Agroindustrial project analysi

190 AGROINDUSTRIAL PROJECT ANALYSISHow does governmental involvement affect raw material costs?[1 Is there a support price?l Are services or inputs subsidized?Should spot prices be used?Ol What are the prevailing spot prices?E How have they varied annually and across years?E Do competitors use spot prices?Are multiple sources a potential pricing mechanism?E Can the plant use multiple crops for the raw material?E How comparable are crops' price levels and variability?E What is the lowest cost combination?E What organizational or technical problems for processing arecaused by multiple sources?How do support prices affect pricing?E Is there a governmental minimum support price for the crop?El What percentage of the crop flow is affected by this program?El How comparable are the support price and the spot price?Is contracting a desirable pricing mechanism?El Are production contracts currently used by farmers?El What should the contract terms be for quantity, quality, delivery,technical and financial assistance, and price terms?E How long a period should the contract cover?E Will the farmers comply with the contract terms?Are joint ventures feasible and desirable?E Are farmers interested in investing in the plant?El Will this increase the certainty of supply or lower the rawmaterial costs?El What socioeconomic benefits would investment bring to thefarmers?Would backward integration lower costs of raw material?El Could the plant integrate vertically backward and absorbtransport or production or both?E Would that lower the raw material costs?