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298 ISBN 979-587-627-9

FINANCING PATTERN FOR SMALL, MEDIUM, AND LARGE

SCALES BUSINESSES CATFISH CULTIVATION IN SOUTH

SUMATERA PROVINCE

Reza Ghasarma1)

Zakaria Wahab2)

Umar HamdanYulia3)

Hamdaini P.4)

1)2)3)4)Lecturers at Faculty of Economics, University of Sriwijaya

ABSTRACT

The aims of this research are to observe and analyze financial pattern of

catfish business project that will be suitable for micro, small, medium, and

large scale enterprises in South Sumatera Province. This research will apply

survey method by using 30 small scale business-holders as sample

respondents. Data analyzed by using quantitative methods, such as statistical

means and discounted cash flows analysis for calculating the NPV, IRR,

BCR, Payback, and sensitivty analysis. Meanwhile, qualitative method

analysis applied on related information regarding technical, management,

legal, social and economic, risk and environmental aspects. From main

points in technical aspects requirements, the research findings concluded

that projects locations are suitable for small, medium and large scales

enterprises to be implemented. The results of management, legal, social and

economic, risk and environmental aspects analysis are also favorable that

supporting the projects implementation. From investment criteria concluded

that the catfish project is feasible due to the positive NPV, the IRR is

greater than cost of capital, and the Payback period is approximately in three

months less than project economic life. The researchers suggest that the

local government has to act as an avalist, subsidizes the borrowing interest

rates in financial pattern, and provides technical, manajerial, and marketing

assistances for micro, small, and medium scales enterprises. The

consultants from university can also serve as partnership in the financial

pattern.

Key Words: Financial pattern, Micro, Smal, Medium, and Large Scales

Enterprises, Discounted Cash Flows Analysis, and

Investment Criteria.

INTRODUCTION

Background

The role of micro, small, and medium business enterprises in Indonesia is very

important. This micro, small, and medium enterprises sector has contributed about 56,7

percent on Product Domestic Bruto (PDB). The contribution on oil and gas is about

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15%, but observing the from number of business enterprises, this sector shares

about 99% of businesses and give shares 99,6 percent on work employment.

Even during economic crises, the small scale business had done the impotant role in

absorbing employment. During the economic crises small scale business also survive

toward economic recession. Small scale business has been as a safety belt to solve

employment problem. Micro sector has contributed about 36,28% on PDB, small scale

sector has contributed 10,9%, medium business sector has contributed 14,7%,

meanwhile for large business is only 38,1% (Statistical Burreau R.I, 2011).

According to (Bank Indonesia, 2013) in fact, that so many small and medium

scale enterprises still have no empowerment, such as lack of capital, weak ini

technological know-how and limited access to market. Eventhough, the micro business,

small and medium scale enterprises have strategic position in our country development.

This sector has constraint to get financing to support developing its business. From

financing side, many small scale business has problem in getting loan from the bank due

to technical aspects, such as has no collateral on its borrowing and lack access to

banking information. Sudaryanto and Hanim (2002) said the small scale enterprises has

problems, such as working capital, low technical skills, and less ability to master

technology and scientific knowledge. Sudaryanto et.al (2012) another constraint is the

business prospect and planning vision and mission not clear enough. Lack of

information and market networks, not easy to access financing and partnership, and low

capacity of information technology to increase competition. Therefore, it need a synergy

among all parties among small business, government, and micro financial institution.

One of business potential small scale enterprises is managing fish cultivation

business. The Ministry of Sea and Fishing RI (2009) realeased news that fishing

production in Indonesia during the last five years of 2004-2008 showed that the average

national fish production was 5,8 million tons with growth on average 9 percent

annually. One of fish cultivation has been increasing is catfish. Cathfish production has

shown a significant increasingly. The reason for catfish cultivation is due to the demand

for catfish is continuing to grow. Another reasons are catfish cultivation business need

relatively small capital and technical skill. Catfish cultivation is suitable to be developed

by small business. This business will grow faster if it is supported by bank financing

and technical know how assistance from related institutions. Catfish Jumbo

Industrialisasion (Kompas 31/7/2009) said that during the last five years cathfish

production (2004 to 2008) was 80,000 tons and growth by 21 percent. If it is

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compared with total national fish production, catfish production is only 1,5%, but

it grew (21%) more faster than national fish production (9%).

Research done by Setiawan (2010) indicated that catfish supply is elasticity

in the short run and long run showing value are 8,8059 and 10,0985 respectively. It

means that any change of production expectation by percent will increase supply

by 8,8% in the short run and 10,09% in the long run. To support the feasibility of

developing catfish cultivation, it needs a pattern of financing and some other aspects of

financial feasibilility study which is the rate of return on invested capital. The financial

creditors also need to know the pattern of financing to provide for small enterprise

holders. In formulating a financial pattern it must be studied that whether a prospective

business is implemented commercially and technically feasible or profitable. Besides

that it needs to estimate the degree of feasibility on certain business to be developed and

financed by investor and creditors as well. In this research we focus on catfish

cultivation done by micro, small, and medium scale business enterprises.

Problem Formulation

1. How are the profil and feasibility of catfish cultivation: small, medium, large

scale enterprises in financing pattern?

2. How is the financing pattern should be for catfish cultivation done by small,

medium, and large scale enterprises in South Sumatera province?

The Purpose of Research

1. To know and analyze the profit and other aspects of feasibility study micro/

small, medium, and large scale enterprises in catfish cultivation in South

Sumatera Province?

2. To formulate the financing pattern for catfish cultivation done by

micro/small, medium, and large scale enterprises in South Sumatera

province?

The Research Contribution

1. South Sumatera Government can receive policy suggestion and recommendation

in fish cultivation for micro/small, medium, and large scale enterprises in South

Sumatera province.

2. Provide a model lending that useful for bank management and microfinance in

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financing policy and financing activity for catfish cultivation for micro/small,

medium, large scale enterprises in South Sumatera province

LITERATURE REVIEW

Catfish

Soetomo (2007) catfish is categorized as Phylum: Chordata class (animal having

backbone). Catfish can live survive in less oxygen water. Catfish also can live in

polluted organic water in lowland and upland even plateau areas. In mountain area at

700 metres from sea level catsifh growth is not good enough. Catfish “Jumbo” is very

popular for cultivation, it comes from Africa. Catfish is cultivated in Indonesia for

consumption and maintaining a good water quality from polution. Catfish put into

polluted water to clean it up from dirty. It also put in the pool or water reservoir in oder

to prevent from moisquitos. Faver & Faber (2008), has assesed on catfish meat taste

different among people, some people said that catfish has a strong delicious, varieties of

taste, and the rest of people responded no special taste. Jenny Baker (1988), in

Europe, catfish is cooked the same method with in USA. NY State Department of

Health (2008) said that catfish contains high D vitamin.

Reuters (2008) said that

catfish contains low omega-3. In Indonesia, people consume most catfish from

Claridae at the same ordo. The most popular cooking is fried catfish and serve as

“pecel lele”. Ferraris, (2007) said catfish is one kind of fish can live in crowded, it owns

high food conversion for its body, therefore, catfish cultivation is profitable if it is

intensively business done.

Financing Pattern

Pattern ia desain or model that can be used to make or produce something. In this

researh pattern is a financing model that used to finance establishment and/or

developing for a micro/small, medium, and large scale enterprises. In this model

financing foces on bank micro finance and/or non-bank micro financial institutions:

formal, semi, and non formal institutions. Micro finance is a formal, semi, and non

formal to do financial service activities for micro business and low income community.

Krisnamurthi, 2002). Micro finance has special characteristics and suitable for its

constituent, such as: 1) provide services on deposit and loan; 2) Focus on low income

community; and 3) Uses simple system and procedures (Chotim dan Handayani, 2001).

In general, Prabowo dan Wardoyo, (2003) said micro finance can be divided into

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banking micro finance and non-banking microfinance: 1) Bank: BRI Unit, branch office

BRI; 2) Non-bank: big family of microfinance nonbank such as LDP in Bali, BKK in

Central Java island, BKD in East Java and Madura, BMT and BK3D,

Small family microfinance non-bank is doing business by receiving small deposit and

making small loan. Several microfinance programs, NGO (non government

organization/LSM), and thousands of informal association, cooperatives, and others.

Definition of Small Business

The criteria of small business according to Law R.I No. 8 year 1995 as

follows:

a) It has a net worth under IDR 200 million, not including land, and building for the

business, or; b) It has an annual sales under IDR1 billion; c) National citizen of

Republic of Indonesia; d) It is a sole prioprietorship business, not a subsidiary or a

branch of other big business, not owned, controlled, affiliated direct or indirect by

medium and large enterprises; e) It is a sole proprietorship business, not a

partnership, not a corporation, or not cooperatives.

The criteria of micro, small, and medium enterprises according to Law (UU) RI Number

20 year 2008 based on total asset and sales owned by an enterprise.

Table 1

The Criteria of Micro, Small, and Medium Enterprises

No. Enterprise Asset Sales Omzet

1 Micro business Max IDR50million Max IDR300million

2 Small Business >IDR50million– IDR500million >IDR300million – IDR2,5 billion

3 Medium business >Rp500million- IDR10billion >Rp2,5 billion – IDR50 billion

Source: Ministry of Cooperatives and Small and Medium Enterprises RI, 2012

The Agency Theory

A contract is a set of rule which arranges mechanism for profit sharing, and risks

sharing that approved by both parties involved in the business, principal and agent. The

core of Agency Theory is how to desain a contract that can syncronize the interest of

prinsipal and agent if there is conflict occurred between them. (Scott, 1997); (Loudon

and Loudon, 2007). Eisenhard (1989), said the agency theory based on 3 (three)

assumptions: (a) assumption about human traits, (b) assumption about organization, and

(c) assumption on information.

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The assumption on human traits show that human has self interest, limited on

bounded rationality, and risk aversion. The assumption, there is a conflict among

organization members, eficiency as productivity criteria, and asymmetric information

between principal and agents. The information can be seen as a commodity that can be

tradeable. The financing pattern catfish cultivation related with agency theory because it

involves the right and compulsory of fund sponsored with the right and duty of

business partnership. Financing sponsor and micro, small, and medium enterprises

must have committment to mutual understanding the right and duties on agreement has

been signed and approved by both parties.

The Business Feasibility Study

This research applied concept of business feasibility study. Wash J.R (1979)

said a Feasibility Study is an inquiry which results in the determination of that project

which will give the maximum return on invested capital.

The aspects of business feasibility study consists of:

a. Legal aspects analyzes the ability of business people to fulfill legal rule and permit

that needed to run the business in certain areas.

b. Environmental aspects analyzes the suitable of operational environment, closed

environment, and far environment with the business will be carried out.

c. Market and marketing aspects analyze the market potential, prospective demand

and business opportunities in the future.

d. Technical and technology aspects analyze the technical feasibility and the

availalibity of technology that needed to run the business.

e. Manajerial and human resource management aspects analyze the steps of business

implementation and readiness of workforce, unskilled labors and skilled labors to

run the business.

f. Financial aspects analyze the need of capital investment, working capital, rate of

return on invested capital. The principles of investment assessment need

assumptions and analysed based on the net present value. Ross (1998:234)

introduced discounted cash flows (DCF) valuation concept. The investment

assessment uses the “Investment Criteria”, they are: The Net Present Value (NPV),

The Internal Rate of Return (IRR), Benefit – Cost Ratio ( B/C) or The Profitability

Index (PI), and The Payback Period (PB) (Moyer, 1984, and Ross, 2005). In this

research also uses BEP (Break-even point) analysis and profitability ratios, such as

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the NPM (Net Profit Margin) dan ROI (Return on Investment) and the Ratio of

Operating expenses to Sales.

Previous Researches

Researches on financing pattern have been done especially by Bank of Indonesia. Bank

of Indonesia published financing pattern as model lending which can be used by

commercial banks in expanding credit to micro, small, and medium enterprises.

Basically, a model lending stresses on feasibility a business venture to be financed by an

executing bank or channelling bank loans. Therefore, feasibility focuses on financial

aspect of a commodity project that feasible to be financed by excuting bank or

channeling bank.

Research on the small business has done by Umar Hamdan, Syamsurijal, Taufik

Marwah (2003) titled ”The Role of Financial Banking in Enhancing Non-oil and Gas

Exports and Developing Small-business in South Sumatera”. This research studied on

supply and demand sides of loans for small business. Some factors from demad side: the

availability of self-financing, fund provided by partnership, and business managing

performances. From supply side of bank loan, it was found that was low LDR (Loan to

Deposit Ratio) that set up by the bank, bank in consolidation state, and banks still

improved the level of their health. There were lack of support from local government

and related services agencies, lack of business facilities, means and infrastructures. In

order to support the role of banking in expanding credit for micro, small, and medium

enterprises and enhancing non oil gas export, it was needed some concrete contribution

from many related parties.

Research done by Alumni IPB & BI (2012), “Model lending for small business

processing industry Nata Decoco in South Lampung” concluded that on bank behalf

there was no special credit scheme to support nata de coco processing industry. Credit

provided was a general credit with general credit requirement. The effective interest rate

on investment loan was 14,5%, monthly installment and no grace period, and debitor

had to provide self financing by 30%, repayment loan in 3 years to maturity. The

effective interest rate on working capital loan was 14,5%, monthly installment, no grace

period, and must be repaid in 3 years.

M. Syahirman Yusi (2012), has developed a financing model: strategic solution to

empower small agrobusiness in South Sumatera Province, concluded that financing

strategy has a significant impact on small business capital, business climate, banking

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credit, microfinance existing, partnership, multifinance, meanwhile for enterprenuership

has no sifnificance effect on empowering small agribusiness in South Sumatera.

Research on small business also has done by Umar Hamdan & Yulia Hamdaini P.

(2012) with title “Business management and empowerment strategy for food industry in

Palembang city”, using survey method toward 30 small business samples in Palembang

city. The method of analysis were quantitative and qualitative, descriptive statistics,

inference statistics and SWOT analysis. Products of small business samples were

soybeen, chips of fish and shrimps, cake, and bread in Palembang city. The research

findings were as follows: 1) the small scale industry holders have simple organization

and management, 2) most of them were having some problems in getting production

input, absolette facilities, and low quality product; 2) the demand on small scale

industrial products was still increasing continuously, 3) competition among small

businesses was very tight, 4) most of them were facing lack of working capital and

investment fund to expand their businesses and refinancing new production facilities.

To empower the owners of small scale industry for food products in Palembang City,

they can choose SO, ST, WO, and WT strategies that fit to their businesses. We,

researchers, recommended that the small scale industry business holders have to: 1) do

more creative and eficiency in production activities, 2) raise more fund for capital

needed from the foster parent company and/or local bank, 3) receive business

management training program from related government agency, private institution,

business association, and/or university as well. We also recommend that the related

local government institutions had to encourage people to do fish cultivation and soybean

farming. Finally, management of Primkopti in Palembang had to cooperate with

BULOG in doing soybean supply.

Another research also on small industry done by Umar Hamdan and Yulia

Hamdaini P (2013) with title “Working capital analysis for small wood working

industry and welding industry in Palembang city”, using survey method toward 20

small industry enterprises samples. The data analyzed by quantitative and qualitative

method such as table of frequency, cross tabulation, financial ratios, and calculation the

need of working capital for small business. The research findings were 1) the firm

samples have simple organization and management. 2) They have no adequate working

capital. 3) They have financial problems to increase stock of raw materials, cash

reserve, and receivable financing. The writer suggests that the firms have to obtain

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additional working capital needed from the banks, foster parent company, and other

sources of working capital financing to support their future sales.

RESEARCH METHOD

Research Desain

The research desain is starting with data collection, analysis of feasibility studies:

marketing aspect, technical aspect, financial aspect, socio and cultural aspects, legal and

environment aspects, risk aspects, introducing the financing pattern of catfish

cultivation business, and conclusion and recommendation

Data Sources, Method, and Sampling

Data collected by interviewing some staff from related government agencies and

using questionaires toward 30 respondents of catfish cultivation by judgemental

sampling. This research used survey metode. The samples are divided into three

groups, each group consists of 10 samples of business people: 10 (ten) samples for

small scale business catfish cultivation, 10 (ten) samples for medium scale business

and 10 (ten) samples for large scale business, by using criteria as follows:

Table 2

Sampling Method Criteria

No. Catfish Cultivation

Business Scale

Number of

seed

Sales Volume Area of cultivation

1 Micro/small <5000 tails <500 kg/cycle/2months <50M2

2 Medium >5000-10.000

tails

>500 to. 1.000

kgs/cycle/2months

>50- 200M2

3 Large >10.000 tails >1.000 kgs/cycle/2months >200M2

Source: Research team Faculty of Economics Unsri.

Research locations are Ogan Ilir District, Banyuasin District, and Palembang City.

Methods of Data Collection

In order to collect primary data in this research, the researchers used

questionaire as an instrument which has been desained especially for this purpose. The

questionare has been tried-out to make sure its degree of validity and realibility of data

from the respondents.

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Method of Analysis

The methods of analysis are descriptive quantitative and qualitative analysis.

Descriptive analysis give information on a group of data and useful for further

analysis, such as distribution, table, diagram and graphic. Quantitative analysis

focused on finansial feasibility of commodity observed. Qualitative analysis is

applied on formulation of model lending of micro, small, and medium enterprises.

RESEARCH FINDINGS AND DISCUSSION

The Description of South Sumatera Province

Sumatera Selatan province lies on South Sumatera island with the capital city in

Palembang. Geographically, it borders with Jambi province in the north, province of

Bangka Belitung island in the east, Lampung province in the south and Bengkulu

province in the west. Since seventh to twelve centuries, Palembang city already was

famous as central of Sriwijaya kingdom and at 15th century famous as Palembang

Kesultanan.

South Sumatera Province lies between 1 to 4 degrees south latitude and 102

derajat to 106 degree east latitude with total area is 87 thousand square kilometres. The

tofography, on the east part low land, swampy, and influenced by the rise and fall of the

tides. In the west part of Sumatera, there is a mountain ranges, Bukit Barisan, with high

range between 900 to 1,200 meters from sea level. In south Sumatera Province there are

several big rivers which sources in Bukit Barisan (Barisan Hill) and empeties in Selat

(strait) Bangka. The big rivers are Musi river, Ogan river, Komering river, Lematang

river, Kelingi river, Lakitan river, Rupit river, and Rawas river as branches of the

Musi river.

Administratively, South Sumatera consists of 14 districts, 4 cities, 212 sub

districts, 354 town villages (kelurahan), and 2.589 villages. Based on current price of

gas and oil there are four sectors have large contributed on PDRB year 2010: industrial

& manufacturing sector, mining and digging sector, agriculture sector, trade, hotel, and

restaurant sector by contributions respectively: 23,67%’ 21,62%, 16,85%, and 12,70

percent. Geografically, all Sumatera Selatan province area suitable for catfish

cultivation, except in the mountain ranges with cold climate. Catfish cultivation is good

for area below 700 metres from sea level and temperature climate at 25C0 to 30C

0. In

2015, South Sumatera province population was 8.7 million. Population growth in 2015

was 3 percent.

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Marketing, Production, and Finance Profiles of Small Business Catfish Cultivation

Catfish cultivation activity is a part of population means of livelihood in South

Sumatera, especially they are working as farmers and fisherman. Most of small scale

cultivation activities are not for commercial purposes, but for family own consumption.

The city and districts governments have given technical and manajerial aids in fish

cultivation to group of farmers and fisherman in the rural areas. Each organization of

farmers has chief, secretary, and some members. These group have been given

knowledge and technical knowhow from related public servants ini technical aspects,

business management, and marketing. Research findings show that some fishermen

have been empowered themselves and doing their business commercially and get access

to bank loans. Eventhough, there are still a lot of farmers and fisherman still awaiting

for supporting from microfinance institutions. The role of consultants from University

(community service institution) also very important to empower small business holders

in technical and managerial knowhow, and how to get loan from the financial

institutions, how to market, technical know how in a good fish cultivation, and doing

business management.

From our survey questionnaires we show research objects profile covered

production, marketing, financial aspects for three business scales catfish cultivation.

The small business samples located in Inderalaya, kawasan Sukarno Hatta, Tanjung

Raja, Tanjung Lago village, Sukajadi, Kenten Laut village, Sukamoro village, Talang

Keramat village, kelurahan Sembawa and Pulau Harapan village. From Table 3, sales

volume on average is 415kgs per cycle (one cycle is +60 days). Selling price is

Rp18.700/kg, and sales omset Rp7,79 million per business unit, see in Table 3 (find

Table 3 to Table 11 in the Appendix). The highest sales is 500kgs per cycle and the

lowest 300 kgs per cycle.

Market target is local markets, they are in Ogan Ilir, Palembang, and Banyuasin.

Catfish sold in traditional market, inpres market, and supermarket (such as lotte mart).

The hihest seling omset is Rp10million and the lowest is Rp5,4million per business

cycle. The highest seling price is Rp20.000,- and the lowest selling price is Rp18.000,-

perkg. Furthermore, number of seed, cost of seed, seling expenses, general and

administrative expenses, and medicine expenses, see in Table 4. The table 4 shows that

small business scale need seed 3.320 tails, cost of seed is Rp704 thousand, selling

expenses Rp367,5 thousand, general and administrative Rp710 thousand and medicine

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expenses Rp67 thousand. The average of initial investment, food, and capital structure

small business scale, see on Table 5. The table 5. shows initial investment starting for

small business scale cultivation is Rp4,2 millon on average. Food expenses is relatively

the highest in catfish cultivation that is Rp1.5 millon/business unit. The average asset is

Rp5,4 million by financing structure: debt is1,5million (28%) and self financing

Rp3,9million (72%).

Marketing, Production, and Finance profiles of Medium Scale Business Catfish

Cultivation

The profiles of marketing, production, and finance for medium scale business,

see on Table 6 (in Appendix). Research locations are Inderalaya, Palembang, and

Banyuasin. The locations generally are hinterland areas with Palembang city. The

highest sales volume is 1.000 kgs and the lowest is 700kgs per cycle. The Table 6

shows that sales volume on average is 840kgs per cycle. Selling price is Rp18.900/kg,

ans sales omset is Rp15,82 million per business unit. Market target is local markets in

Inderalaya, Banyuasin, and Palembang. The average production aspects and operating

expenses see on Table 7. The Table 7 shows that medium scale business need seed

6.720tails on average, seed costs on average is Rp1,5 thousand, selling expenses Rp785

thousand, general and administrative expenses Rp835thousand, and medicine expenses

Rp74thousand. The average of initial investment food expenses, and capital structure,

see on Table 8. The average initial investment for medium scale business is

Rp8,4million. Food expenses is as the biggest expenses in this business on average is

Rp5.millon per cycle. The average asset is Rp10,4 million by composition average debt

is 1,7million (17%) and self financing is Rp8,7million (83%).

Marketing, Production, and Finance Profiles of Large Scale Business Catfish

Cultivation

The profiles of marketing, production and finance large scale business can be

seen in Table 9 (see Appendix). The location of sample businesses in Palembang

(Talang buluh and Gandus) and Banyuasin: Airbatu village, Sungai Rengit village,

Kenten Laut and Tanjung Lago villages. Table 9 shows that the highest sales volume is

3.000kgs and the lowest is 2.000kgs per business cycle, selling price the highest is

Rp19.000,-/kg and the lowest is Rp18.000,-perkg. The highest selling omzet is

Rp57million and the lowest is Rp36million per business cycle. Table 9 indicates that

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sales volume on average is 2.350kgs per business cycle. Selling price on average is

Rp18.300/kg, and sales omzet is Rp43,05million per business cycle. Market outlet in

Palembang and Banyuasin. The average production aspects and operating expenses

large scale business see on Table 10. The number of highest seed needed is 24.000 tails

and the lowest is 12.000 tails. The highest cost of seed is Rp6million and the lowest

Rp3million. The highest selling expenss Rp 4,275million and the lowest is

Rp2,025million. The highest administrative and general expenses Rp3juta and the

lowest is Rp1,5million. The highest medicine expenses Rp300 thousand and the lowest

is Rp150 thousand per business cycle. Table 10 indicates that the average seed

purchased for a large scale business 16.400 tails, costs of seed is Rp4,1million, selling

expenses Rp2,823million, general and administrative expenses Rp2,05million and

medicine expenses is Rp205thousand per business cycle. Table 11 shows the average of

initial investment, food expenses, and capital structure. Table 11 indicates also the

highest initial investment of business sample respondent is Rp24million, te lowest is

16million. The highest cost of food is Rp18million and the lowest is Rp12million per

cycle. The highest asset Rp26million and the lowest is R18million. The highest debt is

Rp5 million and the lowest is Rp1million. The highest capital owned Rp22million and

the lowest is Rp15million. Table 11 also indicates that the average of initial investment

is Rp18,8million. The average food costs is relatively the biggest expensds is

Rp14,10million. The average asset owned is Rp20,8million with compoisition of capital

sructure debt financing Rp2,6million (12,5%) and self capital financing is

Rp18,2million (87,5%).

Debt financing relatively low due to “unwillingness” creditors to finance fish

cultivation business, because high risk ini this business venture. The high risks comes

from high fish death, low technical skills of fisherman, and limited in marketing. From

business owner side, they can not meet banking technical requirement to get the loan,

such as permit, NPWP, and self financing by 25% to 30% from total investment needed

and collateral on loan. Collateral can be covered by credit insurance, but insurance

premium relatively high for small business enterprises.

MARKETING ASPECTS

Today, catfish has been marketing in local market, national, and export markets.

Raw meat of cat fish as “pellet” meat, catfish processed such as abon, chips, hotdogs,

and other finished products are continuous to grow its demand domestically and export.

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The importers catfish come from the United state of America, Germany, Korea, Japan,

and Middle East. Catfish consumed at size 7 to 8 tails per kg. Besides that, demand

catfish for fishing pool also increased by size 3 to 4 tails per kg.

Strategy to Market Catfish

The traditional method to market catfish is directly supply to traditional market,

housing, big restaurant, and small restaurant. Today, small, medium, and large scale of

business enterprises use several printing and electronic media to market their product.

Electronic media such as internet has been very useful intensively, because low cost,

eventhough it may be low coverage.

Business Opportunities

Catfish cultivation will encourage backward linkage and forward lingkages

business opportunities. Backward linkages businesses are fish food business, production

facilities, and fish medicines. Forward linkages business are catfish processed: abon,

crispy, and so on. Businessman also can open special restaurant catfish “pecel lele”,

fishing pool, cultivation training program, and others. From survey findings, we get

information that at the time being catfish cultivation production has a limited market in

local market, traditional market, and small restaurant “pecal lele”. In general, local

production absorbed by traditional market and restaurant in rural city areas.

TECHNICAL ASPECTS

Location of Catfish Cultivation

Surya Gunawan (2016); Mochtar Hadi (2015); and research team of FE Unsri

(2016), approved that location of catfish cultivation can be done everywhere high land

and low land. Cathfish site can be at garden, sawah, house yards, pool, lake, unused

land, and unused building. The area of cultivation can be matched with production

scale. The large area needed is between 50 to 200 square meters, the more pools made

up the more area needed. For small scale cultivation need bout 50m2, for medium scales

is <100m2, and for large scale is more than 200 square meters. The height area has to

be 1 to 700 metres from sea level with medium rainfall. For land area is more than 700

meter from sea level is not good enough for catfish cultivation, because cool weather

can cause catfish methabolisme not growing maximum. The standar temperatue is 25 to

280C. For larva growth it need temperature about 26 to 30

0C.

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Kinds of Land. Water supply, and Type of Soil and Sunshine

The type of goos land is alluvial, muddy, and wet, with slinting from water

supply 5 to 10%. Water must be available enough as needed. Soil Ph is between 6,5 to

8; oxygen contain minimum 0,3ppm; CO2 less than 12,8 mg/litre and ammonium

147,29-157,56 mg/litre. Sunshine is very omportant to support the natural food in the

pool. The pool has to be given shadow. If used indoor system pool, it must be given

water heater.

The location of survey at Inderalaya (OI), Tanjung Raja (OKI), and Sukarno

Hatta highways, Borang area, Kalidoni area, Tanjung Api-Api area, Talang kelapa sub

district, Air batu, Sungai Rengit, Sukamoro/Serong, Sembawa, dan Pulau Harapan

(Banyuasin), Kenten Laut, Tanjung Lago, Talang Keramat, Talang Buluh, Sukajadi,

and Pangkalan Benteng, can be concluded those areas are suitable for catfish cultivation

sites.

FINANCIAL ASPECTS

The Analysis of Small Business Scale Catfish Cultivation

Capital Investment Requirement for Small Business

To start small business scale catfish cultivation need Rp300 thousand for

materials such as bamboo, nails, and pool canvas. Cost for land is not calculated and no

labor cost to start the business.

Production Costs Catfish Cultivation for small business

Production cost for small scale business catfish cultivation is Rp575.000 per

business cycle for seed, food, and medicines. Seed and food costs are the highest costs,

respectively, Rp250.000 and Rp200.000,-

Profit and Loss Projection for Small business Scale

Sales volume projected at 150 kgs, seling price Rp20.000,- it comes to sales

omzet Rp3 million per business cycle. Total costs Rp1.175,-tousand, it will make a

profit of Rp1.825.000 per business cycle, see at the following Table.

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Table 12

Profit and Loss Projection for Small scale business

Description Unit Volume Selling Price Total

Sales kg 150 20,000 3,000,000

Investment costs 300,000

Production costs 575,000

Miscelaneous 10% *P 300,000

Profit 1,825,000

Source: Research team Faculty of Economics Unsri

The Analysis of Medium Business Scale Catfish Cultivation

The Need of Investment Costs for Medium Business Scale

This business need a initial investment of Rp532.500 to purchase of bamboo,

cancas, and other means of production. This cost is not including land and labor costs.

Production Costs for Medium Business Scale

`Production costs consist of seed, fish food, medicine, labour costs, and deprecation

total costs Rp3.766.250,-.

Profit and Loss Projection for Medium Business Scale

The estimate profit and loss for medium business scale catfish cultivation as

follows:

Table 13

Profit and Loss Projection for Medium Business Scale.

Description Unit Volume Selling Price Total Rp

Sales kg 500 20,000 10,000,000

Production costs 3,766,250

Operating costs and others 10% *P 1,000,000

Profit 5,233,750

Note.: Harvest 70%x 5.000 tails:7 tails/kg

Source: Research team of FE Unsri, 2016

The Analysis of Large Business Scale Catfish Cultivation

The analysis for large business scale can be divided into two categories: a)

seeding business, and b) breeding business.

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Seeding business

There some assumptions regarding this large scale business:

1. This business is done by having owned seeding facilities on the area of +300m2

using pool canvas, total 15 units pool.

2. One cycle is 2 months and harvest is done at seed in 5-6 cm lengths sold at

Rp200,- per tail.

3. All food is purchased. Catfish mother is from kinds of Sangkuriang weight 1,5

kgs totalled 30 males and 30 masculines.

4. Each seeding using 2 males and 4 masculines (1:2)

5. One masculine can produce 75.000 eggs/fish mother with death level 30%. So 4

masculines can produce =2x75.000x 70%=105.000 seed/cycle.

6. Water from pool or river. Kakaban neede 8 units @ Rp30.000,-

7. Other means are ember, net, pump, plastic, jerigen, and oxygen.

8. Warehouse and labour camp 6x4 m.

9. Labour are 2 workers and paid Rp1,5million/man/cycle.

The Initial Investment Need for Large Business Scale: Seeding

The total investment needed for large business scale is Rp20.740.000.- For

making pool is Rp7,5 million, guard hut is Rp5million, and purchasing of fish seed is

Rp2,5juta.

The Estimate of Operating Expenses for Large Business Scale: Seeding

Operating expenses are Rp11,2 million. These costs consists of food for fish

mother, food for larva, labor costs, electricity, medicine, and miscellaneous. Food cost

for fish mother is Rp840 thousand, for larva food Rp4,5 million, medicine is

Rp250million, labour Rp3million, and electricity Rp300 thousand, depreciation is

Rp2.07million, and miscellaneous Rp1,037 million.

Estimate of Profit and Loss Projection for Catfish Cultivation Large Business

Scale

The estimate of Profit and Loss Projection for catfish cultivation for Large

business scale as follows:

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Table 14

Profit and Loss Projection for Catfish Cultivation Large business Scale

Description Unit

Sales

Volume

Selling

Price/Kg Total

Sales Ekor 100,000 175 17,500,000

Production Costs

11,251,000

Profit per cycle

6,249,000

Profit Annually

5 siklus

31.245,000

Source: Research Team of FE Unsri

The Analysis of Feasibility Investment of Large scale Catfish Cultivation: Seeding

The feasibility of Project investment analysis catfish uses: Operating Cash Flows

(OCF) of seeding activity, The Net Present Value (NPV), The Internal Rate of Return

(IRR), the Benefit – Cost Ratio ( B/C) or The Profitability Index (PI), and the Payback

Period (PB)

Asumptions:

1. OCF= EAT plus Depreciation. Tax is not calculated in Earning after tax (EAT).

2. Financing structures using bank loan and other source is Rp10million by interest

rate on loan is 15% anno or interest payment per cycle is 1/5x 15%x

Rp10million= Rp300thousand (per two months)

3. One years is 5 cycles.

4. Salvage value based on book value of asset is 50% from total initial investment.

OCF seeding business activity see on the following table:

Tabel 15

Operating Cash Flows of Catfish Cultivation: seeding

Cycle Initial Investment EAT Depreciation Interest payment OCF

- 20,740,000 6,249,000 2,074,000 300,000 8,023,000

1

6,249,000 2,074,000 300,000 8,023,000

2

6,249,000 2,074,000 300,000 8,023,000

3

6,249,000 2,074,000 300,000 8,023,000

4

6,249,000 2,074,000 300,000 8,023,000

5

6,249,000 2,074,000 - 8,323,000

Salvage Value

10,370,000

Source: Research Team of FE Unsri, 2016

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The analysis of feasibility investment of catfish seeding business using DF 15%

because interest rate on oan is assumed by 15%. The results are:

THE NPV (IDR) 11,310,063

THE B/C RATIO 1.55

THE PAYBACK 5 months 2,5 cycles

THE IRR

41.84%

The NPV positive is Rp11,3million, the BCR 1,55 greater than one, the Payback

period is 2,5 cycles. The IRR calculated using interpolation method by DF 15% and

60%, it gets the IRR 41.84 percent. The IRR is above interest payment on loan

(assumed 15%) it means that catfish seeding activity is feasible to be implemented.

Catfish Breeding Business

Asumptions

The feasibility analysis for large scale breeding activity using assumptions as

follows (Surya Gunawan,2016; also done by Research Team of FE Unsri, 2016)

1. Breeding activity is done in owned land with large 500m2 .

2. Nmber of pools are 16 pools with measurement 2x5x0,7m

3. The seed to be put in the pool has a length 7-8 cm buying price Rp250,-/tail

4. Each pool has 3.500 tails of seed with spreading 350 tails per square meters

5. For 16 pools needed seed about 3.500x16 pools=56.000 tails of seed.

6. Maintaining for 2 months, in a year 5 cycles.

7. Catfish will be harvest 90 percent by average measurement 100 gram/tails.

8. Seling price catfish Rp17.000/kg (based on survey the price varies between

Rp15.000 to Rp20.000)

9. Fish foold used buying from supplier of factory pelet food, pelet owned made as

an alternative.

The Initial Investment Need for Catfish Cultivation Large Business Scale:

Breeding

The total investment needed for large business scale breeding is Rp32million.

The investment costs are for making pool Rp16 million, water pump Rp4million, guard

hut Rp5million, electric facility Rp3 million, seeding facility Rp1million, and food

processing machine Rp3 million.

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The Estimate of Operating Expenses for Catfish Cultivation Large Business Scale:

Breeding

Operating expenses are Rp70.6 million. These costs consists of food is

Rp47,5milllion, seed costs Rp12,5million, labor costs Rp3million, electricity is Rp700

thousand, medicine is Rp500 thousand, food cost for fish mother is Rp840 thaousand,

for larva food is Rp4,5 million, depreciation is Rp3,2million, and miscellaneous is

Rp1,037 million.

Estimate of Profit and Loss Projection for Catfish Cultivation Large Business

Scale.

Estimate of profit and loss for catfish large business (breeding) see on the

following table (not including interest payment and taxes)

Table 16

Estimate profit/Loss Catfish Cultivation Business Large Scale: Breeding

Description Unit Volume Seling Price Rp Total Rp

Sales kg 5,000 18,000 90,000,000

Production costs 70,600,000

Profit per cycle 19,400,000

Profit Annually 5 cycles 97,000,000

Source: ResearchTeam of FE Unsri

The Analysis of Investment feasibility of Large Business Scale: Breeding

The assessment of feasibility uses:

The Net Present Value (NPV)

The Internal Rate of Return (IRR) .

Benefit – Cost Ratio ( B/C) atau The Profitability Index (PI)

The Payback Period (PB

BEP (Break-even point)

Profitability ratios: NPM (Net Profit Margin), ROI (Return on Investment), and

Operating expenses to Sales

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Operating Cash Flows (OCF)

Table 17

Operating Cash Flows on Catfish Large Business Scale: Breeding

Period Initial Investment EAT Depresiation Interest OCF

- 32,000,000

1 19,400,000 3,200,000 300,000 22,300,000

2 19,400,000 3,200,000 300,000 22,300,000

3 19,400,000 3,200,000 300,000 22,300,000

4 19,400,000 3,200,000 300,000 22,300,000

5 19,400,000 3,200,000 300,000 22,300,000

Salvage Value 16,000,000

Source: Research team of FE Unsri

The result of NPV, B/C ratio, IRR, and Payback at DF 15% and DF 80% on

breeding business as follows:

THE NPV

50,707,886

(5,012,947)

THE B/C RATIO

2.58

0.84

THE IRR

74.15%

Source: Research Team of FE Unsri

From the above table, the NPV at DF 15% positive amount to Rp50,7million,

BCR is 2,58 more than one 1, and the payback period is 2,58cycles or 5 months. The

NPV at df 80% negative (Rp5,12million), the BCR 0,84 and the IRR is 74%. The IRR

is above interest rate on loan 15%, it means this project is feasible to be implemented.

The BEP (Break-even point) and the Profitability Analysis

BEP and profitability analysis based on normal scenario normal, as folows

BEP/ Volume (Kg) 1,559

BEP/Omset (Rp) 28,060,837

Kapasitas Produksi (%) 31.2%

PROFITABILITY:

Net profit margin (NPM) 21.56%

Return on Investment (ROI) 61%

Operating Costs/Sales 78.4%

Source: Research Team of FE Unsri

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The Sensitivity Analysis

Asumptions:

1. If there is changing from normal scenario to pessimistic scenario, it can cause

decreasing of sales by 10%, but it also can raise variable cost per unit by 10%.

2. The financial data analyzed for large business scale catfish breeding.

3. BEP analysis approved by using profit and loss margin contribution format.

4. From profit and loss statement can be calculated profitability ratios.

The sensitivity Analysis sensitivitas composed into 3 scenarios:

1. Constant selling price, but variable cost perunit increased by 10%

2. Selling price declines by 10% and variable costs has no change.

3. Selling price declines by 10% and variable costs per unit increase by 10%

The result of financial calculation as follows:

ANALYSIS OF BEP, SCENARIO: 1

BEP/ Volume (Kg) 2,057

BEP/Omset (Rp) 37,029,604

Production Capacity (%) 41.1%

PROFITABILITY SCENARIO: 1

Net profit margin 13.03%

Return on Investment 37%

Operating Costs/Sales 87.0%

ANALYSIS OF BEP, SCENARIO: 2

BEP/ Volume (Kg) 2,370

BEP/Omset (Rp) 66,845,380

Production Capacity (%) 47.4%

PROFITABILITY, SCENARIO: 2

Net profit margin 11.23%

Return on Investment 28%

Operating Costs/Sales 88.8%

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ANALYSIS OF BEP, SCENARIO: 3

BEP/ Volume (Kg) 3,751

BEP/Omset (Rp) 66,845,380

Production Capacity (%) 75.0%

PROFITABILITY, SCENARIO 3

Net profit margin 3.37%

Return on Investment 34%

Operating costs/sales 96.6%

Proposed Financing Pattern of Small, Medium, and large Business Scales Catfish

Cultivation

There are some potensial creditors to support financing for small business scale

in South Sumatera province, such BRI Unit, Bank of Sumsel Babel, and other public

and private banks which have credit schemes for small business. Besides that there are

some public corporations that have Corporate Social Responsibility programs that can

be used to serve small business loans application.

In expansion credit the banks follow the credit analysis process such as using the 5C

(Character, Capital, Colateral, Capacity, and Condition). In financing pattern, it is

expected that the creditors also give training program such as business management,

technical know how and marketing aspects for small business.

The Steps in Financing Pattern for Small business holders

First Step. Consultant has done a feasibility study of certain small business project

commodity to find out the feasibility of the project. Lecturers from the University can

do such study work. Step 2. From the feasibility result, the consultant can write a small

booklet or leaflet of feasibility study containing model lending consist of same aspects of

feasibility stufy. This booklet is important for small business holder as a guidance in loan

proposal to the bank/microfinance. Step 3. Small business holders proceed loan

application to the bank. Loan proposal has matched with bank credit requirement and

follow model lending that prepared bby consultant. Based on loan proposal, creditors

will process loan application for small business holders applicant. Bank can cooperates

with university lecturer staff in monitoring small business debtors. Step 4. Bank/

microfinance or foster parent company will decide interest on loan, period of

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installement, grace period if any, and forcing self financing for small business

approximately 30% from total project financing. If loan need collateral, local

government can take action as avalist or subsidize interest on loan, or insured the loan to

Credit insurance company, such as Askrindo. Step 5. Consultant can help

bank/multifinace/poster parent in doing credit monitoring. For this service the consultant

can get payment from creditor and/or from small businesss holder who successfully

doing their busineses.

CONCLUSION AND RECOMMENDATION

CONCLUSSION

The research on financing pattern small, medium, and large business scales for catsifh

cultivation in South Sumatera province has been done with the following conclusion

and recommendation as follows:

1. South Sumatera province areas are suitable for catfish cultivation due to land

below +700 meter sea level and temperature between 25C0 to 30C

0.

2. Cathfish cultivation business is a part of people livelihood activity in this

province especially for farmers and fisherman. Most small scale catfish

cultivations are only used for family owned consumption.

3. South Sumatera local government institutions have given technical know-how

and managerial skills for fish cultivation business holders. The research findings

indicate that some cultivation holders have already empowerment, have ability

in marketing and access to bank loan. But some other small holders business

scale still need to be managed by grouping them into group of fish farmers and

fish fisherman in order to access to financial institutions loan. The role of

consultant from the university and related local government staff are very

important to support small scale fish cultivation business holders to be

successful in finding financing, manajerial, technical know-how, and marketing

producyion output domestically and even export.

4. Marketing profiles, production and finance small scale business concluded that

sales volume on average is 415kgs percycle (note there is +60 days for one

cycle). Selling price average is Rp18.700/kg, and sales omzet Rp7,79million per

business unit. Small business needs seed of 3.320 tails, cost of seed Rp704

thousand, selling epxpenses Rp367,5 thousand, administrative and general

expenses Rp710 thousand, and medicine Rp67 thousand per cycle. The average

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initial investment for small business Rp4,2 million. The average cost of food

relatively the highest cost that is Rp1.5 million per business unit. The average

asset is Rp5,4 million and the composition of capital structure is Rp1,5million

(28%) for debt and for self financing is Rp3,9million (72%).

5. The average sales volume for medium business scale is 840kgs per cycle. The

average selling price is Rp18.900/kg, and sales omzet Rp15,82 million per

business cycle. The market targets are traditional markets in Inderalaya,

Banyuasin, and Palembang.

6. The average seed for medium scales catfish cultivation business is 6.720 tails,

cost of seed is Rp1,5million, selling expenses Rp785thaousand, administrative

and general expenses is Rp835 thousand and for medicine Rp74 thousand.

7. The average of initial investment for medium business is Rp8,4 million. Cost of

food Rp5 million. The average asset is Rp10,4 million with capital structure

composition are debt 1,7million (17%) and self financing Rp8,7million (83%).

8. For catfish cultivation large business scale on the average sales volume is

2.350kgs per business cycle. The average selling price Rp18.300/kg, and sales

omzet Rp43,05 million per business cycle. The market targets are local market:

Inderalaya, Banyuasin, dan Palembang.

9. On the average large scale culativation need seed 16.400 tails per cycle, cost of

seed Rp4,1 million, selling expenses Rp2,823 million, administrative and

general expenses are Rp2 million and for medicine cost is Rp205 thousand per

business cycle.

10. For initial investment large business scale on average needs Rp18,8 million.

Cost of food as the largest cost in catfish cultivation is Rp14,10 juta. The

average asset is Rp20,8 thousand with capital structure composition, debt is

Rp2,6 thousand (12,5%) and self financing for capital is Rp18,2million (87,5%).

11. The lower of debt financing in catfish cultivation business due to there is “We

do not want” on creditors behalf to finance fish cultivation business, since this

business is reatively high risks. The risks of this business are due to high death

of fish, low skills of farmers and fisherman in doing such business, lack of

marketing knowledge, access to market, and most if small scales business have

no ability to fullfill the technical requirement of bank loan such as permit,

collateral, NPWP, and ability to serve self financing about 25% to 30% from

total investment need. The collateral on loan can be covered by credit insurance,

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but high premium, or small business loan can be avalist (guaranteed) by local

government. Small business scale can be grouped into small organization in

order to make easy to be managed and trained. Besides that by grouping small

business can do mutual guarantee “tanggung renteng” system in making loan to

financial institution, such bank or non banks.

12. Marketing prospect for catfish is still favourable, at local, national, and even for

export. The importers countries are U.S.A, Germany, Japan, Korea, and Middle

East countries.

13. To start small business scale needs an inital investment is Rp300 thousand to

purchase means of production materials. Production costs are Rp575 thaousand.

Profit on small scale is Rp1,8 million per cycle. For medium scale need initial

investment of Rp532 thousand to purchase materials that used as means of

production. The estimated profit for medium scale is Rp5,2 million per cycle.

14. The analysis for large business scale divided into: a) seeding business and b)

breeding business. For seeding activity: the initial investment consists of making

pool, purchasing water pump, and purchasing mother fish. For seeding activity,

initial investment to make pool, means of seeding, mother fish, water punmp,

electricity installation, which total costs of Rp31,2million. Operating costs

estimates Rp17million. The profit estimates Rp17,8million per cycle. For

breeding initial costs is Rp32million, operating costs are Rp103million per

cycle. The estimated profit for large business scale is Rp68 million. (Not

including interest on loan, and taxes for PPh and PPN).

15. Based on survey location, Inderalaya (OI), Tanjung Raja (OKI), around

Sukarno Hatta highways, Borang, Kalidoni, Tanjung Api-Api, Talang kelapa,

Air batu, Sungai Rengit, Sukamoro, Sembawa, and Pulau Harapan (Banyuasin),

Kenten Laut, Tanjung Lago, Talang Keramat, Talang Buluh, Sukajadi, dan

Pangkalan Benteng areas are suitable for catfish cultivation business sites.

Eventhough the area around Sukarno Hatta highways is not good enough, due to

polluted water, high (ph), and swampy pilling activity that impact on fish death.

16. The analysis feasibility of investment for large business scale of catfhsh for

seeding shows that the NPV at DF 15% positip, dan negative pada DF 60%. B/C

rasio at DF 15% sebesar 1,5 > greater than one and the payback period for 2,5

cycles or 5 months. The NPV DF 60% negative -Rp7,6million, BCR 0,63 and

the IRR is 41,84%. The IRR is good enough because above the interest on loan

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rate, 15%, it means that seeding acitivity in catfish cultivation large scale is

feasible and good to be implemented.

17. For breeding large business scale the NPV at DF 15% has a positive value of

Rp50,7million, The BCR is 2,58 greater than one, and the payback 2,58 cycles

or 5 months that is shorter that 5 years. The NPV at DF 80% negative by

Rp5,12million, The BCR is 0,84 and the IRR is 74%. The IRR is good enough

because it is above the interest on loan of 15%. It measn that this large business

scale for catfish is feasible to be carried out.

18. The BEP Analysis calculating in normal scenario shows that the BEP/Quantity is

1.559 kgs, BEPRp is Rp28 million and BEP production capacity is 31%. The

profitability ratio, using the NPM is 21,56%, the ROI is 61%, and Operating

cost/Sales is 78,4%.

19. The sensitivity analysis composed in 3 scenarios: a) Constant selling price but

variable costs per unit increased by 10%; b) Selling price is declining by 10%

and constant variable cost; c) Seling price is declining by 10% and variable cost

per unit increased by 10%. At seling price constant at Rp18.000,-, but there is

increased in variable cost by 10%, it means that variebl cost increases from

Rp12.740 to Rp14.014 that make up the changing of sales volume BEP

increases from 1.559 kgs to be 2.057 kgs. Sales omzet BEP increases from

Rp28 million to be Rp37 million. The BEP capacity also increases from 31% to

41%. The NPM decreases from 21,5% to 13,03%. The ROI decrease from 61%

to be 37%, and the operating costs to sales also increases from 78% to be 87%.

If selling price declines from Rp18.000 to be Rp16.200 but variable cost no

change as Rp12.740,- this change can make changes in sales volume BEP 1.559

kgs increase to be 2.370 kgs. Sales Volume of BEP increases from Rp28 million

to be Rp66,8 million. The BEP capacity increases from 31% to be 47,4%. The

Profit margin (NPM) will decline from 21,5% to be 12,23%. The ROI also

decreases from 61% to be 28%, and the operating to sales ratio will increase

from 78% to be 88%. In this case, the decrease on sales is more sensitive on

BEP compared the increasiig of variable cost. The decreasing of seling price is

more sensitive on the profitability than the increase of variable costs perunit. If

seling price is declining from Rp18.000 to be Rp16.200 and variable costs

increase from Rp12.740 to be Rp14.014 per unit, it can cause changing in sales

volume BEP 1.559 kgs increases to be 3.751 kgs. The volume omset BEP

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increases from Rp28 million to be Rp81 million. The BEP capacity increases

from 31% to be 75%. The NPM declines from 21,5% to be 3,37%. The ROI

declines from 61% to be 34%, and operating/sales ratio will increase from 78%

to be 97 percent. Eventhough there is a decreasing in seling price and increasing

in variable costs by 10% catfish cultivation business is still survive and can

make a profit.

RECOMENDATION

1. The proposed Financing Pattern for Small, Medium, and large Scales are: 1)

Consultant has to do feasibility study on any project commodity for small,

medium, and large scales in order to know whether a project feasible or not. The

University teaching staff can do such project feasibility studies. 2). From

consultant feasibility study result, it can be seen the feasibility of related aspects.

The consultant study can follows his work by writing a model lending booklet or

leaflet which contains feasibility study on feasible projects to be implemented; 3)

Consultants gives aid on technical aspects to small business scale enterprises in

writing a bank loan proposal and loan application which has to be done according

to the rule of the game that given by the bank or micro finance officers; 4) Based

on credit proposal, bank creditors or microfinance will provide loan, term of

payment, and repayment of loan to the small business applicant; 5) The

bankers/microfinance/foster parent company can provide technical assistance,

managerial business, marketing to small business holders. Bankers, microfinance,

small business holders, and university staff can work together in doing technical

asistance, managerial training, marketing for small businss scale holders.

2. The local government can also assist small scale holders in issuing permit, such

as SITU, SIUP, and NPWP for free of charges.

3. The local government can act as avalist or guarantor on banking loan, and also

can subsidize interest on loan for small business loan.

4. The environment problems face by small business holders such as thieves can

also be handled by groups of small business holders.

5. Small, medium, and large business scale holders can promote their product using

printing and electronic media due to the increasing of information technology

today. Traditional marketing can be continued to traditional market and

restaurant.

Proceeding 2nd Sriwijaya Economis, Accounting and Business Conference 2016

326 ISBN 979-587-627-9

6. Small, medium, and large business scales catfish cultivation will attract

opportunities backward linkage and forward linkages, such fish food businesses,

means of fish production, seed, medicines, and finished product of fish meats. It

also fishing pool, fish cultivation training program, and so on.

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