Iowa must invest in biochemical industry

Iowa is fortunate to be ranked second in the nation with its supply of biomass. As a result, we have established ourselves as international leaders in the production of renewable fuels and chemicals.

Because of Iowa's rich agricultural resources, bioscience has grown at an exponential rate in this state. In fact, the state's most recent Battelle study released by the Iowa Partnership for Economic Progress shows the bioscience industry has shown continued growth since 2004 despite recessionary pressures that forced contraction in other important industries for Iowa. The study shows that even during the recent recession that started in 2008, Iowa was adding agbiosciences positions at a rate of 4 percent a year.

The production of renewable biochemicals is perhaps the fastest growing segment of this industry. Biochemical production has three key elements that have major economic implications for our state - the production processes spur innovation; the economic potential spurs entrepreneurship and the technology brings sustainability through renewable products.

A U. S. Department of Agriculture report from the consulting firm Nexant last year provides evidence that our early estimate of the job creation potential was conservative. That report found biotechnology applications for renewable chemical production are already commercially competitive with fossil fuels and are entering the marketplace. More than 3,500 U.S. jobs already have been created in the emerging renewable chemicals sector, with the potential for 20,000 by 2025, according to the Nexant report.

Many of these jobs and economic opportunities are being created in rural and agricultural communities, reversing decades-long trends of population loss and one can see evidence of these types of projects throughout Iowa based on various investments that have been made. In Iowa's Creative Corridor, there are several examples of recent biotech investment: KemPharm in Coralville recently closed an IPO for $60 million, Lesaffre has announced a $55 million pilot plant production and production capability investment, Diamond V has a $30 million investment in plant production and DuPont has made a $20 million investment in plant production - all in Cedar Rapids. In addition, the University of Iowa has made a significant investment with Iowa's BioVentures Center.

According to the Biotechnology Industry Organization based in Washington, D.C., every job created in the renewable chemicals or biofuel industry generates another five employment opportunities in the rural economy.

Given the economic implications at stake, Iowa must make an investment to incentivize further growth in this industry. The research investment coupled with the infrastructure required to produce quality biochemicals make for a costly proposition. Through a tax incentive designed to spur entrepreneurs to further invest in this technology, Iowa can create an increase in the growth of this industry that will lead at the national level. Legislation introduced this past session provided for a tax credit on the production of biochemcals in Iowa that would be extended to manufacturers for up to five years.

According to BIO and Battelle, the bioscience industry in Iowa employs over 23,000. These are jobs that average over $64,000 a year. The Iowa General Assembly's passage of this legislation will support the continued growth of biosciences in this state and will most certainly help increase the number of high-paying jobs in this sector. Let's get back to this legislation next year and make sure we move it forward to benefit both rural and urban communities in our state.

In a state where we place so much emphasis on agriculture and STEM education, this represents a winning economic development scenario for Iowa. And perhaps more importantly, it contributes to improving our position on the 2014 Forbes list as the 12th best state to do business.

' Dee Baird is president & CEO of the Cedar Rapids Metro Economic Alliance. Mark Nolte is president of the Iowa City Area Development Group. Joe Hrdlicka is executive director of the Iowa Biotechnology Association. Comments: joe@iowabio.org