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Fufeng Corn Processing Plant: Angry Citizens in Grand Forks

News | December 16th, 2022

By Laura Simmons

Citizens came to speak before the Grand Forks City Council on December 6, sharing their concerns about the Fufeng Chinese corn mill project.

Fufeng is a $700 million corn processing plant that will extract ingredients for animal nutrition feed formulas. Fufeng has raised concern among citizens who say it will put a toll on local resources, they’re worried about Fufeng’s ties to China and they believe the city council is not completing thorough, intelligent due diligence.

This is not the first time citizens have spoken before the city council about Fufeng, which is currently being reviewed by the Committee on Foreign Investment in the United States, or CFIUS, which will decide if Fufeng poses a national security threat.

However, CEO of Grand Forks Region Economic Development Keith Lund cited increased property taxes, job creation, an increased price in corn and indirect general economic growth as incentives for this corn processing plant.

“We were excited to be a part of the discussion because of the positive impact we felt the development would have on the community and the region,” Lund said.

The City of Grand Forks shared a presentation with the High Plains Reader, outlining general statistics and projected benefits of Fufeng.

Although Fufeng will receive significant tax exemptions for the first 20 years, it is still expected to bring in about $2.7 million in taxes within that time period. After 20 years, it will no longer receive tax exemptions and will generate about $5.8 million annually in taxes. These taxes are allocated to the school, city, county and park districts.

Fufeng is also expected to create 233 direct jobs, 525 indirect jobs and about 1,000 construction jobs.

“I have been supportive of value-added ag projects as they bring additional markets and higher prices for our local farmers, new jobs to the community, as well as construction work and additional tax revenues,” Grand Forks Mayor Brandon Bochenski wrote in an email.

Grand Forks Region Economic Development has stated that Fufeng is projected to raise the price of corn for local farmers by 40 cents per bushel. However, this number is an area of contention. Shaun Beauclair, who has 25 years of experience investing and serving on corn processing boards, said when he asked the Grand Forks Region Economic how they got that number, they said it was from asking two local corn farmers what they thought the increased price of corn would be.

Beauclair told the City Council they should fund a corn basis and origination study that would provide a better estimate for the projected increased price of corn. Beauclair said in his experience, it’s usually a four to 20 cent increase.

“The city, county and State of North Dakota taxpayers, the ones providing the over $100 million in grants and tax breaks, deserve the best available facts to decide whether to support the project,” Beauclair wrote in an email.

One Grand Forks semi-retired farmer, Frank Matejcek, said he is concerned about the strain on resources. Matejcek said Fufeng will use as much natural gas and as much water as the city of Grand Forks. Currently, Grand Forks uses 7.7 million gallons of water a day for residential and industrial use and Fufeng will need 6.6 million a day. Any new industrial water demand will come behind Fufeng’s water needs, according to Beauclair, who fears this could deter future businesses from coming to Grand Forks.

“We [the citizens of Grand Forks] are not anti ag processing; we're just anti this ag processing because it's not needed here,” Matejcek said. “There’s just a lot of things about this plant that didn't fit this area.”

City Administrator Todd Feland said Grand Forks is strategically located to provide water because it is farther north along the Red River.

Feland said the city is completing its due diligence to ensure the city can appropriately serve Fufeng. Grand Forks is currently building infrastructure, such as a stormwater pond, to help support Fufeng’s needs. Grand Forks has determined transportation for the corn will be available and the city has been looking at environmental factors through the Department of Environmental Quality.

“I think the important part of our development agreement is making sure we ensure that this is a good project for the entire community,” Feland said.

Grand Forks annexed its northern commercial industrial area in early June. Fufeng wanted to be annexed to have access to city resources, such as the infrastructure the city would provide.

However, most business owners did not want to be annexed, according to Craig Spicer who said 90% signed his protest. Spicer, who owns Spice 1 Trucking, said most landowners don’t have a need for city infrastructure and do not want the increased taxes. Spicer said his own taxes will increase 400 to 600%.

“The annexation process was a forced, manipulated demonstration,” Spicer said.

Fufeng bought 370 acres of land, despite not nearly needing this much for their corn processing plant. Spicer said he thinks this was done so they’d own enough percentage of land to override the landowners who would protest annexation.

Mark Peterson, the owner of Peterson Construction Company, said he received nine letters in the mail corresponding with his nine properties. The letters were from the City of Grand Forks and said that if the Fufeng USA corn mill does not move forward, then he would be liable for part of the cost of the stormwater pond infrastructure. Peterson did the math, finding he could be liable for $58,000 to $67,000.

“I read this letter; they’re basically saying don’t be a problem for this development, because if it doesn’t [finish] they're going to charge you for these improvements,” Peterson said. “Extortion is the crime of obtaining something from someone, especially money by using force or threats and this is a threat.”

Grand Forks citizen Jodi Carlson, who also spoke at the city council meeting, said she has filed a fraud investigation with the county against Grand Forks to look into the annexation and the allocation of ARPA funds, which Carlson said she believes have been misused after she looked at the U.S. Department of the Treasury’s Final Rule containing guidelines for the use of ARPA funds.

The American Rescue Plan Act of 2021, or ARPA, provided $350 billion for state and local governments for COVID relief and investments in water, sewer and infrastructure. Carlson said the city is putting $3 to $4 million in ARPA funds into infrastructure, $3 million for the wastewater treatment plant and $10 million for the natural gas line.

Carlson said the purpose of ARPA funds is not to build infrastructure for Fufeng.

“When you look at the number of small businesses that have been forced to close; you look at the number of hardships that families that have small businesses have encountered through this period of the pandemic and you're going to give $6 to $7 million on Fufeng,” Carlson said.

However, the city of Grand Forks responded to Carlson in an email that the U.S. Treasury allows five different uses of ARPA funds. They highlighted the section stating ARPA funds can be used to invest in wastewater and stormwater infrastructure.

Carlson also asked the City Council if Fufeng had applied for and received the exemption for the Uyghur Forced Labor Prevention Act (UFLPA).

The UFLPA, signed December 23, 2021, bans the importation of goods produced in the Xinjiang Uyghur Region of China. The U.S. has accused China of racial and religious genocide against the Muslim-majority communities who are enslaved in forced labor within the Xinjian region of China.

Carlson said she’s been bringing up the UFLPA since last February. The City Council said they were unaware if Fufeng had filed yet, but they said Fufeng would not be able to import any products until they’ve been cleared.

One of Fufeng’s most profitable factories resides in the Xinjiang Uyghur Region, according to Ross Kennedy, founder of Fortis Analysis, a business developing supply chain, manufacturing and policy solutions.

“We have evidence that Fufeng as an overall company benefits from these horrible things in China,” Kennedy said.

Fufeng voluntarily underwent a review by the Committee on Foreign Investment in the United States (CFIUS) after national security concerns due to Fufeng’s connections to China and proximity to the Grand Forks Air Force Base.

On December 12, CFIUS released its decision, stating that the project does not fall under its jurisdiction. Therefore, CFIUS will not prohibit the plant from being built.

CEO of Grand Forks Region Economic Development Keith Lund said although Fufeng is based in China, it is not owned by the Chinese government.

“The company is publicly traded on the Hong Kong stock exchange,” Lund said. “Anyone across the globe can buy shares in the company. It's not state-owned, which is extremely important.”

However, Kennedy said Hong Kong is now part of China and therefore must follow the same national security laws, including the requirement that they share all their financial records under the 2020 National Security Law.

“Any piece of information that a company is required by U.S. law to collect will be visible and shared at any time with the parent company in China should the Chinese government ask for it,” Kennedy said. “By law, the parent company has to give the data of the American workers to the government of China. That does not sound like an American company to me.”

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