FEASIBILITY STUDY OF COOLING AND PACKING STATION OF HORTICULTURAL EXPORT IMPROVEMENT ASSOCIATION (HEIA) IN LUXOR GOVERNORATE

Abstract

Cold storage projects are important because they provide marketing services through sorting, grading and packing the crops. The Horticultural Export Improvement Association (HEIA) implemented new investments financed by USAID for the development of the cooling station and training district at Luxor Governorate in Upper Egypt with a storage capacity of 90 metric tons per day at L.E. 30 million investments. The Packing and Cooling Station was initiated in July 2015. The study reflects problem at the Cooling and Packing Station at Luxor Governorate. It does not operate at its maximum capacity of 50 tons per day. It operates for no more than two months and is currently inefficiently operating where the fees are higher compared to competitors. This is due to the lack of horticultural crops to operate. The objectives current study were to study the actual reality of the nine associations producing and marketing horticultural crops at Luxor and Qena Governorates, estimate the current and economic containment capacity of this logistic service of The Packing and Cooling Station (HEIA) at Luxor,estimate the financial feasibility of (HEIA) at Luxor, sensitivity measurement analysis through three scenarios to find out the station's ability to meet operational capacity fluctuations and price risk, developing mechanisms to economically operate The station and finally, the direct and indirect impacts were assessed in case of the economic operation capacity of the Packing and Cooling Station (HEIA). To achieve these objectives, the current study utilized questionnaires data at the level of nine associations dealing with the Project (Al-AMAL) during the season 2016/2017. Other information were from (HEIA) office data registers as well as information from some field and meetings obtained with parties who are concerned in this study. Analysis methods used the descriptive statistics of simple averages and percentages, SWOT analysis indicators, methods of quantitative analysis of financial feasibility study using the criteria of non-discount profitability and on discount profitability indicators. Basic solution results were calculated at a capacity of 23.9 thousand tons annual production. The findings indicated that when the service fee is L.E. 1250.5 per ton; the internal rate of return for the project is estimated at about 23% greater than the alternative opportunity cost of capital. It was also noted that simple average return on investment is approximately 11.2% and the payback period of investment was estimated at 8.9 years. The breakeven point of production was estimated at about 22.8 tons per day, representing 26 % of the operating capacity estimated at 88.1 tons per day. The previous results regarding the basic solution show that the minimum required to possibly operate the Station to yield cash flow should not be less than 23.9 thousand tons annually for a period of 270 days . With the increase in the operating capacity mentioned in the first and second scenario by 21.3%, 63.2%, respectively, from the operating capacity mentioned in the basic plan solution, the maximum fee per ton for scenario 1, scenario 2 increases by 1.3%, 2.5% , respectively, compared to the estimated L.E. 1250.5 service price fee per ton related to the basic plan solution. Meanwhile, the minimum price service fee per ton for scenario 1 and 2 decreases by 2.67 %, 1.5 %, respectively, compared to the estimated L.E.1250.5 service price fee per ton in the basic plan solution.The third scenario decreases operating capacity by 17.5% from the operating capacity mentioned in the basic plan solution and reflected the results of economic inefficiency. A. A. Abdul Aziz and W. Y._Sallam................................................................................... 164 Operating the Cooling Station at its economic capacity requires coordination among all concerned parties from civil associations of farmers, the private sector of exporters, supermarkets and factories. A regulatory framework should be established based on contract farming development of horticultural crops providing technical support and post-harvest dealings for farmers.