The US Bioeconomy: $369B and 4 million jobs strong, says USDA

High-Impact report on the bioeconomy, changes to the BioPreferred program and to the Biorefinery Assistance Program; all in a day’s work for Vilsack & Co.

In Washington, Agriculture Secretary Tom Vilsack announced the release of a new report that shows the U.S. biobased industry in 2013 contributed four million jobs and $369 billion to the US economy.  He also announced changes under the 2014 Farm Bill that will create additional opportunities for growth in renewable plant-based materials, supporting the Obama Administration’s efforts to develop a new, rural economy and promote creation of sustainable jobs.

“This report is the first to examine and quantify the effect of the U.S. biobased products industry from an economics and jobs perspective,” said Vilsack.  “Before, we could only speculate at the incredible economic impact of the biobased products industry. Today, we are also adding to the number of innovative products carrying USDA’s BioPreferred label and expanding options for our nation’s biorefineries. This means small businesses and global companies alike can continue to harness the power of America’s farms and forests to create new and innovative biobased products that are used all around the world.”

According to the report’s authors, “the total contribution of the biobased products industry to the U.S. economy in 2013 was $369 billion and employment of four million workers. Each job in the biobased industry was responsible for generating 1.64 jobs in other sectors of the economy. Figure 2 shows these numbers in more detail. The 1.5 million direct jobs directly supporting the biobased industry resulted in the formation of 1.1 million indirect jobs in related industries and another 1.4 million induced jobs produced from the purchase of goods and services generated by the direct and indirect jobs. Similarly, the $126 billion in direct sales by the biobased products industry generated another $126 billion in indirect sales and $117 billion in induced sales.”

The report found that the seven major overarching sectors that represent the U.S. biobased products industry’s contribution to the U.S. economy are: agriculture and forestry, biorefining, biobased chemicals, enzymes, bioplastic bottles and packaging, forest products, and textiles.

The study also includes location quotients by state to show the impact of the industry on individual states. Seven case studies are presented from stakeholders such as The Coca-Cola Company and PlantBottle packaging, Patagonia, and Ford.

The report builds on the “Why Biobased?” report released by the USDA in October 2014. Estimates are that the use of biobased products currently displaces about 300 million gallons of petroleum per year – equivalent to taking 200,000 cars off the road.

Changes to the BioPreferred program

The Secretary also announced changes to include new forest products in the BioPreferred program, along with proposed changes to the former Biorefinery Assistance Program to assist in the development of cutting-edge technologies for advanced biofuels, renewable chemicals, and biobased product manufacturing.

The final BioPreferred program rules will no longer exclude mature market products (those that had a significant market share prior to 1972), providing consumers with more innovative wood products and other materials carrying USDA BioPreferred® label. Forest products that meet biobased content requirements, notwithstanding the market share the product holds, the age of the product, or whether the market for the product is new or emerging, also now meet the definition of “biobased product.”

Beginning in 2005 with its first designations of six product categories, the BioPreferred program now has designated 97 product categories representing approximately 14,000 products on the market today.

Changes to the Biorefinery Assistance Program (Section 9003)

The Secretary also said today that USDA is making improvements to its Biorefinery Assistance Program (Section 9003). The program, which was renamed as the Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program as part of the program’s Farm Bill reauthorization, provides loan guarantees of up to $250 million for the construction and retrofitting of commercial scale biorefineries and biobased product manufacturing facilities.

In a rule that will be published in the Federal Register next week, biorefineries that receive funding are allowed to produce more renewable chemicals and other biobased products, and not primarily advanced biofuels. Also, biobased product manufacturing facilities would be eligible to convert renewable chemicals and other biobased outputs of biorefineries into “end-user” products. The new regulations also implement a streamlined application process.

Created by the 2002 Farm Bill and reauthorized and expanded as part of the 2014 Farm Bill, the USDA BioPreferred program’s purpose is to spur economic development, create new jobs and provide new markets for farm commodities.  The BioPreferred program commissioned the independent Economic Impact of the Biobased Product Industry report, which is primarily authored by Dr. Jay Golden, Director of Duke University’s Center for Sustainability & Commerce, and Dr. Robert Handfield, Professor of Supply Chain Management at North Carolina State University’s Poole College of Management.

Reaction from stakeholders

Brent Erickson, executive vice president of BIO’s Industrial & Environmental Section, stated:

“As USDA’s new study of the economic impact of this program demonstrates, biobased products are capable of generating new economic opportunities, reducing U.S. reliance on foreign oil, and improving the nation’s environmental health. Biobased products already contribute $369 billion to the U.S. economy each year. The sector directly employs 1.5 million Americans, and creates additional employment opportunities for 2.5 million. The 40,000 biobased products that are currently on the market displace about 300 million gallons of petroleum per year, which is equivalent to taking 200,000 cars off the road. The BioPreferred Program provides an important opportunity for products made with renewable resources, including renewable chemicals, to differentiate themselves in the market place. It is an important source of market pull for this emerging sector.”

Lloyd Ritter, co-director of the AgEC

“The renewable energy and energy efficiency programs in the Farm Bill help rural America create new manufacturing opportunities and stable, well-paying jobs. The BioPreferred Program enables biobased product manufacturers to distinguish their products in the marketplace, using a label that identifies the percentage of renewable content. The program already recognizes 14,000 individual biobased products in 97 categories, but estimates that there are now 40,000 biobased products on the market. The biobased products industry contributes $369 billion annually to the U.S. economy and employs more than four million Americans. Under the new rules, more biobased products will be eligible for this program. Together, the use of these 40,000 biobased products displaces about 300 million gallons of petroleum per year, which is equivalent to taking 200,000 cars off the road.”