Agriculture Reference
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basis. Analysis of the technical feasibility of these products is therefore limited.
SFA's primary role in the whole process is to coordinate the process from raw
material procurement through contract processing to warehousing to distribution,
marketing and export.
15. 5 Financial Analysis of Four Micro-enterprises
Results of the financial feasibility conducted for each of the respective
enterprises discussed above are summarized in Table 15.2. The feasibility
analysis of the two fruit juice concentrate enterprises was based on the
maximum output capacity of a small-scale fruit juice concentrate processing
plant and the expected output (and therefore income) and the fixed and
running costs associated with producing and marketing fruit juice concentrate.
The feasibility of the Baobar and jam enterprises in Zimbabwe was assessed on
the basis of the perceived market available for the products. The perceived
market was then used to determine the required output level (and the level of
income at that output level) and the fixed and variable costs associated with
that output level.
The difference in financial feasibility for the two fruit juice concentrate
enterprises at Tabora and Magomero is especially noteworthy. The difference is
due to the location of the processing enterprise with respect to the market. The
remote location of Tabora necessitates distribution costs that are significantly
higher than those of the enterprise located at Magomero, which is near potential
markets. The feasibility studies of these enterprises reveal that distribution
(transport) costs for Tabora amount to an estimated 42% of the total variable
costs compared with 16% for Magomero. This difference makes a significant
contribution to the overall feasibility of the two enterprises and is also proof of
the importance of a good location to feasibility. It must, however, be taken into
consideration that the robustness of the feasibility study results are heavily
dependent upon the assumptions made during each of the studies and on
operating conditions (political, environmental, economic, etc.) remaining
relatively stable for the lifetime of the enterprise. Table 15.3 details some general
risk factors for small-scale enterprises and the expected impact these factors are
bound to have on feasibility. If either the assumptions or the operating
environment were to differ substantially from actual circumstances, the actual
feasibility of the products could differ from the current results.
15.6 Discussion
Commercial processing of indigenous fruit is one of the few competitive
advantages that rural communities have. The benefits from commercializing
indigenous fruits are potentially significant in terms of improved livelihoods for
these communities. Results of the feasibility analyses show that the proposed
ventures are potentially feasible as measured against the four criteria for feasibility.
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