Publication: Star Tribune
August 14th, 2007 - In 1868, farmers near Fredonia, N.Y., came together to form an association they called The Grange, the original chapter of what would become the nation's first and biggest cooperative agricultural organization. Instead of constantly competing against each other to market their products, they reasoned, they might band together to control their own destiny with respect to the warehousing, processing and shipping of the food they produced.
That cooperative philosophy has run right through the history of American agriculture, and it has surfaced again in a bill authored by Sens. Norm Coleman, R-Minn., and Russell Feingold, D-Wis., to help farmers retain some control of the ethanol and biodiesel boom that is sweeping the Upper Midwest. Their bill on biorefineries deserves a place in the big farm bill or in energy legislation that Congress will produce this fall.
Lawmakers need to be careful not to overregulate the emerging biofuels industry or slap on regulations that would scare away investors. But the Coleman-Feingold plan seems prudent.
It requires that any biorefinery financed with federal loans or grants must give local investors a chance to buy ownership, up to 40 percent, with no one local investor owning more than 2.5 percent of the enterprise. (Farmer-owned co-ops, which already own many of Minnesota's ethanol plants, would be exempt from the rule.) It specifies a 50-mile radius for local investors, which means that new biofuels plants would probably attract investment from farmers close enough to supply feedstock to the plants.
This a sensible way of spreading the wealth from the growing biofuels industry and of securing rural economies. It would help farmers diversify their sources of income -- now dependent on notoriously volatile commodity prices -- while giving them a stake in a long-term, sustainable biofuels strategy. It would also help guarantee that rural communities retain some portion of the value added in the biofuels production chain. A recent study at Iowa State University, for example, found that an average ethanol plant creates 133 local jobs -- but creates 162 local jobs when it has 25 percent local ownership.
The Coleman-Feingold proposal should not be seen as an endorsement of corn ethanol or any other single crop or commodity group. Indeed, Minnesotans need to think of corn ethanol as the first step, not the last, toward weaning the nation from fossil fuels. There will be other biomass sources, such as cellulosic grasses, that can produce fuel more efficiently while using fewer chemical inputs and placing fewer strains on the land. Local ownership can, however, align the interests of rural Minnesota with a promising direction in the nation's energy policy.
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