Summary
This report examines the economic feasibility of constructing and operating a value-added blueberry processing facility in the Coffee County area. The main focus of this report will focus on packing blueberries for the fresh and processed market. The industry has successfully added value to blueberries by further processing such as packing in clamshell containers, freezing, and juicing blueberries for convenience. These processes increase the value received by the farmer, cooperative, and retailer. However, the largest percentage of added value occurs in the packing component. Hence, the Coffee County group has requested the Center for Agribusiness and Economic Development (CAED) to research the feasibility of operating a value-added blueberry processing facility.
Situation
A group of blueberry producers in Coffee County, Georgia approached the CAED to consider the economic feasibility of constructing and operating a value-added blueberry processing facility with the unique characteristic of providing “cooling” trailers in the field to start the cooling process at an earlier point in time to better preserve the quality of their berries. The group proposes to provide refrigerated transport trailers to the producers so that the blueberries can begin the cooling process upon harvest and before delivery to the packing shed. By employing rapid post-harvest cooling, the quality of the blueberry will be better maintained through to market. It is estimated that by cooling alone, a producer can gain an increase of 10 to 30 fold in potential shelf-life by lowering the respiration rate and reduction in pathogen growth.
Response
A study considering the economic feasibility of a blueberry packing and processing facility was carried out. The analysis examines the relevant economic issues surrounding the operation of a value-added processing facility. All costs were taken into consideration, even a small direct cost to the producers for delivery of the blueberries to the facility. The majority of this report consists of the marketing, finance, and impact analysis sections. Together these sections explain the feasibility of operating the proposed blueberry packing facility and utilization of refrigerated trailers in the process.
Impact
Estimated capital outlay for the venture totals $2.03 million and includes building and improvements, land and equipment. Equipment lines include both a fresh line and processed line. The capital cost figures include the necessary equipment for sorting, grading, packing and cooling blueberries for fresh market before they are picked up for delivery. Also included is equipment to package and process blueberries for the processed market.
Direct labor and benefits total an estimated annual expense of $274,231. It is assumed that the facility will operate an eight hour shift, five days a week, 20 weeks a year with an effective pay rate of $10.00 per hour. Full-time employees for the facility includes 20 full-time employees for operating the fresh and processed line, 5 truck drivers for delivery and pickup of cooling trailers to producers' fields encompassing a 40 mile radius, and 4 forklift operators. Fixed labor costs related to this venture include a manager to oversee operations and one part-time employee for office and clerical duties with annual salaries of $50,000 and $8,000 respectively.
Total operating cost for the venture is estimated to be $584,693 and fixed cost are estimated to total $449,972 per year resulting in total cost for this venture of just over $1.03 million per year. The projected revenue is expected to total $1.569 million assuming 6 million pounds of berries are handled in the facility with 35% fresh market and 65% processed.
Based on assumptions set forth in this analysis, a blueberry packing facility in South Georgia appears to be economically feasible. Projected net returns are $534,335 or $0.09 per pound above all costs for the services provided. The estimated return on investment based on these assumptions is 26%. Again, it is important to point out that the packing facility will not take ownership of the blueberries nor be responsible for final marketing of them. The venture will provide the opportunity for area growers to enhance quality and reduce loss through the rapid post harvest cooling with the refrigerated trailers provided by the facility. The facility will have the capability of handling both fresh market and processed market blueberries which should be an enticement for area producers.
State Issue
Agribusiness Development/Value Added
Details
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Year:
2008
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Geographic Scope:
County
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County:
Coffee
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Program Areas:
- Agriculture & Natural Resources
