SUMMARY

FEASIBILITY STUDY FOR AGRIBUSINESS

THE THEORY OF FEASIBILITY STUDY FOR AGRIBUSINESS

Arranged by:

Agri English Class

Siska Gustiriyanti Putri

(1710223004)

DEPARTMENT OF AGRIBUSINESS

FACULTY OF AGRICULTURE

ANDALAS UNIVERSITY

PADANG

2019
 Definition of Feasibility Study for Agribusiness

Feasibility study is an analysis of the viability of an idea. The feasibility study

focuses on helping answer the essential question of "should we proceed with the proposed
project idea?” All activities of the study are directed toward helping answer this question.

Feasibility studies can be used in many ways but primarily focus on proposed
business ventures. Farmers and others with a business idea should conduct a feasibility
study to determine the viability of their idea before proceeding with the development of
a business. Determining early that a business idea will not work saves time, money and
heartache later.

A feasible business venture is one where the business will generate adequate cash-
flow and profits, withstand the risks it will encounter, remain viable in the long-term and
meet the goals of the founders. The venture can be either a start-up business, the purchase
of an existing business, an expansion of current business operations or a new enterprise
for an existing business. A Feasibility Study Outline is provided to give you guidance on
how to proceed with the study and what to include. Also, How to Use and When to Do a
Feasibility Study will help you through the process and help you get the most out of your
study.

The Scope in Feasibility Analysis

1. Technical Aspects

The technical analysis will examine the possible technical relations in a proposed
agricultural project: the soils in the region of the project and their potential for agricultural
development; the availability of water, both natural and supplied; the crop varieties and
livestock species suited to the area; the production supplies and their availability; the
potential and desirability of mechanization; and pests endemic in the area and the kinds
of control that will be needed.

2. Institutional-Organizational-Managerial Aspects

In agricultural projects the analyst will also want to consider the managerial skills
of the farmers who will participate. A project design that assumes new and complex
managerial skills on the part of participating farmers has obvious implications for the rate
of implementation. If farmers with past experience limited to crop production are to
become dairy farmers, enough time must be allotted for them to gain their new skills.
3. Social Aspects

Social considerations should also be carefully considered to determine if a

proposed project is as responsive to national objectives as it can be. Those designing or
reviewing projects will also want to consider the issue of adverse environmental impact.

4. Commercial Aspects

The commercial aspects of a project include the arrangements for marketing the
output produced by the project and the arrangements for the supply of inputs needed to
build and operate the project. On the output side, careful analysis of the proposed market
for the project's production is essential to ensure that there will be an effective demand at
a remunerative price.

On the input side, appropriate arrangements must be made for farmers to secure
the supplies of fertilizers, pesticides, and high-yielding seeds they need to adopt new
technology or cropping patterns.

5. Financial Aspects

The financial aspects of project preparation and analysis encompass the financial
effects of a proposed project on each of its various participants. In agricultural projects
the participants include farmers, private sector firms, public corporations, project on
agencies, and perhaps the national treasury. For each of these, separate budgets must be
prepared, along lines suggested.

6. Economic Aspects

The economic aspects of project preparation and analysis require a determination

of the likelihood that a proposed project will contribute significantly the development of
the total economy and that its contribution will be great enough to justify using the scarce
resources it will need. The point of view taken in the economic analysis is that of the
society as a whole.