Meat processing facility in Martuni : feasibility analysis

Abstract

The present paper is an attempt to study the economic feasibility of the proposal made by a group of villagers in Martuni region to establish a meat processing operation and start the production of sausages using local inputs. The questions put forth by the group in their attempt to assess the feasibility of this proposal were: Is there sufficient demand for sausages in the local market area (Martuni region) to justify the establishment of the operation? Is there sufficient supply of animals in the region to support the proposed level of output of 218,400 kg sausages (on average) annually? Can the facility operate at a profit with the current market prices for the inputs (beef and pork), the output (sausages), proposed level of output, and the investment necessary to establish the operation? Will the profit earned from the operation of the proposed facility justify the investment? These questions will be addressed in full in the course of our discussion in the main body of the study. For now, the following should be noted: An analysis of the population and consumption patterns for Martuni region, the primary market area of the proposed facility, called for the estimate of a720,700 kg sausage consumption annually. As there is no meat processing facility in the region, this demand is filled with the imports from other regions, mainly from Yerevan. Projections to future demand indicate a further increase in the consumption of sausage products (the reasons for these will be covered in the mail part of our discussion). Thus, it seems logical to assume that there will be ample demand for the output of the facility operating at the level of production of 131,040 kg luncheon meat and 87,360 kg smoked sausages.