Converting biotech byproducts to new industry takes patience

It seemed like a no-brainer.

After a team of students from the University of Iowa Tippie College of Business  in 2009 compiled a database of byproducts and co-products from Corridor biotechnology and grain processors, some people may have assumed that new industries and jobs would develop in no time.

While burning oat hulls from Quaker Foods & Snacks in Cedar Rapids for fuel or processing them into oat fiber for food might appear to have happened overnight, it took many years. Moving from a waste byproduct to a value-added commodity is a time consuming and complex process, according to Dennis Jordan, vice president of economic development at Priority One in Cedar Rapids.

"It's a little like finding a needle in a haystack when it comes to finding the right company that want to use a byproduct," Jordan said. "Everything has to match up in terms of their need for a byproduct and setting up manufacturing operations in Cedar Rapids or the Corridor. The stars have to align and right now we're just focused on planting seeds with these companies.

"We hope that they will contact us in the future if they have the need for byproducts or co-products that our local companies can provide."

Jordan said Priority One representatives provide a brochure to prospective industries that lists what byproducts and co-products are available and in what quantities. He said companies need more than a ready supply of raw material to justify building a new production facility.

"The market has to be there,"  Jordan said. "They're not going to built it on speculation that the market will come to them. Companies also like to partner with existing businesses."

Jordan said the economic recession also has put a damper on expansion of manufacturing capacity. He added that the UI study, which was funded by Priority One, was created to yield useful information on byproducts and co-products that had not been previously available .

"We certainly didn't expect anything to happen overnight," he said. "It's really a matter of finding the right fit at the right time."

For more than a century, Quaker Foods & Snacks in Cedar Rapids has produced oat hulls as a byproduct of its manufacturing process. An oat hull is the outer shell of an oat grain that remains after the soft, protein contain core has been removed by milling the grain.

Most of the Quaker oat hulls ended up in the landfill until Iowa Electric Light and Power, a predecessor of Alliant Energy/Interstate Power and Light, began burning excess oat hulls at its Sixth Street Power Station early in the 20th century.

In 2002, Quaker representatives approached the University of Iowa about burning Resifil, a processed oat hull product the plant had produced for 80 years, as a replacement for coal in its central power plant. After a test yielded mixed results, UI decided to try using unprocessed oat hulls.

The feather-weight oat hulls required special materials handling solutions, boiler control system modifications, and new procedures to make them work as a viable long-term source of energy for the university. Between 2003 and 2008, the oat hulls provided an average of 12 percent of the UI's energy consumption while costing only around 3 percent of its energy budget.

"During that period, we saved $5.9 million on the cost of buying fuel for our power plant," said Benjamin Fish, UI utilities plant manager. "We pay about half what it would cost for an equivalent amount of coal.""

While burning oat hulls for fuel creates a market for the byproduct, the real value of the oat hulls was not realized until they were purchased for conversion into oat fiber, a value-added commodity.

SunOpta  Ingredients Group, a division of SunOpta Inc. of Norval, Ontario, in early 2004 acquired an oat fiber processing plant at 1000 Wenig Rd. NE from General Mills Bakeries and Foodservice. The plant processes oat hulls purchased from Quaker into oat fiber for human and animal consumption and also processes soybean shells into soy fiber.

In July 2004, J. Rettenmaier & Sohne of Germany created another local market for oat hulls from Quaker when it announced plans for a $24 million dietary oat fiber processing plant on 41st Avenue Drive SW in Cedar Rapids. The oat fiber is primarily used in food, such as low-carb bread.

The UI's Benjamin Fish said using oat hulls in place of  coal has been a win-win-win for the university, Quaker Foods & Snacks and the environment.

"There's substantially less air pollution with the oat hulls and we have reduced the university's overall carbon footprint," Fish said. "While we're proud of what we've done with the oat hulls, we're already looking for other renewable energy sources. We have a goal of generating 40 percent of our electricity from renewble energy by 2020.

"We have to balance that goal with keeping our total energy usage the same in 2020 as it was in 2010, regardless of how many new buildings are added to the campus."

While the 2009 study of byproducts and co-products from local industries is the most recent data available, a federally-funded project that originated in the late 198os also tried to find uses for biotech and grain processing byproducts.

The Iowa Biotechnology By-Products Consortium, with facilities at the UI and Iowa State University, received in excess of $11 million in grants from the U.S. Department of Agriculture to research alternative uses for biotech and grain processing byproducts.

By 2005, the USDA recommended that the consortium's realign its focus with federal renewable energy goals, conducting advanced research to overcome technological barriers to biomass production.