Intermediary between food processing industry and

livestock farmers for facilitating circulation of byproducts

- Case study of Aoyama Trading Firm, Co., Ltd., Aichi Prefecture

(Ph. D. in Agriculture, President, Mikage-An, Research Institute of Livestock Industry and Feed)

1. Preface
2. Nationwide status of utilization of byproducts of food processing
3. Significance of the utilization of byproducts of food processing as feed and requirements for the utilization.
4. Activities of Aoyama Trading Firm
5. Ogasawara Stock Farm, Nishio City, Aichi Prefecture
6. Shimizu Stock Farm, Koda Town, Aichi Prefecture
7. Concluding remark

1.

Preface

The present reporter visited Aoyama Trading Firm, Co., Ltd., in Okazaki City, Aichi Prefecture, with a view to assessing the role of industrial-waste disposal business as a form of distribution of byproducts of food processing. Mr. Taro Aoyama, executive managing director of the company, told the reporter about the company policy by saying at the beginning of the interview "Our firm, since the beginning of its business, has been trading only byproducts of food processing as animal feed, because it is based in Aichi Prefecture which is one of the major thriving dairy farming areas, and where for a long time many farmers have been feeding their cows with byproducts of food processing. Our business policy depends on the concept that we receive the fees for waste disposal from companies discharging wastes and we share the profits with farmers as much as we can." The owner of the Ogasawara Stock Farm, to whom the Aoyama Trading Firm introduced the reporter, and who is running a dairy farm in Nishio City remarked, "In this area, there is a limit for farmers to grow forage crops on their own land. However, there are many things which humans are not able to use but cows can use, and hence I run my business by identifying the significance of dairy farming in this context. In other words, domestic animals are livestock animals which enable us to exploit, for producing animal products, the byproducts of food processing that we, human beings, are not able to eat. I find the meaning of dairy farming in the possibility of effective utilization of such value."

Mr. Tadashi Shimizu in Koda City, while being aged 70, is a cheerful farmer with good humor raising F1 cattle for fattening. He told the reporter, standing with his arms crossed and his cattle barn in the background, saying "Cattle rearing should be practiced by feeding them with what humans are not able to eat. There is no fun if one practices it simply by buying ready mixed formula feed and feeding the cattle mechanically through automatic feeding equipment. I collect diverse kinds of feed materials, mix them, and feed the cattle while watching carefully the conditions of animals such as the color of dung. My pleasure comes from the profit gained through such efforts."

2.

Nationwide status of utilization of byproducts of food processing

Table 1 presents different types of byproducts of food processing and their rate of recycling in the country. The quantity of their generation amounts to around 4.9 million to less than 5.0 million tons annually. The rate of their utilization for animal feed increased in 2005 and 2006 compared with that in 2004, amounting to 38 % in 2006. However, the rate of unutilized byproducts is about 24 %, suggesting that the quantity of potentially available resources is about 1.19 million tons.

Dehydrated products such as oil meal and bran are recycled at a high rate, but conversely the utilization rate of materials with high moisture contents is reportedly lower in general.Efforts for conversion of byproducts into feed would be more appropriately focused mainly on this aspect.

What are the reactions of users about these byproducts? Feed Supply Stabilization Organization has conducted a survey by questionnaire targeting processors of formula feed on the utilization of byproducts of food processing (particularly food residues). The factors raised as issues in the survey result included: "securing of a certain volume and stable supply"; "securing safety"; "stability of quality"; "stability in nutrient composition"; "traceability"; "appropriate prices"; "transformation into final products at the site of generation", etc. ("Toward the utilization of food residues as feed-Manual of utilization for feed (2008 Edition)-", the National Council of Action for Conversion of Food Residues into Feed/ Feed Supply Stabilization Organization, February 2008).

1)

The maize price at the Chicago commodity market that used to remain at 2.0-2.5 dollars per bushel (25.4 kg) during the period from January to October 2006 began to rise from the end of 2006, going up to $ 5 range in March 2008, $ 6 in April, and $ 7.03 on 10th July, which drove up the prices of formula feed in Japan and gave rise to the "animal husbandry crisis".

What could have been the actual impact on livestock farmers?Table 2 shows the result of studies carried out by the reporter and his partners. This table is based on the data collected in the summer of 2004 from 6 dairy farms in Ibaragi Prefecture where the reporter then holding a chair in Nihon University conducted a quantitative study concerning the amount of feed fed to lactating cows and milk production, assisted by students of the laboratory. Comparison has been made between the estimated feed cost in the summer of 2004 and that in the summer of 2008, by assuming that the same amount and quality of feed materials that were fed to the tested dairy herd in 2004 are also fed in 2008 to the dairy herd of the same number of cows with the same level of milk production, so that the impact of elevated feed prices on dairy farming may be assessed quantitatively.Due to the price rise of feed, the feeding cost has increased by about ¥ 9,300 per day, namely about ¥ 280,000 monthly.

The feeding system of this farm F is characterized by the use of the tofu lees (bean curd lees or soy pulp). The tofu lees are fed to cattle with a dose of 0.7-1.0 kg in DM per day. It can be assumed that the TDN of formula feed equivalent to that amount is replaced by the TDN of the tofu lees. According to the calculation based on the price differential between the two kinds of feed, an amount of approximately ¥ 2,400 is supposed to be saved in the daily feeding cost. Likewise, the utilization of cheap byproducts of food processing enables the reduction of financial load in running business.

Table 2 Comparison of feed cost for F farm (33 lactating cows) in Ibaragi Prefecture between the summer of 2004 and that of 2008

Forage

Amount fed

kg/day

Unit price of feed ¥/kg

Amount spent¥/day

2004

2008

2004

2008

Timothy hay

158.4

40

54

6,336

8,554

Oat hay

72.6

38

47

2,759

3,412

Alfalfa hay

42.9

42

51

1,801

2,188

Beet pulp

114.3

37

48

4,229

5,486

Tofu lees

217.8

4

4

871

871

Formula feed A

98.7

42

58

4,145

5,725

Formula feed B

168.0

41

60

6,888

10,080

Total

27,029

36,316

Selling price of milk produced on the day of testing cow herd ¥ 80,963
Difference in feeding cost between 2004 and 2008¥ 9,287/day
Proportion of expense for imported hay products to total feeding cost39 %
Proportion of expense for formula feed to total feeding cost44 %

Feed/milk ratio in 200433.4 %
Feed/milk ratio in 200844.9 %

The crisis and disturbance caused by the price rise of imported maize since the latter half of 2006 could be attributed largely to the fact that the uniform and homogeneous structure of feeding used to prevail in animal husbandry in Japan. If one looks at the problem by referring to dairy farming, one can recognize a different situation that existed before 1975 where each locality had established its own feed structure adapted to the particularity of the region it belongs to, and hence there were found diverse types of dairy farming including that of paddy field zone, that of upland cultivation zone, that based on grazing, that based on grassland, that in urban areas based on byproducts of food processing, etc. However, after the Nixon Shock, under the circumstances where the grain maize imported from the U. S. A. had become available cheaply and stably, the dairy farming of a uniform type had been developed and disseminated throughout the country, in which the standard feed menu consisted of the combination of maize grains, soybean cake, imported beet pulp, imported long hay products like timothy hay, and imported alfalfa cubes. The situation could be compared, in terms of human food, to the extension and stabilization of menus of franchised chain restaurants.

The steep rise of main ingredients of the established menu immediately affected uniformly the management of livestock farmers in the whole country, causing the results similar to the example of Table 2. The menu structure of franchised chain restaurants lacks the capacity for buffering. All actors collapse together in concert as a result of the steep rise of imported feed prices. Augmentation of self-sufficiency rate of feed signifies the construction of resilient feed structure with buffering capacity. In terms of menu, it concerns the realization of best mix.

The concept of realization of best mix could be easily understood if we apply the term to the domain of energy. It is a strategy through which we try to conserve the energy resources while taking account of environment, by diversifying energy sources ranging from petroleum to atomic power, wind power, geothermal heat, natural gas, bio-ethanol, and vegetable fat and oil fuel. The rise of maize price from the latter half of 2006 derived from the best mix strategy of US government by the enactment of "New Energy Act".

The realization of best mix of feed is a strategy by which a resilient feed structure with high buffering capacity is to be built by lowering the dependency on imported cereals and imported hay products. Its tactics include the strengthening of capacity for producing self-sufficient forage and the search and utilization of highly nutritious materials starting with byproducts of food processing.

Table 3 Result of test on fattening of Japanese black cattle steers by feeding mainly the tofu lees and maize silage

These test data constitute one of the results of a research project implemented during the period from 1989 to 1993 and called "Development of low-cost technology for beef production by means of total mixed ration with new ingredients utilizing byproducts of food processing and locally available forage resources", in which feeding trials were carried out on fattening of beef cattle (fattening trials). In December 1993 an agreement was established essentially in the international negotiation on rules of trading agricultural products, so-called Uruguay Round of GATT, in which Japan accepted the policy of tariff reduction, pledging that "the tariff on imported beef shall be reduced gradually from the current rate of 50 % to 38.5 % over the next 6 years’ period".

This research project was implemented, while watching apprehensively the progress of the GATT negotiation, with a view to developing technology for producing beef at lower cost within the country and to disseminating the developed technology to beef cattle farmers.

The objective of test concerning Table 3 was to identify an appropriate feeding method that would enable the production of a larger quantity of dressed carcasses of a highly rated grade while reducing the feeding cost by replacing a portion of feed in the traditional feeding system for fattening, consisting of maize grains and barley, with that containing maize silage and tofu lees.

The test results demonstrated that, compared with the group of steers treated with the traditional feed based on a large quantity of cereals, the group of those treated with the tofu lees (best mix group) consumed a larger quantity of feed, yielded heavier live weight at slaughtering and heavier carcass weight, and recorded higher index numbers of marbling in rib eye, which resulted in a great difference in the carcass price between treatments.

3) the high fat content of the tofu lees contributed to the enhancement of effect for replacing starch energy in cereals and to the fat accumulation; 4) the starch in grains in whole-crop maize silage could effectively replace maize starch in the cereals for the control group.

This study has clearly shown us that the starch of imported cereals can be replaced with locally available resources by applying the knowledge on nutritional science and by utilizing relevant information.

(3)

In order to manage the health of animal satisfactorily and yield animal products of high quality with high efficiency by utilizing byproducts of food processing, it is necessary to pursue the following steps, and in actual practice, it is essential to enlist the collaboration and cooperation of local people acting in different sectors of business. Those steps include: 1) verification of availability and safety of materials, such as estimation of available quantity, assessment of refuge separation and their safety, evaluation of seasonal productivity; 2) evaluation of quantity of fundamental nutrients;3) screening tests like the palatability determination tests using a small animals; 4) collection of detailed data on feed properties that are required for formulation of feeding programs; 5) formulation of feeding programs; 6) execution of trials on lactation or fattening by using animals; 7) comprehensive evaluation including the on-farm assessment of economic effect.

The above describes the requirements for the realization of strategy of best mix of feed. This report is intended to present actual cases of an intermediary role linking livestock farmers with enterprises generating byproducts of food processing, through describing economic activities of Aoyama Trading Firm, Ltd., in Aichi Prefecture.

1)

Dear our loyal customers, we would like to ask for your kind cooperation in our business through understanding about the principles of Aoyama Trading Firm as described below:

The life of Japanese people has become very much affluent. Hidden behind it, there is also another aspect of life going on in the midst of "garbage war".

While animals and plants on the earth live among systems of material cycle, only human being that is a part of them lives outside the systems.

Our goal is the harmony among human life, agriculture, animal husbandry, and nature. Unless the human life is sustained among cycles of organic matter through recycling of all kinds of resources, the next generation of people in years to come will have to live on mounds of garbage.

In order to avoid the development of such circumstances, we are making the utmost effort for facilitating the recycling of organic matter for agriculture (as fertilizer) and animal husbandry (as feed). Your understanding and cooperation is earnestly requested.

Table 4 Types of byproducts of food processing handled by Aoyama Trading Firm

Regarding the processing of collected byproducts, they are treated by different methods in the intermediate treatment plant owned by the firm according to the types of material. In the case of the tofu lees, they are either (1) treated by lactate fermentation without other ingredients, or (2) mixed by the mixer-feeder in the plant with wheat bran and molasses to make TMR silage of mixtures. After treatment the products are shipped out for delivery to livestock farmers in the package of flexible container bag of 700 kg capacity.

At present in the country, the structure of feed supply to dairy farmers is changing, though it is doing so gradually. That means the establishment of TMR centers and the augmentation of cases of shipment and supply of TMR products to dairy farmers. Although the number of TRM centers in the country was 34 in 2003, it increased to 49 in 2005, and particularly the increase in Hokkaido was remarkable (7 in 2005 to 20 in 2007).

Aoyama Trading Firm supplies mainly the soy sauce lees to TMR centers in Hokkaido (Nakashibetu, Tsurui, Akan), and also sake-cake, the starch of broken packages, and the spent malt to certain centers.

Seeing from the information volume and the capacity for action, the role of operators of intermediate processing business for supplying byproducts of food processing to TMR centers, the number of which is anticipated to increase in the future as well, would become more important. In this context, Mr. Aoyama describes the current state and the issues as follows:

In Hokkaido, a specific NPO, Council for Environment, Recycling and Beef Cattle, is carrying out studies on the techniques for utilization of feed derived from byproducts, to provide the information to farmers raising fattening cattle in the prefecture. The organizations in charge of actual experiments and studies are Obihiro University of Agriculture & Veterinary Medicine and Hokkaido Animal Research Center. In 2003, the university and the research center conducted various tests by using the silage supplied by Aoyama Trading Firm containing potato skins as the main ingredient. The composition of the silage and the results of fattening tests using dairy steers are shown in Table 5 and Table 6 respectively (Agricycle, Vol. 3, published by Council for Environment, Recycling and Beef Cattle, 2004).At the end of his report, Mr. Yukinobu Sato of Hokkaido Animal Research Center who took charge of the fattening tests states his views as follows:

Table 5 Composition of ingredients of potato skin silage

(Source: Sato, Hokkaido Animal Research Center, 2004)

Table 6 Results of fattening tests with dairy steers by feeding potato skin silage

Mr. Masahide Ogasawara, 52 years old, is the owner of a dairy farm with the professional experience of 30 years. He is running his dairy farm of corporate entity of limited company, employing 3 permanent workers, 6 temporary ones and foreign trainees, drawing milk 3 times a day.As can be observed from the results of herd testing in May 2008 (Table 7), the farm is a large-scale farming entity in possession of herds of dairy cows with high lactating capacity.

Cow sheds are of loose housing type (free-stall barn), separately housing 4 herds, A-D. Barn A is for cows older than 2 years, B for first calving cows, C for sick cows under medical treatment, and D for cows on 7th-10th day after calving. As feed, a type of TMR is prepared and fed to all herds. For cows of herds C and D, timothy hay is additionally fed ad libitum. Formulation of feeding plans is entrusted entirely to Dr. Ysunori Suzuki, veterinarian at Akabane Clinic.

Table 7 Results of herd testing at Ogasawara Stock Farm (May 2008)

Then, how are the dairy cows of such a large-scale herd with so high lactating capacity utilizing byproducts of food processing? Mr. Ogasawara told the reporter about several facts as follows:

(1) "We prepare TMR twice a day, making 5 tons at a time and 10 tons of TMR daily".

(2) "The byproducts of food processing we use daily consist of 1 ton of tofu lees (700 kg from Aoyama Trading Firm and 300 kg from tofu makers), 350 kg of spent malt, and 100 kg of miso (fermented soybean paste) (products of expired best-before date, intended as supplements for amino acids). In other words, the original matter of TMR of 10 tons contains 14.5 % of byproducts of food processing and similar materials."

(3) "We have been using the tofu lees since the days of my father. In 1987 when the transaction standard of milk was revised (milk fat percentage changed from 3.2 % to 3.5 %), most of dairy farmers in the neighborhood quitted feeding tofu lees. As a consequence of it, the tofu lees became surplus stuff and the price went down to almost nothing. At that time, we had been already producing TMR that used the tofu lees as an ingredient. Because we made an effort for quality control (prevention of deterioration) and for the maintenance of normalization of fermentation in rumen, we were able to continue to use the tofu lees. The lees are a suitable material for the purpose of preparing TMR with a moisture content at around 50 % which is deemed to be the optimum level. The tofu lees also assure good palatability of products."

Nishio City is situated in a rice growing zone, and with respect to collaboration between rice growers and dairy farmers including him, Mr. Ogasawara told the reporter about instances of effort as follows:

The last destination to visit in the current survey has been the beef cattle farm of Mr. Kazumasa Shimizu, 70 years old. When he was 45 years old, he changed his occupation from the job in a meat center to the present one, doing business of rearing and fattening cattle. As mentioned in the preface, he is a cheerful person with good humor.

At present, he raises 100 heads of F1 heifers and 50 heads of steers of Holstein or breeds other than F1. Calves are purchased in the market of Okazaki for a price of around ¥ 50-60. The cattle are shipped out at the age of 26 months, and most of them are said to have body weight of about 670-680 kg, and produce carcasses with weight of 400 kg and rated grade of B-2.

The byproducts of food processing used by the farm are diverse, including tofu lees (500-600 kg per day), bread crumbs, fragments of potato crisp, crude bran of barley, broken beans, damaged maize, and wheat flour (flour from washed processing lines). In addition to them, the farm purchases roll-pressed barley, blended maize of 2 varieties, and soybean cake as ingredients of formula feed, and mix them together by the mixing machine installed at the entrance of cattle barn. As roughage, the farm feed imported straw hay.