Profitability Considerations of Extrusion
Creating a successful return on investment (ROI) in an Insta-Pro ExPress® soybean extrusion plant involves careful planning, thorough analysis, and effective management. Here are some steps and considerations to help you make a profitable investment by considering project feasibility, ownership costs, machine quality and more:
- Market Research & Feasibility Study:
- If you are new to soybean extrusion, begin by conducting comprehensive market research to understand the demand for soybean products (meal and oil, textured soy protein) in your target region. Are soybeans available or will they need to be trucked in? What is the cost of a plant? How much can I sell the end products for?
- Evaluate the feasibility of your project by assessing factors such as market size, potential customers, and competitors. In extruded and mechanically pressed soybeans, the competition includes solvent extracted soybean meal (SBM) and lower quality mechanically extracted soybean meal.
- Business Plan Development:
- Develop a detailed business plan outlining your goals, strategies and financial projections.
- Include information about the type and scale of equipment you plan to use, estimated production capacity, and expected product output. At Insta-Pro, our process is scalable, so you can start at 1 TPH and grow to 24 TPH or more over time as your business grows.
- Quality vs. Cost of Equipment:
- While it’s tempting to opt for low-cost equipment, prioritize quality and reliability. Invest in reputable and proven machinery, to ensure efficient and consistent production. At Insta-Pro we pride ourselves on not only having the most rugged, durable, and reliable equipment, but also on the highest quality output of the ingredients being produced. We know several high-quality providers of ancillary equipment you will need in your plant and are happy to point you in the right direction.
- High-quality equipment may have a higher upfront cost, but it can result in better long-term ROI due to reduced downtime and maintenance costs. Insta-Pro is proud to share we have the lowest total cost of ownership in the industry.
- Competitor Analysis:
- Understanding and promoting the nutritional benefits of your products
- Differentiate from the competition by offering the highest quality meal and oil, and the value you provide to customers, such as consistent quality and reliable supply.
- Ownership Costs & Operational Efficiency:
- Consider not only the initial purchase cost of the equipment but also ongoing ownership costs, including maintenance, repairs, energy consumption, and labor. Insta-Pro can help you determine your operating cost per ton so you can calculate margins and set pricing on your meal and oil.
- Optimize operational efficiency by implementing best practices, maintenance schedules and proper training for your staff. We also encourage regular visits by an Insta-Pro technician to keep the equipment running smoothly and keep the operators trained correctly.
- Financing & Funding:
- Secure adequate funding for your project through a mix of equity, loans, grants, or other financing options.
- Risk Management:
- Identify potential risks such as fluctuating soybean prices, regulatory changes, or supply chain disruptions. Develop contingency plans to mitigate these risks.
- Marketing & Sales Strategy:
- Develop a strong marketing and sales strategy to promote your end products to potential buyers. From the soybean, you may have full-fat soy, ExPress® soy meal, Express® soy oil and if you are dehulling your beans, soybean hulls. It will be important to set pricing of these end products to cover your soybean costs and your processing costs.
- Highlight the quality and value of your products to attract customers willing to pay a premium. You are not selling solvent extracted SBM, you are selling a highly digestible product that will increase growth performance in the livestock.
- Regular Performance Monitoring & Adjustment:
- Continuously monitor your production, financials and key performance indicators (KPIs).
- Regularly assess the effectiveness of your strategies and adjust as needed to optimize your ROI.
Remember that the success of your soybean extrusion plant investment depends on a combination of factors, including market demand, efficient operations and sales strategy. Consulting with experts in the industry such as Insta-Pro, seeking advice from financial advisors and conducting thorough due diligence will greatly enhance your chances of achieving a positive ROI.