Agroindustrial project analysi

THE PROCUREMENT FACTOR 105Are multiple sources a potential pricing mechanism?* Multiple crops for the raw material feasible?* Relative price levels and variability?* Lowest cost combination?* Organizational or technical problems?How do governments' support prices affect pricing?* Existence of support prices?* Portion of crop affected?* Comparability with spot prices?Is contracting a potential pricing mechanism?* Current use of production contracts?* Duration of price agreements?* Expected contract compliance?Are joint ventures feasible and desirable?* Farmers interested in investment?* Effects on raw material costs?Would backward integration lower raw material costs?* Feasibility of integration?* Effect on costs?What does the sensitivity analysis of raw material costs reveal?* Effect of raw material cost changes on profits and return?* Probability of such changes?Organization of the Procurement SystemObtaining an adequate supply of quality raw material at the appropriatetime and for a reasonable cost ultimately rests on theorganization of the procurement system. This organization can beexamined through the system's structure, channel power, verticalintegration, and producer organizations.StructureIn the section "Adequate Quantity," above, it was suggested thatthe projected supply of raw material could be computed from pro-