Assessing Profitability Of Small-Scale Cocoa-Goat Mixed-Farming In West Sulawesi, Indonesia Assessing Profitability Of Small-Scale Cocoa-Goat Mixed-Farming In West

Decline in cocoa yield and cocoa price fluctuation have negatively affected the income of small-scale farmers. An approach to address the sustainability of small-scale cocoa farming is to diversify the household income via cocoa-goat mixed farming. This study aimed to assess whether cocoa-goat mixed farming was a viable and profitable enterprise for small-scale farmers in West Sulawesi by using cost benefit analysis (CBA). Three CBA models were developed to compare profitability of an existing medium-scale cocoa-goat mixed farm located in West Sulawesi with hypothetical small-scale cocoa monoculture and cocoa-goat mixed farming. The CBAs were informed by an interview using structured questionnaire and literature search. The principal CBA assessment criterion was net present value (NPV) while benefit cost ratio (BCR) and internal rate of return (IRR) were supplementary. Sensitivity analysis measured the impact of changes in key parameters on profit. Over a 25-year production cycle, the medium-scale cocoa goat mixed farm is a profitable enterprise, earning an estimated profit of USD 90,403. At small-scale level, the findings suggest that engaging in small-scale cocoa goat mixed farming has potential to increase household income by 27% of profit from the cocoa monoculture.


INTRODUCTION
). This is based on an estimation that 1 ha of cocoa trees produce around 340 kg of cocoa pods annually, fed to the goats at 1.5 kg/goat each day in conjunction with prunings from cocoa and shade trees (Priyanto, 2008). Alternatively, Purwantara et al. (2017) estimated that 1 ha of cocoa farm is capable of supporting 22 goats. This estimation was based on a farm with the maximum number of leguminous shade trees possible among the cocoa trees and regular pruning of these trees.
To date there has been little research to assess the profitability of cocoa-goat mixed farming in Indonesia. Thus, the aim of this study was to evaluate the potential for cocoa-goat mixed farming to be a profitable and viable business. This is essential to improve long term livelihoods, income and resilience for cocoa farmers.

RESEARCH METHODS Data collection
The study was conducted in the major cocoa producing province of West Sulawesi, Indonesia. The Bin Raji Farm (BRF) (coordinates -3.336793, 119.168056) was selected as a medium-scale cocoa-goat mixed farm which has sound management practice in West Sulawesi. A face-to-face interview was conducted with the farm owner and farm manager in November 2017 using a structured questionnaire. Open-ended questions were asked to request information about farm management, farm inputs and outputs. The questionnaire was developed in English and then translated into Bahasa Indonesia by a native speaker of Bahasa Indonesia based at the University of Sydney. The interview was approved by the Human Research Ethics Committee at The University of Sydney (Ethics approval number: 2017/891).
For the hypothetical small-scale cocoa monoculture farm and cocoa-goat mixed farm, secondary data were derived from expert opinion and published literature and from a household economic survey of small-scale cocoa farmers in West Sulawesi by Irfany et al. (2017).

Data analysis
Cost benefit analyses (CBA) were conducted from the perspective of cocoa farmers without considering the environmental and social costs and benefits. The time frame of the analysis is 25 years based on the projected economic life of the cocoa trees. The decision was made on this time frame to capture a full cycle of cocoa production. Three CBA models were developed using Microsoft Excel 2016.
1. Medium-scale enterprise. The first CBA assessed the profitability of an existing medium-scale cocoa-goat mixed farm in West Sulawesi. This indicated how profitable a well-managed cocoa-goat mixed farm enterprise is under Sulawesi conditions and provided an understanding of the management and production procedures relevant to small-scale farmers in the local area. 2. Small-scale cocoa monoculture. The second CBA assessed the profitability of small-scale cocoa monoculture farming in West Sulawesi. 3. Small-scale cocoa-goat mixed farming. The third CBA assessed the profitability of small-scale cocoa-goat mixed farming in West Sulawesi. : Jurnal Sosial Ekonomi Pertanian https://doi.org/10.24843/SOCA.2021.v15.i01.p20 221

SOCA
The original monetary values of the costs and benefits were determined in Indonesian rupiah, which were converted to US dollars using an average exchange rate of 13,551 recorded within the period of 3 months from November 2017 -February 2018 (Bank Indonesia, 2018b). Since the costs and benefits occurred at different time periods, discounting to make them comparable at the present time was applied at 7.25% based on the average policy rate set for Indonesia in early 2018 (Bank Indonesia, 2018a). The policy rate is a rate used by central banks to manage supply of money including interest rate (International Monetary Fund, n.d.). Three assessment decision criteria were used in the evaluation of profitability. Net present value (NPV) was used as the main assessment criteria, while benefit cost ratio (BCR) and internal rate of return (IRR) were also calculated to supplement NPV. The NPV, BCR and IRR were calculated using the formulae outlined as follows (Rushton, 2009): Where: BT= total benefits r= discount rate t = number of years in the future CT = total costs The summary of the three farm models are as follows: 1.

Medium-scale cocoa-goat mixed farm
The medium-scale cocoa-goat mixed at BRF has 10 ha area for cocoa production. 8 ha is currently used for cocoa production with 1,000 cocoa trees/ha. The shade trees consisted of fruit trees (largely papaya and bananas) and leguminous trees (Gliricidia). Prunings of cocoa and shade trees as well as weeds and pod cases were used as goat feed.
In terms of goat production, the BRF records indicate that the current flock at the farm consists of 34 does with production cycle of 1.5/year. The average litter size was 2.0. Weaning is done at day 90. The flock is visited 4 times/year by a vet. An average of 102 yearlings is produced per year. The does are culled after 5 years while the bucks are culled when they are 8 years old. Adult goats were each fed 4.5 kg/day. Forages were purchased during the annual 3-month dry season at USD 0.02/kg. Farm tools and equipment purchased and used at the farm were backpack sprayers, wheelbarrow, grass cutters, hoes, pruning shears, machetes and knife. The price of these items based on the lazada.co.id as of February 2018.

2.
Small-scale cocoa-monoculture farm Information from the survey of Irfany et al. (2017) indicates that the average small-scale cocoa farm in West Sulawesi is 1.2 ha. Around 1,000 cocoa trees are planted per hectare (Moriarty et al. 2014), mainly local clones and Sulawesi 2 genotypes (Irfany et al. 2017). It is assumed in the model that the establishment rate after planting and in-filling is 100%. The shade trees, mainly Gliciridia, a common legume shade tree in Sulawesi (Moser et al., 2010), are planted at the start of the cocoa farm in order to provide protection to the cocoa trees.
Fixed costs included purchase of seedlings and farm tools, and running costs, particularly labour. The land cost was not factored into CBA framework as it is not purchased specifically to establish a cocoa farm but owned by the farmer. Benefits were limited to the sale of cocoa beans.
Major farm inputs include seedlings that are generally acquired from neighbouring farms or a local nursery with the price of USD 0.37 -0.74/seedling (Lebe et al. 2017). A major running cost is labour which is required according to the age of the cocoa trees (Bedford et al. 2002). Around 80-90 days per year/ha are needed for establishing and running non-bearing cocoa trees and then 30 days per year for bearing trees in a hectare of cocoa (Johnson et al. 2004). The daily wage used is USD 3.70/day based on the rate used at the BRF. Labour is required for a variety of activities including land preparation, planting, manual weeding, harvesting and post-harvesting operations. No external paid labour is required as the farm size is small and labour requirement is met fully by the farmer and the household members. It is assumed that small-scale cocoa farmers do not use fertilizer, pesticides and fungicide. This assumption was based on the report of Irfany et al. (2017) that the amount of fertilizers, pesticide and fungicide is negligible among small-scale farmers in West Sulawesi. The losses due to the pests and diseases are not factored in the CBA model. This is because the current poor production figure is assumed to already reflect pest and disease impacts. It is assumed that the old nonproductive cocoa trees start to be replaced 3 years prior to the end of the production cycle.
The start of cocoa yield and the duration of production cycle are as described in earlier section under medium-scale cocoa-goat mixed farming. In relation to the production rate, it is assumed that in the first-year cocoa yield is only around 10%, and then yield gradually increases to 25%, 50%, 75%, 90% and 100% in the succeeding years. This assumption was constructed after consulting local cocoa experts. The peak of production varies but on average it may last around 8 years. After this point cocoa productivity starts to decline. An average annual production of dry cocoa beans from a small-scale cocoa farm in West Sulawesi is around 680 kg/ha (Irfany et al. 2017) but based on the author's consultation with an Indonesian cocoa expert, the yield may be as high as 800 kg/ha particularly when the cocoa trees are at the peak of production. The dry cocoa beans are sold to local collector (Lebe et al. 2017) at an average farm gate price estimate of USD 2.0/kg (VECO, 2011).

Small-scale cocoa-goat mixed farm
Information about the costs related to the cocoa component of the mixed farm is similar with small-scale cocoa-monoculture. As for the introduction of goats, the associated fixed costs include goat shed construction, goat and farm tools purchase. The running costs include maintenance costs, additional feed purchase, additional labour and miscellaneous.
The goat flock size is determined based on the carrying capacity of 1 ha cocoa farm. This was based on 90:1 shade tree to goat ratio per year as practiced at BRF.
Given that there are a total of 1,000 shade trees at the small-scale farm, it has potential to provide feed for around10 head of goats in a year.
The goat shed is assumed to be constructed on an area of marginal land on the cocoa farm which will not decrease the land area for cocoa. The goat shed is constructed using low-cost local materials with an estimated cost of US$ 200 for a flock size of 10 goats. The goat shed construction figure is based on an estimation of per head cost of goat shed which is around USD 20 according to an experienced goat raiser in the area.
Based on the assumption that a 1 ha cacao farm has a goat capacity of 10 head, the start-up goat flock size is determined to be 5 heads which consists of 4 does and 1 buck of PE (Peranakan Etawah). The initial breeding stock are purchased at an average price of USD 122 per buck and USD 104 per doe (Doloksaribu et al. 2014). Given the nature of small-scale goat management, it is assumed that the does are unlikely to achieve maximum production cycle of 1.5/doe/year. It is conservatively assumed that the production cycle is 1.0/doe/year while the litter size is 1.7 (Sodiq et al. 2003). Thus, it is expected that 5 does will produce 7 goats per year. Thus, it is estimated that together with initial breeding stock, an average of 10 goats will be maintained at the farm every year of which 5 goats are the initial breeding goats and 5 young stocks are produced and marketed annually. The breeding does are culled after around 5 years because at this point the doe productivity has significantly declined (Sodiq, 2004). The replacement of the does is implemented for 50% of does at Year 4 and the other 50% at Year 5. The buck is culled after around 8 years. The feed is largely derived from the legume shade trees.
The annual goat shed maintenance is estimated at USD 13. In terms of feeding, the prunings of shade trees, weeds and cocoa are used as feedstuff for goats which is given at 4.5 kg/doe/day (Priyanto, 2008). However, the prunings of the legume shade trees are not available all year round. During the long dry season from May to July (known as drought period) (Indonesian Metereological Climatological & Geophysical Agency, 2018) external feedstuff is purchased. The cost for an additional feed for the flock size of 10 goats is estimated around USD 82/year. This was calculated from the daily amount of consumption multiplied by the 90 days and the price of the forage USD 0.02/kg.
Additional labour is required to run the goat farm. Since the goat shed is located on the cocoa farm, this saves a substantial amount of time and labor in hauling the feed. It is estimated that the additional labor for the goat enterprise is 1 hour/day (Doloksaribu et al. 2014), thus, in total 48 days/year with a daily wage rate of USD 3.70 based on the rate used at BRF. In this model, family labour is not counted as part of the production cost as it is assumed to have been reflected in the annual total number of days needed to run the farm. The miscellaneous fee around USD 10/year was taken into account for unexpected expenses that might occur within the enterprise.
An estimate of 7 goat yearlings are sold per year with the price ranging from USD 65-110 (Murray et al. 2011). A substantial benefit is also derived from the legume shade trees. Having derived goat feed directly from the cocoa farm, the costs saved from purchasing forage is estimated at USD 248/year. This is calculated from multiplying the forage price USD 0.02/kg by the flock size and 4.5 kg (Priyanto, 2008) SOCA: Jurnal Sosial Ekonomi Pertanian https: //doi.org/10.24843/SOCA.2021.v15.i01.p20 224 daily feed intake and 9 months during which the shade tree prunings sufficiently available. Sensitivity analysis Sensitivity analysis measured the impact of a 50% increase or decrease of the baseline value of parameters in the estimate of NPV. The key parameters tested individually in the sensitivity analysis included: cocoa and goat price; cocoa yield; length of drought period; and the discount rate. These parameters were chosen as they are reported to influence cocoa and goat production. The sensitivity analysis was done by changing the value of each parameter while the other parameters are held at their base values.

Profitability of medium-scale cocoa-goat mixed farming
Information gained from the interview included costs of farm inputs such as fixed-costs involved in the establishment of the cocoa and goat farm and the running costs. The details of these costs are shown in Table 1. In relation to the benefits, the collected information included the major benefit streams such as cocoa bean sale, cocoa seedlings, and output derived from the shade trees. The benefits associated with the goat component included the sale of yearlings, culled goats, and increased yields resulting from manure application which was used in the farm as organic fertilizer. The details of the benefits are presented in Table 2.   The medium-scale cocoa-goat mixed farm had negative cumulative NPV for around 10 years. It was estimated that the investment starts to earn positive NPV at year 2023. The NPV increases more gradually towards the end of the 25-year production cycle reaching a total of USD 90,403 at 16.4% IRR and the BCR of 1.5 (Table 03).
The breakdown of the costs and benefit of the medium-scale cocoa-goat mixed farm over the 25-year production cycle is presented in Table 3. Labour constitutes the highest production cost followed by fertilizer purchase (Table 3). More than half of the benefits in the medium-scale mixed-farm are derived from the sale of dry cocoa beans. The inclusion of goat rearing substantially diversified the farm income, accounting for nearly 30% of the total benefit.

Profitability of small-scale cocoa-monoculture farm and cocoa-goat mixed farm
The CBA results for the small-scale cocoa monoculture and cocoa-goat mixedfarming are presented in Figure 2. Integrating goats into the small-scale cocoa farm requires an additional investment of more than USD 900 or around 262% ( 1,361−375 375 ) of the initial capital used for small-scale cocoa farm (Table 5). The benefit in the cocoa monoculture farm is solely derived from the sale of cocoa beans while in the cocoagoat mixed farm the benefits derived principally from the sale of cocoa beans, goat yearlings and culled goats (Table 5). 1 Figure in the bracket shows the percentage of the total cost or the total benefit. From the cumulative NPV (Figure 2), both small-scale cocoa-goat mixed farm and small-scale cocoa monoculture farm have negative NPV from Years 0-5 which indicates that the income generated within this period is not sufficient to outweigh the production costs. However, both farming systems have positive NPV over the 25-9,866 7,755 -3,000 -2,000 -1,000 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 year production cycle which is an indication that both enterprises are financially viable.
Integrating goats into small-scale cocoa farming increases the NPV of the smallscale cocoa monoculture by 27% ( 9,866−7,755 7,755 ) ( Figure 2) over the 25-year cocoa production cycle. Nevertheless, the results also show that the IRR and BCR of the small-scale cocoa monoculture farm are higher as compared to small-scale cocoa monoculture farm.

Sensitivity Analysis
Cocoa yield and cocoa price were two critical parameters found to substantially influence farm profitability (Tables 6 and 7). For the medium-scale farm, when the cocoa price/cocoa yield decreases or increases by 50%, it changes NPV by 98%. For a small-scale farm, when there is a decrease or increase of cocoa yield or cocoa price by 50%, the baseline NPV changes by 65% and 51% in cocoa monoculture and cocoagoat mixed farm, respectively. The changes of the cocoa yield and price have similar effects on baseline NPV as shown in Table 6 and 7. This is because the cocoa yield and cocoa price are closely interrelated. The effect of the cocoa price change on the profit is also dependent on the volume of cocoa yield and vice versa.
In cocoa-goat mixed farming, the price of yearlings and length of drought period are potential parameters that influence the NPV. For the medium-scale farm, the NPV tends to increase/decrease by 46% when the yearling sale price is high or low. For the small-scale farm, the price tends to influence the NPV by 35% when there is increase or decrease of the goat yearling price. The length of drought period was influential only for the small-scale farms, with estimated influence on the NPV by 6% when the drought period was 50% shorter or longer than usual.

Baseline
High 2 (+50%) 1 Low reflects 50% decrease in the baseline value of the parameter. 2 High reflects a 50% increase in the baseline value of the parameter.

DISCUSSION
Productive cocoa farming requires regular management to remove excess shade and weeds, diseased cocoa branches and pods, stimulate flowering and pod maturation. However the benefits of improved management are deferred, in that investments in labour and management are not repaid until pod harvests increase several months later and farmers may direct their resources to more immediate priorities. Incorporating goats into the cocoa farming system provides an immediate incentive for farmers to remove waste products as feed for the animals, producing supplementary income and protein nutrition. Manures can be composted to improve soil fertility and increase cocoa yields in the medium term. This analysis provides, for the first time, direct evidence that cocoa-goat mixed farming is profitable over a 25 year cocoa cropping cycle.
Aside from the additional benefits of having goats, goat sales contributed almost 30% of the total income (Table 4). At the small-scale level, the CBA results show that engaging in cocoa-goat mixed farming has potential to increase the profitability of small-scale cocoa monoculture farms over a 25-year production cycle by around 27% (Figure 2). This is lower than suggested in a previous study by Gunawan & Budisatria (2016) which reports 70% higher profits in small-scale cocoa-goat mixed farms compared to cocoa monoculture in Java. However, it was unclear how the financial assessment was conducted in the study by Gunawan & Budisatria (2016) and the production stages of the cocoa trees on farms in the study was not reported.
Establishing the cocoa-goat mixed farm means additional investment by as much as 262% compared to cocoa monoculture (Table 4). This may be a considerable constraint to small-scale farmers who may have difficulty sourcing the required additional capital to establish the mixed farm enterprise. A bank loan as a source of finance might be an option but Irfany et al. (2017) found that most small-scale cocoa farmers in West Sulawesi do not have a bank account or are reluctant to receive bank loans. However, credit schemes such as Kredit Usaha Rakyat (KUR) recently initiated by the Government of Indonesia and backed by two state-owned corporations will enable readier access to finance among rural smallholders (Nunung Nurayartono, pers. comm.). International non-government organizations established to empower cocoa smallholders, such as Swiss Contact and Rikolto (formerly VECO), provide training and other programs to facilitate access to finance for farm inputs.
Additional benefits of raising goats in the cocoa mixed farm are derived from the production of goat manure that can potentially be used as a source of organic fertilizer for the cocoa trees. A study in South Sulawesi that applied cattle manurebased compost to cocoa trees reported around 5 times higher cocoa yield as compared to inorganic fertilizer (Mulia et al. 2019). Soil organic matter (SOM) plays a key role in promoting nutrient availability and microbial activity in tropical soils (Tiessen et al. 1994;Burger & Jackson, 2003). Cocoa farming generally results in depletion of soil organic matter (SOM), frequently to levels below the minimum recommended for optimal cocoa production (Agoume & Birang, 2009). This is a serious problem in many cocoa-producing areas of Sulawesi (Mulia et al. 2019) and soil amendment using compost and other sources of organic matter is a priority, especially as small-scale farmers currently face declines in farm productivity (Moriarty et al. 2014). Applying manure-based composts in mixed farm systems improves SOM and thereby crop productivity. The preparation of goat manure-based compost is worth investigation taking into consideration costs of additional labour and the compost starter, and the effect on cocoa yield. All the three CBAs have positive NPV over the 25-year production cycle. Sensitivity analysis indicated the estimated NPV over 25-year period is very sensitive to changes in the cocoa yield and price. When there is decrease or increase in cocoa yield and price it substantially changes the estimated NPV (Table 6 and 7). However, the changes are less pronounced for cocoa-goat mixed farm. Therefore, the diversification of farm enterprise with integration of goat raising into the farm can make an important contribution to household income security by acting at least as a buffer to losses in the event that both cocoa yield and price decrease.
A limitation of this study relates to uncertainty about the influence of other parameters such as the application of fertilizer and of fungicide and herbicide use on profitability that were not investigated in the sensitivity analysis. These were not included as their use was limited to the medium-scale farm, being reported only for the BRF. Given that fertilizer and pesticides are viewed as key inputs for cocoa farms due to their substantial impact on cocoa yield and on profitability, further evaluation of profitability for small-scale cocoa-goat mixed farm compared to cocoa monoculture accounting for these inputs is warranted.

CONCLUSION
Engaging in small-scale cocoa goat mixed farming provides a viable medium and long-term supplement to cocoa monoculture that improves profitability, income diversification and nutrition for cocoa farmers in West Sulawesi, Indonesia. The standard of management required for successful cocoa-goat mixed farming in this region was demonstrated by an established successful medium-scale enterprise. There is potential for a small-scale cocoa-goat mixed farm to increase household income by 27% compared to cocoa alone. It takes around 5-year period to realize the benefits of engaging in small-scale cocoa-goat mixed farming and large establishment cost is involved.
For small-scale cocoa farmers to realize such benefits from mixed farming will require long-term planning and a mechanism to provide capital investment adequate to finance establishing the goat herd in addition to the cocoa trees. Given that new knowledge about goat management particularly reproduction and health is required