Agroindustrial project analysi

THE PROCESSING FACTOR 143the cost of future land acquisitions. Locating in cities experiencingrapid urbanization may also result in subsequent traffic congestionand higher transport costs.Developmental effectsOne final consideration on a plant's location concerns the differentdevelopmental effects of alternative locations. The analystshould consider the increased employment and income redistributionthe project will generate. Developing relatively backwardregions may be a governmental priority, and the locating of a processingplant in a backward region might provide the necessarymarket outlet to stimulate agricultural production, furnish a use formarginal lands, or stem rural-to-urban migration. Bates, for example,found rural prosperity and rural emigration to be inverselyrelated. 28 Although not an optimal location, a site may be selectedbecause it fulfills a country's sociopolitical objectives.2 A governmentmay provide fiscal incentives to compensate firms for theadded costs of locating in underdeveloped regions in support ofits development policies. These benefits may make a project's financialreturn compatible with its economic return, thus ensuring theproject's implementation.Salient points for project analysisThe analyst should consider the following questions in decidingwhere to locate the agroindustrial plant.Do raw material, market, and transport factors support the proposedlocation?* Perishability of the raw material?* Reduction or increase in product's weight or volume?* Cost and quality of transport services?* Multiple plants versus single plant?* Should plant provide own transport?28. Robert Bates, Rural Responses to Industrialization (New Haven: YaleUniversity Press, 1976), p. 252.29. United Nations, Industrial Location and Regional Development, Proceedingsof Interregional Seminar, August 1968, Sales no. 71.11.B.18 (NewYork, 1971).