A STRATEGY BUSINESS OF PADDY MILLING INDUSTRY: DEVELOPING A PADDY MILLING PROCESSING PLANT WITH BUMDES PLATFORM TO INCREASE FARMERS INCOME

• Main Author: Armayasa, Rendi
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/50058
• Institution: Institut Teknologi Bandung

Most people in the village, especially on the island of Java, have a profession as farmers. However, only a small proportion of farmers who carry out the process of paddy milling independently so that makes farmers' income is lower. Farmers usually only sell harvested grain to other individuals (fellow farmers), the private sector, and the government. That is why the high price of rice on the market does not have a significant impact on farmers' incomes. The large gap between the price of grain at the farm level and the price of rice on the market makes profits received not by the farmers. In this research, discussing the project plan for developing a paddy milling processing plant with BUMDes platform to increase farmers’ income. This project is planned to use a Badan Usaha Milik Desa (say BUMDes) platform with a scheme of ownership from the village government and farmers who supply grain regularly with certain agreements. While the equity capital in this project uses a village fund grant that is the authority of the village government. The use of village funds will be realized in two Fiscal Years so that operational activities can only be carried out in the fourth year adjusting to the village government bureaucratic process. In business issues exploration, this project uses the Porter Five’s Forces analysi s method and SWOT analysis (Strength, Weakness, Opportunity, and Threat). Meanwhile, to analyzing the financial feasibility of this project, using three parameters, namely the Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period based on calculating method for free cash flow to the project and free cash flow to equity. Besides, a brief discussion on non-profit business is also discussed. In this research, three scenarios were developed based on machine hour. Out of the three scenarios, the second scenario was the best scenario with 11-hour machines. The results of the free cash flow to the project calculation method in the second scenario show an NPV value of IDR 1.093 billion, an IRR of 16.49%, and a Payback Period of 5.25 years. Also, the results of the free cash flow to equity calculation method in the second scenario show an NPV value of IDR 459.9 million, an IRR of 25.02%, and a Payback Period of 2.42 years. Based on these parameters, this project is financially feasible to implement. The realization of this project is expected to provide financial added value to the village government and village societies, especially farmers.