Growth Seen in US Rendering and Meat By-product Industry27 September 2013
The rendering and meat by-products industry in the US has seen sustained growth over the last five years and according to a report from IBISWorld the growth is expected to continue for the next five years.
The reports shows that the growth over the last five years to 2013 has been sustained despite the poor global economy, but the period up to 2018 will see strong revenues because of an increase in imports and exports.
The industry research firm IBISWorld’s report on the Rendering and Meat Byproduct Processing industry says that the sector has benefited from growing demand from downstream markets in the five years to 2013.
Industry operators render animal fat, bones and meat scraps for use in animal food production, industrial machinery, alternative energy and consumer goods.
During the past five years, industry revenue is estimated to have grown at an average annual rate of one per cent to $4.4 billion.
“Increased demand from animal food production and the rising price of feed have promoted industry growth; however, poor conditions in the global economy have limited the industry's increases, causing an estimated 1.2 per cent revenue decline in 2013,” said IBISWorld industry analyst Andrew Krabeepetcharat.
Demand from animal food production is estimated to have rise at an average annual rate of 1.8 per cent during the five years to 2013.
This is estimated to have increased the demand for processed meat by-products in food for farm animals and household pets.
In this five-year period, the price of feed is expected to have increased at an average annual rate of 4.7 per cent, increasing the total revenue for processed meat by-products.
However, because of a weak global economy and trade disruptions after the discovery of diseases related to animal products, exports are estimated to fall at an average annual rate of 2.6 per cent to $1.0 billion in 2013.
Consequently, industry expansion was relatively slow during the period.
During the five years to 2018, industry revenue is expected to continue its growth.
Expected increases in demand from animal food production and the price of feed are expected to fuel industry growth.
Additionally, the industrial production index, which measures the output from the mining, manufacturing, electric and gas industries, is forecast to grow at an average annual rate of 2.8 per cent, prompting rendered animal fats to be used in industrial burners.
Consequently, long-term sustained industry growth is expected as oil prices rise and consumers seek alternative energy sources such as biodiesel produced from rendered animal fats.
The Rendering and Meat Byproduct Processing industry is estimated to have a medium level of concentration, with the top four companies making up less than 50 per cent of the industry's market share.
Market share concentration has increased in the five years to 2013 as competitors consolidated to increase profit margins amid the recession.
According to Mr Krabeepetcharat, concentration increased significantly between 2010 and 2011, courtesy of the merger between Darling International Inc. and Griffin Industries Inc.
Although industry concentration is classified as medium, the concentration in localized areas is often very low.
This difference is because there are usually few rendering and animal by-product processing facilities within localised areas.