Ag's Bioeconomy Prospects     09/10 08:44

   Ag Bioeconomy Has Strong Potential, But Faces Funding, Infrastructure Hurdles

   Agribusinesses, investors and economic-development groups at the Bio 
Innovations North America conference in Omaha focused heavily on a central 
challenge: taking new biobased technologies from the laboratory to commercial 
manufacturing. To help spur growth, some corn groups are providing seed money 
to startup companies.

Chris Clayton
Farm Business Editor

   OMAHA (DTN) -- The Corn Belt has abundant agricultural feedstocks and the 
technology is there to turn more crops and crop residue into chemicals, 
plastics and other products, but a potential explosion in the rural bioeconomy 
is hampered by a shortage of capital and manufacturing infrastructure.

   Agribusinesses, investors and economic-development groups at the Bio 
Innovations North America conference in Omaha focused heavily on a central 
challenge: taking new biobased technologies from the laboratory to commercial 
manufacturing.

   CORN 'RADICLE' INVESTMENTS

   A highlight at the conference Wednesday was the announcement of $1.75 
million in equity investments by 12 state corn associations and Radicle Growth, 
a venture capital firm in California.

   Corn farmers are investing in two startup companies that look to turn 
growing U.S. corn and ethanol supplies into plastics and chemicals now largely 
derived from petroleum or imported palm oil. The two companies, Citroniq and 
Future Origins, were selected from nearly 100 companies that applied for the 
funds and will split them.

   Mel Badheka, president and co-founder of Citroniq, said his company plans to 
convert corn-based ethanol into 100% bio-based polypropylene, one of the 
world's most widely used plastics. Polypropylene is used in everything from 
automobile bumpers and dashboards to roofing materials, appliances, food 
packaging and consumer products.

   Citroniq plans to start construction next year on a plant in Falls City, 
Nebraska, and expects commercial production of corn-based polypropylene to 
begin in 2029. That plant would require roughly 400 million gallons of ethanol 
annually to make the conversion. Citroniq ultimately envisions building at 
least three plants in the Midwest that will convert roughly 1.2 billion gallons 
of ethanol each year into polypropylene-based products.

   Badheka said the strategy is to create a large industrial market for ethanol 
that isn't tied to transportation fuel demand while offering manufacturers a 
lower-carbon alternative to petroleum-based polypropylene.

   Future Origins is pursuing a different market. The company uses fermentation 
and corn-derived dextrose to produce C12 and C14 fatty alcohols, ingredients 
commonly made from palm oil. Those alcohols are widely used as surfactants and 
other ingredients in shampoos, body washes, moisturizers, laundry detergents, 
dishwashing products and cosmetics. The corn-derived product is called "Nalo."

   Chief Business Officer Priti Pharkya said the concentration of palm 
production in Indonesia and Malaysia creates concerns about deforestation, 
price volatility and supply-chain disruptions.

   "If the product market is growing 3%-4% per year, how will companies source 
alternatives to palm oil to meet this demand?" Pharkya said.

   Future Origins' product is designed as a "drop-in" replacement that 
manufacturers can use in existing equipment and formulations.

   Future Origins estimates a commercial plant producing 50,000 to 75,000 
metric tons (mt) annually could consume 12 million to 13 million bushels (mb) 
of corn. The company has already scaled the technology through demonstration 
production and secured commitments for much of its planned first plant's output 
from major manufacturers of consumer products.

   For corn growers, both investments are aimed at the same objective: 
developing large, higher-value industrial markets capable of absorbing steadily 
increasing U.S. corn production. Neal Gutterson, chief technology officer for 
Radicle Growth, credited corn growers for investing in startup bioeconomy 
companies.

   "Every year, a quarter billion bushels more of corn, on average, we 
produce," Gutterson said. "Ten years out, that's 2-billion-plus bushels. If you 
don't create more demand, that's a real big problem, right? You're running 
toward a cliff ... You recognize that putting money to work in a different way 
behind startups who could actually create commercial value and demand and new 
uses."

   Gutterson, like others, also emphasized a growing appetite among companies 
to onshore their ingredients and processing capacity in the U.S. because of 
supply-chain disruptions stemming from the pandemic, tariffs or wars.

   "What people are wanting to pay for is reduced volatility, reliable supply, 
resilience to supply shocks and I think we're seeing that," Gutterson said.

   BROAD POTENTIAL IN FEEDSTOCKS

   James Glueck, executive director of the Plant Based Products Council, said 
companies are increasingly looking at corn, soybeans and other agricultural 
products as domestic feedstocks for chemicals and materials now produced from 
petroleum or imported from overseas.

   Glueck said chemicals and plastics are attracting particular interest as 
companies rethink supply chains following disruptions during the pandemic. 
Rather than one emerging agricultural feedstock dominating the industry, he 
said companies are looking at crops and existing processing capacity based on 
geography and the products being manufactured.

   That could create opportunities around existing ethanol plants and other 
agricultural processors. "Ethanol is a feedstock for some of the folks that we 
work with too," Glueck said. "There are folks who are looking at co-location 
opportunities or looking at some of the existing infrastructure."

   SCALING UP IS THE CHALLENGE

   While research continues to produce potential new products, Glueck said one 
of the industry's biggest challenges is getting those technologies out of 
laboratories and into commercial manufacturing.

   "Funding is the challenge," he said.

   Multiple federal agencies have shown interest in biomanufacturing, including 
the Commerce Department, National Science Foundation and Defense Department. 
Glueck said the challenge is coordinating those programs and maintaining a 
consistent federal strategy across presidential administrations.

   Another gap is the lack of U.S. facilities where companies can demonstrate 
that technology developed at the laboratory scale will work at increasingly 
larger production levels.

   Glueck pointed to Europe, which he said has more than 400 pilot-scale 
facilities, compared with only a handful in the United States. That can leave 
U.S. researchers with promising technologies forced to go overseas to test 
whether they can work at larger scale.

   "You might have a great idea in one of our laboratory university systems, 
but to test it at scale, you've got to go overseas," Glueck said.

   Building that domestic capacity requires large amounts of capital before 
companies have fully demonstrated commercial markets for their products, 
increasing the financial risk for investors.

   FARM BILL ROLE

   Glueck pointed to provisions in both House and Senate farm-bill proposals 
that would update USDA's BioPreferred Program, which has been part of farm 
bills since 2002. The program certifies biobased products while also 
encouraging their purchase throughout the federal government.

   Glueck said the federal procurement component needs strengthening. The bills 
also seek to establish consistent definitions for terms such as "biobased," 
"bioplastic," "plant-based plastic" and other terminology used by manufacturers 
and customers.

   AVOID VALLEY OF DEATH

   Mark Rathe, a professor at the Massachusetts Institute of Technology, said 
the bioeconomy represents the beginning of a broader industrial transformation 
in which biology becomes a manufacturing platform for products extending far 
beyond pharmaceuticals.

   Rathe said the global bioeconomy is valued at roughly $4 trillion today and 
is projected to grow into a $30 trillion industry by 2050. The opportunity 
ranges from agricultural feedstocks and waste streams to fuels, chemicals and 
even materials important to the Defense Department. Expanding U.S. 
biomanufacturing could also bring production and supply chains back into the 
country, create jobs and reduce dependence on foreign suppliers.

   The U.S. is essentially losing out on $600 billion in economic output 
because the infrastructure isn't in place to build out the bioeconomy, Rathe 
said.

   Rathe said the United States has major advantages in biotechnology, 
including strong university research, venture capital, entrepreneurial talent 
and abundant agricultural feedstocks. Yet those advantages haven't translated 
into enough commercial manufacturing because of what he called the industry's 
"valley of death" between laboratory discoveries and technologies sufficiently 
proven to attract large-scale investment.

   Rathe and other researchers are proposing a national network of 
biotechnology incubators that could help companies move from a single liter of 
production to full pilot-scale projects. Rathe warned that other countries are 
already aggressively investing in such infrastructure.

   One model for addressing the problem is the Illinois Fermentation and 
Agricultural Biomanufacturing Tech Hub, or IFAB, which brings together 
facilities and expertise needed to move biotechnology toward commercial scale.

   The approach is designed to eliminate what industry officials call 
"biotourism" -- emerging companies conducting research in one location, 
traveling somewhere else for pilot production and then moving again to test the 
process at larger scale. Keeping those capabilities in one region can reduce 
the time, cost and risk involved in commercialization.

   "The race is for us to win," Rathe said. "But if we do not act decisively 
and nationally, we may very well fall behind and not be able to recover."

   Chris Clayton can be reached at Chris.Clayton@dtn.com

   Follow him on social platform X @ChrisClaytonDTN




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