From the Association By Gerald (J.J.) Smith, Chairman, National Renderers Association Change is Coming – And Quickly Editor’s Note – The following is a speech, in part, given by Gerald (J.J.) Smith, Valley Proteins, Inc. at the National Renderers Association 80th Annual Convention in Naples, FL, in late October. As I complete my term as National Renderers Association (NRA) chairman, overall the past two years have been very good for the rendering industry. We have enjoyed some of the highest fat and protein prices in the industry’s history along with very affordable natural gas prices. The association’s business over the past year has also been very stable. It has not lost any staff members nor faced any major issues. The one challenge from the prior year has been mainly resolved, with ruminant meat and bone meal now being accepted again into Indonesia. NRA enjoyed a record attendance of over 360 people at this year’s convention and received record sponsorships totaling well over $200,000. Thanks go out to all those who have sponsored this year’s event. I am also pleased to report that even though NRA fund balances have decreased by a little over $200,000 these past two years, the association is still in great financial shape. With that said, I believe there is much change facing NRA and it is coming quickly. First, there is a change in NRA leadership. Ross Hamilton, Darling International, Inc. will take my place as NRA chairman and I will to move along to the easiest job on the executive committee – immediate past chairman. Second, after 16 years, NRA members will now see a new face leading the association and staff with Nancy Foster coming on board as NRA president effective November 5, 2013. I look forward to the new ideas and approach that Foster will bring to the association and ask each of you to give her all the support and guidance you can in the coming year. I also hope that each member company will extend an invitation to Foster so that she can learn about our organization by seeing our businesses up close and in person. Third, we are likely to see much lower prices for fats and proteins in the foreseeable future than those we have enjoyed the past three years. Lower prices will present challenges to profitability that were of little concern the past few years, but these lower prices are also likely to bring opportunities. As an industry, one of our biggest challenges the past three years has been steady to declining raw material volume. The significantly lower prices for agricultural commodities will allow livestock and poultry suppliers to return to profitability and likely start expanding once they recover. Lower prices for fats will start taking some wind out of the sails of grease thieves who have dented rendering businesses in so many ways the past few years. Lower fat prices will also make biofuel manufacturing more profitable, likely leading to expansions in biodiesel and renewable diesel production along with increased demand for fats. Finally, lower fat and corn prices might also quiet some of the demands to repeal or drastically reduce the federal government’s renewable fuels mandate. Another area of challenge is the United States (US) government. NRA has benefited from foreign market development funding for over 40 years. The significant federal deficits and the dysfunction among our nation’s president and congressional leaders have caused suspension of US Department of Agriculture/Foreign Agriculture Service (FAS) funding in the fall of both this year and last. The association could definitely see significant reductions in FAS funding in the future along with significant increases in personal income and payroll taxes. I believe that we, as an industry, need to be prepared to fund, through our dues, a much greater percentage of the costs of NRA’s International Market Development Committee activities since no matter where the funding comes from, these markets represent disappearance of rendered products and, ultimately, higher prices for them. We are likely to see much lower prices for fats and proteins in the foreseeable future than those we have enjoyed the past three years. Another challenge facing NRA is industry consolidation. Last year, I reported that NRA had lost no major members and had actually recruited back Smithfield Foods as a maximum dues member. In fiscal year 2012-2013 (that ended September 30, 2013), the association did not lose any members, but it will be a different story this fiscal year with Darling International’s recent announcements of three major acquisitions that include two NRA active members, one of which is a maximum dues payer. Industry consolidation will continue to put pressure on the association dues rates and will have to be an issue for discussion. Fortunately, NRA’s new chairman is an employee of Darling International so I have confidence that Hamilton is ready to lead us through this challenge. Many Thanks Since this is my last address as your chairman, I would like to thank those who supported me and the association during the past two years. First, I appreciate the overall support of the membership. I am sure some may disagree at times with the stances NRA takes on certain issues, but members continue to vote for the association with their dues dollars and that is by far the most important vote of confidence. I also wish to thank again the sponsors for this year’s convention. Sponsorships often provide a surplus from the convention that is then used to offset expenses for the association’s other activities. In view of the continued consolidation of member companies, these extra funds helped keep NRA dues competitive for its renderer members. 20 December 2013 Render www.rendermagazine.com
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