A Feasibility Assessment of a Meat Slaughtering/Processing Plant or Feedlot in Northern Michigan


January 31, 2007 - William A Knudson and H Christopher Peterson

Executive Summary


This report is a result of several forces affecting Michigan’s livestock community. The existence of Bovine TB in the Northeastern Lower Peninsula has affected market access for beef producers. There is also increased interest in developing meat products that meet the needs of specialized groups of consumers. Examples of this include growing ethnic markets and markets for food products that promote health. These markets also create the possibility of higher prices for producers and others in the industry.

This study analyzes the feasibility of a small meat processing plant in the Northern Lower Peninsula as well as the feasibility of a feedlot in the same area. Funding for the study was provided by the Michigan Department of Agriculture as well as the Michigan Agricultural Experiment Station through the Michigan State University Product Center for Agriculture and Natural Resources. Information was gathered from a wide range of published sources as well as discussions from those familiar with the beef, lamb and goat industries.

This feasibility assessment will focus on the following considerations: economic feasibility, market feasibility, technical feasibility, financial feasibility, and management feasibility. In so doing, this study follows the format used by the USDA Rural Development, and could be used by firms interested in grants and loan guarantees. Economic feasibility focuses on access to labor, transportation and other infrastructure issues. Also considered will be the number of animals in the area, and whether or not there are sufficient numbers of animals to support a processing facility or a feedlot. Market feasibility will focus primarily on consumer tastes and preferences and what products could be developed to meet those preferences as well as the level of competition
in the market. Also, the level of commitment of producers and buyers of meat products will be assessed.

Technical feasibility focuses on the engineering of a processing plant and a feedlot as well as environmental and regulatory issues. Traditionally, Michigan has not been as open to large scale livestock operations as other states, environmental and regulatory issues will be particularly important to determine the technical feasibility of either a processing plant or a feedlot. Financial feasibility will focus on the capital requirements necessary for a processing facility or a feedlot, as well as cash flow issues. Management feasibility will focus on the organization structure of a processing facility or a feedlot as
well as the qualifications and skill set needed by the management. Additionally, the type of business structure that would successfully carry out the activities of the processing plant or feedlot will be considered. Given the number of cattle relative to other species of animals in the area, most of the
emphasis of this study is on beef. However, there is also some discussion of lamb and goats as well. This is primarily due to the fact that there are some definite market opportunities for firms in the lamb and goat industry as well as interest in expanding
lamb and goat production in Northern Michigan.


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