Country Investment Plan for Food Fortification in Indonesia
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CHAPTER 8 BENEFIT OF INVESTMENTS
AND COMMITMENTS TO GOVERNMENT
8.1. Benefits and Return
Several common measures of the financial analysis, such as Benefits- Cost BC analysis, Net Present Value NPV, and Internal Rate of Return
IRR, are applied in this study. Applying these measures in the field of food fortification program is not easy since some impacts of food fortification are
difficult to measure quantitatively in terms of economic. Therefore, some assumptions are made, as shown in Appendix 1.
The computer program of PROFILES spreadsheet, developed by ADB- Keystone Center Consultants, was used for financial analysis. The analysis
was done based on additional cost and the additional benefits for each cost and benefits components. The components of the additional cost and benefits
identified are presented in the following table Table 8.1. Table 8.1 Components of Cost and Benefits in the Financial Analysis
of Food Fortification Programs.
No. Nutrients to be fortified
Additional cost Additional benefits
1. Iron for wheat flour
Fortificant Equipment
QAQC Training
Monitoring surveillance
Improving cognitive Increasing productivity
2. Vitamin A
for palm oil Fortificant
Equipment QAQC
Training Monitoring
surveillance Lives saved
Health care cost saving
3. Iodine for salt
n.a n.a 4.
Folic acid for wheat flour
Fortificant Equipment
QAQC Training
Monitoring Lives saved
Health care cost saving
Country Investment Plan for Food Fortification in Indonesia
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surveillance
The financial analysis was not applied to iodine fortification because no consensus on the method for calculating the cost and the financial benefit of
iodine fortification had been made by the Regional Study Team and Consultant of ADB-Keystone Center. Therefore the computer program of PROFILES for
that analysis was not available. The results of the financial analysis for the iron, vitamin A and folic acid
fortification showed that the benefit-cost ratio of the iron – folic acid and vitamin A is 10.7 and 7.0 respectively. While the Net Present Values of each of the
fortification programs are US 135.526 and 214.529 million respectively with a very high the internal rate of return Table 8.2. These evidences indicate that
each of the fortification programs is very feasible financially.
Table 8.2. Results of the Financial Analysis of Food Fortification in Indonesia
No Nutrients to be fortified
Vehicles BC Ratio
NPV 10-yr USD 1000
r = 5 IRR 10-yr
1. Iron and folic acid
Wheat flour 10.7 135,526 402
2. Vitamin A
Palm cooking oil 7.0 214,529 521
3. Iron, folic acid vitamin A
Wheat flour palm cooking oil 7.8 350,055 469
4. Iodine
Salt n.a n.a
n.a
r = discount rate For the detail see appendix 1.
8.2 Risk Analysis
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