Economic Feasibility of Modified Cassava Flour Milling in Gunungkidul Region, Indonesia: A Value-Added Agribusiness Venture

Abstract

Abstract This study embarked on the evaluation of the feasibility of constructing a Modified Cassava Flour (MOCAF) mill in the Gunungkidul Region of Indonesia, a significant cassava producer yet underutilizing its potential due to traditional, low-yield production techniques. The goal was to enhance MOCAF production and leverage its benefits, such as a low glycemic index, to meet contemporary dietary trends. Employing cost-benefit analysis, supported by key financial metrics including Net Present Value (NPV) and Payback Period (PP), we sought to establish the financial viability of this proposed agribusiness venture. Our analysis covered various factory feasibility aspects including market, marketing, technical, technological, human resources, management, environmental, legality, and risk factors. Results indicated the feasibility of the MOCAF mill construction in KWT Ngudi Rejeki, Ngestirejo, Tanjungsari, Gunungkidul DIY, both in operational and financial terms. The mill’s projected payback period was significantly shorter than the maximum threshold (6 years versus 10 years), and the NPV was positive at IDR 49,587,106 over ten years. This study implies that developing MOCAF mills could be a strategic move towards agro-industrial development and food security, advancing the value addition of cassava and providing an attractive investment opportunity for stakeholders in the agribusiness sector.