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Midwest Corn Growers Benefit from Ethanol Ruling
By Erin Galbally
Minnesota Public Radio
June 12, 2001
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A decision by the Bush administration Tuesday is expected to unite Minnesota's expanding ethanol industry with California's gasoline market. The Environmental Protection Agency denied a waiver request by California, mandating that the state continue to use ethanol or other gasoline additives in keeping with Clean Air Act requirements. Now ethanol plants across the Midwest must gear up for the challenge of feeding California close 600 million gallons of the corn-based fuel. One plant in southern Minnesota is already preparing to expand.

The Pro-Corn ethanol plant in Preston, Minn. is expected to double in size over the next two years, in part to meet the growing demand for ethanol in California.
(MPR Photo/Erin Galbally)
EVERY DAY ABOUT 60 TRUCKS ZOOM IN AND OUT of the Pro-Corn ethanol plant in Preston, dropping off golden corn kernels harvested from southeastern Minnesota fields. If all goes according to plan, by this time next year the truck traffic will have doubled - along with the plant's output. It's expected to grow from an annual capacity of 20 million gallons to 50 million gallons - in the process making Preston one of the most prolific ethanol plants in the state. Pro-Corn manager Richard Eichstadt says the market is booming.

"I think if we were not to expand - missing out on the market may not be the best terminology - but this is an opportunity where the facility can take advantage of the increased demand. The farmers and the community can benefit from that," says Eichstadt.

The new plant will consume 18 million bushels of corn each year, and promises farmers at least a nickel per bushel over the current market price. Once California substitutes ethanol for MTBE, a fuel additive linked to ground water contamination, Midwestern farmers expect to cash in on a market estimated at $1 billion. The state Agriculture Department's Ralph Groschen says before ethanol became viable, Minnesota's corn farmers were suffering.

"Unfortunately, our rivers freeze and barge traffic stops. When things are tough, it's hard to find railroad cars and we're at the end of the pipeline in terms of getting corn out," says Groschen. "Consequently, Minnesota had the lowest corn prices in the country, especially out in the western part of the state, farther away from the river."

Corn being unloaded into the Pro-Corn plant, where it will be transformed into ethanol, a fuel additive which reduces tailpipe emissions from cars. Midwestern corn farmers expect to see higher prices and higher demand for ethanol in the coming years.
Extra audio: The future of ethanol
(MPR Photo/Erin Galbally)
Now Minnesota ranks fourth in the nation for ethanol production, trailing behind Illinois, Iowa and Nebraska. It's a position bolstered by a state mandate, requiring gasoline contain 10 percent ethanol.

In order for the corn belt to keep up with what's expected to be skyrocketing demand, production will have to jump from 2 billion gallons to 3.5 billion gallons over the next 18 months, to meet California's ethanol needs. Back in Preston, Pro-Corn manager Richard Eichstadt says a lot has changed in the few years since the plant was built.

"Four years ago, when they first tried to build a plant in this area, the technology was still questionable. The business was questionable in some people's minds. A group of individuals was extremely persistent and they convinced enough farmers to invest their money," says Eichstadt.

Three years later, Preston is ready to build again. While it's likely this will be the last expansion for the Pro-Corn plant, other ethanol producers around the state are scrambling to increase their generating capacity. Now that the Bush administration has paved the way into California, other states are expected to join the trend.

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