April 2001

Energy Just One of Many Challenges for Pacific Coast Renderers

By Tina Caparella

When a crisis hits, it often helps to tackle it head-on as a group. That is exactly what Pacific Coast Renderers Association (PCRA) members did as they gathered in mid-February in Napa, CA, to conduct their annual meeting. Presenters offered grim news about energy costs and bovine spongiform encephalopathy (BSE) while attendees to PCRA’s 69th Annual Convention searched for answers to problems faced by the industry.

Rich Matteis, executive vice president, California Grain and Feed Association, and a registered lobbyist, began the day-long meeting with a short overview of legislative activities in California, including a bill he first mentioned at last year’s PCRA meeting. Matteis said AB 654, which would have required the California Department of Food and Agriculture (CDFA) to conduct a study regarding odor levels emanating from rendering plants located within a half-mile of public schools, was eventually dropped thanks to a lot of negotiating by himself and PCRA. He went on to explain that the introduction of new bills in the state legislature this year has been “incredibly light, except for those that come on blue paper.” Those are bills that pertain to the special session the government body is holding on California’s energy crisis.

Matteis presented several problems that contribute to the state’s energy problems, explaining that the battle with various agencies and environmentalists over building new power plants has resulted in no new power generation being constructed in California. Matteis added that California is currently using 30,000 megawatts per day and predictions put that usage at 52,000 megawatts per day by summer.

“I am told by PG&E [Pacific Gas & Electric], [Southern California] Edison, and others that we’re going to see many, many times the blackouts we had in January and February during this summer,” warned Matteis.

Another problem that affects renderers more than the electrical crisis is the natural gas situation. “The two problems are tied together,” said Matteis. “Because of the poor fiscal health of the utilities, they have not been able to buy natural gas at affordable prices.” He went on to explain other reasons for the high cost of natural gas, which is often supplied from sources outside the state.

“There was a day in December where the transportation component price for delivering gas was $48,” Matteis said. “A year before on that same day the transportation component price for delivering gas to California was 93 cents. That was a 50-fold increase just in the transportation cost. Obviously every day wasn’t that bad but it’s still proportionately very, very high.” He informed attendees that 16 power plants are scheduled to come on line that had been down for maintenance and all are run by natural gas.

“We can expect natural gas prices to remain high,” he warned. “It is a very grave situation.” California renderers use approximately 26.4 million therms of natural gas per year.

One alternative renderers around the country are looking at to help with rising energy prices is the burning of yellow grease. Matteis and PCRA officials met with CDFA to discuss using yellow grease as a fuel, which Matteis described as cleaner than diesel but not quite as clean as natural gas. Several renderers and one feed mill in California’s San Joaquin Valley have been issued temporary permits to burn yellow grease. Matteis explained that the permit process gets more complicated in other regions of California such as the San Francisco and Los Angeles areas.

Matteis provided attendees with a copy of a “white paper” that was assembled by 45 California agriculture associations outlining the severe effects the energy crisis is having on California’s agriculture industry and solutions to mitigate those effects. The paper discusses actions the industry would like the state legislature to take to help agriculture businesses during the energy crisis such as funding to provide installation of alternative fuel systems, the state’s assistance in developing alternative fuels, including yellow grease, and structuring air emissions standards to facilitate the use of these fuels in times of emergency such as the current crisis.

“We have an uphill battle but we have a good group of legislatures that support us,” Matteis said. “We’re in for some tough times but maybe there’s some opportunity there too to move some of your product if we can get some of this alternative fuel legislation passed.”

Following Matteis’ presentation was Gary Conover, director of Governmental Affairs, Western United Dairymen, who said the energy and natural gas crisis has also affected California dairymen, not only on the ranch but in processing too. Conover presented a situation experienced by Land O’Lakes, which has experienced up to 18 hours without power several times due to an agreement between the processor and the utility company put in place several years ago. The loss of power has resulted in a backup of raw milk not only at the plant but also at local farms causing farmers to dump the milk in their holding ponds because there is nowhere to ship it.

“That’s the other problem in this electricity crisis,” commented Conover. “I really want to thank Ray Kelly [PCRA] and Rich Matteis for coming over to the department of ag three weeks ago and helping us out with some really fine testimony, hoping that all of our efforts will result in a little bit of a price increase [in milk] for us to cover those energy costs.” (In early March, the CDFA rejected a request by dairy farmers for a three percent price increase in milk to defray rising energy and transportation costs.)

Next to address the group was Scot Hillman, chief executive officer (CEO), J.D. Heiskell & Co., who shared his “horror” story.

“I think I was naïve, up until about a year ago, about the power of politics in everybody’s industry…and the power of the media,” began Hillman. His company, historically a one feed mill operation, recently purchased five feed mill plants, one of which is in Ontario, CA. Several months after the purchase, a newspaper article alerted the company to a problem they didn’t know existed.

“There was an article in the L.A. Times about this dusty feed mill that was emitting clouds of dust and choking the neighbors and blotting out the sun with these immense clouds of dust and it had the name of our feed mill,” said Hillman. “The first thing we did was to get the neighbors together and say ‘Let’s talk about this.’” The plant was eventually placed under an order for abatement, even though, according to Hillman, the South Coast Air Quality Management District (AQMD) did not know how to write the order because of their lack of knowledge about the feed industry.

“We basically wrote our own order for abatement,” he explained. The company took extreme measures to ensure proper housekeeping practices were in place to control the dust not only from the feed side of the operation but also from the dirt roads and grounds on the property. But complaints from the neighbors continued as did the media coverage. Hillman shared his experience of the treatment by AQMD officials, who really just wanted the plant shut down.

“All of a sudden you realize you’re fighting something bigger than just an abatement order, some neighbors, and a little bit of grain dust,” stated Hillman, who added the company has done everything that the order stipulates, most often before the deadlines they were given. “It’s not going to be enough in the eyes of the neighbors.”

John Dunlap, III, president and CEO, California Restaurant Association (CRA), educated attendees about the CRA, which has 14,000 members and was founded in 1906. He stated that in California alone, there are approximately 70,000 food service establishments, which include school cafeterias, prisons, and medical facilities, of which about 55,000 are public access restaurants.

Dunlap next addressed the situation in Los Angeles, where the city is considering an ordinance for all restaurants to install grease traps or interceptors, primarily in region “hot spots” where grease is clogging city sewers.

“We think there is a vast number of our restaurants who are willing to be leaders and do extraordinary things as long as they can afford to do that,” said Dunlap. “This ordinance in particular has the ability, if it gets away from us, to cost restaurants between $50,000 and $100,000 of new money.”

Dennis Thompson, CDFA, followed Dunlap with a status report on California’s grease theft program that PCRA began several years ago. He said theft and reports of theft are decreasing, although price may have some impact on those statistics.

“Nevertheless, we see much evidence that the program itself is still a significant factor in the decrease,” said Thompson. He presented accomplishments of the program, which included raising awareness to several key groups: people involved with stealing grease and law enforcement officials. Thompson attributed a video that was produced and distributed last year to law enforcement agencies and district attorney (DA) offices for raising the interest of DAs to prosecute cases they may not have otherwise pursued. Besides awareness, Thompson said the program has resulted in numerous indictments and fines levied.

“We’ve had seven prosecutions in court and issued and gotten signed agreements to 40 stipulations and orders that involve a total of $51,000-plus in fines and recovered investigative costs,” he informed attendees. “We revoked one license in 2000 and have one license revocation action pending on another facility.”

Thompson said the program has reached a point that because of its recognition, oftentimes it just takes a phone call or a visit to someone who is suspected of stealing grease to have an impact. He briefly discussed the program’s budget and that fees were dropped by 50 percent last year.

Tom Cook, president, National Renderers Association (NRA), gave his observations about the administration changes in Washington. He noted that for the first time in the history of an administration, there are three women who will have control over American agriculture. Cook also informed attendees that the association is following up on the recent exclusion, but possible inclusion at a later time, of rendered animal fats and yellow grease products in a biodiesel program by the Food and Drug Administration.

BSE was the next topic of concern addressed at the meeting. Cook discussed events taken place to date: various meetings with government agencies and trade organizations; the Purina Mills commingling incident in Texas; and the barrage of media contacting NRA for information on the industry.

“Our phones are ringing off the hook from the media,” Cook commented. “A lot of times I thought I was giving ‘Rendering 101’.” He informed attendees that the National Cattleman’s Beef Association has good information about BSE on their Web site at www.Bseinfo.org.

Michael Langenhorst, chairman, NRA, continued the discussion on BSE, first complimenting the NRA staff on their tireless efforts lately with the BSE issues. He then presented several charts he received from a recent meeting with a group involved with cattle futures trading and the National Cattleman’s Feed Association covering the history of BSE and new variant Creutzfeldt-Jakob Disease (CJD) incidences in the United Kingdom. Langenhorst explained the science behind CJD, introduced a Web site that is tracking the human disease throughout the world, and discussed Europe’s activities in regards to BSE.

“Science doesn’t matter any more,” he commented. “You go over to Europe and all they’re concerned about is zero risk. While we here in the United States have 98 percent compliance with the FDA ban, in certain aspects, they look at that and say we have two percent non-compliance. They feel unless you have 100 percent compliance, it doesn’t matter.” He shared with attendees what took place during a pre-Codex meeting he attended in Brussels in late January where 21 different associations were in attendance. Langenhorst said the European Union is introducing new proposals including one that stipulates tallow be pressure cooked before being used in animal feed.

“There’s a 50-50 chance that that’s going to happen in Europe,” Langenhorst commented. Other proposals being considered are that all dead stock be eliminated from rendering and that Hazard Analysis and Critical Control Point programs be implemented. He added that currently, renderers are still rendering, but since a total ban on using meat and bone meal (MBM) in all animals feeds went into effect in January, thousands of tons of MBM is being stock piled.

“BSE is still a European disease,” Langenhorst stated. “Every animal that has ever had BSE is European.”

According to Langenhorst, the NRA will begin offering a self-certification program that declares renderers are following the FDA rule, which will then be followed up by a third party audit (see “Newsline” on page 8). Currently Australia, Canada, and New Zealand have similar certification programs.

The afternoon was reserved for PCRA’s annual business meeting, which included a change in officers. Michael P. Koewler, SRC Companies, became the association’s new president and James A. Andreoli, Baker Commodities, was elected vice president. Bill Ottone, Salinas Tallow, is past-president after three years of service to the PCRA. Koewler is the first third-generation to become PCRA president, after his father and grandfather held the position.

With regards to compliance of the FDA feed ban within California, it was presented that only four feed mills in the state deal with both ruminant and non-ruminant feed and that state officials have been very diligent on inspecting feed mills to ensure FDA ban compliance.

“California feels it has a very good control on the feed issue,” stated Ray Kelly, Baker Commodities. He added that a working meeting with the state’s agriculture department helped get yellow grease burning permits approved quicker in the San Joaquin Valley but that obtaining permits in the San Francisco area and Southern California have been tougher.

The PCRA members voted to contribute $5,000 to the IMDC and to hold their 2002 meeting in the Carmel/Monterey area.