Production efficiency and economic feasibility of greenhouse-based paprika farming in Bali, Indonesia
Keywords:
paprika, greenhouse, technical efficiency, financial feasibilityAbstract
This study examines the financial feasibility of greenhouse-based paprika farming (Capsicum annuum L.) in Baturiti District, Tabanan Regency, Bali, Indonesia, an area characterized by highland agroclimatic conditions that are conducive to the development of high-value horticultural commodities. The study primarily focuses on evaluating technical efficiency, business profitability, and the resilience of the farming system to potential declines in production output. A quantitative research approach was employed, utilizing Stochastic Frontier Analysis (SFA) to assess production efficiency, along with investment feasibility analysis using Net Present Value (NPV), Internal Rate of Return (IRR), and Net Benefit–Cost Ratio (Net B/C) indicators. Primary data were collected from 35 greenhouse paprika farmers through structured questionnaires and interviews, while secondary data were obtained from relevant institutions and supporting literature. The results indicate that the majority of farmers have not yet achieved optimal technical efficiency, with 29 out of 35 farmers (82.86%) recording technical efficiency scores below 0.90. Despite this condition, greenhouse paprika farming in the study area is financially viable, as reflected by a positive NPV of IDR 666,825,125.30, an IRR of 23.93%, and a Net B/C ratio of 1.27. These indicators demonstrate the enterprise’s capacity to generate economic surplus and provide satisfactory investment returns. Sensitivity analysis further reveals that the farming system remains viable under output reductions of up to 25%. However, financial feasibility cannot be sustained when output declines exceed this threshold or occur simultaneously with increases in major input costs, as indicated by IRR and Net B/C values falling below acceptable feasibility levels. These findings underscore the importance of optimizing production factor utilization and implementing effective farm management strategies to mitigate production risks. Overall, this study provides empirical evidence to support decision-making by farmers, local governments, and stakeholders in promoting the sustainable development of greenhouse-based paprika agribusiness.
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