Asian Journal of Agricultural Extension, Economics & Sociology 5(4): 215-226, 2015; Article no.AJAEES.2015.054 ISSN: 2320-7027
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Potential Feasibility Study of Creating a Small Company That Produces Tomato Paste in Ambatondrazaka District
Hasina Rasolofoharitseheno1*, Kusnandar1 and Minar Ferichani1
1Department of Agribusiness, Sebelas Maret University, Solo, Indonesia.
Authors’ contributions
This work was carried out in collaboration between all authors. Author HR designed the research and made the manuscript. Author MF proposed the inclusion of the situation analysis and corrected the manuscript. Author Kusnandar corrected the manuscript. All authors read and approved the final manuscript.
Article Information
DOI: 10.9734/AJAEES/2015/16352 Editor(s): (1) Jamal Alrusheidat, Extension Education Department, National Centre for Agricultural Research and Extension (NCARE), Amman, Jordan. Reviewers: (1) Anonymous, Romania. (2) Donatella Privitera, Department of Scienze della Formazione, University of Catania, Italy. Complete Peer review History: http://www.sciencedomain.org/review-history.php?iid=898&id=25&aid=8434
Received 27th January 2015 th Original Research Article Accepted 26 February 2015 Published 13th March 2015
ABSTRACT
This research proposes a complete study of project development by analyzing the starting point, situation, before studying the feasibility of the project, creation of a small company that produces tomato paste in the district of Ambatondrazaka-Madagascar, regarding technical and technological, market and marketing, managerial, financial, and environmental aspects. The situation analysis highlighted that there are six opportunities and two strengths that lead into the creation of the company. However, some alternatives such as working closely with farmers, through the establishment of contracts, building good relationship with regional and central governments, training the company’s manager and personnel, and finding places for tomato cultivation during the raining season should be applied by the company to overcome the situation’s weaknesses and threats. The technical and technological, managerial, financial, and environmental analysis showed that the creation of the company is feasible. However, the market and marketing analysis pointed out that the company should adopt an effective marketing strategy for increasing its local and regional sales.
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*Corresponding author: E-mail: [email protected];
Rasolofoharitseheno et al.; AJAEES, 5(4): 215-226, 2015; Article no.AJAEES.2015.054
Keywords: Ambatondrazaka; potential feasibility study; project; tomato paste; small company.
1. INTRODUCTION feasibility of creating mushroom chips company in Bogor regency. The study included both Tomato is one of the most consumed vegetables primary and secondary data and took into in Madagascar. The production of tomato in the consideration aspects such as technical and national scale is dominated by two regions, technological, market and marketing, managerial, namely, Itasy and Alaotra-Mangoro regions [1]. and financial aspects. In 2009, [6] has conducted According to [2], tomato cultivation has started a study in east Kutai-Indonesia that aimed at long time ago in Alaotra-Mangoro region, assessing the possibility of constructing livestock particularly, Ambatondrazaka district is known as slaughter house. This study also included the main producer. There are two species that primary and secondary data and took into dominate tomato cultivation in this district such account four aspects, namely, financial, market as Marglobe or Lycopersicon Lycopersicum and marketing, managerial, and environmental (round fruit) and Roma VF or Lycopersicon aspects. In 2011, [7] carried out a research which esculentum (elongated fruits) [2]. However, the aimed to analyze the feasibility of modifying tile markets are dominated by Roma VF. Over the press machine in a small enterprise located in past few years, a general upward in tomato central Java. This study included only primary consumption has been seen not only in data and took into consideration four aspects of Ambatondrazaka district, but also in whole project feasibility study such as market and Madagascar. In 2010, the average annual per marketing, financial, technical, and socio- capita consumption of tomato in Madagascar is economical aspects. None of these researches about 11 kg [3]. analyzed the starting point of project development study, situation, and included more The total surface of Ambatondrazaka district is than four aspects. The current research aims about 6 492 km2 and the total population in 2012 thus at analyzing the situation and studying the was about 439 570 [4]. This district is well known feasibility of the project, creation of a small for the biggest Lake in Madagascar called company that produces tomato paste in Alaotra. The existence of this Lake made the Ambatondrazaka district, regarding technical and district capable to produce various types of technological, market and marketing, managerial, crops, including tomato crop. The survey in financial, and environmental aspects. October 2014 highlighted that the yield per hectare of tomato during the hot season varies 2. RESEARCH METHODS between forty eight and fifty four tons. This yield allows the district to produce an average 2.1 Research Location production of forty to fifty tons per day. The maximum production of about 200 tons per day The research has been conducted in the district is attained in July to November. This is an of Ambatondrazaka-Madagascar. This district is enormous production which exceeds the located 150 km in northeast of the Capital City: demands of the local and regional markets. between the latitudes 17º and 18º in the South However, farmers do not have technology for and the longitudes 48º and 50º in the East. preserving and stocking fresh tomato. In addition, due to the inadequate transportation system and 2.2 Data Sources and Data Collection the bad road conditions, their access to the Methods provincial and national markets is very difficult. Hence, a considerable quantity of fresh tomato The research includes both primary and cannot leave the district and is deteriorated at the secondary data. Primary data come from place. The existence of a company that can observations, tomato farmers, tomato pastes transform fresh tomato into paste in the district sellers and importers, government workers, and will not only lighten this problem, but also experts. However, secondary data come from increase the value added of tomato. offices, libraries, and internet materials. Data from three experts, namely, the president of rural Presently, there is no data supporting project development working group, responsible of feasibility studies done by researchers in seeds control in the regional department of Madagascar. However, limited amount of studies agriculture, and the regional director of rural have been carried out by Indonesian development, are used in this research for the researchers. In 2004, [5] have investigated the situation analysis.
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Secondary data are collected through desk 2.6 Market and Marketing Analysis research method, however primary data are collected through interview and questionnaires. The market and marketing analysis includes, but The collection of the primary data intends to not limited to, the analysis of the market demand, deepen and actualize the information provided by market supply, existing competitors, and the the secondary data. Data collection areas are marketing strategy applied [12]. chosen purposely, yet the respondents are selected randomly. 2.7 Managerial Analysis
2.3 Situation Analysis According to [7], managerial analysis variables consist of project implementation planning, According to [8], Strength, Weakness, management level planning, work program Opportunity, and Threat matrix, known as SWOT planning, department separation, and work matrix can be used to analyze the situation. It is distribution. built based on the analysis of the situation’s internal and external key factors. The analysis of 2.8 Financial Analysis the internal key factors aims at identifying the situation’s strengths and weaknesses, however The financial analysis includes variables such as the analysis of the external key factors aims at fund source, operating cost, operating revenue, identifying the situation’s opportunities and and operating benefit [13]. threats [9]. These key factors are related to project feasibility study aspects such as technical 2.9 Environmental Analysis and technological, market and marketing, managerial, financial, and environmental According to [6], the environmental analysis aspects. After their identification, the key factors includes variables such as water and air/wind are matched in order to get strategies such as availability, waste disposal or treatment site Strength-Opportunity (SO), Weakness- availability, and environmental impacts of the Opportunity (WO), Strength-Threat (ST), and project. Weakness-Threat (WT). SO strategy uses the situation’s internal strengths to take advantage of 2.10 Data Analysis Methods the external opportunities, WO strategy aims at improving the situation’s internal weaknesses by 2.10.1 Descriptive analysis method taking advantage of the external opportunities, ST strategy uses the situation’s strengths to The descriptive analysis method is used to avoid or reduce the impact of the external analyze the market demand, market supply, and threats, and WT strategy aims at reducing the the environmental impacts of the project. situation’s internal weakness and avoiding the situation’s external threats [10]. 2.10.2 Technical and technological analysis method 2.4 Project Feasibility Analysis This method is used to analyze the raw 2.4.1 Variables materials, infrastructures, and machines and technologies required.
The variables used for this analysis are grouped 2.10.3 Financial analysis method based on the project feasibility analysis aspects as follows: The indicators used in financial analysis are Net Benefit Cost Ratio (Net B/C), Payback period 2.5 Technical and Technological Analysis (PBP), Net Present Value (NPV), and Internal Rate of Return (IRR).
According to [11], the technical and technological 2.11 Net Benefit Cost Ratio analysis includes variables such as project location and duration, project capacity Is used to compare the positive net present production, and raw materials, building, income with the negative net present income. If infrastructures, machines and technologies Net B/C is greater than 1, the project is feasible; required.
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but if Net B/C is smaller than 1, the project is not 3. RESULTS AND DISCUSSION feasible. Net B/C formula is as follows [14] 3.1 Situation Analysis Bt (1 + r) The result of the survey indicated that in (1) Net B/C = Ct Ambatondrazaka district, tomato cultivation is (1 + r) mostly conducted in four communes, namely, Ambohitsilaozana, Ambandrika, Aferamanga Where Avaratra, and Ambatondrazaka Sub-urbane. Through these Communes, the district is capable Bt denotes the benefits received in a year t; to produce up to about 200 tons of fresh tomato Ct refers to the costs incurred in a year t; per day during the hot season. This is an r is the discount rate; and enormous production which exceeds the needs n refers to the number of the year of the local and regional markets. This case offers a potential opportunity to transform fresh 2.12 Payback Period tomato into paste. In addition, the price of fresh tomato is very interesting. Is a financial indicator used to indicate when the investment will be earned back. If payback period The machines and technologies required for duration is less than investment duration, the tomato paste processing are available. According investment is feasible [15]. to the online survey, a country such as China currently proposes various types of machines 2.13 Net Present Value and technologies that can be used for tomato paste processing. Their prices are reasonable
and their transportation to Madagascar needs Is the difference between the present value of only about 15 to 30 days. cash inflows and the present value of cash outflows. If NPV is positive, the project is Madagascar is divided into six provinces, feasible; but if NPV is negative, the project is not namely, Antananarivo, Fianarantsoa, Toamasina, feasible [16]. NPV formula is as follows [17] Mahajanga, Antsiranana, and Toliary and has a