ABSTRACT
191Financial and economic benefits ultimately become the bases for adoption or rejection of new technology. This chapter details potential financial and economic benefits from utilization of isolated soy protein ingredients in manufacturing processed meat products. Through exploration of two alternatives for increasing meat production, the author demonstrates a methodology for quantifying these benefits.
The first alternative uses traditional meat production technology applied through a program of increasing the size of a beef cattle herd, and, therefore, meat output, by 20 percent over a five-year period.
The second approach does not increase the size of the herd, but incorporates isolated soy protein food ingredients in processed meat products to achieve the same 20 percent increase in total meat output. Incorporating isolated soy protein effects a 26.1 percent increase in processed meat production, for a 20 percent gain in total meat output.
The methodology described here is valuable for both private industry and government policy decision making. Financial profitability suggests that private industry should adopt the technology. Economic (social) profitability warrants government support.
Appropriate government policies to support the use of isolated soy protein may include food composition and labeling regulations, trade regulations and nutritional programs, including government feeding programs.
This thorough analysis considers ail meat production factors for both traditional and alternative technologies. It includes the effects of price distortions, wage rates, raw material costs, revenues, cash flows, and additional investments required at all levels – cattle raising, slaughtering and meat processing.
In the example given, the use of isolated soy protein as an ingredient in processed meat products is demonstrated to be intrinsically profitable, both financially and economically. It is also more profitable than increasing cattle output by an equivalent amount.
Net present values of the alternative technologies are calculated for comparison.
The new production goal of increasing total meat (including processed meat products) output by 20 percent is not recognized under the traditional technology until the fifth year. Under the alternative of using isolated soy protein ingredients in processed meat, the increase is achieved in the first year of the program.
Incorporating isolated soy protein in processed meat products demonstrates clear and significant financial and economic advantages in the example given. This alternate technology signficantly raised profits for both private industry and the economy as a whole.
