Greener pastures for bio-tech co-ops? New, bio-based products may only be scratching the surface of potential

Rural Cooperatives, March-April, 2004 by Steve Thompson

What do lubricating oils, diesel fuel, glues, plastics, paints, solvents, inks and packing peanuts have in common?

If you immediately thought "petroleum," you're only partly right. Petroleum is usually used in the manufacturing of such products, but other raw materials can also be used, including those grown on farms. The manufacture of new "bio-based" products to replace or supplement those made with conventional, non-renewable materials may provide new opportunities for farmer cooperatives to add value to their members' crops.

As the nation observes Earth Day in April, it is a particularly good time to take a close look at a new federal government requirement designed to spur development of bio-based products and what that can mean for the nation's farmers.

Farm Law spurs purchases

The Farm Security and Rural Investment Act of 2002 requires federal agencies to buy officially designated, bio-based products whenever possible for purchases of $10,000 or more. On Dec. 19, 2003, the U.S. Department of Agriculture published a proposed regulation for designating bio-based products, to help pave the way for promulgating the new federal procurement guidelines.

The 2002 act gives three main objectives for the new requirement. The first is to improve the demand for biobased products--good news for producers of commodities that can serve as raw materials. The second is to encourage the development of ag-based, value-added processing and manufacturing in rural communities. The third objective is encouraging the substitution of fossil fuels with more enviromnentally friendly substances (see sidebar).

The range of a new generation of bio-based products already available is surprising. The best known are the fuel additives ethanol and biodiesel. Ethanol is made by distilling ethyl alcohol produced by fermenting grain with yeast--basically the same process used for hundreds of years to make distilled liquor. Because the ethanol molecule contains atoms of oxygen, its addition to gasoline can make engines run marginally cleaner. The Environmental Protection Agency. requires that many urban areas use oxygenated fuel, especially during winter, when air pollution is worst. Until recently, methyl tertiary butyl ether (MTBE) has been the oxygenator of choice. But revelations that MTBE has contaminated groundwater in some areas, along with its unhealthy effects when breathed as fumes, have caused many states to ban it. That leaves environmentally friendly ethanol as the best alternative. Farmer--owned ethanol plants both traditional cooperatives and hybrid co-op/limited-liability corporations--are springing up like mushrooms across the Midwest.

Steve Thompson, Writer-Editor,

USDA Rural Development

StephenA.thompson@usda.gov