Investment feasibility analysis of sugarcane harvesters: a case study of farmers in Udon Thani, Nakhon Ratchasima, and Khon Kaen, Thailand
Article Sidebar
Main Article Content
Abstract
Despite the continued growth of Thailand’s sugarcane harvester service business, not all investments in sugarcane harvesters have been successful. This study aimed to analyze the investment feasibility of sugarcane harvesters for farmers in Northeast Thailand. Data were collected in the production year 2019/20 by interviewing 30 farmers with sugarcane harvesters in Udon Thani, Nakhon Ratchasima, and Khon Kaen. The study was based on financial feasibility, which was determined by calculating a proforma financial statement for a period of 12 years with a discount rate of 6.11%. The results found that a new small-scale sugarcane harvester presented the most worthwhile investment, with a net present value (NPV) of united states dollar (USD) 196,304, an internal rate of return (IRR) of 11.15%, and a payback period of 9.71 years. These results were followed by a new large-scale harvester, a used small-scale harvester, and a used large-scale harvester with NPVs of USD 152,630, USD 79,476, and USD 70,201, respectively. The IRRs were 9.25%, 9.56%, and 8.66%, respectively; and the respective discounted payback period was 10.75, 10.56, and 11.12 years. The results indicated that an investment in a new or smaller sugarcane harvester was more worthwhile than a used or larger sugarcane harvester under the same conditions. The investment of a new large-scale or small-scale harvester was better suited for an annual harvest of over 16,000 and 13,000 tons, respectively; whereas a used large-scale harvester or a used small-scale harvester would be appropriate for a minimum annual harvest of 11,000 and 10,000 tons, respectively.
Article Details
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
References
Department of agricultural extension. System for collecting and reporting information on monthly crop production conditions at the sub-district level [Internet]. 2017 [cited 2021 Jan 15]. Available from: http://production.doae.go.th/.
Manivong P, Bourgois E. Thai sugarcane sector & sustainability [Internet]. 2017 [cited 2022 Mar 24]. Available from: https://bonsucro.com/wp-content/uploads/2017/08/Thai-White-Paper-FINAL-LowRes.docx.pdf.
Office of the cane and sugar board. Report of sugarcane planting area, production year 2019/20 [Internet]. 2020 [cited 2021 Jan 15]. Available from: http://www.ocsb.go.th/upload/journal/fileupload/923-1854.pdf.
Baohin P, Tulasombat S. Analysis of activity-based costing of sugar cane farmers Phu Khiao District Chaiyaphum Province. The 6th National sustainability in business conference & journal; Chiang Mai. Faculty of business administration, Maejo University; 2019. p. 704-720.
Khetvijarn Y. A study of costs and returns of sugar cane production by small-scale farmers in Kumphawapi, Udon Thani [Thesis]. Bangkok: University of the Thai Chamber of Commerce; 2019.
Singburi provincial agricultural extension office. Production costs of sugarcane in 2019 [Internet]. 2019 [cited 2022 Dec 20]. Available from: http://www.singburi.doae.go.th.
Cardoso TF, Watanabe MD, Souza A, Chagas MF, Cavalett O, Morais ER, et al. Economic, environmental and social impacts of different sugarcane production systems. Biofuels, Bioprod Bioref. 2018;12(1):68-82.
Pensupar K, Oo YK. Changes in the agricultural labor force of Thailand and the impact of the alien workers on its economy. [Internet]. 2015 [cited 2022 Apr 25]. Available from: https://ap.fftc.org.tw/article/996.
Kasetsart University and Office of Agricultural Economics Foresight Center (KOFC). Impacts of alien workers on Thailand’s economy. Office of Agricultural Economics, Thailand; 2014.
Luaengwilai W. The issue of labor household sugarcane in Nakorn Pathom [Thesis]. Bangkok: Silpakorn University; 2015.
Sommut P. A study on the cost of harvesting sugarcane and the worthiness of investment in a sugarcane harvester for commercial harvesting contracts [Thesis]. Bangkok: Kasetsart University; 2016.
Chuan-Udom S, Saengprachatanarug K, Polpinit W. The solution for PM 2.5 from sugarcane burning by using agricultural machinery. Research report. National Research Council of Thailand [Internet]. 2022 [cited 2022 Dec 24]. Available from: http://www.thai-explore.net/file_upload/submitter/file_upload/853afee7f9a37baca34fd5ecba946f0db07e01c729a79231.pdf.
Kasikorn research center. Sugarcane cutter: one of the tools to achieve the goal of reducing the proportion of sugarcane fire increasing farmers' income and reducing PM 2.5 dust problems [Internet]. 2020 [cited 2021 Jan 15]. Available from: https://www.kasikornresearch.com/EN/analysis/k-social-media/Pages/Sugarcane-cutter-FB-14-01-21.aspx.
Usaborisut P. Progress in the mechanization of sugarcane farms in Thailand. Sugar Tech. 2018;20:116-121.
Thuayjan T, Prasara-AJ, Boonkum P, Gheewala SH. Social life cycle assessment of green and burnt manual sugarcane harvesting in Northeastern Thailand. Environ Nat Resour J. 2022;20(3):246-256.
Saunders M, Lewis P, Thornhill R. Research methods for business student. 7th ed. Pearson Education Ltd.; 2016.
Stutely M. Numbers guide: the essentials of business numeracy. London: Bloomberg Press; 2003.
Dworkin SL. Sample size policy for qualitative studies using in-depth interviews. Arch Sex Behav. 2012;41(6):1319-1320.
Angula N, Schroeder A, Beukes L, Olivier D, Plessis SD. An investigation into the impact of COVID-19 on the academic performance of students in higher education institutions in Namibia. BOHR Int J Financ Market Corp Financ. 2022;1(1):61-65.
Kulis N. Management economics. Bangkok: Chulalongkorn University Press; 2012.
Ag Decision Maker, Iowa State University Extension and Outreach. Estimating farm machinery costs [Internet]. 2015 [cited 2022 Dec 20]. Available from: https://www.extension.iastate.edu/agdm/crops/pdf/a3-29.pdf.
Barker FG. An economic evaluation of sugarcane combine harvester costs and optimal harvest schedules for Louisiana [Thesis]. Louisiana: Louisiana State University; 2007.
Meenaphan H. Principles of project analysis: theory and practice for studying project feasibility. 2nd ed. Bangkok: Chulalongkorn University Press; 2007.
Potts D. Project planning and analysis for development. Boulder (CO): Lynne Rienner; 2002.
US Agency for international development. Project appraisal manual. Baghdad, Iraq. 2013.
Asian development bank. Guidelines for the economic analysis of projects. Manila, Philippines. 2017.
Santos NB, Nascimento RS. Economic viability of the mechanized harvesting system in financial cash of a sugarcane. Cientifica. 2021;49(3):102-112.
Filho TM, Donadon FAB, Santos DFL. Economic feasibility of harvesting in the sector sugar-energy: a case study. Cientifica. 2018;46(4):329-336.
Gitman LJ, Zutter CJ. Principles of managerial finance. 14th ed. Harlow: Pearson Education Limited; 2015.
Bank of Thailand. Government bond in 2019 [Internet]. 2019 [cited 2023 Jan 5]. Available from: https://www.bot.or.th/Thai/DebtSecurities/SalestoIndividuals/GOVBond/Doc_LibCFFiscalYear/Announced-result-SB62-2.pdf.
Bank for Agriculture and Agricultural Cooperatives. Minimum Retail Rate (MRR) for farmers in 2019 [Internet]. 2019 [cited 2022 Dec 20]. Available from: https://www.baac.or.th/th/content-rate.php?content.group=9&content_group_sub=2&inside=1.
The Valuers Association of Thailand. Standards and professional ethics for valuation of machinery and equipment factories [Internet]. 2019 [cited 2021 Jan 24]. Available from: https://www.tva.or.th/Files/Name2/CONTENT5a28a3f57dbb8f1400a3e3517210986945832652.pdf.
Bank of Thailand. Exchange rate in 2020 [Internet]. 2020 [cited 2023 Jan 5]. Available from: https://www.bot.or.th/App/BTWS_STAT/statistics/ReportPage.aspx?reportID=123&language=th.
Kuldilok K, Photchanaprasert N, Athipanyakul T. Sugarcane harvester cost and the management: a case study of Thailand. Proceeding of the 6th IAPSIT International Sugar Conference; 2018 Mar 6-9; Udon Thani, Thailand. 2018. p. 528-533.
Kasempaiboon W, Athipanyakul T, Potchanasin C. Management of assembly, sugarcane harvesting and transportation services: a case study of sugarcane farm business in Supanburi Province. Thaksin Procedia. 2020;2020(3):37-50.
Pingali PL. Agricultural mechanization: adoption patterns and economic impact. Handbook of Agricultural Economics Volume 3. Netherlands: Elsevier Publication; 2007.
Banchi AD, Garcia AP, Grespan A, Albiero D, Favarin LGA, Galvao CB. Operating cost of harvesting function of agricultural productivity and harvester age. R Bras Eng Agríc Ambiental. 2019;23(7):552-557.