CJ Bio America building in central Iowa
Farm News news editor
FORT?DODGE – Sometime in early 2014, CJ Bio America, a new subsidiary of Korea-based CJ CheilJedang is expected to be in full operation. The company broke ground Monday to construct a $320 million lysine production facility at the North Central Ag Industrial Park west of Fort Dodge.
For those with corn to sell in Webster and surrounding counties, the presence of the dry milling plant owned by Valero and the wet milling facility owned by Cargill, both in the ag park, competition for corn is expected to be intense.
And competition for corn is expected to be just the beginning, according to those attending Monday’s groundbreaking ceremonies. They also think that CJ Bio America is just one of additional new manufacturers that could locate in the park in the relatively near future.
“When I was governor before, we were working on value-added products,” said Gov. Terry Branstad. “Now we have the best of all worlds – Valero, Cargill and now CJ (Bio America), right in the midst of some of the most productive agricultural land in the world, raising more corn and soybeans than any American state.”
When asked where the park can go in the
future, Branstad said, “(Cargill’s) going to be buying and processing corn; but there are other biosciences (seeking) to replace petroleum products with bio-based products, including nutraceuticals.
“I believe Cargill is looking for other partners. It’ll be better for the environment and better for the economy. I would not be surprised to see other partners locate in this vicinity.”
Greg Page, chairman and chief executive officer of Cargill Inc., confirmed the possibility without mentioning specific efforts.
“The bioscience industry is a very exciting area around the globe. There are people trying to make all types of chemical and latex replacements. A lot of people are looking for ways to use bioscience to create the same molecules as from petroleum products, whether its the outer lining of disposable diapers or something for the food supply.
“(They’re) trying to use corn to replace petroleum to provide (energy) security, create jobs and it’s better economically.”
Bill Northey, Iowa secretary of agriculture, said: “It’s a great story to tell. The area will need a lot of corn. It’s going to be a corn-deficit area. The competition will mean a bump in price, it’s got to be good for local farmers and I expect this to be one of the higher basis around here.”
Corn basis is the difference in price between the Chicago Board of Trade future price and what a local elevator will bid for corn on any particular day. Usually the basis is lower than CBOT futures, because producers have less of a distance to transport grain.
Northey said the corn basis went down, meaning a better price for local producers, once Cargill opened a similar facility in Eddyville.
“They have to bid to get the corn and have to compete for the corn. Farmers have been accustomed to finding someone who will take our corn; so it’s nice to find someone willing to compete for it.”
Rep. Steve King, R-Kiron, said: “This ag industrial park (adds value to corn) three times before it leaves the community. With spin-off businesses in a year or two from now, I wouldn’t be surprised to hear they’re adding value five and six times before it leaves the neighborhood.”
There are more than 300 different products that corn is converted into and gets to be a high value on the food side.
King said he expects to see a dramatic state of growth in the first several years within the park.
Back in the pre-ethanol days, when ethanol plants were being proposed, King said, “I remember they said, ‘we can add a nickel to the price of your corn.’ We were thrilled about that nickel.
“(Ethanol’s) been very, very successful, and if you look at this situation, now you have two plants competing. They’ll set the grain prices for a long ways around here.”
As the price gets better, he said, more grain will pour in from farther outside the immediate area, and even those areas’ corn end users will compete to get grain within their customer bases.
“Whenever you have strong markets,” King said, “it increases prices even as you move away from Fort Dodge because of the basis. At the same time it rearranges land values to be worth more. These markets will be here a long time.”
He also credited the ethanol co-product, distiller’s dried grain with solubles, as bringing more cattle feeding to Iowa.
“There are 120 feedlots for sale in Oklahoma and Texas,” King said, “because of the value of our grain and DDGS.
“Cattle feeders can now use rough hay that they otherwise wouldn’t bother with,” because DDGS mixed into corn stocks or ditch hay makes forage more palatable to cattle.
Renewable energy is an essential component of Iowa’s economic success, King said.
“You don’t have this level of success in other states,” he said. “Iowa is a center of prosperity. There’s a place where every bushel can go to and we don’t have to ship it out of the state.”
Contact Larry Kershner (515) 573-2141 or at email@example.com
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