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Golden Grease: China’s Poultry Industry Sold on U.S. Recycled Oils
By Mary Ponomorenko 
When officials from China’s Ministry of Agriculture visited the United States last spring they didn’t come to see sunny vineyards or amber waves of grain. What really caught their attention was a special by-product of U.S. culture: recycled fast-food grease.
The delegation apparently liked what they saw–and that’s good news for key U.S. export markets in China.
Yellow grease, as the industry calls this product, provides a quality energy source for livestock.
China’s poultry farmers have begun to choose yellow grease over more costly palm oil from Malaysia or Indonesia. It’s also an alternative to fats from New Zealand and Australia. In fact, between 1998 and 1999 U.S. exports of yellow grease and tallow to China jumped three-fold from 17,477 tons to 56,649 tons.
Making the Case for Quality
This profitable trade pattern is no accident. It resulted from years of hard work and cooperation between the industry and FAS.
It’s a market well worth defending as was necessary last year when a contamination problem with product from Europe gave the Chinese government pause. There were suggestions of banning all imported rendered products, including U.S. yellow grease.
The Chinese officials were also concerned about bovine spongiform encephalopathy, an animal disease that is linked to human illness, fearing that microorganisms could be transmitted through meat and bone meal. They needed assurances that the United States had taken precautions.
Dr. Yu Yu, who represents the U.S. National Renderers Association in China, worked with FAS’ Minister-Counselor Suzanne Hale. Yu used the resources of his trade association, while Hale called on the expertise of FAS analysts in Washington, D.C. They prepared a response to China’s concerns on a 24-hour turnaround.
As it turned out, Europe’s problem stemmed from lack of quality control when collecting used food-grade grease from the public at supermarket depositories. Moreover, the product had not been tested prior to shipping to feed production plants.
U.S. companies buy the grease only from sources that maintain tight content controls. They also perform laboratory tests to ensure safety and quality. The Chinese ministry agreed that the testing procedures proposed by the U.S. industry would meet their needs. As long as test results accompanied U.S. shipments, they said, there would be no need to suspend trade.
Tour an Essential Follow-Up
While Hale and Yu had averted a trade shutdown, the industry realized that trust needed to be strengthened. That is why U.S. rendering plants opened their doors to a Chinese government delegation this past spring.
"We had met with some of the delegation members before, and we knew safety and quality were their chief concerns," said George Congleton, vice president of marketing for Baker Commodities, one of the plants on the tour. "We took them to a Kentucky Fried Chicken outlet and showed them how we collect and store grease, then we demonstrated how we process it at the plant and how we test it before shipping. We wanted them to see for themselves that we won’t ship until we have clear test results back."
Baker Commodities went so far as to develop a book about U.S. processing and safeguards in Chinese, drafted with the help of Don Franco, director of scientific affairs for the National Renderers Association.
The visitors took tours of plants and laboratories not only in California, but also in Wisconsin. They met USDA researchers in Iowa who focus on livestock epidemiology. They also traveled to Washington, D.C., to meet FDA and USDA officials and check out one of the nation’s premier bio-security testing laboratories.
Funding for the 10-day trip came from FAS’ Cochran Fellowship Program and the Foreign Market Development Program. The National Renderers Association also contributed.
History of Export
Success
While these visitors were certainly an important trade delegation, they were not the first. In 1997, a Chinese trade mission to the United States was sponsored by FAS’ Market Access Program or MAP.
MAP is now helping to fund a series of yellow grease feed formulation demonstrations in China’s poultry and hog industry.
The promotions first focused on Guandong and Shandong Provinces, which together now import approximately 3,000 metric tons of yellow grease monthly.
The next feed formulation
workshops and feed nutrition workshops will target the Guangxi,
Shanghai and Henan areas, new markets with sales potential.
It’s yet another case where years of diligent promotional efforts of U.S. feed producers resulted in a big payoff for exporters. In 1999, Chinese officials agreed to allow 30,000 tons of U.S. blended feed fats to be imported at a reduced duty–10 percent instead of 40 percent. This tariff reduction has been extended for 2000.
Yes, Grease Demand Will Grow
U.S. exports of yellow grease, meals and other feeds to China are expected to continue to grow.
That does not mean the industry can become complacent.
For example, in 1999, the industry had to compete with record palm oil production. This has resulted in relatively low prices for 2000.
Although the value of U.S. fats was easier to demonstrate when competing products were more expensive, U.S. feed fats enjoy a quality advantage–better energy value than palm oil.
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The author is an agricultural economist with FAS’ Dairy, Livestock and Poultry Division in Washington, D.C. Tel.: (202) 720-4455; Fax: (202) 720-0617;E-mail Ponomorenko@fas.usda.gov
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