A feasibility study of a new innovative project in the mushroom industry

Abstract

Since Malta's accession in the European Community in May 1st 2004, the Maltese Agricultural Industry has been facing major difficulties: the drastic increase in competition, and the ever present fact, that inflation must be absorbed by the fruit or vegetable grower, rather than passed on to the consumer. These aspects call for re structuring in the industry, by adopting more efficient and cost cutting methods of production mainly through mass production This Feasibility Study revolves around an innovative and promising project; that of the preparation of the growing material for, and cultivation of a different type of mushroom, which is still much unknown in Malta. To arrive at an estimated demand for this product and a reliable consideration of the special purpose machinery which would be needed, intensive research and study was conducted. With regards to the mentioned machinery, estimates from local and foreign companies have been obtained. Various other estimates and calculations were necessary to form an accurate as possible running cost expenditure. Information regarding financial assets has been gathered and used. As a basis for drawing the final conclusions and to assess the feasibility of the venture, projected Profit and Loss and Cash Flows have also been prepared. These have been utilised to prepare a financial evaluation by applying two different discounted cash flow techniques, to achieve reliable information, revealing that the project is financially feasible.