CONTENTS
page Introduction ............................................................................................................................................................ 5 Description of Study .............................................................................................................................................. 5 General Business Characteristics and Services...................................................................................................... 6 Figure 1. Types of Slaughtering and Processing Business Enterprises, Alabama, 2005 ................................ 6 Table 1. Business Income by Activity, Alabama, 2005 .................................................................................. 6 Table 2. Business Income Source by Type of Commodity, Alabama, 2005 .................................................. 6 Figure 2. Number of Years Respondent has Been in the Meat Business, Alabama 2005 .............................. 6 Physical Facilities and Economical Characteristics ............................................................................................... 7 Table 3. Years Meat Plants were Built, Expanded, or Renovated, Alabama, 2005 ....................................... 7 Figure 3. Inspection Status of Meat Plants, Alabama, 2005 .......................................................................... 7 Table 4. Meat Plant and Freezer Locker Space by Size, Alabama, 2005 ....................................................... 7 Table 5. Meat Plant Capacity Used by Month, Alabama, 2005 ..................................................................... 8 Table 6. Meat Plant Operating Days per Week by Processing Activity, Alabama, 2005 ............................... 8 Table 7. Meat Plant Operating Weeks per Year by Processing Activity, Alabama, 2005............................... 8 Table 8. Meat Plant Slaughter Number on a Typical Day by Animal Type, Alabama, 2005 ......................... 9 Table 9. Meat Plant Slaughter Number at Maximum Capacity by Animal Type, Alabama, 2005................. 9 Table 10. Pounds of Meat Processed on a Typical Day by Processing Activity, Alabama, 2005 .................. 9 Table 11. Pounds of Meat Processed at Maximum Capacity by Processing Activity, Alabama, 2005 .......... 9 Table 12. Numbers of Employees at Meat Plants by Activity, Alabama, 2005............................................ 10 Table 13. Hours Worked per Day per Employee by Activity, Alabama, 2005 ............................................. 10 Table 14. Average Wage Paid by Job Type , Alabama, 2005 ....................................................................... 10 Table 15. Custom Price Received for Various Slaughtering Services, Alabama, 2005................................ 11 Table 16. Prices Received for Various Processing Services, Alabama, 2005............................................... 11 Table 17. Value of Capital Assets and Annual Gross Sales in Meat Plants, Alabama, 2005 ....................... 11 Table 18. Methods Used to Determine Custom Service Charges and Prices for Wholesale and Retail Products by Meat Plants, Alabama, 2005 .................................................. 11 Figure 4. Trading Area of Meat Plants, Alabama, 2005 ............................................................................... 12 Figure 5. Percent of Meat Plants That Hire a Bookkeeper to Prepare Financial Reports, Alabama, 2005 ..................................................................................................... 12 Figure 6. Review Interval of Meat Plant Operating Costs, Alabama, 2005 ................................................. 12 Future Plans, Industry Needs, and Solutions ....................................................................................................... 13 Table 19. Future Plans of Meat Plant businesses for Next Five Years, Alabama, 2005 ............................... 13 Table 20. Membership in Trade Associations, Alabama, 2005 .................................................................... 13 Table 21. Major Concerns for Alabama Meat Businesses, Alabama, 2005 ................................................. 13 Grass-fed Beef Opportunities .............................................................................................................................. 14 Figure 7. Respondents that Have Slaughtered and/or Processed Grass-Finished Beef in the Past, Alabama, 2005 ................................................................................................................. 14 Figure 8. Respondents that Would be Interested in Slaughtering and/or Processing Grass-Finished Beef in the Future, Alabama, 2005 ........................................................................... 14 Figure 9. Respondents that Would be Interested in Participating in a 10-Week Business Plan Training Course, Alabama, 2005 ................................................................................ 14 Summary .............................................................................................................................................................. 15
Research contained in this report was funded by the Alabama Cattlemen’s Foundation, through contributions from the Alabama Cattlemen’s Association, the Alabama Farmers Federation, the Dothan Area Chamber of Commerce, and the United States Department of Agriculture. A special acknowledgment is extended to Damian Drennen, Administrative Assistant, and Jessica Stanford, Technical Assistant, for their conscientious efforts with developing and mailing the survey, tabulating data, and preparing the final report.

Information contained herein is available to all persons without regard to race, color, sex, or national origin.

Issued in furtherance of Cooperative Extension work in agriculture and home economics, Acts of May 8 and June 30, 1914, and other related acts, in cooperation with the U.S. Department of Agriculture. The Alabama Cooperative Extension System (Alabama A&M University and Auburn University) offers educational programs, materials, and equal opportunity employment to all people without regard to race, color, national origin, religion, sex, age, veteran status, or disability.

A Study of Alabama’s Livestock Slaughter and Meat Processing Businesses
Walt Prevatt, Deacue Fields, and Chris Kerth

INTRODUCTION
After refrigeration became commonplace in the 1940s and 1950s, Alabama like most states had many small-to-medium, localized livestock slaughter and meat processing businesses. These businesses typically custom slaughtered and/or processed livestock for individuals while also generating some wholesale and retail sales. Some time during the 1960s and 1970s, two additional factors affected the way meat products would be consumed. First, the emergence of major grocery stores offering a wide variety of meat products to consumers in smaller portions became standard. Second, consumers began to spend more of their income on food prepared away from home. As a result, fewer households had large freezers or desired to purchase a large quantity of meat (an entire carcass or half of a carcass) at one time. Beginning in the 1980s, consumer preferences gradually began to shift from large cuts of fresh meats to further processed meats (pre-trimmed, pre-cut, portion sized, etc.). Next, consumers voted with their dollars for value-added meats (rubs, marinated, precooked, heat and serve, etc.). In addition, these livestock slaughter and meat processing businesses witnessed substantial changes in food safety practices that are enforced by regulatory agencies. Increased regulations specifying the use of inputs, best management practices, sanitation inspections, Hazard Analysis Critical Control Point (HACCP) programs, and other regulations further constrained the small-to-medium livestock slaughter and meat processing businesses. As a result of these many changes, the small-to-medium Alabama livestock slaughter and meat processing businesses were forced to make some tough management decisions and adjustments. Some chose to exit the industry, while others chose to specialize in providing services (such as grinding, curing, smoking, etc.) or to add value to meat products (such as luncheon meats, precooking, retail sales). This study attempts to characterize the existing livestock slaughter and meat processing businesses in Alabama. The study provides a detailed description of operating size, current practices, inspection status, and capacity of slaughtering and processing businesses in Alabama.

DESCRIPTION OF STUDY
A twelve-page survey was developed to collect information that would help describe Alabama’s livestock slaughter and meat processing businesses. A listing of livestock slaughter and meat processing businesses was obtained from the Alabama Department of Agriculture and Industries. The survey instrument was developed, field tested, and distributed to 88 business firms by the College of Agriculture at Auburn University during May and June 2005. After two mailings of the survey, a total of 39 respondents returned surveys (a 44 percent response rate). While the response was good, care must be taken in extending information from this study to the entire livestock slaughter and meat processing industry of Alabama. Discussions related to specific topics are based solely on the responses received and are not projected for the entire industry. The survey requested information in the following general areas: general business characteristics and services; physical facilities and economical characteristics; future plans, industry needs, and solutions; and grass-fed beef opportunities. The following discussion will provide more insight about these general areas and the descriptive information collected.
Walt Prevatt is Extension Economist and Professor and Deacue Fields is Extension Economist and Assistant Professor, respectively, in the Department of Agricultural Economics and Rural Sociology, Auburn University. Chris Kerth is a Meat Scientist and Associate Professor in the Animal Science Department, Auburn University.

6

ALABAMA AGRICULTURAL EXPERIMENT STATION

GENERAL BUSINESS CHARACTERISTICS AND SERVICES
Respondents were asked to describe the nature of their business operation. Based on 39 responses, 15 respondents (38 percent) identified themselves as custom slaughter and meat processor operations, 18 respondents (46 percent) were commercial meat processors, and six respondents (15 percent) were considered to be custom and commercial slaughter Figure 1. Types of slaughtering and processing business and meat processors (Figenterprises, Alabama, 2005 ure 1). This data set suggests that there are slightly 60% more businesses involved 46% 50% in commercial meat pro38% cessing than in custom 40% slaughter and processing. 30% Respondents were 15% 20% asked to estimate the percentage of their busi10% ness income from cus0% tom, wholesale, and retail Comm. Custom & Comm. Custom slaughtering and processSlght. & Proc. Meat Proc. Slght. & Meat Proc. N=39 ing. Greater than threeType of Business fourths of the respondents for custom and wholesale Table 1. Business Income by Activity, Alabama, 2005 indicated that their busi—————Percent of business income————— Number ness income was from Activity <10 11-30 31-50 51-70 71-100 responding these activities (Table 1). Custom 5 14 — — 81 21 The respondents that se- Wholesale 11 5 5 5 74 19 20 30 10 20 20 10 lected retail were almost Retail evenly divided between the five levels of business Table 2. Business Income Source by Type of Commodity, Alabama, 2005 income. Type of —————Percent of business income————— Number <10 11-30 31-50 51-70 71-100 responding When asked to estimate commodity 26 14 37 11 11 35 the sources of their busi- Beef Veal 100 — — — — 2 ness income by the type Deer 25 31 13 6 25 16 of commodity during the Goat 100 — — — — 3 most recent calendar year, Lamb 100 — — — — 2 15 24 35 6 21 34 respondents identified beef, Pork Poultry 22 22 33 11 11 9 deer, pork, and poultry as the major commodities, (Table 2). Veal, goat, and Figure 2. Number of years respondent has been in the lamb represented less than meat business, Alabama, 2005 10 percent of slaughtering and processing income for three or less meat busi33% 40% nesses. 23% 18% Respondents were 20% 10% asked to estimate how long 5% 5% 5% they had been in the live0% stock slaughter and meat <10 10-19 20-29 30-39 40-49 50-59 >60 processing business. The Years responses spanned a wide N=39 range from less than 10
Percent
Percent

A STUDY OF ALABAMA’S LIVESTOCK SLAUGHTER AND MEAT PROCESSING BUSINESSES

7

years to more than 60 years (Figure 2). Roughly one-third of the respondents had been in business for less than 10 years, while approximately 43 percent had been in business for 30 or more years.

PHYSICAL FACILITIES AND ECONOMICAL CHARACTERISTICS
In reply to questions regarding when meat plants were built and expanded or renovated in Alabama, almost one-third of the respondents (12 out of 38 or 32 percent) indicated their meat plants were built after 1999 (Table 3). In addition, 15 out of 26 respondents (58 percent) expanded or renovated their meat plants after 1999. The inspection status of Alabama meat businesses revealed 15 firms (39 percent) were federally inspected, 29 firms (74 percent) were state inspected, and 4 firms (10 percent) were inspected by the Alabama Department of Health (Figure 3). State-inspected plants are permitted to transport meat products to be sold within the State, while federally inspected plants Table 3. Years Meat Plants were Built, Expanded, or Renovated, are permitted to transport Alabama, 2005 meat products across state ——Plants built—— Plants expanded or renovated lines. The inspection of the Years number percent number percent Alabama Department of Before 1960 5 13 — — Health permits food prepa1960-69 — — — — ration and consumption 1970-79 11 29 1 4 1980-89 6 16 3 11 and/or retail sale on the 1990-99 4 10 7 27 premises. Almost all (92 After 1999 12 32 15 58 percent) of the respondents Total 38 100 26 100 were satisfied with their inspection status. Figure 3. Inspection status of meat plants, Alabama, 2005 The size of meat plants in Alabama ranged from 35 small — with less than 1,000 29 30 square feet — to medium — with more than 20,000 25 square feet (Table 4). The 20 majority of the plants (57 15 15 percent) ranged in size from 3,000 to 10,000 square feet. 10 The freezer locker space of 4 5 the meat plants also reported a similar wide range of 0 square footage. However, Federally Inspected State Inspected AL. Dept. of Health the majority of the responType of Inspection N=39 dents (about three-fourths) indicated their freezer locker space was less than 1,000 Table 4. Meat Plant and Freezer Locker Space by Size, Alabama, 2005 square feet. ——Meat plant—— ——Freezer locker—— Respondents were Square feet number percent number percent Less than 1000 4 10.81 24 77.41 asked to estimate the per1,000-2,999 4 10.81 2 6.44 cent of meat plant capac3,000-4,999 8 21.62 1 3.23 ity used each month. The 5,000-6,999 6 16.22 1 3.23 majority used from 60 to 7,000-9,999 7 18.92 1 3.23 90 percent of their plant 10,000-14,999 — — — — 15,000-19,999 3 8.11 1 3.23 capacity monthly (Table Greater than 20,000 5 13.51 1 3.23 5). In addition, the percent Total 37 100.00 31 100.00 of meat plant capacity used
Number of Firms

8

ALABAMA AGRICULTURAL EXPERIMENT STATION

between November and January was largest primarily due to deer hunting season. The summer months—July, August, and September—showed the lowest level of meat plant utilization. Respondents were asked to list the number of operating days per week and operating weeks per year (Tables 6 and 7). Processed deer was the highest average number of days per week (5.8 days per week), while slaughter veal was the lowest (1.5 days per week). Slaughter days per week were similar for goat, sheep, and pork. The average days per week for the processing items were between 3.46 to 4.59 days per week. The operating weeks per year for the slaughter data showed cattle with the highest average operating weeks per year (45 weeks per year) and veal with the lowest (13 weeks Table 5. Meat Plant Capacity Used by Month, Alabama, 2005 per year). Operating weeks ——Percent of plant capacity used—— Number Overall per year were similar for Month <20 20-39 40-59 60-79 80-100 responding average cattle and pork. The aver—————Number of firms————— —%— age operating weeks per January 2 2 2 9 23 38 80 year for the processing February 3 4 1 8 20 36 73 4 2 2 11 17 36 71 items ranged between 49 March April 4 2 4 10 16 36 68 to 51 weeks per year. 4 3 5 11 13 36 66 Respondents were May June 6 — 8 10 12 36 64 asked to list the meat plant July 7 2 7 10 10 36 59 slaughter number on a typ- August 4 5 5 13 9 36 60 3 5 6 11 11 36 62 ical day and the meat plant September 3 3 7 11 14 38 66 slaughter number at maxi- October November 2 3 2 7 24 38 79 mum capacity. The majorDecember 2 2 2 6 26 38 81 Table 6. Meat Plant Operating Days per Week by Processing Activity, Alabama, 2005 ——————Operating days per week—————— Number Processing activity 1 2 3 4 5 6 7 responding Average ——————————Percent—————————— Slaughter cattle 20 20 10 10 30 5 5 20 3.45 Slaughter veal 50 50 — — — — — 2 1.50 Processed deer — — — 13 20 40 27 15 5.80 Slaughter goat 40 20 — — 40 — — 5 2.80 Slaughter sheep 50 25 — — 25 — — 4 2.25 Slaughter pork 33 28 — — 28 — 11 18 3.06 Slaughter rabbits — — — — 100 — — 1 5.00 Fresh grinding 14 — 50 14 52 14 — 22 4.33 Cut and wrap 5 — 9 14 64 9 — 22 4.59 Cure, cook, and smoke 23 15 15 46 — — — 13 3.46 Further processing 10 — 10 20 60 — — 10 4.15 Table 7. Meat Plant Operating Weeks per Year by Processing Activity, Alabama, 2005 —————Operating weeks per year————— Number Processing activity <12 12-23 24-35 36-47 48+ responding Average ——————————Percent————————— Slaughter cattle 5 11 — — 84 19 45 Slaughter veal 33 67 — — — 3 13 Processed deer 31 54 — — 15 13 20 Slaughter goat 40 — — — 60 5 32 Slaughter sheep 50 — — — 50 4 28 Slaughter pork 6 12 — — 82 17 44 Slaughter rabbits — — — — 100 1 49 Fresh grinding 5 — — — 95 19 49 Cut and wrap 5 — — — 95 20 49 Cure, cook, and smoke — — — — 100 12 51 Further processing — 10 — — 90 10 49

A STUDY OF ALABAMA’S LIVESTOCK SLAUGHTER AND MEAT PROCESSING BUSINESSES

9

ity of slaughter numbers on a typical day were less than 10 head with the exception of slaughter rabbits (Tables 8 and 9). The meat plant slaughter number at maximum capacity showed significant increases for cattle, deer, goat, sheep, and pork. For instance, the average slaughter cattle increased from an average of 5.36 head per typical day to 11.44 head at maximum capacity, a net gain of 6.08 head per day (113 percent). Similar gains were realized for other commodities, with the exception of slaughter rabbits which showed a gain of 400 head per day (+57 percent). In addition, respondents were asked to list the meat plant processing pounds on a typical day and the meat plant processing pounds at maximum capacity (Tables 10 and 11). The majority of respondents indicated the meat plant processing pounds on a typical day were less than 1,000 pounds per day, while the majority of respondents also indicated the meat plant processing at maximum capacity was less than 1,000 pounds except for cut and wrap. The average estimates of each item for meat plant processing at maximum capacity were almost double the average of meat plant processing on a typical day.
Table 8. Meat Plant Slaughter Number on a Typical Day by Animal Type, Alabama, 2005 —————————Head per day (typical)————————— Number Average Animal type <4 5-10 11-15 16-20 21-30 31-40 41-50 >50 responding no./day ————————————Percent———————————— Slaughter cattle 42 50 7 — — — — — 14 5.36 Slaughter veal 100 — — — — — — — 1 2.00 Process deer — 27 18 18 27 — 9 — 11 21.55 Slaughter goat 50 20 — — — — 20 — 5 12.20 Slaughter sheep 67 33 — — — — — — 3 4.33 Slaughter pork 36 36 14 — 14 — — — 14 9.14 Slaughter rabbits — — — — — — — 100 1 700.00 Table 9. Meat Plant Slaughter Number at Maximum Capacity by Animal Type, Alabama, 2005 ————————Head per day (maximum)———————— Number Average Animal type <4 5-10 11-15 16-20 21-30 31-40 41-50 >50 responding no./day ————————————Percent——————————— Slaughter cattle 13 38 25 25 — — — — 16 11.44 Slaughter veal — 100 — — — — — — 1 5.00 Process deer — — — 17 17 17 8 42 12 112.08 Slaughter goat 25 25 — — — — — 50 4 48.00 Slaughter sheep 33 33 — — 33 — — — 3 14.00 Slaughter pork — 27 13 33 13 13 — — 15 18.33 Slaughter rabbits — — — — — — — 100 1 1100.00 Table 10. Pounds of Meat Processed on a Typical Day by Processing Activity, Alabama, 2005 ————————Pounds per day (typical)———————— Number Processing activity <1000 1001-2000 2001-3000 3001-4000 >4000 responding Average ———————————Percent———————————— Fresh grinding 81 10 5 — 5 19 1,212 Cut and wrap 60 20 20 — — 18 1,193 Cure, cook, and smoke 91 9 — — — 10 375 Further processing 66 — — — 34 4 1,888 Table 11. Pounds of Meat Processed at Maximum Capacity by Processing Activity, Alabama, 2005 ———————Pounds per day (maximum)——————— Number Processing activity <1000 1001-2000 2001-3000 3001-4000 >4000 responding Average ———————————Percent———————————— Fresh grinding 69 5 5 5 16 19 2,334 Cut and wrap 44 11 6 11 28 18 2,911 Cure, cook, and smoke 80 10 10 — — 10 856 Further processing 75 — — — 25 4 3,013

10

ALABAMA AGRICULTURAL EXPERIMENT STATION

The majority of respondents indicated they had between one and two employees for each activity except further processing (Table 12). The average number of employees ranged from 1.51 to 4.60 employees for the various work activities listed. Respondents were asked to give the hours worked per day per employee by work activity (Table 13). The majority of respondents worked eight hours or less for each of the work activities. The highest hours worked per day per employee were estimated for management and slaughtering at 7.73 and 7.27 hours respectively. The lowest hours worked per day per employee were in hide curing at an average of 1.33 hours per day. The majority of respondents reported an average wage of $5.16 to $10.00 per hour with the exception of office and management job types (Table 14). The average wage reported for management was $15.25 per hour, while the lowest average wage paid was $7.25 per hour for rendering.
Table 12. Numbers of Employees at Meat Plants by Activity, Alabama, 2005 ——————Number of employees—————— Number Total Activity/job type 1-2 3-4 5-6 7-8 9-10 11-15 >15 responding Average employees ——————————Percent—————————— Slaughtering 76 19 6 — — — — 16 2.00 32 Hide curing 86 14 — — — — — 7 1.57 11 Cut, grind, and wrap 50 27 8 8 4 — 4 26 4.60 120 Cure, cook, smoke 70 10 — — — — 20 9 4.56 116 Further processing 27 27 18 — 9 9 9 10 4.40 146 Clean up 88 8 — — — 4 — 26 2.09 54 Office 89 11 — — — — — 18 1.51 27 Retail 75 17 — — 8 — — 12 2.17 26 Management 88 — 6 6 — — — 16 2.06 33 Table 13. Hours Worked per Day per Employee by Activity, Alabama, 2005 ———————Hours worked per day——————— Number Activity/job type <4 5-6 7-8 9-10 >11 responding Average ——————————Percent—————————— Slaughtering 16 15 54 16 — 13 7.27 Hide curing 100 — — — — 6 1.33 Cut, grind, and wrap 16 16 60 — — 25 6.94 Cure, cook, smoke 30 20 30 10 10 10 5.85 Further processing 27 18 45 9 — 11 6.27 Clean up 72 — 16 11 — 25 3.86 Office 48 6 29 12 6 17 5.18 Retail 40 — 40 20 — 10 5.65 Management 26 — 20 40 14 15 7.73 Table 14. Average Wage Paid by Job Type, Alabama, 2005 ——————————Wage ($/hour)—————————— $5.16$7.01$8.01 $9.01Number $5.15 7.00 8.00 9.00 10.00 >$10.00 responding Average ———————————Percent———————————— 6 13 19 13 31 12 15 $9.01 — 40 60 — — — 5 $7.40 4 27 18 19 19 15 22 $8.49 — 25 25 42 8 — 12 $8.13 — 9 27 45 9 9 11 $ 9.05 — 50 50 — — — 2 $ 7.25 9 34 30 17 13 13 23 $ 8.32 — 9 18 9 18 45 11 $11.27 — 30 60 — 10 — 10 $ 7.70 — 8 23 — 15 56 13 $15.25

Activity/job type Slaughter Hide curing Cut, grind, and wrap Cure, cook, smoke Further processing Rendering Clean up Office Retail Management

A STUDY OF ALABAMA’S LIVESTOCK SLAUGHTER AND MEAT PROCESSING BUSINESSES

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Respondents were asked to report a custom price for various slaughtering services (Table 15). The majority of respondents reported receiving between $16.00 and $25.00 per head. The average custom price received for slaughtering cattle, veal, and hogs was similar (about $21.00 to $23.00 per head). The custom price received for slaughtering goats and sheep was also similar at $28.00 to $30.00 per head. The highest average slaughtering price was for processing deer at $38.81 per head. Respondents were asked about the prices Table 15. Custom Price Received for Various Slaughtering Services, received for various proAlabama, 2005 ——Price per head ($/head)—— Number $/head cessing services (Table Slaughter service $11-15 $16-20 $21-25 >$25 responding average 16). The majority of prices ——————Percent—————— for process services were Slaughter cattle 11 53 37 — 19 $21.11 less than $0.40 per pound Slaughter veal — 67 33 — 3 $21.67 except for cut, wrap, Process deer 23 8 — 69 13 $38.81 Slaughter goats — 50 17 34 6 $30.00 freeze deer, further proSlaughter sheep — 25 50 25 4 $28.75 cessing, and cure, cook, Slaughter hogs 15 61 22 6 18 $22.83 and smoke. The highest average price paid for processing services was Table 16. Prices Received for Various Processing Services, Alabama, 2005 ———Price per pound ($/pound)——— $2.14 per pound to cure, $0.31- $0.41- $0.61Number $/pound cook, and smoke. The Processing service <$0.30 0.40 0.60 1.00 >$1.00 responding average lowest price received for ———————Percent—————— processing services was Cut, wrap, freeze–beef 27 59 14 — — 22 $0.36 cut, wrap, freeze lamb at Cut, wrap, freeze–pork 26 63 11 — — 19 $0.35 Cut, wrap, freeze–lamb 33 67 — — — 3 $0.28 $0.28 per pound. Cut, wrap, freeze–deer — 25 38 38 — 8 $0.59 Respondents were Further processing 25 25 — 25 25 4 $1.16 asked to estimate the Cure, cook, smoke 33 — — — 67 6 $2.14 meat plant value of the capital assets and their Table 17. Value of Capital Assets and Annual Gross Sales in Meat Plants, annual gross sales (Table Alabama, 2005 17). The majority of re——Value of capital assets—— —Annual gross sales— spondents indicated the Value range number percent number percent value of assets of their <$50,000 4 11 4 11 meat plant was between $50,000-$99,999 8 22 5 14 $100,000-$249,999 12 32 12 33 $50,000 and $249,999 $250,000-$499,999 4 11 3 8 while their annual gross $500,000-$999,999 5 14 — — sales was between $1,000,000-$4,999,999 3 8 7 19 $50,000 and $499,999. $5,000,000-$9,999,999 — — 2 6 Respondents were $10,000,000+ 1 3 3 9 Total 37 100 36 100 asked to describe the methods to determine custom service charges and Table 18. Methods Used to Determine Custom Service Charges and Prices for prices for wholesale and Wholesale and Retail Products by Meat Plants, Alabama, 2005 retail products (Table 18). ——Custom charges—— —Wholesale and retail prices— Method number percent number percent Cost of production was Cost of production 11 41 5 19 identified as the preferred Cost of production 5 — 10 — method to determine a Plus X% profit — 19 — 38 custom service charge by Cost of production 8 — 8 — the largest number of rePlus $X profit — 30 — 31 Competition rate 3 11 3 12 spondents, while cost of
Total 27 100 26 100

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ALABAMA AGRICULTURAL EXPERIMENT STATION

production plus X-percent profit was selected as the preferred method to determine wholesale and retail prices. Respondents were asked to identify the trading area for their business. Figure 4 shows 21 percent of the respondents consider their trading area to be within a county, 38 percent in a multi-county area, 13 percent within the state, and 28 percent in a multistate area. Respondents were asked to indicate whether they hired a bookkeeper to prepare financial reports and if they reviewed their operating costs periodically (Figures 5 and 6). Fifty-one percent of the respondents indicated they hired a bookkeeper to prepare their financial reports. About half of the respondents indicated they reviewed their operating costs either weekly, monthly, or quarterly. Almost one-third (31.58 percent) indicated they do not review their operating costs.

Figure 4. Trading area of meat plants, Alabama, 2005 50% 40% 30% 20% 10% 0% 38% 28% 21% 13%

Percent

N=39

County

Multi-County

State

Multi-State

Figure 5. Percent of meat plants which hire a bookkeeper to prepare financial reports, Alabama, 2005 60%

Percent

55% 50% 45% 40%

51%

49%

N=39

Yes

No

Figure 6. Review interval of meat plant operating costs, Alabama, 2005
40% 30% 20% 10% 0%

Percent

31.58% 18.42% 5.26% Daily Weekly Monthly 23.68% 7.89% 10.53% 2.63% As Needed Do Not Review

Quarterly Annually

N=38

How often reviewed

A STUDY OF ALABAMA’S LIVESTOCK SLAUGHTER AND MEAT PROCESSING BUSINESSES

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FUTURE PLANS, INDUSTRY NEEDS, AND SOLUTIONS
Respondents were asked to describe the future plans of their meat plant business in the next five years ( Table 19). The largest number of respondents indicated they either plan to add services, expand the plant size, or increase plant utilization. Seven respondents indicated they plan to sell the meat plant. One respondent indicated an interest in changing the inspection status of the plant. The respondents were asked to indicate the trade associations of which they were members (Table 20). The largest proportion of respondents (18 respondents or 58 percent) indicated they did not belong to trade associations. The largest membership indicated was the Alabama Cattleman’s Association (8 respondents or 26 percent). The respondents were asked to rate their major concerns associated with the meat business from most important to least important (Table 21). The top five major concerns expressed as being important by the respondents were as follows: insurance rates, energy costs, inTable 19. Future Plans of Meat Plant Businesses creased record keeping, building and equipment costs, for Next Five Years, Alabama, 2005 and availability of competent and reliable labor.
Number Future plans responding Expand the plant size 10 Reduce the plant size — Add services 14 Delete services 1 Increase plant utilization 8 Change inspection status of plant 1 Sell the plant 7 Other plans (retire, renovate, etc.) 7 Percent 37 — 52 4 30 4 26 26 Table 21. Major Concerns for Alabama Meat Businesses, Alabama, 2005 Concerns Ranking Insurance rates 1 Energy costs 2 Increased record keeping 3 Building and equipment costs 4 Availability of competent and reliable labor 5 Repairs and maintenance costs 6 Compliance w/ government regulations 7 Compliance w/ HACCP regulations 8 Labor costs 9 Declining wholesale business 10 Transportation costs 11 Environmental regulations 12 Declining custom business 13 Slow or non payment of customers 14 Inspection service 15 Interest rates 16 Increase concentration among large packers 17 Declining retail business 18 Movement toward case ready products 19 Market information 20 Technical information 21

Table 20. Membership in Trade Associations, Alabama, 2005 Number Association responding Percent Alabama Cattleman’s Association 8 26 Alabama Farmer’s Federation 3 10 American Meat Institute (AMI) 3 10 Southeastern Meat Assoc. (SEMA) 2 6 American Assoc. of Meat Processors (AAMP) 3 10 National Meat Association (NMA) — — Alabama Restaurant Assoc. — — American Meat Science Assoc. (AMSA) 1 3 Do not belong to trade associations 18 58

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ALABAMA AGRICULTURAL EXPERIMENT STATION

GRASS-FED BEEF OPPORTUNITIES
The respondents were asked if they had slaughtered and/or processed grass-finished beef in the past. Thirtythree percent indicated they had slaughtered and/or processed grass-finished beef (Figure 7). The respondents were also asked if they would be interested in slaughtering Figure 7. Respondents that have slaughtered and/or and/or processing grass processed grass-finished beef in the past, finished beef. Sixty-four Alabama, 2005 percent of the respondents indicated they would be 100% interested in slaughtering 67% 80% and/or processing grass60% finished beef (Figure 8). 33% 40% The respondents were 20% offered an opportunity to 0% participate in a 10-week Yes No N=39 training course to develop a business plan that would evaluate their potential Figure 8. Respondents that would be interested in slaughtering and/or to incorporate grass-finprocessing grass-finished beef in the future, Alabama, 2005 ished beef slaughtering and/or processing in their 100% meat business. Seventeen 80% 64% respondents (44 percent) 60% indicated they would be 36% interested in participating 40% in a 10-week business plan 20% training course (Figure 9).
Percent
Percent

0%
N=39

Yes

No

Figure 9. Respondents that would be interested in participating in a 10-week business plan training course, Alabama, 2005 60%

Percent

55% 50% 45% 40% 49%

51%

N=35

Yes

No

A STUDY OF ALABAMA’S LIVESTOCK SLAUGHTER AND MEAT PROCESSING BUSINESSES

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SUMMARY
The Alabama livestock slaughter and meat processing business survey revealed some interesting information: • The majority of respondents were involved in meat processing. • The largest percent of business income was generated from beef, deer, and pork commodities. • Forty-three percent of the respondents have been in the meat business more than 30 years. • Almost one-third (32 percent) of the respondents had built a meat plant after 1999. • The majority (77 percent) of the respondents were state inspected. • The size of the meat plant for the majority of the respondents was less than 10,000 square feet. • The highest use of the meat plants was during November through January. • The respondents operated their meat plants an average of 3 days per week and 45 weeks per year for cattle and pork. • The maximum capacity of slaughter cattle (11.44 per day) for the average meat plant was at least twice the slaughter number on a typical day (5.36 head per day). • The maximum processing capacity at the average meat plant was at least twice the plant processing on a typical day. • The average number of employees was three. • The average wage of the meat plants ranged between $5.16 and $10 per hour. • The value of capital assets of the majority of meat plant was between $50,000 - $249,999. • The annual gross sales income of the average meat plants varied widely from less than $50,000 to more than $10 million per plant. • The average custom rate to slaughter cattle was $21.11 per head. The average custom rate to cut, wrap, and freeze beef was $0.36 per pound. • The most common method used to determine custom service charges was cost of production. • The most common method used to determine price for wholesale and retail meat products was cost of production plus X percent profit. • Approximately 51 percent of respondents hired a bookkeeper to prepare financial reports. • More than 30 percent of respondents did not review production costs. • The most common trading area identified by the respondents was multi-county. • Approximately one-third of the respondents indicated they plan in the future to expand the plant size, add services, and/or increase plant utilization. • Almost two-thirds of the respondents were interested in slaughtering and/or processing grass-finished beef. This study describes the business and physical characteristics associated with 39 (44 percent) of the 88 Alabama meat plant businesses. The discussions related to specific topics in this report are based solely on the responses received and are not projected for the entire Alabama livestock slaughter and meat processing business industry.