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Wheaton, E.R. 1990. Industrial crops commercialization. p. 41-46. In: J. Janick and J.E. Simon (eds.), Advances in new crops. Timber Press, Portland, OR.


Industrial Crops Commercialization

E. Richard Wheaton


  1. INTRODUCTION
  2. DEPENDENCY: A NATIONAL CONCERN
    1. Critical Agricultural Materials
    2. Industrial Materials—Sources from Agricultural Crops and the Forest
  3. LEGISLATION SUPPORTING INDUSTRIAL CROP DEVELOPMENT
    1. Strategic and Critical Materials Stockpiling Act of 1979, PL 96-41
    2. National Materials and Minerals Policy Research & Development Act of 1980, PL 96-479
    3. Critical Materials Act of 1984, PL 98-373
    4. The Native Latex Act of 1979, PL 95-592
    5. Critical Agricultural Materials Act of 1984, PL 98-284
    6. Natural Rubber Development
  4. PROGRESS IN COMMERCIALIZATION
  5. ALTERNATIVE NEW INDUSTRIAL CROPS
  6. REFERENCES
  7. Table 1
  8. Table 2

INTRODUCTION

The congressional Office of Technology Assessment in 1980 estimated that biomass could annually supply, by the year 2000, as much as 20% of the U.S. consumption of energy. This contribution would depend on such factors as cropland availability, productivity, efficiency conversion technologies, plant species energy content and net energy contribution, economics, societal needs, and public policy. Currently, the United States relies on petroleum as its major source of energy and it also serves as the prime precursor for industrial chemicals.

Petroleum, in addition to its use for energy, is the source of fuels, raw materials, and chemicals. Petroleum serves as the primary ingredient of the Nation's polymer industry which is projected to steadily increase in the future. In terms of tonnage and dollars, any potential replacements would be extremely valuable as petroleum is a limited resource and our dependency has major geo-political ramifications. In 1987, about $6.5 billion of petrochemicals were imported into the United States, nearly double the level in 1981 of $3.3 million. Petrochemicals are used to produce other chemical products, such as plastics, synthetic fibers, surface-active agents, plasticizers, solvents, nitrogenous fertilizers, and carbon black.

Since 1974, agricultural scientists have been screening the plant kingdom for sources of high-energy, easily extractable components suitable for fuel, chemicals, and petroleum-sparing chemical feedstock (raw materials used in chemical manufacturing). Nearly 900 species have been evaluated, of which 90 are promising enough to be studied in greater detail. More than 30 species consist of at least 20% polyphenols, and over a dozen yield more than 2% isoprene polymers, both of which are high in potentially useful energy in the form of easily extractable organic compounds. The chemical content of these plants can be separated into three classes of compounds with potential for industrial use (oils, polyphenols, and hydrocarbons). All these crude products contain, in addition to polyphenols, a wide variety of lipids (fats and related substances) and other substances. Polyphenols have good potential as fuels.

There is a national need to address the issues of substituting renewable resources derived from plants for non-renewable petroleum based chemicals, polymers, fuel, energy sources, and natural rubber. Current legislation provides the necessary authorizations for funding and outlines Congressional as well as public concern to address the issues relative to the industrial base and foreign dependency on strategic and essential industrial materials. Industrial crops provide materials of industrial importance and are sources of products utilized by industry in the manufacture of strategic and essential industrial materials. These materials are essential in a world dependent on non-renewable resources, especially petroleum.

Products such as natural rubber, lubricants, plastics, polymers, oil, fibers, resins, and acids, are all various forms of the carbon hydrogen chain finding their origin in plant life. Hydro-carbon producing plants can and are being developed as future oil and chemical resources. The domestic production of agriculturally produced industrial raw materials provides a viable alternative to the Nation's import dependence for petroleum based chemicals, natural rubber, and other industrial raw materials.

The potential for Agriculture's role to help support the Nation's industrial base can be measured in billions of dollars and millions of hectares of production. National policy for the development and commercialization of industrial crops is provided through the Critical Agricultural Materials Act of 1984, PL 98-284 that created the Critical Agricultural Materials Office in the U.S. Department of Agriculture.

DEPENDENCY: A NATIONAL CONCERN

The Nation's dependency on foreign sources for numerous materials, essential for industry and defense, is a major concern of both the public and private sectors of our economy (Department of Commerce 1981). Among the major imports are minerals, petroleum, and plant derived products such as fats and oils (coconut, palm, castor), waxes, resins, gums, tannins, rubber, specially and industrial chemicals, and pharmaceuticals.

Dependency is only one part of this concern. Certain resources are limited in terms of known supplies and in some instances these supplies are located primarily in unstable and even unfriendly foreign nations. Petroleum, currently in oversupply, will begin to diminish by the turn of the century. Because of the need to address these issues the United States government is following a policy to decrease the Nation's vulnerability by taking positive action that will promote our national security, help insure a healthy and vigorous economy, create American jobs, and protect America's natural resources and environment.

The U.S. is very dependent on imported petroleum (Table 1). Only about one fifth of our oil was imported in 1965. In the late 1970's, our imports had grown to over 40%. We reduced our dependency to 29% in 1983, but the U.S. Department of Energy predicts this will again grow to 50% in 1995 and some 56% by the year 2000.

This definition however is not adequate for understanding materials issues if agriculture is to play a role in helping the Nation by providing raw materials in support of the industrial base.

Critical Agricultural Materials

The fact that the U.S. is dependent on foreign sources for certain strategic and essential industrial materials is well documented. Increasingly, there is a focus upon reports that attempt to document known petroleum reserves and U.S. dependency on foreign sources for petroleum as well as numerous raw materials essential in the manufacture of industrial end products (National Commission on Materials Policy 1976).

Critical materials now being extensively used in an agricultural context have been defined in legislation, the Critical Materials Act of 1984, PL 98-284, and the Strategic and Critical Materials Stockpiling Act of 1979, PL 96-41. A new working definition supports the notion that agriculturally produced hydro-carbons and other plant materials can significantly contribute to the Nation's industrial base (U.S. Department of Agriculture 1984).

The following definitions form the basis of the premises that currently underlie the rationale for critical materials policy for research and development of materials based upon agricultural technology. It is not intended nor implied that minerals and metals are included however; new polymers, plastics, composites, and fibers have implications for materials that can readily substitute for products that currently rely on metals.

Critical materials are materials of strategic and industrial importance, for which the Nation is now dependent, or has a high degree of dependency, upon foreign sources [PL 98-284].

Strategic materials are materials that would be needed to supply the military, industrial, and essential civilian needs of the United States during a national emergency and are not found or produced in the United States in sufficient quantities to meet such need [PL 96-41].

Industrial materials are basic raw materials that would be essential to United States industry both in emergency and in sustained production and which could be dependent upon foreign sources [Task Force Report: Growing Industrial Materials].

Within the context of these definitions and reduced petroleum supplies lies the rationale for an agricultural role in providing raw materials for the production of hydrocarbon based products for industry and defense. These raw materials are essentially based on the carbon-hydrogen chain and include a number of short, medium, and long chain fatty acids. The chemical derivatives of these fatty acid compounds are utilized by industry for a vast array of materials.

Two significant Task Force studies, Growing Industrial Materials: Renewable Resources From Agriculture and Forestry, (United States Department of Agriculture, 1984) and Development of New Crops: Needs, Procedures, Strategies, and Options, (Council of Agricultural Science and Technology 1984) addressed the issues of materials and the role Agriculture can play in this important National concern. In addition, a New Farm and Forest Products Task Force Report expressed this concept indicating that "—significant opportunities exist for new farm and forest products to meet real market needs-particularly in industrial, non-food applications (U.S. Department of Agriculture, Office of Critical Materials 1987).

Industrial Materials—Sources from Agricultural Crops and the Forest

Green plants use solar energy to produce a wide variety of products that are competitive with synthetic petrochemicals. These products include tall oil and its derivatives (fatty acids, rosin acids), naval stores (solvents, terpene resins, rosin), vegetable oils, waxes, tannins (phenolic compounds), and natural rubber. Except for vegetable oils, we refer to these types of products collectively as hydrocarbons.

Hydrocarbon-producing plants can be developed as future oil and chemical resources. Such domestic production of industrial raw materials from forest and agricultural crops provides a viable alternative to the import dependency of the United States for petroleum based chemicals, natural rubber, and other essential materials needed by industry.

The need to develop industrial materials from crops and the forest is quite evident simply because of the increasing reliance in the modern world upon exhaustible resources, such as natural gas, petroleum, and coal for energy and chemical raw materials. Agriculturally derived raw materials can be quite competitive for several petroleum based products. In the future, we will have to depend even more upon renewable resources, regardless of desirable prices, because of depletion or temporary nonavailability of traditional derived raw materials.

The annual need for plastics production and industrial chemicals from petroleum (Table 2) is about 230 kg per person. The total petroleum demand exceeds 3860 kg per person, with the difference being used for power and fuels. In addition to the import of petroleum for energy and chemicals, many foreign agricultural products are also needed by industry.

LEGISLATION SUPPORTING INDUSTRIAL CROP DEVELOPMENT

Agricultural products have always been important as industrial raw materials. There are cotton, wool, straw, bagasse, hardwoods, and softwoods for fiber production; tallow, lard, and vegetable oils for coatings; plastics, lubricants, surfactants, printing inks; animal and plant proteins for glues, inks, or thickening agents; grains and potatoes for industrial and pharmaceutical fermentation products; and starch, cellulose, gums, rubber, tannins, alkaloids, animal hides, and many other agricultural specially products with one or more industrial applications.

In the U.S., research into new crops has shown that it is technologically feasible to produce a number of products for industrial use and it is only a matter of time before economic feasibility will be realized. Traditionally, materials issues have centered on minerals, metals, and petroleum. Little focus has been placed on the role agriculture can play in providing substitutes or replacements for many of the traditional materials even though this role has been outlined and defined in legislation (American Association for the Advancement of Science 1976a, b; Congressional Research Service 1977; National Academy of Science 1976; United States Senate 1979).

Strategic and Critical Materials Stockpiling Act of 1979, PL 96-41

This act has provisions for scientific, technological, and economic investigations of the feasibility of developing domestic sources of supplies of any agricultural material or for using agricultural commodities for the manufacture of any material determined to be a strategic and critical material or substitute therefore. This provision is emphasized through Executive Order 12155 of September 10, 1979 that delegates specific responsibility to the Secretary of Agriculture.

National Materials and Minerals Policy Research & Development Act of 1980, PL 96-479

This act implements policy for the coordination of federal materials research and development activities to ensure adequate, stable, and economical materials supplies essential to national security, economic well-being, and industrial production. Of particular concern to agriculture is the support for basic and applied research and development to provide for enhanced methods for processes for the more efficient production and use of renewable and nonrenewable resources including an understanding of materials substitution.

Critical Materials Act of 1984, PL 98-373

This act establishes a National Critical Materials Council under and reporting to the Executive Office of the President. It establishes responsibility for coordination of critical materials policy, including all facets of research and technology, among the various agencies of the Federal government in accordance with the policy and direction given in the National Materials and Minerals Policy, Research and Development Act of 1980.

The above three legislative Acts, all concerned with materials, failed to encompass agriculture as a provider of materials in an industrial sense. Those who have addressed materials issues have not been agriculturally educated nor have there been individuals to champion the potential substitution of agricultural products for industrial materials. Additionally, the economics was not as important then as it is today nor were the concerns as great about future supplies.

This situation has changed as demonstrated by the passage of two important pieces of legislation which have set the stage and specifically defined a role for agriculture in providing materials for the Nation's industries.

The Native Latex Act of 1979, PL 95-592

Natural rubber is a strategic material and the United States is totally import dependent for its supply. Some 750,000 metric tons are imported annually at a cost of just under $1 billion dollars. The Native Latex Act provided a mechanism for research and development of a domestic natural rubber industry. The act provided for interagency coordination of this effort and clearly defined the role for agriculture in addressing one of the Nation's most critical materials need. For the first time, in legislation, agriculture was assigned a role in National Materials Policy. This act expired at the end of 1983. A provision in the Act provided for the development of "OTHER HYDROCARBON CROPS". Using this, the Act was re-written and titled the:

Critical Agricultural Materials Act of 1984, PL 98-284

This bill broadens the Native Latex Act to include other agricultural crops that produce hydro-carbons for the manufacture of critical or essential materials for industry and defense. A major emphasis is the utilization of renewable resources for the production of materials normally produced from petrochemicals.

Congress recognized that the development of a domestic industry or industries for the production and manufacture from native agricultural crops or products other than rubber which are of strategic and industrial importance but for which the Nation is now dependent upon foreign sources, would benefit the economy, the defense, and the general well-being of the Nation. They recognized that additional research efforts in this area should be undertaken or continued and expanded.

Congress also outlined a national policy and a new role for agriculture to produce critical industrial materials to benefit the Nation and promote economic development. The issue of natural rubber development under the Critical Agricultural Materials Act and in the U.S. Department of Agriculture is a story worth noting.

There is also a recognition that the Native Latex legislation initiated one of the first societies associated with "new crop" development. The Guayule Rubber Society was formed in 1979 to promote the research and development of natural rubber from guayule. This year, 1988, the Society responded to the emerging interest in "new crops" and voted to change its name to the Association For The Advancement of Industrial Crops.

It would be misleading to believe that the new crops are new and more accurate to recognize that current interest is a rebirth of a long history of research by governments, universities, and the private sector. It is time to recognize that Agriculture has a role larger than is traditionally recognized as being a provider mainly of food and fiber for human consumption. It is time to recognize a dual role for Agriculture-providing both industrial raw materials and food for the Nation.

Natural Rubber Development

The issues and concerns for developing a natural rubber industry are outlined above in terms of legislation and dependency on foreign sources for a strategic material. The story in the U.S. Department of Agriculture is one of coordination and management of research and development programs. A major focus has been to involve the key Federal Agencies of Agriculture, Commerce, Defense, Federal Emergency Management Agency, National Science Foundation, and the Interior. In addition, the Universities of Arizona and California, New Mexico State University, Texas A&M University and the University of Southern Mississippi have been an essential part of this effort. The private sector has also been involved.

Funding levels have always been a limiting factor but it has failed to dampen the vigor with which a growing number of individuals and entities, both public and private have held to the belief that natural rubber could, someday, be commercialized in the United States. Certain members of Congress have always supported the basic concepts outlined in the legislation. Perhaps the greatest roadblock to commercialization lies in the fact that the co-products have not been adequately exploited until recently. The price of natural rubber has fluctuated and in recent years, been inadequate to justify growing a crop where production cost was nearly double the cost of imported hevea rubber. It is now clear that with the co-products, resin and bagasse, the true costs are more equal to the price of imported natural rubber. With enhancement, the value-added factors of resin and bagasse, should make it possible to commercialize rubber within the next three to five years.

Since 1979, funding for research and development has been:

Agency $ Million
Department of Agriculture 13.2
Department of Defense 13.1
Other Federal Agencies 2.9
The Firestone Tire & Rubber Co. 2.7
$ 31.9
The Department of Agriculture has been the lead agency with the Department of Defense contributing significant leadership in fostering private sector involvement. Significant resources have been directed to commercial size plantings and a prototype rubber processing facility has been constructed by The Firestone Tire & Rubber Company near Phoenix, Arizona. The funding level is:

Agency $ Million
Department of Defense 15.0
Department of Agriculture 4.3
$ 19.3
The efforts in Defense have involved authorities under the Joint Logistics Commanders; use of funding under Title III of the Defense Production Act; and program direction through the office of the Naval Air Systems Command.

The Firestone Tire & Rubber Company has researched and developed a solvent extraction process in use at the prototype facility in Arizona. Some 290 ha of guayule shrub exists in the four states of Arizona, California, New Mexico, and Texas as well as on the tribal lands of the Gila River Indian Community.

The Department of Agriculture has provided support and coordination to this effort through the office of Critical Agricultural Materials Office; directed University and USDA research programs; and supported a number of private sector efforts over the past ten years.

PROGRESS IN COMMERCIALIZATION

Commercialization, new industrial crop research development, private and public sector cooperation, economic feasibility, free market competition, Congressional/Public and private sector interest, traditional agricultural commodity interest, and funding all compete in a major undertaking that represents a potential new industry valued in excess of two billion dollars. Competing and competitive interest all are brought to bear in this effort.

When can such an enterprise succeed? What will make it succeed? Is foreign dependency a reason to drive this success? Are strategic concerns imperative? Is economic feasibility necessary?

All of the above questions (and many others) are relevant in measuring the success of this program as outlines in the Congressional mandate to commercialize natural rubber in the United States. Without the concerns for a strong industrial base and dependency on foreign sources for strategic and essential industrial materials, the only driving force is economic feasibility.

The possibility of rubber supply interruption is the strongest argument for commercial success in the absence of economic feasibility. This alone is a reason to support a new struggling industry by guaranteeing a price support during the formative years. The possibility of competing with imported hevea rubber prices has to be the measure of current success in the free market and that is closer now (1988) than at any time in the history of guayule as a domestic source of natural rubber. Should adequate funding be made available through Congressional appropriations as well as the private sector, commercialization could proceed successfully within the next few years.

Has the program been successful? Yes and no, depending on the perspective. It certainly has been from a scientific and technological point of view. Technology is no longer the problem. The argument of cost is relative in terms of national security and industrial strength. Cost is minimal when considering that the annual import cost is nearly $1 billion dollars, the value of job creation, economic development, and tax considerations. However, in terms of the domestic budget deficit, it is a costly and politically difficult proposition to fund a new industry start up or provide a commodity price support to supply a portion of Defense end product needs. The ability to judge success must he in these arguments and will probably be evident in next three to five years.

Currently, we are moving closer to commercial production of natural rubber in the United States. An arid land plant that produces this commodity can be successfully grown. Natural rubber has been extracted at a pilot facility in Texas and a quantity of rubber delivered to the Army Tank Command at Warren, Michigan for testing on the M-1 tank. A dollar value has been established on two of the most abundant co-products—resin and bagasse. The price of domestically produced natural rubber is within close range of imported hevea rubber.

ALTERNATIVE NEW INDUSTRIAL CROPS

Many crops can provide lubricating oils, waxes, plastics, and other products for industry. Many of these crops have several co-products which makes the economics more attractive as the price of materials and need increases. A national concern for materials supply, legislation to support materials research and development, National Materials Policy, and an agricultural system that is capable of producing essential industrial materials to help support the Nation's industrial base provides an opportunity. It is time to address this opportunity and challenge industry to look to agriculture to supply many of its needed materials and to expend resources for industrial crops commercialization.

REFERENCES


Table 1. U.S. petroleum balances, in million barrels/day.
DomesticImports
YearSupply DemandTo balance% of Total
19659.011.52.521.7
197011.314.73.423.1
197510.016.36.338.7
198010.217.16.940.4
198411.215.64.629.0
198511.315.74.427.0
198611.116.25.032.0
198710.516.35.635.0
19909.816.26.540.0
19958.316.58.250.0
20007.717.49.856.0

Source: USDA Office of Energy


Table 2. Annual use of some petroleum-based chemicals in the United States in period 1973-1976.

Class of chemicalsConsumption
billions of pounds
Surfactants5
Elastomers6
Lubricants22
Plastics27
Polymers (adhesives, thickeners, flocculating agents, coatings)40
Total chemicals from petroleum100


Last update February 12, 1997 by aw