D. B. FZRGUSON. Swift & Company Chicago, Illinois

Transcription

1 VALUE OF ANLMAL BY-PRODUCTS* D. B. FZRGUSON Swift & Company Chicago, Illinois The topic assigned to me was simply "Value of Animal By-Products.'' Like many other English words, the word value can have several meanings. However, based on the position of this paper in this morning's session, I came to the conclusion the program committee wanted someone to bring into perspective the magnitude of the animal by-product business, and not necessarily just in dollar terms. After all, how long is a dollar a dollar? By-products are an important part of the packing house business. After all, every head of cattle the industry kills has a hide. The cattle and calf kill last year was 46.1 million head. Sheep and lambs all produce wool or shearling pelts. Hogs produce lard and all the species that we call variety meats--hearts, livers, etc. And then, of course, there are the raw materials for pharmaceuticals. The dollar value of anirnal by-products in the last few years has been highly dependent upon what day you are talking about. Let me give you a few examples of what I mean. About a year ago when the cow slaughter was increasing and boneless cow meat was at relatively low price levels, there was a premium for pork fat that had a little lean attached to mix with the lean beef for processed meats. This shortened the lard supply and the price of prime steam lard went as high as cents. Recently it has been priced under 16 cents a pound. There are a number of interrelated reasons for the price changes such as the supply and price of competing vegetable oils that I won't go into, but the value of lard per head of hogs has changed violently in the last year or two. Another example--beef hearts normally sell at a premium to pork hearts. They are a lean meat item high in protein. Last year, in a world said to be relatively short of protein, beef hearts could hardly be sold. True, the supply was up with the record cattle kill, but when pork hearts were selling for 23 cents a pound, beef hearts were quoted at 12 cents. Millions of pounds sold at this price before foreign and domestic demand picked up. Recently they have been quoted up to 42 cents a pound. These are simply examples of the volatility of today's markets and, therefore, of by-product dollar values. * Presented at the 29th Annual Reciprocal Meat Conference of the American Meat Science Association, 1976.

2 Let me try to put the importance of by-products into perspective for you in this way. For cattle, if we start with a 1000 pound animal we get about a 600 pound carcass hanging in the cooler. So there are 400 pounds to account for in some way. About 70 pounds of this is represented by the hide and about 55 pounds potentially are variety meats. The balance of 275 pounds is raw mterial for rendering. This raw material produces about 50 pounds of inedible tallow, about 15 pounds of edible tallow, about 35 pounds of dry rendered tankage and 10 pounds of dried blood. The above rendered material is from the killing operation alone. The breaking and cutting operations, although not always done at the same location as the kill, may produce another 12 pounds of tallow and 8 pounds of meat and bone meal. The industry in total produced about 5.2 billion pounds of inedible tallow and grease in Roughly 40 percent of this went into the export market. This, of course, helped with our balance of trade-- offsetting some of the petroleum purchases. Domestically there are many uses for the inedible tallow and grease. Last year about 37 percent went into animal and pet foods. At current price relationships, inedible tallow is an economical energy source in cattle feedlot rations. It is used extensively in pet foods. About 30 percent vas used in the production of fatty chemicals. Anothe 21 percent was used in the production of soaps and 4 percent went into lubricants. Probably the jet plane you rode on to this conference was lubricated in part with a tallow based lubricant. They have a special property needed by the jets. The balance or 8 percent went into other uses. The rendering process also turns out around 3 billion pounds of meat and bone meal a year. This, of course, is the by-product from all species--cattle, hogs, sheep and lambs. This product largely is used domestically. Broiler and turkey feeds take the big part of the production these years. But pet foods in the last year or two have been growing rapidly into a major part of the market. You may have noticed how the dry pet foods have been taking over more of the shelf space from the canned pet foods in the stores. Some of these are as high as 80 percent meat and bone meal. Everyone; of course, is aware that cattle and calf hides are a major by-product of the beef industry. Their green weight last year also approached the 3 billion pound level. Like many of the other by-products of the animal industry, they vary considerably in price from year to year. You are all familiar with the government's series on leading economic indicators. Those measures of the economy that together are supposed to signal the direction and turns of the health of our economy. When the subject of hides comes up, I am always reminded of a statement a professor of a course on prices made years ago.

3 His statement was that the price of hides and the price of black pepper were two of the best leading indicators of the direction of wholesale prices he knew of. They were both world traded commodittes and as such perhaps reflected changes in wor Id economic conditions quicker than predaninantly domestically traded commodities. Hog and pig skins perhaps are less well identified with everyday products to the average consumer. However, they have a wide range of uses. Over the years the pork skin has been left on the carcass through the cutting operation. This meant the skin, if saved, was in pieces and parts of the skin usually moved to the rendering tank. More recently there has been some whole hog skinning. This produces skins which when cured and tanned make up into fine jackets, etc. I m sure you are familiar with the shoes made from pig skin and we have had pig skin gloves for years. Pork skins are a major source of gelatin production which is used in many foods including ice cream, canned meats, marshmallows and gelatin desserts. Som of the skins are used by the poppers11 in making those tasty snacks sold in cellqphane packages. Lard production which is one of the major by-products of hog slaughtering has declined in relative Wrtance Over the years. Twenty years ago the industry produced about 33 pounds of lard per head slaughtered. In 1975, the average was about 14.5 pounds per head. Hogs have been bred to produce larger hams and loins and less back fat. They are leaner hogs. Whereas lard production in 1952 amounted to 2.9 billion pounds it had dropped to about 1.2 billion pounds in Part of this was due to the reduction in nunibem slaughtered, but the big difference was in the type of hog. Earlier I said there was a potential of about 55 pounds of variety meats per 1000 pound cattle. The industry probably falls short of achieving this yield. Part of those 55 pounds find their way to the rendering tank because at times the expense of saving the variety meat item my be greater than the market value for it. We find variety meat products saved per head varies considerably between our plants. There appear to be a number of reasons for this variance. The quality of the aninvzls and of the variety meats from the anhls varies by sections of the country. The productiveness of the labor varies between plants. Our plant layouts are not all the same, which affects the costs. And there is variation fran year to year in the amounts produced per head depending on the relationship between the changes in mrket prices and costs. If they are not saved as edible variety meats because of price, then they find their way to the rendering tank and become a by-product under a different category.

4 Again, t o give you some perspective on t h i s, our production of beef v a r i e t y meats amunted t o about 43 pounds per head i n 1974 and dropped to about 36 1/3 pounds i n 1975 as p r i c e s dropped. Sales d o l l a r s i n 1974 were about $14 per head b u t had dropped t o $9 per head i n You understand that these d o l l a r values were a f t e r t h e expense that we had put on them. The value t o t h e l i v e a n i m l, t h e r e f ore, w a s lower. Nevertheless, many times we see t h e d i f f e r e n c e between a plant being p r o f i t a b l e or not, whether it be a beef p l a n t or a pork plant, m y depend on how they handle t h e i r v a r i e t y mats. Whether o r not t h e y obtain g o d y i e l d s and produce them e f f i c i e n t l y. Let's look a t t h e r e l a t i v e importance of t h e v a r i e t y meats from another angle. The per c a p i t a consumption f i g u r e s that most of you a r e familiar with a r e based on carcass weights f o r beef, l a m b and v e a l and on pork carcass weights excluding t h e l a r d f o r pork.. The per c a p i t a consumption figure f o r pork last year was estimated by t h e U.S Department of Agriculture a t about 55 pounds. To my knowledge, t h e r e a r e no production f i g u r e s collected on edible v a r i e t y meats, but based on our experience I would estimate that t h e per c a p i t a consumption of them from pork amounted t o about 4 pounds last year. For beef, t h e consumption i n t h e U.S. i n 1975 w a s about I20 pounds per c a p i t a carcass w e i g h t basis. In addition, I would estimate t h e e d i b l e v a r i e t y meat consumption added another 5 t o 6 pounds. Much of t h e v a r i e t y meat consumption i s in t h e form of processed meats of one kind o r another. Some of t h e most valued a n i m l b y - p r o d u c t s have t o be those used i n t h e pharmaceutical industry. Since you have a speaker l a t e r t h i s morning on t h i s s u b j e c t, I'll n o t go f a r t h e r. A s a conversation piece, w e do save beef g a l l stones when possible. Our l a s t s a l e w a s a t $1400 per pound. They go t o t h e Chinese who grind them up and use them in ways peculiar t o us. In surmnary then t h e animal by-product business is a tremendously important part of the meat business. It involves b i l l i o n s of pounds of product valued i n t h e hundreds of millions of d o l l a r s annually. Whereas meat is t h e s i n g l e major product from each species, with r e a l l y one use as food, t h e multitude of a n i m l by-products have a myriad of uses that a f f e c t our everyday l i v e s more than w e might r e a l i z e.

5 160 Harold Herring: of four. Let the record show there are five papers instead Dr. Ferguson has consented to a discussion, so if there are any questions of this paper, let's have them at the present time. Audience: What did the Chinese use gall stones for? I can't tell you what all the uses are, but one use, I understand, is that a woman at childbirth puts a little bit of this on the end of her tongue. It's supposed to prevent some of the pain. It's also supposed to be an aphrodisiac. Tony Kotula, USDA: I wonder how the quality of variety meats from the United States are comparing to the variety meats that are on the market in other areas from ather sources. Now, about five years ago, the variety meats to Great Britain from the United States were very poor in quality and the British published a report saying the United States could export a greater amount of variety meats if they would improve their quality. Do you have any information on that? This had been true in the past. Basically, not because of the manipulation on the handling of the product at the packing levels here, but what happened to it in the interim; the thawing, the improper handling and storage at ports overseas. So when it actually got to the end user, they said, "If this is representative of what the United States is sending, we don't want it." It has improved considerably. We're putting it in smaller boxes. We're doing a better job of educating the people about how we put it up here and making them insist upon getting it in the same form there. Don Kinsman, Connecticut: Do they save hair balls from cattle and calves, and if so, for what purpose? No, I don't believe so. Tom Bidner, ISU: HOW'S the pricing structure set up, say for example, on variety meats? What determines the price? HOW'S the structure set up? I guess the only way I can answer that would be to say that it is determined the same way that the prices for all the other meats are determined, by supply and demand basis. We try to sell them for the highest price that we can get for them and the retailer tries to buy them at the lowest price. So, we negotiate a price. Now, this example I used on the heart was a very peculiar situation, because normally these cattle hearts will sell at quite a premium over pork. For some reason, at a time last year they dropped clear under. For everything we could do, we couldn't get more money for them. Finally, we developed the overseas demand and then our own domestic demand seemed to pick up. But it is a negotiated pice. Don Kropf, Kansas State: With a variety of meats where you have an option of edible or inedible, how much more per pound does it cost to make it edible and to meet the sanitation requirements and what other requirements do you haxe?

6 161 Well, t o be honest with you, i t ' s a l i t t l e out of my f i e l d. I couldn't give you a r e a l good answer on that. It depends-it does c o s t more t o meet e d i b l e requirements, of course, and some of them are inedible because t h e y a r e condemned as they go down t h e slaughter l i n e. But I don't have a good answer f o r you. I ' m s o r r y. A 1 Pearson, Michigan S t a t e : Are d o m s t i c lamb p e l t s t h e same as f o r making c e r t a i n items i n t h i s country7 The New Zealanders, I know, save large q u a n t i t i e s and s h i p them t o Boston f o r m k i n g c e r t a i n items. from time t o time. A 1 Pearson: I t ' s not a constant t h i n g then? A 1 Pearson: From time t o time we save them here, but only No. It depends on t h e price7 Right Ray F i e l d, Wyoming: With t h e p o s s i b i l i t y of mechanical deboned meat increasing, it could cause meat and bone meal t o decrease t h e amount of scrap a v a i l a b l e f o r it Have you considered t h i s, and what would be your p r e d i c t i o n as f a r as t h e p r i c e of meat and bone meal i f t h e r e were less raw material available? No, I haven't project& t h e p r i c e s. I t h i n k I would look a t it t h i s way, that t h e meat and bone meal i s t i e d s o c l o s e l y p r o t e i n supplements, soybean meal and so on, that it would t o your ut& increase it no doubt. But I don't t h i n k it wbuld be a question of going through t h e rope t o s e e i f your poultry feed, and s o on, w i l l s t a r t s u b s t i t u t i n g t h e s e other proteins when they g e t t o o f a r out of l i n e. So, undoubtedly, it would r a i s e t h e p r i c e of m e a t and bone meal. But it s t i l l would come t o a balance between that and our other p r o t e i n substitutes. Harold Herring: Thank you very much, Dr. Ferguson. Our next t o p i c is on t h e Use of Plasma i n Edible Meat Products, t o He's a native of Greenville, South Carolina. He has h i s Bachelor's from Baria College, h i s Master's from North Carolina State, and h i s Ph.D. from North Carolina S t a t e i n Food Science, where he spent four years. He then moved t o t h e University of Nebraska, where he was Assistant and Associate Professor f o u r years. He then moved t o Texas A & M University, where he is presently Professor i n Animal Sciecce Department. H i s research areas include Food Chemistry. H i s research i n t e r e s t s include ultra-high temperature systems f o r processing f l u i d products, spoilage and d e t e r i o r a t i o n i n food lipkds, f l a v o r properties of foods, and protein recovery including t h e preparation of food grade protein from a n h l blood. This c e r t a i n l y makes him w e l l q u a l i f i e d t o address t h i s t o p i c. D r D i l l. be presented by C. W. D i l l of Texas A & M University..