Amendment to Farm Bill could open up fresh revenue streams

A proposed amendment by the U.S. Department of Agriculture to the Farm Bill would streamline the approval process for producers of organic ingredients and components, such as plastics and starches, making it easier to sell finished products to the government.

This streamlined process could mean fresh revenue streams for agribusinesses and effectively create a larger marketplace for organically produced, “bio-based” goods.

“In essence, it expands participation within the program and makes it more efficient within the federal government,” said Steve Devlin, an industrial specialist at the Center for Industrial Research and Service at Iowa State University.

According to a USDA release, amendments to the bill would allow for component parts of finished products, “intermediate ingredients such as fibers, resins, and chemicals,” to count as biobased products in the USDA’s BioPreferred catalog.

In other words, the rule change would allow goods produced of a minimum percentage of organic material–known in agribusiness jargon as bio-based materials and products– to automatically qualify for preferential purchase by government agencies under federal procurement rules.

As the certification process for preferred procurement exists right now, the USDA explicitly qualifies only finished products for the program after it finds their component materials meet biobasedd production standards laid out in the Farm Bill.

More farm subsidies and higher grain prices?

 “The federal government is, by and large, the single largest consumer in the world,” said Steve Devlin, an industrial specialist at the Center for Industrial Research and Service at Iowa State University.

Steve Devlin declined to quantify the business potential of this move, but he indicated consumers and businesses were likely to follow the lead of the government as it bought more biobased goods.

In a phone interview, Ron Buckhalt, a USDA spokesman, said the proposed language changes are long overdue, the 2008 Farm Bill charging regulators to put a finer point on the biobasedd procurement process.

“The marketplace is being developed with or without the federal government,” Buckhalt said. Buckhalt pointed to the days before petroleum, when household goods were produced from oils derived from plants and animals. “I guess this is what Tom Sawyer was whitewashing his fence with,” he jested.

“Anything we grow has a biomass component to it. This is a way to development new markets,” said Mike Doherty, a senior economist at the Illinois Farm Bureau. Doherty added that while a larger market for biobased goods could put more upward pressure on grain commodities, “the actual volume for all these products is very small.”

 

Courtesy of Illinois Corn Growers Association

 

 

 

 

 

 

 

 

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