Scaling Up Free Range Poultry Meat Processing with Chris Sramek

Scaling Up Free Range Poultry Meat Processing with Chris Sramek


says Like the introduction set a project it kind of has two different hats or maybe even three different hats that Sometimes you’ll hear in the presentation or what we’re doing it We may put on my on once in a while and and one of them would be as an economic Development director when I returned home from college. I’m actually consulting [meteorologist] return back to the community to start that business working with local ag Producers and [I] had parents that were ill at the time and six siblings in the family to help the family transition the family farm it is a 1200 it’s to two sections, and then we have another half section located not next to the original two homesteads But it is not What we’re seeing in today’s forum says size and scale which you would you know needed to be a successful commodity operation so in this fifth generation Transfer to my generation. I was part of my family’s Will that this? operation could become viable for at least multiple of the six of us five of us live [in] the community all working professional jobs outside of the family farm and looking for a way to Move in that direction obviously with my background in meteorology and climatology Sustainable farming was something that is in my career realm part of the reason I moved back from Kansas City to the home Community was to be one Open spaces because of the farm watch my nieces and nephews grow up, but also to apply my college degree Microclimate is very much part of what is in part of sustainable farming permaculture Xeriscaping things like that can all be applied 22 these sustainable to both techniques, but Northwest Kansas and Commodity ag world This this is you know, we’re talking [10-15] years ago when I’m we made this decision and started this work it was the Odd duck the oddball the crazy idea at the time well times are changing and I’m proud [to] be here this presentation and give a little background, so you got the economic development director hat there the local farm hat and then my role as the vice president of consumers of the coop is a co-Op of Originally Northwest Kansas Farmers it now has expanded to 50 farms in three states. That’s that Tri-State area in the Corner like we said this was a Out-Of-the-box idea 10-15 years ago, so these farms had to go to the Denver market For our market. It was not local we didn’t have lots of farmers markets there the economy out there Is not conducive for direct selling cells of meat? so a little background about the coop to start this off kind of set the stage for The farms as they grow into the coop and become part of the process It’s a producer So actually [this] came into the economic development office when I served as the economic development director the first three or four years I moved home as a part-time job to supplement the weather It was Rocky Mountain Farmers Union ogallala commons Organization that was working on some youth returned home initiatives with the hometown competitiveness model in Northwest Kansas this concept formed based off of the Oklahoma food Co-Op which was Getting some notoriety and success in the late 90s and early 2000s, so it is a like Oklahoma Producer and consumer member co-op you pay one hundred dollars to join the coop and you could do volunteerism Part of the coop is a buying member in particularly we started in the denver area with about 30 customers and then producers are also a member and Same thing $100 become a producer member it is by law tend to be bored controlled by the producers So that is how it? Maintains a producer controlled co-op, so by the board structure it is Driven by the consumer or by the Producer No, so my role of vice president consumers is to develop new markets and strategic planning as the coop Grows Began as the online Farmers market modeled after, Oklahoma direct sales the customers an online ordering system they order from whatever form they want whichever item and then we distribute it drop it off in Trucks and trailers return back to the to the home originating site which is in Northwest, Kansas We’re now are transitioning to a regional food hub and aggregator for the first mile aggregator to the producer our Drop-off points and delivery sites in Denver are the last mile to the consumer. We are picking up some first mile back that comes back to Northwest Kansas you can talk about that a little bit later that is developing some back Haul and Part of the Northwest Kansas food work that is doing programs On more work to start on the food justice side markets, but eventually maybe helping grocery stores And other farmers market with some of their supply issues in the community as they get up and going We got [to] one thought right now. We got 1,000 products We go two times per month to the direct sales during the season during the winter month. It’s one time a month actually [on] that direct sales size side November is the number one month. We just did Are over a hundred orders yesterday and because of thanksgiving and our turkeys mission and values our producer consumers you uniting an interest of locally grown food to all we want to be in virally sustainable and economically viable and socially just and Cultivate the farmer consumer relationships this last name is the number one core value and the original board of directors Which were all pretty much Northwest, Kansas Producers or in that tri-state area we did have some consumer members from Denver, but they were in part of organizations that had that same mission it is to revitalize our rural communities If more rural communities in this sustainable farming that makes is not part of that development piece It is critical to the survival of the community so that is naturally ingrained in our environment where our production and producers are and Still the number one or driving mission of the coop? this map kind of shows you the Infrastructure of the [Co-Op] our customer base obviously is a Denver our Sorting location hub is right here in the middle and then our aggregation hub where the product kind of comes up We have a truck that comes here And we’ve got a truck that comes up from the Nebraska producers up here comes down and we need to Aggregate here the orders get Sorted and then dropped off in 21 pickup Hubs back to these clusters of people on this map It’s showing the disaggregation distribution and processing infrastructure Every one of these blue sites are one of those pick up hubs the yellow sites are our collection aggregation Centers were say 12 farms in this area come in collect here and the collection collects and goes down The interstate in same way here. It collects and collects and then eventually gets there That’s what we call aggregation These blue you are actually a distribution So when the trailers here to shoot we leave at seven in the morning get here about noon distribute it goes out trailers get back here 7 p.m. On Thursdays, and then these blue routes is run on a Friday and then our weekly route runs out of Bennett on Fridays to the restaurants and stores downtown in Denver these these things are critical here these are your usb a Processing facilities, so that’s what makes the clusters or where the farms are? Kansas Initially had more processing so it made more sense Why we had? Forums already doing this a little bit and the capacity to start out here, and this was such a void Colorado Kansas has the state in usda inspection since we are moving across state lines We [have] to have the usda so these are all usda there’s a combination of mobile processing and fixed facilities in here and Then you get to Colorado, and you kind of see what’s happening [here] They’ve lost a lot. It’s bigger people have tried. They don’t have a state inspection system So it’s created a lot [of] boyd around that processing So basically like I said [we’ve] got a core. Group here. We’re developing that this is an uP-and-coming group there’s some lot of specialty crop production going on there and then [this] Colorado So it’s basically from Bennett, Colorado the Coral Springs another group of farmers that [are] Late [you] know that they’re smaller type farms, but again. They’re still main markets or coming in there We do have a co-op down here a partner Co-op on the ark Valley one in the Salida area of Colorado And one in south lacks that comes in here collects into the system eventually caught [connects] [and] Bennett and can Backhaul and move up and down this area We’ve got a market setting here of six million people the food Hub definition here This is what the usDa defines the food hub that is where the coop is moving more in Direction? we’re very unique because when you think of a food hub you usually think of the Urban Definition which you’ve you know Philadelphia east coast Sacramento portland out here in this high plains region are our Population Center is Denver the high price of land and this distribution and lack of processing that’s a whole different landscape out there when we talk a hub, so Us a definition is manages aggregation distribution and marketing of source identified local and regional product and These are the markets that typically a food hub? Works in again, we had to start retail because we’re very very small farms They had to become sustainable learn grow learn the rules and regulations As we go, we’re just starting to enter into some of those volume retail thing and then eventually The big demand is going to come from these food hubs is how do we? Service the institutional markets the interest in the market is there this distribution and processing and System is in place local food system has lots of gaps in it in this part of the country the key thing [to] take from this here is this 5 to 10 anchor producers of uSD statistics say [that] it takes 600 k 2 1,000,000 to sustainably run the food hub function of a What we’re doing with the food co-op and history shows that takes seven left to 11 years to get there Times are changing a window of opportunity the market demand things are pressurizing it there they think that’s now three to seven and that in our particular case since the Distance we’re working within the area. We’re probably more closer to the Million-Plus before It works for the food Co-op The aggregation part you hear that term. What is it just to give you a little bit of an idea? It’s the the meat of the coat the coop of what we do We do the like my position was to Connection relationships and creating the market opportunity then we source the product from the farms Links that production with [the] needs we’ve identified in the market and there the logistics to get it there That’s the drop site the label the tracking the pickup delivered storage and distribution And the more important thing is we keep that value chain from the producer to the end consumer it Is the know your farmer it’s the I wonder where comes from I want to know if my producer is organic and the website? allows that to be listed individually by the farm the farm controls the prices we have a percentage it is on the consumer side of ten percent and the producer side of 15 and We try to average around that twenty percent Margin similar to other food industry type businesses, so there’s a Low-Margin intense infrastructure type business, but we keep that value chain to stay in the local food or sustainable business Model This is the history the coop the sales only thing. I want to hear this was the direct sales Side of the coop is producers learn and grow we saw a little bit of a jump here that year I basically some of this change in here to here was due to some website [and] Internal interchanges, and then here you’re noticing that volume side taking effect it’s Changing the dynamics of the coop. We’re nearing this we are in tweenage stage now where we’re still Volunteer Board we’ve got a few part-time positions, but now we got to Start [making] serious changes as far as you know what we’re going to do is a co-op to be sustainable this this you know, so obviously being a producer in the coop and The presentation Topic here is poultry we we had you know some meat our limiting factor on the meat is the Processing so we have been had to form an entity to to raise chickens Process them and then enter them into this market demand You’ve heard the other farms in this conference talk about poultry. That’s the money the Interest Opportunity you heard the processing issues coming up to solve that but when [we] did our Expansion plan studies has said the capacity you know the [ability] for all these forms to do some both reproduction Enter into the system and go to Denver is probably the leader or the first entity our first product to become an anchor product in the system follow that with specialty crops because that’s sexy And that’s the highest demand thing if you can grow the specialty crop Producers Work on that at the same time and then work on this processing and start building up meats and grains and some of the other items that can go into the system to build the food Hub so here’s our history with high plains poultry or Our first poultry farmers were several of them. I think there might have been of the twelve at least 52 half of them had poultry on the farm felling at the local farmers market eggs or trying to go into schools and that so so we we had these small orders going to denver in two thousand eight and ten that kept dot system kept on going and then in 2011 or Like hey Here’s some opportunity, so the poultry farmer started growing I’m at that time we had to go to McPherson, Kansas so we can imagine what was going on. We dad, Colorado farmers Picking up chickens all the way back to McPherson you drop them off have to go back home And then send another vehicle it will pick them up and come back and very cost inefficient and then one of the producers in atwood at Rollins County area Decided well, we’re going to go ahead and vest. We want to grill is a beef producer Expanding the poultry side of the meat business skills. We’re going to do Poultry bought the processing equipment to basically do it on the farm, but we had to do at Usda. So they because of a ostrich License at the local processing plant allowed them to have the ability to do poultry in the facility so basically the farmer rented the kill room and The date on One day a month or whenever Heat when they weren’t killing they use that room to process the poultry in scale and start Moving more poultry to the system 2012 we did that expansion plan and said you got the infrastructure there go for it with the eggs and the meat that’s what you guys need or with the coop should start poking its tension and then the group of Farmers and 214 said we got to figure out a way to do our processing because we’re in the local [guys] way and We’re tired of going to the person so we did the servant The rest of this presentation will go into the process of what we did during the grand 2015 we ended up deciding to construct an mPU which is part of the share grant process and then as you saw in the Growth of the coop Most of that growth or about twenty eight percent of it Is the meat and the eggs the rest is were not we’re able to do weekly we do have some beef going into that system and some of the specialty crops, so there is a Small percentage of that growth that is Opening the ways for those other forms now to to grow their markets as well So our cell project this was our performance targets and objectives We won the organized first as to make [start-up] an operating [costs] of a at that time we were lookin We’re still thinking Fixed will this thing be mobile. We still built it as a mobile, but it’s really fixed At this point Determine the feasibility Find the site do the permitting that’s required both locally state and Usda Federal equipment purchasing and fabrication implementation start up and develop a plan to enter that co-op Market opportunities This is the outcomes and impacts as you can see we got the plant up and running an october of 2015 and The coop that was the first year We were able to really deliver through the winter with it with it with a product item so we did 600 chickens and 23 turkeys at Thanksgiving this year This year we are I? You know I think this is this was a close estimate to where we’re at the end of the year and we just did our turkeys so again It’s an estimated total and this is our projection and feasibility is where We thought the processing plant would end up in 2019 totally years of utilizing the crews and what can be done in the That we built Our revenues. This was for me right here This is what you saw in that graph for 2016 that tWenty-five percent of that 400,000 and this is what this would do in 2019 And then as far as the farms go right here, it was two farms right here Three or four and then here we could be up to 12 working in this Facility Argh our other outcomes and impacts we wanted to increase jobs obviously because the aquino development 2016 [with] Family [part-time] labor this year we have paid for 28 part-time workers operating to 32 days processing One day packaging and Then we have this projection for 20 19 Again, I brought this back up to really highlight that $100,000 increase in the coop sales sitting here for an anchor producer if we can get for three more of those a a Hydroponic vegetables facility Something else creating that same volume we’re on our [way] to being a sustainable viable food Hub ok back to the mPU Here we started out our Accomplishments were formed an entity for four farms to be able to invest in to thee we didn’t take other than the Funding [that] we had in the sera grant we actually pulled an lLc to invest with four florins We had to start up business plans a fabrication budget did the financing? Within our original sir Grant I think we had 15,000 of it going to the infrastructure and equipment and fabrication class and and then the rest was equity investment from each of the farms the feasibility Obviously our current situations weren’t feasible This is was where we still kind of at and this has to do? I was we decided to go mobile by looking at we toured I went to Ballman’s Anita’s and watch what they’re fixed facility dead we went to kallikrates In st.. Francis beef processing plant and we went to toss, New Mexico and saw where they had a Mobile unit that was fixed and doing all kinds of life stocky and headlamp eggs One day they had some bolt you know they were doing everything in toss Site location travel available labor took all that into consideration When [we] did our economics on it from the McPherson stuff? We were saving three dollars per bird? thought with those numbers of showed up there, we figured this unit will break even operational costs sometime next year around the 12,000 to 15,000 chicken Per Year Mark, and we started out think we’re at 450 for processing of a bird If you’re cutting that it’s another cutting them up into parts another Dollar 25 Give you kind of an iDea what the costs are? Yes, it was probably the biggest variable we thought we were going to do this in three or four [months] and be up and running Last june, we didn’t start till October last year, so it Took us 14 months to do that And this was probably the biggest reason for that. We did have some since we Farmers built, it ourselves Particularly the lead of one of the farmers who was looking at doing this anyway on their own So we with there was some time to fit into our personal farming schedules. It created some time at the biggest laws the hoops to get usda stay all these food safety regulatory issues in line and understanding them and Knowing what we’re doing. I don’t want anybody to get the notion that the uSDa is against or all the things you hear that Why you can’t do this they want to work with you? It’s just do to them and they aren’t staffed and You’re dealing with regions and moving employees for like our FfFFs is had to come from Arkansas Our everyday inspector that has to be on site Had to be trained because he’s never seen poultry his life, beginning, Kansas So it’s all that took time to put it together and then everybody is receptive at usDa we want to learn how to do this because this is an opportunity for everyone ah That is food safety inspection something this is Hazard Critical access point plant you know the within the plant every food state point critical point where Bacteria could develop on the chicken you have a check and the process in place Standard safe operating procedures, so that’s your plan to all the way through from the cage into the plucker and All your processes or keep the mice out of the facility Clean bathrooms you name it that’s in there and you know there’s we’ve had to take our one of our farmers you know took the training and Did a lot of this work? You know internally? feel a lot to to that process their scale up plan This is basically what we’re with that and then number showed you 500 as We speak we can capacity to go to that a hunter a shift does because of this a shift of Five to seven think we got seven people on the ship can do. They’re really good They’re getting up here around this number in three hours. That’s about how many birds we process and Since we are chill them These are going into the air chiller, and you have to have them down to 40 degrees in three hours and then afternoon inspector Houses 8 hour a day and so that’s about all you can do in a shift You can run two shifts have two inspectors You could go two more days a week and bring in another inspector, but that’s down the road we That will take time might it be a new might have to be a second inspector so those are some things that let that either slow the growth or Put you in this plan and again that break even in 2017 Okay, here’s our design. We ended up. We purchased a reefer trailer and then That you saw the picture Here we actually this process. There’s a our local vet offices here and This is just north of that would about two miles This is his circular drive. He’s got pins back there We we operate we rent this from the local vet and then we’re processing our cars park here And we load the chickens in the back from the back end so they come in this back in right here is the Inspectors area he’s got a restroom a locker a desk Clothing there the chickens load on that back side they come in we use killing cones Here’s our plucker. We have one person here two people working in here, and then we hand through Here to the eviscerating area we have You know the inspector stands over here and the chickens. We got you know the legs and cutting running and then checking the feathers, so you got a lot of checking here and to get that bird into [the] air chiller, so That’s how it runs through there. I’m again. We’re doing about 150 and three hours The Air chill here generally, they will break for lunch come back, and then they can either start packaging or generally we let them sit overnight and Start doing it the next day these this market that all of these chickens are going to is Fresh meat going back to Denver restaurants right now We and they want free Eggs, two-and-a-Half to three-and-a-half pounders because then they split them in half and they about two meals out of them Anything that’s smaller or bigger. We freeze it and that goes into our local sales rate Markets benefits convenient and efficient cost-effective easier to access and the USDa inspected facility The challenges probably asking how much it costs to do this I talked about the construction time When you’re doing it ourselves the regulatory processes and then the funding We thought when we do our original budget it would be around fifty thousand dollars it ended up being 75 And while that we we did calculate a value on time and Where we are so that kind of gives you an idea if you were to go buy this already prepared and not to go through That trailer on Cornerstone. I think I saw of that size was about a hundred and Thirty thousand dollars for all the equipment, so it does save some regulatory young and [imma] [for] [us] the other reason we we Kind of do believe that at some point it may grow to where we possibly need a fixed facility particularly Where may be different that we’re covering a lot of areas? So maybe it’s doing multi species in that those are so unanswerable at the time We just wanted to focus on the chicken and then we go this thing could move To another group of producers once it got full and week then we could work on that, so More of the general plan is it will probably move across the state line to one of the other? clusters of Producers whether it’s up in the Nebraska Panhandle We’re down there close to Colorado go through the same process with the permitting regulatory let’s say that would take because we don’t want to shut down now, so Once that process kicks in have the other thing up and running So that one can move and do that type of transition So that’s that’s was a lot of them when we say mobile. It’s not going from farm to farm mobile to us was to cross those state lines and do this whole process over again and and Go from there are farms are more mobile I think to do the farm to farm would be wiser for us to get a do a hob facility that does aggregation collection and by a sprinter vehicle to go to farms or a trade trailer there live and Sprinter for vegetables and go pick stuff up and that but that’s part of your You know if you’re doing a food hub things to consider So I mean those are you know yet sand the questions on [on] those? again, then you know our publications Outreach, we Have a healthy communities initiative in Northwest Kansas so they chose to do food as their initiative and They sent all their technical assistant people from Eastern Kansas and lawyers from Minneapolis and all that out Watching tour this when we were processing one day So it’s being assimilated Through those types healthy communities communities if you’re from there’s 20 of them in Kansas They have a pretty good idea what’s going on out there and would connect with us the USDa Employees themselves Are talking in and you know they like I said are probably receptive of seeing more poultry in Kansas And working working with farmers to do more of it our high plains food co-op annual meeting this meeting and Other other meetings are part of our outreach Future recommendations from us [the] crew or co-op it worked on this project work with your policy councils in your states and usda if you get the pull to go to Washington and Start with the secretary down or so now Let’s talk about streamlining this and planning a little bit ahead So so the next people don’t have to take so long Or another state and coordination somehow there Be honest with the startup funding requirements again It’s not a huge investment to do one of the smaller scale but You know be with any project? You know bigger some a contingency on that and then be conservative with the market in the customers there’s only poultry farming isn’t easy and So so be realistic saan what you can actually deliver and don’t over promise the customer that you’re going to have fresh chickens for 20 restaurants when you can only really just work with one to start so that 2014 we actually with those 600 and what we’re already doing piloted with five And then this year we [have] about 25 customers in this market, so That’s that’s probably my biggest want people if you’re going to go into the scale up dane and try to go from Direct Farmers market and that Really communicate that with your customer. They’ll they’ll understand if bad weather comes and Delivery doesn’t get out [their] chickens all die that. Maybe for two weeks They wanted to pull off the menu as long as they know you communicate that with them The other thing we’ve learned if you do this, and there’s entities out there that say they’re doing this Compete against you on the pricing They are raising their chickens in Arkansas Or Iowa and locally processing them in your market Selling them as local and the quality is not there, and those customers will come back so don’t lower your price That would be my other recommendations is compete in [your] market and understand your customer Yeah Now like I said our ours is right now fixed And and when we’re if we’re going to we you know if you pull up stair and look at the other projects across the country some of them are You know but but then they don’t like us We have that state line thing that brings the uSda in a lot of those other ones in Vermont and those are our State and a run by university of that and they do go farm to farm the farm so The state state ones are depending on the state if it’s approved and they don’t The state inspected sometimes the state inspection there is no specter. It’s just approved and then it can do it but Kansas and You know where were we got an inspection system that? Were usda. So it doesn’t matter, but if we were to do a mobile in Kansas. We’d have to operate under those guidelines and probably not have to have the inspector there each time Through the birds so it could save you you weren’t going the usDa route, but then in Kansas you have to Limit if you get you got 20 usd, Arkansas You can’t as a farm market both ways and if you would choose the Kansas side your form is limited to 20,000 Or do you? your lie Yeah but that’s kind of how I understand it from our regional guy that they would like [they] do with your mate license, they Show up Randomly Walked once or twice a year so okay. Thank you. I’m wondering if you did the figures on how the cost of making this mobile facility would compare to the cost of doing a traditional station silly a traditional we now We have now all meet facility. I know the last one we toured in Colorado that Had the poultice [islands] of the cream of the crop was 1.3 million if you were just to put up a Shed go through the process with the drainage and that you would probably be very Close to this same [thing] Without you know that would be Bait, I mean any expansion if you did something on the farm You can probably anticipate around that same cost. I was doing your numbers on the chickens for six hundred chickens figures out about 1333 a chicken yep, yup that year. That’s probably why we’re selling them for 1225 those three and a half pounders And then when you raise your production up to what was 8,000 and just rough figures come out to about 1250 a chicken or something I was just yes the numbers of Kenya. So how much is your your transportation costs on fifteen percent for accounting marketing Packaging and the transportation you add 15 about seven percent for the transportation 78 223 for your Internal stuff and then the other percent goes back into the coop if the structures It’s 350 per pound and the farm is taking back About three bucks. It’s like 60 minus sixty cents to 90 something like that per pound

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