Investment advantages of broiler production using the partnership system: A study in Indonesia

Abstract

Purpose: Broiler business with independent pattern in Minahasa Regency, North Sulawesi often experiences problems with input and output price fluctuations. Therefore, farmers try to collaborate in partnership with companies that have better capital and technology. An evaluation needs to be carried out whether partnership model of broiler businessin North Minahasa, North Sulawesi Province is financially beneficial or not. Research Method: The research was a case study performed in UD. Matuari Waya, the only broiler farming entities in District of Kalawat, Regency of North Minahasa, of which was partnered with a national-scale husbandry company, Charoen Phokpand Ltd. Data were analyzed through business feasibility scope using analysis of investment criteria and sensitivity model. Findings: Partnership model was financially beneficial to be developed further, by NPV value of IDR.1,487,877,624 (US$101,909.43), net B/C, of 1.219, internal rate of return of 63.18% and the payback period within 1 year & 7 months. Moreover, the result of sensitivity analysis shows that: if price of broiler declined about 15% and operational cost was increased of 12%, the broiler business could still be performed. Nonetheless, whereas broiler’s production declined for 10%, this partnership was non-feasible to be developed since the value of NPV was negative and net B/C was lower than 1. Research Limitations: This study was constrained by the limited broiler breeders with partnership pattern in Kalawat District as the region with the largest broiler population. Originality/Value: The results provide new information on business development standards for broiler chicken partnerships in the context of a decline in output price, decrease of broiler production and an increase in inputs price.