Change can be difficult, but is sometimes necessary and always inevitable. The rendering industry has seen change before and is seeing it again, this time in the form of new leadership for its association and new government regulations. Members of the National Renderers Association (NRA) learned about these new directions and other facets of business at the group’s 80th annual convention in late October in Naples, FL.
Self-proclaimed “equal opportunity finger pointer” James Wiesemeyer, Informa Economics, opened the convention with his take on the future of agricultural politics, regulations, and trade. He said the best way to explain what has happened in Washington, DC, is with a story his father used to tell him: “A glass half full is always good news since it used to be empty.”
“Problem is,” Wiesemeyer said, “Congress wants the glass to be full.” His prediction for economic prospects in the United States (US) is slow growth with headwinds, and stated that American businesses just want to know the rules.
“They may not like them, but they want to know them,” noted Wiesemeyer, who is “51 percent certain” the biodiesel tax credit will be extended after it expires this year.
“This is the perverted way your Congress works,” he declared. Wiesemeyer foresees mega changes in the production and usage of energy and his take on the Transatlantic Trade and Investment Partnership, or the US-European Union (EU) bilateral trade negotiations, is “I’ll believe it when I see it.”
Also peering into the future was economist Dr. Lowell Catlett, New Mexico State University, who admitted that economists “don’t know jack about anything.” He shared a recent report that examined the 195 countries with at least $1 billion in gross domestic product per year. It is estimated that the collective value of those countries in 2013 is $70 trillion, of which $17 trillion comes from the United States and $7 trillion from China.
“Five countries will produce over half of that $70 trillion,” Catlett announced. “More people have more money in the world and we’re [agriculture] producing more calories per person than ever before. That’s pretty darn good!” He then described a new world of three-dimensional manufacturing and the power of cell phones to diagnose cancer and track medical conditions.
“Get ready for a revolution, especially in business,” Catlett proclaimed.
Richard Sellers, American Feed Industry Association (AFIA), discussed the new Food Safety Modernization Act (FSMA) food and feed rules, explaining that “food” as defined by the Food and Drug Administration (FDA) means food for man and animals, “including chewing gum.” He shared the two major actions every rendering facility should expect under FSMA: (1) conduct hazard analysis and critical control point program, and (2) develop and implement written preventive controls plan, perform monitoring, validate the program, take the corrective actions, verify the program, and keep records for two years. In addition, good manufacturing practice rules will be required for all feed, feed ingredient, and pet food manufacturers.
Sellers informed the audience that the food rule focuses on microbial control while the feed rule will target chemical contaminants. He noted that renderers certified under the Rendering Industry Code of Practice or AFIA’s Safe Feed/Safe Food program are currently following the FSMA law, and FDA expects to only annually inspect 600 of the 190,000-plus food facilities due to very low funding.
“Is that not a drop in the bucket?” Sellers asked. On a positive note, industry will be able to assist FDA in writing guidance documents.
Next, Sellers shared tips for FDA inspections, such as inspectors cannot interview employees and are not entitled to see tonnage amounts or prices. He advised renderers to copy any documents that inspectors copy, to be polite, not to allow photography, and especially not to lie.
“You can say ‘I don’t know’ or ‘I can get that information,’ or ‘I’ll have to talk to my boss about that,’” Sellers explained. “It’s a federal crime to lie to a federal officer. And remember: they are there to collect evidence that can be used.”
Kevin Good, Cattle-Fax, gave an overview of the livestock industry, showing that commercial cow slaughter will be down about two percent this year and 10 percent in 2014, but a bigger beef cow herd is on the way for 2015. Feeder cattle imports are down 24 percent (more being fed in Mexico), and steer and heifer slaughter continues its gradual decline of about one percent per year.
“Despite tighter numbers, average carcass weights are up,” Good explained. “Four steers produce as much beef today as five did 25 years ago.” Those increasing weights have offset 75 percent of the impact of a declining cow herd during the last 20 years.
Global cattle slaughter is steadily growing after declining from 2008 to 2010, with India seeing the most growth, primarily water buffalo raised for dairy (India consumes the most dairy in the world, according to Good). India is now the fifth largest beef producer in the world, China is the largest beef importer, and the United States produces 20 to 22 percent of the world’s beef with just nine percent of the cows.
“That’s efficiency,” Good declared. On hogs, lower corn and meal prices will encourage a nearly three percent expansion in production for 2014. Young broiler production is also expected to expand into next year, growing from just over 8.4 billion birds in 2012 to nearly 8.8 billion in 2014. Global pork production in 2013 is forecasted to be 1.8 percent higher than last year while poultry is expected to be 2.2 percent higher. China is the leader in hog production while the United States is the top poultry producer.
As for grains, Good shared that about 45 percent of this year’s US corn crop is harvested and on track to be a record year, primarily fueled by the demand in ethanol, although production has plateaued to meet the Renewable Fuel Standard (RFS) mandate. Soybean production is growing in South America and although US production has been dropping, the country is still a big player.
“The world is awash in soybean oil,” Good stated. As for tallow and hide, tallow prices correlate with the price of crude oil, which is holding steady, and a rise in global car sales has translated to an increased demand for hides.
The role renderers play in the biodiesel industry was addressed by Donnell Rehage, National Biodiesel Board (NBB). He noted that 25 million gallons of biodiesel was produced 10 years ago, while this year’s figure is over one billion gallons.
“We are a feedstock-neutral organization; it’s necessary for the industry to grow,” Rehage commented. He estimated that 28 percent of biodiesel production this year used rendered fats as feedstock and encouraged renderers to join NBB’s advocacy for a multi-year extension of the tax credit that expires at the end of this year. Rehage also asked renderers to connect with the Environmental Protection Agency (EPA) and Congress to ensure RFS annual volumes are not reduced as rumor has indicted.
“No tax credit for 2014, along with a drop in RFS requirements EPA is considering, will cause a drop in biodiesel production,” he warned.
Taking Care of Business
NRA committees met during the convention to address future needs, beginning with the Animal Protein Producers Industry (APPI), where it was announced that AFIA will change its Safe Feed/Safe Food program once FSMA rules are out. Previously, AFIA recognized APPI’s Code of Practice audits as part of its program, but now renderers will need to tell the auditor to certify a plant under both programs to prevent a second costly audit.
Dr. David Meeker, NRA Scientific Services, revealed that the association has joined the Food Safety Control Alliance that was set up by FDA to assist in writing industry guidance under FSMA. He anticipates renderers will need to comply with new feed rules sometime in 2015. Due to the impending feed rules, NRA renamed its Transmissible Spongiform Encephalopathy Committee the Feed Ingredient Regulatory Committee.
Carlos Gonzalez, Novus, provided an update on the company’s petition to FDA to expand the use of ethoxyquin in rendered products. Most pieces are falling into place after FDA acknowledged the importance of this issue, and is on track to be resolved within the next few months.
Everything environmental was presented by Committee Chairman Robert Vogler, Valley Proteins, who announced that EPA is reviewing effluent limitation guidelines for rendering. Specifically, the standards for ammonia and total nitrogen are being studied due to concerns that the industry is a source of elevated nitrates in waterways. In addition, EPA has adopted a new stricter aquatic life ambient water quality standard for ammonia, based on ammonia toxicity of certain mussels and snails. Vogler stated that this standard is used by states in adopting water quality standards for local waterways.
Greg Sindt, Bolton and Menk, reported that the Iowa nutrient reduction strategy using a technology-based approach for reduction of nitrogen and phosphorus has been adopted. Other states in the Mississippi River watershed are looking at this as an alternative to in-stream standards. Sindt encouraged NRA and its members to get involved in this issue.
Biofuels Committee Chairman Chuck Neece, Farmers Union Industries, explained that petroleum companies are against increasing RFS volumes for ethanol because they can’t meet the higher inclusion levels due to decreased fuel demand. Other groups, including food companies and engine manufacturers, are also calling for a repeal or significant reduction of the RFS.
“Politically, a repeal of the RFS will be impossible,” commented Steve Kopperud, Policy Directions, who also shot down the possibility of an extension of the biodiesel tax credit after this year. However, Kopperud does believe EPA and the US House of Representatives Energy and Commerce Committee need to be reminded of the significance biomass-based fuels have on the distillate fuel market. NRA’s committee agreed to support the biomass-based distillate market and the value of the RFS for biodiesel and renewable diesel.
NRA’s Legislative Committee released a white paper on grease theft that is posted on Render’s website. The NRA Executive Committee voted to raise membership dues, the first increase since 2009, and include all renderer members in the International Market Development Committee (IMDC) program. Up until now, IMDC has been a voluntary contribution membership program.
The executive committee then introduced Nancy Foster, NRA’s new president (see “New NRA President Looking Forward” in this issue of Render), and then named the following new officers for a two-year term: Ross Hamilton, Darling International, as chairman; Tim Guzek, Sanimax, as first vice chairman; and Ridley Bestwick, West Coast Reduction, Canada, as second vice chairman.
NRA convention attendees took a trip around the world from the comfort of the meeting room. Niels Nielsen, European Fat Processors and Renderers Association, explained that although poultry and porcine processed animal proteins can now be used in fish feed in Europe, there is a delay in approved testing to allow poultry meal in pork feed and an even further delay for porcine meal in poultry feed. He expects those proteins will not be allowed back in feed until 2015 and 2016, respectively.
Nielsen revealed that European renderers are seeing a drop in raw material due to meat processors shipping more by-products such as pig heads and chicken feet to China. However, the 87 million metric tons (MT) of food waste could become a “very interesting situation” for renderers in the future.
Andy Bennett, Australian Renderers Association (ARA), shared his country’s trials and tribulations, including the welcomed departure of Australia’s two most recent prime ministers who were unfriendly to business. On the woeful side, the country’s carbon tax implemented in 2012 at $23 per metric ton now costs $24.15 with no chance of repealing the law until July 2014. Australia’s largest independent renderer is paying $1.4 million per year for the carbon tax, while Bennett’s operation, Talloman, is paying just under $700,000 annually.
“The tax is not doing anything about pollution,” Bennett declared. “The revenue is filling the black hole the labor government created.”
Australia’s protein meal exports to China is far from resolved with many plants waiting on audits and approval to export, and a recent highly pathogenic avian influenza outbreak in Australia caused China, Indonesia, and Taiwan to ban poultry meal imports from the country down under. These and other challenges have caused prices for rendered products to drop, but the biggest hurdle coming is a major supermarket chain employing British policymaking requiring no animal proteins in poultry diets.
“One major processor won’t capitulate, but another has,” Bennett commented. “ARA has engaged the services of an industry expert to point out the shortcomings of this approach.” Currently, poultry is the most consumed meat in Australia although rendered products processed in Australia and New Zealand are primarily from beef and sheep/lamb.
Alexandre Ferreira of the Brazilian renderers group SINCOBESP pointed out there are 343 integrated and 169 independent renderers in the country processing 12 million MT of raw material; 57.8 percent ruminants, 35.1 percent poultry, 6.1 percent swine, and one percent fish. Brazil’s exports of rendered products are growing, from 57,390 MT in 2010 to 89,227 MT in 2012 with the primary markets being Vietnam (38,592 MT) and Chile (28,910 MT). Over 44,000 MT of those exports is meat and bone meal followed by 19,347 MT of poultry meal and 11,469 MT of fish meal.
Brazil’s other rendering association, Associacao Brasileira de Reciclagem Animal, or ABRA, is working hard at putting the industry on the map by initiating a hygienic rendering program, assembling an export program, and working closer with the Brazilian veterinary department. Ferreira noted that the World Renderers Organization’s code of practice is helping to educate government regulators on the various aspects of rendering.
NRA’s regional directors gave a snapshot of other global areas, beginning with German Davalos who said that Mexico’s feed production has held steady the past two years despite an outbreak of highly pathogenic avian influenza in the second half of 2012 in commercial egg layers and at the beginning of 2013 in breeding hens. The 2012 outbreak was the most expensive at $750 million and a loss of 22 million layers. The country’s shrimp industry has also taken a hit this year from early mortality syndrome that first appeared in China. Production is expected to drop by 60 percent in 2013, which has led to a significant decline in aquafeed production.
Pet food demand in Mexico is increasing, but the country’s government is undergoing fiscal reform and pushing for a 16 percent tax on pet food. Davalos reported that half of Mexico’s households have at least one pet, but 64 percent of those are low income who go to the market and buy two to three pounds a week, not large bags.
Regional director Peng Li focused on Asia, where China has also suffered an outbreak of avian influenza leading to a 12 percent drop in feed production. US market access to the country for rendered products has been troublesome at times, but Li is working at educating feed companies and government entities on the safety of US products by bringing delegations to the states for plant tours and hosting seminars in China. Li announced that Malaysia is a new destination for meat and bone meal and the Indonesian market has reopened to meat and bone meal after being closed since April 2012.
Consultant Bruce Ross focused on Europe, where the feed ban is being relaxed due to a significant drop in bovine spongiform encephalopathy (BSE) cases. Out of 6.3 million tests conducted in 2012 in European Union countries, only 28 animals tested positive for BSE, 19 of those in cattle over 12 years of age. Another reason for the relaxation is the region needs proteins for feed. Ross stated that at the recent Global Aquaculture Alliance (GAA) conference it was made clear that “current fish meal stocks cannot support the growing aquaculture industry and it is unlikely that new sources of fish meal will be discovered.”
Ross next addressed the “horrific” amount of food waste, which is estimated to be about 1.3 billion MT per year globally. In developing countries, over 40 percent of losses occur at the post-harvest and processing stages, while in industrialized countries, more than 40 percent of losses occur at the retail and consumer levels. Europe sees nearly 90 million MT of food waste per year, excluding agricultural food waste and fish discards. European regulatory agencies are examining how to address this mounting problem.
Kent Swisher, NRA International Programs, recapped the international scene, explaining that there was lots of talk about sustainability by the soybean industry at the recent GAA conference. Yet, a chart showing the carbon footprint of various oils and fats indicated rendered products reduce greenhouse gas emissions more than any other fat or oil, a message that needs to get out. Swisher also warned that the new game in sustainability is certification.
NRA’s next annual convention will be held October 21-24, 2014, in Rancho Mirage, CA.
December 2013 RENDER | back