Financial Analysis of Arabica Coffee Cultivation of Agroforestry Systems in Lembang Bokin, North Toraja Indonesia

Abstract

Toraja is a centre for a coffee product in South Sulawesi. One of the most famous species is Arabica, one of the national superior-commodities with a high economic value. Given the demand for coffee, Arabica coffee needs to develop the plantation of Arabica coffee in particular. Therefore, it is crucial to analyze the financial feasibility of Arabica coffee for each type of shade. This research was conducted in some cultivated areas of Arabica coffee in Lembang Bokin, North Toraja. It is located at ± 1,237 meters above sea level, and it has coordinates of 03°01'04,7" – 03 ̊01'45,2"N and 119 ̊59'44,9" – 120 ̊00'03,8"S. The study was aimed to analyze the financial feasibility of Arabica coffee cultivation with a combination of Leucaena glauca and Calliandra calothyrsus and Elmerrellia ovalis (agroforestry models) by calculating: (i) the Net Present Value (NPV); (ii) the Net Benefit-Cost Ratio (Net B/C) and (iii)) Internal Return Rate (IRR). The financial analysis of Arabica coffee under combination Leucaena glauca and Calliandra Calothyrsus was at an interest rate of 10%. The financial analysis result suggests that the production of Arabica coffee shaded by Leucaena glauca and Calliandra calothyrsus was feasible because financial analysis showed a positive NPV value B/C>1, and IRR value (greater than MAR value =10%). On the other hand, the Arabica coffee shaded by Elmerrellia ovalis was not economically feasible because it gave a negative NPV value and Net B/C <1, IRR less than the MAR value of 5.4%.