A feedmill in Africa imports soybean meal from Argentina. Each quarterly shipment is 10,000mt, arriving in a vessel also carrying maize. Current cost (April 2020) is $425-440\/mt, delivered to the mill. The feedmill, which produces mostly poultry feed, uses 25-30% soybean meal in each ton of feed produced. The annual cost of this critical ingredient is thus around $18 million per year. It is a major cost center.<\/p>\n
We decided to analyze the feasibility of importing soybeans, in place of soybean meal, and processing them into meal and oil. The country where the feedmill is located produces soybeans, but not in sufficient quantity to fill the company\u2019s needs.<\/p>\n
First, we looked at the cost of importing soybeans from the United States in containers. Why containers? Because we contacted an exporter who specializes in shipping soybeans in containers, and who is interested in developing sales to Africa. Each container can hold around 25mt of soybeans, loaded in bulk. The price quoted was $440 cost and freight (CFR) to the local port, to which we added $60 for duty, local port costs and delivery of the containers to the feed mill. Total $500 delivered to the mill.<\/p>\n
Next, we looked at bulk shipment of soybeans from Argentina. The FOB Paranagua cost was $338, to which we added $50 for ocean freight and a further $60 for stevedoring, duty and other local costs. Total $448 delivered to the mill.<\/p>\n
We then calculated the value of the soybean meal and the soybean oil from 1 ton of soybeans, allowing for loss of cleanings (called \u2018foreign matter\u2019 or FM) and moisture during processing. This gave us a gross margin of $40 per ton. We then deducted operating costs \u2013 electricity ($0,15\/mt), labor ($1,20\/mt) and wear parts ($2,50\/mt), which totaled $22 per ton.<\/p>\n
Gross margin of $40 less operating costs of $22 leaves us a net margin of $18 profit on every ton processed. Soybean meal has now turned from being a cost of $18 million per year into a profit of almost $1 million.<\/p>\n
Where is the catch? The feedmill first has to invest in Insta-Pro soybean processing technology and a small-scale oil refinery and bottling plant, in order to capture the added value of refined, bottled soybean oil sold in the retail market. A building will be needed, and there are installation costs to be considered.<\/p>\n
A deeper dive into the feasibility shows a payback period of around 4 years. This means all the capital expenditure is recovered in four-years. The soybean segment of the business has now changed from being a cost center to a profit center.<\/p>\n
There are other benefits too. The feedmill is no longer having to manage uncontrollable variations in meal quality. As a processor, the feedmill is now in full control of meal quality. Insta-Pro ExPress\u00ae soybean meal has higher energy and higher amino acid digestibility than solvent-extracted meal. The oil refinery opens up a new business segment for the company. The feedmill has taken control of a vital ingredient, while diversifying its business with a new revenue stream.<\/p>\n
A feasibility study should always be a first step in a project timeline. Too many investors still focus on cost of equipment instead of operational profit. Insta-Pro provides feasibility analysis free of charge \u2013 please ask your sales person for details.<\/p>\n","protected":false},"excerpt":{"rendered":"
A feedmill in Africa imports soybean meal from Argentina. Each quarterly shipment is 10,000mt, arriving in a vessel also carrying maize. Current cost (April 2020) is $425-440\/mt, delivered to the mill. The feedmill, which produces mostly poultry feed, uses 25-30% soybean meal in each ton of feed produced. The annual cost of this critical ingredient […]<\/p>\n","protected":false},"author":8,"featured_media":3959,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[31],"tags":[8495,123],"class_list":["post-13852","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-businessstrategyandfinance","tag-feedmill","tag-soybean-meal"],"acf":[],"yoast_head":"\n