MOOSE JAW, Sask. – Twenty years ago, two-thirds of the corn produced in Minnesota was shipped out of the state.
The state’s corn growers faced the lowest cash prices in the country.
“We were in terrible straits,” said Ralph Groschen, a marketing specialist with the state agriculture department.
Today, Minnesota is putting corn into 16 ethanol plants, most of them owned by farmers, after a concerted state-led effort to boost the economy by replacing gasoline with ethanol, decrease dependence on foreign fuel and improve air quality in urban areas.
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The boom began with a goal to produce 200 million U.S. gallons of corn ethanol. In 1986, there was one plant producing less than one million gallons.
Groschen said it took until 1993 to break ground on the new plants but the plan soon gained momentum. The production goal was later increased to 550 million gallons and production should reach one billion gallons in 2008.
The role of the government is key in ensuring a value-added industry for Minnesota corn, Groschen said.
“Minnesota legislation made this happen,” he said.
A blender’s tax credit in place since 1980 did not result in an in-state ethanol industry. So, in 1986 the government created a fund to directly pay owners of ethanol plants for each gallon produced, up to 15 million gallons
Because farmers own most of the plants, these payments, which ranged from 13 to 20 cents per gallon, had a direct effect on farmers’ bottom lines. Other loan programs and a state mandate requiring all gasoline to be blended with 10 percent ethanol also helped build a strong industry.
“With all the money lying on the table there was a lot of trepidation,” Groschen said. “Banks were scared to death.”
But the industry has created between 4,000 and 5,000 jobs and the annual economic impact is estimated at $1.7 billion US.
Concerns about competing against agribusiness giants like Archer Daniels Midland have been eased because farmer-investors don’t require as much return as large companies, he said.
