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Financial viability of installing a green coconut husk processing unit

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  • Silveira, Vinicius
  • Aragão, Thiago Ricielli de Paula

Abstract

The national production of coconut ( Cocos nucifera ) destined for fresh and processed coconut water consumption in 2014 was approximately 1.5 billion fruits. Tons of husks were mostly discarded in city dumps and landfills, thus wasting a potentially highly applicable and low-cost raw material. This study aims to determine the financial viability of installing a green coconut husk processing unit for the production of powder and raw fibers. The unit will be implemented in the municipality of São Luís (MA). The technical criteria used as a reference were developed and tested by the Brazilian Agricultural Research Corporation [Embrapa] Tropical Agroindustry. For the viability calculations, the financial criteria used were net present value [NPV], discounted payback period, and internal rate of return [IRR], in addition to sensitivity analysis of scenarios. The largest capital investment was allocated to the unit's physical facilities, totaling R$ 550,415.00, while machinery and equipment cost R$ 284,650.00. The project is financially attractive, generating an NPV of R$ 361,458.00 and an IRR of 16%, compared to a minimum acceptable rate of return of 7.13%, with the invested resources expected to be returned in the sixth year. The project is sensitive to price variations in the products sold.

Suggested Citation

  • Silveira, Vinicius & Aragão, Thiago Ricielli de Paula, 2016. "Financial viability of installing a green coconut husk processing unit," Revista IPecege, University of Sao Paulo, vol. 2(3).
    • Handle: RePEc:ags:ipeceg:386241
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