all year long.
Although StateLine has no plans now to ship grain on the railroad, they did want a location near the tracks.
"Long term, if there is a need, we are close enough to the rails we have the option," Sterk said.
The conditional use permit stipulates StateLine must complete its initial phase in two years.
"We hope to have this operational before the fall of 2014," Sterk said.
Phase 1 will be the 1.7 million bushel grain facility.
"We will have all the grain service at that location that we have at our other locations," Sterk said.
Phase 2A calls for at least two more bins of grain storage.
"Demand of customers will determine when we implement the start of the second phase," he said.
Phase 2B is a plant for liquid and dry fertilizer.
Once again, demand will determine when that phase is implemented, Sterk said.
"We're confident 1.7 million bushels of storage are needed up there," he said. "If our projections are correct, more will be needed sooner rather than later."