The Biotechnology Industry Organization hosted its annual World Congress on Industrial Biotechnology two weeks ago at which over 1200 entrepreneurs, companies, government officials and researchers joined together to discuss progress in the emerging industrial biotechnology field. Despite the negative press on biofuels, the downturn in the economy, and other factors in the media, the general feeling was upbeat and enthusiastic. The enthusiasm primarily dealt with the underlying belief in the continued progress of technology to drive major disruptive change in the biofuels and biobased products sectors. There is much room for excitement, however there also seemed to be a lack of understanding and willingness to recognize the realities of raw materials, agriculture, and the logistics associated with the large scale biorefineries.
One of the key barriers to the development of a strong biobased products industry is the acquisition of an ample, large scale supply of consistent raw materials for use in the manufacturing processes. There was a lot of discussion at the BIO conference about the most probable raw materials including short rotation woody crops, grass crops, residues from grain crops, and municipal solid waste. What was not well understood was some of the basic principles associated with working with farmers and the agricultural community. It is not an accurate assumption to model how much is theoretically available in a given area and then extrapolate that the raw material will be there, without developing the necessary relationships with farmers, processors, and other partners.
Several talks did acknowledge that this was a daunting challenge, and the new crops workshop that BioDimensions sponsored included six short talks from leading new crops/feedstock companies. These talks echoed some of my thoughts in that there was very little farmer and agricultural representation. A practical example of why this is important is that most of the talks I heard discussed how a new feedstock needed to compete with high commodity prices when harvested and sold to the factory. In my way of thinking, the new crops offer an opportunity for the farmer to own some of the value-added opportunity. Owning equity in the processing facility adds value to the material beyond a per ton/bushel sell price. Therefore it is not a safe assumption to conclude that you can only grow a new crop that competes with the Chicago Board of Trade’s commodity pricing. If the new crop creates an ownership scenario for the farmer then the value has shifted away from a farm gate measurement. Of course greater equity and value participation must also be balanced against greater risk assumption from the downstream processing operation.
Another area related to feedstocks is the idea that you can universally use any cellulose source in a given process. I think that feedstock transparency is highly desirable - but may be difficult to realize in some processes - and certainly the dependability of the specific feedstock or assortment will be critical.
I do not want to take away from the fact that this is a fast moving, emerging industry in which biotechnology, agriculture, chemistry, and other industries are connecting in new and profitable ways. As projects get underway, with some inevitably failing, the issues related to how to involve the agriculture sector more effectively will become more apparent. The take home lesson from the BIO conference is that the technology and investment climate is exciting and rapidly growing - you can see this with the major announcements daily; while this near-hysteria is probably creating a bit of unrealistic expectations on the raw material supply and the logistics.
Pete Nelson is a principal in BioDimensions, a consultancy dedicated to helping companies that produce plant-based products prosper. He can be reached by email at pnelson@biobased.org.