Darling’s finished products are sold to producers of animal feed, pet products, bio-fuels, and other consumer and industrial ingredient producers. Although the company is, in part, dependent on the controversial livestock industry for its raw material sourcing, Portfolio 21 recognizes that rendering companies recycle waste materials that may be ecologically toxic into something useable. According to Darling’s website, “…over 60 billion pounds of inedible byproducts are generated by the US food industry annually, of which the rendering industry processes 52 billion. Without recycling, some processors would turn to incineration or landfills.” The company states that, without rendering, the country’s available landfill space would be reduced by 25% a year.
In January 2011, Darling entered into a 50/50 joint venture with Valero Energy Corporation to form Diamond Green Diesel. Diamond Green Diesel converts grease, primarily animal fats and used cooking oil, into renewable diesel. Renewable diesel has a different molecular structure from typically produced biodiesel, which means that it doesn’t experience the cold flow issues that cause biodiesel to thicken in cold weather. Renewable diesel can also be distributed using current petroleum pipelines. With the onset of new renewable energy standards and tax incentives, Portfolio 21 believes there is significant opportunity in the company’s new venture. Portfolio 21 has requested that Darling improve its environmental accounting and reporting practices.
To the best of our knowledge the above information is accurate and was obtained from sources we believe to be reliable. Neither the information presented above nor any opinion expressed shall be construed as an offer to sell or a solicitation to buy the security. The views expressed are those of portfolio management as of 1/31/13 and may not reflect current opinions or subsequent events.