USDA: Biobased products industry has major impact on economy

By Erin Voegele | October 04, 2016

On Oct. 3, the USDA released a new report showing that the biobased products industry contributed $393 billion and 4.2 million jobs to America’s economy in 2014. From 2013 to 2014, the sector created new 220,000 jobs and grew by $24 billion.

The new report, commissioned by the USDA BioPreferred Program, is the second Economic Impact Analysis of the U.S. Biobased Products Industry released by the USDA. It analyzes revenue and jobs created by the biobased products industry at the national and state level in 2014. The first report, released last year, analyzed 2013 data.

"When USDA released the first-ever Economic Impact Analysis of the U.S. Biobased Products Industry last year, we were thrilled to see what a positive impact this sector was having on our economy, and this updated analysis shows that the sector is not just holding strong, but growing," said Agriculture Secretary Tom Vilsack. "America has an appetite for everyday products-including plastic bottles, textiles, cleanings supplies and more-made from renewable sources, and that demand is fueling millions of jobs, bringing manufacturing back to our rural communities, and reducing our nation's carbon footprint. As this sector is strengthening, so is the economy in rural America, where this year the unemployment rate dropped below six percent for the first time since 2007. USDA is proud to see such strong returns on our investment into the biobased products industry."

The report explains that the BioPreferred Program, which was created by the 2002 Farm Bill and reauthorized and expanded by the 2014 Farm Bill, aims to transform the marketplace for biobased products, spurring economic development, creating jobs in rural America and providing new markets for farm commodities. The program includes a mandatory federal purchasing initiative and a voluntary labeling initiative. According to the USDA, the program currently has an online catalog of more than 15,000 products, with 2,700 of those products certified to carry the USDA Biobased Product label.

The seven major sectors featured in the report include agriculture and forestry, biorefining, biobased chemicals, enzymes, bioplastic bottles and packaging, forest products, and textiles. The energy, livestock, food, feed, and pharmaceutical industries are not included in the USDA’s definition of biobased products and are not included in the report.

According to the report, the biobased industry supported 1.528 million direct jobs in 2014. For each 1,000 direct jobs, an additional 1,760 jobs in other parts of the economy are supported. Overall, the 1.528 million direct jobs supported an additional 2.695 indirect and induced jobs, bringing the total employment contribution of the biobased products industry to 4.223 million jobs.

The direct value added impact of biobased products industry sales was $127 billion in 2014. This direct value generated another $266 billion in indirect and induced sales, bringing the total impact to $393 billion.

California had the most direct jobs supported by the biobased products industry in 2014, at 145,080. North Carolina was second with 90,040, followed by Texas at 88,680. Georgia, Pennsylvania, Wisconsin, Ohio, New York, Alabama, and Florida rounded out the top 10 states. California was also the leader in direct value added, at $9.863 billion, followed by Georgia at $8.238 billion and Texas at $6.828 billion. Pennsylvania, North Carolina, Wisconsin, Alabama, Tennessee, Ohio, and South Carolina were also among the top 10 states for direct value added.

In addition to an industry overview, the report also features case studies of NatureWorks, BASF, Eastman Chemical Co., DuPont, The Coca-Cola Co., Poet, Verdezyne, and Green Biologics. The report also features an overview of state policies, incentives, and statistics, along with a discussion of environmental benefits and a list of recommendations.

The report makes six specific recommendations aimed at driving growth of the biobased products industry. First, the report recommends that Congress continue to advance the industry for national security and domestic industrial strength. Second, it recommends congress enact a short-term production tax credit. Third, the report encourages Congress to direct the U.S. Department of Commerce to work with the USDA to develop NAICS Codes in support of the biobased products industry. Fourth, it recommends congress fund the USDA BioPreferred Program levels similar to its counterparts. Fifth, the report encourages Congress to ensure federal policies strengthen the biobased products industry. Finally, it recommends biobased product industry participants work together on the challenges facing their industry.

A full copy of the report can be downloaded from the USDA BioPreferred website.