INSIST Vol. 4 No.1, April 2019 (188–190) http://insist.unila.ac.id/ DOI:10.23960/ins.v4i1.188 Received: 22/06/2018 Accepted: 05/01/2019 Published online: 01/04/2019 INSIST Vol. 4 No. 1, April 2019 (188 - 190) 188 Abstract—This research aims to analyse financial feasibility of red chili peppers (Capsicum annum L.) seedling business conducted at Karanganyar, Poncokusumo, Malang. The respondents were farmers who breed red chili peppers and the data collected from March to April 2018. The primary data was collected through interviews based on structure questionnaire to obtain information from selected farmers in the study area. The qualitative study is utilized to analyse the financial feasibility based from Net Present Value (NPV), Internal Rate of Return (IRR), Net Benefit-Cost Ratio (BCR), and Payback Period (PP). This study findings showed a positive NPV (IDR 15403419), IRR is 23.19%, Gross B/C is 1.05, Nett B/C is 1.13, BCR > 1 (1.05), and PP as 19 months. Despite the costly investment and development, the red chili peppers seedling business is financially feasible. Keywords— Financial Feasibility, Red Chili Pepper Seedling I. INTRODUCTION hili peppers considered as a strategic commodity in agriculture, both red chili peppers (Capsicum annum L.) and cayenne peppers (Capsicum frustescences L.). Despite being a vital commodity, the price of chili peppers remains fluctuated in Indonesia. In certain period, the price of chili peppers increased significantly, but dropped to the cheapest in other time. Due to this yearly price fluctuation, the price of chili papers contributes toward inflation in Indonesia. In Indonesia, red chili peppers play important roles both in backward linkage as well as forward linkage, notably for food products, condiment, and sauce. Various food products required red chili peppers as basic ingredient, thus resulting in high demand of red chili peppers as well as its seedling seeds. Previously, the farmers sow all their seeds through conventional methods by themselves only to meet their farming needs, including sowing chili peppers seeds. Due to the high demand, farmers need to create a solution to accelerate the cycle of planting red chili peppers aiming to accommodate its high demand from the market. Consequently, the farmers can promote the red chili peppers seedling in more of industrial ways that are both time- Manuscript received June, 22, 2018. This work was supported in part by the Grant of Kementerian Ristek DIKTI 1 University of Muhammadiyah Malang, Indonesia (corresponding author to provide phone: +6281-233-93080; fax: +62341-460782; e-mail: dyah.erni.w@ gmail.com). 2 Department of Agribusiness, Faculty of Agriculture and Animal Science, University of Muhammadiyah Malang, (e-mail: jabaltarik2012@gmail.com). 3 Department of Animal Science, Faculty of Agriculture and Animal Science, University of Muhammadiyah Malang, (e-mail: winaya1964@gmail.com). 4 Department of Agrotechnologi, Faculty of Agriculture and Animal Science, University of Muhammadiyah Malang, (e-mail: sukorinihenik@gmail.com effective and cost-effective compared to sowing chili seeds by themselves 4 . At the same time, the seedling business opening promising business opportunities for farmers and they are encouraged to invest more in seedling tools, such as greenhouse and other seedling tools. It might be costly to invest for seedling tools, but it is relatively profitable and cost-effective in longer term. In the Province of East Java, there are two red chili peppers farming centre which are Malang and Kediri 5 . The centre in Malang was starting on their red chili peppers seedling business. Thus, this study aims to analyse financial feasibility of red chili peppers (Capsicum annum L.) seedling business conducted at Karanganyar, Poncokusumo, Malang as one of the red chili peppers farming centres in Malang. II. MATERIALS AND METHODS A. Study Area This study carried out in Karanganyar, Poncokusumo, Malang. The sampling of study area was purposively chosen with the consideration as it is one of the centre of red chili peppers seedling business in Malang. In addition, there were a numerous of farmers that owned greenhouses and appropriate seedling tools. The data obtained through a survey, observations, and interviews. The research team used a structured interview guideline to obtain information from selected farmers in the study areas. B. Financial Analysis To evaluate the economic feasibility of investment in red chili peppers seedling tools, the research team counted net present value, internal rate of return, benefit cost ratio, and payback period. The following equations were used to analyse the data 6 . Net Present Value (NPV) The NPV represent the discounted value of the net cash inflows to the business. In this study, a discount factor of 12% was used to discount the net cash inflows as the opportunity cost of the capital, as follows: NPV = ∑ − (1+)  = =1 (1) Where, NPV : Net Present Value in period ‘t’ Bt : Benefit form chili seedling per year Ct : Cost of cultivation per year i : Discount rate t : 1,2,3…n, the life plantation across the study area n : Number of years Financial Feasibility Analysis of Red Chili Pepper Seedling at Karanganyar, Poncokusumo, Malang Dyah Erni Widyastuti 1 , Jabal Tarik Ibrahim 2 , Aris Winaya 3 , Henik Sukorini 4 C eSSN: 2502-8588