A FEASIBILITY STUDY OF INVESTMENT IN RICE SEED FACTORY SUWANNAPHUM DISTRICT ROI ET PROVINCE

Abstract

The objectives of this study were to (1) explore market environment and study technical aspects of rice seeds factory in Amphoe Suwannaphom Changwat Roi Et (2) Perform financial feasibility and test the ability to sustain change of investment on rice seeds factory to be invested in, in Amphoe Suwannaphom Changwat Roi Et. The study was based on primary data obtained by participant observation and in-depth interviews and secondary data collected from text books, research documents, related academic journals along with internet websites. Descriptive and quantitative analysis were conducted using financial tools weighted average cost of capital (WACC), net present value (NPV), profitability index (PI), internal rate of return (IRR),modified internal rate of return (MIRR), and switching value test (SVT).

                The result of the study indicated that there was demand for all kinds of rice seed at 62,000 tons per year, of glutinous rice 30% was non-glutinous rice 70 % and was  60% Khao Dawk Mali 105 of non-glutinous rice, but rice seed center in Changwat Roi Et had average production per year of only 8,000 tons and caused an insufficient quantity per year of   Khao Dawk Mali 105 was 22,680 tons per year. Changwat Roi Et did not have a rice seed factory. Therefore it would be appropriate to build a rice seed factory to encourage the neighbouring farmers to join incontract farming projects due to the influence of higher income, The factory had production capacity of 14,400 tons per year or 4 tons per hour, 432 rais of planted area and rice seed production field of 18,000  rais based on contract farming. New technology in rice seed production was employed to ensure higher productivity of Charoen Pokphand Engineering co. ltd. The financial result based on a project life of 10 years, revenue is expected to be 121,420,800 baht per year, the cost of establishing factory total 384,108,269, operating costs 41,950,702 baht per year and discount rate at 8.94 percent showed that the NPV was 145,806,802 Baht, PI was 1.36, IRR was 14.95 percent and  MIRR  was 12.49 percent. The SVT indicated that the maximal decrease of return was 24.63% and maximal increase of investment capital was 32.67 percent.