By Don Davis
St. Paul Capitol Bureau
ST. PAUL - Minnesota's ethanol industry could help produce jobs in a time they are most needed, agriculture supporters say.
"We can help Minnesota recover from this recession," Brad Nelson told a state Senate agriculture committee Thursday.
Nelson, a south-central Minnesota farmer and Minnesota Ethanol Producers Association president, said, however, that federal government rules limit how much ethanol can be used in gasoline, which stifles the state's industry. He said the rules need to be changed before ethanol can reach its potential.
"Ethanol has been a huge boon to the state of Minnesota," added Doug Albin, a Clarkfield farmer and Minnesota Corn Growers Association president.
The two were among several reporting on the status of Minnesota ethanol, a fuel now made mostly from corn.
Senators heard concerns that they should not cut off subsidies paid to ethanol production plants as they seek ways to balance the state budget. The ethanol industry had been quite profitable, but in recent months those profits have dried up.
The state is due to pay $15 million to farmers that own eight ethanol plants each of the next two years, with another $1.2 million needed in the following year for the final two plants receiving state help.
"It is winding down," Steve Ernest of the state Agriculture Department said of the subsidy program.
Ethanol supporters credit the funding with launching their industry, among the strongest of any state. However, Gov. Tim Pawlenty earlier targeted the program for cuts and farmers fear the same will happen this year when legislators and Pawlenty grapple with a budget deficit estimated to be near $7 billion.
Rod Jorgenson, a Kasson-area farmer, told the committee that one plant cost $18 million to build - with the help of the subsidies - but expanded at a cost of $65 million, adding more jobs.
Some ethanol plants have closed, including the DENCO plant in Morris, and others are fighting declining profits as high corn prices are combined with low ethanol prices.
"The ethanol industry is hurting," declared Steve Anderson of the Central Minnesota Ethanol Co.
Even so, Anderson said, his Little Falls facility plans an expansion to a new type of ethanol, adding 20 jobs.
"We think we can manage this storm," he added.