U.S. Industry Review

Kent SwisherVice President, International ProgramsNational Renderers Association

Overview

• Production• Global Markets• Prices• Outlook

Production Projections

Source: U.S. Census for mammalian MBM

NRA Estimates for poultry

Source: U S Census for mammalian MBMSource: U.S. Census for mammalian MBM

NRA Estimates for poultry

Revenue Losses to Renderers From 

M t i T V lLost Dead and Downer Collections

Metric Tons ValueMBM Lost 35,950       12,618,330$, , ,$Tallow Lost 21,815         17,364,726$ TOTAL 57 765 $29 983 056TOTAL 57,765       $29,983,056Source:  Economic Impacts of Proposed �Changes to Livestock Feed�Regulations

Informa Economics                  Informa Economics

Source: U.S. Census Bureau

Export Markets

Global Animal Protein Meal (HS230110) Exports by Major Suppliers (Metric Tons)

Country 2002 2003 2004 2005 2006 2007 2008 % Change

EU27 23 503 30 862 88 756 150 166 266 386 230 264 340 153 48%

( ) p y j pp ( )

EU27 23,503 30,862 88,756 150,166 266,386 230,264 340,153 48%United States 569,435 505,671 136,932 194,161 216,435 290,385 298,257 3%Australia 223 434 282 486 201 869 205 695 238 209 273 894 259 903 5%Australia 223,434 282,486 201,869 205,695 238,209 273,894 259,903 -5%New Zealand 132,540 131,390 133,018 135,431 152,072 146,266 149,405 2%A ti 39 864 41 813 75 058 76 420 49 909 73 366 73 309 0%Argentina 39,864 41,813 75,058 76,420 49,909 73,366 73,309 0%Brazil 16,448 31,847 44,505 40,296 67,624 71,056 62,903 -11%Uruguay 22,070 31,602 41,037 58,617 55,573 57,107 52,081 -9%Canada 110,011 77,393 60,891 57,811 66,510 42,449 25,709 -39%TOTAL 1,158,283 1,172,866 848,656 986,340 1,182,288 1,257,800 1,338,954 6%

Source: Global Trade Atlas

Source: Global Trade Atlas

Global Animal Protein Meal (HS230110) Imports by Major Importers (Metric Tons)

Country 2002 2003 2004 2005 2006 2007 2008 % Change

Indonesia 310,401 394,379 218,742 212,858 268,877 330,520 309,679 ‐6%

Global Animal Protein Meal (HS230110) Imports by Major Importers (Metric Tons)

Thailand 46,063 35,622 16,763 35,151 87,479 125,382 149,490 19%Vietnam 34,085 90,828 24,669 60,718 80,563 58,339 114,379 96%Mexico 62,634 61,711 59,750 113,433 125,692 112,328 107,187 ‐5%

United States 84,753 89,169 114,455 85,797 82,861 86,855 89,675 3%China 130,932 73,561 21,097 46,361 85,450 68,763 62,905 ‐9%Egypt 111,465 106,920 110,651 122,016 66,427 89,374 62,276 ‐30%Chile 13,580 24,089 33,627 20,953 40,419 45,191 53,141 18%Bangladesh 30,373 30,667 55,093 48,376 67,612 61,563 50,315 ‐18%Philippines 37,422 37,698 941,237 9,968 29,155 28,319 50,054 77%Taiwan 56,169 88,020 36,420 46,296 54,021 49,608 42,190 ‐15%Russia 19,543 24,924 27,147 36,988 23,964 22,379 38,610 73%S th Af iSouth Africa 38,296 33,244 29,014 26,369 37,422 37,698 35,919 ‐5%TOTAL 1,158,283 1,172,866 848,656 986,340 1,182,288 1,257,800 1,338,954 6%

Source: Global Trade Atlas

Global Tallow Exports by Major Suppliers in Metric Tons 2002-2008

Country 2002 2003 2004 2005 2006 2007 2008 % Change

Global Tallow Exports by Major Suppliers in Metric Tons 2002 2008

United States 1,034,398 904,673 853,015 792,372 857,755 1,000,837 1,040,926 4%Australia 340,901 384,758 396,129 375,782 364,205 361,856 372,532 3%Australia 340,901 384,758 396,129 375,782 364,205 361,856 372,532 3%Canada 245,243 173,433 289,432 230,654 237,723 207,847 183,765 -12%New Z l d 114 180 136 337 143 760 143 629 156 422 134 744 148 405 10%Zealand 114,180 136,337 143,760 143,629 156,422 134,744 148,405 10%Uruguay 47,386 39,374 45,227 56,724 75,270 66,387 62,877 -5%EU27 36,922 35,358 50,571 49,383 33,728 55,241 34,848 -37%, , , , , , , %Argentina 11,215 5,089 18,226 37,794 35,798 23,149 24,649 6%Brazil 13,352 4,259 46,347 44,491 12,445 18,516 633 -97%TOTAL 1 850 973 1 687 811 1 851 724 1 756 306 1 791 117 1 878 779 1 878 661 0%TOTAL 1,850,973 1,687,811 1,851,724 1,756,306 1,791,117 1,878,779 1,878,661 0%

Source: Global Trade Atlas

Global Tallow Imports by Major Importers in Metric Tons 2002-2008

Country 2002 2003 2004 2005 2006 2007 2008 % Change

Global Tallow Imports by Major Importers in Metric Tons 2002-2008

Mexico 377,441 370,966 454,512 437,779 399,877 477,711 516,266 8%China 320,865 296,499 318,520 307,361 308,813 337,687 365,351 8%Nigeria 51 585 62 705 57 834 118 805 124 717 161 554 123 567 -24%Nigeria 51,585 62,705 57,834 118,805 124,717 161,554 123,567 -24%Turkey 136,430 116,640 130,993 136,100 153,143 142,400 121,200 -15%South Korea 87,649 48,733 85,305 80,481 134,960 125,935 104,730 -17%CAC 161,852 150,760 169,285 100,518 123,977 121,618 117,182 -4%

Pakistan 84,324 113,483 70,189 92,376 78,208 74,301 64,726 -13%Japan 64,036 86,598 86,670 64,715 75,884 60,105 58,588 -3%pTOTAL 1,850,973 1,687,811 1,851,724 1,756,306 1,790,172 1,869,345 1,878,661 0%

Source: Global Trade Atlas

Rendered Product Exports

Source: Global Trade Atlas

Source: Global Trade Atlas

S GSource: Global Trade Atlas

Prices

Average Annual Prices of Selected Rendered Products, 2000-2008

Product/Location/Unit 2000 2001 2002 2003 2004 2005 2006 2007 2008% ChangeProduct/Location/Unit 2000 2001 2002 2003 2004 2005 2006 2007 2008Change

Inedible Tallow & GreasesPacker Bleachable (CAF Chicago-$/MT) $220 $258 $297 $392 $402 $384 $371 $612 $843 27%R d Bl h bl (CAF ChiRenderer Bleachable (CAF Chicago-$/MT) $231 $267 $299 $405 $425 $388 $371 $605 $796 24%Choice White Grease (FOB Central US-$/MT) $208 $232 $247 $342 $362 $351 $314 $533 $720 26%Yellow Grease (FOB Central US-$/MT) $170 $182 $206 $289 $329 $316 $282 $488 $629 22%Edible Tallow & LardEdible Tallow (CAF Chicago-$/MT) $256 $302 $327 $424 $434 $427 $417 $662 $866 24%Lard (Chicago-$/MT) $270 $329 $315 $441 $587 $462 $477 $706 $863 18%Lard (Chicago-$/MT) $270 $329 $315 $441 $587 $462 $477 $706 $863 18%Edible Tallow (CAF Gulf-$/MT) $254 $286 $316 $402 $401 $405 $414 $580 $733 21%Protein MealsMeat & Bone Meal, 50% Protein (Central US-$/MT) $192 $183 $182 $215 $196 $181 $165 $249 $351 29%Pork Meat & Bone Meal, 50% Protein $/MT $211 $208 $188 $229 $250 $217 $206 $266 $383 30%Blood Meal, 85% Protein (Central US-, ($/MT) $414 $402 $374 $474 $414 $427 $497 $620 $785 21%Pork Blood Meal, 85% Protein (Central US-$/MT) NR $441 $421 $496 $645 $594 $586 $737 $946 22%Source: United States Department of Agriculture (USDA)/Agricultural Marketing Service (AMS) Market News BranchSource: United States Department of Agriculture (USDA)/Agricultural Marketing Service (AMS), Market News Branch

Fats & Greasae reported in cents/cwt, and meals in short tons - converted to metric tons by NRA

NR - Not reported

Source: USDA/FAS; USDA/AMS

Monthly Protein Meal Prices 2003-20082003 2008

Outlook

Source: USDA/FAS

Global Economic Downturn

• 2009 Global GDP growth estimate - 9%2009 Global GDP growth estimate .9%• 2009 Developing nations GDP – 4.5%

• US debt projected to double by 2015 at 20 trillion p j ydollars and 100 percent of GDP

Global Economic Downturn cont.

• China GDP growth – estimated 7 5-8 5% in 2009China GDP growth estimated 7.5 8.5% in 2009• India GDP growth – estimated 6.5% in 2009• Global middle class will grow from 400 million in

2005 to 1.2 billion in 2030 with the largest growth being in Asia

• As incomes rise by 10 percent, meat consumption y p , pincreases by 15 percent

Source: USDA/FAS

2008 Global Biodiesel Production EstimatesCountry

Biodiesel (Metric Tons)

Rendered Product Use (Metric Tons)

A ti 897 405 100% S b OilRaw Material Source as a %

Argentina 897,405Brazil 968,797 145,319 Canada 85 000 76 500

100% Soybean Oil80% Soy Oil;15% Animal Fat

90% Animal FatCanada 85,000 76,500 EU 5,700,000 342,000 Indonesia 90,000

90% Animal Fat94% Vegetable Oil, 6% Animal Fat

100% Palm OilKorea 158,400Malaysia 420,000Paraguay 12 000 8 040

80% Soy Oil100% Palm Oil

67% Animal Fat; 33% vegetable oilParaguay 12,000 8,040 Thailand 329,000United States 2,333,733 466,747

67% Animal Fat; 33% vegetable oil100% Palm Oil

80% Vegetable Oil, 20% Animal FatUnited States 2,333,733 466,747 Uruguay 3,963 2,378 Turkey 25,000 Unknown

80% Vegetable Oil, 20% Animal Fat60% Animal Fat; 40% Soy Oil

TOTAL 10,998,298 1,040,984 Source: United States Deparment of Agriculture/Foreign Agricultural Service, GAIN Reports. National Biodiesel Board. European Biodiesel Board. Industry Estimates.

Brazil – Case Study

• 2008 3% biodiesel blend mandatory• 2008 – 3% biodiesel blend mandatoryWhat did this mean for tallow?• 2005 Brazil exported approximately 45,000 mt

tallow• 2008 Brazil exported approximately 600 mt of

tallowtallow• ………….and imported approximately 11,000 mt

of tallowof tallow• 145,000 mt of tallow used for biodiesel!• YTD 2009, Brazil imported 19,000 mt of tallow

USDA/Foreign Agricultural Service (FAS)

Summary

• Longer term demand variables continue to remainLonger term demand variables continue to remain strongEven with the economic downturn there are still• Even with the economic downturn there are still strong fundamentals for longer term demand

• New uses such as biofuel will continue to attract rendered products

• Rendered products will continue to be demanded in aquaculture as pressure on fishmeal resources q pcontinue

• WATCH CHINA!• WATCH CHINA!

Thank you……