Under the present system of processing, costs aggregated an estimated 

 S17.7 million on the basis of 1957 practices and numbers and types of 

 firms (Table 13. Model I). If these same plants were to effect internal 

 efficiencies to the extent determined in the 10 sizes of model plants dis- 

 cussed in Chapter III and to move to 100 percent evisceration within their 

 plants, systemic costs would be reduced by SI. 6 million (Table 13, Model 

 II ) . Because of the addition of the eviscerating operation, increases would 

 occur in unit costs and total costs of small and medium-sized plants now 

 engaged solely in New York Dressing. But increased efficiency in large 

 plants and elimination of evisceration by scattered separate plants would 

 more than offset the increases for small and medium-sized plants. 



If we had had the same volume processed in 1957 by each plant size 

 group, but by a more limited number of plants operated at 100 percent of 

 capacity, a further reduction of $2.0 million in systemic costs would have 

 occurred. At the same time, plant numbers could have been 70 percent 

 smaller (Table 13, Model III). 



Many processing plants are likely to be expanded in capacity in future 

 years. Such plans encompass expansions of supply through growing pro- 

 grams. Model IV in Table 13 presents some possible changes in numbers 

 and sizes of plants and systemic costs which could occur commensurate 

 with a 40 percent increase in volume of slaughter. Such an increase would 

 be feasible in view of the growth of commercial meat production in recent 

 years. A further shrinking of the movement of live birds out of New Eng- 

 land is also likely. 



These changes envisage fewer and larger processing plants and a continu- 

 ing shift toward volume handling at other levels. With such a system there 

 would be only 25 percent as many processing plants required as existed 

 in 1957. The increased volume could be processed with only a 10 percent 

 increase in aggregate costs over that which the 1957 svstem entailed (Table 

 13, Model I). 2 



Small Plant Survival 



Despite a generally unfavorable outlook, some smaller plants may survive 

 and thrive under certain circumstances. To evaluate these conditions from 

 the marketing standpoint, studies of the assembly and distributive phases 

 are required. However, it is possible from the study of economies of scale 

 in plant operations, and also from knowledge of current market structure 

 and practices, to outline some of the ways in which smaller processing 

 plants can operate effectively and profitably. These can be classified under 

 the following: 



(1) Changes of status; 



(2) Locational considerations: 



(3) Modifying cost factors; 



(4) Types of products and services. 



'r ■ 



20 Aggregative cost and volume data for portions of an industry are extremely useful 

 in estimating current systemic costs. An effort should be made to develop additional 

 estimates similar to those contained in the following release: 



Saunders, R. The Impact of the Broiler Industry on Maine's Economy. Mimeo. Rpt. 

 No. 75, Dept. Agr. Econ., Maine Agr. Exp. Sta., in cooperation with The Maine Poultry 

 Associates, Inc., and the Maine Ext. Service. June 1958, p. 2-3. 



40 



