A Comparative Analysis of Financial Feasibility for Fish Processing Plant in Turkey

Abstract

One of the sectors that have high economic value and potential to be developed in Turkey is the fishing sector. The current status of Turkey aquaculture reaches 836 524 tons (2019). In Turkey, the most important commercial species include trout, tuna, a species such as a sea bream and sea bass. The most important types of catching in Turkey as anchovies, sardines, sea bass, and sea bream. Aquaculture mainly deals with fish species of trout, sea bream, sea bass, and tuna. Choosing the İzmir region are related to be designated as an organized industrial zone, and it is suitable for sea, air and road transportation which means this area is easily accessible to the raw materials and beneficial to the logistic. Analysis of the investment environment in Turkey will create more business opportunities and will contribute to the country's economy. This study aims to analyze the financial feasibility of two different types of processing plants for freshwater (Trout) and salt water (Sea bass and Sea bream), using investment valuation techniques such as Net Present Value (NPV), Internal rate of Return (IRR), Return on investment (ROI) and sensitivity analysis. The discount rate used in this study is 24% during 10 years. The result of this research for freshwater processing plant shows that the NPV value of processing plants in the next 10 years is $1,516,684, IRR value of 45%, and return on investment 0.84. And result of this research for salt water processing plant shows that the NPV value of processing plants in the next 10 years is $5,002,637, IRR value of 32%, and return on investment 0.54. The results reveal that this business is very profitable for both factories. However, trout is a little ahead because it has more market opportunities and more demand in the trout facility. Annual net profit is 3,997,384 USD in freshwater and salt water fish is 2,560,753 USD. The annual operating cost is 3,174,070 USD in freshwater and salt water fish 3,439,247 USD. In this study, selling price, expected operating cost, and initial investment cost were used for sensitivity analysis. The sensitivity calculation used 3 parameters: initial investment, market price, and operating cost. The sensitivity analysis using the switching value method. Sensitivity analysis was done and as a result of these calculations, it has been revealed that both businesses are profitable.