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Newsline By Tina Caparella Five Decades of Market Challenges In the past 50 years, the raw material collected by renderers in the United States (US) has nearly doubled, from ϯϬďŝůůŝŽŶƉŽƵŶĚƐŝŶϭϵϳϮƚŽĂŶĞƐƟŵĂƚĞĚϱϲďŝůůŝŽŶƉŽƵŶĚƐ today. This equates to more than double the amount of ĮŶŝƐŚĞĚƌĞŶĚĞƌĞĚƉƌŽĚƵĐƚƐƉƌŽĚƵĐĞĚ͕ĨƌŽŵϵ͘ϱďŝůůŝŽŶƉŽƵŶĚƐ back in the early 1970s to 22.5 billion pounds in 2020. Broken ĚŽǁŶďǇƉƌŽĚƵĐƚ͕ϯ͘ϱďŝůůŝŽŶƉŽƵŶĚƐŽĨƚŚĞƚŽƚĂůƉƌŽĚƵĐƟŽŶŝŶ 1972 was meat and bone meal while about 6 billion pounds was tallow and grease. In 2020, 10.1 billion pounds of protein meals (including poultry by-product meal and feather meal) and 12.4 billion pounds of fats and greases were produced. While the market challenges renderers have endured ŽǀĞƌƚŚĞƉĂƐƚ ϱϬǇĞĂƌƐ ŚĂǀĞǀĂƌŝĞĚ ĂŶĚ ďĞĞŶďĂƩůĞĚ ŵŽƌĞ than once, the industry has always emerged on the other side stronger and more resilient. Here’s a brief look at a few ŽĨƚŚŽƐĞƚƌŝĂůƐĂŶĚƚƌŝďƵůĂƟŽŶƐ͘ Financial Volatility Financial challenges have always plagued business, from ƚŚĞƌĞĐĞƐƐŝŽŶŝŶƚŚĞŵŝĚͲϭϵϳϬƐƚŽƚŚĞ'ƌĞĂƚZĞĐĞƐƐŝŽŶŽĨƚŚĞ ůĂƚĞϮϬϬϬƐ͘/ŶŇĂƟŽŶĂŶĚŚŝŐŚƵŶĞŵƉůŽǇŵĞŶƚ;ϭϭƚŽϭϮƉĞƌĐĞŶƚͿ ǁĞƌĞ Ă ƐĞƚďĂĐŬ ĨŽƌ ƌĞŶĚĞƌĞƌƐ ŝŶ ϭϵϳϱ͕ ĂƐ ǁĂƐ Ă ƐŝŐŶŝĮĐĂŶƚ ĚƌŽƉŝŶĞǆƉŽƌƚŵĂƌŬĞƚƐ͕ǁŝƚŚƚŚĞŝŶĚƵƐƚƌǇƐƚƌƵŐŐůŝŶŐƚŚƌŽƵŐŚ 1982. The US economy began to move out of the recession in 1983 and rendered product prices saw a brief rise before ƐƵīĞƌŝŶŐĂĐŽůůĂƉƐĞŝŶϭϵϴϱĂŶĚϭϵϴϲ͕ĚƌŽƉƉŝŶŐƚŽƚŚĞŝƌůŽǁĞƐƚ ůĞǀĞůŝŶϭϱǇĞĂƌƐĚƵĞƚŽŚŝŐŚƉƌŽĚƵĐƟŽŶůĞǀĞůƐƚŚĂƚĞǆĐĞĞĚĞĚ ĚĞŵĂŶĚ͘WƌŝĐĞƐǁŽƵůĚĞǀĞŶƚƵĂůůǇƌŝƐĞƐŽŵĞǁŚĂƚĂŶĚŇƵĐƚƵĂƚĞ ĨŽƌĂŶƵŵďĞƌŽĨǇĞĂƌƐƵŶƟůƌĞĂĐŚŝŶŐĐůŽƐĞƚŽŚŝƐƚŽƌŝĐůĞǀĞůƐŝŶ ϭϵϵϱĂŶĚϭϵϵϲĚƵĞƚŽƐƚƌŽŶŐĚŽŵĞƐƟĐĚĞŵĂŶĚ͘ƚƚŚĞĞŶĚŽĨ ϭϵϵϳĂŶĚĞĂƌůǇϭϵϵϴ͕ŚŽǁĞǀĞƌ͕ƉƌŽƚĞŝŶƉƌŝĐĞƐƐƵīĞƌĞĚĂŶŽƚŚĞƌ ĐŽůůĂƉƐĞĨŽƌŵƵůƟƉůĞƌĞĂƐŽŶƐ͕ŝŶĐůƵĚŝŶŐĂŶĞĐŽŶŽŵŝĐĐƌŝƐŝƐŝŶ Asia, which eventually brought down fats and grease prices ŐŽŝŶŐ ŝŶƚŽ ϭϵϵϵ͘ 'ůŽďĂů ĐŽŶĐĞƌŶƐ ŽǀĞƌ ďŽǀŝŶĞ ƐƉŽŶŐŝĨŽƌŵ encephalopathy (BSE) in the United Kingdom would eventually ŚĂǀĞĂŶŝŵƉĂĐƚŽŶďŽƚŚĚŽŵĞƐƟĐĂŶĚŝŶƚĞƌŶĂƟŽŶĂůŵĂƌŬĞƚƐ͘ In January 1997, the European Union prohibited the ŝŵƉŽƌƚĂƟŽŶŽĨĐĞƌƚĂŝŶĂŶŝŵĂůƉƌŽƚĞŝŶƉƌŽĚƵĐƚƐ͕ŝŶĐůƵĚŝŶŐƉĞƚ foods, from the United States, and followed up with a ban on tallow. Other embargos on animal proteins and fats in livestock feed and some industrial uses eventually followed and ƌĞŵĂŝŶĞĚŝŶƉůĂĐĞŝŶƚŽϮϬϭϬ͕ǁŝƚŚƐŽŵĞƌĞůĂǆĂƟŽŶŽĨƵƌŽƉĞ͛Ɛ feed bans in 2011. Other countries around the world have ƉƵƚƚĂƌŝīƐŝŶƉůĂĐĞĂŶĚƉƌŽŚŝďŝƚĞĚƚŚĞŝŵƉŽƌƚĂƟŽŶŽĨĐĞƌƚĂŝŶ rendered products over the years, forcing the US rendering ŝŶĚƵƐƚƌǇƚŽǁŽƌŬĞǆƚƌĂŚĂƌĚƵƐŝŶŐƐĐŝĞŶĐĞƚŽĐŽŶǀŝŶĐĞĨŽƌĞŝŐŶ governments that North American animal proteins and fats are ƐĂĨĞĨĞĞĚĂŶĚŝŶĚƵƐƚƌŝĂůŝŶŐƌĞĚŝĞŶƚƐ͘dŚĞďĂƩůĞƐĐŽŶƟŶƵĞƚŽ ƚŚŝƐĚĂǇ͕ŽŌĞŶƚŽǁĂƌĚŶĞǁďĂŶƐďĞŝŶŐƉƵƚŝŶƉůĂĐĞŽƌĞǆŝƐƟŶŐ ŽŶĞƐƚŚĂƚƐƟůůŚĂǀĞŶŽƚďĞĞŶůŝŌĞĚ͘ /ŶĂŶĞīŽƌƚƚŽƉƌĞǀĞŶƚƚŚĞĞƐƚĂďůŝƐŚŵĞŶƚĂŶĚĂŵƉůŝĮĐĂƟŽŶ of BSE through feed in the United States, the Food and Drug ĚŵŝŶŝƐƚƌĂƟŽŶŝŵƉůĞŵĞŶƚĞĚĂƌƵůĞŝŶϭϵϵϳƚŚĂƚƉƌŽŚŝďŝƚĞĚ most mammalian proteins in ruminant feed. The agency then ƉƵƚŝŶƉůĂĐĞŝŶϮϬϬϵĂŶĞŶŚĂŶĐĞĚĨĞĞĚďĂŶĂŌĞƌƐĞǀĞƌĂůĐĂƐĞƐŽĨ ^ǁĞƌĞĨŽƵŶĚŝŶƚŚĞhŶŝƚĞĚ^ƚĂƚĞƐ͕ƚŚĞĮƌƐƚŝŶůĂƚĞϮϬϬϯŝŶĂŶ imported cow from Canada. In 2007, Canada implemented an ĞǀĞŶƐƚƌŝĐƚĞƌ͕ƐƉĞĐŝĮĞĚƌŝƐŬŵĂƚĞƌŝĂůďĂŶĚƵĞƚŽƚŚĞŝŶĐƌĞĂƐĞĚ number of BSE cases in that country. Today, those bans remain ŝŶƉůĂĐĞ͕ĂůƚŚŽƵŐŚƌĞŶĚĞƌĞƌƐŚĂǀĞƐŚŝŌĞĚƚŽŵĞĞƚƚŚĞĚĞŵĂŶĚƐ ŽĨĐƵƌƌĞŶƚůŝǀĞƐƚŽĐŬĨĞĞĚŵĂŶƵĨĂĐƚƵƌĞƌƐĂŶĚĞǆƉĂŶĚŝŶƚŽŶĞǁ markets, especially pet food. As the industry entered a new century, an evergrowing glut of soybean oil and meal pushed rendered product prices to historic lows. At the same time, renderers and allied ŝŶĚƵƐƚƌŝĞƐǁĞƌĞĂďůĞƚŽĚĞĨƌĂǇŚŝŐŚĨƵĞůĐŽƐƚƐƚŽƐŽŵĞĞǆƚĞŶƚ ďǇƐƵďƐƟƚƵƟŶŐƚĂůůŽǁĂŶĚǇĞůůŽǁŐƌĞĂƐĞĨŽƌŶĂƚƵƌĂůŐĂƐĂŶĚ fuel oil rather than selling these products in a depressed ŵĂƌŬĞƚƉůĂĐĞ͕ Ă ƉƌĂĐƟĐĞ ƚŚĂƚ ďĞĐĂŵĞ ǁŝĚĞůǇ ĂĐĐĞƉƚĞĚ ďǇ ůŽĐĂů͕ƐƚĂƚĞ͕ĂŶĚŶĂƟŽŶĂůĞŶǀŝƌŽŶŵĞŶƚĂůĂŐĞŶĐŝĞƐ͘WƌŝĐĞƐǁĞƌĞ ƌĞďŽƵŶĚŝŶŐŶŝĐĞůǇƵŶƟůĞĐĞŵďĞƌϮϯ͕ϮϬϬϯ͕ǁŚĞŶƚŚĞĮƌƐƚĐĂƐĞ of BSE was discovered in the United States. Although animal ĨĂƚƐĂŶĚŐƌĞĂƐĞƐŽŶůǇƐƵīĞƌĞĚƐŝŶŐůĞͲĚŝŐŝƚĚĞĐůŝŶĞƐŽǀĞƌƚŚĞ ŶĞǆƚƐĞǀĞƌĂůǇĞĂƌƐ͕ƉƌŽƚĞŝŶŵĞĂůƉƌŝĐĞƐƉůƵŵŵĞƚĞĚŝŶϮϬϬϰ ĂŶĚĐŽŶƟŶƵĞĚƚŽĚƌŽƉĨŽƌƐĞǀĞƌĂůŵŽƌĞǇĞĂƌƐďĞĨŽƌĞƉƌŝĐĞƐĨŽƌ all rendered products surged from 30 to 70 percent to record highs in 2007 due to supply/demand factors and a growing ďŝŽĨƵĞůƐŵĂƌŬĞƚ͘ǀĞŶƚŚĞĞǆƉŽƌƚǀĂůƵĞŽĨƌĞŶĚĞƌĞĚƉƌŽĚƵĐƚƐ broke a record that year, reaching the $1 billion mark for the ĮƌƐƚƟŵĞ͘dŚĞďŽŽŵ͕ŚŽǁĞǀĞƌ͕ǁĂƐƐŚŽƌƚůŝǀĞĚ͘ Supply and demand again played a role in the collapse of rendered product prices in the second half of 2008 and into 2009, although prices strengthened toward the end of the year ĚĞƐƉŝƚĞƚŚĞĐŽƵŶƚƌǇďĞŝŶŐŝŶƚŚĞŐƌŝƉƐŽĨĂĐŽŶƟŶƵĞĚƌĞĐĞƐƐŝŽŶ͘ Prices began rebounding in 2010, with tallow reaching ƌĞĐŽƌĚƐŚŝŐŚƐŝŶϮϬϭϭĂŶĚƉƌŽƚĞŝŶƐƚŚĞǇĞĂƌĂŌĞƌ͕ďĞĨŽƌĞĂůů ƉƌŝĐĞƐƐĞƩůĞĚďĂĐŬĚŽǁŶĐůŽƐĞƌƚŽĂǀĞƌĂŐĞƐƚŚƌŽƵŐŚŽƵƚƚŚĞ remainder of the decade. In 2019, however, protein meal prices saw double-digit drops due to declining soybean meal ƉƌŝĐĞƐĂŶĚϭϬƉĞƌĐĞŶƚƌĞƚĂůŝĂƚŽƌǇƚƌĂĚĞƚĂƌŝīƐǁŝƚŚŚŝŶĂ͘/Ŷ 2020, however, prices rebounded closer to average despite a ŐůŽďĂůƉĂŶĚĞŵŝĐ;ƐĞĞ͞DĂƌŬĞƚZĞƉŽƌƚ͟ŽŶƉĂŐĞϭϬͿ͘ Market Changes /ŶϭϵϳϮ͕Ă͞ƌĂŐŝŶŐĐŽŶƚƌŽǀĞƌƐǇ͟ŽǀĞƌĚĞƚĞƌŐĞŶƚƐĂŶĚƚŚĞ ƌĞƐƵůƟŶŐƌĞƐƵƌŐĞŶĐĞŽĨŝŶƚĞƌĞƐƚŝŶŽůĚͲĨĂƐŚŝŽŶĞĚƐŽĂƉĨŽƌĐĞĚ the invisible industry into the spotlight. Beef tallow, which served as the basis for virtually all soaps—from yellow laundry ďĂƌƐ ƚŽ ƚŚĞ ĮŶĞƐƚ͕ ŵŽƐƚ ŐĞŶƚůĞ ĨĂĐŝĂů ĐŽŵƉŽƵŶĚƐͶƚŽŽŬ Ă ďĞĂƟŶŐŝŶƚŚĞϭϵϱϬƐĂŶĚϭϵϲϬƐǁŝƚŚƚŚĞŶĂƟŽŶĂůƐǁŝƚĐŚƚŽ laundry detergents. In 1951, 1.1 billion pounds of tallow was used in soap manufacturing, dropping to 603 million pounds in ϭϵϳϬ͘dŚĂƚƚƌĞŶĚďĞŐĂŶƌĞǀĞƌƐŝŶŐĨŽůůŽǁŝŶŐĂŶĂƩĂĐŬůĂƵŶĐŚĞĚ ďǇĞĐŽůŽŐŝƐƚƐĂŐĂŝŶƐƚƉŚŽƐƉŚĂƚĞĚĞƚĞƌŐĞŶƚƐĂŶĚƚŚĞŝƌƉŽůůƵƟŶŐ ĞīĞĐƚƐ͘ ^ĂůĞƐ ŽĨ ůĂƵŶĚƌǇ ƐŽĂƉ ƵƐŝŶŐ ƚĂůůŽǁ ŝŶĐƌĞĂƐĞĚ ϮϱϬ ƉĞƌĐĞŶƚŝŶϭϵϳϮĂŶĚĂůƚŚŽƵŐŚƚŚĞƵƉƐǁŝŶŐĐŽŶƟŶƵĞĚĨŽƌĂ 8 April 2021 Render www.rendermagazine.com /www.rendermagazine.com