alexa Financial and Technical Assessment of Kenaf Cultivation
ISSN: 2151-6219

Business and Economics Journal
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Research Article

Financial and Technical Assessment of Kenaf Cultivation for Producing Fiber Utilized in Automotive Components

Abdelrhman HA1,2*, Shahwahid M1,3, Paridah MT1, Samad ARA3, Habib MAAEI4 and Ogeri A3

1Department Of Techno Economic in Biocomposite Institute of Tropical Forestry and Forest Products, Universiti Putra Malaysia (UPM), 43400, Serdang, Selangor, Malaysia

2Department of Forestry and Range Sciences, Faculty of NATRES, University of Kordofan, P.O.Box 160, Elobeid, Sudan, Malaysia

3Faculty of Economics and Management, Universiti Putra Malaysia (UPM), 43400, Serdang, Selangor, Malaysia

4International Business School, Universiti Technologi Malaysia (UTM), Malaysia

*Corresponding Author:
Abdelrhman HA
Department of Techno Economic in Biocomposite Institute of Tropical Forestry and Forest Products
Universiti Putra Malaysia (UPM)
43400, Serdang, Selangor, Malaysia
Tel: 0060103101202
E-mail: [email protected]

Received Date: September 07, 2016; Accepted Date: September 23, 2016; Published Date: October 05, 2016

Citation: Abdelrhman HA, Shahwahid M, Paridah MT, Samad ARA, Habib MAAEI, et al. (2016) Financial and Technical Assessment of Kenaf Cultivation for Producing Fiber Utilized in Automotive Components. Bus Eco J 7: 254. doi: 10.4172/2151-6219.1000254

Copyright: © 2016 Abdelrhman HA, et al. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

 

Abstract

The kenaf plant is eco-friendly, renewable, low in cost and not meant to be a food source, owing to its potential commercial value in Malaysia, the government has allocated millions of ringgit for research to develop a viable kenafbased industry. This study is an attempt to assess the financial and technical performance of kenaf cultivation to produce fiber usage in automotive components. The financial data were collected through interviews with kenaf growers and from group discussions as well as production data collected from CMPC (Kenaf Processing and Marketing Centre) Bachok-Kelantan. The financial data were analyzed using Microsoft Excel software while Eview8 was used to analyze the production data. Three scenarios of kenaf production per hectare were assumed which were 15, 12 and 10 ton. According to the data analysis; the results revealed when kenaf production was 15 ton/ha, the farmer made a maximum profit of 37% from the subsidy provided by the Lembaga Kenaf Dan Tembakau Negara (LKTN) or National Kenaf and Tobacco Board, which was more than double the profit margin without subsidy. The financial analysis illustrated that all the three scenarios were viable when using the Benefit Cost Ratio (BCR) as an indicator. However, the production of 15 ton per hectare was the best of the three scenarios due to the five-year payback period, which was equal to half the period run on the model of the financial analysis. Additionally, the analysis of the production input (labor and chemicals) showed a significant effect on kenaf production as indicated in the analysis of Ordinary Least Square (OLS).

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