Financial viability of processing broiler chicken into cut parts in Ashanti region of Ghana

Abstract

This study assessed the financial viability of establishing a 500-bird processing facility to process broiler chicken into cut parts such as thighs, wings, breasts and drumsticks in the Ashanti Region of Ghana. Using data from key informants from Ghana’s poultry industry, the study estimated the net present value (NPV), benefit–cost ratio (BCR), internal rate of return (IRR) and the payback period. At a discount rate of 30%, the NPV, BCR, and IRR were estimated to be GH₵ 581,537.95 (US$ 116,307.59‬), 1.06, 303%, respectively. These figures show that investment in a broiler processing facility with a capacity of 500 birds a day is financially viable. Furthermore, the estimated payback period of 0.44 years (or 5 months 9 days) shows that the initial investment of GH₵-78,128.50 (US$ −15,625.7) is recouped in less than a year, reinforcing the project’s viability. However, sensitivity analyses show that the investment ceases to be viable when either the project cash outflow is increased by 9% or cash inflows reduced by 9%. Based on these findings, the study proffers recommendations to help reduce inefficiencies in resource allocation and utilization and enhance project viability.

Keywords

• financial viability
• processing broiler
• net present value
• benefit–cost ratio
• internal rate of return
• payback period