Gross margin, profitability index, and financial feasibility analyses of potato farming: Empirical facts from Gowa Regency, Indonesia
A Rumallang, M Salam, L Fudjaja, P Diansari

1 Doctoral Program of Agricultural Sciencies, Graduate School of Hasanuddin University, Jln. Perintis Kemerdekaan KM. 10, Tamalanrea, Makassar, 90245, Indonesia
2 Study Program of Agribusiness, Faculty of Agriculture, Muhammadiyah Makassar University, Jln. Sultan Alauddin, No. 259, Gunung Sari, Makassar, 90221, Indonesia
3 Laboratory of Farm Management and Agricultural Marketing, Department of Socio-economics of Agriculture, Faculty of Agriculture, Hasanuddin University, Jln. Perintis Kemerdekaan Km. 10 Makassar, 90245, Indonesia

Abstract

This study aimed to analyze production costs, gross margins, profitability, and financial viability of potato farming in Gowa Regency. Gowa Regency is the largest potato production center in South Sulawesi Province, Indonesia. The sample in this study, which was randomly selected, was 131 potato farmers from a total population of 1,840 people. Then, the data used was primary data obtained from structured interviews using questionnaires that have been made before. In an effort to achieve the objectives of this study, a quantitative approach was used with data analysis methods: cost analysis, revenue, total income, net profit, rate of return, capital turnover, and profitability index. The results showed that potato production costs per growing season incurred by potato farmers amounted to IDR 45,725,516/ha. The largest cost component in this farm was seed cost, which was 42.75 percent of the total cost. Furthermore, the average potato production was 17,951 kg/ha with a selling price of IDR11,351/kg, resulting in a gross margin of IDR158,385,421/ha and a net income of IDR158,043,845/ha. The rate of return on potato production was 3.49 percent and the turnover of potato farming costs was 596.56. The calculation of the profitability index of potato farming amounted to 0.76.

Keywords: Gross margin, profitability analysis, potato farming, Gowa Regency

Topic: Agricultural Socio-economics