Disclosed herein is a method of producing animal feed comprising: (a) taking an oily sludge containing animal fats which is a by-product originating from a food processing plant comprising 25 to 90 wt% fat on a solid basis, mixing with an alkaline agent selected from the group consisting of calcium hydroxide or calcium oxide at 0.2-20 wt% based on the weight of the oily sludge solids, and mixing with a particulate material selected from the group consisting of soybean meal, soy hulls, soybean protein derivatives, wheat, wheat straw wheat bran, corn meal, corn stalks, corn cobs, alfalfa, sweet bran, silage, oats, oat straw, barley, barley straw, meat meal, bone meal, animal blood meal, maize meal, maize derivatives, sunflower meal, sunflower hulls, cottonseed, cotton hulls at 40-120 wt% based on the weight of the oily sludge solids； and (b) drying the mixture to give a flowable non-oily animal feed product.
