April 20, 2007

 

Cargill, other US firms set its sights on corn and soybean-based chemicals

 

 

After turning 60 million bushels of corn a year into sweeteners and ethanol, Cargill Inc is setting its sights of making a new generation of renewable chemicals from corn and soybeans.

 

The growing use of soybeans and corn are showing up on carpets, disposable cups, salad bags, candles, lipsticks, socks, surfboards, cooling fluid in utility transformers and body panels of machine harvesters. Wal Mart stores are also making packaging from renewable plastic.

 

High oil prices have strengthened the economic rationale for making plastics, foam and lubricants from plants grown in the Midwest despite cheaper petroleum-based chemical products.

 

With these developments, Yusuf Wazirzada, the manager of Cargill's soy-based urethane polyols business, said the company is gearing towards producing commodities and chemicals based from these crops.

 

The diversion of yet more farm products toward the energy and industrial sectors could stretch demand and send commodity prices sky high. Other problems remain: For many manufacturers, adjusting equipment to use renewable chemicals made by Cargill and others is cost-prohibitive.

 

Still, the use of farm products to replace plastics and other goods is generating buzz in farm circles, where many players are eager to diversify beyond food and ethanol. At the same time, there appear to be market reasons for a move to corn-based chemicals, especially as a hedge against uncertainties in the oil market.

 

Hickory Springs Manufacturing Co. in North Carolina is replacing some of the petrochemicals it uses to manufacture polyurethane foam with a Cargill soybean compound.

 

Hickory turned to Cargill after its chemicals suppliers boosted prices about 50 percent in the wake of Hurricane Katrina.

 

Ford Motor in Dearborn, Michigan, is considering using soy-containing foam in car seats, armrests and headrests. Now that its scientists have figured out how to use ultraviolet light to eliminate a rancid odour from the foam, the auto maker's appetite for the crop could potentially reach hundreds of thousands of bushels annually.

 

Battelle, a nonprofit research organization based in Columbus, Ohio, is one of several outfits working on 100 percent crop-based polyurethane foam. This development could potentially be a cheap alternative to petro-based material to make a big difference to automakers which put 30 pounds of foam into each vehicle they make.

 

Scientists have long known how to make chemicals from plants. Before the oil age, manufacturers mined carbon and hydrogen in plants to produce all sorts of industrial products. Decades before soybean became a ubiquitous food, it was used to make glue and paint. Celluloid, an early plastic, came from cotton. The diesel engine first ran on vegetable oil.

 

Technological breakthroughs, however, are making a biochemicals renaissance possible. The biodegradable pitch has been dropped: The claim now is the ability to decompose harmlessly in a matter of months in an industrial composting operation. New chemistry, and the genetic modification of crop-eating microorganisms to make industrial products, are driving down costs and increasing the range of bio-materials.

 

The closely held nature of Cargill--which generated fiscal 2006 revenue of US$75.2 billion--has allowed it to nurture the idea of renewable chemicals. Free from the quarterly demands of Wall Street, the commodity-processing giant is able to invest in agriculture without buffeting from impatient shareholders.

 

Other conglomerates are expected to follow suit as experts say continuous high oil prices will push firms to source its feed and chemical needs from plants and other natural resources.