Kent and Max Kurtz harvested more than 850 acres of soybeans on their farm near Forest City, MO, last year. But not a single bushel will be sold as whole beans.

"We manufacture soybean meal and soybean oil here on the farm," says Kent Kurtz, who, farming with his father, also finishes hogs on contract. "We produce soybean meal on a custom basis for several other pork producers."

In fact, they deliver bean meal to pork producers within a 65-mile radius of the farm. Extracted oil is sold to A.C. Humko at Champaign, IL.

The Kurtzes operate two Insta-Pro screw-type extruders to produce about 10 tons of meal per day. Most of the meal then is put through a press to extract much of the oil. Pork producers typically haul a load of soybeans to the Kurtz farm, and haul away a load of soybean meal.

"We deliver meal on a pound-for-pound basis for the soybeans," Kent explains. "We keep the oil as payment for producing the meal. When we collect enough oil to make a semi-trailer load - in about six weeks of normal operation - we haul it to Humko and sell it at prices based on the Chicago Board of Trade market. Our oil usually earns a premium of from $100 to $400 per load."

Hog producers who want full-fat soybean meal are charged a $35/ton processing fee.

"We also charge a 10cents/bu dump fee for soybeans unloaded here, to cover the cost of handling," he adds. "We have drive-through dump pits and overhead soybean meal bins. We can dump a truckload of soybeans and reload with meal in a matter of minutes."

Kurtz recalls how they got into the meal-and-oil business: "At the time, we were farrowing hogs and taking them all the way to market weight," he says. "We liked full-fat meal in rations for baby pigs and for sows. We had the bins, we had a grain leg and we produced soybeans: Why not convert our own soybeans into meal for our hogs?"

They installed an extruder that uses the friction of pressure to form meal at a temperature of about 300 degrees. "We started out with the idea that we would only process soybeans for our own use," Kurtz continues. "But other pork producers wanted both full-fat and regular soybean meal for their rations, so we bought a second extruder."

The extruders require little maintenance or attention. The Kurtzes grind soybeans in a hammer mill before augering them to the extruders. They soon found themselves in a growing feed business, as more and more swine producers traded their soybeans for meal.

"We do some grain banking for farmers who have limited storage," says Kurtz. "Some farmers store their beans here, then draw meal throughout the year. If they run out of soybeans, we can fill in with our soybeans."

Later, an oil press was added.

"We get about 312 lbs of oil for each ton of soybean meal we produce," he says. "At that, the meal still contains about 6% oil, which is a considerably higher oil content than in solvent-extracted meal. The extra oil provides more energy in the ration and helps control dust."

Kurtz puts the equipment investment at just over $100,000, not counting storage bins, grain handling equipment and rolling stock. About $8 worth of electricity is needed to produce the meal and oil from a ton of soybeans.

"We're getting an average return over costs of about $18 per ton of beans," he says. "At that rate, our investment in machinery will pay out in five years."