By Chang-Ran Kim, Asia auto correspondent
NAGOYA, Japan, March 30 (Reuters) - Toyota Motor Corp , the world's No.2 auto maker, said it expected its production of biodegradable plastics to grow into a four trillion yen ($38 billion) business by 2020 when the company hopes to control two-thirds of the world's supply.
"We are one of the world's two major players in this field along with Cargill Dow (of the United States)," Kozaburo Tsukishima, general manager of Toyota's biotechnology and afforestation division, said in an interview.
"(The biotechnology arm) could really explode as a business, and may have the biggest growth potential out of all of our operations," he said.
At four trillion yen, the business would represent one quarter of what Toyota made in total revenues in the business year to March 2003 and be double the sales at Japan's top minivehicle maker, Suzuki Motor Corp .
Japan's top auto maker set up its biotechnology division in 1998 as part of a 50 billion yen venture fund set aside two years earlier by then-president Hiroshi Okuda, now the company's chairman.
In addition to producing bioplastics, which are derived from agricultural products and natural sources such as sugar cane, corn and tapioca, the division grows flowers, rooftop gardens and produces flour using new technologies.
Toyota said late last year that it expected an operating profit of 1.7 billion yen on sales of 5.4 billion yen in 2007 for its biotechnology division.The figures do not include its bioplastics business, which is still at an experimental stage.
Toyota began using bioplastics in some new cars last year, including the Raum and Prius models, but also supplies the material to Japanese cosmetics maker Shiseido Co and other companies, Tsukishima said.
"Companies from all sectors have been contacting us, wanting to use bioplastics in their products," he said. Toyota is working with some 60 companies, including office equipment makers such as Fujitsu Ltd and NEC Corp , to supply the environmentally friendly material, he added.
"Right now we just don't have enough supply," Tsukishima said.
Apart from emitting no harmful gases when incinerated, bioplastics burn at low temperatures, requiring less fuel for disposal, he said.
Toyota produces a small amount of bioplastics at a domestic factory it bought from precision machinery maker Shimadzu Corp , and is planning a 1,000-tonnes-a-year experimental plant in Toyota City this autumn.
"If we succeed in bringing production costs down, and clear other hurdles, we plan to build a proper plant with annual capacity of 50,000 tonnes, perhaps by around 2007," he said.
Japan consumes about 14 million tonnes of plastic a year -- roughly a tenth of the 150 million tonnes produced globally. Of the Japanese total, only 10,000 tonnes is believed to be bioplastics.
But Tsukishima said by 2010, that number was expected to jump to 560,000 tonnes in Japan. By 2020, one-fifth of the world's plastic would be biodegradable -- equivalent to 30 million tonnes, he said.
"We want to be supplying 20 million tonnes of bioplastics by 2020, which would amount to about four trillion yen in revenues if we sold it at 200 yen per kilogram," he said.
Bioplastic now cost between 500 and 1,000 yen per kg, about five times the price of conventional petroleum-derived plastics.
Toyota gets the bulk of its revenues from autos, but also offers financial services and builds houses. ($1=105.45 yen)