A Financial Feasibility Analysis for the Aquaculture of Sea-snail and Mussel in Turkey

Abstract

As a peninsula surrounded by four seas, Turkey has abundant and diverse water resources, from fresh water to brackish water and sea water. Aquaculture currently has a 25% share of the country’s total fish production. With the continuous increase of aquaculture production, sea-snail and mussel aquaculture is an emerging sector of aquaculture in Turkey. Hence this study assessed the financial feasibility of the sea-snail and mussel aquaculture project in Turkey. The proposed project has 1500 tones of sea-snail and 1000 tones of mussel processing capacity. The expected lifetime of the project is 20 years. The total fixed investment of the project is 7,404,500 TL (893.185 $) including, project cost, construction cost, machine equipment cost, machinery transportation, insurance cost, assembly cost, and general expenses. The depreciation costs for fixed assets are allocated annually. The maintenance cost is calculated according to the fixed maintenance cost rates of each asset. Change in the working capital of the project is assumed to be recovered at the end of the project which is equal to 20,079,300 TL (2,422.110 $) including, raw material expenses (7,000.000 TL), auxiliary materials (2,260.000 TL), utility costs (1,440.000 TL), maintenance expenses (184.300 TL), export expenses (1,200.000 TL), labor expenses (7,114.800), sales and marketing expenses (450.000 TL) and depreciation (400.200 TL). Therefore, the initial investment of the project is 27,483,800TL (3,315.296 $). With the 16% discount rate, the calculated NPV value of the project is 46,875,651TL (5,654.481 $), IRR is 45%, and the B/C ratio of the project is 1.28. According to the NPV, IRR, and B/C ratio investment decision-making criteria, this project can be accepted financially and will be highly feasible. The ROI value is 170.6%, and the payback period is 1.8 years which means that the initial investment will be paid back in 1.8 years. In every financial aspect, the sea-snail and mussel aquaculture project of Turkey is financially feasible. (1USD = 8.29TL (Central Bank of Turkey Republic, 2020)).