WASHINGTON, July 22, 2015 –Biotechnology companies creating industrial uses for biobased products are searching for new ways to differentiate their products, especially in light of increased competition from now lower-cost petroleum-based products.
At this time last year, the price of oil was over $100 per barrel. Now, the price of oil has plummeted to its lowest point since early 2009, dropping below $50 per barrel. As a result, the bio-economy appears much more fragile than it did a year ago.
Hans van der Pol, director of strategic marketing at Corbion, said during a panel session at the Biotechnology Industry Organization (BIO) World Congress in Montreal this week that most of his customers take note of the unpredictability of oil prices.
“They tend to take a longer term view,” he said. “They know oil price is always fluctuating…and at the end of the day, oil is still a nonrenewable fossilized fuel.”
USDA’s BioPreferred label is one way that biotech companies can further leverage the appeal of their products, experts say.
For example, Seventh Generation, a plant-based household products company that presented at the BIO meeting, uses the label on many of its products, including laundry detergent, dish soap and baby products. Many other companies that use the label--which displays the percentage of biobased material in the product--place it on intermediate products not necessarily seen by the consumer.
A report published in June by Duke University and North Carolina State University for USDA estimated that there are 40,000 existing biobased products in the market now--much higher than the number of products included in USDA’s database, which records about 19,000.
The label can also be appealing to newer startups that develop biobased products, according to the report’s authors. “New companies want to get their foot in the door into the bioecomony,” noted Jesse Daystar, of the Duke Center for Sustainability & Commerce and one of the USDA report authors, in an interview with Agri-Pulse. “And this is one thing to look at as they sort out some opportunities.”
BioPreferred, created by the 2002 Farm Bill and reauthorized in the 2014 Farm Bill, began in 2005 with its first designations of six product categories. The program now has designated 97 product categories with 232 companies from 40 countries participating. About 2,200 products on the market have the distinguishing label. Along with the voluntary labeling initiative, the law directs all federal agencies to purchase biobased products in categories identified by USDA.
The agency recently expanded the program to forestry products, as directed by the farm bill.
In 2013 alone, America's biobased industry contributed four million jobs and $369 billion to the economy, according to the report—which is the first to examine and quantify the effect of the U.S. biobased products industry from an economics and jobs perspective.
Companies apply to the program online and submit product samples for testing. On average, it takes 30-60 days and a few hundred dollars to complete the approval process, said Marie Wheat, an industry economist at the USDA BioPreferred program, in an interview with Agri-Pulse.
While the program is gaining more attention from domestic and global companies, the label can also boost consumer awareness of bio-based production, Wheat said.
Dennis Hall, director of the OBIC Bioproducts Innovation Center (OBIC) at The Ohio State University, presented the results of a survey that found that consumers generally perceive biobased products as better for the environment than the alternative.
Additionally, consumers generally claim to have awareness of bioproducts, but lack brand-specific product knowledge.
“There is an increasing awareness, but it’s very shallow. It’s not well understood what biobased products are,” Hall said.
The survey, conducted over two years by David Schwantes, CEO of the Ohio-based b4 Branding consulting firm, consisted of 600 nationally representative consumers and 200 Ohio-specific consumers between the ages of 18-74 years old.
Daystar said that it’s not only important to educate consumers about the availability of bio-based products, but also their economic benefits and job-building capacity. He also noted that it is “difficult to track what is biobased and what is not,” because economic sectors do not differentiate between traditional products and biobased products in their current tracking codes.
#30
For more news, go to www.agri-pulse.com.