Opportunity Analysis of Cow Livestock Investment in Gorontalo

High unemployment rate has encouraged the growth of various business units as job providers for productive age. This study aims to examine the business opportunities of cow farming in Gorontalo region. It uses combination of qualitative and quantitative method. The qualitative method is done by observation and interview. The quantitative analysis is done by calculating cash flow, net present value (NPV), internal rate of return (IRR), benefit cost ratio, and gross margin. The results showed that traditional system of cow farming business by self-management and profit sharing has profitable cash flow, NPV, IRR, BC ratios, and gross margin and worthy for selected. The Cash flow and NPV are positive and IRR level is greater than the required profit level. A semi-modern cow cage system for fattening produces lower cash flow, NPV, IRR, BC ratios, and gross margin. The cages cow breeding produces more attractive cash flow, NPV, IRR, BC ratios and gross margin.


INTRODUCTION Background
The growth of available jobs is smaller than the labor force. It causes higher unemployment in productive age. This is a problem faced by government both at national level and regional level in Tomini Bay area without a solution. The Tomini Bay area is a land and sea that can become a resource to drive the people economy. Resource in livestock sector is one of potentials that can be developed as a driver of economic growth.
Gorontalo region supplied cow to Kalimantan in 1980s to 1990s, but now has stopped. This situation illustrates that the production of cow in past is larger than the needs to make this commodity price was lower than Kalimantan area. The region development increases the demand for beef in this region.
The development of livestock business is not proportional with the increase in cow demand. This region cannot longer supplies the cow to Kalimantan. The cow development in this region should be a concerned to fulfill the level of consumption. The cow development can be done by cultivating and motivating people to develop this business.
Cow farming in this region are still developed in a traditional way. The cow breeders develop cow as a side business beside agricultural sector. These breeders use a lot of feed available around their environment, such as straw, banana stems and grass as the main source of feed for their livestock. It can reduce the cost of feed than breeders who rely on purchased feed. There are still many breeders who breed their livestock in a natural way without technology in field of animal husbandry. This is also an obstacle to optimize the cow farming.
The cow breeding has also been partially done with a semi-modern system that already uses cow cage for livestock while the food is provided by livestock owners. This method was done to overcome the narrower land for traditional breeding. The owner must have an adequate source of animal feed to ensure the continuity of his business.
2. Livestock as a branch of business, the livestock becomes one of business branches occupied by breeders. 3. Livestock as the main business, the livestock as the main business developed by breeder while other businesses are a side business from breeder. 4. Livestock as a sole business, namely a business that is developed without any other business as an additional business for breeder.

Cow Business Development
Many breeders in this region are breeders who develop livestock independently in limited numbers. Some still rely on traditional system and some have managed it semi-modern by applying simple technology to breed livestock, process animal feed and sell their livestock. In traditional maintenance tradition, there is also a profit-sharing system that can provide benefits for both parties, because the animal owners (capital owners) do not have sufficient time to maintain and supervise themselves, so it is given to parties who are considered capable and allow them to maintain and supervise cow directly and periodically. The profit sharing creates cooperation between animal owners and breeders. The desire of cow breeders to do their business is constrained by business capital and cow owner gives the capital. It is profit sharing system. This business can contributes income and improving the standard living of cow breeders. The profit sharing system is under an agreement or joint business. An agreement is made for distribution of profits to be obtained between two or more parties. The amount of determination of profit sharing portion between the two parties is determined according to mutual agreement, and must occur with willingness of each party without any element of coercion (Yunianto, 2015). Breeders with small business scales need the support of facilities and role of stakeholders to maintain value chain of beef and beef supply, Zenal Asikin, et al (2020). Lestari et al. (2017) suggested that a cow farm development should pay attention to availability of feed as a basic capital in business success. The other factor is the ability to increase efficiency in developing a business. Comparative advantage should be utilized and always continue to make improvements to increase competitive advantage.

RESEARCH METHODS Research Type and Location
This study uses a combination of qualitative and quantitative research methods. The qualitative and quantitative approaches are generally done during identification and exploration. Qualitative was conducted to get information from breeders about the methods used to develop cow business in order to get best practice through benchmarking between one breeder and another.
Quantitative method is used to get information about the costs and benefits in a cow farming business through analysis of investment performance. This research will be done in Gorontalo City and Gorontalo Regency.

Data Source
The data in this study comes from primary and secondary data sources. Primary data source is obtained from interviews with cow breeders about their business methods. Secondary data is collected from related documents, journal and papers.

Data collection technique
Data collection techniques will be used to complement to each other. 1. Observation. Observation techniques are used to get data and information of cow development. 2. Interview. Direct interviews with breeders collects the methods, feed requirements, animal feed collection process, information on costs that must be incurred by breeders both from feed and other supporting facilities, as well as the selling value of cow.

Data analysis
Cost benefit analysis ( cash flow ) is obtained from interviews with breeders to get information about the amount of income and costs incurred until the cow are sold. Quantitative analysis is done to get an overview of how to assess the performance of an investment using the formula below.

Net Present Value
This formula calculates the level of cost of capital and cash flow from investment. The investment can be made if the NPV value > 0

Internal Rate of Return
This formula is used to equalize the present value of cash inflows and present value of cash outflows. The investment can be done if value of IRR > required profit.

R/C Ratio ( Return Cost Ratio )
It is the comparison between sales income and the costs during the production process. The livestock business will be profitable if the r/c value > 1. Greater R/C value will increase the profit. The formula to calculate R/C ratio is: RC ratio = total income / total production Soekartawi et al., (1996) stated that a benefits business has R/C > 1. Greater R/C ratio shows more efficient the business, and vice versa.

Gross margin
This formula is reduction between Total Revenue and Total Cost Variable

RESEARCH RESULT A. Traditional cow cultivation system
Traditional cow farming have been developed by community utilizing the available animal feed around the environment. This cultivation is done in a limited number according to ability of breeders to maintain and handle their livestock. Bali cow is most widely practiced cultivation for the easier to breed.

Self-managed cultivation system
Bali cow consist of three female and two cow aged one year. This is an independent community farm where they use grass and other feed during the day. They purchases feed for night such as corn leaves and bran. Assuming that breeder sells bulls that are 2 years old, part of their income cover the cost of feed. The cow care for every year are five heads, this number can still be handled directly by one breeder. Livestock with this cultivation system will better if supported by garden planted with forage grass such as elephant grass, odot or pakchong. This feed can reduce the cost to increase cash flow than the cash flow shown in  This project has positive net present value and may be selected. Positive results indicate that total present value based on expected profit level of 20% can still be achieved or even more. This is evidenced by results obtained that present value is still greater than the total value of investment. The total investment is IDR 34,000,000   Table 3 shows the IRR of this project is 32.69% greater than the expected profit. Therefore, this project can still be a good choice for breeders.

Return Cost Ratio
Return cost ratio is a comparison between the profit and the costs, as shown in table 4.  Table 4 shows the comparison between return and cost ratio are increase. The breeders can take advantage of feed available in their environment such as grass, corn husks, banana stalks to reduce the cost.

Livestock cultivation system with profit sharing
The cow owners will raise the cow to other people who do not yet have the ability to buy cow. It will make them do not bear the cost of feed. Table 5 shows the analysis of five female Bali cow which are ready to produce. The total investment value is IDR 40,000,000. This system can help those who do not have the ability to buy cow for breeding will get a share of livestock. Meanwhile, livestock owners are not bothered by cost of feed because the animal feed is fulfilled by people who take care of their livestock. 17,500,000 11,250,000 17,500,000 12,500,000 24,500,000 Cash Flow Cultivate profit sharing system Breeding income is earned for one year old cow. The advantage of breeding is that cow up to one year do not require a lot of feed but the economic value achieves 3.5 million. Assuming 5 cow produce 1 cow after one year it becomes IDR 17.500.000 (3.5 million x 5 ). Female cow at 2.5 to 3 years old will already to produce. Breeder can be get new female cow in 5th year.
Fattening income increase for cow between the ages of 1 year to 2 years is 22,500,000 (4.5 million x 5 cow). The price increase of cow from one year to two years of age is divided by person who takes care of cow. Cow in 2 to 3 years old develop into can be fertilized for female cow and sold to bulls. This cultivation can help breeders who do not have the ability to buy livestock by obtaining livestock from people who have the ability to provide livestock for cultivation. Table 6 shows the Net Present Value of profit sharing system cultivation.  30% + 0.54% = 30.54% The IRR for this project is 30.54%. It is greater than the expected profit. Therefore, this project can be selected by breeders. The project age of five years has IRR rate of 30.54%

Return Cost Ratio and Gross Margin
There is no Return cost ratio and Gross margin in profit sharing system for livestock owners because they do not bear the cost of raising livestock. The cost is fully borne by person who raises the cow.

B. Semi Modern Cow Cultivation.
This cultivation was developed with a cage system. Breeders provide the necessary facilities such as cow pens with livestock manure waste storage and grass chopping machines. Cow feed is provided by breeders, most of which are purchased such as tofu dregs, corn leaves, bran, kale, straw and appetite-enhancing vitamins.
The research samples are fifteen Bali cow and for one year capacity there are two turnovers of domesticated cow. Therefore, the sales for a year are thirty cow. The price for this calculation is under normal conditions. The difference between the selling price and purchase price for fattening for 4 to 5 months is 2 to 3 million. The selling price will higher at Eid al-Adha.
This cow farming cultivation has relatively small cash flow compared to sales turnover from first year to sixth year. The high cost of feed becomes the cause of small cash flow . The farmers should reduce the cost of animal feed by having a feed bank to meet feed sourced from forages such as elephant grass, odot, pakchong, straw, kale. Breeders need to provide land or use unused land to plant grass for their livestock feed.

Cow Feeder
The samples are fifteen Bali cow with two turnovers for a year. The sales for a year are thirty cow. The calculation uses normal price of cow. The difference between the selling price and purchase price for fattening for 4 to 5 months is 2 to 3 million, as shown in table 8.   Table 11 shows that the returns obtained by cow fattening with cage system is profitable but still below the expected profit level. The Gross Margin of semi modern cow fattening system is shown in table 12  Table 12 shows that fattening with this system still gets a gross margin, but the percentage is still small compared to traditional system.

Breeding Cow
Cages cow breeding will provide greater benefits than cow fattening. The income earned by one cow up to one year is 3 million to 4 million rupiah, while the feed used is still relatively small. Every cow with good productivity can give birth every year. Four months later the cow is ready to be fertilized. One female for local breeds can give birth to ten or more depending on lust conditions of female cow. Meanwhile, imported cow ( limousine ) can produce about 4 to 5 cow. Cow that are no longer productive are sold as cow beef. Table 13 shows the Cash Flow of cow breeding with semi modern system.    Table 14 shoes the net present value with a positive value of IDR 63.523,698. This means that the project can be chosen as an alternative investment that can provide benefits for breeders. Internal Rate of Return for cow breeding financing with a semi modern system is shown in table 15.  (13,499,432 / 19,585,645) x 5% IRR 30% + 3.44% = 33.44% Table 15 shows the IRR is 33.44% for this investment. It indicates that the project is feasible to choose because the IRR is greater than the expected return rate of 20%. The Return Cost Ratio of cow breeding with a semi modern system is shown in table 16.

Traditional cattle farming
The two cattle farming traditional systems of managed by owners themselves and profit sharing system provides an attractive cash flow value from year to year. A self-managed system can increase the cash flow, but it has limitations where a breeder can raise only five cow. It creates problems if the breeder has more cow.
The two cow farming traditional systems have a positive NPV value and profitable choice. The net present value at an interest rate of 20% provides greater results than the investment value. The internal rate of return in these two models shows a greater value than the expected interest rate. Therefore, this investment is still a profitable choice. In addition to NPV and IRR, the benefit cost ratio and gross margin analyses also show a very attractive value as an alternative investment for breeders.
The cow that can be developed with this model are relatively limited due to ability of breeders to manage livestock. Therefore, the breeder needs land to plant animal feed if this model is developed into a cow husbandry investment model. This method can increase the efficiency of costs incurred by breeders to meet forage sources of feed.

Semi-modern system of cow farming
This system provides a smaller rate of return than traditional. The cow cultivation can be done by fattening and breeding. The cow fattening will produces a relatively small profit. The high cost of feed is the cause. The cash flow is relatively low , negative net present value , internal rate of return of 4.36% is lower than the expected profit of 20%.
The breeders can reduce the cost of animal feed with feed bank to meet feed sourced from forages such as elephant grass, odot, pakchong, straw, kale and corn leaves. Breeders should have land to grow grass for their animal feed. The grass is easier to cultivate compared to corn so that it can reduce the cost of animal feed which dominates maintenance costs. The straw can reduce feed costs by utilizing abundant straw at harvest time. Gorontalo still has a lot of straw that has not been used as animal feed. The availability of cheap feed can increase the cash flow .
Breeders can ferment the straw during the harvest season and stored as feed reserves. Fermented food is used for fattened cow, while breeding cow should use forage feeds to reduce the risk of lower livestock productivity. This feed cost savings can increase cash flow along with lower feed costs.
The livestock entrepreneurs can sell their livestock directly to buyers to increase potential income. This direct selling can increase the expected profit margin, considering the range between the selling price of cow at breeders and traders is in range of 500 thousand rupiah to 1 million rupiah. Breeders can also buy livestock directly from other breeders to get a cheaper price than cow brokers.
Cages is needed for cow breeding. It will provide greater benefits than fattening. The potential income for one cow up to one year old is 3.5 million to 4 million rupiah, while the cost of feed is still relatively small. Cow with good productivity can give birth every year and four months later the cow is ready to be fertilized.
One female cow for local breeds can give birth to ten or more depending on lust conditions of female. Meanwhile, imported cow can produce about 4 to 5 times. Cow that are no longer productive are sold as cow beef. The feed cost dominates the cow farming. Therefore, the feed bank will save the cost of cow breeding and fattening. Lestari et al. (2017) stated that a cow farm development should pay attention to availability of feed as a basic capital in business success. Another important factor is the ability to increase efficiency in developing a business.

CONCLUSION
This study shows that Bali cow that are most widely developed by traditional and semi-modern breeders. This cow is ease develops and the market price can be reached by most consumers so it is also easy to market.
Most of existing breeders carry out livestock breeding either naturally or artificial insemination. The application of this technology can speed up the breeding process for very productive and every year the breeder can get new cow from each female. Cow farm with breeding models is more profitable than cow for sale. Breeding will provide better cash flow, NPV value is positive and IRR is greater than the required level of profit.
Cow cultivation using semi-modern fattening methods produce a negative NPV value, and IRR was smaller than the expected profit level. The traditional cultivation with self-managed cow has better investment performance. Breeders can utilize the feed available in their environment to reduce the cost.
Traditional cultivation with a profit-sharing system has good investment performance and very interesting to apply. The people who have the ability to provide livestock can help poor people who have the desire to raise livestock but do not have the ability to buy cow. This system gives them the opportunity to have livestock. The breeders of semi-modern and traditional methods should uses productive cow breeding to provide a high level.
Breeders should have land to plant fodder such as odot, pakcong or elephant grass which is easy to grow as the main source of feed for their livestock in addition to use straw with concentrate addition to increase the cow growth, both for breeding and fattening. The land for feed sources can increase efficiency to save the feed costs.

Research limitations
1. All breeders do not have financial records from year to year. This research is based on data from observation and interviews with breeders in base year to become a projection of average increase from year to year. 2. This study does not take into account the inflation rate and risk of dry season which has an impact on feed price from forage.