“State of the Rendering Industry& NRA”

Tim GuzekChairman

National Renderers AssociationFall Convention

Ritz Carlton – Amelia Island, FLOctober 19th, 2016

The Rendering Industry This Year and Opportunities Ahead….

What’s Happened in the Past Year….

Large soybean and corn crops = low prices

Sustained low energy prices (biofuels, fuel, and natural gas)

FSMA feed rule finalized & compliance starting

Sustainability is a growing market trend

Food waste – a rendering issue – gaining national traction

NRA focus on helping our members

National elections in less than 3 weeks

Crop PricesFarm Futures - Bottom line: The crop is big and soybeans may provide only limited help. Look for futures to grind lower into 2017 unless concerns about South American weather emerge.

Ag Web - Corn and Soybeans Post Key Reversal Lower After October 12 USDA Report

Wall Street Journal - Soybean, Corn Prices Fall as Record Harvest Looms

Government raises U.S. production forecast and export prospects

Finished Product PricesFats

Source - The Jacobsen Company

Finished Product PricesProteins

Source - The Jacobsen Company

Energy PricesNymex Crude Oil vs. the Henry Hub Natural Gas

spot price

Food Safety Modernization Act

• Mandatory compliance started in September

• NRA informing, training and assisting membership

• Rendering Code of Practice training

- Held June 21 - 23

• Rendering Code of Practice “201” training

- Online FSMA training curriculum course

- 1st session started July 11

Food Waste – Trend and Rendering Concern

Food Waste “Food Recovery Act,” H.R. 4184

• Goal - Save money and feed more Americans by reducing food ending up in landfills

– Would provide new federal loans/grants for composting and anaerobic digestion projects

– Could divert animal by-products and UCO to “less green” uses, reducing our raw materials

• NRA supports EPA’s Food Hierarchy

Sustainability – A Market Trend

• 72% of Consumers want to learn more about

corporate sustainability initiatives

•75% of Consumers would be more likely to buy a

product or service if the company is making an effort to be sustainable

•82% of Consumers are more likely to purchase a

product that represents Corporate Social Responsibility than one that does not

•93% of Consumers have done something to

conserve energy in the last two years

Source: Clean Edge

NRA Highlights - 2016

• Implementing 2020 Strategic Plan

• 2020 plan driving NRA programs

• New sustainability focus

• More communications telling our story

• Strong regulatory response

• Growing export markets

• Advocacy in Washington,

D.C.

2020 Strategic PlanKey Stakeholders Told Us…

• Sustainability is a market driver, here to stay• Looking ahead - must be sustainable to be

competitive• Rendering sustainability offers

a solution for customers and suppliers to improve their green footprint

• We must enlighten them!

2020 Strategic Plan

• Desired state: Our global community trusts the unique social, environmental and economic value NRA members deliver

• Vision: To deliver sustainable rendering solutions to our global community

• Mission: NRA advocates for a sustainable food chain, public health and the environment via production and marketing of rendered products and services

To Accomplish This, NRA …

• Promotes effective public policy, regulation and technology

• Encourages responsible business practices • Supports free movement of rendered

products in domestic and international markets

• Improves stakeholder awareness and understanding of the value rendering delivers

Rendering is Sustainability

• Rendering plays a critical role in sustainability of the food chain and consumer goods

• It must be economically viable while socially responsible and ecologically sustainable

Principles of Rendering Sustainability

• Produce safe animal food

• Practice environmental stewardship and operate efficiently

• Care for local communities and employees

• Help feed a hungry world by providing nutritious feed ingredients for animal production by recycling responsibly

NRA & Sustainability

• New Sustainability Committee

• Developing industry-wide profile

• Producing tools for individual companies to create their own sustainability profile

– Identified sustainability attributes for rendering

– Carbon footprint calculator measures energy efficiency (developed by FPRF-funded research)

– New infographic on rendering’s sustainability vs. other disposal methods (also from FPRF)

NRA’s Future Focus from 2020 Strategic Plan

• Sustainability is our brand

• Communications

– Promoting

– Defending

– Managing crises

• Improving biosecurity & quality

• Sustain and increase membership

• Encourage future industry talent stream

Spreading the “Sustainability Message” and More …

NRA Communications in 2016

• Promoted our sustainability brand

• Engaged with social media

• Produced new feed safety video with posters for plant use & FSMA compliance

• Upgraded NRA website with FAQ’s

• Developing “Rendering 101” curriculum for university professors

Regulatory Offense … and Defense

• Created tools for members to comply with FSMA

– Popular APPI Code of Practice Training in June, On-line course at Kansas State this summer & fall

– Wrote thermal validation paper for FSMA audit use

• Gained workable changes in AAFCO definitions –UCO, yellow grease, animal fats

• Working with APHIS on new animal disease management plan

NRA in Washington, D.C.Priorities This Year

• FSMA implementation, training, compliance

• Strong biodiesel RFS, tax credits

• Sensible environmental regulations

• Food Waste

– Prevent meat/bone loss

• Exports & international trade

• Washington, D.C. Fly-In,

June 13-15, 2016

Promoting Exports-Growing Trade

• Small ruminant rule proposed, NRA submitted comments

• China - AQSIQ team visit mid-November

– Reopened market for U.S. poultry meal, feather meal, and tallow. Over $70M market

• Goal: U.S. ruminant MBM to Mexico

• Assisted members fix export

obstacles (trade servicing)

• Rendering information for new

APHIS vets

NRA-APPI-FPRF PartnershipOne Staff

FPRF

International Marketing and Promotion

• 18% of rendered products are sold overseas

• NRA receives $1.8 million/yr. from USDA to grow exports

– 70% industry funding match

• Hong Kong, Mexico City offices

• Consultants in aquaculture, poultry, dairy, pet food and EU policy

NRA Challenges Ahead

• FSMA compliance starts September

• Biofuels

– Must prevent “Stop Animal Fat Tax Credits Act”

– Promote robust RFS

• New president & Congress support

• Expand exports via more foreign market access

• Food waste becoming important

– Seek level playing field among recyclers

NRA Looking Forward• 2020 Strategic Plan will continue to drive

programs, resources

• Expand strategic alliances to increase understanding and support for rendering

• Work so FDA inspectors know COP means FSMA-compliant

• Assist members wanting to develop sustainability profiles

• Increase membership

NRA Looking Forward

• Promote rendering’s sustainability

• Expect AAFCO change in feeding fat definition affecting uses of trap grease

• Provide member tools for more community outreach

• Defend the industry and marketplace

• New “NRA Update” member newsletter

Future Industry Challenges

• Human food trends driving pet food purchases

– No byproducts, raw diet, natural, organic, grain free

• All animal food - Increased attention on additives, residues, FM, consistent quality

• Further strengthen community relations to ensure continued ability to operate

– Promote sustainability, jobs, tax base, volunteer commitment and civic involvement

Years 2017 - 2020

Opportunities or Challenges?

Thank You