Freeborn County farmers may benefit from the possible expansion of the market for ethanol in California, now that the state’s other gas additives are no longer available.

Saturday, February 02, 2002

Freeborn County farmers may benefit from the possible expansion of the market for ethanol in California, now that the state’s other gas additives are no longer available. But eliminating the state’s ethanol subsidy as part of budget cuts proposed by Gov. Jesse Ventura and currently being debated by the legislature interferes with that good news for area farmers.

The decision by the EPA to deny California’s request for a waiver on its use of non-ethanol based additives for emissions reduction will be a boon to Midwest corn growers and ethanol producers, said Gary Pestorious, Chairman of EXOL’s board of directors and newly elected state board member for the Minnesota Corn Growers Association (MCGA). According to the best estimates available, California will need at least 580 million gallons of ethanol per year, which is one-third of the current annual production in the United States.

Minnesota, as the fourth largest producer of ethanol in the U.S., may be poised to capture $100 billion of the California market, said Pestorious, citing figures from a state senate report. As the additional demand emerges, new facilities will have to be built and existing facilities will have to be expanded, he said.

With expansion of the market even more likely, now would not be a good time to break the deal that the state of Minnesota made with ethanol producers, added Pestorious.

&uot;We understand the need to cut. And to me, initially, he’s trying to cut everything by 10 percent, but as far as a cut to ethanol it’s going to end up working in reverse. For every dollar the state spends, Minnesota gets back $12,&uot; he said.

Pestorious doesn’t think that it makes sense to cut a program that brings those kinds of returns to Minnesotans, and he thinks that the governor will change his mind once he gets more information from the MCGA and ethanol producers.

&uot;We need to show him the facts, and we’ll get him to see that in this area, it would hurt the budget to cut something,&uot; he said.

The fact that the state would be breaking the deal it made with corn growers and ethanol producers also bothers Pestorious. Ethanol plants like EXOL in Freeborn County were built based on the promise of continued government support, and backing out of it will cause problems for more than just ethanol plants.

&uot;A deal is a deal,&uot; Pestorious said.