State ethanol subsidies deserve protection

The budget situation facing Minnesota is as severe as the Legislature is characterizing it to be. Cuts in funding must be and are being made, although of these, Republican Gov. Tim Pawlenty’s proposed budget cut of $26.8 million to Minnesota’s ethanol subsidies program is unwise and destructive.

Pawlenty’s proposal was quickly and widely criticized by rural Minnesota. Minnesota’s farmers produce more than 350 million gallons of ethanol annually and receive 20 cents on the gallon in the form of subsidies. Under state law, 10 percent of fuels must be of an ethanol blend. Plants statewide, from Marshall to Melrose and from Albert Lea to Little Falls, would be affected by Pawlenty’s slashing.

The importance and benefits of ethanol are clear. Ethanol reduces state imports of fossil fuels while adding to the state’s self-sufficiency by keeping money spent on fuel within the state. Ethanol is friendlier to the environment than fossil fuels. According to a Minnesota Department of Agriculture study, corn ethanol is 34 percent more efficient than fossil fuels and thus reduces carbon dioxide emissions, allowing Minnesota to fulfill Environmental Protection Agency air pollution regulations. Minnesota’s ethanol plants provide approximately 890 direct jobs and more than 5,000 farmer-investors are involved. The proposed cuts will not only affect farmers raising corn but also electric cooperatives that support the plants. Besides soybeans, corn is an essential commodity of rural economics. Ethanol is a vital arm of Minnesota’s rural community.

According to the 2002 Minnesota Department of Agriculture assessment, ethanol created 4,746 to 5,138 jobs while also creating another outlet for corn supplies, resulting in an economic impact of $403 million to $437 million. Additionally, as fossil fuel prices will continue to rise, the ethanol’s price will remain as steady as the price of corn. Farm cooperatives own 12 of Minnesota’s 14 ethanol production facilities, and profits are paid out to farmer shareholders. A 2002 analysis by the Minnesota Department of Agriculture found that expanding the ethanol industry could give Minnesota a net gain of $259 million to $295 million per year.

Yet the Minnesota ethanol program cannot remain wholly unharmed by the deficit plague. Minor cuts can be made without destroying the program. The plant in St. Paul, the smallest and coincidentally only state-run plant, has been found in violation of numerous pollution laws and permit requirements by the Minnesota Pollution Control Agency. The St. Paul plant has been the subject of numerous complaints by nearby residents for odor and noise pollution and is the state’s least productive plant. Legitimately, the St. Paul plant should be shut down.

St. Paul aside, ethanol plants are essential to rural communities. They provide jobs and income to otherwise stagnating communities. Pawlenty’s proposed cut would bring the ethanol program and eventually some rural communities to the brink of departure.

Senior House Republicans, including House Speaker Steve Sviggum of Kenyon, realizing this fact, quickly met with Pawlenty over his proposal. Farmers know their livelihood is at stake and have been presenting their concerns at the State Capitol. Pawlenty must realize his responsibility to the citizens of rural Minnesota and ultimately the state as a whole. Granted, mistakes are made, and this is a big one that should be corrected before it proves to be the asteroid that led to the extinction of rural Minnesota.