Financial evaluation of establishing Ferula assa-foetida medicinal plant production business in dryland conditions

Entrepreneurship and the creation of new and startup businesses are considered as a basic strategy in the growth and prosperity of communities and regions and a stimulus for economic and social development in the development process of countries. Today, any planning and policy-making in agricultural businesses, requires financial and economic justification of activities for entrepreneurs. This research has been prepared in this direction and its objectives have been the financial evaluation of Ferula assa-foetida medicinal plant production in dryland conditions. The data of this research was collected by documentary method in 2017 and its update to the year 2021 in the rain fed conditions of the country.

In order to financial evaluation of this research used profitability indicators of Net present value, Benefit-cost ratio, Internal rate of return and percentage of sales return.

The results showed that capital and current operating costs during the period of investment in production were estimated at 166.6 and 247.6 Iranian million rials, respectively, and a total was 414.2 Iranian million rials. The cost price per kilogram of Ferula assa-foetida product was calculated to be 517756 Iranian Rials. During the investment period, the average sales return show that one rial of Ferula assa-foetida product sales in the fifth and seventh years brings 92.1 and 91.1 percent profit per hectare, respectively. The net present value of activity with a discount rate of 18.5% was estimated at 906.7 Iranian million Rials. Internal rate of return and the benefit-cost ratio were estimated at 84.8 percent and 4.4 units, respectively.

In general, according to the results of profitability index, the benefit-to-cost ratio of Ferula assa-foetida medicinal plant production was greater than one and the percentage of internal rate of return was higher than the bank discount rate, which confirms the economics of medicinal plant production in the target region. Based on this, while proposing extension planning for the continuous training of farmers of this strategic product to increase the productivity of Ferula assa-foetida farms due to the double profitability of gum harvest, educational planning has been recommended to empower the farmers of Ferula assa-foetida production units.