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Livestock feed - toll milling and bagging options?


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#1 Parkz58

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Posted 06 January 2020 - 03:44 PM

Hello,

 

We're a specialized livestock feed mill, currently processing (raw grain to finished product) and bagging one particular product, but my boss is looking at adding another new (very similar) grain...this time, it would already be fully processed, we would simply be bagging it and selling it.

 

We're trying to weight out the pros and cons of taking one of the following three paths to do so:

 

1.  Bring the finished product in, in a bulk form, and package it ourselves.  We currently do NOT have a way to bring in this type of finished product, as everything that is currently incoming is in raw grain form, and we process it ourselves.  So, the big question mark is what it would take to create a product flow from bulk finished product receiving to getting it into the bagging bin (we do NOT currently have bin routing to facilitate this).

 

2.  We have the supplier simply bag it themselves, and label it as our product (toll milling).  This makes us the guarantor...so, under FSMA, what would we be required to do?  I'm assuming we'd need to set them up as an Approved Supplier, but to what extent?  Do we need to do on-site audits at their location?  This is a very low-risk product (and process).

 

3.  Since the supplier already bags and labels this product themselves for their own distribution and sales, we could just buy their product and re-sell it (though obviously the least economically advantageous option, it's also the option with the least amount of liability over product and process).

 

Thoughts?  Opinions?

 

Thanks,

 

Brian



#2 FurFarmandFork

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Posted 06 January 2020 - 06:43 PM

Hi parkz58, not sure there's enough detail here, and unfortunately not a business I've interacted with much before so hard to evaluate feasibility from the business side.

 

1. Is the concern here just for shared equipment for receiving bulk?

 

2. If you aren't the manufacturer, they would be a supplier for you to act as a distributor, so no different that a grocery private label, the level of review you want is correlated with the level of risk you want to assume with your name on it.

 

3. I mean, this is what I pretty much always recommend, that way you can see what kind of market this product actually has before jumping in with your own label. CEO's love to think they've identified a trend with absolutely no consumer research, this limits your business impact and allows you to create a client base for this product with almost no R&D until you've proven you can sell it.


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#3 Parkz58

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Posted 06 January 2020 - 07:22 PM

Hello FurFarmandFork,

 

Thanks for your feedback!

 

1.  Yes, that's my biggest concern - currently, we only receive raw, whole grain in a dump pit.  Obviously, that's not going to be a good route for finished product receiving (too much contamination risk; with raw grain, the product is hulled and steamed before it becomes finished product, so the risks are greatly mitigated downstream), so we'd have to figure out another way to do so...along with the appropriate leg/chute/pipe routing to get it to the correct bin(s).

 

2.  I kind of figured that - I just didn't know if, even with a low-risk product, we'd be expected to do on-site audits and such...or if just having documentation attesting to their specific FSMA compliance was sufficient.

 

3.  This is actually in response to market requests for this new product, so it seems like it's very feasible...and the difference between selling the product with their label vs our own label is minimal, in terms of expense and time put in to update our feed safety plan accordingly, but it could result in a much higher premium return for us when selling our own label instead of someone else's.

 

Brian



#4 SQFconsultant

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Posted 06 January 2020 - 10:01 PM

Hi Brian,

 

With everything considered, I'd be looking at this one...

 

2.  We have the supplier simply bag it themselves, and label it as our product (toll milling).  This makes us the guarantor...so, under FSMA, what would we be required to do?  I'm assuming we'd need to set them up as an Approved Supplier, but to what extent?  Do we need to do on-site audits at their location?  This is a very low-risk product (and process).

 

This would effectively make your supplier a contract supplier - meaning, they pack their product into your packaging and for all intents and purposes it appears to come from you.

 

If your company is SQF (I thought it was, yes?) you would need to follow all the requirements under contract manufacturing including having the contract supplier meet your SQF program in all the requirements, as in if not SQF certified they must meet all the stuff your company has to or be GFSI (any scheme) certified that meets your certification.   As to audits - if they are GFSI cert'd you need a copy of their certificate, if not you would need to get a copy of the most recent 3rd party audit, commission one or do it yourself and also have a formal contract, agreement in place.


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#5 MsMars

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Posted 06 January 2020 - 10:11 PM

Hi Brian, 

 

If it was me: 

 

1. Not ideal, unless you're willing to invest the capital. 

2. I would do an annual on-site audit if it was me and this option was chosen.  Call me overly cautious, but I'm a visual person and like to lay eyes on every process that involves product with our name on it. 

3. Easiest thing to do, but like you said perhaps not the most cost efficient. 

 

I am not sure if you possess any further third party certifications - they may require you to take it a step further.  I'm not aware of FSMA regulation specifically requiring on-site audits of toll mills, just that you manage your suppliers (like everything else) based on risk, however you see fit.



#6 Parkz58

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Posted 07 January 2020 - 05:03 PM

Thanks for the feedback, everyone - much to think about yet, but you've helped us look at things differently!

 

Brian






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