Economic viability of establishing a pig slaughter and processing unit

Leonardo Feron Bisognin and Thiago Ricielli de Paula Aragão

Revista IPecege, 2014, vol. 1, issue 1

Abstract: Traditionally, families in the Centro-Serra region of the state of Rio Grande do Sul raise pigs (Sus scrofa domesticus) as a source of subsistence. However, only a few small agro-industries involved in the slaughter and processing of pork are located in this region. One of these agro-industries is certified for commercialization only within the municipal territory; however, due to interest in expanding the business to the state, the construction of a new industrial plant is necessary. Therefore, in order to analyze the economic viability of implementing a new industrial unit in this region, a field questionnaire and market research were used, in addition to analyses of the infrastructure budget to determine the costs of implementing a new unit. The data obtained were presented in a ten-year cash flow to assess economic viability. The Internal Rate of Return (IRR), Net Present Value (NPV), and payback period were used to analyze the investment. The economic analysis resulted in an IRR of 22%, an NPV of R$ 271,099.67 for an attractiveness rate of 10%, and a payback period of three years and eleven months. With these positive results, from an economic standpoint, the implementation of a new pig slaughter and processing unit for the aforementioned region presents itself as a highly attractive investment.

Keywords: Livestock; Production/Industries (search for similar items in EconPapers)
Date: 2014
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