Study: Ethanol contributed $2.31 billion to Minnesota GDP in 2019

By Erin Voegele | February 19, 2020

A new study conducted by ABF Economics for the Minnesota Bio-Fuels Association has determined Minnesota’s ethanol industry contributed approximately $2.31 billion to the state’s gross domestic product (GDP) last year.  

According to the study, Minnesota’s 19 operating ethanol plants produced 1.31 billion gallons of ethanol last year, up 3.1 percent from 2018. Nation-wide ethanol production, however, fell to approximately 15.8 billion gallons, down nearly 2 percent from 2018.

In addition to ethanol, the state’s ethanol plants also produced an estimated 3.6 million tons of distillers dried grains with solubles (DDGS) and 327 million pounds of distillers corn oil. That amount of distillers grains is sufficient to meet the annual feed requirements of about 2 million beef and dairy cattle, or more than 80 percent Minnesota’s inventory of cattle and calves. The volume of corn oil produced was enough to produce nearly 45 million gallons of biodiesel.

The study notes Minnesota’s ethanol industry added additional production capacity last year, but at a slower rate than in previous years. The report cites MN Biofuels as reporting that 63 million gallons of new capacity were added by the end of the year in Minnesota. ABF Economics estimates that the state’s ethanol industry spent more than $103 million on capital expansion last year, more than half of the spending that took place in 2018.

Minnesota’s ethanol plants spent more than $2.2 billion on raw materials, other inputs, goods and services to produce the 1.31 billion gallons of manufactured in the state last year. Corn accounted for 74 percent of industry purchases, followed by natural gas at 7.5 percent. The analysis conducted by ABF Economics determined that the Minnesota ethanol industry consumed more than 450 million bushels of corn last year.

The analysis determined that ethanol manufacturing and research and development (R&D) alone added nearly $1.21 billion to Minnesota’s GDP. This includes $422 million in direct GDP contributions, $458 million in indirect contributions and $326 in induced contributions. Ethanol manufacturing and R&D also supported 6,787 total jobs, including 1,588 direct jobs, 2,460 indirect jobs and 2,739 induced jobs.

According to the report, the Minnesota ethanol industry has supported the establishment of new blender pumps needed to support the demand for higher ethanol blends. Petroleum marketers in the state added 70 retail stations that offered higher blends of ethanol last year. The development of E15 infrastructure in Minnesota contributed a total of $30 million in sales revenue, $18 million in GDP, 224 jobs and $13 million in household earnings last year. According to the report, the 224 jobs supported by E15 include those in a wide range of industries, such as underground tank installers and blender pump installers.  

In total, the study determined Minnesota’s ethanol plants, the corn and other feedstocks consumed by those plants, biofuels research, construction activity and trade contributed more than $2.3 billion to GDP for Minnesota last year, supported nearly 19,000 full-time jobs in the state, and put more than $1.5 billion worth of earnings in the pocks of Minnesota households.

“As this study demonstrates, the ethanol industry is very important to Minnesota’s economy and steps should be taken by policymakers at both the federal and state levels to rectify abuse of the RFS and the adverse conditions in the market,” said Tim Rudnicki, executive director of MN Biofuels.

A full copy of the report can be downloaded from the MN Biofuels website.