Watonwon Farm Service Cooperative

Industry: Farmer Grain Marketing RDP Investment: $20 million Launched: June 2011

Delavan, MN – Watonwan Farm Service (“WFS”) is a farmer-owned cooperative in Minnesota, serving more than 4,000 producers in southern Minnesota and northern Iowa. In addition to its grain marketing services, WFS offers fertilizer, crop chemicals, seed, livestock feed, petroleum products, and production financing.

WFS used $20 million in NMTC allocation to help finance the construction of a new grain shuttle house and rail terminal facility in Delavan, Minnesota. The high-speed working house includes a concrete slip form elevator with two grain dumping pits, 20,000 bushel-per-hour legs, a 10,000 bushel-per-hour dryer, and a 70,000 bushel-per-hour unit train load-out station. A loop track was developed along State Highway 109 east of Delavan, in the center of four obsolete WFS locations in Faribault County. The facility also includes two 1.33, million-bushel steel bins and four hopper-bottom bins, each with the holding capacity for 220,000 bushels of grain. An adjacent flat storage area is equipped to hold up to 2.88 million bushels of harvest excess.

It is estimated that the NMTC-facilitated project provides an average of $600,000 in new local, county, state, and federal tax revenue per year, and supported 153 full time construction jobs. If not for this project, the Faribault County area would not have unit train capacity that reduces transportation cost for the cooperative and increases the value of farmer member grain bids by at least 10 to 15 cents:

  • 10 to 15 cent value per bushel can be extrapolated to 12 million bushels of grain routed through the new shuttle house ($.10/bushel times 12 million bushels). This equates to $1.2 million annually as added gross revenue for the farmers in the region, providing an estimated gross annual value increase of $1.2 million in bid value to the farmers.
  • Impact of this increase in bid value overflows to the value of the grain bids in the immediate market region, on average 247.7MM bushels within the radius of impact. Discounting for the amount running through the new shuttle-house providing additional value of $23.57MM in bid volume growth for the area equating to $24.77MM of increased bid value in a region where 25% of the census tracts are LICs, for an annual potential increase of $6.2MM on pricing directly in these census tracts.
  • The extrapolated value of the increase in pricing retained at the Cooperative level for the 12MM bushels is approximately $600,000 per annum. This value is provided in annual member dividend pay-out or used to support capital needs that extend the life of existing assets of the Cooperative, typically a combination of both.

Without the train capacity, WFS would not be able to connect to the growing grain markets of Asia. At the time of allocation, according to the US Department of Agriculture, East Asia was the major source of demand for corn and soybean exports.

RDP’s Community Investment Program

Rural Development Partners partnered with WFS to provide an $80,000 community grant:

$67,000 was donated to 20 area fire departments toward the purchase of grain bin entrapment and rescue equipment. Funds were also used to provide volunteers the training needed to operate the equipment.

$10,000 was allocated to the Fuel Assistance Program to benefit low-income households.

$3,000 helped the Minnesota Valley Action Council Food Hub (MVAC) upgrade the software for their product database, giving the foodbank the flexibility to allow producers to sell their produce in different size quantities, maintain accurate records, strong reporting, and clean product lists.

RDP Impact

Without the NMTC allocation, Fairbault County would not have unit train capacity for farmers. Train access increases bids to farmers by as much as 10-15 cents.


Share this Project