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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.
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"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."
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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.
Related Information
- Renewable Fuels Association
- Alternative Fuels Data Center
- Common Cause opposes ethanol tax breaks
- Frontline report on Dwayne Andreas, CEO of ADM
- Minnesota Corn Growers Association
- Minnesotans for an Energy-Efficient Economy
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