The Feasibility of Staple Food Business and Its Implication on Regional Food Supply Chain Development

Abstract

The purpose of this research is to find out the investment feasibility of developing staple food businesses in the rural area of Bojonegoro regency, to review the financial aspects and to calculate the investment feasibility. This research used four types of analysis namely trend analysis, aspects of the investment, the investment feasibility and sensitivity. The results of the research show that there was an increase in the economic growth of 26.50% per year during 2016-2019, IRR 37.2%, positive NPV, the payback period was fewer than 5 years. The sensitivity analysis shows that the possibilities of an increase in operational costs of 2% produced PV 34.7 million rupiahs and the IRR 36.97%, an increase such costs of 4% produced NPV 33.9 million rupiahs and the IRR 36.62%. Meanwhile, the possibilities of a decrease in income of 2 and 4% find NPV 32.4 million rupiahs and the IRR 35.99%; and NPV value was 29,3 million rupiahs and the IRR 34.59% respectively. The results indicate that the staple food business in Bojonegoro regency was considered feasible. Furthermore, this research has implications for regional food chain development in term of the stability of domestic food production, stabilization of food prices, regulation of space infrastructure improvements and business climate of investment.JEL Classification: D19, J54, Q12