NOTICE: Hard copies of the Australian New Crops Newsletter are available from the publisher, Dr Rob Fletcher. Details of availability are included in the
Advice on Publications Available.The step from research to commercial development of new crops poses special difficulties and for various reasons many promising enterprises fail to become commercial. In 1992 in the USA, The Alternative Agricultural Research and Commercialization Center was established to assist in the commercial development of promising new industrial products. The operations of this Center are briefly described in the following article as they may provide a useful guide to new crop and new product development in other countries.
'New Products, New Uses, New Jobs'
The mission of the AARC Center is to assist the private sector (in the US) in closing the gap between research results and commercialisation of industrial (non-food, non-feed) products from farm and forestry materials.
It carries out this mission by:
The Center is a separate entity within the United States Department of Agriculture. Policy and program direction is provided by a nine-person Board of Directors, eight of whom are non-federal, representing processing, financial, producer and scientific interest.
The Center was originally formed in 1992 and was based in Washington, but plans to decentralise to six regional centers throughout the USA.
Any private individual or firm in the US may apply for assistance through the AARC program. Although most of the Center's clients are small firms, non-profit and larger businesses have also been successful applicants. While Universities and similar institutions may apply, the private partner is generally the leader of the commercialisation activities.
The AARC program provides financial assistance at the pre-commercialisation stage of the project. This is the point in a project when the costs are the greatest and the ability to obtain lending from traditional sources is the most difficult.
At the pre-commercialisation stage, a product is expected to have an identified market. However, additional work may remain before the product enters the marketplace, e.g. prototype testing or manufacturing, commercial runs, regulatory clearance or market analysis.
Financial assistance is in the form of a repayable cooperative agreement and includes a repayment portion that recognises the investment risk taken by the AARC Center. Applicants are expected to bring at least a 1:1 match when seeking funding from the AARC program.
In the initial round of projects supported by AARC financing in 1993, AARC contributions ranged from less than $US100,000 to $US1 million.
Evaluation of project proposals, by three outside reviewers and the AARC staff, considers the adequacy of the business plan, the technical feasibility of the proposal, the project's potential to generate jobs in rural America, as well as environmental and conservation aspects. Following a successful review, the proposal is referred to the AARC Center's Board of Directors for final evaluation. Site visits may occur and oral presentations may be required from applicants.
The AARC Board makes the final decision as to who receives assistance and the extent of the assistance. Proprietary information is protected during the review and evaluation process. In addition, the legislation establishing the AARC program specifically exempts the Center from the provisions of the Freedom of Information Act. Procedures are also in place to prevent conflicts of interest occurring.
The title to any intellectual property developed under a joint agreement with the AARC Center remains with the applicant. While US federal legislation does require so-called 'march-in' rights for the government with regard to any invention made with US federal government funds, the private sector firm would have to be compensated through a licensing/royalty arrangement, if such rights were exercised.
The agreements provide for repayments by successful projects. This payback provision is novel and innovative for the US government. With smaller firms, the AARC Center generally establishes an equity position with the company, with the provision that, at a later date, the Center will sell back the stock.
Another approach used by the Center is to arrange a multiple repayment scheme, with a deferred percentage rate included as recognition for the Center's investment risk. The repayment is typically linked to product sales, so that if sales are initially slow, a firm is not strapped for cash in order to meet its obligation to the Center.
Examples of recent projects that have gained AARC support include the following:
Further information can be obtained from:
USDA AARC CenterAny claims made by authors in the Australian New Crops Newsletter are presented by the Editors in good faith. Readers would be wise to critically examine the circumstances associated with any claims to determine the applicability of such claims to their specific set of circumstances. This material can be reproduced, with the provision that the source and the author (or editors, if applicable) are acknowledged and the use is for information or educational purposes. Contact with the original author is probably wise since the material may require updating or amendment if used in other publications. Material sourced from the Australian New Crops Newsletter cannot be used out of context or for commercial purposes not related to its original purpose in the newsletter
Contact: Dr Rob Fletcher, School of Land and Food, The University of Queensland Gatton College, 4345; Telephone: 07 5460 1311 or 07 5460 1301; Facsimile: 07 5460 1112; International facsimile: 61 7 5460 1112; Email:
r.fletcher@mailbox.uq.edu.au[
New Crops Home Page] [New Crops Program] [Australian New Crops Newsletter] [New Crops Publications] [Order Form] [People] [Crop Profiles] [Other Resources]originally created by:
GK; latest update 6 June 1999 by: RF