121 



cessful, they have to pay it back. After some time, we should be 

 able to be self-sufficient. 



The above represent a few of the 577 applications of the AARC 

 Center has received in just over a year. The ideas are intriguing. 

 The entrepreneurship exists to commercialize a host of products. 

 The missing ingredient is adequate support to help share the risk 

 with private sector to undertake such ventures. We have been able 

 to fund less than 10 percent of the applications. A unique aspect 

 of the AARC program is that private sector partners are required 

 to pay back the Government contribution when sales reach a 

 prespecified level. 



The program linkages, I won't go into that in any detail, except 

 to say it is very important that we link this kind of activity with 

 trade issues, environmental issues, rural development issues, com- 

 modity issues, and research initiatives already underway in USDA. 

 We are underway on doing this. 



In conclusion, while some ideas for new uses have been around 

 since the 1930's, there has been no consistent effort to make them 

 commercially viable. When surpluses were high, a big push oc- 

 curred. When supply was more in line with demand, interest 

 waned. Now, consistent commitment is more evident. 



For example, in 1991, nontraditional uses — such as sweeteners, 

 ethyl alcohol and industrial starch from com equaled com exports. 

 By the year 2000, industrial uses will consume an estimated 2.4 

 billion bushels of com — a 1-billion-bushel increase. 



More than 30,000 acres of industrial rapeseed and crambe are 

 grown annually for lubricants, plastics, and antifoam agents. In 10 

 years, expect to see 300,000 acres of those crops. Biodiesel, degrad- 

 able starch polymers, adhesives, inks, paints, and paper products 

 from ag materials are other potential growth areas. 



New technologies and scientific tools such as genetic engineering, 

 continuous-flow fermentation and chemical catal3rtic processes are 

 opening up entirely new markets and uses for raw agricultursd 

 products. As new markets develop, farmers and rural America will 

 become less dependent on Federal farm program payments and ad- 

 ditional demand for renewable based products will more fully uti- 

 lize our agricultural capacity and infrastructure. 



That concludes my statement. 



[The prepared statement of Mr. O'Connell appears at the conclu- 

 sion of the hearing.] 



Mr. Penny. Thank you, Paul. It has been good working with you 

 and with Bob over these past several years. It has taken steps in 

 the direction of new uses for American crops. 



Bob, you mentioned the need to improve the relationship be- 

 tween FAS and State Departments of Agriculture. In what way do 

 you feel we could achieve that objective? 



Mr. Walker. States principally work through the regional trade 

 associations, of which there are four in the country. These associa- 

 tions in turn do most of the legwork working with FAS in programs 

 such as MPP and so on and trade shows and what have you. 



I think to the extent that the FAS staff could periodically rotate 

 for a month at a time with State Departments of Agriculture work- 

 ing with businesses in the States that are interested in export op- 

 portunities that are exporting to give them some insights into the 



