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Livestock Processing/Packing Feasibility Analysis Update

Livestock Processing/Packing Feasibility Analysis Update. Kynda Curtis Assistant Professor & State Specialist University of Nevada, Reno. Introduction . Local Livestock Marketing Group – Gardnerville, NV USDA-RD Rural Business Enterprise Grant (RBEG) Feasibility Analysis Business Plan

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Livestock Processing/Packing Feasibility Analysis Update

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  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. 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 Slaughtering/Processing Unit Preferences 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. 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 Respondent Location

  21. 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 Meat Product Consumption

  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. 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 Target Consumer – Locally Grown

  32. 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 Target Consumer – Grass-fed

  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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