Professional Documents
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R , Vol. 14,Study
No. 10
of (2016): 6615-6628
Fish Capture with Payang Tool before using Electronic Onjhem Fads… ● 6615
Mimit Primyastanto
Abstract: Study on fish capture with payang tool was done in Madura Strait, East Java. This
study was done to determine the feasibility of fish capture with payang tool before using Fish
Aggregating Devices (FADs) of Electronics Onjhem. This study aims were: (a) to analyze the
short-term of R/C level, Profitability, Rentability, and BEP for fish capture with payang tool
before using Fish Aggregating Devices (FADs) of Electronics Onjhem in Madura Strait. (b)
To analyze the long term feasibility using Net Present Value (NPV), Net B/C, Internal Rate
of Return (IRR) and Payback Period (PP) of fish capture with payang tool before using Fish
Aggregating Devices (FADs) of Electronics Onjhem in Madura Strait. This study uses
descriptive method of qualitative and quantitative survey research techniques. The data
collected are primary and secondary data. Short-term analysis was conducted on revenue cost
ratio (R/C), business profits, Rentability and BEP Analysis results of R/C is 1.6524, Profit
from operations is IDR 207,380,400.00 annually, Rentability is 65.2419% and BEP is
4,455.87 kg. Long-term analyses show the Net Present Value (NPV) is 655,661,472.00. Net
B/C is 15.39, Internal Rate of Return (IRR) is 417,35% and Payback Period (PP) is 0.61 or 3
years 6 months faster than grace period of 5 years.
Keywords: Feasibility Study (R/C, BEP, NPV, Net B/C, IRR), payang, Madura, Fish
Aggregating Devices (FADs).
1. INTRODUCTION
1.1 Background
By comparing the value of catch obtained from the exclusive economic zones
(EEZ) of countries where both these conditions are met with those countries,
where this is not the case (Diekert. F.K. et al, 2010). Indonesia is known as a
maritime country and largest archipelago in world, with marine area and
including Indonesian exclusive economic zone (IEEZ) approximately 5.8
million square kilometers or 75% of total Indonesia area. Indonesia is the
world's sixth largest fish producer with volume production of six million
Lecturer at Faculty of Fisheries Socioeconomic, Brawijaya University, Malang, Indonesia
E-mail: 110563@ub.ac.id ; mimitprimyastanto@gmail.com
6616 ● Mimit Primyastanto
tons annually. Former of Ocean and Fisheries Ministry Rokhmin Dahuri also
revealed that Indonesia could become the largest fishery producer in world if
able to increase the fishery cultivation (Fauzi, A. 2004)
Basic properties of all marine fisheries resources are common property.
No one has special rights or prevent others to exploit these resources.
Fishermen race to catch fish as many as possible before preceded by another
fisherman. The presence of economic benefits from fishery makes new
companies also enter to compete in these resources exploitation (Mimit P.,
2012).
Payang ships in Madura Strait generally have a size of 1-2 GT (Gross
Tonnage). Fish capture is still dominated by small-scale enterprises with low
level of efficiency and income. Mukhtar (2008) stated that low income of
fishermen is strongly associated with fishermen ability to access capital,
infrastructure facilities, information, skills and technology.
Study and assessment are needed to know fish capture with payang tool.
One thing to note is production factor and business or economic analysis.
Economic analysis is done to analyze the benefits and feasibility level of
fishing capture with payang tool. Knowing and pay attention to these aspects
are expected to make fish capture with payang tool in Madura Strait will get
optimal fish capture and fishermen profit and increasing the feasibility of
their business in future (Mimit P, 2011a).
Based on above description, it needs a feasibility study on fish capture
with payang tool in order to increase profit of payang fishermen communities
in Madura Strait.
2. METHODOLOGY
Where:
L = Total profits from the submarine for certain period (IDR/month)
M = Capital used to produce the profit (IDR)
(d) Break Even Point (BEP)
According to Riyanto B. (1995) in Mimit P. (2006b), Break Point is a
situation where total revenue equals total cost incurred, there are no
gains or losses,.
FC
BEP =
VC
1
S
Where:
FC = Fixed costs (IDR)
VC = Variable fee (IDR)
S = Sales volume (kg)
Long-term Analysis of a business can be calculated from long period
time of a business. The components calculated are NPV, Net B/C ratio, IRR,
PP, and Sensitivity (Riyanto,B.1995 in Mimit P., 2011c)
(a) Analysis of Net Present Value (NPV)
Net Present Value (NPV) is ratio between PV net cash (PV of proceeds)
and PV investment (capital outlays) over the life of investment. (Umar
H., 2003). Formula to calculate NPV is follows:
n
( Bt - Ct )
NPV = t 1
(1 - i )t
Where:
Bt = benefit in year t
Ct = cost of year t
n = economic lives
i = interest rate
6620 ● Mimit Primyastanto
( Bt Ct )n
tn 1
(1 i )n
NetB /C
(Ct Bt )n
tn 1
(1 i )n
Where :
n
Bt Ct n
Ct Bt
t 1 (1 i )
n
0 and (1
t 1 i )n
0
IRR I 2
NPV2
NPV2 NPV1
X i 2 i1 )
Where:
NPV1 = positive NPV for experiment value of i1
NPV2 = negative NPV for experiment value of i2
i1 = Interest rate
i2 = interest rate (discount rate that produces NPV2).
(d) Analysis of Payback Period (PP)
Payback period of investment is needed to describe the long duration in
order that capital invested can be recovered completely (Husnan S. et al.,
2000).
1
PP =
Ab
Feasibility Study of Fish Capture with Payang Tool before using Electronic Onjhem Fads… ● 6621
Where:
I = The amount of investment costs required
Ab = Net benefit earned each year
Short-Term Analysis
(a) Capital
Fixed and liquid capital are invested to capture fish with tool fishing
gear in Madura Strait. Fixed capital is IDR 42,600,000.00 while the
working capital for each year is IDR 317,863,600.00. Therefore, amount
required to capture fish with payang tool is IDR 360,463,600.00.
(b) Production Cost
Business costs are expenses of activities of fishing effort that must be
spent. These costs consist of fixed cost and variable costs. Fixed costs are
incurred although no fishing activities. Fixed costs incurred by owner
annually. It covers maintenance and depreciation costs as well as the
license fee of payang ship. Fixed costs incurred annually are IDR
10,400,000.00. The costs are divided on into depreciation cost of IDR
5,700,000.00 and maintenance cost and licenses extension annually of
IDR 4,700,000.00.
Depreciation cost is allocation of investment costs for business unit
annually over the life of technical unit. Depreciation cost is not an
element of expenditure money but capital depression due to age of
business unit. This cost is obtained by dividing the investment value of
appliance components with durability (Ghaffar, M. 2006).Maintenance
cost for each unit of payang ship is calculated to all components of fishing
tool. Maintenance is done in form of repair and replacement of damaged
equipment components.
Variable costs is incurred during fish capture activities or often called
operational costs. Variable costs are incurred during the operations in
progress. They are cost of diesel fuel, supplies, ice cubes and retribution
and crew wages based on estimated earnings. Variable costs incurred in
one year for 288 trips is IDR 307,463,000.00
6622 ● Mimit Primyastanto
(c) Revenue
Revenue from fish capture with payang tool is influenced by prices per
kg of fish type caught. Based on calculations, revenue of fish capture
with payang tool is IDR 525,244,000.00 per year. According toEssington
(2010) and Melnychuck et al (2012) focus of the effectiveness of catch
share programs for maintaining catch at targeted level and exploitation
rates, compared to quota-based and effort-based fisheries.
(d) R/C
R/C is the ratio between total incomes (revenue) with a total cost (cost).
R/C ratio analysis is used to see whether the costs incurred can generate
profits from revenues of fish sale. Total revenue (TR) obtained from fish
capture with payang tool for one year is IDR 525,244,000.00. Total cost
(TC) for one year is IDR 317,863,600.00. R/C = TR/TC ratio of 1.6524.
This indicates that fish capture with payang tool is feasible. Revenue cost
ratio (R/C) is comparison of revenue earned and costs incurred to
determine the feasibility of a business at this moment.
R/C = revenue/cost
With criteria:
R/C <1 → the business is not feasible
R/C = 1 → the business is breakeven
R/C > 1 → the business is feasible
Each one rupiah (IDR 1.00) costs to capture fish with payang tool will
generate revenue of IDR 1.6524 as the value of R/C is more than one.
The work done is said likely to generate revenue and can be continued.
This shows that every single rupiah costs of payang unit will generate
revenue of IDR 1.6524, because the value of R/C is more than one, then
the work done can be continued.
(e) Profit
Profit is obtained from the difference between total cost and total costs
used in first year to capture fish. Numbers of trips to capture fish are 288
times per year. The profit here is divided into two, namely; profit before
zakat (PBZ) and profit after zakat (PAZ). Profit before zakat (PBZ)
obtained from the reduction of revenues to operating costs, namely: TR -
Feasibility Study of Fish Capture with Payang Tool before using Electronic Onjhem Fads… ● 6623
Long-term Analysis
(a) Net Present Value (NPV)
Net Present Value (NPV) is a method to calculate the future value of all
projects at this time value(Gittinger, J and Adler, H. 1993). In this study,
NPV is calculated as the difference between the amount of discount
factor the cash invested for project and bank deposit interest rate of 14%.
From calculation in normal circumstances, NPV value is IDR
655,661,472.00. This value indicates excess net cash inflows after the
initial investment is covered. Therefore, it can be concluded that the
business is feasible because the NPV value of its business more than zero
(positive).
(b) Net Benefit-Cost Ratio (Net B/C)
Analysis of Benefit-Cost Ratio (Net B/C) is used to determine the ratio
between the gross revenue with total cost used to know quickly how
much benefit from this business (Kadariah and Karlina, L. 1978). From
Value of Net B/C for fish capture with payang tool (under normal
conditions) is equal to 15.39. It is indicate that the business has greater
benefits than costs. It can be concluded that this business is feasible to
run because the value of Net B/C is greater than one (> 1). Adaptive
management, or more specifically passive adaptive management, is an
approach to managing natural resources that encourages learning from
the outcomes of implemented policies and strategies (Allan and Curtis,
2005;Walters 2007).Another framework is benefit-cost analysis (BCA).
BCA is a well-established and widely-used decision theoretic approach
grounded in welfare economic theory for analyzing trade-offs and
assessing the relative merits of alternative policiesor programs (USEPA,
2000)
(c) Internal Rate of Return (IRR)
Analysis of Internal Rate of Return (IRR) is used to calculate the interest
rate by equalizing the present value of investment with present value of
net cash receipts in future (Kasmir and Jakfar, 2008). From the
calculations, IRR for fish capture with paying tool (under normal
conditions) is equal to 417,35%. This value indicates that interest rate is
417%, present value of net cash inflows equal t initial investment. It can
be concluded that this business is profitable and feasible because the
value of IRR is greater than the interest rate on bank deposits of 14%.
The methodological reference is cost benefit analysis (henceforth, CBA)
Feasibility Study of Fish Capture with Payang Tool before using Electronic Onjhem Fads… ● 6625
5. SUGGESTIONS
Author can gives suggestion below.
To get optimum production, payang fishermen can adopt more advanced
technologies such as electronic onjhem FADs. It can further intensify the
capture at peak fishing season and in turn can create welfare for fishermen
households and creating food security efforts.
Future research should study the analysis of electronic onjhem FADs in
addition to get economic important fish species and also environmental
friendly. It can increase income of fishermen payang and simultaneously
preserving fish resources for sustainable management. Ultimately, it will
ensure food security for future generations.
6626 ● Mimit Primyastanto
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