International Markets, Biofuels on NRA Radar Screen

By Tina Caparella

While business matters were discussed at the National Renderers Association (NRA) spring meeting held in late April in Chicago, Illinois, export markets and the United States (US) biodiesel industry appeared to be at the center of attention.

Members of NRA’s International Market Development Committee (IMDC) heard about the challenges and opportunities in various parts of the world, beginning with Peng Li, NRA’S regional director for Asia. China’s total feed production in 2016 was 187.2 million metric tons, with 75.5 million metric tons for swine and 16.4 million metric tons for aquaculture. Li noted that the pet food industry in China has grown to 900,000 metric tons.

Soap production in China, at around one million metric tons annually, has been stable the past few years, importing 40,930 metric tons of tallow from New Zealand and 28,000 metric tons of tallow from Australia in 2016. The soap industry also imported more than 3.3 million metric tons of palm oil from Malaysia and Indonesia in the first 10 months of 2016, a 34 percent decrease compared to the same time frame in 2015. Poultry and feather meal from the United States is exempt from a Chinese ban that has been in place for Australian products since 2012, although US renderers are seeing increased competition from European and Brazilian meals at low prices. US poultry fat, however, has been banned in China since January 2015. NRA is currently lobbying for market access.

Imports of US tallow to China for industrial uses were once again allowed beginning in 2016 after years of closure. Li stated that the country’s pet food and human food industries need tallow but there is currently a lack of registered US facilities and stringent regulations on importers, pipelines, storage tanks, and final users. NRA will be assisting with the registration of US rendering company members who are looking to export tallow to China.

Li described Indonesia as the most important overseas market for US animal proteins as it produced 18.8 million metric tons of feed last year, of which 1.6 million metric tons was aquafeed. NRA is working on border issues in other Asian countries such as Taiwan – which currently only allows US feather meal, tallow, and porcine plasma imports – Sri Lanka, Vietnam, Thailand, the Philippines, and Malaysia.

NRA regional director German Davalos focused on the Latin American market, which imported 552,000 metric tons of US rendered products in 2016. Mexico was the largest importer at 413,000 metric tons, although down from 561,000 metric tons in 2015 and 467,000 metric tons in 2014. US rendered fat exports to Mexico saw a significant drop last year, from 456,000 metric tons in 2015 to 314,000 metric tons in 2016. Central and South America also imported less US rendered fats due to a switch to lower-priced vegetable oils.

As for the 165,000 metric tons of US animal proteins exported to the region in 2016, about 100,000 metric tons went to Mexico, down slightly from 2015. South America cut its imports by over half, from 97,000 metric tons in 2015 to 45,000 metric tons last year while Central America doubled its imports from 10,000 metric tons in 2015 to 20,000 metric tons in 2016.

“In order to increase animal protein exports into Mexico, we need to open the market for ruminant meat and bone meal,” Davalos commented. He noted that the country’s poultry industry is using porcine protein meal in feed formulations but cannot obtain enough to meet demand.

US animal protein demand in Chile and Peru dropped considerably due to challenging conditions for salmon production; however, Skretting, a global supplier of aquaculture feed, wants to expand its “fish meal free” diets for salmon to other farmed fish species. Worldwide, the aquaculture industry uses 40 million metric tons of aquafeed annually, a number that will double by 2030, according to Davalos.

The pet care industry in Latin America grew six percent from 2011 to 2016, with the premium pet food segment growing at a higher rate due to the humanization of pets in the region. Davalos said Mexico produces nearly one million metric tons of pet food per year, imports 50,000 metric tons, primarily premium products, and exports 25,000 metric tons. NRA is also working on market access for ruminant meat and bone meal in other regions of Latin America.

Bruce Ross, Ross Gordon Consultants, shared recent activities in Europe, including the continued debate over US used cooking oil exports to the European Union (EU) and renewable energy policy. While the EU continues to import used cooking oil from the United States for technical purposes, the European Commission is once again seeking to regulate this trade. Ross mentioned that the goal of the new EU renewable energy directive is to ban crop-based oils for biofuels. However, it is very likely there will not be EU-level targets for biofuel use beyond 2020 when the current mandates end.

Along with international challenges, US renderers are keeping an eye on the biodiesel and renewable diesel markets at home. NRA’s Biofuels Committee Chairman Doug Smith, Baker Commodities, reminded all that the $1-per-gallon blender’s tax credit for biodiesel and renewable diesel expired at the end of 2016 but the National Biodiesel Board (NBB) supports introduction of new legislation to not only reinstate the credit but to change it to a producer’s credit (see Biofuels Bulletin on page 20). This will help deter the increasing amount of imported biodiesel that is receiving a tax benefit originally intended for domestic production. Rendered fats and oils account for about 30 percent of all feedstocks used in biodiesel and renewable diesel production.

“It is a high priority for our industry to support biofuels,” commented NRA President Nancy Foster. Shelby Neel, director of state governmental affairs at NBB, informed the committee that state markets currently drive about one-third of US biodiesel consumption annually, led by California and its Low Carbon Fuel Standard.

“The left and right coasts are where the action and growth is currently,” he noted. “Midwest policies are about economic development while the West Coast is about environment.” In California, rendered fats and oils are preferred feedstocks due to their low carbon intensity. In 2016, nearly 400 million gallons of biomass-based diesel was consumed in California, about two percent of the total diesel fuel volume.

June 2017 RENDER | back