Renderers will Prevail

By Tim Guzek, Chairman, National Renderers Association

Editor’s note – The following is a speech, in part, given by Tim Guzek, Sanimax, at the National Renderers Association 84th Annual Convention in October in Santa Barbara, California.

There have been numerous natural disasters in the United States (US) this year, especially hurricanes, putting 2017 in the top 10 historically for the most active hurricanes with 13 named storms and 8 hurricanes, 5 of which were classified as major. In 2005, there were 10 hurricanes and in 2004, 8. One of this year’s major hurricanes, Maria, devastated Puerto Rico in late September, forcing the National Renderers Association (NRA) to relocate its annual convention from San Juan to Santa Barbara, California.

On the western side of the United States, terrible fires erupted in Northern California in October, destroying more than 7,000 homes and structures, killing over 40 people, and displacing 15,000 individuals.

As I wrap up my term as NRA chairman, let’s look back over the past two years, especially this last year when the United States welcomed a new president and Republican-controlled Congress. During his campaign, President Donald Trump made several promises and slogans that could potentially affect renderers, such as:
• “Buy American – Hire American”;
• ease of regulations – for every one new regulation, two need to be eliminated;
• rewrite the tax code;
• health care reform;
• infrastructure spending;
• stop illegal immigration; and
• improve exports and trade agreements so they are fair.

NRA had a strong voice and worked with Food and Drug Administration (FDA) regulators over the past few years on interpreting and implementing the Food Safety Modernization Act (FSMA). In addition, NRA staff served on a task force with the American Feed Industry Association and other interested parties to write curriculum that was used to train Animal Protein Producers Industry members on how to comply with FSMA and develop a food safety plan. This training was given both in person as well as online in conjunction with Kansas State University. Many FDA inspectors were also part of this educational opportunity.

As the American Association of Feed Control Officials continually reviews and updates feed and ingredient definitions, NRA staff is actively involved and attending committee meetings in an effort to look out for renderers’ interests. So far, staff has been largely successful.

NRA’s international marketing team – consisting of Kent Swisher, Peng Li, Bruce Ross, and German Davalos – is hard at work in front and behind the scenes advocating and supporting the industry’s export market. They have been instrumental in getting the China market back open for US tallow and also for reopening export markets for poultry and feather meals after many closed in 2015 due to avian influenza.

Each year in June, NRA hosts a Washington, DC, fly-in for its members. Anywhere from 30 to 45 renderers attend to listen to policymakers discuss subjects that affect the industry as well as meet with members of Congress and their staff to educate them on rendering and advocating on items that will improve the industry.

We all know that rendering has a great sustainability story. Two years ago NRA developed its strategic plan and several initiatives are already completed. Much more focus is now on communications with additional action plans identified and priorities established, such as a redesigned website and one-page documents with various messages about sustainability and the industry’s branding. The new NRA Update e-newsletter is a good recent addition.

The industry has seen a nice upward trend of about 11 cents per pound for fat prices over the past two years, although prices have recently begun falling. There is some volatility with protein meal prices, but they remain fairly flat overall.

Current Issues
On October 4, 2017, the Environmental Protection Agency (EPA) issued a notice of data availability seeking to potentially further reduce the advanced biofuel and biomass-based diesel volumes required under the Renewable Fuel Standard (RFS). NRA staff and members were on top of this action, collaborating with the National Biodiesel Board to provide comments to the notice. It appears this issue is now behind us as Trump directed EPA Administrator Scott Pruitt to back off any changes that would dilute a federal mandate for biofuel use.

Iowa Governor Kim Reynolds stated, “I had a very productive call with President Trump. Both of them [Trump and Pruitt] affirmed to me their continued commitment to the Renewable Fuel Standard.” A strong RFS helps renderers by creating alternative fuel mandates and increasing volumes that support the biodiesel industry, which uses 30 percent of US rendered fat and grease production as feedstock.

Steve Kopperud, Policy Directions, believes there is a good chance there will not be an extension of tax credits for biofuels from this Congress. If this proves to be the case, it is that much more critical to have a strong RFS to support the industry. Ideally, the rendering industry would like to see the tax credit extended for 2017 and 2018, incentives included in the 2018 farm bill, and support for a stronger biodiesel industry by increasing the volumes in the RFS, all which lead to better values and prices for rendered fats and oils.

On October 17, the US Department of Agriculture (USDA) announced it was withdrawing and not finalizing the Grain Inspection, Packers, and Stockyards Administration interim final rule regarding the scope of the Farmer Fair Practices Rules of the Packers and Stockyards Act. The rules were intended to enhance the power of livestock growers in relationships with buyers and processors. Packers support the withdrawal.

The Clean Power Plan put in place under President Barack Obama requires states to meet specific carbon emission reduction standards. The plan also includes an incentive for states meeting standards on deployment of renewable energy. The recent decision by EPA to rescind the plan supports fossil fuels and not biofuels as much. Withdrawing could also lesson the importance of rendering’s sustainability story. However, it is a clear signal that Trump, agriculture secretary Sonny Purdue, and Pruitt are serious about undoing many of the Obama-era regulations.

There has been a lot of talk on the North American Free Trade Agreement and its negotiations. NRA is advocating for (1) do no harm, (2) gain market access of meat and bone meal into Mexico, and (3) finalize the small ruminant rule to allow animal fats from Canada into the United States. The fourth round of negotiations closed in mid-October. If no deal is ultimately reached, tariffs could rise as they revert to World Trade Organization standards. Currently, rendered products move freely between Canada, Mexico, and the United States with no tariffs.

Issues of Concern to Renderers
There are various livestock/pet diet trends that are putting animal proteins in a negative light. One movement is toward an all-vegetable diet in poultry feed with many poultry producers claiming no animal or bakery by-products were fed to their chickens. Perdue touts “100% veggie fed” on its website, adding that “some chicken companies cut corners by feeding their chickens animal by-products like blood and bone meal. But all Perdue chickens are fed a 100% vegetarian diet, because we believe that if you wouldn’t feed it to your family, we shouldn’t give it to our chickens.” Renderers and animal nutritionists know the value of animal proteins in a chicken’s diet so this trend is ridiculous and primarily a marketing ploy.

Another top concern for renderers is food waste. The federal Food Recovery Act and some state-supported programs, such as in California, encourage alternative disposal options that could potentially take away some rendering raw materials and dispose of them in a method that is not the best use according to EPA’s hierarchy pyramid. The Food Recovery Act provides federal funding and loans for construction of large-scale composting and food waste-to-energy facilities.

Other issues on NRA’s and the industry’s radar include immigration, which agriculture and the meat industry depend on for their labor force, and the 2018 farm bill, which is renegotiated every five years and includes funding for programs such as the Market Access Program and Foreign Market Development that is critical to NRA. NRA staff and its lobbyist are working hard and doing a great job for members in advocating for renderers’ needs and staying on top of concerns and issues.

Positive News for the Industry
Despite some challenges, there is good news for the future of US renderers.

After the severe lows of 2014, the US beef industry continues to rebuild its herd that will ultimately lead to more slaughter and rendering raw material. All major species are on track to post production increases:
• three to four percent more beef, following a four to five percent increase this year
• two to three percent more pork and chicken following record years
• two to three percent more turkey

All of this adds up to a record meat output increase of three to four percent.

According to the Food and Agricultural Organization of the United Nations, worldwide annual livestock production growth is expected to be 1.4 percent year over year through 2030 followed by 0.9 percent growth from 2030 until 2050. In the United States, meat consumption (beef, pork, and chicken) has increased to a projected 214.8 pounds per person per year.

Key items that will help the US rendering industry to be robust and ride the tailwinds to success are:
• increased exports and market access;
• supportive government toward agriculture;
• increasing animal production and slaughter as evident in the opening, or soon to be opening, of several new slaughter facilities; and
• the messaging of rendering and its sustainability. The NRA Communications Committee is hard at work creating messages and tools to be used in telling this story.

Developed during NRA’s strategic planning process is the group’s mission: “To advocate for a sustainable food chain, public health, and the environment through the production and marketing of rendered products.” To accomplish this, NRA:
• promotes effective public policy, regulation, and technology;
• encourages responsible business practices;
• supports free movement and market access of rendered products in domestic and international markets; and
• improves stakeholder awareness and understanding of the value of rendering.

Our story is “Rendering is Recycling.” Our story is that over 50 billion pounds of raw material is converted into 20 billion pounds of finished products each year. These products are used as ingredients and feedstocks for a multitude of other products. Rendering’s benefits to society and the environment continues to grow as animal agriculture grows.

It has been an enjoyable two years working with NRA members, staff, and others affiliated with this great industry.

Renderers provide essential services and products that are part of the sustainability chain and while the industry will always deal with issues and have headwinds that make our job difficult at times, renderers will prevail with more opportunities going forward.

December 2017 RENDER | back