Investment Sensitivity of Corn Silage Production Integrated into Feed Supply Service of Dairy Cooperative

Abstract

The study aimed to identify the sensitivity of investment in commercial corn silage production based on 20 hectares of cropland. The start-up project was prepared through a profit-sharing partnership between the South Bandung Dairy Cooperative and the owner of the land rights. The harvested whole-plant crop (WPC) was processed to produce packaged silage, further distributed to meet the needs of the member of the cooperative. Data on agriculture input and output as well as their prices were gathered through a field survey. The result of data analysis was examined within a focus group discussion attended by the project authority. The project used hybrid corn that could be planted and harvested twice in a year and yields corn silage on average 78 ton/hectare/year. It required an investment fund of IDR1.5 billion for running the project for over ten years. By using social opportunity cost of the capital of 8% a year, financially it gave a positive Net Present Value. The B/C ratio was 1.34, and the IRR was 28.5%. Three variables have to be controlled by the project management because of the sensitive effect on the project feasibility, it consists of the cost of silage distribution, selling price and WPC/hectare yielded.