Prairie AquaTech to expand; building new plant in Volga

‘Village’ mindset key to moving on $60 million project

By John Kubal / Brookings Register / Originally published April 25, 2018 / Reprinted with permission

 

Prairie AquaTech, a successful start-up business founded in Brookings in 2012 will be building in Volga about 5 miles west of Brookings and next to one of its several vital “village” partners: South Dakota Soybean Processors.

South Dakota Governor Dennis Daugaard gave the keynote address at Prairie AquaTech’s Groundbreaking Ceremony May 1. Photo Gallery

Other partners vital to the $60 million project and its continued success include South Dakota State University and the Brookings Economic Development Corporation.

“For projects of this magnitude, it really takes a village to make it happen,” said Mark Luecke, managing director and CEO of Prairie AquaTech, which makes a protein-rich ingredient used in fish feed.

He noted that the company’s products came about out of research at South Dakota State University College of Agriculture and Biological Sciences.

Luecke calls Prairie AquaTech “a very unique facility” that uses “large fermentation tanks where we’ve taken the work that SDSU did in small, little flasks and we’ve now scaled it up to these big fermentation tanks.”

“Essentially what we’re doing,” he explained, “is fermenting soybean meal. We buy soybean meal from South Dakota Soybean Processors in Volga. They have a plant down in Miller that produces non-genetically modified meal.

“We ferment that. And on site, we also have a small feed mill. That allows us to take our ingredients and mix them with other ingredients and pelletize that into a fish feed.” That feed, while not the finished product it produces, can then be used to test AquaTech’s protein-rich ingredient to ensure its compatability as a vital component of a final fish-feed product.

Luecke called the BEDC “an incredible partner for us. They’re part of our village. There’s no better place than Brookings, South Dakota, to start a business.” He worked closely with BEDC Executive Director Al Heuton on the start-up project that became Prairie AquaTech.

The BEDC wrote a grant to the U.S. Economic Development Administration. That grant provided funding support for the ag tech center as a pilot facility on the east side of town south of Daktronics.

“The grant from the EDA was $1 million,” Luecke explained.  BEDC with other community EDCs came up with a match of $1 million. That $2 million provided for building a pilot facility, which is owned by the BEDC. “It remains an asset for the community and we lease the building from them.”

Time to expand

Luecke noted that the need for a larger plant had been on the radar for some time. The new 300,000 square-foot, $60 million ($45 million for construction; $10 million for operating capital; and $5 million for continued development of new products) facility at Volga will add 35 employees to the current staff of 30 people. The factory will be able to produce annually about 30,000 tons of a major protein component that will go into pellets that also contain vitamins, minerals and oils. The pellets then go to fish farms.

The fermentation process at the present AquaTech plant is done in several 2,000-gallon tanks. The tanks at the new plant will be done in 40,000-gallon tanks. That will drive a big demand for soybean meal from SDSP, which Luecke said produced about 700,000 tons on an annual basis.

“We’ll buy about 50,000 tons to get started,” he said. “We’ll be a good customer of theirs.”

Groundbreaking for the new facility took place Tuesday, May 1. Luecke said the plant is expected to be operational in 12 months.

“This groundbreaking represents a significant milestone for our company and for the development of new value-added agriculture businesses in South Dakota,” Luecke said in a news release. “We’re helping farmers by adding value to soybeans produced in the region. The new plant is also evidence of the successful commercialization of research coming out of SDSU.”

Global impact

While Prairie Aquatech’s presence will be visible in South Dakota, Luecke sees its products impacting a global demand at a time when the world’s oceans have been over-fished.

“We’re trying to satisfy the world’s demand for animal protein,” he said. “Aqua culture, or fish farming has been done for centuries. What’s happened is its sophistication as a business has improved dramatically over the past 20 years.”

He explained that the most efficient way to convert plant protein to animal protein is in fish: 1.5 pounds of plant feed can produce 1 pound of fish protein. For a cow that ratio is about 8 pounds of plant food to produce 1 pound of beef protein.

“We are an ag state, so we know how to raise livestock,” Luecke said. “And fish is just another form of livestock.” And AquaTech will help feed those finned livestock.

He noted primary markets for fish feed are “where higher-quality fish are currently being raised,” such as in the Snake River Valley in Idaho, which accounts for “50 percent of U.S. trout production. And trout is an important species to us, so that will be an important market.”

He also cited Canada, which “has four times the amount of salmon and trout production that the U.S. does.”

Looking ahead to the expansion of Prairie AquaTech, Luecke again stressed the role of the company’s village-partners.

“We’re grateful to be in a community like Brookings where you have SDSU as a willing partner in commercializing research,” he said, adding, “and a community development organization – BEDC – which is willing to take some risks to make sure that we have a good entrepreneurial community in Brookings. They helped us build the pilot project that we presently use.”

Concluding, he cited “a willing partner in SDSP in Volga, where we can actually take university research, scale it up and spin out an operating business into one of our surrounding communities in Brookings County and have that community flourish.”

Luecke also expressed his appreciation to South Dakota’s congressional delegation in Washington, Sen. John Thune, Sen. Mike Rounds, and Rep. Kristi Noem, for their support.

Contact John Kubal at jkubal@brookingsregister.com

 

Featured image: Mark Luecke, managing director and CEO, shows off a couple of the 2,000-gallon fermentation tanks at the present Prairie AquaTech plant in Brookings. The fermentation tanks in the new plant in Volga will each have a 40,000-gallon capacity. Photo courtesy The Brookings Register

Aurora, SD flourishes as bedroom community

Public Power is Good for Business is a quarterly section highlighting successful businesses and projects located in our customer communities. Public power communities help foster prosperity and growth by offering reliable electric service at cost-based rates.

 

City is affordable alternative for young families and first-time homebuyers

Josh Spilde knows what it’s like to be a first-time homebuyer.

“Let’s say you spend around $150,000 on a home that is 40-50 years old,” he said. “That’s a big investment and it probably included a large down payment. But the house is old, so you might need to replace windows or fix the roof within a few years or even months.”

Spilde, an electrical contractor, knows many first-time homeowners can’t pay for these early repairs because their money is tied up in buying the house.

“I think housing should be affordable,” he said. “And it should be maintenance-free living for a while.”

This belief led Spilde to purchase and develop fourteen acres in Aurora, SD. What was once raw farm land is now a 24-lot housing development complete with water, sewer, electrical and roads.

“My goal is to provide affordable housing, targeting low- or middle-income families and first-time homebuyers,” Spilde said.

As for his choice in location?

“Aurora was a natural fit,” he said.

Location, location, location

Aurora is home to three housing developments, two of which are entering their second phase.

Home to roughly 532 people, Aurora has seen a housing boom in the last few years. A number of factors have played into this recent growth, but its proximity to another rapidly-expanding community has had the most impact.

Only a few miles away is South Dakota’s fourth-largest city, Brookings, which has seen a 25% population growth since 2000. In the last ten years, it has added over 1,700 housing units, but struggles to keep up.

“Their job market is exploding, but they are running out of affordable places to live,” said Aurora Utility Manager John Muller. “Also, they are developing away from the business district, in the opposite direction from Aurora. That has worked to our advantage.”

Much of the growth in Brookings has been in the southwest corner of the city. Aurora sits about three miles east of Brookings, just south of US Highway 14.

“The commute to Brookings is around five minutes and it’s mostly highway,” said Muller. “You might travel more miles [than you would if living in the city], but you’ll get where you need to be in half the time. Less traffic, fewer stoplights.”

Also in Aurora, the price is right.

“There is a big demand for housing in Brookings, but it’s hard to find good homes under $200,000,” said Spilde. “That’s not a realistic price range for a large portion of people.”

Strike while the iron is hot

Spilde is the owner and operator of Spilde Electric in Arlington, SD, a business he’s run since 2003. In 2015, he was looking for land to build and sell a spec house when he discovered the property in Aurora.

“I realized it wouldn’t cost much more to buy the fourteen acres than to develop one or two lots in Brookings,” he said.

Utilizing low-interest financing from the Heartland Economic development Loan Program (HELP) Fund and First Bank & Trust, he purchased the land and installed the infrastructure.

Spilde’s development in Aurora currently has three homes, including a vacant spec house, pictured in the foreground, for sale for $177,000.

“I sent out bids for water, sewer and road but did all the electrical work myself,” he said.

At $27,900 each, lots are going fast.

“We sold two lots by the end of 2016, and both of those already have houses on them,” he said.

Ten more lots sold within the first two months of 2017, plus two foundations have been poured.

“Half of phase one has sold, and we’ve already started working on phase two, which will be another 18 lots. Phase three is in the works for the next year or two,” he said.

Spilde’s development also offers 1,900 square-foot spec homes that come with a price tag of around $177,000. They can be purchased as-is or custom built with varied floor plans and features.

“I have alternate floor plans for small, medium or large split-foyer or ranch style homes,” he said.

Acting as the general contractor, he plans to keep building spec homes until the development is full.

Ready, set, grow

Spilde’s development is the latest of three to sprout up in Aurora.

“Since 2008, we’ve added 130 new homes. That’s almost double the number of structures in less than ten years,” said Muller.

Although it’s been mostly young families moving in, the city hasn’t doubled in population.

“We’re doing a wastewater study right now, and they are projecting us to reach about 760 people at the next Census,” Muller said. “With the growth we’re seeing from the housing developments right now, our lagoon will be at capacity. If they continue to expand, our lagoon will need to as well.”

Luckily, Muller said, wastewater is the only utility service feeling the strain of growth. The city installed a new substation in 2015 with an upgraded capacity.

The Aurora Quick Stop opened downtown in 2016, a sign of the flourishing community.

“It was sized appropriately, so electrical is not an issue and neither is water,” he said.

He will continue to monitor the situation, though, as the boom in housing has trickled down to other aspects of life in Aurora.

Already home to an ethanol plant, Aurora will welcome a new oil extraction plant northwest of town in a few months.

Also in 2016, a new gas station and body shop opened on Main Street that also includes two second-floor apartments. Employing about ten people and offering fuel, light grocery and auto mechanic work, it has been a welcomed presence in a community that prides itself on convenience.

“After the old station closed in 2008, people used to blame that for the poor housing market,” Muller said. “Now we’ve got this great Quick Stop plus affordable properties and family-friendly neighborhoods–I can’t wait to see what will happen next.”

The future starts today

In 2015, the city of Brookings established a task force to evaluate their local housing situation and the needs of low- and middle-income residents. Patty Bacon, chair of the Brookings Affordable Housing Tax Force, recently gave a public presentation to share some of the groups’ findings and make recommendations.

According to Bacon, some experts say rent or mortgage should be 20-25% of a person’s net income. In Brookings, that should come to about $823 a month on average.

But, Bacon says the average mortgage in Brookings exceeds $1,200 a month, and about half of all renters in the city spend 30% or more of their household income on rent.

While Brookings officials try to find solutions for affordable housing within their city limits, Spilde, Muller and others think living in Aurora is a viable option.

“People like small-town living,” said Muller. “As long as Brookings keeps growing the way it is, I don’t see us stopping.”