BS in Agricultural Business
Composting is becoming more and more pressured into today’s agricultural industry. With this comes a business idea that has the potential to be economically viable. This business consists of taking the waste produced from almond hullers in the Central Valley, which consists of foliage, dirt, and twigs, composting it, mixing it with some sort of synthetic fertilizer to create a blend, and selling the product to farmers in the area. The problem is that agriculturalists don’t know for sure if it can be profitable. This study takes a closer look at the costs and revenues associated with such a business to determine whether it is economically viable.
The tools used to gauge whether or not a business of such kind would work are, the amount of compost that could theoretically be produced, which is an indirect reading of the demand for the product in the area, the net present value (NPV) of the business over a ten year span, and the internal rate of return (IRR) of the business while it produces this amount of compost over the ten years
It was found that the average composter size in the Central Valley produces 68,000 cubic yards of compost per year. Because of the space available to the known location and learning curve faults this number was dropped to 50,000 cubic yards. Producing these 50,000 cubic yards of compost creates a NPV of $228,228.41 and an IRR of 31%. Analyzing these numbers, a business such as this and located in the Central Valley, is in fact economically viable.