Rendering and Meat Byproduct Processing (U.S.) — Industry Primer

NAICS 2022 code 311613. The "invisible" recycling arm of the meat industry: plants that cook animal fat, bone, offal, and scrap into fats, oils, and protein meals sold into animal feed, pet food, biofuels, oleochemicals, and fertilizer.

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1. Overview

Every pound of meat sold leaves behind roughly a half-pound of material people don't eat — fat, bone, blood, feathers, viscera, and trim, plus dead-on-farm animals and used restaurant cooking oil. Rendering is the industrial process that boils, dries, and separates that raw material into two storable commodities: fats and oils (tallow, lard, poultry fat, yellow grease) and protein meals (meat and bone meal, poultry byproduct meal, blood meal, feather meal).[1][5] Without it, slaughterhouses would drown in waste; with it, a low-value or negative-value byproduct stream becomes a multibillion-dollar feedstock business.

The basic inedible-rendering process is to grind the material, heat it to evaporate water and liquefy fat, and then press, centrifuge, or filter it into a fat stream and proteinaceous solids. The solids are dried and ground into meal products; the liquid stream becomes tallow, choice white grease, poultry fat, or related products. Wastewater, vapors, and odor must be treated or controlled. Edible rendering uses more carefully selected material and lower-temperature or centrifugal processes to produce edible lard and tallow.[24]

Why an investor should care: this is a commodity-spread manufacturing business that has been transformed by biofuels. Animal fats that once sold mainly into soap and livestock feed are now a prized low-carbon feedstock for renewable diesel (a drop-in diesel substitute made from fats and oils) and sustainable aviation fuel (SAF). That has pulled fat prices up and tied a sleepy recycling industry to federal energy policy.[3][17]

Public vs. private ways in. There is essentially one large publicly traded pure-play: Darling Ingredients (NYSE: DAR), the biggest independent renderer in North America.[9][11] Most other rendering capacity sits either inside publicly traded meatpackers (Tyson, JBS, Smithfield, Pilgrim's Pride) as a small in-house segment, or inside privately held independents (Baker Commodities, Sanimax). Detail is in Section 4.

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2. What it is and how it's structured

Scope (what 311613 covers). Establishments primarily engaged in rendering animal fat, bones, and meat scraps, and processing meat byproducts into fats, oils, and protein meals.[7] Two business models coexist:

• Independent (or "commercial") renderers collect raw material from many sources — slaughter plants, supermarkets, butcher shops, farms, and restaurants (used cooking oil / grease) — often running collection-truck routes over a wide radius.[5][6]
• Integrated "packer/renderers" are rendering lines bolted onto a slaughter plant that process only that plant's own byproducts.[5][13]

What it excludes — and the adjacent NAICS codes. Rendering that happens inside a slaughter operation is classified with the slaughter plant, not here: 311611 (Animal, except Poultry, Slaughtering), 311612 (Meat Processed from Carcasses), and 311615 (Poultry Processing).[7] Grease/used-cooking-oil collection alone, biodiesel/renewable-diesel refining (NAICS 324110 petroleum refining or 325199 chemicals), pet-food manufacturing (311111), and fertilizer blending (325314) are all separate codes downstream of the renderer. This split matters for the size figures below.

Ownership mix. A handful of large firms plus many small regional operators. Integrated packers (privately held Cargill; publicly held Tyson, JBS, Smithfield) render internally; the independent side is led by publicly traded Darling and by private firms such as Baker Commodities and Sanimax.[1][8]

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3. How big it is

Federal statistics for NAICS 311613 (our ground-truth figures):

The 2022 census receipts of $7.94 billion sit close to independent estimates of roughly $7.2 billion in 2024 industry revenue.[1] (The Herfindahl-Hirschman Index, a standard concentration measure, is suppressed in the federal data and is not reported here.)

The undercount caveat — important here. Federal business statistics assign each establishment to the industry of its primary activity. Because integrated packer/renderers are counted with their slaughter plants (311611/311615), most in-house rendering throughput does not show up under 311613 — the 78 firms and 219 establishments above are essentially the stand-alone and independent renderers. Trade-group figures for all U.S. rendering activity are far larger: North American renderers process roughly 56 billion pounds of raw material a year into about 22 billion pounds of fats, oils, and proteins, an activity the industry values near $10 billion and estimates at more than 62 billion pounds of renderable raw material across the U.S. and Canada.[5][6] Read the census figures as the independent-renderer slice, not the whole rendering economy.

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4. The investable universe

There are very few clean public plays. The closest is Darling; the meatpackers give you rendering only as a minor embedded segment.

Darling in focus. Darling reported ~$5.7B net sales in FY2024 and ~$6.1B in FY2025.[9][11] Its Diamond Green Diesel joint venture with Valero shipped 1.25 billion gallons of renewable fuel in 2024, and Darling took ~$180 million in cash dividends from the JV that year.[9] Its stock is volatile precisely because it now trades on fat prices and biofuel policy: market value swung from roughly $4.8 billion in October 2025 back toward $8 billion by early 2026.[11] Darling has grown by acquisition — it bought U.S. independent Valley Proteins for about $1.1 billion (18 plants) in 2022.[22]

Major private / other owners. Baker Commodities and Sanimax are large privately held independents; Cargill (private) renders internally. Numerous small regional renderers round out the field. For most investors, private rendering is reachable only indirectly — via M&A into Darling or the packers, or via private-equity waste-to-value vehicles — not on a public exchange.[1][5]

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5. How the money works

Rendering is a conversion-spread business. The economics look like a simple manufacturing margin:

Gross margin ≈ (value of fats/oils + value of protein meal) − raw-material cost − energy − processing − freight.

Several features make it distinctive:

• Raw material is cheap, heavy, and perishable. Renderers often get paid to take material (tipping/collection fees) or buy it at low prices; used cooking oil is bought from restaurants for rebates that in 2025 commonly ran $0.10–$0.65 per gallon, while cleaned wholesale yellow grease sold for roughly $2.40–$3.60 per gallon.[3] Because the input is low-value and spoils fast, economics are intensely regional — a plant is only competitive within a truck radius, which tends to create local single-buyer positions.[21]
• Formula-based raw-material pricing. Darling reports that approximately 91% of its U.S. raw-material volume in fiscal 2025 was purchased under formulas tying the supplier's charge or credit to published finished-product or substitute-ingredient prices after processing and freight deductions. Formula contracts dampen commodity exposure but do not eliminate it: sudden price moves, yield changes, and renegotiation lags still affect margins.[28]
• Output prices are commodity prices. Feed-grade fats track competing vegetable oils (especially soybean oil) and energy; protein meals track soybean meal and feed markets. Fat values have been pulled up by biofuel demand — U.S. Gulf tallow was assessed near 89–90 cents per pound in late 2025 (about $1,516 per metric ton in December 2025), among the highest levels on record.[17]
• Throughput and utilization drive fixed-cost absorption. Cookers, presses, and centrifuges are capital-heavy; profitability depends on keeping high-volume plants full. The principal cost drivers are collection logistics (trucks, drivers, diesel, route density), energy (natural gas for boilers and dryers, electricity), direct plant labor and maintenance, and compliance with odor, air-emission, wastewater, and feed-safety rules.[28]
• Vertical integration and offtake. The biggest edge today is capturing the downstream value: Darling doesn't just sell fat, it converts much of it to renewable diesel through Diamond Green Diesel, keeping the biofuel margin in-house.[9]

Illustrative segment economics. Darling's global Feed Ingredients segment (which includes international rendering, used cooking oil, and bakery residuals beyond U.S. NAICS 311613) recorded $3.99 billion of sales in FY2025, a 23.2% gross margin, and approximately 5.4% operating margin — illustrating the low-margin, high-throughput nature of the core business, though the segment is too broad to serve as an industry proxy.[28]

The result is a business with low, cyclical margins on the core rendering line and a large optionality on fat prices and biofuel policy stacked on top.

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6. What drives demand

• Biofuel demand — the swing factor. Renewable diesel capacity roughly quadrupled from 2020 to 2024, and the use of animal fats and greases in biomass-based diesel rose to nearly 12 billion pounds in 2023.[8] Tallow, poultry fat, and yellow grease made up about 37% of renewable-diesel feedstock in 2023, up from 17% three years earlier.[3] Because waste fats have a low carbon intensity (CI) score, they earn richer clean-fuel incentives than crop oils — so biofuel policy now sets the marginal price of rendered fat.[3][17]
• Livestock slaughter volumes set the supply of raw material. Fewer cattle slaughtered (the U.S. cattle herd is near multi-decade lows) means less tallow and bone — tightening supply and supporting prices, but capping volume growth. (Forward-looking.)
• Animal feed and pet food. Protein meals and feed-grade fats remain core outlets for poultry, swine, aquaculture, and pet-food formulas.[5]
• Oleochemicals and fertilizer. Fats feed soap, cosmetics, lubricants, and industrial chemistry; protein and bone products feed organic fertilizer.[5]
• Exports. The U.S. is a major exporter of tallow and meals, so global feed and fuel demand matters.[8]

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7. Regulation

Rendering is regulated on food-safety, environmental, and energy-policy fronts at once:

• FDA feed rules / BSE. After bovine spongiform encephalopathy ("mad cow disease"), the U.S. Food and Drug Administration (FDA) banned most mammalian protein from ruminant feed in 1997 and, in a 2008 enhancement (21 CFR 589), barred the highest-risk cattle tissues — brains and spinal cords from cattle 30 months and older, and certain non-inspected carcasses — from all animal feed. Renderers must exclude this "cattle materials prohibited in animal feed" from their inputs. This means "meat-and-bone meal" is not a completely fungible commodity across species and end markets.[12][13]
• FDA preventive controls. FDA's preventive-controls rule requires covered animal-food facilities to follow current good manufacturing practices, conduct a hazard analysis, and implement and verify controls where necessary. Biological hazards include Salmonella and other pathogens; chemical and physical contamination, species commingling, and traceability failures can cause recalls or loss of premium customers.[29]
• USDA FSIS. Edible rendering (fats for human food) is inspected by the U.S. Department of Agriculture's Food Safety and Inspection Service; inedible rendering is not, but must keep prohibited materials out of the feed stream.[13]
• EPA — environmental. The Environmental Protection Agency regulates air (odor and emissions), water, and waste at rendering plants. EPA's 40 CFR Part 432 requirements cover direct wastewater discharges from independent renderers and are implemented through NPDES permits.[30]
• EPA — biofuel (RFS). The EPA runs the Renewable Fuel Standard (RFS), whose annual Renewable Volume Obligations (RVOs) mandate biofuel blending and thus underpin fat demand.[13][23]
• Clean-fuel tax credit (45Z). The Section 45Z Clean Fuel Production Credit (effective January 1, 2025, extended through 2029) replaced the old blenders' credit and pays biofuel producers up to ~$1.00/gallon based on carbon intensity — favoring low-CI animal fats.[14][15] Crucially, from 2026 the credit applies only to fuel made from North American (U.S./Mexico/Canada) feedstock, disqualifying most imported used cooking oil and much foreign tallow — a direct tailwind for domestic renderers.[16] California's Low Carbon Fuel Standard (LCFS) adds a further state-level premium.[3]
• Plus routine OSHA workplace-safety, DOT transport, and state dead-stock/rendering-license rules.

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8. Competitive dynamics and consolidation

This is a highly consolidated, capital- and permit-intensive industry. Among the firms primarily classified here, the top four account for 67.5% of revenue, the top eight for 80.6%, the top twenty for 94.5%, and the top fifty for 99.5% — a very concentrated field.[2] The industry has grown more concentrated over time: EPA's analysis of 2017 Economic Census data found that the four largest firms accounted for 54.8% of shipments and the eight largest for 71.2%, with an HHI of 1,109 (up from 673 in 2012).[31]

The long arc is consolidation: the U.S. had more than 700 rendering plants in the 1970s but only about 273 by the mid-2000s, with packer-owned facilities handling over 75% of volume.[13] Darling has been the industry's principal consolidator on the independent side (the Valley Proteins deal being a recent example).[22] Barriers to entry are high — you need capital-heavy cookers, hard-to-get environmental/odor permits, and a dense collection network to feed a plant.

Because raw material is low-value and perishable, geography frequently produces local single-buyer positions, and disputes over who controls a region's dead-stock and byproduct disposal can leave small livestock businesses with few alternatives.[21] A renderer with the efficient route network, permits, and supplier contracts around a slaughter cluster can have a strong local position even if national concentration appears moderate. That regional-monopoly dynamic is a recurring antitrust and small-producer concern.

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9. Risks

• Policy dependence. With fat values now set at the margin by biofuel incentives, any weakening of the RFS/RVO mandates, the 45Z credit, or state LCFS programs could sharply cut fat prices and renderer margins. This is the dominant risk today. Darling's Fuel Ingredients segment illustrates the speed at which policy shifts can transmit: operating income fell from $197.2 million in FY2024 to just $3.4 million in FY2025 as the renewable-fuel industry shifted from the blender tax credit to the producer credit and imported-feedstock tariffs changed economics. (Forward-looking.)[3][15][28]
• Commodity volatility. Output prices swing with soybean oil, energy, and feed markets; the spread between input and output can compress quickly. Fat and protein prices do not necessarily move together — fats respond to vegetable-oil, energy, and renewable-fuel markets while protein meals compete with soybean meal, corn, and other feed ingredients.[1][17]
• Raw-material supply. Tight livestock supply (low cattle herd) limits volume even as it supports price; a herd-liquidation or rebuilding cycle moves both ways. Darling reports that most large consolidated meat and poultry plants use integrated rendering, limiting independent renderers' addressable supply. (Forward-looking.)[28]
• Animal-disease shocks. BSE, African swine fever, or highly pathogenic avian influenza can disrupt raw-material flows, trigger feed-use restrictions, and close export markets.[12]
• Trade and tariffs. The North-American-feedstock rule and 2025 tariffs fractured the once-global market for tallow and used cooking oil, helping domestic renderers but disrupting import-dependent buyers and export flows.[16][17]
• Environmental and reputational. Odor complaints, wastewater, and emissions are perennial permitting and liability exposures.[13][30]
• Concentration on demand side. Much fat now flows to a small number of large renewable-diesel refineries; the loss of an offtake outlet is material.[8]
• Substitution. Finished fats compete with soybean, palm, and corn oils and sometimes petroleum-derived inputs; meals compete with soybean meal, grain byproducts, fish meal, and emerging insect or fermentation proteins. For raw materials, renderers compete with landfill operators, anaerobic digesters, waste haulers, biofuel companies, and illegal disposal.[28]

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10. How to invest and the outlook

Public routes.

• Darling Ingredients (DAR) is the only large, reasonably pure public exposure to rendering plus renewable diesel — but understand you're buying a leveraged bet on fat prices and biofuel policy, not a stable recycler. Investors receive global rendering and specialty-food exposure, collagen and casings, used cooking oil and bakery residuals, European bioenergy operations, and a stake in the Diamond Green Diesel joint venture.[9][11][28]
• Tyson (TSN), JBS (JBS), Smithfield (SFD), Pilgrim's Pride (PPC) give you rendering only as a small embedded segment; none reports a separate rendering profit-and-loss statement, so the exposure is economically real but financially diluted and difficult to value. A position in them is fundamentally a bet on protein/meat, with rendering as a byproduct hedge that offsets some slaughter-waste cost.[1][25][26][27]
• Valero (VLO) and other renewable-diesel refiners give indirect exposure as buyers of rendered fat rather than producers of it.[9]

Private routes. The independent renderers that aren't Darling — Baker Commodities, Sanimax, and many regional operators — are privately held; access comes through private equity, direct acquisition, or M&A into the public consolidators, not the stock market. Supplier density, permits, route overlap, plant condition, species mix, formula-contract terms, and wastewater liabilities matter more than a generic revenue multiple.[1][5]

Near-term drivers (forward-looking).

• 45Z's North-American-feedstock rule (from 2026) structurally favors U.S. renderers by pricing out imported used cooking oil and much foreign tallow.[16]
• Higher 2026–2027 RVO biofuel mandates point to stronger structural demand for animal fats.[23]
• Tight cattle supply should keep fat prices firm even as it caps volume growth.
• Offsetting headwinds: the trimmed SAF credit, policy/tax-credit uncertainty, and the sheer cyclicality of commodity spreads mean earnings can stay lumpy.[15][17]

Bottom line: a small, consolidated, unglamorous recycling industry that has been re-rated by the energy transition. The core rendering business is a low-margin regional spread game; the upside — and the volatility — now comes from where a pound of tallow lands: in feed, or in a fuel tank.

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Sources

1. IBISWorld. "Rendering & Meat Byproduct Processing in the US — Industry Report (5787)." 2025. https://www.ibisworld.com/united-states/industry/rendering-meat-byproduct-processing/5787/
2. U.S. Census Bureau. "2022 Economic Census — Concentration ratios and receipts, NAICS 311613." 2022. (CR4 67.5%, CR8 80.6%, CR20 94.5%, CR50 99.5%; 78 firms; $7.94B receipts; HHI suppressed.)
3. Fastmarkets. "The low-carbon feedstock squeeze: why UCO, tallow and animal fats are becoming the most fought-over commodities in US biofuels." 2025. https://www.fastmarkets.com/insights/the-low-carbon-feedstock-squeeze-why-uco-tallow-and-animal-fats-are-becoming-the-most-fought-over-commodities-in-us-biofuels/
4. U.S. Small Business Administration. "Table of Small Business Size Standards (NAICS 311613 = 750 employees)." 2023. https://www.sba.gov/document/support-table-size-standards
5. North American Renderers Association (NARA). "The Facts About Agricultural Rendering." 2024. https://nara.org/about-us/facts/
6. North American Renderers Association. "North American Rendering: The Industry (overview)." 2020. http://assets.nationalrenderers.org/north_american_rendering_v2.pdf
7. IBISWorld. "NAICS Code 311613 — Rendering and Meat Byproduct Processing (classification)." 2025. https://www.ibisworld.com/classifications/naics/311613/rendering-and-meat-byproduct-processing/
8. USDA Economic Research Service. "Growing biomass-based diesel production drives demand for animal fats, waste oils, and grease." 2024. https://www.ers.usda.gov/data-products/charts-of-note/109680
9. Darling Ingredients Inc. "Form 8-K — Fourth Quarter and Fiscal Year 2024 Results (press release)." 2025. https://www.sec.gov/Archives/edgar/data/916540/000091654025000004/exh991-pressreleaseq42024.htm
10. U.S. Census Bureau. "County Business Patterns 2023 — NAICS 311613 (establishments, employment, payroll)." 2023. https://www.census.gov/programs-surveys/cbp.html
11. Macrotrends. "Darling Ingredients (DAR) — Revenue, Market Cap, and Employees, 2012–2025." 2026. https://www.macrotrends.net/stocks/charts/DAR/darling-ingredients/market-cap
12. U.S. Food and Drug Administration. "Feed Ban Enhancement: Implementation Questions and Answers (BSE)." https://www.fda.gov/animal-veterinary/bovine-spongiform-encephalopathy/feed-ban-enhancement-implementation-questions-and-answers
13. Congressional Research Service. "Animal Rendering: Economics and Policy (RS21771)." https://www.everycrsreport.com/reports/RS21771.html
14. U.S. Department of the Treasury. "Treasury Releases Guidance on Clean Fuels Production Credit (Section 45Z)." 2025. https://home.treasury.gov/news/press-releases/jy2780
15. Congressional Research Service. "The Section 45Z Clean Fuel Production Credit (IF12502)." 2025. https://www.congress.gov/crs-product/IF12502
16. ResourceWise. "45Z Update: Imported UCO Now Excluded from Tax Benefit." 2026. https://www.resourcewise.com/blog/environmental-blog/45z-update-imported-uco-now-excluded-from-tax-benefit
17. Fastmarkets / IMARC / Procurement Resource. "Tallow price assessments and market analysis (US Gulf tallow ~89–90 c/lb; ~$1,516/MT Dec 2025)." 2025–2026. https://www.imarcgroup.com/tallow-oil-pricing-report
18. Smithfield Foods, Inc. "Smithfield Foods Announces Pricing of Initial Public Offering (NASDAQ: SFD)." Jan 2025. https://www.prnewswire.com/news-releases/smithfield-foods-announces-pricing-of-initial-public-offering-302361508.html
19. JBS Foods Group. "JBS Begins Trading on the NYSE, Completes Dual Listing with Brazil's B3 (ticker JBS)." June 2025. https://jbsfoodsgroup.com/articles/jbs-begins-trading-on-the-nyse-completes-dual-listing-with-brazil-s-b3
20. U.S. Census Bureau. "County Business Patterns 2023 — first-quarter and annual payroll, NAICS 311613." 2023. https://www.census.gov/programs-surveys/cbp.html
21. Food & Power (Open Markets Institute). "A New Threat to Small Meat Processors: Monopolized Waste Disposal." 2024. https://www.foodandpower.net/latest/mopac-service-termination-hurts-small-livestock-businesses-dec-24
22. PR Newswire / Powder & Bulk Solids. "Darling Ingredients Inc. Completes Acquisition of Valley Proteins (~$1.1B, 18 plants)." 2022. https://www.prnewswire.com/news-releases/darling-ingredients-inc-completes-acquisition-of-valley-proteins-301537385.html
23. farmdoc daily (University of Illinois). "Rewriting the RFS Playbook: The Impact of Final RVOs on Projected Biomass-Based Diesel Feedstock Use for 2026–2027." 2026. https://farmdocdaily.illinois.edu/2026/06/rewriting-the-rfs-playbook-the-impact-of-final-rvos-on-projected-biomass-based-diesel-feedstock-use-for-2026-2027.html
24. U.S. Environmental Protection Agency. "Meat Rendering Plants — Process Description (AP-42)." https://nepis.epa.gov/Exe/ZyPURL.cgi?Dockey=P1001576.TXT
25. Tyson Foods, Inc. "Form 10-K (Fiscal 2025)." https://www.sec.gov/Archives/edgar/data/100493/000010049325000095/tsn-20250927.htm
26. Pilgrim's Pride Corporation. "Form 10-K (Fiscal 2025)." https://www.sec.gov/Archives/edgar/data/802481/000080248126000011/ppc-20251228.htm
27. Smithfield Foods, Inc. "Form 10-K (Fiscal 2025)." https://www.sec.gov/Archives/edgar/data/91388/000009138826000014/smf-20251228.htm
28. Darling Ingredients Inc. "Form 10-K (Fiscal 2025)." https://www.sec.gov/Archives/edgar/data/916540/000091654026000008/dar-20260103.htm
29. U.S. Food and Drug Administration. "FSMA Final Rule for Preventive Controls for Animal Food." https://www.fda.gov/food/food-safety-modernization-act-fsma/fsma-final-rule-preventive-controls-animal-food
30. U.S. Environmental Protection Agency. "Meat and Poultry Products Effluent Guidelines (40 CFR Part 432)." https://www.epa.gov/eg/meat-and-poultry-products-effluent-guidelines
31. U.S. Environmental Protection Agency. "Regulatory Impact Analysis — Meat and Poultry Products (table 2-7, 2017 concentration data)." https://www.epa.gov/system/files/documents/2025-07/mpp_regulatory-impact-analysis_proposed_dec-2023.pdf