SRAC Publication No. 442

VI November 1997 PR

Small Scale, On-farm Fish Processing

Andrew M. Lazur

Because of the small size (5 to 20 ducers need to carefully consider large quantities of product from acres) of many catfish farms, these the increased requirements, time, larger processors at lower prices, businesses have high production and cost of retailing their product making it difficult for small costs compared to more efficient before starting production. processors to compete. If local farms of 50 acres or greater locat- Providing good service and sup- niche markets that are not being ed in the leading catfish produc- plying timely and complete orders supplied by larger processors can ing states. The large, efficient to retail customers are essential. be identified, on-farm processing farms in Mississippi, Alabama, Another important consideration may be a marketing option for Arkansas, and Louisiana are a is that many retail markets buy small farms. direct result of quality clay soils, flat land, lower construction costs, and lower feed costs. An added Table 1. Example of costs and profits for small farms with various advantage in these states is the close proximity to processing catfish markets. plants that allows farmers to sell Market Outlet Farm Cost Selling Price Profit per Pound fish directly to a local processor. per Pound ($) per Pound ($) Live Weight ($) This wholesale type marketing, Processor 0.75 - .85 0.80 (0.05) - 0.05 however, is often not profitable Live Sales 0.85 1.25 - 1.50 0.40 - 0.65 for small farms. To maximize profit potential, retail marketing is Fee-Fishing 1.00 1.25 - 1.75 0.25 - 0.75 suggested. Live sales, fee-fishing, and direct sales of processed fish to restaurants and grocery stores are common retail market oppor- Table 2. Catfish marketing options and considerations. tunities. Direct retail sales can be more profitable than selling to an Farm-raised Product established processor, but there are important considerations to evaluate prior to production Sales to Processor On-farm Processing (Tables 1 and 2). Live Sales Retail markets often want diverse Ð large volume Ð increased capital costs product forms including live and Ð low wholesale price Ð wholesale/retail price Roadside Sales Fee-fishing Live Hauling processed fish in varied sizes and Ð size/time constraints Ð extra labor consistent supply. Small farm pro- Ð greater size/time flexibility Ð high retail price Ð high retail price Ð large volume Ð smaller volume sales Ð variety of products Ð wholesale/retail price Ð extra labor/insurance Ð reduced farmer control *University of Florida Fisheries and Ð location dependent Aquatic Sciences Department Facility design and The facility is designed to process Facility processing capacity can be requirements 500 pounds catfish (live weight) variable and should be based on per day, and the necessary infra- the farmÕs identified market The basic concept of on-farm pro- structure is relatively compact and opportunities. The facility can be cessing is a low-cost, manual fish simple, enabling development in constructed in an existing build- cutting operation using family or an existing farm building (Table ing or use a new building. It is farm labor to process limited 3). Actual equipment require- recommended that construction quantities of fish. To demonstrate ments and costs will vary depend- allow for insulation to maintain the flexibility of facility design, a ing on desired processing capaci- adequate heating and air condi- prototype was developed at the ty, fish species, product form, and tioning requirements. Prices for University of Florida. The on- local regulatory requirements. construction, septic system, and farm processing facility utilized a processing equipment will vary 15 feet x 15 feet area of an existing with location and processing metal building. An example floor capacity. Small machinery such as plan is shown in Figure 1. a tabletop catfish skinner could be incorporated increasing the cost approximately $4,000. Increasing the capacity of the facility to Sink include use of traditional process- Bathroom ing equipment, e.g., electric shock- ing system, band saw for dehead- ing, and an eviscerating system, will significantly add to the in- Offal vestment cost and break-even price. In addition, freezer/refrig-

ank eration space needs will be depen- T Cutting Skinning Heading dent on an individual farmÕs market demand for fresh versus Fish Sink frozen products. Chiller Regulatory considerations A processing facility must meet all necessary state and federal per- Freezer Ice Machine mits and regulations. In most Roll up Door southern states, several govern- Figure 1. Example of a small, on-farm catfish processing facility. ment agencies will be responsible for regulating small scale fish pro- cessing operations. Often these Table 3. Example of facility equipment and infrastructure agencies include the state depart- ment of agricultureÕs division of requirements. food inspection and the state or Item Cost ($) county health department. In Concrete Floor and Block Walls 2,100 addition, all facilities will be required to meet the U.S. Food Window Air Conditioner 300 and Drug Administration HACCP Door 275 (Hazard Analysis Critical Control Suspended Ceiling and Lighting 325 Point) requirements. Specific information on HACCP can be Plumbing and Electrical 900 obtained from state food inspec- 1,050 Gallon Septic Tank 1,300 tion agencies or the FDA. A state Fish Holding Tank 500 annual food handling permit is 3 Compartment Stainless Steel Sink and Hand Sink 1,000 typically required and involves initial facility approval and regu- Fish Processing Table 525 lar inspection. The basic require- Chiller Tank 125 ments for a fish processing facility 400 lb/day Ice Machine 2,400 include: washable floors and 25 Cubic Foot Freezer 600 walls, floor drains, washable ceil- ing, adequate lighting and ventila- Miscellaneous Supplies 300 tion, hand washing and bathroom TOTAL 10,650 facilities, approved water supply, sanitary equipment and utensils, 6. Place processed fish into chill specific sanitation practices, tank (water and ice). Table 4. Example of processing o results for 500 pounds refrigeration at 40 F or less, and 7. Rinse and pack fish on ice for o of 1.5 pound live freezing at 0 F or less. Fish waste, sale, or blast freeze in storage catfish. or offal, must be stored in sealed freezer. containers with daily removal or Item Value freezing capabilities. The offal can be handled in sever- al ways. These methods include Labor (hours) 12.5 In most states, the state depart- burying it on-farm the same day Dressout Percentage 61.7% ment of health is typically respon- and covering the offal with sible for testing the water source enough soil to prevent an odor or Dressout Weight quarterly and permitting the sep- fly problem. Composting with hay (pounds) 308.5 tic system. Regulations and or lawn litter is another method. Water Usage (gallons) 180 responsible agencies vary from Preliminary findings have shown state to state. In some states the that even the bony skeleton can amount of daily water use will decompose in a short period, 6 to dictate the agency and specific 8 weeks, if handled properly. The The cost of processing per pound requirements. The discharge result is a high quality compost/ of dressed fish includes the total water used in cleaning the fish fertilizer. Also, the offal can be cost minus live fish costs divided and facility is commonly classified rendered by grinding and cooking by the total dressout weight. The as commercial wastewater in most for use as a feed supplement to break-even price stated is an esti- states and can be treated by a sep- livestock. If quantities are signifi- mate of all costs associated with tic tank and drain field system. cant, the offal can be frozen for processing fish and operating the Water use from the University of pick up by established rendering prototype facility. It is calculated Florida prototype facility is companies. It is recommended to by dividing total cost by the num- reported in Table 4. Complete check with regulatory agencies for ber of dressed pounds. It is details on specific regulations and proper handling of offal. assumed that half of the estimated permitting in your state can be $10,650 investment cost is bor- obtained from the department of Economic considerations rowed and all fixed costs are agriculture, county health depart- based on 100 days of operation/ ment, and environmental agen- A summary of the University of year. In addition to the processing cies. Contacting these resources is Florida prototype processing trials costs, packaging, delivery costs, an important first step to identify and an operating budget are and time must be considered and current regulations and will aid in shown in Tables 4 and 5. included when determining a determining facility design and cost. Operational guidelines Table 5. Example daily operating budget for a 500 pound per day The following is the basic proce- small scale, on-farm processing facility using 1.5 pound dure for processing catfish in an catfish. on-farm facility: Item Quantity Unit Cost ($) Total Cost ($) 1. Withhold feed from fish 2-3 days and test fish for off-flavor Variable Costs prior to harvest. Off-flavor fish Live Catfish 500 lbs 0.80 400.00 should not be processed. Labor 12.5 hrs 7.00 87.50 2. Transfer harvested fish into fish Electricity 5.00 tank in processing room and Water 180 gals 4.00 hold overnight in well water with aeration. Miscellaneous Supplies 11.00 3. Prior to processing, chill-stun Fixed Costs fish by draining most of the Interest 5.00 water from fish tank and plac- Depreciation 17.00 ing ice on fish. Fees/Insurance 5.00 4. Skin fish using manual pliers Total Costs 534.50 (an electric, floor, or tabletop skinner can be used). Processing Cost per Pound (dressed weight) 0.44 Break-even Price per Pound (dressed weight) 1.74 5. Remove head and guts and place waste into plastic can. profitable selling price. When pro- ing delivery of 300 pounds of increased volume of product. cessing smaller fish, the amount processed product with a packag- Farmers should be aware of local of labor required is greater since ing cost of $0.04/pound, a 50 mile regulations and permits and con- more time is required to remove round trip @ $.30/mile, and three sider the increased time and labor heads and skin. Also the dress-out hours of labor @ $7/hour, the input when servicing retail mar- percentage (headed and gutted) approximate marketing cost kets. for smaller fish is lower. would be $48 or $0.16 per pound Close proximity to retail markets of processed product. Adding this Actual costs of processing will is recommended to minimize time marketing cost to the break-even vary depending on processing and money spent on product price per pound from Table 5 capacity, fish species, labor pro- delivery. Scheduling processing to gives a total break-even price of cessing efficiency, and equipment ensure consistent supply to cus- $1.90 per pound. Retail prices of and facility development costs. tomers is essential and is a major whole dressed fish will vary To determine the economic feasi- challenge for small farms. With depending on location. The on- bility of this type of facility, it is careful planning, on-farm process- farm processor must find niche necessary to have local selling ing is an alternative strategy for markets that will pay enough to prices for processed fish. The local small farms allowing access to cover all costs plus what ever selling price of processed fish retail markets. must be greater than fish process- profit margin is required to justify ing costs. In addition, the added the investment of resources - both Additional Readings cost of marketing (advertising, time and money. labor, and delivery) must be cov- Processing Channel Catfish. SRAC ered for the operation to be truly Summary Publication No. 183. profitable. In the example in Table The relative simplicity of on-farm Processed Catfish: Product Forms, 5, the break-even price to the on- processing and the low invest- Packaging, Yields and Product Mix. farm processor is $1.74 per pound. ment costs may provide an afford- SRAC Publication No.184. Marketing costs such as telephone able marketing tool for small cat- Processed Catfish: Product Quality charges, transportation, and labor fish farmers that have identified a and Control. SRAC Publication No. for delivery and packaging are market niche. The facility can be 185. extra. Packaging costs, e.g., a designed to operate at a variety of waxed cardboard box with a 50 capacities to fit the area market Small-Scale Marketing of pound capacity for ice packing, demand and farm production. Aquaculture Products. SRAC would range from $0.03 to 0.05 Supplying local retail markets Publication No. 350. per pound of whole dressed fish. provides a higher price than tradi- Testing Flavor Quality of Preharvest Delivery costs will vary depend- tional processors and allows rural Channel Catfish. SRAC Publication ing on distance to markets and farms with little or no access to No. 431. volume of products sold. Assum- established processors to sell an

The work reported in this publication was supported in part by the Southern Regional Aquaculture Center through Grant No. 94-38500-0045 from the United States Department of Agriculture, Cooperative State Research, Education, and Extension Service.