Merger of rendering companies expected to be finalized October 28

Darling International expects to close on the purchase of Rothsay, the rendering and biodiesel division of Maple Leaf Foods, on October 28, subject to satisfaction of any remaining conditions. The Competition Act condition required to proceed with the purchase was announced on October 3, clearing the way for the transaction to close.
Rothsay is the leading recycler of animal byproducts in Canada, and it collects, processes, and recaptures edible and inedible byproducts. Rothsay processes raw materials into finished products of fats and proteins. Rothsay has a network of five rendering plants in Manitoba, Ontario and Nova Scotia, and a biodiesel operation in Quebec, Canada. Its 550 employees will transition to Darling International when the transaction closes.
Darling International Inc., based in Irving, Texas, is the largest and only publicly traded provider of rendering and bakery residuals recycling solutions to the food industry. The company recycles beef, poultry and pork byproduct streams into usable ingredients, such as tallow, feed-grade fats, meat and bone meal, poultry meal and hides. The company also recovers and converts used cooking oil and commercial bakery residuals into valuable feed and fuel ingredients. These products are primarily sold to agricultural, pet food, leather, oleo-chemical and biodiesel manufacturers around the world. In addition, the company provides grease trap collection services and sells used cooking oil collection equipment to restaurants.
Maple Leaf Foods food processing company is headquartered in Toronto, Canada.

Maple Leaf Foods to sell Rothsay rendering and biodiesel business

Maple Leaf Foods has entered into a definitive agreement to sell Rothsay, its rendering and biodiesel business, to Darling International. The transaction is subject to regulatory approvals and is expected to close by the end of 2013.
"The sale of our rendering and biodiesel business supports our strategy to focus on effective capital deployment and profitable growth in the consumer packaged foods market," said Michael McCain, president and CEO of Maple Leaf Foods. "We are delighted to have concluded almost a year-long process with an agreement with Darling, the North American leader in food waste recycling. The sale will support future investments in our consumer facing businesses and allow Darling to build on Rothsay's strong capabilities and deep customer relationships."
Proceeds from the estimated $645 million transaction will initially be used to pay down debt. Maple Leaf Foods managers will also consider reinvesting in its core consumer packaged food businesses or returning excess capital to shareholders.
Rothsay is the leading rendering company in Canada and a leading producer of biodiesel. The business operates six rendering plants located in Manitoba, Ontario, Quebec and Nova Scotia, and a biodiesel facility in Quebec. It employs about 550 people, who will transition to Darling once the transaction closes. Maple Leaf plans to enter into a long-term contract with Darling to receive by-products recycling services at competitive market rates.
Darling International, based in Irving, Texas, is the largest and only publicly traded provider of rendering and bakery residuals recycling solutions to the U.S. food industry. The company recycles beef, poultry and pork by-product streams into useable ingredients such as tallow, feed-grade fats, meat and bone meal, poultry meal and hides. The company also recovers and converts used cooking oil and commercial bakery residuals into valuable feed and fuel ingredients. These products are primarily sold to agricultural, pet food, leather, oleo-chemical and biodiesel manufacturers. 

US biodiesel production reaches record levels

United States biodiesel production in May 2013 reached a record level of 111 million gallons, according to data released by the U.S. Energy Information Administration.
Production came from 116 active biodiesel plants with an operable capacity of 2.2 billion gallons per year. Production for the first five months of 2013 was 449 million gallons, an increase of 17 million gallons from the same period in 2012. There were 3.427 billion pounds of feedstocks consumed for biodiesel production during the period from January-May 2013, giving a ratio of 7.6 pounds of feedstock per gallon of biodiesel produced. Of the total biodiesel feedstocks, 1.838 billion pounds, about 54 percent, were soybean oil.
The use of biodiesel as a motor fuel is supported by federal mandates for biodiesel blending under the Renewable Fuel Standard program. Under this program, the U.S. Environmental Protection Agency sets annual targets for the use of biodiesel and other biofuel categories, such as advanced and total biofuels, which can also be satisfied through additional biodiesel use. Biodiesel blenders are also currently eligible for a federal tax credit of $1 per gallon blended.
Most biodiesel fuel is blended with diesel fuel derived from petroleum and is used in the transportation sector. Biodiesel accounted for less than 2 percent of U.S. distillate fuel oil product supplied (used as a proxy for consumption) of 3.9 million barrels per day during the first five months of 2013.

Glycerol treatment system transforms low-grade fats into biodiesel

The Alfa Laval Adavanced Glycerol Treatment plant

Alfa Laval, an engineering solutions provider, announces the Advanced Glycerol Treatment systems. The treatment systems turn low-grade fats, oils or grease byproducts into high-quality biodiesel - allowing processors to pick and choose the lowest byproduct or feedstock market price to increase overall profitability.
Alfa Laval's Advanced Glycerol Treatment system is a prefabricated, turn-key biodiesel pretreatment solution for virtually any existing transesterification plant - scalable for a capacity of 15 to 1,500 hectoliters per day. The systems allows for source material flexibility as it increases vegetable and animal byproduct value by reducing the free fatty acids content down to 0.8 percent, resulting in a higher quality oil which is then easily processed into biodiesel fuel.
Knowing that byproduct or feedstock prices represent the bulk of biodiesel production costs, the Alfa Laval Advanced Glycerol Treatment system provides feedstock flexibility to the price-volatile edible oil spot market - where processors now have flexibility to shop the fat and oil market for the lowest possible raw material cost - increasing overall plant profitability.
The Advanced Glycerol Treatment system also provides flexibility on the plant output side. Processors can tap off the bio-refined oil at different stages of production and upgrading - when biodiesel is traded as an oleochemical for pharmaceuticals and cosmetics, forwarded to off-site biodiesel producers, or processed as mono-glycerides and diglycerides treated oil which is then ready for mixing as heavy fuel oil.
The modular, prefabricated Advanced Glycerol Treatment pretreatment plant is characterized by low operational costs, high yield, heat recovery, low waste and emissions. No catalyst is needed, and it provides optimum use of surplus biodiesel glycerol output. 

Ag economist urging Congress to fix Renewable Fuel Standard

The Renewable Fuel Standard is broken, but Congress can fix the rule by acting now and opening an inclusive, robust debate that leads to extensive reform, Dr. Thomas Elam, president of FarmEcon LLC, said at a media briefing on February 4.
Elam presented his remarks on behalf of the National Chicken Council and National Turkey Federation.
Congress in 2005 enacted the first Renewable Fuel Standard which mandated levels of ethanol to be blended with gasoline. In 2007 that ethanol mandate was expanded, and biodiesel was added. The Environmental Protection Agency on January 31 proposed new percentage standards for four fuel categories that are part of the agency’s Renewable Fuel Standard. The proposal is open for a 45-day public comment period, and the agency will consider feedback before the proposal is finalized.

Renewable Fuel Standard challenge for industry
Elam stated that 2007 was a game changer, referring to it as a "Hail Mary."
"We did not then, and still do not today, have the volume of agricultural raw materials, or the required cellulosic ethanol technology, to meet the 2007 Renewable Fuel Standards goals," he said. "Nearly six years later, it's still not a commercial reality. The courts just a few weeks ago ruled this to be the case, as well."
Corn production has declined while Renewable Fuel Standard mandates have increased, Elam said while discussing the past three years. Smaller supplies have resulted in more than doubling of the most important input cost to poultry production — feed.
"Since Renewable Fuel Standard's enactment in 2005, annual feed costs for chicken producers have risen $8.8 billion, and turkey by $1.9 billion," he added. Cumulative additional costs for broilers and turkeys since 2006 total more than $42 billion.

Price increases passed along to consumers
Poultry producers are not the only ones being hit with added costs, though. Elam said these costs are passed on to consumers in the form of higher prices.
"USDA's average wholesale broiler meat prices leapt from 68 cents in 2005 to a record high 91 cents in December, 2012—a 35 percent increase. Turkey meat soared from 79 cents in 2005 to a record high of 120 cents a few months ago. And it's not just poultry that costs more. A variety of food products that depend heavily on corn feed are also more expensive. It's safe to say Renewable Fuel Standards is hitting consumers, poultry producers and farmers squarely in the pocketbook."
Another unintended consequence from Renewable Fuel Standards is bankruptcy for some. Elam noted that since 2008, eight major poultry producers filed for bankruptcy, and last year, the poultry industry's contract farmers—this includes many small family farms that raise live birds — lost about $500 million in potential income. "This loss is attributable to chicken and turkey production that did not happen because of higher feed costs," he explained.
"We need to inject a dose of reality into Renewable Fuel Standards, especially when corn supplies are limited due to historically low inventories," Elam continued. "Renewable Fuel Standards is a man-made crisis. The 2012 drought was not… As a witness to the devastating impact of Renewable Fuel Standards on the good people who work so hard to feed our country, I say, allow them to compete on a level playing field with fuel ethanol producers who have an unfair advantage thanks to the 2007 Renewable Fuel Standards rule changes.
Another concern Elam shared was that the market for E85 ethanol blends is not as large as some may lead others to believe.
“We’ve had E85 on the market for seven or eight years now, and consumers have not exactly flocked to E85, even though it’s been available. People don’t walk into a dealer buying a new car, saying ‘I’ve got to have a flex-fuel vehicle,’” Elam said. The fact is that ethanol is so expensive compared to gasoline on an energy basis, not a per gallon basis, that E85 is far from economical to put into your car on a cost-per-mile basis because of the reduction you see in your mileage.”

Ethanol exports on the horizon
Elam added that without a feasible market, the U.S. could end up exporting ethanol to other countries, “and I don’t think that was the intent of the law.”
Other groups participating in the media briefing included ActionAid, Taxpayers for Common Sense, American Fuel & Petrochemical Manufacturers, Environmental Working Group and National Marine Manufacturers Association.
Kristin Sundell, who spoke on behalf of ActionAid, said her organization’s biggest concerns about the fuel standards “puts a strain on land and food supplies, contributing to hunger and political instability across the world.”
Developing countries are still feeling the pinch of the U.S. drought and it’s impact on feed supplies, Sundell said, and that problem is magnified by the diversion of more than 40 percent of U.S. corn for ethanol production, in order to meet Renewable Fuel Standard mandates, Sundell added.
Tom Faber, vice president of government affairs for the Environmental Working Group, said ethanol production has hurt the environment, as 23 million acres of grassland and wetlands have been converted for corn production. That is a land mass the size of Indiana, Faber added. That conversion of idle land is driving more carbon to be released into the atmosphere, creating more herbicide and pesticide runoff, and is reducing the amount of available wildlife habitat, he said.
Elam and Steve Ellis, who moderated the media briefing and spoke on behalf of Taxpayers for Common Sense, said they will be participating in congressional briefings February 5 in Washington.
The proposed 2013 overall volumes and standards are: Biomass-based diesel (1.28 billion gallons; 1.12 percent); Advanced biofuels (2.75 billion gallons; 1.60 percent); Cellulosic biofuels (14 million gallons; 0.008 percent); and Total renewable fuels (16.55 billion gallons; 9.63 percent.)

US Senate votes against biodiesel tax credit extension

The United States Senate has voted against a motion to extend the biodiesel tax credit.
The 41-58 vote fell short of the required 67 votes needed for the amendment to pass. The original tax credit expired on Dec. 31, 2009, and the motion would have retroactively extended the credit through the end of 2010. The American Soybean Association has expressed its determination to continue to campaign for an extension until Congress adjourns to campaign for the upcoming elections.

Australian biodiesel producers solicit more feedstock

As Australia's economy rebounds and demand for biofuels increases, fuel companies are courting growers in Victoria state in hopes that they will produce more fuel crops for conversion, according to the Australian Broadcasting Corporation.
"We have a significant capacity in our plant in Melbourne, the whole issue for the biodiesel industry in general is the supply of feedstock," said Robert Gooden of Smorgon Fuels.

Tyson buys Miss. poultry rendering company

Tyson Foods announced it has completed the acquisition of Central Industries, a poultry byproducts rendering company in Forest, Miss., which produces raw materials used to produce pet food and other animal feeds, as well as biodiesel.
Tyson previously held a 49% ownership position in Central Industries.
"We believe 100% ownership will enhance the efficiency of the business and generate a greater financial return," said Jeff Webster, group vice president of Tyson's Renewable Products Division. "It will also give our rendered products business greater access to the southeastern U.S. market."
Tyson officials currently expect to make very few changes in total employment at the Central Industries plant, which currently has about 180 people on staff.
Terms of the acquisition were not disclosed.