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The 3rd Phase of PIU-SRDP

CORN MARKETING PROJECT

BUSINESS AND INVESTMENT PLAN

2017.09.08
I. GENERAL INFORMATION:

TITLE CORN MARKETING BUSINESS


SUBJECT Construction of Drier and Warehouse Complex for Tapaz Farmers Association
PURPOSE To increase the income of upland farmers by broadening their participation in value-
chain of crops in the form of accessible and ready market for their rice and corn produce.
To acquire appropriate price for crops through membership in integrated Barangay
Farmers Association that would consolidate and add value to their produced products.
To establish a system of operation in which producers can participate in distribution and
sales activities.
ROLES KOICA (Korea International Fund Source
Cooperating Agency) Monitoring & Evaluation

TAMCO (Tapaz Marketing Facilitate the concern of Phase I and II


Cooperative) Beneficiary

Tapaz Farmers Association (TAFA) Management of Operations and Facility


Conduct Business Development of the Project
DA ( Department of Agriculture) Technical Support
Monitoring & Evaluation
PLGU Trainings and Seminars
Technical Assistance
MLGU Design and Construction of Facility
Purchase of Machines & Equipment
Site Acquisition
Additional Funding
Partner Agency (DTI, DSWD, PCA, Trainings and Seminars
PCIC, AMAD) Technical Assistance

NGOs and Private Companies Marketing Assistance


FUNDING 25 Million Pesos
DURATION 3 years
LOCATION Tapaz, Capiz
BENEFICIARIES Tapaz Farmers Association, TAMCO, Famers Beneficiary of Phase I and Phase II
IMPACT Corn Marketing is improved
Strengthened beneficiaries in PIU-SRDP, Cooperative and Associations
Establishment of Direct Market Linkage to the Feed Mill
II. EXECUTIVE SUMMARY

An integrated Corn Marketing Business which serve as steady and reliable market of
corn production is proposed by Local Government of Tapaz thru the Tapaz Farmers
Association to the Korea International Cooperation Agency (KOICA) with the assistance of
the Department of Agriculture.

Corn is one of the major agricultural crop produced in the Province of Capiz wherein
it contributes to about 40% of the total corn production in Western Visayas. Tapaz is one of
the 16 municipalities in the Province of Capiz which has a total land area devoted to
agricultural crop production of 18,215.66 hectares and this is about 35.233% of the total land
area of the municipality. Next to rice, corn is the other major crop which has a total area of
2,200 hectares and has an average annual production of 13,200 metric ton. With the high
demand of corn production in the market, most of the municipal corn farmers shifted to
herbicide spraying process instead of mechanized process in land preparation, to have a
cheaper land preparation compare to mechanized process.

Mostly, the traders are providing capital and are also buying the produce. In this case,
our farmers are the least benefited because they dont have the capacity to transport their
products to the institutional buyers who can buy at a higher price.

The enterprise wanted to eliminate the traders and middlemen who usually dictates the
price of corn in the market as farmers lack the resources to transport their goods. Thru direct
buying of their produce, these corn farmers will have a bigger profit margin as they will no
longer wait for the traders. Instead, the Tapaz Farmers Association will facilitate the
purchase of their goods right in their premises by providing vehicles which will transport the
product of the members.

To provide reliable market for the farmers, Local Government of Tapaz will assist the
Tapaz Farmers Association in entering in corn bulk traders and feed millers in Metro Manila
through Supply Contract Agreements.

The Corn Warehouse and Drier Facility will be managed by Tapaz Farmers Association
under the Local Government of Tapaz, Capiz. Tapaz Farmers Associations shall be
composed of farmers association from each barangay of Tapaz. TAFA will serve as a
consolidator of the products from other Farmers Cooperative such as TAMPCO.

III. PRODUCTS
Maize is second to rice as the most important crop in the Philippines, with one-third
of Filipino farmers, or 1.8 million, depending on maize as their major source of livelihood.
White maize is the most important substitute staple in periods of rice shortage, especially for
people in rural areas. Yellow maize is the primary source of feed for the Philippines animal
industry, and is being increasingly used by the manufacturing sector.
Most common in upland areas, maize production peaks from July to September; the lean
months are from January to June. The upland regions of Mindanao have the most area
planted to maize, and the highest production in the Philippines. Maize is also grown in the
lowlands, where it is planted during the dry season after the rice crop has been harvested.
The production of maize after rice increases the productivity of irrigation systems during the
dry season, while supplying needed grain during an otherwise lean period. Integrating
livestock into the system provides high value products and increases the income of maize
farmers with small landholdings (FSSRI, 2000; Eusebio and Labios, 2001).
In the Philippines, corn and corn products constitute 4.5% of the peoples diet. White
corn varieties serve as staple food of 20% of the population while yellow corn is used
primarily as main ingredient for poultry and livestock feeds. Demand growth for feeds is
estimated at 5-6% annually due to increasing requirements of the poultry and livestock.
As indicated in Table 1 and Figure 1, Capiz has a total corn area of 17,704.35 hectares.
Major corn producing municipalities (with areas greater than 700 hectares) include Maayon,
Tapaz, Cuartero, Dumalag and Dumarao (Figure 1).

Table 1. Corn Area of Capiz, 2015

Municipality Area (Ha)


Cuartero 2,276.85
Dao 153.00
Dumalag 1,027.00
Dumarao 935.00
Jamindan 774.00
Maayon 8,200.00
Panitan 152.00
Pilar 581.00
Tapaz 1,450.00
Pontevedra 430.50
Pres. Roxas 1,432.50
Sapian 18.00
Mambusao 50.50
Sigma 224.00
TOTAL 17,704.35
Figure 1. Corn Commodity Map: Existing Area for Corn Production by Municipality, 2015

1; 30,184.50

Cuartero

Dumalag

Maayon
1; 12,764.19
Tapaz

Pres. Roxas
1; 7,677.80 1; 7,285.00
1; 5,231.00

1
Figure 2. Major Corn Producing Municipalities, 2015

Figure 2 shows that the municipality of Tapaz ranked 4 th in Yellow corn


production in the Province of Capiz with a total production of 7,285 MT for 2015. The
municipality of Maayon is consistently the 1 st major producer of corn given that they
have the largest area of 8,200 hectares.
In terms of the volume produced per year, the province was able to increase by
almost 52% from its original harvest for from 2014 to 2015. This gives an average
increase in production of 18,377.03 MT/year (Table 2). There was a decrease in corn area
in 2014 but the volume of production in increasing from 2013 to 2015.

Table 2. Area Harvested, Corn Production & Average Yield, 2013 to 2015

Census Year Harvested Area Production Yield,


(Has.) Volume, (MT) MT/ha

2013 21,538.50 89,534.46 3.78


2014 15,888.25 71,262.76 3.64
2015 17,704.35 74,923.49 3.77

Source: OPA-Capiz Corn Program Reports

Rice is the top commodity of the municipality of Tapaz in terms of agricultural


production. Just like corn, rice traders or middlemen are benefiting especially during peak season
wherein farmers are selling their products at very low price. This is because mostly of rice
farmers dont have post-harvest facilities like warehouse to store their products and hauling
trucks to transport their products to established buyers. These weakness are taken advantage by
the middlemen buying the products of the farmers for the price they dictate.

Establishment of warehouse and procurement of hauling trucks of TAFA for this project
will be a great help for the rice farmers in cooperation with the National Food Authority (NFA)
in dealing with rice farmers in terms of consignment sale.

Production Value by Agricultural Crops


Year 2015

Major No. of Total Production Price per kilo Value of Production Total for 3 years
Cropping (M.T.) (Php) (Php)
Crops
1. Rice
- Irrigated Twice 2,670.44 16.00 42,727,040.00 128,181,120.00
- Rain fed Twice 9,270.30 16.00 148,324,800.00 444,974,400.00
- Upland Once 1,668.80 17.00 28,369,600.00 85,108,800.00

2. Corn(Yellow) Twice 13,200.00 13.00 171,600,000.00 514,800,000.00


3. Banana Year round 13,907.52 12.67 176,208,278.40 528,624,835.20
4. Coconut Quarterly 2,326.86 26.00 60,498,360.00 181,495,.080.00
5. Coffee Once 12.92 40.00 516,800.00 1,550,400.00
6. Fruit Trees Seasonal 166.046 30.62 5,084,328.52 15,252,985.56
7. Abaca Year round 2,845.00 48.00 136,560,000.00 409,680,000.00
8. Bamboo Once 1,470,000 poles 50.00 /pole 73,500,000.00 220,500,000.00
9. Vegetables Year round 15.717 25.52 401,097.84 1,203,293.52
10.Root Seasonal 74.375 20.00 1,487,500.00 4,462,500.00
Crops/Tuber
s
11. Sugar Cane Once 20,090.00 36.00 723,240,000.00 2,169,720,000.0
0
12. Ginger Once 20.913 40.00 836,520.00 2,509,560.00
13. Peanut Twice 12.72 40.00 508,800.00 1,526,400.00
14. Dragon fruits Year round Newly planted 180.00
15.Inland Fisheries Quarterly 16.00 80.00 1,280,000.00
16. VCO Quarterly
17. Geonet Quarterly 3,200 15 /50m.roll

Source: MAO

IV. ORGANIZATION
Tapaz Farmers Association (TAFA) is the official farmer association re-organized by
the Municipality of Tapaz last July 2016. The association is composed of farmers association
from Fifty Eight (58) barangays of the Municipality of Tapaz. Each barangay farmers
association elects their officials and represent them in the federation of officers.

Upland areas where given priority especially in improving the condition of their farm
to marker roads. Farmers starting to have an access to loans and grant of farm inputs from the
national government thru the local government.

KOICA will serve as the funding agency of the project which is the 3rd phase of the
PIU- SDRP Project in partnership with the Department of Agriculture (DA). Farmers
association such as Pangilatan of Artuz, Tuburan of Camburanan , AIFA of Agcagay in
Jamindan and Agcococ will be catered as they are part of the Phase I and Phase II of the
project thru TAMCO.

Barangays in PIU-SRDP

ASSOCIATIONS/ VOLUME PRODUCTS


BENEFIARIES
Tuburan/ Tapaz 20 ha. Corn Planters
Artuz/ Tapaz 80 ha. Corn Planters
Agcacay/ Jamindan 10 ha. Corn Planters

TAMCO will continue to facilitate the needs of the original farmer beneficiary of the
PIU-SRDP.

TAFA FEDERATION
ORGANIZATIONAL STRUCTURE OF THE PROJECT
BOD
POLICY AND MANAGEMENT
SUPERVISION

DEPARTMENT OF
LGU KOICA AGRICULTURE

ADMINISTRATION
BUSINESS & FACILITY
OPERATION

TAFA FARMERS
TAMCO
BARANGAY COOPERATIVE
CORN PRODUCTION FINANCING AND BUSINESS
CONSOLIDATION DEVELOPMENT
PHASE I & II BENEFICIARY
V. MARKET ANALYSIS
Annual Yellow Corn Production in the Philippines for 2016 reached up to 5, 196,309.01
Metric Tons. Cagayan Valley is the major producer which constitutes almost 32% of the total
corn production while Western Visayas has only 3% share as shown in table below.
Table ___ANNUAL PRODUCTION OF YELLOW CORN IN THE PHILIPPINES
%
2012 2013 2014 2015 2016 Share
PHILIPPINES 5,241,519.89 5,248,202.79 5,508,368.71 5,384,082.57 5,196,309.01
CAR 204,790.00 221,818.00 223,896.00 217,952.00 181,362.00 3.49
ILOCOS REGION 383,259.00 394,766.00 425,646.56 442,741.00 462,103.00 8.89
CAGAYAN VALLEY 1,808,978.26 1,659,958.79 1,810,225.65 1,757,347.95 1,640,741.44 31.58
CENTRAL LUZON 186,336.00 198,425.00 211,420.00 239,305.00 228,330.28 4.39
CALABARZON 28,567.00 38,948.00 43,393.00 39,421.00 65,954.00 1.27
MIMAROPA 72,985.20 89,215.00 91,378.00 109,085.00 97,317.00 1.87
BICOL REGION 182,831.00 208,938.00 228,207.00 188,436.00 201,690.00 3.88
WESTERN VISAYAS 256,055.00 265,999.00 267,766.00 254,882.00 135,327.75 2.60
CENTRAL VISAYAS 751.00 3,199.00 2,039.00 1,379.00 1,533.00 0.03
EASTERN VISAYAS 13,173.43 13,225.00 13,379.00 13,404.00 12,637.00 0.24
ZAMBOANGA
PENINSULA 43,760.00 32,882.00 30,325.00 34,821.00 41,303.18 0.79
NORTHERN
MINDANAO 864,835.00 829,795.00 795,914.00 809,042.62 759,824.16 14.62
DAVAO REGION 47,923.00 53,712.00 67,575.00 50,874.00 48,480.00 0.93
SOCCSKSARGEN 960,272.00 1,036,036.00 1,072,891.00 1,005,386.00 926,154.00 17.82
CARAGA 45,059.00 53,281.00 68,319.50 62,695.00 78,259.00 1.51
ARMM 141,945.00 148,005.00 155,994.00 157,311.00 247,238.20 4.76
NEGROS ISLAND
REGION 68,055.00 1.31
Source: PSA

A closer look for Yellow Corn Production in Western Visayas, Province of Capiz shares
almost 41% of the total production next to the province of Iloilo which has 54% shares.
Table ___. Annual Yellow Corn Production in Western Visayas

%
2012 2013 2014 2015 2016 Share
WESTERN 256,055.0 265,999.0 267,766.0 254,882.0 135,327.7
VISAYAS 0 0 0 0 5
1,372.0 2,093.0 1,900.0 1,674.0 2,090.0
Aklan 0 0 0 0 0 1.54
4,934.0 4,020.0 4,784.0 3,733.0 4,061.0
Antique 0 0 0 0 0 3.00
50,145.0 52,059.0 57,453.0 62,070.0 55,459.0
Capiz 0 0 0 0 0 40.98
76. 153.0 318.0 212.0 445.7
Guimaras 00 0 0 0 5 0.33
145,273.0 142,669.0 121,847.0 118,572.0 73,272.0
Iloilo 0 0 0 0 0 54.14

In the figure below, Cagayan Valley supplies corn in Central Luzon and Calabarzon.
Besides Cagayan Valley which supplies corn in Calabarzon, it also imports corn from Ilocos
Region, Mimaropa and even outside the Philippines.
On the other hand, Mimaropa supplies the shortage of corn in Western Visayas while
Central Visayas gets it yellow corn supply from Socsksargen and Northern Mindanao.
Zamboanga Peninsula also imports corn from Socsksargen. Socksargen is the 2nd highest
producer of corn in the country having almost 18% Share followed by Northern Mindanao
having 15% share.
Visayas Regions which include region 6 have low production the reason why we still
import from MIMAROPA. The demand of corn is big due to existing feed mills especially in
the Province of Iloilo. These feed mills also exists due to high demand of poultry and
livestock in the region.
Figure. Geographic Movement of Yellow Corn (Source: Corn Industry Dev. Road Map 2011-2017)

The Value/ Supply Chain of Yellow Corn in the Philippines is shown in the figure
below. According to the author (Salazar, 2011), the flow of yellow corn is from the input
suppliers of seeds, fertilizers and Mechanization to the farmers then to the traders or
processors who has the post-harvest facility like warehouses where they can store
harvested corn. It will then be transported by the big traders and distributors who are the
Wholesaler, Importer, Exporter and Transport Provider and finally to the Consumers
which are the Production Farms for Poultry and Livestock.

Figure____. Yellow Corn Value/Supply Chain in the Philippines (Source: Salazar, 2011)

Figure Value/ Supply Chain of Yellow Corn in the Philippines, Salazar 2011
In each chain, we have identified problems encountered by corn farmers in the area
including our project beneficiaries. In case of the inputs problems such as expensive inputs,
high interest rates of farming loans, limited supply and no delivery to inaccessible areas were
identified. Usually, the traders are offering loans to farmers at high interest rates.
Several problems of farmers are as follows: no initial operating capital, no land, poor
soil condition, pest and diseases, bad weather condition, poor farming practices and low price
competitiveness. These conditions gave opportunity to traders for offering loans to farmers
for them to have sure supply.
Local traders/ processors and other Farmers Associations also have problems such as
limited facilities and equipment, lack of working capital for consolidation and inconsistent
quality of products. Big traders and distributors have also problems such as low buying price
of feed millers and high product requirement.

VI. LOCAL MARKET SHARE

With an estimated annual production of Seven Two Hundred Eight Five Metric Tons
(7285 MT) in the Municipality of Tapaz, the project aims to capture at least sixty five percent
of the total corn product or the Four Million Seven Hundred Thirty Five Thousand Two
Hundred Fifty kilogram (4,735,250 kg) of corn.

The table below shows the estimate shares of local and outside commercial traders in the
annual production of corn of the Municipality based on the 2013 data of the Tapaz Municipal
Agriculture Office.

Local Traders
25 %

Outside Traders
75 %

Source: MAO 2016

As the Local Traders lack enough financial resources to cater all the supply, it only
acquire 25% of the total annual corn production leaving a big vacuum of 75% left of the total
corn produce. This open the opportunity to the outside traders who normally purchased at the
lowest price to recover the cost of their transportation and knowing that the farmers will have
difficulty in selling their corn at a competitive price.

This vacuum on the disposal of the product is intended to be addressed by this project. By
acquiring initially at least 60% percent of the total corn production, TAFA can help the
farmers not to rely heavily on the price dictated by outside traders. But instead, a steady and
reliable market to sell their farm will bring development to the economic status of the farmer
within the Municipality of Tapaz.

VII. BUSINESS STRATEGY AND IMPLEMENTATION

In order to address the issues in the value chain, Corn Marketing has the following
approach:

1. Provide Access to Low Price Farm Inputs


2. Post-Harvest Facility and Transportation Service
3. Establishment of Long Term Supply Contract

Provide Access to Low Price Farm Inputs

For the issue in Input chain, TAFA will rely with TAMCO and other Farmers
Cooperative which provide farm inputs at a low price and with no interest. Thus, reducing
interest and input cost that could increase the income of the farmers will encourage them to
increase their production.

The Local Government will seek also assistance from the Department of Agriculture
for available resources which the farmers can utilize for free and be distributed among the
barangay farmers association.

TAFA thru the barangay farmers association could also request the tractor and other
service vehicle by the local government dedicated to agricultural program for free or at
minimal cost thereby largely reducing the cost of production.

Farming of crops is based on the demand of buyers. Factors such as volume of


production, seed variety and quality that are being required by the buyers should be taken
into consideration before engaging into farming.

Thus, the technical assistance of the Department of Agriculture will be utilized to


ensure that the variety of seed used will result to a productive harvest.

Post-Harvest Facility and Transportation Service

In the phase of the post-harvest activity, TAFA being the consolidator of the corn will
have schedule hauling of harvested products from farm site to the proposed drying facility
and warehouse. The corn farmers beneficiaries from 58 corn producing barangays will be
divided into clusters for easy schedule as to minimize cost of transportation. Each cluster
depends on the number of corn farmers in the area as well as its location for the systematic
hauling of their produce.

Consolidated corn from the farmers in the clusters will be immediately transported to
the facility in TAFA for drying. The facility shall include one (1) unit of vertical corn drier
and one (1) unit of warehouse, both with an area of 700 square-meter each. The complex
will also include one (1) unit of administration building.

A mechanized corn machine sheller which can shell and thresh corn either at the same
time or separately will be purchase. The machine will be lend to farmers association which
can utilized the machine with no cost. Thus the farmers can save effort and labor leading
them to prepare their production for scheduled hauling.

The project also aims to purchase to vehicle for its hauling and transport operation which
consist of one small truck and a big truck for large cargoes and supply. As the Municipality of
Tapaz consist of different barangays with no reliable cemented barangay road network, this
will enable the operation to continue hauling the corn by sending hauling vehicle which is
appropriate for the terrain.

Establishment of Long Term Supply Contract

After the post-harvest management, TAFA through the assistance of the Municipality of
Tapaz will supply the product to the feed mill and other importer. A long term supply contract
shall be established with the buyer ensuring reliable and steady market of goods. Farmers
then will no longer worry about possible losses of their crop due to being unable to sell their
produce. Instead, they will wait for the return of their produce as TAFA and the Municipality
of Tapaz will do the marketing and negotiations of the prices which shall be beneficial to all
corn farmers.

TAFA will only charge the farmers for its services charge which includes operational and
transportation cost thereby increasing the return of farmers income.

VIII. PROJECT FINANCIAL REQUIREMENTS

The project will have a total budgetary requirements of Twenty Five Million Pesos which
will be spent on the following:

Budgetary
ITEM
Requirement (PhP)
Operating Capital 3,044,000.00
Trading Capital 1,150,000.00
Salaries and Honoraria for Project Administration 954,000.00
Administrative Cost 660,000.00
Repair and Maintenance 280,000.00

Capital Outlay 20,706,000.00


Vertical Drier Facility 7,000,000.00
Warehouse and Storage Facility 7,000,000.00
Office Building 1,000,000.00
Mechanical Vertical Dryer 1,500,000.00
Corn Sheller 135,000.00
Post-Harvest Equipment 50,000.00
Office Equipment 121,000.00
Hauling Trucks 3,900,000.00

Monitoring and Evaluation 1,250,000.00


TOTAL 25,000,000.00

IX. OPERATING CAPITAL

Trading Capital

An initial trading capital of One Million One Hundred Fifty Thousand Pesos (PhP
1,150,000.00) shall be use to ensure that the buying of corn will be on continues basis. This
initial capital roughly represent the target purchase cost as the project aims to acquire sixty
percent (60%) of the total annual production of 7250 MT of corn.

However, a Long Term Supply Contract will be entered by TAFA through the guidance of
the Municipality which will require the buyer to make advance payment and the farmers
shall be guaranteed full payments upon delivery and receipt of their produce by the buyer.

Additional funding shall be resorted once the facility becomes operational as to increase
market share of the project. This will enable the payments of corn upon final weighing in the
drier facility complex.

Salaries and Honoraria of the Project Administration

For effective and stable implementation of the project, it requires hiring of operation and
management personnel for its business administration and day to day operation. Such
operation and management personnel includes the following with their general job
description:

Designation Job Description

1 General Manager Oversee the overall day to day operations of the business by
providing general direction, supervision, management and
administrative control over all the operating sections subject to
such limitations as may be set forth by the Board of Directors
(BOD) or the general assembly;
Formulate and recommend in coordination with the operating
sections under his supervision, the annual and medium term
development plan, programs and projects for approval of the BOD
and ratification of general assembly;

Implement the duly approved plans and programs of the enterprise


and any other directive or instruction of the BOD;

Provide and submit to the BOD monthly reports on the status of


the operation of the enterprise vis--vis its target and recommend
appropriate policy or operational changes, if necessary;

Represent the enterprise in any agreement, contract, business


dealings and in any other official business transactions as maybe
authorized by the BOD;

Ensure compliance with all administrative and other requirements


of regulatory bodies; and

Perform such other functions as may be prescribed in the by-laws


or authorized by the general assembly.

1 Secretary Keep an updated and complete registry of all members record,


prepare and maintain records of all minutes of all meetings of the
BOD and the general assembly;

Ensure that necessary BOD actions and decisions are transmitted


to the management for compliance and implementation;

Serve notice of all meetings called and certify the presence of


quorum of all meetings of the BOD and the general assembly;

Keep copy of the Financial report & other reports; and


Perform such other functions as may be prescribed in the articles of
incorporation or authorized by the general assembly.

1 Bookkeeper Records and update books of accounts;

Provide assistance in the preparation of reports on the financial


condition and operations of the enterprise monthly, annually or as
may be required by the BOD and or the general assembly;

Keep, maintain and preserve all books of accounts, documents,


vouchers, contracts and other records concerning the enterprise and
make them available for auditing purposes to the Chairman of the
Audit and Inventory Committee; and
Ensure that all cash collections are deposited in accordance with
the policies set by the board of directors;

Assist the Federation Treasurer in monitoring and review the


financial management operations of the enterprise, subject to such
limitations and control as may be prescribed by the BOD;

Maintain full and complete records of cash transactions;


Maintain a petty cash fund and daily cash position report; and

Perform such other functions as may be prescribed in the articles


of incorporation.

1 Checker Records all products coming and going out of the warehouse

Arrange all products such seeds, fertilizers in proper places

Works closely with the clients during sizing/sampling and harvest


hauling.

1 Drier Operator In-charge of the operation of the vertical drier of warehouse

Conduct routine maintenance of the mechanical vertical drier

Perform other task as assigned by the Manager and BOD

1 Driver In-charge in the delivery of farm inputs to target beneficiaries, and


the hauling of harvested corn from production site to the
warehouse.

Works closely with Checker and Laborer

2 Laborer Assist the hauling products from the hauling truck to the
warehouse Maintains cleanliness in the warehouse

Works closely with Checker and Driver every deliveries in the


warehouse

Role of Tapaz Farmers Association Federation Board of Director (TAFAFBOD)

The Board of Director (BOD) of Tapaz Farmers Association (TAFA) in the Municipal
Federation Level shall have the following roles and responsibility in the project:

Provide general policy direction


Formulate the strategic development plan

Determine and prescribe the organizational and operational structure;

Review the annual plan and budget and recommend for the approval of the general
assembly;

Establish policies and procedures for the effective operation and ensure proper
implementation of such;

Evaluate the capability and qualification and recommend to the general assembly the
engagement of the services of the external auditor; and

Appoint the members of all committees and officers of the enterprise.


The table below contains the annual staffing budgetary requirements in the amount of
Nine Hundred Fifty Four Thousand Pesos (PhP954,000.00) for the Salaries and Honoraria
for the Project administration:

Salaries and Honoraria for the Project Administration


No. of
Position Amount No. Total
Months
Honorarium:
BOD 1,000 12 10 120,000
Salaries
General Manager 16,000 12 1 192,000
Secretary 8,500 12 1 102,000
Bookkeeper 10,000 12 1 120,000
Checker ( Bodegero) 7,000 12 1 84,000
Mechanical Drier Operator 7,000 12 1 84,000
Driver 9,000 12 1 108,000
Laborer 6,000 12 2 144,000

TOTAL 954,000

Hiring of Project Administration and Operation Personnel shall be made upon grant of
the project budget. Priority shall be given to the members of Tapaz Farmers Association who
possess skills and qualifications suited for the positions.

If there exist a situation that the positions cannot be fill up by bonafide members of the
Tapaz Farmers Association, their immediate family shall be given consideration.
X. PROCUREMENT PLAN (Capital Outlay)

To commence the operation of the Corn Marketing Business procurement of necessary


equipment and construction of the facility shall be made.

Building Plan and Program of Work is attached herewith for a detailed examination of the
by approving authority. The facility will be constructed after consultation with the Department
of Agriculture and other technical consultants to make sure that the facility will live up with
the stricter standard required by ISO and AJA for a corn drying and warehouse facility.

Equipment shall be procured from reliable supplier to produce quality product. This will
result to customer satisfaction and product. A mechanical vertical dryer with the capacity to
produce ______________ per ________. This will be placed in a Vertical Drier Facility with
an area of _______________square meter adjacent to a warehouse facility with the capacity
to store _____________of corn.

The facility shall be constructed in one hectare property donated to the local government
and located in_________________. An administration and security building shall be
constructed to provide office for the day to day operation of the business. Installation of
CCTV camera with link to Tapaz Municipal CCTV Command Center shall be made by the
local government unit to provide security to the facility. Below is procurement list of the
Project for its first year of operation.

Procurement List for the 1st Year of Operation


ITEM QTY UNIT UNIT COST TOTAL TOTAL
COST
FACILITY
Vertical Drier Facility 1 unit 7,000,000.00 7,000,000.00 7,000,000.00
Warehouse and Storage Facility 1 unit 7,000,000.00 7,000,000.00 7,000,000.00
Office Building 1 unit 1,000,000.00
EQUIPMENT
Mechanical Vertical Dryer 1 unit 150,000.00 150,000.00 1,500,000.00
Corn Sheller 3 unit 45,000.00 45,000.00 135,000.00
Post-Harvest Equipment 50,000.00
Moisture Meter 2 unit 6,500.00 13,000.00
Weighing Scale Small 2 unit 5,500.00 11,000.00
Weighing Scale Large with Stand 2 unit 13,000.00 26,000.00
OFFICE EQUIPMENT
Office Equipment 121,000.00
Desktop Computer 1 set 44,000.00 45,000.00
Laptop Computer 1 unit 30,000.00 30,000.00
Printer 1 unit 10,000.00 10,000.00
Tables 3 unit 5,300.00 15,900.00
Conference Table 1 unit 7,500.00 7,500.00
Office Chairs 3 unit 3,000.00 9,000.00
Plastic Chairs 12 unit 300.00 3,600.00
TRANSPORTATION AND
LOGISTICS
Hauling Trucks 3,900,000.00
Six Wheeler Close Van Truck 1 unit 1,400,000.00
10 Wheeler Close Wing Van Truck 1 unit 2,500,000.00
TOTAL 20,706,000.00

XI. PROJECTED INCOME

The commercially viability of the project will be reflected in this section. As the project
intends to acquire 60% of the total annual production of corn which is 7285 MT which
translate into 4,371,000 kilogram of corn. Assuming that the price per kilogram of the corn is
12 Pesos, an estimated purchase amount of 52,452,000 will represent the total gross sales of
the Corn Marketing Project on its first year of operation. For the cost of service and
processing, a total of 1 peso per kilo shall be charge for every kilo of corn. Thus, the
4,371,000 kilogram of corn shall be traded at 13 pesos per kilo resulting to gross sales of
56,823,000. After deducting the amount of 52,452,000 as purchase cost of corn, the Corn
Marketing Project will have a gross income of 4,371,000 per annum.

On the 2 nd year, the project expect a 5% increase in the production of corn as more
members increase their area of production maximizing their profit. The 7285 MT tons will
have an additional 364.25 MT resulting to total annual production of 7,649,250 kilogram. The
project expected also to acquire an increase of 4% of the share of annual production on the 2 nd
Year of operation as the farmers experience the value and security of being member
beneficiary of the Tapaz Farmers Association.

PROJECTED 3 YEAR INCOME OF THE PROJECT


TITLE Year 1 Year 2 Year 3 Year 4 Year 5
Annual Crop 7,285,000.00 7,649,250.00 7,878,727.50 7,957,514.78 8,037,089.93
Increase in Production 5% 3% 1% 1%
Increase in Share of
Production 4% 3% 1% 0%
Total Market Share 60% 64% 67% 68% 68%

Volume of Accepted Corn (kg) 4,371,000.00 4,895,520.00 5,278,747.43 5,411,110.05 5,465,221.15


Acquisition Cost (kg) 12.00 12.00 12.00 12.00 12.00
63,344,969.1
Total Purchase Expense 52,452,000.00 58,746,240.00 0 64,933,320.56 65,582,653.81

Trading Price 13.00 13.00 13.00 13.00 13.00


Trading Volume (kg) 4,371,000.00 4,895,520.00 5,278,747.43 5,411,110.05 5,465,221.15
68,623,716.5
Gross Sales 56,823,000.00 63,641,760.00 9 70,344,430.65 71,047,874.95

68,623,716.5
Gross Sales 56,823,000.00 63,641,760.00 9 70,344,430.65 71,047,874.95
63,344,969.1
Less Purchase Expense 52,452,000.00 58,746,240.00 0 64,933,320.56 65,582,653.81
Gross Income 4,371,000.00 4,895,520.00 5,278,747.49 5,411,110.09 5,465,221.14
Less Operating Expense
Salaries & Honoraria 954,000.00 954,000.00 954,000.00 954,000.00 954,000.00
Administrative Cost 660,000.00 660,000.00 660,000.00 660,000.00 660,000.00
Repair and Maintenance 280,000.00 280,000.00 280,000.00 280,000.00 280,000.00
NET INCOME 2,477,000.00 3,001,520.00 3,384,747.49 3,517,110.09 3,571,221.14

On the 3 rd Year, an increase of 3% of annual production of corn will be expected. This will
result to a total annual production of 7,878,727.50 kilogram. The project is also expected to have
an increase of 3% on the share of the total annual production making it market share that of 67
percent or 5,278,747.43 kilogram of corn.

The 4th and 5th year of business operation marks steady increase of 1 percent in the annual
production. The increase will also lead to another increase of market share of 1 percent for 4 th
and 5th year thereby increasing the expected net income of the project on the 4 th year which
would raise to Php3,517,110.09 and on the 5th year which will be in the amount of Php
3,571,221.14.

Assuming that the project will have a steady income of at least 3,571,221.14 a year after
the fourth year of operation, it is safe to conclude that the project will double its asset in its seven
years in operation without deducting the depreciation cost of the equipment and the hauling
trucks.

However, the increase of income will be fix at ten percent at the end fifth year as the
increase of production and market share will be parallel to each other. Thus a one percent
increase in annual production will result to one increase in total volume of accepted corn without
having an increase its market share.

Return investment would start at 9.91% increasing on the 2nd year at 10.92%. Third year of
operation will be the year which the business will expect the highest ROI Rate which will be on
the level of 11.11%. The succeeding year will result to a period which the ROI will normalize
into a predictable pattern of around a conservative estimate of 9.5% ROI per annum as the
business reached its maximum market share.

Ten Year Income, Investment, and Rate of Return Data

Year Net Income Project Income Gross Asset Total Rate of

Investment Return
1 2,477,000.00 2,477,000.00 21,856,000.00 25,000,000.00 9.91

2 3,001,520.00 5,478,520.00 24,333,000.00 27,477,000.00 10.92

3 3,384,747.49 8,863,267.49 27,334,520.00 30,478,520.00 11.11

4 3,517,110.09 12,380,377.58 30,719,267.49 33,863,267.49 10.39

5 3,571,221.14 15,951,598.72 34,236,377.58 37,380,377.58 9.55

6 3,928,335.72 19,879,934.44 37,807,598.72 40,951,598.72 9.59

7 4,317,240.95 24,197,175.39 41,735,934.44 44,879,934.44 9.62

8 4,744,647.80 28,941,823.19 46,053,175.39 49,197,175.39 9.64

9 5,214,367.14 34,156,190.33 50,797,823.19 54,411,542.53 9.58

10 5,730,589.40 39,886,779.73 56,012,190.33 60,142,131.93 9.53

XII. PROJECT TIMELINE

Acti