Economic feasibility of hay enriched extruded production as a complete diet for equine

Abstract

The present study aimed to evaluate the economic feasibility of production and commercialization project of Hay Enriched Extruded (HEE) as a complete diet for horses. The study was based on survey data and quotation activities involving price from the land preparation (repair, planting and fertilization) to the processing of the product at the factory (extrusion) and marketing. Transportation costs and taxes were also considered. Discounted Cash Flow (30 years) was used to calculate the profitability indicator and the Profit and Loss Statement (PLS). Calculations were developed using Microsoft Office Excel® spreadsheets. Three production scenarios were simulated with different consumer prices: Scenario 1 - equivalent to the complete diet, where the ingredients are supplied together, but purchased separately; Scenario 2 - Considering a value 10% higher than the complete diet; Scenario 3 - Considering a value 20% higher than the complete diet. We observed that the project was economically viable in the three suggested scenarios with positive Net Present Value, Internal Rate of Return greater than 9.4% and payback of 11 to 2 years. The results enable us to conclude that the product may be a promising investment for both product quality and ease of use as the rapid return on invested capital.