The fact is that U.S. agriculture has become an enormously successful producer of food and feed. So successful, in fact, that it has become a victim of its own success. During the last three decades in this country, we have had acreage reductions/supply controls in place three out of four years, with an average of 40 million acres idled out of a 400 million acre cropland base (16 million of 160 million ha). The annual bill to taxpayers for idling 10% of our land ranges between $10-15 billion.
In addition, we are not the only ones capable of growing grain. In the 1980s, the rest of the world expanded its grain production, resulting in a decline of U.S. market share in the last ten years. (Maize down from 77% to 66%; wheat down from 44% to 32%; soybeans down from 79% to 66%.) Arguments about unfair trade practices aside, the bottom line is that the balance of global grain market power is shifting away from the U.S.
There is an alternative market for the tremendous productive capacity of U.S. agriculture, however. By recognizing that renewable materials produced on our nation's farms can satisfy more than just food and fiber needs, U.S. agriculture can supply the feedstock for a number of industries ranging from plastic substitutes to newsprint.
The result of developing such materials is nothing short of a complete shift in our nation's economy--away from its current orientation towards petroleum-derived products based on hydrocarbons to plant-derived products based on carbohydrates. It has been said that the United States is the Persian Gulf of carbohydrates.
Such an orientation is a return to the economy of 150 years ago--alluded to in the Department's motto. In recent times, the Chemurgic movement of the 1930s and 1940s championed such a return. That early work led to the formation of the four USDA regional laboratories.
With the peaking of the petroleum age in the 1970s, there is now a renewed interest in developing carbohydrate products. A number of factors have come together to make the use of farm and forest materials in industrial uses more viable in the 90s. They include: more efficient technologies for processing and manufacturing; environmental and regulatory requirements for clean air and water, landfill alternatives, disposability and renewability; availability of skilled labor and resources in rural America; and increased pressure to reduce agricultural subsidies. In its 1987 report to then-Secretary of Agriculture Block, the New Farm and Forest Products Task Force set as this country's goal the development and commercialization of an array of new farm and forest products. The report cited the goal as a 25 year effort that would use 150 million acres (60 million ha) of farmland, generate 750,000 jobs, increase farm income by $30 billion and add $100 billion in national economic activity.
In response to the 1987 report, and with bipartisan congressional support, the 1990 Farm Bill authorized the establishment of the Alternative Agricultural Research and Commercialization--AARC--Center. The Center's mission is to accelerate the commercialization of industrial products (non-food, non-feed) derived from farm and forestry materials--creating jobs and economic activity in rural America. Part of that mandate includes the development of new crops for new industrial materials.
In 1992, Congress authorized the first appropriations for the AARC Center and in March of that year then-Secretary Madigan appointed the Center's nine-member Board of Directors. In the spring of 1993, the Board conducted a series of eight hearings around the country to get advice from the public as to how they felt the Center could best accomplish its mission. In the fall of 1993, drawing on the recommendations from the public hearings, the AARC Center began to enter into its first agreements with private firms.
The AARC Center facilitates commercialization by forming private/public pre-commercial partnerships. This helps to initiate market penetration strategies early in the product/process development. It also places the private sector in the lead; the guiding philosophy being that the private sector has much more knowledge of the marketplace than a government-run organization. Moreover, the Center concentrates on the critical pre-commercialization stage because that is the most difficult stage for a company to secure funding. Most estimates cite the pre-commercialization expenses as being 100 times that of the expenses of basic laboratory research.
Monies provided by the AARC Center should not be viewed as a duplication of other programs by the Department. The unique nature of the AARC Center is that its activities are market driven. Other USDA organizations are technology pushed. Thus, the Center's activities are complementary to other work supported by the Department.
An additional aspect of the AARC Center is its reinvestment strategy. The Center is funded via a revolving fund and not on an annual "use it or lose it" appropriation. Money provided to a firm for commercializing a product is repaid, to include an appreciation for the investment risk taken by the Center. Drawing on these revenues, it is the goal of the Board to build up a fund of several hundred million dollars that can be used for financing future projects.
As of early 1996, the AARC Center is helping to finance nearly 60 projects--mostly small- and medium-sized firms--with some $21 million of taxpayers' money. About $73 million of private sector money is also invested in the projects. The projects not only generate demand for agricultural materials, but they also generate jobs in rural America; approximately 3,000 new jobs are expected to be created in the near-term.
For further information on the AARC Center program, contact the AARC Center via fax at (202)690-1655.