South Dakota Search Light: John Hult
The South Dakota Railroad Board voted Wednesday to send $12.6 million to the Davison Regional Rail Authority for upgrades to service the state’s largest soybean processing facility.
The $504 million High Plains Processing plant 2 miles south of Mitchell broke ground about a year ago. The South Dakota Soybean Processors-led project is designed to help meet demand for soybean feed for livestock and for soy-based biofuels.
The Davison County Commission dedicated $21 million in financing in 2023 through a tax increment financing deal that the company will pay back through new and higher property tax revenues.
The Governor’s Office of Economic Development also chipped in funding, to the tune of $6.7 million. The plant is expected to process 35 million bushels of beans a year, produce 570,000 tons of seed meal and 300,000 tons of oil and employ 85 people.
The new funding will flow to the Davison rail authority, and will be used to build out 6.2 miles of rail line, 22 industrial turnouts and two mainline turnouts for trains to switch tracks. The new rail infrastructure is expected to service 147 rail cars a week, according to the project application submitted to the Railroad Board. Unit trains with 100 or more cars will move through once or twice a month, the application says.
The money will come from the State Rail Trust Fund. The application notes that while there are several private investors for the plant itself, there are none for the rail lines needed to service it.
Shipping by rail, the project’s application says, will keep 30,000 long-haul trucks off the road each year, though project backers told the board that truck traffic would spike in the immediate area as farmers bring crops to the facility.
Rail Board Member Greg Carmen of Brandon recused himself from the discussion and decision on the rail funding because he’s an investor in High Plains.
Tom Kersting of South Dakota Soybean Processors told the board the processing plant will be a boon to economic growth, and that the plant could be up and running in October of 2025.
He noted that the plant might also process crops like sunflower, camelina and canola, which can be more easily grown on the west side of the state. “We could also consider some of these new, novel oilseed energy crops,” Kersting said. “Some of those crops can be grown in the poorer ground out west.”
The Davison Regional Rail Authority was created in August to service the project, but High Plains will sign the promissory note on the loan. Project backers had hoped to secure a $16 million loan, but Transportation Secretary Joel Jundt told the board that the rail fund has about $35 million at the moment, with $10.8 million in funding needs already identified. There are another $15 million or so in potential projects that might seek grant funding soon, he said.
If a rail bridge were to collapse, Jundt said, the board might see a loan application to cover the rebuilding.
“I would caution you to, in essence, not loan out everything we have so we’ll be able to handle some of those emergencies in the future,” Jundt said.
The board agreed, voting to approve a $12.6 million amount for the loan, with a 2.95% interest rate.
Previously, the largest-ever loan from the fund was $7 million in 2007, Jundt said.