Smartness Required

By Michael Koewler, Chairman, National Renderers Association

Editor’s Note – The following is a speech given by Michael Koewler, Sacramento Rendering Company, at the National Renderers Association 76th Annual Convention in October.

It has been a pleasure and privilege serving as National Renderers Association (NRA) chairman for the last two years and I thank all of you for your confidence and support and hope that I met your expectations.

I am grateful to the NRA staff for all their support, guidance, and hard work that has made my job a lot easier. Tom Cook, NRA president, should be commended for his leadership and dedication to our cause. He, David Meeker, Kent Swisher, Sergio Nates, and all of their staff continue to battle every day the growing number of agencies, organizations, and movements that attempt to erode our raw material base and extinguish market access for our finished products.

Rendering is a cyclical business, and I was fortunate to have served as NRA chairman during a period of above average prices for our commodities. Since rendered product prices are influenced by the corn/soy complex and phosphorus prices, the rendering industry experienced fairly good returns amidst the ongoing debate about global warming and erratic weather patterns.

Rendering is part of the food production chain, and the changes that are taking place or perceived to be taking place on our planet influence American agribusiness.

The caption on a chart recently published in Feedstuffs and produced by the IBM Institute of Business Values for the advocates of mandatory animal identification caught my attention: “Smartness required.” Given a dramatically expanding global population and exhausting resources from which to produce food, those foods need to be produced more “smartly” and the planet needs to be smarter. Identification and traceability will help, according to the IBM Institute of Business Values.

We, as renderers, have met challenges in the past by producing commodities smartly. But we need to step it up a notch to continue profitability while our animal producer customers are suffering amidst tough economic times and high grain and soybean prices during a period of overproduction of edible animal proteins and a worldwide recession.

An observer may ask, “What is the difference between this swine, poultry, and dairy cattle cycle and those of the past?” Swine, poultry, and milk prices have been down before, and within a year or two come roaring back as the small, more efficient producers drop out and grain prices slide downward. The difference this time is that many of the best producers are reducing their herds and flocks permanently, and more than expected are simply going out of business.

These events affect renderers in two ways. There are fewer animals domestically to consume our commodities, and fewer raw materials in which to process. Lower supply of finished rendered products into the marketplace will no doubt help prices, but I think we would all prefer a higher volume of raw material through our facilities.

As we face the future, we have to be smarter than in the past. Let’s look at Hormel, regarded as one of the most successful meat packers in the industry. They cut production years ago and concentrated on having the best processed meats on the market. As I mentioned earlier, there is an oversupply of edible meat, so Hormel now promotes the product that has sustained them since World War II – the red meat substitute SPAM. In this recessionary period it seems to be the product of choice for many struggling consumers.

It makes no difference to the rendering industry whether we sell our products foreign or domestically. That proposition is a win/win for everyone. Our future lies in producing safe, quality commodities for the right market. We need a full court present on enlarging our Southeastern Asia market, as well as China, Africa, and South America.

Another example of being smart is the pet food industry. They are profitable by capitalizing on what veterinarians describe as the “humanization of pets” by their owners. Pet food companies have raised prices on the premium lines and it hasn’t slowed down the volume.

This industry has been some of the best customers for renderers over the years, but in the last six issues of Petfood Industry magazine, the feature stories have been how some smaller pet food companies, both old and new, are producing organic and all natural pet food rations. Even some larger companies are moving some of their production into this market, and none of these pet foods contain rendered products.

This trend is following the human craze for organic foods, even though dozens of research projects reject the notion that organic products have some magic benefit to human health. It just sounds good, it’s trendy, and it’s a perceived benefit.

We cannot produce organic commodities, but we can increase consumer awareness by funding research projects that shift the consumer perception from fad to fact.

Let’s increase our research dollars on aquaculture in countries that will import U.S. products. The industrialized nations have pledged $50 billion to developing countries to assist them in producing not only grains, but also proteins from animal production.

Let’s be smart and follow the money and promote our commodities to feed pigs and chickens wherever they are raised. It may take more funding for international market development and rethinking our research strategy, but we can expand our market because we are just as smart as our competitors.

From the Association – December 2009 RENDER | back