Use of food co-products in the feed sector: Opportunities and challenges

Use of food co-products in the feed sector: Opportunities and challenges Arnaud Bouxin FEFAC Deputy Secretary General 24 May 2016 ELC SUSTAINABILITY FORUM

FEFAC in a nutshell Created in 1959 Represents industrial compound feed and premixtures manufacturers 33 Members: 25 Member Associations from 24 EU Member States 2 Observer Members (Serbia, Russia) 7 Associate Members (Turkey, Switzerland, Norway (3), EMFEMA, EFFPA) 156 mio. t of industrial compound feed in EU-28 in 2015 7 Technical Committees to assist the FEFAC Council Animal Nutrition Industrial Compound Feed Production Premix & Mineral Feed Feed Safety Management Fish Feed Milk Replacers Sustainability 24 May 2016 ELC Sustainability forum 2

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EU-28 Livestock sourcing in feedingstuffs - 478 mio. t in 2015 38 156 Source: FEFAC / EU Commission 51 233 Forages Purchased straight feedingstuffs Home-grown cereals Industrial compound feed 24 May 2016 ELC Sustainability forum 4

EU-28 compound feed production development per category +0.2% in 2015 vs 2014) 180 160 140 EU-15 as from 1995, EU- 25 as from 2004, EU-27 as from 2007, EU-28 as from 2013 Source: FEFAC 60 55 50 total in mio. t 120 100 80 60 40 45 40 35 30 per category in mio. t 20 25 0 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 20 Total Cattle Pigs Poultry 24 May 2016 ELC Sustainability forum 5

Feed material consumption by the EU- 28 feed industry in 2014 Feed cereals 48% Source: FEFAC All others 4.5% Minerals, Additives & Vitamins 3% Dried forage 1.5% Dairy products 1% Pulses 1% Cakes & Meals 27.5% Oils & Fats 2% Co-products from Food & Bioethanol Industries 11.5% 24 May 2016 ELC Sustainability forum 6

Feed material consumption by the EU compound feed industry Dried forage 3% Dairy products 1% Pulses 5% Minerals, Additives & Vitamins 2% 1990 2005 All others 6.5% Feed cereals 32% Dairy products 1% Pulses 1.5% Mineral salts, Additives Dried forage & Vitamins 3% 1.5% All others 5% Feed cereals 47% Cakes & Meals 27% Cakes & Meals 25% Animal meals 3% Oils & Fats 2% Tapioca 5.5% Oils & Fats 1.5% Co-products from Food Industry 14.5% Source: FEFAC Co-products from Food Industry 12.5% Tapioca 0.5% 24 May 2016 ELC Sustainability forum 7

Development of feed material consumption by the EU-15 compound feed industry Source: FEFAC 70.000 60.000 50.000 EU-15 AS FROM 1995 total in 1 000 t 40.000 30.000 20.000 10.000 0 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Feed cereals Tapioca Co-products from Food & Bioethanol Industries Cakes & Meals 24 May 2016 ELC Sustainability forum 8

EU-27 balance sheet for protein rich feed materials in 2012/13 Source: UNIP 1,000 t of protein equivalent Products Production Consumption Self sufficiency Soya 344 14,280 2% Rapeseed + sunflower 5,022 6,795 74% Pulses 424 450 94% Dried forages 623 589 106% Miscelleneous 743 1336 56% Total vegetable proteins 7,156 23,450 31% Fishmeal 235 350 67% Total all protein sources 7,391 23,800 31% (*) EU production from EU seeds (**) Including consumption by the petfood industry and on-farm uses Miscellaneous: includes groundnuts, linseed, copra, plam kernel and cotonseed meals and corn gluten feed

Imports of feed materials in the EU-28 in 2014: 43 mio. t Pulses 0.3 Miscellaneous 2.6 Feed Cereals 11.5 Source: EUROSTAT Fishmeal 0.4 Corn Gluten Feed 0.7 DDGS 0.6 Oilmeals 24.8 Molasses 1.8 Citrus pellets 0.3 24 May 2016 ELC Sustainability forum 10

Global compound feed production in 2014 (967 mio. t) Other America 48 Canada 20 Others 59 Source: FEFAC / Alltech EU-28 (incl. EL) 159 USA 172 Other Europe 61 Mexico 31 China 183 Brazil 66 Japan Other Asia 24 144 24 May 2016 ELC Sustainability forum 11

Evolution of global compound feed production (Index 100 = 1999) Source: FEFAC / Alltech / Feed International 240 220 200 180 160 140 120 100 80 60 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 EU-28 Other Europe Brazil USA China 24 May 2016 ELC Sustainability forum 12

EU food co-products and livestock sector A common history

Co-products The Foundation of the Animal feed Industry Animal feed industry founded at the end of the 19 Century Based on the extraction of oil from oilseeds for the soap industry The residue - still referred to as cake was found to be a useful animal feed British Oil and Cake Mills Incorporated 1899 24 May 2016 ELC Sustainability forum 14

Resource efficiency Effective raw material use Feed manufacturers are experts in converting co- and by-products from others processing industries into feed 24 May 2016 ELC Sustainability forum 15

Co-products examples Brewer s grains DDGs Citrus Pulp 16

Animal feed industry a vital and trustworthy partner for utilisation of coproducts Oil crushing (soybean meal, rapeseed meal, palm kernel meal) Grain milling (bran, hulls, middlings (also known as wheatfeed)) Starch production (gluten feed, gluten meal) Sugar production (sugar beet pulp, molasses) Fruit processing (citrus pulp) Dairy processing (whey, skimmed milk powder) Fish and meat processing (fish meal, animal fats) Beer production (brewer s grain) Biofuels production (dried distillers grains and solubles, glycerin) Additives production by fermentation (microbial biomass) Clothes manufacturing (cottonseed hulls, cottonseed meal) Oleochemical industry (fatty acid distillates, crude fatty acids) Etc 24 May 2016 ELC Sustainability forum 17

Co-product or by-product? Co-product is not defined in EU law Legal qualifier is «by-product» Article 5 of Dir. 2008/98: «A substance or object, resulting from a production «process, the primary aim of which is not the production of that item» Co-product more positive than by-product For the supplier (value) For the purchaser (interest paid by the supplier) Catalogue of feed materials refers to «products» 24 May 2016 ELC Sustainability forum 18

Catalogue of feed materials (Regulation (EC) No 68/2013) More than 600 feed materials, thereof a lot of (co-)products 24 May 2016 ELC Sustainability forum 19

Characterisitics of co-products for a feed manufacturer Variability of composition / nutritional value Inter-supplier Intra-supplier Risk profile Processing factors for concentration of contaminants (dioxin, mycotoxins, pesticides, etc.) Processing aids 24 May 2016 ELC Sustainability forum 20

Co-products The «sustainability» opportunity

From a Linear Economy NATURAL RESOURCES TAKE MAKE DISPOSE WASTE WASTE WASTE 24 May 2016 ELC Sustainability forum 22

to a Circular Economy 24 May 2016 ELC Sustainability forum 23

The Feed Solution Animal feed fits perfectly in circular economy concept Keeping food losses in the food chain (using food losses to produce food) Reducing food waste (co-products / former foodstuffs) Optimising resources (feed efficiency) 24 May 2016 ELC Sustainability forum 24

Exploring new resources / co-products Examples of former foodstuffs 24 May 2016 Biscuits Trimmings from cake Sweets Pasta ELC Sustainability forum 25

Processing of crisps, cookies, bread and sweets into free flowing product of the compound feed 24 May 2016 ELC Sustainability forum 26

Processed former foodstuffs: the final feed 24 May 2016 ELC Sustainability forum 27

Nutritional Value of Processed Former Foodstuffs (Source: NRG, VDLUFA, INRA) Processed former foodstuffs Barley Wheat Dry matter 88.0% 88.0% 88.0% Crude protein 10.9% 11.0% 12.4% Lysine 0.26% 0.38% 0.34% Crude fat 9.8% 2.8% 2.1% Crude fiber 2.2% 5.5% 2.7% Starch 41.9% 51.6% 59.2% Sugar 14.0% 2.2% 2.4% Metabolisable energy pig (ME) 15.48 MJ/kg 12.95 MJ/kg 14.43 MJ/kg Main targets: young animals (e.g. piglets) 24 May 2016 ELC Sustainability forum 28

Resource efficiency - Effective animal nutrition 24 May 2016 ELC Sustainability forum 30

Feed production represents 45% of the carbon footprint of livestock products globally (FAO, 2013) 24 May 2016 ELC Sustainability forum 32

Can co-products improve the environmental performance of feed? Intuitively, the higher the proportion of coproducts, the higher the environmental performance of the compound feed but: LCA boundaries: feed efficiency? Allocation product vs. co-products Feed formulation Mind the method! 24 May 2016 ELC Sustainability forum 33

Feed optimization based on GHG (2010) Methodology: Formulas are still optimized on price but a growing constraint on GHG is imposed No availability specifications for substitutions Nutritional requirements remain the same Outcome: Price increases significantely with a GHG constraint The reduction potential vary according to species Feed materials change: More : peas, soybean meal, sunflower meal 33 (shelling is beneficial), gluten Less : rapeseed meal, DDGS Change not systematically to be benefit of (all) co-products

Relative impacts of categories of feed ingredients Cereals Coproducts food industry Vegetable oils Vegetable meals Products of animal origin Dried Forages Pulses Mineral, additives, vitamins Climate change 0.4 0.4 4.0 2.1 1.9 0.1 0.4 1.2 4.7 Climate change ex LUC 0.8 0.8 6.2 1.0 3.5 0.2 0.8 2.4 2.5 Ozone depletion 0.9 0.6 0.6 0.2 4.0 0.0 0.8 9.8 1.3 Human toxicity, cancer effects 0.8 0,4 2,8 1,6 1,3 0,2 3,6 0,7 2,5 Human toxicity, non-cancer effects 1.0 0,4 2,4 1,3 1,2 0,4 2,0 0,3 2,4 Particulate matter 1.0 0,6 2,8 0,9 4,1 0,3 0,9 1,6 1,5 Ionizing radiation HH 1.0 0,6 0,6 0,2 1,8 0,0 0,8 10,3 1,4 Ionizing radiation E (interim) 0.3 0,2 0,2 0,1 0,4 0,0 0,3 26,6 0,5 Photochemical ozone formation 0.6 0,8 2,8 1,1 4,1 0,2 0,2 1,8 8,5 Acidification 1.1 0,6 3,2 0,9 3,4 0,4 1,0 0,8 1,3 Terrestrial eutrophication 1.1 0,5 3,2 0,9 3,5 0,4 1,0 0,4 1,2 Freshwater eutrophication 0.7 0,3 4,2 1,6 0,9 0,2 3,5 0,7 3,5 Marine eutrophication 1.1 0,5 3,6 1,1 1,7 0,3 1,0 0,4 1,6 Freshwater ecotoxicity 1.1 0,5 2,0 1,1 0,8 0,2 1,3 1,1 1,9 Land use 0.7 0,3 2,4 1,9 0,6 0,1 2,6 0,2 3,7 Water resource depletion 0.6 3,8 0,1 0,4 0,2 0,0 0,4 0,2 1,1 Mineral, fossil & ren resource depletion 0.2 0,1 0,9 0,6 0,2 0,0 1,6 23,3 1,0 Other

Contribution to environmental impact of feed 24 May 2016 ELC Sustainability forum 36

FEFAC vision(s) FEFAC vision on animal feed industry: A knowledge driven, reliable partner of a competitive livestock sector FEFAC vision on feed safety management: Sharing responsibility for feed safety along the chain FEFAC vision on animal nutrition: A multifunctional science delivering solutions to a sustainable livestock sector FEFAC vision on sustainability: A responsible and resource-efficient feed industry 24 May 2016 ELC Sustainability forum 37

FEFAC vision on sustainability A responsible and resource-efficient feed industry Underlying messages: There is a potential for improvement of EU livestock sustainability through proactive drive of the feed sector You can manage what you can measure: credible and robust data/benchmarking underpins continuous improvement. 3 thematics Resource efficiency Responsible supply Environmental footprint What is FEFAC doing? Developing guidance on responsible sourcing/supply Methodology for environmental footprint 26 April 2016 Fish Feed Committee 38

FEFAC vision on sustainability FEFAC Soy sourcing guidelines Not a new standard! Meaningful baseline Professional recommendation Purchase decision outside FEFAC s mandate Basis for independent benchmark tool with ITC Volume-based continuous improvement (starting point: 5 MT) 22 April 2016 Council 39

By-product or Waste? Minimum conditions to be met by a by-product not to qualify as waste (article 5 of Dir. 2008/98) (a) further use of the substance or object is certain; (b) the substance or object can be used directly without any further processing other than normal industrial practice; (c) the substance or object is produced as an integral part of a production process; and (d) further use is lawful, i.e. the substance or object fulfils all relevant product, environmental and health protection requirements for the specific use and will not lead to overall adverse environmental or human health impacts. Circular economy package: towards a full exemption of feed materials from the scope of the WFD 24 May 2016 ELC Sustainability forum 40

Food Waste Hierarchy 24 May 2016 ELC Sustainability forum 41

Feed Safety: the must

RASFF notifications in 2015 by type of contaminant for farm animals 4 7 6 Microbiological 9 Aflatoxins 10 PAPs/bone fragments Dioxins/PCBs Heavy metals 22 94 Prohibited substances / overdosage Non EU authorised GMO 8 Non compliance MRLs Pesticides/biocides/medicines Others 24 May 2016 ELC Sustainability forum 43

RASFF notifications in 2015 by feed category Origin of 2015 RASFF notifications by feed category Feed additives / premixtures Compound feed Petfood Feed materials 24 May 2016 ELC Sustainability forum 44

FEFAC s feed safety management vision Primary responsibility of individual Feed Business operators but also collective chain responsibility Need for optimisation of risk management along the chain (top-ofthe-pyramid) Integrated HACCP-based risk management approach Risk communication along the chain is essential to stay ahead of the curve (mapping of emerging risks) Need for closer interactions / active & structured dialogue between official controls, operators and feed safety assurance schemes Next step: ITC benchmarking of national feed safety programmes to check for compliance with EFMC 24 May 2016 ELC Sustainability forum 45

Supply chain pyramid: primary testing at supplier level Increasing number of operators Feed Material Suppliers & Processors Intermediaries: Store keepers & Hauliers Best control point to minimise food / feed crises Compounders & Home Mixers 24 May 2016 ELC Sustainability forum 46

Final verification that the system is working: testing of final compounds Numerous feed materials involved Many suppliers and processors Good point to test that all previous controls have worked for both compounds and feed materials All contained in final feed 24 May 2016 ELC Sustainability forum 47

FEFAC s feed safety management vision Implementation plan FVO National CCAs ISO National Associations Feed SIM-T Co-operation with authorities Capacity building EU Commission Scheme owners Livestock organisations Optimisation of risk management along the feed chain Supplier 24 May 2016 organisations ELC Sustainability forum Feed manufacturers 48

Take home messages Co-products are inherent element of the competitiveness of the EU livestock sector The feed use of co-products is a sustainable solution in circular bioeconomy context Feed is not waste: need also to clarify the boundaries of the feed chain Feed safety remains a must The feed outlet makes the food industry more sustainable The food&feed chain has a nice story to tell: we must tell it 24 May 2016 ELC Sustainability forum 49

Thank you for your attention