Livestock Entrepreneurship

COMMERCIAL ASPECTS

• On the output side, careful analysis of the expected market for the project’s production is essential to ensure that there will be an effective demand at a remunerative price. Where will the products be sold? Is the market large enough to absorb the new production without affecting the price? If the price is likely to be affected, by how much? Is the product meant for domestic consumption or for export? Does the proposed project produce the grade or quality that the market demands? Since the product must be sold at market prices, a judgment about future government price supports or subsidies may also be considered. If the demand is not estimated or forecasted accurately, it may end in over production or missed sale opportunities.

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 livestock projects, the participants include farmers, private sector firms, public corporations, project agencies, and perhaps the national treasury.
• The farm budget becomes the basis for shaping the credit terms to be made available. The analyst must judge whether farmers will need loans to finance on-farm investment (and if so, what is the margin money the farmers should invest from their own resources) or to meet some production costs, and whether seasonal short-term credit should be provided for working capital to finance inputs and pay for hired labor. In long term projects , the analyst should judge whether the farmers have adequate capacity to lead their life till the returns are expected or any special financial arrangements need to be created. The analysis of farm income will also be helpful in assessing the incentives for farmers to participate in the project. What will be the probable level of change in farm income? When it is expected? How likely are price changes or fluctuations could affect farm income? What will be the effect of subsidy arrangements on farm income, and what changes in government policy might affect the income earned by farmers?

Economic aspects

• The economic aspects of project preparation and analysis require a determination of the likelihood that a proposed project will contribute significantly to the development of the farm economy and total economy and whether it justifies using the scarce resources it required. The point of view taken in the economic analysis is that of the society as a whole. The financial and economic analyses are thus complementary-the financial analysis takes the viewpoint of the individual participants and the economic analysis that of the society.