Fueling ethanol up north

Fergus Falls, Minn. — The ethanol boom may be heading north.

Otter Tail Ag Enterprises, LLC hopes to build a 40- or 50-million-gallon ethanol plant near Fergus Falls. “This is a growing industry, and there is a geographic opportunity here,” says Elbow Lake farmer Jerry Larson, chairman of Otter Tail Ag Enterprises. “We think we can duplicate the success of ethanol plants in the southern half of the state.”

The effort to bring ethanol processing to the region began earlier this year, led by “a group of agricultural and Main Street visionaries” from Otter Tail County and the surrounding areas, says Larson, a founding director of Morris and Benson ethanol companies.

The group just completed a feasibility study and is now putting together a business plan. Funds for the planning phase were provided by AURI’s Center for Producer Owned Energy and the Minnesota Corn Growers Research and Promotion Council, which wants to extend ethanol processing to the northern corn belt.

The proposed dry-grind plant requires a $50-million-plus investment, according to the industry’s average new-construction cost estimates. The facility would process about 17 million bushels of corn a year, which should benefit all area corn farmers, Larson says. “History tells us that an ethanol plant adds 4 to 9 cents to the price of every bushel of corn harvested in the region.” The facility would also produce 145,000 tons per year of low-cost, high-protein animal feed, benefiting the local livestock industry.

It makes sense to process more corn locally, Larson says. About one-sixth of Minnesota’s one billion- bushel corn crop is made into ethanol. Still, half the crop leaves the state, and with it, Larson says, go manufacturing opportunities and jobs.

Otter Tail Ag’s venture would create two dozen skilled jobs and would also generate substantial related business activity, says Tom Melin, assistant director of AURI’s Energy Center. According to one industry estimate, 80 percent of revenue generated by an ethanol plant is spent within 50 miles of the facility.

Minnesota’s 13 ethanol plants generate $1.3 billion in economic activity and provide 5,300 ethanol-related jobs, according to a January 2005 report from the Minnesota Department of Agriculture. Three more ethanol plants now under construction will bring the state’s ethanol production capacity to 550 million gallons by year end.

Minnesota manufactures nearly 15 percent of the nation’s ethanol, which will top 3.8 billion gallons this year — up from just 175 million gallons in 1980. Larson, vice-president of the Minnesota corn council and a past member of the National Corn Growers Business Development Team, expects the ethanol market to continue growing. This year Minnesota lawmakers set ambitious renewable energy goals — doubling the ethanol required in gasoline to 20 percent by 2012. “Minnesota is a leader in setting renewable energy standards.

We’re an example for the rest of the states,” Larson says. The national Energy Policy Act of 2005 mandates the annual use of 7.5 billion gallons of ethanol by 2012. And state and federal governments continue to offer ethanol subsidies. These policies are encouraging new ethanol ventures, Larson says: “We’ve had major support for ethanol — from our governor and legislature, from our national political leaders, from consumers and taxpayers, and from agriculture.”

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