Sustainability and Global Markets in the Land Down Under

By Tina Caparella

Sustainability may not have a definitive definition as it relates to feed ingredients, but renderers around the globe have determined their processes and finished products are as sustainable as it gets, including in Australia. With that in mind, “Rendering for Sustainability” was the focus of the Australian Renderers Association (ARA) 12th International Symposium held in late July in Melbourne, VIC, Australia, which attracted several hundred delegates from around the world.

Dr. James Fry, LMC International in the United Kingdom, shared that the drive to be sustainable in the biofuels market has led to the increasing usage of tallow and other recycled oils by biodiesel and renewable diesel producers. Policy, notably in the European Union (EU), has also changed the market for not just rendered fats and oils but all oils.

Fry said that rendering is not a well-documented sector when it comes to production, but his personal estimate shows the leading countries of the 6.5 million metric tons (MMT) of beef tallow produced globally in 2012 were the United States (US) at 2.7 MMT, the EU and South America at 1.6 MMT each, Australia at 500,000 MMT, and New Zealand at 100,000 MMT. He noted the end-use shifts in industrial markets rose “fairly dramatic over a short period of time,” from 3.1 MMT in 2010 to 3.7 MMT in 2012. This translated to a decrease in feed use from 7.0 MMT to 6.0 MMT during the same period.

As for global prices, Fry explained that from 1996 to 2006, tallow and palm oil were cheaper than soy and rapeseed oils and there was no link between the price of all oils and fats and petroleum. However, in what he deemed the “new world” that began in 2007, the picture transformed with all oil and fat prices more closely linked to or trading higher than crude oil due to biofuels. In July 2013, tallow was more expensive than rapeseed, palm, and soy oils.

“We must now analyze the premium of individual oil and fat prices over crude oil rather than the price in terms of so many dollars per ton,” Fry reported. “Tallow has become a relatively expensive feedstock compared to other oils.” He claimed the main reason for this is the EU’s double-counting scheme for biodiesel made from waste oils, an unintended consequence of EU policy. In the EU, every liter of biodiesel produced from approved “waste” products (i.e., tallow and used cooking oil) is counted as two liters when it comes to meeting national EU biodiesel mandate targets. He stated that the greatest beneficiary from this rule has been used cooking oil, but lower grade tallow has also benefited. In fact, thanks primarily to the EU, global tallow use in biodiesel rose by over 60 percent from 2010 to 2012 to approach 1.2 MMT last year.

Fry explained that due to the increased globalization of the oils and fats markets, EU policies now influence the price structure in other parts of the world, especially in the United States where yellow grease discounts to high-grade tallow are shrinking. He said that US biodiesel data reveals little change in tallow or other animal fats use but growth in vegetable oils and recycled oils. As for US policy, Fry believes the country’s fixed mandate in gallons is much too aggressive as demand for fuel is falling, primarily due to more fuel-efficient vehicles. Brazil has become another important market for tallow use in biodiesel with the tallow share of feedstock currently averaging 20 percent of all oils.

Jeffrey Glanz, Neste Oil in Switzerland, provided his take on tallow’s contribution to renewable fuel. Although it’s been a difficult road, Neste Oil now produces renewable diesel at four plants located around the world. Renewable diesel is a drop-in fuel made from animal fats that are broken down to a molecule identical to petroleum diesel. Glanz explained that the EU Renewable Energy Directive addresses land use change, traceability, greenhouse gas (GHG) balance, and sustainability verification of both fuel and feedstocks.

“So is Australian and New Zealand tallow sustainable?” he asked. “Of course it is. If you didn’t render it, you would have to pay somebody to take it away and destroy or bury it.” Glanz said renderers should not be offended if tallow is sometimes called a waste product.

“Nothing in our business is wasted, but if legislation calls it waste, we will call it waste,” he went on. Neste’s commercial decisions are often based on political decisions with the company trying to remove itself from the food versus fuel debate. Glanz said GHG calculations are looked at very closely and animal fats have a very high GHG emission reduction calculation of 91 percent versus palm oil at 52 percent and rapeseed oil at 49 percent.

Glanz announced that sustainability is very complicated since there are multiple global requirements to meet, such as those under the International Sustainability and Carbon Certification that recently have been changed requiring animal fat providers to be audited if the final fuel is supplied to the EU market. There are also compliance system requirements in Australia and the United States.

Tony Edwards, ACE Consulting in Australia, switched the focus to utilizing rendered products as part of the responsible management of feeding the ever-expanding global population and increasing wealth in developing countries, especially those in Asia. Predictions are that by 2050, there will be over nine billion people on Earth, the wealth in developing countries will outpace that in developed countries, and meat demand will double, with China forecasted to import some $150 billion worth of meat by 2050. Edwards said these factors will likely lead to increased rendering activities as developing countries expand meat production, developed countries boost livestock production for export, and aquaculture feeds begin to utilize more rendered products.

Edwards predicted that poultry, pig, and fish will dominate the future meat demand. Historically, swine and poultry diets that included animal proteins support superior growth performance, yet there have been concerns over the risk to animal and human health when using these products, such as Salmonella, antibiotic residues, chemical contaminants, and bovine spongiform encephalopathy (BSE), which still impedes the use of animal proteins and fats in the EU, although that is changing. Another constraint to the use of animal proteins is public and retailer perception. Edwards noted that less than two percent of the Western population is involved in agriculture, creating little understanding of farm practices among consumers. He insisted there is a strong need for collaboration in all industries to educate the public that these products are part of the safe food realm.

A third constraint Edwards addressed was variability in product composition, which has suffered long-standing criticism. While some degree of variability is inevitable due to variance in technology and raw material in each plant, using real-time near infrared (NIR) analysis makes variation a lesser consequence and advanced NIR can determine both total and digestible amino acid levels.

“Variation is manageable and should not restrict the use and value of rendered products,” Edwards proclaimed.

Dr. Leo den Hartog, Nutreco in The Netherlands, reiterated the challenges of doubling the global food production by 2050 while halving the pressure on the planet. He attributed struggling supplies on adverse weather, biofuel production (i.e., one-third of corn produced in the United States is used for ethanol and is subsidized), low stocks, and price speculations. He estimated that consumer diets will require 85 to 108 pounds (39 to 49 kilograms) of meat and 183 to 218 pounds (83 to 99 kilograms) of dairy annually by 2050.

“We have a great challenge, but we can do it,” Hartog insisted, showing that there has been consistent growth in global animal feed production over the last five years, primarily in South America with a 5.2 percent annual increase since 2006; Asia at 4.1 percent; and non-EU countries and Russia at 3.9 percent. He stated that rendered products have “the potential” to be considered sustainable provided they are produced responsibly. On the positive impacts, rendering prevents waste from slaughterhouses and ultimately provides quality feed ingredients for sustainable animal production.

James Rose, Skretting in Australia, declared aquaculture an enormous market that is growing very rapidly and that Skretting could take all of Australia’s rendered products for its fish feed production. The company produced 1.3 MMT of fish feed in 2010 and estimates that figure to grow to 1.8 MMT by 2016 in existing markets.

Rose explained that in 2000, only 33 percent of fish meal went into aquaculture feed, with swine taking 39 percent and poultry consuming 25 percent. In 2010, those numbers were essentially reversed, with aquaculture taking 75 percent, swine using 20 percent, and chickens only consuming five percent. Fish oil use is a similar story, which originally was used as a fuel to run the fishing boats, days that are long gone. However, while its use in aquaculture has grown substantially over the past 40-plus years, there is now a competing demand with the omega-3 industry for human health.

Fish feed composition in Australia has changed considerably since 1990, with rendered products now roughly comprising 50 percent of feed ingredients, an increase from 20 percent previously.

“It’s been a fantastic journey over the past 10 years and the Australian rendering industry has been a big partner in that,” Rose said. Poultry products and blood meal have been vital for reducing fish meal dependence although plant protein concentrates (i.e., wheat gluten and soy) are also important. And even though Skretting’s fish feeds are so high energy that “we’re stuck at the level of rendered products and must now start looking at vegetable proteins,” Rose still sees significant opportunities for rendered products going forward.

Although the first thing Rose is often asked about fish feed is what’s in it, he sees more acceptance of animal proteins and fats due to education and their sustainability. In fact, one Skretting customer actually highlights their use of rendered products in fish feed as being sustainable. Rose suggested renderers use clear and concise messages about their products that consumers will understand, even perhaps renaming poultry fat to poultry oil to be more in line with fish and vegetable oil. Other recommendations were changing “meat and bone meal” to “meat meal” so shoppers won’t confuse it with a product used in the garden, and using “prime poultry meal” versus “pet food grade” poultry meal so consumers don’t think fish are being fed pet food.

“It’s basically a branding and imaging issue for the industry,” Rose explained.

Paul Ryan, Ridley AgriProducts in Australia, discussed marketing food safety in the feed industry by first noting that global farmed fish production has overtaken that of beef with the current gap of three MMT expected to widen. He pointed out that the power over food safety shifted from production and manufacturing in the 1970s and 1980s to the retailer today, creating a difficult environment seemingly beyond control of the feed manufacturer at times. Ryan explained that implementation and maintenance of robust good manufacturing practices and hazard analysis and critical control point programs are now essential, and that renderers should pay attention to the Global Food Safety Initiative, a retail-driven forum where retailers want suppliers to follow their programs. He said there was discussion 18 months ago in Brussels, Belgium, that rendered products would be accepted under the program, but there is uncertainty where the situation now stands.

Beyond Australia’s Borders
The second day of the symposium expanded to the international arena, beginning with an update from World Renderers Organization (WRO) President David Kaluzny II, who declared, “It’s a good year to be a renderer.”

“We didn’t think so in 2000, but a lot has changed in 13 years,” he continued, such as successfully convincing most governments not to remove rendered products from the market after BSE. Kaluzny showed that of the estimated 13 MMT of processed animal proteins (PAPs) produced globally last year, 4.0 MMT was in the United States, 3.9 MMT was in both South America and the EU, 720,000 MT was in Australia, and 214,300 MT was in New Zealand. As for the 10 MMT global animal fat estimates, the United States produced over 4.2 MMT, the EU accounted for almost 2.8 MMT, South America for nearly 2.3 MMT, Australia for 550,000 MT, and New Zealand for 140,000 MT.

Kaluzny shared that the WRO is preparing for the next big crisis should it arise, and has assisted several countries on educating their governments on rendering when considering stricter regulations.

“Keeping regulations to a minimum is what we’ve been working on the last two years at WRO,” he remarked.

Niels Leth Nielsen, president of the European Fat Processors and Renderers Association, said there is always something in the EU legislation pipeline that could affect rendering companies either good or bad. He informed attendees that many EU renderers are losing raw materials, especially in Northern Europe. For example, Danish company Daka Denmark A/S has lost nearly 50 percent of its raw material, particularly porcine, to human consumption in China and the mink industry as feed. As for new sources of raw material, Nielsen believes that recycling Europe’s 87 MMT of annual food waste will be an area of interest for EU renderers.

Highlighting the US industry was J.J. Smith, chairman of the National Renderers Association, who admitted that from a renderer’s perspective, the United States has one of the most unfriendly administrations for business, but the country is still a good place to do business. Although there has recently been many regulations targeting the environment, regulations on feed, rendering, and BSE have been off the front burner for quite a while. One area of contention not yet regulated in the United States is climate change, which is most likely due to its carbon footprint dropping to mid-1990 levels after an increase in natural gas usage over coal.

Smith mentioned that the US rendering industry has a good relationship with the country’s regulatory offices, providing the government with a better understanding and perception of rendering. And while the last five years have been very good economically for the US rendering industry, there is a concern over the increase in animal rights activism targeting animal production.

Bruce Rountree, chairman of the New Zealand Renderers Group, presented the situation in Australasia, which is a geopolitical term for Australia and New Zealand and sometimes New Guinea. In the region, rendered products are predominantly beef and sheep, and account for just over six percent of world production but 20 percent of global trade. The two countries are disease-free in accordance with the World Organization for Animal Health, giving Australasia renderers a trading opportunity. Tallow is predominantly traded with China and Singapore while meat and bone meal’s main market is China and Indonesia. Rountree explained that Australia’s ovine meal is a premium product attracting a premium price into the United States and EU.

Despite currency exchanges being a roller coaster ride for the two countries, there has been good return for producers, providing renderers an opportunity to make capital investments at a steady rate. Rountree noted that the ARA and New Zealand group are working together to promote the industry as responsible, sustainable, and essential as customers become more demanding, wanting assurances that rendered products are free of Salmonella, plastic and metal contaminants, and moisture, impurities, and unsaponifiables.

“Times are good for an Australasian renderer,” Rountree declared. “Good demand and good prices. But we need to be vigilant that international market access requirements are science-based and not technical barriers to trade.”

Lucas Cypriano, Associacao Brasileira de Reciclagem Animal (ABRA), pointed out that rendering was pretty much invisible in Brazil until 2003 when the first rendering regulation was published establishing production procedures, good manufacturing practices, and other specifics.

“Things are changing,” he noted. “Overall, the picture is better now than before legislation.” Yet there is still much work ahead, including educating feed manufacturers on rendered proteins since most are using pet food standards for livestock feed at a higher cost. Rendering companies in the city are also educating local schools and the public “before someone else tells their story in the wrong way,” Cypriano said.

Brazilians love to eat meat at the rate of 229 pounds (104 kilograms) per person annually. Poultry is the leading meat consumed at 44.1 percent, followed by beef at 37.8 percent, pork at 13.3 percent, and turkey at 1.7 percent. The 2003 rendering law does not allow collection of dead stock, zoo animals, or pets, which amounts to 1.4 MMT of material that is primarily composted.

Most rendering plants in Brazil use older technology and equipment from the 1970s and are dry, batch, manual systems leading to poor hygienic control, according to Cypriano. However, three new rendering plants are being built using automated, continuous wet rendering that is more reliable and efficient. In all, Brazil has 512 rendering plants, 343 connected to an abattoir and 169 independent facilities, which processed 12 MMT of raw material in 2012 – 57.8 percent ruminants, 35.1 percent poultry, 6.1 percent swine, and 1.1 percent fish. This translated into 3.3 MMT of protein meals and 1.9 MMT of fats and oils. Nearly 70 percent of those products were used in feed, followed by 14 percent for health and consumer products, almost eight percent in pet food, and just about 10 percent for biodiesel, which has helped boost the price of tallow considerably although demand for biodiesel is only half of the country’s capacity.

Cypriano revealed that the Brazilian government is discussing a new rendered product standard that will set free fatty acid maximums at six percent, although there is no scientific data to support this, peroxide maximums at 10 milligrams for meals and fats, and less than five percent fat content in feather meal. In an effort to move the industry forward in a positive way, ABRA is initiating a hygienic rendering program, assembling an export program, and working closer with the Brazilian veterinary department in an effort to allow rendering of dead swine and poultry, avoid the impending restrictive product law, and adjust the existing rendering law.

Dr. Mark Schipp, chief veterinary officer for the Australian Government’s Department of Agriculture, Fisheries, and Forestry, declared that China is very much a player on the world stage, but can be a complex environment as Australian renderers have experienced. Resumption of tallow trade with China has taken a “step-by-step approach,” stated Schipp, who is now waiting for final word on the market reopening.

He then offered tips from a government perspective on resolving trade issues, such as know the underlying reason for the issue needing resolve, don’t “gang up” on countries, use social situations (i.e., dinner) as an advantage, and don’t just rely on science to win the game. He then turned the table and offered tips for the industry, including using importers for an advantage, having patience, and maintaining a close working relationship with government representatives, which he commended the ARA for having done.

The symposium then turned into a debate forum where industry members from around the globe provided their reasons “for” and “against” more regulations. While some valid arguments were presented for both sides, it was ultimately decided by the audience that the rendering industry didn’t need any “more” regulations, just existing regulations applied appropriately. Several speakers noted that in the end, the customer is the final regulator.

“If the customer doesn’t like your product, they will stop buying your product,” said John Langbridge, Australian Meat Industry Council. “Apply current regulations properly and let the commercial regulator – the customer – rule supreme.”

Technology Takes Over
The third and last day of the symposium focused on environment, beginning with Dr. Mike Johns, Johns Consulting in Australia, who provided innovations to reducing a carbon footprint, a topic of debate among many, although recent studies continue to scale back more alarmist outcomes.

“There’s no doubt there’s been climate change, but I’m not sure carbon is really the driver,” Johns commented. He presented the carbon intensity of rendering operations, which is pretty low and falls in the range of other manufactured products, showing wastewater emissions as half the carbon footprint so this should be the first target for reduction. The first innovation is a covered anaerobic lagoon that Johns said eliminates 98 percent of the wastewater emissions if flaring the gas. An option to flaring would be to use the gas as a boiler fuel, but the lagoon must be robust. He then presented information about anaerobic ammonium oxidation, a new technology that is still in its infancy but shows great promise.

Next up was Sean Boyers, A.J. Bush and Sons in Australia, who shared a renderers experience on utilizing biogas after covering its anaerobic ponds at its Queensland plant. It was determined the keys to providing an optimum environment for anaerobic bacteria were wastewater temperature of 35 degrees Celsius (95 degrees Fahrenheit), plus or minus two degrees; a ratio of bicarbonate alkalinity to organic acids in the effluent of at least three-to-one; a pH of 7.0 to 8.0; and adequate nutrient and micro nutrients (most likely in place due to the nature of rendering wastewater). The project reduced the plant’s annual carbon emissions by 64 percent and its energy costs by 46 percent, earning A.J. Bush and Sons the 2013 Premier’s Sustainability Awards Business Eco-efficiency Award.

Two more presenters recapped a nearly completed project on the effect of rendering and blood processing on abattoir waste and emissions and how to obtain government grants in Australia for low carbon investments.

Julius Rath, Peerless Foods in Australia, closed the symposium with his recap of the meeting. He mentioned that four years ago, the Australia rendering industry’s biggest threats were the global recession, environmental issues relating to climate change, drought, and issues on animal and human health. Two years ago, concerns included the serious debt crises in the United States and Europe, the emergence of the rendering industry from South America, the reemergence of rendered products from North America and Europe, and the problems caused by bureaucracy and overregulation.

“Somehow we seem to learn to live with our problems, overcome them, and keep moving forward,” Rath remarked. “We are part of a resilient industry that is poised to seize the opportunity to provide sustainable energy and be a sustainable part of the food chain in the future.”

August 2013 RENDER | back