Budget Proportion Question

Sugar Mountain Farm Butcher Shop in Progress

On another post Kate in Woodstock wrote:

Hi Walter,

Thanks so much for making your venture accessible to the public… It is because of people like you that progress in sustainable farming and homesteading can be made.

A question for you- You’ve stated that your 1,300sqft facility will cost you approximately $150,000 for both the building and equipping of the shop. Could you off-hand provide me with a breakdown of that figure? I’m interested to know how much investment is needed in building supplies versus processing equipment/tools.

Another question, if you don’t mind- Does the USDA provide any literature about space requirements associated with maximum animal capacity for the facility, and if so could you share the link? Thanks again for your efforts!

Woodstock, VT

I’ll be doing a post some time about the costs break down but here are some really rough numbers. The proportions come out something like this:

  • Hard Construction: ~32%
  • Outside Construction: 8%
  • Moveable Equipment: ~40%
  • Fixed Equipment: ~13%
  • Tools: 5%
  • Misc: 2%

This means that the actual building should come in around $90,000 or so with equipment making up about $60,000. Since I originally made my budget costs have gone up a bit plus I decided to buy a more expensive dehairer so our equipment budget may come in closer to $80,000 by the time we open.

Realize we have some special considerations that keep our budget lower than most places that hire everything done because we have:

  • No cost for land since we already own the land on our farm,
  • No costs for bank financing, closing fees, points, etc since we financed through our own cash flow, CSA Pre-Buys and loans from a number of individuals,
  • No cost for feasibility studies, consultants, architects, construction engineering & design as I do all that,
  • No cost for labor since we’re doing all the work ourselves,
  • No cost for most of the tools since we already owned them and
  • Minimal permitting costs since we’re on-farm and only doing processing for our farm.

There were a few things we hired out such as placing the transformer on top of the 40′ high utility power pole (but we did do the 340′ of underground electric and the pedestal ourselves), septic design (required to be hired out by state law), propane hookup (regulatory requirement) and I’ll have a refrigeration technician working with us (again a legal requirement and a special tool for filling). But virtually all of the other work we do ourselves. Labor is a large part of cost of building a facility. Doing it ourselves makes it more affordable which keeps down the debt load and actually makes the project happen. It also keeps us busy, off the streets and out of trouble. Idle hands and all that…

Lastly, realize that this is not final end all and be all for what the butcher shop will look like. The first step is simply bringing butchering on-farm and under our control. We actually built more than we need for that. The shell of the facility is big enough to allow for future expansion. One of the most common complaints I hear is that the initial buildings didn’t allow for expansion or weren’t big enough.

When we add slaughter we’ll only use a bit less than 50% of the 1,300 sq-ft facility. This will consist of about half of Admin, Abattoir and the Chiller. This works since we do all-in-all-out processing. Virtually everything coming in from the farm each week moves out to the stores and restaurants immediately. Only a tiny bit goes into our chest freezer for later sales. We keep our stock out in our fields rather than in the freezer. Think of it as Just-In-Time-Farming.

In subsequent years, as money and time allows, we will finish off the rest of the building and shift cutting into the more spacious cutting room. At some point we’ll sub-divide the chiller to allow space for aging beef. Over time we will add the 27°F super cooler, the blast freezer, commercial kitchen, brine room and the smoker. Then will come the warm cure rooms for some specialty meats. We may even setup for making all natural pastured pork rinds – something we’re playing with.

As we discover what we want to expand to do we’ll have the rest of the old farm house space to utilize for additional charcuterie and other interesting product such as long cured hams, prosciutto, salami, pepperoni and such. A lot of these require long curing and fermenting times to bring out the flavor in the meats. Lots of possibilities. We’ll take our time – we like to grow slowly. It is exciting to be getting close.

Beyond building there is another big budget issue: Labor and energy are the highest operating costs for meat processing facilities. We provide the labor from our family. Energy is more challenging. As we built the butcher shop we implemented a lot of special details to keep our long term energy costs down. We plan to do some addition exciting improvements that will further push down our energy consumption. From simple things like solar hot water to the more complex like coolth storage batteries to transfer winter’s cold to summer months and other tricks I’ll detail in the coming years as we build them. There are a lot of ways that an individual, a family, a farm, a business can minimize its energy and environmental footprint. This pays back in sustainability as well as keeping more of our money in our pocket which means we don’t have to grow bigger to earn more income. Green is greener.

On the space requirements I have not seen any maximums or minimum requirements given by the USDA. In fact, they steer clear of that, specifically saying that you simply must have space to be able to operate in a humane and hygienic manner that will produce product that is safe for consumers. There are several very good web sites you may be interested in exploring:

USDA Small Scale Meat Processing


Niche Meat Processing

Also check out these posts for more links:

Meat Processing Links

Composting Links

I have a large collection of links, reports, feasibility studies and such that I have gathered over the years related to this project. Sometime I will put together a post with links to those to help other people delve deeper into the prospect of D-I-Y nano-scale USDA/State inspected slaughterhouse, butcher shop and smokehouse construction.

I will also do a more detailed budget post after we’ve opened and we’ll then get to see how close our final numbers were to my initial estimates.

This weekend though, we’re cranking to get ready for our next concrete pour. Think good weather thoughts!

Outdoors: 52°F/33°F Partially Sunny
Tiny Cottage: 67°F/64°F

Daily Spark: A penny spar’d is twice got. -George Herbert’s Outlandish Proverbs, circa 1630

About Walter Jeffries

Tinker, Tailor...
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13 Responses to Budget Proportion Question

  1. Anon says:

    Do you have a rough estimate of what the butcher shop would cost if you’d completely hired out the design and building?

    • Short answer: I really don’t know.

      The budgets I’ve read are 2.5 to 4.5 million for very small scale meat processing facilities however those are all designed to run five to seven days a week, one to two shifts a day, with hired help doing all amendable species – beef, goat, sheep, swine, etc. I would think that had we hired it all out it would be a small fraction of that because of our small size and specialization. Labor would be a big cost of construction.

      Of course, then it wouldn’t have been done exactly the way I wanted because we are doing some very novel construction methods. Instead of the super insulated thermos-bottle ferro-cement barrel vaults we did it would be conventional framing if hired out. That works and is well known so it gets bank financing but in the long run would cost us more in energy.

      An important consideration is that as the capital cost rises so does the debt load. This can lock the business into a spiral where they must grow to handle the debt load which means more debt to grow to handle the increase construction. I have read many case studies that identified that issue. Because we were able to do so much and keep the cost down it make the project feasible.

  2. Bill Harshaw says:

    I’m curious–you specify four areas where government regulations, aka red tape, required you to outsource work. That seems a surprisingly small number. Do you think those requirements were reasonable, or not? You didn’t mention permits: how onerous was that?

    • It took me a large part the first year of working on this project to get the permits all set. Mostly it was a matter of getting the government officials to return my calls, emails and letters. They’re very busy and we’re not a very high priority – we’re small fish.

      I do not feel that the government requirement for a licensed septic engineer is necessary. I know how to do the design – it’s pretty simple and long established basic stuff. Up until a few years ago I was allowed to do it but they changed the laws – a prime example of too much government. We have about 1,000 acres of land and are located in the middle of our land, far from anyone else, far from streams, not much to screw up. In a small neighborhood where people are right on top of each other perhaps they need rules and regulations to keep them from hurting and annoying each other but that is less necessary as people become more spread out. That is the old rats in a cage issue. No rats out here.

      The utility pole transformer I had no interest in installing myself. It requires very specialized, very big equipment as well as turning off the grid to us while they do it. We’re out at the end of about a 1.5 mile section of the line that serves us since we’re so far from anyone else. It took an entire crew from the power company.

      The refrigerant hookup is in the iffy area. Pumping it in, recapture and such require special equipment that I’m not going to need often. Having the technician for that is appreciated. However, I don’t feel the government should have a lock on that. If someone has the equipment they should be able to do it. Since they have already banned the ‘bad’ ozone depleting chemicals that is not the issue on new installs.

      The propane I’m very capable of doing and there should be no government regulations restricting me. It’s my building. No special expensive tools there, basic plumbing. I’ve done it beyond the regulator and the other side of the regulator is no harder. I’m actually not fond of propane but that is for other reasons. I don’t like houses that go boom in the night. You’ll notice I don’t use propane in our house. Wood doesn’t explode and chimney fires are easy to prevent. However for economic reasons it makes sense to use propane in the slaughterhouse. I have done a lot of studying of why houses and other places have exploded from propane and I am designing into our setup ways of preventing that. Interestingly, code does not go far enough on this.

      HACCP/PR and SSOP are fairly reasonable – I was using these techniques years ago in other things before I ever heard it called that. It’s about making sure things happen right. I used it in manufacturing. The problems are more of an issue at big facilities than small facilities and the USDA needs to figure out more about how to scale things. Scaling things is a general problem that government is not terribly good at. They tend to produce uniforms in one size fits all. Few would argue with that. The USDA does have some very good help resources now for small and very small scale facilities. I started down this journey to build our facility in 2004 and have been watching them improve their assistance since then. It wasn’t until 2008 that we kicked into high gear and we’re fortunate that by then the USDA already had in place a lot of the guides and the HACCP/PR system had had almost a decade to mature already.

      So, I answered. Now your turn, since you’ve been on the other side of the fence. I would be most curious to hear from you.

      • Bill Harshaw says:

        Such a complete answer this is going to feel incomplete.

        First, I wasn’t really on the regulatory side, I was shoveling out the dollars, though we had regulations on what is required to get them. But having been a bureaucrat, I’ve more sympathy for their plight than a normal person would.

        Second, while my dad was my model of jack of all trades, and master of most, I think you outdo him, which is a high compliment. Viewing as a bureaucrat, you’re very much of an outlier, which makes the regulatory job hard.

        Third, one thing I think I’ve learned is that it’s very hard to figure out what you don’t know, the “unknown unknowns” in Rummy’s words. And almost everyone want to believe they’re above average.

        Fourth, where I absolutely agree is this: “The problems are more of an issue at big facilities than small facilities and the USDA needs to figure out more about how to scale things. Scaling things is a general problem that government is not terribly good at. They tend to produce uniforms in one size fits all. ” Though I’d say government is mostly awful at scaling things.

        Over the long run, maybe some government regulations will evolve, but I’m afraid it will require more loss of “privacy” than individualistic Americans will permit. Think something like car insurance policies where the premium is adjusted based on experience.

        For an example of what I mean, in your case I could see a government agency tracking this sort of data (with modern technology and information flows, it shouldn’t be hard): how long has Walt been doing X; how many problems have shown up, how big is the operation, how much impact could a problem have, etc. etc. and adjusting requirements based on the record, going with self certifications, etc. (I guess that sounds something like HACCP?) But there’s so much inertia in an agency, and enough outside forces resisting change, that’s not going to occur in my lifetime.

        Maybe I’m being too pessimistic, at least in the long run. Your next to last sentence indicates some progress has been made–I wonder how it was done and how progress in one bureaucracy gets propagated to the others.

        • I’ll agree with the “Mostly awful” on scaling. Rarely are things absolute.

          On your example, there are cases like this: workman’s comp insurance and unemployment insurance I believe are both business experience based. It is doable and they’ve been running those both fairly smoothly for a long time.

  3. Susan Lea says:

    Walter, this is truly amazing! Hats off to you all!

    I have an unrelated question for you (which I realize you won’t be able to address while you’re pouring concrete). We are trying to figure out how much our pigs weigh, and we don’t have a clue how to make a reasonable guess. I was wondering if you would mind looking at their pictures on this link
    standing next to my 5’8″ husband and see if you could make a guess? They are approximately 30″ high on their backs, if that’s any help.

    We are trying to decide which of two facilities to use, so we are planning visits to both. The one is recommended by the farmer who sold us our pigs. It is not USDA-approved, which doesn’t bother us. They can cure bacon & ham, but the woman I talked to with my questions was not very polite. For instance, when I asked if they make ham & bacon, she said, “Your pig makes ham & bacon. We cure it!” We can go look at the processing in a window, but she wasn’t very willing to answer questions.

    The other place is a new guy who has just opened a USDA-approved operation. He is very friendly and informative. Unfortunately, there’s no way to look at the facilities because of gov’t regulations; he’d have had to have a “dummy” set of equipment even to have a window for people to look in! However, he isn’t currently approved for bacon & ham, although they do sausage.

    Right now I’m thinking we should take one pig to each place and see who we like. How’s that for being decisive? :) Anyway, any input you have on pig weights would be greatly appreciated!

    • See how I weight pigs with a string:

      How to weight a pig with a string

      On our pigs I often simply take the length and subtract two inches or so to estimate the girth when going fast. The length is the distance from the base of the tail to the crown – see the illustrations in the article above.

      If you’re just slaughtering for your own needs you don’t need USDA. I would recommend one that vacuum packages as that lasts better in the freezer. The ability to do the ham and bacon is a big bonus. Buy a little of theirs and try it to see if you like how they do it. Attitude is critical – if she’s rude now, don’t take your pigs to her. If she is just joking around and trying to be funny then maybe not a real issue. I am not surprised about no visit, the government makes it very difficult to have an open shop where you can give tours. They want bio-security, check-in, tour guide, public building facilities and a lot more to allow visitors.

  4. Eileen says:

    I hope your concrete pour goes well, Walter! We got the slab down for our farrowing barn…the guy who finished it came Monday morn at 6:15…and left at 8:30…on Tuesday. But the slab is FLAT (except the stalls, they drain towards the doors. So we’re happy!

  5. Matt in Brasil says:

    What a wonderful project! Your family amazes and inspires me to no end! I wish you the most success in your butcher shop. My family has a small beef farm here in Brazil and we want to do this too. We are seeing the grow locally movement here too.

  6. Malena says:

    “We may even setup for making all natural pastured pork rinds – something we’re playing with.”

    Do you have a recipe for making these? So far the ones I’ve made have turned out super hard and crunchy, not light and crispy like the commercially available ones…

    • I don’t have a recipe I want to publish yet because I don’t feel we’ve perfected it. However, that said, search for “chicharones” on Google. Also, here is one blogger chef’s ponderings on the topic. Let me know how you do. As I said, we’re still experimenting with this. When they’re good, they’re very, very good!

  7. Leon says:

    I’m very impressed with your project and that you’re doing it for so much less than the big places. It proves that nanoscale works. Even allowing for your “advantages” of doing it yourself it is still most impressive. Keep up the good work Jeffries family!

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