Agricultural commodities, notably, raw materials, are progressively being used in sectors beyond conventional nutrition and fiber industries.
Growing Functionality of Agricultural Raw Materials
Article from | Joylore
Agricultural commodities, notably, raw materials, are progressively being used in sectors beyond conventional nutrition and fiber industries. This includes energy in the form of biodiesel and ethanol, industrial products such as bio-based synthetic chemicals, pharmaceutical products like functional foods, growth hormones, and organ transplants. Moreover, advancements in the field of biotechnology have encouraged the potential usage of agricultural raw materials, resulting in broadened social and public concerns.
Despite claims that new industrial crops and products will result in benefiting the society, few studies have attempted to examine whether this holds true. Because of the lack of needed information, it is difficult to arrive at a definitive answer. Existing studies can be used to tentatively monitor market trends and market size for some of the products. The expansion of agricultural production in the 1970s and its impact on rural employment provides a platform to examine the potential employment trends resulting from new industrial crops and development. The adoption of modern technology by farmers provide information on the potential impacts on different farm sizes. In this article, Joylore examines the effects of biofuel infusion in cross-industrial sectors.
New developments have lead to cut-throat competition in resource use resulting in the blurring of industry boundaries. This intermixing of industries has created a conducive environment for dramatic changes in the competitive setting of downstream markets. Ralph Hardy, in his article “The Bio-based Economy,” states that “the bio-based economy can and should be to the 21st century what the fossil-based economy was to the 20th century”.
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More specifically, first-generation bio-based energy in the form of ethanol from wheat, corn, sugarcane, or sugar beet and biodiesel, from different raw material sources such as soybean and palm oil or rapeseed, is now common-place in the market. Second-generation biofuels from cellulosic material are under development. According to a USDA study, the growth potential for bio-based chemicals is significant, with the opportunity to move from a current market share of 20% in fine and specialty chemicals to a potential market share of 50% in 2025.
Such products include cleaners, solvents, adhesives, industrial gums, and paints. Examples of bio-based polymers also include plastics from corn starch. With the consumption of renewable polymers projected to increase by 22% annually in the U.S., the market size for biodegradable polymers generated from natural renewable sources, such as plant and animal biomass, is growing significantly. Other bio-based products include industrial enzymes, acidulants, amino acids, vitamins, food conditioners, nutraceuticals, pharmaceuticals, and cosmeceuticals. Moreover, edible vaccines are being prepared and tested to combat human and domesticated animal diseases.
The different applications of agricultural resources highlight the importance of the industry as an input supplier for at least four different industries: food and nutrition products, energy, industrial chemical products, and health and pharmaceutical products. Agriculture has gradually transformed from an industry that produces and processes commodity products to one that biologically manufactures specific raw materials for a broader set of end uses.
Agriculture’s increasing multifunctional role has lead to concern and dilemma. Genetic manipulation, enzyme development, and biotechnology combined with traditional biological, chemical, and engineering advances have resulted in disruptive innovations.
The development of the bio-economy and the growing use of renewables have intensified the discussion of the complementary or competitive nature of the economic motivation of creating value, and the social motivation of environmental responsiveness and sustainability. And, as it often occurs with disruptive innovations, new end-uses result in new customers that previously were not even recognized by incumbent firms, potentially enabling new entrants to be more successful in gaining market position and eventually dominating the traditional participants.
The other dilemma concerns the structural changes that are occurring in the sectors and firms involved in this “new” industry. Traditional supply chains no longer prevail due to the new value and supply chain structures emerging in the bio-economy. Industries that were previously relatively independent of agriculture products like energy, industrial, and pharmaceutical sectors, now intersect. Industry boundaries have been redefined, and the competitive landscape re-explored.
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The growing interest in renewables and the bio-economy is driven in part by the potential to respond to the rising costs of fossil fuels and the growing market potential of biodegradable products (the economic motivation), and, on the other hand, the increased concern about issues of sustainability and environmental challenges of continuing to be heavily dependent on fossil-based raw materials (the social motivation).
Businesses and specifically agribusinesses that rely heavily on natural resources cannot ignore environmental and social issues that have become prevalent in today’s society. Faced with the increasing government regulations and strengthening public opinion, businesses are becoming more accountable for their impact on society and more transparent in their activities as part of the corporate social responsibility.
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The content & opinions in this article are the author’s and do not necessarily represent the views of AgriTechTomorrow
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