Editor’s Note – The following is a speech given by Humphry Koch, West Coast Reduction, Ltd., Canada, at the National Renderers Association 69th Annual Convention in October.
More than a year has passed since the terrorist attack on the World Trade Center. Much has changed since that fateful day. The Taliban have been soundly defeated in a manner that has spectacularly demonstrated America’s determination, courage, leadership, and technological superiority. At the same time, the free world has been shaken out of its complacency. Excesses in companies like Enron have triggered a stock market free fall and a realization among investors at large that stock prices were insupportable.
Yesterday’s euphoria has given way to caution and concern amongst consumers. Legislators and experts are busy trying to devise ways to ensure that history cannot repeat itself. Meanwhile, the simple genius and efficiency of the capitalistic market system has kicked in and taken corrective action that no amount of expertise or legislation could replace.
It is my view that books full of regulations, even if they had been in place before the stock market collapse, would not have been as effective or as quick as investor reaction to the market abuses with which we are now all familiar. Our system is self-correcting, and although sometimes very painful, it is invariably more effective and responsive than an army of bureaucrats trying to enforce an incomprehensible set of regulations.
I strongly believe that recent events provide our industry with some good lessons. There is no doubt that government has a significant role to play in setting the ground rules for conducting business. At the same time it is the industry players and participants who ultimately create the conditions for success or failure.
As an industry, we need to remain self-reliant, responsible, and responsive. We need to work with government to ensure that existing and new regulations do not have the effect of destroying the rendering industry as we know it today to simply satisfy a constituency of consumers and advocates who base their demands on emotions rather than science.
Being self-reliant people, we should be wary of inviting more regulation simply to make life easier in the short term. The market knows that we are the best available option for disposing of animal by-products and dead stock. We need to reinforce this view in a way that ensures we do not lose control of our own destiny. By offering ourselves up to regulators, we invite interference that we will have cause to regret in the future.
Being responsible people, we need to concentrate our efforts on ensuring full compliance with existing regulations. It is not good enough to simply pass the annual inspection. We must strive to improve our industry and corporate standards of compliance so that we are always one step ahead of our critics and the regulators. We cannot afford to draw attention to ourselves by tolerating sloppy management practices leading to breaches of compliance.
Being responsive people, we need to recognize that our markets are more discerning, more demanding, and more discriminating than ever before. Consumers are unreasonably terrified by fear of the unknown when it comes to food safety. Although our consumers are not the public at large, our place in the food chain makes it imperative that we retain the confidence of the people we sell to. Already we are seeing some traditional consumers of our products advertise that they no longer use animal proteins in their feed rations. No amount of regulation will combat this marketing ploy. However, if we continue to convincingly demonstrate that our products are safe, high quality, and good value, we will be able to retain our market share of the animal feed market, particularly in price sensitive developing countries and in a large sector of the price sensitive domestic market.
It is equally important that our foreign customers know that our products are safe for domestic consumption and that they are being consumed domestically. At the same time it may be necessary for us to develop market specific products.
I have briefly touched on what I refer to as the three “Rs:” (self-) reliance; responsibility; and responsiveness. Please forgive me if I repeat myself; however, I believe that the issues we now face are so important that our approach to these issues deserves repeating.
Under the heading of self-reliance, I want to address the U.S. Department of Agriculture’s (USDA’s) advanced notice of proposed rulemaking (ANPR) dealing with the disposal of dead animals. This ANPR flows from the Harvard study and has been published by the USDA to consider additional regulatory options for the disposal of dead stock on farms and ranches. I quote from the USDA news release: “Such cattle are considered an important potential pathway for the spread of BSE [bovine spongiform encephalopathy] in the animal chain.”
We are anxiously awaiting details of the ANPR, which is now in the hands of the Office of Management and Budget. In the meantime, we have provided extensive information to the USDA and others on the role the rendering industry currently plays in the disposal of dead stock. It is as well to remind ourselves, and others, that the disposal of dead stock is already well regulated. We have in place the mammalian-to-ruminant feed ban that ensures rendered products derived from dead stock cannot be fed back to ruminants. At the same time, the feed ban is enforced by state and federal government compliance inspectors and supplemented by voluntary measures such as the Animal Protein Producers Industry(APPI) certification, Hazard Analysis and Critical Control Point programs, and good manufacturing practices.
Other forms of dead stock disposal are not universally regulated. Well-written papers produced by National Renderers Association (NRA) members and staff deal at great length with the advantages of the rendering process in dealing with dead stock disposal. These advantages are clearly evident both from a disease control point of view as well as from an environmental perspective.
The rendering industry does not need any more regulation; however, we urge regulators to look at regulating other forms of disposal so as to ensure enhanced environmental protection, improved food safety, and a level playing field. We need recognition that disposal costs can only be paid for if the USDA acknowledges the effectiveness of the feed ban rule, as articulated in the Harvard study, and continues to recognize the value of protein derived from dead stock.
Let the market for protein determine what protein products it wants to buy. Our industry needs to play its part in this regard. The markets for our finished products will determine what is bought and how much is paid.
As a responsible industry, we must remain fully compliant with existing regulations. Our own interests can best be served only if we remain fully compliant with the feed ban rule. We must constantly seek ways to improve our compliance procedures so as to give confidence to the consumers of our products and to government regulators on whom consumers depend. There is a strong case to be made for the use of meat and bone meal in non-ruminant rations and we can reinforce this case by clearly demonstrating that our existing firewall against BSE is effective.
As a responsive industry, we need to be prepared to respond to questions and concerns voiced by our customers and the government. In this regard we have already done a great deal. NRA was proactive in working with government when the feed ban rule was introduced in 1997. Many renderers have willingly and actively participated in surveillance programs involving the inspection of the brains of dead animals. NRA has commissioned reports by the Sparks Companies that clearly demonstrate the economic impact of further restrictions on the use of rendered products, and we have repeatedly taken our message to Washington and government officials.
Our industry is no longer the “invisible” industry. We have much to do to face the challenges being thrown our way. Many of us have started to market specialty products to meet the demands of our customers. Some of us have excluded raw materials from our raw material base because of market concerns. A challenge that now looms large in some U.S. states and in some Canadian provinces is the incidence of chronic wasting disease (CWD). There is no known scientific reason to exclude CWD infected material from meat and bone meal. The same applies to scrapie-infected sheep material. After all, in Britain, the home of BSE, people have no difficulty in consuming lamb from a national flock that continues to exhibit a high incidence of scrapie. The same can be said of hunters and other consumers of North American venison and sheep products since both scrapie and CWD exist in North America.
The point is that scrapie and CWD have been around for a long time. While eating BSE infected meat is believed to lead to the development of new variant Creutzfeldt-Jakob disease in humans, eating sheep products and venison is not known to pose any risk to human health.
Scrapie and CWD are not BSE. The distinction needs to be drawn. We should not be stampeded into perma-nently excluding ovine (sheep), caprine (goat), and cervid (antelope) materials from the raw material mix we use to manufacture meat and bone meal.
In North America, despite the absence of any regulatory requirement to the contrary, it is a brave renderer who does not exclude ovine, caprine, or cervid material from his raw material mix. These voluntary exclusions, which are done to retain meat and bone meal markets, will sooner or later create an opportunity for others to deal with the disposal problems of those who produce the voluntarily excluded materials.
It is my view that as renderers, we must not lose sight of the need to provide a comprehensive disposal service to all producers, processors, and consumers of meat products. We have to look beyond conventional rendering techniques if we are to continue producing our traditional finished products without voluntarily eroding our raw material base.
Every company in our industry needs to give careful consideration to the types of rendering and disposal services they are willing and able to offer. It is already becoming necessary to tailor our finished products to meet the demands of discerning consumers. For example, some customers want pure porcine meal. Others want lamb meal. These market requirements have a particular impact on the independent renderer who is used to producing mixed meat and bone meal from a variety of raw material sources. The question is, does the independent renderer try and meet specific market demands or does he carry on as before with emphasis being on the disposal end rather than on the marketing end of the rendering business?
I cannot answer this question for you. What I do know, however, is that many of us will be faced with significant capital costs in the future if we want to fine tune our businesses to meet the challenges we face. We will also be confronted with overlap requirements necessitating the use of independent renderer services by packer renderers and vice versa.
Disposal services will carry a significant price tag and our efforts to mitigate this price tag will only succeed if we continue to operate our businesses in compliance with current regulations so that the markets for our finished products are not diminished by further government regulation or declines in consumer confidence.
As an industry, we have made considerable strides in the area of research and development with limited financial resources. The Fats and Proteins Research Foundation (FPRF), one of NRA’s two sister associations, has been instrumental in helping the industry develop alternative uses for its finished products. Biodiesel is one product that is heralded as a safe and environmentally friendly way of disposing of rendered fats and oils. NRA, with considerable help from its sister associations FPRF and APPI, has made extensive lobbying efforts to ensure that biodiesel made from rendered products receives fair and equal tax credit treatment to biodiesel made from vegetable oils. The lobbying efforts continue.
It is my view that we should all support the very worthwhile separate and unique contributions APPI and FPRF make to our industry. The mutual contributions of the NRA, FPRF, and APPI are complementary, and we are exploring ways to ensure that the individual efforts of each of these organizations are not duplicated.
I will restate my conviction that while government has a significant and indispensable role to play in setting the ground rules for conducting business, it is industry players and participants who ultimately create the conditions for success or failure.
From the Association - December 2002 Render