MARKETS

Agriculture Provides U.S. Industry With Diverse Raw Materials

by Sam Brownback, Kansas Secretary of Agriculture, Kansas State Board of Agriculture, and Lewrene Glaser, Agricultural Economist, ERS, USDA, Washington, DC.

U.S. agriculture is expanding its mission. It is rapidly transforming itself into a more diverse business of food, fuels, medicines, and materials.

Farmers and agribusiness have long desired to recover markets lost to the petrochemical industry during the last 50 years. The original nylon was made from corn cobs and now it is all petroleum based. Latex paints have replaced oil-based paints that were made with vegetable oils such as linseed and tung. Synthetic fibers have gained major inroads in textile markets, especially carpeting.

In recent decades, most of this interest in expanding markets for agricultural materials has been prompted by surpluses of traditional commodities, rather than by demands from the marketplace. That situation has radically changed today. Consumers are demanding more environmentally sensitive products. One way individuals want to help the Earth is by decreasing their own consumption of nonrenewable commodities.

Businesses are responding to consumers' concerns. They are also looking at their production systems in an environmental light. It is expensive to dispose of trash and toxic wastes. Increasingly, businesses are trying to minimize the creation of waste products during manufacturing and then to dispose of them in an ecologically sound manner.

Another factor that has changed the equation is agriculture's increasing ability to provide industry with raw materials at competitive prices. For example, the real (adjusted for inflation) price of corn has declined since World War II, while the real price of crude oil, a nonrenewable resource, has increased significantly (see fig.1). This bodes well for the position of agricultural materials compared with petroleum products.

Technological advances have also expanded the ability to competitively derive new, innovative products from agricultural raw materials. Corn and potato starches are being made into ethanol and polymers. Vegetable oils are ingredients in lubricants and inks. Plants and animals are providing doctors and patients with drugs and other complex biochemicals.

Ethanol

Technological improvements, such as energy-efficient cogeneration of steam and electricity or inexpensive processes that separate ethanol and water, have lowered operating costs for modern ethanol plants. Ethanol is now a net producer of energy, according to a recent study by the U.S. Department of Energy. When it was originally produced in large quantities 15 years ago, it was a net energy consumer.

More than 95 percent of the Nation's ethanol is made from corn. But many small plants are using locally available materials such as whey, molasses, and potato and brewery wastes that would otherwise be disposed of in lower value uses or as waste products. Current U.S. production capacity for fuel ethanol is about 1.1 billion gallons per year, with facilities that will provide another 300 million gallons of capacity under construction.

The Clean Air Act creates new market opportunities for fuel ethanol as a component in oxygenated gasolines. The act's 1990 amendments designate 39 urban areas in the United States to sell oxygenated gasoline for at least 4 months a year in an attempt to reduce carbon monoxide levels.

Polymers

Not only is corn a raw material for ethanol, it is also used in the manufacture of moldable polymers. When starch-additive plastics first emerged less than 5 years ago, they contained 2-3 percent starch and 97-98 percent petroleum-based polymers. Today's technologies, however, use starch as the principal ingredient.

National Starch and Chemical Company has developed a biodegradable replacement for expanded polystyrene loose fill (packing peanuts) called Eco-Foam. Resembling a noodle-shaped snack, Eco-Foam is 100 percent corn starch. Output in 1991, the first year of production, was 2.5 million pounds. Currently, Eco-Foam is manufactured in nine U.S. locations. The market is large-50 million pounds of expanded polystyrene loose fill is used annually in the United States. Although Eco-Foam now costs about twice as much per pound as conventional polystyrene loose fill, its cost will probably come down.

Not only is corn a raw material for ethanol, but cornstarch is the principal ingredient in the manufacture of moldable polymers. USDA SD-885

Warner-Lambert's Novon Products Division is marketing a line of starch-based polymers derived from corn or potatoes. Production began in early 1992 at Warner-Lambert's facilities in Rockford, IL. The factory has an annual production capacity of 100 million pounds. Currently, NOVON polymers are used to make packing peanuts, candle cups for churches, and golf tees. Potential uses for NOVON include fast-food packaging such as cups, drink lids, straws, and cutlery.

Both Eco-Foam and NOVON will decompose in sewage treatment plants or in soil composts. One issue in the future will be the need to create compost centers that will take these totally degradable starch-based polymers and truly recycle them.

In addition, corn is now a common raw material for the manufacture of citric and lactic acids. These acids are widely used in diverse chemicals and polymers.

A company named Grand Metropolitan, in conjunction with the Michigan Biotechnology Institute, is developing corn-based protein polymer coatings as replacements for polyethylene and wax coatings on fast-food wrapping paper and paperboard containers. The new coatings are also good barriers to moisture and grease.

And what about edible plates made from wheat? Several foreign firms are in that business, and perhaps American companies soon will be producing edible tableware too. Future restaurant diners not only might order their meals, they might also specify the flavor of their plates!

Vegetable Oils Have Many Industrial Uses

Fats and oils have long been used in the manufacture of soaps, fatty acids, paints and varnishes, resins, lubricants, and other industrial products. But their uses are expanding replacing petrochemicals as raw materials in a number of new product areas. Specialty lubricants, newspaper inks, paints and coatings, and diesel fuel are just a few such examples.