Hot & Dry - Enough is enough! Observations and questions on crops, food supplies & prices, and bio-derived chemicals
July 23, 2012
(Pac Advantage Consulting, LLC)
– The high temperatures and low rainfall plaguing much of the US make keeping up with downward revisions in harvest forecasts challenging. Agricultural commodity prices are jumping, and many experts are saying that even normal rainfall and temperatures from here on out won’t salvage the 2012 harvest in those fields that have been stressed the worst. Farmers are already plowing under many of those failed crops and submitting claims for crop insurance and assistance. Rain this week is spotty, dumping an inch in one place and none 25 miles away.
So what does this have to do with packaging? Well, no informed observers are arguing that we won’t see higher food prices. While some of the projected shortfalls may be made up by imports and drawdown of reserves, prices will be high, as global grain forecasts continue to be scaled back. Talk about volatility - in late May, USDA forecast a record corn harvest; barely 6-7 weeks later with moderate to extreme drought covering over half the Midwest, corn futures prices have gone up by 40%! And increased grain prices will affect every food product in which they are used, including livestock.
Consumer purchase patterns change as prices rise, with those least able to absorb the increased costs making the most changes. With both domestic and global factors weighing on economic recovery, a lot more people are in that category and there seems to be no clear path for a rapid resolution on the horizon. Watch for changes in brand and product mix purchases when the higher commodity prices translate into higher food prices on the shelf.
Higher prices also translate into decreased global food security, particularly in sub-Saharan Africa, which relies heavily on imports. Rising agricultural commodity prices in 2007-2008 resulted in violent protests as governments were unable to shield their populations from large price increases in basic foods. Will we see a repeat or worse in 6 months, or sooner?
Trying to dive a level deeper, corn for livestock feed and corn for ethanol production (federal laws mandate increased bioethanol production for transportation fuel) are interchangeable, but the strains planted for these purposes are not suitable for human consumption. Will the reduced harvests end up concentrated in one or the other type of corn? I haven’t seen any data at that level of granularity yet.
Coming back around to the packaging itself, the continuing search for improvements in package sustainability is evidenced in many ways, with packaging material efficiency by far the largest historical contributor through lightweighting and reduction in product losses due to package failure. In likely second place is the significant reduction in hazardous materials in material formulations and in processing steps.
In another vein, interest, activity and investment in bio-derived polymers and feedstocks is moving ahead around the world. Strictly speaking, biopolymers are polymers produced by living beings, including the pair of polynucleotides that form the double helix of DNA. For the purposes of this discussion, I use “biopolymer” and “bio-derived polymers and feedstocks” interchangeably to refer to polymeric materials of commercial utility that have been produced in part or whole from biomass.
Many experiments are underway to develop these renewable alternatives to oil and natural gas as feedstocks and plastics for packaging and other end uses. These experiments are at various stages of development and commercialization, with public and privately sponsored research institutions expanding programs at an astounding rate. Technical, economic, full sustainability impact and other questions are being examined and debated in many forums.
The most common biopolymer is naturally occurring cellulose, which comprises about 1/3 of all plant matter. Regenerated cellulose from trees, cotton and other sources was developed in the early 1900’s became the first commercial, transparent packaging film, named Cellophane (now a registered tradename owned in the UK and many other countries by Innovia Film Group, who continue to product these films).
Moisture vapor barrier and heat sealable coatings brought this versatile film into heavy use until the economical high volume production of synthetic polymers came on the scene in the 1960’s . The renewable biomass for cellophane ranged from annually planted and harvested cotton to continually planted and harvested trees, whose growing cycles can range to upwards of 30 years.
Today, a variety of the biomass feedstock for biopolymers is used globally, ranging from sugar cane beets, potatoes, wheat, switch grass, and principally in the US, corn with growing interest in soybeans. Many other sources are being investigated as well. For these crops, harvested annually in a concentrated time period, annual yields affect the price and availability of the biomass used as the base materials for conversion into biopolymers.
In the case of trees, with longer growing cycles and continually replanting, there is less volatility in annual harvests and hence more stability in price and availability; this advantage is somewhat offset by the higher difficulty in separating useful components of wood for use in biopolymers.
Obviously, several dynamics are at play, and the prospects for a poor global harvest got me thinking about options, inter-relationships and strategies. Recognizing that there are no be-all/end-all solutions, here’s some fodder for consideration:
- Will the boom in shale gas production and associated planned investments in polymer capacity from this cheap feedstock make it harder for bio-derived alternates to compete? If so, what polymer types are more likely to be resistant to substitution? How might this hold back demand and supply for specific biopolymers?
- Huge forward integration investment in petrochemical and/or biomass rich countries underscores the global nature of the polymer arena. How does a user effectively sort through all the options to find the best balance of use performance, economics and environmental performance?
- Since in any reasonable timeframe biopolymers will not be produced in sufficient quantity or with needed cost/performance balance to displace all traditionally sourced polymers in all applications, and increased recycling will not eliminate the need for virgin plastic, how do we ensure that our use of virgin petrochemical-based polymers is skewed to those produced using the most efficient technologies?
- Over the long term, are we better off concentrating on bio-feedstocks tied to plants harvested annually with the inherent price/supply volatility associated with traditional agriculture markets but with year to year planting flexibility, or feedstocks derived from multi-year growing cycles where 1 or 2 bad growing years are averaged over many more good years, reducing volatility, and where at any given moment more carbon may be sequestered in the growing plants?
- What priority should be placed on migrating from polymer feedstock biomass grown on land suitable for food crops to biomass grown on marginal land? This question is part of the larger one of how we will respond to the challenges of global food security?
- Can we develop biomass sources that have minimal irrigation needs to conserve that increasingly precious resource, fresh water (both above and below the ground)? Minimal fertilizer, herbicide, pesticide needs?
- Add your own questions and engage in thought and conversation.
At a time where complex issues are reduced to simplistic sound bites, we must find ways to broadly and meaningfully engage in informed and objective discussions around the many existing and potential options. Not all will succeed long term, nor should they if people are trying sufficiently bold approaches; most importantly, we need an open market for ideas if we have any chance of creating solutions for the challenges we face.
In the meantime, stay cool and keep a sharp eye out for rain clouds!