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Feasibility Study; Meat Processing Facility A Collaborative Cooperative
Salmon ID, Challis ID, MacKay ID
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Project Team:
• Daniel R. Robles; PE, MBA, Director of Coengineers, PLLC, A professional engineering and business analysis corporation located in the State of Washington
• John Harper, under contract to Coengineers, University of California Cooperative Extension Mendocino & Lake Counties California
• Dr. Robert Needham; Project Manager and advisor to the Salmon Valley Meat Processing Cooperative,
• Salmon Valley Meat Processing Cooperative Steering Committee, representing the towns of Challis, Salmon, and MacKay Idaho
Reference As: Robles, D.R. 2014; Feasibility Study; Meat Processing Facility, Salmon Valley cooperative, Challis, Mackay, Salmon Idaho. Community Engineering Services, PLLC and adaptations of the following works by: (1) Hardesty, S and J. Harper 2013 University of California Cooperative Extension; Mendocino County Meat Plant Study – Staying Local; Public Domain per U.S. Department of Commerce Award No. 07 79 06702; (2) University of Idaho: Strategies to Increase Prosperity For Small Farms Through Sustainable Livestock Production, Processing And Marketing 2014. (3) Oklahoma State University, Dr. Rodney Holcomb, Templates for meat plant feasibility studies. Acknowledgements: Community Engineering Services, PLLC is especially grateful to the general openness and spirit of collaboration among small-‐scale food producers who contributed generously to this report. A large volume of data, information, knowledge, innovation, and wisdom was readily and openly available from hundreds of groups and researcher who have tried many different ways to achieve the ideal of small-‐scale meat plant production. We offer a special thanks to John Harper from the University of California Extension for consulting to this project. His deep knowledge and experience in ranching a meat processing was the ideal compliment to our engineering and operations focus. His prior work in California was a near perfect match upon which to base a feasibility document for his neighbors in Salmon Valley, Central Idaho. The following list is not exhaustive since these people all cite the experience of those who came before them, and in many cases, they cite each other’s work. The small meat processing movement is blessed with a true spirit of collaboration.
Island County Cooperation Puget Sound Meat Processing Co-‐op
CPoW Livestock Processors Coop–Odessa WA Taos Economic Development Corporation
University of California, Extension Svcs Polar King Industries
Mike Callicrate; Ranch Foods Direct TriVan Conversions
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CONTENTS: Project Team 2 Reference as 2 Acknowledgements 2 Contents 3 Executive Summary 5 Introduction 9 Analysis and Demand For USDA Processing 10 General Trends in Local/Specialty Meat 10 Demand for local Meat Processing 11 Livestock Production in Central Idaho 12 Rancher Survey of Potential Utilization 16 Cooperative Business Structure 17 What Works / What Doesn’t 17 Case Studies 20
Island Growers Farmer’s Cooperative 20 Taos County Research Institute 22 Mike Callicrate MPU 23 Puget Sound Meat Producers Cooperative 26 Cooperative Processors of Washington 29 Mendocino County Feasibility Study 30
SVC Plant Requirements 32 USDA Regulations 32 Wastewater Management 33 Composting and Rendering 34 SVC Plant Options 36
Three Phase Approach 40 Option A; Phase 1 40 Option A; Phase 2 42 Option A; Phase 3 44 Option B 45
Risk Assessment and Mitigation 47 Degree of Processing 48 Site Selection 51 Coop Shared Responsibility 52 Summary Conclusion 54 APPENDIX A: Position Descriptions; Management/Staff 51 APPENDIX B: Financials; Worksheets 62 APPENDIX C: Additional Case Studies 78 APPENDIX D: Meat Processors In Idaho 84 APPENDIX E: Resources, Training, And Consultants 87 Bibliography 91
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TABLES: Table 1-‐1: Summary Of Options 6 Table 1-‐2: Risk Adjusted Returns 6 Table 2-‐1: U.S. Retail Beef Sales between 2012-‐2013 11 Table 3-‐1 Processing Scenarios and Markets Served 15 Table 4: Cost Estimates for fixed facility, Mendocino County Feasibility Study 31 Table 5: Estimate of Upfront Start-‐up Project Costs for Two Options 39 Table 6A and 6B; Conversion Tables for EAU and total Head Count 40 Table 7: Operating Assumptions for Revenue Calculations 40 Table 8: Option A, Phase 1: Personnel Costs 41 Table 9: Option A, Phase 1: Start-‐up and Personnel Costs 41 Table 10: Option A, Phase 2: Personnel Costs 42 Table 11: Option A, Phase 2: Start-‐up and Personnel Costs 42 Table 12: Option A, Phase 3: Personnel Costs 44 Table 13: Option A, Phase 3: Start-‐up and Personnel Costs 44 Table 14: Option B, Personnel Costs 45 Table 15: Option B, Start-‐up and Personnel Costs 45 Table 16: Financial Performance all options 46 Table 17: Production Cycle for Cattle in Central Idaho 46 Table 18: Risk Adjusted Return pegged at @10% 47 Table 19: Summary of Equipment for Beef Processing Operation 49 Table 20: Summary of Equipment for Pork Processing Operation 49 Table 21: Options For Each function of Meat Processing Operation 53 Table 22a: Possible phase 1 and 2 function corresponding Coop Locations 53 Table 22b: Possible phase 3 function corresponding to Coop Locations 53 Table 22c: Option B functions corresponding to Coop Locations 53
FIGURES: Figure 1: Early Mobile Slaughter Unit by The Island Grown Farmers' Cooperative 20 Figure 2a: Polar King Cooler Module. 2b: Reefer/MSU unloading to Module 22 Figure 3: Callicrate System Mobile Kill Box 24 Figure 4: Mike Callicrate System for Mobile / Modular Processing 25 Figure 5: Mobile Slaughter Unit By TriVan Conversions 26 Figure 6: Fixed Facility; Cooperative Processors of Washington, Odessa, WA 29 Figure 7: Two Site Modular Meat Processing Illustration of Flow 30 Figure 8: Polar King Cut and Wrap Module with added cooler/freezer 36 Figure 9: TriVan Conversions Mobile Slaughter Unit on Medium Cab 37 Figure 10: Modular Slaughter Unit set in place with integrated building 37 Figure 11: Insulated Metal Building typical for fixed processing facility 38 Figure 12: Carcass hangs for cooling/aging or cut into primals 48 Figure 13: Wrapped Meat Aging on Racks 48 Figure 14: Cut and Wrap Operations in Clean Cooled USDA Insp. Environment 48 Figure 15: individually wrapped cuts Req’s tracking, logistics, and QC 48 Figure 16: Mike Callicrate has had considerable success with retail sales 50
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Salmon Valley Meat Processing Facility Feasibility Study - Executive Summary The proposed project is for a small-‐scale multi-‐species USDA inspected meat plant that will primarily serve ranchers in the Salmon Valley area of Central Idaho. It will process cattle, sheep, hogs, and lamb. This proposed project is different from many case studies because most of the ranchers who would be served, currently sell their livestock at auction to large processors. They will primarily be shifting their sale of live animals for deferred payment, albeit possibly higher margins, by becoming participants in the business of processing of meat. Recent studies indicate that the increased consumer interest in locally raised, grass fed, and/or organic meat is based on the perception and evidence about healthier fats, reduced environmental impact, and increased animal welfare compared with beef raised and/or finished in confinement systems and processed in industrial factories. The lack of nearby processing facilities limits the marketing options for ranchers. It is far simpler to just sell live animals at the cost of being reliant on external entities. A recent study by University of Idaho concludes that there is enough livestock in the area to support meat-‐processing facilities with capacity of 2,400 to 16,000 animals and possibly many more. The facilities proposed here fit well within the current projections. A structured survey of 5 members of the steering committee indicate that there is significant interest in building self-‐sufficiency, job creation, sustainability, and value added to an existing local industry. Ranchers currently sell livestock directly to processors at autumn auction prices. In order for local production to compete with the auction culture, the rancher would need to accept deferred payment for their livestock, or the Co-‐op must buy the livestock at auction prices from the Rancher. The co-‐operative may also offer bridge loans to a Rancher. Ranchers are accustomed to preparing stock for autumn harvest creating a peak season and a lax season whereas the local processing facility proposal is beast suited for year-‐round steady state production. The Rancher may need to accommodate multi-‐species operation or multi-‐niche production (organic, grass fed, grain fed each have different growth rates). Or the Co-‐op could add freezing capacity and offer financial incentives to the ranchers. Two plant options are analyzed Option A is a phased approach with 3 phases of growth consisting of USDA Inspected mobile or modular slaughter unit with adjacent temporary or semi-‐permanent holding pens located on leased land on a prepared Ranch. The second phase is largely achieved by adding personnel. As facilities are maximized, modular refrigeration, wrap, and processing units are added as needed in the 3rd phase. Option B is a built-‐in-‐place 2400 square foot USDA Inspected slaughter and processing facility located on a plot that is purchased or with a long-‐term lease. All USDA inspected processes are contained and controlled within the building. The minimum viable production will be approximately 1500 animal units per year.
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Option A would be somewhat more complicated to operate but it has a lower minimum viable production of approximately 750 animals per year in phase 1 and can be built up to around 3000 equivalent animal units through phase 3 if the coop and market are largely successful. Option A may have a greater recovery value in the event that the cooperative is not successful. Option B would be easier to operate and employ fewer people, but would require a higher level of commitment and initial financial outlay.
Table 1-1: Summary Of Options Risk adjusted project returns: The risk adjusted table sacrifices internal rate of return in exchange for reduced operational risk. Here we peg the IRR to the discount rate at 10% and allocate all excess predicted revenue to operational risk reduction.
Table 1-2: Risk Adjusted Returns This chart shows the amount of short-‐term operational capital could be held in reserve, at the cost of money, which could minimize operational risk. This rotating capital could be used to purchase livestock directly or provide bridge loans to ranchers for the period of time it takes for product to reach market. Other uses may include ramping up temporary personnel to meet peak loads or obtaining additional refrigeration or freezing capacity to preserve product from loss.
Measures Option A Option B Phase 1 Phase 2 Phase 3 Animals (Composition)
750 (100% Cattle)
1500 (75C/20S/5H)
3000 (75C/20S/5H)
1500 (75C/20S/5H)
Capital Investment
$912,000 P1 +$200,000 [$1,147,000]
P2 +$900,100 [$2,047,000]
$1,282,000
Debt Financing
$547,200 (60%)
$658,200 (60%)
$1,128,000 (60%)
$1,025,600 (80%)
Personnel Cost (per year)
$202,500 $351,100 $654,750 $371,250
Gross Revenue Year 5
$546, 317 $861,386 $1,740,459 $861,386
Expenses Year 5
$457,717 $680,647 $1,265,200 $692,200
Payback Period
>10 years 7 years 4 years 7 years
Internal Rate of Return
10.32% 18.03% 26.09% 19.26%
Measures Option A Option B Phase 1 Phase 2 Phase 3 IRR @ 10% $1M = 0% $1.2M $4M $1.5M
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Personnel The most challenging variable in this project will be on the human resources and management side of the equation. A large percentage of attempts at local meat processing capacity fail due to inexperienced operational management specific to the meat processing industry. Further, dealing with the USDA will not be an insignificant human resources component. For these reason, we have provided Option A, which optimizes flexibility, resilience, and ultimately, salvage value in the event that the project fails. Option B is a more traditional approach that can be compared against similar case studies from other communities (reality check). Capital Costs The Small Business Administration’s Section 504 program can potentially provide guaranteed financing for 80% of the option involving land acquisition (Option B). Option A and follow-‐on phases involve leased sites and mobile/modular facilities; they will need conventional financing which is likely to provide only 60% of project cost. Private donors, community investment, regional economic development aid, etc may fund the balance of construction costs. Operating capital may be sourced from traditional business loans. Additional resources are identified later in this report. Utilization: A high level of utilization is critical to the Salmon Valley Co-‐op meat processing operation’s financial viability. The minimum viable production rate of 750 cattle was provided as a hard point to reach as quickly as possible as a condition of project viability. SVC must be confident that they have a near-‐immediate supply and demand for 750 head of beef in year 1. Then they must execute a 10% IRR business plan that integrates possession of pre-‐packaged facilities and obtain USDA approval under competent management. Therefore, experienced management and quality service is needed to attract and retain a few key ranchers to provide reliable high quality livestock within the operational capacity of the initial build-‐out. Experienced management must also secure a ready local distribution channel for 750 head of boxed beef products in a single year. Market With any project involving long-‐term projections, there is always uncertainty related to demand for products or services. Most of the ranchers have already developed markets for their product and most of the distributors have established sources, the challenge will be for SVC to convince the ranchers and the end-‐users that they can deliver reliable processing under competitive or superior terms Infrastructure Due to the variety of jurisdictions and land protection status of the Salmon Valley, site selections will be important for the viability of the project. Pre-‐treatment of wastewater has
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been factored into this study in order to allow deposit into local sewer systems. The prices quoted here come from a California study, which is likely far more stringent than Idaho. Exact cost for hook ups, treatment, and utilities will be treated in the business plan. Other major areas of uncertainty include site development costs, roadway requirements, as well as permit costs zoning, and municipal services as well as the amount and cost of electricity and feed water. Consultants such as an experienced plant design engineer and wastewater engineer will reduce some of these costs substantially. Growth and Sustainability The most difficult period will be in the beginning as the project grows rapidly to minimum viable production and stabilizes supply, demand, and the regulatory environment. Both options are financially viable. While both Option A and Option B will take a certain period of time to reach full capacity, Option A accommodates some growth projections and a great deal more of flexibility to meet peak loads, decentralized production, and niche markets. Option A, Phase 1 represents an estimate of the minimum viable production for a profit making commercial meat processing operation specific to the Salmon Valley Meat Cooperative. If Salmon Valley can set their sights on the Phase 1 operational specification, and can sustain that indefinitely, future ambitions will be most feasible.
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Introduction: The desired outcome of this project is to produce, process, and deliver to market high-‐quality USDA Inspected grass fed, organic, and sustainably produced red meats. The lack of nearby slaughter and processing facilities severely limits the rancher’s ability to increase their bio and agricultural diversity through multi-‐species grazing, custom production, and direct marketing. Substantial costs would be incurred traveling to distant processors, which restricts the possibility of serving local markets, restaurants, institutions, grocers, and butcher shops in the Central Idaho region. Meanwhile, a rapid consolidation of meat processors has led to suppressed auction prices while the price of fuel has increase the cost of transporting livestock and meats over long distances. Community sustainability is an increasing concern recognizing that local production of food and associated skill set increases community resilience and preserves social capital for future generations. These factors have led to the formation of the Salmon Valley Co-‐operative. In response to these issues, this study investigates the development of multi-‐species meat plant that will provide individual member ranchers with slaughter and cut-‐and-‐wrap for beef, lamb, and hogs. The plant is intended to serve primarily markets in the central Idaho region with the ability to serve southern Idaho, Eastern Washington, and Western Montana. It is expected that co-‐op member ranchers will initially target targeting retail, food service outlets, restaurants and established distributors with boxed meats, then increasingly specialized cut and wrap service. Ideally, value-‐added services would be ventured as experience is gathered and operational efficiencies are gained. This draft report is a feasibility study. In order to provide flexibility to the analysis, two different configurations of the USDA inspected meat plant were developed after significant consideration of the community capabilities and expectations. Option A is a mobile or modular meat plant and modular cut-‐and-‐wrap facility and delivery service located in one or more locations within the Salmon Valley Co-‐operative membership domain. The Option A configuration consists of three phases:
• Phase 1: Minimum viable production at 750 animals per year. • Phase 2 sustainable profit making production of 1500 animals, • Phase 3 is a maximum production scenario for 3000 animals.
Adding more modules to the Option A configuration may attain additional production. Option B is a permanent fixed meat plant facility with proximate cut-‐and-‐wrap operation and delivery system of familiar and comparable design as other small-‐scale plants currently in operation elsewhere in the U.S. and designed optimally to process 1500 animals per year in a single daily shift.
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Pro forma financial statements – for net income and cash flow – were developed for each option and respective phases. Returns on investment are compared for each option and again within each phase of Option A. A special case analysis is included that pegs IRR at the cost of money and minimizes operational risk by maintaining relatively high levels of working capital in order to provide bridge funding for rancher’s livestock and/or freezer capacity to serve demand outside of the harvest season, if needed. Analysis of Demand for USDA-Inspected Slaughter and Processing Services This section begins with a review of general trends in specialty/local meat demand, then addresses the more specific demand for locally regionally produced meat in Idaho region. Fortunately, the University of Idaho recently released a comprehensive market study for additional meat plant capacity in nearly the same geographic area as the object of this study. As such, the University of Idaho report is adapted extensively throughout this section. General Trends in Specialty/Local Meat Demand 1 Since the end of World War II, significant concentration has occurred in the U.S. food industry, including the production, manufacturing and retailing sectors. As grocery and food service chains became larger and gained significant market power, the meat processing sector also experienced considerable consolidation. Between 1980 and 2010, the four-‐firm concentration ratios rose from 36% to 85% for steer and heifer packers, from 34% to 65% for pork packers, and from 56% to 65% for sheep and lamb packers. This concentration was accompanied by the closure of many regional meat-‐processing facilities across the nation (USDA-‐GIPSA, 2012). Mathews and Johnson (2013) recently examined the specific production technologies behind alternative beef production systems (natural, organic and grass-‐fed) and products. They reported that, during the past ten years, 55% of cattle were slaughtered in plants that process 1 million or more head per year, and just over 1% was slaughtered in plants that process fewer than 10,000 head per year. Currently, alternatively raised beef accounts for about 3% of the U.S. beef market and has grown about 20% per year in recent years. Gwin, Durham, Miller and Colanna (2012) noted that the “increased consumer interest in grass-‐fed, naturally raised, locally produced meats is based on perceptions and evidence about ‘healthier’ fats, reduced environmental impacts and increased animal welfare associated with meats not raised in confinement systems on grain-‐based diets” (p.92). They also determined that, when consumers had knowledge of the health benefits of grass-‐fed beef, they are willing to pay the higher product prices. 1 Hardesty, S and J. Harper 2013 University of California Cooperative Extension; Mendocino County Meat Plant Study – Staying Local
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Mathews and Johnson (2013) also found that consumers are willing to pay a premium for the omega-‐3 health benefits associated with grass-‐fed beef. They noted that numerous studies published between 2007 and 2012 indicated that consumers were willing to pay a premium of $0.76 per pound for beef produced without hormones. A USDA study found that consumers who buy locally produced foods are motivated by freshness, healthfulness, flavor, quality and support for local farmers (Martinez et al., 2010). Similarly, consumer research commissioned by the National Pork Board indicates that these factors also supported the growing popularity for niche food products (natural, organic or locally-‐grown), as well as being important reasons for purchasing niche pork products. More than half (53%) of niche pork purchasers reported buying these products at a conventional grocery store. Additional 33% purchased niche pork at specialty food stores, 23% at a farmers market or food cooperative, and 20% buy them directly from a local farmer. Consumers most often cited lack of availability in the places where they shop as the reason for not purchasing niche pork more often (49%), followed by inability to find the product locally and price (both 37%). Nationwide, sales of beef in the mainstream grocery market are stronger in the natural/beef category than the overall beef category as shown in Table 2-‐1. The natural/organic beef market is still very limited but growing in market share; natural/organic beef products’ share of total US retail beef sales on a pound basis rose from 1.8% during the 2nd quarter of 2010 to 2.7% during the 1st quarter of 2013; on a dollar basis, they rose from 2.8% to 4.1% during the same period. The organic industry reported that the meat, fish and poultry category is its fastest growing sector, posting 13% growth in sales between 2010 and 2011 sales; however, it remains the smallest of the eight organic food categories (Organic Trade Association, 2012).
Similarly, the American Lamb Board (2013) reported that there is increased consumer focus on local, healthy and sustainable foods, and that the rapidly growing ethnic populations are heavy consumers of lamb. It also noted that more lamb producers are selling direct to chefs, ethnic communities and farmers’ markets. The American Lamb Board also found that fine dining chefs are working more directly with farmers and producers to ensure they source the high quality and sustainably produced ingredients. Demand for Local Meat Processing The availability of small-‐scale USDA-‐inspected meat plants that provide services to individual ranchers is limited in numerous regions across the country. In their analysis of growth in demand of natural, grass-‐fed and organic meats, Mathews and Johnson (2013) determined that the ranchers have to rely extensively on small regional facilities since they are unable to
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meet the volumes and uniform size required by large meat processors. They concluded that structural innovations for slaughter and processing are needed to enable the growth of alternative livestock producers. While ranchers and others assert that limited availability of appropriately scaled processing facilities is restricting the supply of locally produced meats, existing small processors often state that they lack the steady volumes needed to be profitable. Gwin, Thiboumery and Stillman (2013) analyzed the causes of these challenging circumstances. They concluded that merely adding new facilities will not guarantee success; strong coordination and communication between ranchers and processors are critical to the success and expansion of locally produced meats. Such collaborations can involve varying structures, including both public and private sector partners who provide support and technical assistance to meat processors and their rancher-‐customers. Processors can enhance their viability by having a few large rancher-‐ customers who provide significant stability. Another potential tool that processors can use is adopting active scheduling systems and variable pricing to assure steady throughput during the entire year. Ranchers will have a stronger commitment to the processor if they have a financial investment in the plant. Gwin et al. (2013) concluded that, in many cases, greater efficiency is likely if existing facilities are enhanced and expanded, rather than building new facilities. Nevertheless, there are areas, where ranchers need to drive more than two hours one-‐way to a slaughter facility, and then must travel a significant distance to have the carcasses processed. Livestock Production in Idaho 2 Idaho is home to a strong, stable and profitable beef industry. Statewide, some 57 percent of Idaho beef operations have 50 head or less. About 8 percent have more than 500 head—accounting for 68 percent of the total beef cattle inventory in Idaho. Most Idaho beef cattle operations are relatively small, family-‐owned enterprises. The majority of beef cows are located in southern Idaho. Because more than 2/3 of all Idaho land is federally owned, the vast majority of beef cattle spend at least part of the year grazing on public land. The beef industry ranks in the top three of Idaho's agricultural industries and contributes from $600 million to $1 billion, depending on fluctuating market conditions, annually to Idaho's state economy. There are over 9,700 cattle operations in Idaho. As of January 1, 2012, there were 2.2 million head of cattle and calves in Idaho valued at approximately $2.7 Billion. (http://www.idbeef.org/idahobeefindustry.aspx)
2 University of Idaho: Strategies to Increase Prosperity For Small Farms Through Sustainable Livestock Production, Processing And Marketing 2014
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According to the Idaho Agriculture (http://www.agri.idaho.gov) 2007 Agriculture Census, there are approximately 25,349 farms and ranches covering 11,497,383 acres of land. According to a 2011 census 2.2 million head of cattle and calves were raised where 574,000 were dairy cattle. 185,000 sheep and lamb were produced. Cattle are raised in every Idaho County, with the largest production in the southern part of the state. Small independently owned operations are still the backbone of the Idaho cattle industry. Despite the large holdings of corporate operations headquartered in Idaho such as Simplot and Agri-‐Beef, the majority of Idaho cattle are raised and fed on privately owned ranches and feedlots. For the most part, beef cows are raised on open pasture. With more than two thirds of the state owned by federal and state government, most cows and calves spend at least part of their lives on public rangelands. Idaho feedlots depend on crop by-‐products, especially from potato processing operations, to efficiently finish high quality cattle for domestic and international markets. The Idaho Cattle Association (ICA) is the official voice for all segments of the beef business in Idaho, including seed-‐stock breeders, commercial operators and cattle feeders. It is the grassroots policy development organization for Idaho's leading agricultural industry, cattle. Through the ICA, cattlemen and women work to create a positive business environment, while providing consumers with a safe and wholesome product Growing consumer demand for locally produced meat presents an opportunity for small-‐scale livestock producers to take advantage of emerging local beef niche markets, which offer higher profits than selling animals at auction. To take full advantage of this growing demand, producers need more small-‐scale meat processing. Currently, no substantial local feedlot or USDA-‐inspected processing infrastructure occurs in the area, and only two small USDA-‐inspected meat-‐processing facilities occur in the area (Moscow and Sandpoint). Surveys of local consumers in northern Idaho and eastern Washington revealed support for local beef production:
• Consumers’ beef choice is most influenced by distance of origin. They have a strong preference for beef produced within 85 miles of home.
• Consumers are willing to pay 10% more for certified organic and all natural beef. • Locally branded and marketed beef, either certified organic or all natural, is likely to
yield the highest price premium for area livestock producers. To better understand local producers’ perspectives on developing local livestock processing capacity, information was gathered through producer forums, interviews and surveys. Research findings help answer several questions related to small-‐scale meat processing.
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What constraints do livestock producers experience? Producers’ interest in expanding small-‐scale USDA-‐inspected processing is motivated by the perception that increased processing capacity will help producers overcome current constraints:
• Inadequate access to USDA-‐inspected processing options within a reasonable distance; • The amount of time required to direct market; • Inadequate income to support multigenerational families; and • Mismatch between seasonal availability of livestock and times of unutilized capacity at
existing processors. In addition, most small producers currently sell their livestock at auction. While many producers are interested in alternatives, many do not have the ability to finish animals to slaughter weight. Additional finishing capacity will also need to be developed. What processing options are livestock producers interested in pursuing and why?
• Most producers—88%—think it is moderately or very important to develop additional processing options in the region.
• To increase local processing capacity, producers prefer USDA-‐inspected mobile slaughter, followed closely by building a stationary USDA-‐inspected facility.
• Producers with operations selling fewer than 200 head each year are most interested in USDA-‐inspected processing.
Are a sufficient number of producers willing to participate in efforts to expand local processing capacity?
• Most producers are willing to participate in a processing cooperative—93%—or marketing cooperative— 88%.
• An eight-‐member steering committee of livestock producers formed and recruited 26 additional producers for a livestock processing cooperative working group.
• This group will build upon the study’s research to develop a detailed business plan, seek financing and take other steps toward successful implementation of new small-‐scale USDA-‐inspected processing.
Interviews with local livestock processors provided insight into current processing capacity and possibilities for cooperative ventures to increase capacity:
• Most processors think available processing capacity is inadequate to respond to the growing market and producers’ demand for USDA-‐inspected livestock products.
• Processors do not plan to expand to meet the growing demand. • Local custom-‐exempt processors are not interested in becoming USDA-‐inspected, but
they are supportive of working with producers to develop a new business model and new capacity.
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• Custom-‐exempt processors agreed that expanding small-‐scale, USDA-‐inspected processing capacity would benefit the region and would not hurt existing business since it would likely serve a different market.
Table 3-1 Processing Scenarios and Markets Served Conclusion: Many processing options were assessed as part of this study. It was found that there is enough livestock raised in the study area, especially the southern portion of Idaho, to support processing options requiring 2,400-16,000 animals, depending on demand. There is enough livestock supply to support options requiring more animals, but the risk is higher. Processing capacity could be enhanced by the region’s supply of sheep, hogs and goats, which could support a more balanced seasonal supply to processors. The Salmon Valley Cooperative is ideally situated in the geographic center of the state and closest proximity to Western Montana and Eastern Washington markets.
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SVC Rancher Survey of Potential Utilization of Proposed Facility The Salmon Valley Cooperative is the formation of the three communities of Salmon, Challis, and MacKay that are collaborating in development of local meat processing facilities. These 3 towns are roughly aligned on a single highway and separated by about 1 hour drive time (55-‐65 miles) with Challis in the middle. Salmon, to the north is the largest of the three cities and closest to Western Montana. MacKay to the South is likely closest to major markets (such as Twin Falls and Boise) as well as major infrastructure such as rail service and interstate highways. The Population of Challis is: 1083, Mackay: 506, Salmon, 3,044. Livestock production is roughly is 70% cattle, 25% lamb, 5% hogs. No game will be processed by this facility. It is assumed that each geographic location will provide a similar proportion of animal species. There are currently 9 ranchers running the steering committee for the proposed facility. It is not known how many individual farms will participate but all are aware that rancher membership in the cooperative will be an important success factor. Among the first markets to consider serving is the local community of the Co-‐op itself with fresh local products from resident ranchers in boxed meat packages. This would minimize transportation and broker charges in accessing an estimated 4500 persons residing within the three municipalities and a possibility of serving 10-‐15,000 total residents in the Salmon Valley geographical area (including Western Montana) and accessed through existing retail outlets, institutions, and local distributors. As expertise and experience grows in the cut and wrap component, the level of expanded service would include delivery of prime cuts to local and regional restaurants and supplying ground meat products to institutional markets such as schools, government, or food service companies. At any time, the rancher may market their specific lot of product. Most Ranchers responded that their slaughter occurs primarily between the peak times of May through October with little apparent desire to change this schedule. Multi-‐species operation will assist in evening out yearly production as will niche products such as grass fed or organic beef which require a greater lifespan to reach optimum returns. Finally, the options presented here may support flexible operations by doubling personnel or operational shifts. It is likely that the flexibility may be sufficient to provide ranchers with the time to adjust their production schedules to take advantage of lower processing costs during non-‐peak times. Services highly desired by Ranchers from other similar communities include in order meat grinding, and extended hang time. Many ranchers may seek labeling of cuts and delivery to customers since these services are not generally developed in the Salmon Valley region. There was no notable interest in smoked processing or Kosher or Halal slaughter practices.
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Cooperative Business Structure A Cooperative is a jointly owned business that: (a) distributes control equally (either as one member one vote, or proportionate to use); (b) provides equity distributed benefits on the basis of use (rather than on the basis of investment); and (c) has equitably distributed capitalization responsibilities, also on the basis of use. Cooperatives usually have employees who operate the cooperative on a daily basis. In the long run, Cooperatives strive to have each member’s capital investment in the cooperative to be proportionate to his/her utilization of the cooperative. Cooperatives resemble partnerships and LLCs in that their income may be taxed at the individual or member level – if profits are distributed properly as patronage refunds. Cooperatives share the corporate characteristic of limited liability and involve similar capital gains tax advantages. With Respect to the Salmon Valley Meat Processing, the cooperatives members could be the ranchers who utilize the plant’s services. Another variation is that the plant’s employees could be the cooperative members rather than the ranchers; however, employee owned co-‐op would require a relatively high per-‐person investment from a relatively small labor force of 6-‐16 employees. It is not known how many ranchers could be attracted to take an ownership position in the SVC. It is widely expected that a strong demonstration plant would need to be in place in order to convince the second tier of ranchers (or employees) to join. What Does and What Does Not Work 3 Pennsylvania State University recently conducted a study of 35 small meat processor projects over 13 years in 18 states in order to learn what worked and what did not. They found that close to 55% did not raise the investment required. They found that about 35% raised the money but are now shut down. They found that roughly 15% of projects succeed and are running today. Why Such a High Failure Rate? - All have unique reasons but some commonalities 1. Ran out of operating capital and have limited opportunities to find more with investors and lenders. Lesson: Make sure you do the necessary due diligence in the business planning! Huge management mistakes results in #1. 2. Marketing/sales weaknesses. Most projects are supply driven. They thought the plant was the market when what was needed is a market for products and services (demand). 3. Livestock producers do not have the experience to oversee a processing business: Producer Involvement Valuable to a Point but not for Total Ownership It’s not what producers do. 3 Resource provided by John Harper; Citation to Pennsylvania State University appears in text
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Waste valuable time and money learning. 4. Processing is a skill-‐set with its own unique challenges and problems. Processing is a money pit. Producer resources are better used in marketing. What did the Successful Ones Do Right? - One or more of the following:
• Supporters set up a functional Board of Directors with good business understanding. • Purchased a successful processor when available—Not a likely path for this project. • Hired a good manager with experience. • Attracted investments from successful producers with means and started out with
plenty of equity—the importance of a feasibility study and detailed business plan cannot be overstated.
• Producers and investors are dedicated and quality conscious. • Developed good lender relationships.
If New Processing Capacity is the Only Way to be in the Marketplace, what are the most viable strategies?
• Involve an existing processor. • Find a regional processor interested in expansion. • Develop a business partnership • On completion of a feasibility study, a well-‐designed marketing plan should be the first
step in the business planning process. • Involve as many producers with common goals as up can find (equity source, raw
material source). • Shore up equity needs. If short, don’t start!
What hasn’t worked?
• Too large a group of investors with competing interests or ideas. • “Promise” that producers will support the project and operation of the facility. • Too much too fast—let’s provide every product and service possible! • An anti-‐USDA attitude from square one. • Entering an already saturated market. • Not able to charge enough for services (competitive pricing for services by existing
plants) • Not enough livestock available to supply the plant. • Insufficient operations and market research for services and products. • Underestimating expenses. • Inability to obtain correct zoning or underestimate water/sewer costs. • Under estimate transportation costs. • Income losses due to difficult or non-‐cooperative producers. • “Cowboy” mindset—many details to understand and much bureaucracy to address—
“just do it” is a guaranteed prescription for failure. • Poor grasp of the time commitment • Unable to find qualified labor.
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• NO MEAT INDUSTRY EXPERIENCE—raising animals is a very different set of core skills than operating a highly regulated meat processing plant.
What has worked? Expansion of existing businesses
• >90% of the successful operations have been multi-‐generational. • Well-‐managed and methodical approach; comprehensive and detailed planning. • Recognize that the regulations are a “cost of doing business”. • Thorough investigation of the market (services and products)—comprehensive and
detailed planning • Slow but steady expansion (start very small). • MEAT INDUSTRY EXPERIENCE!
Government Regulations for the Inspection of Meat and Poultry Products are to:
• Prevent the sale of adulterated, contaminated, or otherwise unsafe livestock products, • Insure the safety of consumers by establishing minimum standards for the production,
slaughter, processing, and marketing of these products • Create a system of licensing, inspection and labeling to trace a product back to its
origin if a public health problem should arise Case Studies: As of this writing there are only about 20 USDA Mobile meat-‐processing units in the United States – Some are listed in Appendix C. The first is widely recognized to be the Lopez Island MPU first certified in 2002. Later, Mike Callicrate pioneered the scalability of mobile slaughter / modular processing operations. The Taos Economic Development Project reached a little deeper into remote mobile operations while the Puget Sound meat-‐processing cooperative developed the co-‐op/private partnership model in a semi-‐urban setting. In contrast, the Co-‐operative Processors of Washington elected against the mobile movement and built a small permanent facility serving a co-‐operative community in Western Washington. Most recently, the federal government funded several feasibility studies in the Central California area for small-‐scale modular/fixed meat plants in response to emerging niche markets and suppliers of product, who also selected the permanent facility option. These case studies, and many more, demonstrate innovation in decision making when considering a MSU, or rejecting the technology. We will use this prior experience of case studies to help define the approach that we will ultimately recommend to The Salmon Valley Co-‐op. Case 1: The Island Grown Farmers’ Cooperative Often simply called “Lopez Island” The IGFC formed in 1996 when a group of ranchers who could not transport their livestock to the mainland for processing approached the Lopez Island Community Land Trust to sponsor the development of a mobile slaughter unit (MSU). The Land Trust contacted Bruce Dunlop, an engineer, to design and build the MSU. It was paid
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for with several USDA grants and donations from the ranchers and other individuals in the community. It became the first USDA-‐inspected mobile slaughter facility for red meat in the U.S. The MSU is owned by the Lopez Island Community Land Trust and leased to the cooperative (Niche Meats Processing Assistance Network). Further processing is done at a permanent processing plant on the Washington state mainland, which the cooperative owns. Thus, the cooperative operates as a public/private partnership, and Bruce Dunlop now serves as its president.
Figure 17: Early Mobile Slaughter Unit by The Island Grown Farmers' Cooperative
The MSU moves to different members’ ranches on Lopez Island. It slaughters about eight head of beef a day, or 30 sheep or 16 hogs), which takes two butchers eight hours, and an additional two hours of drive time. The MSU operates three to four days a week year-‐round. Its limited staffing also needs to do cleaning and maintenance of the truck and trailer, and the carcasses have to be taken to the mainland for processing. The members handle marketing individually. At the 2012 Western SARE Infrastructure Conference, Bruce Dunlop reported that both the MSU and the processing facility operate at full capacity, which are 1200 equivalent livestock units. This high level of utilization is critical for maintaining the cooperative’s profitability. Basic information Capacity per day: MPU: about 7-‐8 head beef (or 25-‐30 lamb or 15 pigs). This takes 2 butchers 8 hours, plus 2 hours drive time. The MPU can do this only 3-‐4 days/week, because
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of limited staff and the need to bring meat back to the processing plant and do truck/trailer cleaning/maintenance. Hours/day of operation: up to 8 under inspection, extra for set-‐up & clean up. Weeks/year: 52, at 3-‐4 days/week. The processing plant operates 5 days/wk and can process 2500 lbs per day. Species: all four legs Services: slaughter & process; raw sausage; case-‐ready, retail packaging Square feet: trailer is 34’ long. Plant is 3000 sf. #/type of employees: 6 employees (from manager to part-‐time cleaning staff) Annual sales revenues: $300,000 (all services, not including the value of meat processed). Price of services: Slaughter: $40 lamb or goat, $55 pig, $105 steer. In order to have the unit come to their farm, producers have to have a minimum slaughter amount of $450. Cutting (to case ready) = $0.90/lb lamb, $0.60/lb steer, $0.60 pig (plus 10% price increase, spring ’08). Sausage = $1.25/lb for links. (For farmers not in the co-‐op, prices are slightly higher.) Operational costs: ~$290,000/yr. Fee structure is designed to break even or be slightly profitable. The trailer gets ~10 miles/gallon. Retail on-site: Yes, small, selling co-‐op members’ meat (members get revenue). Open 2 days/wk, earns $3000/mo. Wholesale: no Inspection: USDA inspected Certified organic: Yes Certification agency: Washington Dept of Agriculture Custom work: Yes but rarely, because too busy with inspected work. Source verification on label: No, too much hassle. Appropriate when customers can’t meet producers directly. Some members have their own labels. The market opportunity: “No one had a chance to try marketing before we had the processing – and now it’s taking off.” Case 2: Taos County Research Institute “La Matanza” Taos County Economic Development Corporation (http://www.tcedc.org) is a Research Institute that received federal USDA Development funds and local support for a mobile slaughtering operation. The intention was to serve ranchers located in remote areas that posed difficulties in bring products to market.
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Taos County operates a mobile trailer that is 36 feet long by 13 feet tall. They calculate a maximum operational capacity of about 20 animal units per week. However, the average yearly production is 250 USDA Inspected animals per year. As such, utilization rates are lower than what is envisioned by many small operators. The relatively low yearly total is due to limitations in supply, demand, and other issues. TCEDC is organized as a 501(c3) research institution status. Taos makes good use of the Polar King refrigeration module with dual temperature zones for both the 55 for cut and wrap and 35 cold storage and aging process. Their experience in refrigeration will be useful for the Salmon Valley project. Taos processes beef into primals or they can take cut orders from individual ranchers. They do not purchase live animals and never own the carcass. It is the responsibility of the Rancher to market the product.
Figure 18a: Polar King Cooler Module. 2b: Reefer/MSU unloading to Module
TCEDC employs the following technical staff: One Field Butcher $36,000 per year One Assistant Butcher $25,000 per year One meat cutter $30,000 per year One Assistant Meat Cutter $25,000 per year TCEDC Approximate equipment costs are as follows Mobile unit by TriVan $200,000 Processing Cooler 55F $100,000 Processing Cooler 35F $100,000 Approximate operating expenses Insurance (product and vehicle) $6000.00 per year Operating costs (fuel, C&R) $13,000 per years
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Revenue: Slaughter costs $85.00/animal Cut and Wrap $0.75/lb to plastic vacuum Funding: USDA Rural Business Agriculture Grant Federal Rural Development Grant 501 (c3) Research and Development. The operators of Taos County Research Institute make the following recommendations to others:
• Design for your specific operations and service area • Personally meet and know all of the regulators • Create a reserve fund for the unexpected • Plan facility out before building • Communicate with community, client, market, etc. • Logistics of moving mobile unit is significant
Case 3: Mike Callicrate MPU Mike Callicrate is a noted activist for family farms and states his goal is to increase income to farmers, help rural communities, challenge industrial model of production, and provide good food. Callicrate produces higher production rates by introducing some process efficiencies and operational innovation to the original mobile slaughter concept. The Callicrate system can operate 20 working days per month at about 20 beef per day maximum. These are likely the highest rates that can be attained with a Mobile Slaughter Unit. The Callicrate way may represent an ideal transition methodology for a producer that is outgrowing their mobile unit and may not be quite ready for a modular or permanent facility. For this reason, we pay attention to his experience relative to the Salmon Valley meat plant. Mike and his partners have developed a mobile slaughter unit to their own specifications and experiences often innovating where needed to increase yields and efficiency. They provide free advice and consultation to other meat processors who share their ideals of empowering resilient communities. Mike Callicrate has developed a custom MPU design that they have successfully achieved a USDA approval and for which they have sold to other producers. In order to reach economical production, the Callicrate MPU seems to have characteristics of both a mobile and a stationary or modular facility. Instead of a direct range or farm kill, Callicrate locates a mobile unit on a prepared concrete pad where drainage, wastewater, potable water, and electrical facilities are
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in place (where practical). He then brings a suite of ground support equipment such as a mobile hide puller, portable kill box, shuttle unit refrigerator truck, and portable corral for staging live product. In this manner, Callicrate can guarantee that as soon as one animal has been moved to the next station, another can enter. Callicrate production rates are optimized for cost and quality. The mobile slaughtering unit and ancillary equipment can then be moved to the next location. Individual ranchers would likely be responsible for water, power, and waste facilities to meet USDA requirements. The Callicrate MPU is a 60-‐foot modified refrigerated trailer with a docking station that allows the unit to back up to a station with a sealed interface. The unit is able to accommodate 220V and 440V power.
Their large shuttle truck can accommodate 60 carcasses where as their small shuttle can carry 16 carcasses. Most of the value added is in cut and wrap. Mike Callicrate advises that the cut and wrap units should be located close to where people are in order to access as many markets as possible from wholesale to retail. This will help to maximize processing margins. There is a good percentage of slaughter value available in the processing of hides; a grade 1 hide can sell for 40 dollars; or about 30% of the total value of slaughtering an animal.
Maximum production is 20 head per day sustaining 20 days per month. Shuttles carry product to market: Cost of Callicrate MPU and towed vehicles $300,000 Repair and maintenance $500.00 per month Supplies $500.00 Per month 4 man crew @ 20 hpd $60.00 per hour Utilities $6.00 per hour Revenue Slaughter fee $65.00 for cattle Hide recovery (salted) $40.00 per hide
Figure 19: Callicrate System Mobile Kill Box
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Mike provides the following additional advice:
• Show the community that there is an “Alternate way” and they will respond favorably. • Ranchers need ability to salvage animals that have been stifled or injured • Find a school district or institution for grind product • Find a good builder to provide infrastructure. • Unimproved roads can be an issue. • All terrain MPU would be nice • Must have hazard plan in place • USDA is very challenging to deal with • Create systematic procedures and controls • People skills and talented employees are helpful. • Retail outlets were the best decision he made.
Figure 20: Mike Callicrate System for Mobile / Modular Processing
Case 4: Puget Sound Meat Producers Cooperative (PSMPC) 4 Like Island Grown Farmers’ Cooperative, Puget Sound Meat Processing Cooperative (http://www.pugetsoundmeat.com/) is an example of a public/private partnership. It began operating in 2009; it was established to ensure that USDA-‐inspected services remain available
4 http://www.extension.org/pages/28436/puget-‐sound-‐meat-‐producers-‐cooperative
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to Pierce County Producers and other ranchers. Its members include local ranchers, farmers, butchers, restaurant owners and others. It handles cattle, sheep, hogs and goats. It currently travels between two sites in Pierce County, and is used by members and nonmembers. The slaughter unit can handle 8 to 10 animal units per day (1 cow, 2 pigs, 3 sheep/goats all represent 1 animal unit). It operates for up to eight hours a day under inspection (including a 30 minute pre-‐inspection), with extra time for set-‐up, clean up, and transportation.
Figure 21: Mobile Slaughter Unit By TriVan Conversions
Start-‐up costs totaled approximately $500,000 for the 45-‐foot mobile unit in the trailer ($250,000-‐-‐purchased from TriVan), training necessary for employees, operating capital (including the lease cost of the truck) and $12,000 for small equipment and tools. The Pierce Conservation District in Pierce County, Washington provided the capital for the MSU; the District obtained a loan to cover part of the capital costs and operating costs for the first year. Originally, PSMPC had five paid employees, which was not sustainable given the low initial utilization rate. This nearly led to bankruptcy, and required restructuring the operation. Currently, PSMPC has no employees. A local livestock producer and founding PSMPC member who also has his own custom-‐exempt/retail-‐ exempt butcher shop now operates the MSU on a contract basis. Carcasses requiring USDA inspected cut-‐and-‐wrap are taken to two inspected plants in the region. Other custom-‐exempt/retail-‐exempt butchers also use the MSU to have inspected carcasses they can cut up and sell from their own retail counter. The contract butcher works
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with one assistant (more when needed), who handles the paperwork. PSMPC board members handle the scheduling and bookkeeping on a volunteer basis. As its profitability increases, PSMPC plans to restore paid staff positions, beginning with a bookkeeper. During 2011, the co-‐op had net income of approximately $11,000 (after paying the butcher and covering operational and maintenance expenses) with 90 processing days. During 2012, it harvested over 1,000 animals. Utilization of the mobile slaughter is increasing; it has risen from 516 carcasses during the first full year of operation in 2010, to 850 in 2011 and 1,000 in 2012. Only 20% of the membership used the MSU regularly during 2011. The Pierce Conservation District owns the MSU, for which the co-‐op pays a $1 annual lease payment. The contract butcher is paid a $300 daily rate (for set-‐up and transport) plus a fee per animal unit; the butcher pays his assistants and purchases all consumable supplies used with the MSU. The member slaughter charge for cattle under 1,000 pounds of hot carcass weight is $110 and $50 for sheep under 100 pounds of hot carcass weight; members pay $140 per hour for processing. Rates are approximately 25% higher for nonmembers. Prices paid by producers to PSMPC include a margin to cover fixed costs, including maintenance, repairs, and equipment replacement; insurance; lab fees; legal fees/permits; and site improvements. Utilization of the MSU appears to continue to be an issue; the online schedule shows only 9 days of monthly use scheduled during April through July 2013. The April 2013 minutes of the Pierce Conservation District indicate that PSMPC will engage in increased outreach to members and will expand the MSU’s geographic operating area. Basic information PSMC has a capacity of about 8-‐10 animal units per day (1 cow, 2 pigs, 3 three sheep/goats = 1 animal unit). They operate 8 hours per day under inspection including 30 minutes pre-‐inspection, extra for clean up, and transportation. Weekly operations are on-‐demand as needed or reserved. In 2012, the PSMC operated for 90 processing days. Species: Cattle, sheep, pigs, and goats Services: Slaughter and delivery of carcasses to cut and wrap facility Square feet: Trailer is 45' long. #/type of employees: PSMPC has no employees. The Lead Butcher operates the MSU on a contract basis (see above) with one assistant (more when needed), who handles the paperwork. Board members handle scheduling and bookkeeping on a volunteer basis. Annual revenues: In 2011, the co-‐op had net income of ~$11,000 (after paying the butcher and covering operational & maintenance expenses). Price of services: Members: beef = $110; pigs = $70; sheep/goats = $50 Non-‐members: beef = $140; pigs = $90; sheep/goats = $70 Extra charge for cattle older than 30 months Extra charge for pigs >275 lbs and sheep/goats >100 lbs Mileage, disposal, stall, toll, and other fees may also apply
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Capital (start-up) costs: $500,000 (est.) for trailer, training necessary for employees, operating capital, and tool purchase. Operational costs: $57,000 in 2011 Retail on-site: No, Wholesale: No Inspection: USDA-‐inspected; can also do custom-‐exempt Certified organic: Yes Certification agency: Washington State Department of Agriculture Custom work: Yes
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Case 5: Cooperative Processors of Washington (CPoW) at Odessa. A highly organized community of ranchers designed the Odessa Washington meat processing facility specifically as a regional meat processing facility. This first class facility cost approximately 2.5 million dollars to construct. It is not known if that is the cost of the complete project. Estimates go as high as 4 million dollars. Construction issues delayed opening so full operational numbers are not available at this time. However, the Odessa facility provides many important lessons including those that are common to Idaho.
• Staffing is a critical component, master butcher and master cutters are increasing in value and often difficult to find.
• Ranching is a seasonal business and the Odessa plant was able to bring in year-‐round work from USDA market customers.
• Engineering was improper with undersized refrigeration capacity now creating bottlenecks in the aging.
• Peak capacity is 2000 – 2500 cattle per year • All custom processing – they do not purchase animals. • Get a good marketing plan
Figure 22: Fixed Facility, Cooperative Processors of Washington, Odessa, WA
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Case 6: Mendocino County Meat Plant Feasibility Study Mendocino County Meat Processing Plant Feasibility study Option A describes and evaluates a mobile slaughter and process facility using the following diagram:
Figure 23: Two Site Modular Meat Processing Illustration of Flow From Slaughter Unit to Cut & Wrap Unit (courtesy of Kathryn Quanbeck)
The recommended option for the recent Mendocino County Meat Processing Feasibility study is cited here for reference due to many similarities and well-‐isolated differences with the Salmon Valley Co-‐operative. The Mendocino researchers had to their benefit the earlier case studies cited above, as well as their own special considerations. The comparative value of this particular case study is excellent. The estimated costs for the Mendocino County Facility Ultimately, the Mendocino County Feasibility Study recommended the fixed option over the mobile option due to reasons such as permitting, favorable financing, the regulatory environment in California, and placement of users. The recommended option is a fixed 40 X 60 steel building that houses both the slaughter and processing activities. This option involves the acquisition of purchased land. Land costs totaling $483,516 based on the cost of the small parcel in the Hop Kiln Business Park off Ford Road (3.7 acres, priced at $3 per square
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foot/$130,680 per acre). The land is zoned “general industrial” (I-‐2) and has electric and water utility hook-‐ups; however, this site is not currently included in the Ukiah Valley Sanitation District. Alternatively, the meat processing plant may be located on property owned by the City or another public entity, with a long-‐term lease (20 years or longer) to ensure that the site improvement costs will be recouped. 3.7 acre parcel in an industrial park, zoned I-‐2 $483,516 Steel building w/insulated doors and roof & wall insulation— delivered to Ukiah $150,000 Freezer, Chill Cooler, Aging Cooler, Slaughter & Cutting area cooling system $75,000 2 refrigerated cargo containers, used $40,000 Interior holding pens $15,000 2 Ford F-‐150 trucks (used) $30,000 Rail system (used) $31,000 Refrigerated Box truck for deliveries (used) $30,000 1 forklift (used) $10,000 Misc. office furniture & equipment (used) $3,000 Slaughter fixtures & equipment (used) $30,000 Processing fixtures & equipment (used) $50,000 Wastewater pre-‐treatment equipment $122,000 Site prep, permits, utility hook-‐ups, engineering consultant $356,000 TOTAL COST FOR MENDOCINO OPTION C $1,425,516
Table 4: Cost Estimates for fixed facility, Mendocino County Feasibility Study The design and cost of the facility are based primarily on the Iowa State University publication, Guide to Designing a Small Meat Plant (Thiboumery, 2009). The base price of the delivered building shell with 4 insulated doors and 6” of insulation in the roof and walls is $23,335 from Empire Steel Building; the remaining cost of $126,665 is for erecting the structure, pouring the concrete flooring, and improvements to the building, including electric wiring and fixtures, carpeting and linoleum, interior walls, a restroom, and small kitchen area. There is $356,000 budgeted for site preparation, permits, hook-‐ups and engineering consulting for this building, as well as $122,000 to purchase and install the wastewater pre-‐treatment equipment. The total cost budgeted for the building is $1,425,516.
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Salmon Valley Cooperative Plant Requirements
USDA Requirements The design and feasibility requirements for the Salmon Valley Cooperative’s meat processing plant is to be inspected by a USDA Food Safety Inspection Service (FSIS) inspector in order to be able to sell the carcasses and processed meats wholesale. The Niche Meats Processing Assistance Network (NMPAN) has considerable information to assist small-‐scale meats processors. As noted in the regulations section of its website 5 There are seven steps that need to be followed to become an inspected meat processing plant—commonly referred to as “obtaining a grant of inspection”. The seven steps include having the following approved components: water source; sewer system; labels and/or brands; hazardous analysis and critical control point (HACCP) plan; and sanitation standard operating procedures (SSOPs). The Salmon Valley Co-‐operative Meat Processing Plant (SVCMP) needs to be built and operated such that it meets regulatory performance standards, which relate primarily to the following areas as listed by NMPAN6
• Pest management • Tested potable water • Adequate drainage that prevents backflow and keeps sewage lines distinct from
wastewater • Adequate lighting and ventilation • Adequate rest rooms, hand-‐washing stations, and garbage cans. • Walls, floors and ceilings must be “impervious to moisture” and easily cleaned and
sanitized • And the catchall: Building conditions must “not result in product adulteration or the
creation of insanitary conditions.” Unfortunately, USDA-‐FSIS does not specify any metrics to ensure adequacy; instead, when the MCMP is first inspected, it will either pass or fail. Therefore, many organizations hire a consultant (often a retired USDA-‐FSIS inspector) when developing their plant construction plans. Once the MCMP has obtained its grant of inspection, a full-‐time inspector will be assigned to the plant to work (at USDA’s expense) Monday through Friday, from 8AM to 5PM. The plant must provide the inspector with a locking office (at least 100 square feet) with a locker and desk, along with laundry service the inspector’s lab coats. Any overtime must be paid by
5 http://www.extension.org/pages/17170/meat-‐processing-‐rules-‐regulations 6 http://www.extension.org/pages/17979/step-‐3:-‐facilities-‐must-‐meet-‐regulatory-‐performance-‐ standards
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MCMP. Readers are referred to the NMPAN website for an excellent, detailed description of the processes for obtaining the USDA-‐FSIS requirements grant for inspection 7. State Requirements for Wastewater 8: There are numerous state regulations that the Salmon Valley Co-‐operative will need to comply with. The State Water Quality Control Board’s wastewater requirements appear to be the most challenging for small-‐ scale meat processing facilities. It is expected that Idaho would be similar to other states especially due to National Parks and federal reserves spaces. The Idaho DEQ (Department of Environmental Quality, 1410N Hilton, Boise, 83706) regulates the discharge of waste to surface waters as well as to storm drains, ground surfaces, and to ground waters in the Idaho region. It is responsible for enforcement of the National Pollutant Discharge Elimination System (NPDES), which includes regulating the discharge of waste to ground surfaces or groundwater. Industrial operations which discharge wastes directly into municipal, or other publicly owned wastewater collection systems, are not required to obtain a [NPDES permit from the NCRWQCB]. Livestock slaughter and processing generates wastewater from washing carcasses, washing after evisceration, processing offal, and cleaning and sanitizing equipment and building surfaces. It can be divided into five general types: (1) manure-‐laden from pens and holding areas; (2) manure-‐free, high-‐grease from slaughter and processing operations; (3) manure-‐free, low-‐grease from the slaughterhouse; (4) manure-‐free, low-‐grease from packaging areas; and (5) clear water from cooling systems, steam condenser water, and onsite storm water runoff. The slaughter function generates the greatest wastewater. Wastewater is characterized by high loading of solids, floatable matter, manure and other organic substances. Fats and proteins are present in both particulate and dissolved forms. Analyses indicate high concentrations of biological oxygen demand (BOD), chemical oxygen demand (COD), suspended solids, nitrogen, phosphorous, coliforms, and enteric pathogens. The concentrations are highly variable depending on processes and effectiveness of solids separation. Many municipal systems charge industrial clients according to the volume of wastewater they generate and the quality of the wastewater factoring the amount (milligrams per liter) of total suspended solids (TSS), biochemical oxygen demand (BOD) and wastewater (gallons per day) into its sewer hook-‐up charges. Water usage varies widely among meat plants. The Pacific Institute (2003) reported the following use rates per head by species: cattle-‐300 gallons; hogs—60 gallons; and sheep—40 gallons. These rates were used to estimate the Salmon Valley Cooperative’s projected daily water use of 1200 gallons. When Calculating the hook up charge, SVC should use the following estimated 7 http://www.extension.org/pages/19712/how-‐to-‐apply-‐for-‐meat-‐and-‐poultry-‐inspection 8 Most of this discussion on wastewater is adapted from a report by Kennedy/Jenks Consultants. 2010. “Energy Use in Wastewater Treatment in the Food and Beverage Industry.”
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daily water use of 1,200 gallons and the values of 150 for BOD and 58 for TSS reported on NMPAM by a new small plant in Idaho. For a similar plant in Washington, the SVC hook-‐up charge would be $51,950. A BOD level of 2,500 was also reported for another operation by NMPAN; this level would raise SVC hook-‐up charge to $275,000, assuming the other values remain unchanged. Clearly, the difference between these two conditions would for hook-‐up charge (as well as its sewer rates) provides significant financial incentive to pre-‐treat SVC wastewater before discharging it into the sewer system. Wastewater treatment requires a series of primary and secondary steps. Primary treatment for grease removal is typically accomplished using a baffled tank of dissolved air floatation (DAF). Chemicals are often added to improve treatment efficiency. Alternatively, some plants rely on a series of screening and sedimentation steps. Secondary treatment to reduce BOD is accomplished biologically using systems that may include lagoons, activated sludge, oxidation ditches, sequencing batch reactors, or anaerobic digesters. Covered, low-‐rate anaerobic lagoons are often used in series with aerobic lagoons to maximize BOD removal. However, NMPAN noted recently “we have not yet found an anaerobic digester system that is cost-‐effective for a small processing facility. The systems are expensive and meat processing waste isn’t a very good substrate for anaerobic digesters” 9. Aerobic treatment options include activated sludge systems, biological filters, waste stabilization ponds and aerated lagoons. While these systems are proven to be effective for meat processing wastewater, most require aerators, which are energy intensive and costly to operate. It will benefit the SVC greatly to design the plant to minimize both its water usage, and the amount of blood, solids and grease it disposes in its wastewater. Preliminary discussions with a wastewater engineer and a supplier of wastewater treatment systems (Chuck Ross with Environmental Treatment Systems based in Acworth, Georgia) indicated that a system would cost approximately $77,000 in parts and $45,000 in installation costs. The equipment costs would include the necessary tanks, pumps, pipes, control panel, and design and start-‐up services. Wastewater treatment is clearly a complex issue, and an engineering consultant experienced with Idaho’s wastewater standards should be retained soon to ensure that water usage is minimized and to design a cost-‐effective pre-‐treatment system to maximize the quality of the discharged wastewater. It will also require the plant manager to develop and enforce water use policies to ensure that employees, particularly the cleaning staff, are very conscientious when using water. Composting and Rendering Composting in Idaho is governed by statewide regulations implemented at the local level by each of seven district health departments. Industrial waste, sewage sludge disposal and some 9 http://www.extension.org/pages/68216/wastewater-‐treatment-‐for-‐meat-‐processors
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agricultural practices may or may not fall under the regulations on the operation and site. The Idaho Department of Agriculture regulates retail sales of compost sold as fertilizer. Composting involves the manipulation of aeration, moisture and nutritional balance of plant and animal residue to create idea conditions for natural decay. This is accomplished with various degrees of sophistication. Composting is performed to render certain materials more pleasant to handle, and increase the nitrogen content of some low nitrogen materials. More information: Rob Howarth, Idaho Department of Health and Welfare, Central District Health Department. Division of the Environment, 707N Armstrong Place, Boise, ID 83704 (208) 327-‐8520 rhowarth@cdhd.idaho.gov
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PLANT OPTIONS: The financial feasibility of the SVC meat processing facility was assessed for two different plant options. These options were developed after discussion with local ranchers, project leaders, and individuals outside of the area who are engaged with meat processing, as well as an extensive review of applied research publications and case studies related to small-‐scale meat processing. Regulatory requirements were factored into the development of the different plant options. To provide flexibility, a decentralized and a centralized configuration was considered for a USDA inspected meat plant. Both configurations have an average annual capacity of 1500 equivalent livestock units (1 cattle = 2 hogs = 3 sheep/goats = 1 equivalent livestock unit). The difference is that one option is more flexible at the expense of operational complexity. The other is less flexible to the benefit of operational simplicity. The Figures 8-‐11 below demonstrate some basic components of a mobile and or modular and or fixed facility:
Figure 24: Polar King Cut and Wrap Module with added cooler/freezer
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Figure 25: TriVan Conversions Mobile Slaughter Unit on Medium Cab
Figure 26: Modular Slaughter Unit set in place with integrated building
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Figure 27: Insulated Metal Building typical for fixed processing facility
Option A is a mobile or modular slaughter facility and separate refrigeration cut-‐and-‐wrap facility with combined tasks shared by ranchers from 3 towns (Salmon, Challis, MacKay, ID) separated by about 60 miles from the next nearest town Phase 1 is a high quality mobile or modular slaughter unit and adjacent holding pens on leased site(s). New modular cut and wrap facility employing minimum staff located in proximity of target market will process a minimum viable production (MVP) of 750 animals per year (limited by staff). Phase 2 adds refrigeration/freezers otherwise utilizes the same machinery and equipment but doubles staff until a maximum production approaches 1500 equivalent animal units (limited by equipment). Staff reductions can easily return to the 750 animal rates as needed or lay fallow as needed (where MVP is approximately 750 head). Phase 3 adds additional modular slaughter units and additional modular cut-‐and-‐ wrap units to achieve MVP of 1500 EAU. Staff and/or equipment may be added until 3000 animals or more are achieved or lay fallow as needed (where MVP is approximately 1500 head). Option B is a combined slaughter and processing facility located on a plot that has been purchased or leased for at least 20 years. An MVP of 1500 head was assumed for an IRR of 10% cost of money. Doubling staff or working multiple shifts could yield 3000 head. Pro forma financial statements – for net income and cash flow – were developed independently for each phase of Option A. The objective was to maintain approximately 10% internal rate of return at minimum viable production capacities of 750, 1500, 3000 head. Option B is a nearly identical to a recent feasibility study performed for Mendocino County California and also serves as a control case.
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Upfront Project Costs
Water Treatment Option A (phase 1) Option B Wastewater Treatment $140,000 $150,000 Engineering consultant $15,000 $25,000 Equipment $125,000 $125,000 Site Preparation Site Development $60,000 $290,000 Lot Grading $10,000 $50,000 Access Road $0 $100,000 Paved Area $15,000 $60,000 Concrete Pad $20,000 $0 Livestock Pens $5,000 $5,000 Storage Shed $2,500 $0 Utility Hookup Electrical $2,000 $25,000 Sewer $1,000 $30,000 Water $5,000 $20,000 Permits City/county Permit and Fees $50,000 $50,000 Zoning Use permits $20,000 $20,000 County Sanitation District Hookup
$30,000 $30,000
Total Upfront Costs $250,000 $490,000 Table 5: Estimate of Upfront Start-up Project Costs for Two Options
Equivalent animal units EAU are a measurement that roughly equates different species of animals for relative time required to kill and process. It is also used to equate feed requirements, grassland allocation, and many other parameters in ranching. Further, many communities also discuss herds on terms of ratios. The Salmon Valley Cooperative specified 75% Beef, 25% Lamb, and 5% hogs. Therefore, converting from total head to EAUs in the specified ration will require the following conversion chart where:
Equivalent Animal Unit: 1 Beef = 2 Hogs = 3 Lamb Example: Head ->EDU 562.5 + 1/3(150) + ½ (37.5) = 631 Therefore, ratio of: Head/EAU [in the proportion of 75%/25%/5%] = 750 / 631 = 1.188 EAU/Head [in the proportion of 75%/25%/5%] = 631 / 750 = .841
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Table 6A and 6B; Conversion Tables for EAU and total Head Count
Process Cattle Lamb Hog Hot weight per head 700 lb 50 lb 210 lb Base slaughter fee per head $105.00 $35.00 $60.00 Boning/cutting/pkg. per lb. $0.85 $0.95 $0.70 Total Revenue per head $700.00 $82.5 $207.00
Table 7: Operating Assumptions for Revenue Calculations OPTION A: PHASED APPROACH Option A is intended to be a low cost-‐cost means of entering the meat processing industry while developing experience and capacity in the community. The SVC community may also need to minimize their market risk while optimizing their growth potential and unifying their co-‐op community. Many new operations struggle with converting the suppliers from their traditional methods of processing their cattle to a new facility or method of delivering product. Either the ranchers do not want to lose their place in line at the crowded industrial slaughter facilities or they are accustomed to simply selling their cattle at auction and think very little about the processing of meat. The phased approach allows the community the ability to gain experience and knowledge while demonstrating to others the value of the meat processing facility to the wider economic benefit of the ranchers. Phase 1: The purpose of the Phase 1 is to build out the capability to the minimum number of animals that will make sense financially. Break even means that the cost of the build out, operational expenses, and the labor costs can be supported by the operations of the facility may be between 0% -‐ 10% IRR. It is presumed that the social and community benefit of self-‐reliance are sufficient to justify the project. By establishing the minimum condition the impact of many additional variables may be assessed.
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The minimum viable production (MVP) is calculated to be approximately 15 animal units per week processed into primals, aged, cut or boxed for delivery to deliver to local markets. Yearly production target is about 750 animals per year. This analysis is valid for harvest rates that are steady throughout the year. Higher seasonal production may be accommodated with additional personnel and freezers (see phase 2). Operation Scenario: One mobile slaughtering unit spends 3 days per week at one or more locations. A single butcher and assistant can slaughter 5 animal units per day for 3 days per week under USDA inspection. The same butcher and an assistant can process cut and box those animals for 2 days under USDA cut and wrap inspection. Carcass halves or quarters are delivered by cooling truck to the cut and age cooler for segmentation into primals by the butcher and inspected by USDA inspector. Driver delivers boxed sections to market. Butcher, USDA Inspector and driver work 40 hours per week. Internal Rate of Return ranges from -‐1.3% to +13.7% depending on the product mix. Table 8:
Option A Phase 1: Personnel
Per Year Total
Operations/Plant Manager / Butcher $60,000 Slaughter/Cut Butcher $35,000 Driver/Livestock Holding Pen/Cleaner $25,000 Administrative Assistant / Scheduler $30,000 Subtotal (not including benefits) $150,000 Total (including Benefits @35% salary) $202,500 Table 9:
Option A Phase 1 Start-up and Facilities Costs
Polar King Cut and Wrap Module $245,000 Mobile or Modular Slaughtering Unit $225,000 Wastewater Pretreatment $82,000 Modular/mobile office (12’ X 48’) used $30,000 2 Refrigerated Cargo Containers, used $40,000 Site Prep, permits, utility hook-‐up, USDA, Engineering Consultant $170,000 Refrigerated Box Truck, deliveries, used $30,000 Medium Duty Cab (used) $50,000 2 forklifts, used $20,000 Miscellaneous office furniture and equipment $2,000 Leased Land $15,000 2 storage sheds $3,000 Total Cost For Option A; Phase 1 $912,000
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Phase 1 has an internal rate of return of 10.3% and payback of about 10 years if the SVC only processes 100% cattle. For a multi-‐species operation of 75% Cattle, 20% lamb, and 5% hogs, the IRR falls below the discount rate of 10%. The financial performance assumes that the SVC achieves 750 units in the first year. This may be accomplished with rancher guarantees and market guarantees. The SVC may also purchase cattle outright and float the time to market. These constraints are substantial. Financial performance was based on 60% of the operation is finances and 40% is acquired in private investment and includes approximately $200K in finance charges. Phase 2: Add another butcher or assistant butcher and marginal additional cold storage to double production from 5 animal units to 10 animal units per day with existing equipment. Now the Co-‐op can shift back and forth between Phase 1 volumes and phase 2 volumes to handle seasonal loads. The co-‐op may process a risk adjusted 40-‐50 animal units per week into primals, age, wrap and deliver to market. Phase 2 yearly yield averaging 34 weeks of production = 1500 animal units per year. Operation Scenario: Additional personnel may be added to existing facilities in order to handle peak loads, seasonal loads, or special orders. Plant manager, driver, and maintenance personnel may have dual or multi roles for added flexibility. One or two USDA inspectors will be needed which are provided at no cost by the USDA with the exception of overtime charges if incurred. Where USDA inspector is not available, alternate markets may be able to absorb product under custom exempt inspection. Sufficient refrigerated, freezing or slaughter capability will increase flexibility to meet USDA inspector schedule. Table 10:
Option A Phase 2; Personnel
Per Year Total
Operations/Plant Manager / Butcher $60,000 Slaughter/Cut Butcher $35,000 Assistant Butcher $30,000 (1) Cut/wrap $25,000 Driver/Livestock Holding Pen $25,000 (1) Cleaner/Maintenance $25,000 Administrative Assistant / Scheduler $30,000 Sub-‐total (not including benefits) $260,000 Total (Including Benefits @35%) $351,000 Table 11:
Option A Phase 2; Start-up and Facilities Costs
Carry over phase 1 expenditure $912,000 Polar King freezer/refrigeration/aging units $203,5000 Total Cost For Option A; Phase 2 $1,147,000
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Phase 2 has an internal rate of return of 18.03% and payback of 7 years if the SVC operates a multi-‐species facility for 1500 animals at 75% Cattle, 20% lamb, and 5% hogs. Due to limitation in the analysis spreadsheet, the financial performance assumes that the SVC achieves 1500 units in the first year – this is the same as refinancing Phase 1 and starting at t=0. The more likely scenario is that the SVC will swing between phase 1 and phase 2 production rates as needed and incorporate frozen stock and bridge loans in order to manage the realities of seasonal swings. Financial performance was based on 60% of the operation is finances and 40% is acquired in private investment and includes approximately $230K in finance charges. Phase 3: Expansion: After the experience of operating in phase 1 and phase 2, markets will have been developed for both supply and demand for cattle. Sufficient capital or available credit will have been accumulated to float the operation. Most importantly, confidence in the co-‐op and organization will be solidified. Strategy: Phase 3 may process up to 60 animals per week into boxed or individually wrapped cuts, aged and deliver to market fresh or frozen for a maximum yearly production of 3000 animals. Since a modular slaughtering unit is less expensive than another mobile unit, the location with the highest prior yields will receive a modular slaughter unit, which can operate independently or in parallel with the mobile unit. Each additional butcher may add 15-‐20 more animals per week to the co-‐op total while the mobile unit continues to sustain Phase 2 volumes across all 3 locations. Expansion to the cut and age facility will be from added modules. Another driver and reefer would be added. Phase 3 has an internal rate of return of 26% and requires a 4-‐year period to pay back the initial investment assuming full utilization. Essentially, SVC would be operating two modular facilities at capacity sharing common inventory, management, and markets. Risk is reduced through diversity of acquired knowledge to get to this point as well as redundancy in many areas eliminating single points of failure. Operating this system at this level would be fairly complex undertaking likely requiring technological productivity software. If the SVC attempts to only process 3000 cattle, the IRR will increase however, too much seasonal flexibility may be lost to justify the higher returns. Due to limitation in the analysis spreadsheet, the financial performance assumes that the SVC achieves 3000 units in the first year. As such, each phase assumes that the prior phase is refinanced and the clock is reset. The more likely scenario is that the SVC will swing between phase 1, 2, and 3 rates as needed and incorporate frozen stock as a means of managing seasonal swings. Financial performance was based on 60% of the operation is finances and 40% is acquired in private investment and includes approximately $423K in finance charges over the 10-‐year term of the loan.
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Table 12: Option A Phase 3; Personnel Cost Yearly Total Operations/Plant Manager / Butcher $65,000 (2) Slaughter/Cut Butcher $70,000 (2) Assistant Butcher $65,000 (4) Cut/wrap $100,000 (3) Driver/Livestock Holding Pen/Cleaner/maintenance
$75,000
(2) Cleaner/Maintenance $50,000 (2) Administrative Assistant / Scheduler $60,000 Subtotal (not including benefits) $485,000 Total (including benefits @35%) $654,750 Table 13:
Option A Phase 3; Start-up and Facilities Costs Carry over phase 2 expenditure $1,147,000 Second Modular Slaughter Unit $190,000 Add’l Polar king, Cut and Wrap Module $245,000 Additional Polar King freezer/refrigeration/aging units $300,000 Additional Soft Costs $170,000 Additional Office, Trucks, equipment $100,000 TOTAL COST: Phase 3 $2,060,000
Option B: Full permanent facility The second option is to build a permanent facility that can handle all facets of the slaughter and processing. The initial facility will be sized to handle 1500 equivalent animal units evenly distributed throughout the year. Peak loads may be accomplished by adding production personnel assuming a ready market exists. Peak loads could be sustained if the product is readily absorbed by the market (i.e., not requiring freezing or storage) throughout the year, then 4000 equivalent units may be produced by adding personnel and shifts. Option B has an internal rate of return of 19.26% and requires a 7-‐year period to pay back the initial investment. However, this assumption is based on full capacity operation. More likely than not, the facility will operate at incremental capacity prior to reaching full production allowing for the supply, the demand, and the operational efficiency of the plant to mature. A full and permanent facility has several advantages over a mobile slaughtering unit. It is easier to manage with fewer people and with stationary equipment, it is easier to maintain and clean. Fewer USDA inspectors will be required and a higher percentage of products would be USDA inspected, graded, and packaged. A stationary facility may double production
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by simply adding another work shift, and it can be shuttered easily for periods of inactivity. Finally, banks may finance a permanent facility with a lower down payment. While many may argue that there is no salvage value if the SVC fails, a full facility could be sold to a private meat processor operator or used for any type of business that requires a controlled environment such as a warehouse, food retail, or medical facility. Table 14: Option B; Personnel Yearly Total Operations/Plant Manager / Butcher $60,000 Slaughter/Cut Butcher $40,000 Assistant Butcher $30,000 (2) Cut/wrap $25,000 Driver/Livestock Holding Pen $25,000 (2) Cleaner/Maintenance $25,000 Administrative Assistant / Scheduler $30,000 Subtotal (not including benefits) $280,000 Total (including benefits @35%) $378,000 Table 15:
Option B; Start-up and Facilities Costs 4-‐5 Acre Parcel appropriately zoned and meeting all site requirements near paved road
$250,000
Steel Building with insulated walls ceiling and doors delivered and constructed on selected site
$150,000
Freezer, Chill Cooler, Ageing Cooler, Slaughter and cutting area cooling system
$150,000
2 Refrigerated Cargo Containers, used $ 40,000 Interior Holding Pens $ 15,000 2 Ford F-‐150 trucks or similar, used $ 30,000 Refrigerated Box Truck for deliveries, used $ 30,000 Rail System, used $ 30,000 Forklift, used $ 10,000 Misc. Office Furniture and equipment $ 3,000 Slaughter fixtures and equipment, used $ 30,000 Processing Fixtures and Equipment, used $ 50,000 Wastewater pre-‐treatment $122,000 Site prep, permit, hook-‐ups, USDA Consultant, Engineering Consultant
$350,000
Total Cost For Option B $1,260,000 Due to limitation in the analysis spreadsheet, the financial performance assumes that the SVC achieves 1500 animals in the first year. This may be accomplished where SVC has options to purchase cattle or where rangers have commitments to supply animals somewhat evenly
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throughout the year. The analysis assumes that a ready market of USDA distributors exists. Financial performance was based on 80% of the operation is finances and 20% of the debt is held by private investors. The finance charges will be approximately $383,000 over the 10-‐year term of the loan.
Table 16: Financial Performance all options:
Table 17: Production Cycle for Cattle in Central Idaho 10
10 University of Idaho: Strategies to Increase Prosperity For Small Farms Through Sustainable Livestock Production, Processing And Marketing 2014.
Measures Option A Option B Phase 1 Phase 2 Phase 3
Animals (composition)
750 (100% Cattle)
1500 (75C/20S/5H)
3000 (75C/20S/5H)
1500 (75C/20S/5H)
Capital Investment
$912,000 P1 +$200,000 [$1,147,000]
P2 +$900,100 [$2,047,000]
$1,282,000
Debt Financing
$547,200 (60%)
$658,200 (60%)
$1,128,000 (60%)
$1,025,600 (80%)
Personnel Cost (per year)
$202,500 $351,100 $654,750 $371,250
Gross Revenue Year 5
$546, 317 $861,386 $1,740,459 $861,386
Expenses Year 5
$457,717 $680,647 $1,265,200 $692,200
Payback Period
>10 years 7 years 4 years 7 years
Internal Rate of Return
10.32% 18.03% 26.09% 19.26%
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Risk Assessment Financial Projections for complex feasibility studies are subject a wide range of variables related to supply, demand, regulations, engineering challenges, and human resource challenges. None of these are trivial and a failure in any could render the best feasibility estimate useless. In researching this report, I was struck by the many ways that a meat processing plant can fail – none of which appeared on the feasibility study. This section will endeavor to elucidate many of the risks and challenges that other processors have encountered as well as attempt to identify risks specific to the Salmon Valley Cooperative. The risk adjusted table sacrifices internal rate of return in exchange for reduced operational risk. Here we peg the IRR to the discount rate at 10% and allocate all excess predicted revenue to operational risk reduction.
Table 18: Risk Adjusted Return pegged at @10% This chart shows the amount of short-‐term operational capital could be held in reserve, at the cost of money, which could minimize operational risk. This rotating capital could be used to purchase livestock directly or provide bridge loans to ranchers for the period of time it takes for product to reach market. Other uses may include ramping up temporary personnel to meet peak loads or obtaining additional refrigeration or freezing capacity to preserve product from loss.
Measures Option A Option B Phase 1 Phase 2 Phase 3
IRR @ 10% $1M = 0% $1.2M $4M $1.5M
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Processing Like slaughter capacity, it is expected that the sophistication of the SVC Cut & Wrap facility will increase over time as the markets develop and the experience be gained. The simplest processing is to cut the carcass into primals and sell boxed meat to distributors and meat shops. The most complex is to individually cut and wrap to order with branded labeling. Fortunately, value is added with each step providing an incentive to mature.
Figure 30: Carcass hangs for cooling/aging or cut into primals
Figure 29: Wrapped Meat Aging on Racks
Figure 28: Cut and Wrap Operations in Clean Cooled USDA Inspected Environment
Figure 31: individually wrapped cuts requires a high level of tracking, logistics, and quality controls
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Processing Equipment11 The cost and complexity of processing equipment will increase as new markets are served. For example, A three-‐man crew can process four beef per day. Four beef carcasses weighing 750 lbs., cut and wrapped at 70 cents per lb. will gross $2,100/day. Mike Callicrate has had notable success with his retail outlets and provides the following list of tools and equipment to set up a full service cut and wrap facility. Table 19:
Summary Of Equipment For Beef Processing Operation Grinder $3,300 Band saw $7,300 Tenderizer $2,200 Slicer $1,400 2 -‐ Stainless steel cutting tables $2,000 1 – Stainless steel wrapping table $1,000 6 -‐ Freezer racks with baskets $3,400 2 -‐ Scales $1,400 Misc. equipment, knives, clothing, protective gear, etc. $2,000 Total $24,000 Pork Processing: A three-‐man crew can process 15 hogs per day at $145 per hog (cut and wrap, smoked and cured). Plus: There is approx. 20 lbs. of lard per hog that can be rendered and sold for 50 cents per lb. (The USDA reported market for bulk lard on November 4, 2010 was 79 cents per lb.). Total gross income for pork equals $2,325 per day Table 20:
Summary Of Equipment For Pork Processing Operation Grinder $3,300 Band saw $7,300 Slicer $1,400 2 -‐ Stainless steel cutting tables $2,000 1 – Stainless steel wrapping table $1,000 6 -‐ Freezer racks with baskets $3,400 2 -‐ Scales $1,400 Smoker (pork and beef) 9,000 Curing table and Pump (pork) -‐ $3,000 $3,000 Bacon hanger and hooks -‐ $300 $300 Sausage stuffer -‐ $2,000 $2,000 Lard renderer -‐ $5,000 $5,000 Misc. equipment, knives, clothing, protective gear, etc. $2,000 Total $41,400 11 Adapted from Mike Callicrate Ranch Foods Direct: http://ranchfoodsdirect.com
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Summary of Income and Employment: 4 hd. of Beef -‐ $2,100 per day 15 hd. of pork -‐ $2,325 per day
Total - $4,425 per day Employees:
• 6 full-‐time meat cutters (3 beef, 3 pork) • 1 full-‐time clerical and bookkeeping person
Retail Market: Retail market income will depend on the size and support of the community (Consider a producer/consumer -‐ cooperative/community type of ownership structure). A traditional fresh meat counter with paper wrap would likely fit the operation nicely with potentially a significant separate profit center. Other locally produced items could be sold; including poultry, eggs, in season vegetables, baked goods, raw milk pick-‐up, etc.
Figure 32: Mike Callicrate has had considerable success with retail sales
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SITE SELECTION
Several important criteria to be used when selecting a site for the SVC are discussed below. These considerations are applicable to a mobile slaughtering unit, a modular slaughter/processing unit(s), or a stationary facility. Access to municipal sewer utilities Mechanical pretreatment of the plant’s wastewater followed by discharge into a municipal sewer system will alleviate the need to have a series of wastewater treatment tanks or ponds and related management effort. Although fees to hook-‐up to the municipal sewer system can be quite high, their cost may be considerably less than the costs accrued over time to operate an onsite wastewater management system. Limited monitoring of the pretreatment equipment will be required. Access to municipal electric and water utilities If these utilities are not close by, considerable cost can be incurred to extend lines to the site. Potable water is required for washing down the carcasses and to clean the machinery, equipment, tools and work surfaces. Option A (all phases) may require transport of potable water from the processing plant to the ranch slaughter site. Proximity to a major transportation route If located in any of the three participating towns; Salmon, Challis, or MacKay, the components of the plant should locate within a few miles of the intersections of Highway 75 and 93 and 93 and 28. The majority of the participating ranchers will be within a 1-‐hour drive of the SVC, and t will travel on Highway 93 to get to the plant. Depending on where the slaughter facility is located, larger towns such as Missoula Mt, Twin Falls, and Boise are roughly 3 hours from Salmon, Challis, or Mackay. These are easy day trips to deliver finished product but lengthy drives to deliver live cattle. The specific site must be easily accessible to trucks bringing in livestock and loading out finished products. Highway 93 is also the primary route for traveling to the participating ranchers’ customers in all directions. Nevertheless, it is advisable to have fencing and/or trees or bushes to screen the plant and livestock pens from direct public view. Community acceptance of project site Many communities will express vocal opposition to many the larger meat plants that may be proposed by industrial processors. There appears to be strong acceptance within the agricultural community of SVC. The State of Idaho, through the economic development commission and the University of Idaho, has expressed considerable interest in the current small-‐scale local food production.
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Labor force availability There are several USDA and custom-‐exempt facilities operating in Idaho, which could be a likely source of labor. Finding experienced meat processing management – especially plant management with regulator expertise -‐ will be critical to the success of the SVP. This factor is cited in several studies. Land site suitability This criterion relates to appropriate zoning. Also, the facility should have minimal impact on the local community—visually and environmentally. Most counties will permit “industrial, manufacturing, or storage uses which may be objectionable by reason of production of smoke, dust, noise, radioactivity, vibration, bright light or other causes” on sites with Manufacturing (M) zoning, subject to first securing a use permit. Ranch site requirements The Mobile Slaughter facility will have specific site requirements such as a concrete pad for slaughtering the animal and clean water availability. There could be many sites that accept the mobile unit as long as they meet the USDA requirements. The modular slaughter facility would be a more developed version of the same. Ideally, the site for the both types of slaughter unit has potable water and paved roadway to the site that is in good repair. The site should also have holding pen(s) that meet the Certified Humane criteria (see Attachment 5D, Ranch Site Facility Requirements developed for members of the Central Coast cooperative). The site should have a concrete pad with proper drainage to prevent surrounding areas from becoming soggy. It is expected that all components, phases, or options for this facility will be located within the Salmon Valley Cooperative designated area. Coop Shared Responsibilities: We may divide the meat processing facility into 3 components: Slaughter Cut and wrap Distribution Any of these components can be permanent, modular, or mobile. Each has benefits and drawback. These need to be matched with the specifications of the community and the conditions of the market. The third variable is the availability of USDA Inspectors and the logistics involved with complex operations.
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Process Method 1 Method 2 Method 3 Slaughter Mobile Modular Permanent
Cut and Wrap Mobile Modular Permanent Transport/Storage Mobile Modular Permanent
Table 21: Options For Each function of Meat Processing Operation In order for the Coop to be successful and involve all parties in collaboration, the processing workflow may be separated into 3 distinct areas corresponding to the towns of Salmon, Challis, and MacKay. These may correspond to the following options: OPTION A - P1, P2 Salmon Challis MacKay
Slaughter Mobile Age, Cut, Box Modular Distribution Mobile Table 22a: Possible phase 1 and 2 function corresponding Coop Locations
OPTION A - P3 Salmon Challis MacKay Slaughter Modular
Age, Cut, Box Modular Distribution Mobile
Table 22b: Possible phase 3 functions corresponding to Coop Locations
OPTION B Salmon Challis MacKay Slaughter Permanent
Age, Cut, Box Permanent Distribution Mobile Mobile Mobile
Table 22c: Option B functions corresponding to Coop Locations
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Summary Conclusion Both options are financially viable, however, there are risk exposures that the co-‐op may accept or reject that could determine the best approach. All phases of Option A are individually viable if implemented alone. The correct level of utilization is imperative for the success of this or any other meat processing facility. Ranchers will be asked to convert some of their herd to local production for deferred payment or to change their ranching practices for staggered harvesting. Ancillary business opportunities will need to be exploited by local entrepreneurs. All of this takes time to develop. Therefore if the Salmon Valley Cooperative intends to operate reliably at between 750 and 1500 animals, then the recommendation is select Option A and deploy a USDA mobile or modular processing facility with centralized USDA cut and wrap capability. If the Salmon Valley Co-‐op seeks to operate at 1500 -‐ 3000 animals per year the recommendation is to select Option B install a permanent USDA inspected facility containing both slaughter and cut & wrap operations in the same structure.
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APPENDIX A: Position Descriptions for Management and Staff 12 Position Title: General Plant Manager/Butcher -‐ $60,000 to $90,000 (not including benefits) Manages plant’s HACCP program. Monitors performance of plant’s wastewater pre-‐treatment system. Supervises and coordinates activities of workers engaged in slaughtering, skinning, and dressing cattle, hogs, sheep and goats on killing floor of abattoir. Directs and trains workers in use of knife, air-‐knife, saws, and other hand tools. Supervises and coordinates activities of workers engaged in cutting carcasses into standard cuts, removing bones and trimming excess fat from cuts, and preparing special cuts for marketing: Instructs new employees in cutting carcasses and preparing special cuts. Examines cuts of meat to determine if quality standards are met. Inspects meat for specified color and texture to verify conformity to government regulations. Manages relations with customers. Has skills or performs other duties as described below. Duties & Responsibilities: Operational
• Provide leadership that promotes team effort by personnel to accomplish the highest standards for sanitation, safety, and attention to detail in meat processing
• Ensure a high level of sanitation as required by the USDA • Implement systems to ensure proper tracking of products from live animals to finished • Cuts -‐ including carcass, order, and freezer management • Oversee daily operations to ensure a high level of efficiency, sanitation, and
professionalism • Regular testing of product to ensure food safety • Fix/delegate any maintenance issues • Keep all machinery and tools in clean, working order • Keep inventory and order items to keep supplies stocked at working levels • Ensure humane handling standards are met consistently
Administrative
• Keep a high level of customer service and public relations • Record keeping of all FSIS documents, as well as company files and documents • Daily book keeping including managing accounts receivables and payables, worker’s
hours, and purchase orders • Ensure the front of the plant (offices, meeting rooms, bathrooms, outside) is clean and
orderly • Manage employees including approving raises, hiring and firings based on • Performance reviews • Maintain a strong working relationship with other processors and vendors in the area • Develop and implement new products or services to offer customers
12 Hardesty, S and J. Harper 2013 University of California Cooperative Extension; Mendocino County Meat Plant Study – Staying Local Addendum March 2014
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• Create and implement a marketing strategy for services, including marketing to producers and marketing of educational opportunities for producers (in collaboration with UCCE)
• Maintain a company website, attend regional and national association conferences, represent the company at any festivals and gatherings in the region
Knowledge, Skills & Ability
• Extensive knowledge of FSIS regulation, including HACCP, SSOP, labeling, and quality assurance programs
• Extensive knowledge of various meat products • Extensive knowledge of humane animal handling, stunning, and harvest procedures • Understand where hazards in a food production process can be controlled, reduced or
eliminated • Work with a variety of knives, hand tools, power equipment and computer-‐operated
machinery • Possess good eye-‐hand coordination, common sense and safe working habits • Be able to work with heavy machinery and heavy pieces of meat • Possess stamina to allow for long periods of standing in a cold or hot environment • Need good physical strength for lifting and carrying up to 50 pounds • Possess a high standard for personal hygiene and motivate others to do the same • Be able to give advice about alternative cuts, cooking methods, storage requirements
and nutritional aspects of meat products Credentials & Experience
• 3-‐5 years meat processing experience (inspected facility a plus) • 3-‐5 years in a managerial role • Bachelor’s degree or equivalent work experience • Food service experience a plus
_________________________________________________________________________________________________
Position Title: Assistant Plant Manager/Butcher -‐ $60,000 (not including benefits) Optional second shift. Supervises and coordinates activities of workers engaged in cutting carcasses into standard cuts, removing bones and trimming excess fat from cuts, and preparing special cuts for marketing. Directs and trains workers in use of knife, air-‐knife, saws, and other hand tools. Instruct new employees in cutting carcasses and preparing special cuts. Examines cuts of meat to determine if quality standards are met. Inspects meat for specified color and texture to verify conformity to government regulations. Has skills or performs other duties as described below. Duties & Responsibilities: Operational
• Provide leadership that promotes team effort by personnel to accomplish the highest standards for sanitation, safety, and attention to detail in meat processing
• Ensure a high level of sanitation as required by the USDA • Implement systems to ensure proper tracking of products from live animals to finished
cuts -‐ including carcass, order, and freezer management
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• Oversee daily operations to ensure a high level of efficiency, sanitation, and professionalism
• Regular testing of product to ensure food safety • Fix/delegate any maintenance issues • Keep all machinery and tools in clean, working order • Keep inventory and order items to keep supplies stocked at working levels • Ensure humane handling standards are met consistently
Duties & Responsibilities: Administrative
• Keep a high level of customer service and public relations • Record keeping of all FSIS documents, as well as company files and documents • Daily book keeping including managing accounts receivables and payables, worker’s
hours, and purchase orders • Ensure the front of the plant (offices, meeting rooms, bathrooms, outside) is clean and
orderly • Manage employees including approving raises, hiring and firings based on
performance reviews • Maintain a strong working relationship with other processors and vendors in the area • Develop and implement new products or services to offer customers • Create and implement a marketing strategy for services, including marketing to
producers and marketing of educational opportunities for producers • Maintain a company website • Attend regional and national association conferences • Represent the company at any festivals and gatherings in the region
Knowledge, Skills & Ability
• Extensive knowledge of FSIS regulation, including HACCP, SSOP, labeling, and Quality assurance programs
• Extensive knowledge of various meat products • Extensive knowledge of humane animal handling, stunning, and harvest procedures • Understand where hazards in a food production process can be controlled, reduced or
eliminated • Work with a variety of knives, hand tools, power equipment and computer-‐operated
machinery • Possess good eye-‐hand coordination, common sense and safe working habits • Be able to work with heavy machinery and heavy pieces of meat • Possess stamina to allow for long periods of standing in a cold or hot environment • Need good physical strength for lifting and carrying up to 50 pounds • Possess a high standard for personal hygiene and motivate others to do the same • Be able to give advice about alternative cuts, cooking methods, storage requirements
and nutritional aspects of meat products Credentials & Experience
• 3-‐5 years meat processing experience (inspected facility a plus) • 3-‐5 years in a managerial role
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• Bachelor’s degree or equivalent work experience • Food service experience a plus
_________________________________________________________________________________________________
Position Title: Butcher -‐ $35,000 to $45,000 (not including benefits). Performs slaughtering and butchering tasks in small slaughtering and meat packing establishment, using cutting tools, such as cleaver, knife, and saw. Stuns animals prior to slaughtering. Shackles hind legs of animals, such as cattle, sheep, and hogs, to raise them for slaughtering or skinning. Severs jugular vein to drain blood and facilitate slaughtering. Trims head meat and otherwise sever or remove parts of animal heads or skulls. Saws, splits, or scribes slaughtered animals to reduce carcass. Slits open, eviscerates, and trims carcasses of slaughtered animals. Cuts, trims, skins, sorts, and washes viscera of slaughtered animals to separate edible portions from offal. Washes carcasses. Wraps muslin cloth about dressed animal carcasses or sides to enhance appearance and protect meat. Shaves hog carcasses. Trims and cleans animal hides, using knife. Cuts bones from standard cuts of meat, such as chucks, hams, loins, plates, rounds, and shanks, to prepare meat for marketing. Examines, weighs, and sorts fresh cuts. Skins sections of animals, or whole animals such as: cattle, sheep, and hogs. May prepare meats for smoking. May cut and wrap meat. May salt (cure) and trim hides. Has skills or performs other duties as described below. Duties & Responsibilities Operational
• Ensure a high level of sanitation as required by the USDA • Ensure humane handling standards are met consistently • Participates in and follows HACCP • Carries out plans to ensure proper tracking of products from live animals to finished
cuts including carcass, order, and freezer management • Fix/delegate any maintenance issues • Keep all machinery and tools in clean, working order • Assist in training of meat cutter and assist in overseeing clean-‐up • Knowledge, Skills & Ability • Extensive knowledge of FSIS regulation, including HACCP, SSOP, labeling, and QC • Extensive knowledge of various meat products • Extensive knowledge of humane animal handling, stunning, and harvest procedures • Understand where hazards in a food production process can be controlled, reduced or
eliminated • Work with a variety of knives, hand tools, power equipment and computer-‐operated
machinery • Possess good eye-‐hand coordination, common sense and safe working habits • Be able to work with heavy machinery and heavy pieces of meat • Possess stamina to allow for long periods of standing in a cold or hot environment • Need good physical strength for lifting and carrying up to 50 pounds
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• Possess a high standard for personal hygiene and motivate others to do the same Credentials & Experience
• 3-‐5 years meat processing experience (inspected facility a plus) • Bachelor’s degree or equivalent work experience • Food service experience a plus
_________________________________________________________________________________________________
Position Title: Butcher Assistant -‐ $33,000 (not including benefits) Optional 2nd Shift. Assisting the Butcher by work in slaughtering and meatpacking performing precision functions involving the preparation of meat. Work may include specialized slaughtering tasks, cutting standard or premium cuts of meat for marketing, making sausage, or wrapping meats. Has additional skills or other duties as described below. Duties & Responsibilities
• Keeping ac lean and organized workspace in accordance with AHAC and USDA standards
• Cut, trim, skin, sort, and wash viscera of slaughtered animals to separate edible portions from offal
• Slaughter animals in accordance with humane practices • Slit open, eviscerate, and trim carcasses of slaughtered animals • Perform a few of the many cuts needed to process a carcass • Remove bones, and cut meat into standard cuts in preparation for marketing • Sever jugular veins to drain blood and facilitate slaughtering • Wash carcasses in preparation for further processing or packaging • Trim, clean, and/or cure animal hides • Shackle hind legs of animals to raise them for slaughtering or skinning • Skin sections of animals or whole animals • Trim head meat, and sever or remove parts of animals' heads or skulls • Saw, split, or scribe carcasses into smaller portions to facilitate handling • Grind meat into hamburger, and into trimmings used to prepare sausages, luncheon
meats, and other meat products • Stun animals prior to slaughtering • Wrap dressed carcasses and/or meat cuts
Knowledge, Skills & Ability
• Have an adequate understanding in the care and handling of livestock and carcasses • Have an adequate understanding of meat processing techniques, cuts, and packaging • Have extensive knowledge of labeling requirements regulated by the USDA • Be able to work well with others and willing to provide excellent customer service • Possess a willingness to always improve your knowledge, skills and abilities • MeticulouslyimplementthesanitationandsafetyrequirementsforaUSDAinspectedfacility • Understand where hazards in a food production process can be controlled, reduced or
eliminated • Work with a variety of knives, hand tools, power equipment and computer
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• Operate machinery safely and effectively. • Possess good eye-‐hand coordination, common sense & safe working habits when using
tools & equipment • Be able to assemble and operate, disassemble and clean the equipment in all
departments • Possess stamina and good physical strength for lifting and carrying • Possess stamina to work in hot and cold environments while standing for long periods • Possess a high standard for personal hygiene
Credentials & Experience
• 1-‐3 years meat processing experience (inspected facility a plus) • Bachelor’s degree or equivalent work experience • Food service experience a plus
_________________________________________________________________________________________________
Position Title: Meat Packaging/Cutting -‐ $24,960 to $28,000 (not including benefits) Cuts and trims meat to size as ordered by customer, using hand tools and power equipment, such as grinder, cubing machine, and power saw. Shape, lace, and tie meat cuts by hand, using boning knife, skewer, and twine to form roasts. Wraps all cut meats in either paper or cryovac sealed packages. Labels packages and boxes accordingly. Boxes wrapped meats and moves them into appropriate locations in the freezer. Loads meat on delivery truck. Has additional skills or performs other duties as described below. Duties & Responsibilities
• Communicating with butchers to identify orders of meat that have been cut, read cutting instructions to find customers packing preferences, and wrapping meat according to instructions
• Labeling meat according to customers request and USDA regulations using computer software
• Properly handling, storing, and organizing packaged products to ensure proper food safety handling procedures are met in accordance with HACCP & SSOP guidelines
• Organizing freezer for easy identification and location of customer orders • Loading out customers for product pick-‐up including filling out and checking of all
proper paperwork for shipment of USDA inspected meat products • Keeping a clean and organized workspace in accordance with AHAC and USDA
standards • Maintaining a high level of Customer Service and Customer Relations when interacting
with all customers, including over the phone • Careful and safe use of tools and equipment during production and during cleaning • Use correct dilutions of detergents and sanitizers to prevent residue on food,
equipment and other food surfaces • Assist in the implementation of Standard Operating Procedures in the processing room
and coolers • Communicate effectively and professionally with custom, wholesale & private label
customers
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• Clean equipment and rooms at the end of production (including restrooms) • Keep the entire building and grounds in a clean and presentable manner • Use appropriate rinses, detergents and sanitizers to prevent contamination of product,
premises and equipment • Grind, season, and stuff meat for ground meat and sausages (must lift 50 pounds) • Assisting butchers with de-‐boning trim, when needed
Knowledge, Skills & Ability
• Have an adequate understanding in the care and handling of livestock and carcasses • Have an adequate understanding of meat processing techniques, cuts, and packaging • Have extensive knowledge of labeling requirements regulated by the USDA • Be able to work well with others and willing to provide excellent customer service • Possess a willingness to always improve your knowledge, skills and abilities • Meticulously implement the sanitation and safety requirements for a USDA inspected
facility • Understand where hazards in a food production process can be controlled, reduced or
eliminated • Work with a variety of knives, hand tools, power equipment and computer-‐operated
machinery safely and effectively • Possess good eye-‐hand coordination, common sense & safe working habits when using
tools & equipment • Be able to assemble and operate, disassemble and clean the equipment in all
departments • Possess stamina and good physical strength for lifting and carrying • Possess stamina to work in hot and cold environments while standing for long periods • Possess a high standard for personal hygiene
Credentials & Experience
• High School Diploma or equivalent Proficient in computer use • Meat processing experience a plus Knowledge of live stock and meat
_________________________________________________________________________________________________
Position Title: Driver/Livestock Holding Pen/Cleaner -‐ $24,120 to $26,500 (not including benefits) Assists customers unload incoming livestock to holding pen. Maintains clean water supply for livestock. Moves livestock through chutes to kill box. Cleans and sanitizes holding pen and chutes daily. Delivers processed meats to ranchers’ restaurant and grocery customers in the North Bay, San Francisco and East Bay area. Delivers processed meats to ranch customers directly if needed. Assists cleaner with thorough sanitation of kill box and slaughter room floor, and other duties as assigned. Has additional skills or other duties as described below.
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Duties & Responsibilities
• MaintainingahighlevelofCustomerServiceandCustomerRelationswheninteractingwith all customers and their restaurant and grocery customers
• Assist in receiving livestock for slaughter • Maintain cleanliness of the live slaughter animal holding area • Assist butcher in livestock movement prior and during slaughter. • Careful and safe use of tools and equipment during production and during cleaning • Communicate effectively and professionally with custom, wholesale & private label
customers
Knowledge, Skills & Ability
• Have an adequate understanding in the care and handling of livestock and carcasses • Have extensive knowledge in the humane slaughter process of livestock • Skilled in humane treatment of cattle, sheep, goats and hogs • Patient and caring in working with animals • Excellent driving record • Possess good eye-‐hand coordination, common sense & safe working habits when using
tools & equipment • Be able to work well with others and willing to provide excellent customer service • Possess a willingness to always improve your knowledge, skills and abilities • Meticulously implement the sanitation and safety requirements for a USDA inspected
facility • Understand where hazards in a food production process can be controlled, reduced or
eliminated • Be able to assemble and operate, disassemble and clean the equipment in all
departments • Possess stamina and good physical strength for lifting and carrying • Possess stamina to work in hot and cold environments while standing for long periods • Possess a high standard for personal hygiene
Credentials & Experience
• High School Diploma or equivalent • Class I and II driver’s license • Meat processing experience a plus • Knowledge of livestock and meat products
_________________________________________________________________________________________________
Position Title: Cleaner -‐ $24,000 (not including benefits) (works 3 pm-‐6 pm, 10 pm-‐1 am). Assist other workers in plant clean up. Including rooms, floors, machinery and knives, holding pens, coolers and restrooms. Must use correct dilutions of detergents and sanitizes for both traditional meat processing and organic meat processing. Cleans trolleys used to move animal carcasses along overhead rail, in vats or tanks filled with solution: Turns water and steam valves to fill and heat cleaning vats or tanks. Dumps caustic soda and detergents into tank and
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stirs mixture with paddle. Pushes rack of trolleys to tank and lowers each trolley into solution, or immerses rack into solution, using hoist. Removes trolleys from solution and rinses them in hot water spray. Cleans and sterilizes machinery, utensils, and equipment. Turns valves to drain machines or tanks and disconnects pipes using wrenches. Sprays machines, tanks, and conveyors with water to loosen and remove dirt or other foreign matter. The Cleaner scrubs all machines, tanks, tables, pans, bowls, compartments, and conveyors, using brushes, rags, cleaning preparations, and diluted acids. Rinses articles with water, and dries them with compressed air. The Cleaner also scrubs floors and walls, using brushes, rags, and diluted acids. Connects hoses and lines to pump and starts pump to circulate cleaning and sterilizing solution through hoses and lines. Scrubs interior of disconnected pipes, valves, spigots, gauges, and meters, using spiral brushes. Cleaner mixes cleaning solutions and diluted acids, according to a process formula. Draws off samples of cleaning solutions from mixing tanks for laboratory analysis. Has additional skills or other duties as described below. Duties & Responsibilities
• Keeping a clean and organized workspace in accordance with AHAC and USDA standards
• Careful and safe use of tools and equipment during production and during cleaning • Use correct dilutions of detergents and sanitizers to prevent residue on food,
equipment and other food surfaces • Clean equipment and rooms at the end of production (including restrooms) • Keep the entire building and grounds in a clean and presentable manner • Use appropriate rinses, detergents and sanitizers to prevent contamination of product,
premises and equipment Knowledge, Skills & Ability
• Possess good eye-‐hand coordination, common sense and safe working habits • Be able to work with heavy machinery • Possess stamina to allow for long periods of standing in a cold or hot wet environment • Need good physical strength for lifting and carrying up to 50 pounds • Possess a high standard for personal hygiene
Credentials & Experience
• High School Diploma or equivalent • Meat processing experience a plus • Knowledge of livestock and meat a plus
_________________________________________________________________________________________________ Position Title: Administrative assistant/scheduler – $30,000 to $40,000 (not including benefits) Assisting with any duties related to administrative functions, dispatch, fleet, and sales at meat harvest and processing plant; any reasonable task that may be requested. Training will be provided in support of duties and responsibilities; however, the suitable
64
candidate must obtain the capability to learn and grow in the position; completing the tasks assigned accurately and effectively, and in accordance with internal working procedures. Has additional skills or other duties as described below. Knowledge, Skills & Ability
• Ability to cope with workload pressure and preparedness to work long hours • Computer literacy (MS Word, Excel and PowerPoint) • Excellent phone skills and attention to details • General knowledge of a USDA inspected meat harvest and processing plant desired • Proven finance, planning, organizational and marketing management skills • Abilitytointerfaceeffectivelywithinternalandexternalclientsandsuppliers • An assertive assistant, a strong team player and an excellent people motivator • Ability to work in a changing environment • Self-‐motivation
Duties & Responsibilities
• With the Manager, ensure the efficient and cost effective running of the plant • Process customer orders, billing, payroll, purchasing and other office duties • Managing the timely and accurate delivery of customer products • Assist the Manager with his/her administrative duties including record-‐keeping and
filing • Assist in ensuring compliance with all legislation and procedures regulating USDA
inspected operations • Undertaking any other clerical duties as may be required
Credentials & Experience
• High School Diploma or equivalent • Proficient in computer use • Meat processing experience a plus • Knowledge of livestock and meat
_________________________________________________________________________________________________
Position Title: General Assistant -‐ $28,000 (not including benefits) optional second shift: The General Assistant works in slaughtering and meatpacking and may perform precision functions involving the preparation of meat. The assistant helps move animals in preparation of slaughter, move animals along the rail to the cooler and back to the butcher. The assistant will help with cleaning and will move packaged meat, hides and offal to storage and may assist in moving product to delivery trucks. Work may include specialized slaughtering tasks, cutting standard or premium cuts of meat for marketing, making sausage, or wrapping meats. Has additional skills or other duties as described below. Duties & Responsibilities
• Assist in receiving livestock for slaughter • Maintain cleanliness of the live slaughter animal holding area • Assist butcher in livestock movement prior and during slaughter
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• Careful and safe use of tools and equipment during production and during cleaning • Assist meat cutter/packager, driver/cleaner, and cleaner in the performance of their
job duties Knowledge, Skills & Ability
• Have an adequate understanding in the care and handling of livestock and carcasses • Have an adequate understanding of meat processing techniques, cuts, and packaging • Be able to work well with others and willing to provide excellent customer service • Possess a willingness to always improve your knowledge, skills and abilities • Work with a variety of knives, hand tools, power equipment and computer-‐operated
machinery safely and effectively • Possess good eye-‐hand coordination, common sense & safe working habits when using
tools & equipment • Be able to assemble and operate, disassemble and clean the equipment in all
departments • Possess stamina and good physical strength for lifting and carrying • Possess stamina to work in hot and cold environments while standing for long periods • Possess a high standard for personal hygiene
Credentials & Experience
• High School Diploma or equivalent • Meat processing experience a plus • Knowledge of livestock and meat
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APPENDIX B: Worksheets and Analysis13
13 Oklahoma State University Spreadsheet templates developed by Dr. Rodney Holcomb
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Worksheets: Option A – Phase 1; Operating Assumptions
Worksheets: Option A – Phase 1; Sales Projections and GOGS
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Worksheets: Option A – Phase 1; Personnel Expenses
Worksheets: Option A – Phase 1; PP&E
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Worksheets: Option A – Phase 1; Expense Summary
Worksheets: Option A – Phase 1; Income, Expense, Profit, Cash Flow Summary
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Worksheets: Option A – Phase 1; Internal Rate of Return
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Worksheets: Option A – Phase 2; Operating Assumptions
Worksheets: Option A – Phase 2; Sales Projections, GOGS
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Worksheets: Option A – Phase 2; Personnel Expenses
Worksheets: Option A – Phase 2; PP&E
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Worksheets: Option A – Phase 2; Expense Summary
Worksheets: Option A – Phase 2; Income, Expense, Profit Summary
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Worksheets: Option A – Phase 2; Internal Rate Of Return
75
Worksheets: Option A – Phase 3; Operating Assumptions
Worksheets: Option A – Phase 3; Sales Projections, COGS
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Worksheets: Option A – Phase 3; Personnel
Worksheets: Option A – Phase 3; PP&E
77
Worksheets: Option A – Phase 3; Expense Summary
Worksheets: Option A – Phase 3; Income, Expense, Profit Summary
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Worksheets: Option A – Phase 3; Internal Rate of Return
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Worksheets: Option B; Operating Assumptions
Worksheets: Option B; Sales Projections, COGS
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Worksheets: Option B; Personnel
Worksheets: Option B; PP&E
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Worksheets: Option B; Expense Summary
Worksheets: Option B; Income, Expense, Profit, Cash Flow
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Worksheets: Option B; Internal Rate of Return
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APPENDIX C: Additional Case Studies and Plant References Reviewed in this report
Fixed Facilities
Smuckers Meats Mount Joy, Pennsylvania: Smucker's Meats is a family-‐owned, USDA-‐inspected slaughter, fabrication, and further-‐processing plant for red meat. The core of their business is processing locally grown livestock that are sustainably raised. Their services are in high demand -‐-‐ they are typically scheduled out 3-‐4 months. They process an average of ~45 head of beef and 5-‐10 hogs each week.
Lorentz Meats Cannon Falls, Minnesota: Lorentz Meats is a USDA-‐inspected slaughter, fabrication, and value-‐added processing plant for beef and bison. They handle more than 8000 head per year, on a fee-‐for-‐service basis for niche meat brands and independent farmers. The business has been in the family since 1968.
Heritage Meats Rochester, Washington: Heritage Meats is a small, USDA-‐inspected cut and wrap facility that provides fee-‐for-‐service processing of all red meat species for independent farmer-‐marketers and retail butcher shops. The plant has a custom-‐exempt side for freezer-‐beef customers. They are a primary processor for the region's USDA inspected mobile slaughter unit.
TFC Poultry Processing Ashby, Minnesota: TFC is a USDA-‐inspected poultry processor that provides fee-‐for-‐service processing for small-‐scale, local farmers and two organic meat companies. The majority of their throughput is spent hens from a variety of sources. Their motto is "big enough to do things, small enough to cater."
White Oak Pastures Bluffton, GA: White Oak Pastures is a family owned, vertically integrated, grass-‐fed meat company with two on-‐farm slaughter and processing plants, one for poultry and one for cattle, sheep, and goats. Both are Tallmadge-‐Aiken plants. All meat and poultry processed are sold under the White Oak Pastures label.
Ranch Foods Direct Colorado Springs, CO: Ranch Foods Direct is a USDA-‐inspected processor and retail food company that do cutting, packaging, and some value-‐added processing. RFD primarily processes cattle for its own house brand of beef but also provides processing services on a
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fee-‐for-‐service basis for ranchers who market their own meats independently. RFD also operates a USDA-‐inspected mobile slaughter unit in Kansas.
Midwestern Country Locker Midwest: This case study details an small, locker-‐type plant from the Midwest (the owners wish to remain anonymous). The facility has been in continuous operation since 1939, and the current owner is looking to build a new facility. Though the plant is state-‐inspected for hog slaughter and for processing, their work is 90+% custom uninspected, and they offer a wide variety of ready-‐to-‐eat products. The plant processes an average of 11 beef a week and 15 hogs, plus a large volume of deer in the fall and winter.
Good Natured Family Farms Uniontown, Kansas: The plant processes meat for the Good Natured Family Farms brand, distributed regionally around Kansas City, Missouri. Although the plant is owned by one farm, the meat processed there comes from regional farms and the policies and practices are designed to serve the needs of local farmers. Good Natured Family Farms is a model of responsible vertical integration: The company founders operate a working farm, a meat processing plant, a food distribution company, steward the Good Natured Family Farms brand, and organize of a farmer-‐owned all-‐natural beef co-‐op. This plant processes 8-‐10 head of cattle or 300 chickens per day and is USDA inspected.
Harvey, North Dakota, USDA Slaughter and Processing Plant Harvey, North Dakota: A cautionary tale, this is a three part story about one USDA inspected slaughter & processing plant, first conceived in 1999, opened in 2001, failed & reborn twice, and closed in August 2008 (though it may be opened yet again, by a new operator).
Sioux-Preme Packing Company Sioux City, Iowa: In 1970, Sioux-‐Preme started out as a harvest-‐only facility, in a "hog-‐rich" part of Sioux County, and expanded to fabrication in the early 1990s. When the company began, in the mid-‐90s, to look for a differentiation strategy, it found that opportunity in niche pork processing. Today its customers include Niman Ranch, Beeler's Natural, Organic Valley, and others. Sioux-‐Preme is large enough to handle significant volume but small and flexible enough to meet customer needs in a dynamic, diversified marketplace.
Acre Station Meat Farm Pinetown, North Carolina: Built in 1978, Acre Station Meat Farm combines a processing facility and a retail grocery store. As the only small meatpacker in the state able to produce a range of value-‐added products, such as bacon and ham, they have become the “go-‐to” processor for a number of the state's independent farmers direct marketing their own meats. Acre Station also works closely with stakeholders in the state who are establishing connections between local independent farmers and local retail markets.
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Mobile Units
Island Grown Farmers Cooperative Bow, Washington: The Island Grown Farmers Cooperative (IGFC) mobile processing unit (MPU) was the first USDA-‐inspected mobile slaughter facility for red meat in the U.S. Further processing is done at a permanent plant in Bow, WA, also USDA-‐inspected. The MPU can process 9-‐10 head beef (or 40 sheep or 24 pigs) each day, 3-‐4 days a week. In 2007, the IGFC MPU and processing facility handled 308,000 lbs of meat for its members and has stayed at that capacity since then.
Kentucky Mobile Poultry Processing Unit Frankfort, Kentucky: This small, mobile poultry processing unit was built in Kentucky in 2001 by Heifer International with Kentucky State University (KSU), Partners for Family Farms (PFF), and the National Center for Appropriate Technology (NCAT). State-‐approved but uninspected, the MPU is owned and maintained by KSU. Farmers use it on a rental basis to process poultry and aquaculture.
Coast Grown Mobile Harvest Unit Central Coast Region, California: This mobile unit was built in 2002 by ranchers who wanted better access to an inspected slaughter facility. Regulatory complexities paired with uncertain markets kept it parked for seven years. In 2009, it finally began operations as a USDA inspected unit. This case study, written after the first few months, describes the long and often confusing path to getting it up and running, and the plan for its future success.
Hudson Valley Poultry Processing Hudson Valley, New York: Hudson Valley Poultry Processing Inc. owns the first state-‐inspected, enclosed, mobile poultry processing unit (MPPU) operating in New York State, approved in November 2009. Owner Ed Leonardi, a small livestock producer in the Catskills, designed it to allow other producers to process their own birds under their own state (5A) license.
Tangletown Farm Poultry Processing Middlesex, Vermont: Tangletown Farm in Vermont, owns and operates a mobile poultry processing unit under state inspection. The unit was originally built as a prototype by the state of Vermont in 2008. Operator George Eisenhardt brought a lifetime of experience in the slaughterhouse business when he started using the MPPU in August 2009. It was sold to Tangletown Farm in January 2012-‐ they currently use it to process their own poultry only.
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Puget Sound Meat Producers Cooperative Tacoma, Washington: The PSMPC is a non-‐profit cooperative of local ranchers, farmers, butchers, restaurant owners, and others who jointly operate a mobile, USDA-‐inspected slaughter unit. It initially services King, Kitsap, Lewis, Mason, Pierce, and Thurston counties. The MSU is owned by the Pierce Conservation District; PSMPC leases it. The first animals were slaughtered in the unit in October 2009. Mobile MPUs Operating in the US Red Meat Units (Listed alphabetically by state and business name) Alaska Meat Company, AK Kodiak, Sitkinak Island, Alaska "Multi-‐Location Abattoir" Species: cattle Inspection: USDA-‐inspected Capacity per day: 5 cattle Website: http://www.alaskameat.com/Services_Available.php Other: at this time, the unit only handles cattle for Alaska Meat Company Contact: Bob or Nathan Mudd, Kodiak, AK: bobmuddjr[at]gmail.com, (907) 486-‐3905; nathanmudd[at]gmail.com, (907) 654-‐7422 Central Coast Grown (CA) San Luis Obispo, California Species: beef, lamb, swine, goat Inspection: USDA-‐inspected Capacity per day: 5 beef or 10 hogs or 20 lambs and goats Owned and managed by the Central Coast Agriculture Cooperative; operated by J&R Meats, a USDA-‐inspected cut and wrap facility Central Coast Grown website Detailed case study, with photos: Coast Grown Mobile Harvest Unit Contact: J&R Meats, 805-‐237-‐8100 Nebraska Prairie Harvest Project (NE/CO) Species: beef, bison, hogs, goats, sheep Inspection: USDA-‐inspected Capacity per day: 10 beef Built by Nebraska Environmental Action Coalition (NEAC), owned by Socially Responsible Agricultural Project's Renewable Harvest Operated by Mike Callicrate, Ranch Foods Direct, Colorado Springs, CO Good Food Concepts Mobile Meat Processing website
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Cost: the Nebraska Environmental Action Coalition built this mobile unit for $120,000 (includes the whole trailer and equipment but not the truck to haul the trailer). The unit includes an ozone-‐based water filtration system. Renewable Harvest provides free consulting to farmers and communities interested in building and operating MSUs. Contact: Laura Krebsbach, Renewable Harvest, (402) 549-‐2365, info[at]renewableharvest.org Contact: Good Food Concepts, (866) 866 6328, info[at]GoodFoodConcepts.com Taos County (NM) Economic Development Corporation Mobile Matanza Taos, New Mexico Species: bison, beef, hogs, goats, sheep Inspection: USDA-‐inspected Capacity per day: 5-‐8 beef or bison, 15-‐15 goats, sheep or hogs Owned by the Taos County Economic Development Corporation (TCEDC) TCEDC website 2012 article about the Mobile Matanza, in "Taos Food News," the TCEDC newsletter Contact: Terrie Bad Hand, TCEDC, (575) 758-‐8731, tcedc[at]tcedc.org The Modular Harvest System (NY) Hudson Valley, New York Species: beef, hogs, sheep, and goats Inspection: USDA-‐inspected Capacity per day: approximately 10-‐12 beef, 24 hogs, 30-‐40 sheep or goats Built by the Glynwood Center Owned and operated by Local Infrastructure for Local Agriculture (LILA) MHS information on Glynwood Center website The MHS is the first USDA-‐inspected red meat MSU in the country designed to slaughter inside. Contact: Jess Hamilton, LILA, (800) 792-‐4014, (518) 821-‐0004, hamilton[at]lila-‐northeast.org Community Agricultural Development Center (WA) Colville, Washington Species: beef, hogs, sheep, and goats Inspection: USDA-‐inspected Capacity per day: 6-‐7 beef, 20-‐25 sheep or hogs Owned by the Community Agricultural Development Center; operated by S & K Processing, a USDA-‐inspected cut and wrap facility Community Agricultural Development Center website Contact: Al Kowitz, Community Agricultural Development Center, akowitz[at]communityagecenter.org
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Island Grown Farmers Cooperative (WA) Bow, Washington Species: beef, hogs, goats, and sheep Inspection: USDA-‐inspected Capacity per day: 8-‐10 head beef (or 40 sheep or 20 pigs) Owned by Island Grown Farmers Cooperative (IGFC) IGFC website Detailed case study, with photos: Island Grown Farmers Cooperative Contact: Jim Wieringa, IGFC, (360) 766-‐4273, manager[at]igfcmeats.com Puget Sound Meat Producers Cooperative (WA) Tacoma, Washington Species: beef, pork, sheep and goat Inspection: USDA-‐inspected, Certified Organic by Washington State Department of Agriculture Capacity per day: 10 animal units (AU); 1 beef = 1 AU, 1 hog = 0.6 AU, 1 sheep/goat = 0.44 AU Owned by the Pierce County Conservation District Puget Sound Meat Producers Cooperative website Contact: Perry Schermerhorn, PSMPC, (254) 225-‐2226, psmpc[at]pugetsoundmeat.org
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APPENDIX D: List of meat processor facilities in Idaho 14 M20290-‐P20290-‐V20290
Targhee Brands, Inc.
8149 South 600 East Rexburg 83440 (208)
359-‐2710 Processing
M454-‐P4988-‐V454
Owyhee Meat Company
3408 Industrial Road
Homedale 83628 (208) 337-‐3648
Slaughter, Processing
V226A Independent Meat Co. 3077 Eldridge Twin Falls 83301 (208)
733-‐0980
00226A M
Independent Food Corp. 3077 Eldridge Twin Falls 83301 (208)
733-‐0980 ID Warehouse
M226-‐P4863-‐V226
Independent Meat Company
2072 Orchard Drive East Twin Falls 83301 (208)
733-‐0980 Slaughter, Processing
M11023-‐P11023 VTA, Inc. 758 South
Main Pocatello 83204 (208) 232-‐5559 Processing
M11027-‐V11027
Rammell Valley Pack
7080 N. 3000 W. Tetonia 83452 (208)
456-‐2546 Slaughter, Processing
M11032-‐P11032-‐V11032
Northwest Premium Meats, LLC
137 N. Happy Valley Road Nampa 83687 (208)
466-‐9413 Slaughter, Processing
M11033-‐P11033
Greenfield Custom Meats, Inc.
2965 W. Amity Road Meridian 83642 (208)
888-‐9690 Slaughter, Processing
M11044-‐P11044-‐V11044
University of Idaho Meats Lab
University of Idaho Meats Lab
Moscow 83843 (208) 885-‐6727
Slaughter, Processing
00598 M-‐00598 P
Frontier Trading Co. Highway 95 Eastport 83826 (208)
267-‐3683
V598 Frontier Trading Co. Highway 95 Eastport 83826 (208)
267-‐3683
M11061-‐P11061-‐V11061
Meridian Meat and Sausage
119 East Bower Meridian 83642 (208)
888-‐5588 Processing
M11063-‐P11063-‐V11063
Tri-‐City 1346 N. Hickory Ave. Meridian 83642 (208)
884-‐2600 Processing
M11070-‐P11070-‐V11070
Mickelsen Packing Co.
2011 Riverton Road Blackfoot 83221 (208)
785-‐0860 Slaughter, Processing
M11072 Doug's 907 So. State Shelley 83274 (208) Processing
14 USDA Data by State; Idaho.
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Wholesale Meats
357-‐7281
M45126-‐P45126
Potato Products of Idaho
398 N. Yellowstone Hwy.
Rigby 83442 (208) 745-‐8610 Processing
M866-‐P7698-‐V866
CTI-‐SSI Food Services, LLC
22303 Highway 95 N Wilder 83676 (208)
482-‐7844 Processing
19467 M Ida Cold, Llc 6198 Treasure Valley Way
Nampa 83687 (208) 467-‐4992
ID Warehouse
M11011-‐V11011
Custom Meat Packing Co., Inc.
515 E. 45th Street Boise 83714 (208)
375-‐9424 Slaughter, Processing
M34043-‐P34043
Great American Appetizers, Inc.
216 8th Street North Nampa 83687 (208)
465-‐5111 Processing
V34043A Great American Appetizers
6198 Treasure Valley Way
Nampa 83687 (208) 475-‐1190
M8120-‐P8120-‐V8120
Wood's Meat Processing, Inc.
482169 Highway 95 Sandpoint 83864 (208)
263-‐3077 Slaughter, Processing
M8112-‐P8112-‐V8112
Commons Wholesale Meats
530 West 20th Street Idaho Falls 83402 (208)
522-‐4804 Processing
M44099 Ridley's Family Markets
621 Washington Street S.
Twin Falls 83301 (208) 324-‐4633 Processing
G31557 Walton Feed Inc.
29337 Highway 89 Montpelier 83254 (208)
847-‐3357
M7722-‐P7722-‐V7722
Jones Meat & Food Services, Inc.
423 North Yellowstone Hwy
Rigby 83442 (208) 745-‐6523
Slaughter, Processing
M18535-‐P18535
Big Lost River Meats
410 Pine Street Mackay 83251 (208)
588-‐3085 Processing
M40217-‐P40217 JCNB, Inc. 610 N. Almon,
Suite 135 Moscow 83843 (509) 330-‐8569 Processing
M27440A Valley Beef, Inc. 3051 S. 2000 E. Wendell 83355 (208)
536-‐1700 Processing
M27440 Valley Beef, Inc.
437 W. Avenue B Wendell 83355 (208)
308-‐7050 Slaughter, Processing
M39999-‐P39999
Rite Stuff Foods
2155 S. Lincoln Jerome 83338 (208)
324-‐8410 Processing
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Avenue
M39904-‐P39904
Mountain View Packaging, LLC
3494 South TK Avenue Boise 83705 (208)
344-‐1183 Processing
M18205-‐P18205
Heinz Frozen Food Company
221 Ore-‐Ida Court Pocatello 83202-‐
-‐199 (208) 235-‐4800 Processing
M6076-‐P6076-‐V6076
Glenwood Smoked Turkey
4491 North Haroldsen Drive
Idaho Falls 83401-‐-‐920
(208) 529-‐9851 Processing
M6220-‐P6220-‐V6220
Intermountain Natural, LLC
737 S. Capital Avenue Idaho Falls 83402 (208)
227-‐9000 Processing
M6266-‐P6266-‐V6266
LJD Holdings, Inc.
3491 S. TK Ave. Boise 83705 (208)
344-‐1183 Processing
M34719-‐P34719-‐V34719
Intermountain Natural, LLC
1740 S. Yellowstone Hwy.
Idaho Falls 83402 (208) 227-‐9000 Processing
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APPENDIX E: Resources, Training Resources and Consultants: USDA/NCDA&CS FACILITY GUIDELINES FOR MEAT PROCESSING PLANTS http://www.ncagr.gov/meatpoultry/pdf/Facility%20Guidelines.pdf USDA Food Safety and Inspection services; Small Processors Outreach Support http://www.fsis.usda.gov/wps/portal/fsis/topics/regulatory-‐compliance/haccp/small-‐and-‐very-‐small-‐plant-‐outreach
• Small and Very Small Plants: Small plant owners and operators can use this page to find information about FSIS policies, technical assistance and answers to common questions from small plants across the country.
• Small and Very Small Plant Outreach: FSIS has assembled food safety resources
designed to assist small and very small plants with their HACCP programs.
• Small Plant News: Topics of interest to owners and operators of small meat and poultry plants are covered in this 4-‐page, full-‐color monthly newsletter. Get help, in plain language, translating FSIS rules and regulations into daily operational practices.
• Export Information: Learn what requirements are necessary for exporting your
products to other countries including packaging, labeling and other special conditions.
• FSIS Directives: FSIS Directives contain instructions of an indefinite duration.
• FSIS Notices: FSIS Notices are temporary instructions that are scheduled to expire no later than 1 year from the issuance date
Niche Meat Processor Assistance Network; http://www.nichemeatprocessing.org/ Welcome to the Niche Meat Processor Assistance Network. NMPAN is a network and info hub for people and organizations who want small meat processors to thrive. We offer tools and information for small processors and the farmers, marketers, and meat buyers who depend on them. Job Training Resources: http://www.cfbnj.org/hope/job-‐training-‐programs/meat-‐cutters-‐training-‐program/ The Meat Cutters Training Program (MCTP) is a 12-‐week job-‐skills program in which motivated students are trained for careers in the retail meat cutting industry. Students learn
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meat cutting skills as well as product handling, safety and sanitation standards through hands-‐on and classroom training. Our graduates have 500 hours of Food Service Training Academy (FSTA) kitchen experience, certification in ServSafe Food Sanitation, and approximately 500 hours of MCTP experience. Fuller Consulting http://www.meatchris.com/
• HACCP compliance, Plant Design, General Butchery Consulting. • Facility design -‐ architect advising, site & building plan review, equipment placement
(including electrical and plumbing needs) • Operational Advising -‐ procedural development and training, production layout,
inventory systems, efficiency reviews • Butchery Consulting -‐ whole animal breakdown, producer relations, meat cutter
training, yield analysis, menu development, merchandising, product marketing • USDA compliance -‐ HACCP plan development, writing, implementation, and training
including RTE, cured, and smoked products. • On-‐site reviews of buildings and equipment intended for purchase. • On-‐site consulting with general contractors for new construction or renovation.
Andre' Herrmann Meat Processing Specialist/ Master Butcher/ SausageMaker http://www.meatproconsultant.com/INTRODUCTION.html Swiss Meat Processing Consultant based in California, specializing in all areas of meat processing from livestock to finished product. Specializes in:
• Meat Processing Technology • Product development • Technical services • Management and Management Training • Employee Training
Rocky Mountain Institute of Meat http://www.rockymountaininstituteofmeat.com/ Foodservice and Small Plant Consulting: Specialty Processing HACCP Learn, Understand & apply the Proper Fundamentals of Meat Fabrication and Butchery Basics:
• Sanitation • Standard Operating Procedures • Good Manufacturing Practices • Process Categories and associated HACCP Plans • Professional Purchasing Practices • Product Acquisitions • Foundations of Primal/Sub-‐Primal • Portion Cuts Identification • Acquisitions/Purchasing Cutting/Fabrication • Understand/Practice • Further Processing / Basic Fresh Sausages
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Standard Formulation Benefits
• Hands on learning • Individualized instruction • Industry applicable techniques • Acclaimed industry instructors • High quality education with modest cost • Centrally located state of the art facility
Northern Sun Consulting: http://www.nscfoodsafety.com/index.php
• Food Safety Manager Certification & Re-‐Certification Education • HACCP Training & Certification • On-‐line Classes • Live Classes in Minnesota • Re-‐Certification Training • Customized Training • Home Food Safety, SQF Consulting, • All programs are professionally developed and maintained. • Food Safety System Development, • critical training for employees, duties of Certified Food Safety Manager.
*** Thomas J Hoffman Consulting: Mr. Hoffman spent 35 years with the USDA FSIS with knowledge of all systems.
• International HACCP Alliance Certified HACCP Training Teaching basic and advanced HACCP courses in SSOP/HACCP.
• Prepare SSOP plans/HACCP plans/SPS programs/Generic E coli, Salmonella, Listeria sampling programs/GMP’s/Pre-‐requisite programs, etc.
Regulatory Issues
• SSOP/HACCP system failures. • Inspection issues. • Appeal of non-‐compliance records (N.R’s). • Conducting independent third party SSOP/HACCP audits. • Responding to FSIS 3 day and 30 day letters. • Notices of Intended Enforcement Action (NOIE). • Notices of Suspension. • Withdrawal of Inspection Services. • Incident Investigation Team Reviews. • EIAO Food Safety Assessments. • Criminal, civil and administrative cases. • Expert witness. • Product recalls.
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International Performing audits of foreign countries inspection and enforcement programs Sanitary and Phyto-‐Sanitary (SPS) monitoring and enforcement systems and practices. Conducting foreign equivalency reviews. Development of inspection and enforcement programs for state and foreign governments. Food Safety Audits Sanitation Audits. HACCP Verification and Validation Audits. HACCP Plan Audits and Re-‐assessments. Audit preparation for all major auditing firms and USDA/FSIS Decontamination Plans Specialize in designing and implementing re-‐inspection and de-‐contamination programs for rodent infestations. Personal Safety Teaching courses on personal safety for government regulators Global Food Safety Initiative (GFSI) Preparation for SQF, BRC, Primus GFS, and ISO 22000 audits. Design bio-‐terrorism programs. From: Protecting Your Farm or Ranch: A guide for Direct Farm Marketing in Idaho http://www.ruralroots.org/resources/directmarketing/handbook/41066-‐%20Rural%20Roots%20Booklet%20Chapter%204.pdf
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BIBLIOGRAPHY:
American Lamb Board. 2013. 2013 Industry Update. http://www.sheepusa.org/user_files/file_1138.pdf Arcata Economic Development Corporation. http://aedc1.org. Beef Checkoff-‐Retail Marketing. Natural/Organic Beef Category Reports. http://www.beefretail.org/naturalorganiccategory.aspx Gwin, L., C. Durham, J. Miller and A. Colonna. 2012. Understanding Markets for Grass-‐fed Beef: Taste, Price and Purchase Preferences. J. of Food Distribution Research, 43:2. 91-‐105. Gwin, L, A. Thiboumery, and R. Stillman. 2013. Local Meat and Poultry Processing: The Importance of Business Commitments for Long-‐Term Viability, ERR-‐150, U.S. Department of Agriculture, Economic Research Service. Holcomb, R., K. Flynn and P. Kenkel (2012). Feasibility Template for a Small Multi-‐Species Meat Processing Plant (Excel program). Oklahoma State University. Martinez, Steve, et al. Local Food Systems: Concepts, Impacts, and Issues, ERR 97, U.S. Department of Agriculture, Economic Research Service, May 2010. Niche Meats Processing Assistance Network. Mobile Slaughter Unit Case Studies. http://www.extension.org/pages/33160/mobile-‐slaughter-‐unit-‐case-‐studies Organic Trade Association. Consumer-driven U.S. organic market surpasses $31 billion in 2011. April 23, 2012. http://www.organicnewsroom.com/2012/04/us_consumerdriven_organic_mark.html Thiboumery, A. 2009. Guide to Designing a Small Meat Plant. Iowa State University Extension. http://www.extension.iastate.edu/publications/pm2077.pdf U.S. Dept. of Agriculture, 2007 Census of Agriculture. Volume 1, Chapter 2: County Level Data. http://www.agcensus.usda.gov/Publications/2007/Full_Report/ U.S. Dept. of Agriculture, Rural Development, Value-‐Added Producer Grants. http://www.rurdev.usda.gov/BCP_VAPG.html http://www.mobilemeatprocessing.com/ Presentation Mobile Slaughter Units: Reports from the Field and Future Directions http://www.extension.org/pages/33160/mobile-‐slaughter-‐unit-‐case-‐studies http://www.law.cornell.edu/uscode/text/21/chapter-‐12
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http://www.extension.org/mediawiki/files/d/d7/LocalMeatforLocalMeals_Puget_Sound_Meat_Coop.pdf http://www.extension.org/pages/15739/island-‐grown-‐farmers-‐cooperative Selected media coverage "The Mobile Meat Processing Story" on CRCC TV-‐22 "Slaughterhouse on Wheels Aids "Locavore" Movement" Seattle Times, 8-‐11-‐09 Additional case study (2012): more about how IGFC works Consumer research commissioned by the National Pork Board (http://www.porkretail.org/filelibrary/Retail/NichePorkSurveySummary.pdf) http://www.agri.idaho.gov/Categories/Marketing/Documents/English%20Final%202011%20-‐%20for%20emailing.pdf Kennedy/Jenks Consultants. 2010. “Energy Use in Wastewater Treatment in the Food and Beverage Industry.” Two Site Modular Meat Processing Illustration of Flow From Slaughter Unit to Cut & Wrap Unit (courtesy of Kathryn Quanbeck) PSMPC Their decision rested in large part on a feasibility study, "An Assessment of Demand for a Mobile Slaughtering Unit in Pierce, King, Kitsap and Thurston Counties, for the Puget Sound Meat Producers Cooperative", prepared by Georgine Yorgey, then an MPA student at University of Washington.
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