Agroindustrial project analysi

THE PROCESSING FACTOR 119In milling operations, breakage is determined by seed varietyand the kind of drying and milling equipment. Technological optionsrange from pounding by hand to almost completely automatedmilling. The higher capital investments for more sophisticatedtechnology must be compared with the higher revenues fromthe larger total milling yield and the premium prices that the increasedyield of whole grain will obtain. The qualitative demandsof the market and the price spread between whole and brokengrain are one criterion for deciding on more or less sophisticatedtechnology.The qualitative requirements of the export market frequentlyexceed those of the domestic market. A production shift to exportingmay require corresponding technological adjustments. Alternatively,the servicing of both markets may permit a broader useof raw material because products unacceptable for the export marketcan be sold domestically. Similarly, it may be desirable tooperate both fresh and processed fruit and vegetable operationssimultaneously. Produce that is unacceptable in the fresh market becauseof perishability (easy blemishing or early maturity) can beprocessed. For example, a marketing project for fresh apples inIndia added a processing component to use the culled apples, whichrepresented 20 percent of its gross production, and significantly increasedfarmer income. 2Process requirementsCertain kinds of processing can only be carried out by a narrowrange of technology because of the nature of the transformativeprocess. Consequently, little choice exists regarding the type ofequipment to be used. These technical constraints can also haveeconomic implications. A capital-intensive process, for example,will have a minimum economic scale of operations, below whichthe agroindustry will not be financially viable. These possible requirementsof scale must be assessed against the market forecaststo see if the project should proceed.2. Arnold von Ruemker, "Reappraisal of Himachal Pradesh Apple Processingand Marketing Project (India) Case Study," Economic Development Institute(Em) Case Study Exercise Series, no. AC-156-P (Washington, D.C.,revised January 1977; processed).