So what more could you ask for?
You might ask for no more bovine spongiform encephalopathy (BSE) issues to deal with and $250 a ton protein prices. That would be reasonable.
Well, if you remember last year at this time, we were facing a still-closed beef market in Japan and a proposed change to the feed rule courtesy of the Food and Drug Administration (FDA). Well, we took that bull by the horns (no pun intended) and challenged the FDA proposal and its reasoning head on.
The Informa Economics study that most renderers participated in, when presented to the FDA, forced them to stop, take notice, and re-evaluate the premises they built the proposed rule upon. Privately at first and now publicly, they have admitted that the rendering industry’s data pointed to flaws in the FDA studies and their subsequent proposed rule. The FDA is now back to square one, so to speak, re-evaluating with a new study of their own. Given how many times we felt a final rule was just around the corner, this is good news.
So far, no news is good news. That which seemed so eminent just one year ago may now never see the light of day thanks to the industry’s efforts working with the NRA. It also helped that a new report has come out of the Harvard risk assessment model factoring in the three quarters of a million head of cattle tested for BSE with only two indigenous, though a-typical, cases found.
We may have this proposed feed rule finally licked. Now we’ve got to get U.S. and Canadian rendered protein and fat markets reopened to the Far East and elsewhere. Indonesia is starting to open – China can’t be far behind. With $1,000-a-ton fish meal, they could really use U.S. and Canadian meat and bone meal, poultry meal, etc., especially with meat and bone meal hovering around $70 a ton here on the West Coast.
Speaking of meat and bone meal, protein will soon become the industry’s biggest issue. Worldwide, we are in a protein deficit. There’s just not enough to meet demand. However, here in North America, we literally have a glut. First, we have no real exports post-BSE. That alone is tough on a country that traditionally exports 25 to 35 percent of its protein production.
Add to that distillers grains from five billion gallons of ethanol and we’ve got depressed protein markets. Now export markets are starting to slowly open. But with the only additional capacity under construction today, ethanol production will increase 60 percent by 2008 – that’s less than two years away. It’s a linear relationship – 60 percent more ethanol means 60 percent more distillers grains to compete against. Distillers grains are projected to hit 17 million tons by 2012!
Add to that mix the ever-increasing volumes of glycerin on the market as a by-product of biodiesel production. It has feed value as a calorie enhancer and competes with rendered fats and greases. Historically, the United States has used 400 million pounds of glycerin a year with most of that coming from fatty acid splitters. Biodiesel production today produces nearly that much and will produce another 400 million pounds in the next two years as plants currently under construction come online.
Let’s look further at biodiesel production. Most of it today uses soybean oil with a few plants under construction to use canola or rapeseed oil. As more of these plants come online, the demand for soybean oil will rise dramatically and soon the oil, which historically was a by-product of the crushing operations that were primarily driven by the need for meal, will produce more bean meal than ever. Soy biodiesel production should hit one billion gallons in 2008. Those one billion gallons translate into 33 billion pounds of soybean meal! Like I said, protein everywhere!
That’s why it is so good to see the Fats and Proteins Research Foundation (FPRF) working on novel uses for rendered proteins, as we need help in this area and will need it even more so in the future.
It’s not hard to see how my comments, though centered on rendered products and their competing commodities, have a common theme of energy behind them. While we as an industry have been buffeted in recent years by ever-increasing energy prices, we are now bearing the brunt of competition with alternative energy by-products. But at the same time, alternative energy is providing the industry with great opportunities in the form of new markets for rendered fats and greases in the production of biodiesel as well as the blended fuel credit for those same fats and greases.
On the NRA operational level, the staff in Washington, DC, headed up by Tom Cook, has done an outstanding job of keeping us from ever becoming the “invisible industry” again. Between Cook, Dr. David Meeker, and Kent Swisher, the industry is well represented on committees, boards, and task forces from the U.S. Department of Agriculture Secretary’s Advisory Committee on Foreign Animal and Poultry Diseases, to the U.S. Trade Representative Agricultural Technical Advisory Committee on Animals and Animal Products and the U.S. Agricultural Export Development Council, with many more in between.
If you’re not at the table, you’re out of mind and that can put you in trouble or leave you out in the cold. So the NRA staff, including Glenda and Barbara in Alexandria, VA, the quick-witted Dr. Yu Yu, the quiet and confident German Davalos, the dry-witted Neville Chandler, and the some-kind-of-witted Washington, DC, gadfly Steven Kopperud, makes sure the industry is at the table and remembered – or shall I say, memorable.
Over the past year, this staff has taken on the administration of FPRF and brought the Animal Protein Producers Industry organization in under the umbrella as a standing committee of the NRA, much like the International Market Development Committee. Making memories is now a whole lot easier and more efficient with everyone in one office.
Challenges, opportunities, change. Nobody ever said that rendering would ever get humdrum and boring like the “good old days.” That’s behind us – we’re no longer invisible. We’re right in the thick of it all – where the action is.
So just hold on tight for the ride of your life!
From the Association - December 2006 Render