Feasibility, planning and purchase of Mobile Processing Unit (MPU) for Scaling up Free Range Poultry Meat Processing for High Volume Retail Market

Feasibility, planning and purchase of Mobile Processing Unit (MPU) for Scaling up Free Range Poultry Meat Processing for High Volume Retail Market

Summary

The demand for locally produced food in the United States continues to grow and a group of poultry farms in Eastern Colorado and Northwest Kansas, who are members of the High Plains Food Co-op, see an opportunity to diversify their farm operations and create opportunities for second family members to return to the farm or provide beginning farmers an economical entrance into farming. This can happen by supplying the demand for locally grown poultry in Eastern Colorado and Western Kansas including the City of Denver, total population 6 million with 85% located in the Colorado Urban Corridor.

Pasture poultry production is a sustainable farming system that has been adopted by many small-scale farmers in other areas of the United States and can be replicated in the High Plains Region by addressing processing barriers.  In the High Plains Region, pasture poultry farmers are at a significant disadvantage when it comes to addressing consumer demand for their locally produced chickens because birds processed on-farm do not qualify for USDA Inspected Status and there are only a handful of USDA facilities in the entire 600 mile region between Denver and Kansas City that process poultry. For these reasons, pasture poultry sales for High Plains Farms is limited to direct household consumers and farmers markets and there is no access to volume markets that can make poultry farming viable in the Region.  To address these barriers, this project is expected to complete the feasibility, planning and purchase of a Mobile Processing Unit (MPU), and develop an implementation plan to process chicken for the original group of farms in 2015 and scale-up and expand processing to other High Plains Food Co-op producers by 2016.   MPU’s are an innovatative processing approach being used in other parts of the Country and this project will be a blueprint for laying out the necessary steps in solving local permitting, labor, meat inspection, water quality, wastewater treatment and disposal challenges.

Objectives/Performance Targets

The goals of this project were to: 1) organize the project, 2) estimate the start-up and operating costs, 3) determine feasibility, 4) site determination and permitting, 5) equipment purchasing and fabrication, 6) implementation and startup and 7) develop a 2015 – 2016 plan to scale-up processing.

Accomplishments/Milestones

Project Organizing

Project startup was completed with grant administration and contractor agreements being signed, the preparations of a project work plan/timeline and the formation of a business structure for the MPU. High Plains Poultry was selected as the official name for the farms investing startup capital towards the project, a bank account was established and business formation documents completed. Regular project update conference calls amongst the project partners began in May and will continue through the project’s completion.

Estimate Operating, Capital and Startup costs

Early iterations of projections of capital, startup and basic operating costs were developed then revisited, modified, and adjusted month by month as additional information was obtained. These projections are being updated frequently as new or different cost information is identified and expenditures are being made.   A start-up budget to equip, purchase and fabricate the MPU was established, which determined the investment capital needed. In addition an informational meeting was held with a banking group to discuss the concept, to review the project and gauge their interest in participating in the future.

Feasibility

Overall feasibility of the venture was considered from several different fronts. Attempting poultry processing in an operating beef processing facility, turned out not to be feasible from a logistics and scheduling standpoint. Taking poultry to another processing plant involving two – 500 mile round trips is not feasible from a time and mileage cost standpoint. When compared with a stand-alone building, the mobile processing unit (MPU) offers less capital cost and fewer site preparation requirements, while being moveable providing a temporary fix to the processing barrier in multiple locations within the High Plains Region. Construction time should also be less affording a quicker turnaround to become operational. While these advantages are expected to contribute to feasibility it is still early in the project’s development. The feasibility of various site locations was also considered. It was decided to proceed with a site selection in Northwest Kansas where the highest number of birds could be produced immediately, and local support and labor resources are in place.

Based on an early iteration for year one operational costs and farm production numbers, the price per bird for MPU processing services was projected to be $1 to $2 less than what is currently costing producers to share processing space or travel.   Production costs will be adjusted month to month as efficiencies improve in processing.

Site determination and permitting

Identifying the first location for the MPU was considered and several scenarios were evaluated. Those options included purchasing land for locating the MPU, parking it on a farm or co-locating with or near a current processing plant. Several considerations were taken into account including, water and electric supply, wastewater and eviscerate disposal and the impact of processing on a site. A final site for a startup location has been proposed and agreements are currently being negotiated.

For permitting, other MPU owners have been contacted or their reports reviewed, agencies have been contacted, permitting requirements reviewed and a process defined for obtaining the necessary permits and/or agreements. Agreements for waste water disposal, zoning approval, eviscerate disposal, potable water supply and county health department approval are proposed and are currently being completed.

Equipment purchasing and fabrication

A rough out design for the MPU was prepared and reviewed. A trailer, construction materials, refrigeration unit and equipment were purchased and unit fabrication and construction initiated. A number of design changes have occurred and a number of construction challenges have been addressed. MPU unit fabrication and construction is approximately 50% complete.

Implementation and Startup

For safety plans required for startup, other MPU owners have been contacted or their reports reviewed, agencies have been contacted, USDA requirements reviewed and a process defined for obtaining the necessary approvals, permits or certificates. The preparations of the safety plans required are in process. For example, initial drafts of the HACCP (Hazard Analysis and Critical Control Point), SOP (Standard Operating Procedures) and SSOP (Sanitation Standard Operating Procedures) plans have been prepared for review and a USDA inspection permit application has been drafted.   These plans and application are expected to be submitted for USDA approval by the spring of 2015.

Scale up plan

The primary result for this project is to increase production, processing and on-farm revenue for poultry producers to expand into wholesale and institutional markets. Hence, chickens were grown for processing this fall but delays in construction resulted in these chickens being processed elsewhere. Currently, more chickens are being grown for processing during the spring of 2015. If the project remains on schedule and the MPU works as planned, this objective will be met by July 2015 with a plan in place to expand production over the next 18 months.

Impacts and Contributions/Outcomes

The outcomes and final impacts of this project will benefit High Plain’s poultry producers by providing:

1. Access to a USDA inspected poultry processing facility.
2. Feasibility data from this and other MPU processing projects
3. A summary of solutions addressing the complicated challenges of starting a MPU.
4. An implementation plan to expand processing.

Collaborators: