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How Does Minnesota Make Its Money? Its Five Biggest Industries

The state's economy has different sectors. In the north, mining and tourism are the biggest contributors to income. The region surrounding Minneapolis and St. Paul is a major industrial and commercial area. Directly to the west of the Twin Cities is the state's largest agricultural area.

1. The Iron Range

Located in northeastern Minnesota, the Iron Range contains the largest iron ore deposits in the United States. Large-scale mining operations began in the 1890s. After about 60 years of open-pit mining on the Iron Range, the high-grade ores began to run out.

Mining companies switched to mining lower-grade taconite ores. Taconite contains iron, but in much smaller concentrations than high-grade ore. The change to making taconite pellets was expensive. State laws favored mining of the higher-grade ores, and taxed taconite producers at that high rate. Mining companies and their supporters worked to change those laws. In 1964, a constitutional amendment eliminated the taconite taxes.

Other Minnesota mining products include construction sand and gravel, crushed stone, limestone, and clay. Peat is mined in northern Minnesota. (Peat is partly decayed plant matter that has built up in bogs and swamps over thousands of years.) It is used for fuel or as fertilizer.

2. Tourism

Tourism has provided one profitable alternative to mining along the Iron Range. The walls of an old open-pit mine in Biwabik have been transformed into Giants Ridge, a first-class alpine ski resort in winter and a championship golf course in the summer.

Fishing and hunting provide jobs for people who live in northern Minnesota. The Voyageurs National Park, with headquarters in International Falls, and the Boundary Waters Canoe Area Wilderness are favorite destinations for canoeists, campers, and hikers. The North Shore of Lake Superior is a national scenic byway; its resorts and the spectacular scenery of its lake and cliffs draw many vacationers.

3. Agriculture

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Minnesota farms produce a wide array of crops. The state's leading crops are corn, soybeans, hay, and wheat. Other important crops are sugar beets, potatoes, wild rice, green peas, and honey. Minnesota ranks among the top ten states in raising hogs, poultry, and sheep.

Southern Minnesota is a fertile growing area. The Jolly Green Giant of vegetable fame is celebrated in Blue Earth. Other crops raised there are sugar beets, soybeans, corn, and oats. Livestock makes up a large portion of the agricultural output of southern Minnesota. Minnesota farmers raise many thousands of turkeys for market. In Faribault, famous woolen blankets are woven from the wool sheared from local sheep.

When Minneapolis was the milling capital of the world, Minnesota residents called the rich central area of the state the "bread and butter belt." Powdered milk, butter, cheese, and processed foods are major dairy products. Minneapolis was once the world's largest flour producer. Today, it is the headquarters of General Mills, which produces such well-known brands as Betty Crocker, Pillsbury, Gold Medal, and Bisquick.

Farms and pastures cover a little more than half of Minnesota's land area. Although agriculture is an important state industry, less than 3 percent of Minnesota's workers work in farming.

4. Shipping

Duluth and its neighboring city—Superior, Wisconsin—are known as the Twin Ports. They were once bitter rivals for shipping business. But today, the two cities cooperate to improve and promote the international port. Steel companies ship taconite in 1,000-foot (305-meter)-long ore carriers to other Great Lakes cities or overseas. Corn, soybeans, and other crops are shipped in bulk carriers.

The Twin Ports have modern, high-speed loading and unloading equipment. A long line of towering grain elevators store millions of tons of grain until it is sold and shipped. Coal from Wyoming is taken from railcars and shipped to fuel power plants in the East. Timber used to make tissue paper, paper towels, napkins, and other finished paper products is shipped to paper mills in Wisconsin, Michigan, and Ohio.

5. Services and Retail Shopping

Minnesota businesses employ some 3 million people. More than 50 percent of workers have service jobs. Trade, transportation, and utilities account for approximately 20 percent of workers.

Major banks, insurance companies, health-care-service companies, and educational institutions are located primarily in the Twin Cities area. Edina's Southdale Center was the nation's first indoor shopping mall. The largest indoor mall in the United States—the Mall of America—is in Bloomington.

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