#TITLE_ALTERNATIVE#

• Main Author: WINARTO (NIM 29106036), WIWIN
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/9639
• Institution: Institut Teknologi Bandung

Contribution of food and estate crops commodities to the national economic growth which is reflected from Gross Domestic Product (GDP) during 2003&#8208;2006 was 9.1% (food crops contributed 7.0% and estate crops contributed 2.1% to the GDP, respectively). The percentage of GDP was almost twice higher than Oil and Gas Mining contribution which is only 5.5%.<p> <br /> <br /> <br /> Economic crises (1998&#8208;1999) which also affected the fertilizers scarcity up to the recent year have directly declined the average growth rate of food and estate crops during the same period. The growth of Food crops commodities have declined during 2003-2005 from 3.6% to 2.6%, that condition was also occur to the Estate crops growth rate which is fell down from 4.4% in 2003 to 0.4% in 2004. However, the growth of Estate crops during 2005&#8208;2006 has increased to 3.2%, but this growth rate was lower than 2003 growth rate.<p> <br /> <br /> <br /> Responding to the fertilizers scarcity recently, especially for chemical fertilizers, such as Urea, SP&#8208;36, ZA, and NPK which is caused not only by lack of LNG (Liquefied Natural Gas) supply, but also by gas price increase, The Government of Indonesia through Ministry of Agriculture had stimulated in producing and applying organic fertilizers for crops agricultural and plantation, by issuing an important policy of 345 thousands ton subsidized organic fertilizers in early 2008. Organic fertilizers are useful of recovering land fertility which had been degraded by long period application of chemical fertilizers.<p> <br /> <br /> <br /> This Final Project analyzing a manufacturing development strategy of municipal organic fertilizers to respond not only to the current situation, but also to the future <br /> <br /> <br /> organic fertilizers demand.<p> <br /> <br /> <br /> Market segment of organic fertilizers are involving food crops (including paddy, soybean, corn, groundnut, cassava, sweet potato, vegetables, potato, shallot, and chili) and estate crops agricultural sector (including oil palm, cacao, rubber, cashew nut, pepper, coffee, sugarcane, and tobacco).<p> <br /> <br /> <br /> Meanwhile, the market size of organic fertilizers for the food and estate crops based on this study are 4.48 million ton in 2010; 5.64 million ton in 2015; 7.15 million ton in 2020; and 9.11 million ton in 2025.<p> <br /> <br /> <br /> The price of organic fertilizers is planned to be respectively Rp 3.000/Kg of Liquid Organic Fertilizer and Rp 2.000/Kg of Granule Oragnic Fertilizer. This pricing <br /> <br /> <br /> decission was structured lower than the current price of NPK&#8208;chemical fertilizers which were Rp 3,200/Kg without Government subsidized price.<p> <br /> <br /> <br /> The application of municipal solid wastes organic fraction separation technology together with thermophilic aerobic digestion technology, the problem on manufacturing production of organic fertilizers can be solved together with the problem of municipal solid wastes management in many cities in Indonesia.<p> <br /> <br /> <br /> By analyzing marketing strategy, manufacturing strategy, and industry analysis as well, organic fraction of municipal solid wastes manufacturing development strategy <br /> <br /> <br /> combined with thermophilic aerobic digestion process that produce organic fertilizers product is the most feasible to be implemented.<p> <br /> <br /> <br /> Municipal solid wastes generation which referred to Bandung City as a case study, will potentially generate raw materials of organic fertilizers, whereas based on <br /> <br /> <br /> projected solid wastes generation of 2010&#8208;2025 are respectively 1,055 ton/day (in 2010); 1,120 ton/day (in 2015); 1,189 ton/day (in 2020); and 1,264 ton/day (in 2025). The content of organic fraction of Bandung municipal solid wastes is approximately 63.56%, hence, will potentially generated organic fraction of municipal solid wastes in 2010 is 671 ton/day; 712 ton/day in 2015; 756 ton/day in 2020; and 803 ton/day in 2025.<p> <br /> <br /> <br /> Under this study and by using the TOWS&#8208;matrix, development strategy of organic fertilizers manufacturing can be developed in 2 alternatives of development Strategy, <br /> <br /> <br /> which are : <br /> <br /> <br /> 1. Development Strategy of Alternative&#8208;1 (with Initial Investment of Rp 77.0 Billion) : Development of the entire manufacturing process from organic municipal solid wastes separation manufacturing process to the organic fertilizers manufacturing process. The Private Investor will purchase municipal solid wastes from the Pemda with amount to Rp 10,000/ton of transported municipal solid wastes as raw materials. In this development strategy Pemda will earn approximately Rp 2.06 Billion of the first <br /> <br /> <br /> commercial year (with 10% increasing rate of each year). <br /> <br /> <br /> 2. Development Strategy of Alternative&#8208;2 will be divided in 2 development schemes, which are : <br /> <br /> <br /> -Pemda Investment (with Initial Investment of Rp 33.5 Billion) : Pemda will develop manufacturing process of organic municipal solid wastes separation, the product will be sold to the Private Investor as organic fertilizer developer with price of Rp 50/kg of organic municipal solid wastes. In this strategy Pemda will earn approximately Rp 6.4 Billion of the first commercial year (with 10% of increasing rate); <br /> <br /> <br /> -Private Investment (with Initial Investment of Rp 52.5 Billion) : Private Developer will operate manufacturing process of organic fertilizer Selling concept of organic fertilizer products will be collaborated with incumbent <br /> <br /> <br /> fertilizer producers (such as PT. ABC or PT. XYZ) with price compensation up to Rp 100,000/ton organic fertilizer products (with 10% increasing rate).<p> <br /> <br /> <br /> Referring to the feasibility of investment analysis of both development strategy which are analyzed in 3 scenarios of capital structure schemes (60% of Debt; 65% of Debt; and 70% of Debt) with 2 debt repayment schemes (10&#8208;year Debt Repayment and 5&#8208;year Debt Repayment), the result of investment analysis are financially FEASIBLE of the entirely scenarios.<p> <br /> <br /> <br /> Meanwhile, the most financially feasible is Development Strategy of Alternative&#8208;1 with 60% of Debt as capital structure and 10&#8208;year Debt Repayment. The most financially feasible of Alternative&#8208;1 is primarily reliable to the risks exposure sensitivity, such as financial risk, operational risk, sustainability risk, and also political <br /> <br /> <br /> risk.<p> <br /> <br /> <br /> The summary of financial analysis figures of development strategy of Alternative&#8208;1, <br /> <br /> <br /> are as follow: <br /> <br /> <br /> -Initial Investment : Rp 77.0 Billion <br /> <br /> <br /> -Capital Structure : 60% Debt dan 40% Equity <br /> <br /> <br /> -Interest rate of long&#8208;term debt : 14.5% per annum (by using investment loan interest rate) <br /> <br /> <br /> -Debt Repayment Schedule : 10 years <br /> <br /> <br /> -NPV (discounted at WACC 19.48%) : Rp 69,154,324,000 <br /> <br /> <br /> -IRR : 34,63% (greater than WACC 19.48%) <br /> <br /> <br /> -Pay Back Period : 3.19 years <br /> <br /> <br /> -Profitability Index : 1.9 <br /> <br /> <br /> -ROI : 19.03%