Australian Rendering Industry Australian Rendering Industry Australian Rendering Industry Australian Rendering Industry Australian Rendering Industry Australian Rendering Industry UpdateUpdate

Australian Rendering Industry Australian Rendering Industry UpdateUpdate

Presented by Craig Palmery gAustralian Renderers Association

National President

Industry OverviewIndustry OverviewIndustry OverviewIndustry OverviewIndustry OverviewIndustry OverviewIndustry OverviewIndustry OverviewTotal number of rendering plants in Australia has dropped to 86.

Total number of ARA Accredited plants in Australia has risen from 59 to 63

Although tallow and meal prices have come off the highs we saw in 2007/2008 we are stillAlthough tallow and meal prices have come off the highs we saw in 2007/2008 we are still enjoying reasonable levels this year, prices that we would have only been too glad to see 5 years ago.

The continued drought conditions over the last 6 years have put a dent in both cattle and sheepThe continued drought conditions over the last 6 years have put a dent in both cattle and sheep numbers and it is obvious about the effect this will have on rendered product volumes out of Australia.

Even though most of the World is in some form of recession Australia has “technically” avoided itEven though most of the World is in some form of recession Australia has technically avoided it to date, and this in turn has had a dramatic effect of late on A$/US$ exchange rates which again reduces returns to Australian renderers on an FOB basis.

Input costs in the form of energy continue to rise (in some states by as much as 40%) andInput costs in the form of energy continue to rise (in some states by as much as 40%) and alarmingly we are facing a carbon tax of some type that has yet to be finalized. Drought conditions have forced water costs up by over 12% with a similar rise in trade waste disposal costs.

Livestock Production Livestock Production StatisticsStatistics

Livestock Production Livestock Production StatisticsStatisticsStatisticsStatisticsStatisticsStatistics

Source ABS, DAFF,MLA forecasts, APL

Cattle Slaughter Sheep Slaughter Sows SlaughterYear (‘000,000)

g(‘000,000) (‘000,000)

g(‘000,000) (‘0,000)

g(‘000,000)

2008 24 7 7 95 79 32 25 8 5 32008 24.7 7.95 79 32 25.8 5.3

2009 25.2 7.69 75 29.9 23.8 4.72009 25.2 7.69 75 29.9 23.8 4.7

2010 28.46 7.98 73 29.7 24.2 4.8

Livestock Production Livestock Production St ti tiSt ti ti

Livestock Production Livestock Production St ti tiSt ti tiStatisticsStatisticsStatisticsStatistics

Prime Tallow PricingPrime Tallow PricingPrime Tallow PricingPrime Tallow Pricing

Australian Prime (1% FFA) and BFT Prices for the last 5 years (monthly average)

1000

1200

600

800

$/TO

N BFT

400

A$

0

200

J… A… J… O… J… A… J… O… J… A… J… O… J… A… J… O… J… A… J… O… J… A… J… O… J… A… J… O…

BFT Tallow PricingBFT Tallow PricingBFT Tallow PricingBFT Tallow PricingBFT Tallow PricingBFT Tallow PricingBFT Tallow PricingBFT Tallow Pricing

1000

BFT MONTHLY AVG PRICE COMPARISONAUD$/TONNE

700

800

900

500

600

700

TO

NN

E

2003200420052006

300

400

AU

D/T 2007

20082009

0

100

200

0JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Prime Tallow PricingPrime Tallow PricingPrime Tallow PricingPrime Tallow Pricing1200

PRIME TALLOW MONTHLY COMPARISON

Prime Tallow PricingPrime Tallow PricingPrime Tallow PricingPrime Tallow Pricing

1000

AUD$/TONNE

800

600

/TO

NN

E

200320042005200

200

400

AU

D/ 200

62007

0

200

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Australian Tallow & Yellow Grease Australian Tallow & Yellow Grease E t D ti tiE t D ti ti

Australian Tallow & Yellow Grease Australian Tallow & Yellow Grease E t D ti tiE t D ti tiExport DestinationsExport DestinationsExport DestinationsExport Destinations

Source: OilworldSource: Oilworld

Estimated Meal ProductionEstimated Meal ProductionEstimated Meal ProductionEstimated Meal ProductionEstimated Meal ProductionEstimated Meal ProductionEstimated Meal ProductionEstimated Meal Production

Total Meal Production Estimated at 625,000 mt

Estimated Meal UsageEstimated Meal UsageEstimated Meal UsageEstimated Meal UsageEstimated Meal UsageEstimated Meal UsageEstimated Meal UsageEstimated Meal Usage

Meal PricingMeal PricingMeal PricingMeal PricingMeal PricingMeal PricingMeal PricingMeal Pricing

Factors Effecting Australian Factors Effecting Australian R dR d

Factors Effecting Australian Factors Effecting Australian R dR dRenderersRenderersRenderersRenderers

Climatic ConditionsCompetitiveness of alternative productsLivestock and Slaughter NumbersHigh Exchange RateMarket Access and ConditionsMarket Access and ConditionsReligious RequirementsSupermarket influence/interferenceUtility Cost Increases

Markets & MarketingMarkets & MarketingMarkets & MarketingMarkets & MarketingMarkets & MarketingMarkets & MarketingMarkets & MarketingMarkets & Marketing

Marketing trip taken jointly between Australian and NZ Renderers toMarketing trip taken jointly between Australian and NZ Renderers to China and Philippines in December 2008

Joint marketing trip planned to Thailand early 2010Continuing discussion on protocol between AQIS and MAF Japan

for the re-entry of poultry meal, poultry digest and porcine meal for pet food production

Australia continues to have a favorable BSE statusThe acceptance by many overseas markets of the “Australian

Standard for Hygienic Rendering”has made market access yg gissues easier to manage

Industry training course which has seen over 600 people be trained in Hygienic rendering.yg g

Continual year on year reduction in Salmonella positive results