The profitability of processing protein foods is easily disrupted—margins can be attractive, but dramatic swings in commodity costs and fierce competition can cripple even segment-leading organizations.
One category that dramatizes this is aquaculture. A one-step forward, two-steps back pattern characterizes domestic aquaculture, most of which focuses on breeding fingerlings for later release in the wild or into ocean pens. One of the more promising developments for inland operations in recent years involved Bell Aquaculture, a vertically integrated Indiana practitioner of intensive recirculating aquaculture systems (RAS).
Seven years ago, Bell opened a processing plant to fillet the yellow perch it was growing to better serve restaurants. The Midwestern tradition of the Friday fish fry depended on yellow perch from Lakes Michigan and Erie. When the populations crashed, Bell founder Michael Miller saw a value-added opportunity in supplying this mainstay.
Bell boasted of being the country’s largest aquaculture operator, and few would argue. Inputs of 1.2 lbs. of feed produced 1 lb. weight gains in the perch, and technical improvements cut growout time almost in half. Advanced filtration slashed water use to 5 percent of original levels and reduced electric consumption by a factor of three. Business viability was strong enough to attract almost $100 million in capital investments.
A new feed mill that would enable Bell to boost annual production to 6 million lbs. was in the works when lawsuits over unpaid bills started to fly. After several unfavorable judgments, the company went dark. Today, calls to Bell’s Redkey, Ind., headquarters go unanswered and its 10-year-old website is “under construction.”
Bell’s problems notwithstanding, forecasts for North American aquaculture remain upbeat, with groups like Tides Canada and the Conservation Fund’s Fresh Water Institute nurturing technical advancements in closed-loop RAS. The fish themselves have been modified to thrive on plant protein rather than fish meal. The sustainability of aquaculture using fish meal has been challenged as unsustainable. Thanks to genetic modifications, Bell’s perch were able to digest soybean meal.
RAS is the best bet for industrial-scale operations. They used to be plagued by what Phil Shambach, owner of Romney, Ind.’s Tippco Fish Inc., calls “aqua shysters,” but operating conditions are improving. Biofilters developed for the municipal wastewater industry now can be purchased directly by operators like Shambach and integrated into their RAS as components, providing an alternative to pricey turnkey systems that made financing difficult.
“Aqua shysters were a big black eye for the industry,” says Shambach, “but that era has pretty much ended.” Today, the biggest hurdle to commercial success is the vertical integration needed to deliver processed fish to retailers and foodservice operators.
Tippco raises tilapia, a species that requires only 0.9 lb. of feed to produce 1 lb. of meat. “We can compete with anyone on quality and safety,” Shambach says, “but to get into supermarket chains, we need much higher volume to offer processed tilapia.” Until then, Tippco distributes live fish through Asian grocery stores, where shoppers select the fish of their choice and either take whole or have it filleted while they wait. Retail prices range from $3.10-$3.50 per pound, or the equivalent of $9 a pound for the fillets.
Frozen tilapia from China, by comparison, retails for as little as $1.99 a pound. The opacity of growing and processing practices in China make some people leery, however, creating an opportunity for domestic firms that can leverage today’s interest in locally grown food from trusted and transparent sources. Those food trends and the ability to operate indoors north of the Mason-Dixon Line have led economic development officials to forecast a $1 billion seafood business in Indiana alone.
Automated deboning of poultry
Inland aquaculture may be in its infancy, but poultry processing is an advanced and mature processing segment. To maintain their position as the global gold standard, U.S. firms depend on continuous improvement, making advanced automation a priority.
Deboning is poultry processing’s most labor-intensive activity, accounting for 35 percent of processing personnel by some estimates. Self-powered cut and trim tools boost throughput per person compared to knives. A more automated approach was featured by Meyn America Inc. at the recent International Production and Processing Expo (IPPE) in Atlanta. The Ball Ground, Ga., division of Meyn Food Processing Technology B.V. demonstrated the TDS M1.0 system, shorthand for thigh deboning solution. It follows a previously released automated breast deboner.
Meyn brought the processing plant to Atlanta’s exhibition hall, constructing an enclosure with insulated metal panels to showcase TDS and a new shackling system for its Flex cut-up line, which automatically cuts various components of the back half of a bid. The bigger star was TDS, which separates the kneecap from the fillet while leaving the oyster muscle unscathed, minimizing the risk of bone fragments in the fillet.
Yield is comparable to manual deboning, according to Dallas Smith, sales manager. “It just takes a whole lot less people than hand deboning,” he adds. The mid-range model debones 1,000 thighs a minute and requires eight staff members to load and tend to the line, a rate of more than 15 pieces per person. A cone-line worker with a trim tool produces 7.5-8 pieces a minute; working with a knife, the rate is 4.5 per minute, according to Smith. Both options involve repetitive motion, he points out.
Resolving an ergonomic issue is a soft benefit. The bigger advantage is labor reduction. “Every time you take a person out of the plant, you take a problem out of the plant,” says Smith.
The first TDS is being installed at Claxton Poultry in Claxton, S.C. More than two dozen of the previously released breast deboners are in operation at several poultry processors’ plants.
Meyn’s headquarters are in the Netherlands, where market-weight chickens are barely half as large as U.S. birds. Equipment modifications usually are required at Meyn’s U.S. manufacturing facility to handle the larger birds. An example is the trolley system for the company’s air-chilled line.
While air chilling has largely replaced water emersion in Europe, U.S. processors have resisted the transition. MBA Poultry in Tecumseh, Neb., pioneered air chilling’s use in North America, with a second system installed 11 years ago at Farmer’s Pride in Fredericksburg, Pa.
Scott Sechler, owner of Farmer’s Pride, which does business under the Bell & Evans brand, estimated the refrigeration system that supports air chilling added about 5 cents to his processing cost, overhead that he easily recouped through his products’ premium price. Lost revenue is a bigger issue: With water immersion, each carcass gains up to 12 percent in additional weight through absorption, thereby boosting yield.
Despite the economics, Smith predicts air chilling will become standard U.S. practice in another decade. Most Canadian poultry processors have adopted the technology, and specialty processors such as Pitman Farms, a Sanger, Calif., firm that markets Mary’s Free-Range Chicken, have air-chill capacity. The country’s largest processor “is looking very hard at it,” he adds.
Packaging the pops
Once product reaches the store shelf, how it looks is more important than how it was chilled. Packaging improvements for meat, poultry and seafood were highlighted at IPPE by Sealed Air Corp., parent of Cryovac food packaging.
Cryovac introduced microwavable vacuum skin packaging nine years ago. Called Simple Step, the self-venting film on a black tray was designed for previously cooked products. The tray typically is merchandised in a cardboard sleeve, but a ready-meal processor in Cady, Texas, wanted an updated look that provided greater visibility to its refrigerated entrees. At the same time, the firm, Perfect Fit Meals, was transitioning from MAP packaging to material that could better withstand high-pressure processing (HPP).
“With gas flush, we experienced the scramble syndrome when the product got to the store,” explains Jasmine Sutherland, vice president-product operations at Perfect Fit. Vacuum packaging allows retailers to display the firm’s 14 single-serve meals upright instead of flat. Using a rectangular white tray and a label that doesn’t hide the presentation, the package was hit with retailers, with grocers as far north as Minneapolis and Amazon Fresh adding the line in recent months.
A square version of the white tray with labeling that doesn’t hide the meat, penne pasta and vegetables is used by Menza Foods, a suburban Chicago food company supplying frozen single-serve meals. Last summer, Menza opened Frozen Foodies, a carry-out only shop in Chicago’s Lincoln Park neighborhood, to sell its Firenze to Go line.
Besides chef-created, restaurant-style entrees, Menza offers dessert items such as carrot cake. To avoid crushing food when a tight vacuum is pulled, products are flash frozen in a nitrogen tunnel prior to packaging.
Perfect Fit’s Sutherland also serves as president of Texas Food Solutions, an HPP tolling service with cross ownership. While HPP inactivates bacteria, viruses and spoilage organisms, it isn’t effective against Clostridium botulinum, she allows, and that pathogen is a concern with vacuum packaging. Biological testing of every batch, formulations to lower pH if possible and “diligence in process” safeguard her clean-label products.
Perfect Fit’s three vacuum machines output 24 trays each per minute. That’s not enough volume for major food companies, acknowledges Sean Brady, market development manager for Sealed Air, Duncan, S.C. Pulling a vacuum slows cycle times compared to tray-lid packaging systems, limiting throughput to less than 100 units per minute.
That limitation has kept major frozen food suppliers like Nestle on the sidelines. But sales of frozen entrees are in decline, and shoppers are migrating to refrigerated ready meals like Perfect Fit’s because of their perceived quality and healthy eating profile.
Being a market leader doesn’t guarantee success, as Bell Aquaculture demonstrates. Major food companies must proceed with caution, monitoring the successes and failures of up-and-coming innovators before changing course and improving existing processes in the meantime.