Agroindustrial project analysi

114 AGROINDUSTRIAL PROJECT ANALYSIS* Extent of integration?* Additional requirements for fixed investment and workingcapital?* Reduction of flexibility in obtaining sources of raw material?* Effect on variable and fixed costs and break-even point?* Political feasibility?* Social feasibility?Are there producers' organizations?* Degree of producers' organization?* Purposes and activities of producers' organizations?* Barriers to organization?* Possible incentives for producers to organize?* Use of organizations to communicate, control quality, transmitservices?Should farmers integrate vertically forward?* Financial and managerial resources available for, and economicand social benefits from, such integration?SummaryBecause of the transformative nature of agroindustries, the processingplant's input of raw material is critical. Defects in procurementand supply are carried through, and sometimes magnified in,the processing and marketing activities. Raw material costs are also,in general, the major cost of the agroindustry. Moreover, the organizationof the project's procurement system can significantly determineits socioeconomic benefits.The effective procurement system attempts to obtain a quantityof raw material that will satisfy both market demand and a plant'sprocessing capacity. Defining that quantity requires an examinationof the raw material's historical, current, and projected plantingarea, yields, and alternative uses. The raw material must also meetthe desired qualitative requirements. Variable characteristics determineproduce quality, and each market will have its own qualitativestandards. It is essential for a plant to identify these quality requirementsin its market(s) and to determine what characteristics of theraw material will produce the desired end product. The quality ofraw material is affected by farm inputs, cultural practices, and