GRAND FORKS, N.D. (DTN) -- On the northern edge of Grand Forks, North Dakota, dirt work is starting on roads and other infrastructure for a project that has become the most controversial corn mill ever proposed in the U.S.
After talks with local economic development leaders last year, a Chinese food-processing conglomerate, Fufeng Group, launched plans to build a $700 million, 25-million-bushel corn wet milling plant that could potentially make products such as monosodium glutamate (MSG), other starches and amino acids that would primarily be used for livestock production.
The farmland being converted for the corn mill also is about 12 miles east of Grand Forks Air Force Base. That has become just one of the major sticking points dividing the Grand Forks area over the project.
The Grand Forks area is already home to multiple mills and processors, primarily serving a range of other commodities. The 100-year-old North Dakota Mill, a state-owned wheat mill, is just down the road. Potato processor Simplot would be a neighbor to Fufeng. Alliance Valley Bean, an edible bean company, is just west of town. American Crystal Sugar is located across the river in East Grand Forks... just to name a few.
A corn mill seemed to fit the bill, but the project has now become one of the biggest political and national security debates over Chinese foreign investment in the U.S.
On Tuesday, 50 Republican House members wrote Biden administration Cabinet leaders -- the Agriculture secretary, Defense secretary and Treasury secretary -- calling the Fufeng Group's land ownership "an alarming development for our national security."
The lawmakers added, "The presence of a CCP-affiliated corporation near a military installation potentially undermines the integrity of our high-capability military bases, jeopardizing our strategic interests."
The House members called for Treasury, USDA and Defense "to take effective action in addressing the potential national security risks that appear to arise from this transaction and what it means for the future of our national security."
The corn mill is already under review by the U.S. Committee on Foreign Investment in the United States (CIFIUS), a federal interagency group that specifically looks at the national security implications of foreign purchases of businesses and real-estate. Committee staff have been in Grand Forks interviewing people about the project. It's expected CIFIUS will make its decision about the Fufeng project sometime in early November.
Eric Chutorash, chief operating officer for Fufeng in the U.S., did not respond to multiple emails from DTN seeking an interview about the project.
DRONE MFG WEIGHS IN
The letter from lawmakers comes a week after a major aeronautical employer in Grand Forks also came out publicly against Fufeng. San Diego-based General Atomics Aeronautical Systems Inc., a manufacturer of drone aircraft systems, issued a news release raising its concerns about Fufeng being located near the Air Force base operations, which includes an array of drone and radar-system technologies.
"The proposed agricultural project represents a major vulnerability for maintaining the necessary secrecy and integrity of classified weapons, communications frequencies, satellite connectivity and many other technologies vital to global security," General Atomics stated.
"Chinese business efforts are inextricably linked with Chinese government efforts," said C. Mark Brinkley, a spokesman for General Atomics. "We can't ignore the opportunity for sophisticated military espionage to co-locate itself within a Chinese business of such scale and scope. Given the proximity to critical national airspace and sensitive military operations on and around Grand Forks Air Force Base, American leaders should be very, very concerned. I know I am. So, we've got to act."
Brinkley said CIFIUS "or another similar authority must stop the corn mill project in view of the security risks it poses."
While the Fufeng corn mill development raises questions, few people are challenging the Chinese ties to aviation already anchored in Grand Forks. Cirrus Aircraft, one of the world's largest manufacturers of single-engine planes, already employs 300 people in Grand Forks. Cirrus is owned by China Aviation Industry General Aircraft Co. (CAIGA) a Chinese state-owned entity, which acquired Cirrus in 2011.
Along with that, the University of North Dakota's aerospace program also has at least a 30-year history of training hundreds of Chinese pilots.
PRO: REASONS TO ALLOW FUFENG
Paul Sproule's farm operation raises potatoes, sugarbeets, wheat, edible beans and corn around Grand Forks, as well as on farms in Illinois. Sproule notes North Dakota's two major industries are energy and agriculture. Corn is a crop, however, that has lacked some of the value-added processing that other crops have in the area.
"If you have a company that is going to come in and process as much as corn as they are going to process, that is a big deal," Sproule said.
At 25 million bushels, Fufeng would process roughly 6% of North Dakota's corn crop, according to USDA's Crop Production numbers. Locally, however, Sproule said Fufeng could move the basis for area corn. Right now, corn basis is about 48 cents under in Grand Forks and it swings to 55 cents under in nearby elevators. Normally, basis can run 50 cents to 70 cents under, Sproule said.
It's been estimated Fufeng could swing local basis upward as much as 40 cents, though critics doubt the project would have that impact. Sproule points to the basis impact the wheat mill has in the area, at just 5 cents under the December CME price.
"That's some of the impact this is going to have on corn," Sproule said. "We are not heavily invested in value-added ag. Any tie you can have (to) finished goods or have a processing facility that utilizes your agricultural goods, it adds value. It's not going to just go on a unit train to the PNW; it's being processed here."
John Oncken, CEO and owner of True North Equipment, a John Deere dealership in Grand Forks, said he was part of those meeting with Fufeng's management early. He said the project was seen as an investment in the future and providing another avenue for marketing grain in the area.
"Logistically, this is a nice space of ground that would fit for corn milling," Oncken said. "There's nothing new here than what it always has been. It's just been heavily exaggerated around the intent."
Instead, Oncken said, "Everything has gotten co-mingled and politically charged."
CON: REASONS TO REJECT FUFENG
Frank Matejcek, another local farmer and cattle producer, once owned the land where Fufeng is being developed. Among his questions, he wonders why the development needs to happen on the black, rich soil of that property when there is more marginal land nearby, also farther outside the city.
"There is no reason that really good soil needs to go that direction," Matejcek said.
Among Fufeng's focus would be to produce amino acids, a key product for helping boost production for livestock and poultry. Matejcek and others wonder why Fufeng would choose an area not heavily into livestock rather than locate somewhere closer to larger livestock and poultry production.
"I'm not a big conspiracy theorist, but why do they want to be here?" he said.
Ben Grzadzielewski initially became an opponent over the water needs Fufeng would require, which he said equates to nearly the water demands of Grand Forks itself. Residents during last year's drought were told to conserve water, yet city officials want to bring in a business that would take significant water requirements every day.
"The water demands and the odor were the things that really stuck out before the national security issues came up," Grzadzielewski said. "The city just has a terrible track record on these big economic development projects."
Grzadzielewski and Matejcek point to the now-idle Red River Biorefinery as reflecting a poor track record of city and local economic development moves. The biorefinery is just a stone's throw from where Fufeng will develop. Red River Biorefinery opened in 2020 as a project to convert sugarbeet tailings into ethanol. During the early part of the pandemic, the facility was making hand sanitizer. Along the way, the refinery drew complaints about the odor, was fined by state officials over wastewater dumping violations, and owed the city of Grand Forks several hundred thousand dollars for its water use. The biorefinery is now closed and American Crystal Sugar announced earlier this month it is canceling its contract with the biorefinery. The Grand Forks Herald reports the biorefinery's owners expect to detail to city officials sometime in the next few months what the plans are to reopen the facility.
"If anyone is questing the corn plant they just have to say, 'Where was you your due diligence for that biorefinery?'" Matejcek said.
Shaun Beauclair, a farmer from Stephen, Minnesota, is skeptical about the basis projections. An investor in a wet mill plant and ethanol plants, Beauclair said there would unlikely be such a dramatic positive swing in corn basis from the project. Beauclair said there also was never a real analysis shown to draw such as conclusion.
"They are not going to spend $700 million on this project and not know what the impact is going to be on the corn price. It just doesn't add up," Beauclair said.
Opponents pushed for a city referendum on Fufeng but it was thrown out of state court in August after city officials argued the petition couldn't overturn their administrative decisions. Right now, a lot of perception and the project will hinge on the CIFIUS decision.
"If CIFIUS approves it, I think it makes it much more difficult for the people to oppose it," Beauclair said.
Still, Beauclair pointed to comments from North Dakota Sen. Kevin Cramer, a Republican, that China has not been a reliable agricultural partner. Beauclair also questioned the ethics of business relationship with a country that suppresses free speech and violates human rights.
"You are only going to likely have one corn processing plant in Grand Forks," Beauclair said. "Do you want it to be with China or do you want it with someone who shares your values?"
To read the letter sent to U.S. Treasury, Energy and Agriculture secretaries by GOP House members, see:
Also see, "Senators Want Federal Review of Chinese Corn Mill Project in North Dakota," https://www.dtnpf.com/…
Chris Clayton can be reached at Chris.Clayton@dtn.com
Follow him on Twitter @ChrisClaytonDTN
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