Economic viability of milk production on a small rural farm in Chiba - Japan

To execute a project in any sector, it is essential to initially analyze its feasibility. The economic feasibility analysis, which is the focus of this study, indicates whether the project is viable from the entrepreneur's economic perspective. The objective of this work was to assess the economic viability of a dairy cattle project in Chiba Prefecture, eastern Japan. This study was divided into seven stages. The first stage involved defining the project scope, while the second and third stages focused on gathering expenses and revenues. After compiling financial inflows and outflows, a cash flow statement for the project was created. In the fifth stage, different possible economic scenarios (C1 to C9) were projected for the constructed cash flow. In the sixth stage, the economic indicators of the project were calculated. Finally, in the last stage, the economic feasibility analysis was conducted. The results of the study presented the cash flows for each economic scenario, as well as the values of the economic viability indicators (NPV, IRR, Payback, and PI). For all scenarios, positive values were obtained for NPV, and the IRR exceeded the proposed minimum rate of return (0.52%) for the project. Based on the results of these indicators, it is concluded that the project is economically viable when considered over a ten-year perspective.