by Edwin Bowater of FJB Systems...Edwin Bowater of FJB Systems +44 (0) 1372-468839 AdAgenda About...
Transcript of by Edwin Bowater of FJB Systems...Edwin Bowater of FJB Systems +44 (0) 1372-468839 AdAgenda About...
MeatMeatExperiences of the Economics of Setting
up Meat Plants in theMiddle EastMiddle East
bybyEdwin Bowater
ofofFJB Systems
www.fjb.co.uk+44 (0) 1372-468839
A dAgenda
About FJB SystemsAbout FJB Systems
Overview of the Middle Eastern Meat Industry
Overview of the Business Planning Tool
Case Study
Summary
FJB S tFJB SystemsOne-stop Service for the Meat Industry
• Feasibility Studies/Business PlanningFJB SystemsM.E. Overview
• Process LayoutsA hit t
• M & E DesignR f i ti
Feasibility Studies/Business PlanningM.E. OverviewBusiness ToolCase StudySummary • Architecture
• Building Design• Refrigeration• Insulation
• Project Management• Training, Commissioning & Managementg, g & g
FJB SFJB Systems
• Fields of Expertise - Beef, Sheep, Pork & Poultry• Experience in slaughtering boning value adding • Experience in slaughtering, boning, value-adding,
rendering, canning & cold storageFJB SystemsM.E. Overview
cold storage
M.E. OverviewBusiness ToolCase StudySummary
Value addedfeedlot abattoir boning Value-addedfeedlot abattoir boning
rendering
FJB SFJB Systems
Worldwide Experience
FJB SystemsM.E. OverviewM.E. OverviewBusiness ToolCase StudySummary
Middl E O iMiddle Eastern Overview
• Sheepmeat - preferred proteinp p p• Increasing Oil Wealth since 1973• Preference for fresh meat Live Imports
FJB SystemsM.E. Overview • Preference for fresh meat Live Imports
• Australia & New Zealand
M.E. OverviewBusiness ToolCase StudySummary
• Increasing personal wealth: Mutton Lamb• High quality gas flushed productg q y g p• Still large preference for fresh meat
Middl E O iMiddle Eastern Overview
China
World Sheep Inventories
EU
AustraliaFJB SystemsM.E. Overview
Iran
India
M.E. OverviewBusiness ToolCase StudySummary
New Zealand
Sudan
S i
South Africa
Turkey
0 20,000,000 40,000,000 60,000,000 80,000,000 100,000,000 120,000,000 140,000,000
Spain
Source: FAO
Middl E O iMiddle Eastern Overview
Leading Lamb & Mutton producing Countries
EU
ChinaFJB SystemsM.E. Overview
New Zealand
AustraliaM.E. OverviewBusiness ToolCase StudySummary
Turkey
Somalia
India
Iran
Turkey
P ki t
Syria
India
0 500,000 1,000,000 1,500,000
Pakistan
Source: FAOTonnes cwt
B i T lBusiness Tool
• Powerful computerised business toolp
• Models existing or proposed businesses via computer FJB SystemsM.E. Overview
spreadsheets
• Model based on real operational experience
M.E. OverviewBusiness ToolCase StudySummary • Model based on real operational experience
• Allows “What If” scenarios to be instantly tested
• Identifies sensitivities/weaknesses of a business
• Is the proposed or existing business viable?
C S dCase Study
• Proposed New Middle Eastern Slaughter & Rendering Plant to replace existing 2000 Head Sheep/Day & Plant to replace existing - 2000 Head Sheep/Day & 50 Cattle/CamelsP i t O ti
FJB SystemsM.E. Overview • Private OperationM.E. OverviewBusiness ToolCase StudySummary
C S dCase Study
Example of Middle Eastern Public Slaughterhouse
FJB SystemsM.E. OverviewM.E. OverviewBusiness ToolCase StudySummary
Note: Not built to International Standards
C S dCase StudyDual Purpose Low Throughput Public/Private Slaughterhouse
FJB SystemsM.E. OverviewM.E. OverviewBusiness ToolCase StudySummary
C S dCase Study
• Proposed New Middle Eastern Slaughter & Rendering Plant to replace existing 2000 Head/Sheep Day & Plant to replace existing - 2000 Head/Sheep Day & 50 Cattle/CamelsI ti Li Sh
FJB SystemsM.E. Overview • Importing Live Sheep
• Monthly Animal Shipments
M.E. OverviewBusiness ToolCase StudySummary
• Feedlot RequirementB ilt t USDA & EU St d d• Built to USDA & EU Standards
• Will it make money?y• What are the business weaknesses?
C S dCase Study
Key Variables
DIAGRAMATIC REPRESENTATION OFINTERACTIVE BUSINESS PLANNING MODELMIDDLE EAST SLAUGHTERHOUSE
Plant Service CostsWethers
Offal & RenderingCredits
HoggetsOffal & Rendering
Credits VIXIIXIDirect Costs
VI
Planned StockThroughput
Numbers & Costs III
IIa & IIb
FJB SystemsM.E. Overview
Packaging &Production Material
CostsHoggets
Carcass RevenueWethers
Carcass Revenue VIXIIXI
M.E. OverviewBusiness ToolCase StudySummary XIIXI
Income Statement
Feedlot Direct & Fixed Costs
IX
Project Finance
Wages &Surcharges
TradingP fit & L
VIII
V
Cattle
Monthly
Project FinanceCharges
Profit & LossAccount
Overheads
COSTS
VIIIV VIICarcass Revenue
CattleOffal & Rendering
X
yCash Flow
INCOME
XIIIOffal & Rendering
CreditsX
C St dCase StudyModel includes over 100 separate variables which can be independently changed - illustrated by these examples:
Livestock Purchase Price:
Exchange Rate:
27 A$/head (FAS Western Australia)
US$/A$0.585FJB SystemsM.E. Overview g
Throughput:
Average Local Feed Prices: US$/tonne
%
Sheep/day2000
235
44
M.E. OverviewBusiness ToolCase StudySummary
Dressing Yield:
Employee Wage Rates:
Meat Prices:
US$/day
%
%44
15
100Meat Prices: %100
Base Profitability is calculated at Base Profitability is calculated at US$1.61m (year 8) incl. Deprec.
C St dCase StudyAssume 10% increase in Livestock Purchase Price
Livestock Purchase Price:
Exchange Rate:
27 A$/head (FAS Western Australia)
US$/A$0.585
30FJB SystemsM.E. Overview g
Throughput:
Average Local Feed Prices: US$/tonne
%
Sheep/day2000
235
44
M.E. OverviewBusiness ToolCase StudySummary
Dressing Yield:
Employee Wage Rates:
Meat Prices:
US$/day
%
%44
15
100Meat Prices: %100
and process the results ….
C St dCase StudyUS $1.61 million Adjusted profit US $0.45 m10% livestock price 72% profit
FJB SystemsM.E. OverviewM.E. OverviewBusiness ToolCase StudySummary
3
S$
Profit & Loss Statement3
S$
Profit & Loss Statement
0
1
2
s af
ter t
ax U
Sm
illio
ns
0
1
2
ss a
fter t
ax U
Sm
illio
ns
-3
-2
-1
Prof
it/Lo
s m
-3
-2
-1
Prof
it/Lo
s m
Y 1 Y 2 Y 3 Y 4 Y 5 Y 6 Y 7 Y 8Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8
C St dCase StudyAssume 10% decrease in Exchange Rate
Livestock Purchase Price:
Exchange Rate:
27 A$/head (FAS Western Australia)
US$/A$0.5850.526FJB SystemsM.E. Overview g
Throughput:
Average Local Feed Prices: US$/tonne
%
Sheep/day2000
235
44
M.E. OverviewBusiness ToolCase StudySummary
Dressing Yield:
Employee Wage Rates:
Meat Prices:
US$/day
%
%44
15
100Meat Prices: %100
and process the results ….
C St dCase StudyUS $1.61 million Adjusted profit US $3 million10% exchange rate 86% profit
FJB SystemsM.E. OverviewM.E. OverviewBusiness ToolCase StudySummary
3
S$
Profit & Loss Statement3
S$
Profit & Loss Statement
0
1
2
s af
ter t
ax U
Sm
illio
ns
0
1
2
s af
ter t
ax U
Sm
illio
ns
-3
-2
-1
Prof
it/Lo
s m
-3
-2
-1
Prof
it/Lo
s m
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8
C St dCase StudyAssume 10% increase in Throughput
Livestock Purchase Price:
Exchange Rate:
27 A$/head (FAS Western Australia)
US$/A$0.585FJB SystemsM.E. Overview g
Throughput:
Average Local Feed Prices: US$/tonne
%
Sheep/day2000
235
44
2200M.E. OverviewBusiness ToolCase StudySummary
Dressing Yield:
Employee Wage Rates:
Meat Prices:
US$/day
%
%44
15
100Meat Prices: %100
and process the results ….
C St dCase StudyUS $1.61 million Adjusted profit US $2.3 million10% throughput 43% profit
FJB SystemsM.E. OverviewM.E. OverviewBusiness ToolCase StudySummary
3
S$
Profit & Loss Statement3
S$
Profit & Loss Statement
0
1
2
s af
ter t
ax U
Sm
illio
ns
0
1
2
ss a
fter t
ax U
Sm
illio
ns
-3
-2
-1
Prof
it/Lo
s m
-3
-2
-1
Prof
it/Lo
s m
Y 1 Y 2 Y 3 Y 4 Y 5 Y 6 Y 7 Y 8Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8
C St dCase StudyAssume 10% increase in Feed Prices
Livestock Purchase Price:
Exchange Rate:
27 A$/head (FAS Western Australia)
US$/A$0.585FJB SystemsM.E. Overview g
Throughput:
Average Local Feed Prices: US$/tonne
%
Sheep/day2000
235
44
259
M.E. OverviewBusiness ToolCase StudySummary
Dressing Yield:
Employee Wage Rates:
Meat Prices:
US$/day
%
%44
15
100Meat Prices: %100
and process the results ….
C St dCase StudyUS $1.61 million Adjusted profit US $1.17 million10% feed price 27% profit
FJB SystemsM.E. OverviewM.E. OverviewBusiness ToolCase StudySummary
3
S$
Profit & Loss Statement3
S$
Profit & Loss Statement
0
1
2
s af
ter t
ax U
Sm
illio
ns
0
1
2
ss a
fter t
ax U
Sm
illio
ns
-3
-2
-1
Prof
it/Lo
s m
-3
-2
-1
Prof
it/Lo
s m
Y 1 Y 2 Y 3 Y 4 Y 5 Y 6 Y 7 Y 8Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8
C St dCase StudyAssume 1% increase in Dressing Yields
Livestock Purchase Price:
Exchange Rate:
27 A$/head (FAS Western Australia)
US$/A$0.585FJB SystemsM.E. Overview g
Throughput:
Average Local Feed Prices: US$/tonne
%
Sheep/day2000
235
44
M.E. OverviewBusiness ToolCase StudySummary
Dressing Yield:
Employee Wage Rates:
Meat Prices:
US$/day
%
%44
15
100
45
Meat Prices: %100
and process the results ….
C St dCase StudyUS $1.61 million Adjusted profit US $2.27 million1% dressing yields 40% profit
FJB SystemsM.E. OverviewM.E. OverviewBusiness ToolCase StudySummary
3
S$
Profit & Loss Statement3
S$
Profit & Loss Statement
0
1
2
s af
ter t
ax U
Sm
illio
ns
0
1
2
s af
ter t
ax U
Sm
illio
ns
-3
-2
-1
Prof
it/Lo
s m
-3
-2
-1
Prof
it/Lo
s m
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8
C St dCase StudyAssume 10% increase in Wage Rates
Livestock Purchase Price:
Exchange Rate:
27 A$/head (FAS Western Australia)
US$/A$0.585FJB SystemsM.E. Overview g
Throughput:
Average Local Feed Prices: US$/tonne
%
Sheep/day2000
235
44
M.E. OverviewBusiness ToolCase StudySummary
Dressing Yield:
Employee Wage Rates:
Meat Prices:
US$/day
%
%44
15
100
16.50
Meat Prices: %100
and process the results ….
C St dCase StudyUS $1.61 million Adjusted profit US $1.56 million10%wage rates 3% profit
FJB SystemsM.E. OverviewM.E. OverviewBusiness ToolCase StudySummary
3
S$
Profit & Loss Statement3
S$
Profit & Loss Statement
0
1
2
s af
ter t
ax U
Sm
illio
ns
0
1
2
ss a
fter t
ax U
Sm
illio
ns
-3
-2
-1
Prof
it/Lo
s m
-3
-2
-1
Prof
it/Lo
s m
Y 1 Y 2 Y 3 Y 4 Y 5 Y 6 Y 7 Y 8Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8
C St dCase StudyAssume 1% increase in Meat Prices
Livestock Purchase Price:
Exchange Rate:
27 A$/head (FAS Western Australia)
US$/A$0.585FJB SystemsM.E. Overview g
Throughput:
Average Local Feed Prices: US$/tonne
%
Sheep/day2000
235
44
M.E. OverviewBusiness ToolCase StudySummary
Dressing Yield:
Employee Wage Rates:
Meat Prices:
US$/day
%
%44
15
100101Meat Prices: %100101
and process the results ….
C St dCase StudyUS $1.61 million Adjusted profit US $2.14 million1%meat prices 33% profit
FJB SystemsM.E. OverviewM.E. OverviewBusiness ToolCase StudySummary
3
S$
Profit & Loss Statement3
S$
Profit & Loss Statement
0
1
2
s af
ter t
ax U
Sm
illio
ns
0
1
2
ss a
fter t
ax U
Sm
illio
ns
-3
-2
-1
Prof
it/Lo
s m
-3
-2
-1
Prof
it/Lo
s m
Y 1 Y 2 Y 3 Y 4 Y 5 Y 6 Y 7 Y 8Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8
C S dCase StudySummary of Plant Operating Costs:-
Livestock Purchase 44.74%Freight Costs 41.59%
C %95.27%FJB Systems
M.E. Overview Feedlot Costs 8.94%Direct Labour 1.17%Production Consumables 0 22%
M.E. OverviewBusiness ToolCase StudySummary Production Consumables 0.22%
Services Costs 0.95%Inspection Costs 0.56%pOverheads & Misc. 1.83%
(Excl. Depr. & Finance) 100.00%
C S dCase StudyAustralian live wether export prices to the Middle East
February 1992 to April 2004
200
150
175FJB SystemsM.E. Overview
125
150
rs p
er h
ead.
M.E. OverviewBusiness ToolCase StudySummary
75
100
stra
lian
Dol
lar
25
50Aus
0Feb1992
Aug1992
Feb1993
Aug1993
Feb1994
Aug1994
Feb1995
Aug1995
Feb1996
Aug1996
Feb1997
Aug1997
Feb1998
Aug1998
Feb1999
Aug1999
Feb2000
Aug2000
Feb2001
Aug2001
Feb2002
Aug2002
Feb2003
Aug2003
Feb2004
DateDateAll prices free alongside ship (FAS) Western Australian Source: MLA
C S dCase StudyAustralian live wether export prices to the Middle East
February 1992 to April 2004
200 200
150
175
150
175
AU$/head
U.A.E.Drhm/head (Adjusted to prevailing exchange rate)
FJB SystemsM.E. Overview
125
150
rs p
er h
ead.
125
150
m p
er h
ead
M.E. OverviewBusiness ToolCase StudySummary
75
100
stra
lian
Dol
lar
75
100
U.A
.E. D
irham
25
50Aus
25
50
0Feb1992
Aug1992
Feb1993
Aug1993
Feb1994
Aug1994
Feb1995
Aug1995
Feb1996
Aug1996
Feb1997
Aug1997
Feb1998
Aug1998
Feb1999
Aug1999
Feb2000
Aug2000
Feb2001
Aug2001
Feb2002
Aug2002
Feb2003
Aug2003
Feb2004
Date
0
DateAll prices free alongside ship (FAS) Western Australian Source: MLA
SSummary
• Live Import Slaughterhouse extremely sensitive
FJB SystemsM.E. Overview
Live Import Slaughterhouse extremely sensitive
• Exchange RatesM.E. OverviewBusiness ToolCase StudySummary • Livestock Price & Quality
• Feed Prices
• Freight Charges
• Business Model allows scientific analysis and
determination of risk for such a businessdetermination of risk for such a business