Financial feasibility study of kepok banana (Musa paradisiaca) agroindustry in Gowa regency, Indonesia

Abstract

In Indonesia, bananas (Musa paradisiaca) rank among the top horticultural products, offering significant potential for value added processing through small scale agroindustries. This research seeks to assess the financial viability of the kepok banana agroindustry in the Pallangga District, Gowa Regency, Indonesia. The evaluation utilized primary data from representative firms, focusing on investment metrics such as Net Present Value (NPV), Internal Rate of Return (IRR), Net Benefit Cost Ratio (Net B/C), Gross Benefit Cost Ratio (Gross B/C), and Payback Period (PP). A five year projection was used, with an average discount rate of 14.75%. The findings reveal that this agroindustry is financially sound, as demonstrated by a positive NPV of IDR 17,432,686, an IRR of 28.73% surpassing the discount rate, a Net B/C ratio of 1.34, and a Payback Period of two years and five months. Although the gross B/C ratio is slightly below one (0.944), indicating operational cost inefficiency, the investment remains financially viable due to positive net returns, as indicated by the NPV, IRR, and net B/C results. This study underscores the vital need to enhance financial management and improve market access to boost the competitiveness and sustainability of Indonesia’s small scale banana agroindustry.