Agroindustrial project analysi

142 AGROINDUSTRIAL PROJECT ANALYSISexperiencing raw material shortages while at the same time cattlegrowers in a neighboring province were unable to bring their animalsto the plant because the roads and climate were not suitablefor transport of live animals. Consequently, the government helpedthe cattlemen put up a slaughterhouse and freezing plant in thecattle-raising areas. The frozen beef blocks were then transportedto the corned-beef plant for further processing.If the infrastructure is deficient, the project should compare theinvestment cost of its providing this infrastructure against the advantagesof the location. Similarly, and even when there are sourcesof public power, the plant should consider incorporating an emergencygenerator to ensure against costly power outages.The social infrastructure-including housing, schools, health,and recreational facilities-should also be inventoried becausethese social components may affect the project's ability to recruitthe necessary personnel.Social infrastructure should generally be established with thecooperation of the government and should incorporate communityownership of facilities. This sharing of responsibilities minimizesthe managerial and social problems associated with "companytowns."Some governments have promoted agroindustries by creatingindustrial estates or parks. These developments provide the productioninfrastructure for a complex of agroindustries, encourage complementaryindustries to locate together, and permit greater efficiencyby the firms' sharing services (buying or marketing) andfacilities. In rural areas, however, they have sometimes created "islands"of developmental activity that are not integrated into anddo not affect the adjoining rural areas.Land costsLand costs usually represent a relatively small percentage of totalcapital outlay because processing plants are not land extensive.Nonetheless, land costs vary, and comparative shopping for a siteis necessary. If the owner of the project's potential land is also aproject promoter, the land cost should be compared with other landcosts to verify its fair market value. Urban land is usually more expensivethan rural land, but the price depends on the site's alternativeuses. The firm should purchase enough land to accommodatefuture expansion. Suburban expansion increases land values and