Agricultural Economics Series 133 July 1979 FEASIBILITY OF SUPPLYING AND PROCESSING NORTHERN GULF OF MXICO GROUNDFISH IN ALABAMA 4 v \xY* -, MAY Agricultural Experiment Station of Auburn University R. D. Rouse, Director Auburn, Alabama TABLE OF CONTENTS I. INTRODUCTION. . .s". United States Coixvercial Fish Production from Gulf of Mexico in 1976 Alabama Seafood Industry Resource Development Potential Problem and Objectives of the Study Problem Objectives Review of Literature Method of Study II. DEVELOPMENT OF GROUND FISH TRAWLER AND PROCESSING PLANT BUDGETS . . . . . . . . . A . . . . " . . . . . . . . . . 8 Ground fish Trawler Catch Composition, Operation, and Processing Ground fish Trawler Capital Investment and Operating Costs Ground fish Processing Plant Operations Unloading and Sorting Fresh Fish Production Pet Food Production Surimi Production Fishmeal and Oil Production Ground Fish Processing Plant Costs Capital Investment Costs Operational Costs Depreciation Interest Insurance Ground Fish Trawler Capital Investment and Operating Costs Ground Fish Processing Plant Operations Property Taxes Lease Miscellaneous Fixed Costs. Consumables Energy Requirements Labor Water, Sewage, and Maintenance Miscellaneous Variable Costs III. GROUND FISH PROCESSING PLANT AND VESSEL ProessngPlanT't Reenu i i IV, SL'ARYADCONCLUSIONS . . a..a."i.... 32 Summary Conclusions V. BIBLIOGRAPHY...............0 w.o.. 1#00.0.. . .,. . . . . 0 37 FEASIBILITY OF SUPPLYING AND PROCESSING NORTHERN GULF OF MEXICO GROUDF ISH IN ALABAMA D. L ScovellIM. V. Rawson, and E. W. McCoy Marketing Specialist, Florida Fish and Game Commission, Marine Re- source Development Specialist, Alabama Cooperative Extension Service, and Associate Professor, respectively, Department of Agricultural Economics and Rural Sociology, Auburn University. INTRODUCTION Increasing demand for edible protein has severely stressed the world's traditional fisheries through over-utilization. Realization thattradi- tional fisheries are not unlimited resources and that many fish stocks are reaching their maxirmum yields has caused much concern New emphasis has been placed on increasing yield from the sea by developing previously unuti- lized or underutilized, but abundant, fish and shellfish species. This task is highly complicated involving development of efficient methods of harvesting these species, creation of technologies to process the species into usable forms, and development of markets for these underutilized re-S sources. Al.though the State of Alabama has a relatively small coastline, develop- ment of unused fishery resources present in the Gulf of Mexico off the coast of Alabama could have an important economic impact on the local economy of south Alabama and the State as a whole. .'s1am United States Comercial Fish Production from Gulf of Mexico in 1976. The Gulf of Mexico is one of the most productive fishing areas in the world. In terms of productivity, it is second only to the Peruvian coast (16). For this reason, production from the Gulf of Mexico makes a highly significant contribution to total U.S. fish production. In 1976, Gulf production from U.S. ports amounted to 1.8 billion pounds valued at $382 million. These landing accounted for 33 percent of total U.S. landings and 20 percent of value (41). Two Major fisheries dominate Gulf of Mexico landings. Shrimp and menhaden make up 83 percent of the total Gulf catch. In 1976, 210.1 million pounds (heads on) of shrimp were produced representing 52 percent of total U.S. production. Menhaden landings amounted to 1,237.8 million pounds in 1976, or 61 percent of total U.S. production (41). .Aabarma Seafood Ilnust Alabama produced 34.9 million pounds of fish and shellfish in 1976. This represented 2 percent of total Gulf landings and 9 percent of value (38). Economic value of the seafood industry to the local economy of south Alabama is estir~ated to be in excess of $ 70 million while economic value to the state and nation exceeds $120 million (36). The fishing fleet is based in Baldwin and Mobie coutnts :3, and most of the seafood industry is located in Mobile County at Bayou La Batre. Bayou La Batre ranked as the -3- tant species, ranked according to value, landed by the seafood fishery of Alabama during 1976 (36). Ri~soucfe Development Potentrial JuhI described under-utilized and latent resources of the Northern Gulf of Mexico (16). These fish resources can be divided into three groups. Large pelagic fish make up the first group and are composed of billfish, dolphin, mackerel, sharks and blackfin, skipjack and little tuna. Coastal pelagic fish comprise the second group, composed of small, surface, and mid- water schooling fish such as thread herring, Spanish sardine, scad, round herring, cigar fish, and anchovy. The third group of under-utilized fish is demersal, ground fish or bottom fish group, approximately 175 species and probably constituting the second largest resource, by volume, in the Gulf (16). Drums, croaker, spot, and sea trout are dominant species of this group. Bullis and Carpenter estimated a latent bottomfishery potential of 2.8 million tons in the Gulf of Mexico (4). Also, Waters estimated that after consideration of shrimp fleet discards, industrial and food fish use, recreational use and other mortalities, approximately 165,000 tons of bottomfish are available for expanded use in the NortheriGulf (42). Although certain coastal pelagic fish are more abundant, some are difficult to catch. Production of such fish as Spanish sardine, round r and fish, p rimarilyv croaker , are boxed, iced, and shipped in the round to fresh fish markets on the East Coast. Species of bottomfish are used in canned petfoods and are made into fishmeal. In addition, meatbone separator technology, which has recently been developed, makes smaller sizes of groundfish processable into forms suitable for human consumption. Problem and Objectives of thSud ?rob lem Interest has been shown in the development of a seafood industrial park facility in Mobile County, Alabama. Several sites for the proposed facility are now being considered. The industrial park facility would provide convenient access for vessel owners and seafood processors to such things as land, utilities, deep water channelization and waste disposal systems. Alabama's seafood industry is established and well-developed. Limi- ted use is presently being made, however, of groundfish resources by Alabama seafood producers and processors and much interest has been ex- pressed in the feasibility of increased utilization of these resources. A plant which would use the ground fish resources has, therefore, been pro- posed for location in the industrial park facility as a viable alternative to established seafood industries. Prior to the establishment of a ground fish processing plant in the seafood industrial park facilitWy, an evaluation was needed of such a plant s - potential profitability. Few plants presently exist which process ground- Objectives The primary objectives of the study were: (1) To estimate costs and returns of processing groundfish in Alabama ; and (2) To estimate costs and returns of operating a groundfish trawler engaged in supplying a ground fish processing plant. Review of Literature Bottom fishery in the Northern Gulf of Mexico came from the need to utilize so called "trash" fish caught incidental to shrimp and other food fish trawis. The problem of how to use these unwanted fish was the subject of a report published in 1907 by the U.S. Bureau of Commercial Fisheries (8). Haskell reported that it was 1952 before a bottom fish industry came into being with the establishment of a petfood plant at Pascagoula, Miss"- ssippi (13). Since that time, bottom fishery has been the subject of several governmental reports. Guthery et. al., Haskell, and Roithmayr, described historical aspects of the industrial bottom fishery, vessel characteristics and operational methods, fishing season and efforts, catch rates, species composition, bottom fish util.i.:.tion and processing methods (11, 13, 30) . Little economic information was available on vessels or processing. In 1973, Juhi published results of a study on economic costs of production of grotud fish and food fish trawlers (15). Information was given for packaging, freezing, storage, selling expense, and margin remained cons- tant between species, Greenfield was able to look at effects of varying selling price, purity of catch or ex-vessel prices. At the 1973 price for minced cod and pollock block of $.25 per pound, assuming minced bottom fish .re equally comparable in quality, and with 70 percent purity of catch, four species (cutlass fish, mullet, whiting, and white trout) appeared to be feasible for processing. At a minced block price of $.30 per pound and 70 percent purity o catch, all species of ground fish became extremely at- tractive for processing. Lea and Roy evaluated the economic feasibility of processing Louisi- ana ground fish in 1976 (18). Three different size plants capable of pro- ducing fishmeal, fish oil, pan dressed fish, frozen minced fish, and frozen fish patties were studied. Capital investment requirements and operating costs 'ere estimated for each product. Contributed cost per pound of pro- ducing each product was developed from these data. Production rates, con- tributed margins for products produced, and estimates of yearly fixed costs were then calculated to obtain an estimate of yearly net income. Return on investment CR01), internal rate of return (IRR), and payback period were caluclated. Computer analysis indicated that only fish patties should be produced. From production of 2,175,088; 4,522,032, and 9',063,144 pounds of product at a price of $.35 per pound, the following returns were realized: P1ant Size RolI..RRPabc Researchers at Texas A&M University assessed the feasibility of several alternative systems for landing and holding ground fish caught incidental to shrimp trawling operations (24). Five methods were evaluated: installa- tion of a separate freezer unit, brine immersion tank, or fishmeal plant on board the shrimp trawler, hiring of an extra crew member to process the ground fish catch, or the use of an additional vessel to which the incident- al catch of ground fish from several shrimp vessels could be transferred. None of the proposed systems appeared to feasible except under very restric- tive condtions. Thet authrs con~lued tat fulutizioofhegod fish resources depended on development of a fishing industry separate from current shrimp trawling operation* Method ofStuf Initial assumptions of plant capacity and products to be produced by the plant were made after consultation with Alabama Marine Advisory Service personnel. The size of the ground fish processing plant was established assuming that five vessels with a maximum capacity to hold 104 tons of fish per trip would supply the plant. The ground fish processing plant was as- sumed to produce five products: fresh fish, pet food, surlmi (a Japanese cooxaodity) , fish n.eal, and fish oil. Information on capital investment requirements and operational costs associated with production and processing of the ground fish catch was collected from secondary sources and contracts with Alabama Marine Ad- cessing plant were then developed from the information collected to esti- mate the profitability of ground fish production and processing. DEVELOPMENT OF GROUND FISH TRAWLER AND PROCESSING PLANT BUDGETS Groun fish Trawer Catch Co sition, 2peaton and P~oc inssi Fundamental to any vessel operator or fish processor are the types of fish taken in the catch. Species composition and size affect the price paid to boat operators and the types of products the plant is able to produce. Catch rates for ground fish are generally higher in sumr and fall and lower in winter and spring (31). A catch rate of 2.87 tons per hour is assumed for June through November (period one) and 1 ton per hour for December through May (period two) . This study assumed .25% of the catch is shrimp and 2% is foodfish (15). Fifty percent of the catch is assumed to be croaker. This percentage is lower than what is found in the literature, but more in line with present catch rates (33). The croaker catch is broken down into three size groups by length. Each length group is assumed to make up the following percent of the total croaker catch (34): LengthPercent of croaker catch Less than 6" 33 6" to 8" 50 4775% of the catch. Vessels were assumed to be capable of holding 104 tons of fish per trip and operating 14.5 hours per day (15). One day running time to and from the fishing grounds was required during the sumer through fail period and 2 days during the winter through spring period. Off-'loading times were assumed to be I day during period 1 and 1/2 day during period two. Based on the above catch-rates and operating assumptions, the.following v~ssl schedle was asumcd o be followed urin h ero ue hog November: 3.5 days at sea 1 day off-loading 2.5 days reprovisioning, repairs, crew leave, etc. 7.0 days total According to this schedule, each vessel would make twentysix trips durii period one. At sea, operations of vessels during period two were restricted to 5 days to ensure the quality of fishi for fresh fish and minced fish pro- duction (32). The following schedule was assumed to be followed by vessels during period two: 5.0 days at sea .5 days of f-loading 25days reprovisioning, repairs, crew leave, etc. 1a- Tables 2 and 3 were constructed to obtain the poundages of fish available from each category per production period. Annual production is also given in Table 4. C round fish Trawler Canital Investment and OperatingCosts Estimated costs of contructing a vessel of the size used in this study was obtained from a ship building firm in Mobile, Alabama. The vessel was assumed to be made of steel, 90 feet in length, with a total capacity of 150 tons, powered by a 520 horsepower engine and 30-kilowatt generator. It was also assumed to have a refrigerated brine system to preserve the catch giving an estimated total construction cost of 415,000 (35). The basic outline of operating costs used by Juhl was followed (15). Costs for fuel, lubricants, nets, doors, cable, and insurance were updated by contacts with local businesses in Bayou La Batre, Alabama; Mobile, Alabama; and Biloxi, Mlississippi. Interest cost of 8.5% was based on rates presently charged under National Marine Fisheries Service Obligation Guar- antee Program of loans for fishing vessels. Remaining costs outlined by Juhl were increased by 30% to account for inflation. Prices paid to vessel owners for shrimp and food fish were obtained from local fishing firms in Bayou La 3atre, Alabama. Pricey for pet food and surimi quality fish were obtained from Smtih (32, 33). Straight line methodi of depreciation for an estimated 20 year life catch principle. The plant was assumed to produce five products using all fish unloaded at the dock and fish waste from plant production units. Fish were ass~umvd to be Sold fresh, grou nd into pet food, deboned and processed into surimi, or processed into fish meal and oil. Figure I illustrates how the catch is handled as it Is transferred from a vessel and processed through the plant. Five vessels were assumed to supply the plant. Vessels were assumed to unlx.d only on ':aekdays with one vessel unloaded each day during the summer- fa.U period. Due to longer trips assumed in the winter-spring period, only four vessels would unload most weeks. One vessel unloads each day with the specific day being determined by the vessel's position in rotation. Some weeks during period two vessel rotation is suchchat all five vessels unload in 1 week. For this reason, an average daily rate was used as a Sasis for plant capacity calculations in period two. Total availability of raw material for processing amounted to 104 tons per day during period one and an average of 36.8 tons per day during period two. Unlading and Sort in Fish were assumed to be removed from the hold of the vessel by means of a pneumatic fish pump which pumps the fish directly into the plant. This system was used instead of the conventional system which uses water as the transporting medium to eliminate expensive waste treatment of water of ter its use. -12- fresh fish section of the plant. Six through 8-inch size croaker are removed, weighed, and sent to the section for mincing. All remaining fish are neighed and transferred to the pet food station. Fresh Fish Productirn The assumed catch composition of each vessel and the quantities going into each production unit per trip were listed in tables 2 and 3. As indicated 520 pounds of shrimp and 21,340 pounds of fin fish are available for fresh fish processing per day during period one, and an average of 184 pounds of shrimp and 7,730 pounds of fin fish are available for processing per day during period two. Processing in this section ::as assumed to be simply a matter of placing the fish and shrimp into 100 pound capacity wooden boxes and icing the fish to maintain quality during shipment to local fish markets. Pet: Food Production Grou id fishi and croaker less than 6-inches in length were assumed used in the production of pet food. Pet food production involves grinding whole fish and mixing the fish with certain ingredients, vitamins, and water. This mi.xture is then cooked. Once cooked the product is canned, sterilized, labeled, cased, and stored until it can be sold. -13- period. In order to translate the plant pet food production into cans per minute (cpm) so the capital inves eat requirement can be estimated, two assumptions were made. Actual equipment operating time was as- sumed to be 15.5 hours during period one, and 7.5 hours during period two. The second assumption was that cans hold 1 pound of pet food. Based on these assumptions, the canning equipment must be able to process 436 cpm during the peak summer-fall period and 318 cpm during the winter-spring period Surimi Production Six to 8-inch size croaker were assumed to be used in the pro- duction of surimi. Surimi is a semi-processed wet fish protein (22). This interrmediate stage product can be frozen and shipped to Japan waere it is used #n production of Kamaboko, an elastic or rubbery type of fjsh cake highly prized by the Japanese consumer (21). Surimi production begins with heading, gutting, and washing of the croaker. Then fish muscle i~s separated from skin and bones by sending the fish through a deboning machine. The resultant minced fish flesh is washed, dewatered, strained, and transferred to a mixing machine where additives are mixed with the minced flesh. This mix- ture is then Packaged, frozen, and stored in freezer until sold. The conm ptsrimi productinprocess is described by Miyauchi, et al. -. 14~ fish .re assumed to lose 40% of their body weight. In the deboning process, another 65% of the remaining weight is lost. Thus, 21% of she whole fish is assumed to be recoverable in minced fish flesh (33). Daily production of surimi. in period one utilized 10,920 pounds of fish flesh per day while period two utilized 3,865 pounds. Five percent sorbitol and ..2 percent sodium tripolyphosphate by weight of minced fish flesh is added to retard denaturation of fish protein during frozen storage (22). Plant production of surimi in period one was 11,488 pounds per day and 4,066 pounds per day in period two. The product was packaged in 25-pound freezer cartonsfrozen in a double contact plate freezer, and stored in the plant's freezer storage space until shipped to Japan. Fishmeal and 01 Production Fish not suitable for use in any of the other production units can be ground into fish meal. This study assumed, however, that all fish are used in other production processes, and only fish wastes from surimi production were used for fish meal production. A fish meal production process varies depending on the nature of the raw material. Gererallyr, the process consists of grinding and coxking the material. After cooking, the material is transferred thrug.h a stra ine-r nd cnrw praesto %remove o lsc nd w ar._ Re-b -15- meal production during the drying phase where it is mixed with the cake. The resultant product is called whole meal. Yield figures given previously indicate 41,080 pounds of fish wastes were available during period one, and 14,539 pounds were avail- able during period two from heading, gutting, and deboning stages of surimi production. Assuming 5 pounds of raw fish produce 1 pound of fish meal, 8,216 pounds and 2,908 pounds of fish meal are produced daily during the two production periods, respectively (17,18). In ad- dition to the fish meal produced, fish oil is also available as a by- product of the fish meal production process. Fish oil also can be extracted from the skin washing tanks of the surimi production unit. Each ton of fish meal assumed to produce 283 pounds of oil, and 72 pounds of oil are produced for each ton of suriwl (6,18). One gallon of oil is assnud2 to weigh 7.5 pounds (18). Production of fish oil in period one totals 210 gallons and 74 gallons in period two. The fish oil is pumped to a 3,000 gallon storage tank. Fish meal is bagged in 100-pound sacks and stored in the plant warehouse. Ground Fish Prcess-La Pl.ant Costs C-12 ta1. Investment Costs Capital Investment costs include the cost of equipment, cons- truion l"o f hbu iingsc, andipurchasingof land. - fi Plant soace r% quirements must be known before building costs can be estimated. Space requirements for unloading and pet food, surimi, ;nd fish meal production were obtained from equipment manufacturers representatives. Data on which to base estlmates of space require- ments to sort ard weigh the total catch and to process fresh fish was nz "-!ii1able. Miller,et al. indicated that 1,800 square feet were necessary to process a mix of fin fish and shrimp in a prototype plant capable of processing 1,000,000 pounds per year (20).AThe same space requirements were assumed to be adequate to handle sorting and weighing stations as well as processing of fresh fish. Addi- tional space to house offices, restrooms, employee's lounge, quality control, and workshop spaces were estimated at 20% of processing space. Storage space is also needed to house the inventory of materials necessary for production and to store plant production. Before this space can be estimated, the amount of inventory and production to be k.--.,pt on sand must be established. Thierauf gives a formula for es- t ima ting amounts of inventory a plant should retain on hand (37). Product delivery lead t yes ;nd inventory reordering costs were not ei tit d for the plant. Therefore, the formula was not used. The amount of inventory the plant keeps on hand was fixed at a 10 produc- CS:ch as sal. t, rc ;rxide, soybean meal, f ish meal, and corn e were -.1 7.- assumed to be stored in 1.00-pound sacks requiring 1.65 cubic feet each (18). Pet food was packed in cases of 48 cans each, occupying approximately 1.4 cubic feet (39,7). Empty cans were assumed to oc- cupy the same space. Space for lids, labels, and fish meal bags was not estimated. Freezer storage space was estimated based on the assumption that one 25-pound freezer carton occupies 1.2 cubic feet (20). The room necessary to house fresh fish production overnight was based on the av:umption that one -00-pound capacity wooden box occupies 3 cubic feet (27). Appendix table, 2 illustrates how storage space require- ;went calculations are made for each storage section of the plant. Total space requxir cements and building costs, including such things as plumbing, iring,. and steam pipes, are outlined in table 10. Total space requircments amounted to 20,130 square feet and total cost of plant construction is $669,088. Land costs for the model plant were not estimated. An initial assumption of the study was that the plant is located in a seafood industrial Lark facilit.; - 7.here such things as land, deep water access docking :space, and ; e~ to waste disposal systems are available. Land adequate for the plant was, therefore, assumed to be leased from a state or local.. governmental agency which has developed such a site. -1$- plant output. Variable costs are those costs which vary depending upon plant output. Fixed costs are divided into six categories. priion. Depreciation of buildings and equipment was cal- culated using the straight line method. Salvage value (S) for a particular item is subtracted from its replacement cost (R), then divided by the expected useful life of the item (L) to obtain annual depreciation (1)). Salvage values for buildings and equipment is as- ~umed to be zero. Depreciation is then calculated using the following formula: R- S5 L Classificaticns and life expectancies used for buildings and equip- ment are taken from Greenfield (10). Total annual depreciation on buildings ani equipment is $251,950, table 12. Interest. Interest on capital investment was calculated at 9% .E average capital investi enr. Average capital investment is the total capital investment divided by 2 and represents the average size of the debt throughout the repayment period. Estimated annual inter- est costs amounted to $89,303. Insutrance. Cost of i::3uring a plant and its equipment was obtained from an insurance agency in Mobile, Alabama (12). Included -49- Twenty-two trips could be made during this period by a vessel following this schedule. Based on vessel trip schedules, operating hours, and catch com- position, tables 2 and 3 were constructed to obtain the poundages of fish available from each category per production period. Annual production is also given in Table 4. Ground Fish TrawLer Capital Investment and Ooetinn Costs Estimated costs of constructing a vessel of the size used in this study was obtained fr.om a ship building firm in Mobile, Alabama. The vessel was assumed to be made of steel, 90 feet in length, with a total capacity of 150 tons, powered by a 520-horsepower engine and 30-kilowatt generator. It was also assumed to have a refrigerated brine system to preserve the catch giving an estimated total cons- .ruction cost of $415,000 (35). The basic outline of operating costs used by Juhl was followed (15). Costs for fuel, lubricants, nets, doors, cable, and insurance vvre updated by contacts with local businesses in Bayou La Batre, Alabama; Mobile, Alabama; and Biloxi, Mississippi. Interest cost of 8.5% was based on rates presently charged under National Marine Fisheries Service Obligation Guarantee Program of loans for fishing S traight line method of dnprecia tion for an estiate 20--year life was used to depreciate the vessel and zero estimated salvage value was assured. Ground Fish Processing Plant Oerations The mtodel processing plant was designed on the total utilization of catch princip o. The plant was assured to produce five products usig all fish unloaded at the dock and fish waste from plant production units. Fish were assumed to be sold fresh, ground into pet food, deboned and processed into surimi, or processed into fish meal and oi.. Fi ure I. illustrates how the catch is handled as it is trans- ferred from a vessel and pocssed through the plant. Five vessels were assumed to supply the plant. Vessels were assumed to unload only on weekdays ith one vessel unloaded each day during the suer-fall period. Due to longer trips assumed in the winter-spring period, only four vessels would unload most weeks. One vessel unloads each day with the specific day being determined by the vessels position in rotati n. Some weeks during period two vessel rotation is such that all five vessels unload in l week. For this reason, an average daily rate was used as a basis for plant capacity :; ?cul ations , $40,000 per year. P r~tv Taxes. Property taxes on building and equipment .were paid by the plant. Taxes on land were not included since the land and equipment were $568,725 and $1,230,949, respectively. Based on these assumed assessed values, $22,046 in property taxes were paid annually by the plant, Lease. Land required for the plant was estimated as 2.5 times the space requirements of the buildings to allow for such things as emnoyee parking spaces, outside storage spaces, and loading areas (17). Bulding square footage requirements were estimated at 20,130 square feet. Lard necessary to hotse all plant facilities was estimated at 50,325 square feet or 1.15 acres. Land leasing costs in she Mobile area for industrial use are approximately $S80 per acre per year giving total annual leasing costs of $920 (29). Miscellaneous Fixed Costs. License fees and contractual ser- vices such as refrigeration equipment maintenance were included in tis category. These costs were estimated at $1,000 annually (17). Variable costs were divided into five categories. Consumable s. Consumables refers to items used directly in the pro uc tic'n process. Exampltes of ccnsuxuables are ingredients such as fish, sodium tripolyphosphate used in surimi production, or items such as cans, labels, and lids used in pet food production. No consumables are access~ary in unloading arid sorting fish. process ing. Eleven consumables are necessary for pet food production, table 14. Ingredient quantities necessary in production were calculated based on assumptions outlined in the previous section describing the pet food productio:n process. To obtain ingredient quantities, the percent by weight for each ingredient listed in the pet food formula was multiplied by the total output for each production period. Numbers of cans, lids, and labels, were also based on this output. Case rcquirenrets were calculated assuming 48 cans to the case. Prices for ingredients were as indicated in the table, Total costs for consunables for each production period were $48,916 and $17,312, respectively. Four consumabl us items are necessary in the production of surimi, table 15. Five percent sorbitol and .2 percent sodium tripoly- phosphate by weight of minced flesh are added. The two ingredients :alculations were computed on the basis of 10,920 pounds of minced flesh for period one and 3,865 pounds of minced flesh for period two. frne:er carton usage t, as calculated by dividing total output per prodIuction period of 11,488 and 4,066 pounds, respectively, by freezer carton capacity of 25 pounds. Prices for each consumable were as indicated in table 15. Total daily costs for consumables fo.-r sur im production during each period were $4,169 and $1,475, Total consumables costs assuming one bag costs $.20, were $17 for the smmer-fall period and $6 for the winter-spring period (25). Enje reqe iremaen its. Energy requirements for each unit of the plant fall into two groups. Electrical energy is needed to run pumps, conveyors, grinders, mixers, and other equipment. Steam is needed for pet food and fish meal processing. Horsepower ratings for each piece of equipment are shown in Appendix table 3 through 6. Horsepower was converted to kilowatts by multiplying by .76 since electricity costs are based on kilowatt hours (KWH). To obtain plant electricity consumption, all equipment was assumed to operate 15.5 hours per day during period one and 7.5 hours per day during period two. Assuming electricity costs of $0.45/KWH, daily costs for electricity in each period were $266.00 and $129.00, table 16 (2). Eleven hundred pounds of steam were assumed to be needed for each ton of raw material used in fish meal production (6). Canning of fisheries products requires approximately -boiler horsepower per case of production (14). This equates to approximately 15 pounds of steam per case if initial temperature of water used to generate steam is 21.1?C, table .17. Total steam requirements for each period were 149,149 pounds for period one, and 52,787 pounds for period two. .u4 - steaa (5). Natural gas which was assumed to be used as fuel contains 1,030 BTU's per cubic foot, therefore, 1.42233 cubic feet of natural gas was required to produce 1 pound of steam (26). Daily natural gas consump tion was estimated to be 212.14 thousand cubic feet (NCF) of gas for period one and '15.1 MCF for period two. The rate charged to large commercial users of natural gas for uninterrup table service is $1.711 per MCF in Alabama giving costs for steam production in period one of $363.00 per day (1). Steam generating costs in period two are $128.00 per day, table 18. Labor. Little highly' skilled labor was assumed to be necessary, thus minimum wage was assumed to be paid all workers except manage- ment. During period one, the plant was assumed to operate on two 8- hour shifts per day with one 8-hour shift being sufficient during period two because of lower catch rates of vessels. Labor requirements to unload the catch were provided by the equip- ment manufacturer. o information was available on personnel require- ments necessary to sort and weigh the catch or to process the fresh fish. Therefore, the personnel requirements were estimated based on discussions with Alabama Marine Advisory Service personnel (28).% Labor requirements to unload, sort, weigh the total catch, and process the fresh fish for each 8 -hour shift are shown below: Personnel S umne r Winter (number)(number) -25- Labor requirement esti ae s were obtained from a canning equip- tent manufacturer familiar with pet food operations (44). Labor requirements for pet food processing for each -hour shift are as follows: Personnel Summer Winter (number) (number) Grinder 1 l Blender-cooker 1 1 Canfiller and closer l I Retort 5 3 Labeler 1l1 Case set-up and caser 1 1 Palletizer IlI Total 11 9 Davis (6) estimated the labor requirements for an 8-hour shift of surimi production as follows: Personnel Summer Winter (number) (nurtber) Filleter 2 2 Deboner 1 I Dewate re r I I Strainer 1 1 -26-. Management personnel include one plant manager who is responsible for overall plant operation, a shift supervisor for each 8-hour shift, ~one ecre tary, and one clerk. Fringe benefits were estimated at 12 percent of the total wage costs (18), FICA tax was based on a rate of 6.05 percent of daily wages making total daily labor costs amount to $4,232 for period one and $1,665 for period two, table 19. Wate, SWwag, and Maintenant e . Water, other than water used as an ingredient in production, is required in ice production, steam generation, and for the proper operation of some machinery used in surimi production. Ice requirements for fresh fish processing were 4,472 pounds per day in period one and 1,563 pounds per day in period two. Assuming 1 gallon of water weighs 8.3 pounds, approximately 539 gallons of water would be needed daily during period 1 and 188 gallons during period two. Steam requirements were 149, 149 pounds per day for period one and 52, 787 pounds per day for period two. Water necessary to generate the steam was 17,970 gallons and 6,360 gallons, respectively, for each production period. water is required for the fish washing machines, the fish filleting -27- gallons in period two. With water cost per gallon assumed to be $0.00O8 (43), aily cost for water usage was $39 in period one and $17 in period two. Liquid wastes fron surimi production and recondensed water from .team production were assumed to utilize the sewage disposal system provided at the site. Cost of using the sewage disposal system was assumed to e $.60 per 1,000 gallons (28). Wastes entering the system were 48,855 gallons per day in period one and 21,308 gallons in period two for a daily waste disposal cost of $29 and $13, res- pec tively. Maintenance costs were assumed to be 5 percent of initial equip- ment investment annually (17). Investment in plant equipment was *l,315,433 giving annual maintenance costs of $26,309 or daily average maaintenance cost of $104 assuming 254 days of annual operating time. Ms;scellaneous Variable Costs. Miscellaneous costs include such items as lubricants for machinery, cleaning utensils and supplies, and various office supplies such as stationary, typewriter ribbons, and telephones. These costs were estimated at 5 percent of daily variable costs for each production period. Daily average miscellaneous costs were estimated at $3,035 per day for period one and $1,087 per day for period two . the peak production period of June-November amounted to $63, 743. Daily variable costs for period two amounted to $22,836. Based on 127 operating days for each production period, total annual variable costs were $20,995,533. Fixed costs, Table 2 were computed on an annual basis and totaled S405,219, giving total annual operating ex- penses of the ground fish processing plant of $11,400,752. Processing Pant Revenue Esriaed revenue for each production unit was based on the following prices for finished productions. Fresh fish $ .30 per pound Fresh shrimp 1.90 per pound pet food .14 per pound Surimi .80 per pound Fish meal .05 per pound Fish oil .15 per pound Price for fresh fish was based on the February 17, 1978, price of l arge croaker (40) since croaker was estimated to make up 8.1 percent of the fres h fish catch. No data were available on the quantity by size of the shrimp found in the catch of groundfish trawlers. After discussions with Alabar:.a Marine Advisory Service personnel, $1.90 was selected as a representative price (28). on*290W by Smith (32). Fish meal price was based on prices received on November 23, 1977 and November 30, 1977, for fish meal processed from tuna scrap and which contained 50 percent protein (40).eFish oil prices were assumed to be the same as used by Kuinnerow, et al. (17). Revenue computations for the ground fish processing plant are given in table 23. Annual revenue for the ground fish processing plant amounts to $12,712,700. Pr cuss .no, . liant Re turn Net returns after deduction of total costs and estimated federal and state income taxes amounts to $'616,616, table 24. This amounts to a 62 percent return on average investment. Assuming that all the costs of capital investment were financed over a period of 5 years and repayment of the loan principal is made at a rate of 20 per year, an amua1 principal payment of $396,904 would be required. Money used to meet the priacipal payment came from cash spendable income and also f om the $24.2,854 all .:sated as depreciation. Assuming all depreciation goes to meet the principal payment, an additional sum of. $144,954 was required from net spendable income, making $471,622 available to the owners as ca.-:,h spendable income. 30.- order to stimulate new investment in vessels by potential suppliers. Vessel owners will also have to receive additional compensation for their catches due to the necessary restrictions required to maintain the increased quality of the catch. Higher prices will have to be paid to compensate for less total time spend fishing and the lower total annual production which results. Esttated annual operating expenses are shown in table 25 for the ground fish trawler supplying the plant. Operating or variable costs account for 70 percent of total cists and total $84,322. Owner- ship costs make up 40 percent of total costs and total $55,246. Fuel costs, fishing gear maintenance and repair, and insurance make up the major portion of operating costs. Fuel costs alone account for 65 percent of ope Sting costs and 39 percent of total costs. Interest and depreciation account for 19 percent and 15 percent of total costs, respcctively . estimated total annual pr:duction amounts to 7,322,000 pounds. Table 26 gives the breakdown of annual production going into each product line and the resulting vessel owners expected revenue. Costs and returns for the hypothetical ground fish trawler are shown in table 27i. Owner's net returns after deduction of total costs and crew shares amounted to $75,809, representing a 36.5 per- tbn of owner'sa net returns must be used to repay loans for capital investraent. A principal paymnt ofS31.125 is used which represents a 11) percent annual am r tizatLion of the original loan. An additional $10,373 is required after use of money allocated to depreciation to mfg-yet the principal parment. M4oney is substracted from owners net re- t: s to obtain the funds required to meet the loan payment. Thus, the owner has $65,434 awilabl e as net spendable income. The average price received by the ground fish trawler owner is $88 per ton. This i: considerably higher than the $55-$60 per ton tzhich can be obtained in t:. pet food industry. For this reason, a breakeven price is calculated to give the boat owner an idea of the price range within which he can operate and still meet expenses and principal pay'ment but have minimal cash spendable income. To zal-uate breakeven price the following fobnula is used: 'TC +pP .6 x TP where P = Minimum price in dollars and cents per ton, TC cot l costs of $139,568, PP= principal payment of $10, 375, and TP=total production of 3,661 tons. To breakewen, the bcat o .ner must receive an average price of $68.26 132- fish. used in pet food production. Fish used in pet food production represent 98 percent of the catch by weight and 89 percent of the value . Ownership and operating casts are assurmed to be the same as for the ground fih trawler with the exception of fuel and lubricant costs. These costs are increased to account for the additional 460 hours per year the pet food trawler can spend fishing. Expected annual production fir the pet food trawler is 8,295,000 pounds and the expected revenue totals $274,140, table 29. Costs ad returns for the pet food trawler are shown for compari- son purposes in table 27. 'Net returns to the owner amount to $17,723 which represents an 8.5 percent return on average investment. Net spendable income after Principal payment is $7,348. SI2' MRY AND CONCLUSIONS S u sart Development of ndk. r-utilized fisheries resources in the Gulf o Mexico caa have an important impact on the local economy of south Alabama and the State as a whole. To assess the economic feasibilityr of incraasin~ the use of under-utilized ground fish resources of the Gulf, the feasibility of supplying and operating a processing plant was determined by using e pital budgeting techniques. Quanti ties o~f fish available for processing were estimated by ,agssuing thaive vessels,_ each withte capacityto'cacha maxi- 33- trawlers of the Gulf of Mexico. The production year was also divided into two periods to simulate the peak production months of June through November and the slack product-ion period of December through May which iz charateristic of' the ground fish fishery. Vessel schedules of inport and at-sea time were then constructed based on a high catch rate for production period one and a low catch rate for production period two. From the vessel schedules and expected catch composition of each fishing vessel in each period, an estimate of total raw material available for each category was obtained. Five product lines were hypothesized for the plant. Fish of the proper kind, size, and quality, and any shrimp caught were assumed to be sold fresh and in the round. Six to S-inch size croaker were assumed to be of the proper size or be minced and then used to make surimi hich is exported to Japan. All remaining ground fish were assumed to be canned as pet food. In adition, in keeping with the principle of total utilization of catch, fish wastes from the surimi production unit were ass zd to be used in the production of fish m'.1 and oil.# The processing plant facilities were assumed to be located in a seafood industrial park facility near the city of Mobile, Alabama. Several sites for such a Com~plex are currently under study. Capital 34- for it-em needed in the production process, energy costs, labor costs, and water and sewage costs. Tota capital investment in plant and e'juipment to process 36,610,000 pounds *f g ound fish per year were ~.,i, 93' 511 Annual ,perating e.penses ere $11,400,742. Estim ates of expected revenue from plant operations were based o:. wholesale prices which were close to current market conditions. E tt:uaizes of whokosale price for fresh fish and shrimp were $-30 per pound and .9t0 per pound, respectively. A pet food wholesale price of $.1.4 per pound was used, and a wholesale price of $.30 per pound w as used for surimi. r ish " meal and fish oil prices were estimated at $.05 per pound and $.15 per round, respectively. Annual re vn ue from ground fish pr;-cess ng amounted to $12,712,700. -,,e returns amounted to $1,311,948, and net returns after taxes were $616,616. Return on average investment was used as a measure of the project's profitabIlity. Return on average investment was 62 percent. Nt cash spendable income after deductions of a principal payment on total capital investmont amounted to $471,662. A ground fish processingopant requires a higher quality product than is nor:,ailv needed in a plant which produces only pet food be-- cause some of the p rodiction is eventually used for human consumption . If refrigerated brine is used as the means of preserving the catch. ..35- fish trawler were estimnate;. The vessels used in the study were assumed to be 90 feet in length with a gross carrying capacity of 130 tons. Estimated capital investment requirements for this size vessel. were $415,000. Ownership and operating costs were alsc es eisted and incLude such things as interest on capital investment depreciation, fuel, repair and maintenance, fishing gear replace- ment, and insurance. Estirm~ated annual ownership and operating ex- senses totaled $139,568. Based on prices of $.l0 per pound for foodfish, $-70 per pound for shrimp, $.07 per pound'for surimi-size fish, and $.03 per pound for pet food quality fish, and an estimated total annual production o4 7,322,000 pounds, a ground fi3h trawler owner realized 36.5 percent return on averaeg investment aft~r alto-ing for crew shares and op- 2rating costs. Net cash p ndabe incom after allowance for a princ w~pal paymonc amounted to S65,434. in contrast, a vessel operating under optimum conditions in the pet f od industry Lverages a* total annual production of 8,295,000 rounds of fish., but realizes only -$.03 per pound for 98 percent of the catch. Return on av1ra ue investment for a pet food trawler is R.5 rercent and a pet food trawler owner realizes a net spendable in- come of $7,348. 36~ Con clus ions increased utilization of ground fish resources appears to be highly profitable for the processor and the vessel owner. Although eve ry effort has been made to base the feasibility analysis on assumptions which realistically fit the ground fish fishery, potential investors should realize profitability is restricted to conditions exactly as outline~d. Ad jus tnent s hould be made to fit individual investor requirem~ents ad the investor's own knowledge and exeri- once of the industry: should be utilized to modity the study conditions to meet specific situations. This study does indicate, however, that increased utilizati ,n of ground fish resources can be a feasible fishery resource development :itornative. lw3 7- BIBL IOGRAPHY 1. lab a aa Gas Corporation, February 1978. Private interview with representative via telephone. Mobile, Alabama. 2. A1ba a Power Company. February 1978. Private interview with representative via telephone. Birmingham, Alabama. 3. Brown, Rich and Robert Palmateer. 1976. Seafood plant design, some planning considerations for the small processor. Washington Sea Grant Marine Advisory Program, University of Washington, Seattle, Washington 46 pp. . flullis, H. R. and J. S. Carpenter. 1968. Latent fishery re- sources of the central west Atlanttc region. In D. W. Gilbert (editor) The future of the fishing industry of the United States, P. 61-64. University of Washington Publications in Fisheries, New Series Volunie IV, Seattle. 5. Cleaver-Brooks Boilers. January 1978. Private interview with representative via telephone. Birmingham, Alabama. 6. Davis, J. W. January, 1978. Unpublished Data. Nasua Nova Scotia Corporation, New York, New York. 7. Dessert, Fred. January 1978. Private interview via telephone. Winn Dixcie Food Stores. Montgomery, Alabama. 8. Field, Irving. 1907. Unutilized fishes and their relation to the fishing industries. Bureau of Fisheries Document 622. 50 pp. 4m 38 S, 10. 1973. The Japneesuiiarkt,oppormity for minced croaker. Notes supporting presentation d e Orleans, Louisiana, October 31, 1973. 11,. G threy, E. J, G. X. Rusell, A. F. Serra ad A. Rohr. 1975. $ psis of the Nothern Gulf of Moxico Industrial and foodfioh industries. Mari Fisheries Review. 39 (7) $111. 12. ll, Wayn. October 1977. Private interview via te Iua s r-Croom Insurance Agency, Mbile, Alab . 13. wuoke11j V. A. 1961. Gulf of xico trawl fishery for indu trial species. Comrcial 'ishrie Rview 23 (2) :14. 14. Jarvis, N. D. 1943. Principles and sods in cug of fishery products. U.S.o pr at of Interior Fish and Wildlife Service Research Rport 7. 366 pp. 15. Juh, Raf* 1974. Econmimacs of Gulf of t sIndustrial and foodfish trawlers. Marine Fisheries Review. 36(U) : 3942. 16. . 1976. Notes on the udruti izd fishery re-m sources of the Gulf of Moxico. Proceedings of the First Annual Tropic and Subtropical Fisheries Technlogica Conference. 2:538-547. 17. Ku rov, Max, Richard Veis trup, Davis S tuibr, Robert Lindsay. 1977. A preliminary study of the f ishal industry, feasibility - 39. 25. Ralst;n Purina Ccmpany. March 1978. Private interview with represemtati 'e via telephone. Montgomery, Alabama. 2.'. Ramer, R. 11. 1976. Energy--An introduction to physics. San Franc sco, :VW. H. Freeman and Company. 528 pp. 27. Racsey, V. E. December 1977. Private interview via telephone. Boca Raton, Florid 4 . 28 Rawson, M. V. February 1978. Private interview via telephone. Alabama Marine Advisory Service. Alabama Cooperative Extension Service. Mobile, Alabama. 29. . September 1977. Personal comunication. Alabama Marine Advisory Service. Alabama Cooperative Extension Service. Mobile, Alabama. 30. Roithmayr, C. M. 1965. Review of industrial bottomfish fishery in northern Gulf of Mexico. Commercial Fisheries Review. 27(1): -l6. 31. R ~sse1, Michael and C. 0. Neal. 1977. An atlas for industrial b,)t tomf ish fisherman in the northern Gulf of Mexico.u Sea Grant Advisory Service. Mississippi Cooperative Extension Service. 32. Smith E. M. 1977. Market trends for fish and surimi in Japan. tnpublished data. National Marine Fisheries Service, Pascagoula, Mis sis~ippi. 33s Stinson, ane October 1977. Private interview via telephone. Be xde-: Sipbui1. :Ccrn a y$ Mobile, ALbama. 3O. Swingle, ; ayn.2. 19 75. Anlysis of commercial fisheries catch data for Alab .:a. Alabama Ma'rine Resources Bulletin. 1:26-50. 3.Thierauf, R. J. and R. A. Grosse. 1970. Decision Making Through Operations ?Research. New York: John Wiley and Sons, Inc. 570 pp. 38. U.S. Department of Commerce. 1977. Alabama landings annual su nary, 1976. Current F isheries Statistics 7220. National O ea is and Atmospheric Administration. 5 pp. 39. U.S. Department of Coerce. 1977. Canned Fishery products annual s' urary, 1975. Current Fisheries Statistics 6901. National Oceanic and Atmospheric Admi.nis tration. 12 pp. 40. U'.S. Department of Cormerce. 1977-78. Fisheries Market News Reports. Commercial Development Se rvices Branch. National M arine Fisheries Servi'ce, New Orleans, Louisiana. 41. C.S. Department of Commerce. 197 7. Fisheries of the United States, 19 76 . Current Fisheries Statistics 7200 National Oceanic and Atmospheric Admina.,tration. 960 pp. ~2. Waters, tvn 1977. Notes from presentation given at Gulf States Marine~ Fisheries Csittee meeting. Mobile, Alabama. 43. Water Works Board. January 1978. Private~ interview with Table 1, Eight Most Valuable Seafood SpeciesLaddIAlba,17 Shrimp (heads on) Oysters (meats) Croaker Red Snapper Blue crab (bard) Flounder White sea trout Yu1e t Dollars 30,393,075 1,155,475 873,337 387,670 281),108 195,868 153,014 92,492 Pounds 18,689,887 1,236,058 6,313,486 634,855 1,298,653 803,273 1,344,708 865,093 SOURCE: Alabama Landings, Current Fisheries Statistics of the United States (38). molmol . Landed In Alabama, 1976 Table 2. Assumed Catch Composition Of Alabama Northern Gulf Of Mexico Groumdfish Trawler, Period One, 1977 of Pounds Pounds Product Catch Per Trip 26 Trips - Use Shrimp Food fish (other than croaker) Grounmd fish (other than croaker) Croaker 6"fl(33%) 6-m8" (50%) 9of1 1 s7 0.25 2.00 47.75 16.50 25.00 8.50 520 4,160 13,520 108 ,160 99,320 2,582,320 34,320 52,000 892,320 1,352,000 459,680 Fresh fish market Fresh fish market Petfcod Pe t food Minced fish Fresh fish market a100.00 208 ,000 5,408,000 I,,L,, Total Table 3. Assumed Catch Composition Of Alabama Northern Gulf Of Mexico Ground Fish Trawler Period Two, 19 77 Percent of rd catch Per trip 22 TriD Use Shrimp Fodt fish (other than croaker) Grour d fish (other than croaker) 6" 6 981 0.25 2.00 217.5 1,740.0 41,785 Fresh fish market 38,230 Fresh fish market 47.5 55 913,95 Peto 16.50 25.00 8.50 14,355.0 21,750.0 315 ,810 473,500 162,690, Pet food Minced fish Fresh fish market ot1000 3 7,000,0 1,914,000 . Total Table 4Y Assumed Annual Production Of Alabama Northern Gulf Of Mexico Ground Fish Trawler, 1977 Product Shrimp Food Fish Pet Food size fish Surimi sire fish Total Tons 9.15 384.40 2,352.20 91.5.25 3,'561.0O Pounds 18,305 768,810 4,704,385 14830 r500 7,322,000 ---- dram Figure 1. Relationships Of Ground Fish Processing Plant Production: Units f M' ! r' . s J 11r v r Tab? e 5. Foriuia Used in Pet Food Production Unit of Ground Fish Processing Plant In edi ennc ;Water Fis1,h Co rn ma Soybean meal (49% protein) Sal t iiri:pre-mix Iron oxide Total Per-etbvYweiht 1'9.10 334.00 9.80 7.50 .40 .03 100.00 :0IR C .sR. T 1L"vell, s ft scr rprtk X30m~en"1t oFisheries and Al2.L;ed Aq'.:ac utues , Auburn University, Auburni, Aabama. 0. Table 6. CapitalInTvestment Req~uiremuents And Costs For Unloading, Sorting anid Fresh Fish Production~ Units, Of Ground Fish Processing Plant,?Xlabama, 1977 dlars Una adin g pneu ttic f.sh pucnp each 25 ,000 1 25,000 Sort , g com'~e or each 2 ,625 1 2 ,625 ocrrin g baskets each 13.75 120 2,250 Incustrial p latfo ri scales each 1,605 1 1,615 Fresh f. sh ice .aahine each 11, 000 .1 20 Yr. la cost 429,490 stuipptag anda nd1,i..i...n9;' iota'& cost 45,16+ "' See Appendix Lible I for description and source of equipment, Table 7. Capital tnvestz~ent Requirements and Costs For P~tfcod ?r oduc ticn Unit Of Cround.Fisli Processing Plant Alabama each each each each e ach each each each each each each each "w.xer/c coker Can filler C n closer Re r C ndola cars Labeler Case set up Cas e r~ ti Cas r i... ie syoit er s; ship;.ping arA i nstallaticn ' This 1.x,000 42,500 36,000 5,000 15 ,000 700 13,21 19,000 21,000 33,000 25,000. 14 ,290 735,000 0" -1 *-Os" 1 2 1 1 30 1 1 1 See Appendix Talle I for description and source of equipment. ',.a r s 15,000 '85, 000 86,000 75,000 75,000 21 ,000 13,210 19,2000 21,000 33,000 25,000 1 4 ,290 150,000 632,500 4 '4 . 576 ,77 5 i i a8. Capital Investment Requiremnents And Costs For S ur itni P roduc- ti.on Unit OM Grc und.Fish Processing Plant Alabama, 1977 :Y . Washer Filleter Washer Debone r washer Dew~aerin.:g sieve Press S trainer HoLding tank Stuffer and weigher Stuffing tab.le Plat e freez-r 3 lock pans !I cellanecus Flu.:es and ccn': evors tnit-ial cast ins :a..I ati o n Lot" Cos0t each each each each each each each each each each each each each Cost/ .it..a.. dollars 15 ,808 42,269 11,556 79,622 1,500 5,000 25,000 14,000 500 20,000 40,400 300 X9,000 Cr ii s 1 1 1 I I I1 1 I I 1 600 dollars 15,808 42,269 11,556 79,622 3,000 5,000 25,000 14 ,000 500 20 ,000 40,400 19,0CC 3,7 00 235,155 19,961 .3054 16 See Appendix Table I for description and source of equipment.& Table 9. Capital Investment Requirements And Costs For Fish-Heal And Oil Production Units Of Ground. Fish Processing El 7t Alabama 1977 Item-L Unit Cost/Unit Units Total Fishmeal and oil. plant Oil storage tank Initial cost 7% shipping and installation each each dollars 243 ,OOO 1,195 dollars 245,000 1,195 246,195 17,9234 Total cost See Appendix Table -I for description and source of equipment. 263,429' Table 10 . Space Requirements And Building Costs For Ground Fish Processing Plant, Alabama, 1977 Item Souare feet Production are a Dock Fresh fish P e tfood Su r iri Fishmeal Office employee work-~ shop, quality control toe&area Dry storage Holding freezer Holding cooler Total 1,740j1/ 1,4O0 / 1,841I.V 8322?8/ 649.! I1 20, 130 cost/ dollars 21 4.1 41 41 41 32 21 80 65 Cost dollars 1,344. 13,800 71,340 172,200 57,400 38,912 174,762 51,920 XL102 669,088 Browni et al. (3) . Temco ;tnc. , Bellevue, Washington, December, 1977. Mil1.:le r et al.. (20). Petfood equipnment space requirement of 1,450 sq ft plus 20 percent. nassau ova Scotia Co., New York, NY, January, 19 78 . Kar Birow et al. (17). Twenty percent of production area total space of 9, 204 sq ft. From Appendix Tabl.e 2. I/ 2/ 5/ 6/ ONNOMMMIEWAMOSSOMN A Table 11. Total Capital Investment Costs Of Ground fish ?rocessing Plant, Alabama, 1977 I4 em Cost do liars 6699088Building Equipment Unloading, sorting and fresh fish units Pet food Fish meal Surlii Office eq ipment (estimated Subtotal *1iscefl aneous equipment and tools (1%) Total capital investment 45,40:: 676,775 263,429 305 ,116 1,964,872 1,984,521 now Annua. Depreciation Costs Of Ground fish Processing Plant Buildivngs And Equipment, Alabam,. 1977. tem Buildings Processing equi prent Office equipment Niscel aneous equ:ip~nent and tools F .. s" maea2. plant and storage tank Boilers Total depreciation Cz'st Deprecia~i.on dollars 669,088 877,3c;5 5,000 19,649 263,429 150,000 Lire years 331/ ,1/ S0 do liars 20,275 175,471 1,250 3,275 32,929 X51, 950 IGreenfield (10) . o Assumed . Table 12.0 mkw. Taible 13.0 Estimated Daily Consumables Usage And Costs For Unloading, Sort- ing And Fresh Fish. Production Units, By Period, 1971 I1Lem Unt It Ft itIoxL's Fl' sh 'rot-itcost cost/ un)it dollars 1*24' Pounds A Stur WItter Shne inter ta ts uits __ Cosit.cot do 1.lars (1o1lars 2 6 9 u j94 3 36 117 12 ,3602 / 7t814 2L k781 2,572 898 V .ron E. Rant,;ey, Inic. , loca Raton, FIlorida, Dec ember 19177 2/ Quality S.ya foods, Bayou La a t res Alabam~a, November 1977. w-.r + r wr.w +..+ w.. " . r" " r. r w ".y.."+..r.. . ww"r r.+r r . +rw..W. . rr r.i.rw r. ww- ... r r..r.+" r. ... w. +^.. .r.Y rw . . + .+w r....r.w M f "+ww+r . ... w . +w ,. ... ,. M -fi r .. M + t .. w.r r r".tw W v w, r . . w . .M wrrM,"+ .. 1 - " """ " -04-00- Table 14. Estimated Daily Consumab le Usage And Costs For Pet-food Produc- tion Unit, By Period, 1977 Cosh/ Suimer Winter Summer Wne Itemi Unit unilt Units units Cost cs dollar! do!tIarsdoar 141atteLc ga llon *0008!-' 23,951 8,419 197 Cornmeal pound .10t3! 39,681 1 4 t,04t6 3,9691,0 Soybean eail poundI. 10154' 30,373 101,149 3,0831,9 Vitamin premix pound .452' 688 244 31011 Sallt poulnd1.037 2/1,620 5713 52 1 Iron oxide pound .10 3/ 121 43 124 Lidsi each . 0 1 5 5 1"- 404,970 143,327 6,2812,3 Cane; each .068264' 404,9/f) 143,327 2 7 ,64 3918 Labe 1s ea"Ic1h .003825/ 1404,97() 14 3,32/7 1,55154 CAI ;eeach .2355?t' 8,437 2,986 1,98770 p~~ ound .03 l 33,64~0 47,298 4 009 149 rot a t148 916 17 31 -Water Works, fMobilec, Alabama, January 19/8 (4 ) Zi"T he I ugred lent Marke t", Feedsitui s, June 27, 1977. Mountaiare (Xporat ion, North Li tt.eI Rock, Arkans;as, December 1977 J41a1 lee Coorporat tl, New Orle ans,*[ouisiana, December 1917. Li jC. No .:1Smi ths, Usher' Markeet. i g SpecIal ist , Nat'tonal N. ar 1w' Fiahe Iit s Service, fve- bert'19 78. Table 15. Estimated Dily Connumbles Usage Arnd Costs For Surial Produc- tion Unit, By Period, 1977 Cost/ Sinnr Winter Simmr Winte item unit " unit units units dols do:lr Sodlum tripoiyphios ".3~ paea03522 8 3 Sorbitol 0 . 680 -' 546 193 3713 Freezer cartons each 0.328 - 460 163 151 5 Fish each l07 " 529000 18,404364 Total4,169 147 U ~CChemical Division, Philadelphia, Pennsylvania. March 1918. VICI Unitedl States, Wilmington, Dolaware. March 1918. WPM Consolidated Box Company, Rirmingham, Alabama, March 1978. {Smith (32). Table 16. Estima~ted Daily Ground fish Processing Electrical Requirements And Costs, By period, 1977 Ki lowat ts Swuw, r Winater S*uwmer Wne Prod trt t i e or aeusae st 14 castc number kwh kwh c1(toiLs dolrs dollr UnI0tEadlug, sorting and f rests fish 50 115 375 .045 35 1 Pet food 62 961 465 .045 43 2 Stir [it i 208 3,224 1,560 .045 145 7 Nisht meal 61 945 457 .045 43 2 . twiI 38 5,9+.2,57 26 12 266 129 38[ 5,905 2,857 Tota I Table 17. Estimated Daily Ground fish~ Processing Steam Requirements By Period, 1977 It em Fhfishmeal Pet4 food To tal r i n c o ns te un i t 1100 15 Unit Surmmer Winter Su nitr Winter tort / 2/ case 20.54 8,47 727 2, 98( 2 2, 594 12 6L5!)5r 149, 149 1,991 44 ,790 52,81 1/ -It~piL of raw matertil per daiy, -Output per d .y. ...-.... -.....-........ ,,..,........r..........., Table 18, Estimaited Daily Ground. fish Processing Steam Costs, fly Period, 1977 P r i Octt u ceent pomld steam - (MFt") Cst~ 1 149,149 1.42233 212.14 1.71133 2 52,178/ 1.422133 75.10 1.71112 Tabl~e 19. Estimated Daily Ground fish Processing Labor Requirements And Costs, By Period, 1977 Laborers' 1 Summer Winter number numbe r Work titime Summer Winter hours h ours Hourly Summer Winter ratea cost Cos t do! :irs dol lars do I~ars Production workers Unloading, sorting, weighing & fresh f ish 54 PeI food 11 Sutir im i 9 Fish meal 3 Warehouse Workers 2 ~1;a~meitW ork er s Plant manager 1 Shift supervisor 1 Secretary 1 Clerk 1 Total Wages Fringe benefits FICA (6.05% oif total wages) Labor Costs - iaior& rs working 8 hr shilfts. ItIem 35 9 9 .3 16 16 16 16 16 8 16 8 8 8 8 8 8 8 8 2.65 2.65 2.6b5 2.65 2.65 8. 37 6.89 4.10 3. 2t 2, 290 466 382 12/ 85 67 1i () 33 2 6 3,58 5 742 191 191 64 4 2 67 55 33 26 1 1/4U1) 1j6t 85 1(,65 430 217 4 it232 .. ,...._,.....4 ...+.. ............ r.. Mw iy "4'rYUM M II r yO r y ! Table 20. Daily Water Usage Rates Of Surimi Production Mchinery By Period Mah iner;' Raw fish washer 'Fish filleter Ftlleted fish washer Skin wshing tank Period 8,1 93 6,510 4,092 0 30,885 water usage Ir Ferkod 2 3 ,96 8 } 3,150 * 1,980 14,948 -v----- NOW - ----- NINMNNIWAP Table ?21.0 Estimted Ground fish Processing Plant Variable Costs, Alabama, 1977 Variable o s ts Period I dollars Con s cable s Unloading, sorting6 fresh fish Pet food Surimi Fish :4nal Elec tri city Seam Labor W a t e Waste disposal Maintenance Subtotal 5% Miscellaneous Total .ariable costs (per day) Total variable Costs (127 days production) Total annual variable 'C~t 2,572 48,9916 4,170 17 266 363 4,232 39 29 104 60,708 3 1035 63,743 8,095,361 899 17,312 194 76 6 129 128 1, 665 17 13 104 21 , 749 22,836 2,900,172 10,995,533 M-dw " r " . .. dollars Period 2 Table 22. Estimated Ground fish Processing Plant Annual Fixed Costs, Alabama, 1977 Fixed rsts Depreciation Insurance Interest Property taxes Leasing costs Miscellaneous costs Total fixed costs dollars 251 ,950 40,000 89,303 22,046 920 LL.. 2.22-w 405,219 Estimated Ground fish Processing Plant Production And Revenue, Alabama, 1977 n . tPeriod Ie r ic 2 Price dollars Fresh fish Fish 21,840 71730 .30 Shrim 50 84 1.90 ]Pet food 404,970 143, 327 .14 ISuri"mi 11,488 4,066 .80 Fish meal Meal 8,216 2,908 .05 Oil 1,576 558 . 15 Total daily revenue Total avenue ? er production period k based on 12?7 days) Annual revenue Revenue L?.. .. C P eriod 2 ache.:rs dollars 6,55240 988 56,696 9,190 '11 236 7'4,073 2, 319 160 20,066 3,253 143 84 26,027 9,407,271 3,305,429 12,712,700 Table 23. w. Edwwmwmmopm Table 24. Estimated Ground fish Processing Plant Annual Costs And Returns, Alabama, 1977 Costs Fixed Variable Total Total retvenue Net Returns Net returns after taxes-1 Percentage return on average investment ? nc al payment (less depreciation) 2 1 Cash spendable income 405,219 11,400,752 12 *,712,700 1,311 ,948 616,616 62 144 ,954 471,662 -- 48 pe cent federal, 5 percep..state. Based on 5 year loan. ~KerU~nS, ~a~Pdog. rars t eir, A-noun Table 25. Alabama Ground fish Trawler Annual Ownership And Operating Costs Estimate, Alabama, 1.977 Item Own*mrsh i) casts Boat interest (loan of 311,250) Opportunity cost Boat depreciation Tota icn1 hp csts 2pera t logi { Sts Li,1r i c:fl1 flul I Refrigeration & power plant Spare parts & supplies Fishing gear Nets Doe)rs Twine, webbing, chaffing gear Cabile Block, lines, etc. Peck. working supplies AdmIiis irative costs Description~ 8.5 percent 25 percent down at 7.75 perrent 20 year life 44c/gallon; 3,580 hours at 35 gia11onsI/tour 1.75/gallon; 488~ gallons 2'1 per year 2 sets per year 4100 fathoms every 2 years 4, 500 1 t500 4 55 5 64 4 55F A oiili rs Pf .nl- ww~w wr~. r.. ++ i~w w + ~w/.r 5" 8,040 55,246 55,132 854 4, 5 f0 7,-';14 351 780) . . ......... ..... ......... ,...W.. ........... ,.....,... ... ,.. wAY 4/ ' I IM'A/ rrIM11 / MM I 1 y + V Vwl wN1 RT ' Yr/ W Y" Table 25. (Continued) Description Insu.rance flu I Liabtlty Breach of war rusty Tota prating cs3ts. Total Costs I tem Amount dot iar3 9,500 3, 350 14,200 84,322 139,568 Table 26.0 Alabama Ground fish Trawler Annual Production And Revene Est ipate, 1977 Product shrimp Food fish Pet food iced fish 18,305 768,810 4,704,385 lit830t500 71,322,000Total Price/ dollars .10 . 03 a07 Revenue dollars 12,813- 76,881 141,132 1.2jI35 358,961 -- J-- *J__.f.Mr _.-I----- - -- a-ar------ - waWmMoMlllr 1*IL. -- - _UJL U - T1 J_- W Ui - Table 27. Comparison Of Alabam Ground. fish And Pet food Travier Annua Costs And Returns, 1.977 Total Io eturns (less 40% crew share) Owner'sa ?turns Net Returns to owner Percentage raturnt on average investment Principal paymnt (Less depreciation) Cash spendable ncote Ground fish t rawier dollars 139,3568 358,961 215 ,377 75,809 trawle*r 146, 760- 274,140 164 ,484 17 ,723 36.5 10,375 65,434 10,375 7,348 Mmm- 8.5 _- u___ j I a- - l_ _-_ u u------ - - Table 28. Alabaaaa pet food Trawler Annual Ownrship And Operating Costs Estimate, Alabama, 1977 Occ rtilt4 i Bout tLtcrersr(loan of 311,250) Oppo trnafty cost Ioat apruc.t~ton W - - -- , - -d-t -aAL at 8. 5 percent 25 'p.ircwnt down '.c 7.15 percent 20 year l te Total Ower411p Cots~ at Lit st& Kop: IJr ani 4 wntenantoc ictrIger.rioa & powe.r pIaut Spae. arts 6 8uppUCit' Twinatetwad:bng, chsarf toL Re~a r hihauc&, lines, at.. Deck .itk tlug supp I c AJel tstrativy casts 44. /g, !lt; 4.040 hoar, 4t 35 gaflw,.I/hour l.15/gaon..-550 ga4oa/yeer 21j per year 2 sets per year 400 tattiousevery 2 years 1,500 26,456.00 8,040.00 20,1750.00 55, 246.00 62,2t6.00 962.50 4,550.x00 455.00 520.00 1,414.00 455 564 45 357.00 180.00 Aunt Tree Tab2le 28 (Cont~nued). I t Dcription (INsranco tlt1 .9#500 Ltib lI ty 3,350 breach of warranty1 Total ratiLng coaeat15s Total costs 16,6 Zable 29. - ?em Pt food? sr AualP oc~qi t tn sLI i 8 LIZOOO0.03.b123.360 tractY1ub 162,200 .10 16,20 ThcaJ,293,000274,140 Appendix Table 1. Equipment Manufacturers And Selected Equipment Specifi- cations For Ground fish Processing Plant Production Units item Unloading, so rt &A fresh fish Pneumatic unloader Sorting conveyor (model T1W) Sortinog buckets ice Machine industrial platform Scales per food Unit Grinder Ribbotn blender-cooker (nmodel (;) Can filler (c-210 M&S ) Can closer (652) Horizontal retort wih instruments Gondola cars Labeler. (model 915) Case seL up (model E4 3) Eqkuifpmen t manufacturer or represerntatifve Tempco, Inc. Bellevue, Wa. Turner Supply Co. Mobile, Al. Delta Net & Twine Greenville, Mx. Alabama Beverage & Ie Mobile, Al. Ebb er t 6 Kirkman Birmingham, Al. Edward Rennebu rg & Sons Day Mixing Co. CincInnatI, Oh. FMIC Corp. loo pstOn , 11. HC Corp. Hloopeston, Li . Reid Boiler Works Blelingham, tWa. Rei(d Boiler Works BecllIn gham,e. S tatnda rd Knapp Portland1, Ct. FMC Corp. iloopeston, 11. Approximate' Dimens ions 15 ton/hr 1200 lb 8 pecks 5,000 lb/dlay 200 lb 15 ton/hr 465 gal 600 CPH (Max) 250-600 CPlM 6 cars 1,560 cans (loose) 100 CPU (Max) 20 ca/mm 8' x25' x2 5' 40' x24" 22" dia. 14" depth Unavai1.lable N/A Unavailable 11'x4'x6' 8.5 1xS5'x6' 7 ' x3' x7' 2 3lx6 "x8" 5"x4 .5' x3.S5 8x3x6. 5 14x 1.5x8. 5 Other 8" di. )hose Wire me'sh belt Galvaniized wire 1.9 CM air Appendix Table 1. (continued) Equlpment madflufaCttkttW I rbinor pr~esenltative Fish M~eaIlp uction Fish plant Fish oil plant Concentrating plant Fish oil storage Stord Bartz Ab Bergen, Norway Stord Blartz Ab Biergen. Norway Stord Bartz Al, Betgen, Norway Birmisngham Tank Co. Birmingham, Al. App rox imate Ca jafl-y d imensions 33 ton/raw/ material/24 hr Not listed Not listed 3,000 gal 11x6x9 .5 5 ,5x6 ,5x8 9.5x7xi0 64" ial 18' long Other 1,100 lb steam per ton/raw materi al1 3/ 16 Inc. steel .... ,.... y._...,.....,. -- " ..... ,.,............, Appendix Table 2. Ground fish Processing Plant Storage Space Requirements Calculations 1 I: dinunit 10ldysI Y. ~Cubic feet/Unit Styrbl totl pound 6,580 *016510 ~odiiri trlpolyphiosphate pound 260 .01654 (".orntnc. lI pound 396, 900) .0165654 Soybeanx mea I pound 303, 700 .01655,1 Vitamin premix pound 6,900 .016514 Salt pound 16,200 .016526 Iron oxide pounld 1,220 .0165 2 Cans case 84 ,3 10 1.418,8 Subtotal13,9 P't I nod case 84,370 1.418,8 F ishimeal pound 82,160 .0165135 Sn L In i carton 4,595 1.25,1 Freshu fish box 324 3.091 Cubit. (eeLt Dry storage space (ingredients 249,666 plum pt'LfocuI & fishmeoal) Freezer space 5,514 Cooler space 972 Square footage dry storage 8,322 (30 ft waltls) Sqluare footage freezer 649 (8.5' wails) Square foot age cooler spaIce 114 (8.5' walls) Appendix Table 3.LUnloading, Sorting, And Fresh Fish Production Equipment Horsepower Requirements 7ter Unloading Pneumatic fish pump Sorting Sorting conveyor Fresh fish Ice ma; nine Horsepower 60.0 0.3 'otal 65.3 ~ag Pr~r R arr iapa~- ~, un~ aa~b 6:. w im am a Wes- io tai. 65?3 Appendix Table 4. Pet food Production Equipment Horsepower Require- ents Item Grinder Blender-cooker (2 ) Can filler Can closer Labeler Case set-up Caser Palletize r Compressor Conveyor ystem Total. joer 10.60 30.00 2.50 10.00 2.50 2.75 1.00 8.00 5.00 10,f./ 81?.75 mo IEstimate .U. Appendix Table 5. SuriiiProduction Equipment Horsepower Requirements Ites are we Raw fish washer 0.75 Fi lle ter 4.50 Fillet washer 0.75 Meat bone separator 5.75 Dewatering seine 5.QomA! Press 5.00?f S trainer 5.00!! Mixe r 10.00 tf,-r10.0 Plate freezer 217.00 Con;veyors -and pumps 10.00 Total 273.75 'Estimate Appendix Table 6. Fish meal And Oil. ?roduction Equipment Horse- power Requirements .tea Horse tower Fishmeal plant Feed screw conveyor 3.00 Indirect cooker & screw motor 500 Tearing & mixing conveyor 2.00 Drier motor 20.00 Centrifugal fan motor 4.00 Presswater transfer pump 1.00 Mifling & bagging plant motor 20.00 Subtotal 55.00 Fish oil plant V; brating screen motor 0.50 Presswater pump 1.00 Oil separator motor 10.00 S ti?kwater transfer pump 2.00 Subtotal 13.50 S tick~ate r plant Stickwater feed pump 2.00 Vacuum pump 5.50 Ccndensate discharge pump .75 Solubles discharge pump 1.50 Solubles dosing PUM~P 1* Subtotal 11.25 Total 79.75rr cac 79.75 pop o t a AqlNr XL t 05/26/97 30545