11.10 New Uses of Agricultural Products

New uses of agricultural commodities hold the promise of “shifting the demand curve” for agriculture well beyond the current food and fiber sectors.  In many ways, these new uses are not new at all; it’s a trend back into the future.  Early in the industrial revolution, many industrial inputs were based on plant and animal products.  Vegetable oils were used to make paints, varnishes, soaps, and lubricants.  Methanol was used as an industrial solvent, and later to produce the first generation of plastics.  Petroleum-based products squeezed agricultural materials out of the industrial markets to a large extent by the 1920s and 1930s when agricultural-based materials accounted for about 35 percent of industrial inputs.  During the decade of the 90s, that share dropped to about 15 percent — much of which was for producing paper.

At the dawn of a new century, environmental interests, rising energy costs, and national security concerns are spurring renewed interest in plant and animal feedstocks to industry.  In 2000-01, fuel ethanol production from corn set new monthly production records for 23 of 24 straight months.  The challenge is to find similar opportunities in pharmaceutical, industrial, and other energy sectors.

Moreover, a greater challenge to “think outside of the box” lies in the area of environmental enhancement.  The desirable public benefits of green space, buffer strips, carbon sequestration and other positive contributions from well managed farms can be quantified, and can provide an entirely new market for farmers — the opportunity to market environmental benefits as “commodities.”  It also provides society with invaluable net gains in air and water quality.

Throughout history, agriculture's primary purpose has been to provide a source of food and fiber.  Agricultural policies reflect that purpose by focusing more on increasing yields for traditional uses and on expanding international markets, rather than finding new uses for farm commodities.  That focus has changed recently, as yields have expanded and supply of food and fiber commodities have begun to exceed demand.  International trade competition has increased.  At the same time, the use of non-renewable resources, such as fossil fuels and petrochemical plastics are causing environmental concern.

The high environmental costs of retrieving, transporting, using, and disposing of non-renewable resources has become increasingly apparent.  There is an increasing industrial need and demand for agricultural-based products as an alternative to those produced from fossil fuels.  Also, many other non-renewable resources have to be imported, increasing the nation's trade deficit.

In response, processors and manufacturers have looked to America's plentiful renewable agricultural resources to prevent and solve various social and environmental problems and to improve quality of life.  Technological advances have made agriculturally-based goods more competitive in the marketplace.  As more of these products become available, demand is likely to increase as well.

NASDA believes that industrial and pharmaceutical uses for agricultural products offer U.S. farmers an opportunity for market growth.  In order for new uses of agricultural products to be realized to the greatest extent practicable, NASDA believes that additional crop research is needed to develop alternatives to traditional uses of agricultural products.  Agriculture's expansion into non-traditional industries will boost rural economies, with a positive economic and environmental ripple effect throughout the nation.

The members of NASDA support the development of alternative fuels such as ethanol, biodiesel, and other biomass fuels.  The members of NASDA also support extending the federal tax credit for ethanol recently extended until 2007.  The members of NASDA also support the minimum oxygen standard of the 1990 Clean Air Act Amendments and the replacement of MTBE with ethanol to meet that standard.


  • Comprehensive Agricultural Energy Initiative
    Last updated: February 08, 2010

    There is a tremendous opportunity to formulate and propose agriculture-based energy initiatives that could be used as a “new opportunity” to promote ethanol and its economic contribution to agriculture. Oxydiesel alternatives and others also provide an opportunity to share clean energy biomass electricity alternatives to a nation looking for more energy.

    Potential biomass production by using advanced gasification technology (not burning), biomass from switch grass crop residues and solid waste could produce a significant amount of clean, sustainable power. The economic benefits for biomass electricity and biofuels would create jobs and provide an additional source of income for producers, rural communities, and businesses. Biomass energy will keep energy dollars in the U.S. and provide the positive environmental impacts that are called for.

    NASDA supports the development of a “comprehensive agricultural energy initiative” by the Administration that considers the renewable resources of this nation’s agriculture industry.

  • Energy Costs
    Last updated: February 08, 2010

    Historically changes in cost of production have been due primarily to changes in the cost of land. More recently farmers have been especially hard hit by sharp increases in fuel prices because of their extensive use of oil and gas products in agricultural production.  Agriculture already has a low return on investment and equity when compared to many sectors of the American economy, so volatile swings in energy and other input costs can drastically alter farmers’ net revenue.  USDA’s projection for farmers’ expenditures for fuels and oils, electricity, fertilizer, and pesticides in 2001 is $30.0 billion, up $700 million from 2000.  That equals a decrease in net cash income of about 10 percent.

    Increased energy prices, especially fuel prices, immediately impact farmers’ costs of production.  Even though farmers are more energy efficient than ever before, spikes in energy costs hit particularly hard their already tight profit margins.  But when considering the impact of higher energy prices on agriculture, it is also important to remember that the amount of energy used in agriculture is significant beyond the traditional gas and diesel for vehicle and machinery use.  They use heating oil, natural gas, propane, kerosene and/or electricity to heat or regulate temperature in their hog or chicken facilities and dry their crops.  Even pesticide costs are directly related to petroleum. As a general rule, it takes the equivalent of one gallon of diesel fuel to make one pound of active ingredient of pesticides. 

    Farmers are limited in what they can do to mitigate the effects of higher energy prices.  When and where possible, producers are limited to employing different production strategies, such as reducing field operations by switching from conventional tillage practices to reduced till, adjusting fertilizer application rates, changing the timing of fertilizer applications and using animal manure and green fertilizer.  Unfortunately, however, for the foreseeable future the costs of energy will remain relatively high and it is in the nation’s best interest to deal with how to adjust to the increased prices.

    NASDA recommends that government support for alternative fuel sources to fossil fuels continue, focusing on the use of ethanol, biodiesel and biomass production.  In the interim period, there should be a renewable fuels content standard in energy legislation, and preferential tax treatment for ethanol, such as in the small ethanol producer tax credit.  Congress should also provide funds to continue the USDA Commodity Credit Corporation Bioenergy Program.  Renewable fuels such as ethanol and biodiesel are the cornerstones in assisting American agriculture in terms of the use of its product and energy requirements.

  • Industrial Hemp
    Last updated: February 08, 2010

    NASDA supports revisions to the federal rules and regulations authorizing commercial production of industrial hemp.

    NASDA urges the U.S. Department of Agriculture (USDA), the Drug Enforcement Administration (DEA) and the Office of National Drug Control Policy (ONDCP) to collaboratively develop and adopt an official definition of industrial hemp that comports with definitions currently used by countries producing hemp.  NASDA also urges Congress to statutorily distinguish between industrial hemp and marijuana and to direct the DEA to revise its policies to allow USDA to establish a regulatory program that allows the development of domestic industrial hemp production by American farmers and manufacturers.