Chapter 9 SUMMARY OF COSTS

In the preceding chapters the specific costs, in US$ per 1 000 1/day, arising from machinery, transportation, retailing and costs of packaging materials have been estimated. The costs of the remaining items, plant area, services and labour must now be considered in order to summarize and compare the total costs for the various packaging and distribution systems selected for analysis. It must again be emphasized that for two of these systems, in-bottle sterilized milk and UHT milk, the costs associated with the special heat treatment involved are included as they form an integral part of the packaging operation.

Packaging and storage. The cost of constructing one square metre of a milk plant building according to the required standards (without equipment) is estimated at US$ 500. This figure is relative to what is called in Chapter 3 ‘reduced area unit’. Assuming an annual depreciation of 2.5% (about 40 years life), annual maintenance cost about 7%, interest on capital 10% and insurance and taxes at 2.5%, the building overhead cost per day is given by the expression

This figure when multiplied by the specific reduced area requirements (Tables 7 and 8) gives the building costs in US$ per 1 000 1/day throughput.

Services. In the specific services requirements listed in Table 10, the electricity requirements included provision for all services. Thus the calculated total electricity requirement includes not only the consumption of electrical energy by processing and packaging machines but also the requirements for steam, refrigeration, water and air. Although this is an approximation, since for instance the consumption of refrigerant is not included, for the purpose of this study the resulting figures may be taken as indicative of requirements in practice. The only other factor remaining to be assessed is the fuel requirement for steam raising and electricity generation.

In order to arrive at approximate total specific costs of services the following assumptions have been made:

1. One kg of steam can be produced by burning approximately 0.12 litre of fuel equivalent in calorific value to gas oil.

2. One kWh of electrical energy can be produced by consuming approximately 0.33 litre of fuel (Diesel oil) in a medium size generating set.

3. The price of fuel for both purposes was assumed at US$ 0.15 per litre.

Labour. The cost of labour has been estimated at US$ 0.70 per hour and the data for specific labour requirement in Table 12 have been multiplied by this coefficient. It may be considered high for developing countries but it includes all costs of employment (seventh day in a week free, annual leave, paid sick and special leave, etc.).

The individual and total costs are summarized in Table 18 and the total costs are presented in graphical form in Fig. 52.

It should be noted that the cost of milk wastage during packaging and distribution is not included in Table 18 and Fig. 52.

Table 18 Estimated costs of liquid milk packaging, transport and retailing in US$ per thousand litres (component figures rounded to US$ 0.1, total figures rounded to US$ 1.0)

AUTOMATIC VENDING MACHINES Out of the components listed above only three (labour, transport and retailing) concern this system. The resulting value is about US$ 34 per thousand litres for practically all throughputs.

Fig. 52 Estimated costs of liquid milk packaging, transport and retailing