Report on the Feasibility of a Small-scale Small-animal ...

1 Report on the Feasibility of a small -scaleSmall- animal slaughter Facilityfor independent Meat producers inNorth CarolinaPrepared for theNorth Carolina Department of Agriculture& Consumer ServicesBy Smithson MillsFebruary 2007 This Project Received Support From2 AcknowledgementsThe author gratefully acknowledges the support of the North Carolina Department ofAgriculture and Consumer Services, the North Carolina Golden LEAF Foundation, andthe following individuals and organizations:Ron Fish, NCDA&CS Agribusiness DevelopmentNathan Holleman, NCDA&CS Agribusiness DevelopmentBill Lelekacs, NCDA&CS Property & Construction DivisionNeal Pate, NCDA&CS Property & Construction DivisionDr. Steven Wells, NCDA&CS Meat & Poultry Inspection DivisionCameron WoldRebecca Knight, Mars Hill CollegeAshley Reed, Mars Hill CollegeLaw Office of Thomas A. Beckett, PLLCL aura Kirby, Appalachian Sustainable Agriculture ProjectTaylor Sisk3 Table of ContentsExecutive Summary.

2 5 Section One: Introduction .. 9 Section Two: Secondary Research on Existing small -scaleSmall- animal slaughter Facilities Serving independent Meat producers .. 13 Section Three: Assessing Potential Demand for a small -scaleSmall- animal slaughter facility in North Carolina .. 45 Section Four: A Profile of Western North Carolina Small-animal MeatProducers .. 55 Section Five: Site Selection and Development Options for a small -scaleSmall- animal slaughter facility in Western North Carolina .. 67 Section Six: Assessing the Market Potential for Locally ProducedPoultry and Rabbit Meat in Western North Carolina .. 77 Section Seven: Building Design Options and Construction Specificationsfor a Small-scale Small-animal Processing facility .. 101 Section Eight: Equipment Options for a Small-scale small -animalProcessing facility .. 115 Section Nine: Legal Entity Considerations for a small -scaleSmall- animal slaughter facility .. 135 Section Ten: Federal and State Regulations Affecting PoultryProcessing Plants Operating in North Carolina.

3 153 Section Eleven: facility and Program Management Considerations .. 165 Section Twelve: Research Conclusions and RecommendedNext Steps .. 177 Appendix One: North Carolina Department of Agriculture & ConsumerServices Needs SurveyAppendix Two: Report on a Community Meeting to Discuss theProcess of Establishing a Small-scale Small-animal SlaughterFacility in Western North CarolinaAppendix Three: Report on a Rabbit Growers Meeting to Discussthe Process of Establishing a Small-scale Small-animal SlaughterFacility in Western North CarolinaAppendix Four: Milwaukee Journal Sentinel: Rabbit multiplies toorapidly on menusAppendix Five: Small-scale Poultry ProcessingAppendix Six: Application for State Meat InspectionAppendix Seven: Coming Under Inspection for small Processing PlantsAppendix Eight: North Carolina Poultry Products Inspection Law5 Executive SummaryIn November 2005, the North Carolina Golden LEAF Foundation awarded a grant to theNorth Carolina Department of Agriculture & Consumer Services (NCDA&CS) for thepurpose of conducting a study on the Feasibility of establishing Small-scale slaughterfacilities in the state to meet the needs of independent Small-animal (poultry and rabbit)meat producers .

4 In April 2006, NCDA&CS contracted with the researcher to conduct theprimary duties of such a study, including the following key deliverables: Conduct secondary research on similar projects Conduct a statewide survey to measure demand for such a facility Determine a geographical area of the state with greatest need for a facility Conduct interviews and focus groups with prospective facility users Measure and assess market demand for local poultry Recommend possible site locations for a facility Review regulatory guidelines applicable to such a facility Propose a facility design and suggested equipment, along with cost estimates Review and recommend legal and managerial options for a project servingindependent Small-animal meat growers in the targeted regionDespite being the fourth-largest poultry producing state in the country, North Carolinahas only two inspected slaughter facilities serving independent Small-scale small -animalgrowers: one in Pittsboro and one in Bladenboro.

5 Nationally, examples of successfulsmall- animal slaughter facilities were found in both the cooperative and for-profit found was a model whereby a state university owned and operated a small conducted a statewide written survey of farm-based producers to determinethe level of existing and potential demand for such a facility , the geographical area whereunmet demand is the greatest, demographic characteristics of potential users and thepotential economic impact of a of 60 survey responses reveals the existence of small , diversified farmsthroughout the state with a strong interest in increasing production through use of aninspected slaughter and processing facility . These growers are currently producing verysmall volumes of small meat animals, ranging from chickens and turkeys to rabbits andsuch niche poultry as quail and ducks. The majority of these producers are sellingprocessed meat from their farms directly to consumers, with a substantial numberexpressing interest in larger-volume wholesale trade to restaurants and grocery growers expressed reservations about divulging their production volumes due to alack of understanding of state regulations regarding on-farm slaughter and sale of most every measure, the western region of the state has the greatest unmet demand foraccess to a USDA- or state-inspected Small-animal slaughter facility .

6 Subsequentresearch on producer demographics, site selection and facility planning was thereforeconducted for determining the Feasibility of establishing a Small-animal processingfacility in Western North found that in Western North Carolina, many growers are in need of access toan inspected slaughter facility in order to increase and professionalize their productionand marketing systems. These producers are currently unable to expand their businessesdue to legal restrictions for growers not using state- or federally-inspected processingfacilities. State law only allows up to 1,000 chickens or 250 turkeys to be processed andsold straight from a farm growers are spread over a wide geographical area and are producing a variety ofpoultry and rabbit products. The majority of respondents in the region are directlymarketing their meat to consumers, while a substantial number also Report marketing torestaurants. Among 30 respondents, 23 reported being in business now, while sevenreported they had not yet started their meat establishment of slaughter and processing services for small meat animals in theregion would likely substantially increase production among growers.

7 Using only datasupplied by existing Small-animal producers , research estimates an annual potential of33,205 head of small animals processed at an inspected facility in Western NorthCarolina in its earliest stages of operation, with a retail value estimated at $377,000 ayear. This represents a five-fold increase over current recorded production criteria for selecting potential facility sites include locations with adequateinfrastructure to meet production and regulatory requirements, reasonable proximity tofarm-based producers who wish to access the facility and community receptivity towardhosting a slaughter facility . Research indicates that the optimal site location would be inthe western foothills, between Buncombe County to the west, Iredell County to the east,Ashe County to the north and Cleveland County to the relating to site selection for a Small-animal slaughter facility in Western NorthCarolina are limited by a lack of interest in expansion of existing large- animal facilities toprocess poultry and rabbits and a lack of private equity investment for projectdevelopment.

8 These factors, along with a measured lack of technical training andeducation available to producers , strongly suggest that a facility of this nature should bemanaged as a nonprofit entity focused on training and education for producers , inaddition to providing the service of processing animals for on a review of possible site locations and considering preferable managementand organization issues researchers recommend a site in Marion as the most viable ofavailable choices. A second location, at the Mountain Horticultural Crops ResearchStation, located in Fletcher in south Buncombe County, is deemed potentially viable butis not considered an optimal was conducted to estimate the market potential for locally grown small -animalmeats. Supporting demand potential are findings that direct sales from farmers increased20 percent between the 1997 and 2002 agricultural censuses and the number of farmerstailgate markets in the region now stands at more than three dozen.

9 Market researchprovides further evidence that consumers and businesses in the region care about wheretheir food comes from and how it s sales to consumers hold the greatest potential for locally produced rabbit andpoultry meat. Expanded direct sales also allow for a good match between supply and7demand for locally raised poultry and rabbit meat in WNC. Good infrastructure existswithin at least part of the region for these types of sales, given the extensive network offarmers tailgate markets and the growing network of Community Supported Agricultureprograms. Additional infrastructure needs for selling within the current system includerefrigerated transportation and storage. Among larger markets, the restaurant sector likelyholds the greatest potential for producers , given higher potential margins and the interestby many restaurants in offering local poultry and rabbit instead of, rather than in additionto, poultry and rabbit meat from other considerations for a suitable Small-scale Small-animal processing facility musttake into account producer demand, projections for future production and market growthand the limited resources that can be expected for the project s on measured levels of producer demand and potential availability of funding,researchers recommend development of a pilot plant for slaughter and processing ofmultiple species of poultry and rabbits.

10 A recommendation is for a facility design with amaximum daily throughput of not more than 1,000 chickens a day, and that can beefficiently operated with a minimal number of workers. The design should be scalable toallow for future expansion and to meet regulatory requirements for every level ofinspection, beginning with state inspection under the NCDA&CS Meat and PoultryInspection estimate basic construction costs for a small facility in Marion, including sitepreparation and utility tie-ins, at $450,000. Basic costs of acquiring and installingprocessing equipment are approximately $100,000, bringing total physical infrastructuredevelopment costs to an estimated $550,000. Project management costs exceedingrevenues from processing fees are estimated at $200,000 over a five-year for forms of legal organization include an agricultural cooperative, businesscorporation, nonprofit corporation, limited liability company, a hybrid of these or ahybrid government/corporate entity.