Financial Feasibility of Investing in Smallholder Cow-Calf Cooperatives in Baluran National Park
Journal Title: Agro Ekonomi - Year 2017, Vol 28, Issue 1
Abstract
Livestock grazing is a major driver of human-wildlife conflict in conservation areas. Currently, there are an estimated 3000 heads of cattle illegally grazing within Baluran National Park (BNP) in East Java. Competition between wildlife and cattle has led to population reductions in several highly threathened species, most notably the Banteng (Bos javanicus). Recent research has indicated the potential of livestock system intensification to reduce land-use and conflict with conservation priorities. Here we investigate the financial feasibility of starting intensive cow-calf cooperatives by smallholders in the BNP area based on optimal herd management using whole farm Linear Programming and Discounted cash-flow analysis. Investment lifetime was set at 15 years and four alternative varieties of cattle were considered: Bali, Peranakan Ongole, Limousin and Simmental. Our results show investing in all varieties represents a positive investment opportunity, but with the Bali cattle obtaining the highest NPV ($53.769), IRR (14,25%) and B/C ratio (1,13). Farmer income can be increased by 152% through a combination with additional Off-farm labour. However, debt-servicing capabilities of cow-calf cooperative activities showed that the loan principal can only be repaid in the 10th year instead of the maximum eight years set by the governments cow-calf credit scheme. We urge the government to reconsider either the interest rate or the grease period of the credit scheme to better fit the cash-flow characteristics of cow-calf enterprises.
Authors and Affiliations
Mark Rademaker| Magister Management Agribusiness , Any Suryantini| Dosen Jurusan Sosial Ekonomi Pertanian, Fakultas Pertanian, Universitas Gadjah Mada , Jangkung Handoyo Mulyo| Dosen Jurusan Sosial Ekonomi Pertanian, Fakultas Pertanian, Universitas Gadjah Mada
Keywords
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- EP ID EP15450
- DOI 10.22146/jae.23543
- Views 397
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