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

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