Ethanol industry has highs and lows

LITTLE FALLS, Minn. -- Steve Anderson has experienced the highs and lows of the ethanol industry.

The Foley-area farmer and president of Little Falls' Central Minnesota Ethanol Co-op has been involved with ethanol co-ops since the mid-1990s.

The future looks good for renewable fuel, Anderson said. Minnesota Department of Agriculture marketing specialist Ralph Groschen agrees.

Ethanol is part of a renewable fuel picture that's received strong support from the Obama administration, Groschen said.

Minnesota established a producer payment program in the mid-1980s, Anderson said. The first plants were small with around a 10 million gallon capacity, Anderson said. The Little Falls plant was considered large at the time with its 15 million gallon plant.

The producer payments gave lenders security when working with plants. Fourteen plants that got started with the state producer payment program.

"That payment helped them to get going," he said.

The state received benefits from the new ethanol industry, Anderson said. The plants provided economic development. After a few years, the plants began to increase their output and expanded to 40 to 50 million gallons, he said.

"They were able to take advantage of the economies of scale," he said. "The cost of production was less."

Many of the state's initial ethanol incentive programs have ended, but it hasn't stopped farmers and investors from building new plants. Some have used the state's JobZ program.

Bio-energy incentives and programs made available through the USDA and Department of Energy are targeted for projects that will utilize greener technologies at existing and new facilities, Anderson said.

"The Obama administration seems intent on increasing our energy independence for the nation," he said.

The ethanol industry is being challenged.

Foreclosure proceedings have started against Otter Tail Ag Enterprises based in Fergus Falls. It and others were caught in a perfect storm with high corn and low fuel prices, Anderson said.

Groschen credits the cooperative ethanol model for laying the groundwork for the state's ethanol industry.

The renewable fuel industry is evolving. Cellulosic ethanol is still in research mode. Some plants, including CMEC and Chippewa Valley Ethanol Cooperative in Benson, have taken the first steps toward biomass gasification to replace propane as the plant's fuel source.

source: agrinews