Economics
Enterprise-level economic considerations
· Analytical models
· Capital costs
· Operating costs
·
1. Analytical models
· Marianas Slaughterhouse
Feasibility Study Illustrative Analysis spreadsheet:
§ This excel-based planning tool
was developed by BES specifically for this project. The spreadsheet provides a broad range of user-customizable inputs regarding
operations and economics aspects of a potential slaughterhouse and meat business to be based in the islands.
· Click on the following link to download the excel file: http://www.agenergyenterprises.com/feasibility/MFS_illustrative_analysis_v8b.xls
§ The spreadsheet is designed to easily evaluate multiple scenarios (each scenario consists of a different mix of animal types and/or
# of head to be processed per day).
· Click on the following link to download
the accompanying notes and explanatory information to the spreadsheet: http://www.agenergyenterprises.com/feasibility/notes_to_analyses.pdf
§ The model includes preliminary estimates of key assumptions as discussed below. The assumptions can be modified or updated by
the user as desired.
§ The model was constructed so that key inputs and outputs are
on a single page and can be viewed concurrently with the proforma on a widescreen monitor.
· Feasibility Analysis for a
§ This excel-based planning tool,
based on the Thundering Hooves mobile processing unit in Washington State, lets you test the feasibility of owning and operating a
similar unit yourself, based on your data: # of head, days/week used, yield assumptions, pricing, and other details. The program is
set up for the MPU to work with a local processor to cut and wrap the meat.
§ This
tool was created by Kathleen Painter, an analyst at the
§ AES recommends that the excel file be saved to the hard drive and opened and operated within Microsoft Excel, rather than trying to
operate the spreadsheet within a browser window. The planning tool can be obtained from this site: http://www.extension.org/pages/Feasibility_Analysis_for_a_Mobile_Slaughter_Unit
·
§ Although this is not a user-interactive model
and the study was undertaken 14 years ago, the report provides useful insights into the potential feasibility of a slaughterhouse
business in the
§ Click here to download a copy of the report. (Note:
the pdf document is 96 pages long and a 5.2MB file, so it may take additional time to download.)
2. Capital costs
Factors to consider include:
· site
§ land
§ site preparation
§ utilities to the site/building
§ liquid waste management
§ solid waste management
§ parking, fencing, other
· slaughterhouse
§ animal unloading & cull re-loading
§ animal holding pens
§ building
§ equipment
§ instrumentation
& controls
§ plumbing
§ electrical
§ air conditioning & ventilation
§ water heater
§ cold storage
§ back-up generator
§ office
equipment
§ cleaning equipment
· processing
facility
§ building
§ equipment
§ instrumentation & controls
§ plumbing
§ electrical
§ air conditioning & ventilation
§ cold storage
§ back-up generator
§ office
equipment
§ cleaning equipment
· working
capital
· reductions in capital costs from public sector support
§ for example, grant funds from federal, Guam/CNMI government, or local municipal agencies.
3. Operating
costs
Factors to consider include:
· Fixed operating expenses
§ Labor
· general manager
· butcher
· assistant
§ USDA inspection
· The USDA
Food Safety and Inspection Service is required by law to provide an inspector (at no cost to the slaughter/meat business) to inspect
the slaughtering operation. However, overtime labor costs for the inspector would have to be borne by the business. According
to the Federal Register (April 12, 2011) FSIS’ overtime rates for 2011 are approximately $67/hour: http://www.federalregister.gov/articles/2011/04/12/2011-8699/new-formulas-for-calculating-the-basetime-overtime-holiday-and-laboratory-services-rates-rate#p-12
§ Utilities
· water
· electricity
· sewer
· solid waste management
§ Other
· Cleaning solutions and supplies
· office-related
· maintenance
· property
taxes
· advertizing and marketing
· General and administrative (G&A) expenses
· Variable operating expenses
§ Cost of animals
· Since, as of January 2011, there are no formal animal markets in
the
§ Wrapping and packaging
· These
costs reflect the type and extent of packaging to be used by the facility for the target products.
§ Transport of products to markets
· For the islands, this will vary significantly between
road transport to on-island markets vs. air/sea transport to other islands.
4. Proforma and sensitivity
analyses on key assumptions