analysis of mocaf substitution capability to wheat flour and its

Analysis of Mocaf Substitution Capability to Wheat Flour and Its

Business Feasibility

Dr. H. M. Riza Firdaus, SE., MM, Dr. Hastin Umi Anisah, SE., MM, Widyarfendhi, SE., M.Si,

Wimby Wandary, SE., MM

Lambung Mangkurat University, South Kalimantan

Abstract

The increasing consumption of wheat flour-based food in Indonesia in the last several decades raises the import of wheat. The limited capacity of wheat production in fulfilling national needs creates continuous deficit which can burden the national spending. Advanced study is needed to solve the deficit of this basic need, especially through the developing of flour made of modified cassava as a substitution to wheat flour.

The substitution capability of modified cassava flour (Mocaf) which is prepared to replace the wheat flour is tested by using experiment technique and literature review. Using the various proportion scheme of mocaf, the products produced from experiment should be similar with their counterparts in terms of taste, flavor, texture, and color.

The study resulted from the experiment shows that mocaf has a substantial capability in substituting wheat flour. Hence, it is feasible to develop mocaf-based product industry in concern with cost reduction.

I. INTRODUCTION

1.1 Background of the Study

Indonesia is a rich country blessed by not only non-renewable but also renewable

natural resources. However, non-renewable resources such as gold, irons, coppers, nickels,

etc. have decreased in number. According to Indonesian Commercial Newsletter (2011),

metallic mineral deposits in Indonesia are predicted to last for only 24 to 33 years from

now, excluding iron ores which have more deposits compared to other metallic minerals.

Moreover, the amount of other mining commodities such as coals, petroleum, and gases are

also decreasing year by year.

Aside of the optimization of mining sector through the creation of value-added

commodities in mining industries, Indonesia should also pay attention to the development

of renewable resources industries. Agriculture and plantation are two sectors of the

renewable resources industries that can potentially give benefits to the country.

Geographical condition of Indonesia with fertile soil topography is an ideal environment to

develop agricultural and plantation sectors.

Value-added commodities of agriculture and plantation products are very potential to

be created not only because such commodities are needed to fulfill the needs of societies

but also because the creation of value-added commodities gives multiple advantages for the

societies. In addition, Indonesia can also reduce its dependency to other imported countries

by making use of local products to substitute commodities being imported.

According to Asosiasi Pengusaha Tepung Terigu Indonesia (APTINDO), wheat flour

consumption in 2011 exceeded 4.6 million tons which is higher compared to the

consumption in 2010, 4.3 million tons. Despite the increasing consumption of wheat flour

in the country, the capacity of national wheat production is still relatively low,

approximately 10% of the total need of wheat for overall domestic wheat flour productions.

The price of wheat flour in domestic market is pretty high, between Rp. 7,000 to Rp.

10,000 per kilogram. According to data from DISPERINDAG, September 2011, the

national average price of flour within September 2010 to September 2011 period is

relatively stable over Rp. 7,000,- with 0,3 percent of monthly price volatility coefficient.

However, there are significant price differences among cities all over the country, starting

from the lowest of Rp. 6,900,-/kg in West Indonesia to the highest of Rp. 10,200,-/kg in

East Indonesia. In the future, the market price will get higher as the direct impact of 5%

import duty implementation, in accordance with Regulation of the Minister of Finance

Number 13/PMK.011/2011 applicable as per January 1st , 2012 (Emil, 2011).

The low productivity of wheat in Indonesia is caused by the fact that wheat is a sub-

tropical plant which cannot grow optimally in any country with tropical climate such as

Indonesia. Until now, there is no genetically engineered wheat that can grow well under

Indonesia’s climate. Thus, wheat substitution product should be considered to be used as

raw material to make flour. Indonesia’s dependency on imported wheat and flour

commodities can be reduced by using “mocaf (modified cassava) flour” which is a

derivative product of cassava made through fermentation process.

According to the data from Bank of Indonesia in 2011, in relation to agricultural

economic sector, some provinces whose basic commodity is cassava are: North Sumatera,

West Sumatera, Riau, Bengkulu, Lampung, DKI Jakarta, West Java, Central Java, East

Java, Bali, West Nusa Tenggara, East Nusa Tenggara, West Kalimantan, Central

Kalimantan, South Kalimantan, East Kalimantan, South Sulawesi, Southeast Sulawesi,

Gorontalo, Maluku, North Maluku, Papua and West Irian Jaya.

In South Kalimantan, the central of cassava plantation is Tanah Laut. Geographically,

Tanah Laut, with Pelaihari as its regency capital, is surrounded by: Java Sea in the west and

the south, Tanah Bumbu Regency is the east and Banjar Regency in the north. Tanah Laut

lies between 114o30’20’’ WL – 115o23'31'' WL and 3o30'33'' SL – 4o11'38' SL. Tanah Laut

total land’s area, according to the Decree of the Governor of South Kalimantan, is 3,631.35

km2 or about 9.71% of overall South Kalimantan Province’s land area (BPS, 2011).

Tanah Laut consists of 11 sub-districts. The biggest sub-district is Jorong with 628.00

km2 of total land’s area, followed by Batu Ampar sub-district with 548.10 km2 total land’s

area, and Kintap sub-district with 537.00 km2 total land’s area. The smallest sub-district in

Tanah Laut is Kurau with only 127.00 km2 total land’s area. With its hilly geographical

condition, Tanah Laut has abundant mineral deposits including iron ores and coals. Fertile

soil condition makes agricultural and plantation sectors in the area are able to not only

cover the needs of the area itself but also the needs of its surrounding regencies.

Tanah Laut has a great potency in terms of plantation production development,

specifically the development of cassava plantation. Based on Statistik Perkebunan

Indonesia year 2007-2009, cassava’ potency in Tanah Laut in 2007 is 45,772 tons;

however, the land used for cassava plantation is only 3,210 tons or only 7% of the total

potency.

Land use level for cassava planting is relatively low because cassava’s price in

farmers’ market is still too cheap. It happens due to the fact that cassava-based products are

still limited in number, making the demand for cassava is relatively lower compared to the

demand for several other plantation commodities. This condition, of course, holds the

farmers from growing more cassavas.

1.2 Problem statement

Considering the possibility of using mocaf flour made of cassava as the substitution to

wheat flour which its raw material is imported, it is really important to know the business

feasibility of mocaf flour production industry. If the business is feasible, then the

industrialization of mocaf flour will eventually bring multiple benefits for society members.

Thus, this research is aimed to address the questions of:

1. What is the result of capability analysis of mocaf-based flour made of fermented

cassava to substitute wheat flour made of wheat?

2. What is the result of business feasibility analysis of mocaf flour production industry

as the pioneer of cassava-based flour production industrial development in South

Kalimantan?

1.3 Specific Objectives of the Research

Specific objectives which are the focuses of this research are:

1. To assess the capability of mocaf-based flour made of fermented cassava to

substitute wheat flour made of wheat.

2. To find out the business feasibility of mocaf flour production industry as the pioneer

of the cassava-based flour production industrial development in South Kalimantan.

1.4 General Objectives of the Research

The primary objective of the research is finding out the potency of cassava to

substitute wheat flour which later will lead Indonesia to be the flour self-supporting

country. In addition, it is not impossible that the country would be able to provide and

export flour to other countries worldwide in the future. Besides, the existence of mocaf-

based industry does not only benefit the producers and farmers as it can also improve the

living standard of society members.

II. REVIEW OF RELATED LITERATURES

2.1 Theoretical Background

2.1.1 Study of Business Feasibility

A study of business feasibility is the study of business plan which does not only pay

attention to the analysis of whether or not the targeted business is feasible to be developed,

but also to the analysis of whether or not the maximum profit within unlimited time period

is possible when the business is operated on regular basis. The study of business feasibility

is useful to state if a business plan is feasible to be realized. In its application, the study of

business feasibility is used by investors, creditors, company managements, government,

communities, and other parties who may need it as a source of consideration to review the

business plans they have (Husein, 2007).

There are several steps to take in the study of business feasibility: discovering idea,

doing research, making evaluation, arranging appropriate suggestions, planning, and

executing the plan. In the research phase, several aspects of considerations are including

market, internal aspect of company, competition, and external aspect. Internal aspects of the

company are divided into marketing aspect, technical and technological aspect, human

resources, managements, and finance (Husein, 2007).

2.1.2 Definition of Mocaf

Modified cassava flour (Mocaf) is kind of flour which is derived from cassava

(manihod esculenta crantz) that is fermented using cell modification principle. Mocaf is

one of local commodities expected to take part in the successfulness of food diversification

in Indonesia in order to reduce wheat flour dependency of the country. Mocaf flour is

commonly used as substitution to wheat flour as the raw material for various kinds of food

such as noodles, bakeries, cookies, and so on (Bambang et.al: 2011).

Mocaf is made using the principle of cell modification in which cassava’s cells are

modified through fermentation process. Growing microbes resulted by the fermentation

process change the characteristics of produced flour in which they cause the increasing of

viscosity, gelational ability, rehydration ability, and degree of solubility. The microbes also

produce organic acids, specifically lactic acid, which can blend well into other ingredients.

When the ingredients are processed into edible food, the acids will boost distinctive aroma

and taste which cover the original aroma and taste of cassava that tend to be unpleasant to

customers. During the fermentation process, color changing component and protein causing

brownies color in drying process are eliminated so that Mocaf-T1 produced is lighter in

color compared to regular cassava flour.

2.1.3 Characteristics of Mocaf

Mocaf-T1 has more specific physical and organoleptical characteristics compared to

other cassava flour even though there is no difference in terms of their chemical

compositions. Based on the analysis result, mocaf can be categorized as “edible cassava

flour” in accordance with CODEX STANDART, CODEX STAN 176-1989 (Rev. 1-1995)

(Mr. Y: 2009).

In terms of its physical appearance, mocaf is as white as wheat flour. Mocaf is used to

substitute wheat flour in instant noodles for up to 25%, cookies and biscuits for 100%, and

bakery for up to 25% substitution.

2.14 Advantages of Using Mocaf

According to Mr. Y (2009), the advantages of mocaf flour include:

1. Soluble fiber of mocaf flour is higher than tapioca flour.

2. Mineral (calcium) of mocaf flour is higher than paddy and wheat (mocaf contains

of 58 calcium while paddy and wheat contain of 6 and 16 calcium).

3. Oligosaccharides which cause the flatulency have been hydrolyzed in mocaf flour.

4. Mocaf flour has similar rising ability to wheat type II (medium protein content).

5. Mocaf flour can be digested easier compared to tapioca flour.

Mocaf flour is useful to improve national food stability. Cassava-based mocaf is a

product diversification which takes the advantages of local potency. By using mocaf flour,

it is expected that Indonesia can depend less on imported food products such as wheat flour

and rice. Moreover, the fact that mocaf flour has cheaper price compared to other flour

commodities will help the poor fulfill their needs of food easier.

Mocaf production industry is potential to create wider business and job opportunities.

Mocaf production process involves not only farmers but also other parties. Mocaf can be

used as raw material for food homemade industry, medium industry, and even big industry.

The production of mocaf by upstream industries and the use of mocaf by downstream

industries will create various business and job opportunities. In addition, farmers also get

benefits from mocaf production industry because such industry will increase the demand of

cassava which in turn will improve the prosperity of farmers.

The use of marginal land in Indonesia can be increased by the existence of mocaf

flour production industry. Indonesia has a very large marginal land which will suffer from

erosion, fire, and reduction of land’s fertility if it is not used. Cassava is a highly adaptive

plant which can grow in dry land. Mr. Y (2009) stated that the use of mocaf as novel food

ingredient in food industries can improve business efficiency as well as national food

stability. Mocaf production process which involves farmers will of course increase the

farmers’ incomes. Therefore, considering its advantages, the development of mocaf

industry must be supported by proper political policies from government.

SECTION III: RESEARCH METHODOLOGY

3.1 Conceptual Framework

t y

y t

Figure 1. Research Conceptual Framework

Figure 1 above explains how the research is conducted – starting from making the

analysis of mocaf substitution capability toward wheat flour. The result of analysis is used

as a consideration to determine business feasibility. The analysis of business feasibility is

Current Condition

Analysis of Mocaf Substitution

Capability to Wheat Flour

Feasibility Study

All aspects are analyzed to see their feasibilities

Identification of various aspects:

Market & marketing, production & technology, human resources, law, socio-cultural aspect, and so on.

Overcoming obstacles

Feasible? Problems solved

Mocaf based Industry is run

Mocaf based Industry isterminated

done by identifying current conditions of certain aspects such as market and marketing,

production and technology, human resources, finance, law, socio-culture, and other relevant

aspects. For the purpose of the research, a case study is conducted to review the business

feasibility of selected producers that use mocaf flour as the raw material of their products.

3.2 Research Location

This research is taken place at Tanah Laut Regency, South Kalimantan. The location

is chosen based on the mapping that has been done in reference to the historical data

mentioning Tanah Laut as the primary supplier of cassava to other regencies all over South

Kalimantan. Another consideration of choosing this area is the fact that Tanah Laut has

potential topography for cassava planting.

3.3 Data Collecting Procedures

Both primary and secondary data is collected using the combination of the following

techniques:

a. In-depth interview. The in-depth interview is the activity of directly collecting

information from all respondents in the research by interviewing them.

b. Experiment. The experiment is the activity of producing mocaf flour with

different compositions on the basis of certain standards.

c. Observation. Observation is the activity of directly observing real situations on

the field.

d. Documentation. Documentation is the activity of collecting secondary data such

as income per capita, consumption pattern, and surrounding community

conditions based on occupations of community members.

3.4 Ingredients and Utilities

Ingredients used to make mocaf-based products are similar to those that are used to

make other kind of flour-based products; however, adequate compositions of mocaf and

wheat flour in the making process should a get special attention.

Utilities used in the experiment are mixer, baking pan, oven, frying pan, spatula –

similar to those utilities used to make other flour-based products.

3.5 Methodology

The research is an experimental research intended to find out the effect of mocaf

substitution toward wheat flour. Experiment is one of the ways used to find out causal-

effect relationship between two factors raised by the researcher through the elimination of

other disturbing variables.

Independent variables in this research are 50% and 100% substitution of regular

mocaf and 100% substitution of premium mocaf. Dependent variables in this research are

the characteristics of experimental resulted products that have been compared to wheat

flour-based products in four aspects of comparisons: taste, aroma, appearance, and texture.

100%

Moc

afPr

emiu

m

100%

Moc

af

50%

Moc

af

Tota

l

100%

Moc

afPr

emiu

m

100%

Moc

af

50%

Moc

af

Tota

l

100%

Moc

afPr

emiu

m

100%

Moc

af

50%

Moc

af

Tota

l

100%

Moc

afPr

emiu

m

100%

Moc

af

50%

Moc

af

Tota

l

The process of making mocaf substitution products is done in the same way as it is on

other flour-based products. Composition of ingredients and utilities used are following the

standard of those in the process of regular wheat flour-based products making.

IV. Result and Discussion

The chart below presents the assessment result of 88 respondents on mocaf-based

products in terms of flavor, aroma, appearance and texture.

54,5

43,5

32,5

21,5

10,5

0

Flavor Aroma Appearance Texture

Figure 2. Bar Chart of the Respondents’ Assessment on Mocaf-Based Product

Figure 2 shows that there is no significant difference on the flavor, aroma, appearance and

texture of the product made of mocaf and the one made of wheat flour. Generally, the

product made of 50% mocaf has the closest characteristics to the product made of wheat

flour, except for its texture. By comparing the characteristics of the product made of 100%

premium quality mocaf to the product made of 100% standard quality mocaf, it can be seen

that the product made of premium quality mocaf has the closest proximity level of

characteristics to the product made of wheat flour.

1. The Flavor of Mocaf-Based Product

It is expected that the mocaf-based product to have a similar flavor to the wheat flour-

based product. Table 1 below is the comparison of flavor of 100% premium quality mocaf-

based product, 100% standard quality mocaf-based product, and 50% standard quality

mocaf-based product by using one-way anova test.

Table 1 One Way Anova of the Flavor of Mocaf-Based Product on Different Substitution Level

Sum ofSquares

dfMean

SquareF Sig.

Between Groups

Within Groups

Total

7.669

119.786

127.455

2

85

87

3.834

1.409

2.721 0.072

Source: Data processed, 2013

On the table 1, it can be seen that there is no significant difference on the flavor of the

products made of either 100% premium quality mocaf or 100% standard quality mocaf and

50% standard quality mocaf.

2. The Aroma of Mocaf-Based Product

The table 2 below shows the comparison of the aroma of mocaf-based product and

wheat flour-based product by using one-way anova.

Table 2 One Way Anova of the Aroma of Mocaf-Based Product on Different Substitution Level

Sum ofSquares

dfMean

SquareF Sig.

Between Groups

Within Groups

Total

6.894

87.185

94.08

2

85

87

3.447

1.026

3.361 0.039


From the table 2, it can be seen that the aroma of the products are different depending on

the amount and the quality of the mocaf used. Duncan test, then, used to figure out on

which level of mocaf substitution that the product satisfied the respondents the best.

Tabel 3 Duncan Test of the Proximity of Mocaf-Based Product Aroma on Different Level of Substitution

Duncana,b

Tingkat Substitusi Mocaf N

Subset for alpha = 0.05

1 2

100% Mocaf

100% Mocaf Premium

50% Mocaf

Sig.

41

42

5

3.07

3.55

.253

3.55

4.00

.275


As can be seen on the table 3, there are two different groups: the first groups are 100%

standard quality mocaf and 100% premium quality mocaf, and the second groups are

100% premium quality mocaf and 50% standard quality mocaf. Furthermore, of all the

substitution level of based-mocaf products, the aroma of 50% standard quality mocaf-

based product is the closest to the aroma of wheat flour-based product. The second

closest aroma is the product made of 100% premium quality mocaf while the product

with the least level of proximity of aroma is the one made of 100% standard quality

mocaf.

3. The Appearance of Mocaf-Based Product

Other than the flavor and the aroma, the appearance of the mocaf-based product is

also compared to the wheat flour-based product. One-way anova is used to see whether

there is a significant difference among the three levels of substitution.

Tabel 4 One Way Anova of the Appearance of Mocaf-Based Product on Different Level of Substitution

Sum ofSquares

dfMean

SquareF Sig.

Between Groups

Within Groups

Total

2.484

82.607

85.091

2

85

87

1.242

0.972

1.278 0.284


The table 4 above shows that there is no significant difference on the product appearance

of the three levels of substitution. Thus, Duncan test is not needed to see the level of

proximity of the mocaf-based product to the wheat flour-based product.

4. The Texture of Mocaf-Based Product

Texture is the fourth characteristic tested to see whether there is a significant

difference between the mocaf-based product and the wheat flour-based one. One-way

anova is used to compare the products.

Tabel 5 One Way Anova of the Texture of Mocaf-Based Product on Different Level of Substitution

Sum ofSquares

dfMean

SquareF Sig.

Between Groups

Within Groups

Total

1.686

103.393

105.08

2

85

87

0.843

1.216

0.693 0.503


Of all the substitution levels - 100% premium quality, 100% standard quality, and 50%

standard quality - it can be seen that there is no significant difference on the appearance

of the products. Thus, advanced test is not needed.

Furthermore, by using the descriptive statistics, the data distribution of mean

relative scale of each substitution group can be described as below.

Tabel 6 Statistic Descriptive of the Mocaf Substitution Level Based on the Characteristics of Product

CharacteristicsSubstitution Level

100% Mocaf

Premium

100% Mocaf

50% Mocaf Total

Flavor 3,31 3,10 4,40 3,27

Aroma 3,55 3,07 4,00 3,35

Appearance 3,26 3,29 4,00 3,32

Texture 3,21 3,15 2,60 3,15

Mean 3,3325 3,1525 3,75 3,2725Mean value relative to the scale 0,6665 0,6305 0,7500 0,6545


Table 6 above shows that the product made of 50% mocaf has the closest proximity to

the product made of wheat flour since its mean value relative to the scale of five is 0.75.

Meanwhile, the mean value relative of the product made of 100% premium quality is

0.66% and the product made of 100% standard quality is 0.63%.

Table 7 Wheat Flour Consumption and the Saving of Mocaf Substitution

Year2009 2010 2011 2012

1. Wheat Equivalent (000 MT) 5.224 5.793 6.210 6.6682. Growth* (%) 12,54 10,91 7,12 7,063. Average substitution 0,68 0,68 0,68 0,684. The amount of wheat substituted 3.564,51 3.952,76 4.237,29 4.549,805. The value of wheat substituted(in trillion Rp) @Rp.7500/kg 26.733,82 29.645,68 31.779,68 34.123,496. The value of mocaf (in trillion Rp)@Rp.6500/kg 23.169,31 25.692,92 27.542,39 29.573,697. Saving, 5 – 6, (Milyar Rp) 3.564,51 3.952,76 4.237,29 4.549,80

Source: *= Aptindo, 2013, data processed in 2013

Table 7 above presents the increasing number of wheat flour consumption on 2009,

2010, 2011 and 2012 released by Asosiasi Produsen Tepung Terigu Indonesia (Aptindo).

As seen in the table, the average substitution score for different mocaf substitution levels

is 0.68. By taking the price of wheat flour and mocaf into account, it is predicted that

Rp. 3.56 trillion could have been saved in 2009, Rp. 3.95 trillion could have been saved

in 2010, Rp. 4.23 trillion could have been saved in 2011, and 4.55 trillion could have

been saved in 2012.

Business Feasibility Analysis

The feasibility analysis in this research focuses on the amount of cost that can be

saved by substituting wheat flour to mocaf flour. The result, afterwards, is used to

identify the effect towards the Net Present Value (NOV), Internal Rate of Return (IRR),

Payback Period (PP), Profitability Index (PI), and Modified Internal Rate of Return

(MIRR).

The first step on the feasibility analysis was conducted by calculating the obtained

saving ratio by considering the proximity level, price and the mean value relative to the

scale of five in order to determine the proportional price difference and mean relative

price of the total. As the result, the cost saving ratio obtained is 14.22%, as can be seen

on the Table 8 below.

Table 8 The Ratio of Production Cost Saving Ratio Seen from Different Level of Mocaf Substitution

Level of substitutio

n

Wheat flour price(RP)

Mocaf price(Rp)

Price differe

nce(Rp)

Mean Relative Scale 5

Price differe

nce relative

(Rp)

Mean Relative

to100%

Proortionalprice

difference(Rp)

Relative price to100% (Rp)

(1) (2) (3) (4) (5) (6) (7) (8)

100% Premium 11.000 7.500 3.500 0,6665 2.332,75 0,3256 759,54 3.581,58100% Standar 7.500 6.500 1.000 0,6305 630,50 0,3080 194,20 2.310,0950% Standar 7.500 6.500 1.000 0,7500 750,00 0,3664 274,79 2.747,92Total 1.228,53 8.639,59

Saving ratio (Sv) = Total (7)/Total (8) 0,1422

Source: data processed, 2013

Thus, the amount of cost saving obtained by substituting wheat flour to mocaf flour is

predicted as below:

S – C = EBIT

Due to cost saving, the formula turns into:

S – (C-(C x Sv)) = EBIT

S – (C(1 – Sv)) = EBIT ………………………………………………………… 1)

Because EBIT – i = EBT, where i = interest, then:

S – (C(1 – Sv)) – i = EBT…………………..…………………………..………. 2)

Because EBT – Tax = EAT, then:

(S – (C(1 – Sv)) – i) – Tax = EAT,

((S – (C(1 – Sv)) – i)) (1 – T) = EAT ……………………………………………3)

If the tax (T) is 10% = 0,1, and based on the calculation of saving (Sv), obtained

Sv = 0,1422, then:

((S – (C(1 – 0,1422)) – i))(1 – 0,1) = EAT

(S – C(0,8578) – i)(0,9) = EAT

0,9S – 0,9(0,8578C) – 0,9i = EAT

0,9S – 0,77C – 0,9i = EAT

If S = 2; C = 1 and i = 1, then:

Mocaf-based product will earn net profit as much as:

EATmocaf = 1,8 – 0,77 – 0,9 = 1,8 – 1,67 = 0,13

While wheat flour-based product will earn net profit as much as:

EATwheat = 1,8 – 0,9 – 0,9 = 1,8 – 1,8 = 0

Or in the other words, the focus of the calculation is the cost variable since other

variables are quite similar. The lower cost is the result of the saving due to the

substitution of wheat to mocaf, and reduction of tax of the needed cost.

NCF = EAT + Depreciation

Since the depreciation of wheat flour-based product and the mocaf-based product

is similar, the depreciation can be excluded, or in the other words Cash Flow (CF)

= EAT.

Where: S = Sales; C = Cost; Sv = Savings; EBIT = Earnings Before Interest and Tax;

EBT = Earnings Before Tax, EAT = Earnings After Tax

The lesser the cost is, the bigger the profit is. As the result, the net cash flow

earned in the next periods will be more than the amount earned at the current state. NPV

earned by the existing business will be bigger if the business earns bigger profits and net

cash flow without adding more cash to the investments and to other components. The

increasing value of NPV is possible since the cost decrease to (0.8578(1 – Tax rate)).

Furthermore, due to the same reason, Payback Period will be faster, Internal Rate of

Return will be bigger, and Modified Internal Return will also be bigger. By referring to

the result of feasibility analysis, it can be concluded that a business that has already been

run well will earn more profit if the business substitutes wheat flour to mocaf flour.

Conclusion

The value of mocaf substitution to wheat flour is approximately 0.68 or 68%. By

considering the high number of wheat flour consumption in Indonesia in 2012, around

Rp 4.55 trillion can be saved by substituting wheat flour to mocaf flour. Industries or

businesses that use mocaf flour as their main raw material will have lower production

costs which lead them to have bigger net cash flows per period. In addition, by

considering various investment assessment methods, the businesses that have been run

will be more feasible through the saving of cost after tax as much as 0.77 as the result of

the substitution.

References:

Bambang DKK. 2011. Pengolahan Tepung Mocaf di Kabupaten Trenggalek. LPPM Brawijaya University: Indonesia

Emil Salim. 2011. Mengolah Singkong Menjadi Tepung Mocaf – Bisnis Produk Alternatif Pengganti Terigu. Andi Publisher: Indonesia.

Husein Umar. 2007. Studi Kelayakan Bisnis Edisi 3 Revisi. PT Gramedia PustakaUtama: Jakarta.

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analysis of mocaf substitution capability to wheat flour and its

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