Financial Feasibility of Smallholder Closed-House Broiler Probiotic Farm

Abstract

Broiler meat has the highest protein consumption and contributes significantly to protein needs. However, the broiler farming business in Indonesia is dominated by smallholders who have not implemented appropriate maintenance management, followed by technology application, and taking health into account. The purpose of this study is to find out the financial feasibility of smallholder closed-house broiler probiotic farms. This study use qualitative approach, with interviews as primary data. Financial feasibility will be analysed using payback period, Net Present Value (NPV), and Internal Rate of Return (IRR), and the risk will be assessed using sensitivity analysis and scenario analysis. The result shows that the project is financially feasible to be executed, with payback period of 2.16 years, positive value of net present value (NPV) of IDR 180,155,939, and internal rate of return (IRR) of 36%, which is higher than the weighted average cost of capital (WACC) of 6.62%. Furthermore, four variables have been identified as sensitive variables: chicken price per kg, average chicken weight sold, Cost of Goods Sold (COGS)feed, and Cost of Goods Sold (COGS)Day-Old Chick (DOC) and the project are not feasible to be executed in the worst-case scenario.