Business feasibility of several PS-01 hybrid silkworms (Bombix mori L.) cultivation scheme

Forest Research and Development Center has developed technology to increase productivity of sericulture through selection of types and varieties and cross-breeding to obtain superior hybrids. One of the superior hybrids produced is superior silkworm PS-01. The use of PS-01 hybrid silkworm seeds has been officially carried out with the Minister of Forestry Decree Number 794 I Menhut-II/2013 concerning the Release of PS-01 Hybrid Silkworm (Bombyx Mory L) Seeds. Several variations in the cultivation of the PS-01 hybrid silkworm in the field result in several cultivation schemes. This study aims to assess feasibility of several of PS-01 hybrid silkworm cultivation schemes. The research is conducted at KTH Bina Mandiri Sukabumi. Data and information are obtained through in-depth interviews with several farmer group members Bina Mandiri Sukabumi, owner and manager of PT Begawan Nusantara as a partner of KTH, which cultivates PS-01 silkworm seeds. Data are analyzed descriptively and qualitatively. Feasibility of PS-01 hybrid silkworm cultivation business is assessed using several criteria, namely NPV, BCR, IRR, and BEP, during the 10-year business cycle. The results of financial analysis on four silkworm cultivation schemes using PS-01 hybrid silkworm seeds show Schema I : KTH farmers buy PS-01 hybrid silkworm eggs and sell their products in cocoons; it is not feasible; Schema II : KTH farmers buy PS-01 hybrid silkworm egg seeds and sell their products in the form of yarn, and it is feasible; Schema III : KTH farmers do not purchase PS-01 hybrid silkworm eggs and sell their products in the form of cocoons; it is not feasible; Schema IV. In a partnership scheme, KTH farmers are assisted with silkworm eggs, consumable operational materials, farmers receive maintenance assistance up to the 3rd instar, and the sale of the produce in the form of cocoons is feasible.


Introduction
Silkworms and their cultivation began in Indonesia in the 10th century through trade mechanisms and began to be seriously developed since 1953 [1]. The development of the national silk industry is carried out through the establishment of institutions, including the establishment of the Sericulture Center in Lembang Bandung, the construction of the Sericulture Development Project in Sulawesi, the establishment of National Sericulture Deliberation Board (Bamus Sutera), the Indonesia-Japan Cooperation on sericulture ATA-72 (1978), the establishment of Pilot Project Regaloh spinning mill (1972), Candiroto Silkworm Breeding Center, Perhutani (1975), the establishment of PT Indo Jado Pratama in cooperation with Jado Corporation and granting of Sericulture Farmer Credit (KUT) to  [1]. However, until now, the national silk thread production has not been able to meet domestic demands. The national demands for silk thread reaches around 800-900 tons, about 95% of which is completed by imports, mainly from China and Japan [2].
Based on the regional biophysical typology, Indonesia has a climate and land condition suitable for cultivating silkworms (Bombyx mori L.) [2]. The agro-climatic conditions with dry season conditions that are not too hot and rainy season that is not too cold allow mulberry as silkworm feed to grow and be cultivated throughout the year [3]. However, this carrying capacity has not encouraged the establishment of a strong and independent national sericulture industry. Several challenges in developing the national sericulture industry include high competition with other countries, low government support for national sericulture industry, lagging technology, and slow handling of pests and diseases [1]. In addition to these challenges, there are obstacles related to the availability of quality and silkworm seeds, because according to [4], silkworm egg seeds are a key factor in the sericulture industry. This is in line with the statement [5]. The quality of silkworm eggs is one factor that needs to be considered to realize the success of sericulture industry in Indonesia.
The Forestry Research and Development Agency of the Ministry of Environment and Forestry, through the Forest Research and Development Center, conducted a series of studies to increase the productivity of national sericulture by developing silkworm seeds with high productivity (superior). The development of superior silkworm seeds is carried out through species selection, variety selection, and cross-breeding. One of the superior silkworm seeds produced is the PS-01 hybrid. The use of PS-01 hybrid silkworm seeds for silkworm cultivation activities has officially been carried out with the Minister of Forestry Decree Number SK. 794 I Menhut-II/2013 concerning the Release of Silkworm Seeds (Bombyx mori L.). PS-01 silkworm seeds have a parent code (cross-type) 804 x 927 [6]. The 804 x 927 cross have a higher cocoon weight and cocoon shell ratio than the C3 01 produced by Perum Perhutani [7]. According to [8], cocoon weight has a positive correlation with cocoon yield per box and is closely related to the added value obtained by silk farmers.
PS-01 hybrid silkworms have been cultivated in several places, including Sukabumi, Garut, Boalemo, Pati, and Soppeng Regencies. Cultivation activity is a business activity that needs observation for the benefits and feasibility [9]. One aspect that needs to be assessed to see the benefits and feasibility is the financial aspect [9]. Therefore, to assess the benefits and feasibility of silkworm cultivation using PS-01 silkworm seeds, it is necessary to conduct a financial feasibility analysis. The results of the analysis are expected to be the basis for formulating policy recommendations for the development of sericulture using PS-01 hybrid silkworm seeds.

Time and location of research
The study was conducted from January to April 2021 conducted by Bina Mandiri Forest Farmers Group, Sukabumi, West Java Province.

Data collection method
Data are collected in the form of primary and secondary data. Primary data are obtained from in-depth interviews with sericulture entrepreneurs and farmer groups who cultivate PS-01 hybrid silkworms and process products from PS-01 hybrid silkworm cultivation. Secondary data are obtained from various related agencies and literature studies from previous studies.

Data analysis method
Implementation of financial analysis can use the method or criteria for investment appraisal [9]. Through assessing investment criteria, it can be seen whether or not a project is feasible to be implemented from the aspect of commercial profitability [10]. Several investment criteria parameters to assess the feasibility of a project are Net Present Value (NPV), Internal Rate of Return (IRR), Net Benefit-Cost Ratio (Net B/C Ratio), and Pay Back Period (PBP) [9]. A business or activity is declared financially Tabel 1. Location and productivity of silkworm cultivation with hybrid silkworm seeds PS-01 and C3-01

Sericulture industry in Sukabumi Regency
Sukabumi community is a user of silk weaving but does not have a weaving tradition from generation to generation like other areas in Sulawesi and Kalimantan [16]. The sericulture industry in Sukabumi began with the establishment of PT Indo Jado Pratama in the 1990s. [17]. PT Indo Jado Pratama was the only silk thread processing industry with modern technology that existed in Indonesia at that time. PT Indo Jado Pratama accommodates cocoons from farmers on the island of Java and buys cocoons produced by farmers from Sumatra and other islands. [17]. However, unfortunately, PT Indo Jado Pratama is no longer operating due to a shortage of raw materials for silkworm thread, while the machine's production capacity is very large [18]. After PT Indo Jado Pratama ceased operations, sericulture farmers lost their silkworm seed suppliers and market guarantors, resulting in a decline in silkworm cultivation activities in Sukabumi [18]. This condition is exacerbated by the cessation of silkworm egg production belonging to Perum Perhutani [5].
After discovering PS-01 hybrid silkworm seeds, sericulture farmers in Sukabumi began to find new sources of silkworm seeds. However, PS-01 hybrid silkworm seeds are not immediately available for IOP Conf. Series: Earth and Environmental Science 917 (2021) 012031 IOP Publishing doi:10.1088/1755-1315/917/1/012031 4 widespread use by the community. The Center for Forest Research and Development (P3H), as the institution holding the patent for PS-01 hybrid silkworm eggs, has limited capacity and functional tasks to mass-produce PS-01 hybrid silkworm seeds. [18]. Therefore, there needs to be another party called a breeder. Breeders act as custodians of the 804 and 927 strains and produce PS-01 hybrid silkworm seeds, resulting from crossing pure 804 and 927 breeds. The breeders are expected to supply PS-01 hybrid silkworm eggs to sericulture farmers in the Sukabumi region. And the surrounding.
PT Begawan Sutra Nusantara is one of the breeders assisted by the Center for Forest Research and Development. PT Begawan Sutra Nusantara has 2 tasks: 1. Preserving 804 and 927 brooders and 2. Crossing to produce PS-01 hybrids. This authority is given after facilitated with various kinds of training and guidance from researchers and technicians who handle sericulture. However, due to limited equipment for storing eggs, some breeder activities are still carried out at Sericulture Laboratory of the Center for Forest Research and Development.
PT Begawan Sutra Nusantara will maintain the results of this PS-01 hybrid egg until instar 3. For the next maintenance stages, until it becomes a cocoon, PT Begawan Sutra Nusantara cooperates with the forest farmer group (KTH) Bina Mandiri Sukabumi. In addition to collaborating with KTH Bina Mandiri Sukabumi, PT Begawan Sutra Nusantara also collaborates with nine other KTHs. So, in this case, there is a dependence of KTH members on PT Begawan Sutera Nusantara in the form of providing silkworm seeds hybrid PS-01. As reciprocal cooperation, the results of silkworm cultivation from KTH in cocoons will be purchased by PT Begawan Sutra Nusantara.

Analysis of financial feasibility of sericulture industry using PS-10 silkworm seeds at KTH Bina Mandiri Sukabumi
Some assumptions used in the analysis of the financial feasibility of the sericulture industry using PS-01 hybrid silkworm seeds at KTH Bina Mandiri Sukabumi: 1. The scope of the analysis includes cultivation and processing of production up to yarn; 2. Cultivation stages include egg handling, rearing small silkworms, raising large silkworms, cocoon process; 3. The number of maintenance cycles in one year is eight times; 4. The production capacity of each KTH member is two boxes of egg seeds/cycle; 5. Productivity of cocoons harvested 38 kg/box/cycle; 6. 1 kg of yarn requires 9 kg of cocoons; 7. Price of hybrid silkworm eggs PS-01 Rp. 200,000/box; 8. The price of non-grade cocoons is Rp. 41,000/kg; 9. Yarn price Rp. 900,000/kg; 10. Labor wages Rp. 60,000 per HOK; 11.The demand for mulberry leaves per cycle 800 kg/box of hybrid silkworm eggs PS-01; 12. The price of mulberry leaves is approached from the wages for taking leaves because there is no data regarding the cost of building a mulberry garden; 13. Discount factor of 8%; 14. Financial feasibility assessment is carried out on a 10year business cycle. The analysis is carried out in four schemes: Scheme I. KTH farmers buy PS-01 hybrid silkworm eggs and sell their products in cocoons; Scheme II. KTH farmers buy PS-01 hybrid silkworm egg seeds and sell their products in yarn; Scheme III. KTH farmers do not buy PS-01 hybrid silkworm eggs and sell their products in the form of cocoons; Scheme IV. In a partnership scheme, KTH farmers are assisted with silkworm eggs, consumable operational materials. Farmers receive maintenance assistance up to the 3rd instar and the sale of the product in the form of cocoons.

Output flow.
The disbursement stream is divided into 1. The investment cost, which includes making a house for the maintenance of silkworm, is only carried out once in one business cycle, namely at the beginning of the activity. 2. Operational costs are consisting of fixed operating costs and variable operating costs. Fixed operating costs include the purchase of a seriframe, payment for electricity, and purchase of cleaning equipment. Fixed operating costs are not affected by the amount of production. Variable operating costs depend on production, consisting of purchasing eggs, purchasing lime, purchasing chlorine, buying newsprint, maintaining wages, taking leaves, and spinning wages. The following are the components and costs incurred in 1 cycle of silkworm cultivation using PS-01 hybrid silkworm seeds in each financial feasibility analysis scheme.  Table 3 shows that the most significant cost component of silkworm cultivation activities comes from labor wages. Labor wages can be seen in investment components number 12, 13 and 14 in Table 3. The proportion of labor costs to the total investment costs for scheme I is 53.93%, scheme II is 73.14%, scheme III is 53, 93% and scheme IV 20.17%. When compared to the other three schemes, scheme IV has the smallest proportion of wage costs. However, the cost of labor wages in scheme IV has a larger proportion compared to other costs, except for the cost of building a caterpillar rearing house which the proportion reaches 27.47%. So it can be said that the proportion of labor costs in scheme IV is also significant in the cultivation of sericulture. This follows the statement [19] that sericulture is a laborintensive farming business that absorbs labor. Sericulture activities can also support social forestry programs that improve welfare and provide employment opportunities for communities both around the forest and further one from the forest areas [19].

Financial feasibility analysis results.
In conducting financial feasibility analysis, it is necessary to consider changes in the value of money over time. This is because the flow of money used to calculate IOP Conf. Series: Earth and Environmental Science 917 (2021) 012031 IOP Publishing doi:10.1088/1755-1315/917/1/012031 6 the investment eligibility criteria uses a fairly long period, in this ten years activity. During this period, the value of money will continue to change. To consider changes in the value of money over time is it done by including a discount factor in the analysis. The discount factor is required to convert the expected future flow of resources into an estimated present value [20].
The results of the financial analysis of silkworm cultivation using PS-01 hybrid silkworm seeds in each scheme are presented in Table 4 with the assumption of a discount factor of 8%. The assumption of the discount rate is based on the rate of Bank Rakyat Indonesia's credit interest in 2021. According to the statement [21], the interest rate for financial analysis is the cost of money prevailing in the market, which is the same as the interest rate for loans. Net Present Value (NPV) is the present value of the difference between benefits and costs at a specific discount rate [22]. The results of the analysis show that schemes 1 and 3 have negative NPV values, which means that the cultivation of sericulture using PS-01 hybrid silkworm seeds with schemes I and III are not feaseable if these activities are carried out. This is different from the results of research conducted by [23] FMU Boalemao, at Gorontalo Province. Using PS-01 hybrid silkworm seeds and a similar scheme, the NPV results of this activity show a positive value. This difference is possible because 1. Silkworm cultivation activities in FMU Boalemo include income from mulberry cuttings, not as it in KTH in Sukabumi Regency. 2. Cocoon productivity in FMU Boalemo reaches 40 kg/eggs-box, while KTH in Sukabumi Regency is only 38 kg/eggs-box. 3. The number of silkworm cultivation cycles in FMU Boalemo in one year is 12 times, while KTH in Sukabumi Regency is only eight times. This is possible because the silkworm cultivation in KPH Boalemo separates the building for rearing small caterpillars from large caterpillars. At the same time, KTH in Sukabumi Regency only has one building that is the same for keeping small silkworms and large silkworms. Although cultivation schemes I and III are not financially feasible in the field, the community continues to carry out these activities. This is because labor costs, which are the largest component of costs, are not actually incurred by farmers. Labor costs are often not taken into account so that when they generate final income where its value is greater than the actual costs incurred, the silk farmer already earn some profit.
In schemes II and IV, the NPV value shows a positive result. This shows that from the NPV criteria, silkworm cultivation activities using PS-01 hybrid silkworm seeds provide benefits so that they are feasible to do. The highest NPV value in scheme II is that farmers sell their cultivation in the form of yarn. To realize this scheme II, cooperation with partners is needed in the form of increasing the skills of farmers to process silkworm cocoons into yarn and a commitment from partners to receive production yarn from farmers. In the current partnership scheme, partners only receive non-grade cocoons and do not receive products in the form of yarn.
Internal Rate of Return (IRR) is a method for calculating the discount rate that makes the current value of all estimated cash inflows equal to the present value of expected cash outflows [24]. In principle, IRR is a series of calculations that make the NPV zero. In scheme 1, from the beginning to the end of the business cycle, the present value is always negative. This results in the IRR value not being identified. The IRR scheme I is not identified and for scheme III is 1%. These values are smaller than Benefit-Cost Ratio (Gross B/C) is a comparison between present value of benefirs and present value of cost. The BCR value for silkworm cultivation in scheme I is 0.88, and scheme III is 0.99 or less than 1, so that from the BCR criteria, these two schemes are not feasible to do. In scheme II, the BCR value is 2.03, and in scheme IV, it is 1.39 or greater than 1, so from the BCR criteria, both schemes are feasible.
Analysis of the payback period (PBP) is needed to determine the period takes for a business to return the investment value. The value of the Pay Back Period (PBP) of business II in the 2nd year and the IV scheme in the 4th year. So for schemes II and IV, from the PBP criteria, it is feasible. Schemes I and III until the end of the concession do not occur PBP, so the two schemes are not feasible from the PBP criteria.

Conclusion
The feasibility of silkworm cultivation using PS-01 hybrid silkworm seeds is determined mainly by the sales form of the end product. Sales of the end product in the form of yarn are more profitable than sales in cocoons. Although, compared to partnership schemes farmers receive various kinds of assistance from partners. However, farmers still have limitations if they have to sell silkworm cultivation in the form of yarn. These limitations include lack of farmers' access to the silk yarn market. In addition, the dependence of PS-01 hybrid silkworm seeds on partners has resulted in farmers being bound to sell their cultivation products to partners. Until now, partners have only received cultivated products from farmers in the form of cocoons. For this reason, it is urgent to provide PS-01 hybrid silkworm seeds commercially so that farmers can obtain these silkworm seeds by buying them freely. Farmers must also increase their capacity to be able to process cocoons into quality silk thread. Provide facilitation for farmers to access the yarn market freely so that there is no monopsony of buyers of silk yarn as has happened so far.