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A Feasibility Study on the Establishment of a Goat Breeding Project in Palu Municipality, Central Sulawesi, Indonesia
Field Study Abstract:
Goat meat has long been eaten and relished by humans. Three types of goat meat are consumed, namely: meat from kids, meat from young goats and meat from old goats. The chemical composition of goat meat is as follows: 74.2-76 percent moisture, 20.6-22.3 percent protein, 0.6-2.6 percent fat, and 1.1 percent ash. Goat meat appears to contain more argine, leucine, and isoleucine than mutton, and is adequate in all essential amino acids. Goat meat also has relatively lower fat content because its tissues are more concentrated in the viscera.
Goat as one of products of the livestock sub-sector increases per year by 1.28 percent on the average. However, this increase does not keep pace with the annual increase in the human population, especially in the Palu municipality, where goat production continually decreased from 1994 to 1996. To meet the lack of goat stock, goats must be supplied from other province.
To increase the production of goats, the Cooperative of Gumbasa Sibalaya in Palu municipality, Central Sulawesi, Province, Indonesia established a goat breeding project in a 5,000 m2 land. This project aimed to produce and market goat meat, especially to supply the customers in Palu Municipality. The project was located at Sibalaya village, one of the villages in South Palu Sub-district, Palu Municipality. This area was classified as tropical, which has three dry months and nine wet months. Its average rainfall per year is 3,000 mm and its average daily temperature is 27°C, which is suitable for breeding goats.
Management system for feeding was semi-extensive system, namely: shed confinement at night and morning, and free grazing at late morning up to afternoon (a mixture of grazing and stall feeding). The production capacity was 359 heads of 4,291.54 kg/year and each female was assumed to produce two kids per year.
To determine the feasibility of the project, it needed a study in various aspects, namely: marketing, technical, organization and management, financial, socioeconomic, and environmental.
A market survey was undertaken in four districts in Palu Municipality, which were considered as geographical markets. The market survey included both institutional buyers and individual buyers to determine the magnitude of the demands and the trends of their preferences. The survey was conducted from 16 November 1997 to 16 January 1998. The secondary data used in the study were gathered from government institutions, i.e., Central Bureau of Statistics and Animal Husbandry Services (Livestock Services). Secondary data in form of literature on the production and marketing of goat meat were also searched.
The marketing study revealed that the projected demands for 1998, 1999, 2000, 2001, and 2002 were 239,453.23 kg (20,038 heads); 253,084.14 kg (21,179 heads); 267,515.39 kg (22,386 heads); 282,793.96 kg (23,665 heads); and 298,969.61 kg (25,018 heads), respectively, whereas the potential market for 1998 amounted to 1,170 heads. Results of the market survey also showed that 73.13 percent of the respondents purchased goat meat at the price of IDR7,500 per kg.
The study on organization and management aspect showed that the cooperative was registered at the Department of Cooperative. Its registration number was 083- a/BH/XIX/P. There was also a clear organizational chart and job description. The cooperative also obtained support from the government in the form of technical and managerial assistance.
Based on the study on financial aspect, the project cost amounted to IDR34.07M with IDR30.8M as investment and IDR3.4M as working capital. In terms of financing, the project cost will be financed by self-financing (50%) and credit loan from bank0 (50%). Financial ratios revealed at the final period the current ratio of 3.84, the acid test ratio of 3.39, average collection period of 18, debt ratio of 0 percent, gross profit margin of 75 percent, and net profit margin of 47 percent. The NPV and IRR of the project were IDR5.97M, and 25.45 percent, respectively. The payback period of the project was 2.9 years and the NBC ratio was 1.24. Finally, the sensitivity analysis indicated that the price may not go down by 10 percent or more because if it occurs, the NPV of the project is less than zero and the IRR of the project is less than the current interest rate. Similarly, variable manufacturing cost may not go up by 57 percent or more because if it occurs, the NPV is less than zero and the IRR is less than the current interest rate.
The existence of the goat breeding project is expected to contribute in terms of giving benefits to the community.