Decentralized Tomato Processing: Plant Design, Costs, and Economic Feasibility

E. V. Jesse, W. G. Schultz and J. L. Bomben

No 307557, Agricultural Economic Reports from United States Department of Agriculture, Economic Research Service

Abstract: Excerpts from the report Summary: The report considers decentralized or satellite plant processing of tomatoes as an alternative to conventional processing methods. An acreage distribution pattern typifying conditions for a California plant determined that cost savings exceeding $200,000 could be achieved by initially processing a portion of total raw product requirements at one optimally-located satellite. Addition of subsequent satellites yielded successively smaller cost reductions. Estimated plant establishment costs were approximately $1.2 million as of early 1974, while variable operating charges (labor and supplies) were about $150 per hour at capacity operation. Comparing cost savings with establishment costs for a model plant indicates an investment recovery period of about 5-1/2 years, and an internal annual rate of return of 12.7 percent for one satellite if satellite capacity replaces existing plant capacity. Return on investment is more attractive if satellites are used to expand productive capacity.

Keywords: Crop Production/Industries; Production Economics; Productivity Analysis (search for similar items in EconPapers)
Pages: 60
Date: 1975
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uerser:307557

DOI: 10.22004/ag.econ.307557

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