8th Annual Farmers COOP Conf'

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Economics, Technology, and Politics Opportunities
for Agriculture
Dr. Bernard Y. Tao Dept. of Agricultural and
Biological Engineering Purdue University
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Take-Home Points

• U.S. economic growth depends on developing novel
  products and technologies
• The biological sciences are be the next major
  technological driver for economic growth
• Immense social needs have created opportunities
  to re-link agriculture and industry through
  vertical integration, industrial partnerships
• Universities are developing the entrepreneurial
  human resources and technologies needed for this
  economic growth
• Success depends on infrastructure development and
  political vision/implementation

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Back to the FutureHistorical Perspectives
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Shifts in Economies
May you live in changing times. - Ancient
Chinese Blessing/Curse
Source Marvin Zonis Associates
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Shifts in Economies
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How does the U.S. build such a historically
strong economy?

• U.S. economic competitiveness depends on having
  innovative, high value products to sell
• Processed food products
• High quality steel
• Novel polymers and chemicals
• Automotive/Aerospace transportation
• Electronics/computers
• Pharmaceuticals/medicines

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How did we get here?

• Entrepreneurship and education are critical to
  developing new high value technologies/products
  that cannot be made elsewhere
• U.S. has always been a leader in innovative
  entrepreneurship in technology and products
• U.S. always been a leader in education

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Who are our competitors in the next generation
economy?
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How are other nations overtaking the U.S. economy?

• Historical U.S. innovated products are going to
  high volume, low cost producer economies
• Computers, cell phones, steel, automobiles,
  clothing, fuels, plastics, chemicals, digital
  cameras, internet, etc.
• The U.S. consumer is funding the capitalization
  of high volume, low cost producers
• China, Korea, India, Mexico, etc.
• U.S. schools educate the top international
  students who return to their homes to rev up
  national economies

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Where is the U.S. Economy Going?

• Without new, innovative technologies and
  products, the U.S. economy will decline
  (competition for low paying production jobs)
• What will drive the creation of innovative new
  technologies/products in this century?
• Biologically-based technologies, Education, and
  Entrepreneurship

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Shifts in Economies
May you live in changing times. - Ancient
Chinese Blessing/Curse
Source Marvin Zonis Associates
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"Bury me on my face," said Diogenes and when he
was asked why, he replied, "Because in a little
while everything will be turned upside down." -
Socrates
50-Year Cycles Inherent In The Capitalistic
Economy Driven by new Technologies
Fundamental Changes in Technology Nikolai
Dimitriyevitch Kontratyev Long-Wave Cycle
Petrochemical Era
Railroad Era
Information Age
Steam Engine Era
Biological Age
Water Power Era
1830
1880
1930
1980
2030
1780
2080

• Technology changes driving industrial growth,
  phase frequency 50 years
• Technology shifts do not mean technology vanishes

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Fundamental Economic Changes Driving Engineering
Economic Activity
Economic Activity
Economic Activity
Years
Years
Years
Oil In Declining Phase
Internet / E-commerce growth phase
Biotechnology Initial Phase
Biological Engineering
Chemical Engineering
EE/Computer Engineering

• Implications
• Science has 20 year lead to shape technology
• Investments in industries change in anticipation
  of new technologies
• Industries employing graduates will change
• Educational processes usually lag behind
  technology changes

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The Top 25 US Companies by Market Value Economy
Focus
Source University of Chicago, Standard Poors
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What does History Teach Us?

• Technology is the driver for economic development
• Shifts in technologies for change foundational
  industrial/social infrastructure
• Those who adopt changes early have the best
  opportunities to benefit
• There is about a 20 year lag time between
  scientific discovery and technical
  implementation/social impact
• We are currently about 5-10 years from the next
  major shift to biologically-based technologies

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Fuel for ThoughtAn Example of Opportunity
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In 2004, how many of us thought wed be happy to
pay 2.50/gal?
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How important is domestic energy to the U.S.
national security and economics?
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Campbell-Laherrère World Oil Production
Estimates, 1930-2050
Production Peak 2004
Campbell
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Take-home messages

• Petroleum availability will peak in the next
  decade or so
• International competition for oil will mean
  significantly greater costs
• Need to develop secure, domestic, economic
  alternatives (national homeland security issue)
• Significant opportunities for renewable,
  sustainable technology/product development
• Need to gain attention of political/consumer/
  industrial audiences

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How does society change when we dont have cheap
petroleum?

• Reduced, more expensive transportation
• more localized industries/manufacturing
• Changes in national energy infrastructure
• Alternative energy resources
• stationary vs. mobile (solid vs. liquid)
• coal, nuclear, wind, solar, biological
• Alternative raw materials sources
• renewable resources
• New technologies needed

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Agriculture is Tomorrows Green Gold

• Changing view of Agriculture
• Extend markets beyond food/feed to industrial
  products
• Energy, materials, manufacturing, processing,
  sensors, medicine
• Green production/Environmental issues
• New Bioprocessing Technologies
• Transgenic modification/products
• Processing/manufacturing
• Environmental sustainability

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Energy, Homeland Security, Integrated Domestic
Economy

• Changing view of Industry
• Foster Green production technologies/Environment
  al stewardship Develop domestic renewable
  energy/materials sources
• Shift from old to new technologies to grow
  the economy
• Re-link U.S. agricultural and industrial sectors

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U.S. Ethanol Production
U.S. Capacity - 2.1 billion gal/yr (48
plants) Canadian Capacity - 52.3 million gal/yr
(6 plants)
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Petroleum fuel consumption
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Aviation Gas Turbine Fuels from Renewable Plant
Oil

• Engine Tests
• Fuel blends tested in an Allison 250 C-20
  turbo-prop gas turbine (stationary)
• Engine performance parameters equivalent to
  current jet fuels (power and fuel consumption) at
  operating range from 45 rpm (idle), 50-60 rpm
  (cruise), and 70 rpm (take off)
• Decreased NOx and SO2 emissions
• Estimated costs about 3/gallon vs. 3-5 for
  commercial aviation fuels

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Aviation Deicer/Anti-Icers

• 200 million lb/year market in the US
• Currently based on
• 70 propylene glycol formulations
• 30 ethylene and diethylene glycol based products
• Concerns over mammalian toxicity (EG),
  environmental disposal
• High cost (5-8/gal) (tied to natural gas prices)
• Using glycerin from biodiesel production can make
  deicers/anti-icers with equivalent performance to
  commercial products at 1/10 the cost

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Deicer Limit
Anti-Icer Limit
Purdue University School of Aeronautics and
Astronautics
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Biosurfactants from Lipids and Carbohydrates 1000x
more surface active than sodium lauryl sulfates
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Bio-based Products/Technologies

• Automotive biodiesel fuel, home heating oil
• Polyurethane plastics, insulation foams
• Inks, paints, coatings
• Surfactants, detergents
• Polymers, solvents, lubricants

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• Transgenic Post-synthetic Lipid in vivo
  Modification

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How Do We Get Oils From Plants?
Current Approach
Grow Plants
Plants Store Oil In Seeds
Harvest Process Plants
Chemically Modify Oils

• Low yields and high purification costs
• Byproduct generation and hazardous solvents
• High energy input

Proposed Approach
Plants Store Modify Oils In Seeds
Harvest Process Plants
Grow Plants

• Enzymes to catalyze reactions (but enzymes can
  be slow)
• Production within the plant to reduce processing
  costs

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Soybean Oleosin Proteins

• Soy oleosins are a group of closely related soy
  oil body membrane structure proteins
• Soy oil bodies
• Subcellular triacylglycerides (TAGs) storage
  particles
• TAG core
• Monolayer phospholipids
• Oleosin protein coating

Oil Body 3-D Structure
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in vivo micro-bioreactor conceptusing enzymatic
reactions
Create an oleosin-enzyme Fusion protein in vivo
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Isolate immature zygotic soybean embryo tissue
Bombard tissue with recombinant genetic material
Grow out and select living tissue cells
 
Use GFP/Antibody/PCR to detect transforrmed
tissue Grow out to proliferative embryos
Germinate embryos and grow recombinant plants
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Creating New Life Forms

• Cloning pets - warm fuzzy
• Potential economic benefits
• Alteration of definition of life
• Behavioral genetic issues

• Alba, the GFP bunny chimerical animal that does
  not exist in nature

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Human ResourcesChampions for Biological
Engineering
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Entrepreneurial undergraduate soybean product
innovation
Home heating fuel
Snow ski wax
UV curable plastic
Emulsion markers
Crayons
Birthday candles
Gelatin replacements
Protein snack crackers
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The Soybean Science KitK-12

• The Soybean Science Kit (SSK) teaches basic
  chemistry and physics in a fun, safe, hands-on
  fashion using primarily materials obtained from
  soybeans and other natural renewable materials.
• Teaches students about the importance of
  environmental issues, science, technology and
  industrial applications
• Polymers, proteins, fatty acids, chromatography,
  enzymes, DNA, biodiesel and more
• Developed by the Indiana Soybean Board, over 3000
  kits distributed
• Approval by State Education Commission
• Reaches est. 60,000 students annually (as well as
  their teachers, parents and siblings)

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Teaching Ethics to Students

• Ethics is about choices in behavior while in
  relationships/community with others
• Biotechnology/Agriculture will play a dominant
  role in society in this century
• With power comes responsibility, and you will
  have great power as a Ag school graduate
• How will you choose to live?

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• Who Moved My Cheese?
• Issues for the Agricultural Community/Industry

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How does Agriculture Fit in?

• How should Agriculture re-think its purpose,
  function, and goals in a bioeconomy?
• What should its role be based on new
  biotechnologies?
• How can Agriculture benefit economically from
  these changes in technology?

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Materials Polymers, coatings, detergents,fabrics
fabrics
automotive
paints, coatings
plastics
cosmetics
detergents
packaging
electronics
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Shift from single to distributed
technologies/geographical sources

• Opportunities to develop replacements for
  petroleum in chemicals, fuels, polymers,
  surfactants, coatings
• Opportunities for Agriculture to become main
  supplier of raw materials (domestic
  security/inherent advantages)
• Opportunities for liquid energy fuels

fuels
biomass
fuels
1950-2020 U.S. Economy/ Core Processing
Technologies based on petroleum refining/off
shore sources
2020-2100 Core Processing Technologies based on
distributed technologies/ geographical sources
chemicals
solar/wind/ water
chemicals
plastics
petroleum
plastics
Fuel cells
coatings
nanotech
coatings
energy
biotech
energy
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Shift from single to distributed
technologies/geographical sources

• Shift to regional energy technologies (?)
• Solar, biomass, hydroelectric, coal, fuel cell,
  LNG, hydrogen(?)
• Common electricity grid/power distribution
• Common mobile liquid fuel technologies/geographica
  l distribution (?)
• Competitive global economics/technologies (?)

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Opportunities for Rural Economic
Growth/Biorefineries

• Vertical product/market integration
• Re-capitalization of rural economy to encompass
  biorefinery concept
• Partnerships

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Vertical product/market integration

• Make products for consumer/industry, not only
  high volume/low price commodity feedstocks
• Fuels, protein polymers, antifreeze, etc.
• Example of petrochemical industries starting with
  drilling and integrating through fuels,
  chemicals, polymers, paints
• Higher profit margins, decrease outflow by
  internal utilization/recycling

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Re-capitalization of rural economy to encompass
biorefinery processing concept

• Expand operational knowledge of biotechnology and
  post-harvest technologies
• Develop expertise/ownership of post-production/har
  vest technologies
• Capitalization of integrated biorefinery
  processing systems

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Partnerships

• Strengthen relationships with existing support
  infrastructure
• universities, food processors, industrial grain
  processors, CO-Ops
• Expand outreach to form relationships with
  non-traditional entities
• Chemical eng., life sciences, petroleum refiners,
  chemical synthesis companies
• Unify agricultural industry to form a strong,
  corporate entity
• Supply chain strongest link

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Big Fish Eat Small Fish

• Issues involving scale of demand/supply
  operations
• Small fish
• Individual farmers, small COOPs
• Medium fish
• ADM, Cargill, Bunge
• Big fish
• Mobile-Exxon, BP, Dow, DuPont/Solae

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Small Fish Can Dominate Big Fish

• Strength in numbers
• Coordination
• Unity of Purpose
• Ownership of Supply Chains

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Take-Home Points

• U.S. economic growth depends on developing novel
  products and technologies
• The biological sciences are be the next major
  technological driver for economic growth
• Immense social needs have created opportunities
  to re-link agriculture and industry through
  vertical integration, industrial partnerships
• Universities are developing the entrepreneurial
  human resources and technologies needed for this
  economic growth
• Success depends on infrastructure development and
  political vision/implementation

57
?

• "Chance favors the prepared mind.- L. Pasteur
• Where your treasure is, there will your heart be
  also. Matt. 621