Building the "Minnesota Model"

The Minnesota Corn Growers Association produced a book about the rise of ethanol production in the state and what's commonly referred to in the industry as the "Minnesota model." The book includes interesting anecdotes and insights into the behind-the-scenes activities that took place during ethanol's early years.
By Kris Bevill | March 10, 2008
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Minnesota didn't get its reputation as a leader in the ethanol industry by accident. It took years of hard work by highly motivated people who believe in the renewable fuel and its benefits. High Octane: How Minnesota Led the Nation in Ethanol Development details the rise of the ethanol industry in Minnesota, told from the perspective of those individuals who created the industry. The book is peppered with accounts of legislative battles and start-up struggles and tales of hard work, optimism and hope by people who were determined to get the state's ethanol industry off the ground. "One of the highlights for me writing this book was just talking with the people who were behind this," says the author Wendy Fernstrum. "They're passionate and intelligent people. It was just a joy to hear their stories and to talk about what they'd been through and what they'd achieved. And none of them are saying it happened because of me.'"

Fernstrum had never set foot on a farm, but the freelance writer decided to work on a book about ethanol two years ago at the suggestion of the Minnesota Corn Growers Association. Fernstrum was living in a rural town in southern Minnesota and had done some work for the MNCGA, but hadn't delved into the history of ethanol until she began researching for the book. "It was a fascinating story to unravel," she says. "The fact that it was a grassroots effort, and that farmers built the plants and put their resources toward them was impressive to me. I was really impressed with their leadership and their vision."

Fernstrum witnessed firsthand the classic Minnesota humbleness and the can-do attitudes of those lobbying for the ethanol industry as she talked with some of the people who were featured in the book. "If they had sat down, thought about how difficult it was and how risky it was they probably wouldn't have done it," Fernstrum says. "They had this naivetythey didn't know they couldn't do it. They did it because they had faith, they thought they could and they basically had nothing to lose. They had a pile of corn and it needed to be put toward a purpose. Nobody had a grand scheme as to how it would happen it just all came together."

The Early Days
What is now referred to as the "Minnesota model" did come together, but it wasn't easy. As the book demonstrates, it was a "one step forward, two steps back" dance between those in favor of a farmer-run industry and those who had a stake in the petroleum industry.

Among the people involved during the early days were Ralph Groschen, senior marketing specialist for the Minnesota Department of Agriculture, Kathy (Graf) Bryan, president and cofounder of BBI International, and Larry Johnson, who owns an ethanol development consulting company called LLJ Consulting. Many others had a hand in the development of the Minnesota model and are mentioned in various instances throughout the book and in conversations. Merle Anderson, a Climax, Minn., farmer and one of the founders of the American Coalition for Ethanol, for instance, is "the founder of' most everything ethanol in Minnesota," Johnson says. However, Johnson himself has been referred to at times as the founder of the Minnesota model. The truth is any one of those involved in the rise of ethanol in Minnesota if asked can handily provide a whole list of people who they feel were vital to the development of the industry. "Bruce Stockman and the MNCGA had a tremendous impact on the success of the ethanol industry in Minnesota," Bryan says. "It was their hardwork that made this happen." After reading the book, it's clear that such a monumental task could never have been achieved were it not for many different types of people coming together to support a common goal.

One of those people is Bryan, who spent many years as a struggling farmer and ethanol producer before BBI International, and says she never considered giving up on ethanol because she didn't have "enough common sense to do that." While banks were fairly willing to give money to farmers in the '80s, they didn't really believe the ethanol industry could succeed. Bryan and her then husband, Rudiger Graf, persisted and became one of the first beneficiaries of Minnesota's producer payments. She also began working on behalf of the MNCGA, talking about ethanol's benefits to anyone who would listen. "One of the biggest lessons I learned is what an impact you can make when you start getting involved in a topic and go talk to legislators," she said in the book.

Then there was Johnson, who was a farmer in southwest Minnesota and was involved in corn grower groups at state and national levels before becoming the "Ethanol Answer Man" for the Minnesota Ethanol Commission in 1988. "A lot of people were just trying to get one small victory at a time, move ahead and then we'd move to something else," he says. "We frequently laughed about it, in fact we had no idea what we were starting."

So just what is the Minnesota model? "There never was a model until everything came together and was working and somebody said Oh, that's a model,'" Johnson says. "I don't know who coined that phrase. To begin with, there was just a number of people who thought ethanol was a good idea and was an answer to some of the world issues. We didn't have any great vision. We just had a lot of little things that we thought were good ideas, and all the little things ended up being what is today known as the Minnesota model."

Vital Elements of Success
The Minnesota model is essentially a partnership between private and public sectors that combined their efforts to keep funding for ethanol and profits from production in local economies. Local ownership was the key to success according to Fernstrum. "Farmers were the ones who built up this industry and there's a huge rural economic benefit to that," she says. "[Ethanol] created a value-added industry for the farmers. It's awfully hard to make a living just growing corn." It was the potential benefits to farmers that appealed to Groschen. "This is the most satisfying thing I've ever been involved in," he says. "My main focus was the local farmers actually investing in and getting more of a return on their crops than they would by just selling them to the elevator. That was the whole idea for me."

Johnson believes the Minnesota model was successful because of legislation that provided payments to producers. Without that, small plants might never have had a chance to get started. Getting information out about the benefits of ethanol was vital to getting legislators' attention, but it wasn't always enough. The book tells of the inventive tactics ethanol supporters used to combat the onslaught of negative information produced by oil companies. For example, in 1986 the MNCGA created an "orange card campaign" where two versions of orange business cards were delivered to gas stations. One was a "shame on you" card that was given to station managers who didn't have ethanol fuel available for their customers; the other was a positive card that members handed out at stations that were selling ethanol-blended fuel. Another example of untraditional awareness campaigns created by the MNCGA involved yellow nickels. Nickels were spray painted on one side with yellow paint and the coins were handed out at gas stations to customers who fueled their vehicles with ethanol. "We had a lot of fun when the industry was small," Bryan says. "We got to do the outrageous things. We had the attitude that we never thought something couldn't be done. It didn't always work, but that was the attitude we had."

Those who worked to make ethanol a success story in Minnesota don't take any of their victories for granted. They continue to look ahead at what advancements can be made in the industry. The last few chapters of Fernstrum's book examines the future of ethanol in the state and, although the outlook is positive, there are a few questions yet to be answered.

Ethanol's Future in Minnesota
After writing this book, Fernstrum is convinced that Minnesota's ethanol industry is here to stay as long as farmers continue to control the plants. "Farmers cannot make a living just by growing commodities," she says. "They need value-added opportunities and ethanol plants are a great way to do that. The fact that these farmer-owned plants are bringing in almost $5 billion to the state's economy is important. What other grassroots industry contributes that kind of money to a state?"

Despite their success, the people who helped develop Minnesota's ethanol industry will tell you that there's a lot of work ahead. Groschen believes cellulosic ethanol is vital to the growth of the industry. "I think, as the NCGA says, 15 billion gallons of ethanol can be made from corn without significantly impacting food prices," he says. "Let's go there and then make sure it doesn't stop there because it doesn't have to. It's going to take a lot of research to develop cellulosic ethanol, but if we want to go beyond here, we really should make cellulosic work. I think we hurt ourselves if we try to make people think that we're going to make 36 billion gallons of ethanol from corn."

In the meantime, Minnesota's accomplishments in the ethanol industry haven't gone unnoticed, Bryan says. "I have the chance to travel around to other countries and people talk about Minnesota and what the state has done," she says. "Their accomplishments are recognized around the globe. Mike (Bryan) and I went on a recent trade mission in central Europe and almost all the organizations that we met with were aware of Minnesota's successes. I think the Minnesota model has dispelled dozens of myths that were held about using ethanol."

Fernstrum says she wrote this book to provide information to anyone who may not know about ethanol in Minnesota and to document the historic rise of the industry in the state. People curious to learn more about ethanol will find this book informative and accurate. Those who were involved in developing the Minnnesota model should enjoy looking back at their accomplishments.

Kris Bevill is an Ethanol Producer Magazine writer. Reach her at kbevill@bbibiofuels.com or (701) 373-0636.