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Livestock Processing/Packing Feasibility Analysis Update Kynda Curtis Assistant Professor & State Specialist University of Nevada, Reno.

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Presentation on theme: "Livestock Processing/Packing Feasibility Analysis Update Kynda Curtis Assistant Professor & State Specialist University of Nevada, Reno."— Presentation transcript:

1 Livestock Processing/Packing Feasibility Analysis Update Kynda Curtis Assistant Professor & State Specialist University of Nevada, Reno

2 Introduction Local Livestock Marketing Group – Gardnerville, NV USDA-RD Rural Business Enterprise Grant (RBEG) –Feasibility Analysis –Business Plan –$120,638 Drs. Kynda Curtis & Tom Harris, Steve Lewis

3 Feasibility Components Components –Producer Interest Survey Supply, location, other –Consumer Survey Pricing, demand, cuts, characteristics, other –Business Plan Financials Profitable business??

4 Producer Interest Survey Surveyed 800 agricultural producers in 5 NV & 2 CA counties 153 livestock producer responses –95% owner/operators –73% in business 21 or more years –12% in business 11-20 years Mostly producing angus grass-fed or grass/grain mix Selling mostly yearlings (70%), or fat (20%)

5 Farm/Ranch Locations 27.5% Lahontan 16.3% Carson Valley 13.1% Mason Valley 11.8% Smith Valley 9.8% Washoe Valley 3.3% Bridgeport 2.0% Dayton 1.3% Antelope Valley 0.7% Truckee Meadows 13.7% Other –These respondents either did not specify their location or had a farm/ranch in more than one location

6 Current Production Figures Beef/cattle: 39,745 head/year Sheep/lamb: 8,983 head/year Goat: 635 head/year Pork: 166 head/year Ostrich: 65 head/year

7 Calving by Season Beef Calving by Season –82% spring –16% fall –2% winter Sheep Calving by Season –60% spring –36% winter –4% fall

8 Current Marketing 70% of animals sold as yearlings (7,512) 20% of animals fed and sold fat (2,106) 2% of animals sold as culls or weaned (200) 1% of animals direct marketed to consumer (153) 0.5% of animals packaged and sold as small cuts (52) <1% of animals sold at auction (15) 6% of animals sold using another method (674) –Varies or did not specify method

9 Direct Marketing Methods 58% Do not use direct marketing or did not specify a method 26% Use word-of-mouth as a direct marketing technique 5% Market at farmer's markets 4% Market using the Internet or mail 7% Use other methods: –Booths at fairs, rodeos, etc –Advertise in trade magazines –Market at auctions or through a broker

10 Slaughtering/Processing Unit Preferences –Beef/cattle: 3,243,750 lbs At 800 lbs/head = 3,605 cattle –Sheep/lamb: 1,065,600 lbs At 150 lbs/head = 5,328 sheep –Goat: 23,000 lbs At 200 lbs/head = 115 goats –Pork: 45,400 lbs At 200 lbs/head = 227 pigs –Ostrich: 6,000 lbs At 250 lbs/head = 24 ostriches –Poultry: 1,000 lbs At 4 lbs/head = 250 chickens If a local slaughtering unit was available for use, respondents would want to slaughter and/or process annually

11 Slaughtering/Processing Unit Preferences If a USDA-inspected slaughter facility was available: –68% of respondents would like it to be stationary –26% of respondents would like it to be mobile –6% of respondents have no preference between stationary or mobile

12 Slaughtering/Processing Unit Preferences A mobile slaughter unit may require holding animals in a corral –67% of respondents do not have on-site corral facilities –26% of respondents do have an on-site corral –7% of respondents were not sure

13 Slaughtering/Processing Unit Preferences A mobile slaughter unit may also require handling offal (animal waste) –93% of respondents had the capacity to handle waste on-site –6% of respondents do not have the capacity to handle waste on- site –<1% of respondents were unsure

14 Slaughtering/Processing Unit Preferences If a cooperative or other business entity of local producers was formed to process and/or market livestock, respondents would like the entity to be able to perform duties: –28% Slaughtering –26% Packaging and Wrapping –25% Aging –22% Marketing

15 Investment Starting a new business requires start-up capital. If a producer business entity were shown to be potentially profitable: –61% of respondents would be interested in investing in the entity –39% of respondents would not be interested in investment

16 Investment Respondents were asked to give an idea of the range of their potential investment: –8% would not invest money –45% would invest between $1-$2,500 –26% would invest between $2,501-$5,000 –16% would invest more than $5,000 –4% would be willing to lend their expertise to the entity Various processing expertise (cutting, wrapping, skinning, etc) and expertise with unique livestock

17 Producer Conclusions 60% participation (willing to invest)- Good News! Processing/packing capacity –2163 annual cattle/180 month –3196 annual sheep/266 month –69 annual goat/5 month –136 annual pork/11 month 91 potential producer members $227,500 in investment conservative (91 X $2500) $375,500 in investment possible (40 X $5000, 51 x $2500)

18 Potential Outcomes Two scenarios –Mobile slaughter with stationary hanging/processing/packing (if possible for # animals) –Stationary with all facilities, incl. corrals Location of processing/packing plant in Silver Springs

19 Consumer Survey Overview Consumer demand survey –7200 Nevada residents surveyed during summer 2006 –538 valid responses from across the state Objective: to evaluate preferences for –Meats (beef, lamb, pork) –Cuts –Special attributes (locally grown & lean (grass- fed)) –Pricing

20 Respondent Location Respondents represented all regions of Nevada, but slight majority were from Southern Nevada –56% Southern Nevada (Las Vegas, Henderson, etc.) –40% Northern Nevada (Reno, Carson City, etc.) –2% Eastern Nevada (Elko, Winnemucca, etc.) –2% did not specify

21 Meat Product Consumption Respondents were asked how many times their household eats meat each week –50% eat meat 1 to 5 times/week –32% eat meat 5 to 10 times/week –14% eat meat more than 10 times/week –4% Do not eat meat on a regular basis

22 Meat Purchasing Respondents were asked to rank the stores/outlets they purchase meat from according to which they visit most: Majority of respondents who chose "other" specified warehouse stores, such as Costco

23 Meat Consumption by Type Asked to report what quantities of beef, pork, and lamb their household has consumed in the past 30 days, by cut type –This gives us idea of how much meat is being consumed locally, and what cuts are preferred Respondents consume more beef than pork and lamb by a wide margin –Average beef consumption/month: 16 lbs/household –Average pork consumption/month: 7 lbs/household –Average lamb consumption/month: <1 lb/household (average household size: 2.5 people)

24 Beef Consumption per Household

25 Pork Consumption per Household

26 Lamb Consumption per Household

27 Meat attributes Respondents were asked to rank the importance of a variety of meat attributes Most important: –Freshness, Taste/Flavor, Safety, Tenderness, Leanness, Price Important : –Cut Type, Humane Treatment of Animal, Environmentally Friendly, Marbling, Naturally Raised, Feed Type, Packaging Less important: –Organic, Muscle Texture, Sale/Promotion, Origin of Product, Brand Name

28 Pricing Respondents were asked how much they usually pay per pound for several different cuts of meat, and what quantity (in oz.) they typically purchase of the cuts

29 Support For Local Meats Percentage of respondents who would pay at least some premium for labeled product.

30 Pricing Consumer willingness to pay for labeled meat types with differing features ($/lb)

31 Target Consumer – Locally Grown NY Steak –Younger age adults –Male –Children in household –Fully employed Ground Beef –Younger age levels –Male –Higher education –Higher income levels –Live in northern Nevada

32 Target Consumer – Grass-fed NY Steak –Younger age adults –Higher education –Minority group –Live in northern Nevada Ground Beef –Younger age levels –Male –No children –Part-time employed –Live in northern Nevada

33 Consumer Conclusions Respondents primarily consuming beef products 10% primarily shop at specialty stores, farmers markets – target market Have definite preferences for different cuts 65-86% willing to pay a premium for labeled locally grown and grass-fed –Range from $.03/lb for pork chops to $4.33/lb for NY steak

34 Final Study will be completed by end December 2006 Business Plan & Recommendations Building/Mobile financials –Currently under construction Producers may consider applying for start-up funding

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