The Invisible Industry Episode 3

This is a transcript of the Third episode of The Invisible Industry, a podcast brought to you by the North American Renderer’s Association (NARA)



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’m the director of communications for NARA. And joining me, as always, is our host, Marcus Windsor.

Today’s co-host, Michael Karmen. And today’s guest, Michael Rath. Thank you so much, everybody, for joining us. And a big thank you to Mike and, Mike, I know your schedules are hectic, so we really cannot thank you enough for being here. And without further ado, I’m going to go ahead and turn it over to Marcus for the introductions.


Thanks, Anna. Thank you all for being here today. And just want to say hello to our guest host, Mike Carmen, if you wouldn’t mind giving us an introduction of yourself, please.

Mike K

Hi, everybody. Mike Karmen with Santimax, located in Green Bay, Wisconsin, here at Sanimax 30 years, grew up on a small family dairy farm just outside of Green Bay, Wisconsin. Studied agribusiness in college, and right after college, moved right into,a small local rendering company by the name of Animax here in Green Bay.

I worked my way through fat on the farm, through international sales, through marketing of finished products, as well as a little stint in traditional biodiesel, and then onto procurement. So all raw material for our us locations. So a little bit over 30 years and happy to be here in the rendering industry and happy to be here today.

Thank you, Marcus.


Thanks again for being here today. Mike Rath, you’re up next as our guest. Would you mind giving us your introduction, please?

Mike R

Thank you, Marcus. Yes. So I’m Michael Rath. Darling ingredients. Been here for almost 13 years now in the industry overseeing, product sales and marketing. And then also our federal lobby on renewable fuels, along with our oversight of our energy procurement and our railroad fleet management.

Prior to Darling Ingredients, I spent about 22 years at ADM, overseeing or involved in various aspects from grain merchandising, oilseed crush, to soy protein, edible sales, and then the last, seven years in their business development of renewable fuels and renewable chemicals division.

So thank you, Marcus, and looking forward to this.


Thank you again, Mike. Pleasure having both of you guys here today. Since you’re both very busy, we’ll jump right into the questions. So what exactly are biofuels? And what is the biofuel industry? Could you describe that to us, Mike R?

Mike R

 Certainly the biofuels industry, I think, first is, you know, if you were to describe it as renewable fuels are made from biological feedstocks that reduce toxic emissions typically greater than 50% is the criteria needed versus traditional gas or diesel in the tank. So that would be the definition of renewable fuels in general. 

And typically, if you look at the US industry, it’s made up of the gas side, which is ethanol-based. And on the diesel side, it’s renewable diesel and biodiesel.

Mike K

And Mike, just a question around the differences between traditional biodiesel and renewable biodiesel, if you can maybe explain that a little bit.

Mike R

Certainly so traditional biodiesel was the first generation and it is probably a simpler process, to produce fuel than renewable diesel. Traditional biodiesel was brought in in the late nineties, early two thousands into the United States. And if I could, I’ll just try and go over the layman’s process of it.

Typically you bring a vegetable oil in and it goes through a step called transesterification, where you react it with methanol in a catalyst. You clip off the glycerin and you end up with a methyl ester. And that methyl ester then is cleaned up and it can be blended with traditional, petroleum diesel typically up to 20% for over the road vehicles.That product has very similar emissions to renewable diesel, very clean emissions. 

The second generation is really defined with renewable diesel. Renewable diesel is probably, three key steps, but it’s really a petroleum refinery technology being applied to a different feedstock. The three major steps are going to be, first, a pre treatment, which is very similar to what you see at a soybean oil refinery that produces soybean oil for food grade refined bleach, deodorized.

A lot of those steps are utilized in some modifications of that, of the feedstock to make sure it’s clean before it goes into the reactors. Why does it need to be clean? Any minerals or metals can cause bad reactions in the reaction step. The first reaction step is called hydrotreating.

And in the hydrotreating, you’re taking the clean oil under very high heat, very high pressure and reacting it with a catalyst. And what you come out of there with is a paraffin or something that’s very thick. So you’ve had the first reaction. After that, you need to get it to a liquid fuel.

That step, again, is another reaction with high heat, high temperature, different catalysts, maybe some different conditions, and it’s called isomerization. And what you’re doing is taking it from, say, a crisco type product all the way to a liquid fuel. And that liquid fuel is identical to diesel from a molecule standpoint.

So big difference is methyl ester is a different molecule than petroleum diesel. Renewable diesel is the same molecule as diesel. Other big difference is biodiesel is much more economical. That was probably why it was very first generation, for less capital to be utilized. That’s kind of a description of the differences in it.

But both low-emission products that have similar benefits to the environment.


Let’s say you’ve got a product like used cooking oil or something like that. That’s a raw material that comes into a rendering facility. How do you change rendered products into something that can be a biofuel?

Mike R

So typically the rendering industry is very similar to other AG industries that we’re in the transportation business of the raw material, in the case of used cooking oil, we’re going to bring it in and we’re going to refine it, clean it up. And then we’re going to ship it out in large transport, typically truck, rail, or sometimes even barge to the biodiesel or renewable diesel facility.

So it’s very similar to soybean, corn or wheat. Soybean will move from the elevator. To a crush plant. The crush plant will apply separation technology and ship the product out. Or the elevator will ship it on a rail car or barge down to an export facility. And it will be exported.

So, if you think about it, we’re very similar in agriculture and bringing in a product on the meat byproduct for rendering. We’re bringing in a product. We’re separating protein, fat, and water. And then we’re refining all three of them, value-adding and sending them out. And we’ll refine the animal fat and send it in rail cars, down to the facilities that will do the conversion into renewable diesel or bodies.

Mike K

So, Mike, maybe could you explain a little bit about government involvement in our industry and then how this may support the rendering industry?

Mike R

Yeah, so I think it’s important that we do a little bit of a timeline on that. Especially as it applies to the United States here in 2007, we had RFS become law. And then 2009, it was promulgated. And that was really the backbone of the renewable fuel standard for the United States and the growth.

And it was set to go through 2022 and every year to be reviewed. And what that does, it puts an obligation on the refiners to move towards a more environmentally friendly fuel. And so if you think about that, it should be growing every year, creating investment in the industry to produce renewable fuels.

As we grow the business we should be able to do that. And so there’s two parts to it. One is the renewable fuel standard, which basically is providing the volumes that the refiners or the marketplace will need to meet every year. Both in biodiesel, advanced biomass based diesel, and then, ethanol and cellulosic ethanol.There’s kind of four buckets nested in together. 

So they were pretty sharp in how they developed that, and that was the backbone. And along with that, there was a dollar tax credit in there, and so that was there to help create an investment on this. So every year our industry looks forward to what’s going to be the increase in mandated volumes, number one. And number two, are we going to have the tax credit? And so Mike, as you know, being in the business world, in a high capital business, investment in a payback is usually three to seven year timeframe.

And our industry has really struggled because the mandated volumes are a little bit of a political football every year between a big ag and petroleum. And sometimes the environmentalist, getting involved as well. And then along with that the tax subsidy has expired. And there’s been as long as two years in the rears before we knew we were getting it for the last two years of production and then only maybe a year forward.

So it’s a real credit to the industry, if you think about that. We’ve been in that since 2010. Basically when the law was promulgated in 2009. And I look back in 2010, we produced 310 million gallons in the United States. And we’re going to 2022. I think we’re on pace to be just under 3 billion or right at 3 billion gallons.

So just in a little over ten years, we’ve had a ten factor size and we really haven’t had a long term policy either on the subsidy or the volume growth that was out there. So I think that’s a real asterisk to the resiliency of our industry.

Mike K

Right, I agree. And when you look at what it does for the rendering industry, what it also does for, if you want to talk about the ethanol industry and ddgs and extracting corn oil, causing that demand out there for those fats and oils, um, to be able to go into those markets and further advance the value of those products for companies,here in the United States.

Mike R

Mike you hit on something that I think we maybe need to probably expand upon, is one of the reasons, and I think your company was probably similar that we looked at in, 2009 of getting into this. Number one, we had feeds, a lot of feedstock that was you know, had the ability to become biodiesel or renewable diesel.

Number two, I think in 2007 through 2008, roughly, we were, as an industry, not just Darling, but as a rendering industry, we were exporting between 35% and 38% of our animal fats and used cooking oil. And we’ve seen some things on the horizon that looked like, boy, we’re not going to be exporting that, we need consumption. 

When you got a 30 year market going in exports, and that was for various reasons, trade barrier, palm growth, etcetera, and so that was one of the reasons that we started looking into the renewable fuels and getting involved in the conversion of it was we’ve seen a decrease in demand for our products.

And it’s amazing you look at that. I think today, Mike, and you’re probably closer to this than me, we’re only exporting 12% to 15% of our portfolio as an industry. So we’ve lost 20% to 25% of that market share. But yet we’ve been able to increase value to our supply network, being the cattle producer, the swine producer, the chicken producer and the processor through increased value. 

And that increased value matters. I mean we were exporting in 2007, 2008 at twelve cents a pound. I want to say tallow, and today that’s around $0.50 or better a pound. And I think that’s a real tribute to RFS. And Mike, I’d be interested to hear your comments, but as we’ve grown with RFS, the meat production in the United States, which was traditionally going to be against RFS, has grown and exports have grown.

So we’ve made ourselves the most competitive supplier of meat, around the globe.

Mike K

So when we look at, on the export side, we were exporting so much more and prices were quite a bit lower. Now we’re looking at say that 10% to 14% exports at some point in time with the demand that we see coming from RFS, but also the demand that’s going to be coming from the facilities that are being announced to be built.

There could be a potential where we may not ever see exports totally go away, but those imports will start replacing some of those exports because you’ll never replace maybe edible tallow going to Mexico or tech tallow going to Mexico. Those exports may still happen, but we’ll be replacing those pounds with material from other countries.

Mike R

I think RFs in an indirect way, through economic soybean meal and distillers grain, has provided us to be the most economical meat production country  in the world, along with our infrastructure to get it exported. So I think it’s a great story that probably gets under told and undervalued in the United States.

Mike K

Exactly. I totally agree.


Thank you both very much for that discussion. That was great. Hey, one question I have that’s come up. A lot of people talk about carbon footprints and that sort of thing. So what do you think? It’s going to be the conversation here in the future?

Mike K

So we see that with some of our major suppliers and even some smaller suppliers that are inquiring to understand what their opportunity is for maybe selling the story to their consumers, what they’re doing as far as recycling and reducing their carbon footprint. They look to companies that are returning their products back to the market to understand, so that they can build that story for the younger generation that wants to understand how much carbon,footprint is being reduced.

I can honestly say we’re being asked those questions. We can’t quite get to the numbers currently, but at some point in time those numbers will have to start flowing through and there’ll have to be an understanding of how do we calculate those numbers on a basis so that everybody’s on the same, if you want to say it, same basis so that it’s more understandable for the consumer and everybody’s on the same playing field.

Mike R

Every public company is getting asked more and more to report on this or develop metrics for it. And that’s really a reflection of the younger consumer in my mind today, as they want choices, and they want choices that make them feel good when they purchase something. 

And I think that’s really a growth that we’re seeing in the renewable fuels is you know, when you go to the meat counter, there’s choices, organic meat, wagyu beef, grass fed, etcetera. And I think they want the same choices at the pump a little bit, so to speak, when they, when they fill up.

And so we’re seeing that demand across the board from it’s consumer driven, now it’s moving to Wall street, hedge funds, etcetera. There’s even a few hedge funds that are out there that, you know, prefer to only, invest in environmentally friendly companies or sustainable companies. So, the word sustainability has different definitions to a lot of people.

And Mike’s absolutely correct. We’ve got to get some uniformity to really, pull this through the entire system as we go forward here. I would say that we’re not in the embryo stages, but the infant stages of that as an industry. 


So, what would be the marketplace in when you’re comparing different sources for biofuels?

Mike K

So, Marcus, that’s a great question. So, when you look at mainly how biodiesel started, it, it started with traditional vegetable oils. Mainly soybean oil was used as some of the first feedstocks for the biodiesel process. It’s because the product was pretty similar. It was liquid at room temperature.

It was easy to convert. And then what happened there was advancements on, um, pre tr biodiesel. Animax at that time saw that demand coming and they had invested in a facility to turn some of those animal fats into traditional biodiesel.

Most of the plants in the beginning were smaller, just due to their size and location and the feedstock availability in the regions. So there was a lot of smaller traditional biodiesels across the US that were built, if you want to say the first versions. And then after that was more onto the renewable side.

Mike R

Yeah. So when you look at, I think maybe for the general consumer, we should talk about the wide array of what can be used for biodiesel or renewable diesel. Traditionally, it’s been soybean or canola vegetable oils that were refined, bleached and deodorized. Then we moved to the animal fats and used cooking oil.

As Mike mentioned, his pre treatment expertise got better. And then after we started seeing the market growth, the corn ethanol market realized that they were sending out quite a bit of corn oil in their ddgs and started extracting that. So now today we have distillers corn oil out there as a raw material as well.

And there’s also what I would call third and fourth generation oils being developed as Catalina and algae oil are being developed in pilot lab or small commercial scales. So hopefully we have additional feedstocks to convert down the road here. I guess that probably bleeds us into really what’s going on in today’s marketplace Mike.

We’ve had a lot of announcements on renewable diesel growth you know, expansions of. Refurbishing old plants, building new plants. Our company certainly has been part of that growth. But what has been the result of that is we’ve had an incredible amount of soybean and canola crush plants announced.

And I think that’s a really big advantage for the United States circle of agriculture, both row crop production, meat production and renewable fuel producer. Because that’s going to provide us more oil. And if you look at it today, we export about 60% of our soybeans yet and a large chunk of those go to China.

So this goes back to Mike’s earlier comments. Let’s move the product here in the United States. Let’s build the facilities to convert it and value add, create jobs. And then by the way, we got more oil, we’re going to have more greenhouse gas reduction here and we’re helping the environment.

So the recapturing of all the animal fats used cooking oil, we’ve added value to those, we’ve added jobs and then on top of that we’ve reduced the greenhouse gas effects in the environment tremendously, as an industry.

Mike K

Right. I think Mike, you hit it on the head. And what that is, is really the effect of the RFS, the renewable fuel standard and what that’s done for the row crop opportunity to gain those yields and have the finished markets for that. But then also the meat sector, as you had said growing our meat business here in the US.

But then what that’ll also do is it’ll allow for more production of rendered products to go back into and feed the system. So it’s the renewable fuel standard is what’s been allowing that growth and that’s allowing that growth to be homegrown here in the US and creating those jobs and those opportunities here 

Mike R

In North America as we mentioned, RFS is a federal program, but we also have state programs, a big one in California, Washington and Oregon. Canada hasnt announced their program, or the specifics are behind it, but we have some ideas as an industry what that’s going to look like. New Mexico and New York have come very close in passing someit’s called lcfs or low carbon fuel standards.

And really what they’re doing in that is they want to drive incentive or drive the fuel to move to their marketplace. And so there will be financial incentives to buy that product and utilize it in their state. And so that’s a second part of the commitment by governments and consumers is not only the federal but the state level.

And if you look around the world that’s going on, there’s a program in South America, in Brazil and Argentina and Bolivia, for renewable fuels. And then you go to Europe, which has probably been the leader in our industry when it comes to green legislation. And they’ve had red renewable energy directive, and they’ve actually, we’re on red two now, the second version of this.

And so they’ve got a European Union, I think, 22, 23 members, and then the individual. Individual states or countries within the European Union can also write their additional specific legislation within red two’s guidelines. So we’re continuing to see this growth not just in the United States or North America, but on a global basis Asia.

There’s various, consumption guidelines there for biodiesel as well. So this is not a trend that we’re just seeing here in the United States. It’s a trend everywhere. And I think one thing that’s interesting on that is we’re at about four and a half percent, maybe, of the diesel fuel tank that’s blended here in the United States.

You look in Europe and that’s, you know, you’re closer to the 7% and 10% range down in South America. And the two large vegetable oil producing countries, Argentina and Brazil, it’s about 10 to 15 typically. And then in Asia, there’s a couple countries that are up to 20% and 30%, um, blending activities.

So we’ve made a lot of progress. But yet, when you compare it on a global basis, we’re not the leader or we’re in the front. So, I think that gives us a pretty exciting horizon as we look out forward here.


There’s obviously room to grow. Do you think we’re going to have Amazon rocket going to the moon anytime soon that runs on old french fry oil or anything like that?

Mike R

Well, you know, the build back better bill that the democrats have attempted to get through here in 2022, and in late 21, has some inclusions for sustainable aviation fuel. So we’re going to have to wait and see how that legislation develops here.

And first of all, the specifics of the legislation. And then secondly, if it passes and what it looks like when it does. So you know, if you look to Europe, they’re certainly, putting some, mandates in over in Europe for sustainable aviation fuel in a few of the countries there.

So that trend is started. We’re going to have to see how it develops here in the United States. I’m not in the business of predicting political outcomes.


I really appreciate you all being here, especially Mike K. And Mike R. And Anna, our moderator. thank you all again.

Mike K

Thank you. Mike Rath, wonderful guest to have on the show here today. And I appreciate Marcus and Anna taking the time to promote the industry and promote Nara and help the American public and the American farmers. So, thank you.

Mike R

Thank you, Mike. Appreciate it as well. And look forward to seeing everyone shortly here.


Thank you again. Marcus and Mike. And, Mike, thank you so much for joining us today. We really appreciate you being on the podcast. And thank you at home listening or watching for joining us. For the invisible industry to learn more about rendering or the North American Renderers Association, you can visit stay curious, everyone.

And to all our rendering listeners out there, stay seen and stay green.


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