2007 Annual Meeting of the National Institute for Animal Agriculture BioFuels Energy: Animal Agriculture at the Crossro

1. 2007 Annual Meeting of the National Institute for Animal AgricultureBioFuels Energy:Animal Agriculture at the CrossroadsApril 2, 2007

2. 2007 Annual Meeting of the National Institute for Animal Agriculture BIOFUELS AND RENDERING PARTNERSHIPS ADDRESSING POTENTIAL SOLUTIONS David J. Kaluzny, II Chairman, National Renderers Association

3. BIOFUELS AND RENDERING PARTNERSHIPSADDRESSING POTENTIAL SOLUTIONS What is Rendering? Rendering 101 Volumes Rendered Products of Production Rendered Product Usage Animal Production Usage Biofuel Production with Fats Biodiesel Production 100 Biodiesel by-products Glycerin for feed use Feed vs. Fuel – What Now?

4. What is Rendering? Rendering is Cooking and Drying. Rendering is Recycling. Rendering is Essential to Public Health.

5. Rendering is Cooking and Drying • Continuous flow or batch • Steam cookers • 245º to 290º F. for 40 to 90 minutes • Inactivation of bacteria, viruses, protozoa, and parasitic organisms.

6. The Rendering Industry (U.S. and Canada) 273 Facilities in the U.S. and 29 in Canada $3.5 billion annual revenue 60 billion lb raw material each year 164 million lb raw material each day

7. 35 million cattle (49% of live wt. not used for human food) 100 million hogs (44% not used for human food) 8 billion chickens (37% not used for human food) 280 million turkeys (36% not used for human food) U.S. Animal Agriculture Annual Production

8. Raw Materials Offal Bones and fat Blood Animals dead on arrival, in transit or on farms Restaurant grease Feathers

9. “Fallen” Animals (Died On Farms) 1.91 million adult cattle/yr 2.92 million calves/yr 18 million swine/yr 350 million lb poultry/yr Total = 4.4 billion lb/yr Approx. 2.2 billion lb/yr (50%) is rendered. Approx. 4.5% of rendered products come from fallen animals.

10. Raw Material Meat & Bone Meal Greases & Oils Tallow Pet Food Livestock Feed Poultry Feed Fuel Soap Hides Stearic Acid Linoleic Acid Glycerin Oleic Acid Lubricants Textiles Shampoo Emulsifiers Cleansing Creams Inks Glues Solvents Antifreeze Explosives Leather Shoes Garments Upholstery Rubber Tires Lubricants Esters Esters Lubricants Paints

11. Highly valued protein supplements for livestock, poultry, pets • Tallow for the manufacture of fatty acids and as a source of energy in feed rations. The U.S. industry converts more than 54 billion pounds of animal by-products into usable commodities annually.

12. Tallows and Greases • Edible Tallow 1.6 billion lb/yr • Inedible Tallow 3.9 • Lard and Grease 1.3 • Yellow Grease 2.6 • Poultry Fat 2.2 • Total 11.6 billion lb/yr

13. Protein Meals – 9.2 billion lb/yr 125 AAFCO-defined animal by-products • Meat Meal • Meat and Bone Meal (can be species specific) • Blood Meal (Flash/Spray/Ring/Batch Dried) • Can be whole or only hemoglobin • Poultry By-Product Meal • Poultry Meal • Hydrolyzed Poultry Feather Meal

14. Stabilized Poultry Fat Hydrolyzed Poultry Feather Meal Stabilized Pet Food Poultry Fat Stabilized Poultry Protein Meal Low Ash Pet Food Poultry Protein Meal Pet Food Poultry Protein Meal Examples of a Few Finished Products

15. Total U.S. Lipid Production • Edible Tallow 1.6 billion lb/yr • Inedible Tallow 3.9 • Lard and Grease 1.3 • Yellow Grease 2.6 • Poultry Fat 2.2 Subtotal 11.6 billion lb/.yr. • U.S. Vegetable Oil Production 22.4 billon lbs./yr. ( Soybean, corn, canola, etc.) Grand Total Lipid Production34 billon lbs./yr.

16. WHAT ARE THEY? • Edible Tallow • Edible Lard • Tallow, Bleachable Fancy Tallow (BFT) • Choice White Grease (CW) • Poultry Fat (PF) • Yellow Grease (YG) • Brown Grease • Listed in order of highest quality and price to lowest.

17. Biodiesel Production from Fats & Oils Biodiesel is defined as mono-alkyl esters of long chain fatty acids derived from vegetable oils or animal fats. Biodiesel is made through a chemical process called transesterification whereby the glycerin is separated from the fat or vegetable oil in the presence of methanol and a catalyst. The process leaves behind two products -- methyl esters (the chemical name for biodiesel) and glycerin (a valuable byproduct usually used in cosmetics, soaps and other products).

18. Reactor 1 Reactor 2 Biodiesel Wash Column Methanol Recovery Catalyst Crude Glycerin Transesterification Oil GlycerinCROSS-FLOW(Patented) Methanol Glycerin Water Evaporation Catalyst Closed WASH-WATER loop Glycerin Water

19. Biodiesel Production is Increasing

20. Glycerin is a By-Product of Biodiesel Production

21. Glycerin One pound of glycerin is produced for every gallon of biodiesel refined. • Glycerin is used in soaps, toothpaste, cosmetics, pharmaceuticals • Glycerin is a substitute for other glycols • Antifreeze, concrete conditioner etc. • Glycerin is a GRAS feed ingredient • High metabolizable energy source

22. Glycerin Glycerin has 90% of the energy value of feed fat. Feeding trials are going on with glycerin being used as both a energy source and a binder in feed pellets. Just as with Dried Distillers Grains (DDG’s), numerous feeding trails are going on with cattle, hogs and poultry and added glycerin.

23. FEED vs. FUEL It is not a zero sum game. Market dynamics do not operate in a vacuum. Supply and demand move decision makers. Planning for the future. Scenarios already in play

24. David J. Kaluzny, II Vice President, Kaluzny Bros., Inc. President, K.B.I. Energy, LLC Vice President, Lipid Logistics, LLC 1528 Mound Road Joliet, IL 60436 815-744-1453 815-729-5069 Fax dkaluzny2@aol.com