This is a transcript of the fifth episode of The Invisible Industry, a podcast brought to you by the North American Renderer’s Association (NARA)
Anna: Hi, everyone, and welcome to the Invisible Industry, a podcast where we discuss and educate on everything you didn’t know, you didn’t know about agricultural rendering, brought to you by the North American Renderers Association, or NARA. I’m your moderator, Anna Wilkinson. I am the Vice president of communications for NARA.
And joining me, of course, is our host, Marcus Wentzer. Now, today we’re going to be launching a new series on the show where we’re going to be talking about where rendered products actually go. And for our first episode today, we’re going to be focusing on animal feet. So without further ado, I’m going to go ahead and turn it over to Marcus to introduce our guest.
Marcus: Thank you. Clark Miller, our guest today, grew up in the commercial cattle feeding industry in La Salle, Colorado. He graduated from Colorado State University in 1992 with a degree in agricultural economics with an emphasis in animal science. Since then, he has continued to grow his expertise in animal feeds, working for such companies as Purina Mills.
Miller Feedlot is currently senior sourcing manager at Land O’LAKES Purina and has been involved with futures trading. He is also the proud grandpa of three of the cutest little girls in the world. Thanks for being here with us today, Clark.
Clark: Thank you.
Marcus: So, Clark, first question. Which rendered products do you use and do you have to process them further for your use?
Clark: So my focus really, um, I’ve used a lot of, from the pork bean bone meal, um, tremendous amount of blood meal, railcars, trucks, everything. So I use a tremendous amount. Um, and all of mine is going to go into the feed sector. Most m of it. There’s a little bit that I will sell directly into dairies to be used directly into their feed.
But most of my, most of what I purchase is going to go into the Purina feed mills. We have 54 plants around the country and they’re going to go into the feed mills and blended either into a pellet, into a meal, into a mineral mix, going into the actual feed.
So yes, there is further processing that we take it from, from the, what we receive from the, from the processing plants all the way to the, to the, uh, you know, into the finished feed to deliver to the, to the ultimate customer.
Marcus: Have you always used rendered products as an ingredient? And if not, what alternative products or ingredients have you used?
Clark: So I. Interesting. So I started trading, um, animal byproducts back in my younger days, but I first started with Purina Mills the first time in the, in the early 90s and actually started trading some of the animal byproducts back then, which, you know, back then meat and bone meal was just one.
We did pork meat bone meal, we did ruminant meat bone meal. And then when we had to segregate the two then, then you started segregating pork meat and bone meal, ruminant meat and bone meal, you know, avian blood meal, ruminant blood meal, pork blood meal and then I also buy plasma and things like that.
So, so I actually think that I buy a tremendous amount of the, of the rendered products and I’ve done it for you know, 35 years now.
Marcus: If you wouldn’t mind, could you tell us what the final product is and give us a little bit more of a description of it.
Clark: If you, if you think about what our process is, we are, you know, in the feed industry, I look at it and say it’s just like you know, we’re the bakers of the cake. So my job is to buy the ingredients, buy you know, the sugar and the flour and everything, bring it in and then we’re going to put that into a cake to take it out to the customer.
If you think about a pellet that we’re coming into depending on what that product is being used for and what the ultimate, you know, so a lot of times, um, some of the rendered products, most of it is going to be the protein value in blood meal, the protein value of pork meat, bone meal, etc.That’s where the value comes.
But if you take, if you take um, blood meal for example, that’s also a very good carrier for minerals. So what that finished product will look like is going to be different depending on what we’re doing. So if I think about the pelleted product you’re taking, um, you’re taking several different ingredients, um, and it could be you know, several dozen that go into mixing a ton of feed and that process is going to be, you know, through heat and steam.
It’s going to mix for a time frame and then it’s going to be put into a pellet and so you’re not going to be able to distinguish anything in that pellet, you know, individually. It’s going to be, you know, it might have wheat middlings in, it might have some, some soybean meal
But into that least cost formulation that pellet’s going to come to meet the formulation specs to the customer. And then that pellet is going to be delivered, to the customer. On the, other side of it is we may not pellet it, we may just mix it.
I’m going to say mix it very well so that it’s indistinguishable, but it’s, it’s just mixing. It’s not going through a belting process. So it’ll come in again, you know, several dozen different ingredients will come in to make that finished product, but it’s mixed into a meal. Then that meal is then delivered into the dairy, or to the poultry facility or to the hog facility, or just into, you know, consumer products as well.
So that’s where it’s going to move from point. You know, our process is going to be combining dozens of ingredients to make one final ingredient that meets the nutritional requirements for that customer.
Marcus: So you talked about nutrition, nutritional requirements. This is kind of an off topic. I don’t have this on the list of questions here, but curiosity. If somebody came along and they have came across some pelletized meal or whatever, the finished product for cow, and they wanted to feed it to another animal, chicken, a pig or even their pet dog or something like that, I mean obviously it’s not going to be formulated properly for that animal.
I guess how different is it between the different species?
Clark: So it’s going to be significantly different, especially depending on the type of product that you’re going into. So we’ve got, we’re very specific on, you know, the firewalls we have in place to have um, ruminant, um, ruminant products in that go into, into ruminant feeds, we can’t have that at all.
So we have, you know, so if there’s a, if there’s any ruminant meaning cattle feeds being manufactured in a facility, then we can’t have ruminant meat and bone meal in that facility, beef meat and bone meal in that facility. So we have tremendous amount of firewall. So you can’t, you can’t just take a feed that has been formulated for, for cattle and give it to hogs and vice versa.
The other side of it is, I mean as you all know that the nutritional requirements for each of the animals. For example, you know, a steer, cattle, etc. The way they metabolize because of their stomach system, they will metabolize Nutritional spec and nutritional products differently than what a hog will or, or a chicken will or anything like that.
So the types of proteins that you use will be different for a cow versus a hog versus a chicken. So, yes, for the most part there’s not going to be a problem, if the chicken gets some, cattle feed.
But whether it’s its ability to digest, it will be significantly different. But you do not want to have you going into the cattle side is where the big firewalls really happen.
Marcus: Yeah, understandable with the, BSE history and all that sort of thing.
How different would the product be, without using rendered products?
Clark: The way I would look at it is that there’s some products that just from a formulation standpoint because again if you’re trying to formulate, you’re formulating off of so many different things you’re formulating off of, when I was at CSU and you had your Pearson square, you’re formulating off of protein and fiber and that was about it.
Today we formulate off of so many different factors that it’s, it may include protein and may include metabolized protein. It may include, I mean there’s you know, fiber. It’s going to include, it’s going to include so many different things that if you take out something like animal, you know, especially blood meal or you know, pork meat, bone meal, et cetera, sometimes you can’t actually solve that formula.
So if I look at, if I look at blood meal for example, I love trading blood meal. It’s one of my favorite things to trade and there’s lots of reasons for that. But one of the things is there are so many things that you can’t replace it because it’s such a high protein to solve for the protein to deliver it into that animal.
It just physically can’t be done without something that’s extremely high in protein that’s natural. I mean, yeah, you can get some other you know, urea based products, things like that that you might be able to get that protein level but then you’ve got a lot of other issues.
So I mean blood meal is just a it’s a difficult product to use but yet it, it gives the ability to solve so much of that nutritional requirement.
Marcus: So Clark, it sounds like you’re saying that it’s critical for you guys to use rendered products in your, to make the high quality finished product you want to make.
Clark: Absolutely. You can’t. You. The need for the rendered products is essential to some of our finished products. Some things you can formulate around, but there are several things. That you cannot formulate around to hit the nutritional specs that those products require without the rendered products.
Marcus: So it sounds like we’ve already kind of answered this next question and let me know if I’m wrong here. Why do you use rendered products as a key ingredient instead of a synthetic alternative? And it sounds like you’ve answered that if, that you could be adding something else in or be lacking some other piece of the puzzle, if you tried to do so, yeah, you can.
Clark
You’re going to lack a piece of the puzzle because again, you’re trying to formulate for so many different factors. But the other side of it is that you might, you know, on paper you might be able to solve for a formula, but that animal cannot.
The digestibility of that animal just passes. For example,in the cattle, it might just pass right through the rumen. So you don’t get any, you don’t get any nutritional value. Even if it was incredibly high in protein, if they can’t metabolize it, then it does that animal no good.
Marcus: In an effort to understand future demand, what sort of growth do you anticipate for your products over the next three to five years?
Clark: The hope is that you continue to grow, all of our products and can you grow your business? The one thing that I kind of see is, a massive move that the industry will continue to have to make. And I think about this, that it happened back in the late 90s in the hog industry.
You see it happen in the cattle industry and you’re seeing it happen in the dairy industry. But as the individual processor, the individual growers begin to get bigger and more commercialized, what they start doing is their demands actually change. Where a dairy may need, they might sit there and say, I can buy all of my blood meal because I’m big enough, I can buy, rather than running it through the feed, I can buy it direct from the processor, um, the beef packing facilities, et cetera.
Or I can somehow start cutting out that middleman because I can have a more concentrated package right onto their facility. So I think the biggest thing that you’re going to see as, as producers get bigger, um, the demands,the way we supply their nutritional needs are going to change from, them being able to take larger pieces of the same thing.
Again, use an animal byproduct rather than, rather than, you know, running through a feed mill, they may buy it direct. And we got to figure out how to formulate around that
Marcus: With respect to that growing market demand for your products. What challenges do you think you’re going to face?
Clark: Biggest challenge that I would say that we face and this is just the nature of what we deal with. everybody in the industry wants price protections. They want to be able to control their costs so that they can you know, in essence protect their margin. You know, there’s so many opportunities, so many things available to protect um, their finished margin because all they’re trying to do is stay in business, protect the margin, make a good margin over the course of time.
One of the, challenges that you have with rendered products that you don’t have with a lot of other products is there. It’s a very, it’s a very difficult market to purchase forward. So if I’m selling a three month product to a customer, but yet your rendered product facility because of a, the you know, rendered products whether it be your tallows, your blood meals, your animal byproduct, you know, pork meat bone meal, etc.
They, have such huge, price swings and absorbing that risk for the customer is very difficult to do. So if I would say the biggest challenge that we have is how do you, how do you protect yourself from a price standpoint as you’re selling, as you’re, as you’re selling that product to the customer?
That customer needs the ability to price their fee so they can manage their margins.
Marcus: How’s that been lately with, I mean commodities are you know, up and down with fuel, um, prices and everything else lately just high. It’s probably been pretty tough to keep yourself safe then it has been.
Clark: The, I would say and I love what I do, but it has been in my 35 years of doing this, um, I’ve never…the challenges that we faced over the last um, the last three years have been just extreme. My little joke that I tell people, I said every day I feel like that I’m putting a puzzle together, figuring out how to make all the pieces work across our 54 females.
But every day at about 9 o’clock the four year old comes and knocks the table and messes up my puzzle. Because the logistics side of it, what happens with processors, being able to operate, your demand and your supply and demand just have not met easily.
I mean the price fluctuations I mean blood meal just because that’s close to my heart. The price fluctuations that we’ve seen this year on blood meal, um, I’ve never seen in my 35 years. When you go from room in a blood meal from $600 a ton to close to $3,000 a ton back to $600 a ton, it’s just massive moves and the ability to manage that risk and pass, you know, manage that risk to the customers is very difficult.
So yeah, it’s been unreal over the last, you know, two to three years and especially this last, this last year for some reason.
Marcus: Well, this is our, actually our last question. What competitive advantages do you feel you have versus your competitors through using rendered products?
Clark: So I guess, there’s a few things that I would say kind of is a, is a huge advantage. And this is where I’ve got advantages that you know, some others don’t. But because of, you know, my large buying footprint across the country, I’m able to, those risks that we talked about that are out there that most people can’t absorb, I can absorb them because I’ve got storage facilities in parts of the country that I can protect some price risk and I can kind of move some things around. So that’s one advantage that I have.
The other thing that I think just really um, helps us work through things is the ability to lease cost formulate is you start seeing you know, things just kind of moving up and down. You can, you can um, you can manage your risk a little bit through the formulation side.
And you know I would say that one of the advantages, some people may say disadvantages for me would be the relationships that we’ve developed over the last, you know, that I’ve developed over the last 30 years. I’m still trading and building relationships with the same people that I traded and had relations with relationships with 30 years ago.
So one thing that is changing that I, struggle with, I don’t really like is that there is a generation of trying to do everything through email and, just the non-verbal communications. And I really feel like that the way you develop a, partner which again I look at you know, the rendering operations, I look at them as partners because we’re all trying to get accomplished the same thing.
And by what, by those relationships that I have, they understand the needs that I have and I understand what they have and we work together very well. And that comes with just building relationships in the industry.
Marcus: Yeah, you remind me a lot of a person I used to work with, who was, he was on the sales end for rendered products. So he was always the face to face. And building those relationships was always, very important. It is still, I think and one of the things too that you said that you can kind of hedge your bets a little bit with storing some product in other places. That’s got to be tricky though with the shelf life that you might run into with rendered products.
Clark: Absolutely, yeah, that shelf life, you know, but again, the industry has done such a, and not exaggerating, the industry has done such an incredible job of building, a product that adds a lot, a long shelf life. And you know, if we, if you, care for a project, if you take care of it and store it properly, our ability to store is pretty significant.
But again, that’s come from the industry continuing to make a product that is consistent and um, um, consistent. And again, we can move it a lot of miles, etc.
Marcus: Clark, I really appreciate you being on today. I think you’ve really had some great informative answers here. It’s been a real pleasure speaking to you today.
Clark
Well, thank you very much. I really enjoyed being a part of it.
Anna: Thanks, Marcus. And again, thank you so much Clark, for joining us. And for all of you out there listening or watching online, we appreciate you joining us for another episode of the Invisible Industry. If you’d like to learn more, you can visit us online by going to ww.nara.org stay curious everyone, and to all our rendering listeners, stay, stay seen and stay green.
