Is it profitable to become a meat packer or processor?

[shorty]

If you already had facilities and equipment that would pass federal inspection it could be profitable, but if you have to start with all new facilities and equipment the cost would probably eat up the profits for quite awhile.

 

[OhioRiver]

I DO LIKE THE NOTION OF THE USDA APPROVED MOBILE UNIT FOR SURE.

ANYONE HAVE ANY IDEAS ON WHAT START UP COSTS ON THAT WOULD BE AND WHERE I WOULD GET TRAINING/AND OR EXPERIENCE IN CUTTING AND PREPARING

If you already had facilities and equipment that would pass federal inspection it could be profitable, but if you have to start with all new facilities and equipment the cost would probably eat up the profits for quite awhile.

 

[MikeC]

WHERE I WOULD GET TRAINING/AND OR EXPERIENCE IN CUTTING AND PREPARING

Take a Meat Science course at your local Land Grant University.

 

[Rich]

I'll do you one better than that, Just get a job working for a mom and pop's slaughterhouse. One where you will get experience at the kill floor and with the processing. There is alot to learn and you will also find out just how hard of work it is too. Not for the weak of arm or stomach by no means on that kill floor. Especially for a one man band.

Last time I seen the on farm deal was a program I watched on tv. The guy had a dooly pickup and pulled a completely enclosed trailer. He rode out into the pen on the tractor with the farmer and shot the animal in the pen. I am going to assume this animal was a bit nutty for doing it this way. Then the farmer brought the steer to the back of the trailer with his loader tractor and the butcher' took over from there.

Now, to make the meat usda approved for sale to the public, I am pretty sure you are going to have to have an inspector on site. Little fuzzy on memory there. Otherwise, it's just a mobile unit for personal slaughter beef where you are merely profiding a service for a customer and he is getting his own product back. Then you will probably be open to inspections of your equipment, how and what process you do things so there is minimal to zero contamination and most importantly, your cleanup process.

I know the fella I worked for had a gal that came through. I think there were 4 different inspectors that rotated through a set of slaughterhouses and processing shops at different times and she would always find at least one small thing that needed done. If it wasn't something that needed paint, it was the way I marked the beef "Custom, not for sale" on the carcass and it was smeared a little bit and it had to be crystal clear to read.

You are going to enter into an industry that has some people that inspect that will nitpick even when they do get to know you on a first name basis. Not like that is entirely a bad thing. The public does want a safe place to have thier meat handled. It will just make extra leg work for you possibly that I wanted you to be aware of.

You'll learn 10 times more faster working at a joint then trying to learn it all at some meat schools. I am not saying do not attend the classes at all. They will bring you up to speed about modern practices and new ideas and clear the air about alot of rulings but for sure, get a job working in one for some time. It will take more than a year to get your feet good and wet and your cherry popped.

Good Luck. It's a dying practice. So much is commerical anymore it seems like it's harder and harder to find local butcher's to custom slaughter beef.

Don't limit to yourself to that either. To date I've helped with Beef, Swine, Sheep, Deer and Ostrich. That was one to tell a few tales about.

Rich

 

[Bluestem]

I DO LIKE THE NOTION OF THE USDA APPROVED MOBILE UNIT FOR SURE.

ANYONE HAVE ANY IDEAS ON WHAT START UP COSTS ON THAT WOULD BE AND WHERE I WOULD GET TRAINING/AND OR EXPERIENCE IN CUTTING AND PREPARING

If you already had facilities and equipment that would pass federal inspection it could be profitable, but if you have to start with all new facilities and equipment the cost would probably eat up the profits for quite awhile.

The USDA mobile unit- about $150,000. My son started out at the local grocery store processing boxed beef. He just graduated from college with a B.S. degree in meat science. Worked in the meat lab while there. They would process 5-15 cows per day. Plus pigs,goats and sheep. Had his graduation picture taken in the cooler.

 

[Jogeephus]

I talked to someone a couple of weeks ago that's building his own processing facility in south Georgia. He's running 600 cows plus several hundred stockers. He said it was going to cost $1.5 million and would be USDA approved. I assume the numbers looked good enough for him to jump in like that. Of course, he's selling grassfed, certified humane, ground beef at $6 per pound. :shock:

If you are referring to the one I'm thinking of, and all the numbers sound like you are, the total investment also includes a grocery store to sell the meat along with everything else a grocer would sell. The federal inspector and I talked about his setup and the inspector was really excited that this fella is going this route. His business plan sounds sound and I wish him the best of luck and hope he can pull it off cause it is similar to a dream I have. I would much prefer to buy local and think outfits like this are the solution to a lot of problems with the rural economies.

 

[sanchez]

That's about the same as asking if it's viable to own a Subway franchise. It can be, anything can be profitable if you find the right way of doing it.

 

[somn]

I talked to someone a couple of weeks ago that's building his own processing facility in south Georgia. He's running 600 cows plus several hundred stockers. He said it was going to cost $1.5 million and would be USDA approved. I assume the numbers looked good enough for him to jump in like that. Of course, he's selling grassfed, certified humane, ground beef at $6 per pound. :shock:

That is certainly a huge investment. It will take 375,000# of ground beef to pay for that and that is before interest and operating expenses. I wish them luck. With the current prices and the way most households money is being already stretched so thin I just can't see to many people paying $6.00 per # for ground beef. To me anytime someone is advertising beef as certified humane they are only helping to further the cause of PETA.

 

[ETF]

Jo, the gentleman I taked to was Will Harris of White Oak Pastures in Bluffton, GA.
http://www.whiteoakpastures.com/

I'm looking for a good local processor to use for a couple of steers next year (and hopefully many more in the years to come). He said that he is going to take in outside beef to process but hadn't decided on pricing. Do you know of any good alternatives in the area?

Like I said, I don't know anything about what the $1.5 million covers. It would make sense to include a retail store. Just back of the envelope, it sounds like he will raise about 1,000 head a year himself, so that's roughly 400,000 pounds per year if it's all made into hamburger. Even considering operating and carrying costs, that alone would have a payback period of 1 to 2 years without considering outside processing revenue, retail sales, sales of steaks at higher prices than hamburger, etc. That's an impressive return. Of course, if the country goes into recession his market could shrink to nothing - nothing in business is risk free.

 

[Brandonm2]

A thousand head is a big beef herd; but if you slaughter 4 days a week times 50 weeks a year that would only be 5 head per working day. At two sides per steer, that is only 40 whole ribeyes and 40 whole sirloins per week. A modest steakhouse or grocery store would use more product than that.

IF you figure that his thousand finished head would be worth ~$1000 a head through NORMAL marketing channels or $1000000 a year. To pay for building the plant he needs an additional $150,000 over that. A simple crew of 6 at $10/hour is another $120,000 in wages alone. Tack on another 20% in employer FICA and insurance $24,000. Then there are operating costs like water, waste water treatment, offall disposal, electricity to run the coolers, saws, lights, etc. I am guessing something ABOVE $10,000 a month (and I am probably waaay low) . Throw in mass marketing costs....$50,000? or $150,000? (I worked for a successful political campaign once that burned up $150,000 on tv, radio, mailouts, and newspaper ads real quick) and a $100,000 return to management and $75,000 return too capital. Then on the low end he needs $1639,000 a year in sales MINIMUM from those 1000 calves too make it pay. At ~450 lbs of meat per 1200 carcass and $80 per hide (and finding somebody too pay that for just 20 hides a week will be difficult) I figure he needs too average $3.46 per pound of sold product.

http://ars.sdstate.edu/MeatSci/May99-1.htm

 

[Jogeephus]

Jo, the gentleman I taked to was Will Harris of White Oak Pastures in Bluffton, GA.
http://www.whiteoakpastures.com/

I'm looking for a good local processor to use for a couple of steers next year (and hopefully many more in the years to come). He said that he is going to take in outside beef to process but hadn't decided on pricing. Do you know of any good alternatives in the area?

Like I said, I don't know anything about what the $1.5 million covers. It would make sense to include a retail store. Just back of the envelope, it sounds like he will raise about 1,000 head a year himself, so that's roughly 400,000 pounds per year if it's all made into hamburger. Even considering operating and carrying costs, that alone would have a payback period of 1 to 2 years without considering outside processing revenue, retail sales, sales of steaks at higher prices than hamburger, etc. That's an impressive return. Of course, if the country goes into recession his market could shrink to nothing - nothing in business is risk free.

Different operation. My understanding is the White Oak has been successful in getting their feet in the door with Publix and maybe some more grocery chains. Also think he was contracting this work out to others which - in my opinion - left him vunerable being his business has taken off so. In light of this, his investment in his own processing plant is a smart move. From my experience with Walmart, if you get your foot in the door with a chain that can move mountains of product - you better be able to deliver and deliver in a big way.

As you say, there is risk in anything but I think the market is ripe for more business like this. People are wanting to know where their food comes from. The fella the inspector was talking about was going this route. He was going to raise and butcher his own cattle and pigs and then sell it in his own store. Haven't visited his operation yet but am told it is nice.

 

[donnaIL]

-Check with your extension office...here in IL it is illegal to kill on your property..but you can get some kind of permit/license to sell your beef by the lb if it is processed at a USDA processing center. The price is very reasonable (under $100).

I really don't understand how government can tell you what you can do with your stock.
.. but that was the info passed at a recent educational seminar I went to.

Gets me that you can kill wild animals (deer&turkey) but not your own personal property, not that I think people alway follow the law anyway.

Donna

 

[Medic24]

I dare any regulator to come on to my farm and tell me what I can or cannot do with my own beef, as I am not selling it to the general public, it's my business. Right? RIGHT!

As far as starting your own prosessing plant, I might add a word here..................We have a close-by slaughter house that I wish I would not be liable for slander if I mentioned the name, that does little local business...............why? bad reputation for return on custom processing.............seems the orders often come back kinda light of the premium cuts on a regular basis, not to mention they ignore requests for certain cuts.

I found out the hard way after they asked to purchase one of my cull cows.............I unloaded it, and started dickering for the price, and even after we couldn't agree on a fair price.........as they were trying to get this cow almost free, the guy inside shot the cow anyway while we were still talking over whether I was even going to let them have it....he did a poor job of it , and I had shoot it to put it down. I was so mad, that I made sure i left with my few dollars offered before I decided to say or do something I would regret. They gave me ten pounds of bagged sausage to make up for the 'mistake and confusion'..it got splattered in the parking lot on my way out. Their name got splattered all over the area shortly there after.... along with several other not so satified customers.

So......the point of the story? Keep up a good reputation......trust me...............my word spread around over the past few years or so, no doubt has cost them a sizable amount of business. :cboy: