Financial Profitability and Sensitivity Analysis of Palm Oil Plantation in Indonesia

Oil palm cultivation in Indonesia is increasing. This study investigates the financial and economic aspects of establishing an oil palm plantation using data collected in 2014. The financial case study is undertaken from the perspective of company in North Sumatra, Indonesia. A spreadsheet model was used to develop and calculate the net present value (NPV), return of investment (ROI), internal rate of return (IRR) and payback period (PP). Sensitivity analysis of the NPV to the default discount rate (10%) was included. A 8,000 ha plantation over 25 years was estimated to result in a positive NPV of USD 10,670 with a ROI 73.50% and an IRR at 14.83% and payback period of 6.75 years. Establishing an oil palm plantation seems to be very profitable investment on the basis of the assumptions made. System is tested on sensitivity in different capital and recurrent costs and in selling price of raw material, while change in selling price of FFB is more sensitive to NPV than change in investment and recurrent costs Discount rate is also one of the factors affecting NPV and system is tested between 5–15% change in discount rate.

Download Full-text

Analisis finansial peremajaan perkebunan sawit rakyat di Kabupaten Muaro Jambi

Jurnal Paradigma Ekonomika ◽

10.22437/jpe.v16i1.12501 ◽

2021 ◽

Vol 16 (1) ◽

pp. 209-224

Author(s):

Saad Murdy ◽

Saidin Nainggolan ◽

Dompak Napitupulu

Keyword(s):

Sensitivity Analysis ◽

Oil Palm ◽

Primary Data ◽

Selling Price ◽

Snowball Sampling ◽

Oil Palm Plantation ◽

Production Factors ◽

Input And Output ◽

Financial Perspective

This study aims to (1) determine the feasibility of smallholder oil palm plantations assessed from a financial perspective using investment criteria, (2) determine the sensitivity of smallholder oil palm plantations to changes in input and output prices. This research was conducted in Muaro Jambi Regency. The method of analysis used an analysis of investment criteria consisting of NPV, IRR, BCR, PBP, and BEP. The data used were primary data obtained through interviews using questionnaires. Samples were taken by snowball sampling of 40 small independent smallholders of Muaro Jambi Regency. The results showed that smallholder oil palm plantations, conventional rejuvenation, and underplanting rejuvenation were feasible to be cultivated. The results of the sensitivity analysis on the increase in the price of production factors by 15% and the selling price of FFB is considered constant, and the selling price of FFB has decreased by 15% and the price of production factors is fixed, both types of oil palm plantation rejuvenation are still feasible to carry out. Changes in FFB prices are more sensitive to changes in the value of investment criteria than changes in the price of production factors.

Download Full-text

Financial Feasibility Analysis of Chocolate Spread with Coconut Ingredients as Agroindustrial Product

Journal La Bisecoman ◽

10.37899/journallabisecoman.v2i2.353 ◽

2021 ◽

Vol 2 (2) ◽

pp. 14-24

Author(s):

Dyah Ayu Savitri ◽

Herlina Herlina ◽

Noer Novijanto

Keyword(s):

Sensitivity Analysis ◽

Development Strategy ◽

Production Management ◽

Payback Period ◽

Raw Material ◽

Feasibility Analysis ◽

Selling Price ◽

Financial Feasibility ◽

Chocolate Spread

Chocolate spread is a type of paste which is mostly spread on breads and pastries. This research was conducted by calculating financial feasibility of chocolate spread with addition of coconut flour and coconut sugar produced by Yayasan Suren untuk Indonesia. The aim of this research is to observe the financial feasibility of chocolate spread with addition of coconut flour and coconut sugar in order to obtain its development strategy on production management and marketing. The results showed BEP value of 16659,4; PBP (year) value of 1,9; NPV value of 20389635,9; IRR value of 1526% and B/C ratio of 1,05. Therefore, based on financial feasibility analysis, this business is feasible to execute. Furthermore, based on sensitivity analysis using four scenarios, this business is not feasible to execute while undergoes increasing of price of raw material as big as 4% and decreasing of selling price as big as 3%. Based on those scenario, NPV value of this business was Rp -194.353.160,28 (<0); followed by value of IRR, Net B/C, payback period and BEP were 10,94%; 1,00; 7,88 and 155.020,62 respectively.

Download Full-text

Techno-economic evaluation of integrated levulinic acid-bioethanol plant design based on oil palm empty fruit bunches

IOP Conference Series Earth and Environmental Science ◽

10.1088/1755-1315/926/1/012064 ◽

2021 ◽

Vol 926 (1) ◽

pp. 012064

Author(s):

Muryanto ◽

K L Putri ◽

P Srinophakun ◽

M Gozan

Keyword(s):

Economic Evaluation ◽

Oil Palm ◽

Levulinic Acid ◽

Net Present Value ◽

Economic Value ◽

Production Capacity ◽

Raw Material ◽

Biodiesel Production ◽

Selling Price ◽

Plant Design

Abstract Currently, renewable energy started to become a focus of the world as it can be an alternative to fossil energy. Bioethanol is the result of glucose fermentation derived from lignocellulosic raw material (second-generation bioethanol). As one of the countries with the most significant biomass resources globally, Indonesia has a huge opportunity to develop the bioethanol industry. Oil Palm Empty Fruit Bunch (OPEFB) is the most significant solid waste generated by oil palm plantations. Levulinic acid can be used as a chemical platform for biodiesel production, which has a higher selling price than bioethanol. In this research, techno-economic evaluation of integrated levulinic acid-bioethanol plant based on OPEFB was conducted. Optimization of production capacity is done to determine the suitable plant capacity so that the integrated levulinic acid-bioethanol plant is feasible to be developed. Based on simulation results with SuperPro Design 9.5 and analysis of the economic value, Net Present Value (NPV), Internal Return Rate (IRR), and the payback period is 53.939.000 USD; 29,77%; and 4,52 years, respectively. In conclusion, an integrated levulinic acid-bioethanol plant based on OPEFB has fulfilled the economic parameters of a chemical plant.

Download Full-text

Techno-Economic Evaluation of Hand Sanitiser Production Using Oil Palm Empty Fruit Bunch-Based Bioethanol by Simultaneous Saccharification and Fermentation (SSF) Process

Applied Sciences ◽

10.3390/app10175987 ◽

2020 ◽

Vol 10 (17) ◽

pp. 5987 ◽

Cited By ~ 2

Author(s):

Andre Fahriz Perdana Harahap ◽

Jabosar Ronggur Hamonangan Panjaitan ◽

Catia Angli Curie ◽

Muhammad Yusuf Arya Ramadhan ◽

Penjit Srinophakun ◽

...

Keyword(s):

Oil Palm ◽

Capital Investment ◽

Net Present Value ◽

Simultaneous Saccharification And Fermentation ◽

Economic Feasibility ◽

Raw Material ◽

Selling Price ◽

Cellulose Content ◽

Empty Fruit Bunch ◽

Simultaneous Saccharification

Oil palm empty fruit bunch (OPEFB) is a potential raw material abundantly available for bioethanol production. However, the second-generation bioethanol is still not yet economically feasible. The COVID-19 pandemic increases the demand for ethanol as the primary ingredient of hand sanitisers. This study evaluates the techno-economic feasibility of hand sanitiser production using OPEFB-based bioethanol. OPEFB was alkaline-pretreated, and simultaneous saccharification and fermentation (SSF) was then performed by adding Saccharomyces cerevisiae and cellulose enzyme. The cellulose content of the OPEFB increased from 39.30% to 63.97% after pretreatment. The kinetic parameters of the OPEFB SSF at 35 °C, which included a µ max, ks, and kd of 0.018 h−1, 0.025 g/dm3, and 0.213 h−1, respectively, were used as input in SuperPro Designer® v9.0. The total capital investment (TCI) and annual operating costs (AOC) of the plant were $645,000 and $305,000, respectively, at the capacity of 2000 kg OPEFB per batch. The batch time of the modelled plant was 219 h, with a total annual production of 32,506.16 kg hand sanitiser. The minimum hand sanitiser selling price was found to be $10/L, achieving a positive net present value (NPV) of $108,000, showing that the plant is economically feasible.

Download Full-text

FAKTOR MEMPENGARUHI PENGLIBATAN BELIA DALAM SEKTOR PERLADANGAN KELAPA SAWIT (Factors Affecting Youth Participation in the Oil Palm Plantation Sector)

International Journal of Management Studies ◽

10.32890/ijms.28.1.2021.10559 ◽

2021 ◽

Vol 28 ◽

Author(s):

Wan Nur Sa’adah Surianshah ◽

Lai Wei Sieng ◽

Norlida Hanim Mohd Salleh ◽

Siti Hajar Mohd Idris ◽

Hawati Janor

Keyword(s):

Logistic Regression ◽

Oil Palm ◽

Labour Force ◽

Demographic Factors ◽

Analysis Method ◽

Safety Factors ◽

Agricultural Industry ◽

Factors Affecting ◽

Oil Palm Plantation ◽

Age Range

Sektor perladangan kelapa sawit merupakan sektor yang sangat penting dalam industri pertanian dan merupakan penyumbang terpenting kepada ekonomi Malaysia. Namun begitu, isu tenaga buruh di sektor ini sering diperkatakan kerana masih berintensif buruh. Penyertaan golongan belia dalam sektor perladangan kelapa sawit adalah kurang memberangsangkan berbanding sektor lain walaupun sektor ini menawarkan peluang pekerjaan yang lebih luas. Oleh sebab itu, kajian ini bertujuan untuk mengenal pasti golongan belia yang lebih bersedia untuk melibatkan diri dalam sektor perladangan kelapa sawit berdasarkan faktor demografi mereka. Borang soal selidik digunakan bagi mengumpul data daripada responden yang terdiri daripada golongan belia berusia 18 hingga 35 tahun. Seramai 724 orang responden yang telah menjawab soal selidik ini mewakili setiap negeri di Malaysia. Data yang dikumpul dianalisis menggunakan kaedah analisis faktor dan model regresi logistik. Hasil kajian menunjukkan bahawa faktor jantina, bangsa, tempat tinggal, pengalaman, dan penglibatan ahli keluarga dalam sektor perladangan kelapa sawit merupakan faktor yang menyumbang kepada kesediaan belia untuk melibatkan diri dalam sektor tersebut. Faktor gaji, faedah, persekitaran kerja dan keselamatan perlu ditambah baik bagi menarik lagi minat golongan belia untuk melibatkan diri dalam industri pertanian negara khususnya di sektor perladangan kelapa sawit. Abstract The oil palm plantation sector is a very important sector in the agricultural industry and is a major contributor to the Malaysian economy. However, the issue of labour in this sector is often addressed as it is labour-intensive. The participation of youths in the oil palm plantation sector is less favourable than the other sector although it offers greater employment opportunities. Therefore, this study aimed to identify youths who are better prepared to participate in the oil palm plantation sector based on their demographic factors. The questionnaire was used to collect data from respondents in the age range of 18 to 35 years. A total of 724 respondents answered this questionnaire representing each state in Malaysia. The data collected were analysed using the factor analysis method and logistic regression model. The results show that the gender, race, residence, experience and involvement of family members in the oil palm plantation sector are factors contributing to youths’ readiness to participate in the sector. Factors such as salary, benefits, work environment and safety factors need to be improved to attract more youths to participate in the agricultural industry, especially in the oil palm plantation sector. Keywords: Youth, labour force, oil palm, demographic factors, logistic regression.

Download Full-text

Economic Valuation of Oil Palm Plantation Investment in Swamp Area of Tapin Regency, South Kalimantan, Indonesia

Modern Applied Science ◽

10.5539/mas.v10n7p22 ◽

2016 ◽

Vol 10 (7) ◽

pp. 22

Author(s):

Hamdani Hamdani

Keyword(s):

Oil Palm ◽

Net Present Value ◽

Economic Valuation ◽

Environmental Cost ◽

Cost Ratio ◽

Benefit Cost Ratio ◽

Financial Valuation ◽

Oil Palm Plantation ◽

Valuation Method ◽

Benefit Cost

This study describes the companies’ feasibility determination on oil palm plantation investment. We also compare it with the oil palm plantation in swamp area, by considering economic, social and environmental aspects. We used total valuation method to valuing the environmental value of swamp area. Otherwise, investment analyzed by the model of benefit cost ratio (BCR), net present value (NPV), and internal rate of return (IRR). The study showed that the financial valuation of investment feasibility that is made and proposed by the plantation companies to banks (creditors), did not account the land value (economic, social and environmental values) of swamp ecosystems. The assessment on swampland value obtained Rp232, 570,833,400 or US$24,481 million per year for 10,000 ha area – US$2,448 per ha each year. Although the total value of economic environment is included in the valuation element of oil palm plantation investment in swampland, it still result insufficient value. However, by sensitivity analysis scenario of swampland plantation would become sufficient if the Crude Palm Oil (CPO) price is above US$1300 per ton. It also has a second scenario if the environmental cost can be pressed optimally into Rp9, 025,541 or US$950 per ha per year.

Download Full-text

An Analysis of the Effectiveness of Two Rainwater Harvesting Systems Located in Central Eastern Europe

Water ◽

10.3390/w11030458 ◽

2019 ◽

Vol 11 (3) ◽

pp. 458 ◽

Cited By ~ 17

Author(s):

Agnieszka Stec ◽

Martina Zeleňáková

Keyword(s):

Sensitivity Analysis ◽

Net Present Value ◽

Rainwater Harvesting ◽

Payback Period ◽

Practical Aspect ◽

Financial Ratios ◽

Present Value ◽

Toilet Flushing ◽

Harvesting Systems ◽

The Impact

Decentralized water systems are perceived as solutions that not only save water, but also as a way to partially or completely become independent from centralized suppliers. Taking this into account, an analysis of the effectiveness of rainwater harvesting systems (RWHS) for toilet flushing in existing academic facilities located in Poland and in Slovakia was carried out. The tests took into account the different volumes of storage tanks collecting rainwater. On the basis of two financial ratios, namely Net Present Value and Discounted Payback Period, the profitability of these systems was also assessed. The research was extended by the sensitivity analysis, which allowed determination of the impact of changes in individual cost components on the financial effectiveness of the investments considered. The results obtained clearly showed that the implementation of RWHS in the dormitory in Rzeszów was unprofitable for all tank capacities tested, and the payback period significantly exceeded the period of 30 years accepted for the analysis. Completely different results were obtained for RWHS in a dormitory located in the city of Košice, for which the financial ratios NPV (Net Present Value) and DPP (Discounted Payback Period) were very favorable. It was also confirmed by the results of the sensitivity analysis. The use of rainwater for toilet flushing caused that it was possible to achieve water savings of an average of 29% and 18%, respectively, for facilities located in Slovakia and Poland. The results of the research have a practical aspect and can provide an indication for potential investors and managers of academic facilities, similar to those analyzed in the article. Taking into account that in many countries water and sewage rates are significantly higher than in Poland and Slovakia, the cost-effectiveness of using the analyzed installation options in these countries could be even higher.

Download Full-text

Design, Cost Estimation and Sensitivity Analysis for a Production Process of Activated Carbon from Waste Nutshells by Physical Activation

Processes ◽

10.3390/pr8080945 ◽

2020 ◽

Vol 8 (8) ◽

pp. 945

Author(s):

Marcelo León ◽

Javier Silva ◽

Samuel Carrasco ◽

Nelson Barrientos

Keyword(s):

Sensitivity Analysis ◽

Activated Carbon ◽

Cost Estimation ◽

Net Present Value ◽

Cash Flows ◽

Raw Material ◽

Total Annual Cost ◽

Physical Activation ◽

Production Plant ◽

Tax Rate

A conceptual design of an industrial production plant for activated carbon was developed to process 31.25 tons/day of industrial waste nutshells as the raw material and produce 6.6 ton/day of activated carbon using steam as an activation agent. The design considered the cost of the main equipment, the purchase price of the nutshells, basic services, and operation. A sensitivity analysis was developed, considering the price of the finished product and the volume of raw material processing varied up to ±25%. Furthermore, the total annual cost of the product was determined based on the production of 2100 tons/year of activated carbon. Two cash flows were developed and projected to periods of 10 years and 15 years of production, using a tax rate of 27%, a low discount rate (LDR) of 10% per year, and without external financing. For a 10-year production project, the net present value (NPV) was USD 2,785,624, the internal return rate (IRR) 21%, the return on investment (ROI) 25%, and the discounted payback period (DPP) after the fifth year. Considering a project with 15 years of production, the NPV was USD 4,519,482, the IRR at 23%, the ROI 24%, and the DPP after the fifth year of production.

Download Full-text

Analysis of different impact rates on the forecasts cost of building project using sensitivity analysis techniques

World Journal of Advanced Engineering Technology and Sciences ◽

10.30574/wjaets.2021.4.1.0083 ◽

2021 ◽

Vol 4 (1) ◽

pp. 040-051

Author(s):

Godwin Adie Akeke ◽

Melody Sunday Osok

Keyword(s):

Sensitivity Analysis ◽

Life Cycle ◽

Discount Rate ◽

Life Cycle Cost ◽

Net Present Value ◽

Discount Rates ◽

Discounted Cost ◽

Analysis Techniques ◽

Initial Cost ◽

Building Project

Over the years, Life Cycle Costing (LCC) has been recognized and used as an important technique for evaluating, forecasting and discounting the future costs of building to the present day value, from conception, design to completion, operation, maintenance, down to decommissioning. This work presents a study of Analysis on different discount rate of the forecasts cost of building project using sensitivity analysis techniques, the case study being Calabar International Conference Center (CICC) building project. Life cycle cost analysis was conducted and forecast for 51 years using Net present value (NPV) with the following discount rates 4%, 5%, 6%, 8%, 10%, 12% and 13% respectively. Results showed that the lower the discount rates, the higher the cost value and via vasa. The building had a positive value >0 indicating a significant benefit at the end of the study period. The percentage contribution of the discount rate on the initial cost, salvage value and the life cycle cost indicates that at 4% the initial cost accounted for 85% of the discounted cost, life cycle cost 13% and salvage value 2%. The salvage value recorded 0% at 12% and 13% discount rate The higher the discount rates the higher the discounted initial cost and the lower the life cycle cost.

Download Full-text

PENILAIAN KELAYAKAN FINANSIAL KEBUN KELAPA SAWIT RAKYAT DI KABUPATEN ROKAN HULU

Agro Ekonomi ◽

10.22146/agroekonomi.17749 ◽

2017 ◽

Vol 24 (1) ◽

pp. 99

Author(s):

Defidelwina Defidelwina

Keyword(s):

Oil Palm ◽

Production Factor ◽

Primary Data ◽

Selling Price ◽

Input Price ◽

Input Output ◽

Sale Price ◽

Price Changes ◽

Oil Palm Plantation ◽

The People

This study aims to (1) determine the feasibility of people’s business oil plan plantation assessment in terms of financial by using investment criteria, (2) to know the sensivity of people’s business oil palm plantation in price changes of both input output. The research was conducted in Rokan Hulu Regency. The analyzed method used was analysis of the investment criteria of NPV, IRR, BCR, PBP, and BEP. The data used are the primary data obtained though interviews using qesioner. The samples taken by Purposive Sampling from 50 respondents of the people pure self oil palm plantation in Rokan Hulu Regency. The results showed that the people oil palm plantations, either before or after financing is feasible to be implemented. The results of sensitivity analysis of input price increase by 10%, and the FFB selling price is considered fixed and FFB sale price fell by 10% and the price of the production factor fixed, either before r after the financing business is still feasible to be implemented. FFB price changes are more sensitive to changes the value of investment criteria than the production fact price changes.

Download Full-text