Technology: The driving force behind rural Minnesota change


Trains chug into Elbow Lake, Minnesota, pulling more than 100 hopper cars to be loaded with corn or wheat – and sometimes soybeans – that start a journey from farms on the lower edge of the Red River Valley to markets as far away as Japan, Russia, India, Egypt, China and Morocco.

Part 2 in a 5 part series. Click Here to read last week’s story.

Technology makes this possible. It is a technological change that will cause some rural communities to dry up and blow away while it opens opportunities for some people to do business anywhere from a base they choose to call home.

The technology evident in downtown Elbow Lake (pop.1,275) calls into question sociological notions of “remoteness.” The world is within reach from almost everywhere; and the Internet connects people even where the absence of railroad lines, roads and water make shipping bulk commodities difficult.

Two rural Minnesota communities – Elbow Lake and Ely – show the impact of change brought by technology. Both offer a glimpse of how the Ruttan-Hayami Model of Induced Innovation works, as described in the first installment of this series, and how technology can be adapted to serve new purposes when resources, established culture and institutions are under stress.

Minnesota now has at least 500 communities with populations less than 1,000 that must find new economic reasons to justify their existence or they will slip into history as ghost towns, remembered only by descendants of families and researchers. A successful transition will require innovation and adaptation of new technologies that, in turn, will need more institutional support from education.

Earl Melchert, fertilizer plant manager for Elbow Lake Coop Grain Co., uses the farming area around Grant County as an example of how technology has rapidly changed the way farming is performed in his area on the lower edge of the Red River Valley. The change has been constant since railroads reached the area more than a century ago, but “drastic” in the past five years, Melchert said.

Meanwhile, Richard and Elizabeth Watson, proprietors of Lutefisk Technologies Inc. at Ely, provide evidence that people do not need to be displaced by changing markets and transportation technologies. Rather, they simply need to use new technologies to reach new markets and become more entrepreneurial.

Here’s how we got to this point:

Historically, farmers around Elbow Lake used about a third of their acreage to grow small grains, and especially hard red spring wheat. Another third was used to grow soybeans, and about a third was used to grow corn. Dairy farmers were responsible for a lot of the corn grown in Grant and surrounding counties, and much of it was chopped into silage for feed.

“Right now, I’d say there is at least 50 percent of the land in corn, and maybe 30 percent in soybeans. Wheat (production) is way off,” Melchert said.

That could change next year, however. A shortage of wheat has driven up prices. The Elbow Lake elevator was paying $8 a bushel for hard red spring wheat on Thursday, and futures prices reached $9 a bushel on Friday at the Minneapolis Grain Exchange, the highest price ever in the 125-year trading history of the exchange.

“That should bring some acreage back into wheat,” he said.

A big reason for the shift from wheat to corn is the development of ethanol distilling technology, and the institutional support bio-fuels production is receiving from governments. Some grains grown in the Grant County area is shipped about 50 miles south, to Benson, where the Chippewa Valley Ethanol Co distills corn into ethanol. It also has a second plant where it distills wheat and rye into different varieties of vodka for the Shakers brand of vodka – product lines of Infinite Spirits Inc.

The Benson plant is among two-dozen value-added processing plants using new technologies to make value-added products new from Minnesota farm commodities and byproducts.

Farmers invested to bring the technology to Benson to add value to their grain commodities. Farmers in west-central Minnesota also invested million of dollars over the past 20 years to upgrade their country elevators to service unit trains that efficiently haul their grains and oilseeds to more distant plants and export terminals.

The Elbow Lake elevator is among those country grain marketing sites that were upgraded to load unit trains. The co-op also leases a smaller elevator 11 miles away, at Wendell, which it uses for short-term storage and then trucks that grain back to Elbow Lake for timely loading on trains.

Meanwhile, Elbow Lake is surrounded by ghost towns, former communities displaced by changing transportation technology. Rural population numbers continue to decline because large grain farms use technology-enhanced seed genetics (biology and chemistry), bigger farm equipment (physics), and more plant nutrients (chemistry and biology) to raise larger crops with less personal and hired labor.

Labor-intensive livestock farming is also declining and shifting to larger operations that employ new technologies. “I think we’re down to about four dairy farms in all of Grant County now,” Melchert said.

Prices influence planting decisions about crops. Life style considerations may be a much larger influence on changes in dairy and livestock production.

“I would say life styles are the biggest influence on the dairy industry,” he added. Dairy farming requires seven days a week work, not just during the growing season. Larger dairy farms use new technologies and engage more than one family or a family and employees. That means dairy farmers can take vacations and weekends offs like most Americans.

Elbow Lake area farmers now produce up to 200 bushels of corn per acre on land a decade or more ago was considered too far north to produce a good yield. This yield this year will be done because of dry growing conditions in mid-simmer, Melchert said, but farmers were finding 150 to 160 bushels of corn per acre in their fields.

For urban readers more than two generations removed from the family farm, an acre of land is about the same size as a football field. Genetics and new farming technologies keep making those football fields more productive all the time.

Historical records kept by the National Agricultural Statistics Service, an arm of the U.S. Department of Agriculture (USDA), shows the march of change on major field crops raised in Minnesota. Sugar beets, Minnesota’s third largest crop, are not included here but follow a similar pattern.

Corn – Minnesota farmers had an average yield of 39.5 bushels per acre, valued at $219.7 million, in 1950; 54 bushels per acre, valued at $287.2 million, in 1960; and 97 bushels per acre, valued at $1.7 billion, in 1980.

The average yield increased to 124 bushels per acre, valued at nearly $1.7 billion, in 1990; and 145 bushels per acre, valued at $1.7 billion, in 2000.

The past two years saw average yields of 174 bushels per acre, valued at $2.2 billion, in 2005; and 161 bushels per acre, valued at $3.5 billion, last year. This year’s crop could have a lower average yield, given summer weather problems, but the farm value of the crop may be larger given current market prices.

Soybeans – Minnesota farmers had an average yield of 15.5 bushels per acre in 1950, valued at $42.8 million. The yield increased to 19.5 bushels per acre in 1960, valued at $87.6 million; and 25 bushels per acre, and $219.8 million in 1970.

The average yield reached 31.5 bushels per acre, and $1.1 billion in 1980; 39 bushels per acre and $995.7 million in 1990; and 41 bushels per acre and $1.3 billion in 2000.

The past two years found harvests of 45 bushels per acre in 2005, valued at $1.7 billion; and 45 bushels per acre in 2006, valued at nearly $1.8 billion.

Spring wheat – The average yield for hard red spring wheat was 17 bushels per acre and was the crop was valued at $27.7 million in 1950, 27.5 bushels per acre valued at $46.1 million in 1960, 27.5 bushels per acre valued at $35.2 million in 1970, and reached 32.5 bushels per acre, valued at $397.1 million in 1980.

Since then, average yields reached 49 bushels per acre, valued at $339.6 million, in 1990; 49 bushels per acre, valued at $276.1 million, in 2000; and the last two years the yields were 41 bushels per acre and valued at $259.6 million in 2005 and 47 bushels per acre, valued at $356.7 million, last year.

It should be noted that other types of agriculture, such as organic farming and fruit and vegetable growing, are incorporating new technologies as well that include transportation to markets, biological breakthroughs and information and marketing technology.

In a nutshell, agriculture isn’t going back to the old ways of labor-intensive production
The Chippewa Valley Ethanol and Shakers Vodka Plant in Benson
The Chippewa Valley Ethanol and Shakers Vodka Plant in Benson
that helped populate the rural towns and cities of rural Minnesota.

That’s what makes the work the Watsons are doing, with their Lutefisk Technologies, so important for the Ely area and northeast Minnesota.

They not only repair computers and printers, they develop web sites and computer systems for people wishing to live in the north woods but must still reach people to make a living.

“A majority of our clients are resorts and outfitters,” Richard Watson said, noting that Ely is a major gateway in the Boundary Waters Canoe Area Wilderness. Arrangements for services are made before people from all across the country arrive to experience the wilderness.

“Food, bait, fuel, bullets and ice are what people want to arrange,” he said. “We’re that 7-11 shop in the digital world.”

Ely is a city of 3,724 people that have transitioned through at least three distinctive economic periods. It was a boomtown for forestry at one time, and it was a mining town on the Vermillion Iron Range before those underground mines were depleted. Since then, it has undergone change with tourism and regulated use of area forests and lakes.

Increasingly, however, people are using the Internet to do business from the Ely area just because they want to live there, and now can find economic activities to support their preferred lifestyles. This will be an unending challenge, however, because the desirability of Ely makes for unusual demographics, Watson said.

“We have a lot of over-educated people living here, for what they are doing,” he said.

Vernon Ruttan, the professor emeritus from the University of Minnesota who co-authored the Induced Innovation Theory with Yujiro Hayami of Japan, is among the highly educated residents during summer months. “Ely is one of the few places where you can actually get a good cup of coffee north of the Twin Cities,” Ruttan said in suggesting a close look at technical change in the woodsy community.

There are more like Ruttan discovering Ely.

“In the summertime, people fall in love with the area and ask what they might do if they lived here,” Watson said. “Right now, moving to places like Ely is more a psychological barrier than an actual barrier.”

Patti Steger’s Mukluks business in Ely, and the Mostly Moose retail store on Main Street both reach the world through Internet and catalog mailings, he said, and are not dependent on sparsely populated northern Minnesota street traffic.

Out in the woods, new technology allows rural Ely resident Kim McCluskey to take business to exotic areas around the world as well as bring business into northern Minnesota.

A native of Arkansas, McCluskey started visiting the BWCAW in 1981. He got to know Steve Piragis of Piragis Northwoods Co., the outfitter that helped him explore the wilderness, and then began exploring how he could move to Ely.

McCluskey went to work for Piragis and helped develop an Internet subsidiary of the Ely outfitting company that arranges guided tours for kayakers, canoeists and hikers to exotic and remote waterways and mountain areas around the globe.

Pirigas sold the latter business, Worldwide Paddling Adventures, to McCluskey a year ago. Scheduling Pirigas to lead some of the guided adventures was part of the terms of the sale.

“Steve has a group over in Mongolia right now,” McCluskey said this past week as he was packing for a trip to Vietnam. McCluskey, meanwhile, left Sunday, combining a tour of remote mountain villages of different ethnic communities near the Chinese border with work on building a fourth schoolhouse for rural children in Vietnam.

A wonderful Duluth News Tribune story about McCluskey and his foundation’s work in Vietnam can be found on his company’s website. It isn’t hard to find; Ely is wired and can show Minnesota the way out of the woods.