Bioplastic

INDUSTRIAL USES OF AGRICULTURAL MATERIALS


August 28, 1996
Approved by the World Agricultural Outlook Board



INDUSTRIAL USES OF AGRICULTURAL MATERIALS Situation and Outlook is publishedonce a year by the Economic Research Service, U.S. Department of Agriculture,>Washington, DC 20005-4788.  IUS-6.  Please note that this release contains only the text of INDUSTRIAL USES OF AGRICULTURAL MATERIALS--tables and graphics are not included.
 
Subscriptions to this report are no longer available



 
Contents
 
Summary
Introduction
Macroeconomic and Industrial Outlook
Starches and Sugars
Fats and Oils
Natural Fibers
Animal Products
Forest Products
Specialty Plant Products
Special Article
  Potential Niche Fuel Markets for Biodiesel and Their Effectson Agriculture
List of Tables
 
Coordinator
Lewrene Glaser
voice (202) 219-0091, fax (202) 219-0035, e-mail lkglaser@econ.ag.gov
 
Contributors
William Bryan Just, ERS
Linwood Hoffman, ERS
Ron Buckhalt, Alternative Agricultural Research and CommercializationCenter
Bruce Kinzel, Agricultural Research Service
David Torgerson, ERS
Allen Baker, ERS
John McClelland, ERS, Office of Energy and New Uses
Paul Tatarka, Agricultural Research Service
Charles Plummer, ERS
Irshad Ahmed, BoozAllen & Hamilton, Inc.
Lewrene Glaser, ERS
Sandra Pyles, ERS
Anton Raneses, ERS
James Duffield, ERS, Office of Energy and New Uses
Leroy Watson, National Biodiesel Board
Craig Chase, Technical and Engineering Management
Steven McLaughlin, University of Arizona
Jacqueline Salsgiver, ERS
Peter Ince, Forest Service, Forest Products Laboratory
J. Michael Price, ERS
 
Statistical Support
Anton Raneses, (202) 219-0752
Charles Plummer, (202) 219-0717
Mae Dean Johnson, (202) 219-0506
 
Editor
Diane Decker
 
Graphics, Design, and Layout
Wynnice Napper
Anne Pearl
 
Summary released August 27, 1996.  The next summary of Industrial Uses of Agricultural Materials Situation and Outlook Report is scheduled for release in July 1997.
 
Acknowledgments
 
This report was made possible through the active support of many
people and organizations.  Funding for this issue was receivedfrom
USDA's Alternative Agricultural Research and Commercialization
Corporation.  Harry Parker, Professor of Chemical Engineeringat
Texas Tech University, and Donald Van Dyne, Professor of Economics
at the University of Missouri, contributed time and expertise to
this report.
 
Mention of private firms or products does not indicate endorsement
by USDA.  Printed on kenaf paper with soy ink.
 
Summary
 
Greater Planting Flexibility and Industrial Uses Provide More
Market Opportunities for Agriculture
 
With U.S. farmers now facing few restrictions on what they can
plant, industrial crops will need to stay competitive--economically
and agronomically--with other crops to ensure their continued
viability.  Expanded planting flexibility is a hallmark of the
recently passed Federal Agriculture Improvement and Reform Act of
1996 (1996 Act).  The 1996 Act takes the United States to an almost
fully market-oriented farm policy by eliminating annual supply
control programs, instituting near full planting flexibility, and
decoupling income support from production and market prices. The
1996 Act allows farmers greater freedom to respond to market
incentives. Therefore, expected market returns and crop rotation
needs or desires will become important factors as farmers evaluate
commodities to produce in the future.
 
The 1996 Act also made USDA's Alternative Agricultural Research and
Commercialization (AARC) Center a wholly owned government
corporation.  In addition, the Act amends Federal procurement
policy to encourage Federal agencies to give procurement preference
to environmentally friendly products produced by companies
supported by the AARC Corporation.
 
Scientific developments from USDA's Agricultural Research Service
are now posted on the Internet.  Industry, the scientific
community, and consumers can use this Internet service to target
specific interests.  More than 13,000 research project reportsare
available on the agency's Technology Transfer Automated Retrieval
System.
 
The strong growth in U.S. gross domestic product in the second
quarter of 1996 is expected to give way to more moderate growth for
the rest of 1996 and 1997.  Reflecting moderating growth,
manufacturing output is expected to rise at an average annual rate
of 3.5 to 4.5 percent through the end of 1997.  As mature
industries in a mature economic recovery, most of the industrial
sectors using agricultural inputs will grow more slowly than
manufacturing overall.
 
Industrial uses of corn are expected to total 622 million bushels
in 1995/96 (September/August), down 18 percent from the previous
year, mainly due to lower use for ethanol.  Ethanol producersare
in the midst of a financial squeeze, resulting from rapidly rising
corn prices, only moderate gains in coproduct prices, and
relatively stable ethanol prices.  Several companies are
manufacturing biodegradable loose-fill packaging materials from
corn and wheat starch.
 
Industrial vegetable oil markets reflect a varied picture of
production and use.  Tung oil is being produced in the United
States for the first time since 1973.  Crambe is again being grown
in North Dakota after a year of no commercial production.
Industrial rapeseed acreage in the Pacific Northwest is down from
previous years.  Glycerine markets remain tight, as demand
continues to outpace supply.  Biodiesel commercialization facesa
number of regulatory and market challenges in the United States.
 
Approximately 37 million metric tons of paper and wood materials
were recovered for recycling in 1994, providing a renewable source
of inputs to manufacturers.  Beside paper and paperboard products,
other items made from recycled paper and wood include cellulose
insulation, molded-pulp products, animal bedding, paper mulch,
packaging cushioning material, and wallboard panels.  Findingnew
markets for wastepaper and waste wood is essential to the growth of
the recycling industry.
 
To meet environmental regulations of the last three decades,
environmental remediation has developed into a multibillion dollar
industry.  The high cost of many traditional methods is causing
many organizations to look to lower cost alternatives.
Phytoremediation, the systematic use of plants to treat
environmental contamination, is a potential low-cost technology
that is being investigated for many remediation applications.
 
A special article examines possible biodiesel demand in three niche
fuel markets the biodiesel industry has identified as likely
candidates for commercialization--Federal fleets, mining, and
marine/estuary areas.  If a 20-percent biodiesel blend becomesa
competitive alternative fuel in the coming years, these markets
could demand as much as 100 million gallons of biodiesel.  If
soybean oil was the sole feedstock used to produce the biodiesel,
these markets could account for an additional 770 million pounds of
soybean oil.  Results of an econometric-based simulation indicate
the effect of this increase in demand on the U.S. soybean complex
and net farm income would be small.  Moreover, if biodiesel
commercialization occurs, cheaper raw materials, such as waste
cooking oil, may be the primary feedstocks.
 
Introduction
 
1996 Farm Legislation Affects Industrial Crops and Products
 
Expanded planting flexibility is one of the hallmarks of the
recently passed Federal Agriculture Improvement and Reform Act of
1996 (1996 Act).  The 1996 Act also amends Federal procurement
policy to give preference to environmentally friendly products
produced by companies supported by USDA's Alternative Agricultural
Research and Commercialization Corporation.  Scientific
developments from USDA's Agricultural Research Service are now
available on the Internet.
 
1996 Act Makes Major Changes in Commodity Programs
 
Since the 1930's, agricultural legislation has been enacted to
stabilize and boost farm income.  Farm laws originally enactedin
1938 and 1949 are considered permanent legislation, because they do
not have a specified termination date.  However, since their
original passage, these two laws have been amended with new farm
legislation about every 4 to 5 years, temporarily setting
agricultural policy and guiding farm production.  One general
result was to link production and marketing controls with price and
income support for many important farm commodities, such as wheat,
corn, cotton, rice, sugar, tobacco, and peanuts.  During fiscal
years 1989 through 1995, annual payments to farmers producing
wheat, feed grains, cotton, and rice have totaled more than $40
billion, averaging $5.8 billion annually.
 
In 1995 and 1996, Congress considered farm legislation to replace
the expiring Food, Agriculture, Conservation, and Trade Act of 1990
(1990 Act).  The result was the Federal Agriculture Improvementand
Reform Act of 1996, which was signed into law on April 4, 1996, and
covers crop years 1996 through 2002.  Title I of the 1996 Act
provides set payments and a nonrecourse loan program with marketing
loan provisions for wheat, feed grains, cotton, and rice.  Soybeans
and minor oilseeds (sunflower seed, canola, industrial rapeseed,
safflower, flaxseed, and mustard seed) receive only the nonrecourse
loan program with marketing loan provisions.  One of the stated
purposes of the 1996 Act is to improve the operation of the farm
programs for milk, peanuts, and sugar.
 
The 1996 Act will likely become another landmark in U.S.
agricultural policy.  It takes a major step toward phasing outsome
aspects of commodity programs that have existed, in some form,
since the 1930's.  For example, it takes the United States toan
almost fully market-oriented farm policy by eliminating annual
supply control programs, instituting near full planting
flexibility, and decoupling income support from production and
market prices.
 
Dependence on market forces will generate economic efficiency gains
and make the U.S. farm sector more competitive in the global
marketplace.  However, farm income may become more variable and,
therefore, producers will have more responsibility for managing
income risk, a previous role of the Federal Government that is
sharply reduced under the 1996 Act.
 
One major change that will be of particular interest to individuals
and businesses involved in industrial crop production is the
planting flexibility provisions.  Farmers planting minor oilseeds,
alternative crops (such as sesame, plantago ovato, and triticale),
and industrial crops (such as crambe, meadowfoam, kenaf, and
milkweed) will be able to plant any amount of these crops without
program restrictions.
 
New Production Flexibility Contracts
 
Production flexibility contracts (PFC) are the new method of
providing payments to farms that produce wheat, feed grain, cotton,
and rice.  Deficiency payments, which fluctuated depending on
market prices, are eliminated and replaced with PFC payments.
PFC's provide set payments to program participants regardless of
production levels or season-average farm prices.  The total amount
available for PFC payments is fixed in advance and declines
gradually over the 7-year life of the 1996 Act.  PFC paymentsare
based on contract acreage and the farm-program-payment yield
(similar to crop-acreage base and program yield under the 1990 Act
and other previous farm bills).  Annual acreage reduction programs,
0/85/92 and 50/85/92 programs, and the Farmer-Owned Reserve are not
authorized for 1996 through 2002.
 
Any producer with an established crop-acreage base who had land
enrolled in an annual acreage reduction program in at least 1 of
the past 5 years, or who had land that was considered planted, was
eligible to sign a PFC.  Sign-up began May 20, 1996, and extended
through August 1, 1996.  However, there is an exception to this
one-time sign-up.  Acreage in Conservation Reserve Program
contracts expiring after August 1 will be permitted to enter the
program if these acres were part of a farmer's crop acreage base.
Producers signing contracts have to comply with conservation,
wetland, planting-flexibility, and land-use requirements.  All
PFC's, unless terminated earlier, will extend through the 2002
crop.  As of August 20, 1996, 98.8 percent of estimated eligible
acreage had been enroled in PFC's.
 
For fiscal years 1996 through 2002, the 1996 Act allocates a total
of $35.6 billion for contract payments.  An individual annual
contract payment is calculated as the contract-payment quantity (in
bushels, pounds, or hundredweight) times the annual payment rate
(dollars per bushel, pound, or hundredweight).  Although the annual
payment rates will not be known until after sign-up, they will be
affected by total participating base acreage, program yields
associated with that base acreage, and any adjustments made to the
total payment amount based on deficiency-payment refunds or
repayments, or terminated contracts.  Annual contract paymentswill
be made by September 30th each year.
 
Under the 1996 Act, producers may plant any commodity or crop on
contract acreage (although there are restrictions on fruit and
vegetable production) and still receive an annual payment.  In
general, fruits and vegetables cannot be produced on contract
acreage, but if a history of fruit and vegetable cropping exists on
contract acres, production may continue in some cases with a
corresponding acre-by-acre drop in payments for that year.  Haying
or grazing on all contract acreage, including unlimited planting of
alfalfa and other foliage, may occur at any time during the year
without loss of an annual payment.  Planting a crop is not required
for payment eligibility.  Farmers, however, must use contract
acreage for some agricultural or related activity and not for
nonagricultural commercial or industrial purposes.
 
The 1996 Act orients production agriculture to market returns by
allowing farmers to respond to market incentives, instead of
government programs.  Expected market returns and rotational needs
or desires will become major determining factors as producers
evaluate commodities to produce in the future.  Because producers
will know what their PFC payments will be until 2002, they will
have greater freedom to implement multiyear crop rotations and
production plans.  Therefore, industrial-crop returns must stay
competitive, economically and agronomically, with other crops to
provide farmers with production incentives.  Marketing and
contractual relationships and vertical coordination developed in
recent years will be important, as producers secure markets for
industrial crops and processors secure quality supplies.
 
Nonrecourse, marketing-assistance loans are available for each loan
commodity (wheat, corn, barley, grain sorghum, oats, extra-long-staplecotton,
upland cotton, rice, soybeans, sunflower seed,
canola, industrial rapeseed, safflower, mustard seed, and flaxseed)
for the 1996 through 2002 crops.  The general loan provisionsfrom
the 1990 Act are continued under the 1996 Act.  Producers canplace
eligible production under loan in return for receiving the
commodity loan rate.  Marketing loan provisions are not available
for extra-long-staple cotton but are continued for wheat, feed
grains, upland cotton, rice, soybeans, and minor oilseeds.
Producers may repay nonrecourse, marketing-assistance loans at the
lesser of the loan rate plus interest or the repayment rate, which
may fall below the loan rate to minimize government stock holding
and allow for competitive markets.
 
Minimum loan rates will be calculated as 85 percent of a moving
average of the last 5 years' market prices, excluding years with
highest and lowest prices, subject to maximums set equal to the
1995 loan rate.  Corn and wheat loan rates may be further reduced
based on stocks-to-use ratios.  Sorghum, barley, and oats loan
rates are set in relation to the rate for corn, taking into account
their feed value relative to corn.  The rice loan rate is setat
$6.50 per hundredweight.  Loan rate ranges have been set for
several commodities:  soybeans will range between $4.92 to $5.26
per bushel; minor oilseeds, between 8.7 and 9.3 cents per pound;
and upland cotton, between 50 and 51.92 cents per pound.  Theloan
rate for extra-long-staple cotton is subject to a maximum of 79.65
cents per pound.
 
The maximum a person can receive in PFC payments is $40,000 per
year, down from the previous limit of $50,000.  An individual's
limit on payments from marketing-loan provisions, marketing-loan
gains, or loan-deficiency payments continues at $75,000.
 
NAP May Also Benefit Industrial Crop Producers
 
Another change implemented by the 1996 Act is that producers who
receive farm program benefits are not required to obtain crop
insurance, if the producer waives emergency crop loss assistance.
For those crops not currently covered by crop insurance, USDA is
instructed to continue to operate a noninsured crop disaster
assistance program (NAP).  USDA's Office of Risk Management offers
crop insurance, including catastrophic coverage, for major field
crops and many fruits and vegetables.
 
NAP will provide producers of noninsured crops with coverage
equivalent to the catastrophic risk protection available to
producers of major commodities, provided that an area-based yield
trigger is first met.  Industrial rapeseed (on a pilot basis)and
flaxseed are currently the only industrial crops eligible for crop
insurance.  Research is underway examining the feasibility of
insuring crambe, specialty canolas, and other noninsured crops.
NAP is administered by USDA's Farm Service Agency (FSA) and funded
by the Commodity Credit Corporation.  NAP covers various fruitsand
vegetables, floriculture, ornamental nursery, Christmas tree crops,
turfgrass sod, seed crops, aquaculture, and noninsured industrial
crops.
 
NAP requires both an area trigger and an individual trigger for a
producer to collect a payment.  An area must have a yield lossof
35 percent, and may be defined, at the discretion of the State FSA
director, as a county, a geographic area with at least 320,000
acres, or a geographic area with a crop value of at least $80
million.  To date, virtually all areas have been defined usingthe
county definition.  In addition to the area trigger, an individual
producer must have a crop loss of at least 50 percent of the
expected yield.  NAP payments are based on established yieldsfor
the crop and an average market price or comparable coverage
determined by the Secretary of Agriculture.  For crop years 1996
through 1998, 60 percent of the average market price or comparable
coverage is recoverable.  For crop years 1999 through 2002, 55
percent of the average market price or comparable coverage is
recoverable.
 
A third part of the 1996 Act that may be of interest to industrial
crop producers and processors is the research title (Title VIII),
which amends the National Agricultural Research, Extension, and
Teaching Policy Act of 1977 (NARETPA).  As amended by the 1996Act,
the purposes of federally supported research, extension, and
education are to increase and enhance competitiveness and
productivity of U.S. agriculture, develop new uses and new products
for agricultural commodities, aid with technology transfer, improve
risk management in the U.S. agricultural industry, improve safe
production and processing of food while maintaining a balance
between yields and environmental soundness, support higher
education, and maintain safe food supplies to meet human
requirements.  For example, Title VIII Section 806 relates to
grants for research or the production and marketing of alcohol and
industrial hydrocarbons from forest products and agricultural
commodities.  The 1996 Act extends authority for appropriationson
agricultural research, extension, and education activities under
NARETPA through fiscal 1997.
 
Government Encouraged To Buy AARC Products
 
The 1996 Act also made USDA's Alternative Agricultural Research and
Commercialization (AARC) Center a wholly owned government
corporation.  In addition, there is language in the Act's rural
development title amending Federal procurement policy to encourage
Federal agencies to give procurement preference to environmentally
friendly products produced by companies supported by the AARC
Corporation.
 
The intent of the new procurement language is to give Federal
procurement officials the latitude to establish set-asides and
preferences for AARC Corporation-supported, environmentally
preferable products.  Some argue that since the Federal Government
has taken an equity position in these companies, the American
people are, in essence, stockholders.  The quicker these companies
can become profitable, the faster they can repay the Federal
investment.  Their repayments go into the AARC Corporation
revolving fund to be reinvested in other companies, thereby
continuing the process of creating new economic opportunities in
rural communities, while protecting the environment.  The
procurement preference is not open-ended.  The preference
eligibility will expire 5 years after companies have repaid their
investment to the AARC Corporation, or no longer than 10 years
after companies receive support from the Corporation.
 
The AARC Corporation supports companies that have a variety of
products now on the market, including absorbents; biocontrol agents
and planting media; construction materials and composites; coatings
and films; cosmetics; cleaning agents, solvents, detergents, and
surfactants; degradable polymers; filler, yarn, and insulations;
fuels; inks; lubricants; pharmaceutical and veterinary products;
and paper and packaging.  Interested persons should contact the
AARC Corporation for a catalog of supported products and more
information (phone 202-690-1633, fax 202-690-1655, e-mail
rbuckhal@rus.usda.gov).  This report is printed on kenaf paper
supplied by KP Products, an Albuquerque, New Mexico company, in
which the AARC Corporation has invested.
 
Secretary Glickman Tours Office Built With AARC Products
 
On April 24, 1996, Secretary of Agriculture Dan Glickman and Deputy
Secretary Richard Rominger, along with Federal Environmental
Executive Fran McPoland, toured the new Washington, DC,
headquarters of the Natural Resource Defense Council (NRDC). NRDC
is using many "green" products in its new offices.
 
Four construction products supported by the AARC Corporation were
used at the NRDC headquarters at 1200 New York Avenue, NW:
o  Nonload-bearing walls (EnviroPanels) and interior doors inthe
office were made from compressed wheat straw by Stramit U.S.A. in
Perryton, Texas.
 
o  Cabinets were fashioned from PrimeBoard, fiberboard made from
100-percent wheat straw with no noxious chemical additives, by
PrimeBoard, Inc., of Wahpeton, North Dakota.
 
o  The counter tops for computers and work stations were madefrom
Environ, a composite material manufactured from soybean meal and
waste newspaper.  Environ looks like marble but can be handledlike
wood, and is produced by Phenix BioComposites in St. Peter,
Minnesota.
 
o  Strong, lightweight Gridcore panels for furniture and office
partitions were manufactured using recycled paper or kenaf fibers
by Gridcore Systems International of Long Beach, California.
 
Some 25 percent of the AARC Corporation's partners are involved in
construction and the building-products industry.  Other
construction-related materials in the AARC Corporation portfolio
that were not used in the NRDC office include:
o  Load-bearing wall panels made from wheat straw by AgriBoard
Industries of Fairfield, Iowa, and Coppell, Texas;
 
o  A composite material made from recycled plastic and wheat straw
for outdoor use in posts, railroad ties, decks, docks, window and
door frames manufactured by XYMAX, Inc., of Mankato, Kansas;
 
o  Lightweight, extended-life utility poles, constructed by joining
tapered wood staves with veneer wraps,  made by PoleTech, Inc.,of
North Branch, Minnesota; and
 
o  An environmentally friendly concrete-form release agent made
from crambe and/or industrial rapeseed oil by the Leahy-Wolf
Company of Franklin Park, Illinois.
 
More Repayments Received
 
Although the AARC Corporation has been making investments for only
4 years, it has already begun to receive paybacks from six
companies.  The first paybacks came in 1995 from Leahy-Wolf and
Natural Fibers of Ogallala, Nebraska, which manufactures pillows
and comforters using milkweed floss and markets the products
internationally.  Thus far in 1996, the AARC Corporation has
received paybacks from:
o  BioPlus, Inc., of Ashburn, Georgia, which uses peanut hullsas
the carrier base for crop protection materials and as flushable cat
litter;
 
o  Aquinas Technologies of St. Louis, Missouri, which producesand
markets ethanol-based products made from corn, including a
windshield washer fluid, America's Solution, that will soon be
available nationwide;
 
o  Innovative Biosystems of Moscow, Idaho, which uses crop residues
to make potting mix; and
 
o  Midwest Biofuels, a subsidiary of Interchem Environmental,Inc.,
of Overland Park, Kansas, which uses soybean methyl esters to make
a variety of products including biodiesel and cleaning solvents.
 
In its first 4 years of funding, the AARC Corporation has invested
$28 million in projects in 32 States, and has leveraged $112
million in private funds, creating over 5,000 jobs in rural
communities.
 
ARS Technology Transfer Continues
 
Scientific developments from USDA's Agricultural Research Service
(ARS) are now available on the Internet.  More than 13,000 research
project reports are available on the agency's Technology Transfer
Automated Retrieval System (TEKTRAN) at
http://www.nal.usda.gov/ttic/tektran/tektran.html.  Industry,the
scientific community, and consumers can use this Internet service
to target specific interests.  Projects can be searched by
keywords, such as commodity type, potential industrial application,
and scientific discipline.  Entries of newly completed research
projects submitted for publication are added to TEKTRAN on a
biweekly basis.
 
In addition, information on licensable patents and patent
applications can be accessed through TEKTRAN's link to the National
Agricultural Library.  Licensable patent information is updated
each month and kept current by ARS' Office of Technology Transfer
(OTT).  Inventor addresses, and phone and fax numbers accompany
each entry to expedite commercialization efforts of ARS-developed
technology.  A planned OTT home page is expected to offer a full
range of technology transfer opportunities and services.
 
The agency's longstanding commitment to improving the commercial
viability of biofuels continues.  For example, two patent
applications on technology developed by ARS scientists in
Philadelphia, Pennsylvania, were filed recently that specifically
address this issue.  One invention involves enzymatic productionof
a fuel additive, using oilseed byproducts, that can be added
directly to automotive fuels.  A second invention uses inexpensive
feedstocks, such as rendered fats and restaurant grease, to make
biodiesel, as well as to produce fuel additives and lubricants.
 
ARS's technology transfer efforts continued in fiscal 1996, with
the agency signing a number of Cooperative Research and Development
Agreements (CRADA's) and licensing agreements with U.S. firms.
(CRADA's allow joint collaboration between government scientists
and industry to develop particular discoveries.)  For example,ARS
scientists in Albany, California, have entered a CRADA with Tenneco
Packaging Company, Inc., of Canandaigua, New York, on the
development of biodegradable containers made from wheat starch.
The technology also can be used to make a lightweight concrete-like
product, which is of particular interest to the high-value
ornamental brick and stone market.
 
Two other CRADA's signed in fiscal 1996 involve the development of
composite materials from starch to make products such as fast-food
packaging, cutlery, films, and plates.  Scientists in Peoria,
Illinois, are working with the Biotechnology Research and
Development Corporation of Peoria and Tenneco Packaging, Inc., on
an extruded starch-based sheeting technology to develop
biodegradable alternatives to petroleum-derived plastics.
 
A variety of food and nonfood applications is being commercialized
using a stable, nonseparable composition made from starch and oil.
Known as Fantesk, it was developed and patented by ARS scientists
in Peoria, Illinois.  The Union Camp Corporation of Wayne, New
Jersey, was granted an exclusive license to the technology to make
environmentally friendly adhesives, glues, and coatings.  OptaFood
Ingredients of Bedford, Massachusetts, licensed the technology for
a variety of food applications, such as fat replacements.
Additional companies are working with Opta on sublicensing the
technology to develop commercial products.  The starch-oil
combination also attracted the attention of Seedbiotics, Inc., of
Caldwell, Idaho, which will use the technology to encapsulate
fertilizers and biological pesticides and herbicides in
compositions that can be used to coat seeds to reduce surface-level
application of these compounds.  Additional applications of the
technology include pharmaceuticals, lubricants, and personal-care
products.
 
In addition, Quincy Soybean Company of Quincy, Illinois, has
applied for an exclusive license for an ARS-patented method for
manufacturing 100-percent soy inks.  Developed by ARS scientistsin
Peoria, Illinois, the 100-percent soy inks have characteristics
that meet or exceed industry standards for product functionality
and quality.
 
The textile industry is showing interest in an improved enzymatic
retting process being developed by ARS scientists in Athens,
Georgia, to make products from fiber flax.  The technology would
replace existing enzymatic treatments and dew-retting, which
depends on microorganisms and weather conditions to separate flax's
long bast fibers from the rest of the stem.  The technology should
allow textile companies to develop a more consistent product, with
high strength and moisture-absorbance characteristics.
 
A Memorandum of Understanding for Technology Transfer between ARS
and the State of Florida, which was signed in November 1995, began
to bear fruit in fiscal 1996 with several activities benefiting
both organizations.  To assist Florida's new port inspection
program, ARS notified Florida officials about a patented method
developed in Albany, California, that uses imaging technology to
inspect plant materials.  Florida officials are working with a
business partner to develop a CRADA.
 
Likewise, Florida officials have assisted in efforts to
commercialize a USDA pest-control technology, which uses global
positioning systems to target pests, by locating businesses
associated with the Kennedy Space Center.  Four companies are
currently evaluating the commercial potential of this new
technology.  Florida also forwarded an inquiry from a Fort
Lauderdale company concerning the development of a precision
fertilizer-injection system.  After further investigation, itwas
determined that this system could also be used to deliver
biological pest control materials developed by ARS scientists in
Mississippi and Texas.  [1996 Act:  William Bryan Just, ERS,and
Linwood Hoffman, ERS, (202) 501-7103, lhoffman@econ.ag.gov.  AARC
Corporation:  Ron Buckhalt, AARC Corporation, (202) 690-1633,
rbuckhal@rus.usda.gov.  ARS:  Bruce Kinzel, ARS, (301) 504-6965,
bmk@ars.usda.gov.]
 
Macroeconomic and Industrial Outlook
 
More Moderate Economic Growth Expected in the Rest of 1996 and 1997
 
The strong growth in U.S. gross domestic product in the second
quarter of 1996 is expected to give way to more moderate growth for
the rest of 1996 and 1997.  Reflecting moderating growth,
manufacturing output is expected to rise at an average annual rate
of 3.5 to 4.5 percent through the end of 1997.  As mature
industries in a mature economic recovery, most of the industrial
sectors using agricultural inputs will grow more slowly than
manufacturing overall.
 
U.S. industries that use agricultural inputs tend to be mature
industries and, as such, find their economic prospects closely tied
to changes in the general U.S. economy.  This section providesan
overview of the U.S. economy and manufacturing sector, focusing on
nine major industries that use agricultural materials.
 
The U.S. gross domestic product (GDP) grew a robust 4.2 percent in
the second quarter of 1996, reflecting strong manufacturing growth.
Lumber-and-products output rose as new housing and home improvement
projects, delayed by bad weather in the first quarter, began in the
second.  Also, housing demand was up because strong disposable-incomegrowth
from a real increase in total wages paid (employment
increased sharply during the quarter) and the use of variable rate
mortgages overcame the impact of long-term mortgage rates that were
1 percent higher than at the end of 1995.  Transportation-equipment
output increased because of car and van rebates, good personal-incomegrowth,
rising business spending on vehicles, and dealers
rebuilding inventories depleted by the strike at General Motors
(GM).  Textile-mill production rose because of increased spending
on furniture.  Chemicals and products and rubber and plasticswere
hurt by higher energy prices and a strengthening of the dollar that
slowed exports and increased imports.
 
Manufacturing output increased 2.4 percent in the first quarter of
1996, while GDP grew a moderate 2.0 percent (table 1).  Of nine
major industries using agricultural materials (lumber and products,
furniture and fixtures, industrial machinery and equipment,
transportation equipment, textile-mill products, paper and
products, chemicals and products, rubber and plastic products, and
leather and products), only two experienced gains in the first
quarter.  Industrial machinery and equipment grew at an annualized
rate of 19.5 percent and chemicals and products increased 1.7
percent.  Production dropped in the other seven industries.
Lumber-and-products output declined because of unusually bad
weather that inhibited construction.  The GM strike was responsible
for a quarterly decline in transportation-equipment output.  Rubber
output was stagnant as export sales could not make up for a drop in
domestic demand for tires and material on GM cars.
 
Mature Industries in a Mature Recovery
 
The current recovery is at a mature stage, which means the robust
growth seen in the second quarter will not be reflected in the nine
industries.  Only the industrial-machinery-and-equipment industry,
because of computers and business equipment, and the
rubber-and-plastic-products industry are running at capacity utilizationrates
similar to those of the 1988-89 peak of the last business cycle
(table 2).  These two industries have also averaged output growth
comparable to that of  the last two business recoveries that lasted
more than 5 years (1961-69 and 1981-89).
 
Based on capacity utilization behavior and other characteristics,
the nine industries generally could be described as mature
industries.  The chemicals-and-products and noncomputer-based-machinery
industries are cases in point.  Employment growth in
these industries is below average for the economy as a whole, and
output has not generally expanded as fast as overall manufacturing.
Double-digit output-growth rates, such as those of the technology-driven
computer industry, are very unlikely.  Finally, the
industries they provide with inputs, such as other manufacturers,
are also mature, providing only modest growth in derived demand.
 
Prospects for the Rest of 1996 and 1997
 
In the second quarter of 1996, the nine major industries using
agricultural materials enjoyed a good economic environment.  The
next year and a half probably will be less favorable as economic
conditions will be more like an average of the previous four
quarters.  While growth in the third quarter of 1996 may be above
trend because of the positive impact of the previous two quarters'
gains, the fundamentals point to moderate growth for the rest of
1996 and 1997.  GDP growth is expected to average 2 to 2.6 percent
during the period, with manufacturing output expected to rise 3.5
to 4.5 percent.
 
Consumers, while stimulated by higher incomes, are not likely to
continue accumulating debt as they have for the last year and a
half.  Credit card and other loan delinquencies are up, so lenders
are likely to increase their scrutiny of potential borrowers.
Cash-strapped State and local governments, faced with increasing
school enrollments and declining Federal assistance, will raise
fees and property, income, and sales taxes, further cutting into
consumers' spendable income.  The 100-basis-point rise in long-term
interest rates since late 1995 will further slow consumer durable
spending and contribute to lower investment growth.
 
Investment spending is apparently slowing as manufacturers and
resellers of computers, which have led the investment boom of the
last 3 years, have recently reported sluggish sales growth.  The
record increases in profits are moderating, making some slowdown in
equipment spending inevitable.  The recent strengthening of the
dollar versus the German mark and the Japanese yen makes it
unlikely that a declining real trade deficit will provide an
impetus for growth.  Lower Federal spending, only partially offset
by higher local spending, will be an additional drag on GDP growth.
 
Crude oil prices are likely to fall as North Sea and Iranian
production expand.  Prices are expected to average $18 to $19per
barrel during the next six quarters.  If prices do rise, becauseof
unexpected supply disruptions or pressure from higher than expected
U.S. and world growth, they are not likely to increase above $25
per barrel due to the large excess capacity held by increasingly
independent oil producers.
 
If the strong growth of the second quarter continues into the
summer, the Federal Reserve (Fed) may raise short-term interest
rates.  Although housing and consumer durable growth will decline
soon after any rate hike, a significant slowing of the economy
would not be seen for four to six quarters.  The banking-credit
system, however, is in good shape and, with available funds,
lending should not be severely restrained.
 
Although the economy has been quite strong, capacity utilization is
not close to a level presaging inflationary bottlenecks.
Productivity has grown faster than wages so far in this expansion,
also insulating the economy from a runup in inflation.  Greater
industrial competitiveness, which makes it hard to pass on wage
increases, is another impediment to sharply higher inflation.
Thus, there is little chance of higher wages or production
bottlenecks starting an inflationary spiral that the Fed will have
to choke off with large hikes in short-term interest rates.
 
Prospects for the Nine Industries Mixed But Modestly Good
 
None of the nine major industries using agricultural materials
should be in recession in 1996 or 1997 due to general economic
conditions, but growth will be below that of the first two quarters
of 1996.  Lumber and products and furniture and fixtures, dueto
less expected construction activity and slow growth in durable
spending by consumers, will likely grow modestly at best, compared
with the second quarter.  Higher short-term interest rates, ifthey
occur, would further slow construction and durable spending growth.
 
The prospects for transportation-equipment growth are modest at
best, because the domestic light-vehicle market is saturated and
local governments are likely too strapped for cash to buy vehicles.
However, the U.S. competitive position for airplane exports is
good, possibly bringing growth in transportation equipment in one
or two of the next six quarters, despite weak fundamentals for the
rest of the industry.  Production of paper and products and rubber
and plastic products is close to full capacity, making growth
prospects limited.  Rubber is also constrained by the meager
prospects for transportation-equipment-output growth.
 
The major risk to the industries' moderate prospects is stronger
GDP growth than the 2- to 2.6-percent average expected for the rest
of 1996 and 1997.  If growth stays strong, the Fed will raise
short-term rates more than currently anticipated.  This would
likely boost long-term rates as well.  Lumber and products and
furniture and fixtures would do well for a quarter or two, then
likely be faced with several quarters of declining output.
Industrial machinery and equipment and transportation equipment
would likely face sharp declines in late 1996 and 1997 with higher
interest rates.  Chemicals and products and rubber and plastic
products would likely do somewhat better in 1996 at the cost of a
much weaker 1997.  Slow auto industry growth and the likely risein
the dollar from higher U.S. interest rates, which would lower
exports, would reduce output and prices in 1997 for most companies
in these two industries.  [David Torgerson, ERS, (202) 501-8447,
dtorg@econ.ag.gov]
 
Starches and Sugars
 
Ethanol Production Down, But Packaging and Adhesive Uses Are Up
 
Industrial uses of corn are expected to total 622 million bushels
in 1995/96, down 18 percent from the previous year, mainly due to
lower use for ethanol.  Ethanol producers are in the midst ofa
financial squeeze, resulting from a combination of rapidly rising
corn prices, only moderate gains in coproduct prices, and
relatively stable ethanol prices.  Biodegradable loose-fill
packaging materials are being manufactured from corn and wheat
starch.  Almost one-third of all adhesives produced and used inthe
United States are of natural or renewable origin.
 
Industrial uses of corn are expected to total 622 million bushels
in 1995/96 (September/August), down 18 percent from the previous
year (table 3).  Corn use for the production of industrial starch,
fuel, and manufacturing alcohol will all be lower than in 1994/95,
primarily due to this year's high corn prices.  In 1996/97, witha
larger corn crop, industrial uses of corn are forecast to rise 6
percent from this year's depressed levels to 661 million bushels.
 
Corn used for ethanol production in 1995/96 is estimated at 395
million bushels, down 26 percent from last year.  Higher corn
prices have affected fuel ethanol producers, especially dry-mill
operations.  With corn prices expected to stay strong and ethanol
prices held down because of competitive pressures, as of August
1996, producers are expected to keep production low until new-crop
corn is available.  In 1996/97, ethanol production is likely to
partially rebound and use 425 million bushels of corn, which is
still below the 1994/95 peak of 533 million bushels.
 
Corn used to make starch in the first three quarters of 1995/96
declined 4 percent from a year earlier.  Starch prices have been
strong and may have encouraged some switching to other feedstocks
to reduce use.  High reported prices suggest producers have passed
along the higher costs of corn.  Based on elevator bid pricesand
values of wet-mill byproducts, the net cost of corn for starch has
increased sharply during 1996.  In May 1996, net corn costs were
9.64 cents per pound, up from 1995's average of 4.34 cents.  Useof
corn for starch may be up in June to August from a year ago,
leaving use for all of 1995/96 down 3 percent from the 226 million
bushels used in 1994/95.
 
In 1995/96, corn used for denatured manufacturing and industrial
alcohol is expected to total 40 million bushels, nearly the same as
the 36 million used in 1994/95.  Current data are only available
from the Bureau of Alcohol, Tobacco, and Firearms (ATF) through
December 1995 and showed a doubling in corn use for the September
through November period.  With high corn prices, use will likely
slow, as has occurred in prior high-cost periods.   In thelast
half of the marketing year, use is expected to drop significantly
below a year earlier.  If corn prices decline as expected in
1996/97, corn use in manufacturing alcohol will likely hold its own
against other feedstocks and chemical processes for making ethyl
alcohol (ethanol).
 
Revisions Made in the Data on Food and Industrial Uses
 
Data on food and industrial uses of corn were revised this month
following a review of various use categories.  These estimateswere
changed to reflect the numbers reported in the final 1992 Census of
Manufacturers.  Changes in beverage and manufacturing alcoholalso
relied heavily on ATF data.
 
Estimates of corn used to make starch were lowered slightly to
reflect Census Bureau numbers.  For beverage and manufacturing
alcohol, the new series is much more variable and around 20 million
bushels larger than previous estimates for recent years.  Although
licensed by ATF as beverage plants, some ethanol plants also
produce fuel or manufacturing alcohol.  This necessitated a
revision in the data.  While the Census of Manufacturers previously
published data on beverage industries, the 1992 Census broke out
ethyl alcohol production by organic chemical manufactures,
including fuel alcohol from wet and dry milling and pure (natural)
alcohol.  The Census data are within 1 percent of the ATF data,
assuming denatured alcohol is 95 percent alcohol and pure alcohol
in proof gallons is actually 185 proof.  Because alcohol dataare
reported in proof gallons, tax gallons, and wine gallons, aligning
the two sets of data is not always easy.  ATF has distinct legal
definitions of proof and tax gallons, but in practice a proof
gallon and a tax gallon are about the same, both 100 proof, 50
percent ethyl alcohol.
 
While the ATF and Census data on alcohol production agree, Census
numbers on grains used in alcohol production are not available for
the organic chemical category to compare with ATF numbers.  TheATF
data give production of various types of alcohol and total grains
used.  For alcohol and spirits 190 proof and over, there is a
breakout of production by kind of materials used, such as grain,
fruit, or ethylene gas.  Some simplifying assumptions were usedto
calculate use.  Estimated corn used for beverage and manufacturing
alcohol was calculated by taking grain needed and multiplying it by
corn's share of total grains as reported by ATF.  Grain neededwas
the sum of estimated grain spirits over 190 proof, less net
withdrawals for fuel, grain spirits less than 190 proof, and
whiskey production converted to grain at 5.1 proof gallons per 56
pounds of grain.  Finally, corn used to produce beer, as reported
by ATF, continues to be included in the beverage category.
 
Prices Squeeze Ethanol Producers
 
Ethanol producers are in the midst of a financial squeeze,
resulting from rapidly rising corn prices, only moderate gains in
coproduct prices, and relatively stable ethanol prices.  The result
has been a 30-percent reduction in ethanol production from a year
ago, and production is expected to continue falling over the next
several months.
 
Ethanol production is seasonal, picking up in September and October
in anticipation of the oxygenated-fuel season that runs from
November through February in about 30 cities.  Production beginsto
decline in March and April, as wet millers shift to making
sweeteners used in beverages that are in higher demand during the
summer (figure 1).  Producers also tend to upgrade and perform
maintenance on their facilities during the summer, when seasonal
demand for ethanol is lower.
 
Several factors have affected the profitability of ethanol
producers in the first 6 months of 1996.  First, corn prices have
been historically high, exceeding $5 per bushel in Chicago spot
markets at one point.  Second, while soybean prices have also
increased, they have not risen as much as corn prices.  Thus,corn
prices are higher relative to soybean prices on an historical
basis.  Prices of coproduct feeds from ethanol production are
closely linked to soybean meal prices and, therefore, have not
increased as much as corn prices have.  Third, until the sharprise
in gasoline prices in February and March, gasoline prices remained
steady.  Ethanol prices are strongly influenced by gasoline prices,
because a large proportion of the ethanol produced in the Corn Belt
is blended into regular gasoline as an octane enhancer and fuel
extender.  Stable gasoline prices have tended to keep ethanol
prices from climbing.
 
The result of these market forces has been an increase in the net
cost of corn per gallon of ethanol produced from about 50 cents a
year ago to more than $1 now, based on cash prices for corn of
$4.80 to $5 per bushel.  (Net corn costs include the cost of corn
per bushel minus revenue for coproduct feed.)  With these costs
doubling, producers needed similar increases in ethanol prices to
maintain profit margins.  Instead, ethanol prices were held inthe
$1.10 to $1.20 range through April 1996.  This combination of
rising net corn costs and flat ethanol prices created financial
conditions that could not sustain ethanol production in the long
run.   Not until the effects of the February and March gasoline
price spikes had worked their way into the market were ethanol
producers able to raise prices and ease tight margins.
 
Because some ethanol producers engage in hedging and other
strategies to limit price risk, they probably have been affected
less severely than an analysis using cash prices would indicate.
However, some producers found their most profitable course of
action was selling their futures positions that had nearly doubled
in value and temporarily suspending production, instead of buying
corn to produce ethanol.  This action on the part of several firms
will exacerbate the seasonal reduction in ethanol production and
could result in the lowest monthly ethanol production in 10 years.
 
The outlook for the next 6 months is for lower production and poor
margins for producers.  As production drops, prices may get aboost
because a greater share of ethanol demand will be as an oxygenate
in reformulated gasoline markets instead of a fuel extender in
conventional gasoline blending.  If profit margins for ethanol
producers remain tight, ethanol blending in the conventional
gasoline octane/extender market could come to a virtual halt.
However, mandated markets for oxygenated fuel and reformulated
gasoline will continue to provide a market for ethanol, which
remains competitive with other oxygenates in many mandated market
areas.
 
States are continuing their financial support for ethanol
producers.  While some ethanol plants have been temporarily closed,
others in Minnesota have just begun production.  These farmer-owned
cooperatives are backed by the commitments of their members and a
20-cents-per-gallon State payment.
 
A good corn crop this year is likely to bring ethanol prices down.
August USDA estimates for the 1996/97 marketing year of $3.15 to
$3.55 per bushel might be high enough to keep some plants from
returning to full production at current gasoline prices.  However,
the real key to producer profitability is net corn costs per
gallon.  A more normal alignment between corn and soybean prices
should help net corn costs decline after the harvest.  If theydo,
many ethanol producers will begin producing at much higher
utilization rates.
 
Starch-Based Loose Fill Used for Product Packaging
 
Protective packing materials are used to cushion, protect, and
stabilize articles in boxes, cartons, and other containers for
shipping and storage.  Manufacturers, mail-order firms, and other
industries are big users of protective packing materials.  Themost
common materials used to make protective packing are expanded
polystyrene (EPS), shredded newsprint, cardboard, excelsior (fine
wood shavings), popcorn, and starch.  EPS-based, loose-fill foams
have enjoyed a steady growth in packaging applications over the
last two decades, but are now a target in the solid waste disposal
debate because of their nondegradability.  Consumers are demanding
and legislators are mandating the use of environmentally benign
packing materials.
 
To address the public's concern regarding disposability,
biodegradable loose-fill packaging products are being developed and
manufactured from corn and wheat starch, and are a growing portion
of the loose-fill packaging market.  In most cases, starch-based,
loose-fill products are 100-percent biodegradable, with the
exception of products that contain nondegradable additives.  Most
starch-based, loose-fill products can be dissolved in water.
Smaller quantities could be disposed of in flowerbeds and gardens
or simply flushed down the drain to a municipal wastewater
treatment facility.  Large quantities, which could have detrimental
effects on a wastewater treatment facility simply due to the sheer
volume of product, would need to be composted; for example, with
municipal lawn and garden waste.  A 1993 comparative study bythe
Minnesota Office of Waste Management claims that starch-based loose
fill is a reasonable alternative to EPS-based loose fill if
composting infrastructures exist and EPS foam recycling is
impractical.
 
Satisfactory performance, good properties, and low cost have
enabled EPS-based loose fill to grow over the last 20 years into a
successful 90-million-pound-per-year packaging product (1).  EPS
market growth was particularly strong in the 1980's, at more than
20 percent per year.  However, many external-market and economic
forces, such as the Persian Gulf War, recession, and the switch to
alternative packing materials and methods, slowed this growth rate
to less than 2 percent during the 1990's.  In addition to using
alternative loose-fill products, manufacturers have redesigned
packages and packing products to use less material.  Suppliers
conservatively estimate the starch loose-fill market, as of June
1996, at approximately 15 to 20 percent of the EPS loose-fill
market.  This means that packagers are using 13.5 to 18.0 million
pounds of starch loose fill in addition to the 90 million pounds of
EPS loose fill.
 
For starch-based products to have captured some of the loose-fill
market means they have had to compete with EPS's performance
characteristics.   For example, mechanical integrity is important
because the function of loose fill is to adequately protect shipped
or stored goods.  Compression and resiliency tests, conductedby
USDA's National Center for Agricultural Utilization Research
(NCAUR) in Peoria, Illinois, demonstrated that both starch-based
and EPS-based loose fill have similar mechanical integrity.  Starch
loose fill is more sensitive to changes in relative humidity and
temperature than EPS loose fill, but the higher amount of absorbed
moisture does not compromise its mechanical properties.  A
beneficial property that starch loose fill has, which EPS does not,
is the ability to resist static cling.
 
Starch-Based Loose Fill Produced by Several Companies
 
In general, starch-based packaging products are manufactured using
extrusion technology, a process in which the starch is cooked,
worked into a plastic-like dough, forced through a die, expanded by
loss of moisture and a decrease in pressure, and cooled into a
rigid structure with a porous texture.  Modified or unmodified
starches may be used, depending on the producer and the product.
In addition, manufacturers add proprietary additives and other
ingredients to develop specific products.  Technology typicalof
the plastics industry molds the starch-based material into final
shapes, such as loose fill, sheets, and other forms.
 
Several companies actively develop, produce, and/or market starch-basedloose
fill.  The products and producing companies are:
 
o  CLEAN GREEN by Clean Green Packing Company of Minneapolis,
Minnesota, a wholly owned subsidiary of Environmental Technologies
USA, Inc.;
 
o  ENVIROFIL by EnPac, a DuPont/ConAgra Company, of Wilmington,
Delaware;
 
o  ECO-FOAM by American Excelsior Company of Arlington, Texas;
 
o  FLO-PAK BIO 8 by Free-Flow Packaging Corporation of Redwood
City, California;
 
o  RENATURE by Storopack, Inc., of Cincinnati, Ohio; and
 
o  STAR-KORE by Star-Kore Industries of Memphis, Tennessee,
formerly Unistar Industries, Ltd.
 
Some of these companies produce or distribute other nonstarch-based
packaging products as well.  For example, Free-Flow Packaging
manufactures 100-percent, recycled EPS loose fill and American
Excelsior manufactures virgin EPS loose fill.
 
Warner Lambert of Morris Plains, New Jersey, no longer manufactures
starch-based resin for loose fill, but licenses the technology to
EnPac.  National Starch of Bridgewater, New Jersey, licenses its
high-amylose starch technology exclusively to American Excelsior
Company.  Norel Company of Little Ferry, New Jersey, and Storopack,
Inc., manufacture and distribute starch loose fill for EnPac under
the ENVIROFIL trademark.   EnPac sublicenses the Warner-Lambert
technology to other companies including Clean Green Packing and
Free-Flow Packaging Corporation.
 
Many companies have recently introduced new-product applications.
EnPac has introduced ENVIROMOLD, a wheatstarch, loose-fill material
that is dampened with water so the foamed pieces can stick together
to form a continuous protective cushion.  This product is targeting
packagers that use foamed-in polyurethane (liquid chemicals that
are combined to form a resilient foam structure) and polyethylene.
This market is estimated at about 300 million cubic feet (2).
American Excelsior manufactures starch-based extruded shapes and
rigid-sheet products for a variety of applications, including end
caps, pouches, rolls, and die-cut forms.  Other applications
recently announced by American Excelsior at the International
Agricultural Summit in Kansas City, Missouri, include toys such as
foamed logs and blocks, confetti, furniture guards, and potty
training aids.  Star-Kore Industries has developed flexible- and
rigid-sheet products from modified-starch technology.
 
Starch Loose-Fill Prices Dependent on Corn Prices
 
Though comparable in function to EPS loose fill, starch-based loose
fill is still about 30 percent more expensive.  Excluding shipping
costs, the average price of commercial starch-based loose fill is
54 cents per cubic foot, while EPS loose-fill prices average about
41 cents per cubic foot from the manufacturer.  In addition to
being higher priced than EPS loose fill, starch loose fill also has
a higher bulk density (weight per cubic foot) than EPS loose fill.
This means that an equal volume of starch loose fill in a package
will weigh more than an equivalent volume of EPS loose fill. Thus,
end users of starch loose fill are hit twice, first by higher
purchase prices and then by higher shipping costs due to more
weight.  However, over the past year, manufacturers of starch-based
loose fill have been able to narrow the cost differential between
starch and EPS-based foam products due to improvements in
manufacturing methods.
 
Because commercial starch-based loose fill generally contains more
than 90 percent starch, the price of a specific loose-fill product
is highly dependent on starch prices.  (The remaining 10 percentor
less consists of additives that facilitate production and improve
performance.)  Because cornstarch is the cheapest, most widelyused
industrial starch in the United States, most starch-based loose
fill likely is manufactured from cornstarch, although some products
may use wheat and/or potato starch.
 
Good mechanical performance and biodegradability have enabled
starch-based loose fill to successfully compete with EPS-based
products.  Industry sources anticipate continued market growthfor
starch-based products, as research efforts continue to reduce cost,
improve performance, and develop new applications for loose fill
and other starch-based foam products.  This research is being
conducted by starch producers, packaging manufacturers, and USDA
laboratories such as NCAUR.
 
Natural Adhesives Respond to Changing Market Influences
 
Adhesives are used in a wide variety of applications.  Over 1,000
different types of natural and synthetic adhesives are used in the
manufacture of textiles, plastics, wood products, ceramics,
electronics, glass items, cosmetics, pharmaceuticals, and metals.
 
Adhesives are one of the leading industrial-product categories that
use a large amount of natural raw materials.  Almost one-thirdof
all adhesives produced and used in the United States is of natural
or renewable origin (figure 2).  Natural adhesives are derivedfrom
a wide variety of raw materials, including agricultural, animal,
and forestry components.  Leading feedstocks are corn and wheat
starches, vegetable oils, rubber, animal-based proteins, gelatin,
lignin, and mussels.  Specialty natural adhesives are derivedfrom
highly refined starches.  Synthetic adhesives are primarily derived
from petrochemicals and include thermoplastics, thermosets,
bitumens, and elastomeric adhesives.  The thermoplastics sectoris
the largest sector by volume, while the elastomerics sector is
highest in value of the synthetic adhesives.
 
The 12.8-billion-pound U.S. adhesives market was valued at $6.5
billion in 1995.  In the last decade, overall adhesive growth
averaged 2 percent per year, by volume.  The recession of 1990
dampened adhesive use, but the demand for natural adhesives has
been growing steadily since late 1992.  In 1995, the overall demand
for adhesives grew 3.1 percent, and is projected to grow at 3.3
percent annually through 2000.  Natural adhesives are expectedto
exceed this average and grow over 3.8 percent annually through
2000, higher than the rates projected for bitumens and
elastomerics.  Certain synthetic subcategories, catering to niche
markets, may also see above average growth.
 
During late 1980's, certain synthetic subcategories saw growth
several times the average, notably hot melt, hot melt
pressure-sensitive, acrylic pressure-sensitive, polyvinyl acetate,
cyanoacrylate, anaerobic, and radiation-curable adhesives.
However, their growth rates have suffered in the 1990's.
Environmental regulations restricting the use of certain synthetic
adhesives, product-quality improvements, green-product
reformulation, and identification of new applications, combined
with overall growth in the U.S. economy in recent years, are some
of the key factors responsible for the recent and projected growth
for natural adhesives.  This year's high corn prices, however,have
dampened the demand for many starch-based adhesives.  High-volume,
low-value grades may see no or slight market growth until prices
become competitive with other substitutes.  High-value, refined,
starch-based naturals may not be affected by higher corn prices.
 
Certain important categories of synthetics, particularly
thermoplastics, are expected to shrink over the next 5 years, while
some specific naturals, especially protein-based adhesives, will
probably grow at twice the average.  Part of this change is based
on the industry's response to environmental regulations.  For
example, because of Clean Air Act regulations limiting emissions of
volatile organic compounds, solvent-based adhesives are being
displaced with refined naturals and other specialized synthetic
elastomerics in such fields as pressure sensitive, construction,
and automotive applications.
 
Robotics are an increasingly popular means of applying adhesives in
assembly line production.  These automated systems exhibit a
technical preference for natural adhesives due to easy equipment
cleaning and flow characteristics.  Higher engineered applications,
such as the replacement of mechanical fasteners, will also
contribute to the overall growth of adhesive markets.  In foundry
applications, demand for natural adhesives (binders) is expected to
grow at 2.8 percent annually to 134 million pounds in 1997.
 
Environmental concerns have spurred the use of natural adhesives
that have better biodegradability profiles than their synthetic
counterparts.  The success of starch-based adhesives in the
packaging industry is directly associated with the solid-waste
disposal problems faced by petroleum-based films.  Recycling
operations have spurred the use of starch-based adhesives in paper
cartons, bottle labels, stationery, and some interior plywood
fabrications.
 
Starch-based adhesives are the largest segment of the
natural-adhesives market.  In 1995, approximately 60 percent ofthe
4 billion pounds of natural adhesives produced and consumed in the
United States were derived from starch, primarily corn and wheat
starch.  These 2.4 billion pounds of starch required roughly 73
million bushels of corn equivalent.  National Starch & Chemical
Company is one of the leading starch-based adhesives companies in
the United States.  It has led the way in developing and
introducing a number of starch-based adhesives, including the
Kor-Lok and Duro-Lok lines of adhesives.  It is estimated that
there are over 100 different formulations of starch-based adhesives
currently on the market.  Starch-based adhesives are less expensive
then other natural and synthetic adhesives and range in price
between 50 cents and $2.50 per pound.  Almost all natural adhesives
are priced under $8.00 per pound.
 
Another type of natural adhesive is animal glue.  It is producedby
the hydrolysis of the protein collagen from the skins, hides, and
bones gathered from slaughterhouses.  The glue's diverse
applications in paper, glass, abrasives, matches, and metal
refining maintain its commercial position in the face of highly
competitive synthetic materials.  Besides being used directlyas an
adhesive, animal glue is also an additive in a wide range of
adhesive and flocculating formulations.
 
New Research and Development May Lead to Future Growth
 
Significant research and development have been underway since the
early 1980's to design and develop natural adhesives with specific
functional properties.  For example, at least three USDA
laboratories are engaged in developing natural adhesives with
better water resistance properties.  Some of the latest natural
adhesives under investigation are based on protein, fiber, and oil
from corn, wheat, soybeans, and mussels.
 
Although soy proteins have been used in paints and coatings for
many years for their coagulation properties, only recently have
commercially viable adhesives with superior application properties
been developed.  Soy-based wood adhesives are the first alternative
adhesives likely to capture significant market share.  Mussel
protein-based adhesives are already reaching commercial
significance, with great potential in medical and industrial
applications.
 
Midwest Grain Products, Inc., of Atchison, Kansas, is developing a
new wheat gluten-based line of adhesives for both food and nonfood
applications.  Gluten-based adhesives present exceptional
properties, such as solubility, adhesion, binding, elasticity,
plasticity, flexibility, and chemical reactivity, and are used to
make pressure-sensitive tapes, electrostatic painting, ceramics,
and water resistant applications.
 
While new categories of natural adhesives are being developed,
existing products are being improved.  The outlook for natural
adhesives in most application areas is bright through the turn of
the century as environmental laws continue to regulate the use of
synthetics.  Efforts by private industry and USDA laboratories
promise to further expand the number of natural adhesives and their
market share.  [Industrial uses of corn:  Allen Baker, ERS,(202)
219-0360, albaker@econ.ag.gov.  Ethanol:  John McClelland,
ERS/OENU, (202) 501-6631, jmcclell@econ.ag.gov.  Starch-basedloose
fill:  Paul Tatarka, ARS, (309) 681-6428,
tatarkpd@ncaur1.ncaur.gov, and Charles Plummer, ERS, (202) 219-0717,
cplummer@econ.ag.gov.  Adhesives:  Irshad Ahmed, BoozAllen&
Hamilton, (703) 917-2060, 71332.3160@compuserve.com.
 
1. Modern Plastics, Vol. 73, No. 1, January 1996.
 
2. Plastics News, Vol. 8, March 25, 1996.
 
Fats and Oils
 
Crambe, Industrial Rapeseed, and Tung Provide Valuable Oils
 
In 1996, crambe is again being grown commercially, while industrial
rapeseed acreage is down from previous years.  Tung oil is being
produced in the United States for the first time since 1973.
Glycerine markets remain tight, as demand continues to outpace
supply.  Biodiesel commercialization faces a number of regulatory
and market challenges in the United States.
 
Crambe Again in Commercial Production
 
The American Renewable Oilseed Association (AROA), an organization
of crambe growers, contracted with 145 farmers in 1996 to grow
22,000 acres of crambe.  No commercial acreage was planted in1995
because much of the crambe oil produced in 1994 had not been sold
prior to spring planting.  Commercial crambe production beganin
North Dakota in 1990, and U.S. acreage peaked in 1993 at 57,683
acres (table 4).  (See the June 1993 and the September 1995 issues
of this report for more information on crambe supply and uses.)
 
All of the 1996 acreage is in North Dakota.  As of mid-July, about
19,000 acres were in good to excellent condition.  There is no
predetermined contract price this year, but producers are likely to
receive between 11.5 and 12 cents per pound of seed harvested. The
crop will be toll processed by Archer Daniels Midland at its
Enderlin, North Dakota, oilseed crushing plant.  AROA has
contracted with Witco Corporation, headquartered in Greenwich,
Connecticut, to buy the crambe oil and will market the crambe meal
to feed manufacturers for beef finishing rations.
 
AROA has set up a separate steering committee and business to
develop a production, processing, and marketing infrastructure for
novel oilseeds in the Northern Great Plains.  The grower-owned
company, AgGrow Oils, plans to offer stock to growers this
December, construct a 200-ton-per-day crushing facility in 1997,
and begin operation with the 1997 crop.  Negotiations are underway
that include contracting for 30,000 to 60,000 acres of crambe
annually and other novel oilseeds such as high-oleic sunflower and
safflower, flax, and possibly specialty canolas.
 
U.S. Industrial Rapeseed Production Declines
 
Like crambe oil, industrial rapeseed oil contains high amounts of
erucic acid.  To meet industry requirements, industrial rapeseed
oil must contain at least 45 percent erucic acid.  In contrast,
canola and other special types of rapeseed, such as high-lauric
canola, have been bred or genetically engineered to contain
different fatty acids in their oils.  Canola oil is used for edible
consumption and, according to Food and Drug Administration
standards, must contain less than 2 percent erucic acid.  Canolais
the name generally applied to rapeseed that has low amounts of
erucic acid in its oil and low levels of glucosinolates in its
meal.
 
Cross pollination can occur if industrial rapeseed and canola are
planted in adjacent fields, resulting in an oil with an
intermediate erucic acid content that would be useless for either
application.  Visually, the seeds of the two types are identical;
only testing can differentiate their characteristics.  In the
Pacific Northwest, where both types are grown, a couple of States
have designated production regions to address the cross-pollination
issue.  Idaho established six production areas in 1986 and
Washington State finalized rules and regulations for 12 production
districts in 1988.
 
Industrial rapeseed has been grown in the Pacific Northwest for
over 40 years.  It was also produced in the South during the late
1980's and early 1990's.  Harvested acreage of industrial rapeseed
has declined from 19,400 acres in 1987/88 to 2,400 in 1995/96
(table 5).   During the same period, domestic productionhas
dropped from 22 million pounds to an estimated 3 million pounds.
 
In the Pacific Northwest, industrial rapeseed is produced for
birdseed and oil.  Historically, birdseed has accounted for at
least 50 percent of production, according to Andrew Thostenson, a
former merchandiser with Spectrum Crop Development, a canola and
rapeseed merchandizing firm in Clarkston, Washington.  After
becoming familiar with canola, birdseed manufacturers now buy
either industrial rapeseed or canola, whichever is cheaper.
 
The only known U.S. crusher of industrial rapeseed is Koch
Agricultural Services of Great Falls, Montana.  According to Steve
Chambers, a marketing manager for the company, Koch contracts for
seed and buys it on the open market.  In addition, unprocessedseed
is exported to Japan, where it is crushed and the oil used as
lubricants in the steel manufacturing industry and the meal used as
fertilizer.
 
The Market for Erucic-Acid Oils Remains Tight
 
Charles Leonard, an oleochemical industry expert, estimates world
consumption of high-erucic-acid oils for industrial applications at
about 125 million pounds per year, with the United States
accounting for about 35 million pounds.  This is up from a 1991
industry estimate of 25 to 30 million pounds for the U.S. share.
Other major industrial users are Europe and Japan.
 
Two 1996 articles in the Chemical Marketing Reporter, quoting
industry sources, estimate the U.S. supply of industrial rapeseed
oil at about 5 million pounds of domestic production and around 25
to 30 million pounds shipped in from Canada and Europe (1, 2).
This is similar to USDA estimates of industrial-rapeseed-oil
production and imports for the late 1980's and early 1990's (table
19).  However, according to USDA figures, U.S. rapeseed oil
production has declined from 5.7 million pounds in 1991/92 to an
estimated 836,000 pounds in 1995/96, while imports have averaged
9.8 million pounds during the same period.
 
Although no data are available from industry sources or USDA on
U.S. crambe-oil production, crambe oil reportedly gained acceptance
in the U.S. high-erucic-acid market in the early 1990's when Humko
Chemical, a division of Witco Corporation, began relying on it as a
domestic source of erucic acid.  Humko currently uses both
industrial rapeseed and crambe oils (4), but supplies of crambe oil
are reported as limited.
 
World supplies of high-erucic acid oils have tightened in the last
few years as older rapeseed varieties have been replaced with
canola types.  For example, Poland and the former East Germany
historically have been heavy producers of industrial rapeseed oil
because much was used for edible purposes.  However, since the
breakup of the Eastern Bloc, industrial rapeseed has yielded to
canola because industrial rapeseed oil cannot be sold to European
Union countries for edible purposes.  Erucic acid-containing
rapeseed varieties are now considered specialty crops in Canada and
Europe.  China, Russia, and India, however, still use high-erucic
acid rapeseed oil for human consumption.
 
World supplies of industrial rapeseed oil are expected to remain
tight.  Although Canadian production is fairly stable, European
production is below expectations again this year.  According toa
spokesman for Croda Universal, Inc., which is headquartered in the
United Kingdom, the 1996 European harvest of industrial rapeseed
will be 1,000 hectares short of what is needed (1).  The U.S.
market for high-erucic-acid oils will likely be served mostly by
domestic production and imports from Canada.  Calgene Chemical,a
subsidiary of Calgene, Inc., of Davis, California, has an agreement
with CanAmera Foods of Oakville, Ontario (North America's largest
rapeseed processor) to distribute some of CanAmera's industrial
rapeseed oil in the United States.
 
Prices for erucic-acid oils have increased as supplies have
tightened (1, 2).  Higher world prices have been felt in erucic-acidproduct
markets.  Three producers of erucamide--Witco
Corporation, Croda Universal, Inc., and Akzo Nobel Chemicals, Inc.--raisedthe
prices of their erucamide products by 20 cents per
pound in April and May 1995 due in part to high prices of high-erucic-acid
oils.  Because of current high prices and the prospects
of continued tight supplies, the companies increased their
erucamide prices again in May and June 1996, Akzo by 8 cents per
pound and Witco and Croda by 25 cents per pound.  While U.S.-based
Witco uses both crambe and industrial rapeseed oils, the other two
manufacturers use only industrial rapeseed oil.
 
High-Erucic-Acid Oils Have Traditional and Emerging Uses
 
The primary market for high-erucic-acid oils is erucamide.
Plastic-film manufacturers have used erucamide for decades in bread
wrappers and garbage bags.  It lubricates the extruding machine
during manufacture of thin plastic films.  After processing, the
erucamide migrates to the surface of the films and keeps them from
clinging together.  Two cheaper amides, stearamide and oleamide,
cannot individually provide the critical properties that erucamide
does.  Therefore, erucamide is preferred, even at about twicethe
price.
 
Charles Leonard estimates that 48 million pounds of high-erucic-acidoils are
used worldwide in making about 15 million pounds of
erucamide per year (table 6).  Erucamide is sold by a half dozen
oleochemical producers in the United States, Europe, and Asia.
Witco is the largest worldwide producer and marketer, supplying
product from its Memphis, Tennessee, production facility.  Leonard
estimates that erucamide market growth roughly parallels the growth
of polyolefin film sales, which in recent years has ranged from 4
to 6 percent per year.
 
Cationic surfactants that function as active ingredients in
personal-care products, laundry softeners, and other household
products appear to be an up-and-coming use for high-erucic-acid
oils.  Some companies in Japan and the United States are using
cationic surfactants derived from 22-carbon fatty acids, such as
those found in rapeseed, crambe, and meadowfoam oils, as the active
ingredient in hair conditioners.  At least two U.S. companiesare
doing research in this area.  An estimated 18 million pounds of
high-erucic-acid oils are used worldwide to manufacture roughly 6
million pounds of cationic surfactants.
 
Because rapeseed and crambe oils have a high degree of lubricity,
they also are used either directly as lubricants or in lubricant
formulations.  They are used as spinning lubricants in the textile,
steel, and shipping industries; as cutting, metal-forming, rolling,
fabricating, and drilling oils; and as marine lubes.  For example,
Calgene Chemical offers a line of erucic-acid esters to the textile
and automotive fluids industries.   International Lubricants,Inc.,
of Seattle, Washington, sells erucic-acid-oil-based automatic
transmission fluid additives, cutting oils, hydraulic oils, and
power steering fluids.  The transmission fluid additives are
currently used by five European automobile manufacturers and U.S.
transmission repair shops, and are newly available in retail auto
parts stores.
 
One of the selling points of the erucic-acid-oil products offered
by International Lubricants is their enhanced biodegradability
compared to their petroleum-based counterparts.  Thus, they are
said to be more environmentally friendly.  Several companies are
reportedly in the market for industrial rapeseed and canola oils
for lubricant applications because of their environmental
attributes, which has caused a recent increase in demand (2).
 
Another use of erucic-acid oils in response to environmental
concerns is in the production of concrete mold-release agents.
Leahy-Wolf Company of Franklin Park, Illinois, has developed and
patented a biodegradable concrete-release agent based on industrial
rapeseed oil, and is marketing it through U.S. distributors.
Construction companies and precasters of concrete structures, such
as sewer pipes, vaults, and bunkers, coat their molds and forms
with release agents to facilitate the release of the hardened
concrete.  Often these compounds, which are traditionally
petroleum-based, leach out of the mold or concrete and end up in
the groundwater.  Construction firms and precasters have had to
modify their operations, however, to meet increasingly strict State
and local regulations that limit the release of petroleum-based
chemicals into the environment.
 
Tung Oil Production Begins Again in the United States
 
Tung oil, a nonedible vegetable oil, is scheduled to be produced
again in the United States beginning in December 1996.  The sole
U.S. producer will be American Tung Oil Corporation (ATO) of
Lumberton, Mississippi.  ATO was created 4 years ago by Blake
Hanson of Industrial Oil Products (IOP) of Woodbury, New York, to
revive domestic production of tung oil, which has not occurred
since March 1973.  IOP is the largest supplier of tung oil inthe
Western Hemisphere.
 
Tung oil, produced from the fruit (nut) of the tung tree, contains
mainly eleostearic fatty acid, with smaller amounts of oleic,
linoleic, and palmitic fatty acids.  Tung oil's physical and
chemical properties make it useful as a protective coating,
solvent, and/or drying agent in various paints, varnishes,
lacquers, resins, fiberboard, concrete sealers, electronic circuit
boards, and printing inks.  Its superior drying properties allowit
to be sold at a price premium compared to other vegetable drying
oils such as linseed oil (tables 37 and 40).  Various new
applications for tung oil and its byproducts also are being
developed for use in products such as cosmetics, insecticides, and
lubricants.
 
Tung oil is produced commercially mostly in subtropical regions,
primarily in China and South America.  Tung oil production issmall
compared with that of many other vegetable oils.  Estimated world
production averages 50,000 metric tons a year.  Major producers
include China (about 42,000 metric tons), Paraguay (about 4,000
metric tons), Argentina (about 3,000 metric tons), and Brazil
(about 1,000 tons) (3).
 
The world supply of tung oil can be very volatile, as tung orchards
can be greatly affected by adverse weather conditions and by age of
the orchards.  Though hearty, fast growing, and naturally resistant
to disease and insects (tung trees require no fungicides or
pesticides), tung trees are very sensitive to temperature levels
during fruit-set.  There is also some concern that aging orchards
in South America may be losing productivity.  In addition, Brazil
produces primarily for domestic consumption and China uses as much
as 25,000 metric tons of oil per year (3).  A poor crop in anyof
the major producing countries often leads to volatile tung oil
prices.
 
The current U.S. tung oil market is supplied largely by Argentina
and Paraguay.  During 1991-95, 50 percent of U.S. imports of tung
oil came from Argentina, another 37 percent from Paraguay, and 11
percent from China (table 7).  Small South American crops in
1991/92 and 1992/93 led to extremely high tung oil prices in the
United States from mid-1992 through most of 1993 (table 40). Good
crops in South America and China in 1993/94 helped prices decline
in 1994.  Decreased demand from Japan and Europe in 1994 and 1995
helped keep U.S. tung oil prices down, despite smaller crops the
last two seasons.
 
However, U.S. tung oil prices have increased slightly this summer,
and may rise even further, as South America and China are
anticipating relatively small crops again this season.  In
addition, a lower supply of Chinese tung oil and renewed Japanese
demand due to a strengthening economy are likely to put more upward
pressure on prices for South American tung oil.  How far prices
will rise remains to be seen, but the market's continued volatility
will likely encourage some companies to use other natural and
synthetic alternatives in their product formulations.
 
Tung Production Is Centered in Mississippi
 
ATO is confident its revitalization of domestic production will
help stabilize tung oil supply and prices.  The company is
currently planting its initial goal of 5,000 acres of tung trees,
500 acres of which will be company owned, and the rest contracted
with individual growers.  Current production of tung nuts is from
several hundred acres of 3- to 4-year-old trees in southern
Mississippi, although ATO is open to contracting with growers in
other parts of the U.S. production region (a 100-mile wide area
along the Gulf Coast extending from north central Florida into
eastern Texas).  The oil will be extracted at ATO's Tung Ridge
Ranch mill near Poplarville, Mississippi, and will be distributed
by IOP.
 
Blake Hanson, president of IOP, projects U.S. production for 1996
to be about 50,000 pounds of oil, which will have little impact on
world markets.  However, Mr. Hanson notes that as trees reach
production maturity in about 4 to 5 years (when they will be 7 to 8
years old), the United States will be a significant producer of
tung oil.  He projects that in 5 years, U.S. production will be
about 2 million pounds of oil.  In 8 years, if all 5,000 acresare
planted and producing, production could be over 4 million pounds.
These trees could sustain commercial production for about 25 years,
unless destroyed by natural disaster.
 
Prior U.S. production of tung oil occurred between the late 1930's
and 1972, peaking in 1958 at 44.8 million pounds.  Indicativeof
the tung oil industry, production during this period varied greatly
from year to year, due primarily to the crop's natural bearing
cycle and late frosts during budding.  Weather will still be an
important factor in this current production effort.  However,
higher fruit yields than were realized in previous decades are
anticipated due to the use of heavy bearing varieties and improved
farming methods.  Harvesting costs will be reduced by mechanical
harvesting, which is not used internationally and was not employed
in the United States until the late 1960's.  In addition, ATOplans
to store surplus tung oil during years of over-production in an
attempt to stabilize market prices during years of under-production. Under
proper conditions, tung oil can be stored for
several years.
 
Tung Oil Market Has Changed
 
The U.S. market for tung oil has changed dramatically during the
past half-century.  U.S. industrial use of tung oil peaked in1947
at 130.4 million pounds, with over 75 percent used by the paint and
varnish industry, and about 10 percent used by the resins industry.
However, in the late 1940's, as the protective coatings industries
shifted to lower cost substitutes, including synthetics and other
oils, domestic consumption of tung oil declined dramatically. By
1961, domestic use had fallen to around 35.9 million pounds, with
73 percent consumed by the paint and varnish industry and 15
percent by the resins industry.
 
A general shift from the use of vegetable oil-based paints, which
often require petrochemical solvents to reduce paint viscosity, in
favor of water-based latex paints since the 1960's, contributed to
a further decline in the use of tung oil.  In 1994, domestic use
was estimated at 9.3 million pounds, with 71 percent consumed by
the resins and plastics industry, and 13 percent by the paint and
varnish industry (table 30).  The 1995 estimate for domestic useof
tung oil is 20.2 million pounds, but this, according to industry
sources, is likely overstated.  One industry source estimates
current tung oil use at around 10 million pounds, broken down as
follows:  40 percent in paints, varnishes, and wood coatings;40
percent in inks and overprint varnishes for graphic arts; 14
percent in fiberboard and other building materials; and 6 percent
in miscellaneous items like caulk, concrete sealers, and brakepads
(3).
 
Current and future uses of tung oil depend on several factors,
including various regulations in the Clean Air Act Amendments of
1990 (CAAA) that require coatings manufacturers to reduce volatile
organic compounds (VOC's) in their formulations.  Petrochemicals
such as toluene, xylene, methyl ethyl ketone, and methyl isobutyl
ketone must be eliminated entirely.  Chlorinated solvents mustbe
removed from formulations because of their ozone-damaging
potential.  Because of these regulations, many companies are
formulating new products, a number of which use tung oil because of
its good drying ability and inherent solvency.  However, these
regulations have also caused the phaseout of some older tung-oil-containing
products that include petrochemical solvents, which
contain VOC's.  Therefore, the net effects of CAAA regulationsfor
the coatings industries will continue to play a major role in tung
oil consumption.  (For more information on VOC's and solvent
replacements, see the fats and oils section of the June 1994 issue
of this report).
 
In addition to air quality regulations, future uses of tung oil are
likely to depend upon market stabilization, price reduction, and
the development of new uses and new modified-tung oil products.
Lower prices and the success of these new products will be vital to
increasing the demand for tung oil.
 
Glycerine Uses Continue To Expand
 
Glycerine is a byproduct of producing soaps, fatty acids, and fatty
esters from the triglycerides in vegetable oils and animal fats.
Primary sources of glycerine include tallow, palm kernel oil, and
coconut oil.  Dow Chemical is presently the only U.S. manufacturer
producing synthetic glycerine from petrochemicals.
 
Although the terms glycerine, glycerin, and glycerol often are used
interchangeably, subtle differences in their definitions do exist.
Glycerine is the commonly used commercial name in the United States
for products whose principal component is glycerol.  Glycerin
refers to purified commercial products containing 95 percent or
more of glycerol.  Glycerol is the chemical compound
1,2,3-propanetriol.
 
Worldwide production and consumption of glycerine is estimated at
1.5 billion pounds in 1995, up 10 percent from a year earlier.
Europe and the United States account for over half of the
consumption volume (figure 3).  The supply of natural glycerineis
directly related to fatty-acid and fatty-ester production.  More
sources of byproduct glycerine have been identified in recent years
as uses for vegetable oils have increased, including processes for
manufacturing biodiesel, fat substitutes, and polyols.  In Europe,
an estimated 100 million pounds of glycerine is currently produced
in biodiesel production plants.
 
In 1995, the United States had an estimated glycerine production
capacity of 522.5 million pounds.  Roughly 25 percent of thatis
synthetic glycerine.  Procter & Gamble and Dow Chemical arethe two
largest U.S. producers.  In the United States, eight natural
glycerine producers, including Procter & Gamble, currently have15
production plants in operation.  Dow has one synthetic glycerine
plant.
 
Glycerine is used in over 1,500 applications and end products. It
has an extensive list of traditional uses that include drugs,
cosmetics, resins, polymers, explosives, toothpaste, tobacco
processing, paints, paper manufacturing, lubricants, textiles, and
rubber (see the December 1993 issue of this report for more
information).  Pharmaceuticals, toothpaste, and personal-care
products were major uses in 1995 (figure 4), and more applications
are being developed all the time.  For example, because of its
environmentally friendly characteristics, glycerine has potential
in new-generation fabric softeners, deicing fluids, and drilling
fluids.
 
The glycerine market has been tight since 1992.  While world
production has increased, rising demand continues to outpace
supply.  Glycerine competes with sorbitol and propylene glycolin
food, beverage, and tobacco applications, but these and other
glycerine substitutes may not be readily accepted by consumers
because of their taste.  Although tight supply conditions are
expected to continue, declining cellophane and explosive use will
compensate for some of the projected growth in newly identified
applications, such as fabric softeners, sports drinks, and deicing
fluids.
 
Glycerine prices fluctuate widely, depending on supply and demand
factors.  Historically, glycerine prices have ranged from 51 cents
to $1.08 per pound.  Current prices are between $1.05 and $1.08per
pound.  High 1996 prices are due to a worldwide shortage of
glycerine estimated at roughly 100 million pounds.  Demand is
strong because of new applications, an unwillingness on the part of
end-product manufacturers to switch to substitutes, and
environmental pressures to enhance end-product biodegradability.
 
To satisfy the rising demand for glycerine, producers are boosting
capacity by an estimated 50 million pounds through expansion and
debottlenecking of existing facilities.  Henkel Corporation, which
is headquartered in Germany, is investing $60 million to add 10 to
20 percent to its worldwide glycerine capacity.
 
U.S. demand in 1995 is estimated at 420 million pounds.  The market
is expected to grow 3 to 4 percent per year through 2000, higher
than its historical growth rate of 2 to 3 percent per year, due to
a wide variety of newer applications and product lines.  By the
year 2000, demand is projected to reach 500 million pounds.
Glycerine prices are expected to remain high because of continued
increases in demand.
 
Fuel and Environmental Regulations Offer Challenges for Biodiesel
 
One potential source of glycerine in the United States is
biodiesel.  However, despite new market opportunities for
alternative fuels created by CAAA and the Energy Policy Act of 1992
(EPACT), biodiesel commercialization still faces a number of
regulatory and market barriers.
 
One challenge stems from EPACT's alternative-fuel, motor-fleet
regulations that require Federal, State, and alternative fuel
providers to increase their purchases of alternative-fueled
vehicles.  In a March 1996 final rule on the Alternative Fuel
Transportation Program, the U.S. Department of Energy (DOE)
concluded that neat (100 percent) biodiesel meets EPACT's criteria
as an alternative fuel for this program (5).  However, biodieselis
an expensive fuel and to lower its cost, potential users want to
blend it with petroleum diesel.  The most common blend used today
is a mixture of 20-percent biodiesel and 80-percent petroleum
diesel (B20).   However, B20 vehicles have been disqualifiedfrom
the Program based on the March 1996 final rule.  In the absenceof
a special ruling on B20 or some other blend, it is unlikely that an
immediate demand for biodiesel will be created through the
Alternative Fuel Transportation Program.  Biodiesel advocatesare
working with DOE to establish an appropriate blend level that will
qualify as an alternative fuel.
 
Like most fuel producers, manufacturers of biodiesel and biodiesel
blends have to meet CAAA fuel-property definitions and satisfy
health-effect requirements.  Hence, another regulatory hurdlestems
from the U.S. Environmental Protection Agency's (EPA) current rule-making
process of defining a standard diesel fuel.  This definition
will enable fuel manufacturers to determine whether their diesel
fuels are substantially similar (sub-sim) to EPA's definition of
diesel fuel in terms of chemical composition.  When the finalrule
is implemented, most fuel manufacturers, including those of
biodiesel and biodiesel blends, must either be able to prove that
their fuels are sub-sim to the diesel standard or receive a waiver
under CAAA Section 211(f).  If fuel manufacturers are able toshow
that biodiesel has the same emission characteristics and the same
engine degradation properties as EPA's definition of diesel fuel,
they may be able to get a waiver for biodiesel.  EPA expects to
propose definitions for diesel fuel in December 1996, with an
expected final rule in December 1997.
 
Biodiesel producers also have to overcome the potential public-health-effect
data requirements under CAAA Section 211(b) and (c).
These provisions require manufacturers to gather preliminary
research data on their fuels to evaluate the potentially harmful
human health effects of fuel emissions and submit this information
to EPA by May 1997.  Biodiesel analysts are currently conducting
research that will help biodiesel comply with both the sub-sim and
health-effect requirements.  Negative findings from these data
could delay commercialization and require the biodiesel industry to
conduct a new round of expensive health-effect testing to address
EPA concerns.
 
Another regulatory challenge for biodiesel relates to EPA's
requirements on implementing particulate matter (PM) standards for
pre-1994-model-year urban buses in areas with a 1980 population of
more than 750,000.  Finalized in 1993, the Urban Bus Retrofit
Rebuild Program is designed to reduce PM exhaust emissions from
older-model urban buses.  Although the standards were to become
effective when engines are rebuilt or replaced after January 1,
1995, EPA delayed enforcement for 1 year.
 
EPA has developed two compliance options to provide some
flexibility to bus operators in meeting the new PM standards. The
standards in both options are based on what PM reductions can be
achieved by equipment certified by EPA. The first option requires
an operator to install certified PM-reduction equipment on each of
their buses when bus engines are rebuilt or replaced.  (An urban
bus engine generally undergoes two or three rebuilds during its 15-year
lifetime.)  The second option requires that PM levels for the
entire bus fleet be below a yearly average target level at the
beginning of each year.  This target level can be calculated by
urban bus operators through a computer program provided by EPA.
Average target levels will vary by engine age and PM-reduction
requirements for the various engine types within the fleet.
 
To date, five technologies in the form of rebuild kits and/or
catalytic converters have been certified by EPA for the Urban Bus
Retrofit Rebuild Program.  In June 1995, Twin Rivers Technologies,
a Massachusetts-based company, submitted a certification package to
EPA different from the five technologies.  This package aims to
lower PM in some bus engines through the combined use of B20 and a
catalytic converter.  Even with EPA certification, the B20 package
still faces an economic challenge, because under the first
compliance option, the certified rebuild kits and catalytic
converters are cheaper to use than the B20 package.  Biodieselmay
have a better opportunity under the second option, depending on how
the B20 package affects fleet operators' average PM target levels.
 
Additional Research Is Needed
 
Research is needed to help biodiesel comply with government
regulations, including exploring its environmental and health
benefits and economic feasibility.  USDA, DOE, and the National
Biodiesel Board (NBB) have been working together to investigate
these topics.  For example, representatives from these
organizations, along with university and other researchers,
recently attended a biodiesel workshop at Mammoth Hot Springs,
Wyoming, May 21-22, 1996.  DOE,  through its Pacific Northwestand
Alaska Regional Bioenergy Program, and the University of Idaho's
National Center for Advanced Transportation Technology sponsored
the event, entitled Commercialization of Biodiesel:  Environmental
and Health Effects Workshop.  The workshop's purpose was to assess
the health and environmental effects associated with emissions from
compression ignition engines and to identify the benefits to be
gained by using biodiesel.
 
Workshop participants agreed that, when compared to petroleum
diesel, neat biodiesel generally offers the following known
environmental and health benefits:  biodegradability; reductionsin
soot, greenhouse gases, and some emission levels; and a positive
energy balance.  Several other benefits were identified, suchas
reduced toxicity and lower amounts of ozone precursors and
mutagenic and carcinogenic compounds.  However,  additionaldata
are needed to verify these potential benefits and how they change
when blended with petroleum diesel.  Workshop organizers hopeto
use these known and potential environmental and health benefits to
help meet CAAA health-effect data requirements and as an education
campaign to boost biodiesel commercialization.
 
An important opportunity to show biodiesel's net environmental
benefits will be an analysis of biodiesel's life-cycle.  The main
purpose of this joint USDA-DOE study is to compare the
environmental effects of biodiesel versus petroleum diesel.  Life-cycle
analysis accounts for all production activities and raw
materials involved in producing a product.  For example, with
biodiesel, the analysis begins with assessing the environmental
effects of growing soybeans, including the production of seed,
fertilizer, and other inputs used on the farm.  After the inputs
aspect is analyzed, the environmental effects are then examined
through the product's manufacturing, followed by consumption, and
finally the waste stage (recycling or disposal).  A final reportis
expected before the end of the year.  [Crambe and industrial
rapeseed:  Lewrene Glaser, ERS, (202) 219-0091,
lkglaser@econ.ag.gov.  Tung:  Charles Plummer, ERS, (202)219-0717,
cplummer@econ.ag.gov, and Sandra Pyles, ERS.  Glycerine: Irshad
Ahmed, BoozAllen & Hamilton, (703) 917-2060,
71332.3160@compuserve.com.  Biodiesel:  Anton Raneses, ERS,(202)
219-0752, araneses@econ.ag.gov; Jim Duffield, ERS/OENU, (202) 501-6255,
duffield@econ.ag.gov; Leroy Watson, NBB, (202) 331-7373; and
Craig Chase, Technical and Engineering Management, (307) 527-6912,
104723.623@compuserve.com.]
 
1. Chapman, Peter.  "HEAR Oil Supply Crimp Affecting Erucic Users."
Chemical Marketing Reporter.  Schnell Publishing Company, NewYork,
NY, May 6, 1996, p. 10.
 
2.  Dolack, Pete.  "HEAR Oil Prices Higher Due to Supply
Tightness."  Chemical Marketing Reporter.  Schnell Publishing
Company, New York, NY, March 4, 1996, p. 10.
 
3.  Hanson, Blake, President, Industrial Oil Products, Woodbury,
NY.  Personal Communication, July 10, 1996.
 
4.  Santos, William.  "Crambe Oil Makes Moves Into RapeseedOil
Territory."  Chemical Marketing Reporter.  Schnell Publishing
Company, New York, NY, April 1, 1996, p. 10.
 
5.  U.S. Department of Energy.  "Alternative Fuel Transportation
Program."  Federal Register, Vol. 61 No. 51, March 14, 1996, pp.
10,629-30.
 
Natural Fibers
 
Hesperaloe Has Properties That Interest Papermakers
 
The University of Arizona has been working with several companies
in the pulp and paper industry to develop Hesperaloe as a new
source of fibers for papermaking.  Hesperaloe fibers are unusually
long and thin, similar to those of abaca and sisal.  Such nonwood
fibers have important uses in high-value specialty papers.  While
abaca and sisal fibers are imported, Hesperaloe could be produced
in the southwestern United States.
 
Most papermakers in the United States, Canada, and Europe use trees
as their source of fibers.  In the pulping process, the wood is
broken down, either chemically or mechanically, into individual
fiber cells that are then suspended in an aqueous slurry and
reformed into sheets on high-speed papermaking machines.  Evergreen
conifers (softwoods), such as pine, spruce, and Douglas fir,
produce comparatively long fiber cells that form strong paper.
Broad-leaved trees (hardwoods), like poplar and aspen, have
shorter, broader cells that produce a smoother paper with less
strength.  Many papers, such as newsprint, are a mixture of
softwood and hardwood pulps.  Because the stronger softwood pulps
command a higher price than hardwood pulps, papermakers blend these
pulps to optimize paper quality while minimizing their use of
higher cost fibers.
 
Nonwood fibers, such as cereal straws, bamboo, and sugarcane
bagasse, are also used in the pulp and paper industry.  In 1993,
world nonwood pulping capacity was 21 million metric tons, 10.6
percent of world paper pulping capacity (1).  Nonwood fibers arean
important source of papermaking materials in developing countries
that have limited forest resources.  China and India account for
about 80 percent of the world's nonwood pulping capacity.
 
There have been efforts in the United States over the past 30 years
to develop kenaf, an annual fiber crop, as a nonwood fiber for
papermaking, and more recent work in Europe has emphasized fiber
hemp.  Given that almost any plant is suitable for making sometype
of paper, a new crop developed specifically for papermaking must
have significant advantages in both quality and price to justify
the commercialization effort.
 
Hesperaloe a Possibility
 
The University of Arizona has been working with several companies
in the pulp and paper industry to develop two species of Hesperaloe
(H. funifera and H. nocturna, desert plants native to northern
Mexico) as a new source of fibers for papermaking.  This 10-year
project is about to move from the exploratory research and
development stage toward full-scale commercialization. 1/
 
1/ Some of the research was funded by USDA's Alternative
Agricultural Research and Commercialization Corporation under
Agreement 93AARC20030 and USDA's Cooperative State Research,
Extension, and Education Service under Cooperative Agreement 94-COOP-1-0036.
 
The greatest market opportunity for Hesperaloe fibers may be as a
blend for strengthening various grades of paper (2), such as
recycled paper.  Fiber cells lose considerable strength in the
deinking and repulping processes.  Some amount of virgin fiber,
usually softwood, must be added to recycled fibers to provide
strength.  Using a nonwood fiber, such as Hesperaloe, in recycled
papers could be an attractive feature to consumers.
 
The fiber cells of these Hesperaloe species are unusually long and
thin (table 8).  They range between 3 and 4 millimeters in length,
comparable to the softwood fibers.  However, they are much
narrower, only 14 to 17 microns in width.  The ratio of lengthto
width, called the aspect ratio, is a good indicator of paper
strength.  This ratio for Hesperaloe is very high, about 240. In
other words, Hesperaloe fibers combine the length of softwoods with
the narrowness of straw fibers, an unusual property found only in
abaca, sisal, and a few other specialty fibers.
 
Pulps with special properties, such as a high aspect ratio, command
a relatively high price.  Some specialty nonwood pulps cost twoto
four times that of softwood pulps (table 9).  Abaca and sisal
pulps, in particular, may cost $2,500 to $3,000 per metric ton.
Both abaca and sisal are tropical crops that are harvested by hand
and processed in small batch facilities, which account for the high
cost of their fibers.  Sisal production and processing, however,
may change in the future if production is geared toward paper
applications instead of twine and cordage.
 
Because of their high cost, use of abaca and sisal pulps is
restricted to certain small specialty markets, such as tea bags,
certain filters, and sausage skins (2), with stringent requirements
for high strength and fine texture (1).  According to Census Bureau
data, imports of raw or processed abaca fiber averaged 990 metric
tons per year during 1989-94, while imports of raw or processed
sisal fiber averaged 500 kilograms during the same period.  Some
imports of abaca and sisal cordage may also be used by the pulp and
paper industry.  Imports of abaca and sisal twine and cordage
averaged 6,700 and 78,800 metric tons, respectively, during 1989-94.
 
The James River Corporation has investigated using Hesperaloe
fibers in several types of paper.  Its patent on the use of
Hesperaloe in tissue and towel papers (3) provides some information
on the performance of these fibers.  With these types of sanitary
papers, it is difficult to simultaneously improve both softness and
strength.  However, using Hesperaloe fibers in the blend enhances
both strength and softness, while increasing bulk and absorbency.
An unpublished study, conducted by the Herty Foundation of
Savannah, Georgia, for the University of Arizona, compared papers
made from Hesperaloe (unbleached hand sheets) with papers made from
softwood kraft, abaca, and sisal.  According to this study, the
Hesperaloe papers had superior breaking length and burst index over
a range of refining intensities.  Thus, papers made from Hesperaloe
fibers are as good as those made from high-cost, specialty pulps.
 
Hesperaloe Production Is Under Investigation
 
The compact growth habits of Hesperaloe funifera and H. nocturna
suggest that they could be grown at a high stand density. These
perennial plants are very water-efficient, and their leaves are
spineless and thornless, which facilitates handling.  All these
traits suggest that Hesperaloe species might do well under
irrigated production in the arid southwestern United States.
 
Test plantings of Hesperaloe funifera have been growing at Tucson,
Arizona, for more than 8 years.  Initial growth of transplanted
stands was very slow, but high biomass yields were obtained after 5
years (table 10).  Stands harvested at 5 years regrew to producea
second harvest after another 3 years.  A third harvest may be
possible after another 2 years, since each plant now consists of a
larger base from which more regrowth can occur.  It is unknownhow
many harvests could be made from a single stand before plants
expand to fill the rows and interfere with machine operations.
Larger plantings have been established recently at the Maricopa
Agricultural Center at Maricopa, Arizona.
 
Because seeds of these species are extremely scarce, and because
planted seeds are slow to germinate and emerge, commercial
production of Hesperaloe will have to use transplants for stand
establishment.  Weed control will also be costly in the beginning,
since Hesperaloe is not competitive during its first few years when
growth rates are low.
 
Hesperaloe has a low-irrigation requirement because it possesses
the crassulacean acid metabolism (CAM) pathway for photosynthesis.
CAM plants take up carbon dioxide and transpire water at night
rather than during the day, as is the case with most plants. Since
the rate of transpiration is much lower during the night than
during the day, CAM plants have a very high water-use efficiency.
Grown throughout the year, Hesperaloe only requires about 24 inches
of water annually.  In comparison, wheat, which is grown in the
winter in Arizona, requires about 36 inches of irrigation water and
cotton, a summer crop, requires about 48 inches.
 
The projected crop cycle for Hesperaloe consists of stand
establishment with transplants during year 1, first harvest at year
5, second harvest at year 8, and third harvest at year 10 or 11.
Fresh-weight leaf yields from the three harvests obtained over the
10 or 11 years are projected to total about 250 metric tons per
acre (based on a planting density of 8,700 plants per acre). For
commercial production, flower stalks would be removed at an early
stage of growth.  The effects of this on subsequent leaf growthhas
yet to be investigated.  Because dry fibrous raw material
represents approximately 30 percent of the leaf fresh weight and
pulp yield is 40 percent of the raw material, 1 acre of Hesperaloe
funifera could probably produce sufficient biomass to yield 30
metric tons of pulp.  This is equivalent to a 10- to 12-percent
pulp yield based on the original fresh weight.  Like abaca and
sisal fibers, Hesperaloe fibers can be pulped by the kraft, soda,
or sulfite processes (2, 3).
 
In addition to its possible use in specialty papers, Hesperaloe
could also potentially replace some softwood uses.  For instance,
in some applications, half as much sisal pulp can be used when
substituted for softwood pulp (2), but market prices for sisal and
softwood pulps do not favor such substitution.  However, Hesperaloe
pulp is superior to that of sisal and probably can be produced for
less than twice the average price of softwood pulp.  (Softwoodpulp
prices vary greatly in 3- to 5-year cycles.)  This potential for
substituting Hesperaloe pulp for softwood pulp would greatly expand
its market opportunities beyond that of the premium specialty
papers.  Additional markets would be necessary to justify the
development of a new fiber crop, given the small size of the
specialty papers market.
 
Research on Hesperaloe will continue.  Acreage at the Maricopa
Agricultural Center is being expanded, primarily to increase seed
production.  The private sector is conducting pilot-scale pulping
and papermaking trials.  [Steven McLaughlin, University of Arizona,
Office of Arid Lands Studies, (602) 621-8577, spmcl@ag.arizona.edu]
 
1.  Atchison, Joseph E.  "Nonwood Fiber Could Play MajorRole in
Future U.S. Papermaking Furnishes."  Pulp & Paper, July 1995,pp.
125-31.
 
2.  Hurter, Alfred. M.  "Utilization of Annual Plants and
Agricultural Residues for the Production of Pulp and Paper."
Nonwood Plant Fiber Pulping Progress Report 19, TAPPI Press,
Atlanta, GA, 1991.
 
3.  Reeves, R.H., J.D. Plantikow, L.J. Smith, T.P. Oriaran, A.O.
Awofeso, and G.L. Worry.  "Soft High Strength Tissue Using Long-Low
Coarseness Hesperaloe Fibers."  U.S. Patent No. 5320710, 1994.
 
Animal Products
 
Wool Gaining Favor Outside of Apparel Industry
 
Traditionally, wool has been used in making worsted and woolen
fabric for apparel and carpet, but wool's resiliency, absorbency,
and flexibility have made it a popular input into other industries
as well.
 
Wool fibers are mechanically processed to form yarns, threads,
fabrics, and nonwovens, with various end uses.  Apparel,
upholstery, blankets, carpeting and carpet pads, windings for
baseballs, felts for piano hammers, and fabric for billiard and
gaming tables are just a few of the many products that are made out
of wool.  New uses for wool include mulches, needle-punch pads,and
booms, socks, and mitts to soak up oil and other materials from
spills and leaks (table 11).
 
Wool Goes Through Several Processing Steps
 
The first step in wool processing takes place on the ranch where
the sheep are shorn or clipped.  The wool is sorted by lengthand
fineness for its intended use in either the worsted or woolen
system.  Worsted and woolen are the two major classificationsfor
wool yarns and fabrics.  The primary difference between the two
systems is the quality of the wool fiber they require and, thus,
the value of the wool.  The worsted system uses wool fibers that
are of fine diameter and more than 3 inches in length.  The fibers
are combed and drawn during processing to make the individual
fibers lie parallel and to eliminate shorter fibers, called noils.
Worsted yarn is used to produce higher quality wool products, such
as suits, dresses, gabardines, and crepes.  The woolen systemuses
shorter wool fibers to make fluffy yarns for sweaters, coats, and
carpets.  Beside raw wool (wools that have not been previously
processed), the woolen system uses noils from the worsted system.
 
Properties of wool that affect its value include fineness, fiber
length, strength, color, the number of intermingled black fibers,
and the presence of vegetable and foreign matter mixed in it.
Fleece wool, which comes from the main body of the sheep, is
normally separated from the belly and the skirtings.  Fleece wool
is evaluated for its quality and usually sold to processors in the
worsted system.  Belly wool is of good fineness but is shorter,
relatively weak, discolored, and likely to carry vegetable matter.
Belly wool is best suited for the woolen system.   Finally,the
skirtings provide the coarsest wool, which is often stained and is
likely to carry kempy hairs (stiff, unsnippable fibers that will
not take a dye).  Skirtings are best used by the woolen systemor
in nonwoven applications.
 
After the fleece is clipped from the sheep and sorted, the wool is
scoured or washed to remove grease and foreign matter, which can
account for 30 to 70 percent of raw (unscoured) fleece weight.
Wool is then passed through a system of wire rollers that
straighten the fibers and remove any remaining vegetable matter.
This process, called carding, produces a waste material that can be
blended back into the spinning process with other wool to produce
special-effect yarns or it can be sold for use in other markets.
 
Wool is a natural protein fiber, similar to the protein found in
human hair and fingernails.  Properties of protein fibers,
including low flammability, flexibility, and absorbency, make wool
an excellent candidate for industrial applications.  Wool is
normally regarded as a safe flammable material since it burns very
slowly and is self-extinguishing.  Wool can also be given a flame-retardant
finish with little effect on the physical or chemical
properties of the fiber.  Second, wool has excellent flexibility.
The fibers can be bent back on themselves 20,000 times without
breaking, as compared to 3,000 times for cotton and 75 times for
rayon.  Finally, wool can absorb moisture in vapor form and repel
moisture in liquid form (up to 30 percent of its weight) without
the surface feeling wet.
 
Most Wool Is Used for Apparel
 
The 1996 U.S. supply of raw wool is estimated at 175 million
pounds, clean (after scouring), 10 percent below last year (table
12).  Stocks at the beginning of 1996 are estimated to have been40
million pounds.  Estimated 1996 wool production, at 30 million
pounds, is 11 percent less than the previous year.  U.S. raw wool
imports are 85 million pounds, 4 percent below 1995.
 
The apparel industry accounts for the largest share of raw wool,
using more than 64 percent on average during 1990-94 (figure 5).
Although most wool is used in the apparel industry, some of the
lower quality wool is not suitable for this use and can be put into
nontextile or industrial applications.  Nearly 6 percent of raw
wool was used in industrial and