10. COST INFORMATION

10.1 Single Costs
10.2 Production Costs

10.1 Single Costs

The costs of the most important equipment used for canning tuna, Sardines, fish paste products, salmon and shrimp are given in the following chapters. The costs given are based on a 1983 fob level. All prices are given in '000 NOK.

10.1.1 General fish handling equipment

Dock hoist crane(2 tons)

200
Fork lift (1.5 tons)

130
Battery charging unit

20
Hand lifting truck

5
Stainless steel cart

4
Internal pallets (polyethylene), nos 100

15
Containers 750 l (polyethylene) (not insulated)

1.2
Containers 1 000 l (polyethylene) (not insulated)

1.5
Ice production equipments (3 tons/24 h)

180
Steel or wire belt conveyor approximately per 1m

6
Plastic or wire belt conveyor approximately per 1m

3
Roller conveyor

1.5
Hydraulic container lifter for discharging steel and HD containers

60
Automatic scale

30-75

10.1.2 General canning equipment

Steam boiler (1 500 kg/h)

200
Steam boiler (3 500 kg/h)

350
Steam boiler (5 000 kg/h)

450
Compressed air plant (2 500 l/h)

25
Combined oil. brine and tomato filling machine (150 cans per min)

125
Tomato mixing machine (1 000 kg/h)

30
Aut. can seaming machines with clincher (capacity 100 cans per minute)

240
Fully automatic can seaming machine with clincher (capacity 100 cans per minute)

300
Aut. can seaming machines with aut. after filling device, clincher, lid plunger and control device (capacity 150 cans per min)

380
Aut. steam vacuum seaming machine, 1 type of can

700
Overpressure retort (5 500 cans of 450 g capacity)

450
Washing & drying machine

135
Automatic labelling machine (55-60 cans/min)

110
Can stacking machine (9-10 000 cans/min)

85
Semi automatic carton filling machine

143
Carton adhesive machine (10 000 cans/min)

28
Oil separator (500 l/h)

350
Seam cross cutting saw

1.4

10.1.3 Equipment for canning tuna

Bulk elevators

30 to 100
Semi-automatic gutting machine arr. with cleaning section for skipjack

150
Electric hand saws

1.1
Electric meat cutter (bandsaw)

35
Automatic grading machine for tuna (skipjack)

75
Rotor cooker with counter flow, cooler and discharge belt

750
Filleting arr. for loins 20 operators

200
Filleting arrangements for small tuna, 4 operators each

350
Automatic scale

136
Overlying conveyor for accumulation of fillets

30
Hydraulic press for moulds

75
Pack shaper for skipjack line

460

10.1.4 Equipment for canning sardines

Thawing device, capacity 15 t/d

140
Grading machine

160
Automatic nobbing machine (400-550 fishes per minute)

250
Flash cooker (capacity 2 tons/h)

1 000
Rodding table

10
Pre-smoking unit 5 t/8 h

280
Automatic cutting machine for heads

110
Rod washing machine

12
Packing line, 30 operators

300
Packing line, 16 operators

160
Try-washing machine

100
Brine making unit

46
Continuous brining unit

155

10.1.5 Equipment for canning fish paste products

Splitting equipment

50
Meat separator

200
Screw press

150
Mincer

650
Pump

25
Cooker and former

350
Fryer and former

300
Product filling table for fish balls

250
Product filling table for fish cakes

250

10.1.6 Equipment for canning salmon

Butchering machine (1 000 kg/h)

260
Sliming and washing table (8 operators)

45
Cutting machine (l 000 kg/h)

35

10.1.7 Equipment for canning shrimps

Feeding tank and peeling machine (450 kg/h)

368
Cleaner (900 kg/h)

40
Steam cooker (450 kg/.h)

16

10.2 Production Costs

Production costs will vary depending on local' conditions (prices. wages, etc.). As an example cash flow projection and internal rate of return are calculated for the sardine cannery while production costs are shown for the fish paste cannery. The costs are partly based on production in existing canneries and partly in assumptions made in the report. (All prices are NOK '000).

10.2.1 Production costs for canning sardines in oil .

Basis for calculation:

Investment costs:

NOK '000
Land

165
Civil works

700
Total site costs

865
Buildings

7 162
Equipment (depreciation 5 years)

1 860
Equipment (depreciation 10 years)

9 411
Total investment costs

19 298

Costs per 100 l/4 club cans based on costs in existing canneries (yield 50%):

Sardines

NOK

    

28.77
-waste

NOK

    

(1.50)
Sub-total

NOK

    

27.27
Other costs:  
Freight costs

NOK

    

5.50
Freezing costs

NOK

    

14.00
Sub-total

NOK

    

46.77
Other raw materials  
Oil/sauce/salt

NOK

18.98

    
Ingredients

NOK

0.40

    
Lithographed cans, cartons

NOK

9.28

    
Sub-total

NOK

28.66

    
Sub-total  

NOK

28.66
Raw materials  

NOK

75.38
Labour:  
Hour/100 cans:

1 002 hours

  
Direct labour

NOK

36.61

    
37% soc expenses

NOK

13.55

    
Sub. Direct labour

NOK

50.16

NOK

50.16
Total production costs  

NOK

125.54
Production costs per can  

NOK

1.255

Cash flow projection and internal rate of return are shown in Table 29. The calculations are based on the assumptions above and given in the following notes:

  1. Sales prices per can is NOK 1.55.
  2. Waste is 30% of raw material sold at NOK 0.10 per kg.
  3. Borrowers contribution is 10% of investment costs.
  4. Loan amount is 90% of investment costs
  5. Fish is purchased at NOK 1 514 per ton.
  6. Filler and salt at NOK 19.38 per 100 cans.
  7. Cans and cartons at NOK 9.28 per 100 cans.
  8. Direct labour at NOK 50.16 per 100 cans and management etc. at NOK 450 000.
  9. Water at NOK 1.50 per ton.
  10. Electricity at NOK 0.34 per kWh.
  11. Fuel oil at NOK. 2.00 per litre.
  12. Insurance is 2% of aggregated investment costs.
  13. Maintenance and spares are 4% of aggregated investment costs.
  14. Freezing costs at NOK 14.00 per 100 cans.
  15. Freight at NOK 5.50 per 100 cans.
  16. Miscellaneous costs are estimated.
  17. Working capital is 10% of operating costs and interest of working capital is 14.5%.
  18. Equipment is replaced each 5th and 10th year according to lifetime. Lifetime of buildings are 25 years and lifetime of site investments are 50 years. Residual. values at 20th year are calculated accordingly
  19. Interest to be capitalized over the first 5 years and loans to be repaid over the following 20 years. Interest 11%.

10.2.2 Production costs for canning fish paste products

Basis for calculations:

Example I:

Raw materials:

Production capacity:

Example II:

Raw materials:

Production capacity:

The waste (offal) is sold unfrozen for a price equal to 10% of the price of the fish raw material.

Note: Normally the weight increase during the cooking is approximately 12%.

Table 29 Cash flow projection -canning sardines in. Oil. Capacity 15 tons raw fish per 8 hours. (NOK 000’)

YEARS

1

2

*

6

7

12

17

20
1. CASH INFLOW  
GROSS SALES CANNED PROD. 1)    

34 104

34 104

34 104

34 104

34 104

34 104
GROSS SALES WASTE 2)    

108

108

108

108

108

108
TOTAL GROSS INCOME    

34 212

34 212

34 212

34 212

34 212

34 212
BORROWERS CONTR. 3)

803

1 127

            
LOAN AMOUNT 4)

7 224

10 144

            
TOTAL CASH INFLOW

8 027

11 271

34 212

34 212

34 212

34 212

34 212

34 212
2. CASH OUTFLOW  
OPERATING COSTS  
PURCHASE OF FISH 5)    

5 451

5 451

5 451

5 451

5 451

5 451
FILLER AND SALT 6)    

3 672

3 672

3 672

3 672

3 672

3 672
CANS AND CARTONS 7)    

1 758

1 758

1 758

1 758

1 758

1 758
LABOUR 8)    

9 954

9 954

9 954

9 954

9 954

9 954
WATER 9)    

202

202

202

202

202

202
ELECTRICITY 10)    

180

180

180

180

180

180
FUEL OIL 11)    

1 656

1 656

1 656

1 656

1 656

1 656
INSURANCE 12)

81

243

243

243

243

243

243

243
MAINTENANCE AND SPARES 13)    

487

487

487

487

487

487
FREEZING 14)    

2 653

2 653

2 653

2 653

2 653

2 653
FREIGHT 15)    

1 042

1 042

1 042

1 042

1 042

1 042
MISCELLANEOUS 16)    

100

100

100

100

100

100
INTEREST OF WORK. CAP. 17)

1

4

397

397

397

397

397

397
TOTAL OPERATING COSTS

82

247

27 795

27 795

27 795

27 795

27 795

27 795
INVESTMENT COSTS 18)

8 027

11 271

    

1 860

11 271

1 860

- 4 578
DEBT. SERVICE 19)      

3 800

3 800

3 800

3 800

3 800
TOTAL CASH OUTFLOW

8 109

11 518

27 795

31 595

33 455

42 866

33 455

27 017
NET CASH FLOW

- 82

- 247

6 417

2 617

757

- 8 654

757

7 195
FINANCIAL B/C  
BENEFITS    

34 212

34 212

34 212

34 212

34 212

34 212
COSTS

8 109

11 518

27 795

27 795

29 655

39 066

29 655

23 217
NET BENEFITS

- 8 109

- 11 518

6 417

6 417

4 557

- 4 854

4 557

10 995
FINANCIAL RATE OF RETURN: 27.1%
* ALL OTHER YEARS		  

Example I

 

Quantity per shift a/

Cost per shift

Per can

Unit

Quantity

Unit price

Total cost

Quantity

Cost
Fish raw material:  
Headed, gutted

kg

9 500

6.00

57 000

0.380

2.280
– waste (yield 75%)

kg

(2 375)

0.60

(1 425)

0.095

(0.057)
Sub-total

kg

7 125

  

55 575

0.285

2.223
Sundry raw materials:  
Milk

kg

4 000

2.04

8 160

0.160

0.326
Potato floor

kg

1 000

7.50

7 500

0.040

0.300
Salt

kg

250

1.06

265

0.010

0.002
MSG

kg

15

13.00

195

0.001

0.001
Species

kg

20

77.00

1 540

0.001

0.062
Sub–total sundry raw material

kg

5 285

  

17 660

0.212

0.691
Total raw materials

kg

12 410

  

73 235

0.497

2.914
Packing materials:  
Cans (0.5% waste)

Nos

25 125

1.61

40 450

  

1.618
Labels (1.0% waste)

Nos

25 250

0.08

2 020

  

0.081
Card-board (trays)

Nos

2 100

0.75

1 575

  

0.063
Plastic

kg

75

10.00

750

  

0.030
Pallets

Nos

26

65.00

1.690

  

0.068
Sub-total packing material  

-

  

46.485

  

1.860
Total raw mat + packing      

119.720

  

4.774
Labour:  
Filleting department

hrs

128

38

4 864

0.00512

0.195
Production

hrs

88

38

3 344

0.00352

0.134
Retorts and packing

hrs

56

43

2 408

0.00224

0.096
Auxiliary act + cleaning

hrs

50

40

2 000

0.00200

0.080
Sub-total direct labour

hrs

322

  

12 616

0.01288

0.505
37% soc. expenses      

4 668

  

0.186
Total direct labour      

17 284

  

0.695
Total production costs      

137 004

  

5.469

Example II

Industrial fish, ungutted, head on, average size 300-500 g. Compared with gutted headless fish,. the yield will decrease from 75% to 50%. Labour expenses at filleting department will increase by 25%.

Milk powder and water are substitutes for fresh milk, 0.014 kg milk powder/can.

Raw material price

NOK

3.00/kg

  
Milk powder price

NOK

20.00/kg

  
New calculations:    
New material, total

14 250 kg x 3 NOK/kg

NOK

42 750
-Sale of waste

7 125 kg x 0.30 NOK/kg

NOK

2 140
Raw material, net price total  

NOK

40 610
Price raw material per can

(25 000 cans)

NOK

1.624
Price milk powder per can

(0014 x 20.00)

NOK

0.280
Labour exp. filleting dept.

(0 195 + 25%)

NOK

0.244
+ 37% soc. expenses  

NOK

0.091
Labour exp. filleting dept. per can  

NOK

0.335

Difference from Example I to Example II

Raw material

2.283 - 1.624

NOK

0.659
Milk

0.326 - 0.280

NOK

0.046
Labour

0.267 - 0.335

-NOK

0.067
Decrease in costs (per can)  

NOK

0.638
Total production costs for alternative II:      
Price for alternative I (per can)  

NOK

5 469
-Price difference  

NOK

0.638
Total production costs  

NOK

4 83l

The production costs for example II will depend almost entirely on the price for the raw material.

If the price for the fish raw material used in example II is lower than NOK 4.06 per kg, the production costs will be lower using this type of raw material (industrial fish).

To choose between different raw materials is normally not only a question of price, but more often, availability. This refers also to fresh milk and milk powder; especially in developing countries where the supply of fresh good quality milk is not reliable, and because of this it is therefore advisable to base the recipes on milk powder.

Regarding labour expenses it is obvious that this will, to a great extent, depend on the size of the fish. It will, therefore, always be necessary to compute price, and if possible also a price comparison, between different types of raw materials.

The costs shown in the above mentioned examples are only direct production costs.

No general overheads, indirect labour, energy, sales expenditure, etc. are included.