Protein meal

Summary of submissions

In response to the December 2009 consultation document, the Meat Industry Association (MIA) submitted that an activity definition for ‘meat by-product rendering’ be developed.

The MIA represents 38 of the 42 firms in the meat rendering industry, and officials met with over 20 representatives of MIA in late February. At this meeting, it was agreed that officials should continue to communicate with the industry through the MIA.  Following the meeting, MIA was able to identify the four firms not represented by the Association. MIA and these firms were sent the formal consultation documents  on 15 March 2010.

Although it is unlikely that fish renderers will be eligible for industrial allocation, they may be indirectly affected due to changes in the market for animal and fish rendering products. Therefore officials deemed it appropriate to consult with the fishing industry. This was primarily achieved through discussions with the Seafood Industry Council. Other firms, which were identified by the Council as being ‘interested parties’, were also contacted and informed of officials’ proposed approach to the rendering industry. The formal consultation documents on protein meal were subsequently circulated to the Seafood Industry Council and the other ‘interested parties’ from the fishing industry.

One written submission was received in response to the draft activity definition for protein meal, which was circulated to industry members during March 2010. This was from the MIA.

The key issue raised by the MIA in their response to the proposed draft activity definition was the difference between fish and animal rendering products. Their view is to treat animal and fish rendering products as distinct, as it is likely that a definition that includes both products will result in the industry falling short of the threshold for allocation. MIA also asked for three months to gather data.

Of the four meat rendering firms that are not represented by the MIA, one responded saying they did not produce protein meal and therefore are ineligible for allocation. No feedback was received from the remaining three firms.

Members from the fishing industry officials spoke to agreed that the products of fish and animal rendering differed. They concluded that our approach of having an activity definition for protein meal that excludes products from fish rendering is appropriate.

Proposed activity definition by industry

MIA has recommended a number of minor amendments to the draft activity definition. These changes are designed to ensure the definition will exclude fish rendering processes. Officials agree that the suggested changes offer further clarity to the definition and that these changes will ensure the exclusion of inputs and outputs not from livestock animals. 

Summary of analysis

Following consideration of the issues set out in submissions regarding a distinguishing between rendered livestock and fish products, officials consider that treating fish and animal rendering products as separate activities is the best reflection of the nature of the products produced in New Zealand.

The basis for this decision is that Section 161E(1) of the Climate Change Response Act 2002 (the Act), requires that each activity be defined by reference to a physical, chemical or biological transformation of inputs into outputs. MIA’s submission demonstrates that the characteristics of both the inputs and end products of animal and fish rendering are distinctly different.   In particular, while both meal products generally have similar uses, there are clear distinctions as follows:

  • livestock meals cannot be fed to ruminant animals in New Zealand (due to Biosecurity (Ruminant Protein) Regulations), while fish meal can;
  • livestock meals cannot be used in aquaculture feeds to the same extend as fish meal;
  • livestock tallow is primarily used in soap making, oleo-chemical and biodiesel industries, and to a lesser extend as an energy source in animal feeds; and
  • fish oil is used principally as an ingredient/flavour enhancer in aquaculture feed and can also be used to prevent rust.

An implication of this decision is that a ‘fish protein meal’ activity could also be developed. However, it is unlikely that renderers of fish by-products will be eligible for industrial allocation under the NZ ETS. This is because most of the rendering of fish by-products occurs on the fishing vessels and the primary energy source for this onboard process is diesel, which is not eligible for allocation under the NZ ETS.

Furthermore, the Act already provides for a one-off allocation to the fishing sector. Eligible fishing quota owners will be allocated units to compensate them for a potential decrease in the value of their fishing quota as a result of the liquid fossil fuel sector entering the Emissions Trading Scheme.

Tallow has been identified as a co-product. This means it has been identified as a saleable output that is always sold if produced, and where both emissions and revenues should be calculated when determining eligibility. Revenues for tallow will be included in the eligibility calculation, but because it is produced in a fixed ration to protein meal, it is not necessary to have a separate allocative baseline for this output. In their submission, the MIA agreed with officials suggested treatment of the tallow co-product from the rendered livestock meals.

Matter Analysis
The requirement to define each activity by reference to a physical, chemical or biological transformation of inputs into outputs. The proposed activity definition is consistent with this matter.  The activity description is expressed as a physical and chemical transformation of inputs into outputs. The inputs and outputs have been described in a way that ensures the exclusion of the fish products (as an input) into fish meal and oil (as outputs) that are similar to those in the proposed protein meal activity definition.
The undesirability of activities being defined by reference to the technology employed, the fuel used, the age of the plant, or the quality of the types of feedstock used when the activity is carried out. The proposed activity definition does not reference technology, fuel used, age of plant, or the quality of the feedstock.
The desirability of defining activities:
  • consistently and equitably across industries.
  • in a way that takes into account the impact that definitions may have on business investment, geographical location, and the structure of activities.
  • in a way that takes into account the potential for intermediate inputs produced when the activity is carried out to be substituted for bought-in inputs.
 The proposed activity definition is consistent with this matter.
The desirability of there being no overlap between activity definitions. The proposed activity definition does not overlap with other activities. The proposed activity also ensures the activity definition does not overlap with fishing allocation under the Act.
Any other matters the Minister considers relevant, including activity definitions proposed to be used in Australia. The production of protein meal is not an eligible activity in Australia.

Recommendation

We propose that a ‘livestock animal protein meal’ activity definition be used, with tallow as a co-product.

Last updated: 24 May 2010