Project Analysis of the Rubber Purchasing Center in Chiang Rai

Abstract

The farmers growing Para rubber in Chiang Rai, northern Thailand, have faced many problems derived from depreciation from middle-men and there are insufficient places offering a reasonable price to them. The purposes are (1) to study a location for a rubber purchasing center in Chiang Rai, (2) to analyze profitability from an investment in the rubber purchasing center, and (3) to study the externality of the projects impact on the environment. This study is based on 10-year secondary data (2003-2013) derived from the Office of the Rubber Replanting Aid Fund. The result of the study found that the rubber purchasing center should be located in Tung Kor Sub-District, Chiang Rung District, Chiang Rai Province. A financial analysis illustrates that Net Present Value of the project is equal to positive 34.72 that means net profit is more than net cost or it is appropriate to invest in the project. Interest Rate of Return is equal to 26% which is higher that discount rate, therefore, this project is an interesting investment. Payback period is equal to 4.24 meaning this project will meet a breakeven point within 4 years 2 months and 27 days. Also, break-even point in quantity is equal to 1.12 which means this project needs sale volume of 1.12 million units to meet the breakeven point. The environmental impacts shows both positive and negative externality that more concern has put on water, air, and noise pollution derived from a production process of the project.