Financial analysis of coffee from agroforest managed by women farmers group in Tanggamus Lampung

Abstract

Coffee (Coffea robusta) is one of the most important products of the community forest (HKm) of Beringin Jaya in Tanggamus Lampung. A women farmers group called KWT Himawari is managing the business of coffee processing. The KWT Himawari was established in 2014 and currently operating a set of coffee processing equipment. This group produces several coffee brands, i.e. Kopi Codot (bat battered coffee), Kopi Merah (red coffee), and Kopi Premium (premium coffee). This study aims to evaluate business feasibility of the coffee processing of KWT Himawari using the financial criteria of Net Present Value (NPV), Benefit Cost Ratio (BCR) and Internal Rate of Return (IRR) within an investment period of 15-years. This study concludes that without any improvement in the business process, the KWT Himawari will potentially lose hundreds million rupiah, indicated by the negative Net Present Value (NPV) of (IDR 181,518,037), Internal Rate of Return (IRR) of (5.245%) and Benefit Cost Ratio (BCR) of 0.781 or less than 1. This study suggests some business improvement to make the women group business feasible. The improved business of coffee processing, so called optimal business model, will make the business profitable with a great potential gain, i.e. NPV of IDR 2,356,763,475, BCR of 1.33 and IRR of 259.57%. The optimal business model can be reached by optimizing production and market that provides several multiplier effects, such as increasing the women’s group income, raising the employment absorption, and stabilizing price of raw coffee from farmers around the forest area.