BioMatNet Item: QLK5-2000-30141 - Assessment of the Commercial Impact of Shared Cost Research in the Area of Non-Food Products supported under the AIR (1991-1994) Programme

[BioMatNet Database - FP5 Quality of Life Programme]

QLK5-2000-30141
Assessment of the Commercial Impact of Shared Cost Research in the Area of Non-Food Products supported under the AIR (1991-1994) Programme

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Summary Information

Contract No:	QLK5-2000-30141
Source:	Final Report - January 2003 - Preface Final Report - January 2003 - Abstract

Assessment of the Commercial Success of the AIR Programme (1990 -1996)
in the area of Biomaterials & Green Chemicals (Non Food):
Relevance to the Sixth RTD Programme (FP6)

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Final Report - January 2003 - Preface

This report represents a snapshot in time within the series of European Union Framework Programmes that have, since the early 1980s, sought to meet the needs of the evolving Community with respect to non-food use of crops. Based on transnational co-operation, and benefiting from ever increasing resources, these programmes have tackled important Community issues covering energy, agriculture, environment and quality of life, promoting investment in technology with the aim of increasing the competitiveness of Europe within an expanding global market.

Although the Non-Food projects reviewed here received only a small fraction of the available budget from the Third Framework programme,the results impinge upon almost all of these areas. However, the ultimate commercial impact relating to biomaterials and green chemicals was less than might have been expected. The main aim of increasing agricultural outlets was not achieved. Reasons for this varied. The favourable price and availability of established raw materials remains over-riding to industry, while some projects were affected by company mergers, acquisitions and disposals. In addition, increasing public concern about GM crops restricted imediate development in several areas.

It is also clear that the underlying divergence of views between the academic `publish or perish' and the commercial `patent and profit' persists. This is not helped by the fact that, under the present system, patent costs can be prohibitively high, and there is an urgent need for revision of the system leading to a lower cost Europe-wide system of intellectual property protection. At the same time it is clear that the length of projects and possible disbanding of groups once funding ends is a disincentive for setting up new SMEs.

Such issues have prompted a radically re-thought structure for the Sixth Framework Programme, which aims to link recognised centres of excellence, through collaborative networks, fostering links between public and private sector activities, as well as between the Commission and Member States. It is hoped that by helping to harmonise national research programmes and avoiding replication, results and resources can be targeted more effectively. To avoid such replication there is a need for tools to track existing research results, as well as for more extensive post priori programme review, such as is presented here.

Almost uniquely, the Commission has supported a database covering all `non-food ' RTD activities funded by the EC since the late 1980s (available through this website - www.biomatnet.org), as well as reports such as this. In particular, the Biomatnet website has proved to be an invaluable tool and now receives 10,000 visits each week. It has also demonstrated the clear need for increased co-ordination and collaboration to bring novel products and processes to market. It is hoped that this report will encourage further support of this area through Networks of Excellence and targeted research projects within the Sixth Framework programme.

Final Report - January 2003 - Abstract

AIR (Agriculture and Agro-Industry including Fisheries, 1991-1994) as part of the third RTD Framework Programme of the European Union, was the first activity to bring together management by the Research Directorate (DG12)with that of Agriculture (DG6) and Fisheries (DG 14).
The non-food activities that followed on from the previous ECLAIR, BIOMASS and JOULE Programmes, covered around 130 projects (including shared cost research,concerted actions and demonstration) within four sectors: Biomass for energy, Green Chemicals and Polymers, Forestry and Forest Products, Inputs for Non-food Crops and Non-Food Demonstration.
This report covers around 40 shared cost research projects that mainly fell within the sections covering Green Chemicals and Polymers and Inputs for Non-Food crops.
In spite of the Non-Food and Green Chemical designation of these activities, almost half included food-related objectives and/or aimed to produce food or animal feed. Some projects focused on ingredients, including flavours,fragrances and pigments as well as enzymes for food processing, that were non-nutritional. Other projects looked at inputs to crops systems (biocontrol agents, botancial pesticides or genetic modification) that would be of equal value for cultivation of either food or non-food crops.
The projects that covered non-food applications in the strictest sense dealt with:plant cell wall degrading enzymes (2 projects); natural dyes for fabrics; industrial use of starch (2 projects); new methods of paper pulping including enzymes (3 projects); new fibre- based products;production and extraction of novel vegetable oils (3 projects); solvents and intermediates for polymer production (3 projects); oleochemicals (4 projects) and pharmaceutical intermediates. Two projects included genetic manipulation of higher plant lipids as the major objective.
Overall, the potential for commercial application of the results was reduced from that expected by unexpected developments within the agro-industrial, seed and food sectors. The launch of the AIR Programme coincided with the first open field trials of a genetically modified (GM)crop in Europe. At this time such techniques were expected to form the basis of the next agricultural revolution. Hence, genetic manipulation played an important part in many of the projects. However, as is now widely known, the 1990s saw mounting opposition to GM plants and products derived from them. Activists, environmental bodies, the media, the general public, food shops, politicians and, in some cases, governments of Member States, led variously to destruction of trials, removal of products from sale, cancellation of trials, revised EU-legislation on labelling and a general loss of confidence in the concept.
At the same time, global restructuring in the agro-chemical,plant seed, chemical and food processing industries led to changing priorities. In part this was a response to the growth and subsequent decline of interest in GM plants within the agricultural seed and chemical business, and in part to a more general rationalisation within companies that had interests in many or all of these sectors. Sales and acquisitions led to greater specialisation, with the new groupings focusing on pharmaceuticals, fine chemicals, food ingredients or seeds, resulting in changing commercial priorities and a loss of interest in results of the AIR projects.
Restructuring and/or changes in funding mechanisms were also seen within a number of research institutes, including some in the UK, Netherlands and France. This led to closures and/or the emergence of private companies, with some loss of staff (including those associated with AIR projects) during reorganisation.
Nevertheless, at least four projects led (directly, or indirectly following further funding under the subsequent FAIR programme) to new commercial activities. Three of these were food related (feed enzymes, fish food, sauces) and one concerned fatty esters as alternatives to solvent-based metal cleaners.
Three projects were funded as demonstration projects under FAIR. These covered the production of vanillin or lactic acid by fermentation and the production of sugar-esters using enzymes. By the end of the FAIR project all required further development before they could be exploited commercially.
Eight projects supported by the AIR programme, were `extended ' through funding under the FAIR programme. Another five AIR projects led to further funding under FAIR that was more loosely related, but used similar techniques, personnel or facilities. Two projects resulted in Concerted Actions under FAIR, aimed at obtaining a consensus of how the AIR results could be exploited.
Five projects directly concerned GM crops. Two resulted in field trials within the EU and two resulted in field trials outside the EU. In general, these trials were positive. However, future commercial exploitation within the EU is dependent on changes in attitude.
Very few projects failed to produce any results of scientific or technical value. Probably the least successful project was that looking to increase the extractability of oil from seeds of novel crops. Another technically sound project looking at botanical pesticides indicated to the commercial partner that the traditional route of production was the soundest. Otherwise, most organisations or individuals that did not receive funding from FAIR continued to work in the same or related areas with funding from national or private sources.
A number of projects produced potentially useful results that were not taken up by the commercial partners. The reasons for this varied. In two projects involving plant cell wall degrading enzymes the interests of the commercial partners changed. For two projects involving flavours, the commercial partner sold the relevant subsidiary. Results from a project covering catalytic hydrogenation of vegetable oils declined in interest due to a move in the marketplace toward soft spreads, while the production of viral pesticides was considered as a niche market,too small for the international company involved.
A number of non-food alternatives still cannot compete commercially on price, quality, appearance and/or performance with petroleum-based products. These include solvents, packaging, paper additives, thermoplastic starches and biopolymers. Scale-up of fermentation-based products was also found to be problematic. These limitations did not always become apparent during funding by AIR, but emerged as further work was carried out.
When conceived, the non-food activities in this area were seen as a means of encouraging industrial use of agricultural raw materials. As a result of the factors discussed above the impact on European agriculture has to date been negligible and may well remain so. In part this also reflects the number and type of project funded, which tended to gravitate towards the established food markets and higher-value, lower-volume niche products.
Although the direct impact of the AIR programme was modest,this is not unexpected since the actual funding of `green chemical' projects was much lower than that for the previous ECLAIR programme. The level of industrial participation in these projects was also lower than that for ECLAIR. At the same time, the AIR activity can be seen as a stepping stone between the commercial success of ECLAIR and the much wider activities funded subsequently under FAIR and more recently within the Fifth Framework Programme under Key Action 5 (Quality of Life).
The AIR activities also contributed to the gradual resolution of the many scientific, technical and commercial aspects of the non-food use of agricultural raw materials that have occurred over the last decade. This enables a realistic approach to be taken both with regard to the position of the EU in relation to other areas of the world (falling behind) and to the future possibilities of funding in this area. In this respect, it is clear that there should be a tighter focus of objectives, excluding food and feed as well as high value niche products, with an emphasis on the market needs (quality, price, performance) of the end products. Industrial aspects relating to markets for final products should take priority over policies linked to agricultural production.