food plant economics

xviii

FOOD PLANT

ECONOMICS

© 2008 by Taylor & Francis Group, LLC

xviii

FOOD SCIENCE

AND TECHNOLOGY

Editorial Advisory Board

Gustavo V. Barbosa-Cánovas Washington State University–PullmanP. Michael Davidson University of Tennessee–KnoxvilleMark Dreher McNeil Nutritionals, New Brunswick, NJRichard W. Hartel University of Wisconsin–Madison

Lekh R. Juneja Taiyo Kagaku Company, JapanMarcus Karel Massachusetts Institute of Technology

Ronald G. Labbe University of Massachusetts–AmherstDaryl B. Lund University of Wisconsin–Madison

David B. Min The Ohio State UniversityLeo M. L. Nollet Hogeschool Gent, BelgiumSeppo Salminen University of Turku, Finland

John H. Thorngate III Allied Domecq Technical Services, Napa, CAPieter Walstra Wageningen University, The Netherlands

John R. Whitaker University of California–DavisRickey Y. Yada University of Guelph, Canada


xviii

FOOD PLANTECONOMICS

ZACHARIAS B. MAROULISGEORGE D. SARAVACOS


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Library of Congress Cataloging‑in‑Publication Data

Maroulis, Zacharias B., 1957‑Food plant economics / Zacharias B. Maroulis and George D. Saravacos.

p. cm. ‑‑ (Food science and technology ; 171)Includes bibliographical references and index.ISBN‑13: 978‑0‑8493‑4021‑5 (alk. paper)ISBN‑10: 0‑8493‑4021‑7 (alk. paper)1. Food industry and trade. 2. Chemical engineering. 3. Chemical plants. I.

Saravacos, George D., 1928‑ II. Title. III. Series.

TP370.5.M36 2007664’.024‑‑dc22 2007014371

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v

to Anda and Vassilis Maroulis

and Katie Saravacos


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CONTENTS I. Preface xv I. List of Application Examples xvii

1. Introduction I. INTRODUCTION 1 II. FOOD SYSTEM 2 III. FOOD PROCESS TECHNOLOGY 3 IV. FOOD PLANT ECONOMICS 4 V. ECONOMIC ANALYSIS OF FOOD PROCESSING PLANTS 5 1. Food Preservation Plants 6 2. Food Manufacturing Plants 6 3. Food Ingredients Plants 7 VI. FOOD RESEARCH AND DEVELOPMENT 8 1. Food Science 9 2. Food Engineering 9

2. Structure of the Food Industry I. INTRODUCTION 13 II. FOOD SYSTEMS 14 1. The US Food System 14 2. The US Food Processing Industry 15 a. Industry Classification 16 b. Food Consumption 17 c. Value Added in Food Processing 19 d. Raw Materials 19 e. Labor and Energy 19 3. Food Trade Industries 20 4. The European Food Processing Industry 20 a. Dairy Industry 22 b. Sugar 22 c. Edible Oils 22 d. Fruits and Vegetables 22 e. Grain Milling 23 f. Baking Industry 23 g. Confectionery 23 h. Meat Industry 23 i. Fish Industry 23 k. Coffee Industry 23 5. Multinational Food Companies 24 6. Food Distribution Systems 25


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3. Overview of Food Process and Plant Design I. INTRODUCTION 27 II. FOOD PROCESS DESIGN 28 1. Process Flowsheets 29 2. Material and Energy Balances 29 3. Sizing and Costing of Equipment 33 III. FOOD PLANT DESIGN 34 1. Plant Buildings 35 a. Plant Location 35 b. Building Construction 35 2. Food Plant Safety 36 3. Hygienic Design 37 4. Cleaning of Equipment 39 5. Plant Maintenance 39 IV. FOOD PLANT UTILITIES 40 1. Process Water 40 2. Steam 40 3. Electricity 41 4. Plant Effluents 41 V. FOOD PLANT ECONOMICS 42 1. Capital Investment Cost 43 2. Operating Expenses 43 3. Food Plant Logistics 44

4. Process Engineering Economics I. MONEY FLOW IN A BUSINESS ENTERPRISE 47 II. CAPITAL COST 49 1. Fixed Capital Cost 50 2. Working Capital Cost 56 III. MANUFACTURING COST 60 IV. CASH FLOW ANALYSIS 65 1. Construction Period 65 2. Operating Period 67 3. Discounted Cash Flow 74 V. PLANT PROFITABILITY 76 VI. SENSITIVITY ANALYSIS 78

5. Capital Cost of Food Plants I. INTRODUCTION 83 1. Unit Operations in Food Processing 83 2. Mechanical Processes 85 a. Mechanical Transport Operations 85 b. Mechanical Processing Operations 86 c. Mechanical Separation Operations 86 3. Food Packaging Processes 86 II. QUOTATIONS FROM FABRICATORS 90


ix

III. EQUIPMENT COST ESTIMATION 92 1. Effect of Material of Construction 93 2. Effect of Pressure on Equipment Cost 94 3. Effect of Inflation on Equipment Cost 95 IV. DATA FOR PRELIMINARY EQUIPMENT COST ESTIMATION 98 V. SHORT-CUT EQUIPMENT SIZING 120 1. Pumps and Blowers 120 2. Compressors 121 3. Conveyor Belts 122 4. Screw Conveyors 123 5. Size Reduction 124 6. Vessels 124 7. Heat Exchangers 126 8. Evaporators 127 9. Dryers 128 10. Filters 130 11. Continuous Flow Sterilizers 130

6. Operating Cost of Food Plants I. INTRODUCTION 135 II. RAW MATERIALS 135 III. FOOD PRODUCT COST DATA 137 1. Retail Prices 137 2. Farm Prices 141 3. Retail-to-Farm Price Ratios 146 IV. PACKAGING MATERIALS 151 V. UTILITITIES 151 VI. UTILITY COST ESTIMATING MODEL 154 1. Fuel oil Cost 154 2. Natural gas Cost 156 3. Electricity Cost 158 4. Steam Cost 160 5. Cooling Water Cost 160 6. Refrigeration Cost 161 7. Energy-Related Utilities Cost 161 8. Non Energy-Related Utilities Cost 164 9. Waste Treatment Cost 164 VII. LABOR 165 VIII. LABOR COST ESTIMATING MODEL 166 1. Factorial Method 166 2. Annual Operating Time 167 3. Manpower 168 4. Labor Rates 168


x

7. Food Preservation Plants . INTRODUCTION 175 1. Food Preservation Plants 176 2. Application Examples 177 I. TOMATO PASTE PLANT 178 1. Process Technology 178 a. Raw Materials 178 b. Concentrated Tomato Products 178 c. Inspecting/Washing 179 d. Crushing/Finishing 179 e. Concentration 179 f. Sterilization/Packing 179 g. Plant Effluents 179 2. Process Flowsheet 180 3. Material and Energy Requirements 183 4. Capital Investment 184 5. Operating Expenses 185 6. Plant Profitability 188 7. Sensitivity Analysis 190 a. Break-Even Analysis 190 b. Effect of Resource Prices and Tax and Debt Characteristics 191 II. ORANGE JUICE CONCENTRATE PLANT 194 1. Process Technology 194 a. Raw Materials 194 b. Washing/Grading 194 c. Juice Extraction /Finishing 194 d. Centrifuging/Debittering 195 e. Juice Pasteurization 195 f. Juice Concentration 195 g. Aseptic Packing and Storage 195 h. Peel/Pulp Drying 196 i. Peel Oil Extraction 196 j. Plant Effluents 196 2. Process Flowsheet 196 3. Material and Energy Requirements 199 4. Capital Investment 200 5. Operating Expenses 201 6. Plant Profitability 203 7. Sensitivity Analysis 205 III. UHT STERILIZED MILK PLANT 208 1. Process Technology 208 a. Raw Material 208 b. Separation/Homogenization 208 c. UHT Sterilization 208 d. Aseptic Packaging 208 2. Process Flowsheet 208 3. Material and Energy Requirements 210


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4. Capital Investment 211 5. Operating Expenses 212 6. Plant Profitability 215 7. Sensitivity Analysis 217 IV. FRUIT CANNING PLANT 220 1. Process Technology 220 a. Raw Materials 220 b. Washing/Pitting/Peeling/Grading 220 b. Filling/Syruping 221 c. Sealing/Sterilization of Cans 221 d. Labeling/Packing/Storage 221 2. Process Flowsheet 221 3. Material and Energy Requirements 224 4. Capital Investment 226 5. Operating Expenses 227 6. Plant Profitability 228 7. Sensitivity Analysis 229 V. VEGETABLE FREEZING PLANT 232 1. Process Technology 232 a. Raw Materials 232 b. Cleaning/Grading/Cutting 232 c. Blanching 232 d. Freezing/Packing 233 e. Storage 233 2. Process Flowsheet 233 3. Material and Energy Requirements 233 4. Capital Investment 238 5. Operating Expenses 238 6. Plant Profitability 239 7. Sensitivity Analysis 242 VI. VEGETABLE DEHYDRATION PLANT 244 1. Process Technology 244 a. Raw Materials 244 b. Washing/Peeling 244 c. Dicing/Blanching/Sulfiting 244 d. Drying 244 e. Packing 245 2. Process Flowsheet 245 3. Material and Energy Requirements 245 4. Capital Investment 249 5. Operating Expenses 250 6. Plant Profitability 252 7. Sensitivity Analysis 253 VII. TECHNO-ECONOMIC COMPARISON 256 VIII. SUPPLIERS OF MAJOR FOOD PROCESSING EQUIPMENT 266


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. INTRODUCTION 269 I. BREAD MANUFACTURING PLANT 274 1. Process Technology 274 a. Bread Ingredients 274 b. Dough Preparation 275 c. Fermentation 275 d. Dough Mixing 275 e. Dough Dividing/Rounding 275 f. Pre-proofing 276 g. Bread Molding/Panning 276 h. Proofing 276 i. Baking Oven 276 j. Depanning/Cooling of Bread 276 k. Slicing/Packaging 277 l. Storage 277 m. Frozen Dough 277 2. Process Flowsheet 277 3. Material and Energy Requirements 280 4. Capital Investment 280 5. Operating Expenses 281 6. Plant Profitability 284 7. Sensitivity Analysis 287 a. Break-Even Analysis 287 b. Effect of Resource Prices and Tax and Debt Characteristics 287 II. YOGURT MANUFACTURING PLANT 290 1. Process Technology 290 a. Raw Materials 290 b. Standardization/Mixing 290 c. Homogenization 290 d. Heat Treatment 290 e. Fermentation 291 f. Mixing of Yogurt 291 g. Packaging 291 h. Cooling/Storage 291 2. Process Flowsheet 292 3. Material and Energy Requirements 292 4. Capital Investment 295 5. Operating Expenses 295 6. Plant Profitability 299 7. Sensitivity Analysis 301 III. WINE PROCESSING PLANT 304 1. Outline of Process Technology 304 a. Raw Materials 304 b. Grape Crushing 304 c. Juice Expression 304 d. Fermentation 305 e. Ageing of Wine 305

8. Food Manufacturing Plants


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f. Wine Filtration 305 g. Bottling of Wine 306 h. Bottle Storage 306 i. Plant Wastes 306 2. Process Flowsheet 306 3. Material and Energy Requirements 306 4. Capital Investment 309 5. Operating Expenses 309 6. Plant Profitability 313 7. Sensitivity Analysis 315 IV. ECONOMIC COMPARISON 318

9. Food Ingredients Plants . INTRODUCTION 323 I. BEET SUGAR PLANT 326 1. Outline of Process Technology 326 a. Raw Materials 326 b. Sugar Extraction 326 c. Juice Concentration 328 d. Sugar Crystallization 328 e. Centrifugation 329 f. Drying of Sugar 329 g. Drying of Beet Pulp 329 h. Sugar Molasses 329 i. Plant Effluents 329 j. Sugar Storage 330 2. Preliminary Sugar Plant Design 330 3. Outline of Sugar Economics 335 II. OVERVIEW OF PROCESS PLANT OPTIMIZATION 336 1. Parametric Optimization 336 2. Structural Optimization 338 3. Cogeneration in Food Processing 339

Appendices I. GLOSSARY OF ECONOMIC TERMS 344 II. NOTATION AND CONVERSION TO SI UNITS 348 III. USEFUL THERMOPHYSICAL PROPERTIES OF WATER 350 IV. THERMOPHYSICAL PROPERTIES OF SOME FOOD MATERIALS 350 V. RHEOLOGICAL PROPERTIES 351 VI. OVERALL HEAT TRANSFER COEFFICIENTS 351 VII. ACCOMPANYING CD 352 .


xv

PREFACE

Food Plant Economics can be considered as part of process economics, which was developed in chemical engineering and has been applied successfully in the chemical process industries. Food economics involves the entire food system, comprising of production of agricultural raw materials, food processing, and food distribution. In addition to economic considerations, food production should meet special requirements of customer acceptance, human nutrition, and food safety. The purpose of this book is to analyze the economics of food processing plants. Food Plant Economics is related to the design and operation of food proc-esses, processing equipment, and processing plants. It utilizes recent advances in process economics and computer technology, particularly computer aided design (CAD). Simplified spreadsheet (Excel) applications are convenient in preliminary plant design and plant economics. Economic analysis of food plants requires quantitative data from the design and operation of food processes and processing plants. For preliminary economic analysis, material and energy balances, equipment sizing, and plant operating costs are necessary. The first 3 chapters of the book are devoted to the background of Food Plant Economics. Chapter 1 outlines the subjects discussed in the book and summarizes the recent advances in food process technology and in food research and technol-ogy. Chapter 2 discusses the structure of the Food System with emphasis on the United States and European food industries. Chapter 3 reviews the principles of modern design of food processes, processing equipment, and processing plants. Chapter 4 reviews critically process economics in relation to food plant eco-nomics. The concepts of capital cost, manufacturing (operating) cost, and cash flow are discussed and applied to the estimation of plant profitability. Sensitivity analysis is discussed briefly in relation to food processing plants. Chapter 5 discusses the estimation of capital investment of food plants, ap-plying modern process economics techniques. The conventional engineering cost indices for processing equipment and plants are explained in relation to food plant design. Engineering data, derived from the literature, are presented for the pre-liminary cost estimation of process plants. Cost data of selected food processing equipment can be provided by equipment suppliers. A shortcut design procedure, used in this book, is outlined, including some useful rules of thumb. Chapter 6 covers the estimation of operating (or manufacturing) cost of food plants, which consists of the cost of raw materials, labor, utilities, maintenance, depreciation, and local taxes. Statistical data on the prices of US food products are presented, showing the differences among the farm, retail, and processed products. The cost of food packaging materials is an important cost component of the manu-factured foods. The cost of plant utilities includes steam, fuel, electricity, refrigera-tion, cooling water, and waste treatment and disposal. Empirical models are pre-sented for cost estimation of plant utilities as a function of crude oil cost.


xvi

Chapters 7–9 discuss the economics of various food processing plants, based on the procedures of Chapters 5 and 6. A number of hypothetical food plants are considered, using established process technology and technical data from the literature, the food industry, and the suppliers of equipment. Chapter 7 deals with the economics of 6 typical food preservation plants, i.e., tomato paste, orange juice concentrate, UHT sterilized milk, fruit canning, vegetable freezing, and vegetable dehydration. The procedures and data of Chap-ters 4, 5, and 6, and the appendices are used for the estimation of profitability of the example food plants. Chapter 8 discusses the economics of three typical food manufacturing plants, i.e., bread, yogurt, and wine. The application examples of food plants are designed and analyzed utilizing the data of Chapters 4, 5, and 6, and the appendi-ces. Chapter 9 reviews the design and economics of food ingredients plants, such as sugars, oils, proteins, and food chemicals. Such plants are designed and opti-mized using conventional chemical engineering procedures. The appendices contain tables and information useful in calculations of the various application examples of the book, such as nomenclature, conversion of units, food properties, and heat transfer coefficients. A glossary of the economic terms used in this book is included. The accompanying CD contains Excel files of equipment cost, utilities cost model, and plant economics results of application examples. The applications can be updated and modified according to the user specifications. We wish to acknowledge the contributions and help of our colleagues, asso-ciates, and graduate students at the National Technical University of Athens, espe-cially Magda Krokida for preparing the tables and diagrams, and checking the calculations in this book. We appreciate the information provided by manufactur-ers and suppliers of equipment and materials, used in the design and evaluation of food plants of the application examples of this book. We hope that this book will contribute to the recognition of process eco-nomics as an important part of the developing field of food engineering. We real-ize that some areas of Food Plant Economics need further development, and that some other aspects should be added. The cost components of the food plants should be updated with the latest information from various suppliers and manufac-turers of materials, equipment, and labor. We will appreciate the comments and criticism from readers experienced in this field.

Zacharias B. Maroulis George D. Saravacos


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LIST OF APPLICATION EXAMPLES

Food Preservation Plants (Chapter 7) 1. Tomato paste 2. Orange juice concentrate 3. UHT sterilized milk 4. Fruit canning (apricots, peaches) 5. Vegetable freezing (beans, peas) 6. Vegetable dehydration (potatoes, carrots) Food Manufacturing Plants (Chapter 8) 7. Bread 8. Yogurt 9. Wine Food Ingredients Plants (Chapter 9) 10. Beet sugar


1

1 Introduction

I. INTRODUCTION

Commercial Food Processing converts raw agricultural or animal materials into edible intermediate or consumer food products through application of technol-ogy and labor. Farm and marine raw materials are converted to more refined, concentrated, convenient, nutritious, and more palatable food products. Large amounts of food products are processed world-wide to feed the expanding population and satisfy the consumer nutrition requirement and or-ganoleptic preferences. Economics plays an important role in supplying suffi-cient quantities of food products at affordable prices, while providing consider-able profit to the food producers, processors, and distributors. Food Plant Economics is a special subject of the field of Process Eco-nomics, which deals with the economic analysis of various Process Industries (Holland and Wilkinson, 1997). Economics plays an important role in the de-sign and operation of industrial processes and processing plants (Peters et al., 2003; Couper, 2003). The design and optimization of food processes is based on the applica-tion of Food Science principles to the established techniques of Chemical Proc-ess Design. Simplified computer-aided techniques, such as the Excel spread-sheets, have been applied to the design of several food processes (Maroulis and Saravacos, 2003). Food processes, based on heat and mass transfer, such as heating, refrigeration/freezing, evaporation, dehydration, thermal processing, and mass transfer separations, can be analyzed, designed, and optimized quanti-tatively, using published engineering data, particularly transport properties of food materials. The design of mechanical processes and separations of solid and semi-solid food materials, such as mechanical transport and storage, size reduction


2 Chapter 1

and enlargement, mixing and forming, mechanical separation of food parts, mechanical expression, and mechanical cleaning, are designed empirically, based mostly on technical data and specialized processing equipment, provided by equipment manufacturers and suppliers (Saravacos and Kostaropoulos, 2002). Food Plant Design is an optimum integration of Food Process Design, Equipment Design, and Process Engineering Economics. In addition, the re-quirements of appropriate plant buildings and hygienic (sanitary) operation should be considered (Lopez-Gomez and Barbosa-Canovas, 2005). Food Processing is characterized by some important peculiarities, such as variability and sensitivity of the raw materials, and strict safety requirements of the food products. Hygienic design and operation and food safety precede any other engineering and economic consideration of food processing plants.

II. FOOD SYSTEM Food processing is one of the largest industries in most countries in terms of annual sales, raw material and product capacity, and labor force (Connor and Schiek, 1997). Food Processing is considered part of the Food System, which includes agricultural production, processing, distribution, and consumption of food products. The Food System or Food Chain is the major part of the Agro-Industrial Complex, which includes food and nonfood agricultural products. Raw materials for the food processing industries include agricultural, animal, and marine products, packaging materials, food ingredients, and food chemicals. They represent the major operating cost of the food plants. Some large food processing industries use raw food materials produced in other coun-tries, such as the milling industry which may use large quantities of imported wheat. Food Processing contributes substantially to the national economy of a country by the significant value added to the products, which is the difference between the sales and the processing expenses. Value added includes labor, capital utilization (depreciation of equipment), taxes, and profit. Large food companies produce large quantities of semi-processed and consumer food products in continuous-flow operations. These industries re-quire high capital investment to specialized processing and control equipment, which must be utilized continuously. Computer applications can improve the processing operations and the economics of food plant operation. Manufacture of specialized food products in relatively smaller amounts is based mostly on batch-operated processing equipment with only the necessary process control, imposed by food safety regulations. Multiple use (flexible)


Introduction 3

equipment is often used for several products, produced in relatively small batches. Food Distribution includes transportation, storage, and sale of food prod-ucts. Food is distributed in food stores (e.g., supermarkets), food service, and food exports. The food processing and food distribution costs are increasing faster than the cost of raw materials.

III. FOOD PROCESS TECHNOLOGY

Traditional food process technology was based on experience and it developed from small scale to industrial production. The food preservation industry was developed mainly to preserve seasonal fruits and vegetables into food products, making them available to the consumers throughout the year. Science (Chemistry and Microbiology) and Engineering (Mechanical and Chemical) have been applied successfully at various stages in the development of Food Process Technology (Lopez-Gomez and Barbosa-Conovas, 2005). Quantitative application of unit operations requires quantitative data on the physical and engineering properties of foods (Rao et al., 2005; Saravacos and Maroulis, 2001). Food processing equipment has been adapted from equipment used in the Chemical Process Industries with some important modi-fications to handle sensitive food materials, without damaging the nutritive and organoleptic quality of the finished food products. Recent books on Food Processing attempt to combine the underlying principle of process engineering with the advances in Food Science and Nutri-tion (Ramaswamy and Marcotte, 2005). In addition to the (physical) unit opera-tions, Food Processing involves several microbiological, biochemical, and chemical processes, which are based on Reaction Kinetics (Earle and Earle, 2003). Recent changes in food availability, production, and use are affecting world economics and management of Agriculture. Issues of food legislation, environment, food safety and quality, nutrition and health have a significant impact on traditional and new process technologies. Recent emphasis of con-sumers on food safety and quality, and the protection of the natural environ-ment are observed world-wide, especially in EU and the USA. These important developments have significant economic implications and they should concern Food Plant Economics. World Food Economics is affected by agricultural food production, food processing, food trade, and food use. Food legislation, environmental issues, food safety and quality, nutrition and health affect food process technology.


4 Chapter 1

IV. FOOD PLANT ECONOMICS Food Plant Economics can be considered a specialized area of Process Engi-neering Economics, which has been developed mainly in Chemical Processing. (Couper, 2003; Brennan, 1998). The economic analysis of food processing plants is based on the estimation of capital cost (or fixed capital investment) and the operating cost (operating expenses). In addition, the profitability of the food plant is determined, using modern economic concepts, such as time value of money, cash flow, and depreciation. The basis of plant economic analysis is the capital cost estimate. A guide for simplified capital cost estimation was presented by Gerrard (2000). Sophis-ticated computer programs are used by large corporations, but useful engineer-ing estimates can be obtained using PC spreadsheet programs. Capital cost es-timates appear in balance sheets and in income statements, since most operat-ing expenses are capital dependent. Process flowsheets (block diagrams) are used to estimate the material and energy balances of the food plant. Contrary to chemical processing, where a large number of alternative flowsheets is possible for a given process, only a limited number of food process flowsheets is possible, due to the strict process conditions, such as temperature sensitivity of foods, food safety, and hygienic requirements of food plants. Food plant capacity and material and energy balances are used in process equipment sizing and costing, and in cost estimation of utilities (steam, water, electricity). Empirical factors, such as the Lang factor, are used to estimate the costs of installation, construction, engineering, and various overhead charges. Capital cost estimates are used in deciding the development of a new plant project or in expanding and revamping existing plants. Cost estimates are approximations and the probable range of accuracy should be given, whenever possible. They are valid for a given time and location, and adjustments should be made when transferring such figures. Operating costs (expenses), contrary to capital costs, are not found easily in the literature, because such information is of proprietary nature. They can be divided into process operating costs and nonprocessing costs. Process operating (manufacturing) costs include costs of raw materials (agricultural, marine, intermediate food materials, packaging materials, and chemicals), utilities (steam, fuel, water, and electricity), personnel, and capital-related costs (Brennan, 1998). Nonprocessing (nonmanufacturing) costs include costs of distribution, selling, research and development, and the cost of running the company, which can be allocated to the product in question. The raw material requirements are estimated from detailed material and energy balances in the food process flowsheet. The unit costs of food raw mate-rials depend on the availability of agricultural materials and the location of the


Introduction 5

food plant. The supply and prices of raw materials are negotiated by contracts, or purchases are made in the “spot” market. There is a wide variation of prices from country to country and from season (year) to season. Large quantities of some raw materials are available in international trade at relatively stable prices, e.g., wheat, corn, and soybeans. Food Packaging constitutes a major part of food processing. The cost of food packaging materials is very important in overall food plant economics, especially in manufacturing food products in individual consumer packages. Food preservation and manufacturing plants use either aseptic packaging systems or metallic and plastic individual packages. Food ingredients plans, e.g., sugar, starch, and vegetable oils are packed in bulk containers and they are transported to the food plant for further processing. Utility requirements can be estimated from material and energy balances on the process flowsheet. In estimating energy requirements, thermal losses to the environment should be taken into account (25% of the theoretical energy requirements). Utility charges are usually expressed as $/GJ, $/MWh, or $/t of product. Utility costs vary with plant location and availability of fuel, water, and electricity. International energy crises, such an oil crisis, will affect strongly the utilities costs. Personnel requirements include process labor (often working in shifts), maintenance labor, and plant staff and management (engineering support, labo-ratory, accounting, and secretarial personnel). Food plant profitability requires the estimation of several economic quan-tities, such as depreciation, cash flow, taxes, net income, and payout time (Couper, 2003). Profitability analysis of a new venture will show whether an investment should be made. Sensitivity and/or uncertainty analyses examine various scenarios to de-termine the effect on profitability of changes in sales price, sales volume, capi-tal requirements, and operating expenses. Feasibility analysis includes items from estimating the capital requirements through sensitivity and uncertainty analyses.

V. ECONOMIC ANALYSIS OF FOOD PROCESSING PLANTS For the purposes of this book, food processing plants can be divided into three major groups, i.e., Food Preservation Plants, Food Manufacturing Plants, and Food Ingredients Plants. This loose division is intended to emphasize underly-ing processing, engineering, and economic principles in a much diversified food industry. Costs of a number of food processing plants, designed and operated in various countries, were published by Bartholomai (1987).


6 Chapter 1

1. Food Preservation Plants Food Preservation includes thermal, refrigeration and freezing processes, con-centration and dehydration, and nonthermal preservation. Food preservation plants utilize agricultural raw materials, which are usually seasonal and sensi-tive to mechanical damage and to microbial spoilage. The food plants are nor-mally located near the agricultural production area to minimize spoilage during transportation of raw materials. The quality of raw materials and preserved foods is highly depended on the agricultural growing conditions and the variety of the product. The cost of raw materials is often the major operating cost of preserved food products. Freezing is the most expensive preservation process, followed by thermal processing and dehydration. Nonthermal preservation methods, such as radia-tion processing and high pressure technology, are still in the developing stage and they are considered as not economical at the present time. The design and economics of 6 food preservation plants are analyzed, using process engineering and economics principles, and process technology data from the literature. The plants discussed involve traditional preservation methods of fruits/vegetables and milk, such as concentration/dehydration, thermal processing, and freezing. The application examples represent hypothetical food processing plants of medium commercial size. Several simplifying assumptions were made con-cerning the engineering design, the processed product, and the economics of plant design and operation. Simplified computer-aided design, using Excel spreadsheets, is used in the engineering and economic analysis of the food processing plants.

2. Food Manufacturing Plants Food manufacturing plants include several small and medium sized processing plants, often batch-operated, which produce a multitude of food products from agricultural, animal, and marine raw materials. They apply the classical food preservation processes of heating, refrigeration/freezing, concentration and dehydration, fermentation, and use of antimicrobial agents. Packaging plays a very important role in the economics of such plants, since the food products are usually delivered to the consumers in rather expen-sive individual packages. These plants use several mechanical processing operations, such as mix-ing, mechanical separation, mechanical expression, forming, extruding, ho-mogenization, and agglomeration. Combined mechanical and heating opera-tions are applied in baking and roasting processes. The new field of Food Prod-


Introduction 7

uct Engineering is applied to formulate and produce foods of desired mechani-cal structure and texture, food quality, and food safety. Food manufacturing plants are located preferably near urban centers for easy access to the consumers. The raw materials of small/medium food plants are often transported from distant production areas or imported from other countries. Refrigeration or freezing may be needed for the storage and distribution of heat-sensitive food products, increasing substantially the cost. Hygienic plant operation and food safety are of paramount importance, since microbial spoilage and chemical changes of most manufactured products are possible during processing. Three different food manufacturing plants are used as application exam-ples in this book, i.e., bread baking, yogurt manufacture, and wine processing. They represent hypothetical food plants of medium to large commercial size, using established technology. Several simplifying assumptions were made in the engineering design, the plant economics, and the food product specifications. The engineering as-sumptions and technical data are in accordance with the established engineer-ing technology, reported in the literature, and applied in practice.

3. Food Ingredients Plants Food ingredient plants produce various ingredients used in food processing, such as sugars, starches, vegetable oils, proteins, food extracts, pectins, natural flavors and gums, and food chemicals. Several food ingredients are supplied by the Fine Chemicals Industry, such as artificial sweeteners, antioxidants, pre-servatives, amino acids, and vitamins. The raw materials of the natural food ingredients are bulk (commodity) agricultural products, available in large quantities and at relatively low cost, e.g., sugar beets or sugar cane, soybeans, and corn. Some food ingredients are produced from by-products of food processing plants, e.g., citrus or apple peels, cheese whey, and fish waste. The design of food ingredient plants is based on the classical unit opera-tions of Chemical Engineering with optimum use of raw materials and utilities (energy). Instrumentation and process control are essential, and the plant efflu-ents are treated to meet the environmental requirements. Hygienic and food safety requirements of such plants are less strict than food preservation and food manufacturing plants, since microbial spoilage and chemical deterioration of food ingredients are very limited. Less expensive process equipment can be used, similar to the chemical process industries.


8 Chapter 1

The design and economics of a hypothetical food ingredient plant, i.e., beet sugar processing, is outlined as an example, using process engineering and economic principles, and technology data from the literature.

VI. FOOD RESEARCH AND DEVELOPMENT

Food R&D provides the knowledge to produce and deliver the safe and nutri-tious foods needed to improve the life of the consumers. A fundamental under-standing of the Chemistry, Microbiology, and Physical Properties of foods is needed in any industrial application of Food Preservation or Food Manufactur-ing. In the US, basic or generic food research is conducted primarily in State Universities. Applied research and development is conducted mainly in Gov-ernment Laboratories, in Private Laboratories, and in the Industry. In several countries applied research and development may be carried out in State Univer-sities. The State Universities and the State Agricultural Experiment Stations have contributed decisively in the development and growth of the US Food Industry. They succeeded in combining the agricultural output of farm raw materials with the development of food products needed for national consump-tion and export. The Agricultural Experiment Stations were particularly useful for the small and the intermediate-size food industries, which could not afford a R&D Laboratory. Recent advances in Science and Technology have led to the development of Centers of Advanced Technology in the US, which utilize the expertise and equipment of various University Departments to address difficult food research problems. The growth of large food industrial corporations has created the need for fundamental research, which can be provided only by high-quality Research Universities. The research needs in Food Science and Technology were dis-cussed by Heldman (2004). Large food companies have R&D departments and laboratories, which develop new food products and processes, and oversee the production of safe and quality food products. Large international food companies operate central R&D departments, which can address food research, development, and quality problems from food plants, operated in different parts of the world. The food processing industries employ a smaller share of scientists and engineers and spend considerably less in R&D than the other US manufactur-ing industries. Food industries employ biological and agricultural scientists, chemists, engineers, and other scientists. R&D expenditures (1991) of the food processing industries was 1.4 G$, corresponding to 0.4% of the net sales. All US industries spent 104 G$ for


Introduction 9

R&D in 1991, corresponding to 4.7% of the net sales (Connor and Schick, 1997). Food industries spend most of the research funds in applied research and development and only about 5–10% in basic research. Applied food research is concerned with product development, process engineering, and quality control. A significant part of the applied R&D research is outsourced (contracted) to independent laboratories. Food processors import innovations from various other manufacturers, such as instrument and control, packaging, industrial equipment, and food in-gredients. Food processors need the R&D performed in Universities, Govern-ment agencies, consultants, and suppliers to improve their R&D efforts and increase their innovative activities. Food R&D related to the Food Industry can be divided into two broad categories, i.e., Food Science and Food Engineering. A brief review of current Food R&D in these areas is outlined below.

1. Food Science Research in Food Science is concerned mainly with the development of new or the improvement of existing food products acceptable to the consumers. To a lesser degree it is directed to the development of new or improved food proc-esses, resulting in more efficient operations. Food Science is based on the prin-ciples and techniques of Food Chemistry, Food Microbiology, and Food Engi-neering Science. Food Research projects in Universities include food composition and structure/texture, microbial kinetics, transport properties of foods, shelf-life prediction, and new preservation technologies. Emphasis is on food quality, food pathogens, and predictive modeling. The application of recent advances in Molecular Biology and Biotechnology to food systems is also investigated. Food quality and safety in Food Processing is of paramount importance and basic and applied research is carried out for better understanding and con-trol. Recent quality management systems include Hazard Control Critical Points (HACCP), international quality standards (ISO 9000), and Total Quality Control (TQC).

2. Food Engineering

Fundamental Food Engineering research is focused on the physical and engi-neering properties of foods, which are required in the quantitative design of food processes, food processing equipment, and food processing plants (Rao et al., 2005). Of particular importance are the transport properties of foods, which are affected strongly by the physical structure of the product (Saravacos and Maroulis, 2001).


10 Chapter 1

The design of food processes and food processing equipment has ad-vanced remarkably during the recent years by the application of the Chemical Engineering principles and the use of simplified computer design techniques (Maroulis and Saravacos, 2003; Saravacos and Kostaropoulos, 2002). Modern economic analysis is essential in evaluations of the efficiency and profitability of food processing plants. Control and automation of food processes and processing plants requires research on on-line sensors of process parameters, such as temperature, mois-ture content, and composition. Computerized systems can be applied to many food plants. Modern food plants are using increasingly continuous flow proc-esses, which can be controlled more readily than the batch processes. Research on efficient and economic methods of treatment and disposal of food wastes, especially wastewater and solids, is necessary to comply with the strict environmental laws and regulations. In addition to conventional Process Engineering, recent research is fo-cused on Food Product Engineering, i.e., the design and manufacture of food products based on scientific principles of Physical Chemistry, Materials Sci-ence, and Chemical Engineering (Cussler and Moggridge, 2001). Food Product Engineering is related to the molecular structure, nanostructure, microstructure, and macrostructure of food products, which affect strongly their texture, and the rheological, heat, and mass transfer properties (Aguilera and Stanley, 1999; Saravacos and Maroulis, 2001). The food industry is concerned mainly with food products which are sold to the retail consumers in relatively small packages. Processing of foods and filling in individual packages requires packages and high speed packaging equipment, which can handle thousands of units per hour (Saravacos and Kostaropoulos, 2002; Valentas et al., 1997). Specialized packaging materials are provided by experienced companies. The manufacture of consumer food products is increasingly using pur-chased semi-processed food materials (food ingredients), such as concentrated juices and pulps, dehydrated foods, and isolated food components. Food chemicals, approved for food safety, are provided by specialized chemical companies. Food Engineering is concerned with the control and automation of the food plants, which can reduce labor, improve the yield, and increase the prod-uct throughput. Process modeling, control and sensors require an understanding of the complex food structure, especially the solid and semi-solid materials.


Introduction 11

REFERENCES

Aguilera JM, Stanley DW, 1999. Microstructural Principles in Food Processing and Engineering. Aspen Publications.

Bartholomai A, 1987. Food Factories: Processes, Equipment, Costs. VCH Publishers. Brennan D, 1998. Process Industry Economics. IChemE. Connor JM, Schiek WA, 1997. Food Processing. An Industrial Power-house in Transi-

tion, 2nd Edition. Wiley. Couper JR, 2003. Process Engineering Economics. Marcel Dekker. Cussler EL, Moggridge GD, 2001. Chemical Product Design. Cambridge University

Press. Earle R, Earle M, 2003. Fundamentals of Food Reaction Technology. Leatherhead Food

Research Association. Gerrard AM, 2000. Guide to Capital Cost Estimation. 4th Edition. IChemE. Heldman DR, 2004. Identifying Food Science and Technology Research Needs. Food

Technology 58(12)32–34. Holland FA, Wilkinson JK, 1997. Process Economics. In RH Perry and DW Green, eds.

“Perry’s Chemical Engineers’ Handbook” 7th Edition. McGraw-Hill. Lopez-Gomez A, Barbosa-Canovas GV, 2005. Food Plant Design. CRC Press. Maroulis ZB, Saravacos GD, 2003. Food Process Design. Marcel Dekker, New York. Peters SM, Timmerhaus KD, West RE, 2003. Plant Design and Economics for Chemical

Engineers, 5th Edition. McGraw-Hill. Ramaswamy HS, Marcotte M, 2005. Food Processing: Fundamentals and Applications.

CRC Press. Rao MA, Rizvi SSH, Datta AK, 2005. Engineering Properties of Foods, 3rd Edition.

CRC Press. Saravacos GD, Kostaropoulos AE, 2002. Handbook of Food Processing Equipment.

Kluwer Academic / Plenum. Saravacos GD, Maroulis ZB, 2001. Transport Properties of Foods. Marcel Dekker. Valentas KJ, Rotstein E, Singh RP, 1997. Handbook of Food Engineering Practice. CRC

Press.


13

2 Structure of the Food Industry

I. INTRODUCTION

Food Processing is the largest industry in the United States of America (US) and in most of the developed world. It is very important in developing coun-tries, and it has a large potential in underdeveloped areas of the world. Food Processing is a very stable industry with steady growth potential, since it ad-dresses the basic and continuing need of humans for food and nutrition. Detailed statistical data are available on food industry in US Government publications. Some information is available on the food industries of European Union (EU), but similar data and information on other countries are very limited. The development of Food Processing in the various countries follows more or less the pattern of the US food industry, and it is believed that an economic analysis of food processing plants, based mainly on available US and EU data and expe-rience, will be very useful world-wide. Globalization and world trade of the economy have changed markedly the food industry during the recent years. The rise of the per capita income and the fast population growth of the urban areas of the underdeveloped countries have created the need for large amounts of nutritious processed foods at afford-able cost. At the same time, health and food safety concerns of the consumers require that the food industry conforms with the increasingly strict national and international food standards and regulations.


14 Chapter 2

II. FOOD SYSTEMS

1. The US Food System

The food delivery system consists of production of raw food materials (agricul-tural and marine), food processing, food trade, food distribution, and food ser-vice. Statistical data and evaluation of the US food system are given by Connor and Schiek (1997), Putman and Ambrose (1998), and the Council of Economic Advisers (2004). The value added in the US food system was 495 G$ (billion US dollars) per year (1992). The value added is defined as the total output (sales) minus the external purchases of goods and services. This value amounted to 8.2% of the US Gross Domestic Product (GDP) in 1992. Economic trends in the US show that the food system was surpassed recently by the health-related (medical, pharmaceutical) expenses, which grow at a faster rate. A broader estimation of the US Food System, including industries pro-viding to agriculture, food processing, distribution and food service (machi-nery, chemicals, energy, business services, motor vehicles, refrigeration equipment, construction services) sums up to 668 G$, which corresponds to 12% of the US GDP (1992). Food processing represents about 25% of the total food system value, while agriculture is gradually decreasing to about 15%. Food distribution and food service are increasing their share to about 30% and 20%, respectively. US farms sold about 30% of their production to other countries in 1992, most of which was processed in the importing countries. The US imported 30 G$ of raw and semi-processed foods and 6 G$ of seafood in the same year. Employment in the US Food System (1995) was 18.5 M (million), out of which 17% was for agriculture and 10% for food processing. Recent trends show that employment is nearly stable in food processing, it is decreasing gradually in agriculture and it is increasing in the food distribution and food service systems. Americans spend less percentage of their personal expenditures for food than any other country, 10.7% (1994), down from 13.8% (1970). Expenditures in some other countries (1994) were, Canada 10.5%, U.K. 11.2%, various un-developed countries 50%. The inexpensive food in America is the result of a large and efficient agricultural production, and efficient food processing and food distribution systems, supported by technical information from Universi-ties, and state and federal agencies. Approximate economic values of the US food system for the current year can be obtained from the 1992 data by assuming an average increase of con-sumer price index of 4% per year. Thus, the total food sales for 2005 would be about 495x (1+ 0.04x15) = 792 G$.


Structure of the Food Industry 15

2. The US Food Processing Industry The Food Processing Industry, the largest US manufacturing industry, had shipments (sales) of processed foods of 495 G$ in 1992, about 10% of the total shipments of all the US industry. The majority of the 20,000 US food processing plants are rather small with less than 20 employees. The value of food shipments (sales) was 495 G$ out of total manufactur-ing sales of 3000 G$ (1992). Food processing heads the list of manufacturing, followed by chemicals/pharmaceuticals, industrial machinery, electric-al/electronic equipment, etc. Manufacturing amounted to 18% of the US GDP (1992). Meat products accounted for the 22% of total food shipments in the US (1992), followed by beverages (15%), dairy products (12%), fruits and vegeta-bles (12%), grain mill products (11%), bakery products (9%), sugar and con-fections (4%), and miscellaneous foods (10%). Some important economic data on the U.S. economy for 2003 are: GDP 10 400 G$, value added in manufacturing 1450 G$, agriculture 142 G$. Non-durable goods exports 218 G$, imports 480 G$. Profits of nondurable goods 78 G$ (foods 32 G$, chemicals 24 G$, petroleum products 20 G$). Food processing is a labor-extensive industry with an average annual cost of 250 k$/employee, i.e. high output per employee. It is a capital-intensive in-dustry with high physical assets per employee. It is also a materials-intensive industry, handling large quantities of raw materials and processed products. Smaller food plants are located primarily in rural areas, near agricultural production, while the headquarters and the management of the large plants concentrate in urban areas. The food processing industry purchases the services of other companies, such as engineering design, plant equipment, and food plant cleaning. Although employment is not increasing, the growth in food processing industry is achieved by increases in labor productivity. The productivity of the US food processing industry has increased by the replacement of batch production by continuous-flow equipment, particularly in brewing, baking, confectionary, and large food ingredient/intermediate indus-tries. The number of food processing plants in the US is about 20,000, out of which about 120 are large plants with more than 1000 employees. About 50% of the plants are quite small with less than 20 employees. Large companies have central administrative headquarters and they own several operating plants in various locations. There are about 16,000 food companies with an average 1.4 plants per company. Capital expenditures in Food Processing are about 2–4% of the sales/year. It is very low in meat packing (0.8%) and high in pasta manufactur-ing (6.9%). High rates of capital cost characterize food industries of rapid tech-


16 Chapter 2

nological change, introducing new products, and requiring new equipment, e.g., flour mixes, cookies, canned and dried fruits. The output of the US food processing industry is the largest in the world, followed by Japan (55% of US) and Germany (33% of US). The total food production in the European Union (EU) is slightly higher than the US (Connor and Schiek, 1997). The average prices for processed foods in the US are about 30% lower than in Western Europe and Japan. Shipments (% of world sales) of processed foods in some developed countries (1995): EU 44%, USA 35%, Japan 9.8%, Germany 9.1%, France 8.4%, UK 8.1%, Spain 5%, and Italy 4.8%. Sales of processed foods in developing large countries are increasing gradually, following the growth of their national economy, e.g., China, Brazil, and India. There is more foreign (mostly European) investment in US food indus-tries than investment of US food industries abroad.

a. Industry Classification The food processing industries in the U.S. were classified in 1987 according to the Standard Industrial Classification (SIC) system. The food and kindred products were classified in the SIC 20 series using 4-digit codes (US Census Bureau, 1992; Connor and Schiek, 1997). The Food and Kindred Products group includes establishments of processing or manufacturing foods and beve-rages for human consumption, and certain related products, such as manufac-ture of ice, vegetable and animal fats and oils, and prepared animal feeds. The SIC system lists 49 Food Processing Industries coded from 2011 (Meat Pack-ing Plants) to 2099 (Misc. Food Preparations). Recently (1997), the North American Industrial Classification System (NAICS) was adopted in the U.S., Canada, and Mexico. The food processing industries are classified in the NAICS 311 series using 6-digit codes (US Cen-sus Bureau, 2002). Table 2.1 lists 9 main groups of Food Processing Industries (Manufac-tures), according to the SIC and the NAICS systems. Table 2.3 lists in detail both the SIC and NAICS codes of specific processed foods.



Table 2.1. Main Groups of Food Industries, SIC and NAICS Codes Food Product SIC code NAICS code Animal (meat, poultry, egg) products 201 3116 Dairy (milk, cheese) products 202 3115 Canned and preserved fruits and vegetables 203 3114 Grain mill (flour) products 204 3112 Bakery (bread, biscuits) products 205 3118 Sugar and confectionery (candy, chocolate) products 206 3113 Animal and vegetable fats and oils 207 3112 Beverages (beer, wine, soft drinks) 208 3112 Miscellaneous foods (seafood, pasta, coffee) 209 3119

b. Food Consumption Details on food consumption in the US were presented by Putman and Allah-ouse (1998.). The US spent 710 G$ for food in 1997, corresponding to 10.7% of the GDP. The annual consumption per capita of some important foods in the US (1997–1998) is as follows:

• Animal Products: beef 39 kg, chicken 20 kg, pork 20 kg. eggs 250 pieces (20% processed), dairy total 250 kg, fluid milk 100 L (50% whole and 50% low- and nonfat), cheese 12.5 kg, ice cream 8 kg, yogurt 3 kg.

• Fruits and vegetables 325 kg, sugar (sucrose) 32 kg, corn sweeteners 36 kg, fats and oils 28 kg, candy 10 kg, flour 100 kg (65% wheat flour).

• Carbonated beverages 200 L, coffee 90 L, beer 80 L, fruit juices/drinks 65 L, wine 8 L, distilled spirits 5 L.

During the last 20 years the consumption of the following foods in-creased substantially: fruits and vegetables, grain products, poultry and fish, cheese, fats and oils, beer, and carbonated beverages. There was a decrease in the consumption of eggs, fluid (whole) milk, and coffee.


18 Chapter 2

Table 2.2. Classification of Food Processing Industries, SIC and NAICS Systems Food Product SIC Code NAICS Code Meat products 2011 311611 Sausages, prepared meats 2013 Meat byproducts, lard 311613 Poultry and egg products 2015 311615 Creamery butter 2021 311512 Cheese products 2022 311513 Dry, evaporated, condensed dairy products 2023 311514 Ice cream and frozen desserts 2024 31152 Fluid milk, cream, yogurt 2026 311511 UHT fluid milk 311514 Canned specialties 2032 311422 Canned fruits and vegetables 2033 311421 Dried fruits and vegetables 2034 311423 Pickled fruits and vegetables, sauces 2035 311941 Frozen fruits, fruit juices, and vegetables 2037 311411 Frozen specialties 2038 311412 Flour, other grain milling products 2041 311211 Cereal breakfast foods 2043 31123 Rice milling 2044 311212 Flour mixes and doughs 2045 311822 Wet corn milling 2046 311221 Refined oils 2046 311225 Dog and cat food 2047 311111 Prepared animal feeds 2048 Bakery products 3051 311812 Cookies and crackers 3052 311821 Frozen bakery products 2053 311813 Cane sugar 2062 311312 Beet sugar 2063 311313 Confectionery products 2064 311313 Confectionery from cocoa beans 2066 Confectionery from chocolate 31133 Chewing gum 2067 Nonchocolate confectionery 31134 Roasted nuts and seeds 2068 311911 Cottonseed oil 2074 311223 Soybean oil 2075 311222 Vegetable oils 2076 311223 Animal and marine oils 2077 311613 Shortening and margarine 2079 311225 Malt beverages 2082 311213 Wine and brandy 2084 311213 Soft drinks 2086 Coffee and tea flavorings 2087 31192 Flavoring extracts and syrups 2087 31193 Seafood canning 2091 311711 Fresh and frozen seafoods 2092 311712 Coffee and tea products 2095 31192 Potato chips and similar snacks 2096 311919 Manufactured ice 2097 311113 Dry pasta products 2098 311823 Miscellaneous food products 2099 311999



c. Value Added in Food Processing The value added depends on the food product, technology used, and the cost of raw materials. High priced farm raw materials yield low value-added products, e.g., meat, dairy products, and seed oils. Also, semi-processed food ingredients yield low value-added products, e.g., tomato paste, juice concentrate, con-densed and dried milk. Industries based on fresh fruits and vegetables, grains, and convenience foods yield higher value-added products. Value added of typical food products, in diminishing order are, food fla-vorings, cereals, cookies, bread, pasta, beer, confectionary, canned specialties, dried fruits and vegetables, frozen specialties, coffee, meat packing, soybean oil. Most of the beverage industries and food industries that use flow-type processes rank high in value-added products, e.g., oils, sugars, sauces, flour, and rice milling. Labor-intensive food processing industries rank low in value-added production, e.g., cookies, bread, dried fruits and vegetables, frozen foods.

d. Raw Materials Raw and other materials of the food processing industries, purchased from oth-er sectors, such as agricultural products, livestock, crops, semi-finished foods-tuffs, containers, and chemicals, represent about 60% of the total cost, with a wide variation in the various industries. The requirements of raw materials used in food processing are unique, due to the biological nature of agricultural and marine products. There is a seasonal variation of supply of some food raw materials, due to farm production, e.g., fruits and vegetables, corn, beets, and oil seeds. Some farm raw materials are spoilage-sensitive, e.g., fruits, vegetables. Storage-stable raw materials include grains (wheat) and oil seeds. Some farm products are subsidized by the Government in order to increase the farm income: Typical examples of subsidies are corn, cattle and pork in the US, and milk, fruits (oranges), and vegetables in the European Union. Demand-oriented industries (fluid milk, beer) tend to locate near cities, while supply-oriented industries (canned fruits and vegetables) locate near agricultural production. Coastal areas near cities are convenient for food processing industries, using imported raw materials, such as tropical fruits and vegetables, grains and seafood.

e. Labor and Energy Food Processing is a labor intensive industry, representing about 15% of the food sales. The food industry assets are in the range of 100–1500 k$/employee


20 Chapter 2

(k$ = thousand US dollars). A large substitution of capital for labor is observed in technologically advanced industries, e.g., grain products, sugar, vegetable oils, coffee and beverages. Energy requirements in the food processing industries are relatively low, on the average 1.3% of sales. However, higher energy requirements are ob-served in some food industries, e.g., 6% in corn milling, cane sugar, beet sugar, 4.5% in cottonseed oil, and 2.6% in freezing and drying of fruits and vegetables.

3. Food Trade Industries

Establishments engaged in packing and selling, but not manufacturing, food products are classified as Trade or Wholesale Trade Industries. The following examples are considered food trade (not processing) industries in the US: a. Bottled natural spring water – not carbonated water b. Cutting and resale of purchased fresh carcasses c. Bakeries selling directly products on the premises to household consumers d. Grading and marketing of farm dried fruit, such as prunes and raisins e. Bottling purchased malt beverages. Bottling, but not manufacturing, pur-chased wines, brandy, and various liquor.

4. The European Food Processing Industry

The food processing industry is one of the largest industrial sectors of all Euro-pean states. The principal food industries in Europe are the dairy, meat processing, edible oil, fruit and vegetable, grain milling, bakery, sugar, confec-tionery, fish, and coffee. Most European states support the large dairy and meat industries, which bring considerable income and economic development to the rural areas. An economic analysis of the European food processing industry in the period 1975–1980 was reported by Kostaropoulos (1983). The initial EEC was changed to the EU10 (European Union of 10 countries), which later expanded to 15 countries (EU15). The total sales of the European food industry in 2003 (EU15) was 950 G$. Table 2.3 shows the food industry sales in some European countries. Table 2.3 Food Industry Sales in EU15 Countries (2003) Country Food sales, (G$) France 165 Germany 155 UK 134 Italy 125 Spain 75 Sweden 18 Greece 12



The European Union has recently expanded to Eastern Europe and the Balkans to include 27 countries (EU27). Recent data on the European food industry can be found in Publications of the Statistical Society (Eurostat: http://ec.europa.eu/eurostat). The location of the food industries depends strongly on the availability of raw materials. Thus, fruit and vegetable processing plants are located prefera-bly in southern regions of Europe, due to favorable weather conditions for growing raw materials. Beet sugar plants requiring large quantities of raw ma-terials, can operate in northern regions. Edible oil plants, requiring large amounts of imported oil seeds, are located near harbor facilities. Dairy plants, requiring large amounts of fresh milk, operate near dairy farms, and preferably close to large urban areas, where consumers live. Fish processing plants are located near sea ports, where fishing vessels bring in the fish catch. In addition to agricultural and marine raw materials, the food processing industry is depended to some other industries and services, such as food processing equipment, food packaging, and storage and transportation facilities. Food preservation plants are usually small to medium size and they use established processing technology and equipment. The required labor includes unskilled workers from the farm areas near the plant. The investment of fruit and vegetable canning or freezing plants is about 10 M$ per plant. Sugar and edible oil plants are more capital intensive. They have larger capacities than the preservation plants and they use advanced technology and automation, requir-ing investments near 50 M$ (M$ = million US dollars). The European food industries are classified according to the NACE sys-tem (Table 2.4). Table 2.4 Classification of the European Food Processing Industries (NACE) NACE Food Processing Industry 411 Processing of vegetable and animal oil and fat 412 Slaughtering, preparing, and preserving of meat 413 Manufacture of dairy products 414 Processing and preservation of fruits and vegetables 415 Processing and preserving of fish 416 Grain milling 417 Manufacture of pasta, spaghetti, etc. 418 Manufacture of starch and starch products 419 Manufacture of bread and flour pastry 420 Sugar manufacturing and refining 421 Manufacture of cocoa and confectionery 422 Manufacture of animal and poultry foods 423 Manufacture of other food products 424 Manufacture of ethanol from fermented liquors 425 Manufacture of wine from grapes and related beverages 426 Brewing and malting 427 Manufacture of soft drinks, including bottled water


http://ec.europa.eu

22 Chapter 2

A brief overview of the European food processing industries is presented here:

a. Dairy Industry The dairy industry is the top food industry in Germany, France, United King-dom, the Netherlands, and Italy. Good prospects for growth have the fluid milk, yogurt, and cheese, while condensed milk and milk powder are rather declin-ing. Most of the fluid milk is pasteurized, while a growing percentage is steri-lized by the high temperature-short time (UHT) process. The production of yogurt (fermented milk product) is growing. A large portion of the milk powd-er produced in Europe is used for animal feed. Cheese is produced mainly in France, the Netherlands, and Italy, usually in multi-purpose dairy plants.

b. Sugar Europe is one of the largest beet sugar producers in the world with an annual output of about 15 Mt/y (1980). Beet sugar is produced mainly in Germany and France in large plants of about 65 kt/y annual capacity. Due to seasonal availa-bility of the beets, the sugar plants operate at maximum capacity for about 2–3 months a year. The sugar by-products are used as an animal feed. (Mt = million tons; kt = thousand tons)

c. Edible Oils The raw materials for the edible plant oil industry in Europe, i.e. soybeans and rapeseeds, are imported from the US or South America. The vegetable oils are extracted from the crushed beans by a solvent. The bean residue after the sol-vent extraction is sold as an animal feed, representing a significant income.

d. Fruits and Vegetables The processing plant should be located near the agricultural production of the sensitive raw materials, which should be harvested, transported, and processed fast. The seasonal availability of the raw materials requires high capacity processing plants. Fruit and vegetable canning plants are located in France, Germany, Unit-ed Kingdom, Italy, and Greece. Freezing plants operate in the Netherlands, while dehydration is practiced in France, Ireland, and Germany. Potato processing is concentrated in the Netherlands, Germany, and the United King-dom.



e. Grain Milling Grain milling, mainly production of wheat flour, is a large food processing industry in France, Germany, United Kingdom, and Italy. It is characterized by a small number of large units, located near grain-producing areas or in harbors. Grain milling is a capital intensive industry, using modern technology. It sup-plies with various flour products the baking, biscuit, and pasta industries.

f. Baking Industry The baking industry consists of several small bakeries, producing various bread types, and a few large baking plants, producing standardized bread loaves and pastry. Biscuits are produced by large bakeries, mainly in the United Kingdom, France, Italy, and Germany. Pasta (spaghetti, macaroni, etc.) production is a capital intensive industry, developed mainly in Italy.

g. Confectionery The confectionery industry is particularly important in the United Kingdom, Germany, France, and the Netherlands. It is based mainly on imported cocoa beans, and it uses large amounts of sugars. The principal confectionery prod-ucts are cocoa, chocolate, and candy products. Ice cream is considered as a confectionery product in some countries, while in other countries it is classified as a dairy product.

h. Meat Industry The meat industry is a large food industry in Germany, France, and Italy. Most of the beef and poultry are consumed as fresh (refrigerated), and only a small portion is processed. On the contrary, pork (pig meat) is processed to various products, mostly sausages and ham.

i. Fish Industry Denmark is the largest producer of processed fish in Europe. Fish processing is also important in the United Kingdom, Germany, France, and Italy. Canned tuna fish and frozen fish are the most important processed fish products.

k. Coffee Industry The coffee industry is an important processing industry in Germany and the Netherlands, followed by France, United Kingdom and Italy. It produces ground roasted coffee and soluble coffee from coffee beans imported from


24 Chapter 2

South America and Africa. There are only a few large coffee processing com-panies, located near seaports (import of raw material) and large urban areas.

5. Multinational Food Companies A number of multinational food companies, with headquarters mainly in Eu-rope and the US, operate several food processing plants in different parts of the world. Foreign industrial investment improves the economy of less developed countries and increases international trade. Some food products can be processed and manufactured more economically in countries with abundant raw materials and less expensive labor. Several small food companies are acquired by international food compa-nies, resulting in more efficient plants, better marketing, and improved food quality. The major multinational companies are listed in Table 2.5. The headquarters of the multinational companies are located mainly in the USA, United Kingdom (UK), Switzerland (CH), the Netherlands (NL), and France (F). Several US food companies operate food processing plants in foreign countries. The following companies have more than 30% of their plants abroad: CPC International, Heinz, Ralston Purina, Quaker Oats, Kraft, Philip Morris, Kellogg’s, McCormick, Campbell Soup, Procter and Gamble, and Sara Lee. Table 2.5 Multinational Food Companies Multinational company Major food products Nestle (CH) Coffee, dairy foods Unilever (NL, UK) Edible oils, frozen foods Danone (F) Dairy foods Philip Morris/Kraft (USA) Coffee, cheese Coca Cola (USA) Soft drinks Pepsico (USA) Soft drinks, snack foods Best Foods (USA) Soups Mars (USA) Confectionery Cadbury Schweppes (UK) Confectionery Heinz (USA, UK) Canned Foods RHM (UK) Baked foods Cargill (USA) Edible oils Campbell (USA) Soups



6. Food Distribution Systems The Food Distribution Systems specialize in the transportation, storage, display and sale of food products (Connor and Schiek, 1997). The Logistics system of food distribution is discussed in Chapter 3 of this book. Processed foods in the US are distributed to food stores (52%), food ser-vice and institutional sales (20%), semi-processed foodstuffs and byproducts (22%), and exports (6%). Food imports are also about 6% of the total processed foods. Food stores include food supermarkets, large consumer centers, and su-per centers. Food service includes catering, hotels, restaurants, fast food outlets, and Government and international aid. Supermarkets selling brand names dominate the sales of processed foods in the US, while private labels represent about 15% of the food sales. By con-trast, private label sales of processed foods are much higher in the EU, e.g., 40–50% in the UK, with higher profits than the US food outlets. Efficient distribution of processed foods in supermarkets or large con-sumer outlets (e.g., Wal-Mart) lowers food prices. The demand of a particular food product is expressed by the Stock Keep-ing Units (SKU), which may account up to 20,000 in a typical supermarket. To meet the SKU demands of various customers, many food plants employ Flexi-ble Manufacturing Systems (FMS), which can switch from one product to another, using the same processing or packaging equipment. International companies and supermarkets may dump various foods, i.e. sell products at very low prices, with local companies unable to compete in the market. Anti-dumping measures are taken by various countries to protect their industries at the national and international levels.

REFERENCES

Connor JM, Schiek WA, 1997. Food Processing. An Industrial Powerhouse in Transi-tion, 2nd Edition. John Wiley & Sons.

Council of Economic Advisers, 2004. Economic Report of the President. Government Printing Office, Washington, D.C.

Kostaropoulos AE, 1983. Concentration, Competition and Competitiveness in the Food Industry of the EEC. Commission of the European Communities IV/584/83-EN, Brussels, Belgium.

Putman JJ, Allhouse JA, 1998. Food Consumption, Prices, and Expenditures, 1970–1997. Food and Rural Economics Division, Economic Research Service, US Dept. of Agriculture, Statistical Bulletin No. 965.

US Census Bureau, 1992. Census of the Manufactures: Industry Report Series. US Census Bureau, 2002. North American Industry Classification System (NAICS).

Washington, DC. http//www.census.gov/epcd/www/naics.htlm


http://www.census.gov

27

3 Overview of Food Process and Plant Design

I. INTRODUCTION

The design of food processes, processing equipment, and processing plants has evolved from an empirical art and industrial practice into an applied engineer-ing and economics area, based on the principles and practices of modern Chemical Engineering. Chemical process and plant design have contributed greatly to the development of efficient chemical and petrochemical plants, pro-ducing large quantities of industrial (commodity) and consumer products at relatively low cost. The conventional design of chemical processes, equipment, and plants is described in standard books, such as Seider et al. (1999), Turton et al. (1998), Biegler et al. (1997), Perry and Green (1997), Sinnott (1996), Smith (1995), Peters et al. (2003), Douglas (1988), and Walas (1987). The design and operation of the chemical process industries has been improved by the application of modern molecular thermodynamics, mathe-matical modeling and simulation, and computer technology. These industries process mainly gases and liquids, for which sufficient data and predictive mod-els of their physical and engineering properties are available in the literature (Biegler et al., 1997). Most large chemical process industries are operated con-tinuously, which makes them easier to model, simulate, and control. Limited literature and fewer data are available for food process and plant design. Food products are more sensitive to processing and storage than chemi-cals, and there are strict requirements on food safety and quality, which should be considered in addition to conventional engineering and economics. The application of Chemical Engineering analysis to Food Process De-sign has been successful in the classical unit operations of heat and mass trans-


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fer (heating/cooling, evaporation, drying, extraction), and in the kinetics of biochemical and microbiological reactions (Fryer et al., 1997; Maroulis and Saravacos, 2003). However, widely used mechanical processing operations of Food Manufacturing, such as size reduction, mechanical separations, mixing and forming, and packaging are still designed empirically, based on industrial experience and technical information from suppliers of equipment (Saravacos and Kostaropoulos, 2002; Walas, 1988; Perry and Green, 1997). Recent research and publications on engineering properties of foods (Rahman, 1995; Rao et al., 2005) and food transport properties (Saravacos and Maroulis, 2001) have improved significantly the quantitative design of food processes and processing equipment. Food Plant Design involves the estimation of capital (investment) and operating costs. The capital cost is based on the estimation of the equipment cost, while the operating cost includes the costs of raw materials, labor, utilities operation, and various overhead expenses. Design and overall cost data of sev-eral food processing plants were published by Bartholomai (1987). In addition to conventional Process Engineering, the food plants must comply with the special requirements of hygienic (sanitary) design of equip-ment and plant facilities, and the safety and quality of the processed food prod-ucts (Clark, 1997; Clark, 2000; Lelieveld et al., 2003). More attention is paid recently to Food Product Engineering, i.e. the de-sign and engineering of food structure and quality of processed foods. A similar trend is observed in chemical product design (Cussler, 2001). The micro-structure of complex fluid and solid food products, such as colloids, emulsions, porous and extruded products, plays an important role in determining their quality and acceptability (Aguilera and Stanley, 1999). The transport properties of foods, especially the mass diffusivity and the thermal conductivity, are af-fected strongly by the micro-structure (1 – 10 μm) and the macro-structure (0.1 – 10 mm) of the foods (Saravacos and Maroulis, 2001). Food Process Economics is applied to estimate the profitability of food processing operations. The methods used in Process Engineering Economics (Couper, 2003) can be applied to the economic analysis of food processes and processing plants.

II. FOOD PROCESS DESIGN

Process Design, based on unit operations, transport properties, and chemical kinetics has been developed and applied to the Chemical Process Industries. In addition to the techniques of Chemical Engineering, Food Process Design is based on the principles and practices of Food Science and Technology. Food Process Design includes the selection of the process flowsheet, the material and energy balances, and the sizing and costing of the process equip-ment (Maroulis and Saravacos, 2003). The design of food processes is based on


Overview of Food Process and Plant Design 29

the same principles of Chemical Process Design, considering also the require-ments for food quality, hygienic operation, and food safety. The unit operations of Food Processing include the basic heat and mass transfer operations, several mechanical processing operations, and specialized food processing operations, such as thermal processing, refrigeration, freezing, and packaging (Saravacos and Kostaropoulos, 2002; Gould, 1996). Computer spreadsheets are useful in Food Process Design (Zaror and Pyle, 1997).

1. Process Flowsheets

The simplest flowsheet in Food Processing is the process block diagram (PBD), which shows the flow of materials in distinct blocks. The PBD is convention-ally used in preparing the material and energy balances of the process. Figure 3.1 shows a simplified PBD of an orange juice concentrate process. The process flow diagram (PFD) or the flowsheet (Figure 3.2) presents the flow of the raw materials and products in more detail, using accepted sym-bols for the various types of equipment. The layout or floor plan of the process equipment (Figure 3.3) is used in estimating the floor requirements of the food processing plant. Three-dimensional (3D) flowsheets are useful for a better visualization of the food plant (Saravacos and Kostaropoulos, 2002). Piping and instrumentation diagrams (PID) are used in complex plants to represent piping, process instrumentation, and process control.

2. Material and Energy Balances Material and energy balances provide necessary quantitative data for the design of food processes and processing plants. They are based on the material flow rates and the composition of the raw materials, the intermediate, and the final food products. The percent total solids (%TS), or moisture content, wet basis (%Water = 100 - %TS) are the most commonly used composition data. In some applications, other special components may be used in material balances, such as % sugar, % fat, % protein, or % salt. In sugar solutions or fruit juices, the sugar content is expressed as oBrix, which is defined as the % content of TS, wet basis, expressed as sucrose. In clear sugar solutions and in clarified fruit juices, the nonsugar content is negli-gible and the oBrix is approximately identical with the % TS (Saravacos and Kostaropoulos, 2002). Material balances should be based on mass flow rates, e.g., kg/h or ton/h. Volumetric flow rates, (L/h or m3/h) are converted to mass flow rates, using the appropriate mass density of the material (kg/L or ton/m3). It should be noted that International Units (SI) are used throughout this book and the ton is 1000 kg. In the U.S. the “short” ton is sometimes used, which is equal to 2000 lb or 908 kg.


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Oranges 13.6% TS

Rejects

Oranges 13.6% TS 100 kg Peel oil 0.30

Peels 14.5% TS48.0

Pulpy juice 13% TS 52.0 Peels 14% TS 47.7

Pulp 36.0% TS2.00

Orange juice 12% TS 50.0 Pulp 14.9% TS 49.7

Orange juice 12% TS 50.0 Annimal feed 90% TS 8.20

Concentrated juice 65 % TS 9.23

Concentrated juice 65 % TS 9.23

Storage

Mixing

Evaporation

Cooling

DryingPasteurizing

Finishing

Asepting packing

Oranges

Washing

Inspecting/sorting

Oil extractionJuice extraction

Figure 3.1 Process block diagram and material balance of orange juice concentrate plant. Basis, 100 kg of oranges.



Inspecting

Rejects

Extraction

Peel oil DryingPeels

Finishing PressingPulp Animal feed

Orange juice

Evaporation

Pasteurizing

Concentratedorange juice

CoolingAseptic packaging

SortingOranges

F

A

W

s

S

K

s

S

C

c

Figure 3.2 Process flow diagram of orange juice concentrate plant. A, air; C, cooling water; F, fuel; K, packaging material; S, steam; W, condenser water.


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Storage of oranges

Sorting

OilExtraction

Juice Extraction

Drying

Washing

Cooling

Finishing

Pasteurizing

Aseptic packaging Storage

Evaporation

Figure 3.3 Equipment layout of orange juice concentrate plant. Most food processes involve continuous flow operations, and the inlet must be equal to the outlet mass, i.e. the mass accumulation is zero. In batch processing operations, the accumulation (inlet minus outlet) in the process or the equipment is an important term of the material balance equations. Energy balances in Food Processing refer mainly to heat (enthalpy) bal-ances around processing equipment and entire processes. Mechanical energy flow, expressed in kW, refers to motors used in various processing equipment and plant utilities. Of particular importance are heat balances in processes, which use large amounts of energy, such as evaporation and drying (removal of water form foods). Material and heat flows in the whole processing plant are sometimes presented graphically in a Sankey diagram.



Heat balances require thermal property data for foods, water, and air (Rahman, 1995; Rao et al., 2005; Saravacos and Kostaropoulos, 2002). Very useful thermal data for water are specific heat Cp = 4.18 kJ/kg K, heat of va-porization (pressure 1 bar) ΔΗv = 2.26 MJ/kg, and heat of freezing ΔΗf = 333 kJ/kg. The energy requirements are often expressed as MJ/kg or kWh/kg prod-uct (1kWh=3.6MJ). In energy balances calculations, the SI units are convenient, and the other technical units (e.g., Btu/lb or kcal//kg) should be converted to MJ/kg or kWh/kg, when starting the calculations.

3. Sizing and Costing of Equipment The size of the food processing equipment can be estimated, using the flow diagram and the material and energy balances of the process. The techniques of the Chemical Engineering Unit Operations can be used effectively, especially in the design of conventional heat and mass transfer operations, such as heat exchangers, evaporators, dryers, distillation columns, and solvent extractors. Some novel food process operations, such as membrane separations (ultrafiltra-tion and reverse osmosis), can be designed applying the same techniques (Ma-roulis and Saravacos, 2003). Mechanical processing equipment, such as grinders, agglomerators, ex-truders, mixing and forming equipment, and food packaging equipment are designed and selected empirically, based on the experience of equipment sup-pliers and food manufacturers (Saravacos and Kostaropoulos, 2002). Mechani-cal equipment is selected on the basis of product capacity, usually kg/h, and the power requirement, mainly for the electrical motor (kW). The requirements for other utilities should also be specified, e.g., steam and water (kg/h), and com-pressed air (m3/h). The materials of construction and the hygienic design of the food proc-essing equipment are very important and should be specified (see section on Plant Design in this chapter). The design of special food processing equipment, such as thermal steri-lizers, refrigeration and freezing equipment, and packaging equipment is based on engineering principles and the experience of equipment manufacturers and food processing operators. Similar procedures (engineering and practical ex-perience) are used in the design and operation of treatment and disposal of food wastes (water, gaseous, and solid wastes). The cost of food processing equipment can be determined directly by price quotations from equipment suppliers. For preliminary design, cost data for Chemical Engineering equipment can be used in food process design, espe-cially for conventional fluid flow, and heat and mass transfer equipment (Peters et al., 2005; Couper, 2003). The Marshall and Swift (M&S) index is used to convert the cost from previous years.


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Limited cost data have been published on food processes and processing equipment. Some data on selected food processing equipment were presented by Saravacos and Kostaropoulos (2002). Costs of entire food plants were pre-sented by Bartholomai (1987).

III. FOOD PLANT DESIGN

The design of food processing plants is based mainly on the design of food processes and processing equipment. In addition, several components of the food plant should be analyzed quantitatively, such as plant buildings, raw mate-rials, food products and by-products, plant utilities, packaging materials and equipment, labor, quality control, storage (warehousing), and waste treatment (Lopez-Gomez and Barboza-Canovas, 2005). Food Plant Economics is very important and it is outlined in the next section of this chapter. Food plants, in addition to economic efficiency (profitability), should conform to strict requirements of food product safety, legal, and environmental regulations. Laws and regulations (State and Federal) should be considered at the design stage, such USDA (inspection of meat and poultry), FDA (Code of Federal Regulations), and EPA (environmental) in the United States. Stricter standards than the official regulations may be applied by some food companies to ensure their product safety to the consumers. Increased international trade of food products makes it necessary to con-sider the food laws of other countries or federations, e.g., of the European Un-ion (Saravacos and Kostaropoulos, 2002). In Food Plant Design, the following special requirements should be con-sidered: (a) The raw materials are usually seasonal and sensitive agricultural products which require special harvesting, transportation and storage before processing; (b) materials handling equipment and processing should not dam-age mechanically or cause microbial, enzymatic, or chemical spoilage of the product; (c) special packaging materials and equipment may be required for each food product; (d) hygienic (sanitary) design and cleaning of the process equipment and the processing plant are necessary (Clark, 1997). Most food plant design and construction is concerned with improvements of existing installations rather than building new (grassroots) plants. Such modifications or revamps and expansions are necessary for meeting the new requirements of ecology, waste reduction, energy availability, specialized labor, nutrition and food safety, international trade, increasing population, and eco-nomic profitability.



1. Plant Buildings The design of food plants is an architectural and civil engineering task which, in addition to structural engineering, should consider strict food safety and quality requirements and regulations of foods being handled and processed. The food plant should provide adequate space for equipment installation and storage of materials, prevent cross-contamination of the products, provide adequate lighting and ventilation, and protect the products from outside con-tamination and pests (Clark, 2000; Lopez-Gomez and Barbosa-Canovas, 2005).

a. Plant Location The location of the food plant is decided by considering the availability of raw materials and labor, the access to plant utilities (water, power) and waste treat-ment/disposal, the transportation systems, the regulation requirements, and the food consumption outlets. In evaluating a food plant location, the following aspects should be con-sidered (Downing, 1996): 1. Quantity, quality, and cost of raw materials. 2. Sales and delivery cost to markets. 3. Transportation and distribution by high-ways, railroad, waterways, or airways. Storage and terminal facilities. 4. Ade-quate labor, labor skills, supervisory personnel. 5. Availability, quality, and cost of water. Waste and sewage disposal. 6. Availability and cost of power. 7. Laws related to workers, waste disposal. 8. Taxes and banking system. 9. Cli-mate (rainfall, snowfall, storms). 10. Living conditions, housing, schools, hos-pitals. 11. Site characteristics (soil, elevation, drainage, flooding). A medium size food processing plant would require a lot area of about 10,000 m2. Fruit and vegetable processing plants should be located near the agricultural farms, so that truck transportation will be fast enough to prevent any spoilage of the sensitive raw materials. Medium size processing plants of about 100 tons/day raw materials are usually built and operated for such mate-rials. Much larger plants of the order of 1000 tons/day are operated for some high-volume food ingredients, such as beet sugar and soybean oil.

b. Building Construction The construction of plant buildings should take into consideration the special hygienic and legal requirements of food processing plants. Based on the block flow and the equipment layout diagrams of the food process, a block building diagram can be prepared, which will define the floor (space) requirements of the food plant. Building space is important in designing the efficient flow of raw materi-als, products, and personnel in the plant. One-story buildings (large floor space) are preferred in general for better equipment layout, product flow, process in-spection and control, cleaning, and maintenance. The plant buildings, espe-cially the internal walls and floors, should conform to the hygienic require-


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ments and regulations. The building construction should prevent and eliminate the entrance of animal pests, such as insects, rodents, and birds, and prevent any accidental or intended contamination of the processed and stored foods. Plant floors should preferably be at ground level to permit direct unload-ing and loading of the raw materials and the finished products. The earth resis-tance of the floors should be adequate (reinforced, if necessary) to withstand high loads and lift trucks. The plant site should have a soil-bearing capacity of at least 14 tons/m2. Modular construction is preferred in the construction of new food proc-essing plants, so that future expansion of the plant can be realized easily. Concrete floors should be about 12–15 cm thick, coated with silicate fillers, to resist the acidity of food wastes. Floor drains, 12–15 cm deep and 15–39 cm wide with grated covers, are normally used. Free drainage of plant floors requires a slope of about 1–2%. Floor finishing materials, such as ceramic tiles and epoxy resins, should withstand CIP cleaning solutions, including acids, and be no-slippery. Building walls of the plant processing section should be lined with tiles or epoxy resins, which are resistant to food spillage and cleaning so-lutions. In addition to the main processing and warehousing buildings, special spaces are needed for the cold storage, the steam boiler, the machine shop, the other plant utilities, the waste treatment/disposal facilities, the offices, the qual-ity control and research laboratories, and the employee facilities. Industrial lighting, properly designed, is required for the efficient opera-tion of the food processing plants. Recommended light intensities (candela/ft2 or lumen/m2) for various food plant operations (e.g., product inspection) are provided by the Illuminating Engineering Society (Downing, 1996). Fluores-cent lamps are preferred over incandescent lamps, because they are 2.5 times more efficient and they provide a softer light.

2. Food Plant Safety Food plant safety refers to the safe design and operation of food equipment and food plants, i.e. prevention of physical hazards and accidents that may cause physical damage to the food plant and/or health problems and injuries to the workers and employees. Plant safety programs should include management and employee in-volvement, work place analysis, hazard prevention and control, and safety and health training (Imholte, 1984). Equipment and plant regulations, issued by Government agencies, and practical rules and good manufacturing practices should be followed (Saravacos and Kostaropoulos, 2003). Two important hazardous operations (HAZOP) in food processing plants are fire and explosions, which require strict measures and practices for efficient prevention. Fire danger exists in ovens and furnaces, edible oil plants, grinding



mills, and in storage of dry products. Fire detection and fire fighting equipment must be installed in all food plants. Explosions are a serious hazard in equipment and storage installations handling combustible food powders and dusts, e.g., pneumatic conveying and storage silos of flour, starch, or sugar. Prevention of explosions is based on controlling the solids concentration of air/particle mixtures and the elimination of local overheating and electrical sparks in product transport and storage in-stallations. A potential explosion hazard is the plant steam boiler, parts of which may be overheated by the combustion gases, when no water is present. To avoid potential damage to the employees and the rest of the plant, steam boilers should be installed in separate rooms. Dust explosion is a serious hazard in equipment handling powdered food solids, e.g., dryers, grinders, silos, dust collectors, mixers, and pneumatic con-veyors. Dust explosions occur when the solids concentration in air suspension is above the minimum and below the maximum critical concentrations for the particular material. Ignition sources are mechanical seals, friction heating, and electrostatic discharges (Zalosh et al., 2005). Dust explosions can be prevented by proper design of the process equipment (vents), dust concentration control, safe operating temperatures, and low oxygen (inert) atmosphere (Center for Chemical Process Safety, 2005; National Fire Protection Association, 2000). Food plants handling fire and explosion hazardous materials must con-form to special regulations of Government agencies, such as the OSHA (Occu-pational Safety and Health Organization) of the US Department of Labor, and the National Fire Protection Association (NFPA) of the US. The fire protection system should provide for the safety of the employ-ees, and protect the plant (building, equipment, raw-material, and products). Fire extinguishers, fire detectors, fire alarms and water sprinklers should be installed in appropriate locations. In the US, the testing of the fire protection equipment is conducted by the Underwriters Laboratories (Storm, 1997). Noise levels in industrial working places should not be excessive and damage the health of the personnel, e.g., operators of bottling lines. The noise level in European Union workplaces should not exceed 87dB in a period of 8h work. HAZOP (Hazardous Operations) studies should be made at the design stage, before the plant is constructed (Kletz, 1999).

3. Hygienic Design Hygienic (sanitary) design refers mainly to the prevention of microbiological hazards of food products during processing and storage. Proper equipment and plant design can eliminate the hazard (danger) of growth of spoilage and pathogenic microorganisms (mainly bacteria), which may have serious health effects on the consumers. Physical and chemical contamination of food prod-ucts should also be avoided, because of the adverse effect on food quality and consumer acceptance.


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Hygienic and safety requirements for food products and environmental considerations are of primary importance during the design, construction, and operation of food plants (Gramer, 2006). Hygienic design refers to both food processing equipment and food plant. (Jowitt, 1980; Saravacos and Kostaropoulos, 2002). Regulations of hygienic design and operation of processing plants are issued and enforced by appropriate health authorities in various countries. A significant number of hygienic practices, known as Good Manufacturing Prac-tices (GMP) are applied to food equipment and food plants (Gould, 1994). In the U.S., the hygienic (sanitary) aspects of food processing are the concern of the United States Department of Agriculture (USDA), the Food and Drug Ad-ministration (FDA), the Environmental Protection Agency (EPA), and some other authorities and organizations. Food plant hygiene (sanitation) in plant design, operation, and inspection is practiced by food sanitarians (Troller, 1993; Marriott, 1997) and hygienic engineers (Lelieveld et al., 2006). Cross contamination, i.e. contamination of processed (sterilized or pas-teurized) products with incoming unprocessed food, should be prevented by proper layout of equipment. Hygienic design of food processing equipment involves the construction materials and the fabrication of equipment, which should be suitable for the processing operation and be easily cleaned. (Jowitt, 1980; Saravacos and Kostaropoulos, 2002). Government and professional regulations and standards of hygienic de-sign and operation of food processing equipment include the USDA (meat and poultry), the US Department of Interior (fish), the FDA, and the International Association of Milk, Food, and Environmental Engineers (IAMFES). The 3-A sanitation standards, originally developed for milk processing equipment, are recently applied to other foods. The US Codes of Federal Regulations (CFR) contain information on sanitary (hygienic) design and operation of food plants. The European Hygienic Equipment Design Group (EHEDG) has devel-oped guidelines and test methods for equipment used in food processing (EHEDG, 1997; Lelieveld et al., 2006). In the European Union, the 3-A sanita-tion standards and the EHEDG guidelines are recommended for various pieces of food processing equipment. Provisional safety and hygienic requirements have been published for various processing equipment, e.g., dough mixers, bakery ovens, mincing machinery, vegetable cutting machines, etc. The building services of food plants, such as air conditioning, refrigera-tion, and air filtration, should comply with the hygienic standards. The process and storage buildings should be designed and constructed to control (eliminate) pest infestation, i.e. rodents, insects, and birds. Food plant safety programs use the Hazard Analysis Critical Control Points (HACCP) system, which identifies, evaluates, and controls the microbi-ological, physical, and chemical hazards. The HACCP system was first devel-



oped for meat, poultry, and dairy products, which are very sensitive to microbi-ological spoilage and health hazards (Gould, 1994). Recently, it has been ex-panded to several industries world-wide. Detailed HACCP programs are an integral part of Food Quality Control in most food industries. Food plant design should consider the application of HACCP programs during plant operation. Microbiological contamination and hazards should be minimized or eliminated by e.g., by product flow without cross contamination, and by positive air pressure in the processing areas (Saravacos and Kostaropou-los, 2002).

4. Cleaning of Equipment

Food processing equipment needs periodic cleaning to remove undesirable deposits (fouling). The various deposits reduce the efficiency of the process equipment, and they may damage the quality of the processed food. Fouling is particularly serious in heat exchangers (plate or tube) handling heat-sensitive fluid foods, e.g., milk and fruit juice. The food processing equipment should be designed and fabricated so that it can be cleaned thoroughly. Small equipment can be cleaned by dismantling to individual parts. Large scale equipment is usually cleaned by Cleaning In Place (CIP) systems: The processing system (tanks, pumps, piping, process vessels, etc.) is rinsed with water, cleaned with alkali, rinsed again with water, neutralized with acid, and sanitized with chlorine solution (Seiberling, 1997). Two CIP systems are used, i.e. the once through and the recirculation systems. The cleaning processes of food plants should be monitored and tested according to cleaning standards and food safety regulations.

5. Plant Maintenance Large food processing plants, e.g., sugar refineries, may require a separate maintenance department with mechanical and electrical specialists. In smaller food preservation and food manufacturing plants, maintenance may be the re-sponsibility of operating personnel, when the plant is not in operation. In some plants, outside maintenance contractors may be utilized. Preventive maintenance is applied to high-speed operating equipment, where some moving parts must be replaced before they are worn out. Predic-tive maintenance uses testing techniques to detect possible problems, e.g., vi-bration analysis, current analysis, thermography, and ultrasonic analysis (Chou, 2000). A parts inventory should be maintained in the plant, with as few as needed parts at hand. Modern plants use special computerized management systems.


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IV. FOOD PLANT UTILITIES

The principal plant utilities in a food plant are process water, process steam, electric power for motors and lighting, and fuel (Robberts, 2002).

1. Process Water

Process water is required for washing the raw materials and for various cooling operations. In fruit and vegetable processing plants, water may be used for transportation (fluming) of the raw materials from receiving to processing ar-eas. Water used in steam boilers may require ion exchange treatment to reduce its hardness. Total water requirement in fruit and vegetable processing may range from 5 to 15 m3/ton of raw material (Greensmith, 1998).

2. Steam

Steam boilers are needed in most food processing plants to provide process steam, used mainly in various operations, such as heating of process vessels, evaporators and dryers, sterilization, blanching, and peeling. A medium size food plant (80 tons/day raw material) may require a boiler producing about 10 tons/h of steam at 18 bar pressure. Two principal types of steam boilers are used in the food processing in-dustry (Robberts, 2002), i.e. the fire-tube and the water-tube boilers. The fire-tube boilers operate at relatively lower pressure (1–24 bar) and produce cleaner steam. The water-tube units operate at higher pressures (100–140 bar) and they are suited for co-generation, i.e. electrical power and exhaust steam of lower pressure for process heating. Co-generation is economical in large food plants, requiring large amounts of low-pressure steam, e.g., beet sugar plants. Safety regulations for pressure vessels, such as the ASME codes are re-quired for all steam boiler installations. A standby steam boiler of proper ca-pacity may be necessary to provide process steam during any boiler failure or breakdown. Steam boilers are rated in Btu/h, kW or boiler HP (1 Btu/h = 0.293 W, 1 boiler HP = 9.8 kW). The heat flux in the boiler heating surface is about 0.75kW/m2. The boiler efficiency is about 85% with most of the thermal losses in the dry gases and the moisture. Steam generation is about 1.4 t/h per MW. In order to maintain the concentration of accumulated dissolved solids in steam boilers below 3500 ppm, periodic discharge of hot water (blowdown) is practiced. Fuel is used in food plants mostly for generating process steam and proc-ess drying. Natural gas and liquefied propane (LPG) are preferred fuels in food processing, because their combustion gases are not objectionable in direct con-tact with food products. Fuel oil and coal can be used for indirect heating, i.e. through heat exchangers. The heating values of the common industrial fuels



are: natural gas 37.2 MJ/m3, LPG 50.4 MJ/kg, fuel oil 41.7 MJ/kg, anthracite coal 30.2 MJ/kg, and lignite coal 23.2 MJ/kg (Robberts, 2002; Saravacos and Kostaropoulos, 2002). Culinary steam of special quality is used when steam is injected in food products. The steam must be free of objectionable chemicals used in boilers, which may be carried into the food being heated. Culinary steam is usually produced from potable water in a secondary system of a heat exchanger heated with high pressure industrial steam.

3. Electricity Electrical power in food processing plants is needed for running the motors of the processing, control, and service equipment, for industrial heating, and for illumination. For a medium size food plant processing about 100 tons/day raw materials, the power requirement may of the order of 500 kW. A standby power generator of about 200 kVA is recommended for emergency operation of the main plant, in case of power failure or breakdown. Single-phase or three-phase alternating current (AC) of 110 V (60 cycles) or 220 V (50 cycles) is used in food processing plants. The electrical motors are either single-phase or three-phase squirrel cage. National codes, such as the US National Electrical Code (NEC) are applied in the electrical installations (Storm, 1997). Energy-efficient electrical motors should be used in various food proc-essing operations. A measure of the efficiency of electrical power is the power factor (pf), defined as pf = kW/kVA, which should be equal or higher than 0.85. Illuminating (lighting) of industrial food plants should utilize fluorescent lamps, which can save significant amounts of energy.

4. Plant Effluents Plant effluents consisting mainly of wastewater, but including solids and gas wastes require special handling and treatments to comply with the local laws and regulations (Wang et al., 2006). Food plants should be designed and operated so that a minimum pollu-tion is caused to the environment (Clark, 1997). The Environmental Protection Agency (EPA) in the US has issued codes and regulations that ensure the qual-ity of natural water bodies is not damaged by effluent discharges from indus-trial plants. Similar regulations apply to atmospheric emissions of objectionable gases and dust. Environmental information needed to comply with EPA regulations for wastewater includes testing for pH, temperature, biochemical oxygen demand (BOD), fats oil and grease (FOG), and total suspended solids (TSS).


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Large amounts of waste are produced in the processing of fruits and vegetables, as in canning, freezing, and dehydration operations. Smaller waste volumes are produced in dairy plants (with the exception of cheese and milk powder), and in dry-processing (milling) of grain (e.g., wheat flour). A medium size fruit or vegetable processing plant handling about 100 ton/day of raw materials may discharge about 1000 m3/day of wastewater. Treatment of food wastewater may involve one or more of the following operations: 1. Simple screening out of the suspended solids, 2. gravel filtration, 3. solids settling in sedimentation tanks, 4. biological oxidation (aeration), 5. spray irrigation, 6. discharge into the local public sewer, and 7. discharge into a waterway. Liquid wastes (wastewater) can be disposed to the local waste (sewage) treatment plants, after removing some objectionable components, such as fat, oil, and grease to an acceptable level, e.g., lower than 1000 mg/L. Pollution loads higher than 200 mg/L are common in food plant liquid wastes. It is more economical to pay pollution surcharges to the local sewage plant, whenever possible, than to build an expensive wastewater treatment facility. Food preservation plants, located away from municipal sewage systems, dispose the process water to large storage ponds (lagoons), where a slow natu-ral bio-oxidation of the organic waste takes place. The treated lagoon wastewa-ter can be discharged to the land adjoining the plants (Storm, 1997). Some solid food wastes can be sold at relatively low prices for animal feeds, either unprocessed or dried, e.g., solid citrus or sugar beet wastes. Some solid food wastes can be diverted to the land (grape pomace to vineyard), while some other can be mixed with the soil (composting). The sanitary sewage of food plants, depending on the number of employ-ees, should be treated in a different system than the process wastewater. It can be discharged to the local sewage system, if available. Otherwise, it is treated in septic tanks constructed near the food plant. Relatively small amounts of gas wastes (odorous VOC) are generated by some food industries, such as bakeries (ethanol), fishmeal dryers, and edible oil refining plants. Also, odors from coffee and cocoa roasting may require some form of treatment. Treatment of objectionable gas wastes involves gas absorp-tion equipment, such as wet scrubbers (Saravacos and Kostaropoullos, 2002). The design of treatment facilities for industrial wastewater, and sol-ids/gas wastes requires the expertise of environmental engineers who are famil-iar with the local laws and regulations concerning environmental pollution (Tsobanoglous and Franklin, 1991).



V. FOOD PLANT ECONOMICS

A detailed discussion of the economic aspects of food plants is presented in the following chapters of this book. Process Engineering Economics is essential in preparing the capital and operating cost estimates, and the profitability analysis of food processing plants (Peters et al., 2003; Couper, 2003). A preliminary economic analysis of capital costs, operating expenses, and profitability is needed to determine if a food plant project can be realized successfully. If the project appears feasible, detailed process engineering data, capital, and operat-ing costs are obtained for the detailed engineering of the food plant. Economic analysis is also applied in process improvement projects (re-duction of utilities and energy consumption), and in product improvement pro-jects (food product quality, safety, stability). Modern economic analysis should be based on the new concepts of profitability, cash flow, and net present value. Process Engineering Economics is based on the estimation of capital costs and operating expenses, out of which plant profitability can be evaluated (Couper, 2003). A limited literature has been published on Food Process Economics: Bar-tholomai (1987), Clark (1997), Saravacos and Kostaropoulos (2002), Maroulis and Saravacos (2003), Lopez-Gomez and Barbosa-Canovas (2005). The design and scale-up of some food processing operations was discussed by Valentas et al. (1991). In addition to the classical quantitative economic criteria, some important intangible factors may control the viability of a food processing operation. They include employee safety, food safety and hygienic operation, and envi-ronmental and legal constraints (state, federal, and international). The capital requirements, operating expenses, and changes in cash flow should be esti-mated in order to meet the safety and environmental codes and regulations.

1. Capital Investment Cost

The estimation of the capital investment or fixed capital cost is based on the process equipment cost, which is estimated in Food Process Design. The proc-ess flowsheet is used to calculate the material and energy balances and the util-ity requirements of the food processing plant. Detailed Chemical Engineering calculations and empirical shortcut methods are utilized to estimate the size and cost of the main processing equipment (Walas, 1988; Perry and Green, 1997; Saravacos and Kostaropoulos, 2002; Couper, 2003). Empirical factors or percentages of the equipment cost are used to esti-mate the various components of the Fixed Capital Investment, such as installa-tion of equipment, site preparation, plant buildings, environmental control equipment, and engineering fees (see Chapter 5).


44 Chapter 3

2. Operating Expenses Operating expenses of food plants include direct costs, such as raw materials and labor, and indirect costs, such as warehousing, maintenance, quality assur-ance, and office personnel (see Chapter 6). Raw materials and utilities expenses can be estimated with reasonable accuracy from material and energy balances for a process and from price in-formation. Less literature is available on operating expenses than on capital investment. Operating expenses include cost of manufacturing and packaging the food product plus costs of selling and distribution plus maintenance and general overhead. Labor expenses are difficult to estimate, and practical experience is necessary. All the other cost items of the operating cost are estimated as per-centage of labor expenses. The cost of packaging of many consumer products, such as beer, soft drinks, and breakfast cereals, can be higher than the cost of the ingredients. Modern food processing is applying new management techniques, such as JIT, FMS, and TQC. JIT (Just-In-Time Manufacturing) is used to reduce inventories, particularly when the finished food product is perishable in the warehouse, or when demand is temporarily very high. FMS (Flexible Manufac-turing Systems) and CIM (Computer Integrated Manufacturing) utilize com-puter technology for more efficient and profitable operation.

3. Food Plant Logistics

Logistics is defined as the design, organization, and management of the most effective flow of materials and information in an enterprise. It includes cus-tomer service, supply of materials, storage, management of inventories (stocks), distribution of products, materials handling, forecasting, materials traceability, information systems, documentation, and handling of orders. Logistics is important in the modern food supply chain, which involves raw materials, food processing plants, food storage, and distribution to custom-ers. Recent developments in the standard of living of increasing world popula-tion have created the need for mass food production and efficient distribution. Globalization and competition among national and multinational companies require improved economics of raw materials, food plants, and distribution systems. Food plant logistics is concerned with the storage of processed foods in large quantities, near consumption centers, such as large cities and metropolitan areas. The stored products (including several nonfoods) are distributed to local supermarkets, food stores, and food service outlets. Logistics systems may be established and operated by own large food companies, but mostly by specialized companies (third party logistics, 3PL), which store, distribute, and offer services of added value. Logistics centers re-



quire special equipment and personnel. Logistics installations may be rented to food processing and marketing companies. The building areas of logistics centers include dry and refrigerated stor-age rooms, product movement equipment (lift forks, conveyors), and associated services, i.e. refrigeration/air conditioning, administration. Large areas are con-structed, e.g., 20 to 200 km2. Logistics center services include receiving of the product, quality control, product classification, storage/preservation, picking, packing, inventory control, and product renewal. Supply chain management (SCM) or stock and supply management in-cludes warehousing and distribution systems. Automated distribution centers have been developed recently in the US. The right amount of stock must be available in storage (logistics) centers to cut costs. Large inventories of stored supplies are uneconomical, because considerable capital is immobilized. The FIFO (first in first out) system is applied to all products stored in the logistics centers. Particular attention is paid to sensitive food products of short expiration dates, e.g., pasteurized milk. The logistics and distribution costs of some food products may be high, e.g., 30% of the net sales of refrigerated pasteurized milk. Costs of logistics for other refrigerated products vary in the range of 5–7%, and for nonrefrigerated shelf-stored food products 2–3%. In general, the logistics cost is higher when the food industry operates its own facilities (3–10% of sales) than when out-sourcing, i.e. using 3PL (2–5% of sales).

REFERENCES

Aguilera JM, Stanley DW, 1999. Microstructural Principles in Food Processing and Engineering. Aspen Publications.

Bartholomai A, 1987. Food Factories - Processes, Equipment, Costs. VCH Publishers. Biegler LT, Grossman IE, Westerberg AW, 1997. Systematic Methods of Chemical

Process Design. Prentice Hall. Center for Chemical Process Safety, 2005. Guidelines for safe handling of powders and

bulk solids. AIChE. Chou CC, ed, 2000. Handbook of Sugar Refining. J Wiley. Clark JP, 1997. Cost and profitability estimation. In: KL Valentas, E Rotstein, RP Sing,

eds, Handbook of Food Engineering Practice. CRC Press. Clark JP, 2000. Plant design and construction. In: Francis FJ, ed, Wiley Encyclopedia of

Food Science and Technology. J Wiley. Couper JR, 2003. Process Engineering Economics. Marcel Dekker. Cramer MM, 2006. Food Plant Sanitation, Maintenance, and Good Manufacturing Prac-

tices. CRC Press. Cussler EL, Moggridge GD, 2001. Chemical Product Design. Cambridge Univ Press. Douglas JM, 1988. Conceptual Design of Chemical Processes. McGraw-Hill. Downing DL ed, 1996. A Complete Course in Canning, Vol 1, 13th Edition. CTI Publ. EHEDG, 1997. Guidelines and test methods. Trends in Food Science and Technology.


46 Chapter 3

Fryer PJ, Pyle DI, Rielly CD, 1997. Chemical Engineering for the Food Industry. Blackie Academic and Professional.

Gould WA, 1994. Current GMP’s in Food Plant Sanitation. CTI Publications. Gould WA, 1996. Unit Operations for the Food Industries. CTI Publications. Greensmith M, 1998. Practical Dehydration, 2nd Edition. Woodland Publications. Imholte TJ, 1984. Engineering for Foods Safety and Sanitation. Technical Institute of

Food Safety. Crystal. Jowitt R, 1980. Hygienic Design and Operation of Food Plant. Ellis Horwood. Kletz T, 1999. HAZOP and HAZAN, 4th Edition. IChemE. Lelieveld H, Mostert M, Holah J, 2006. Handbook of Hygiene Control in the Food In-

dustry. CRC Press. Lopez-Gomez A, Barbozs-Canovas G, 2005. Food Plant Design. Taylor and Francis. Maroulis ZB, Saravacos GD, 2003. Food Process Design. Marcel Dekker. Marriott NG, 1997. Essentials of Food Sanitation. Chapman Hall. National Fire Protection Association, 2000. Standard for the prevention of fire and dust

explosions from the manufacturing, processing, and handling of combustible par-ticulate solids. NFPA 634. National Fire Protection.

Perry RH, Green DW, Maloney JO, 1997. Perry’s Chemical Engineers’ Handbook, 7th Edition. McGraw-Hill.

Peters SM and Timmerhaus KD, West RE, 2003. Plant Design and Economics for Chemical Engineers, 5th Edition. McGraw-Hill.

Rahman S, 1995. Food Properties Handbook, CRC Press. Rao MA, Rizvi SSH, Datta AK, 2005. Engineering Properties of Foods, 3rd Edition,

Taylor and Francis. Robberts TC, 2002. Food Plant Engineering Systems. CRC Press. Saravacos GD, Kostaropoulos AE, 2002. Handbook of Food Processing Equipment.

Kluwer Academic/Plenum. Saravacos GD, Maroulis ZB, 2001. Transport Properties of Foods. Marcel Dekker. Seiberling DA, 1997. CIP sanitary process design. In: Valentas KJ, Rotstein E, Singh

RP, eds, “Handbook of Food Engineering Practice”. CRC Press. Seider WD, Seader JD, Lwein DR,1999. Process Design Principles. J Wiley. Sinnot RK, 1996. Chemical process design. In: Coulson JM, Richardson JF, eds, Chemi-

cal Engineering, Vol 6, Butterworth-Heinemann. Smith R, 1995. Chemical Process Design. McGraw-Hill. Storm D, 1997. Winery Utilities. Chapman and Hall. Troller JA, 1993. Sanitation in Food Processing, 2nd ed. Academic Press. Tsobanoglous G, Franklin RL, 1991. Wastewater Engineering, Treatment, Disposal,

Reuse, 3rd Edition. McGraw-Hill. Turton R, Bailie RC, Whiting WB, Shaeiwitz JA, 1998. Analysis, Synthesis and Design

of Chemical Processes. Prentice Hall. Valentas KJ, Levine L, Clark JP, 1991. Food Processing Operations and Scale-Up. Mar-

cel Dekker. Wang LK, Hung Y-T, Lo HH, Yapijakis C, 2006. Waste Treatment in the Food Process-

ing Industry. CRC Press. Walas SM, 1988. Chemical Process Equipment. Butterworth-Heinemann. Zaror CA, Pyle DL, 1997. Process design: an exercise and simulation results. In: PJ

Fryer, DL Pyle, CD Reilley, eds. “Chemical Engineering for the Food Industry”. Blackie A & P.


47

4 Process Engineering Economics

Process engineering economics is concerned with the design, operation, and economic analysis of processing plants. It has been applied successfully to the chemical process industries, resulting in economic production of large quanti-ties of chemicals, petrochemicals, and other products. The chemical engineer-ing aspects of process economics have been presented by Peters and Timmer-haus (2003), Holland and Wilkinson (1997), and Couper (2003), Brown (2007).

Application of process engineering economics to the food industry has been limited, due to the diversity of food processes and the lack of engineering and economic data related to the complex food products (Clark, 1997). How-ever, recent advances in food engineering, especially in the engineering proper-ties of foods and in the computer application in food process design, can be utilized in developing food process economics, resulting in more efficient and profitable food processing plants.

I. MONEY FLOW IN A BUSINESS ENTERPRISE

Modern companies and corporations are complex in their financial structure, but basically, the following model describes them adequately (Clark, 1997):

A successful business enterprise must survive financially, which means that it must generate enough money to pay its obligations by selling goods or


48 Chapter 4

services at prices that exceed their cost. A typical money flow diagram to and from an enterprise is summarized in Figure 4.1.

The various businesses utilize some form of assets to generate the goods or services sold. The assets of food industries include mainly the manufacturing plant and the distribution system. The initial capital is provided by the investors and the banks.

The inventors who provide a portion of the capital expect to earn a prof-itable return. This return comes from dividends and/or from an increase in the value of their shares in a stock market.

The banks which provide the remainder portion of the initial capital ex-pect to recover their capital plus the appropriate interests.

As the business operates, a sales income is obtained from the consumers. This income is used to pay the various resources spent in the manufacturing process, that is raw materials, utilities, labor, maintenance, etc.

The difference between money flowing in from sales and money flowing out for expenses (manufacturing cost) is the gross profit. From the gross profit obtained, the tax and the loan payments are subtracted to obtain the net profit. The net profit is divided to the dividends payment and the retained earnings, which are used for reinvestments.

Tax Authorities

Investors

Banks

Consumers

Resources

Manufacturing Cost

Sales Income

Taxes

Own Capital

Loan Payment

Dividend

Loan

FIRM

Figure 4.1 A simplified money flow diagram to and from a business enterprise.


Process Engineering Economics 49 Once survival is obtained, the second important purpose of a business is

to enhance its value. Value may reflect in the market price of publicly traded stock or in calculated book value. In theory, stock prices reflect the present value of future cash flows to the stockholders, often estimated as earnings per share. In practice, the actual price of a stock is affected by supply and demand, by opinions about the economy, and by opinions about potential changes in future earnings of the firm.

Rapid growth companies often are valued more highly than those seen as more stable. They often achieve their results: (a) by retaining a higher portion of earnings, sometimes paying no dividends at all; and (b) by assuming rela-tively high debt loads, thus acquiring assets more quickly than profits alone would permit.

Most major food companies are stable and have stocks which usually pay dividends, with a balance between debt and equity in their financial structure. They obtain predictable earnings, which lead to stock values, which can grow steadily and reliably over time.

The ultimate purpose of capital and operating cost estimates is to help al-locate the funds available for investment so as to increase the value of the firm, with less concern of how it is realized.

Cash is of primary importance in business, and it is critical to survival and value enhancement. Thus, most evaluation techniques depend on estimat-ing the cash impact of investment.

II. CAPITAL COST

The total capital CT invested in a processing plant, as shown in Figure 4.2, con-sists of the following:

• The fixed capital CF or fixed investment, needed to supply the neces-sary plant facilities, and

• The working capital CW, necessary for the operation of the plant that is:

WFT CCC += (4.1) The fixed capital CF includes the cost of the purchased equipment, instal-

lation, piping, instrumentation and control, electricals, buildings, site improve-ment, land, off-site facilities, engineering, start-up, contractors fee, and contin-gency, as shown in Figure 4.2.


50 Chapter 4

Fixed

CAPITAL COST

0 Purchased Equipment

1 Installation 2 Piping 3 Instrumentation and control 4 Electrical

Working

8 Off-site facilities

5 Buildings 6 Site improvement 7 Land

9 Engineering10 Start-up11 Contractors fee12 Contigency

Figure 4.2 Total capital cost breakdown.

The working capital CW in an industrial plant consists of the total amount

of money invested in raw materials and supplies carried in stock, finished and semi-finished products, accounts receivable and payable, and cash kept on hand.

1. Fixed Capital Cost

The fixed capital investment in a processing plant can be estimated from em-pirical rules or approximations. For example, the Lang method can be used to estimate the fixed capital CF from the process equipment cost Ceq, using the empirical equation (Chilton, 1960; Peters and Timmerhaus, 2003):

eqLF CfC = (4.2)


Process Engineering Economics 51 where fL is the Lang factor and Ceq the purchased equipment cost. The purchased equipment cost Ceq is calculated using the following

equation, after a process sizing procedure:

∑ ⎟⎟⎠

⎞⎜⎜⎝

⎛=

j

n

j

jjeq

j

AA

CC0

0 (4.3)

where, Aj is the size of the jth equipment, C0j is the cost of the jth equip-

ment at a standard size A0j and nj the scaling factor of the jth equipment. The most important equipment is included in Equation 4.3. Updated values of the equipment cost characteristics (C0j, A0j, and nj) are discussed in Chapter 5.

Traditionally, for plants in Chemical Process Industry (CPI), the Lang factor varies in the following ranges (see, for example, Sinnott (1996), Holland and Wilkinson (1997), or Seider et al. (1999)):

processing fluidsfor processing idsfluids/sol mixedfor

processing solidsfor

4.804.704.103.603.803.10

−−−

=Lf (4.4)

The higher fL factor for gases and liquids processing is due to the higher

requirements for piping and valves. The above values refer to plant expansion cost. For grass roots (entirely new) plant cost, these values should be increased by 1. It is generally recognized that the Lang method has the tendency to over-estimate the fixed capital cost.

In food processing plants, the fL factor is generally smaller, because of the higher cost of equipment (stainless steel) and less piping. Cost data of vari-ous food processing plants presented by Bartholomai (1987) and compiled by Marouli and Maroulis (2005) are summarized in Table 4.1 and Figure 4.3. Both Table 4.1 and Figure 4.3 present a revealing picture of the Lang factor for vari-ous food plants. Thus, the Lang factor fL for food industries should be consid-ered in the range:

maximum2.75 probablemost 1.80

minimum1.35 =Lf (4.5)


52 Chapter 4

Table 4.1 Lang Factor f for Various Food Processing Plants LPlant C eq C F f L

Fruits and VegetablesApple Processing Plant 3.93 5.85 1.49

Fruit Puree Plant 1.53 2.20 1.43Orange Juice Concentrate Plant 2.03 4.12 2.02

Tomato Paste Plant 2.08 3.67 1.76Frozen Vegetable Plant 1.61 2.70 1.68

Dairy and Egg ProductsMozzarella Cheese Plant 0.68 1.68 2.47

Blue Cheese Plant 5.72 8.19 1.43Dairy Plant 13.2 27.1 2

Modular Dairy Plant 1.52 2.42 1.59Milk Powder Plant 5.40 8.00 1.48

Dried Whole Egg Plant 2.61 4.57 1.76Yogurt Plant 6.47 9.66 1.49

Ice Cream Plant 2.66 5.03 1.89Cereals and Grains

.05

Parboiled Rice Plant 1.78 2.76 1.55Corn Starch Plant 27.4 60.6 2.21

Pasta and TofuPasta Plant 3.43 4.71 1.37

Precooked Lasagna Plant 4.42 6.52 1.47Fermantation

Baker's Yeast Plant 19.6 53.1 2.72Vinegar Plant 1.00 1.50 1

Extruded Products and Snacks.50

Quenelles Plant 0.95 1.97 2Tortilla Chip Plant 2.50 3.38 1.35Corn Snacks Plant 0.24 0.62 2.53

Seafoods and Meats

.07

Catfish Processing Plant 2.02 4.80 2.37Shrimp Processing Plant 0.38 0.86 2.25

Surimi Plant 11.8 20.0 1.70Coextruded Sausage Plant 2.00 4.00 2.00

Protein Recovery Plant 3.80 5.34 1.41Fats and Oils

Vegetable Oil Refinery 2.64 4.72 1.79Baked Products

Pan Bread Bakery 3.44 5.61 1.63Arabic Bread Bakery 1.32 2.54 1.93

Half-baked Frozen Baguette Bakery 2.38 3.91 1.64Beverages

Sea Water Desilination Plant 16.1 36.9 2.29Fruit Juice Plant 0.99 1.62 1.63

Ceq equipment cost in M$, CF fixed capital cost in M$.


Process Engineering Economics 53

apple products

fruit puree

concentrated juice

tomato paste

frozen vegetables

mozzarella cheese

blue cheese

milk products

milk products

skim milk powder

egg powder

yogurt

ice cream

parboiled rice

corn starch

pasta

lasagna

dry yeast

vinegar

quenelles (dumplings)

tortilla chips

corn snacks

frozen fish

frozen shrimp

seafood

sausages

protein

white bread

arabic bread

frozen bread

water

fruit juice

0.1

1

10

100

0.1 1 10 100

Equipment cost C eq (M$)

Fixe

d ca

pita

l cos

t CF(M

$)

C F = f L C eq

f L =1.35 minimum1.80 fitted2.75 maximum

Figure 4.3 Fixed capital cost versus equipment cost for various food processing plants. Data from Bartholomai (1987).


54 Chapter 4 Nevertheless, in modern food processing plants, using modern instru-

mentation and process control, environmental protection (effluent treatment), and computers, the Lang factor may be greater. A value of 3 should be consid-ered as safe enough for preliminary estimations. This value corresponds to main processing plants or plant expansion, while for grass roots plants it should be increased to 4, as analyzed in Table 4.2 and summarized in Figure 4.4.

Table 4.2 is a breakdown of the Lang factor to its components. Typical average values for food industries are presented. These values will be used in all applications in this book in order to obtain comparable results between the various industries examined in the second part of the book.

Table 4.2 Lang Factor Breakdown for Food Plants

0 Purchased Equipment 1.00 1.001.00 1.00

1 Installation 0.50 0.502 Piping 0.25 0.253 Instrumentation and control 0.15 0.154 Electrical 0.10 0.10

1.00 1.00

5 Buildings 0.35 0.356 Yard improvement 0.05 0.057 Land 0.10 0.10

0.50 0.50

8 Off-site facilities 0.00 1.000.00 1.00

9 Engineering 0.25 0.2510 Start-up 0.10 0.1011 Contractors fee 0.05 0.0512 Contingency 0.10 0.10

0.50 0.50

Lang Factor 3.00 4.00

Plant expansion Grass roots (new)



0 1 2 3 4 5

Foods

Foods

Solids

Fluids/solids

Fluids

Lang factor

Traditional valueschemical process plants

6

Food processing plants(Data from Bartholomai, 1987)

Plant expansion Grass roots

Suggested values for modern food processing plants

Figure 4.4 Lang factor ranges for chemical and food processing plants.


56 Chapter 4

2. Working Capital Cost It is logical to estimate the working capital cost as a fraction of the annual sales income S:

SfC WSW = (4.6)

The working capital factor fWS essentially expresses the so called collec-

tion period tcol:

SC

tf WcolWS == (4.7)

which is the fraction of the year needed to collect the working capital

from the sales income. Nevertheless, in plant design it is more convenient and more usual to es-

timate the working capital as a fraction of the fixed capital:

FWFW CfC = (4.8) The following equation correlates the above two factors:

WSWF fTCRf = (4.9) where TCR is the turnover to capital ratio defined as:

FCSTCR = (4.10)

Turnover to capital ratio TCR is a characteristic of the type of the food

plant. It varies from 0.2 to 5. Values less than 1 are for large volume, capital-intensive plants, while values greater than 1 are for plants with small equipment or expensive raw materials. Exemplary values are presented by Holland and Wilkinson (1997) in Table 4.3. It must be noted that these data are very old (before 1960). More recent results for food plants, presented in Table 4.4 and Figure 4.5, were derived from the data presented by Bartholonai (1986).



Table 4.3 Working Capital Factors Estimation

Working Capital Factors f WS = t col

f WF = TCR f WS

where

Collection Period t col = 0.10 (0.10 y = 36 days)

Turnover to Capital Ratio TCR = 0.50 for chemicals1.00 for pharmaceuticals1.50 for foods


58 Chapter 4

CRTable 4.4 Turnover to Capital Ratio TCR for Food Processing Plants

Plant C F S TFruits and VegetablesApple Processing Plant 5.85 17.0 2.90

Fruit Puree Plant 2.20 2.82 1.28Orange Juice Concentrate Plant 4.12 12.6 3.06

Tomato Paste Plant 3.67 19.2 5.23Frozen Vegetable Plant 2.70 5.62 2.08

Dairy and Egg ProductsMozzarella Cheese Plant 1.68 4.07 2.42

Blue Cheese Plant 8.19 5.78 0.71Dairy Plant 27.1 24.0 0.89

Modular Dairy Plant 2.42 2.39 0.99Milk Powder Plant 8.00 30.7 3.84

Dried Whole Egg Plant 4.57 9.80 2.14Yogurt Plant 9.66 27.2 2.81

Ice Cream Plant 5.03 4.07 0.81Cereals and GrainsParboiled Rice Plant 2.76 1.14 0.41

Corn Starch Plant 60.6 36.5 0.60Pasta and Tofu

Pasta Plant 4.71 4.37 0.93Precooked Lasagna Plant 6.52 5.33 0.82

FermantationVinegar Plant 1.50 1.06 0.70

Extruded Products and SnacksQuenelles Plant 1.97 2.17 1.10

Tortilla Chip Plant 3.38 3.56 1.05Corn Snacks Plant 0.62 0.56 0.91

Seafoods and MeatsCatfish Processing Plant 4.80 25.1 5.22Shrimp Processing Plant 0.86 1.83 2.13

Surimi Plant 20.0 28.4 1.42Cattle Slaughterhouse 7.32 61.9 8.45

Coextruded Sausage Plant 4.00 1.50 0.38Protein Recovery Plant 5.34 4.99 0.93

Fats and OilsSoybean Oil Extraction Plant 49.8 166 3.33

Vegetable Oil Refinery 4.72 16.9 3.57Baked Products

Pan Bread Bakery 5.61 8.97 1.60Arabic Bread Bakery 2.54 6.54 2.57

Half-baked Frozen Baguette Bakery 3.91 3.16 0.81Beverages

Sea Water Desilination Plant 36.9 24.6 0.67Fruit Juice Plant 1.62 3.68 2.27

S annual sales in M$/y, CF fixed capital cost in M$. Data from Bartholomai (1987).



apple products

fruit puree

concentrated juice

tomato paste

frozen vegetablesmozzarella cheese blue cheese

milk products

milk products

skim milk powder

egg powder

yogurt

ice cream

parboiled rice

corn starch

pasta

lasagna

vinegar

quenelles (dumplings) tortilla chips

corn snacks

frozen fish

frozen shrimp

seafood

slaughter products

sausages

protein

soybean oil

cooking oil

white breadarabic bread

frozen bread

water

fruit juice

0.1

1

10

100

1000

0.1 1 10 100

Fixed capital C F(M$)

Ann

ual s

ales

S(M

$/yr

)

S = TCR C F

TCR =8.45 maximum1.54 best fit0.38 minimum

Figure 4.5 Annual sales versus fixed capital cost for various food processing plants. Data from Bartholomai (1987).


60 Chapter 4

III. MANUFACTURING COST

The annual manufacturing cost CM required to operate a processing plant con-sists of (See Figure 4.6):

• The direct manufacturing cost, also called operating cost, which in-cludes a part analogous to fixed capital cost CMF, called “fixed”, and a part analogous to production capacity CMV, called “variable”

• The indirect manufacturing cost COver, also called overheads, which includes all the enterprise allocated costs

that is:

OverMVMFM CCCC ++= (4.11) Overhead cost is also variable cost but it is kept separately, since it de-

pends on the allocation of the enterprise’s general costs, which do not concern directly the examined plant.

Based on the above definition, the following equations could be stated:

FMFMF CfC = (4.12)

SfC MVMV = (4.13)

SfC OverOver = (4.14) where the coefficients of the above analogies are called cost factors.

They are characteristic of the plant, as shown exemplarily in Table 4.5. The fixed manufacturing cost factor fMF can be approximated through ex-

perience, based on its component values. The overheads manufacturing cost factor fOver is extremely variable de-

pending on the enterprise characteristics, which does not necessary reflect the plant characteristics. It is an allocated cost.

The variable manufacturing cost factor fMV is a crucial magnitude. The di-rect variable manufacturing cost CMV is the sum of the raw materials cost CMat, the packaging materials cost CPack, the utilities cost CUtil, and the labor cost CLab:

LabUtilPackMatMV CCCCC +++= (4.15)



Direct (Operating)

MANUFACTURING COST

Variable 1 Raw Materials 2 Packaging Materials 3 Utilities 4 Labor

Indirect (Overheads)1 Sales Expenses2 General Expenses

Fixed1 Maintenance2 Insurance3 Taxes4 Royalties

Figure 4.6 Manufacturing cost breakdown.

The above components of the direct manufacturing cost can be estimated from the material and energy balances, the process manning, and the produc-tion schedule of the examined plant. The following set of equations is a sys-tematic attempt to estimate these magnitudes.


62 Chapter 4

Table 4.5 Exemplary Values of Manufacturing Cost Factors

Manufacturing Cost Fixed Capital Sales Income

Fixed1 Maintenance 0.122 Insurance 0.013 Taxes 0.014 Royalties 0.01

f MF = 0.15Variable

5 Raw Materials 0.206 Packaging 0.057 Utilities 0.058 Labor 0.20

f MV = 0.5Overheads

9 Sales Expences 0.0510 General Expenses 0.05

f Over = 0.1

0

0

The sales S is calculated by the following equation:

Pjj

PjcFtS ∑= (4.16)

where FPj (t/h) is the flow rate of the jth product material, cPj ($/t) is the

unit cost of the jth product material, and t (h/y) is the annual operating time. The cost of the raw materials CMat required by the process is calculated

from the material balances:

Rjj

RjMat cFtC ∑= (4.17)

where FRj (t/h) is the flow rate of the jth raw material, and cRj ($/t) is the

unit cost of the jth raw material.


Process Engineering Economics 63 Similarly, the cost of the packaging materials CPack required by the proc-

ess is calculated from the material balances:

Gjj

GjPack cFtC ∑= (4.18)

where FGj (t/h) is the flow rate of the jth raw material, cGj ($/t) is the unit

cost of the jth packaging material. The cost of utilities CUtil required by the process is calculated from the

energy balance:

Ujj

UjUtil cFtC ∑= (4.19)

where FUj (t/h) is the flow rate of the jth utility, and cUj ($/t) is the unit

cost of the jth utility. The annual cost of labor CLab is calculated by the following equation:

∑=j

LjjLab cMtC (4.20)

where Mj is the required manpower at the jth specialization level, cLj ($/h)

is the corresponding labor rate. The total manufacturing cost CMT, also called total annualized cost TAC,

includes the annualized capital charge, that is:

TMMT CeCC += (4.21) where CT is the total capital invested, CM the manufacturing cost, and e is

the capital recovery factor, which is calculated from the equation:

NiiNiCRFe −+−

==)1(1

),( (4.22)

where i is the discount rate, expressing the time value of money, and N is

the life time of the investment. The information flow diagram for estimation of the total manufacturing

cost is summarized in Figure 4.7.


64 Chapter 4

Equipment Cost

Fixed Capital Cost

Sales Income

Total Capital Cost

Manufacturing Cost

Working Capital Cost

Raw Materials Cost

Packing Materials Cost

Utilities Cost

Labor Cost

Variable Manufacturing Cost

Fixed Manufacturing Cost

Overheads(Sales, General Expenses)

Total Manufacturing Cost

Process Manning

Material Balances

Process Sizing

WFT CCC +=

eqLF CfC =

SWW CfC =

OverMFMVM CCCC ++=

SOverOver CfC =

TMMT eCCC +=

LabUtilPackMat

MV

CCCCC+++

=

FMFMF CfC =

∑ ⎟⎟⎠

⎞⎜⎜⎝

⎛=

j

n

oj

jojeq

j

AA

CC

Pjj

jyS cPtC ∑=

Mjj

jyMatMat cRtfC ∑=

Gjj

jyPackPack cGtfC ∑=

Ujj

jyUtilUtil cQtfC ∑=

∑=j

LjjyLabLab cMtfC

Energy Balance

Production Planning

Figure 4.7 Information flow diagram for manufacturing cost estimation.



IV. CASH FLOW ANALYSIS

Modern plant profitability techniques are based on cash flow analysis which is described in the present section. It is presented for both the construction and operating periods as shown in Figures 4.8 and 4.9, respectively. Both figures come from the generalized flow diagram of Figure 4.1.

1. Construction Period It is assumed that the total capital invested CT is covered partially by the inves-tors CO and the remainder CL is borrowed from a bank loaner, that is:

LOT CCC += (4.23)

The fraction of the total capital obtained by loaning is called the leverage

ratio λ. Consequently, the loan CL and the own capital CO are as follows:

TL CC λ= (4.24)

( ) TO CC λ−= 1 (4.25) The total capital invested is used for both fixed CF and working CW capi-

tal:

WFT CCC += (4.26)


66 Chapter 4

Gross Profit

P G

Sales Income

S

Devidend

P D

Manufacturing Cost

C M

Profit

P

Retained Earnings

P R

Loan Payment

P L

Taxes

T X

Total Capital

C T

Own Capital

C O

Loan

C L

Working Capital

C W

Fixed Capital

C F

INDUSTRIAL OPERATIONS

FIRM'SBANK

PRODUCTION RESOURCES

TAX AUTHORITIES

BANKS

INVESTORS

Figure 4.8 A money flow diagram for financial analysis model. Construction period.



2. Operating Period

The annual gross profit PGn is the sales income Sn minus the manufacturing cost CMn:

MnnGn CSP −= (4.27)

The subscript n denotes the nth year of operation. The taxable income PTn is the annual gross profit PGn minus the deprecia-

tion allowed by the tax authorities, minus the interest part of the loan payment:

LnFnGnTn CbCdPP '−−= (4.28) where dn is annual depreciation allowed by the tax authorities for com-

puting taxable income, b’n is the annual interest payment as a fraction of the total loan.

Thus, the annual taxes TXn are calculated by the following equation, con-sidering an income tax rate t:

TnXn PtT = (4.29)

The annual loan payment LX is calculated by the equation:

LX CbL = (4.30) Consequently the annual profit after taxes and loan payment Pn is calcu-

lated by the equation:

XXnGnn LTPP −−= (4.31) The depreciation rate dn is decided by the tax authorities:

( Dn Nndd , )= (4.32) where d( ) is a function describing the method adopted and ND is the pe-

riod of recovery.


68 Chapter 4 Table 4.6 summarizes some often used depreciation methods. The

amount depreciated in any given year dn and the unrecovery value BV (book value) are presented. The results are compared in Figures 4.10 and 4.11. The MACRS method presented in tabulated format is the current method used in USA.

The annual loan payment as a fraction of the loan b depends on the loan interest rate iL and the loan payoff period NL, both being subject of negotiation with the bank loaner:

LNL

L

iib −+−

=)1(1

(4.33)

It must be noted that both ND and NL are generally different from the

economic life of the project N. Loan payment is the sum of two terms:

• The interest payment, and • The capital payment.

This distinction is crucial in financial analysis since only the interest

payment is tax deductible, as noted in Equation (4.20). The interest payment as a fraction of the loan bn’ is calculated by Equation 4.34 and depicted in Figure 4.12.

( )bib Nn

n1' )1(1 −−+−= (4.34)

The following equation calculates the unpaid fraction of the loan Ln at the

end of the nth year:

L

L

NL

NnL

n iiL −

−

+−+−

=)1(1)1(1 (4.35)



Gross Profit

P G

Sales Income

S

Devidend

P D

Manufacturing Cost

C M

Profit

P

Retained Earnings

P R

Loan Payment

P L

Taxes

T X

Total Capital

C T

Own Capital

C O

Loan

C L

Working Capital

C W

Fixed Capital

C F

INDUSTRIAL OPERATIONS

FIRM'SBANK

PRODUCTION RESOURCES

TAX AUTHORITIES

BANKS

INVESTORS

Figure 4.9 A money flow diagram for financial analysis model. Operating period.


70 Chapter 4

Table 4.6 Summary of Usually Used Depreciation Methods

Depreciation method Depreciation rate d n Unrecovery value C n

Straight Line (SL)

Double Declining Balance (DDB)

Modified Accelerated Cost Recovery System (MACRS)

Recovery period N (y)Year n (y) 3 5 7 10 15

1 33.33 20.00 14.29 10.00 5.00 3.7502 44.45 32.00 24.49 18.00 9.50 7.2193 14.81 19.20 17.49 14.40 8.55 6.6774 7.41 11.52 12.49 11.52 7.70 6.1775 11.52 8.93 9.22 6.93 5.7136 5.76 8.92 7.37 6.23 5.2857 8.93 6.55 5.90 4.8888 4.46 6.55 5.90 4.5229 6.56 5.91 4.462

10 6.55 5.90 4.46111 3.28 5.91 4.46212 5.90 4.46113 5.91 4.46214 5.90 4.46115 5.91 4.46216 2.95 4.46117 4.46218 4.46119 4.46220 4.46121 2.231

see values bellow

20

nN

Cn11−=

1212 −

⎟⎠⎞

⎜⎝⎛ −=

n

n NNd

n

n NC ⎟

⎠⎞

⎜⎝⎛ −=

21

=nd

Ndn

1=

∑=

−=n

yyn dC

1

1



0.0

0.1

0.2

0.3

1 2 3 4 5 6 7 8

Recovery period (y)

Ann

ual d

epre

ciat

ion

rate

dn (-

)

Straight Line

0.0

0.1

0.2

0.3

1 2 3 4 5 6 7 8

Recovery period (y)

Double Declining Balance

0.0

0.1

0.2

0.3

1 2 3 4 5 6 7 8

Time n (y)

Modified Accelerated Cost Recovery System

Figure 4.10 Comparison of various depreciation methods.


72 Chapter 4

0.0

0.2

0.4

0.6

0.8

1.0

0 1 2 3 4 5 6 7 8

Time n (y)

Unr

ecov

ery

frac

tion

(-)

Straight Line

Double Declining Balance

Modified Accelerated Cost Recovery System

0.0

0.2

0.4

0.6

0.8

1.0

0 2 4 6 8 10 12 14 16 18 20 22

Time n (y)

Unr

ecov

ery

frac

tion

(-)

35

710

15

Recovery period N (y)

20

Figure 4.11 Comparison of various depreciation methods.



0.00

0.10

0.20

0.30

1 2 3 4 5 6 7 8 9 10

Time n (y)

Ann

ual p

aym

ent

(-)

0.00

0.20

0.40

0.60

0.80

1.00

0 1 2 3 4 5 6 7 8 9 1

Time n (y)

Unp

aid

loan

(-)

0

Figure 4.12 Capital and interest loan payment versus time. Unpaid loan versus time.


74 Chapter 4

3. Discounted Cash Flow The annual cash flow defined in Equation (4.31) is summed over N years to get the Cumulated Cash Flow CCF, which characterizes the total project:

(4.36) ∑=

+−=N

nnO PCCCF

1

The Cumulated Cash Flow CCF does not take into account the time

value of money. Instead, the Net Present Value NPV, defined by Equation (4.37), does:

∑= +

+−=N

nn

nO i

PCNPV1 )1(

(4.37)

where i is the interest rate, expressing the time value of money. It must be noted that:

CCFNPV = , when i = 0 (4.38) In conclusion, the most important magnitudes in financial analysis are: the Cumulated Cash Flow CCF, and the Net Present Value NPV If P is constant over the years, then it can be proved that:

PNCCCF O +−= (4.39)

ePCNPV O +−= , where Ni

ie −+−=

)1(1 (4.40)

Figure 4.13a depicts the cash flow of an exemplary project, while Figure

4.13b represents both the Cumulated Cash Flow CCF and the Net Present Value NPV of the project versus time N. The following characteristic time peri-ods are shown:

NC Construction period ND Depreciation period NL Loan period


Process Engineering Economics 75 NE Economic lifetime

-150

-100

-50

0

50

100

150

200

250

300

350

1 3 5 7 9 11 13 15 17 19 21 23 25 27

Time n (y)

Cash

flo

w (k

$/y

)

N E

N L

N D

N C

CF

-100

0

100

200

300

400

500

600

0 5 10 15 20 25 30

Time n (y)

Net

pre

sent

val

ue (k

$)

N C

N D

N L

N E

NPV

CCF

Figure 4.13 A money flow diagram for financial analysis model.


76 Chapter 4

V. PLANT PROFITABILITY

There are essentially three bases used for the evaluation of profitability: cash, time, and interest rate. For each of these bases the time value of money can be taken into account (discounted techniques) or not (nondiscounted), as shown in Table 4.7.

Cumulated Cash Flow CCF has been defined by Equation (4.36) in the previous section. It is a function of time N.

Simple Payback Period SPB is defined as the time N when CCF equals to zero:

0=⇒= CCFSPBN (4.41)

The inverse of the simple payback period SPB is called the Return on In-

vestment ROI:

SPBROI 1

= (4.42)

Net Present Value NPV has been defined by Equation (4.37) in the previ-

ous section. It is a function of both time N and interest rate i. Discounted Payback Period DPB is defined as the time N at which NPV

equals zero:

0=⇒= NPVDPBN (4.43) Discounted Payback Period DPB is a function of interest rate i. The internal rate of return IRR is defined by the following relation: 0=⇒= NPVIRRi (4.44)

Internal rate of return IRR is a function of time N.



Table 4.7 Measures of Plant Profitability

Nondiscounted Discounted

Cash Cumulated Cash Flow, CCF Net Present Value, NPVTime Simple Payback Period, SPB Discounted Payback Period, DPBRate Return on Investment, ROI Internal Rate of Return, IRR

If P is constant then it can be proved that:

PC

SPB T= (4.45)

TCPROI = (4.46)

( )( )

( )iSPBiDPB+

−=

−

1ln1ln 1

(4.47)

( ) NIRRIRRROI −+−

=11

(4.48)

The following inequalities should be kept in mind:

0, =⇔=≥ iSPBDPBSPBDPB (4.49)

∞→⇔→≤ NROIIRRROIIRR , (4.50)

Recently, the Economic Value Added (EVA) concept is used in financial analysis. It is defined as the after-tax net operating profit minus the cost of capi-tal (Couper, 2003). A positive EVA value means that a business earns more than the cost of capital. EVA analysis can improve the efficiency of operation of food processing plants.


78 Chapter 4 Table 4.8 presents the measures of the plant profitability which will be

used in the examples of this book. Capital Return Ratio CRR is defined as the ratio of the Net Present Value

to the Own Capital invested (Couper, 2003; Holland and Wilkinson, 1997; Brennan, 1998):

CRR = NPV / CO (4.51)

Table 4.8 Measures of Plant Profitability IRR Internal Rate of Return DPB Discounted Pay Back Period NPV Net Present Value CRR Capital Return Ratio

VI. SENSITIVITY ANALYSIS

Plant profitability depends on a lot of technical and economic factors. Thus, it is crucial to obtain the effect of the most significant factors on the profitability. The resulting procedure is called sensitivity analysis and the most common technique applied is to vary one factor at a time and calculate the effect on the profitability measures. The following steps are normally used:

1. Determine which factors of interest should be examined 2. Select the range and the increment of variation for each factor 3. Select the measure or measures of profitability to be calculated 4. Compute the results changing one factor at a time 5. Display the results in tables or figures

A typical figure to show the sensitivity analysis results is the so called “spider plot”. It represents the relative variation of the profitability measure versus the relative variation of each factor (see Figure 4.14). Sensitivity analysis is easy to prepare and yields useful information (Moresi, 1984).



Factor 3

Factor 3

Factor 2

Factor 2

Factor 1

Factor 1

Factor 5

Factor 5

Factor 4

Factor 4

-0.30

-0.20

-0.10

0.00

0.10

0.20

0.30

-0.30 -0.20 -0.10 0.00 0.10 0.20 0.30

Relative change in each factor

Rela

tive

cha

nge

of p

rofi

tabi

lity

Figure 4.14 Results of a sensitivity analysis using the spider plot. A special case of sensitivity analysis is the “break-even analysis”. Break-even refers to the point at which income just equals expenses. Both income and ex-penses are plotted versus the production capacity. The resulting profit is usually plotted in the same graph. Figure 4.15 represents an exemplary break-even plot. Each curve could be plotted for various values of a factor of interest (e.g., time) to show its effect on the break-even points. All these concepts are explained in detail in the applications section (Chapters 7–9).


80 Chapter 4

Sales

Manufacturing cost

Profit

0

5

10

15

20

25

30

0 500 1000 1500 2000 2500

Annual operating time (h/y)

Ann

ual i

ncom

e/ex

pens

es (M

$/y

)

Lowerbreak-even point

Upperbreak-even point

Maximumprofit

Figure 4.15 Break-even analysis. The factors which are included in a sensitivity analysis are divided into two categories:

• Design variables, (also called and decision variables or independent variables); and

• Technical and economic data Practically, the design variables can be assigned to any value into a feasible range, while data get values from uncontrolled external factors. Thus, two critical points arise:



• To calculate the optimal values of the design variables to optimize profitability; and

• To take into account the uncertainty of the data on the profitability The first point refers to “plant optimization” (also called “economic balance”), while the second point refers to “risk analysis”.

NOMENCLATURE

APR t/y Annual Product Rate Ceq M$ Purchased Equipment Cost CF M$ Fixed Capital Cost CL $/h Labor Rate Cost CLab M$/y Labor Cost CM M$ Manufacturing Cost CMat M$/y Raw Materials Cost CMF M$/y Fixed Manufacturing Cost CMV M$/y Variable Manufacturing Cost Co M$ Own Capital COver M$/y Overhead Cost CPack M$/y Packaging Cost CS M$/y Sales Income CT M$ Total Capital Cost CTR - Capital to Turnover Ratio CUtil M$/y Utilities Cost CW M$ Working Capital Cost d - Depreciation Rate DPB y Discounted Payback Period e - Capital Recovery Factor fL - Lang Factor fLab - Labor Cost Correction Factor fMat - Material Cost Correction Factor fMF - Fixed Manufacturing Cost Factor fOver - Overhead Cost Factor fPack - Packaging Cost Correction Factor fUtil - Utilities Cost Correction actor fWF - Working Capital Factor fWS - Working Capital Factor i - Discount Rate IRR - Internal Rate of Return


82 Chapter 4

L - Leverage Ln M$ Loan Lx M$/y Loan Payment M persons Manpower N y Lifetime NPV M$ Net Present Value P M$/y Profit PG M$/y Gross Profit PN M$/y Net Profit PR t/h Product Rate ROI - Return On Investment S M$/y Annual sales SPB y Simple Payback Period t - Tax Rate TAC M$/y Total Annualized Cost TCR - Turnover to Capital Ratio Tx M$/y Taxes t h/y Annual Operating Time tc y Collection period

REFERENCES

Bartholomai A, 1987. Food Factories–Processes, Equipment, Costs. VCH Publications. Brennan D, 1998. Process Engineering Economics. IChemE. Brown T, 2007. Engineering Economics and Economic Design for Process Engineers.

CRC Press. Chilton CH, 1960. Cost Engineering in the Process Industries. McGraw-Hill. Clark JP, 1997. Cost and profitability estimation. In: Handbook of Food Engineering

Practice, CRC Press. Couper JR, 2003. Process Engineering Economics. Marcel Dekker. Holland FA, Wilkinson JK, 1997. Process Economics. In: Perry RH, Green DW, Ma-

loney JO, Perry’s Chemical Engineers’ Handbook, 7th Edition, McGraw-Hill. Marouli AZ, Maroulis ZB, 2005. Cost data analysis for the food industry. Journal of

Food Engineering, 67(1)289–299. Maroulis ZB, Saravacos GD, 2003. Food Process Design. Marcel Dekker. Moresi M, 1984. Economic study of concentrated citrus juice production. In McKenna B

ed, Engineering and Food. Elsevier. Peters MS, Timmerhaus KD, West RE, 2003. Plant Design and Economics for Chemical

Engineers, 5th edition. McGraw-Hill. Seider WD, Seader JD, Lewin DR, 1999. Process Design Principles. John Wiley. Sinnot RK, 1996. Chemical process design. In: Coulson JM and Richardson, JF, eds,

Chemical Engineering, Butterworth-Heinemann.


83

5 Capital Cost of Food Plants

I. INTRODUCTION

As described in Chapter 4, most of the methods of estimating the fixed capital cost are based on the cost of process equipment. In this chapter the methods of estimating the process equipment cost are presented:

• Quotations from fabricators • Methods based on cost versus capacity equations • Past purchase records updated with appropriate cost indices

1. Unit Operations in Food Processing

The basic Unit Operations of Chemical Engineering, i.e., Fluid Flow, Heat Transfer, and Mass Transfer, have been applied to the food processing industry for many years. The theory on these operations was developed originally for gases and liquids (Newtonian fluids), but in food processing (or food manufac-turing) non-Newtonian fluids, semi-solid and solid food materials are handled, and adaptation or extension of the theory is necessary (Maroulis and Saravacos, 2003). Some food processing operations, dealing with such complex materials are still treated empirically, using rules, practices, and equipment developed through experience (Brennan et al., 1991). Generalized models of unit opera-tions are useful in preliminary design. Many specialized unit operations have been developed in the food proc-essing industry, and more than 150 such food processing operations were listed by Farkas (1977, 1980). The unit operations of food processing can be classified on the basis of the processing equipment, and typical examples are shown in Table 5.1 (Saravacos and Kostaropoulos, 2002).


84 Chapter 5

Mechanical processing and mechanical separation operations are very important in most food process industries, dealing with fluid, semi-fluid, and solid food materials. Some of them have been developed empirically for the processing of specific foods and they require specialized equipment. Some me-chanical equipment has been adapted from the chemical process industry, using suitable construction materials, such as stainless steel, and hygienic (sanitary) design to protect the quality and safety of the food products. Mechanical transport operations include pumping of liquids, pneumatic and hydraulic transport, and mechanical conveying. Pumping can be modeled and simulated, based on the principles of Fluid Flow and the Rheology of fluid food materials. However, the other mechanical transport operations are based on empirical rules and specialized equipment, developed through experience of manufacturers of equipment and industrial food processors. Modeling and simulation of mechanical processing operations is diffi-cult, and empirical rules and equations are generally used. Size reduction, ag-glomeration, mixing, and extrusion, developed in the chemical process indus-tries, are adapted and applied to various food processes. Sorting, grading, peel-ing, slicing, expression, and forming require specialized equipment, which has been developed for the various food products and processes (Saravacos and Kostaropoulos, 2002). Chemical Engineering mechanical separations, such as screening, filtra-tion, and centrifugation, have been adapted from the chemical process indus-tries in various food industries. Cleaning and washing are empirical operations, using specialized equipment, developed for specific food raw materials. Most of the heat and mass transfer processes used in food processing can be modeled and simulated, using established techniques of Chemical Engineer-ing (Maroulis and Saravacos, 2003). Novel nonthermal preservation methods, e.g., irradiation and high pressure processing, are still in the development stage, and economic processing equipment is not available. Food packaging operations and equipment are highly specialized, and they are difficult to model and simulate. Packaging equipment is expensive and its selection is based on the specific food product and food package. A practical description of the unit operations, used in the processing of fruits and vegetables, was presented by Gould (1996). Fruit and vegetable processing is a large industry, consisting of a large number of small to medium-sized processing plants, producing several diverse food products. These plants utilize several mechanical unit operations, since the materials being processed are solid or semi-solids, sensitive to mechanical and thermal processing. Some large food processing industries such as the dairy, edible oil, milling, and beer industries process large amounts of fewer products, utilizing a smaller number of conventional unit operations. The scale-up methods, used extensively in Chemical Engineering, are difficult to apply to food processing operations, due to insufficient physical


Capital Cost of Food Plants 85

property data, and the complex physical, chemical and biological changes in the food systems. Pilot plant data, collected under similar processing condi-tions, are necessary for scale-up of industrial operations of complex food proc-esses, such as extrusion cooking of starch-based foods (Valentas et al., 1991), or processing of new foods. The pilot plant is useful in evaluating new food processes, and in testing new processing equipment under industrial operating conditions. It is often used for the production of large samples of new food products, used in storage and marketing tests.

2. Mechanical Processes

Mechanical processing operations include mechanical transport of food materi-als, mechanical processing, and mechanical separations. Mechanical transport includes pumping and mechanical conveyors; mechanical processing is con-cerned with size reduction, agglomeration, mixing, and forming; and mechani-cal separations involve filtration, centrifugation, expression, removal of food parts, and cleaning (Table 5.2). Mechanical operations are based on equipment, specific for various proc-esses, developed mostly from experience of equipment manufacturers and users in the chemical and food processing industries. Some empirical equations are applied to specific processes and equipment, but rigorous mathematical model-ing and simulation of the mechanical processes is not feasible, except for pumping of fluids, which is based on Fluid Flow and Rheology. Description of mechanical processing equipment, in general, is found in Perry and Green (1997), Walas (1988), and Bhatia (1979-1983), while equipment used in food processing is described by Saravacos and Kostaropoulos (2002). Details of mechanical equipment can be found in bulletins and catalogs of manufacturers and suppliers of processing equipment. Lists of directories of equipment sup-pliers are given by Saravacos and Kostaropoulos (2002). The equipment used in mechanical processing of foods must comply with the principles of hygienic (sanitary) design and operation. The equipment surfaces coming into contact with food materials should be made of corrosion-resistant stainless steel, and should be cleanable with the cleaning in place (CIP) system (Jowitt, 1980; Troller, 1993).

a. Mechanical Transport Operations Liquid and semi-fluid foods are transported in food processing plants using various types of pumps, while food particles (powders) and grains are trans-ported by pneumatic conveyors. Hydraulic conveying is used for large food pieces, while various types of mechanical conveyors are used for solid foods, food packages and containers.


86 Chapter 5

i. Transport of Fluid Foods Rheological data are required for the design of pumping of fluid foods in piping systems. Most fluid foods are non-Newtonian fluids (Saravacos and Maroulis, 2001), and the power-law model yields useful parameters for the estimation of the Reynolds number, the pressure drop, and the energy requirements (Ber-noulli equation). Friction losses in pipes and fittings are estimated using em-pirical equations of fluid flow (Holland and Bragg, 1995; Saravacos and Kostaropoulos, 2002). The design of most food processes is concerned mainly with heat and mass transfer operations, and the equipment required to carry out these impor-tant operations, e.g., sterilizers, evaporators, and dryers. Transport of food ma-terials is considered an auxiliary operation, which is carried out with empiri-cally designed specialized equipment (pumps, piping, and valves). Table 5.2 shows some important fluid transport equipment used in food processing (Maroulis and Saravacos, 2003). ii. Mechanical Conveyors Several types of mechanical conveyors are used in transporting solid foods, food packages, and containers. Typical units are listed in Table 5.2.

b. Mechanical Processing Operations Mechanical processing equipment, used in chemical and mineral processing, such as grinders, mills, agglomerators, and mixers, has been adapted to food processing. Specialized equipment, such as homogenizers, paste and dough mixers, and forming/extrusion, have been developed by equipment manufac-turers for specific food processes and products. Some typical mechanical processes, used in food processing, are shown in Table 5.2.

c. Mechanical Separation Operations A wide range of mechanical separation equipment is used in food processing. Some basic equipment, such as screens, filters, centrifuges, and cyclones, are adapted from the chemical process industry. Specialized equipment, such as sorters, peelers, and juice extractors, have been developed for specific food processes and food products. A list of mechanical separation equipment is shown in Table 5.2.

3. Food Packaging Processes

Food Packaging is highly dependent on packaging equipment and packaging materials, empirically developed by manufacturers. Specialized equipment is used for container preparation, product filling and closing, and aseptic packag-ing of foods (Kostaropoulos and Saravacos, 2002).

Table 5.3 summarizes the main equipment used in Food Packaging.



Table 5.1 Classification of Unit Operations of Food Processing Group of Operations Typical Food Processing Operations

Mechanical Transport Pumping of Fluids Pneumatic Conveying Hydraulic Conveying Mechanical Conveying

Mechanical Processing Peeling Cutting Slicing Size Reduction Sorting Grading Mixing Emulsification Agglomeration Extrusion Forming

Mechanical Separations Screening Cleaning Washing Filtration Mechanical Expression Centrifugation

Heat Transfer Operations Heating Blanching Cooking Frying Pasteurization Sterilization Evaporation Cooling Freezing Thawing

Mass Transfer Operations Drying Extraction Distillation Absorption Adsorption Crystallization from Solution Ion Exchange

Membrane Separations Ultrafiltration Reverse Osmosis

Nonthermal Preservation Irradiation High Pressure Pulsed Electric Fields


88 Chapter 5

Table 5.2 Mechanical Processes in Food Processing Equipment Applications Fluid Transport

Pumps Centrifugal Low viscosity fluids Radial, axial flow Dilute suspensions Positive Displacement Lobe, gear, piston, Viscous, sensitive fluids and pastes progressive cavity

Pneumatic Conveyors Particles and grains suspended in air

Hydraulic Conveyors Fruits and vegetables suspended in water Mechanical Conveyors

Belt Conveyors Particles, pieces, packages Roll Conveyors Packages, heavy products Screw Conveyors Pastes, grains Chain Conveyors Containers Bucket Elevators Particles, grains Mechanical Processing Operations

Cutting Equipment Fruits / vegetables Slicers, dicers Meat

Grinders Roll mills, hammer mills, Cereal grains disc grinders, pulpers Fruits / vegetable, meat

Agglomerators Rotary pan, drum Food granules from Fluidized-bed, drying food powders Compression, palletizing Food pellets

Homogenizers Milk products Pressure, colloid mills Food emulsions

Mixers Liquid/liquid Agitated tanks liquid/solid mixers of solids Solid/solid

Forming/Extrusion Equipment Forming extruders Forming of cereal foods Twin extrusion cookers Extrusion cooked products



Table 5.2 Continued Equipment Applications

Mechanical Separations Screens Sieving equipment Food particles, flour

Sorters Sizing of fruits

Filters Cake filters, frame, Fruit juices, wine vacuum, depth filters water, air

Centrifuges Centrifugal separators Milk, vegetable oil filtering centrifuges, decanters fruit juices

Cyclone Separators Particles / air

Mechanical Expression Expression equipment, Vegetable oil Screw presses, juice extractors fruit juices

Removal of Food Parts Peeling, pitting Fruit products Skinning equipment animal products

Removal of External Parts Fruit/vegetables Wet cleaners, air cleaners grain cleaning

Table 5.3 Food Packaging Equipment

Container Preparation Metal, glass, plastic, paper

Filling Equipment Dosing, weighing, valves

Closing Equipment Metallic containers, glass closures Plastic containers, cartons and cardboard

Aseptic Packaging Form-fill-seal equipment Monoblock, combiblock systems

Group Packaging Wrapping Palletizing


90 Chapter 5

II. QUOTATIONS FROM FABRICATORS

The most accurate cost estimation for process equipment is to obtain a price quotation from a reliable manufacturer or supplier (vendor) of equipment. Specification sheets for each process unit should be prepared for the equip-ment, which should contain basic design data, materials of construction, and special information that will help the supplier to provide the appropriate equipment (Walas, 1988). Standardized equipment is preferred because of lower cost and faster delivery. It should be noted that very strict and detailed specifications could in-crease substantially the price of the equipment, while an available “off-the-shelf” unit at a lower cost might be satisfactory. Second-hand equipment at a lower cost may, in some cases, be satisfactory for the intended application. Suppliers of processing equipment are found in various directories and in international equipment fairs. Table 5.4 presents the web sites of selected food process equipment suppliers.



Table 5.4 Web Sites of Selected Food Processing Equipment 1. Mechanical Processing Equipment a. Bulk storage of raw materials and products Vebe Technik www.webe-technik.se b. Fruit / vegetable preparation and expression FMC FoodTech www.fmctechnologies.com Urschel www.urschel.com Bucher-Guyer www.bucherguyer.ch/foodtech Pieralisi www.pieralisi.com Turatti www.turatti.com c. Dairy processing equipment APV www.apv.com Alfa Laval www.alfalaval.com 2. Heating / Cooling Equipment a. Sterilizers / Pasteurizers / Blanchers Alfa Laval www.alfalaval.com APV www.apv.com FMC Corporation www.fmc.com Rossi & Catelli www.cftrossicatelli.com Cabinplant International www.cabinplant.com b. Freezing equipment Frigoscandia www.frigoscandia.com GEA www.geaag.com c. Baking Equipment APV www.apv.com APV Baker www.apvbaker.com 3. Packaging Equipment Angelus Can www.angeluscan.com R. Bosch www.boschpackging.com Delaval (Tetrapak) www.delaval.com FranRica www.fmc.com Sidel www.sidel.com Universal Filling Machine Co www.universalfilling.com

Data from Saravacos and Kostaropoulos (2002).


92 Chapter 5

III. EQUIPMENT COST ESTIMATION

When approximate cost data are required for preliminary design, empirical methods and rules are used, which will yield fast results within the accepted accuracy (Chilton, 1960). A popular method is to use the Guthrie charts of equipment cost versus capacity (Guthrie, 1969; Peters and Timmerhaus, 2003; Perry and Green, 1997; Douglas, 1988). Plotted on log-log scales, the Guthrie charts show straight lines. These charts are represented by the generalized cost-capacity Guthrie equation (Maroulis and Saravacos, 2003):

n

oo A

ACC ⎟⎟⎠

⎞⎜⎜⎝

⎛= (5-1)

where C and Co are the equipment costs (e.g., USD=$) at equipment capacities A and Ao (e.g., kg/h), respectively. The scale index (cost exponent) n varies with the type of equipment over the range 0.5 to 1.0, and it is often taken approximately as n=2/3. The “2/3” factor is related to the cost of spherical vessels: C=kV2/3, where V is the vessel volume and k is a constant (Biegler et al., 1997). Exponent values near n=1 are characteristic of complex mechanical or electrical units, such as motors, compressors, homogenizers, and distillation columns. In food processing, the scale index n=1 may be used for individual complex units, such as packaging machines and sterilizers. Low values near n=0.5 characterize large processing units, such as evaporators, heat exchangers, and tanks. Typical data on the unit cost and the scale index for various equipment are given in the cost diagrams (Figure 5.3) of this chapter. To take into account the effect of inflation, material of construction, and operating pressure, Equation (5-1) is modified to Equation (5-2):

n

ooPMI A

ACfffC ⎟⎟⎠

⎞⎜⎜⎝

⎛= (5-2)

where the correction factors for inflation fI , material fM, and pressure fP are dis-cussed in the following paragraphs.



1. Effect of Material of Construction The correction factor for a material of composite construction fM described by Equation (5-2) is estimated from the following equation:

CS

MM C

Cf ε= (5-3)

where CM is the cost of material M in $/kg, CCS is the carbon steel cost in $/kg, and ε is the portion of the material M in the equipment construction, varying from 0.4 for clad construction to 0.6 for solid construction. An indication of the relative cost of some commonly used materials is given in Table 5.5. Table 5.5 Relative Cost of Some Commonly Used Construction Materials

Carbon steel 1 Low alloy steels (Cr-Mo) 2

Nickel steel (9%) 2.5 Stainless Steel 304 5 Stainless Steel 321 5.5 Stainless Steel 316 8 Stainless Steel 310 10

Stainless Steel High Ni 20 Copper 2.5

Aluminum 3 Nickel 10 Monel 9

Titanium 60


94 Chapter 5

2. Effect of Pressure on Equipment Cost The correction factor for pressure fP described by Equation (5-4) is estimated from the following equation:

⎟⎠⎞

⎜⎝⎛ −

=75

1exp Pf P (5-4)

The correction factor of empirical equation (5-4) for pressure 1-70 bar comes from fitting exponential equations to data presented by Biegler et al. (1997). Figure 5.1 shows the effect of pressure on the cost factor fP (Maroulis and Saravacos, 2003). The pressure correction factor may be used at pressures up to 70 bar, but not at the very high pressures of supercritical fluid extraction (about 300 bar) or the ultrahigh pressures of high-pressure food processing (1-8 kbar).

0

1

2

3

0 25 50P (bar)

f P

75

Figure 5.1 Equipment cost correction factor for pressure.



3. Effect of Inflation on Equipment Cost The cost of processing equipment at a given time can be estimated by multiply-ing the known cost of the equipment at a past time by the ratio of an appropri-ate index, corresponding to the same time points. The correction factor for inflation fI described by Equation (5-2) is de-fined by the following equation (Maroulis and Saravacos, 2003):

⎟⎠⎞

⎜⎝⎛

⎟⎠⎞

⎜⎝⎛=

400or

1100& CEPSMf I (5-5)

where M&S and CEP are the two common engineering indices in the process industries: a) The Marshall and Swift Equipment Index (M&S) (formerly Marshal and Stevens Index), published periodically in the journal “Chemical Engineer-ing”, is the weighted average of the cost of equipment of 8 chemical process industries (chemicals, petroleum, paper, rubber, paint, glass, cement, and clay products). The M&S all-industry index is the arithmetic average of indices for 47 different industrial, commercial, and housing equipment. The M&S all-industry index is about 2% lower than the M&S equipment, and it is used in this book. The base year of both M&S indices is 1926 (= 100). b) The Chemical Engineering Plant Cost Index (CEP) shows construc-tion costs for processing plants. It consists of the weighted average of four ma-jor components: equipment, machinery and supports; erection and installation labor; buildings materials and labor; engineering; and supervision. The major component, equipment, consists of fabricated equipment; process machinery; pipe, valves, and fittings; process instruments and controls; pumps and com-pressors; electrical equipment and materials; and structural supports, insulation, and paint. The base year of the CEP cost index is 1957–1959 (=100). Both M&S and CEP cost indices are used in process and plant design, giving similar results. Table 5.6 and Figure 5.2 show the cost indices M&S (all-industry) and CEP during the period 1977–2006. These data can be extrapo-lated to the near future using linear regression equations fitted to recent years. The following simplified equations are also presented in Figure 5.2. CEP = 480 + 10 (Year-2005) (5-6) M&S = 1250 + 25 (Year-2005) (5-7) The increases of the cost indices are caused by inflation and rises in the prices of certain expensive materials, e.g., stainless steel. The sharp increase of the cost indices during the decade 1970–1980 is mainly due to the rising costs of energy (world-wide petroleum crisis).


96 Chapter 5

Table 5.6 CEP and M&S Cost Indices

YEAR CEP M&S1976 192 4791977 204 5141978 219 5521979 239 6071980 261 6751981 297 7451982 314 7741983 317 7861984 323 8061985 325 8131986 318 8171987 324 8141988 343 8521989 355 8951990 358 9151991 361 9311992 358 9431993 359 9641994 368 9931995 381 10281996 382 10391997 387 10571998 390 10621999 391 10682000 394 10892001 394 10942002 396 11042003 402 11242004 444 11792005 457 12612006 510 1340



0

200

400

600

800

1000

1200

1400

1600

1975 1980 1985 1990 1995 2000 2005 2010

Calendar Year

Cost

Ind

ex

M&S

CEP

Figure 5.2 Marshal and Swift all-industry equipment (M&S) and chemical engineering plant (CEP) cost indices in the period 1977–2006.


98 Chapter 5

IV. DATA FOR PRELIMINARY EQUIPMENT COST ESTIMATION

Figure 5.3 plots the cost equation (Equation 5-1) for various chemical and food engineering processes, classified in suitable categories. The parameter esti-mates for the cost equation are also tabulated along with the application range. These results come from fitting the cost equation to various data extracted from the literature. That is, data from Ulrich (1984), Gerrard (1988), Garrett (1989), Walas (1988), and mostly from the recent edition of Peters and Timmerhaus (2003) were selected, updated, screened, and used in a regression analysis pro-cedure to obtain the results shown in Figure 5.3. Table 5.7 summarizes these results while Figure 5.4 presents the flowsheet symbols for the examined equipment. These cost data are also incorporated in an Excel file named “Equipment Cost” included in the accompanying CD-ROM. The user can select a process category or a single process by pull down menus. New data can be introduced easily. Most food engineering processes require some type of special equipment, developed empirically in the food industry and supplied by equipment manu-facturers. The cost of such equipment varies according to its complexity and capacity. Some equipment may be expensive due to the materials of construc-tion (usually stainless steel) and the strict hygienic (sanitary) requirements. The scale index of special food equipment is usually near 1, i.e. more similar units are used for increased capacity. Most of the special food processing equipment is classified mechanical processing or packaging equipment (Tables 5.2 and 5.3), for example, washing machines and packaging systems (Saravacos and Kostaropoulos, 2002). Price quotations from manufacturers and suppliers of special food proc-essing equipment are necessary for the design and economic analysis of food plants. Such equipment is specified for capacity (kg/h or t/h) and material of construction. Table 5.8 and Figure 5.5 list cost data of some typical mechanical proc-essing and packaging equipment, which can be used in the application exam-ples of food processing plants of this book (Chapters 7 and 8). The web sites of suppliers of selected food processing equipment are given in Table 5.4.



Equipment Unit Cost (k$) Scale Index Min Size Max Size1 Electric motor 1 0.67 1 10002 Agitator 4 0.55 1 1003 Compressor 5 0.8 5 5004 Pump 5 0.6 4 7005 Fan 1 0.8 1067

200

Electric motor

Agitator

Compressor

Pump

Fan

1

10

100

1000

10000

0.1 1 10 100 1000 10000

Power (kW)

Cost

(k$)

Fluids transport

Figure 5.3 Cost of Equipment.


100 Chapter 5

Equipment Unit Cost (k$) Scale Index Min Size Max Size1 Silo 2 0.55 10 2002 Storage tank 5 0.45 5 50003 Process vessel 10 0.5 1 10004 Agitated jacketed reactor 50 0.6 1 100567

Silo

Storage tankProcess vessel

Agitated jacketed reactor

1

10

100

1000

10000

0.1 1 10 100 1000 10000

Volume (m3)

Cost

(k$)

Vessels

Figure 5.3 Continued.



Equipment Unit Cost (k$) Scale Index Min Size Max Size1 Conveyor belt 2 1 1 1002 Belt washer 5 1 1 1003 Belt dryer 10 0.95 14 Belt freezer 20 0.95 1567

100100

Conveyor belt

Belt washer

Belt dryer

Belt freezer

1

10

100

1000

10000

0.1 1 10 100 1000 10000

Area (m2)

Cost

(k$)

Conveyor belts



102 Chapter 5

Equipment Unit Cost (k$) Scale Index Min Size Max Size1 Scraped surface heat exchanger 5 0.95 2 202 Shell and tubes heat enchanger 3 0.65 1 10003 Plate heat exchanger 7 0.6 10 15004 Tubular evaporator 20 0.7 5 5005 Forced circulation evaporator 100 0.7 5 50067

Scraped surface heat exchanger

Shell and tubes heat enchanger

Plate heat exchanger

Tubular evaporator

Forced circulation evaporator

1

10

100

1000

10000

0.1 1 10 100 1000 10000

Area (m2)

Cost

(k$)

Heat exchangers




Equipment Unit Cost (k$) Scale Index Min Size Max Size1 Tray dryer 10 0.45 1 1002 Vibratory conveyor dryer 50 0.67 1 3003 Rotary dryer 5 0.85 2 1004 Fluidized bed dryer 20 0.57 1 1000567

Tray dryer

Vibratory conveyor dryer

Rotary dryer

Fluidized bed dryer

1

10

100

1000

10000

0.1 1 10 100 1000 10000

Area (m2)

Cost

(k$)

Dryers



104 Chapter 5

Equipment Unit Cost (k$) Scale Index Min Size Max Size1 Vacuum drum filter 40 0.6 0.5 102 Plate filter 3 0.75 1 1003 Vibrating screen 15 0.85 1 104567

Vacuum drum filter

Plate filterVibrating screen

1

10

100

1000

10000

0.1 1 10 100 1000 10000

Area (m2)

Cost

(k$)

Filters




Equipment Unit Cost (k$) Scale Index Min Size Max Size1 Cutter 10 0.65 12 Crusher 40 0.67 1 10003 Grinder 52 0.59 0.2 104 Ball mill 200 0.45 0.2 10567

100

Cutter

Crusher

Grinder

Ball mill

1

10

100

1000

10000

0.1 1 10 100 1000 10000

Capacity (kg/s)

Cost

(k$)

Size reduction



106 Chapter 5

Equipment Unit Cost (k$) Scale Index Min Size Max Size1 Centrifuge 300 0.55 1 202 Screw press 120 0.45 0.01 13 Extruder 200 0.25 0.01 0.54 Packaging equipment 360 0.67 0.1 100567

Centrifuge

Screw press

Extruder

Packaging equipment

1

10

100

1000

10000

0.1 1 10 100 1000 10000

Capacity (kg/s)

Cost

(k$)

Mechanical processing




Equipment Unit Cost (k$) Scale Index Min Size Max Size1 Turbine 750 0.6 0.12 Boiler 10 0.95 134567

5500

Turbine

Boiler

1

10

100

1000

10000

0.1 1 10 100 1000 10000

Power (MW)

Cost

(k$)

Utilities



108 Chapter 5

Table 5.7 Unit Cost and Scale Index of Miscellaneous Process Equipment Equipment SizeUnits UnitCost, k$ ScaleIndex MinSize MaxSize Operators

VesselsSilo Volume (m3) 2 0.55 10 200 0.10

Storage tank Volume (m3) 5 0.45 5 5000 0.10Process vessel Volume (m3) 10 0.50 1 1000 0.20

Agitated jacketed reactor Volume (m3) 50 0.60 1 100 1.00Fluids transport

Electric motor Power (kW) 1 0.67 1 1000 0.10Agitator Power (kW) 4 0.55 1 100 0.10

Compressor Power (kW) 5 0.80 5 500 0.50Pump Power (kW) 5 0.60 4 700 0.10

Fan Power (kW) 1 0.80 10 200 0.10

Conveyor beltsConveyor belt Area (m2) 2 1.00 1 100 0.10

Belt washer Area (m2) 5 1.00 1 100 0.50Belt dryer Area (m2) 10 0.95 1 100 1.00

Belt freezer Area (m2) 20 0.95 1 100 1.00Heat exchangers

Scraped surface heat exchanger Area (m2) 5 0.95 2 20 1.00Shell and tubes heat enchanger Area (m2) 3 0.65 1 1000 0.50

Plate heat exchanger Area (m2) 7 0.60 10 1500 1.00Tubular evaporator Area (m2) 20 0.70 5 500 1.00

Forced circulation evaporator Area (m2) 100 0.70 5 500 1.00

FiltersVacuum drum filter Area (m2) 40 0.60 0.5 10 1.00

Plate filter Area (m2) 3 0.75 1 100 1.00Vibrating screen Area (m2) 15 0.85 1 10 0.50

DryersTray dryer Area (m2) 10 0.45 1 100 1.00

Vibratory conveyor dryer Area (m2) 50 0.67 1 300 1.00Rotary dryer Area (m2) 5 0.85 2 100 1.00

Fluidized bed dryer Volume (m3) 20 0.57 1 1000 1.00Size reduction

Cutter Capacity (kg/s) 10 0.65 1 100 1.00Crusher Capacity (kg/s) 40 0.67 1 1000 1.00Grinder Capacity (kg/s) 52 0.59 0 10 1.00Ball mill Capacity (kg/s) 200 0.45 0 10 1.00

Mechanical processingCentrifuge Capacity (kg/s) 300 0.55 1 20 1.00

Screw press Capacity (kg/s) 120 0.45 0.01 1 1.00Extruder Capacity (kg/s) 200 0.25 0.01 0.5 1.00

Packaging equipment Capacity (kg/s) 360 0.67 0.1 100 1.00

UtilitiesTurbine Power (MW) 750 0.60 0.1 5 1.00

Boiler Power (MW) 10 0.95 1 500 1.00. .



Vessels Fluids transport Conveyor belts

Silo Electric motor Conveyor belt

Storage tank Agitator Belt washer

Process vessel Compressor Belt dryer

Agitated jacketed reactor Pump Belt freezer

Fan

S

sR

G

A P

R

L P

W

R

P

RP

R P

R

P

RP

sS

R

P

R

P

R P

Z

zR

P

Figure 5.4 Flowsheet symbols for miscellaneous process equipment.


110 Chapter 5

Filters Heat exchangers Dryers

Vacuum drum filter Scraped surface heat exchanger Tray dryer

Plate filter Shell and tubes heat enchanger Vibratory conveyor dryer

Vibrating screen Plate heat exchanger Rotary dryer

Tubular evaporator Fluidized bed dryer

Forced circulation evaporator

G

F

A

P

R

R

P

P

s

S

R P

s

SR

P

s

S

R P

B

S

s

R

G

A

P

s

S

R

P

B

sS

R

P

RP

P

R P

P

G

F

A

P

R

S

sR

G

A P




Size reduction Mechanical processing Utilities

Cutter Centrifuge Turbine

Crusher Screw press Boiler

Grinder Extruder

Ball mill Packaging equipment

S

s

F

A

GR

P

K P

R

R

PP

R

P

R

P

R

P

R

P

R

P

R

P



112 Chapter 5

List of Equipment Nomenclature

Vessels System input streamsSiloStorage tank Raw materialProcess vesselAgitated jacketed reactor Packaging materialFluids transportElectric motor Auxiliar materialAgitatorCompressor FuelPumpFan Process waterConveyor beltsConveyor belt Ambient airBelt washerBelt dryerBelt freezer System internal recycled streamsHeat exchangersScraped surface heat exchanger SteamShell and tubes heat enchangerPlate heat exchanger Steam condensateTubular evaporatorForced circulation evaporator Cooling waterFiltersVacuum drum filter Cooling water returnPlate filterVibrating screen RefrigerantDryersTray dryer Refrigerant returnVibratory conveyor dryerRotary dryer Compressed airFluidized bed dryerSize reductionCutter System output streamsCrusherGrinder ProductBall millMechanical processing ByproductCentrifugeScrew press Liquid wasteExtruderPackaging equipment Gas wasteUtilitiesTurbineBoiler

C

S

s

c

R

K

L

G

F

A

P

W

X

Z

M

B

z




Table 5.8 Food Processing Equipment Cost

t t/h k$

1. Mechanical Processing Equipment

a. Storage of raw materials and products Fluid milk tanks 100 100Flour bins 50 50Sugar silos 5000 200Wine fermentation tanks 40 50Wine storage tanks 150 100

b. Fruit/vegetable preparation Fruit/vegetable unloader 20.0 50Fruit/vegetable washing machine 10.0 50Fruit/vegetable inspection belt 10.0 30Fruit/vegetable sorter/sizer 10.0 50Fruit pitting machine (peaches, apricots) 5.00 100Fruit/vegetable peeler (steam, lye) 5.00 100Pea preparation machine 5.00 100Green bean cutting machine 5.00 100

c. Juice expression/extraction Orange juice extractor 5.00 30Orange/tomato juice finisher 10.0 80Tomato pulper 10.0 80Peel oil expression/recovery 150Grape crusher/destemmer 100Grape screw press 100

d. Dairy processing equipmentCentrifuge 5.00 150Homogenizer 5.00 250


114 Chapter 5

Table 5.8 Continued t t/h k$

2. Thermal processing equipment Rotary cooker/cooler 1500 cans/h 0.84 L 1.26 500 Vegetable blancher 5.00 200 Bread baking tunnel oven 5.00 300

3. Freezing equipment Belt freezer 2.00 250 Fluidized bed freezer 2.00 300

4. Bread baking equipmentMixing tanks 1.00 75Fermentation tanks 1.00 125Dough kneading tanks 1.00 150Dough dividers/rounders 3.00 60Pre-proofing cabinet 2 30Bread moulders/ panners 5000 pans/h 0.50 kg 2.50 50Conveyor belt proofer 10000 pans/h 0.50 kg 5.00 200Conveyor belt oven 10000 pans/h 0.50 kg 5.00 300De-panner/cooler 10000 pans/h 0.50 kg 5.00 50Slicing machine 5000 loaves/h 0.50 kg 2.50 40Wrapping machine 5000 loaves/h 0.50 kg 2.50 50

5. Packaging EquipmentCan seaming machine 1500 cans/h 0.84 L 1.26 250Aseptic packaging of milk 1000 cartons 1.00 L 1.00 400Aseptic packaging of yogurt 25000 cups/h 0.20 L 5.00 800Can labeling machine 1500 cans/h 0.84 L 1.26 50Can casing machine 1500 cans/h 0.84 L 1.26 30Wine bottling machine 4000 bottles/h 0.75 L 3.00 250



Pre-proofing cabinet

Wine storage tanks

Wine fermentation tanks

Flour bins

Fluid milk tanks

0

20

40

60

80

100

120

140

160

180

200

0 20 40 60 80 100 120 140 160 180 200

Capacity (t)

Cost

(k$

)

Figure 5.5a Food processing equipment cost: Storage of raw materials and products.


116 Chapter 5

Fruit/vegetable inspection belt

Fruit pitting machine (peaches, apricots)

Fruit/vegetable sorter/sizer

Fruit/vegetable washing machine

Fruit/vegetable peeler (steam, lye)

Pea preparation machine

Green bean cutting machine

Orange juice extractor

Orange/tomato juice finisher

Tomato pulper

Centrifuge

Homogenizer

0

50

100

150

200

250

300

0 2 4 6 8 10 12 14

Capacity (t/h)

Cost

(k$

)

Figure 5.5b Food processing equipment cost: Fruit and vegetable processing.



Rotary cooker/cooler

Vegetable blancher

Bread baking tunnel oven

Belt freezer

Fluidized bed freezer

0

100

200

300

400

500

600

0 1 2 3 4 5 6 7 8 9

Capacity (t/h)

Cost

(k$

)

10

Figure 5.5c Food processing equipment cost: Thermal processing and freezing.


118 Chapter 5

Wrapping machine

Slicing machineDe-panner/cooler

Conveyor belt oven

Conveyor belt proofer

Bread moulders/ panners

Pre-proofing cabinet

Dough dividers/rounders

Dough kneading tanks

Fermentation tanks

Mixing tanks

0

50

100

150

200

250

300

350

0 1 2 3 4 5 6 7 8 9

Capacity (t/h)

Cost

(k$

)

10

Figure 5.5d Food processing equipment cost: Bread baking.



Wine bottling machine

Can casing machine

Can labeling machine

Aseptic packaging of yogurt

Aseptic packaging of milk

Can seaming machine

0

100

200

300

400

500

600

700

800

900

1000

0 1 2 3 4 5 6 7 8 9

Capacity (t/h)

Cost

(k$

)

10

Figure 5.5e Food processing equipment cost: Packaging.


120 Chapter 5

V. SHORT-CUT EQUIPMENT SIZING

Detailed design methods for the most common food processes are systemati-cally presented by Maroulis and Saravacos (2003). Instead of these methods, short-cut process and plant design methods are adequate for preliminary sizing and cost estimating. For chemical processes short-cut design methods are pre-sented in the literature, e.g., Douglas (1988), Walas (1990), Turton et al. (1998) [which presents the original data from Walas enhanced, updated, and trans-formed to the SI system], Branan (1998), Peters and Timmerhaus (2003). These references are used as a basis in constructing the procedures presented in the following paragraphs, which are suitable for food processes and plants. Simplified theoretical and empirical equations are presented for the de-sign of selected chemical and food engineering equipment, as listed below:

• Pumps and blowers • Compressors • Conveyor belts • Screw conveyors • Size reduction • Process vessels • Heat exchangers • Evaporators • Dryers • Filters • Sterilizers

The design of special mass transfer equipment, applicable to food processing, such as distillation and membrane separations, is discussed by Saravacos and Kostaropoulos (2002) and Maroulis and Saravacos (2003). Food refrigeration and food packaging design is discussed by Saravacos and Kostaropoulos (2002).

1. Pumps and Blowers The size of a pump or a blower (fan) is expressed by the electric power, which is approximately estimated by the equation:

ρηPFE Δ

=

where E kW Electric power F kg/s Feed flow rate



ΔP kPa Pressure loss ρ kg/m3 Fluid density η - Efficiency Pump efficiency varies between 0.45 and 0.90 depending on the pump type. Blower efficiency varies between 0.60 and 0.85 depending on the blower type. Thus, minimum values should be used for more accurate estimation: η = 0.45 for pumps η = 0.60 for blowers Special pumping conditions (velocity, shear rate, pressure) are necessary to avoid mechanical damage of the quality of food emulsions and suspensions. Positive displacement pumps are suitable for non-Newtonian food fluids. Centrifugal pumps are used in pumping Newtonian fluids, such as water, milk, and vegetable oils. Net positive suction head (NPSH) should be in the range of 1.5–6 m. Centrifugal pumps: capacity 1-30 L/s, max head 150 m Rotary pumps: capacity 0.06-30 L/s, max head 15 km Fans can raise the pressure up to 30 cm water, blowers up to 3 bar, and compressors to higher pressures. Vacuum pumps: rotary piston 0.001 Torr; 3-stage steam ejectors 1 Torr.

2. Compressors

The size of a compressor is expressed by the electric power, which is roughly estimated by the equation:

⎥⎥

⎦

⎤

⎢⎢

⎣

⎡−⎟⎟

⎠

⎞⎜⎜⎝

⎛= 11

1

21

γ

η PP

TCFE P

where E kW Electric power F kg/s Feed flow rate T1 K Input temperature P1 kPa Input pressure P2 kPa Output pressure CP kJ/kgK Specific heat γ - Polytropic coefficient η - Efficiency


122 Chapter 5

The polytropic coefficient varies from 0.40 for monatomic gases to 0.29 for diatomic and 0.23 for more complex gases. Compressor efficiency varies between 0.60 and 0.85 as the compression ratio is increased from 1.5 to 3. The following values are suggested for typical calculations: γ = 0.29 η = 0.60 There are three main types of compressors: (1) reciprocating, (2) cen-trifugal, and (3) rotary.

3. Conveyor Belts

The size of a conveyor belt is calculated by the equation:

( ) zuLFAρε−

=1

where A m2 Belt area F kg/s Feed flow rate L m Conveyor length D m Belt width u m/s Transport velocity z m Loading depth ρ kg/m3 Particle density ε - Void fraction of loading Belt width from 0.35 to 2 m at velocities up to 5 m/s can be used. The loading void fraction depends on the particle shape and a typical value of 0.40 for spheres can be used. Thus, the following values are suggested for typical calculations: D = 1 m ε = 0.40 u = 1 m/s z = 0.10 m The required electric power is estimated by the equation:

LFgkE b=



where E kW Electric power F kg/s Feed flow rate L m Conveyor length g m/s2 Gravity acceleration kb - Belt power coefficient The belt power coefficient depends on the type of equipment. Typical value, kb = 0.2 g = 10 m/s2

Belt conveyors have lengths up to 100 m in a plant, but much longer out-side. Inclination up to 30o. A 60 cm wide belt can carry 85 m3/h at a speed of 30 m/min.

4. Screw Conveyors The size of a screw conveyor is calculated by the equation:

( ) uDFLA

ρε−=

14

where A m2 Screw peripheral area D m Screw diameter F kg/s Feed flow rate L m Conveyor length u m/s Transport velocity ρ kg/m3 Particle density ε - Void fraction of loading The required electric power is estimated by the equation:

LFgkE S= where E kW Electric power


124 Chapter 5

F kg/s Feed flow rate L m Conveyor length g m/s2 Gravity acceleration kS - Screw power coefficient Screw conveyors may have lengths up to 50 m and inclination about 20o. A 30 cm diameter conveyor can handle 30–90 m3/h at speed 40–60 RPM.

5. Size Reduction

The following semitheoretical equation (Bond law) can be used for estimat-ing the power required to form small particles from large feed particles:

⎟⎟

⎠

⎞

⎜⎜

⎝

⎛−=

12

11DD

FwkE d

where E kW Electric power F kg/s Feed flow rate D1 m Input particle size D2 m Output particle size w kJ/kg Work index kd - Size reduction power coefficient The work index depends on the material hardness, while the size reduc-tion power coefficient depends on the equipment type. The following typical values are proposed for preliminary design estimations: w = 40 kJ/kg kd = 0.01 Roll crushers (smooth or toothed) operate at speeds of 50–900 RPM with reduction ratios up to 4. Capacity is about 25% of the maximum, corresponding to a continuous ribbon of material passing through the rolls. Hammer mills are provided with screens, which use cutting edges for fibrous materials. Reduction ratios up to 40 may be achieved. Speed of large hammer mills 900 RPM, smaller units up to 16,000 RPM.

6. Vessels The following equations calculate the required volume of a vessel when the residence time and the fluid flow rate are specified:



FV

LDV

LDA

ρτ

π

π

=

=

=

4

2

where V m3 Vessel volume D m Vessel diameter L m Vessel length F kg/s Feed flow rate τ s Residence time ρ kg/m3 Fluid density When the vessel is agitated, the following equation calculates the re-quired electrical power:

2==

G

G

kVkE

where E kW Electrical power required for agitation kG - Power coefficient for agitation Moreover, when heat is added or removed, the following additional equa-tions should be taken into account:

( )

( )KmkWU

TTUQA

TTCFQ

RS

RP

2

0

/1=

−=

−=

where Q kW Thermal load T0 K Feed temperature


126 Chapter 5

TR K Vessel temperature TS K Hot utility temperature U kW/m2K Overall heat transfer coefficient Cp kJ/kg K Food specific heat It must also be noted that storage tanks: Volume < 5 m3 use vertical tanks on legs Volume 5–50 m3 use horizontal tank on concrete supports Volume > 50 m3 use vertical tanks on concrete foundations Use 10–15 % freeboard (top empty space) Capacity of storage tanks at least 1.5 times higher the size of transportation equipment, e.g., 30 m3 tank trucks and 100 m3 tank (railroad) cars.

7. Heat Exchangers The following equations calculate the required heat transfer area of a typical heat exchanger:

( )HHpHH TTCFQ 12 −=

( )CCpCC TTCFQ 12 −=

[ ])/()(ln)()(

22111

2211

CHCH

CHCHL TTTT

TTTTT−−

−−−=Δ

LTAUQ Δ= where

FH kg/s Hot stream flow rate FC kg/s Cold stream flow rate T1H oC Hot stream input temperature T2H oC Hot stream output temperature T1C oC Cold stream input temperature T2C oC Cold stream output temperature ΔTL oC Mean temperature difference Q kW Thermal load A m2 Heat transfer area U kW/m2K Overall heat transfer coefficient CpH kJ/kg K Hot stream specific heat CpC kJ/kg K Cold stream specific heat Systematic solutions of detailed mathematical models for complex heat exchangers are presented by Maroulis and Saravacos (2003).



Shell and tube HE are operated countercurrently. Standard tubes 19 mm (3/4 in) OD, 5 m (16 ft) long. Shells of 305 mm (1 ft) diameter have a heat transfer area of about 10 m2; 600 mm (2 ft) diameter 40 m2; 900 mm (3 ft) 100 m2. Minimum temperature approach in HE, 10oC for water, 5oC for refriger-ants. Cooling water inlet temperature 30oC; outlet 50oC. Double-pipe HE competitive at heat transfer surfaces < 20 m2. Plate-and-fin (compact) HE have heat transfer area 1150 m2/m3, about 4 times the area per m3 than shell-and-tube units. Plate HE (stainless steel) are suitable for high hygienic services; they are about 40 % less expensive than equivalent shell-and-tube units. Applied overall heat transfer coefficients (U): water/liquid condensers 750 W/m2K; liquid/gas, gas/gas, 25 W/m2K.

8. Evaporators

The following simplified equations estimate the required thermal load, the op-erating average temperature difference, and the required heat transfer area per evaporator of an N-effect evaporator system in order to evaporate a given flow rate, when steam is available for heating and cold water for cooling.

TUQA

NTTT

NHW

Q

CS

S

Δ=

+−

=Δ

Δ=

1

η

where W kg/s Solvent evaporating flow rate ΔHS kJ/kg Latent heat of solvent vaporization Q kW The required thermal load per effect N - Number of evaporator units η - Thermal efficiency ΔT K Operating average temperature difference TS K Steam temperature TC K Cooling water temperature A m2 Heat transfer area per evaporator effect U kW/m2K Overall heat transfer coefficient


128 Chapter 5

Systematic solutions of detailed mathematical models for N-effect evapo-rators under complex configurations are presented by Maroulis and Saravacos (2003). Long tube vertical evaporators (natural or forced circulation) are pre-ferred in concentrating aqueous food solutions. Tube diameter 20–60 mm, tube length 3–9 m. Liquid velocity in forced circulation 4–6 m/s. Steam economy approximately 0.8N in an N-effect evaporator. Eco-nomic number of effects in the evaporation of sugar solutions 4–6. Efficiency of steam recompression 20–30%, mechanical recompression 70–75%.

9. Dryers

Continuous tray and belt dryers used for food pieces 3–15 mm require 10–200 min for drying. Rotary cylindrical dryers with air velocities of 2–10m/s require 5–90 min for drying. Holdup of solids 7–8%. Rotational speeds about 4 RPM. Pneumatic conveying dryers can dry particles 1–10mm. Dryer diameter 0.2–0.3 m, length up to 30m. Air velocities10–30 m/s. Residence time: single pass 0.5–3 s, normal recycling up to 60 s. Fluidized bed dryers used for particles up to 4 mm. Gas velocities twice the minimum fluidization velocity. Drying times: 1–2 min for continuous operation, up to 2 h for batch op-eration. Spray dryers can dry food particles in less than 60 s. Parallel flow air/ product is preferred. Length to diameter ratio of spray dryers: with spray noz-zles 4–5, with spray wheels 0.5–1. Systematic solutions of detailed mathematical models for various types of dryers under complex configurations are presented by Maroulis and Saravacos (2003). Short cut sizing methods for belt and rotary dryers are presented in the following. In any case, the drying time of the material should be known and the examined dryer should ensure a residence time equal to the required drying time.



a. Belt dryer

( )

LFgkE

Lu

FzA

DLA

b=

=

−=

=

τ

ρετ 1

where A m2 Belt area D m Belt width L m Belt length τ s Residence time F kg/s Drying material flow rate ε - Void fraction of material loading z m Loading depth ρ kg/m3 Drying material density u m/s Belt velocity E kW Electrical power g m/s2 Gravity acceleration kb - Power coefficient

b. Rotary dryer

( )

( ) VDNgkEF

V

LDV

r ρεπ

ρετ

π

−=

−=

=

1

14

2

where D m Dryer diameter L m Dryer length V m3 Dryer volume


130 Chapter 5

τ s Residence time F kg/s Drying material flow rate ε - Void fraction N 1/s Rotating velocity ρ kg/m3 Drying material density E kW Electrical power g m/s2 Gravity acceleration kr - Power coefficient

10. Filters Continuous filtration is applicable if a 3 mm (1/8 inch) cake thickness is formed in less than 5 min. Rapid filtering: use belt or pusher-type centrifuges Medium filtering: use vacuum drums or discs Slow filtering: use pressure filters or sedimenting centrifuges For clarification of liquids without cake buildup use centrifuges, precoat-drum or sand filters.

11. Continuous Flow Sterilizers Systematic solutions of detailed mathematical models for continuous flow steri-lizers under complex configurations are presented by Maroulis and Saravacos (2003). The following equations can be used for short cut sizing of a continuous flow sterilizer where the fluid food is heated to a target temperature and then is cooled back to its initial temperature:

( )( )

( )

( )C

SS

XX

S

SS

PC

PX

PS

TTUQ

A

TUQA

TTUQ

A

TTTCFQTTTCFQ

TCFQ

−=

Δ=

−=

−Δ+=Δ−−=

Δ=

2

1

20

01

where F kg/s Food flow rate



Cp kJ/kg K Food specific heat ΔT oC Minimum heat exchanger temperature approach T0 oC Food initial temperature T1 oC Food target temperature T2 oC Food final temperature TS oC Hot utility temperature TC oC Cold utility temperature QS kW Hot utility load QC kW Cold utility load QX kW Heat exchanger load AS m2 Heater transfer area AC m2 Cooler transfer area AX m2 Heat exchanger transfer area U kW/m2K Overall heat transfer coefficient Continuous flow sterilizers (or pasteurizers) are essentially heat exchang-ers (shell-and-tube or plate). They are designed by considering the heat transfer rate and the kinetics of microbial inactivation. In-container sterilizers (continuous and batch) are designed and selected empirically, based on container size and loading, and sterilization (or pasteuri-zation) time.

NOMENCLATURE

A m2 Area Cp kJ/kg K Specific heat D m Diameter, width, particle size E kW Electric power F kg/s Flow rate g m/s2 Gravity acceleration kb - Belt power coefficient kd - Size reduction power coefficient kG - Power coefficient for agitation kr - Power coefficient for rotation kS - Screw power coefficient L m Length N - Number of evaporator units N 1/s Rotating velocity P kPa Pressure Q kW Thermal load T K Temperature U kW/m2K Overall heat transfer coefficient


132 Chapter 5

u m/s Velocity V m3 Volume W kg/s Evaporating flow rate w kJ/kg Work index z m Loading depth ΔHS kJ/kg Latent heat of solvent vaporization ΔP kPa Pressure loss ΔT oC Minimum heat exchanger temperature approach ΔTL oC Mean temperature difference ε - Void fraction γ - Polytropic coefficient η - Efficiency ρ kg/m3 Density τ s Residence time

REFERENCES

Bhatia MV, 1979-1983. Process Equipment Series, vol 1-5. Technomic. Biegler LT, Grossman IE, Westerberg AW, 1997. Systematic Methods of

Chemical Process Design. Prentice Hall. Branan C, 1998. Rules of Thumb for Chemical Engineers, 2nd Edition. Gulf

Publishing Company. Brennan JG, Butters JR, Cowell NP, Lilly AEV, 1990. Food Engineering Op-

erations, 3rd ed. Applied Science. Biegler LT, Grossman IE, Westerberg AW, 1997. Systematic Methods of

Chemical Process Design. Prentice Hall. Couper JR, 2003. Process Engineering Economics. McGraw-Hill. Chilton CH, 1960. Cost Estimating in the Process Industries. Mc Graw-Hill. Douglas JM, 1988. Conceptual Design of Chemical Processes. McGraw-Hill. Farkas DF, 1977. Unit operations concepts optimize operations. Chemical

Technology 7:428-433. Farkas DF, 1980. Optimizing unit operations in food processing. In: Linko P,

Malkki Y, Olkku J, Larinkari J, eds. Food Process Engineering, vol 1. Ap-plied Science, pp 103-115.

Garrett DE, 1989.Chemical Engineering Economics. Van Nostrand Reinhold. Gerrard AM, 1998. Guide to Capital Cost Estimating, 4th Edition. IChemE. Gould WA, 1996. Unit Operations for the Food Industry. CTI. Guthrie KM, 1969. Capital and operating costs for 54 chemical processes.

Chemical Engineering 77: 140–156. Holland FA, Bragg R, 1995. Fluid Flow for Chemical Engineers. Edward Ar-

nold.



Holland FA, Wilkinson JK, 1997. Process Economics. In: Perry RH, Green DW, Maloney JO, Perry’s Chemical Engineers’ Handbook, 7th Edition. McGraw-Hill.

Jowitt R. Hygienic Design and Operation of Food Plant. Ellis Horwood. Maroulis ZB, Saravacos GD, 2003. Food Process Design. Marcel Dekker. Perry RJ, Green JH, 1997. Perry's Chemical Engineers' Handbook, 7th ed.

McGraw-Hill. Peters MS, Timmerhaus KD, West RE 2003. Plant Design and Economics for

Chemical Engineers, 5th Edition. McGraw-Hill. Saravacos GD, Kostaropoulos AE, 2002. Handbook of Food Processing

Equipment. Kluwer Academic / Plenum Publishers. Troller JA, 1993. Sanitation in Food Processing, 2nd ed. Academic Press. Turton R, Builie RC, Whiting WB, Shaeiwitz JA, 1998. Analysis, Synthesis

and Design of Chemical Processes. Prentice Hall. Ulrich GD, 1984. A Guide to Chemical Engineering Process Design and Eco-

nomics. J Wiley. Valentas KJ, Levine L, Clark JP, 1991. Food Processing Operations and Scale-

up. Marcel Dekker. Walas SM, 1988. Chemical Process Equipment. Butterworths.


135

6 Operating Cost of Food Plants

I. INTRODUCTION

The total operating cost (or expenses) of a food industry consists of the plant operating (manufacturing) cost and the general (administrative and selling) cost. The plant operating cost is the sum of the costs of raw materials, utilities, labor, maintenance, depreciation, and local taxes (Brennan, 1998). The Food Processing Industry is materials-intensive, capital-intensive, and labor-extensive. There are 5 main categories of operating costs in food processing plants: Raw materials, packaging, capital, labor, energy, and busi-ness services. Agricultural food raw materials and packaging materials constitute the major plant operating cost. Average food processing industry costs: Raw mate-rials 64%, labor 11%, gross margin 25% (including capital utilization, services and profits). During the recent years, semi-finished (ingredient) food materials constitute about 40% of the total food raw materials (Connor and Schiek, 1997).

II. RAW MATERIALS

The food processing industry uses large amounts of agricultural raw materials, produced in local or distant farms. An increasing portion of semi-processed or ingredient foods are also used as special raw materials of a variety of food products. The cost of raw materials (excluding packaging) is high in soybean oil extraction (90% of the product cost) and in wheat milling (76%), but low in mayonnaise (42%), and breakfast cereals (26%).


136 Chapter 6

Raw materials for food plants include fruits and vegetables, cereal prod-ucts (grains), oil seeds. dairy products, animal products, and marine products. In growing agricultural raw materials for food processing, product vari-ety (cultivar), soil, and climatic conditions are important considerations. Me-chanical harvesting, postharvest handling, and transportation to the plant con-tribute to plant economics (Luh and Woodroof, 1988; Woodroof and Luh, 1986; Salunkhe and Kadam, 1995, 1998). Raw materials should have the suitable composition and quality for proc-essing, i.e. the basic chemical constituents (carbohydrates, proteins), and the needed vitamins, flavor components, and dietary fibers.). The price of some raw materials may be related to the percent content of a major component, e.g., percent soluble solids content (oBrix) of sugar beets used in sugar processing, and tomatoes used for tomato paste. Supply of food raw materials should aim at improving overall product quality, lowering processing costs, and improving company profitability. Some difficulties in the supply process are caused by the biological nature (variation) of the agricultural raw materials. Various types of contracts are used, e.g., forward price contracting, fu-tures contracting, and supplier partnership. Some large food processing compa-nies use vertical integration, i.e. the processor produces his own raw materials. The suppliers are usually responsible for the transportation and delivery of raw materials, packaging materials, food ingredients, food chemicals, and process equipment. R&D services to improve existing products and processes and develop new ones are usually supplied by external contractors, except in large corporations, which operate their own research facilities. The cost of agricultural raw materials is affected strongly by the country and the location of the growing land. Some agricultural products are subsidized by individual countries (e.g., USA) or confederations (e.g., the European Un-ion, EU). Subsidies increase the income of the farmers, while keeping the cost of raw materials and processed foods competitive in the world markets. Subsi-dized products in the USA (about $15 billion in 2004) include wheat, corn, cattle and hogs. In the EU subsidies (about $60 billion in 2004) cover the pro-duction of milk, wine, orange juice, olive oil, and sugar beets. The food packaging materials cost increased on the average from 4% (1947) to about 10% (1987) of the total product cost. Packaging costs are very important in soft drinks, canning, freezing, and confectionery. Paper is the most important packaging material, followed by plastics.


Operating Cost of Food Plants 137

III. FOOD PRODUCT COST DATA

1. Retail Prices

Raw materials cost is the most significant operating cost in food industry. Thus, the accuracy of the estimation is a crucial point in economics evaluations. Cost data for food materials or food-related commodities can be found in US or international statistical organizations. For example the Bureau of Labor Statistics is suggested for the US:

• http://www.bls.gov Monthly average prices are presented for more than

• 1200 food products • 40 US coded areas • 20 years

For example, Figure 6.1 depicts the retail prices for tomatoes at an average US city since 1980, based on the data which have been retrieved and compiled from the above source.


http://www.bls.gov

138 Chapter 6

0.00

1.00

2.00

3.00

4.00

5.00

6.00

1975 1980 1985 1990 1995 2000 2005 2010

Calendar year

Price($/kg)

Figure 6.1 Tomato retail prices. Data from the US Bureau of Labor Statistics.



Similarly, annual averaged data for selected food materials are presented in Table 6.1 and in Figure 6.2. Table 6.1 Annual Average Retail Prices for Selected Food Products. Data from the Bureau of Labor Statistics

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005Apples 2.05 2.00 2.08 1.98 2.03 1.91 2.09 2.16 2.30 2.09

Bread, white 1.93 1.92 1.90 1.96 2.05 2.20 2.24 2.21 2.14 2.29

Bread, whole whea 2.76 2.83 2.85 2.93 2.99 3.17 3.22 3.14 2.92 2.98

Carrots 1.13 1.13 1.23 1.24 1.24

Flour 0.63 0.67 0.66 0.65 0.64 0.67 0.69 0.69 0.67 0.71

Milk 0.69 0.69 0.71 0.75 0.73 0.76 0.73 0.73 0.83 0.84

Orange juice 3.60 3.65 3.44 3.78 3.89 4.00 3.90 3.91 3.99 3.87

Oranges Navel 1.36 1.32 1.07 1.86 1.38 1.59 1.84 1.85 1.89 2.20

Oranges Valencia 1.55 1.39 1.45 2.09 1.34 1.16 1.25 1.27 1.52 1.98

Peaches 2.59 2.31 2.99 3.15 2.91 3.28 3.34 3.24 3.13 3.49

Pears 2.02 1.86 2.06 2.09 2.13 2.13 2.20 2.18 2.57 2.46

Potato chips 6.74 6.91 6.97 7.18 7.41 7.55 7.40 7.71 7.50 7.42

Potatoes, frozen 1.97 2.06 2.22 2.24 2.31 2.37 2.45 2.25 2.16 2.05

Potatoes 0.84 0.78 0.83 0.87 0.84 0.86 1.09 1.01 1.00 1.04

Rice 1.20 1.25 1.19 1.18 1.08 1.06 1.03 1.00 1.18 1.22

Tomatoes 2.67 2.85 3.25 3.02 3.05 2.91 2.92 3.33 3.54 3.55

Wine 4.93 5.17 5.07 5.24 5.41 5.96 6.23 6.39 6.92 7.77

Yogurt 2.87 2.92 2.97 3.02 2.80 2.84 3.00 3.46


140 Chapter 6

Apples

Potatoes

Tomatoes

0.00

1.00

2.00

3.00

4.00

1994 1996 1998 2000 2002 2004 2006

Calendar year

Retail price($/kg)

Potato chips

Potatoes, frozen

Potatoes

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

1994 1996 1998 2000 2002 2004 2006

Calendar year

Retail price($/kg)

Milk

Orange juice

Wine

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

1994 1996 1998 2000 2002 2004 2006

Calendar year

Retail price($/kg)

Bread, white

Bread, whole wheat

Flour

0.00

1.00

2.00

3.00

4.00

1994 1996 1998 2000 2002 2004 2006

Calendar year

Retail price($/kg)

Figure 6.2 Annual average retail prices for selected food products. Data from the Bureau of Labor Statistics.



2. Farm Prices While retail price is the value paid by the consumer to get the goods from the market, farm price is the value received by the farmers for raw farm commodi-ties. Farm prices can be found in US or international statistical organizations. For example, the National Agricultural Statistics Services is suggested for the US:

• http://www.nass.usda.gov Figure 6.3 depicts, for example, a comparison between retail and farm prices for tomatoes during last years, while Figure 6.4 presents the corresponding retail-to-farm price ratio. Furthermore, Table 6.2 includes average farm prices for selected foods. The original data have been retrieved and compiled from the above source.


http://www.nass.usda.gov

142 Chapter 6

0.00

1.00

2.00

3.00

4.00

5.00

6.00

2000 2001 2002 2003 2004 2005 2006

Calendar year

Price($/kg)

Retail value

Farm value

Figure 6.3 Retail and farm prices comparison for tomatoes.



0

2

4

6

8

10

12

2000 2001 2002 2003 2004 2005 2006

Calendar year

Retail to farmprice ratio

Figure 6.4 Retail-to-farm price ratio for tomatoes.


144 Chapter 6

Table 6.2 Farm Prices for Selected Foods. Average Values during the two-years period 2002–2003. Data Compiled from NASS/USDA

Food Price Food Price$/kg $/kg

Commodities: Vegetables for fresh market:Wheat 0.13 Artichokes, California 1.62

Rice 0.14 Asparagus 2.48Corn 0.09 Broccoli 0.71

Peanuts 0.41 Cabbage 0.29All milk, sold to plants 0.27 Cantaloups 0.38

Milk, fluid market 0.27 Carrots 0.42Milk, manufacturing grade 0.25 Cauliflower 0.74

Honey 3.01 Celery 0.29Cucumbers 0.43

Field crops and miscellaneous: Garlic 0.59Barley 0.13 Green peppers 0.66

Beans, dry edible 0.39 Honeydew melons 0.41Cotton seed 0.11 Lettuce 0.43

Flaxseed 0.23 Onions 0.29Hay, all, baled 0.09 Snap beans 1.07

Hops 4.16 Spinach 0.79Oats 0.11 Sweet corn 0.42

Peas, dry edible 0.17 Tomatoes 0.76Peppermint oil 26.3 Watermelons 0.19

Potatoes 0.14Rye 0.12 Vegetables for processing:

Sorghum grain 0.09 Asparagus 1.14Soybeans 0.24 Cucumbers 0.27

Spearmint oil 20.3 Green peas 0.25Sweet potatoes 0.40 Lima beans 0.44

Snap beans 0.15Livestock and livestock products: Spinach 0.11

Beef cattle 1.61 Sweet corn 0.07Calves 2.19 Tomatoes 0.06

Chickens, broilers, live 0.72Eggs 0.93 Olives (California):Hogs 0.78 For all sales 0.49

Lambs 1.85 Crushed for oil 0.24Sheep 0.69 For canning 0.56

Turkeys, live 0.80 Papayas 0.66



Table 6.2 ContinuedFood Price Food Price

$/kg $/kg

Citrus Peaches:

Grapefruit 0.11 For all sales 0.39Lemons 0.22 For fresh consumption 0.60

Limes, Florida 0.16 Dried, California (dried basis) 0.45Oranges 0.09

Tangelos, Florida 0.07 Pears:

Tangerines 0.25 For all sales 0.30Temples, Florida 0.04 For fresh consumption 0.36

Dried, California (dried basis) 1.33Apples: Fo rprocessing (except dried) 0.20

For fresh consumption 0.61For processing 0.13 Plums (California):

For all sales 0.40Apricots: Prunes, dried (California) 0.79

For fresh consumption 0.65Dried, California (dried basis) 1.68 Prunes and plums (excl. California):

For processing (except dried) 0.27 For fresh consumption 0.42Avocados 1.81 For processing (except dried) 0.23

Berries for processing: Strawberries:

Blackberries (Oregon) 1.25 For fresh consumption 1.61Boysenberries (California & Oregon) 1.69 For processing 0.67

Loganberries (Oregon) 1.98Raspberries, black (Oregon) 1.95 Grapes:

Raspberries, red (Oregon & Washington) 1.19 For all sales 0.40Raisin varieties dried, California (dried basis) 0.48

Cherries: Other dried grapes 0.48Sweet 1.48 Kiwi 0.82

Tart 0.89Cranberries 0.73 Tree nuts:

Dates, California 1.60 Almonds 2.95Hazelnuts 1.02

Sugar crops: Pecans, all 2.14Maple syrup 5.58 Pistachios 2.56Sugarbeets 0.04 Walnuts 1.16

Sugarcane for sugar 0.03


146 Chapter 6

3. Retail-to-Farm Price Ratios Retail-to-farm price spread is the difference between retail price and farm price. It represents the cost of:

• processing • wholesaling • retailing

Retail-to-farm price ratio is an alternative magnitude to express this dif-ference. Retail-to-farm price ratio is a useful measure in techno-economic cal-culations. Data for calculating the retail-to-farm price ratio can be found in US or international statistical organizations. For example, the Economic Research Service is proposed:

• http://www.ers.usda.gov For example, Table 6.3 and Figure 6.5 depicts the retail-to-farm price ratio for selected foods, based on the data which have been retrieved and com-piled from the above source. Finally, Figure 6.6 and Table 6.4 summarize average values of retail-to-farm price ratios for some processed food products. These values can be used for preliminary calculations in techno-economical analysis.


http://www.ers.usda.gov


Table 6.3 Retail-to-farm price ratios Food 1998 1999 2000 2001 2002

Animal products:Eggs 1.93 2.13 1.90 1.65 1.62Beef, choice 2.11 2.04 2.05 2.18 2.29Chicken, broiler 1.86 2.04 2.10 2.30 2.34Milk 2.45 2.55 2.98 3.47 3.86Pork 3.98 4.03 3.27 3.32 4.29Cheese, natural cheddar 2.55 3.12 3.45 3.81 4.44

Crop products:

Sugar 3.15 3.23 3.73 4.44 5.00Flour, wheat 5.00 5.44 5.37 5.30 5.42Shortening 3.86 5.59 6.54 7.88 10.32Margarine 3.91 5.87 6.77 8.00 9.78Rice, long grain 4.46 5.27 7.25 9.50 11.40

Prepared foods:Peanut butter 3.91 4.44 4.50 4.67 5.03Pork and beans, 303 can (16 oz.) 9.00 9.20 9.20 11.75 11.75Potato chips, regular, 1-lb. bag 12.64 10.87 12.92 15.04 14.88Chicken, fried, frozen, 11 oz. 7.93 8.00 7.12 6.83 6.53Potatoes, french fried, frozen 9.18 9.27 10.50 12.00 13.75Bread 21.50 22.00 22.00 24.25 25.25Corn flakes, 18-oz. box 26.25 26.25 23.78 27.25 27.50Oatmeal regular, 42-oz. box 16.06 18.86 19.14 19.43 21.31Corn syrup, 16-oz. bottle 34.20 34.60 34.60 34.60 34.60


148 Chapter 6

Table 6.3 Continued Food 1998 1999 2000 2001 2002

Fruit and vegetables:FreshLemons 4.00 4.29 4.45 4.46 4.64Apples, red delicious 5.22 5.29 4.84 4.48 4.23Potatoes 6.48 5.25 5.76 6.10 6.15Oranges, California 4.69 3.60 6.89 5.91 5.23Grapefruit 5.45 5.42 6.10 6.33 6.44Lettuce 4.75 4.19 4.11 3.73 3.52FrozenOrange juice conc., 12 fl. oz. 2.65 2.68 3.07 3.16 3.28Broccoli, cut 9.29 9.57 8.06 7.05 6.59Corn 12.89 13.22 13.56 15.63 16.00Green beans, cut 15.29 15.57 20.29 20.86 16.71Canned and bottledPeas, 303 can (17 oz.) 4.00 4.55 4.64 4.25 4.33Corn, 303 can (17 oz.) 4.30 4.50 4.50 5.63 5.75Applesauce, 25-oz. jar 7.12 6.94 6.35 5.82 5.53Pears, 2-1/2 can 6.30 7.79 7.84 7.84 7.95Peaches, cling, 2-1/2 can 6.89 7.06 6.94 6.89 6.89Apple juice, 64-oz. bottle 3.09 5.38 5.50 5.59 5.75Green beans, cut, 303 can 7.33 7.50 7.50 7.50 7.67Tomatoes, whole, 303 can 14.25 14.75 11.80 11.80 12.00DriedBeans 4.93 4.93 5.21 5.54 6.00Raisins, 15-oz. box 3.50 2.81 6.10 2.21 3.33



Apples, fresh

Apples, sauce

Apples, juice

3.00

4.00

5.00

6.00

7.00

8.00

1997 1998 1999 2000 2001 2002 2003

Calendar year

Retail tofarm ratio

Oranges, fresh

Apples, fresh

Potatoes, fresh

3.00

4.00

5.00

6.00

7.00

8.00

1997 1998 1999 2000 2001 2002 2003

Calendar year

Retail tofarm ratio

Figure 6.5 Retail-to-farm price ratio for selected foods.


150 Chapter 6

Fresh

Canned and bottled

Frozen

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

1997 1998 1999 2000 2001 2002 2003

Calendar year

Retail tofarm ratio

Figure 6.6 Average retail-to-farm price for processed foods. Table 6.4 Averaged Retail-to-farm Price Values for Processed Foods

Fresh 5.07Frozen 10.8

Canned and bottled 6.95



IV. PACKAGING MATERIALS

The packaging materials used for processed foods include metal, paper, plas-tics, and glass. Bulk packing is used for food products delivered to institutional consumers or to re-processors. Individual consumer packages are more expen-sive per unit mass (kg) of product. Cost data of various packaging materials can be obtained from local or international suppliers (Saravacos and Kostaropoulos, 2002). The cost of se-lected packaging materials, used in the application examples of Chapters 7 and 8, is presented in Table 6.5. Table 6.5 Cost of Selected Food Packaging Materials (Application Examples of Chapters 7, 8) Description Capacity Use $/p kg/p $/kg

Plastic drums 208 L Pulps 20.0 235 0.09Metallic cans 0.85 L (No 2 1/2) Canned fruits 0.10 0.85 0.12Glass bottles 0.75 L Wine 0.15 0.75 0.20Paper cartons 1 L Milk 0.10 1.00 0.10Plastic cups 150 g Yogurt 0.12 0.15 0.80Plastic bags 0.5 kg Frozen vegetables 0.05 0.50 0.10

V. UTILITITIES

Food processing consumes relatively less energy than other industries, e.g., chemicals, petroleum, and steel. The US food system (agriculture, processing, distribution, and consumption) consumes about 13% of the total national en-ergy. Food processing consumes about 4% of the total (Connor and Schiek, 1997). Fuel cost represents about 1.8% of the total product cost or 4.5% of the value added in food processing, which is considerably lower than the fuel cost of all manufacturing. The energy crisis (sharp increase of oil prices) of the 1970s led to consid-erable savings and improved technology in energy use. The average increase in energy consumption in recent years (3%) is about one-half of the increase in food processing production (6%). The food industry is, in general, less affected from energy crises than some energy-consuming industries, such as chemicals and metals. Table 6.6 shows typical energy consumption in various food processing plants. The energy values (MJ/kg or GJ/ton of product) were derived from data of a survey of the US food processing industry in the period 1980–1985 (Singh,


152 Chapter 6

1986). Energy (mainly heat) losses in the food processing industries varied according to the process and equipment used, ranging between 10–30 % of the total energy. Steam and hot water are used mainly in thermal food processing opera-tions, such as evaporation, drying, blanching, pasteurization, and sterilization. Heating fuel (mainly gas or oil) is used for direct heating of food products, such as drying, roasting, and cooking. Most of the electrical power in the food processing industries is used in refrigeration and freezing processes, and for running motors of processing equipment. Electricity is also essential in space air conditioning and illumina-tion. High energy consumption characterizes energy-intensive operations, such as drying, evaporation, extraction, grinding, roasting, and distillation. High energy consuming products, such as instant coffee, beet and cane sugar, breakfast cereals, and citrus juice concentrate, involve more than one of these operations. Fuels used in food processing plants include, natural gas, LPG, fuel oil, and coal. Cost of petroleum fuels depends on the cost of oil ($/barrel); oil prices fluctuate widely, due to international crises. The cost of coal is relatively stable, but its use in food processing is limited to heating some steam boilers. Typical heating values of fuels are: natural gas 37.2 MJ/m3, LPG 50.4 MJ/m3, and fuel oil 41.7 MJ/kg. The cost of electricity depends directly on oil prices. A significant part of electricity is derived from nonfossil sources, e.g., hydroelectric, nuclear, and renewable sources. Renewable energy sources include wind and solar power. Significant electrical energy can be provided from windmills and direct conversion of solar energy (photoelectric cells). Thermal energy can be derived from solar heaters of water or air. The use of renewable energy sources in food processing is confined to low-energy ap-plication, such as solar panels to heat air for drying of foods (Saravacos and Kostaropoulos, 2002), or heating water in a dairy plant . It should be noted that a significant investment is needed for the installation of a solar heating system, since the incident solar radiation is relatively low, e.g., 0.6 kW/m2 for a 7-hour operation per day, or 15 MJ/m2 day in a temperate zone. Energy losses in food processing industries are about 25%.



Table 6.6 Energy Use in Food Processing Plants Total Energy Use Percent Energy (%) Food Product MJ / kg product Steam Fuel Electricity High Energy Use Instant coffee 60.2 41 54 5 Potato granules 25.2 38 53 9 Beet sugar 20.5 56 40 4 Cheese and dry whey 14.3 75 18 7 Breakfast cereals 12.8 34 54 12 Milk powder 12.0 62 32 6 Citrus juice concentrate 10.8 24 39 37 Intermediate Energy Use Chocolate / candy 8.4 69 5 26 Soybean oil 8.2 92 - 8 Canned meat 5.8 75 16 9 Bread rolls 4.9 62 20 8 Sausages 4.3 51 22 27 Frozen cooked food 4.0 15 40 45 Canned evaporated milk 3.6 88 - 12 Milk chocolate 3.0 47 23 30 Beer 2.4 58 30 12 Canned fruits/vegetables 2.2 94 - 6 Low Energy Use Yogurt 1.2 60 14 26 Wine 0.6 34 - 66 Wheat flour 0.5 38 - 62 Fluid milk 0.5 54 - 46 Data adapted from Singh (1986).


154 Chapter 6

VI. UTILITY COST ESTIMATING MODEL

Utility operating cost is usually the most significant variable operating cost after raw materials. The effectiveness of an investment depends on the accu-racy in estimating the cost of the utilities. In order to obtain a consistent and reliable estimation of the utilities cost, a robust model is needed to reconcile (compensate) the market fluctuations. Such a model is proposed in this section. Utility operating costs include: a. Energy related utilities

• Fuel (fuel oil, natural gas, etc.) • Electricity (purchased, self-generated) • Steam (high, medium, and low pressure) • Cooling water • Refrigeration

b. Nonenergy related utilities • Process water • Compressed air

c. Waste treatment utilities • Waste disposal • Waste treatment

The best way to estimate the cost of utilities is to relate the cost of any utility to the corresponding fuel cost by using thermodynamics and typical effi-ciencies of power plants. Market fluctuations should also be taken into account.

1. Fuel oil Cost Fuel oil cost varies significantly due to market fluctuations. Figure 6.7 depicts the fuel oil evolution during the last twenty years. The values refer to annual average data in an average city in USA (Bureau of Labor Statistics). Diachronic values of the fuel oil cost follows the crude oil market price variation, which is presented in Figure 6.8. The relationship is linear as re-vealed in Figure 6.9 and expressed by the equation:

24 1023.11037.8 −− ×+×= bf CC where Cb ($/bbl) is the crude oil cost and Cf ($/kWh) the fuel oil cost.



0.00

0.10

0.20

0.30

0.40

0.50

0.60

1985 1990 1995 2000 2005 2010Calendar year

Fuel oil cost($/L)

Figure 6.7 Fuel oil cost during the 20-year period 1986–2005. Data from the Bureau of Labor Statistics.

0

10

20

30

40

50

60

1985 1990 1995 2000 2005 2010Calendar year

Crude oilcost ($/bbl)

Figure 6.8 Crude oil cost during the 20-year period 1986–2005. Data from the Bu-reau of Labor Statistics.


156 Chapter 6

0.00

0.01

0.02

0.03

0.04

0.05

0.06

0 10 20 30 40 50 6Crude oil cost ($/bbl)

Fuel oil cost($/kWh)

0

Figure 6.9 Effect of crude oil cost on fuel oil cost during the period 1986–2005.

2. Natural gas Cost

Natural gas cost varies less than fuel oil cost. Figure 6.10 depicts the natural gas cost during the last twenty years. The values refer to annual average data in an average city in USA (Bureau of Labor Statistics). Diachronic values of the natural gas cost is related to the fuel oil cost as presented in Figure 6.7. The relationship is linear as revealed in Figure 6.11 and expressed by the equation:

009.0652.0 −= fg CC where Cg ($/kWh) is the natural gas cost and Cf ($/kWh) the fuel oil cost.



0.000

0.005

0.010

0.015

0.020

1985 1990 1995 2000 2005 2010Calendar year

Natural gascost ($/kWh)

Figure 6.10 Natural gas cost during the 20-year period 1986–2005. Data from the Bureau of Labor Statistics.

y = 0.652x - 0.009

0.000

0.005

0.010

0.015

0.020

0.01 0.02 0.03 0.04 0.05 0.06Fuel oil cost ($/kWh)

Natural gascost ($/kWh)

Figure 6.11 Relationship between the natural gas and the fuel oil cost during the period 1986–2005.


158 Chapter 6

3. Electricity Cost When electricity is bought from centralized power generation companies, the price tends to be more stable than fuel costs. Figure 6.12 depicts the electricity cost evolution during the last twenty years. The values refer to annual average data in an average city in USA (Bureau of Labor Statistics). The diachronic variation is more smooth than the fuel oil cost as concluded by comparing Fig-ures 6.12 and 6.7. The effect of fuel oil cost on electricity cost is revealed in Figure 6.13 and expressed adequately by the equation:

076.0425.0 += fe CC where Ce ($/kWh) is the electricity cost and Cf ($/kWh) the fuel oil cost. The above cost of electricity refers to average cost from a public pro-vider. Instead, the self-generating cost can be estimated using a typical process efficiency according to the following equation:

e

fe

CC

η='

where Ce’ ($/kWh) is the self generating electricity cost, Cf ($/kWh) is the fuel oil cost, and ηe the system efficiency.



0.00

0.02

0.04

0.06

0.08

0.10

0.12

1985 1990 1995 2000 2005 2010Calendar year

Electricitycost ($/kWh)

Figure 6.12 Electricity cost during the 20-year period 1986–2005. Data from Bureau of Labor Statistics.

y = 0.425x + 0.076

0.06

0.07

0.08

0.09

0.10

0.11

0.12

0.01 0.02 0.03 0.04 0.05 0.06Fuel oil cost ($/kWh)

Electricitycost ($/kWh)

Figure 6.13 Effect of fuel oil cost on electricity cost during the period 1986–2005.


160 Chapter 6

4. Steam Cost Steam costs vary with the price of fuel. If steam is generated only for heating purposes and not used for power generation in steam turbines, then the cost can be estimated from local fuel costs assuming a boiler efficiency.

b

fs

CC

η=

where Cs ($/kWh) is the steam cost at a reference pressure of 42.5 bar, Cf ($/kWh) is the fuel oil cost, and ηb the boiler efficiency. When combined heat and power generating systems are used, the follow-ing equation estimates the steam cost versus the steam pressure:

( ) ( ) ss CPPC 25.0)ln(20.0 += where Cs ($/kWh) is the high-pressure steam cost and Cs (P) is the cost of the steam at pressure P(bar).

5. Cooling Water Cost

Cooling water costs tend to be low relative to the value of both fuel and elec-tricity. The cost of cooling duty provided by cooling water is of the order of 10% that of the cost of power.

ew CcprC = where Cw ($/kWh) is the cooling water cost and cpr = 0.100 for tower water 0.085 for river or sea water 0.115 for well water



6. Refrigeration Cost The cost of power required to operate a refrigeration system can be estimated approximately by the following model:

wr

er

r Ccop

Ccop

C ⎟⎟⎠

⎞⎜⎜⎝

⎛++=ηη

111

where Cr ($/kWh) is refrigeration cost, Ce ($/kWh) is the electricity cost, and Cw ($/kWh) the cooling water cost. ηr is the system efficiency and cop the coef-ficient of performance defined by the equation:

min

min

dTTTdTTT

TTTcop

wc

re

ec

e

+=−=−

=

where Te(K) the refrigerant temperature at evaporator, Tc(K) the refrigerant temperature at condenser, Tr(K) the required process temperature, Tw(K) the cooling water temperature, and dTmin(K) the minimum heat exchanger tempera-ture difference.

7. Energy-Related Utilities Cost

The above suggested model estimates adequately the cost of the energy-related utilities versus the crude oil price. The results are summarized in Figures 6.14 and 6.15 for crude oil price of 67 and 80 $/bbl, respectively. For comparison the cost of coal as well as the cost of thermal systems (for chemical processes) are also presented.


162 Chapter 6

Utility Description $/kWh $/ Common unitElectricity Purshased 0.105

Self generated 0.085Crude 67.0 $/bblFuels Fuel oil 0.068 0.68 $/L

Natural gas 0.46 $/m3Coal 65.0 $/t

Thermal systems 300 C 0.083400 C 0.089600 C 0.105

Steam 40 bar 0.075 37.4 $/t10 bar 0.054 26.9 $/t5 bar 0.043 21.7 $/t1 bar 0.019 9.5 $/t

Cooling water tower 0.011 0.244 $/m3river or sea 0.208 $/m3

well 0.281 $/m3Refrigeration 5oC 0.073

-20oC 0.091 -50oC 0.135

0.00

0.05

0.10

0.15

-200 0 200 400 600 800

Temperature (oC)

Utility cost($/kWh)

Refrigeration

Cooling water

Steam

Thermal systems

Purchased electricity

Self-generated electricity

Crude oil cost ($/bbl) = 67.0

Figure 6.14 Cost estimation for energy related utilities. Crude oil price = 67 $/bbl.



Utility Description $/kWh $/ Common unitElectricity Purshased 0.110

Self generated 0.099Crude 80.0 $/bblFuels Fuel oil 0.079 0.79 $/L

Natural gas 0.53 $/m3Coal 65.0 $/t

Thermal systems 300 C 0.096400 C 0.103600 C 0.122

Steam 40 bar 0.087 43.3 $/t10 bar 0.062 31.2 $/t5 bar 0.050 25.1 $/t1 bar 0.022 11.0 $/t

Cooling water tower 0.011 0.255 $/m3river or sea 0.217 $/m3

well 0.293 $/m3Refrigeration 5oC 0.076

-20oC 0.095 -50oC 0.141

0.00

0.05

0.10

0.15

-200 0 200 400 600 800

Temperature (oC)

Utility cost($/kWh)

Refrigeration

Cooling water

Steam

Thermal systems

Purchased electricity

Self-generated electricity

Crude oil cost ($/bbl) = 80.0

Figure 6.15 Cost estimation for energy related utilities. Crude oil price = 80 $/bbl.


164 Chapter 6

8. Nonenergy-Related Utilities Cost Nonenergy related utilities cost is generally more stable than the energy-related utilities cost. Typical values for 2006 are presented in Table 6.7. A general in-flation index can be used for updating the next years. Table 6.7 Nonenergy-related Utilities Cost

Utility Description CostAir Process 0.025 $/m3

Instrument 0.050 $/m3Water Process 0.50 $/m3

Boiler feed 2.50 $/m3Deionized 1.00 $/m3

9. Waste Treatment Cost Waste treatment is not strictly considered as utility, but since it has the same characteristics as an operating cost as the utilities, it is presented here. Typical values are presented in Table 6.8. Table 6.8 Nonenergy-related Utilities Cost

Utility Description CostWaste disposal Non hazardous 35 $/t

Hazardous 145 $/tWaste Treatment Primary 0.40 $/t

Secondary 0.45 $/tTertiary 0.55 $/t

The high disposal costs shown in Table 6.8 refer to general processing plants, which generate solid and semi-solid wastes. The undesirable wastes are either removed by track to special disposal / treatment sites, or treated in plant by drying or combustion. The dried waste is either used as a by-product of the plant or disposed to an outside site. Disposal of hazardous wastes, usually chemicals, requires special com-bustion facilities or safe packaging and disposal to special outside sites. Primary wastewater treatment consists of sedimentation and/or filtration of suspended particles. Secondary treatment involves biological oxidation of organic waste in aerated tanks or basins. Tertiary treatment, usually not prac-ticed in food plants, involves removal of mineral components and odors. Organic solid wastes and wastewater from small to medium sized food plants, located away from inhabited areas, can be disposed to nearby agricul-tural land for irrigation and fertilizing of growing plants. For the examples of food processing plants, considered in Chapters 7–9 of this book, the combined cost of treatment and disposal of the generated solid and water wastes can be taken as approximately equal to 5 $/t.



VII. LABOR

The food processing industry employs full-time and part-time labor. The food preservation plants utilize various seasonal raw materials and employ several part-time workers. Seasonal labor of relatively low cost can be recruited from local areas, with the workers returning to farm jobs, after the processing “cam-paign”. Production workers, up to the working foreman, are engaged in fabricat-ing, processing, assembling, inspecting, receiving, storing, handling, packag-ing, warehousing, shipping, maintenance, repair, product development, power plant operation, and record keeping. Nonproduction workers are engaged in factory supervision above the working foremen level, sales, advertising, credit, installation and servicing, clerical and routine office functions, executive, purchasing, financing, legal, personnel, professional, and technical. Labor cost in food processing plants average 13%, is lower than the labor cost in all US manufacturing sector (20%). High labor cost is found in baking (29%) and ice cream/confectionery 15%. Low labor cost is met in soybean oil, cheese, and milling industries. These industries use large labor-saving machin-ery to increase worker productivity. The process labor requirements can be estimated from the process flow-sheet and the material and energy balances. The supporting labor (maintenance, supervision, staffing (engineering support, laboratory, accounting, clerical, and secretarial) can be estimated using empirical factors, such as: total personnel = 3 x (process labor). Estimation of labor hours: (hours/shift) x (shifts/day) x (days/year) = hours/year. Assuming a continuous plant operation, we have 7 x 24 = 168 h/wk. For a 40 h/wk, 168 / 40 = 4 x (operators per shift). Food processing plants employ several unskilled workers (labor), some of them on temporary basis.


166 Chapter 6

VIII. LABOR COST ESTIMATING MODEL

1. Factorial Method

A factorial method is proposed in order to estimate the labor cost in a food plant. The method is based on the equation:

MCftC LLabyLab = where CLab the annual labor cost ($/y) ty the annual operating time (h/y) CL the production worker hourly rate ($/h) M the required manpower (production workers) fLab the labor cost correction factor The labor cost correction factor is a product of the following individual correc-tion factors:

OBQTSCLab fffffff = where fC the country effect fS the supervising and clerical assistance fT the advanced technological and automating level fQ the skilled and qualified level of the personnel fB the social benefits B

fO the overtime work The country effect factor fC is expressing the average country wage rates comparative to US for which fC=1.00. The supervising factor is usually consid-ered for preliminary calculation as fS=1.20. The automating level factor varies between 0.80 and 1.20 according to the automation level of the plant and an average value may be assumed fT=1.00. The personnel qualified factor varies according to the personnel qualifications and a value of fQ =1.50 is proposed for preliminary calculations. The social benefits factor is adequately estimated us-ing a value of fB=1.40. The overtime factor is estimated according to the work-ing schedule comparative to standard with no overtime schedule f

B

O=1.00. Thus, an overall labor factor (fLab) of 2.50 is appropriate for typical calcu-lations:



fC =1.00 fS =1.20 fT =1.00 fQ =1.50 fB =1.40 B

0

0

fO =1.00

2. Annual Operating Time

The annual operating time ty (hours) is calculated by the following equation:

hpsspddpwwpyty ×××= where wpy weeks per year dpw days per week spd shifts per day hps hours per shift Food plants are characterized by seasonal operation. Typical annual op-erating times are presented in Table 6.9 for various operating modes. Table 6.9 Typical Modes of Operation for Food Plants Mode wpy dpw spw ty

1 season5 days 1 shift 12.5 5 1 5005 days 2 shifts 12.5 5 2 10007 days 2 shifts 12.5 7 2 14005 days 3 shifts 12.5 5 3 1500continuous 12.5 7 3 2100

2 seasons5 days 1 shift 25 5 1 10005 days 2 shifts 25 5 2 20007 days 2 shifts 25 7 2 28005 days 3 shifts 25 5 3 3000continuous 25 7 3 420

All the year5 days 1 shift 50 5 1 20005 days 2 shifts 50 5 2 40007 days 2 shifts 50 7 2 56005 days 3 shifts 50 5 3 6000continuous 50 7 3 840


168 Chapter 6

3. Manpower The required manpower can be estimated for preliminary analysis by several short-cut methods, two of which are suggested in this book: a. The first method counts the processes included in the plant and assigns typical values for each process. That is, the required manpower M is calculated by the equation:

∑=

=N

jjmM

1

where mj is the typical requirements for the j process. Table 6.10 represents some typical requirements for the purposes of this book. b. The second method uses existing data and scales-up according to the plant capacity. That is:

LnFMM 0= where F is the plant capacity (t/h) and the empirical parameters M0 and nL char-acterize the specific plant category. For food plants a good estimation can be obtained by fitting the above equation to systematic data by Bartholomai (1987). The results are presented in Figure 6.16.

4. Labor Rates

Detailed data for Labor hourly rates for various personnel categories at various locations are presented systematically by the Bureau of Labor Statistics:

• http://www.bls.gov Figure 6.17 depicts, for example, the US average production worker hourly rate (not including benefits) during the last decade. Comparative labor cost for various personnel categories used in food plants are presented in Table 6.11. Overtime work is taken into account by considering a 50% addition for night operation and 100% addition for weekend operation as shown in Table 6.12. The labor cost for other than US countries is presented in Table 6.13 and Figure 6.18.


http://www.bls.gov


Table 6.10 Typical Personnel Requirements for Various Food Processes

Eqipment Operators

Silo 0.10Storage tank 0.10Process vessel 0.20Agitated jacketed reactor 1.00

Electric motor 0.10Agitator 0.10Compressor 0.50Pump 0.10Fan 0.10

Conveyor belt 0.10Belt washer 0.50Belt dryer 1.00Belt freezer 1.00

Scraped surface heat exchanger 1.00Shell and tubes heat enchanger 0.50Plate heat exchanger 1.00Tubular evaporator 1.00Forced circulation evaporator 1.00

Vacuum drum filter 1.00Plate filter 1.00Vibrating screen 0.50

Tray dryer 1.00Vibratory conveyor dryer 1.00Rotary dryer 1.00Fluidized bed dryer 1.00

Cutter 1.00Crusher 1.00Grinder 1.00Ball mill 1.00

Centrifuge 1.00Screw press 1.00Extruder 1.00Packaging equipment 1.00

Turbine 1.00Boiler 1.00


170 Chapter 6

fruit juice

frozen bread

arabic bread

white bread

cooking oil

soybean oil

protein

sausages

slaughter products

seafood

frozen shrimp

frozen fish

corn snacks

tortilla chips

quenelles (dumplings)

vinegar

dry yeast

lasagnapasta

corn starch

parboiled rice

ice cream

yogurt

egg powder

skim milk powder

milk products

blue cheese

mozzarella cheese

frozen vegetables

tomato paste

concentrated juice

fruit puree

apple products

M = 10 F2/3

1

10

100

1000

0.1 1 10

Plant capacity F(t/h)

Workers

100

Figure 6.16 Personnel requirements for several food plants. Data compiled from Bartholomai (1987).



0

5

10

15

20

1994 1996 1998 2000 2002 2004 2006Calendar year

Unskilled laborrate ($/h)

Figure 6.17 Average hourly rates of production workers during the 10-year period 1996–2005. Data from the Bureau of Labor Statistics. Table 6.11 Comparative Labor Cost for Various Categories Category Relative costUnskilled operator 1.00Skilled operators 2.00Mechanics 3.00Technicians 3.50Foremen 4.00Plant managers 5.00 Table 6.12 Comparative Labor Cost for Overtime Work hours per week Relative cost 1 - 88 1.00 89 - 144 1.50145 - 168 2.00


172 Chapter 6

Table 6.13 Comparative National Labor Cost Relative to USA Country 1999 2000 2001 2002 2003 2004

Norway 1.31 1.15 1.13 1.28 1.42 1.50 Denmark 1.29 1.11 1.07 1.13 1.35 1.46 Germany 1.30 1.15 1.09 1.13 1.33 1.40 Netherlands 1.13 0.98 0.96 1.03 1.23 1.33 Finland 1.14 0.99 0.96 1.02 1.22 1.32 Switzerland 1.23 1.07 1.05 1.11 1.25 1.31 Belgium 1.17 1.02 0.96 1.02 1.19 1.29 Sweden 1.14 1.02 0.89 0.95 1.13 1.23 Austria 1.14 0.97 0.93 0.97 1.14 1.22 Luxembourg 1.04 0.89 0.84 0.87 1.04 1.15 United Kingdom 0.91 0.85 0.81 0.85 0.95 1.07 France 0.90 0.78 0.76 0.80 0.95 1.03 United States 1.00 1.00 1.00 1.00 1.00 1.00 Australia 0.84 0.73 0.65 0.72 0.89 1.00 Ireland 0.73 0.65 0.66 0.71 0.86 0.95 Japan 1.08 1.12 0.94 0.87 0.91 0.95 Canada 0.85 0.84 0.79 0.78 0.87 0.92 Italy 0.82 0.70 0.66 0.69 0.81 0.88 Spain 0.63 0.54 0.52 0.56 0.67 0.7 New Zealand 0.47 0.40 0.37 0.40 0.50 0.5 Israel 0.56 0.58 0.60 0.52 0.52 0.53 Korea 0.39 0.42 0.38 0.41 0.45 0.50 Greece 0.44 0.46 0.53 0.53 0.50 0.47 Singapore 0.37 0.36 0.34 0.31 0.32 0.32 Portugal 0.27 0.23 0.22 0.24 0.28 0.30 Taiwan 0.30 0.31 0.29 0.26 0.26 0.26 Hungary 0.15 0.14 0.15 0.18 0.22 0.25 Hong Kong 0.28 0.28 0.28 0.26 0.25 0.24 Czech Republic 0.15 0.14 0.15 0.18 0.21 0.23 Brazil 0.18 0.18 0.14 0.12 0.12 0.13 Mexico 0.10 0.11 0.12 0.12 0.11 0.11 Sri Lanka 0.02 0.02 0.02 0.02 0.02 0.0

46

2



Norway

Germany

United Kingdom

Japan

Spain

Greece

Brazil

Sri Lanka0.00

0.25

0.50

0.75

1.00

1.25

1.50

2000 2001 2002 2003 2004 2005

Calendar year

Labor costrelative to USA

Figure 6.18 Comparative National Labor Cost Relative to USA.


174 Chapter 6

REFERENCES

Bartholomai A, 1987. Food Factories: Processes, Equipment, Costs. VCH Publishers. Brennan D, 1998. Process Industry Economics. ICHEME, Rugby, UK. Connor JM, Schiek WA, 1997. Food Processing. An Industrial Powerhouse in Transi-

tion 2nd Edition. John Wiley. Couper JR, 2003. Process Engineering Economics. Marcel Dekker. Luh BS, Woodroof JG, 1988. Commercial Vegetable Processing. 2nd Edition, Van

Nostrand Reinhold. Maroulis ZB, Saravacos GD, 2003. Food Process Design. Marcel Dekker. Moresi M, 1984. Economic study of concentrated citrus juice production. In: McKenna

B ed. Engineering and Food, Vol. 2. Elsevier Applied Science Publ. Peters MS, Timmerhaus KD, West RE, 2003. Plant Design and Economics for Chemical

Engineers, 5th Edition. McGraw-Hill. Salunkhe DK, Kadam SS, 1995. Handbook of Fruit Science and Technology. Marcel

Dekker. Salunkhe DK, Kadam SS, 1998. Handbook of Vegetable Science and Technology. Mar-

cel Dekker. Saravacos GD, Kostaropoulos AE, 2002. Handbook of Food Processing Equipment.

Kluwer Academic/Plenum Publ. Singh RP, 1986. Energy in Food Processing. Elsevier. Woodroof JG, Luh BS, 1986. Commercial Fruit Processing, 2nd Edition, Van Nostrand

Reinhold.


175

7 Food Preservation Plants

INTRODUCTION

The food preservation plants utilize agricultural and marine raw materials to process and preserve food products, applying the principles and technology of thermal processing, refrigeration and freezing, and concentration/dehydration. Novel food preservation methods, such as irradiation and super–high pressure, are in the development stage, and industrial production is at the present time limited. The food preservation industry is highly depended on the raw materials, some of which (e.g., fruits and vegetables) are seasonal and depend on the soil and climate of the growing area. The raw materials should be tailored to proc-essing requirements, i.e. good yield, maturity, special harvesting properties, good transportation and storage stability, and good quality attributes, such as color, flavor, texture, and total solids content (%TS). The cost of raw food material affects strongly the cost of the preserved food products, especially in high quality fruits, such as oranges (50–60% of the product cost). The food preservation plants are usually located near the agricultural production of the raw materials. For seasonal products, the processing plant is not utilized fully, e.g., operation for only 3–4 months a year. Longer operating periods can be achieved by processing raw materials which mature at different times. Transportation of raw materials by trucks from longer distances may improve the economics of food plant operation. Fish processing (canning, freezing) plants are located near sea ports for ready access to seafoods, transported by fishing ships from the catch areas. Similarly, meat and poultry processing plants should be located near slaughter houses and chicken raising farms.


176 Chapter 7

The plant utilities of these plants, especially energy and water, represent a significant operating cost. Energy in the form of steam is required in evapora-tion, dehydration, and thermal processing operations (Singh, 1986). Large amounts of water are required for washing the raw materials and water–cooling operations. Significant amounts of wastewater are generated during food proc-essing, which should be treated or disposed to protect the environment. Food packaging in consumer packages is a major operating cost item in canning and freezing processes. Concentrated and dehydrated food products are usually bulk–packed economically in large containers. Hygienic (sanitary) and food safety considerations, such as HACCP, ISO, GMP, and government regulations increase significantly the cost of food processing plants and food products.

1. Food Preservation Plants Table 7.1 lists several food preservation plants of economic importance. A large number of such plants use fruits and vegetables as raw materials, which are available only during the growing period, e.g., 2–4 months during summer and fall. Milk (mainly cow’s), meat, poultry, and fish can be available through-out the year. A large portion of the operating labor of the fruit and vegetable preserva-tion plants may be seasonal workers from the plant surroundings. The perma-nent labor consists of technicians and equipment operators, who can do main-tenance work and product handling (storage, packaging) during off–season. Table 7.1 Food Preservation PlantsPreservation Process Processing Plant

Pasteurization Milk pasteurization Fruit juice pasteurization

Sterilization Canning of fruit and vegetable products Canning of fish and meat products Canning of food and ready meals

Aseptic processing UHT milk sterilization Aseptic packing of juices and concentrates

Freezing Freezing of vegetable products Freezing of fish and meat Freezing of ready meals

Dehydration Air dehydration of fruits and vegetables Spray drying of milk products Vacuum / freeze drying of sensitive foods


Food Preservation Plants 177

Solid and liquid wastes in some small plants can be disposed in agricul-tural land, if available, near the food plant to comply with the local environ-mental laws. Refrigeration (temperatures 0–10oC) is often used in the storage of heat–sensitive products, such as fruits, fish, and animal products.

2. Application Examples

The economics of 6 different food preservation plants is analyzed in this sec-tion. They represent conventional food processes of economic importance, which can be applied to various food industries around the world. They are medium–sized plants, resembling actual commercial food processing plants, which can be operated in any country with an elementary technological infra-structure. The hypothetical food plants are designed by normal engineering proce-dures, based on material and energy balances, unit operations, and capital and operating cost estimates (Chapters 3–6). Several simplifying assumptions, nec-essary in the design and economic analysis procedures, are made using engi-neering judgment, and literature data from food plants. They represent prelimi-nary designs, useful for cost estimations. Detailed final designs are prepared by experienced engineers. Application examples 7.1 and 7.2 are concerned with the design and eco-nomics of food preservation plants, employing concentration and thermal treatment of fruit and vegetable juices (tomato and orange). Raw material, la-bor, and utility costs in the form of steam and fuel are very important in process economics. Preliminary designs of the tomato paste and orange juice concen-trate plants were published, respectively, by Maroulis and Saravacos (2003) and Saravacos and Kostaropoulos (2002). The economics of citrus juice con-centration was analyzed by Moresi (1984). Example 7.3 outlines the design and economics of ultra high temperature sterilization and aseptic packaging of fluid milk. Raw material (milk), labor, and packaging costs are the most important operating cost items. Example 7.4 outlines the design and economics of a fruit canning plant (peaches and apricots), which is traditional canning industry. Raw materials, labor, and packaging materials are the major operating costs. Example 7.5 outlines the technology and economics of commercial freezing of two vegetable products (peas and green beans). Raw materials, la-bor, and energy (refrigeration) costs are important. Example 7.6 describes the technology and economics of air dehydration of two typical vegetable products (potatoes and carrots). Raw materials, labor, and energy costs for dehydration operations are the major operating costs.


178 Chapter 7

I. TOMATO PASTE PLANT

1. Process Technology

a. Raw Materials Tomato varieties used for tomato paste and tomato puree (pulp) should have high solids content, a bright red color, and a characteristic tomato flavor. The tomato fruits mature almost simultaneously, and so harvesting of the entire tomato field can be carried out in only one operation. In the U.S., mechanical harvesting is normally used, requiring special tomato varieties (Gould, 1992). Tomatoes are a commercial vegetable grown in several countries during the summer period, for both fresh market and food processing (Salunkhe and Ka-dam, 1997). Ripe tomatoes contain 4.5–7.0% TS (total solids), determined quickly by refractometer. The refractometer readings (oBrix) represent the % soluble solids content, which in tomato products is about 1% lower than the % TS. The oBrix values are converted to exact %TS or specific gravity, using special analytical tables for tomato products (Luh and Woodroof, 1988; NFPA, 1997). Tomatoes used for processing should have an acidity of 0.35–0.55% (cit-ric acid), a pH less than 4.2, and an ascorbic acid (vitamin C) content of at least 20 mg/100 g. The high acidity classifies the tomato products as acid foods, which simplifies thermal processing and preservation operations. There is no danger of growth of the toxin–producing spoilage microorganism Clostridium Botulinum (Downing, 1996). The tomato processing plant should be located near the tomato growing fields, since harvested ripe tomatoes are very sensitive to mechanical damage and spoilage during transportation by truck in bulk or in lugs (boxes) at long distances. Tomatoes are processed as fast as possible, when received in the plant. Intermediate storage before processing is avoided, because of the danger of spoilage, since harvesting of tomatoes takes place during the summer period, when high ambient temperatures prevail.

b. Concentrated Tomato Products The U.S. standards of identity define tomato paste as a concentrated product made by evaporation of pulped ripe tomatoes and containing at least 24% TS, salt–free, as determined by refractometer. Commercial tomato paste contains usually about 32% TS. Tomato puree or tomato pulp, made from pulped ripe tomatoes, contains less than 24 % TS, salt–free, as determined by refractometer (Downing, 1996). Tomato ketchup (catsup) is made by blending a tomato product (pulped ripe tomatoes, tomato juice, or tomato paste) with salt, vinegar, onions, and



various seasonings, and cooking the mixture in open–kettles (boilers) to a con-centration of 25–30% TS.

c. Inspecting/Washing Samples of tomatoes, received in the plant, are inspected for color and percent of defective fruit (green, bruised, or spoiled) unfit for processing. The inspected sound tomatoes are washed thoroughly in washing ma-chines to remove any soil or external material. The tomatoes are soaked and brushed in hot water (54oC) for 3–5 min, and subsequently they are sprayed with pressure (9 bar) water jets. The washed tomatoes are sorted and any unfit product is rejected.

d. Crushing/Finishing The washed sound tomatoes are crushed by the “hot break” process, i.e. heating to about 93oC for 5 min and crushing to extract the pectin and inactivate the pectic enzymes. The crushed tomatoes are cooled to about 40oC and passed through a cylindrical finisher (screen) to remove any skins, cores, and seeds from the tomato juice.

e. Concentration The thick tomato juice is concentrated in multiple–effect evaporators until the total solids content reaches 32%. Usually, 3–effect evaporation systems are used in order to reduce energy (steam) consumption. Forced–circulation evapo-rator units are applied to prevent thermal fouling and increase the heat transfer (evaporation) rate. Tomato products are not very heat sensitive, and they can be subjected to relatively high temperatures and long residence times in the evapo-ration system.

f. Sterilization/Packing The tomato paste product of this example will be packed aseptically in poly-ethylene–lined fiber drums of 55 gallons (208 L) capacity for commercial and institutional use. Continuous flow sterilization and packaging equipment will be used (Downing, 1996). Larger aseptic packing containers and tanks can be used for storage and transportation of tomato paste. Part of the tomato paste may be packaged for the consumers in small–size enameled metal cans.

g. Plant Effluents Solids waste (seeds, skins, cores, unfit fruit) can be used as an animal feed, or disposed to the soil (agricultural use). Wastewater can be used for agricultural field irrigation, or disposed at the local sewage system, if available. In some large plants, a wastewater treatment (biological oxidation) facility may be required.


180 Chapter 7

2. Process Flowsheet A material and energy balance diagram of the tomato paste plant is shown in Figure 7.1a. The balances are based on 1 kg product. Thus, 5.62 kg of raw to-matoes are required for 1 kg tomato paste. In the same diagram the utilities requirements are presented in kWh/kg, excluding electricity. The requirements in electricity, used mainly for electrical motors, will be presented in the next paragraphs after the equipment sizing procedure. A process flowsheet based on the above technology is presented in Fig-ure 7.1b. The flowsheet depicts the main processes and defines their interrela-tions. Three intermediate storage tanks are included (processes No. 8, 10, 12), while pumps and other equipment of minor importance are not shown in the flowsheet. The basic assumption is that the examined system consists of a process-ing plant with central utilities, e.g., steam, cooling water, waste treatment, etc. Thus, the utilities system is not included in the flowsheet, but an operating allo-cated cost is considered in the cost analysis section. Steam (S) is used in heating (No. 5), evaporation (No. 9) and sterilizing (No. 11). Cooling water (C) is used in condenser (No. 14) and sterilizer (No. 11). Process water (W) is used in washing (No. 1 and 2) along with the pure water (w) produced in the condenser which is recycled. Liquid and solid wastes (L) are extracted from washing (No. 2) and finishing (No. 7). Processed tomato products are not very heat-sensible and they can with-stand relatively high temperatures for long times. Thus, tomato juice evapora-tors can be operated at relatively high temperatures, using forced circulation to increase the heat transfer rate. Sterilization of tomato paste can be achieved in tubular heat exchangers, which are less costly than plate and scraped surface units. The bulk packing of sterilized tomato paste, used in this example, is cost-effective for commercial and institutional use of the product. However, more expensive packaging materials will be needed if tomato paste is packaged in small sized metallic, plastic, or paperboard containers. The high acidity of tomato products facilitates the food sanitation and food safety procedures, required in a food process plant.



Tomatoes 5.62 kg

7 %TS

Water5.62 kg Waste

5.62 kg

5.62 kg7 %TS

Waste0.08 kg

5.54 kg7 %TS

0.65 kWh

Waste0.20 kg

5.34 kg6 %TS

1.26 kWhWater

1.26 kWh 4.34 kg

1.00 kg32 %TS

0.01 kWh

0.01 kWh

Cans

1.00 kg32 %TS

Washing

Inspecting

Packaging

Sterilization

Finishing

Evaporation

Pulping

Heating

Steam Cooling water

Figure 7.1a Material and energy balances in the tomato paste plant.


182 Chapter 7

1 Dumping 2 Washing 3 Inspecting

7 Finishing

4 Pulping

6 Flash 5 Heating

15 Vacuum8 Juice tank

9 Evaporators

14 Condenser

10 Concentrate tank

12 Aseptic storage

13 Packaging

11 Sterilizer

c

s

c

s

s

C S

S

S

C

R

L

K

L

G

G

P

L

L

WW

w

Figure 7.1b Process flowsheet of the tomato paste plant.



3. Material and Energy Requirements

Table 7.1a lists the material and energy requirements of the tomato paste plant, based on the material and energy diagram of Figure 7.1a. The heat require-ments of the process were estimated using the thermophysical properties of the product and the water/steam (Appendix). The annual data corresponds to 960 h/y, according to the operating scheme described in the next paragraph. The Labor refers only to seasonal unskilled workers which is obtained by the process counting method (See Chapter 6). The supervising, and technical support is taken into account using the factorial method (Chapter 6). The solid waste of the plant, shown in the flowsheet is shown in Table 7.1a, along with the waste water treatment. It is disposed at $36/t, according to Chapter 6. The combined water and solid wastes, shown in Table 7.1a, are treated and disposed at an average cost of 5 $/t. The packaging material refers to 208 L or 235 kg plastic drums. Table 7.1a Material and Energy Requirements of a Tomato Paste Plant

ProductsTomato paste 1.00 kg/kg 2.00 t/h 1 920 t/y

Raw materialsRaw Materials Fr. 5.62 kg/kg 11.2 t/h 10 790 t/y

Packaging Material Fg. 235 kg/p 9 p/h 8 170 p/y

UtilitiesProcess Water Fw. 1.28 kg/kg 2.56 t/h 2 460 t/y

Electricity Fe. 0.08 kWh/kg 0.16 MW 150 MWh/ySteam Fs. 1.92 kWh/kg 3.84 MW 3 690 MWh/y

Cooling Water Fc. 1.27 kWh/kg 2.54 MW 2 440 MWh/yRefrigeration Fz. 0.00 kWh/kg 0.00 MW 0 MWh/y

Fuel Ff. 0.00 kWh/kg 0.00 MW 0 MWh/y

WastesWaste Treatment Fj. 5.90 kg/kg 11.8 t/h 11 330 t/y

LaborManpower M. 10.0 h/t 20.0 p 19 200 h/y

Per Product Hourly basis Annual


184 Chapter 7

4. Capital Investment Based on the simplified shortcut methods of Chapter 5, the size and the cost of the equipment presented in the flowsheet of Figure 7.1a are estimated and the results are summarized in Table 7.1b. The most expensive equipment refers to a 3-effect evaporator, while the packaging equipment follows. The required capital is estimated as described in Chapter 5, and the re-sults are summarized along with the appropriate assumptions in Table 7.1c. The design of the major thermal processing equipment, i.e. evaporation and sterilization is discussed, using application examples, by Maroulis and Saravacos (2003). The required thermal and transport properties of the system were taken from the related Tables of the Appendix. Table 7.1b Equipment Cost Estimation of a Tomato Paste Plant

No Process Qty Size Units Cost1 Dumping 2 5 t/h 502 Washing 2 5 t/h 503 Inspecting 2 10 m2 404 Pulping 2 5 kW 205 Heating 2 20 m2 806 Flash 2 1 m3 107 Finishing 2 5 t/h 1008 Juice tank 2 10 m3 209 Evaporators 3 50 m2 1800

10 Concentrate tank 1 2 m3 1011 Sterilizer 1 25 m2 8012 Aseptic storage 1 2 m3 1013 Aseptic packaging 1 2 t/h 20014 Condenser 1 60 m2 3015 Vacuum 1 10 kW 20

2520 k$



Table 7.1c Capital Cost Estimation of a Tomato Paste Plant

Purchased Equipment Cost Ceq 2.52 M$

Lang Factor fL 3.00 -

Working Capital Factor fW 0.25 -

Fixed Capital Cost CF 7.56

Working Capital Cost CW 1.01

Total Capital Cost CT 8.57 M$

5. Operating Expenses

The operating cost is calculated on the basis of the assumptions presented in Table 7.1d, and the results are summarized in Table 7.1e and in Figure 7.1c. The cost of raw material (tomatoes), the labor, and the manufacturing cost are the major components of the product cost. The utilities cost is also im-portant. A typical cost of 60 $/t tomatoes was assumed, although lower cost can be obtained in some areas of mass production and low growing and harvesting expenses. A labor rate of 15 $/h was assumed, which is representative of unskilled production workers. The annual operating time refers to 12 week per year, 5 days per week, 2 shifts per day, and 8h per shift. The waste water produced in the plant is disposed to a sewage system or it is used for irrigation. The solid waste (skins and seeds) is disposed away from the plant.


186 Chapter 7

Table 7.1d Assumptions for Operating Cost Estimation

Tomato paste Plant

Product Rate PR 2.00 t/h

Operating Season wpy 12 w/y

Annual Operating Time ty 960 h/y

Operating Cost Factors Data

Fixed Manufacturing Cost Factor fMF 0.10 -

Overhead Cost Factor fOver 0.05 -

Utilities Cost

Crude Oil Cost Cb. 67.0 $/bbl

Fuel Cost Cf. 0.07 $/kWh

Electricity Cost Ce. 0.11 $/kWh

Steam Cost Cs. 0.08 $/kWh

Cooling Water Cost Cc. 0.01 $/kWh

Freezing Cost Cz. 0.11 $/kWh

Process Water Unit Cost Cw. 0.50 $/m3

Waste Treatment Cost Cj. 5 $/m3

Labor Cost Characteristics

Labor Rate Cost CL 15.0 $/h

Labor Cost Correction Factor fL 2.50 -

Overtime Correction Factor for Second Shift fL2 1.50 -

Overtime Correction Factor for Third Shift fL3 2.00 -

Material Unit Cost

Product Cp. 2.50 $/kg

Raw Materials Cr. 0.06 $/kg

Packaging Material Cg. 20.00 $/p



Table 7.1e Operating Cost Estimation of the Tomato Paste Plant

Manufacturing Cost

Raw Materials Cmat 0.77

Packaging Cpack 0.16

Utilities Cutil 0.32

Waste Treatment Cwst 0.06

Labor Clab 0.90

Variable Manufacturing Cmv 2.21

Fixed Manufacturing Cmf 0.76

Overheads Cover 0.20

Manufacturing CM 3.17 M$/y

Capital Charge e CT 0.71 -

Total Annualized TAC 3.89 M$/y

Raw Materials

Labor

Overheads

Capital Charge

PackagingUtilities

Waste Treatment

Fixed Manufacturing

0.00

0.50

1.00

1.50

2.00

2.50

1Operating Cost

Uni

t Co

st (

$/kg

)

…

Figure 7.1c Operating cost estimation of the tomato paste plant.


188 Chapter 7

6. Plant Profitability Table 7.1f summarizes all the required economic assumptions in order to calcu-late the plant profitability, that is: A tax rate of 35% is considered. The Negative Tax Permission Index is 1 when the examined plant is a part of larger factory and the plant taxation is consolidated with the total factory, and 0 otherwise, which means that the tax reduction may be lost. The annual depreciation is estimated according to the MACRS method described in Chapter 4. According to this method, the equipment is depreciated in 7 years. It is assumed that 50% of the required capital is covered by loan with interest of 5% for 15 y. It is also assumed that the plant lifetime is 27 y, but after 20 y the equipment has no salvage value. A discounted interest rate of 7% is assumed in order to express the time value of money. The calculated capital recovery factor (Equation 4.24), for i=0.07, and N=27, is e=0.083. Based on these assumptions, the annual cash flow of the examined sys-tem during its life time is presented in Figure 7.1d. Figure 7.1.d also presents the Cumulated Cash Flow CCF and the Net Present Value NPV for the project life time (see Chapter 4). The characteristic time intervals are the depreciated period ND, the loan payment period NL, the positive salvage period NS, and the project life time NE. Moreover, CCF inter-cepts the time axis at the simple payback period SPB, while NPV intercepts the time axis at the depreciated payback period DPB. Table 7.1f Assumptions for Plant Profitability Estimation

Tax CharacteristicsDepreciation Method jd MACRS -

Depreciation Period ND 7 yTax Rate t 0.35 -

Negative Tax Permission Index ntp 1 -

Debt CharacteristicsLeverage L 0.50 -

Loan Interest Rate iL 0.05 -Loan Period NL 15 y

OtherDiscounted Interest Rate i 0.07 -

Plant Lifetime N 27 yNonzero Salvage Value Period NS 20 y



0.0

0.5

1.0

1.5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

Operating year

Cash

flo

w (M

$)

Net Profit

TaxTax Reduction

Loan Payment

CCF

NPV

NENSNLND

-2

0

2

0 5 10 15 20 25 30

Operating year

Net

pre

sent

val

ue /

Ow

n Ca

pita

l

Figure 7.1d Annual cash flow (upper) and cumulated cash flow (CCF) and net pre-sent value (NPV) of the tomato paste plant.


190 Chapter 7

Table 7.1g Plant Profitability of the Tomato Paste Plant

Profitability

Sales Income S 4.04 M$/y

Manufacturing Cost CM 3.17 M$/y

Gross Profit Pg 0.87 M$/y

Net Present Value NPV 1.25 M$

Own Capital Cost Co 4.28 M$

Capital Return Ratio CRR 0.29 -

Internal Rate of Return IRR 0.10 -

Based on these data, the resulting profitability indices are summarized in Table 7.1g.

7. Sensitivity Analysis

All the above results refer to a basic reference point. The sensitivity of these results to the variation of basic data constitutes a crucial concept in the design and analysis of the food plants. Several sensitivity analysis situations could be formulated, depending on the factors and the response variables selected. In this section the effect of the following factors on the plant profitability will be examined:

• The annual operating time (break-even analysis), and the product price • The resources prices (raw materials, labor, utilities, equipment) • The economic environment (e.g., tax and debt characteristics)

a. Break-Even Analysis A typical break-even analysis is presented in Figure 7.1e. The three crucial operating magnitudes, that is, the annual sales income, the annual manufactur-ing cost, and the corresponding annual gross profit are plotted versus the annual operating time. The profit curve indicates three characteristic points:



• The lower break-even point • The maximum profit point • The upper break-even point

It is obvious that the plant operation in the range between the lower and the upper break-even points is profitable. The optimum operating point happens to an annual operating time of about 1000 h, which corresponds to operation of 2 shifts daily for 5 days per week. The optimum is not sharp and consequently an annual operating time between 500 and 1200 h is accepted, as near optimum operation. These results are further analyzed in Figure 7.1f, which presents the profit versus the annual operating time for three different values of the product price. The main conclusion suggests that when the product price approaches the value of 2.25 $/kg, the annual operating time should be decreased to about 500 h (1shift per day, 5 days per week). Instead, when higher value of product price is expected, the annual operating time should be increased to about 1500 h (3 shifts per day, 5 days per week). In conclusion, these graphs reveal the economical operation of the plant and suggest the required changes in order to match external changes in the eco-nomic environment of the plant. In a world of rapid changes, the plant flexibil-ity is a crucial matter towards profitability.

b. Effect of Resource Prices and Tax and Debt Characteristics Figure 7.1g reveals the effect of the resource prices (equipment Ceq, raw mate-rials Cr, labor CL, utilities Cb) and the economic environment (tax rate t, dis-count rate i, loan interest rate iL and leverage L) on the Capital Return Ratio CRR (Net Present Value to the Own Capital invested Ratio), respectively.


192 Chapter 7

1 shift 2 shifts 3 shifts + weekends

0

2

4

6

8

10

0 500 1000 1500 2000 2500


Ann

ual i

ncom

e/ou

tcom

e (M

$/y

)

.

Sales

Manufacturing cost

Profit

Figure 7.1e Break-even analysis of the tomato paste plant.

0.0

0.5

1.0

1.5

2.0

0 500 1000 1500 2000 2500


Ann

ual p

rofi

t (M

$/y

)

Product price ($/kg) =

2.25

2.50

2.75

Figure 7.1f Break-even analysis of the tomato paste plant.



CbCb

Ceq

Ceq

CL

CL

Cr

Cr

-3.00

-2.00

-1.00

0.00

1.00

2.00

3.00

-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40

Relative variation

Capi

tal R

etur

n Ra

tio

.

L

L

i

i

t

tiL

iL

-1.00

-0.50

0.00

0.50

1.00

-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40

Relative variation

Capi

tal R

etur

n Ra

tio

.

Figure 7.1g Sensitivity analysis of the tomato paste plant.


194 Chapter 7

II. ORANGE JUICE CONCENTRATE PLANT


a. Raw Materials Fruit varieties used for processing of orange juice concentrate include Valencia and Navel oranges. Mature oranges of proper solids content (at least 8 oBrix in Florida) are required. The fruit maturity is expressed by the oBrix/acid ratio, which should be at least 8 (California) or 10 (Florida).The oBrix value is the % soluble solids (sugar), measured with a refractometer. The acid is expressed as % by weight of citric acid (Kimbal, 1999; Nagy et al., 1993). Oranges are harvested and processed during the winter months, i.e. De-cember to March in the northern Hemisphere. They are transported to the food plant by trucks in boxes or in bulk, and they can be stored, usually in bulk, for up to one week before processing. Spoilage of the fruit during transportation and storage is relatively small, due to the low ambient temperatures of the win-ter season. Oranges for processing are tested for % rot, fruit size, juice content, and oBrix/acid ratio. Rejected fruit is used for animal feed or it is dumped. Orange juice is an acid food with a pH in the range of 2.6–4.4, which facilitates thermal processing and preservation.

b. Washing/Grading The oranges are transported from the storage area to the processing area usually in water flumes (hydraulic transport). The fruit is fed to the washing machines, in which the fruit is soaked in chlorinated water, brushed, and sprayed with pressurized water. The consumption of wash water is about 150 L/t of fruit. The washed oranges are graded for size, which facilitates the operation of the juice extractors.

c. Juice Extraction /Finishing Orange juice is extracted in special FMC cup extractors or Brown reamers, each unit having a capacity of about 4 t/h of oranges. The extractors have a number of cups, which can receive a range of fruit sizes. The extractors should extract only a minimum amount of peel oil into the juice. The extracted juice contains large amounts of orange pulp, which is re-moved down to about 12% in the juice finishers. The cylindrical finishers oper-ate in two stages, pressing the juice through screens (openings of 1.0 and 0.5 mm), using screws or paddles. The extractors should extract only a minimum amount of peel oil into the juice (Saravacos and Kostaropoulos, 2002).



d. Centrifuging/Debittering In order to facilitate concentration of the juice (reduced viscosity), the pulp content can be removed down to 3–5% using centrifugal separators or ultrafil-tration membranes. Bitter components and excessive acidity of some orange juices can be removed by ion exchange treatment, using special resins. Ion exchange col-umns require clarified orange juice, which is prepared by centrifugation or ul-trafiltration. The orange juice used in this application example requires no debittering treatment.

e. Juice Pasteurization The orange juice must be pasteurized before further processing in order to re-duce the spoilage microorganisms and inactivate the pectic enzymes, which may reduce the juice viscosity by breaking down the pectins. High temperature short time pasteurization at 90–95oC for 15–60 s may be applied, using plate heat exchangers. Pasteurization of juice destined for evaporation may be omitted, if the juice is processed immediately after extraction and a high temperature short time evaporator, e.g., the TASTE system, is used.

f. Juice Concentration The orange juice is concentrated in multiple–effect falling film evaporators from about 12 to 65 oBrix. The high temperature short time evaporation (TASTE) system is used, since the heat–sensitive juice is subjected to high temperature only for a short residence time (Chen and Hernandez 1997). Mul-tiple effect systems reduce substantially the steam requirements of evaporation. A 4–effect system is commonly used in citrus juice concentration, al-though more effects are also applied. A combined multiple effect evaporator– mechanical vapor recompression system can reduce further the energy (steam) requirements (Maroulis and Saravacos, 2003). The volatile flavor components of orange juice can be recovered as a concentrated essence solution, using a stripping–distillation system, combined with the juice evaporator (Sarravacos and Kostaropoulos, 2002). No volatile flavor recovery is used in this application example.

g. Aseptic Packing and Storage The orange juice concentrate (65 oBrix) is cooled to about 0oC in a scraped surface heat exchanger. The product is usually packed aseptically in 55 gallons (208 L) drums, lined with a polyethylene film. The aseptically packed orange juice concentrate can be stored at refrigeration temperatures (0–2oC) for 6–12 months.


196 Chapter 7

The orange juice concentrate (65 oBrix) can be stored aseptically in larger containers and tanks up to 400 t capacity, which are kept at about 0oC for up to 1 year. It can be transported in refrigerated tanks or boats for re–processing, food service, and institutional use.

h. Peel/Pulp Drying The peels and the pulp, separated from the orange juice, are mixed and pressed in a continuous press, and then dried to a moisture content of less than 10%, using a rotary air–dryer. The dried product is used as an animal feed, and rela-tively high drying temperatures can be used, without significant damage to the product nutritive value. Natural gas or LPG is a suitable fuel for supplying the required energy for drying.

i. Peel Oil Extraction The orange peels, after extraction of the orange juice, are normally used to re-cover the peel oil, which is sold as valuable byproduct. The oil is expressed by mechanical pressing, emulsification in water, and centrifugation (Kimball, 1999).

j. Plant Effluents The solid orange wastes (peels, seeds etc.) are usually dehydrated to produce animal feed. The plant wastewater of large installations may require secondary treatment before discharging to the environment.

2. Process Flowsheet

A material and energy balance diagram of the orange juice plant is shown in Figure 7.2a. The balances are based on an 1 kg product. Thus, 10.85 kg of or-anges are required for 1 kg orange juice concentrate. In the same diagram the utilities requirements are presented in kWh/kg, excluding electricity. The re-quirements in electricity will be presented in the next paragraphs after the equipment sizing procedure. A process flowsheet based on the above technology is presented in Fig-ure 7.2b. The flowsheet depicts the main processes and defines their interrela-tions. The basic assumption is that the examined system consists of a process-ing plant with central utilities, e.g., steam, cooling water, waste treatment, etc. Thus, the utilities system is not included in the flowsheet, but an operating allo-cated cost is considered in the cost analysis section. The waste solids of the plant, consisting mainly of orange peels, are de-hydrated and sold as animal food (a plant byproduct). The waste water is dis-posed to a sewage system or it is used for irrigation.



Oranges 10.85 kg

13.6 %

Water Waste10.85 kg 10.85 kg

Peels Oil5.20 kg 0.03 kg

Pulp/Juice 5.65 kg 5.17 kg

Pulp0.23 kg

Juice 5.42 kg 5.40 kg12.0 %

0.08 kWhWater

0.1 kWh 3.15 kWh 4.5 kg

0.90 kg

3.09 kWhWater

3.09 kWh 4.42 kg

Juice Concentrated 1.00 kg65.0 %

0.15 kWh

Drying

Oil extraction

Mixing

Washing

Inspecting

Juice extraction

Packaging

Finishing

Pasteurizing

Evaporators

Cooling

Steam Cooling water

Figure 7.2a Material and energy balances in the orange juice concentrate plant.


198 Chapter 7

3 Juice extraction2 Inspecting

1 Washing

4 Finishing

5 Pasteurizing

10 Mixing9 Oil extraction

12 Condenser

11 Dryer

6 Evaporators

7 Cooling8 Packaging

c

s

c s

C S

S

C

R

L

K

G

P

L

W

w

c

C

G

F

A

P

P

Figure 7.2b Process flowsheet of the orange juice concentrate plant.




Table 7.2a lists the material and energy requirements of the orange juice con-centrate plant, based on the material and energy diagram of Figure 7.2a. The annual data corresponds to 1280 h/y, according to the operating scheme described in the next paragraph. The labor refers only to seasonal unskilled workers which is obtained by the process counting method (See Chapter 6). The supervising and technical support is taking into account using the factorial method (Chapter 6). The packaging material refers to 208 L plastic drums. Table 7.2a Material and Energy Requirements of an Orange Juice Plant

ProductsOrange juice 1.00 kg/kg 1.00 t/h 1 280 t/y

Dried peels 0.90 kg/kg 0.90 t/h 1 150 t/yPeel oil 0.03 kg/kg 0.03 t/h 38 t/y





Cooling Water Fc. 3.33 kWh/kg 3.33 MW 4 260 MWh/yRefrigeration Fz. 0.00 kWh/kg 0.00 MW 0 MWh/y

Fuel Ff. 3.15 kWh/kg 3.15 MW 4 030 MWh/yWh





200 Chapter 7

4. Capital Investment Based on the simplified shortcut methods of Chapter 5, the size and the cost of the equipment presented in the flowsheet of Figure 7.2a are estimated and the results are summarized in Table 7.2b. The most expensive equipment refers to a tubular 4-effect evaporator. The required capital is estimated as described in Chapter 5, and the re-sults are summarized along with the appropriate assumptions in Table 7.2c. Table 7.2b Equipment Cost Estimation of an Orange Juice Concentrate Plant

No Process Qty Size Units Cost1 Washing 2 5 t/h 502 Inspecting 2 10 m2 403 Juice extraction 1 10 t/h 1004 Finishing 1 5 t/h 505 Pasteurizing 1 80 m2 806 Evaporators 4 30 m2 7007 Cooling 1 15 m2 208 Aseptic packaging 1 1 t/h 2009 Oil extraction 2 5 t/h 100

10 Mixing 1 1 m3 2011 Dryer 1 100 m2 24012 Condenser 1 30 m3 20

1620 k$ Table 7.2c Capital Cost Estimation of an Orange Juice Concentrate Plant









5. Operating Expenses The operating cost is calculated on the basis of the assumptions presented in Table 7.2d and the results are summarized in Table 7.2e and in Figure 7.2c. The cost of raw material, the labor, and the utilities (steam and fuel) are the major components of the product cost. The annual operating time refers to 16 week per year, 5 days per week, 2 shifts per day, and 8h per shift. Table 7.2d Assumptions for Operating Cost Estimation

Orange juice PlantProduct Rate PR 1.00 t/h

Operating Season wpy 16 w/yAnnual Operating Time ty 1280 h/y

Operating Cost Factors DataFixed Manufacturing Cost Factor fMF 0.10 -


Utilities CostCrude Oil Cost Cb. 67.0 $/bbl

Fuel Cost Cf. 0.07 $/kWhElectricity Cost Ce. 0.11 $/kWh

Steam Cost Cs. 0.08 $/kWhCooling Water Cost Cc. 0.01 $/kWh

Freezing Cost Cz. 0.11 $/kWhProcess Water Unit Cost Cw. 0.50 $/m3


Labor Cost CharacteristicsLabor Rate Cost CL 15.0 $/h

Labor Cost Correction Factor fL 2.50 -Overtime Correction Factor for Second Shift fL2 1.50 -


Material Unit CostProduct Cp. 3.60 $/kg

Raw Materials Cr. 0.12 $/kgPackaging Material Cg. 20.00 $/p

The product price (3.60 $/kg) includes the value of the by-products, expressed in $/kg of orange juice concentrate: Orange juice concentrate, 3.10 $/kg; dried peels, 0.20 $/kg; peel oil, 0.30 $/kg.


202 Chapter 7

Table 7.2e Operating Cost Estimation of the Orange Juice Concentrate Plant

Manufacturing CostRaw Materials Cmat 1.67

Packaging Cpack 0.11Utilities Cutil 0.65

Waste Treatment Cwst 0.07Labor Clab 0.72

Variable Manufacturing Cmv 3.21Fixed Manufacturing Cmf 0.49

Overheads Cover 0.23Manufacturing CM 3.93 M$/yCapital Charge e CT 0.50 -


Raw Materials

Labor

Overheads

Capital Charge

Packaging

Utilities

Waste Treatment

Fixed Manufacturing

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

1Operating Cost

Uni

t Co

st (

$/kg

)

…

Figure 7.2c Operating cost estimation of the orange juice concentrate plant.



6. Plant Profitability A plant profitability analysis of the design and economics of the orange juice concentrate plant was performed according to the procedure described for the tomato paste plant (see Section I.6 of this chapter). Similar results were ob-tained. The assumptions for the plant profitability estimation are summarized in Table 7.1f of this chapter. Figure 7.2d presents the annual cash flow CCF, the cumulated cash flow CCF, and the net present value NPV of the orange juice concentrate plant during its lifetime. The characteristic economic quantities are indicated in this Figure: Depreciated period ND, loan payment period NL, posi-tive salvage period NS, and project life time NE. The simple payback period SPB and the depreciated payback period DPB are obtained as the intercepts with the time axis of the CCF and NPV curves, respectively. Based on these data, the resulting profitability indices are also summa-rized in Table 7.2f. Table 7.2f Plant Profitability of the Orange Juice Concentrate Plant

Profitability

Sales Income S 4.61 M$/yManufacturing Cost CM 3.93 M$/y


Net Present Value NPV 1.30 M$Own Capital Cost Co 3.01 M$




204 Chapter 7

0.0

0.5

1.0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

Operating year

Cash

flo

w (M

$)

Net Profit

Tax

Tax Reduction

Loan Payment

CCF

NPV

NENSNLND

-2

-1

0

1

2

3

0 5 10 15 20 25 30

Operating year

Net

pre

sent

val

ue /

Ow

n Ca

pita

l

Figure 7.2d Annual cash flow (upper) and cumulated cash flow (CCF) and net pre-sent value (NPV) of the orange juice concentrate plant.




A sensitivity analysis of the orange juice concentrated plant was performed according to the procedure described for the tomato paste plant (see Section 1.7 of this chapter). Similar results were obtained. Figure 7.2e shows the three characteristic points of the break-even analy-sis with an optimum at an annual operating time of about 1000 h, correspond-ing to operation of 2 shifts daily for 5 days per week. Figure 7.2.f presents the annual profit for three different values of the product price. Figure 7.2g reveals the effect of the resource prices (equipment Ceq, raw materials Cr, labor CL, utilities Cb) and the economic environment (tax rate t, discount rate i, loan interest rate iL, and leverage L) on the Capital Return Ratio CRR (Net Present Value to the Own Capital invested Ratio), respectively.


206 Chapter 7


0

2

4

6

8

10

0 500 1000 1500 2000 2500 3000 3500


Ann

ual i

ncom

e/ou

tcom

e (M

$/y

)

.

Sales

Manufacturing cost

Profit

Figure 7.2e Break-even analysis of the orange juice concentrate plant.

0.0

0.5

1.0

1.5

0 500 1000 1500 2000 2500 3000 3500


Ann

ual p

rofi

t (M

$/y

)


4.054.50

4.95

3.853.50

3.15

Figure 7.2f Break-even analysis of the orange juice concentrate plant (the product price includes the value of the by-products).



Cb

Cb

Ceq

Ceq

CL

CL

Cr

Cr

-2.00

-1.00

0.00

1.00

2.00

-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40

Relative variation

Capi

tal R

etur

n Ra

tio

.

L

L

i

i

t

t

iLiL

-1.00

-0.50

0.00

0.50

1.00

-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40

Relative variation

Capi

tal R

etur

n Ra

tio

.

Figure 7.2g Sensitivity analysis of the orange juice concentrate plant.


208 Chapter 7

III. UHT STERILIZED MILK PLANT


Commercial milk (cow’s or other milking animal) is preserved by pasteuriza-tion, sterilization, or dehydration (spray drying). Fresh milk is pasteurized in continuous flow equipment at 72oC for 15s and it is preserved in refrigeration for about 1 week. The shelf life of pasteurized milk can be extended beyond one week by high temperature pasteurization at 85oC for 2s. Ultra high tem-perature (UHT) processing of milk at 135oC for 2s and aseptic packaging will sterilize the milk and preserve it for longer time (Lewis and Heppell, 2000).

a. Raw Material The plant will use cow’s milk from nearby dairy farmers. The milk will be transported to the processing plant with refrigerated truck tanks, where it will be stored for a short time in refrigerated tanks. The raw cow milk contains 12% TS, including 3.5% fat.

b. Separation/Homogenization The milk is first clarified in centrifugal separators, and the fat content is re-duced to 2.0 %. in a centrifugal separator. The milk is subsequently homoge-nized in a high pressure homogenizer at 200 bar and 55oC.

c. UHT Sterilization The milk is sterilized in a continuous flow system using steam injection (Ma-roulis and Saravacos, 2003; Lewis and Heppel, 2000).

d. Aseptic Packaging The sterilized milk is packaged aseptically in 1 liter paper cartons, using an automatic form–fill–seal (FFS) system (Saravacos and Kostaropoulos, 2002).


A material and energy balance diagram of the UHT sterilized milk plant is shown in Figure 7.3a. The balances are based on 1 kg product. Thus, 1.08 kg of raw milk is required for 1 kg UHT sterilized milk. In the same diagram the utilities requirements are presented in kWh/kg, excluding electricity. The re-quirements in electricity will be presented in the next paragraphs after the equipment sizing procedure. A process flowsheet based on the above technology is presented in Fig-ure 7.3b. The flowsheet depicts the main processes and defines their interrela-tions. The basic assumption is that the examined system consists of a process-



ing plant with central utilities, e.g., steam, cooling water, waste treatment, etc. Thus, the utilities system is not included in the flowsheet, but an operating allo-cated cost is considered in the cost analysis section. Steam (S) is used in homogenization (No. 3) and sterilization (No. 4). Cooling water (C) is used in sterilization (No. 4). Process water (W) is used in equipment washing.

Milk 1.08 kg

Cream0.08 kg

1.00 kg

0.015 kWh

0.015 kWh

Cartons

1.00 kg

Storage

Packaging

Homogenization

Sterilization

Centrifugal

Steam Cooling water

Figure 7.3a Material and energy balances in the UHT sterilized milk plant.


210 Chapter 7

1 Storage

2 Centrifugal

3 Homogenization

4 Sterilization

5 Packaging

6 Cold Storage

R

K

cs

C

S

P

s

S

Zz

Figure 7.3b Process flowsheet of the UHT sterilized milk plant.


Table 7.3a lists the material and energy requirements of the UHT sterilized milk plant, based on the material and energy diagram of Figure 7.3a. The annual data corresponds to 3840 h/y, according to the operating scheme described in the next paragraph. The Labor refers only to production workers and it is obtained by the process counting method (See Chapter 6). The supervising, and technical sup-port is taken into account using the factorial method (Chapter 6). The packaging material refers to 1 L paper cartons.



Table 7.3a Material and Energy Requirements of the HUT Sterilized Milk Plant

Products

Milk 1.00 kg/kg 2.00 t/h 7 680 t/y

Raw materials

Raw Materials Fr. 1.08 kg/kg 2.2 t/h 8 290 t/y

Packaging Material Fg. 1.00 p/kg 2000 p/h 7 680 000 p/y

Utilities

Process Water Fw. 1.08 kg/kg 2.16 t/h 8 290 t/y

Electricity Fe. 0.06 kWh/kg 0.12 MW 460 MWh/y

Steam Fs. 0.02 kWh/kg 0.04 MW 150 MWh/y

Cooling Water Fc. 0.02 kWh/kg 0.04 MW 150 MWh/y

Refrigeration Fz. 0.08 kWh/kg 0.16 MW 610 MWh/y


Wastes

Waste Treatment Fj. 1.08 kg/kg 2.2 t/h 8 290 t/y

Labor

Manpower M. 2.5 h/t 5.0 p 19 200 h/y


4. Capital Investment

Based on the simplified shortcut methods of Chapter 5, the size and the cost of the equipment presented in the flowsheet of Figure 7.3a are estimated and the results are summarized in Table 7.3b. The most expensive equipment refers to the packaging equipment. The required capital is estimated as described in Chapter 5, and the re-sults are summarized along with the appropriate assumptions in Table 7.3c. The detailed design of the sterilizing equipment is discussed, using appli-cation examples, by Maroulis and Saravacos (2003). The required thermal and transport properties of the system were taken from the related Tables of the Appendix.


212 Chapter 7

Table 7.3b Equipment Cost Estimation of the UHT Sterilized Milk Plant No Process Qty Size Units Cost

1 Storage 1 50.0 m3 502 Centrifuge 1 2.50 t/h 1004 Homogenizer 1 2.50 t/h 1505 Sterilizer 1 400 m2 2506 Packaging 1 2.00 t/h 6007 Cold Storage 1 250 t 50

1200 k$


The operating cost is calculated on the basis of the assumptions presented in Table 7.3d and the results are summarized in Table 7.3e and in Figure 7.3c. The cost of raw material is the major component of the product cost, fol-lowed by labor and packaging costs. A labor rate of 15 $/h was assumed, which is representative of unskilled production workers. The annual operating time refers to 48 week per year, 5 days per week, 2 shifts per day, and 8h per shift. Table 7.3c Capital Cost Estimation of the UHT Sterilized Milk Plant









Table 7.3d Assumptions for Operating Cost Estimation

Milk UHT Plant







Utilities Cost














Material Unit Cost




The material unit cost of the product (0.92 $/kg) is UHT sterilized milk. The cost of the separated milk fat is neglected (relatively small quantity).


214 Chapter 7

Table 7.3e Operating Cost Estimation of the UHT Sterilized Milk Plant

Manufacturing Cost





Labor Clab 0.90







Raw Materials

Labor

OverheadsCapital Charge

Packaging

Utilities Waste Treatment

Fixed Manufacturing

0.00

0.50

1.00

1Operating Cost

Uni

t Co

st (

$/kg

)

…

Figure 7.3c Operating cost estimation of the HUT sterilized milk plant.



6. Plant Profitability A plant profitability analysis of the design and economics of the UHT sterilized milk plant was performed according to the procedure described for the tomato paste plant (see Section I.6 of this chapter). Similar results were obtained. The assumptions for the plant profitability estimation are summarized in Table 7.1f of this chapter. Figure 7.3d presents the annual cash flow CCF, the cumulated cash flow CCF, and the net present value NPV of the orange juice concentrate plant during its lifetime. The characteristic economic quantities are indicated in this Figure: Depreciated period ND, loan payment period NL, posi-tive salvage period NS, and project life time NE. The simple payback period SPB and the depreciated payback period DPB are obtained as the intercepts with the time axis of the CCF and NPV curves, respectively. Based on these data, the resulting profitability indices are summarized in Table 7.3f. Table 7.3f Plant Profitability of the UHT Sterilized Milk Plant

Profitability









216 Chapter 7

0.0

0.5

1.0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

Operating year

Cash

flo

w (M

$)

Net Profit

TaxTax Reduction

Loan Payment

CCF

NPV

NENSNLND

-2

-1

0

1

2

3

0 5 10 15 20 25 30

Operating year

Net

pre

sent

val

ue /

Ow

n Ca

pita

l

Figure 7.3d Annual cash flow (upper) and cumulated cash flow (CCF) and net pre-sent value (NPV) of the UHT sterilized milk plant.



7. Sensitivity Analysis A sensitivity analysis of the UHT sterilized milk plant was performed accord-ing to the procedure described for the tomato paste plant (see Section 1.7 of this chapter). Similar results were obtained. Figure 7.3e shows the three characteristic points of the break-even analy-sis with an optimum at an annual operating time of about 2000 h, correspond-ing to operation of 2 shifts daily for 5 days per week. Figure 7.3.f presents the annual profit for three different values of the product price. Figure 7.3g reveals the effect of the resource prices (equipment Ceq, raw materials Cr, labor CL, utilities Cb) and the economic environment (tax rate t, discount rate i, loan interest rate iL, and leverage L) on the Capital Return Ratio CRR (Net Present Value to the Own Capital invested Ratio), respectively.


218 Chapter 7


0

2

4

6

8

10

0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000


Ann

ual i

ncom

e/ou

tcom

e (M

$/y

)

.

SalesManufacturing cost

Profit

Figure 7.3e Break-even analysis of the UHT sterilized milk plant.

0.0

0.5

1.0

1.5

0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000


Ann

ual p

rofi

t (M

$/y

)


0.830.92

1.01

Figure 7.3f Break-even analysis of the UHT sterilized milk plant.



CbCb

Ceq

Ceq

CL

CL

-3.00

-2.00

-1.00

0.00

1.00

2.00

3.00

-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40

Relative variation

Capi

tal R

etur

n Ra

tio

.

L

L

i

i

t

t

iLiL

-1.00

-0.50

0.00

0.50

1.00

-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40

Relative variation

Capi

tal R

etur

n Ra

tio

.

Cr

Cr

Figure 7.3g Sensitivity analysis of the UHT sterilized milk plant.


220 Chapter 7

IV. FRUIT CANNING PLANT


a. Raw Materials The economics of canning of two different commercial fruits, i.e. apricots and peaches, is analyzed in this application example. Both fruits can be processed in the same equipment with some minor variations. They mature and are avail-able for processing in a short time during the summer (northern Hemisphere), apricots in June–July and peaches in August–September. Thus, a combined apricot–peach processing plant can operate for a 4-month period per year, im-proving the economics of the processing plant. The two fruits may be produced in two different agricultural areas, due to climate conditions, the apricots requiring warmer weather. In such a case, the processing plant may be located near the growing areas of the major fruit, e.g., peaches, while the other fruit is transported by truck to the plant. Apricots have a higher solids content, about 15%, compared to peaches (11%). Both fruits, destined for canning, should be mature with good color and pleasant flavor. Particular attention is placed on the texture of apricots, which should be firm after thermal processing. Both fresh fruits can be stored for a few days at 0–4oC and 85% RH before processing (Woodroof and Luh, 1986). Fruit varieties suitable for canning should be used, e.g., Blenheim apri-cots and clingtone peaches in the U.S. Apricots are usually canned unpeeled after halving and pitting, while some small fruit may be used as whole with pits. Peaches are normally pitted and peeled.

b. Washing/Pitting/Peeling/Grading The fruit is first sorted for spoiled and unfit product and then washed with wa-ter in fruit-washing machines to remove any soil and unwanted material. The peaches are pitted mechanically by halving the fruit and removing the pits. The fruits are sorted by size and they are aligned before feeding the pitting machines. The minimum peach diameter for passing the U.S. grade is 6.0 cm. The halved peaches are peeled in a hot alkali solution, followed by thor-ough washing with water and a weak acid solution. Peach halves and peach slices are used in canning. The halved apricots are inspected and graded for size using screens of openings 3.18, 3.81, 4.45, 5.10, or 5.40 cm. Grades Fancy, Choice, and Stan-dard are based not only on the size, but mainly on the color, texture, and ab-sence of defects.



b. Filling/Syruping The sound fruit halves are filled into the can in accordance to the required minimum fruit weight, e.g., 524 g of peaches for the No. 2 ½ cans. Liquid sugar (sucrose or corn syrup solutions of about 67 oBrix) is used to prepare the syrups, which fill the fruit–containing cans. The syrup strength is measured in the product after canning and equilibration (cut–out test). In peaches the “cut–out” syrup concentration is related to the grade of the canned product, e.g., Fancy > 26 oBrix, Choice > 21 oBrix, and Standard > 17 oBrix.

c. Sealing/Sterilization of Cans The filled cans are pre–vacuumized and sealed in a double seaming machine, using a steam–flow sealer. The No 2½ cans of both fruits are sterilized at 100oC for 20 min in a still retort, or for 15 min in a agitating cooker. For adequate sterility, the minimum can center temperature should be 90oC prior to water cooling. The sterilized cans are cooled in a agitating water cooler to about 38oC. Chlorinated cooling water (2 ppm available chlorine) is used to prevent any microbial contamination during the cooling process.

d. Labeling/Packing/Storage The cans are labeled mechanically and packed in cardboard cases containing 24 No. 2½ cans. The yield of peaches is about 55 standard cases per t of fruit. The peach and apricot cases can be stored at room temperature of about 20oC for up to one year before consumption.

2. Process Flowsheet A material and energy balance diagram of the fruit canning plant is shown in Figure 7.4a. The balances are based on an 1 kg product. In the same diagram the utilities requirements are presented in kWh/kg, excluding electricity. The requirements in electricity will be presented in the next paragraphs after the equipment sizing procedure. A process flowsheet based on the above technology is presented in Fig-ure 7.4b. The flowsheet depicts the main processes and defines their interrela-tions. The basic assumption is that the examined system consists of a process-ing plant with central utilities, e.g., steam, cooling water, waste treatment, etc. Thus, the utilities system is not included in the flowsheet, but an operating allo-cated cost is considered in the cost analysis section.


222 Chapter 7

Apricots 0.90 kg

Water0.9 kg Waste

0.9 kg

0.9 kg

Pits0.09 kg

Apricot halves 0.81

0.04 kg

0.77Syrup

0.23 kg

Cans

1.00 kg

0.015 kWh

0.015 kWh

1.00 kg

Washing

Inspecting

Labeling/Casing

Sterilization

Filling/Syruping

Vacuum seaming

Halving/Pitting

Grading By product

Peaches 1.02 kg

Water1.02 kg Waste

1.02 kg

1.02 kg

Pits0.10 kg

Peach halves 0.92

0.075 kWh Peels0.08 kg

0.84

0.07 kg

0.77Syrup

0.23 kg

Cans

1.00 kg

0.015 kWh

0.015 kWh

1.00 kg

Washing

Inspecting

Labeling/Casing

Sterilization

Filling/Syruping

Vacuum seaming

Halving/Pitting

Grading

Lye peeling

By product

Steam Cooling water

Figure 7.4a Material and energy balances of the fruit canning plant.



2 Inspecting

1 Washing

3 Halving

4 Lye peeling5 Grading

6 Syruping

7 Filling 8 Vacuum seaming

10 Labeling/Casing

9 Sterilization

R

L

K

L

L

W

c s

C S

P

S

s

G

W

R

Figure 7.4b Process flowsheet of the fruit canning plant.


224 Chapter 7

Since the same equipment is used for both fruits, the analysis in the next paragraphs could be based on one of the following assumptions:

• Charge the half of the equipment cost to each process and use the ac-tual annual operating time.

• Charge all the equipment cost to each process and use double the an-nual operating time

The second assumption is used in this chapter in order to obtain the effect of the particular product characteristics on the plant profitability.

3. Material and Energy Requirements Table 7.4a lists the material and energy requirements of the fruit canning plant, based on the material and energy diagram of Figure 7.4a. The annual data corresponds to 1280 h/y, according to the operating scheme described in the next paragraph. The labor refers only to seasonal unskilled workers and it is obtained by the process counting method (see Chapter 6). The supervising, and technical support is taken into account using the factorial method (Chapter 6). The packaging material refers to 0.85 L metallic cans.



Table 7.4a Material and Energy Requirements of the Fruit Canning Plant Apricot

ProductsAppricot canned 1.00 kg/kg 2.00 t/h 2 560 t/y


Packaging Material Fg. 0.85 kg/p 2353 p/h 3 011 760 p/y


Electricity Fe. 0.09 kWh/kg 0.17 MW 220 MWh/ySteam Fs. 0.02 kWh/kg 0.03 MW 40 MWh/y

Cooling Water Fc. 0.02 kWh/kg 0.03 MW 40 MWh/yRefrigeration Fz. 0.00 kWh/kg 0.00 MW 0 MWh/y





Peach

ProductsPeach canned 1.00 kg/kg 2.00 t/h 2 560 t/y











226 Chapter 7

4. Capital Investment Based on the simplified shortcut methods of Chapter 5, the size and the cost of the equipment presented in the flowsheet of Figure 7.4a are estimated and the results are summarized in Table 7.4b. The sizing is based in the peaches data. The required capital is estimated as described in Chapter 5, and the results are summarized along with the appropriate assumptions in Table 7.4c. Table 7.4b Equipment Cost Estimation of the Fruit Canning Plant

No Process Qty Size Units Cost1 Washing 1 5 t/h 502 Inspecting 1 10 m2 203 Halving 1 2 t/h 504 Peeling 1 2 t/h 1005 Grading 1 2 m2 306 Syrup tank 1 12 m3 307 Filling 1 2 t/h 2008 Seaming 1 2 t/h 2009 Sterilization 1 2 t/h 400

10 Labeling / Casing 1 2 t/h 2001280 k$

Table 7.4c Capital Cost Estimation of the Fruit Canning Plant









5. Operating Expenses The operating cost is calculated on the basis of the assumptions presented in Table 7.4d and the results are summarized in Table 7.4e and in Figure 7.4c. The cost of raw materials is the major cost component, followed by the labor and the packaging costs. The annual operating time refers to 16 week per year, 5 days per week, 2 shifts per day, and 8h per shift. Table 7.4d Assumptions for Operating Cost Estimation of the Fruit Canning Plant

Appricot canning Plant Appricot Peach

Product Rate PR 2.00 2.00 t/h

Operating Season wpy 16 16 w/y

Annual Operating Time ty 1280 1280 h/y


Fixed Manufacturing Cost Factor fMF 0.10 0.10 -

Overhead Cost Factor fOver 0.05 0.05 -

Utilities Cost

Crude Oil Cost Cb. 67.0 67.0 $/bbl

Fuel Cost Cf. 0.07 0.07 $/kWh

Electricity Cost Ce. 0.11 0.11 $/kWh

Steam Cost Cs. 0.08 0.08 $/kWh

Cooling Water Cost Cc. 0.01 0.01 $/kWh

Freezing Cost Cz. 0.11 0.11 $/kWh

Process Water Unit Cost Cw. 0.50 0.50 $/m3

Waste Treatment Cost Cj. 5 5 $/m3


Labor Rate Cost CL 15.0 15.0 $/h

Labor Cost Correction Factor fL 2.50 2.50 -

Overtime Correction Factor for Second Shift fL2 1.50 1.50 -

Overtime Correction Factor for Third Shift fL3 2.00 2.00 -

Material Unit Cost

Product Cp. 1.40 1.65 $/kg

Raw Materials Cr. 0.30 0.40 $/kg

Packaging Material Cg. 0.16 0.16 $/p


228 Chapter 7

Table 7.4e Operating Cost Estimation of the Fruit Canning Plant Manufacturing Cost

Raw Materials Cmat 0.82Packaging Cpack 0.48

Utilities Cutil 0.03Waste Treatment Cwst 0.01

Labor Clab 0.60Variable Manufacturing Cmv 1.95

Fixed Manufacturing Cmf 0.35Overheads Cover 0.15

Manufacturing CM 2.45 M$/yCapital Charge e CT 0.36 -


Appricot

Raw Materials

Labor

Overheads

Capital Charge

Packaging

UtilitiesWaste

Treatment

Fixed Manufacturing

0.00

0.50

1.00

1.50

1Operating Cost

Uni

t Co

st (

$/kg

)

…







Peach

Raw Materials

Labor

Overheads

Capital Charge

Packaging


Fixed Manufacturing

0.00

0.50

1.00

1.50

1Operating Cost

Uni

t Co

st (

$/kg

)

…

Apricot Peach Figure 7.4c Operating cost estimation of the fruit canning plant.

6. Plant Profitability

A plant profitability analysis of the design and economics of the fruit canning plant was performed according to the procedure described for the tomato paste plant (see Section I.6 of this chapter). Similar results were obtained. The assumptions for the plant profitability estimation are summarized in Table 7.1f of this chapter. Figure 7.4d presents the annual cash flow CCF, the cumulated cash flow CCF and the net present value NPV of the orange juice concentrate plant during its lifetime. The characteristic economic quantities are indicated in this Figure: Depreciated period ND, loan payment period NL, posi-tive salvage period NS, and project life time NE. The simple payback period SPB and the depreciated payback period DPB are obtained as the intercepts with the time axis of the CCF and NPV curves, respectively. Based on these data, the resulting profitability indices are also summa-rized in Table 7.4f.



0.0

0.5

1.0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

Operating year

Cash

flo

w (M

$)

Net Profit

TaxTax Reduction

Loan Payment

0.0

0.5

1.0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

Operating year

Cash

flo

w (M

$)

Net Profit

TaxTax Reduction

Loan Payment

CCF

NPV

NENSNLND

-2

-1

0

1

2

3

0 5 10 15 20 25 30

Operating year

Net

pre

sent

val

ue /

Ow

n Ca

pita

l

CCF

NPV

NENSNLND

-2

-1

0

1

2

3

0 5 10 15 20 25 30

Operating year

Net

pre

sent

val

ue /

Ow

n Ca

pita

l

Apricot Peach Figure 7.4d Annual cash flow of the fruit canning plant.


A sensitivity analysis of the fruit canning plant was performed according to the procedure described for the tomato paste plant (see Section 1.7 of this chapter). Similar results were obtained. Figure 7.4e shows the three characteristic points of the break-even analy-sis with an optimum at the operating time of 1200 h, corresponding to opera-tion of 2 shifts daily for 5 days per week. Figure 7.4.f presents the annual profit for three different values of the product price. Figure 7.4g reveals the effect of the resource prices (equipment Ceq, raw materials Cr, labor CL, utilities Cb) and the economic environment (tax rate t, discount rate i, loan interest rate iL, and leverage L) on the Capital Return Ratio CRR (Net Present Value to the Own Capital invested Ratio), respectively.


230 Chapter 7

Table 7.4f Plant Profitability of the Fruit Canning Plant Apricot

Profitability






Peach

Profitability









0

2

4

6

8

10

0 500 1000 1500 2000 2500 3000 3500


Ann

ual i

ncom

e/ou

tcom

e (M

$/y)

.

SaleManufacturing

Profit


0

2

4

6

8

10

0 500 1000 1500 2000 2500 3000 3500


Ann

ual i

ncom

e/ou

tcom

e (M

$/y)

.

SaleManufacturing

Profit

Figure 7.4e Break-even analysis of the fruit canning plant.

0.0

0.5

1.0

1.5

0 500 1000 1500 2000 2500 3000 3500


Ann

ual p

rofi

t (M

$/y)


1.261.40

1.54

0.0

0.5

1.0

1.5

0 500 1000 1500 2000 2500 3000 3500


Ann

ual p

rofi

t (M

$/y)


1.491.65

1.82

Figure 7.4f Effect of raw material price on the profit of the fruit canning plant.

CbCb

Ceq

Ceq

CL

CL

Cr

Cr

-2.00

-1.00

0.00

1.00

2.00

-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40

Relative variation

Capi

tal R

etur

n Ra

tio

.

L

Li

i

t

t

iL iL

-1.00

-0.50

0.00

0.50

1.00

-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40

Relative variation

Capi

tal R

etur

n Ra

tio

.

CbCb

Ceq

Ceq

CL

CL

Cr

Cr

-2.00

-1.00

0.00

1.00

2.00

-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40

Relative variation

Capi

tal R

etur

n Ra

tio

.

L

L

i

i

t

t

iL iL

-1.00

-0.50

0.00

0.50

1.00

-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40

Relative variation

Capi

tal R

etur

n Ra

tio

.

Apricot Peach Figure 7.4g Sensitivity analysis of the fruit canning plant.


232 Chapter 7

V. VEGETABLE FREEZING PLANT


a. Raw Materials The economics of freezing of two different commercial vegetables, i.e. green peas and green beans, is analyzed in this application example. Both vegetables can be processed in the same plant with some variations in the processing equipment. They mature and are available for processing in a short time during the summer period (northern Hemisphere). Thus, a combined green pea–green bean processing plant can operate for a 4-month period per year, making the plant more economical. Vegetables of highest quality should be used for freezing, in terms of color, flavor, tenderness, and lack of defects. Lower quality vegetable raw ma-terials could be used in thermal processing (canning) or dehydration. Green peas are harvested mechanically in the U.S. and they are trans-ported immediately by truck to the processing plant. The peas are vined (re-moved from the clusters and shells) either in the field or in the plant. Green beans are harvested by hand or mechanically. The tenderness and size of green peas and beans are very important in both frozen products. Texture, size, and specific gravity measurements are nec-essary in determining the quality of raw materials for freezing. Tender green vegetables deteriorate rapidly after harvesting and they should be processed and frozen immediately after harvesting, in order to main-tain high quality.

b. Cleaning/Grading/Cutting Both vegetables are cleaned from dirt and external materials before further processing. The cleaned vegetables are separated for size before blanching and freezing. The green beans are graded into 6 sizes according to the thickness. The bean pods are snipped mechanically to remove the stems and the tips. The snipped beans are cut mechanically into pieces 2.54–3.81 cm (Luh and Wood-roof, 1986).

c. Blanching Blanching of both vegetables before freezing is necessary to prevent flavor deterioration (enzymatic oxidation) during storage. Green peas are blanched in steam at 100oC for 1½ minutes, while blanching of cut green beans requires 3 min. The blanched vegetables are cooled rapidly in cold water to prevent qual-ity degradation.



d. Freezing/Packing Peas are usually frozen in a fluidized bed (individually quick freezing, IQF). Freezing in consumer packages (waxed cartons) may be also used. Frozen peas are packed in 208 L (55 gallon) fiberboard drums, lined with polyethylene film (Cleland and Valentas, 1997). Cut green beans are usually packaged in individual waxed cartons 3 cm thick and frozen in air–blast freezers (straight or helical conveyor belts).

e. Storage Bulk–packed or individually packaged vegetables are stored at –18oC for sev-eral months. They are transported and distributed to the consumers as frozen products.


A material and energy balance diagram of the vegetable freezing plant is shown in Figure 7.5a. The balances are based on an 1 kg product. In the same diagram the utilities requirements are presented in kWh/kg, excluding electricity. The requirements in electricity will be presented in the next paragraphs after the equipment sizing procedure. A process flowsheet based on the above technology is presented in Fig-ure 7.5b. The flowsheet depicts the main processes and defines their interrela-tions. The basic assumption is that the examined system consists of a process-ing plant with central utilities, e.g., steam, cooling water, waste treatment, etc. Thus, the utilities system is not included in the flowsheet, but an operating allo-cated cost is considered in the cost analysis section. Since the same equipment is used for both vegetables, the analysis in the next paragraphs could be based on one of the following assumptions:


• Charge all the equipment cost to each process and use double the an-nual operating time.



Table 7.5a lists the material and energy requirements of the vegetable freezing plant, based on the material and energy diagram of Figure 7.5a. The annual data corresponds to 1280 h/y, according to the operating scheme described in the next paragraph.


234 Chapter 7

The labor refers only to seasonal unskilled workers which is obtained by the process counting method (see Chapter 6). The supervising, and technical support is taken into account using the factorial method (Chapter 6). The packaging material refers to 208 L fiber board drums for green peas and 0.5 kg waxed paper cartons for green beans.

Grean beans 1.18 kg

Water1.18 kg Waste

1.18 kg

1.18 kg

Rejects0.06 kg

Beans 1.12 kg

Waste0.06 kg

1.06 kg

Waste0.06 kg

Beans 1.00 kg

0.15 kWh

Cartons

Frozen beans 1.00 kg

Blanching

Cutting

Cleaning

Storage

Grading

Pod separation

Freezing

Packaging

Pea vines

Shells

Green peas 1.15 kg

Rejects0.10 kg

Peas 1.05 kg

0.15 kWh

Rejects0.05 kg

Peas 1.00 kg

Frozen peas

Drums

Frozen peas 1.00 kg

Blanching

Inspecting

Storage

Vining

Size Separation

Freezing

Packaging

Steam Cooling water

Figure 7.5a Material and energy balances in the vegetable freezing plant.



2 Pod separation

1 Cleaning

3 Grading

4 Cutting

5 Blanching

6 Packaging

7 Freezing8 Storage

K

R

Z

z

S

s

L

Z

z

L

W

Figure 7.5b Process flowsheet of the green bean freezing plant.


236 Chapter 7

1 Vining

2 Size separation

4 Inspecting

3 Blanching

5 Freezing

6 Packaging7 Storage

K

R

Z

z

S

s

L

L

Z

z

Figure 7.5b Process flowsheet of the green pea freezing plant.



Table 7.5a Material and Energy Requirements of a Vegetable Freezing Plant Peas

ProductsPeas frozen 1.00 kg/kg 2.00 t/h 2 560 t/y







WastesWaste Treatment Fj. 0.20 kg/kg 0.4 t/h 510 t/y



Beans

ProductsBeans frozen 1.00 kg/kg 2.00 t/h 2 560 t/y











238 Chapter 7

4. Capital Investment Based on the simplified shortcut methods of Chapter 5, the size and the cost of the equipment presented in the flowsheet of Figure 7.5a are estimated and the results are summarized in Table 7.5b. The required capital is estimated as described in Chapter 5, and the re-sults are summarized along with the appropriate assumptions in Table 7.5c. Table 7.5b Equipment Cost Estimation of the Vegetable Freezing Plant

BeansNo Process Qty Size Units Cost

1 Cleaning 1 2 t/h 202 Pod separation 1 2 t/h 403 Grading 1 2 t/h 504 Cutting 1 2 t/h 505 Blanching 1 2 t/h 1006 Packaging 1 2 t/h 2507 Freezing 1 40 m2 6808 Storage 1 240 t 60

1250 k$ Peas

No Process Qty Size Units Cost1 Vining 1 2.3 t/h 602 Size Separation 1 2 t/h 503 Blanching 1 2 t/h 1004 Inspecting 1 4 m2 205 Freezing 1 40 m2 6706 Packaging 1 2 t/h 2407 Storage 1 240 t 60

1200 k$


The operating cost is calculated on the basis of the assumptions presented in Table 7.5d and the results are summarized in Table 7.5e and in Figure 7.5c. The cost of raw materials and labor are the major components of the product cost. A labor rate of 15 $/h was assumed, which is representative of unskilled production workers. The annual operating time refers to 16 week per year, 5 days per week, 2 shifts per day, and 8h per shift.



Table 7.5c Capital Cost Estimation of the Vegetable Freezing Plant

Peas


Lang Factor fL 3.00 -Working Capital Factor fW 0.25 -

Fixed Capital Cost CF 3.75Working Capital Cost CW 0.67


Beans





6. Plant Profitability A plant profitability analysis of the design and economics of the vegetable freezing plant was performed according to the procedure described for the to-mato paste plant (see Section I.6 of this chapter). Similar results were obtained. The assumptions for the plant profitability estimation are summarized in Table 7.1f of this chapter. Figure 7.5d presents the cumulated cash flow CCF and the net present value NPV of the vegetable freezing plant during its life-time. The characteristic economic quantities are indicated in this Figure: De-preciated period ND, loan payment period NL, positive salvage period NS, and project life time NE. The simple payback period SPB and the depreciated pay-back period DPB are obtained as the intercepts with the time axis of the CCF and NPV curves, respectively. Based on these data, the resulting profitability indices are summarized in Table 7.5f.


240 Chapter 7

Table 7.5d Assumptions for Operating Cost Estimation of the Vegetable Freezing Plant

Freezing Plant Peas BeansProduct Rate PR 2.00 2.00 t/h

Operating Season wpy 16 16 w/yAnnual Operating Time ty 1280 1280 h/y

Operating Cost Factors DataFixed Manufacturing Cost Factor fMF 0.10 0.10 -


Utilities CostCrude Oil Cost Cb. 67.0 67.0 $/bbl

Fuel Cost Cf. 0.07 0.07 $/kWElectricity Cost Ce. 0.11 0.11 $/kW

Steam Cost Cs. 0.08 0.08 $/kWCooling Water Cost Cc. 0.01 0.01 $/kW

Freezing Cost Cz. 0.11 0.11 $/kWProcess Water Unit Cost Cw. 0.50 0.50 $/m3

Waste Treatment Cost Cj. 5.00 5.00 $/m


3

Labor Rate Cost CL 15.0 15.0 $/hLabor Cost Correction Factor fL 2.50 2.50 -

Overtime Correction Factor for Second Shift fL2 1.50 1.50 -Overtime Correction Factor for Third Shift fL3 2.00 2.00 -

Material Unit CostProduct Cp. 1.25 1.15 $/kg

Raw Materials Cr. 0.25 0.20 $/kgPackaging Material Cg. 20.0 0.05 $/p



Table 7.5e Operating Cost Estimation of the Vegetable Freezing PlantManufacturing Cost







Raw Materials

Labor

Overheads

Capital Charge

Packaging

UtilitiesWaste

Treatment

Fixed Manufacturing

0.00

0.50

1.00

1.50

1Operating Cost

Uni

t Co

st (

$/kg

)

…







Raw Materials

Labor

Overheads

Capital Charge

Packaging

UtilitiesWaste

Treatment

Fixed Manufacturing

0.00

0.50

1.00

1Operating Cost

Uni

t Co

st (

$/kg

)

…

Figure 7.5c Operating cost estimation of the vegetable freezing plant.

0.0

0.5

1.0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

Operating year

Cash

flo

w (M

$)

Net Profit

TaxTax Reduction

Loan Payment

0.0

0.5

1.0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

Operating year

Cash

flo

w (M

$)

Net Profit

TaxTax Reduction

Loan Payment

CCF

NPV

NENSNLND

-2

-1

0

1

2

3

4

0 5 10 15 20 25 30

Operating year

Net

pre

sent

val

ue /

Ow

n Ca

pita

l

CCF

NPV

NENSNLND

-2

-1

0

1

2

3

4

0 5 10 15 20 25 30

Operating year

Net

pre

sent

val

ue /

Ow

n Ca

pita

l

Peas Beans Figure 7.5d Annual cash flow of the vegetable freezing plant.


242 Chapter 7

Table 7.5f Plant Profitability of the Vegetable Freezing plant

Peas

Profitability






Beans

Profitability







A sensitivity analysis of the fruit canning plant was performed according to the procedure described for the tomato paste plant (see Section 1.7 of this chapter). Similar results were obtained. Figure 7.5e shows the three characteristic points of the break-even analy-sis with an optimum at the operating time of 1200 h, corresponding to opera-tion of 2 shifts daily for 5 days per week. Figure 7.5.f presents the annual profit for three different values of the product price. Figure 7.5g reveals the effect of the resource prices (equipment Ceq, raw materials Cr, labor CL, utilities Cb) and the economic environment (tax rate t, discount rate i, loan interest rate iL, and leverage L) on the Capital Return Ratio CRR (Net Present Value to the Own Capital invested Ratio), respectively.



0

2

4

6

0 500 1000 1500 2000 2500 3000 3500


Ann

ual i

ncom

e/ou

tcom

e (M

$/y)

.

SalesManufacturing

Profit

0

2

4

6

0 500 1000 1500 2000 2500 3000 3500

Annual operating time (h/y)A

nnua

l inc

ome/

outc

ome

(M$/

y)

.

SalesManufacturing

Profit

Figure 7.5e Break-even analysis.

0.0

0.5

1.0

1.5

0 500 1000 1500 2000 2500 3000 3500


Ann

ual p

rofi

t (M

$/y)


1.13

1.25

1.38

0.0

0.5

1.0

1.5

0 500 1000 1500 2000 2500 3000 3500


Ann

ual p

rofi

t (M

$/y)


1.04

1.15

1.27

Figure 7.5f Break-even analysis of the vegetable freezing plant.

CbCb

Ceq

Ceq

CL

CL

Cr

Cr

-1.50

-0.50

0.50

1.50

-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40

Relative variation

Capi

tal R

etur

n Ra

tio

.

L

Li

i

t

t

iL iL

-1.00

-0.50

0.00

0.50

1.00

-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40

Relative variation

Capi

tal R

etur

n Ra

tio

.

CbCb

Ceq

Ceq

CL

CL

Cr

Cr

-1.50

-0.50

0.50

1.50

-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40

Relative variation

Capi

tal R

etur

n Ra

tio

.

L

Li

i

t

t

iL iL

-1.00

-0.50

0.00

0.50

1.00

-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40

Relative variation

Capi

tal R

etur

n Ra

tio

.

Peas Beans Figure 7.5g Sensitivity analysis of the vegetable freezing plant.


244 Chapter 7

VI. VEGETABLE DEHYDRATION PLANT


a. Raw Materials The economics of a carrot and potato dehydration plant is analyzed in this ap-plication example. Carrots and potatoes are two commercially dehydrated vegetables, which can be processed in the same plant with some variations in the processing equipment. They mature and are available for processing for a relatively long time period, and the dehydration plant could be operated for several months each year, making the plant more economical. Carrots contain about 12% TS and they can be stored for long time at 0oC and 95% RH before dehydration. They should be of good color and free of defects. The solids content of potatoes (about 24%) is about twice that of carrots, requiring significantly less energy for dehydration.

b. Washing/Peeling The carrots and potatoes are first dry-cleaned on a conveyor belt to remove any dirt and external materials, and then they are washed in conventional water washing machines. The washed root vegetables are normally peeled in a steam peeler at 7 bar for 30 s. Lye peeling can also be used, although it has the disadvantage of environmental pollution (Greensmith, 1998).

c. Dicing/Blanching/Sulfiting Peeled carrots and potatoes are diced mechanically (sliced into die shape) to sizes 9.5x9.5x9.5 mm, and then they are blanched for 6 min on a conveyor belt, using saturated steam at atmospheric pressure (Luh and Woodroof, 1988). The blanched carrot dice are usually sulfited with sprays of sulfurous solutions to preserve the color (carotene) during dehydration and subsequent storage.

d. Drying The diced carrots and potatoes are dehydrated in a conveyor belt air–dryer until a moisture content of about 8% is reached. The product may require further dehydration to 3% moisture content in a bin dryer, using dehumidified air.



e. Packing The dehydrated product is inspected, and the fines and defects are rejected. The product is packed in No. 10 cans or fiber drums, lined with polyethylene film. The containers of dehydrated carrots are flashed with nitrogen to prevent oxida-tion and discoloration of the dehydrated product. The packed dehydrated prod-uct can be stored at room temperature for several months.

2. Process Flowsheet A material and energy balance diagram of the vegetable dehydration plant is shown in Figure 7.6a. The balances are based on an 1 kg product. In the same diagram the utilities requirements are presented in kWh/kg, excluding electric-ity. The requirements in electricity will be presented in the next paragraphs after the equipment sizing procedure. A process flowsheet based on the above technology is presented in Fig-ure 7.6b. The flowsheet depicts the main processes and defines their interrela-tions. The basic assumption is that the examined system consists of a process-ing plant with central utilities, e.g., steam, cooling water, waste treatment, etc. Thus, the utilities system is not included in the flowsheet, but an operating allo-cated cost is considered in the cost analysis section. Since the same equipment is used for both vegetables, the analysis in the next paragraphs could be based on one of the following assumptions:


• Charge all the equipment cost to each process and use double the an-nual operating time.


3. Material and Energy Requirements Table 7.6a lists the material and energy requirements of the vegetable dehydra-tion plant, based on the material and energy diagram of Figure 7.6a. The annual data corresponds to 2560 and 1280 h/y for potato and carrot drying, respectively, according to the operating scheme described in the next paragraph. The labor refers only to seasonal unskilled workers which is obtained by the process counting method (See Chapter 6). The supervising, and technical support is taking into account using the factorial method (Chapter 6). The packaging material refers to 208 L fiberboard drums.


246 Chapter 7

Potatoes 4.75 kg24 %TS

Water4.75 kg Waste

4.75 kg

4.75 kg

0.10 kWhWaste

0.50 kg

4.25 kg

Waste0.25 kg

4.00 kg

4.00 kg

0.48 kWh

4.00 kg24 %TS

2.10 kWhWater

3.00 kg

1.00 kg96 %TS

Cans

1.00 kg96 %TS

Washing

Inspecting

Packaging

Blanching

Drying

Cutting

Peeling

Carrots 9.25 kg12 %TS

Water9.25 kg Waste

9.25 kg

9.25 kg

0.19 kWhWaste

0.75 kg

8.50 kg

Waste0.50 kg

8.00 kg

8.00 kg

0.96 kWh

8.00 kg12 %TS

4.90 kWhWater

7.00 kg

1.00 kg96 %TS

Cans

1.00 kg96 %TS

Washing

Inspecting

Packaging

Blanching

Drying

Cutting

Peeling

Steam Cooling water

Figure 7.6a Material and energy balances of the vegetable dehydration plant.



1 Washing 2 Peeling

3. Inspecting

4 Cutting

6 Drying

5 Blanching

7 Packaging

R

L

K P

L

W

S

s G

A

L

S

LS

Figure 7.6b Process flowsheet of the vegetable dehydration plant.


248 Chapter 7

Table 7.6a Material and Energy Requirements of the Vegetable Dehydration Plant Potato

ProductsPotato dried 1.00 kg/kg 1.00 t/h 2 560 t/y










Carrot

ProductsCarrot dried 1.00 kg/kg 1.00 t/h 1 280 t/y












4. Capital Investment Based on the simplified shortcut methods of Chapter 5, the size and the cost of the equipment presented in the flowsheet of Figure 7.6a are estimated and the results are summarized in Table 7.6b. The required capital is estimated as described in Chapter 5, and the re-sults are summarized along with the appropriate assumptions in Table 7.6c. Table 7.6b Equipment Cost Estimation of the Vegetable Dehydration Plant

PotatoNo Process Qty Size Units Cost

1 Washing 1 5 t/h 502 Peeling 1 5 t/h 1003 Inspecting 1 10 m2 204 Cutting 1 4 t/h 605 Blanching 1 5 t/h 1006 Drying 1 100 m3 8007 Packaging 1 1 t/h 150

1280 k$

CarrotNo Process Qty Size Units Cost

1 Washing 1 20 m2 1002 Peeling 2 5 t/h 2003 Inspecting 1 20 m2 304 Cutting 1 8 t/h 1205 Blanching 1 10 t/h 2006 Drying 1 160 m3 12007 Packaging 1 1 t/h 150

2000 k$


250 Chapter 7

Table 7.6c Capital Cost Estimation of the Vegetable Dehydration Plant Potato





Carrot






The operating cost is calculated on the basis of the assumptions presented in Table 7.6d and the results are summarized in Table 7.6e and in Figure 7.6c. The cost of raw materials, the labor, and the utilities (fuel for drying) are the major components of the product cost. A labor rate of 15 $/h was assumed, which is representative of unskilled production workers. The annual operating time refers to 32 (potato) and 16 (carrot) weeks per year, 5 days per week, 2 shifts per day, and 8h per shift.



Table 7.6d Assumptions for Operating Cost Estimation of the Vegetable Dehydration Plant

Drying Plant Potato CarrotProduct Rate PR 1.00 1.00 t/h

Operating Season wpy 32 16 w/yAnnual Operating Time ty 2560 1280 h/y

Operating Cost Factors DataFixed Manufacturing Cost Factor fMF 0.10 0.10 -


Utilities CostCrude Oil Cost Cb. 67.0 67.0 $/bbl

Fuel Cost Cf. 0.07 0.07 $/kWElectricity Cost Ce. 0.11 0.11 $/kW

Steam Cost Cs. 0.08 0.08 $/kWCooling Water Cost Cc. 0.01 0.01 $/kW

Freezing Cost Cz. 0.11 0.11 $/kWProcess Water Unit Cost Cw. 0.50 0.50 $/m3

Waste Treatment Cost Cj. 5 5 $/


m3

Labor Rate Cost CL 15.0 15.0 $/hLabor Cost Correction Factor fL 2.50 2.50 -

Overtime Correction Factor for Second Shift fL2 1.50 1.50 -Overtime Correction Factor for Third Shift fL3 2.00 2.00 -

Material Unit CostProduct Cp. 2.50 5.90 $/kg

Raw Materials Cr. 0.12 0.18 $/kgPackaging Material Cg. 20.00 20.00 $/p


252 Chapter 7

Table 7.6e Operating Cost Estimation of the Vegetable Dehydration PlantManufacturing Cost







Raw Materials

Labor


Packaging

Utilities

Waste Treatment

Fixed Manufacturing

0.00

0.50

1.00

1.50

2.00

2.50

1Operating Cost

Uni

t Co

st (

$/kg

)

…







Raw Materials

Labor

Overheads

Capital Charge

Packaging

Utilities

Waste Treatment

Fixed Manufacturing

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

1Operating Cost

Uni

t Co

st (

$/kg

)

…

Potato Carrot Figure 7.6c Operating cost estimation of the vegetable dehydration plant.

6. Plant Profitability

A plant profitability analysis of the design and economics of the vegetable de-hydration plant was performed according to the procedure described for the tomato paste plant (see Section I.6 of this chapter). Similar results were ob-tained. The assumptions for the plant profitability estimation are summarized in Table 7.1f of this chapter. Figure 7.6d presents the cumulated cash flow CCF and the net present value NPV of the vegetable freezing plant during its life-time. The characteristic economic quantities are indicated in this Figure: De-preciated period ND, loan payment period NL, positive salvage period NS, and project life time NE. The simple payback period SPB and the depreciated pay-back period DPB are obtained as the intercepts with the time axis of the CCF and NPV curves, respectively. Based on these data, the resulting profitability indices are summarized in Table 7.6f.



0.0

0.5

1.0

1.5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

Operating year

Cash

flo

w (M

$)

Net Profit

TaxTax Reduction

Loan Payment

0.0

0.5

1.0

1.5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

Operating year

Cash

flo

w (M

$)

Net Profit

TaxTax Reduction

Loan Payment

CCF

NPV

NENSNLND

-2

-1

0

1

2

3

4

5

0 5 10 15 20 25 30

Operating year

Net

pre

sent

val

ue /

Ow

n Ca

pita

l

CCF

NPV

NENSNLND

-2

-1

0

1

2

3

4

5

0 5 10 15 20 25 30

Operating year

Net

pre

sent

val

ue /

Ow

n Ca

pita

l

Potato Carrot Figure 7.6d Annual cash flow of the vegetable dehydration plant.

7. Sensitivity Analysis A sensitivity analysis of the vegetable dehydration plant was performed accord-ing to the procedure described for the tomato paste plant (see Section 1.7 of this chapter). Similar results were obtained. Figure 7.6e shows the three characteristic points of the break-even analy-sis with an optimum at the operating time of 1200 h, corresponding to opera-tion of 2 shifts daily for 5 days per week. Figure 7.6.f presents the annual profit for three different values of the product price. Figure 7.6g reveals the effect of the resource prices (equipment Ceq, raw materials Cr, labor CL, utilities Cb) and the economic environment (tax rate t, discount rate i, loan interest rate iL and leverage L) on the Capital Return Ratio CRR (Net Present Value to the Own Capital invested Ratio), respectively.


254 Chapter 7

Table 7.6f Plant Profitability of the Vegetable Dehydration PlantPotato

Profitability






Carrot

Profitability








+ weekends3 shifts2 shifts1 shift

0

2

4

6

8

10

0 1000 2000 3000 4000 5000 6000 7000


Ann

ual i

ncom

e/ou

tcom

e (M

$/y)

.

Sales

Manufacturing

Profit


0

2

4

6

8

10

0 500 1000 1500 2000 2500 3000 3500


Ann

ual i

ncom

e/ou

tcom

e (M

$/y

)

.

Sales

Manufacturing cost

Profit

Figure 7.6e Break-even analysis of the vegetable dehydration plant.

0.0

0.5

1.0

1.5

2.0

0 1000 2000 3000 4000 5000 6000 7000


Ann

ual p

rofi

t (M

$/y)


2.252.50

2.75

0.0

0.5

1.0

1.5

2.0

0 500 1000 1500 2000 2500 3000 3500


Ann

ual p

rofi

t (M

$/y)


5.31

5.90

6.49

Figure 7.6f Break-even analysis of the vegetable dehydration plant.

Cb

Cb

Ceq

Ceq

CL

CL

Cr

Cr

-1.50

-0.50

0.50

1.50

-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40

Relative variation

Capi

tal R

etur

n Ra

tio

.

L

Li

i

t

t

iL iL

-1.00

-0.50

0.00

0.50

1.00

-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40

Relative variation

Capi

tal R

etur

n Ra

tio

.

CbCb

Ceq

Ceq

CL

CL

Cr

Cr

-1.50

-0.50

0.50

1.50

-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40

Relative variation

Capi

tal R

etur

n Ra

tio

.

L

Li

i

t

t

iL iL

-1.00

-0.50

0.00

0.50

1.00

-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40

Relative variation

Capi

tal R

etur

n Ra

tio

.

Potato Carrot Figure 7.6g Sensitivity analysis of the vegetable dehydration plant.


256 Chapter 7

VII. TECHNO-ECONOMIC COMPARISON

In this section the results presented in the previous sections of Chapter 7 are summarized and compared. This procedure reveals the main techno-economic characteristics of the food preservation plants. Table 7.7a summarizes the total energy requirements of the examined 6 food preservation plants. The theoretical energy requirements were calculated from the material and energy balances of each process. The estimated energy was calculated from the theoretical assuming an average 25% loss. High energy requirements are observed in food plants using evaporation and drying proc-esses (examples 7.1, 7.2, and 7.6). The energy requirements are similar to the data reported by Singh (1986). Figures 7.7a, 7.7b, and 7.7c summarize the plant requirements in raw materials, equipment cost, and manpower, respectively. The main conclusions are as follows:

• Tomato paste, orange juice, potato drying, and carrot drying plants re-quire large amount of raw material, since they remove a large amount of water by evaporation or drying. The remainder plants require quan-tities of raw material which is about equal to the product.

• Due to requirements in evaporators and dryers, the above plants also re-quire more expensive equipment.

• The same happens to the manpower requirements. Figure 7.7d presents the product to raw material price ratio for the examined food preservation plants. This ratio varies from 2.78 (UHT milk) to 5.93 (to-mato paste. Figures 7.7e and 7.7f reveal the plant profitability in terms of internal rate of return (IRR) and capital return ratio (CRR), respectively. The vegetable dry-ing plants seem to be the most promising, while the vegetable freezing plants follow. Figure 7.7g depicts the correlation between the product price and the annual plant capacity. The results verify the general rule that the most expen-sive products are produced in less quantities (e.g., Holland and Wilkinson, 1997). Figure 7.7h reveals a linear correlation between the annual turnover and the own capital invested. The main conclusion is that in food preservation plants the annual turnover to own capital ratio is constant about 1.75. Figures 7.7i and 7.7j reveal the effect of own capital invested on the plant profitability in terms of internal rate of return (IRR) and net present value (NPV), respectively. Figure 7.7k compares the plant profitability between the examined food preservation plants in both terms of net present value (NPV) and internal rate of return (IRR). Again, the drying plants seem to be the most promising and the freezing plants follow.



Table 7.7a Energy Requirements of Food Preservation Plants Food Plant Theoretical Estimated (25% losses) MJ/kg product MJ/kg product 1 Tomato paste 9.70 13.0 2 Orange juice concentrate 8.00 10.7 3 UHT sterilized milk 0.16 0.21 4 Fruit canning Apricots 0.96 1.28 Peaches 0.81 1.08 5 Vegetable freezing Green peas 0.52 0.70 Green beans 0.50 0.67 6 Vegetable dehydration Potato 13.8 18.4 Carrots 27.4 36.5 Note: To convert MJ/kg to kWh/kg divide by 3.60.


258 Chapter 7

0.00

2.00

4.00

6.00

8.00

10.00

12.00

Tomatopaste

Orangejuice

Peachcanning

Appricotcanning

Peafreezing

Beanfreezing

Potatodrying

Carrotdrying

Milk UHT

Raw

mat

eria

l req

uire

men

ts (k

g/kg

)

Figure 7.7a Raw material requirements for various preservation plants.

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

Tomatopaste

Orangejuice

Peachcanning

Appricotcanning

Peafreezing

Beanfreezing

Potatodrying

Carrotdrying

Milk UHT

Equi

pmen

t co

st r

equi

red

(M$

) per

1t/

h pr

oduc

t ra

te

Figure 7.7b Equipment cost requirements for various preservation plants.



0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

Tomatopaste

Orangejuice

Peachcanning

Appricotcanning

Peafreezing

Beanfreezing

Potatodrying

Carrotdrying

Milk UHT

Man

pow

er r

equi

red

(p) p

er 1

t/h

pro

duct

rat

e

Figure 7.7c Manpower requirements for various preservation plants.

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

Tomatopaste

Orangejuice

Peachcanning

Appricotcanning

Peafreezing

Beanfreezing

Potatodrying

Carrotdrying

Milk UHT

Prod

uct

to r

aw m

ater

ial p

rice

rat

io

Figure 7.7d Product to raw material price ratio for various preservation plants.


260 Chapter 7

0.00

0.05

0.10

0.15

0.20

0.25

Tomatopaste

Orangejuice

Peachcanning

Appricotcanning

Peafreezing

Beanfreezing

Potatodrying

Carrotdrying

Milk UHT

Inte

rnal

rat

e of

ret

urn

(IRR

)

Figure 7.7e Internal rate of return (IRR) for various preservation plants.

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

Tomatopaste

Orangejuice

Peachcanning

Appricotcanning

Peafreezing

Beanfreezing

Potatodrying

Carrotdrying

Milk UHT

Capi

tal r

etur

n ra

tio

(CRR

)

Figure 7.7f Capital return ratio (CRR) for various preservation plants.



Milk UHT

Carrot drying

Potato drying

Bean freezingPea freezingAppricot canningPeach canning

Orange juice

Tomato paste

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00

Annual production (kt/y)

Prod

uct

pric

e ($

/kg)

Figure 7.7g Product price to annual production rate correlation.

Milk UHT

Carrot drying

Potato drying

Bean freezing

Pea freezing

Appricot canning

Peach canning

Orange juice

Tomato paste

1.50

2.00

2.50

3.00

3.50

4.00

4.50

2.00 2.50 3.00 3.50 4.00 4.50 5.00 5.50 6.00 6.50 7.00

Annual turnover (M$/y)

Inve

sted

ow

n ca

pita

l (M

$)

Figure 7.7h Annual turnover to own capital invested correlation.


262 Chapter 7

Milk UHT

Carrot drying

Potato drying

Bean freezing

Pea freezing

Appricot canningPeach canning

Orange juice

Tomato paste

0.00

0.05

0.10

0.15

0.20

0.25

1.50 2.00 2.50 3.00 3.50 4.00 4.50

Own capital invested (M$)

Inte

rnal

rat

e of

ret

urn

(IRR

)

Figure 7.7i Internal rate of return to own capital invested correlation.

Milk UHT

Carrot drying

Potato drying

Bean freezing

Pea freezing

Appricot canning

Peach canning Orange juice

Tomato paste

0.00

1.00

2.00

3.00

4.00

5.00

6.00

1.50 2.00 2.50 3.00 3.50 4.00 4.50

Own capital invested (M$)

Net

pre

sent

val

ue (M

$)

Figure 7.7j Net present value to own capital invested correlation.



Milk UHT

Carrot drying

Potato drying

Bean freezing

Pea freezing

Appricot canningPeach canning

Orange juice

Tomato paste

0.00

0.05

0.10

0.15

0.20

0.25

0.00 1.00 2.00 3.00 4.00 5.00 6.00

Net present value (NPV) .

Inte

rnal

rat

e of

ret

urn

(IRR

)

Figure 7.7k Plant profitability comparison. Figure 7.7l is an interesting and useful cost summary. It represents in a graphical way the analysis of the cost production to its components. The main conclusions are:

• The most significant component of the production cost is the raw mate-rial cost, followed by the labor cost.

• Utility cost is also significant for some food preservation plants • Packaging and waste treatment costs are of minor importance in some

plants. Packaging is important in fruit canning and sterilized milk plants.

Finally, Figure 7.7m presents in a comparative manner the cumulated cash flow (CCF) and the net present value (NPV) for all the examined food preservation plants as a function of their lifetime. Carrot drying seems as the most promising with a depreciated payback period of about 5 years, while the tomato paste plant is the less promising with a depreciated payback period of more than 15 years. It must be noted that all the previous results in this chapter are very sensi-tive to techno-economic assumptions made and any change in them may mod-ify significantly the results.


264 Chapter 7

Raw Materials

Labor

Overheads

Capital Charge

PackagingUtilities

Waste Treatment

Fixed Manufacturing

0.00

0.50

1.00

1.50

2.00

2.50

1Operating Cost

Uni

t Co

st (

$/k

g)

Raw Materials

Labor

Overheads

Capital Charge

Packaging

Utilities

Waste Treatment

Fixed Manufacturing

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

1Operating Cost

Uni

t Co

st (

$/k

g)

Raw Materials

Labor


Packaging


Fixed Manufacturing

0.00

0.50

1.00

1Operating Cost

Uni

t Co

st (

$/k

g)

Tomato paste Orange juice UHT sterilized milk

Raw Materials

Labor

Overheads

Capital Charge

Packaging


Fixed Manufacturing

0.00

0.50

1.00

1.50

1Operating Cost

Uni

t Co

st (

$/k

g)

Raw Materials

Labor

Overheads

Capital Charge

Packaging


Fixed Manufacturing

0.00

0.50

1.00

1Operating Cost

Uni

t Co

st (

$/k

g)

Raw Materials

Labor


Packaging

Utilities

Waste Treatment

Fixed Manufacturing

0.00

0.50

1.00

1.50

2.00

2.50

1Operating Cost

Uni

t Co

st (

$/k

g)

Peach canning Pea freezing Potato drying

Raw Materials

Labor

Overheads

Capital Charge

Packaging


Fixed Manufacturing

0.00

0.50

1.00

1.50

1Operating Cost

Uni

t Co

st (

$/k

g)

Raw Materials

Labor

Overheads

Capital Charge

Packaging


Fixed Manufacturing

0.00

0.50

1.00

1Operating Cost

Uni

t Co

st (

$/k

g)

Raw Materials

Labor

Overheads

Capital Charge

Packaging

Utilities

Waste Treatment

Fixed Manufacturing

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

1Operating Cost

Uni

t Co

st (

$/k

g)

Apricot canning Bean freezing Carrot drying Figure 7.7l Production cost comparison of food processing plants.



CCF

NPV

NENSNLND

-2

-1

0

1

2

3

4

5

0 5 10 15 20 25 30

Operating year

Net

pre

sent

val

ue /

Ow

n Ca

pita

l

CCF

NPV

NENSNLND

-2

-1

0

1

2

3

4

5

0 5 10 15 20 25 30

Operating year

Net

pre

sent

val

ue /

Ow

n Ca

pita

l

CCF

NPV

NENSNLND

-2

-1

0

1

2

3

4

5

0 5 10 15 20 25 30

Operating year

Net

pre

sent

val

ue /

Ow

n Ca

pita

l

Tomato paste Orange juice UHT sterilized milk

CCF

NPV

NENSNLND

-2

-1

0

1

2

3

4

5

0 5 10 15 20 25 30

Operating year

Net

pre

sent

val

ue /

Ow

n Ca

pita

l

CCF

NPV

NENSNLND

-2

-1

0

1

2

3

4

5

0 5 10 15 20 25 30

Operating year

Net

pre

sent

val

ue /

Ow

n Ca

pita

l

CCF

NPV

NENSNLND

-2

-1

0

1

2

3

4

5

0 5 10 15 20 25 30

Operating year

Net

pre

sent

val

ue /

Ow

n Ca

pita

l

Peach canning Pea freezing Potato drying

CCF

NPV

NENSNLND

-2

-1

0

1

2

3

4

5

0 5 10 15 20 25 30

Operating year

Net

pre

sent

val

ue /

Ow

n Ca

pita

l

CCF

NPV

NENSNLND

-2

-1

0

1

2

3

4

5

0 5 10 15 20 25 30

Operating year

Net

pre

sent

val

ue /

Ow

n Ca

pita

l

CCF

NPV

NENSNLND

-2

-1

0

1

2

3

4

5

0 5 10 15 20 25 30

Operating year

Net

pre

sent

val

ue /

Ow

n Ca

pita

l

Apricot canning Bean freezing Carrot drying Figure 7.7m Cumulated cash flow (CCF) and net present value (NPV) com-parison between the examined food preservation plants.


266 Chapter 7

VIII. SUPPLIERS OF MAJOR FOOD PROCESSING EQUIPMENT

Alfa Laval (S) www.alfalaval.com – Plate heat exchangers (heaters, pasteurizers, coolers), 2–20 t/h – Centrifugal separators, 3 t/h milk; 500 kg/h water/orange peel oil

APV (UK) www.apv.com

– Scraped surface heat exchangers, 2 t/h fruit juice concentrate APV Baker (UK) www.apvbaker.com

– Milk homogenizer, 3 t/h Babcock–BSH AG (D) www.babcock–bsh.com

– Rotary dryer, 10 t/h orange peels from 15 to 90% total solids Babcock & Wilson www.babcock.com

– Packaged steam boilers, food processing, 20 bar, 2–10 t/h Cabinplant International (DK) www.cabinplant.com

– Steam blancher 2 t/h cut vegetables Cleaver–Brooks (USA) www.cleaver–brooks.com

– Packaged steam boilers, food processing, 20 bar, 2–10 t/h Delaval (Tetrapak) (S) www.delaval.com

– Aseptic packaging machine, 3 t/h UHT sterilized milk in 1 L cart Dixie Canner (USA) www.dixiecanner.com

– Can filling and can seaming machines, 3000 cans/h No. 2½ FMC Food Tech (USA) www.intl.fmcti.com

– Rotary cooker–cooler, 3000 cans/h No. 2½ – Peach lye peeler, 2 t/h – Potato steam peeler, 1 t/h – Peach pitting machine, 2 t/h – Fruit washing machines, 2 t/h, 10 t/h – Tomato pulper – hot break, 10–20 t/h – Juice finishers, 10–20 t/h – Orange juice extractors, 20 t/h oranges


http://www.alfalaval.com

http://www.apv.com

http://www.bakerperkinsgroup.com

http://www.babcock.com

http://www.cabinplant.com

http://www.cleaverbrooks.com

http://www.delaval.com

http://www.dixiecanner.com


FranRica (USA) www.fmc.com – Aseptic bulk packing machines, lined drums (200 kg),

4 t/h fruit concentrate, 1 t/h frozen or 200 kg/h dehydrated vegetables Frigoscandia (USA) www.frigoparts.com

– Belt freezer, 1 t/h vegetables – Fluidized bed freezer, 1 t/h peas

GEA–Wiegand (D) www.gea–ag.com

– 3–effect evaporator, orange juice 12 to 65 oBrix, 10 t/h water evaporated Lubeca–Scholz (D) (www.scholz-mb.de

– Can filling and can seaming machines, 3000 cans/h No. 2½ Ocme (I) www.ocme.it

– Labeling machine, 3000 cans/h No. 2½ – Casing machine 3000 cans/h No. 2½

Proctor & Schwartz (USA) www.proctor.com

– Belt dryer, cut vegetables, 1 t/h water evaporated – Rotary dryer, 10 t/h orange peels from 15 to 90% total solids

Rossi & Catelli (I) www.tin.it

– Tomato juice evaporator 6 to 32 % total solids, 16 t/h water evaporated SIG Holding (CH) www.sig-group.com

– Packaging machine for frozen vegetables, 1500 plastic packages 0.75kg/h

Standard Kessel (D) www.standardkessel.com

– Packaged steam boilers, food processing, 20 bar, 2–10 t/h Urschel (USA) www.urschel.com

– Potato, carrot cutting (dicing) machine, 1 t/h – Green bean cutting machine, 1 t/h


http://www.fmc.com

https://us.fmcti.com

http://www.geagroup.com

http://www.scholz-maschinenbau.de

http://www.ocme.it

http://www.proctor.com

http://tin.alice.it

http://www.sig-group.com

http://www.standardkessel.com

http://www.urschel.com

268 Chapter 7

REFERENCES

Chen CS, Hernandez E, 1997. Design and performance evaluation of evaporation. In “Food Engineering Practice”, KJ Valentas, E Rotstein, and RP Singh eds. CRC Press.

Cleland DJ, Valentas J, 1997. Prediction of freezing time and design of food freezers. In “Food Engineering Practice”, KJ Valentas, E Rotstein, and RP Singh eds. CRC Press.

Downing DL, 1996. A Complete Course in Canning III, 13th ed. CTI Publications. Gould WA, 1992. Tomato Production, Processing and Technology, 3rd ed. CTI Publica-

tions. Greensmith M. 1998. Practical Dehydration, 2nd ed. Woodhead Publications. Holland FA, Wilkinson JK, 1997. Process Economics. In: RH Perry, DW Green, JO

Maloney eds. Perry’s Chemical Engineers’ Handbook, 7th Edition, McGraw-Hill. Kimball DA, 1999. Citrus Processing, 2nd ed. Aspen Publications. Lewis M, Heppell N, 2000. Continuous Thermal Processing of Foods. Aspen Publica-

tions. Luh BS, Woodroof JG eds, 1988. Commercial Vegetable Processing, 2nd ed. Van

Nostrand Reinhold. Maroulis ZB, Saravacos GD. 2003. Food Process Design. Marcel Dekker. Moresi M, 1984. Economic study of concentrated citrus juice production. In “Engineer-

ing and Food”, Vol 2, B McKenna ed., Elsevier Applied Science. Nagy S, Chen SC, Shaw PE, 1993. Fruit Juice Processing Technology. Agscience Inc. NFPA, 1997. Tomato Products, 7th ed. National Food Processors Association. Salunkhe DK, Kadam SS, 1995. Handbook of Fruit Science and Technology. Marcel

Dekker. Saravacos GD, Kostaropoulos AE, 2002. Handbook of Food Processing Equipment.

Kluwer/Acadenic/ Plenum Publications. Singh RP ed, 1986. Energy in Food Processing. Elsevier. Woodroof JG, Luh BS, eds, 1986. Commercial Fruit Processing, 2nd ed. Van Nostrand

Reinhold.


269

8 Food Manufacturing Plants

INTRODUCTION

Food manufacturing plants include several small, medium, and large food processing plants in which food products of desirable quality, nutritive value, and convenience are produced. Manufactured foods are produced com-mercially in large quantities at a relatively low cost, afforded by the consumers.

Food manufacturing plants use one or more of the various physical, chemical, and biological processes, such as mixing, separating, heating/cooling, cooking, drying, baking, roasting, and fermentation to produce a specific prod-uct, distributed normally in consumer packages. They use as raw materials ei-ther original agricultural or animal products or intermediate food products, pro-duced by food preservation or food ingredients plants. Food preservation plants are treated separately in Chapter 7, and food ingredients plants in Chapter 9.

Manufactured foods require, in general, more labor and more packaging than preserved foods and food ingredients. Batch processes are used more often than continuous operations. Specialized equipment may be required in some food processes.

Food manufacturing plants are preferably located near large consumer centers for quick distribution of the food products, some of which have short shelf lives. Food plants using sensitive raw materials, such as fruits should be located near agricultural production. Plants using large amounts of imported raw materials, such as coffee beans and soybeans, are preferably located near seaports.

Most manufacturing plants operate throughout the year, and ample stor-age facilities should be available for raw materials and processed food prod-ucts.


270 Chapter 8

Limited amounts of liquid and solid wastes are usually produced in these plants, which can be disposed in the municipal sewage system, if available at a close distance and at affordable charge (cost). Otherwise, wastewater treatment facilities must be built near the food processing plant. Solid wastes can be treated and disposed to agricultural soils.

The manufacture of most consumer food products is characterized by strict hygienic and safety regulations and practices, due to their sensitivity to microbial, biochemical, and chemical spoilage. Quality control, and compli-ance with government and international regulations and standards (HACCP, ISO) increase significantly the operating cost of the food plant.

Packaging of manufactured foods is a major cost item, since consumer products are usually marketed in small packages, which must protect the prod-uct, appeal to the consumer, and provide the needed nutritional information (Abvenainen, 2003).

Table 8.2 lists various food manufacturing plants of commercial and economic importance.

Table 8.1 Food Manufacturing Plants Food Product Category Manufacturing Plant Cereal Products Bread baking Pasta Dough products Cakes, biscuits Cake mixes Rice products

Dairy products Cheese Butter Yogurt Milk powder Ice cream Whey

Confectionery Candy Chocolate Cookies


Food Manufacturing Plants 271

Fruit and vegetable products Tomato sauces, ketchup Fruit jams, marmalades Potato products Animal products Corned beef Ham, bacon Sausages Poultry meat Egg products Fish products

Fats and oils Vegetable oils Margarine Mayonnaise

Soft drinks Carbonated beverages Colas Bottled water

Fermented drinks Beer Wine Distilled drinks

Fermented foods Pickles, sauerkraut Olives Vinegar

Coffee and Tea Products Ground coffee Instant coffee Decaffeinated coffee Instant tea

Ready meals / Snack foods Salads Soups Pizzas Potato chips Precooked meals Mashed potato Nuts Intermediate moisture foods


272 Chapter 8

The cereal manufacturing plants are based mostly on mechanical proc-essing and formulation of ingredients. The cost of raw materials, mainly wheat flour, and the packaging materials are relatively low. Baking and other heat treatments require substantial amounts of energy in the form of fuel gas. The small amounts of food wastes produced can be handled with low-cost opera-tions. Labor requirements are relatively high.

The dairy manufacturing plants have high raw materials (milk) and labor costs. Some dairy products (yogurt and ice cream) have high packaging costs. The energy costs are low and liquid waste treatment is costly in some dairy plants. Ageing of cheese during controlled storage adds to the manufacturing cost. The manufacture of ice cream involves mechanical and freezing opera-tions (Marshall et al., 2003).

Confectionery is a traditional labor-intensive industry, based on me-chanical processing, formulation, and mixing operations (Becket, 1994). Pack-aging costs are high, while energy and waste treatment costs are relatively low. The old hand-manufacturing methods are being replaced by continuous (e.g., extrusion) processes.

The manufacture of fruit and vegetable products involves various me-chanical and thermal processes, which require substantial amounts of energy. Labor cost is moderate, while the cost of liquid (wastewater) treatment may be high.

Manufactured animal products (meat, poultry, fish, and eggs) are charac-terized by high raw materials and energy (refrigeration) costs. The costs of la-bor, packaging, and waste treatment are moderate (Hall, 1997).

Edible fats and oils have relatively low raw materials costs. However, the energy cost of oil extraction and refining is very high. The costs of labor, pack-aging, and waste treatment are moderate.

Soft drinks require high capital investment in packaging equipment. The costs of raw materials and labor are moderate. Waste treatment costs are low.

Fermented drinks, such as wine and beer, are based on controlled fer-mentation of juices or malt extracts. Raw material costs may be high for wine, especially when high-quality grapes are used. Storage and ageing of wine and distilled drinks in wooden barrels for long time is expensive. Energy require-ments are low in wine and high in distilled drinks.

Fermented vegetable products, such as pickles and olives, are relatively low-cost products, produced from low-cost raw materials. The costs of labor, packaging, and energy are low.

The manufacture of coffee products, especially instant and decaffeinated coffee, requires high investments in processing equipment and packaging ma-chinery. The operating cost is affected by the high costs of raw materials and energy.

Ready meals and snack foods are manufactured in small to medium plants with high labor and packaging costs. The cost of raw materials is moder-



ate. Food preservation methods, such as thermal processing, refrigeration/ freezing or dehydration may be used, increasing the energy cost.

Three application examples of different food manufacturing plants are presented in this Chapter of the book. The hypothetical food plants are de-signed following normal engineering procedures, i.e. material and energy bal-ances, unit operations, and capital and operating cost estimates (Chapters 3–6). Several simplifying assumptions, necessary in the engineering analysis, are made using engineering judgment, and literature data from actual food manu-facturing plants.

Example 8.1 analyzes the design and economics of a rather large bread baking plant. The plant is based on mixing, fermentation, and baking opera-tions. Raw materials and energy are very important in plant economics, while packaging and waste disposal play minor roles.

Example 8.2 deals with the design and economics of a large yogurt manufacturing plant. Heat treatment, fermentation, and packaging are the most important economic operations. The raw materials (fluid milk and milk pow-der) are very important, while packaging in consumer cups requires expensive equipment and materials.

Example 8.3 discusses the design and economics of a medium-sized commercial white wine processing plant. The plant basic operations are fer-mentation of grape juice, and ageing and bottling of wine. The required large fermentation and ageing tanks and the bottling machinery represent significant capital investment costs. The major waste of the winery is solid pomace, which can be disposed in surrounding vineyards.

Expensive special wines are produced in relatively small wineries, using special variety grapes, grown under favorable soil and weather conditions. These wines are usually red-colored and they are stored for long times (several years) in traditional wooden barrels to develop their characteristic flavor and aroma.


274 Chapter 8

I. BREAD MANUFACTURING PLANT


a. Bread Ingredients Wheat flour is the basic ingredient of bread manufacturing. It is produced in large quantities by the milling industry, using mostly hard wheat as a raw mate-rial. The hard wheat flour contains about 12% protein (gluten), which is essen-tial in the bread-making process (bread structure). Milling of hard wheat yields about 74% flour and 26% bran. Flours of most other cereal grains contain sig-nificantly less protein than wheat, and for this reason they are normally not used for bread making (Matz, 1992). For the purpose of this book, the manufacture of white pan bread is con-sidered in detail, since it represents the major product of the bread processing industry. Bran-containing bread is manufactured similarly. The formulation of bread composition is based on the wheat flour, and all other ingredients are expressed as a percentage (%) of the flour (Doerry, 1995). The major bread ingredients, in addition to flour, are:

1. Water, about 57% (flour basis); 2. Sugar, about 6% (flour basis), usually in the form of high fructose

corn syrup (HFCS) 71 oBrix, 9% (flour basis); 3. Vegetable oil, e.g., corn oil, 2.5% (flour basis); 4. milk protein, 2.5% (flour basis), in the form of nonfat milk (NFDM)

powder or whey protein; 5. Salt (sodium chloride), 1.5% (flour basis); 6. Compressed yeast (Saccharomyces cerevisiae), 1.5% (flour basis). In

some wheat breads, part of the flour (e.g., 5%) may be replaced by vi-tal wheat gluten.

Various minor ingredients are added in the dough mixture to improve bread processing and bread quality, such as mineral yeast food (ammonium salts), oxidizing agents (ascorbic acid and azodicarbonamide, enzymes (amy-lases), dough strengtheners (emulsifiers), crumb softeners (mono-glycerides), and food preservatives (propionates), 0.15% (flour basis). Sorbic acid may be added in small amounts to the surface of baked bread loaves to prevent mold growth during storage. Flour bins, 50 t capacity, are used for flour storage in the plant. For daily flour consumption (plant capacity) of 50 t flour, 2 truckloads of 25 t each are needed. For one week (6 days) operation, 6 storage bins of a total 300 t capac-ity are required. Liquid sugar (HFCS solution) requires a liquid storage tank, e.g., 50 t for two weeks. The other minor ingredients are stored in bags or in refrigerated containers.



b. Dough Preparation A semi-continuous (batch) process is widely used in the USA and in many other countries. The flour is transported pneumatically to the 1 t dough prepara-tion tanks. Each batch yields about 1200 loaves of 1 lb (0.45 kg). Dough for commercial bread is prepared mostly by the sponge dough technology, which uses about 60% of the flour and some ingredients (yeast, sugar, milk powder) in a pre-fermentation step and the rest of the flour and ingredients are added in the fermentation step. The dough ingredients (sugar syrup, NFDM, and salt) are mixed with the flour and the water, and the re-quired amount of yeast is added. Instead of compressed (wet) yeast, active dry yeast (ADY) at the rate of 0.7% (flour basis) may be used for convenience. The dough mixture is blended and pre-fermented for about 30 min at 25oC, so that the flour is hydrated and a desired gluten structure is developed. A “plastic” dough is thereby developed, holding the fermentation gases in the dough mass.

c. Fermentation The rest ingredients (complementary water, vegetable oil, etc.) are mixed in 1 ton fermentation tanks, which are normally housed in separate fermentation room. Dough fermentation is carried out at 25oC and 80% RH for about 4 h. Excessive rising (accumulation of fermentation gases) of the dough is prevented by “punching” with special needles.

d. Dough Mixing The fermented dough, after adding some minor ingredients, is mixed (kneaded) thoroughly in special equipment. Mechanical kneading increases substantially the viscoelasticity and gas holding capacity of the bread dough. Most tradi-tional dough mixers are batch operated at about 70 RPM mixing speed (Matz, 1992; Doerry, 1995; Levine and Boehmer, 1997; Saravacos and Kostaropoulos, 2002). Kneading involves repeated compressing and stretching of the elastic dough. Horizontal kneaders are used mostly in the USA, while vertical spiral mixers are used in Europe. Recently, continuous dough mixers-extruders are used in bread technology. The intense mixing of the dough may cause significant overheating, which can be controlled by water cooling of the mixer jacket.

e. Dough Dividing/Rounding Reciprocating or rotary dividers are used at high speed to produce bread loaves of the accurate weight, e.g., 0.5 kg or 1 lb. After dividing, the dough pieces are rounded mechanically. The divided dough piece is rounded between a rotating cone and a stationary rounding bar.


276 Chapter 8

f. Pre-proofing Trays of rounded dough pieces are introduced into a cabinet where they are allowed to relax at ambient temperature and controlled relative humidity for about 5 min. The intermediate proofing cabinet is usually placed above the dough mixing equipment.

g. Bread Molding/Panning Bread molders are used to shape the rounded dough into loaves. The dough pieces are first sheeted and degassed by a series of rollers. The flattened dough pieces are rolled up into a loaf by passing through a curling chain. The loaves are deposited into baking pans and proofing trays.

h. Proofing Proofing allows the dough to ferment and produce the leavening gas which expands the loaves resulting into a soft texture of the finished baked bread. Proofing is carried out at about 40oC and 80–85% RH in batch proof boxes or automated proofers. In the commercial automated proofers, the product is transported slowly on tray racks, or conveyor belts at controlled temperature and high humidity. Proofing time is about 45 min.

i. Baking Oven Various types of baking ovens are used, such as tunnel ovens, traveling tray ovens, multiple hearth ovens (Matz, 1989; Halstrom et al., 1988; Saravacos and Kostaropoulos, 2002). Refined natural gas or LPG (direct firing) are the preferred fuels, since they leave no combustion residues on the baked bread. Heating oil, fuel oil, or coal can be used in a heat exchange system. An oven temperature of 232oC and baking time 20 min are used for 0.5 kg (1 lb) loaves. Forced circulation ovens can be used with the advantage of lowering the baking temperature by 14–19oC. A moisture loss of about 10% of the dough weight is normally observed during baking. Low pressure (0.3 bar) steam may be needed in baking bread loaves without pans on a conveyor.

j. Depanning/Cooling of Bread The hot baked bread loaves are removed from the pan containers automatically, using suction cups. The bread loaves are cooled to about 35oC in an overhead conveyor by natural convection, under sanitary conditions. The cooling time is about 60 min for the 0.5 kg loaves. A high relative humidity should be maintained during cooling, so that the bread surface does not dry out excessively.



k. Slicing/Packaging US regulations specify that the moisture content of white bread should not ex-ceed 38% and the minimum weight of a bread loaf should be ½ lb or 0.227 kg. A surface bread preservative such as sorbic acid may be used to prevent mold growth. Band, rotary, or wire slicers are used to slice the bread loaves before packaging. Wrapping machines are used to package the bread into plastic bags of polyethylene or polypropylene (Matz, 1989). The plastic bags are reclosable, using plastic clips.

l. Storage The packaged bread is distributed to the markets and the consumers soon after production. The fresh bread should be consumed within a few days of its pro-duction.

m. Frozen Dough Prepared dough of various shapes and sizes can be packaged in plastic film and frozen at –18oC for long-time storage. The frozen dough is distributed recently through Supermarkets, where it is thawed, baked, and sold as fresh bread. Other dough products, such as bread rolls and croissants, can also be prepared, stored, and distributed in the frozen state. Frozen dough products represent convenient new products, which are competing in the food market with the traditional baked products.


A material and energy balance diagram of the bread manufacturing plant is shown in Figure 8.1a. The balances are based 1000 kg raw material. In the same diagram the utilities requirements are presented in MJ. A process flow-sheet based on the above technology is presented in Figure 8.1b.


278 Chapter 8

Flour

1000 kgWater 25

oC HFCS570 kg 90 kg

Wet yeast NFDM15 kg 25 kg Electricity

Salt 115 kg

1715

23 MJ

kgVegetable oil

20 kg

1735 kg

Electricity123 MJ

Electricity68 MJ

Heating50 MJ

Electricity68 MJ

Heating108 MJ

40 oC

Heating1260 MJ Water vapor

170 kg1565 kg220

oC

Cooling120 MJ Water vapor

20 kg1545 kg

35 oC

Electricity80 MJ

25 oC

Bread

Baking

Depanning / cooling

Slicing / packaging

Storage

Flour storage

Dough preparation

Fermentation

Proofing

Dough mixing

Dough dividing

Pre-proofing

Molding / panning

Figure 8.1a Material and energy balances of the bread manufacturing plant.



Flour Salt NFDM HFCS

yeast

OilDough preparation

Fermentation

PreproofingMixing

Dividing ProofingMoldingPanning

BakingStorage

DepanningPackaging

Z

z

S

s G

A

Figure 8.1b Process flowsheet of the bread manufacturing plant.


280 Chapter 8

3. Material and Energy Requirements Table 8.1a lists the material and energy requirements of the bread manufactur-ing plant, based on the material and energy diagram of Figure 8.1a. The annual data corresponds to 3840 h/y, according to the operating scheme described in the next paragraph. The Labor refers only to production workers which is obtained by the process counting method (See Chapter 6). The supervising, and technical sup-port is taken into account using the factorial method (Chapter 6). The packaging material refers to plastic bags.


Based on the simplified shortcut methods of Chapter 5, the size and the cost of the equipment presented in the flowsheet of Figure 8.1b are estimated and the results are summarized in Table 8.1b. The required capital is estimated as described in Chapter 5, and the re-sults are summarized along with the appropriate assumptions in Table 8.1c. Table 8.1a Material and Energy Requirements of the Bread Manufacturing Plant

Products

Bread 1.00 kg/kg 5.00 t/h 19 200 t/y

Raw materials



Utilities


Electricity Fe. 0.08 kWh/kg 0.42 MW 1 590 MWh/y

Steam Fs. 0.25 kWh/kg 1.27 MW 4 890 MWh/y

Cooling Watre Fc. 0.02 kWh/kg 0.11 MW 410 MWh/y



Wastes

Waste Water Treatment Fj. 0.00 kg/kg 0.0 t/h 0 t/y

Labor

Manpower M. 6.4 h/t 32.0 p 122 880 h/y




Table 8.1b Equipment Cost Estimation of the Bread Manufacturing Plant No Process Qty Size Units Cost

1 Flour storage bins 6 50 t 3002 Corn syrup storage tank 1 50 t 503 NFDM storage in bags 1 7 t 104 Salt storage in bags 1 5 t 55 Refrigerated storage of yeast 1 5 t 156 Mixing tanks 3 1 t 757 Fermentation tanks 5 1 t 1258 Dough kneading tanks 3 1 t 1509 Dough dividers and rounders 2 3 t/h 60

10 Pre-proofing cabinet 1 2 t 3011 Molders/panners 2 3 t/h 5012 Conveyor belt proofing 1 6 t/h 20013 Tunnel conveyor belt oven 1 6 t/h 30014 Depanner/coolers 1 6 t/h 5015 Slicing machine 2 3 t/h 4016 Bread wrappers 2 3 t/h 50

1510 k$ Table 8.1c Capital Cost Estimation of the Bread Manufacturing Plant







5. Operating Expenses The operating cost is calculated on the basis of the assumptions presented in Table 8.1d and the results are summarized in Table 8.1e and in Figure 8.1c. The cost of raw material and the labor are the major components of the product cost. A labor rate of 15 $/h was assumed, which is representative of unskilled production workers. The annual operating time refers to 48 week per year, 5 days per week, 2 shifts per day, and 8h per shift.


282 Chapter 8

Table 8.1d Assumptions for Operating Cost Estimation of the Bread Manufacturing Plant

Bread Plant







Utilities Cost








Waste Treatment Cost Cj. 0.05 $/m3






Material Unit Cost




For the purposes of the application example, it is assumed that the raw material cost includes the cost of all additives, expressed in $/kg flour. Detailed cost calculations require data on the cost of each material.



Table 8.1e Operating Cost Estimation of the Bread Manufacturing Plant







Raw Materials

Labor


Packaging


Fixed Manufacturing

0.00

0.50

1.00

1Operating Cost

Uni

t Co

st (

$/kg

)

…

Figure 8.1c Operating cost estimation of the bread manufacturing plant.


284 Chapter 8

6. Plant Profitability Table 8.1f summarizes all the required economic assumptions in order to calcu-late the plant profitability, that is: A tax rate of 35% is considered. The Negative Tax Permission Index is 1 when the examined plant is a part of larger factory and the plant taxation is consolidated with the total factory, and 0 otherwise, which means that the tax reduction may be lost. The annual depreciation is estimated according to the MACRS method described in Chapter 4. According to this method, the equip-ment is depreciated in 7 years. It is assumed that 50% of the required capital is covered by loan with interest of 5% for 15 y. It is also assumed that the plant lifetime is 27 y, but after 20 y the equipment has no salvage value. A discounted interest rate of 7% is assumed in order to express the time value of money. In all application ex-amples, the calculated capital recovery factor, for i=0.07 and N=27, was e=0.083. Based on these assumptions, the annual cash flow of the examined sys-tem during its lifetime is presented in Figure 8.1d. Figure 8.1.d also presents the Cumulated Cash Flow CCF and the Net Present Value NPV for the project life time (see Chapter 4). The characteristic time intervals are the depreciated period ND, the loan payment period NL, the positive salvage period NS, and the project life time NE. Moreover, CCF inter-cepts the time axis at the simple payback period SPB, while NPV intercepts the time axis at the depreciated payback period DPB. Table 8.1f Assumptions for Plant Profitability Estimation

Tax CharacteristicsDepreciation Method jd MACRS -

Depreciation Period ND 7 yTax Rate t 0.35 -

Negative Tax Permission Index ntp 1 -

Debt CharacteristicsLeverage L 0.50 -

Loan Interest Rate iL 0.05 -Loan Period NL 15 y

OtherDiscounted Interest Rate i 0.07 -

Plant Lifetime N 27 yNonzero Salvage Value Period NS 20 y



0.0

0.5

1.0

1.5

2.0

2.5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

Operating year

Cash

flo

w (M

$)

Net Profit

Tax

Tax Reduction

Loan Payment

CCF

NPV

NENSNLND

-2

-1

0

1

2

3

4

5

6

7

8

0 5 10 15 20 25 30

Operating year

Net

pre

sent

val

ue /

Ow

n Ca

pita

l

Figure 8.1d Annual cash flow (upper) and cumulated cash flow (CCF) and net pre-sent value (NPV) of the bread manufacturing plant.


286 Chapter 8

Based on these data the resulting profitability indices are also summa-rized in Table 8.1g. Table 8.1g Plant Profitability of the Bread Manufacturing Plant

Profitability










7 nsitivity Analysis ll the above results

. Se refer to a basic reference point. The sensitivity of these

sults to the variation of basic data consists a crucial concept in the design and

depended on the factors and the response variables selected. In this section the effect of the following factors on the plant profitability will be examined:

• The annual operating time (break-even analysis), and the product price • The resources prices (raw materials, labor, utilities, equipment) • The economic environment (e.g., tax and debt characteristics)

a. Break-Even Analysis A typical break-even analysis is presented in Figure 8.1e. The three crucial operating magnitudes, that is, the annual sales income, the annual manufactur-ing cost, and the corresponding annual gross profit are plotted versus the annual operating time. The profit curve indicates three characteristic points

• The lower break-even point • The maximum profit point • The upper break-even point

It is obvious that the plant operation in the range between the lower and the upper break-even points is profitable. The optimum operating point happens to an annual operating time of about 2000 h, which corresponds to operation of 1 shift daily for 5 days per week. The optimum is sharp and an operation of 2 shifts will significantly decrease the profit. These results are further analyzed in Figure 8.1f, which presents the profit versus the annual operating time for three different values of the product price. These curves show a significant effect of the product price on the profit. In conclusion, these graphs reveal the economical operation of the plant and suggest the required changes in order to match external changes in the eco-nomic environment of the plant. In a world of rapid changes, plant flexibility is a crucial matter towards profitability.

b. Effect of Resource Prices and Tax and Debt Characteristics Figure 8.1g reveals the effect of the resource prices (equipment Ceq, raw mate-rials Cr, labor CL, utilities Cb) and the economic environment (tax rate t, dis-count rate i, loan interest rate iL, and leverage L) on the Capital Return Ratio CRR (Net Present Value to the Own Capital invested Ratio), respectively.

Areanalysis of the food plants. Several sensitivity analysis situations could be formulated

:


288 Chapter 8

30

1 shift10

nnua

l i

2 shifts 3 shifts + weekends

20

5000 6000 7000 8000 9000 10000

ual operating time (h/y)

ncom

e/ou

tcom

e (M

$/y

)

25

.

Sales

15

Manufacturing cost

0

5

A

Profit

0 1000 2000 3000 4000

nnA

ig the bread manufacturing plant. F

ure 8.1e Break-even analysis of

0.0

1.0

2.0

3.0

nnua

l pro

fit

(

4.0

5.0

M$

/y)


0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000

A

1.081.20

1.32


Figure 8.1f Break-even analysis of the bread manufacturing plant.



CbCb

Ceq

Ceq

CL

CL

Cr

Cr

-2.00

-1.00

0.00

1.00

2.00

-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40

Relative variation

Capi

tal R

etur

n Ra

tio

.

L

Li

i

t

t

iL iL

-1.00

-0.50

0.00

0.50

1.00

-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40

Relative variation

Capi

tal R

etur

n Ra

tio

.

Figure 8.1g Sensitivity analysis of the bread manufacturing plant.


290 Chapter 8

II. YOGURT MANUFACTURING PLANT


a. Raw Materials The main raw material of yogurt is fresh cow’s milk, usually collected from dairy farms close to the plant. The milk contains about 13% TS, including 3.5% fat. The milk is transported from the farm to the plant by refrigerated tank trucks of about 30 t capacity and stored in stainless steel tanks of about 80 t capacity. Nonfat dry milk (NFDM) or milk whey protein is used for fortification of the liquid milk. Yogurt culture in wet or dried form is used for inoculation (Tamine and Robinson, 1999). Yogurt stabilizers, such as gelatin, pectin, modified starch, or gela-tin/plant gum mixtures are normally used to thicken the yogurt coagulum. Fruit pieces or fruit pulp is used to prepare the fruit yogurt. The raw material (milk) of this application example is similar to the milk used in the UHT sterilization plant of example 7.3.

b. Standardization/Mixing In this application example, medium-fat yogurt is produced, containing 1.5% milk fat. Centrifugal separation is used to remove about 2% of fat from the initial liquid milk and clarify the raw milk. The milk is fortified with milk proteins to produce a thick-body yogurt product. Nonfat dry milk (NFDM) at the rate of 4% is usually added, but dried whey protein may be also used. Milk protein stabilizers, used to prevent whey separation (syneresis) of yogurt during storage, are added at the rate of about 0.3%.

c. Homogenization The mixture of milk ingredients is homogenized in a high-pressure continuous homogenizer, operated at about 200 bar pressure and temperature 55oC. Ho-mogenization retards fat separation (creaming) and improves the water-binding properties of milk proteins (casein).

ent about 90oC for 5

in for increasing the water-binding capacity of milk proteins and denaturation of the whey proteins. At the same time the milk mixture is pasteurized, i.e. all pathogenic and most spoilage bacteria are inactivated (Ranken and Kill, 1993).

d. Heat Treatmhe homogenized milk is heated in a plate heat exchanger to T

m



e. Fermentation The heated milk mixture is cooled to about 45oC and pumped to fermentation tanks, where it is inoculated with a yogurt culture. The yogurt inoculum (wet

a mixed culture of Lactobacillus bulgaricus and Streptococcus thermophilus in proportion of 2% of the milk mixture. Incuba-

45oC, after which a firm coagulum is formed, which is

ng about 15% total solids, is , or dried fruit, and it is comminuted into pieces of

ng include polyethylene (PE), polypropylene (PP), polystyrene (PS), or VC).

culture starter) consists of

tion time is about 3h atused in the manufacture of various stirred yogurts, e.g., yogurt with fruit pieces, strained yogurt, or drinking yogurt. Set yogurt is prepared by packaging the inoculated milk mixture into consumer cups and incubating the aseptically sealed packages at 45oC for 3–4h. Modern yogurt plants use freeze-dried culture starters, replacing the old wet culture method. The freeze-dried starter is provided by culture manufactur-ers in powder form. The starter is applied by direct vat injection (DVI) at the rate of 0.5% of the milk mixture.

f. Mixing of Yogurt The bulk-set yogurt is cooled through a plate heat exchanger to 15oC, using entleg (low shear) mechanical transport (positive displacement pumps). Fruit-

containing yogurt is prepared by gentle mixing of bulk yogurt with about 5% fruit pieces or fruit pulp. The fruit product, containisupplied as frozen, cannedthe desired size before use. Strained yogurt is prepared by separating part of the whey from the stirred yogurt either in cloth bags or in a centrifugal separator.

g. Packaging Stirred yogurt or inoculated milk mixture is usually packaged in plastic cups and sealed with aluminum lids, using automatic packaging machines, which operate under aseptic conditions. Semi-rigid plastic materials used in yogurt packagipolyvinylchloride (P The plastic cups may be supplied by plastics manufacturers or preferably formed in place by the packaging machine. The form–fill–seal (FFS) system is used in automatic machinery. The entire packaging operation is carried out under aseptic conditions, using hydrogen peroxide and/or UV radiation for sterilization.

h. Cooling/Storage The sealed yogurt cups are cooled and stored at about 5oC. Refrigerated storage life is 2–3 weeks, and the yogurt is displayed in retail shops at about 10oC. The yogurt cups must be handled gently to prevent mechanical damage (shearing) of the yogurt coagulum.


292 Chapter 8


ble

pter 6). The supervising and technical sup-port is taken into account using the factorial method (Chapter 6).

material refers to plastic cups.

A material and energy balance diagram of the yogurt manufacturing plant is shown in Figure 8.2a. The balances are based on 1000 kg raw material. In the same diagram the utilities requirements are presented in MJ. A process flow-sheet based on the above technology is presented in Figure 8.2b.


Ta 8.2a lists the material and energy requirements of the yogurt manufactur-ing plant, based on the material and energy diagram of Figure 8.2a. The annual data corresponds to 3840 h/y, according to the operating scheme described in the next paragraph. The Labor refers only to production workers which is obtained by the process counting method (see Cha

The packaging



Milk

Milk storage

1000 kgNFDM

Fat40 kg20 kg

Stabilizers Electricity40 MJ

Standardization

1020 kg25 oC

H Electricity

100 MJ 50 MJ

eatingHomogenization

o55 C

Heating

180 MJ Electricity20 MJ

92 oC

Cooling

125 MJ

oC45

Wet calture20 kg

1040 kg

Cuos, lids Electricity40 MJ

30 oC

Heating

50 MJ

oC45Refrigeration

180 MJ

5 oC

Inoculation

Packaging

Refrigeration storage

Cup incubation

Heat treatment

Cooling

Figure 8.2a Material and energy balances of the yogurt manufacturing plant.


294 Chapter 8

NFDMStabilizers

Standardization

FatRaw milk storage

Homogenization

Heat treatment

Wet calture

Inocubation

Packaging

Cold storage

cs

C

Ss

S

Z

z

Figure 8.2b Process flowsheet of the yogurt manufacturing plant.



Table 8.2a Material and Energy Requirements of the Yogurt Manufacturing Plant

Products

Yogurt 1.00 kg/kg 5.00 t/h 19 200 t/y

Raw materials



Utilities



Steam Fs. 0.09 kWh/kg 0.44 MW 1 690 MWh/y




Wastes

Waste Water Treatment Fj. 1.00 kg/kg 5.0 t/h 19 200 t/y

Labor

Manpower M. 3.6 h/t 18.0 p 69 120 h/y



Based on the simplified shortcut methods of Chapter 5, the size and the cost of the equipment presented in the flowsheet of Figure 8.2b are estimated and the results are summarized in Table 8.2b. The required capital is estimated as described in Chapter 5, and the re-sults are summarized along with the appropriate assumptions in Table 8.2c.


The operating cost is calculated on the basis of the assumptions present in Figure 8.2c.

The cost of raw material and the labor are the major components of the roduct cost.

or rate of 15 $/h was assumed, which is representative of unskilled roduction workers.

The annual operating time refers to 48 week per year, 5 days per week, 2 shifts per day, and 8h per shift.

edTable 8.2d and the results are summarized in Table 8.2e and in p A labp


296 Chapter 8

Table 8.2b Equipment Cost Estimation of the Yogurt Manufacturing Plant No Process Qty Size Units Cost

1 Trucks 4 30 t 4002 Milk storage tanks 3 80 t 2403 Mixing tanks 3 1 t 504 Homogenizers 1 5 t 2505 Plate heat exchanger 1 5 t/h 2006 Cooler 1 5 t/h 1007 Aseptic packaging 5 1 t 8008 Incubation room 1 16 t 509 Refrigerated storage 1 50 t 200

10 CIP cleaning system 1 2 t 2002490 k$

Table 8.2c Capital Cost Estimation of the Yogurt Manufacturing Plant









Table 8.2d Assumptions for Operating Cost Estimation of the Yogurt Manufacturing Plant

Yogurt Plant







Utilities Cost














Material Unit Cost




For the purposes of the application example, it is assumed that the raw material cost includes the cost of all additives, expressed in $/kg milk. Detailed cost calculations require data on the cost of each material.


298 Chapter 8

Table 8.2e Operating Cost Estimation of the Yogurt Manufacturing Plant

Manufacturing Cost





Labor Clab 3.24







Raw Materials

Labor


Packaging


Fixed Manufacturing

0.00

0.50

1.00

1Operating Cost

Uni

t Co

st (

$/kg

) .

…

Figure 8.2c Operating cost estimation of the yogurt manufacturing plant.



6. Plant Profitability A plant profitability analysis of the design and economics of the yogurt manu-facturing plant was performed according to the procedure described for the bread manufacturing plant (see Section I.6 of this chapter). Similar results were obtained. The assumptions for the plant profitability estimation are summarized in Table 8.1f of this Chapter. Figure 8.2d presents the cumulated cash flow CCF and the net present value NPV of the yogurt manufacturing plant during its life-time. The characteristic economic quantities are indicated in this Figure: De-preciated period ND, loan payment period NL, positive salvage period NS, and project life time NE. The simple payback period SPB and the depreciated pay-back period DPB are obtained as the intercepts with the time axis of the CCF and NPV curves, respectively. Based on these data, the resulting profitability indices are also summa-rized in Table 8.2f. Table 8.2f Plant Profitability of the Yogurt Manufacturing Plant

Profitability









300 Chapter 8

3.0

4.0

$)

Tax

0.0

1.0

2.0Cash

flo

w (

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

M

Tax Reduction

Net Profit

Loan Payment

Operating year

CCF

NPV

NENSNLND

-2

-1

0

1

2

3

4

5

6

7

8

0 5 10 15 20 25 30

Operating year

Net

pre

sent

val

ue /

Ow

n Ca

pita

l

Figure 8.2d Annual cash flow (upper) and cumulated cash flow (CCF) and net pre-sent value (NPV) of the yogurt manufacturing plant.




A sensitivity analysis of the yogurt manufacturing plant was performed accord-ing to the procedure described for the bread manufacturing plant (see Section 1.7 of this chapter). Similar results were obtained. Figure 8.2e shows the three characteristic points of the break-even analy-sis with an optimum at an annual operating time of about 2000 h, correspond-ing to operation of 2 shifts daily for 5 days per week. Figure 8.2.f presents the annual profit for three different values of the product price. Figure 8.2g reveals the effect of the resource prices (equipment Ceq, raw materials Cr, labor CL, utilities Cb) and the economic environment (tax rate t, discount rate i, loan interest rate iL, and leverage L) on the Capital Return Ratio CRR (Net Present Value to the Own Capital invested Ratio), respectively.


302 Chapter 8

30

25

1 shift 2 shifts 3 shifts + weekends10

Ann

ual i

ncom

0

5

0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000


e/m

e .

20

(M$

/y)

Sales

15

outc

o

Manufacturing cost

Profit

Figure 8.2e Break-even analysis of the yogurt manufacturing plant.

0.0

1.0

2.0

3.0

4.0

5.0

6.0

0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000


Ann

ual p

rofi

t (M

$/y

)


1.131.25 1.38

Figure 8.2f Break-even analysis of the yogurt manufacturing plant.



CbCb

Ceq

Ceq

CL

CL

Cr

Cr

-1.00

0.00

1.00

-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40

Relative variation

Capi

tal R

etur

n Ra

tio

.

L

Li

i

t

t

iL iL

-0.50

0.00

0.50

-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40

Relative variation

Capi

tal R

etur

n Ra

tio

.

Figure 8.2g Sensitivity analysis of the yogurt manufacturing plant.


304 Chapter 8

III. WINE PROCESSING PLANT

1. Outline of Process Technology

a. Raw Materials The main raw material in wine processing is grapes of a wine-making variety. Wine quality is affected strongly by grape variety, soil, cultivation method, and weather conditions (temperature, humidity, and sunlight). Some regions of the world are suitable for high quality grapes and wines, such as France, Mediterranean countries, California, South Africa, South America, and Australia. Traditional wines are produced in small to medium-sized wineries, ap-plying batch processes. Modern wine processing plants apply scientific and engineering principles to produce large quantities of wines at competitive cost. The economics of such a modern wine plant is analyzed in this example. Grape harvesting lasts about one month in the fall (September in the Northern Hemisphere). The grapes are harvested by hand in most countries. Mechanical harvesting of grapes is used in California. Maturity of the grapes is judged from the sugar content, e.g., 22oBrix. Mechanical harvesting can be accompanied by field crushing of the grapes. An added advantage of mechanical harvesting is destemming of the grapes and rejection of the stems in the field (vineyard), with less solid waste (pomace) in the plant (Boulton et al., 1996). Sulfite treatment of crushed grapes may be needed too in the vineyard.

b. Grape Crushing The stems of the grapes are removed and the grape berries are crushed in a combined destemming/crushing operation. A perforated rotating drum is used with 25 mm diameter holes. The grapes are caught, crushed, and passed through the holes, while the stems and leaves are separated and discharged from the cylinder (Boulton et al., 1996; Nagy et al., 1993).

c. Juice Expression In white wine processing, the juice is separated from the crushed grapes quickly to prevent the extraction of undesirable components from the grape

n the production of red wines, the crushed grapes r to extract the

igments and other desirable components of the grapes. The grape juice for white wines is expressed using various machines, e.g., the screw or the Willmes (bladder) presses (Saravacos and Kostaropoulos,

skins and seeds. However, iare heated to about 50oC and fermented with the skins in ordep



2002). The pressed low-moisture pomace (mixture of grape skins, seeds, and stems) is disposed by mixing with the soil in the vineyard.

The expressed juice is treated with some yeast nutrients (ammonium salts) and pm sulfur dioxide) to control the alcoholic fermentation.

3 .

o

orage. of the storage tanks may be needed during the ageing pe-

emove all the suspended particles before bottling. Frame

d. Fermentation

sulfites (about 50 p Stainless steel fermentation tanks of about 40 m capacity are usedGrape juice of 22oBrix when fermented completely with yeast will yield wine with 11.5% ethanol. at the approximate rate of 1 L wine / kg juice. The grape juice is inoculated with activated dry yeast (ADY) at the rate of 0.15 kg/t. Carbon dioxide is produced during fermentation, along with ethanol, at

e ratth e of 0.1 kg CO2 /L juice of 22 Brix. Large concentrations of CO2 must be removed from the fermentation room using venting fans. Fermentation is an exothermic biochemical process, and the temperature in the fermenting tank must be kept below 30oC. Cooling may be required, such as circulating the fermenting liquor through an external heat exchanger.

e. Ageing of Wine hiteW wines are aged in bulk for short time, e.g., 6 months, before bottling.

Red wines are usually aged in wooden barrels for long time (more than one year) in wine cellars, acquiring characteristic flavor and aroma (bouquet), re-sulting in expensive wines. Stainless steel tanks of about 150 t capacity (40,000 gallons) may be used for bulk storage of white wines at about 20oC. Concrete tanks, lined with epoxy paint, may be used in wine st Refrigeration riod. Wine storage results in some desirable biochemical and physicochemical reactions, and clarification of the wine. Ageing in bulk tanks can be accelerated by introducing wood chips in the wine, a process used in the manufacture of lager beer.

f. Wine Filtration Wine is filtered to rand plate filters, leaf filters, of pad filters may be used, employing some type of filter aid. Recent advances in Membrane Technology allow the use of microfiltra-tion or ultrafiltration in the clarification of wine (Saravacos and Kostaropoulos, 2002). Microfiltration membranes of proper pore size can remove all spoilage microorganisms (bacteria, yeasts, and molds) from the wine, resulting in a ster-ile product.


306 Chapter 8

g. Bottling of Wine The clarified aged wine is usually packaged in glass bottles of 0.75 L capacity, using high speed bottling machines. The wine is filled automatically in the bot-

rked and sealed at the rate of up to 5000 bottles/h. A separate

age

wineries (pomace) is normally disposed in the vineyards by

ma

3. Material and Energy Requirements material and energy requirements of the wine manufactur-

cribed in the next paragraph.

tles which are cobottling room, operated at positive pressure under sterile conditions, is re-quired. Bottling is carried out off-season and after the wine has aged. The empty bottles are rinsed with water and sterilized with a permitted chemical (e.g., a peroxide).

h. Bottle StorThe wine bottles are stored at room (cellar) temperature for several months or years before sale distribution. The price of wine depends strongly on the grape variety, the vineyard area, the wine manufacturing technology, and the storage time.

i. Plant Wastes The solid wastes ofmixing with the soil. The sanitary waste of wineries can be discharged to a lo-cal sewage plant or to a plant sewer. The winery liquid wastes, if low in vol-ume, can be used for irrigation of the vineyard soil (Storm, 1997). Large vol-umes of liquid wastes can be discharge to local sewage or in a special wastewa-ter treatment installation in the winery.


A terial and energy balance diagram of the wine manufacturing plant is shown in Figure 8.3a. The balances are based on 1000 kg raw material. In the same diagram the utilities requirements are presented in MJ. A process flow-sheet based on the above technology is presented in Figure 8.3b.

Table 8.3a lists the ing plant, based on the material and energy diagram of Figure 8.3a. The annual data corresponds to 320 h/y, according to the operating scheme des The Labor refers only to production workers which is obtained by the process counting method (See Chapter 6). The supervising and technical sup-port is taken into account using the factorial method (Chapter 6). The packaging material refers to glass bottles.



Grapes 1000 kg

ElectricityPomace 40 MJ

320 kgJuice 680 kg

Destemming/crushing

ElectricityJuice clarification Residue 40 MJ

20 kgJuice 22o Brix 660 kg

Refrigeration

90 MJ CO2

Wine 12o

Refrigera

Fermentation

tion

140 MJ

Electricity

Residue 20 MJ10 kg

650 kg

Bottles, corks

Filtration

Bottling

Ageing

Electricity

15 MJ

Electricity

5 MJLabeling/casing

Refrigeration

80 MJ Bottle storage

Figure 8.3a Material and energy balances of the wine manufacturing plant.


308 Chapter 8

Grapes

PomaceDestemmingCrushing

Clarification

Fermentation

Ageing

Filtration

BottlingStorage

Figure 8.3b Process flowsheet of the wine manufacturing plant.



Table 8.3a Material and Energy Requirements of the Wine Manufacturing Plant

Products

Wine 1.00 kg/kg 5.00 t/h 1 600 t/y

Raw materials



Utilities

Process Water Fw. 0.00 kg/kg 0.00 t/h 0 t/y


Steam Fs. 0.00 kWh/kg 0.00 MW 0 MWh/y




Wastes

Waste Water Treatment Fj. 0.00 kg/kg 0.0 t/h 0 t/y

Labor

Manpower M. 6.4 h/t 32.0 p 10 240 h/y



Based on the simplified shortcut methods of Chapter 5, the size and the cost of the equipment presented in the flowsheet of Figure 8.3a are estimated and the results are summarized in Table 8.3b. The required capital is estimated as described in Chapter 5, and the re-sults are summarized along with the appropriate assumptions in Table 8.3c.


The operating cost is calculated on the basis of the assumptions present in in Figure 8.3c.

The cost of raw material, fixed manufacturing, and labor are the major omponents of the product cost.

A labor rate of 15 $/h was assumed, which is representative of unskilled production workers. The annual operating time refer to 4 week per year, 5 days per week, 2 shifts per day, and 8h per shift.

edTable 8.3d and the results are summarized in Table 8.3e and c


310 Chapter 8

Table 8.3b Equipment Cost Estimation of the Wine Manufacturing Plant No Process Qty Size Units Cost

1 Fermentation tanks 20 40 t 10002 Storage tanks 10 150 t 10003 Crusher/destemmer 1 5 t/h 1504 Screw press 1 5 t/h 1505 Plate heat exchanger 1 5 t 1506 Microfiltration 1 1 t/h 1507 Bottling machine 1 5 t/h 400

3000 k$ Table 8.3c Capital Cost Estimation of the Wine Manufacturing Plant









Table 8.3d Assumptions for Operating Cost Estimation of the Wine Manufac-turing Plant

Wine Plant







Utilities Cost














Material Unit Cost




For the purposes of the application example, it is assumed that the cost of the raw material (grapes) includes the minor cost of the additional processing materials.


312 Chapter 8

Table 8.3e Operating Cost Estimation of the Wine Manufacturing Plant

Manufacturing Cost





Labor Clab 0.48







Raw Materials

Labor

Overheads

Capital Charge

PackagingUtilities Waste

Treatment

Fixed Manufacturing

0.00

0.50

1.00

1.50

2.00

2.50

3.00

1Operating Cost

Uni

t Co

st (

$/kg

) .

…

Figure 8.3c Operating cost estimation of the wine manufacturing plant.



6. Plant Profitability A plant profitability analysis of the design and economics of the wine manufac-turing plant was performed according to the procedure described for the bread manufacturing plant (see Section I.6 of this chapter). Similar results were ob-tained. The assumptions for the plant profitability estimation are summarized in Table 8.1f of this Chapter. Figure 8.3d presents the cumulated cash flow CCF and the net present value NPV of the yogurt manufacturing plant during its life-time. The characteristic economic quantities are indicated in this Figure: De-preciated period ND, loan payment period NL, positive salvage period NS, and project life time NE. The simple payback period SPB and the depreciated pay-back period DPB are obtained as the intercepts with the time axis of the CCF and NPV curves, respectively. Based on these data, the resulting profitability indices are also summa-rized in Table 8.3f. Table 8.3f Plant Profitability of the Wine Manufacturing Plant

Profitability









314 Chapter 8

3.0

$)

1.0

2.0

Cash

flo

w (

0.0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

M

Net Profit

TaxTax Reduction

Loan Payment

Operating year

CCF

NPV

NENSNLND

-2

0

2

4

6

0 5 10 15 20 25 30

Operating year

Net

pre

sent

val

ue /

Ow

n Ca

pita

l

Figure 8.3d Annual cash flow (upper) and cumulated cash flow (CCF) and net pre-sent value (NPV) of the wine manufacturing plant.



7. Sensitivity Analysis A sensitivity analysis of the wine manufacturing plant was performed accord-ing to the procedure described for the bread manufacturing plant (see Section 1.7 of this chapter). Similar results were obtained. Figure 8.3e shows the three characteristic points of the break-even analy-sis while Figure 8.3.f presents the annual profit for three different values of the product price. Figure 8.3g reveals the effect of the resource prices (equipment Ceq, raw materials Cr, labor CL, utilities Cb) and the economic environment (tax rate t, discount rate i, loan interest rate iL, and leverage L) on the Capital Return Ratio CRR (Net Present Value to the Own Capital invested Ratio), respectively.


316 Chapter 8

1 shift 2 shifts 3 shifts + weekends10

.

Sales

0

0 100 200 300 400 500 600 700 800


Ann

ual i

ncom

e/y)

5

outc

ome

(M$

/

Manufacturing cost

Profit

Figure 8.3e Break-even analysis of the wine manufacturing plant.

0.0

1.0

2.0

3.0

4.0

0 100 200 300 400 500 600 700 800 900


Ann

ual p

rofi

t (M

$/y

)


3.60

4.00

4.40

Figure 8.3f Break-even analysis of the wine manufacturing plant.



CbCb

Ceq

CL

CL

Cr

Cr

-0.50

-0.25

0.00

0.25

0.50

-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40

Relative variation

Capi

tal R

etur

n Ra

tio

.

L

Li

i

t

t

iL iL

-0.50

-0.25

0.00

0.25

0.50

-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40

Relative variation

Capi

tal R

etur

n Ra

tio

.

Figure 8.3g Sensitivity analysis of the wine manufacturing plant.


318 Chapter 8

IV. ECONOMIC COMPARISON

The results presented in the previous sections of Chapter 8 are summarized and compared. in this section. Table 8.4a summarizes the energy requirements in the 3 food manufac-turing plants, considered in Chapter 8. The theoretical energy requirement, in MJ/kg product, was calculated from material and energy balances of each plant. The estimated (actual) energy requirement was calculated from the theoretical, assuming a 25% energy loss. It is evident that the energy requirements of the food manufacturing plants, considered in this chapter, are generally lower than the energy re-quirements of the food preservation and food ingredients plants, considered in Chapters 7 and 9, respectively. However, food manufacturing plants, using energy intensive operations, such as evaporation and drying, may require much higher energy per unit product mass. Figure 8.4a compares the plant profitability between the examined food manufacturing plants in both terms of net present value (NPV) and internal rate of return (IRR). Figure 8.4b is an interesting and useful figure. It represents, in a graphi-cal way, the analysis of the cost breakdown to its components.

• The most significant component of the production cost is the raw mate-rial cost followed by the labor cost.

• Utility cost is not significant for some food manufacturing plants. • Packaging cost is important in yogurt and wine manufacture, but less im-

portant in baked bread. • Waste treatment cost is of minor importance in the food manufacturing

plants examined in this chapter. Finally, Figure 8.4c presents in a comparative manner the cumulated cash flow (CCF) and the net presents value (NPV) for all the examined food manu-facturing plants as a function of their lifetime. It must be noted that all the previous results in this chapter are very sensi-tive to techno-economic assumptions made and any change in them may mod-ify significantly the results. Table 8.4a Energy Requirements of Food Manufacturing Plants Food Plant Energy Requirements, MJ/kg product Theoretical Estimated 12. Bread 1.30 1.73 . Yogurt 0.73 1.00

3. Wine 0.54 0.72 Note: To convert MJ/kg to kWh/kg divide by 3.6.



0.40

Wine

Yogurt

Bread0.30

urn

(IRR

)

0.10

0.20

Inte

rnal

rat

e of

ret

Food preservation plants

Food manufacturing plants

0.00

0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00

Net present value (NPV) .

8.4aFigure Plant profitability comparison.


320 Chapter 8

Bread

Raw Materials

Labor



Treatment

Fixed Manufacturing

0.00

0.50

1.00

1Operating Cost

Uni

t Co

st (

$/k

g)

Yogurt

Raw Materials

Labor


Packaging


Fixed Manufacturing

0.00

0.50

1.00

1Operating Cost

Uni

t Co

st (

$/k

g)

Wine

Raw Materials

Labor

Overheads

Capital Charge


Treatment

Fixed Manufacturing

0.00

0.50

1.00

1.50

2.00

2.50

3.00

1Operating Cost

Uni

t Co

st (

$/k

g)

Figure 8.4b Production cost comparison.



Bread

CCF

NPV

NENSNLND

-2

0

2

4

6

8

10

0 5 10 15 20 25 30

Operating year

Net

pre

sent

val

ue /

Ow

n Ca

pita

l

Yogurt

CCF

NPV

NENSNLND

-2

0

2

4

6

8

10

0 5 10 15 20 25 30

Operating year

Net

pre

sent

val

ue /

Ow

n Ca

pita

l

Wine

CCF

NPV

NENSNLND

-2

0

2

4

6

8

10

0 5 10 15 20 25 30

Operating year

Net

pre

sent

val

ue /

Ow

n Ca

pita

l

Figure 8.4c Cumulated cash flow (CCF and net present value (NPV) comparison etween the examined food manufacturing plants.

) b


322 Chapter 8

REFERENCES

Ahvenainen R, 2003. Novel Packaging Techniques. CRC Press. Becket ST ed, 1994. Industrial Chocolate Manufacturing and Use. Blackie Academic

and Professional. Boulton RB, Singleton VL. Bisson LF, Kunkee RE, 1996. Principles and Practices of

Winemaking. Chapman Hall. Doerry WT, 1995. Breadmaking Technology. American Institute of Baking. Hall GM ed, 1997. Fish Processing Technology, 2nd ed. Blackie Academic and Profes-

sional. Hallstrom B, Skjoldebradt C, Tragardh C, 1988. Heat Transfer and Food Products. El-

sevier Applied Science. Levine L, Boehmer E, 1997. Dough processing stems. In Valentas KJ, Rotstein E,

ngh RP, eds: Food Engineering Practice. CR Press. ll RT, Goff HD, Hartel RW, 2003. Ice Cream 6th edition. Kluwer Academic/

Plenum Publ. Matz SA, 1989. Bakery Technology. Packaging, Nutrition, Product Development, Qual-

ity Assurance. Elsevier Publ. Matz SA, 1989. Equipment for Bakers. Elsevier Science Publ. Matz SA, 1992. Bakery Technology and Engineering, Van Nostrand Reinhold. Nagy S, Chen CS, Shaw PE, 1993. Fruit Juice Processing Technology. Agscience Inc,

Auburndale. Ranken MD, Kill RC, 1993. Food Industries Manual, 23rd ed. Blackie Academic and

Professional. Saravacos GD, Kostaropoulos AE, 2002. Handbook of Food Processing Equipment.

Kluwer Academic / Plenum. Storm D, 1997. Winery Utilities. Chapman & Hall

AY, Robinson RK, 1999. Yoghurt: Sc nce and Technology, 2nd edition. Woodhead Publ.

syCSi

Marsha

. ieTamine


323

9 Food Ingredients Plants

INTRODUCTION

Food ingredients plants utilize agricultural and natural raw materials to separate and recover valuable food components, such as wheat flour, sugar, edible oils, pectin, protein, and salt, which are used in the manufacture of several food products. Wheat flour and other cereal flours can be considered as food ingre-dients, which are used in large quantities in the baking and other food indus-tries. Various other food ingredients, used in smaller quantities, are produced by the Chemical Process Industries, e.g., flavors and gums, coloring materials, sweeteners, antioxidants, preservatives, vitamins, nutritive minerals, and spe-cial food chemicals. The raw materials of the natural food ingredients are bulk agricultural products of relatively low cost, such as cereal grains (wheat, corn), sugar beets or sugar cane, and soybeans. Some food ingredients are produced from by-products of food preservation or food manufacturing plants, e.g., pectin from citrus or apple peels, and protein from cheese whey. The design and economics of food ingredient plants is based on conven-tional Chemical Engineering technology. The plants are optimized, instru-mented and controlled, and the plant effluents are treated to meet the environ-mental requirements. Microbial spoilage and chemical or biochemical deterio-ration of food ingredients during processing are very limited, and hygienic and food safety requirements in such plants are less severe than in conventional food preservation and food manufacturing plants. Food ingredients plants produce higher value-added products, compared to the food preservation and food manufacturing plants. The raw materials are subjected to extensive processing in order to separate and purify the desired


324 Chapter 9

ingredient. As a result, the cost of processing is increased and the cost of raw materials becomes less important. Table 9.1 lists various food ingredients plants of importance to food manufacturing. Food flours (mainly wheat) are produced in large milling plants, using mechanical reduction (mills) and separation (sieving) equipment, operated con-tinuously. A number of flour fractions are produced, used in bakeries and other food manufacturing plants. Flour mills are located near ports and large popula-tion centers. Bulk storage and transportation of flours are used extensively. Starch and sugar plants are generally large chemical engineering installa-tions producing large quantities of food ingredients from agricultural raw mate-rials. The food ingredients are separated, recovered and, if needed, modified by a series of mechanical, physical, and chemical processes. The plants use large amounts of energy (steam, fuel, electricity) and process water, and they pro-duce significant amounts of wastes, which should be treated. Food biopolymer plants utilize agricultural raw materials and food plant wastes to produce pectin, gelatin, whey protein, etc., which are used in the manufacture of several food products. Food proteins are especially important because they provide the required high nutritive value to various foods. Vegetable oil plants produce large quantities of edible oils from oil seeds, olives, and corn, using mechanical expression, mechanical separation, and sol-vent extraction. These plants produce large amounts of by-products, which can be utilized in the production of proteins and other useful food ingredients (Sha-hidi, 2005). The liquid, solid, and gaseous wastes of these plants must often be treated to comply with the environmental pollution laws. Plant extracts are produced by water or solvent extraction of useful in-gredients from vegetable plant materials, such as flavor compounds, gums, or phytonutrients (flavonoids, carotenoids, etc.). These ingredients are produced in relatively small quantities in specialized chemical processing plants. A large number of food chemicals and biochemicals are produced in spe-cialized chemical plants, e.g., vitamins, food preservatives, and food enzymes. These ingredients are produced in relatively small quantities, often batch oper-ated, using complex processes and specialized equipment, and hence they are relatively expensive materials.


Food Ingredient Plants 325

Table 9.1 Food Ingredients Plants

Food Ingredient Category Processing Plant

Food flours Wheat Other grain Soya Sugars / starches Beet sugar, cane sugar Starches, modified starches Corn syrups, HFCS Food biopolymers Pectin Cellulose Gelatin Whey protein Soy protein Vegetable oils Soybean oil Corn oil Rapeseed oil Olive oil Plant extracts Flavors, colors Hydrocolloids Gums Phytonutrients Food chemicals and biochemicals Vitamins Amino acids Antioxidants Acidulants Preservatives Enzymes


326 Chapter 9

I. BEET SUGAR PLANT

The Economics of a large beet sugar plant is discussed briefly in this applica-tion example, following the procedure of the examples of food preservation and food manufacturing plants (Chapters 7 and 8). The detailed design and eco-nomic analysis of such plant would require more engineering and economic information and data, which are found in books and literature on Chemical Plant Design (Perry’s Chemical Engineers’ Handbook, 1997; Peters and Timmerhaus, 2003). Beet sugar plants are located in agricultural regions, grow-ing large amounts of sugar beets. Sugar processing involves several chemical engineering operations and processes, such as sugar extraction, juice clarification, sugar crystallization, and sugar drying. The sugar plants consume large quantities of energy and process water, and generate considerable amounts of wastes. Sugar molasses and dried sugar pulp are byproducts of considerable economic value. Cane sugar is produced from sugarcane in similar sugar plants, except for the juice extraction process, which is based on the mechanical expression (pressing) of the raw material (Chen and Chou, 1993). Raw cane sugar is pro-duced in sugar mills in cane growing regions (tropical or semi-tropical), and refined to pure crystalline sugar in sugar refining plants, located near large con-sumption centers (Chou, 2000).

1. Outline of Process Technology

a. Raw Materials Sugar beets are grown in large quantities in several countries of the Northern Hemisphere and they are harvested mechanically during the fall, so that the sugar plants operate during the fall and winter of each year (“campaign”). Sugar beets contain approximately 23% TS (Total Solids) by weight, which include 16.6% sucrose and 6.4% nonsugars. Of the 16.6% sucrose, about 14% is recovered in the sugar plant as sugar, 2% goes to the byproduct molas-ses, and 0.6% is lost during processing. Molasses contain about 80% TS, half of which is sugar and the rest nonsugars (McGinnis, 1971; Schneider, 1968). The harvested beets are transported by truck to the sugar plant, where they are stored either in silos or in bulk until processed.

b. Sugar Extraction The beets are transported from the storage area to the processing plant by flum-ing (hydraulic transport in a water canal). At the same time they are washed of external materials, such as soil, leaves, and weeds, while various stone materi-



als are removed. Approximate water requirements for beet transport 6 m3/t, and for washing 2 m3/t. The washed beets are cut into long pieces (strips or “cosettes”) 5–7 cm long. Special horizontal rotating cutting machines (slicers) are used with sharp knives, which are replaced and sharpened periodically. The sugar is extracted (or leached) from the beet pieces by contacting with hot water for sufficient time. Under these conditions, the sucrose mole-cules will diffuse from the interior to the surface of the beet pieces, and then transfer to the surrounding solution. Modern sugar plants use continuous extraction equipment, such as the DDS (De Danske Sukkerfabriker) system. The DDS extractor is an inclined (10o) long trough, in which a slowly rotating screw transports the beet pieces from the bottom to the top, while the extraction hot water flows by gravity from the top. The extractors are about 20 m long and they are operated at tempera-tures 70–80oC and residence time about 1.5 h. Heating of the beet pieces inactivates the cell membranes of the beet, facilitating the diffusion of sucrose into the surrounding water. Clean steam condensates from the sugar evaporators may be used in the extraction process. The extracted beet pieces (or pulp) contain the water-insoluble solids (“marc”), which are dried to an animal feed byproduct. The yield of wet pulp (16% TS) is about 32% of the beets and, after drying, to 90% TS it corresponds to about 5.6% of the beets. The extracted juice is clarified from the colloidal and dissolved non-sugar substances, which may affect adversely the processing operations (con-centration and crystallization) and the quality (color, impurities) of the sugar. The juice is treated repeatedly with lime (about 2.5 kg CaO / ton of beets) and carbon dioxide and filtered to bring about the required chemical reactions and separation processes of the juice clarification. A lime kiln is normally installed in the sugar plant, producing calcium oxide from limestone (calcium carbonate) and carbon dioxide in about equal amounts. The heat of reaction, 1.76 MJ/kg limestone, is provided by the burning of 60 kg coal/t. Addition of lime to the juice at 80–90oC raises the pH to about 11, caus-ing coagulation of the colloids and destruction of most of the invert sugars and amides in the juice, which cause problems in the concentration and crystalliza-tion of the sugar. The lime-treated juice is saturated with carbon dioxide gas for the pur-pose of precipitating and removing the lime as calcium carbonate. Treatment of the sugar juice with lime, followed by carbonation with CO2 and filtration, is repeated one or more times until a satisfactory clarified juice is obtained. All juice is filtered before concentration, using some rotary and pressure filters. Modern membrane separation technology (microfiltration and ultrafiltration) may replace the lime clarification process.


328 Chapter 9

c. Juice Concentration The clarified sugar juice, containing normally 15% sucrose (15oBrix), is con-centrated to a sugar solution of about 65oBrix, using an economic industrial concentration system. Since large amounts of water must be removed from the sugar solution, energy-efficient systems are necessary, such as multiple-effect evaporators or thermal/mechanical vapor recompression evaporators. A typical concentration system, used in the sugar industry, is the 5-effect feed-forward short-tube evaporator (Saravacos and Kostaropoulos, 2002). Clarified sugar solutions of low oBrix are relatively heat-stable and they can be evaporated at temperatures above 100oC. The temperature in the first effect (15oBrix) should not exceed 130oC, while in the last (5th) effect (65oBrix) it should be less than 100oC (e.g., 70oC), necessitating vacuum operation of the last effects. The boiling point elevation (BPE) of dilute sugar juices (lower than 30oBrix) is less than 1oC and it can be neglected in preliminary calculations. However, BPE becomes important at higher sugar concentrations, e.g., 4.4oC at 65oBrix. The steam used for heating the first effect of the evaporator is usually saturated at 3.6 bar pressure and temperature 140oC. In the large beet sugar plants, the process steam is usually provided by a power generation system, which uses superheated steam at e.g., 26 bar pressure and 370oC temperature. The superheated steam is produced by the steam boiler and it drives a power generating turbine (cogeneration system). Thus, power is generated for the electrical needs of the processing plant, while the exhausted low-pressure steam is used for heating (Section II of this chapter). The steam condensates from the evaporator units are used for preheating the sugar solutions in the clarification operation. Part of the condensates is re-turned to the feed water of the steam boiler

d. Sugar Crystallization The juice concentrate (65oBrix) is filtered using filter aids and crystallized in evaporative crystallizers, removing part of the water and yielding a sugar mass (magma) containing 90% sucrose, and a thick solution of sugar and nonsugars (molasses). The batch crystallizers are operated in vacuum at about 90oC, using steam from the steam boiler or vapors from the evaporator. The thick sugar solution is seeded with ground sugar crystals (seed size 10 μm and concentra-tion 8 g/m3) to initiate crystallization, and sufficient time is allowed for crystal growth. The sugar magma is separated in centrifuges into crystalline sugar and molasses. The separated raw sugar is washed with water and purified by re-crystallization one or two times. Refined white sugar is produced by dissolving the raw (cane) sugar in hot water, vacuum evaporation, and re-crystallization.



e. Centrifugation Vertical basket centrifuges are used to separate the sugar magma from the mo-lasses. The capacity of each centrifuge is about 600 kg, and several centrifuges, operated in parallel, are required in a large sugar plant. The separated sugar magma is either dried or purified by re-crystallization. The separated sugar, containing about 97% TS, is washed in the centrifuge with water and the wash sugar solution is returned to the crystallization system.

f. Drying of Sugar Sugar, separated from the molasses in the centrifuges, is dried from about 97% TS to 99.97% TS in a rotary air-dryer. Relatively high air temperature and short residence times are used to prevent heat damage to the dried sugar. The hot air in the dryer should not exceed 90oC and the discharged sugar should be at less than 45oC .

g. Drying of Beet Pulp The pulp residue, produced in the sugar extraction of beets and the filtrates of the clarification process is first pressed mechanically to remove the excess wa-ter, e.g., from 14% to 18% TS, and the pressed pulp is dried from about 18% to 90% TS by air-drying. Since a large amount of water must be removed, high capacity rotary dryers are used. The dryers can be operated at relatively high temperatures, since the dried animal feed produced is a thermally stable prod-uct.

h. Sugar Molasses Molasses, the liquid residue of sugar crystallization, and dried beet pulp are two important byproducts of sugar processing, which have a considerable economic value. Molasses contain about 80% TS, half of which is sugar and the rest vari-ous nonsugar substances of high nutritive value. Molasses is used as a raw material in several fermentation industries, as an animal feed, often mixed with dried beet pulp, and as a sugar additive in some food products.

i. Plant Effluents Large amounts of water are used in the beet sugar plant, for example 11 t wa-ter/ton beets. Due to extensive water recycling (e.g., 10 times), the net use of water and the wastewater outflow (effluent) is about 1 ton water/ton beets. The waste water from the sugar plant contains small amounts sugars and organic substances (BOD) which can be easily oxidized in biological oxidation systems. The treatment of food wastes is discussed briefly in Chapter 3.


330 Chapter 9

j. Sugar Storage The dried crystalline sugar may be stored in large concrete silos of capacity about 5000 t each. Sugar is packaged in 40 kg multiwalled bags for commercial use. For retail distribution, consumer bags (paper or plastic) of 0.5 to 1.0 kg are used. Large quantities of sugar are used by the food industry in the form of sugar solutions of 77% TS (invert liquid sugar), which is transported in 30 t trucks.

2. Preliminary Sugar Plant Design

A preliminary design of the beet sugar plant can be prepared following a pro-cedure similar to that of the Application Examples of Chapters 7 and 8. The sizing and costing of the process equipment (Capital Cost estima-tion) can utilize the methods and data of Chapter 5. In addition, technical and cost data on special equipment, such as size reduction (slicing), sugar extrac-tion, juice clarification, lime production, juice clarification and filtration, sugar crystallization, and sugar centrifugation can be found in known Chemical En-gineering references (Perry et al., 1997; Peters and Timmerhaus, 2003; Walas, 1988; Couper, 2003) or from quotations of equipment manufacturers and sup-pliers (Saravacos and Kostaropoulos, 2002). For illustrative purposes, a medium-sized beet sugar plant of capacity 3000 t/d beets is considered. Figure 9.1 shows the simplified process block diagram of material and energy balances, while the main process flowsheet is shown in Figure 9.2. Table 9.1 outlines the material balances of the 3000 t/d beet sugar plant, while the major plant equipment is listed in Table 9.2. White sugar is produced by washing with water the separated sugar on the centrifuges and recrystallizing the solution one or more times. Thus, the yield of sugar is reduced and more molasses is produced.



Waterppm SO2

Beets 16.6oB 1000 kg

Electricity0.5 kW

Beets 16.6oB 1000 kgWater 1000 kg Electricity

Electricity Lime 2.5 kg Beet pulp 1 kW0.5 kW Steam 327 kg Water

93 kW 16% TS

Juice 15oB 1060 kg Beet pulp 16%TS 327 kgCO2 2.5 kg Fuel

ppm SO2 Sludge 200 kWElectricity Electricity0.2 kW Fuel Water 2 kW

90 kW Juice 15oB 1000 kgDried pulp 90%TS 58 kg

Steam CondensateElectricity 154 kW0.3 kW

Concentrate 65oB 230 kg

SludgeElectricity0.2 kW

Concentrate 65oB 230 kg

SteamElectricity 41 kW0.2 kW

Sugar magma 90%TS 166 kgWater

Electricity2 kW

Molasses 146 kg

Electricity0.2W

Water

Electricity1 kW Steam

6 kW Wet sugar 97%TS 156 kg

FuelElectricity 3 kW0.5 kW

Raw sugar 140 kg

Electricity0.5 kW

Raw sugar 140 kg

Centrifugation B

Drying

Sieving

Washing

Cutting

Crystallization B

Centrifugation A

Crystallization A

Evaporation

Filtration

Extraction Pressing

Clarification Drying

Figure 9.1 Material and energy balances of a beet sugar plant. Basis: 1 t/h beets.


332 Chapter 9

s

c

S

C

S

s

R

L

F

A

A

L

G

G

A

G

P

KP

G

P

R

F

KP

c

CG

s S

S

P

L

W

S

s

s

s S

S s

sS

A

s

S

WW

W

w

Figure 9.2 Simplified process flowsheet of a beet sugar plant.



Table 9.1 Material balances of the 3000 t/d beet sugar plan Plant capacity, sugar beets: 3000 t/d = 125 t/h = 270,000 t/y Operating time: 90 d/y = 2160 h/y Beet composition: 23%TS = 16.6% sucrose + 6.4% nonsugars Sugar yield: 14% of beets + 2% molasses + 0.6% sugar losses = 37 800 t/y sugar + 5400 t/y molasses Beet pulp: Yield of 16% TS wet pulp 312 kg/t beets or 39 t/h Dried pulp 6.9 t/h = 14 978 t/y 90% TS Clarified beet juice of 15oBrix 1 t/t beets. Juice concentration 15 to 65oBrix Juice concentrate 230 kg/t beets = 28.7 t/h. Water evaporation 1000 – 230 = 770 kg/t beets = 96 t/h 5-effect evaporator: water evaporated per effect 96/5 = 19 t/h Sugar magma 90% TS in crystallizers 166 kg/t beets = 20.7 t/h Water evaporated in crystallizers 28.7 – 20.7 = 8 t/h The 20.7 t/h sugar magma is separated in batch vertical centrifuges to 19.2 t/h centrifuged sugar 97% TS and 1.5 t/h of molasses. The sugar is washed with water and the sugar washings are recrystallized, resulting in 18.0 t/h sugar 97% TS and 1.0 t/h molasses. Total molasses production 2.5x2160 = 5400 t/y The 97% TS sugar is dried in a rotary air dryer to 17.5 t/h sugar of 99.97% TS (0.03% moisture). Beet pulp 16% TS 39 t/h pressed to 34.7 t/h pulp. Water removed 4.3 t/h. Pressed pulp 34.7 t/h dehydrated by air drying to 6.9 t/h dried pulp 10% TS. Water removed 27.8 t/h. Liming of beet sugar for clarification requires 25 kg CaO (44.6 kg limestone)/t beets, or 5.6 t /h. limestone. Total limestone required 2160x5.6 = 12,096 t/y Fuel required 0.08x12096 = 968 t/y coke (coal product). In the beet sugar plant, considered here, the theoretical energy require-ments are about 15 MJ (4.2 kWh)/kg sugar, and practically about 18 MJ (5 kWh)/kg sugar. Most of the energy is consumed in heating processes, such as evaporation and drying. Significant energy economy can be achieved by utiliz-ing the hot condensates from the evaporation effects to heat the beet juice or the crystallizers.


334 Chapter 9

In some sugar plants, cogeneration of heat and electrical power (Section II of this chapter) may reduce substantially the energy cost. The 3000 t/h sugar beet plant, producing 17.5 t/h sugar requires a total energy of 17.5x5 = 87.5 MW. Material and energy data from Figure 9.1 show that the energy require-ments of 18 MJ/kg sugar are broken down to about 8 MJ/kg sugar for steam and electricity and 10 MJ/kg sugar for fuel heating (dryer and calciner). Thus, the power requirement of a cogeneration plant would be 8x17,500 MJ/h = 39 MW. Since the steam energy is about 2.5 MJ/kg, the steam requirement would be 56 t/h. The energy required for drying and calcining 48.5 MW can be sup-plied by fuels, e.g., natural gas of 40 MJ/kg heat value, 48.5x3600/40 = 4365 kg/h or 4.4 t/h. Table 9.2 Major processing equipment of the 3000 t/d beet sugar plant - Beet slicing machines (50 t/h), needed 3x50 =150 t/h - Continuous countercurrent sugar beet extractor, DDS type, 150 t/h - Lime kiln (calciner), 150 t limestone/d - Juice clarification tanks (50 t/h), needed 3x50 = 150 t/h - Rotary filters for beet sugar juice (50 t/h), needed 3x50 = 150 t/h - Rotary filters for second filtration of beet sugar juice (50 t/h), needed 3x50 = 150 t/h - Pressure leaf filers for beet sugar juice (50 t/h), needed 3x50 = 150 t/h - 5-effect short-tube evaporator for sugar juice concentration 15 to 65oBrix. Total water evaporation 96 t/h, water evaporation per effect 19.2 t/h. - Pressure leaf filter for the sugar juice concentrate, 30 t/h - Sugar evaporative crystallizers, 30 t/h juice concentrate - Sugar magma centrifuges (2 t/h), needed 10x2 = 20 t/h - Rotary air dryer for sugar drying 20 t/h sugar from 3% to 0.03% water. Water evaporation, 0.6 t/h - Rotary air dryer for drying 34.7 t/h pressed pulp 18% TS to 6.9 t/h dried pulp 90% TS. Water evaporation 27.8 t/h. - Steam boilers: 2 boilers of capacity 25 t/h steam at 25 bar. - Bulk storage of sugar: 8 large concrete (cement) bins of 5 kt capacity each. - Bulk storage of molasses: 5 steel tanks of 1 kt capacity each



3. Outline of Sugar Economics Using the procedures described in Chapters 5 and 6, and cost data from the application examples of Chapters 7 and 8, the equipment cost was estimated to be about 25 M$. Using the Lang factors of Chapter 4, the estimated capital cost (investment) of a 3000 t/d sugar beet plant would be approximately from 75 M$ (main processing plant) to 100 M$ (grassroots plant). Thus, the capital cost of a medium-sized beet sugar plant is about 10 times higher than the cost of most food processing plants discussed in Chapters 7 and 8. Sugar plants are industrial installations much larger than typical food preservation and food manufacturing plants. Large capital investments are also required for some other major food ingredients plants, such as vegetable oils, grain flours, starches, and proteins. The profitability of the sugar beet plant can be estimated, following a procedure similar to the examples of food processing plants. The operating cost of the sugar plant is affected strongly by the price of the raw material (sugar beets) and the energy (mainly steam) cost. Sugar plants produce large quanti-ties of wastewater containing considerable amounts of sugars and other organic compounds which could pollute the environment, if discharged untreated. Strict pollution regulations may require the installation of wastewater treatment fa-cilities at the plant site, increasing significantly the plant cost. Primary treat-ment (mechanical separation) of suspended particles, followed by secondary treatment (bio-oxidation) is necessary in most sugar plants. During the recent years, beet sugar is facing a stiff competition from cane sugar, which is produced in larger quantities at lower cost in tropical and sub-tropical countries. Sugar consumption is decreasing worldwide, due to dieting and the substantial use of artificial sweeteners. The overcapacity of sugar plants and the low sugar prices of beet sugar have led to government subsidies to beet growers in Europe. The world sugar market is discussed by Spence (2005). The limited supplies and increasing prices of oil have created an expand-ing market of renewable fuels, especially bioethanol, i.e. ethanol produced by fermentation of sugar-containing agricultural products. Large quantities of bio-ethanol are produced from cane sugar in Brazil and from corn in the USA. Bio-ethenol is used mainly as an automobile fuel, mixed with gasoline. In the European Union, a number of sugar plants are converting partially or entirely to bioethanol plants, utilizing the excess capacity of sugar beet pro-duction. The bioethanol plant consists of a beet juice extraction and clarifica-tion section, similar to the beet sugar plant, a fermentation section, similar to the wine fermentation plant of Chapter 8, and an ethanol distillation section, discussed in Perry’s Chemical Engineers’ Handbook (1997) and special books on Distillation, and in Maroulis and Saravacos (2003). A simplified computer model has been proposed for the design of a mixed beet sugar – bioethanol plant (Henke et al., 2006).


336 Chapter 9

Bioethanol can be also produced from corn and other starch-containing agricultural products by enzymatic conversion to sugars, followed by fermenta-tion and distillation. The capital cost of a 100 kt/y bioethanol plant from sugars is about 100 M$. Typical cost data for beet sugar and byproducts are presented in Table 9.3: Table 9.3 Typical Cost Data for Beet Sugar and Byproducts (2006) Sugar beets 50 $/t White sugar 700 $/t Molasses 200 $/t Dried pulp 100 $/t Bioethanol 400–800 $/t

II. OVERVIEW OF PROCESS PLANT OPTIMIZATION

A straight forward design, like the concept applied in previous examples, rarely is profitable for complex plants. Thus, a severe attempt is needed toward plant optimization. The plant optimization is also called in economic terminology as economic balance (Couper, 2003). The basic theory of optimization, the problem definition, and the applied mathematical techniques are developed in chemical engineering text books (Peters and Timmerhaus, 2003; Edgar and Himmelblau, 1988; etc.). Applica-tions in food process optimization are presented by Maroulis and Saravacos (2003). An information flow diagram for conceptual plant design, in which the optimization phases are introduced, is presented in Figure 9.3. The following stages are involved: (1) Selection of the proper flowsheet to realize the required production; (2) material and energy balances, which are specifying the process requirements of the plant; (3) sizing and rating of the required industrial proc-ess equipment; (4) cost estimation; (5) financial and profitability analysis; (6) parametric optimization; and (7) structural optimization of the process. Thus, two types of optimization is usual considered:

1. Parametric Optimization

The parametric optimization, is a mathematical procedure towards the mathe-matical optimum of given economic functions. No flowsheet changes are ex-amined and the corresponding information flow diagram is presented in Figure 9.4.



ProcessSpecifications

1Process

FlowsheetSynthesis

2Material

and EnergyBalances

3 7Equipment Structural

Sizing Optimizationand Rating

4 6Equipment Parametric

and Utilities OptimizationCosting

5Financial

and ProfitabilityAnalysis

ProcessDesignResults

Figure 9.3 Information flow diagram of process design (Maroulis and Saravacos, 2003).


338 Chapter 9

Process Technical Economical

specifications data data

Designvariables Process

mathematicalmodel

Optimization Economictechnique objective

function

Optimumsolution

Figure 9.4 Information flow diagram for process optimization (Maroulis and Saravacos, 2003).

2. Structural Optimization

Structural optimization refers to flowsheet changes towards the optimum flow-sheet structure. No pure mathematical techniques can be effective. Instead, expert systems of artificial intelligent tools may be used. Figure 9.5 summa-rizes some special techniques proposed for chemical and food engineering. Heat exchanger networks optimization is an efficient technique of energy integration (Linnhoff et al., 1982). Thermal energy and power cogeneration is a specific case of energy integration.



Optimization

Parametric(conceptual mathematics)

Structural(expert systems, artificial intelligent)

Superstructure(leads to parametric)

Network optimization

Heat exchangers

Distillation columns

Chemical reactors

Figure 9.5 Structural optimization.

3. Cogeneration in Food Processing In large food processing plants, where very large amounts of energy are con-sumed, such as beet sugar and wet corn milling, considerable energy savings may be achieved by using the energy cogeneration system (Teixeira, 1986). The topping system is normally used, in which high-pressure steam, e.g., 120 bars, is used to generate electricity, while the exhaust low-pressure steam, e.g., 2 bars, is used in heating process applications. Figure 9.6 shows a simplified diagram of a cogeneration system, consist-ing of the high-pressure steam boiler, the steam turbine, the electrical generator, and the necessary piping. Cogeneration is usually applied to beet and cane sugar plants (Section I of this chapter). Another potential application of this energy-saving system could be in large citrus juice concentrate plants (application example 7.2). The capital investment for cogeneration is considerable (high-pressure steam boiler, steam turbine, electrical generator). Cogeneration is justified only when electricity cost is high and fuel cost is low.


340 Chapter 9

HPSHigh Pressure Steam

Electricity

Condensate

Flue

FuelAir

MPSMedium Pressure Steam

LPSLow Pressure Steam

Boiler

Steamturbines

Figure 9.6. Cogeneration system.

REFERENCES

Chen JCP, Chou CC, 1993. Cane Sugar Handbook, 13th ed. J Wiley. Chou CC, 2000. Handbook of Sugar Refining. J Wiley. Couper JR, 2003. Process Engineering Economics. Marcel Dekker. Edgar TF, Himmelblau DM, 1988. Optimization of Chemical Processes. McGraw Hill. Henke S, Bubnik Z, Hinkova A, Pour V, 2006. Model of a sugar factory with bioethanol

production in program “Sugars”. J Food Engineering, 77, 416. Linnhoff B et al., 1982. User Guide for Process Integration for the Efficient Use of En-

ergy. The Institution of Chemical Engineers, UK. Maroulis ZB, Saravacos GD, 2003. Food Process Design, Marcel Dekker. McGinnis RA, ed, 1971. Beet Sugar Technology, 2nd edition. Beet Sugar Development

Foundation. Perry RJ, Green DW, 1997. Perry’s Chemical Engineers’ Handbook, 7th edition.

McGraw-Hill.



Peters SM, Timmerhaus KD, 2003. Plant Design and Economics for Chemical Engi-neers, 5th edition. McGraw-Hill.

Saravacos GD, Kostaropoulos AE, 2002. Handbook of Food Processing Equipment. Kluwer Academic / Plenum Publishers.

Schneider F, 1968. Technologie des Zuckers. Schaper Verlag. Shahidi F, ed, 2005. Bailey’s Industrial Oil and Fat Products, 6th ed., J Wiley. Spence D, 2005. The World Sugar Market, CRC Press. Teixeira AA, 1986. Cogeneration in food processing plants. In: Energy in Food Process-

ing, RP Singh, ed.. Elsevier. Walas SM, 1988. Chemical Process Equipment. Butterworth.


344 Appendix

I. GLOSSARY OF ECONOMIC TERMS

Administrative cost: Administrative and offices salaries, rent, auditing, legal, engineering, etc. ex-penses. Amortization: Same as Depreciation, but the period of time (life) is definitely known. Annual net sales: Kilograms (tons) of product sold times the net selling price. Annual report: The report of management to the shareholders and other interested parties at the end of a year of operation showing the company status, its funds, profits, income, expenses, and other informa-tion. Assets: The book value of property owned by a firm. Balance sheet: A tabulation of the assets, liabilities, and stockholders’ equity for a company. The assets must be equal to the liabilities plus the stockholders’ equity. Battery limits: A boundary around the equipment units which constitute the process plant. Plant facili-ties outside the boundary limits are defined as “off-site” or “outside battery limits”. Book value: The original investment minus the accumulated depreciation. Break-even chart: An economic production chart showing the point at which the total revenue equals the total cost of production. Byproduct: A product made in the production of a main product, which may have a value in itself, or it may be used as a raw material for another product. Campaign: A lengthy production run, followed by plant shutdown for cleaning, maintenance, or modi-fications. Successive campaigns may be made either for a single or for different products. Capacity (plant): The maximum production capability of a process plant per unit time, expressed in tons/day or similar units, assessed by a production trial over of a period of one to three days. The annual capacity is the product of maximum daily capacity and the equivalent availability (days/year) of the plant to produce at maximum daily capacity. Capital cost: The sum of fixed capital (investment) and working capital. Capital ratio: The ratio of capital investment to sales; it is the reciprocal of the capital turnover. Capital turnover: The ratio of sales to capital investment; it is the reciprocal of the capital ratio. Cash: Money which must be on hand to pay for monthly operating expanses, such as raw materials, wages, salaries, etc. Cash flow: Net income after taxes and depreciation. CIF (Cost, insurance, freight): The exporter’s payment of the cost of shipping a product to the import-ing country’s destination. Commodity: An industrial product traded usually in large volume at the same specifications. Common stock: Money paid into a corporation for the purchase of common stock which becomes the permanent capital of the firm. The common stock can be transferred to individuals or firms. Consumer good: A product which requires no further processing prior to use by the ultimate consumer. Contingency: Unforeseen cost elements, likely to occur. They include costs occurring from minor design changes in the project, due to weather, currency exchange rate, or inflation.


Appendix 345

Cost of capital: The cost of borrowing money (interest rate) from all sources, i.e. loans, bonds, pre-ferred and common stocks. Cost of sales: The sum of fixed and variable (direct and indirect) costs for producing a product and delivering it to the customer. Creditors: Companies or persons to whom money is owned by a Company, e.g. for purchase or raw materials or utilities. Depreciation: A reasonable time, allowed by Tax Authorities for wear and obsolescence of equipment used in industry. The period of time (life time) is estimated (not known definitely). Depreciation is deductible from income for tax purposes. Depreciation methods: Straight line (SL), double declining balance (DDB), and modified accelerated cost recovery system (MACRS). Direct cost (expenses): The cost directly associated with the production of a product, like utilities, labor, maintenance, etc. Direct labor cost (expenses): The cost of labor involved in the actual production of a product or ser-vice. Discounted cash flow rate of return (DCFR): The interest rate at which the net present value (NPV) is equal to zero. The DCFR must exceed the cost of capital (interest) for a project to be profitable. Discounted payback period (DPB): The time at which the Net Present Value (NPV) equals zero. Distribution cost: The cost of advertising, samples, travel, freight, warehousing, etc. to distribute a product. Dividend: A share of profit distribution to stockholders. Earnings: The difference between income and operating cost (expenses). EBITDA: Earnings before interests, taxes, depreciation. Economic Value Added (EVA): Profit above the cost of capital generated by a company. Equity: The funds owned by a company, including those of new share issues and retained earnings from profitable operation. Exchange rate: The rate at which one international currency can be exchanged for another. FIFO (first in, first out): The first material going into an operation is the first used or going out. Fixed assets: The real material facilities that represent part of the capital in an enterprise. Fixed operating cost: Cost of a product, in $ per unit time, which is unchanged with a change of pro-duction rate. FOB (Free on board) price: Price of equipment or product on board ship in country of origin. The importer pays the subsequent cost of shipping the product to its destination. Goods manufactured, cost of: The total cost, direct and indirect, including overhead charges. Grass roots plant: A complete plant including main processing and off-sites. Gross domestic product (GDP): The sum of the goods and services produced by a nation within its borders.


346 Appendix

Gross national product (GNP): The sum of the goods and services produced by a nation including domestic and foreign activities attributable to that nation. Indirect cost (expenses): Manufacturing cost that is not directly related to the amount of product proc-essed, such as depreciation, local taxes, insurance, etc. Internal rate of return (IRR): Same meaning with the “discounted cash flow rate of return” (DCFR). Inventory: The quantity of raw materials and /or supplies held in a process or in storage. Leverage: The influence of debt on the earning rate of a company. Liabilities: The economic obligations (debts) of a company. Market value added: The present value of the EVA. Net present value (NPV): Cumulative cash flows incurred over the life of a project, including invest-ment, operational and terminal phases. Net worth: Total assets minus total liabilities. Off-sites: Facilities outside the main processing plant (battery limits), such as storage of raw materials and products, utilities, and service facilities (offices, workshops, laboratories, cafeteria, and others). Operating cost: The sum of the cost (expenses) for the processing of a product plus general, adminis-trative, and selling expenses. Operating profit (margin): The gross profit (margin) minus the general, administrative, and selling expenses. Payback time: The time required to recover investment costs in a project. More frequently, the time from the start of production to recover fixed capital costs. Present worth: The value at a given time of expenditures, costs, profits, etc. according to a predeter-mined method of computation. Processing cost (expenses): The sum of the direct and indirect processing costs. It includes the raw materials, utilities, labor, maintenance, depreciation, local taxes, etc. Production rate: The amount of product manufactured in a given time period. Productivity: Tons of product / ton of raw material; tons of product / MWh; tons of product / year.person; tons of product / year.dollar of fixed capital. Profit, gross: The total revenue minus the cost of products sold. Profitability: Economic feasibility of a proposed project or an ongoing operation. Revenues: The net income from the sale of a product to a customer. Return in investment (ROI): The interest rate at which the nondiscounted net present value equals zero. Royalty: Payment to a technology licensor as an initial lump or a periodic payment, based on sales. Royalty may include know-how for new plants and products and subsequent improvements of technol-ogy which can be incorporated into plant operations. SARE (Sales, administration, research, and engineering expenses): Overhead expenses for maintaining administration offices, sales offices, and the expense of


Appendix 347

maintaining research and engineering departments. It is expressed as a percentage of annual net sales. Simple payback period (SPB): The time at which the nondiscounted net present value equals zero. Selling expenses: Salaries and commissions paid to sales personnel. Surplus: The excess of earnings over expenses which is not distributed to stockholders. Time value of money: The expected interest rate that capital would earn. Total operating investment: The fixed capital, utilities and service capital, and working capital. Value added: The difference between the raw material cost and the selling price of a product. Variable operating cost: Cost expressed in ($ / unit time) which varies with production rate, such as raw materials and utilities costs. Working capital: The current assets minus the current liabilities. The total amount of money invested in raw materials, supplies, products in process or in inventory, accounts receivable, and cash minus the corresponding liabilities due within 1 year. References Brennan D, 1998. Process Industry Economics. IChemE. Couper JR, 2003. Process Engineering Economics. Marcel Dekker.


348 Appendix

II. NOTATION AND CONVERSION TO SI UNITS

From To (SI) Units Multiply by acre m3 4.046x103

Angstrom m 10-10 atm (760 Torr) bar 1.013 bar Pa 1x105

barrel (bbl), fermented liquor m3 0.117 barrel (bbl), oil m3 0.159 box (oranges ) kg 41.0 Btu kJ 1.055 Btu/cwt (long) kJ/kg 0.02 Btu/h ft oF W/m K 1.729 Btu/h ft2 W/m2 3.154 Btu/h ft2oF W/m2 5.678 Btu/h W 0.293 Btu/lb kJ/kg 2.326 bushel m3 0.035 cP Pa s 0.001 cuft m3 0.0284 cuft/lb m3/kg 0.0624 cuft/min (CFM) m3/s 0.5x10–3

d (day) h 24 dyne N 1 x 10-5

erg J 1 x 10-7

ft lb J 1.355 ft of water Pa 2990 ft m 0.305 ft/min (FPM) m/s 0.0051 gallons (Imperial) m3 4.543x10–3

gallons (US) m3 3.785x10–3

gallons/min (GPM) m3/s 0.063x10–3

grain kg 6.48 x 10-5

h (hour) s 3 600 hectare m2 10x103

HP (boiler) kW 9.80 HP kW 0.745 hundredweight (cwt), short kg 45.4 hundredweight (cwt), long kg 50.8 in (inches) m 0.0254 in Hg Pa 3386 inch of Hg Pa 3.38 kPa inch of water Pa 0.25 kPa kcal kJ 4.18 kg force (kp) N 9.81 kWh MJ 3.6 L (lit, lt, l) m3 0.001


Appendix 349

lb force N 4.45 lb mass kg 0.454 lb/cuft kg/m3 16.02 lb/ft s Pa s 1.488 lb/ft2 Pa 47.9 lb/inch2 (psi) Pa 6894 miles km 1.609 mm water Pa 9.81 MWh GJ 3.6 ounce (oz) kg 0.028 P (poise) Pa s 0.10 pint (1/2 quart) m3 4.73 x 10-4

quart m3 9.46 x 10-4

RPM (rpm) 1/s 1/60 sq ft (ft2) m2 0.093 sq in (inch2) m2 0.645x10–3

therm (100 kBtu) MJ 105.5 t (ton), metric kg 1000 ton (US), short kg 907.2 ton-refrigeration kW 3.51 Torr (mm Hg) Pa 133.3 y (year) d (days ) 365 y (year) h (hours) 8 760 yard m 0.914 K = oC + 273.15 oC = (oF – 32)/1.8 $ (USD) = US Dollar Prefixes da (deca) = 101

h (hecto) = 102

k (kilo) = 103

M (mega) = 106

G (giga) = 109

d (deci) = 10–1

c (centi) = 10–2

m (milli) = 10–3

μ (micro) = 10–6

n (nano) = 10–9

In the USA, the following prefixes are sometimes used: M (thousand) = 103

MM (million) = 106

Billion = 109


350 Appendix

III. USEFUL THERMOPHYSICAL PROPERTIES OF WATER

Density of liquid water (ρ) 1000 kg/m3

Specific heat of liquid water (Cp) 4.18 kJ/kgK Heat of freezing of water (ΔHf) 0.33 MJ/kg Heat of evaporation, 100oC (ΔHe) 2.3 MJ/kg Typical enthalpy of steam (ΔHs) 2.4 MJ/kg Data from Saravacos and Kostaropoulos (2002), Maroulis and Saravacos (2003).

IV. THERMOPHYSICAL PROPERTIES OF SOME FOOD MATERIALS

(Examples of Chapters 7, 8, 9) Food material % Total Solids ρ kg/m3 Cp kJ/kg K Apricots 15 1000 3.6 Carrots 12 1030 3.8 Flour, wheat 87 785 1.8 Bread 65 350 2.0 Grape juice 22oBrix 22 1090 3.5 Green beans 11 900 3.8 Green peas 22 1040 3.5 Milk 12 1020 3.8 Milk powder 96.5 610 1.3 Oranges 13.6 1030 3.8 Orange juice 12oBrix 12 1040 3.8 Orange juice 65oBrix 65 1315 2.5 Peaches 11 930 3.8 Potatoes 24 1050 3.5 Sugar beets 23 1040 3.5 Beet juice 15oBrix 15 1050 3.4 Beet juice 65oBrix 65 1320 2.5 Sugar, white 99.9 1600 1.26 Tomatoes 7 1020 3.9 Tomato juice 6% 6 1020 3.9 Tomato paste 32% 32 1130 3.3 Wine 12% (vol.) 970 3.8 Data from Saravacos and Kostaropoulos (2002), Maroulis and Saravacos (2003).


Appendix 351

V. RHEOLOGICAL PROPERTIES

Fluid (20oC) n K Ea

Water 1.00 0.001 15 Tomato juice 6oBrix 1.00 0.002 16 Orange juice 12oBrix 1.00 0.002 16 Sugar solution 15oBrix 1.00 0.003 18 Sugar solution 65oBrix 1.00 0.045 40 Orange juice 65oBrix 0.76 0.400 40 Tomato paste 32oBrix 0.30 120.0 15 Generalized rheological equation: ηa = K γn-1

ηa = apparent viscosity, Pa s; γ = shear rate, 1/s; n = flow behavior index, -; K = flow consistency coefficient, Pa sn; Ea = activation energy, kJ/mol

VI. OVERALL HEAT TRANSFER COEFFICIENTS (U)

Heating / Cooling U, kW/m2K Air heating – cooling 0.05 – 0.10 Water heating – cooling 0.5 – 2.5 Steam heating 1.0 – 3.0 Viscous liquid foods 0.2 – 1.0 Evaporation of liquid foods 0.5 – 2.0 Data from Saravacos and Maroulis, 2001.


352 Appendix

VII. ACCOMPANYING CD

The book accompanying CD contains the following Excel files:

1. EquipmentCost.xls 2. UtilitiesModel.xls 3. PlantEconomics.xls

The EquipmentCost.xls file calculates the cost of equipment versus its size. Using appropriate pull down menus a specific equipment or a group of equipment can be selected. Figures 5.3 of Chapter 5 can be reproduced or modified. The UtilitiesModel.xls file implements the proposed model of Chapter 6. The utili-ties cost is calculated versus the crude oil price. Crucial Figure 6.14 can be up-dated according to current crude oil price. The PlantEconomics.xls produces the results of Chapters 7 and 8. All the applica-tions of this book can be updated and modified according the user specifications.


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