The Product Building materials; parts for cars, trucks, trains, planes, tractor trailers and recreational vehicles;

furniture; carpet pads; coolers, water heaters and vending machines; packaging and pallets; mattresses; materials for ships, boats and tloatatipn devices; industrial insulation and sealing shoes and boots-all are end uses for plastics. Three market segments seem to offer the best near-term opportunities for the applications of soyderived materials: urethane foams, urethane binders and agricultural film. Market Size and Value: Urethane Of all the urethane market segments, rigid foams and polyurethane (RJR) binders are priorities. Annual product demand for these represents 1.767 billion pounds, with a conservative demand for soy raw materials of about 300 million pounds, or 7.7 million bushels, of soybeans. Specifically, priority markets for soy-based polyurethane products look like this (in millions of pounds of product): Product Rigid foam Polyurethane binders & fillers Total Market total 1,486 411 1,897 Poss. soy markets 200 100 300

Appliances, with end uses including household appliances, reach-m coolers, recreational coolers, vending machines and water heaters; Packaging, with end uses including foam packaging and pallets; and Tanks and pipes, with end uses including industrial insulation and sealing. Penetration of the four priority market segments is estimated to be (in millions of pounds of products): Segment Market SOY size products Construction 1,521 279 Appliances (insulation) Tanks & pipes (rigidfoam) Packaging (rigid foam) Total 401 127 196 2,245 20 10 20 329

The Construction Market: Rigid Foam Construction, the top-priority market segment, can be divided into several different sub-segments, named as end uses above. All of these end uses use rigid foam as the base material, except for wood products, which are represented by the polyurethane binders. As the name implies, rigid foam is a rigid vs. a flexible product. It normally has two functions: insulation (mainly in the appliance and residential industries) and structural integrity. Rigid foam is made basically from low cost, high functional polyols and isocyanates with many additives to adjust the formulation for specific enduse properties. Soy could compete as an additive (up to 10 percent) to increase humidity- and heatstability. Physical Properties Soy-based additives offer some physical property advantages over competitive materials as additives in the rigid foam market. Soy additives are easily obtainable and provide improved aging stability. Soy products, especially flour, could be an inexpensive reactive filler for rigid urethane foams.

The polyurethane rigid foam construction market is 1.021 billion pounds per year, and is growing at a rate of about 3 percent annually. The national economy-GDP and construction marketsdrives this market. Market Segments There are at least 15 market segments for polyurethane, of which four may be classified as priorities for soy-based products. They include: Construction, the top priority with end uses including residential and non-residential building, bridges, refrigerated buiJdings, walk-in coolers, industrial construction lumber and wood products, laminated insulated board block, block insulation, doors and metal panels;

Relative Economics To have a driving force for market entry, soy materials used must lower the cost of the urethane :>roducts. Rigid foam has been produced using soybean :roducts (mostly epoxidized / hydrolyzed soybean oil) up to 10 percent as an additive. But cost / performance considerations limit its use. If soybean flour could be used, this would lower the cost of the rigid foam formulation and be a driving force for greater use. Soy flour costs 20 to 25 cents per pound. This compares with: Product Isocyanates Polyols Soy concentrate Soy isolate Price 70-80 cents/lb. 60-70 cents/lb. 50-75 cents/ lb. 90 cents-$1.30/lb.

New technology being introduced into the composite board area is expected to enhance the growth of this industry as the timber wood supply declines. Physical Properties Soy flour-based powders and other new low cost soy products will compete technically by meeting most of the current product performance requirements for strength and physical properties, water absorption, thickness swell and linear expansion. Binders can be produced using soybean products and isocyanates at about a 5050 blend. Isocyanatel soy flour binders offer improved properties vs. percentage of binder to filler, use the latest technology (dry powder binders mixed with filler particles), produce a composite board with higher properties and are environmentally stable. Relative Economics Phenol formaldehyde resin binders are the major competition to isocyanate/ soy flour binders. Phenol formaldehyde resin binders are less expensive, but produce an inferior product and are known to release formaldehyde for the life of the product. The industry is very cost-competitive, so the least expensive materials will be used. Soy flour costs 20 to 25 cents per pound. This compares with: Product Price Isocyanate 70-80 cents / lb. used in this area 40-50 cents/lb. Formaldehyde resin It is expected than an oversupply of isocyanate will develop in one or two years, and that some small companies will disappear as large companies cut costs. This will put pressure on pricing. Replacement Potential Polyurethane Binder Material Market (millions of pounds) Materials Isocyanates Polyols Total Rubber 20 48 68 Wood 250 66 310 Foundry 33 33

Replacement Potential Rigid polyurethane foam always has been formulated from the lower cost isocyanates and poly01s because of the competitive nature of the business. In the past, most of the foams were blown with Freon 11, which now has been regulated out of the industry because of its ozonedepleting properties. The industry still is trying to find a universal replacement. Because producers typically use the least expensive materials available, any additive that can lower the cost of a formulation without affecting properties will immediately be accepted. The Construction Market: Polyurethane Binders and Fillers The binder segment is considered part of the polyurethane construction segment. Polyurethane Binders Markets Wood binders Rubber binders Foundry core binders Total 310 million lbs. 68 million lbs. 33 million lbs. 411 million Ibs.

Wood and agricultural products such as wheat, corn and rice fibers are bound together using heat, pressure, high functional isocyanates and sometimes a polyol. The opportunity for soy products lies in the binder segment of the market for composite boards made by this process. Combining soy products with isocyanates can lower the cost of the end product.

Soybean derivatives can and are used as additives to lower the total production cost of wood and agricultural fiber-filled construction products. Anew composite technology patented by John Stofko, Beaverton, Ore. (U.S. Patent 4,944,823), could create an opportunity for more soybean products as additives.

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If soy flour could lower the quantity of more costly isocyanate used in the process, all parties would benefit. Market Size and Value: Agricultural Films Agricultural film use consists mainly of low density polyethylene (LDPE) mulch film for growing row-crop vegetables and fruits. Film mulching promotes early production by raising soil temperatures, conserving moisture and fertilizer, and inhibiting weed growth, fungus infection and insect infestation. Mulching practices have successfully enhanced crop yields globally and caused plastic film use to expand rapidly since the 1950s. U.S. mulch film use is 83 to 250 million pounds per year; total world demand is about 1,300 million. Mulching or fumigating with typical 1.25 mil (0.00125-inch-thick) LDPE film requires about 240 pounds of film per acre. Although current known mulch film use is 1.3 billion pounds, the calculated world market requirement is 2.4 billion pounds, based on reported levels of global mulching. A degradable/ compostable soy protein film product is a priority plastic market segment opportunity. Rising removal and waste disposal costs of non-biodegradable LDPE films has caused a key competitive opportunity for soy protein-based films to develop. Within the eight U.S. agricultural film market segments, three offer the greatest need and growth opportunities for a soy plastic product: Application Mulch film Fumigation film Degradable mulch film Total Million Ibs. 80 15 3 98
. .* . . . .

Film gauge of 1.5 mils or less; high elas&ity; pesticide resistance; moisture resistance; \ ultra-violet (UV) stability; and variable biodegradation at controlled intervals: - mulching-90,120,150 and 180 days - fumigation-5 days

A biodegradable/ compostable soy protein film product would reduce not only disposal costs, but labor costs in terms of field collection of waste film. Potential use as an animal feed supplement also is seen. Relative Economics Making soy-based mulch films economically competitive will be a major challenge. Soy protein raw material costs in the isolate and concentrate forms are high, and commercial LDPE mulch film pricing is relatively low: Product Soy isolate Soy concentrate Soy flour Price 90 cents-$1.20/lb. 50-80 cents / lb. 20-25 cents/lb.

Commercial mulch film Price LDPE smooth, standard film, 1.25-1.5 mils 60-65 cents/lb. Specialty LDPE films 72-75 cents / lb. HDPE ,0.6-0.7 mils 75 cents/ lb. However, removal and disposal of mulch film offers a strong driving force for a biodegradable/compostable product: one source estimated the cost of removal and disposal at up to $125 per acre. Thus, a 20-30 percent premium may be possible if mulch film removal and disposal is not required. This would project a cost of 72 to 85 cents per pound for the soybean mulch film. Replacement Potential The market opportunity potential for a soybased polymer film for mulch and fumigation in the United States is 98 to 250 million pounds. However, the market opportunity outside the United States is far greater: Area Western Europe Africa & Middle East Eastern Europe Asia & Oceania United States, Canada. Mexico Total Million lbs. 120 5 5 900 130-350 1,160-1,380

The mulch film market alone actually might be as large as 250 million pounds per year, according to some industry sources. This would translate into 5.4 million bushels of soybeans if soy flour were used, or 10.6 million if soy concentrate were used at a level of 85 percent of the film formulation. Physical Properties Dr. Jay-lin Jane of Iowa State University has extruded film samples based on soy protein isolate, glycerine and starch. This initial product research has resulted in a material with properties to compete with commercial mulch films. Potential product research projects include polymer modification to achieve:

Development of mulch films in the United States initially can lead to expanded global use (especially in China) plus penetration into other agricultural film and compostable bags applications. Success is dependent on the development and commercial compounding of resin formulations that will provide the performance properties required by the market. The need for a truly biodegradable mulch film is widely recognized among the world horticultural and plasticulture community. Introduction of biodegradable / compostable mulch film will create a significant opportunity to replace existing LDPE-type films. It also will create new market demand in areas where film waste-disposal problems have limited expanded mulch film use.

As soy protein films are modified and further developed, additional product opportunities appear to be: compostable garbage and yard-waste bags, forestry seedling mulch films, and cotton mulch seed films.
The United Soybean Board is a farmer-funded, market-development organization representing the interests of the more than 25QooO soybean farmers in the United States. The organization promotes sales of soybeans domestically and in the export market. It also funds research in new industrial uses, in nutrition and health, in soybean product processing, and in on-farm soybean production. X&