I am reminded of a story about a young Armour (of the meats). He bought a cow for $20, raised it and butchered it. He sold the meat for $20, and the hide for $2.
This is the concept that led to Armour Meats being so huge. Since they did all the processing in one place, they could sell things that previously had gone to waste, like organs and hide and hair.
And since he had the marginal products to live on, he could sell the meat at cost, and undercut any local butcher.
This is true of almost all commodity processing industries. Since usually everyone is using mostly the same processes, and paying largely the same price for their inputs, there is no differentiation and thus no profit in the base processing. Where people start to make money is to find a market for the by-product, and, particularly if the by-product has low bulk value, site a processing plant for the by-product next door to the main plant.
Absolutely. My sister works for a company that ships byproducts such as cow hearts and brains over to Europe where apparently there is a pretty big market for the stuff that we're too finicky to eat here in the US.
This is the concept that led to Armour Meats being so huge. Since they did all the processing in one place, they could sell things that previously had gone to waste, like organs and hide and hair.
And since he had the marginal products to live on, he could sell the meat at cost, and undercut any local butcher.