Tough Times Down Under

By Tina Caparella

Australian renderers are having a tough go of it these days. The country’s meat producers are now using more of the animal for food meaning fewer by-products are going to rendering. In addition, a depletion of the cattle herd over the last few years and a reduction in sheep/lamb meat production has meant even less raw material available for renderers down under. The industry is also seeing challenges in export markets, energy and labor costs, and product prices. Because of these hurdles, renderers gathered to see “what tomorrow holds” at the Australian Renderers Association (ARA) 14th International Symposium in late July on the Gold Coast of Queensland.

A panel of meat producers provided a look at the big picture beginning with beef, which accounts for 48 percent of the country’s total animal protein production despite its substantial decline over the past 45 years. A record cattle sell-off in 2014 and 2015 has led to a 23 percent drop in production in the second half of 2016 and into this year.

Michael Nolen, Nolan Meats, confirmed that “back-to-normal” beef production may take a very long time to reach the levels of 2014/2015 but herd rebuilding is taking place in eastern Australia. He noted one downside of the situation has been the loss of skilled and knowledgeable workers due to plant shutdowns. Nolan shared the steps his company is taking to better prepare for the future, such as creating a more value-added product, maximizing the recovery of previously low-demand products for human consumption, and minimizing unnecessary costs, especially energy.

Poultry is Australia’s second largest meat sector, about 27 percent of all animal protein production. There have been eight consecutive years of record poultry production with expectations of this continuing as consumers change eating habits and opt for a more affordable protein source. Graeme Dillon, Ingham’s Group, which processes 3.5 million birds weekly, reiterated animal protein producers’ move toward adding value to raw materials that traditionally went to rendering, such as livers, hearts, lungs, feet, heads, and gizzards. He added that the industry is also seeing more demand for chicken raws going directly to wet pet food production.

Accounting for 16 percent of all animal protein production, sheep meat saw a slight decline (3 percent) in 2016 from the highs in 2014 and 2015, with a further reduction expected this year. This downward trend is due to producers retaining ewes for flock rebuilding and sheep for wool production. Roger Fletcher, Fletcher International Exports, noted that the industry is changing with less family farms and more corporate production, less domestic consumption leading to increased exports, and, again, use of more of the animal so less by-products are going to rendering. Rising energy costs are also a challenge in the sheep meat industry.

At only 9 percent of all animal protein production in Australia, pork has seen steady growth over the past four years. Linchon Hawkes, Swickers, stated the industry is seeing increased exports as only 60 percent of pork production is consumed domestically. He sees significant opportunity for Australian renderers under the United States (US) Environmental Protection Agency’s Food Recovery Hierarchy that shows feeding animals and industrial uses are preferred methods of food waste disposal over other options. Hawkes concluded that new rendering technologies and rethinking old solutions (i.e., collection and distribution) will be needed to address hurdles in the pork industry.

Allan McCallum, Tassal, reported that fish consumption is growing at a faster pace than all other animal proteins. Salmon consumption in Australia has doubled since 2004/2005 forcing Tassal to sustainably manage salmon by-products at their facility on Tasmania’s east coast. A new rendering plant was commissioned in November 2015 with 60 percent of its output being fish oil and the rest as fish meal supplying animal feeds and some pet food applications. However, as is the case in other animal protein sectors, there is some increase in consumer demand for fish by-products such as heads, belly, and trimmings leading to less material going to rendering. Yet growth in more value-added products like filets will ensure a balance of raw materials.

Thomas Mielke, Oil World, focused on the outlook for tallow and other fats/oils, saying that the annual price of tallow cannot be relied upon; instead look at the monthly and quarterly prices to understand tallow’s price movement. He noted that palm oil is the driver for all oils and fats.

“It is the elephant in the room,” Mielke commented. He went on to say that US tallow prices are overvalued while Australian tallow prices are undervalued, something he doesn’t expect to continue as one major biodiesel producer in the European Union wants to replace vegetable oil feedstock with tallow in the years ahead. As biodiesel production worldwide rises, tallow is of increasing importance for sustainability, Mielke declared. However, world demand cannot be met without Australian tallow, which is seeing low production.

He then shared that tallow production is rising worldwide with 9.5 million metric tons (MMT) forecasted for October 2016 through September 2017, up from nearly 9.2 MMT during the same time period in 2014/2015. Although there are ample supplies of oilseeds worldwide, primarily soybean, India and China are losing markets for oilseed production and there is a moratorium in Malaysia on the further planning of oilseeds. Soybean production will decline in 2017/2018 but supplies are still ample while rapeseed and canola will remain tight as European Union farmers lose interest.

Dave Elsenbast, Renewable Energy Group, reviewed the complex US biofuels market, which is becoming a mature, resilient industry despite unsettled federal policy at times. Currently, 60 percent of feedstock used for biomass-based diesel (biodiesel and renewable diesel) production in the United States is soybean and canola oils. Elsenbast believes more tallow will be used in the future due to an increase in renewable diesel production and state policy, such as in California. The state is the largest consumer of biomass-based diesel in the country because of its low carbon fuel standard, utilizing 412 million gallons in 2016, 12 percent of the state’s diesel market. Predictions are for 1 billion gallons to be used by 2020, 28 percent of California’s diesel pool. On a global scale, Elsenbast showed current production of biomass-based diesel at 10 billion gallons with projections of 14 billion gallons by 2021.

Feed Focus
Several presenters discussed sustainability in the feed industry, beginning with keynote speaker David Bray, Darwalla Milling and chairman of the Stock Feed Manufacturers’ Council of Australia as well as director at International Feed Industry Federation (IFIF). Australia’s total feed consumption last year was 13 MMT, with nearly half going to the beef and dairy industries and 24 percent to poultry. The feed council has been working with IFIF to create an environmental footprint for feed and to try to bring consistency to US, Canada, and European Union feed regulations. One question raised is whether shipping soybean meal across the world remains sustainable.

“Without imported soybean meals, [feed] mills would use more domestic canola and animal protein meals,” Bray stated. Other components being examined in feed sustainability are rising labor and energy costs and labor availability. As an association, Bray believes IFIF should conduct more research on why the poultry industry needs to use rendered products in feed. He shared that several poultry producers in New Zealand attempted to feed an all vegetarian diet but the birds were not responding well.

Roger Bektash, Mars Petcare and president of the Pet Food Industry Association of Australia, said foreign material contaminants in both fresh whole meats and rendered animal proteins is of utmost concern to the pet food industry as is Salmonella found in tallow and palatants. In addition, the environmental footprint of pet food production needs to be balanced with the value that pets bring to society.

International Interests
One morning of the symposium was dedicated to reports from around the world. Christine Wang, China Feed Online, gave a clear and concise explanation on the complexities of exporting rendered products to the Chinese market while Lucas Cypriano, Associacao Brasileira de Reciclagem Animal, or ABRA, examined both the Mexican and Brazilian rendering markets. In Mexico, just 28 percent of a cow goes to rendering while 24 percent of a chicken and just 12.6 percent of a pig that is not used for food is rendered. Despite this, newer and more state-of-the-art rendering plants are coming online although Mexico remains a net importer of animal proteins and fats for candles, soaps, and feed.

In Brazil, 12.2 MMT of raw material from ruminants, poultry, swine, and fish were rendered in 2015 with 680,000 MT coming from ruminants and 438,000 MT from poultry. This translated into 334,000 MT of protein meals of which 80 percent went into domestic animal feed and 16 percent to pet food. Fats and oils production was 192,000 MT of which 40 percent went for biodiesel, 35 percent for animal feed, 17 percent for health and personal care, and 5 percent to pet food. Brazil exports very few rendered products and is a net importer of animal fats.

Martin Alm, European Fat Processors and Renderers Association, updated attendees on the European market while Tim Guzek, National Renderers Association, highlighted the US rendering industry, which is seeing favorable prices for most rendered products. However, the United States is seeing an increasing trend to an all-veggie diet in the poultry industry due to a marketing misperception.

“We will always have some obstacles, but in the long run I think the rendering industry will do just fine,” said Guzek.

New Zealand meat and bone meal exports have been wobbling around 140,000 MT to 165,000 MT since 2001, noted Bruce Rountree, New Zealand Renderers Group. Tallow exports have ranged from 120,000 MT to 150,000 MT over the past 16 years. However, the tallow export market has switched dramatically from China being the primary importer up until 2013 when Singapore took over the top spot, except for a significant drop in 2015.

Technical Topics
The ARA symposium also featured a technical workshop and presentations by several individuals who addressed DNA testing of meals for specific species, steam optimization, air classification, feather processing, the emergence of insect meals, pressing, process management, removing foreign matter from raw material, and the efforts in Australia to curtail the vast amount of marine debris. Michael Betar, Standard Commodities Group, summed up the symposium with these words.

“Sustainability is a buzzword today across so many sectors, but it is a word that started with this industry,” he remarked. “It’s natural, it’s pure, and it’s recycling. Today’s world definitely applauds renewables, and tallow as a feedstock is recognized as an important raw material in the supply chain for many sectors and, in particular, biofuels. Animal protein has more options in the feed chain today than ever before and as the middle class grows so too will the opportunities for these products.”

August 2017 RENDER | back