Holly Building Ceiling Form Support Trusses for Our Butcher Shop
Let me ask you this…if you were to do a “Mobile Butcher” shop would it be less expensive to get USDA certified? Just curious, because we have a few of those around here.
Very Good question…
No, actually a mobile solution would be quite a bit more expensive than what we’ve done and it wouldn’t do as much as our nano-scale stationary facility.
Much Longer answer:
We did look into mobile processing units. Mobile units cost significantly more than stationary ones, are much smaller having less capacity and less functionality. There are a lot of reasons we went with building a stationary facility…
Slaughter vs Butcher:
Butcher and slaughter are often used interchangeably but they actually have separate meanings and in this case the distinction becomes very important.
Slaughter is one part of the entire process. After the animal is slaughtered the carcass must be chilled & aged, butchered (meat cutting) and any value added processes done such as sausage, smoking, etc.
All of the red meat mobile units I know of are not mobile butcher shops (meat cutting, sausage making, etc) but are rather just mobile slaughter units.
Mobile poultry slaughter units are an exception as they do include the butchering but there simply isn’t enough space in a trailer to do it all with larger animals like pigs and cattle. Our pigs bring home the bacon so this is highly relevant.
Mobile units are limited in size to a tractor trailer box which is 40’x8’x8′. Yes, there are some larger trailers but forget about driving them on back country roads most of the year and watch out for the weight limit on our little bridges. That’s about half the size of our kill floor and you still need to use some of that space in the mobile unit for hanging the carcasses before delivering them to the stationary facility for chilling and aging. Subtract from that box any space for insulation.
Don’t forget that you must provide the USDA inspector with a bathroom, laundry services and an office with a locking file cabinet. These are all more expensive in a mobile solution where space is at a premium. All this takes away from the space available for slaughter and chilling.
The cost of the units varies greatly depending on what animal type it specializes in. The lowest cost I know of is just a bit under $100,000 for a poultry only unit but the typically red meat unit costs $150,000 to $300,000 for red meat. Yet that high cost only has a capacity to do five to fifteen animals. The carcasses are then delivered to a stationary butcher shop for carcass chilling, aging, cutting, sausage making and smoking. The mobile unit would be the equivelant of just our Abattoir room, our kill floor, in functionality.
Note that that cost does not include the cost of the truck that pulls the mobile trailer slaughter unit. The trucks typically cost another $50,000 to $150,000 depending on their towing capacity. Used can be a third of that but don’t sacrifice reliability or you’ll have not just the truck sitting but the mobile unit out of commission and the butcher shop that it supplies will end up idle.
Did I mention butcher shop? Yes, there also needs to be the butcher shop with chiller that the mobile unit delivers to. That typically costs $500,000 to $1,500,000 for the smallest meat cutting shops. I know of one that was for sale for about $320,000 recently but you would not want to buy it because it was so run down. Renovations would have doubled or quadrupled the cost of ownership. Ours cost less because we already own the land and are doing all the construction ourselves so it is possible to spend less.
One of the issues with red meat species such as cattle and pigs the entire process takes a week to a month depending on aging time. With the an expensive mobile processing unit you don’t want to tie that machine up for that long just a few animals. You need the mobile slaughter unit to go out and process the next animals at another farm to justify its cost. On the other hand, chickens are quickly sent right through the mobile unit with no aging time, butchering is minimal, further processing isn’t necessary (e.g., smoking, sausage). This makes the mobile unit make pretty good sense for poultry.
There are some big problems with the mobile units for all farms – they need to have an approved, inspected, tested water supply and sewage dump point at each farm. This is a very large part of the cost of building meat processing facilities and this prevents the mobile unit from going to some farms that don’t have sufficient capacity. Typically that cost is $100,000 to $500,000 to the cost of building a facility. To upgrade each farm on the mobile unit’s route is about $5,000 to $30,000 for drilling a well, filtration and possibly a new septic system. This will also be needed at the stationary butcher shop portion of the mobile unit and is included in that budget.
In addition to water and septic the unit either needs to bring its own generator (takes up space and is expensive to run) or have sufficient power on the farm. Many farms don’t have enough power to share and in our area 3 Phase power is rare. We’re five miles from the nearest source of 3Ø power and it would cost over $80,000 to get it to us. Our solution is a rotary phase converter. Some generators produce that. Again that is another cost to add to the mobile unit and one more thing that takes up space. In our case we have a mechanical room for the converter and space is not at quite such a premium as it is on a trailer.
A mobile unit would not be able to handle scald & scrape of pigs. This is a key issue for us since we sell a lot of roaster pigs. Losing that market would instantly make the mobile unit not worth it – Nobody wants a skinned pig at their BBQ. Scald & scrape also produces a higher quality meat which ages better so we need it for that as well. With pigs for us skinning is not an option as it would be for sheep, goats and cattle. As a physical problem, the scalder weighs almost 1,500 lbs, requires 3 Phase power, would take up nearly one half of the mobile unit’s interior space, requiring about 100 gallons of water with each fill which adds another 800 lbs. When the scalder starts up it shakes – not something you want a trailer doing high off the ground. Not insurmountable challenges for a mobile but nearly so. The scalder also costs $40,000 and I do not like to think about the damage that constantly transporting would do to to such an expensive machine.
We have spent about $210,000 so far on our facility to get to the cutting phase and will spend about $120,000 more to get to slaughter, smoking and such. Almost all of that cost would be required for the stationary portion of a mobile unit since the mobile unit just does slaughter. All a mobile unit does is replace the abattoir, the kill floor. You still need to chill and age the carcasses, cut the meat, make sausage, brine and smoke plus any other value added processes.
$150,000 Red Meat Mobile Slaughter Unit
$50,000 Truck to Tow Mobile Slaughter Unit
$270,000 Stationary Butcher Shop to work with Mobile Unit†
$470,000 Total for a “Mobile” Solution
+Higher annual operational costs
+Higher annual maintenance
+Shorter Lifespan of equipment
†Realize that this is a very low budget for the stationary portion as it is based on our home-brewed construction where we did all the permitting, design, engineering, construction and used a fair bit of recycled insulation. The typical small scale facility costs $1.5 to $4.5 million dollars to build. A couple of years ago three were built in our region in the same size range as us that cost:
$1,500,000 (built in existing building shell) and
$5,000,0000 (built from scratch – largest of the three).
The cost of operation for the mobile units is a lot higher than for a stationary facility. Even if we were to just park it here on our farm and not drive it around, thus ignoring gasoline, registration, road insurance, etc, it would not have as much insulation so the cost of running the refrigeration system would be more expensive than with our super insulated facility. This is a long term cost that would reoccur year after year.
Since farm’s can’t be assumed to have sufficient electrical power a generator is necessary and that both takes up space, costs money to buy and is more expensive electrical power than what comes from the utilities even with our high 20.5¢/KWHr local power costs.
It is interesting to note that the person who was running the mobile poultry unit here in Vermont declared it unsustainable after several years. That is why the unit got sold. This would make me hesitate to dip my toes in that pool. All of the mobile units I know of charge higher costs for slaughter than stationary facilities because of the higher costs of operation and are not profitable. Their construction was paid for with grants and typically the operations are subsidized too.
Then there is the problem that the mobile units simply won’t last for very long. Anything on the road wears out quickly. Even if you were to build it completely out of stainless steel to counter the corrosion of road salt, blood and brine you would still be faced with higher maintenance and a shorter life than a stationary masonry high mass facility like ours which will last for generations. The cost of ownership is tightly related to how long a piece of equipment lasts. If it costs more to buy to begin with and doesn’t last as long that’s a really bad combination.
There is another bigger problem for us, and many farmers. The mobile units are tractor trailer trucks which simply can not get to a lot of farms much of the year. They just can’t climb our mountain in the bad seasons. In November we have the fall mud season which would block he truck from getting to us for weeks. In the March or April there is the spring mud season which blocks big truck traffic on our road for weeks on end. Then there is winter. We use a van to transport our livestock rather than a trailer to transport largely because towing a trailer up and down our curving, icy, rutty, mountain roads simply isn’t possible or would be at risk of life much of the year. In the deadly cold weeks of the year when it typically drops in to the negative twenties machinery doesn’t start, especially diesel engines. Block heaters help, oil heaters help, but somedays nothing starts the engines. Working in a poorly insulated mobile unit during that time of year would be to invite frost bite as well.
We need processing every week. Sharing a mobile unit with a lot of other farms means maybe we will get the unit but maybe not. If it breaks down on the road then that messes up the schedule for our customers, restaurants and stores who have schedules of their own. If we don’t deliver regularly we lose our hard won place on their menu or shelf. The unreliability of a mobile unit is a deal killer never mind the higher construction, operating and maintenance costs.
Cost of Inspection:
Assuming you went with a mobile unit, once you have it built the cost of USDA certification is exactly the same as with a stationary facility. The regulatory standards are the same too whether you are mobile or stationary. I have heard that it is harder to get inspection for mobile units because it is outdoor slaughter which the USDA does not like. But some mobile units have gotten licensed so it is possible.
The only advantage I can come up with for a mobile unit for us is that it would not be taxed as real estate each year. I did think about putting wheels on our building or floating it in a puddle so I could declare it mobile but that seems like a lot of work.
This tax advantage is offset by registration fees, road insurance and fuel if you’re traveling around with your mobile unit – which is rather the point of such a machine.
It would be faster to just order a manufactured mobile unit than to build one ourselves. But that would have meant having the cash in hand to order said unit all in one fell swoop. We’ve operated more along the bootstrapping methodology. We have built as we had the money and sometimes that meant that construction stopped while we saved up our pennies.
What has slowed us down is money – we’re paying for our project ourselves. Contrast this with every single mobile unit I know of, all of which have been built with government grants.
We have no bank loans, no grants, etc. To fund the butcher shop we have used our farm’s cash flow and sold CSA Pre-Buys which helped fund the purchase of materials. Our Kickstarter project was an example of Pre-Buys which helped pay for concrete and equipment this summer. We have also gotten a number of loans from individuals who believed the vision of our project. Each month of farm cash flow, CSA Pre-Buy and personal loan has allowed us to move forward with the next concrete pour, equipment purchase and other materials.
The other thing that slows us down is simply winter – until we were closed in this past December of 2012 winter meant that construction stops in December and can’t resume until May. That’s a reality of our climate. Half the year is frozen in – we do construction in the warm months, pushing winter back as far as we can in the fall until the snows stop us. Given that it normally takes four years to get a facility built we’re doing well since we’re in year four and almost there. Now that we’re closed up tight against the weather we are able to actually work indoors for the first time continuing construction in the winter – a blessing in the -15°F windy weather.
Where Mobile Works:
There are some situations where the mobile slaughter units make a lot of sense. In flat country with good roads with the necessary utility infrastructure a mobile unit can be shared between multiple close farms who don’t need the slaughter capacity very often or on a regular schedule.
Of course, all of this is moot since we don’t need mobility. We’re building a facility for processing our livestock on-farm. We’re not looking to get into the business of doing meat processing for other farms.
Our Own Conclusion:
We need the slaughter capacity every single week. We must have a place to chill and age the carcasses for a week (pork) to a month (beef) and we also need the actual meat cutting (butchering), sausage making, smoking and other value added processes which aren’t in mobile slaughter units. For this reason we realized it would be cheaper both in the short term and the long term to build a real, stationary, nano-scale facility.
In the end, it’s easier to just herd our pigs across the mountain pastures to the lairage for slaughter each week – something we would have to do even with a mobile unit.
Outdoors: 2°F/-13°F Sunny
Tiny Cottage: 66°F/62°F
Daily Spark: Experience – by the time you have enough you are too old for the job.
Walter I am interested in the loan angle. On the one hand I view your project as amazingly expensive from a personal point of view. I can’t imagine spending that much on something although I guess building a house could cost that much and you are doing more than that and it is a business cost that you hope will return profits to pay for it. I ama amazed that you don’t have bank or government loans. I thought all projects like this had to be financed with government grants and loans. Why not yours? But you have gotten some loans you said. How did that work? And isn’t the kickstarter thing like a grant? You got over 33k that way.
Hmm… Several questions there. Let me start with Kickstarter. That was not a loan or a grant. Kickstarter was much like our CSA Pre-Buys. People paid in advance and will get our product after we have the butcher shop up to the necessary level of inspection for them. e.g., for people in Vermont we need state inspection. For people in other states we need USDA inspection to be able to ship. Of the $33,456 we raised on Kickstarter we got about $30,000. Kickstarter and Amazon took about 10% for processing, to pay for their web servers, personnel, etc. Of the $30,000 we received about half of that is going to pay for the products and shipping. The other half we spent on concrete and equipment for our project.
You are right that most projects like ours are funded by government grants and bank loans. In fact, I don’t know of even one that isn’t and I’ve spent years studying this topic since we’re in the middle of this.
Government Grants: We have applied for many of them. We have never gotten any. What I have observed over time is that the state level grants seem to be created with the intent of funding some specific project even though they are ‘open’ for competitive applications. This is based on observing how they’re written and who ends up winning those grants. We are specifically excluded from both the state level and federal grants for a variety of reasons such as we are not hiring employees, we are not doing processing for other farms, we are doing the construction ourselves, etc. Often the grant money is designated for consulting for business planning and market studies. We’ve done all of that already so we don’t need those. Even though we will be providing jobs for five family members plus the inspector we don’t qualify for most grants because we are not hiring outside employees. Our building our facility is helping other farmers since it frees up processing openings at other facilities but because we won’t do meat cutting for other farmers that disqualifies us. Going through the grant hoops has been an interesting and eye opening experience.
Bank loans: I’ve had and paid many bank loans in the past 30 years. I fully expected to just get a bank loan for this project. But we started our project right after the banks got bailed out by our government. Theoretically the banks were supposed to pass on that bailout to make loans to businesses to lift the economy but what I’ve read in the newspaper is that the banks sat on the money and handed out big bonuses to their executives instead. I spent two years applying for bank loans but was always told no in almost exactly the same words: “We’re not making loans to new or expanding businesses at this time.” The uniformity of the response was extraordinary. Very strange.
Private Loans: We have gotten a number of private loans from individuals and local businesses. Sometimes this was extended terms for the purchase of materials for construction or in the case of our hay the farmers who do the haying let us pay them over a six month period which freed up money for buying concrete. Other private loans have come in gradually over the past two years from people we know or who knew about our project – most of them blog readers who wanted to help. We had a lawyer approve a simple one page loan agreement and we pay monthly interest on these loans. These individuals have been a great help in moving our project forward over the past two years.
Private Donations: We have also received several donations from individuals. I never expected that and it was a wonderful surprise. People are amazingly generous. They range from $10 to $1,000 which have helped with buying construction materials over the years.
CSA Pre-Buys: A lot of people have bought pork in advance and sometimes piglets and bred gilts in advance. The CSA Pre-Buys varied from a quarter pig to decades of pork where people will get shipments every year. In exchange for pre-paying we offer free processing which comes to roughly a 30% discount. For more details on how that works see the CSA page. We will continue to offer the half and whole pig CSA’s for a while as we finish off the project in 2013.
Farm Cash Flow: The pigs have paid for a lot of the construction. They paid for all of it for most of the first two years. Our farm’s cash flow continues to put money towards the butcher shop. When we run out of money we stop spending it and just focus on construction elements that don’t require any cash. Sometimes that has stopped us for six months but then we get enough saved up to make another pour of concrete and we order more materials.
Logging: We also do sustainable logging on our land and that has helped to pay for construction. This might go under the cash flow category of funding but it is not every month so I think of it separately.
Savings: Before we started on the butcher shop we had been saving up money to build a greenhouse. All of that money got diverted to the butcher shop. In time the butcher shop will start saving us the cost of processing which runs about 64% per pig and then we’ll again start saving up for the greenhouse. A matter of priorities.
Hired processing costs us most of what we earn. Part of that is the travel which costs about $100 per week in gasoline plus wear and tear on the vehicle and a full day of my wife’s time each week. Most of that is the cost of hired slaughter, meat cutting, sausage making and smoking. It costs the butcher for labor, bags, their facility, etc so they must make a living too. We will gradually take on the elements of processing in phases starting with the one that costs us the most – meat cutting and sausage making often collectively referred to as butchering. The savings every pig on butchering will then get plowed back into buying materials and equipment for our next phase of construction. It’s a snowballing effect and in time we’ll have all of the processing here on-farm. Perseverance.
For more about funding the butcher shop check out the post Funding the Butcher Shop.
very interesting outline i would be interested in reading more about the costs of financing such a venture and how you put the money together like how did you go about finding loans without a bank and how do you arrange that and how do the csas work i read the csa page did you get a good response on that
The biggest single cost of our project is the concrete. We’ve spent a bit over $40,000 for concrete. We’ve spent about $20,000 for insulation – I already had a fair bit recycled insulation saved up before we started which helped keep costs down. We also spent about $40,000 for the scalder dehairer and still have some other equipment to buy. The other big cost is the materials for the wooden form work we built. I don’t know the total on that at the moment but I would not be surprised if that was around $50,000 almost all of which is re-usuable and some of which was used on past projects. I think we have about $15,000 more to spend before we have butchering on-farm and another $80,000 or so to bring slaughter on-farm.
My initial estimate, almost five years ago, was $150,000 to get to the point of bringing the butchering on-farm. Since then steel, insulation and concrete prices have all gone up quite a bit along with general inflation. We also built the shell of the building slightly larger than I originally planned so as to have space for the coolth attic which will be a long term benefit by reducing our energy consumption and utility costs. We’re pretty close to that budget so I’m pleased.
See the response to Marcus for more details along these lines of financing the butcher shop.
The CSA Pre-Buys work by people pre-paying now for pork they’ll receive in the future. In some cases those ore one time orders and in others they’re orders where the buyer gets boxes of pork every month, six months or year for up to a decade. In return for this upfront money we offer free processing which is a savings of about 30%. If you have specific questions don’t hesitate to email me.
Wow, that was an intense and detailed answer. What a huge amount of thought and planning and figuring you have done! One might think you’ve jumped off the deep end building your own facility but when you lay it out with all the pros and cons, you’re really doing the most efficient, cost-effective approach to realizing the goal of providing quality processing for your farm-raised livestock. Did I mention I’m really, really impressed. You’ve turned all the knee-jerk assumptions completely on their head. Well, it’s still a lot of work though: that’s probably the sticking part for most folks. Your family is amazing.
Hmm… I do get that reaction from some people, quite a few, that the project is too complex, I’m off the deep end, etc. But if you break it down logically into phases and structures then it reduces to manageable chunks, small problems that can be solved individually and put back together as a unified whole. It is much less daunting and more achievable that way.
Really, Walter. Don’t you think you should think things through before you start building willy-nilly?
I would imagine also that you also get some cash flow back via tax refunds thanks to depreciation allowances and all that… ?
This does make the point of course that the tax code needs to be a lot simpler, but on the other hand I think there is a valid concern that wholesale changes in terms of depreciation, deductions, etc could have a possible negative effect on farmers, much less small business in general.
That’s a common misconception. The cost materials for construction and production are a business expense. Taxes are on the net (gross income – expenses). People commonly miss-understand how that works and think that deducting the cost of production is somehow a tax refund. It isn’t. If it was then you would be paying the taxes on the entire gross income of the business that you work for rather than just your small portion of after expenses income that you get for a salary or hourly wage. This is a common miss-understanding about how taxes work. Taxes are on the net income, not the gross income and that has nothing to do with fancy deductions, loop holes and such. Nothing special about that related to farming or small businesses either.
I would love to see the tax code greatly simplified and I’ve written the President and Congress about just how to do it. So far they seem to be ignoring me. I suspect they will never take my suggestions because my solutions would eliminate a lot of jobs in accounting and law offices as well as virtually all the lobbyists.
You seem to have the animals under control on your farm. Voters need to stop breeding tainted politicians. There should be a non-violent way to cull the diseased ones. When the world is about to blow up they will hide in fancy bunkers built with other people’s money. The people who’s money it was come second.
The tax code is cryptic and government agencies have huge budgets that go unquestioned. In my area we raise taxes to build extravagant public buildings, then we argue that since there is no money left, we need to raise taxes. We even had a tax where nothing got built and that was an excuse to raise taxes to finish the project.
The public airwaves are “shared” with license holders. Public rights of way are granted to companies for monopoly control of utility and data delivery. Good ideas that encourage shared use of public resources get stopped so powerful groups can get a larger share than would be fair. When I try, public resources seem difficult and hard to access, but for powerful groups the public resources come delivered in marble crates lined with cash.
Another problem is that if everyone were self-sufficient the federal government wouldn’t have much to tax, at least not without further stretching the Constitution. It has no real interest in a self-sufficient public.
I think your argument about freeing up resources for other farmers has merit. You’re likely familiar with Wickard v. Filburn, a Supreme Court case in 1942, where it was found that by growing wheat for use on his own farm the farmer was affecting interstate commerce. I’m no lawyer though.
Good day sir i would like to know the supplier for the red meat mobile unit because im in need of one. Please email to me their address. Thank you!!!
You might contact NicheMeatProcessing.org.