FOOD PROCESSING GUIDE Steven C Seideman Extension Food Processing Specialist Institute of Food Science & Engineering 2650 North Young Avenue University of Arkansas Fayetteville, AR 72704 Last Updated; October 17, 2006 1 FOREWORD This publication was prepared by Steve Seideman, Extension Food Processing Specialist of the Institute of Food Science & Engineering at the University of Arkansas. This guide is designed to provide fundamental information to entrepreneurs, small food processing businesses and individuals in large food companies who want to learn more about food processing. Included in this guide is information on basic business considerations, planning a marketing strategy, processing, food science, labeling, and regulations. Some of the materials for this guide were drawn from outside sources and the original authors are identified with this material. The author of this manual expresses his appreciation to these authors for allowing the use their material. The Institute of Food Science & Engineering is part of the Division of Agriculture, University of Arkansas. It is composed of interactive technology centers that provide research and extension support for value-added processing of agricultural products in Arkansas. These centers provide an interdisciplinary focus for programs and an information pipeline to the food processing industries of Arkansas. Programs encompass harvesting, handling, processing, packaging and evaluation of food products. The Institute's ultimate mission is to provide technical advances in food processing and packaging that foster safe, efficient, environmentally responsible processing systems. This mission relates to the public's need for safe, affordable nutritious food products and the need for economic growth in the state's agricultural and processing sector. The information in this guide is designed as a starting point. Since new product development is both a science and an art and success of a new product is largely dependent upon timing, perseverance and luck, there is no guarantee that following the fundamental information contained in this guide will ultimately lead to success. However, by following the principles set forth in this guide, your probability of success will be greatly improved. Further information on food processing can be obtained by going to the following websites; http://www.uark.edu/ua/foodpro. - This website has additional information on food processing and also lists the services that the Institute provides and sources of valuable information needed to enter the food processing business. http://www.uark.edu/ua/foodedu- This website contains numerous modules of fundamental food processing lectures. There are over 230 food processing plants in Arkansas. Food manufacturing in Arkansas is an $11b /year business representing 25% of all manufacturing in the state. Food manufacturing is strong in Arkansas for several reasons. The first is that the labor pool is good, hard-working and relatively inexpensive compared to some northern states. Second, Arkansas is a “Right to Work” state meaning that people who work in these processing facilities do not have to join a labor union. Third is the fact that there is an excellent interstate road system that crisscrosses the state. Fourth is the fact that there are plenty of commodities to process. And fifth is that Arkansas is centrally located in United States with easy access to any market in any direction. 2 ACKNOWLEDGMENTS This guide was compiled from a variety of sources and I would like to express appreciation to the authors of these works for allowing me to use their materials. Appreciation is also expressed to those people who lent their expertise in reviewing the information presented. This guide was started with material from the book entitled “Starting a Food Processing Business” by Luke Howard and Pam Brady. Some sections of that book have been used in this guide. In addition, some sections of this guide have been adapted from fact-sheets and other materials. Acknowledgements are given to the original authors at the beginning of these sections. The purpose of this guide is to put information and contacts at the fingertips of Arkansas food processors and manufacturers. We hope you will use this as a guide in your efforts to promote quality and value-added food products in the state of Arkansas. The names of companies, laboratories, government agencies and food processing companies have been compiled from several sources believed to be reliable. However, we assume no liability for errors or omissions. Nor do we endorse one company over another, or necessarily recommend the use of these companies. Please note that the companies and associations listed herein are for the convenience of the guide users. The University of Arkansas does not recommend any specific company and is not held liable for any company. Links to commercial sites are provided for information and convenience only. Inclusion of sites does not imply University of Arkansas Division of Agriculture's approval of their product or service to the exclusion of others that may be similar, nor does it guarantee or warrant the standard of the products or service offered. The mention of any commercial product in this web site does not imply its endorsement by the University of Arkansas over other products not named, nor does the omission imply that they are not satisfactory. 3 TABLE OF CONTENTS Chapter# Chapter Section Page Forward 2 Acknowledgements 3 1) Starting a Food Business – An Overview 6 A. Introduction 6 B. The Product 6 C. The Business Plan 7 D. Manufacturing / Operations / Regulations 7 E. Label Design and Packaging 8 F. Going to Market 8 G. Assistance 8 H. Checklist for Entrepreneurs 8 2) Developing Food Products for a Changing Marketplace 13 A. Introduction 13 B. Getting market Share 13 C. Entrepreneurship 14 D. The Product 18 E. Understanding the Business 20 F. Food Channels/ Distribution 22 G. Value Added Foods 24 H. Food Product Development 25 I. Innovation as a Competitive Strategy 29 3) Business Considerations/ Business Plans / Marketing 30 A. Introduction 30 B. Business Blueprints 30 C. Business Planning/ Plans 33 D. Organizing Your Business 37 E. Marketing your Product 46 F. Guerrilla Marketing 51 G. Pricing your Product 53 H. New Product Presentations 59 4) Principles of Food Preservation and Processing/ Food 61 Microbiology and Safety A. Introduction 61 B. Principles of Food Preservation and Processing 61 C. Microbiology 83 D. Food Preservation 91 E. Pathogens 93 F. Shelf Life and Stability 103 G. Code Dating 104 H. Recalls 104 4 I. HACCP 107 J. Bioterrorism 111 5) Organization/ Operations/ Management 115 A. Introduction 115 B. Organization of a Food Company 115 C. Operations of a Food Processing Plant 120 D. Copacking of Food Products 128 E. Crisis Management 131 6) Food Processing and Equipment 141 A. Introduction 141 B. Food Processing 141 C. Food Processing Equipment 145 D. Finding Food Equipment 147 7) Food Product Labeling, Additives and Ingredients and 148 Packaging A. Introduction 148 B. The Basics of Food Labeling 148 C. Nutritional Labeling 152 D. Other Label Components 154 E. Food Ingredients, Additives and GRAS 158 F. Food Packaging 165 G. Label Design and Packaging 172 8) Food Processing Regulations 173 A. Introduction 173 B. History of Food Regulations and Major Legislation 173 C. Food Processing Regulations- General 174 D. FDA Regulations 175 E. USDA Regulations 176 F. Ingredient Uses in Food Products 177 G. Local Contacts 177 5 1. Starting A Food Business- An Overview A) Introduction; B) The Product; C) The Business Plan; D) Manufacturing/ Operations/ Regulations; E) Label Design and Packaging; F) Going to Market; G) Assistance; H) Checklist for Entrepreneurs A) Introduction; This chapter is a general overview of the field of starting a food business. The road to developing a successful new food product can be somewhat confusing and long. This guide can be used to make the journey easier to understand. This first chapter goes through some of the key things one must do to start the journey and is written to help you understand the “big picture”. The details of the components of this first chapter are discussed in subsequent chapters in greater detail. B) The Product; The first step in starting a food processing business is to have a food product concept or idea. The concept or idea can be either a particular product or a new and innovative processing method. The idea or concept doesn’t have to be perfect to begin with. You just need to just get started on something. Your original idea or concept will probably change several times as you develop your business plan and get to know the business. So just start with any idea and move forward. Your idea could put more people to work and you may be the kind of person this country needs to compete in world markets and maintain its standard of living. Your idea may be the cutting edge of the future. In general, food products with just a different flavor do not have a high success rate because they can be easily matched by spice companies. Anyone can go into a store, buy your product and match the flavor within a matter of weeks. On the other hand, the restaurant trade is always looking for food products that they can just heat and serve. They may have an interest in a new food item. Just start with a concept or idea knowing it does not have to be the ultimate idea. Remember that ideas are “a dime a dozen”. This means that your idea for a new product is not the key to success. I agree you have to have a good idea but companies with good ideas fail all the time. You have to have knowledge of the business, certain skills necessary to run the business, have family support for the first 3-5 years to get your business off the ground.