Analysis of business feasibility on rice milling business in Porsea district of Toba Samosir regency

Abstract

The consistent growth in grain production, particularly rice, in Toba Samosir has led to the emergence of numerous rice milling businesses in the region. This is due to the significant potential for further expansion in grain production in the district, making it an attractive area for such ventures. Nevertheless, the rice milling industry in the Porsea sub-district has various intricate challenges, including funding, technological advancements, marketing strategies, and access to market intelligence. This study aims to ascertain the characteristics of the rice milling industry and determine the firm’s financial viability. The methodology employed in this study involves doing a feasibility analysis utilizing the metrics of Net Present Value, Internal Rate of Return, and Net Benefit Cost Ratio. The objective is determine the viability of rice milling activities in the Porsea sub-district. The findings indicated that the mean annual income of the rice milling industry in Porsea amounted to 147,439,448 IDR. The Porsea rice milling business has met the necessary criteria for consideration, with a Net Present Value (NPV) of IDR 658,682,140, a Net Benefit-to-Cost ratio (Net B/C) of 1.2, and an Internal Rate of Return (IRR) of 46.29%. These figures suggest that most regional rice milling firms are financially feasible.