FINANCIAL FEASIBILITY ANALYSIS OF SWEET ORANGE PRODUCTION IN SINDHULI, NEPAL

Abstract

Although the sweet orange business has been one of the prime sources of income for farmers of the Sindhuli district of Nepal, they are still unaware of the feasibility of this business. Therefore, research was conducted with the objective of analyzing the feasibility of sweet oranges in Sindhuli. Data sources for the study included both primary and secondary sources. To acquire primary data for the study, focus group discussions and household surveys via questionnaires were done, while secondary data were extracted from various journals, research articles, annual reports, and publications of governmental institutions. A total of 95 respondents were selected using simple random sampling from the Golanjor rural municipality. The Benefit Cost Ratio (BCR), Net Present Value (NPV), Internal Rate of Returns (IRR), and Pay-Back Period (PBP) were used to assess the feasibility. From the analysis, the BCR, NPV, IRR, and PBP were calculated to be 2.09, NPR 23,863,688, 32.44%, and 6 years, 10 months, and 18 days, respectively. A BCR of more than one, a positive NPV, an IRR greater than the bank rate, and a payback period shorter than the 20-year project duration indicated that sweet orange production in Sindhuli is financially feasible and lucrative. Likewise, the result of the sensitivity analysis suggested that the sweet orange production business can also withstand the undesired conditions, such as a decrease and increase in production cost and price, respectively, by 10% and delayed production by 1 year.