I.

PROJECT BRIEF

Project Title : Hollow Block Maker Machine

Project Location : Purok 10a, Barangay Alejal, Carmen, Davao Del Norte
Proponent Beneficiaries : Diamond Individual Farmers Cooperative (DIFCO)

Contact Persons:
Name: Manuel D. Orapa
Designation: Chairperson
Contact Number: 0907- 325- 7672

Name: Reynaldo D. Araneta, Sr.

Designation: General Manager
Contact Number: 0907-780-9948

Total Project Cost Php 1,998,376.27

Grant Amount Requested to DOLE: Php 1,498,782.17
Proponent Beneficiary Equity: Php 499,594.10

Table 1. Estimated Total Project Cost

DIAMOND INDIVIDUAL FARMERS COOPERATIVE
Hollow Block Maker Machine Project
Qty Unit ITEM ARTICLE/DESCRIPTION UNIT COST TOTAL COST
2 Unit 2 Mortar Mixer W/ 10 HP 140,092.43 280,184.86
Kingstone Diesel Engine
2 Unit 3 Hollow Block Machine W/Motor 78,763.07 157,526.15
4” x 4 PCS x 8” x 16”
1 Unit 4 Hollow Block Machine W/Motor 78,763.07 78,763.07
6”x 3 PCS x 8” x16”
5,020 PCS 5 Hollow Block Machine Pallet #4 161.880.00 812,637.60
1,000 PCS 6 Hollow Block Machine Pallet #6 169.670.00 169,670.49
Grand Total Php 1,498,782.17

Funding Institution: Department of Labor and Employment (DOLE)

Funding Program: DOLE Integrated Livelihood and Emergency
Employment Program (DILEEP)
Grant Purpose: Fabrication and Installation of Hollow Block Maker
Machines & Equipment
 Proposed ACP: DIAMOND INDIVIDUAL FARMERS
COOPERATIVE (DIFCO

II. BACKGROUND
a. Organization Overview

Diamond Individual Farmers Cooperative (DIFCO) was registered

under Cooperative Development Authority (CDA) with Registration No. 9520 –
11002624 dated 26th day of October 2005. The cooperative provides Hometel
services, lending, marketing, and agricultural produce.
The goal of this cooperative is to help improve the quality of life of its
members and in furthermore shall aim:

● To attain increased in income, savings, investments, production, and

purchasing power, and to promote among themselves equitable

distribution of net surplus through maximum utilization of economics of
scale, cost sharing and risk sharing;

● To provide optimum social and economic benefits to its members;

● To encourage and promote self-help or self-employment as an engine

for economic growth and poverty alleviation; and

● To adopt such other plans that may help foster the welfare of the

member, their families, and the community.

The cooperative has 302 members headed by the following officers:

Chairperson : Manuel D. Orapa Secretary : Laysa T. Palban

Vice Chairperson : Julito M. Cachero Manager : Reynaldo D. Araneta,
Sr.
BOD Member : Mario P. Arroyo , Sr. Treasurer : Josephine F. Ugnay
Fidel R. Maboloc
Buenaventura A. Banono
Zacarias P. Penaranda, Jr.
Ruel R. Ombajin
Jaime A. Delima
b. History

In May 5, 2005, the Five Hundred Twenty-Nine (529) individual farmer

members of Diamond Agrarian Reform Beneficiary Multi-Purpose Cooperative
(DARBMUPCO) formed themselves into another cooperative named Diamond
Individual Farmers Cooperative (DIFCO). It was registered with Cooperative
Development Authority (CDA) with registration number 8095-DVO dated
October 26, 2005. It was principal office located at Purok 10a Barangay Alejal,
Carmen, and Davao Del Norte. DIFCO member represent Sixty Seven
percent (67) of the total members of DARBMUPCO, a duly registered
cooperative engaged in the production and export of Cavendish bananas.
DIFCO acquired sixteen and a half (16.5) hectare of Agricultural land located
at Sagayen, Asuncion, Davao del Norte worth Three Million Pesos (P3M) and
have it registered under its name in December 2005. The land is planted with
rice (3 hectares), coconut and other fruit trees (9.5 hectares). The remaining
hectares of the agricultural land are not yet productive. DIFCO donated 9,900
square meter to LGU Asuncion for the Eco-tourism last October 20, 2018.

As individual farmer members of DARBMUPCO B, the members of DIFCO

are earning an average annual net income per hectare of Three Hundred
Twenty Thousand Pesos (320,000). The average production per hectare of
the individual farmer is Five Thousand (5,000) boxes per hectare. Since 2009,
the members of DIFCO (also known DARBMUPCO) B) have been the
consistent top producer awardee among sixteen partner cooperatives of
FARMCOOP. DARBMUPCO acquired loan from Unifrutti, the buyer of their
banana produce, One Hundred Sixteen Million Pesos (P116M) used to install
cableway system and three packinghouses. It was fully paid within five years.
After that, DARBMUPCO acquired another loan for Ten Million Pesos (10M)
used to install Overhead cable Propping System (OHCP) covering the new
 awardee areas at the Seventy One (71) hectares. They were able to pay the
full amount in one year. DARBMUPCO B also acquired loan from Dole Phils.
Amounting to P29M for land improvement and was fully paid in One and half
year (1,5 year). The 689 VOS has CARP land mortgage at Land Bank of the
Philippines was paid on September 9, 2016.

III. RATIONALE

One of the primary objectives of the Diamond Individual Farmers

Cooperative (DIFCO) is to increase the income of its members. However,
without a piece of machinery that can assist them in mass manufacturing
concrete hollow blocks while requiring less time during the process, their
target in achieving this goal will be difficult to achieve.

One of the major constraints of the Cooperative is the continuity of their

income-generating operation. Despite of the various channel for revenue, they
are still bound to inherent limitations of many factors such as agricultural
season, member’s incapacity to pay their borrowed money, etc.

To provide a solution to this dilemma that they are currently facing,

they opt to venture out to another avenue for revenue that is in demand with
the market and has a large likelihood to continue regardless of the season
and other factors– Hollow Block Making.

As the construction industry rising in their local area, the Cooperative

has a high chance to succeed, and this project will prosper with the help of a
government grant.

With the aforementioned situation, the Cooperative would like to avail

the grant of the Department of Labor and Employment (DOLE) under its
DOLE Integrated Livelihood and Emergency Employment Program (DILEEP).
With the financial assistance, the Cooperative would be able to achieve its
objective in acquiring the Hollow Block Maker Machine.
IV. PURPOSE AND OBJECTIVE OF PROPOSED PROJECT

The hollow block maker machine that the cooperative proposes is to

obtain achieves objective of increasing the income of its members by
producing concrete hollow blocks and fully meet the market demand. Due to
the necessity for hollow blocks' longer durability and quick effective
production, hollow block maker machines are becoming ever more significant
as the building industry expands.

Table 1 represents the Estimated Income per member of Hollow Block

Making. The income for selling of 1unit of concrete hollow block for each
member of the cooperative will receive an individually average estimate of
only Php 5,024.43 per member within quarter, and that is Php 1,674.81 per
month, as presented below overall perspective.

Table 1.Estimated Income per Member for Hollow Block Making

Sale
(385,944pcs x12 pesos/unit) Php 4,631,328.00
Less: Cost of Sales

Direct Materials
385,944pcs x Php 8 Php 3,087,552.00
Direct Labor and Overhead
0.57% of Income
Costs 26,398.57

Net Income
Php 1,517,377.43
Divide by number of
members ÷ 302
Average Income per
member Php 5,024.43

*Based only on estimated maximum capacity of the Hollow Block Maker Machine for one
(1) year
Refer to Table 2. Class Size of 4” was chosen in estimating the annual sales to forecast
their maximum annual income capacity as it is the most common and in demand class
size of hollow block.
 Table 2. Market Price of Hollow Block
Class Size Price per unit (Php)
4” 12
6” 14

And because of this, the cooperative wanted to apply vertical integration,

since our primary goal is to increased income, savings, investments, production, and
to promote among themselves equitable distribution of net surplus through maximum
utilization of economics of scale, cost sharing and risk sharing.

They want to reach their full potential by providing and commercializing

concrete hollow blocks to construction companies and even to their local area
consumers for those who are constructing their houses who will need quality
concrete hollow blocks in building construction activities.

The proposed Hollow Block Maker Machine will be able to perform all the
major phases of the production process with little to no manual labor; save all the
repetitive expenses mentioned above.

To achieve this, the following are also aimed by this venture:

⮚ Avail the grant from the Department of Labor and Employment

(DOLE) under its DOLE Integrated Livelihood and Emergency

Employment Program (DILEEP) amounting to Php 1,498,782.17
for the fabrication of the Hollow Block Maker Machine.
 ⮚ Produce a certain level of quantity to supply the need of all

members and community for their construction activities, sell the

finished product, and divide the profits among the members.

V. PRODUCTION

The production process will only utilize one machine - the Hollow Block
Maker Machine
Direct materials such as sand, cement and water must be supplied for
the production of hollow blocks. These materials will be mixed together and
the machine operator shall make the necessary procedure to come up with
the desired output – high quality concrete hollow blocks with two varying class
sizes (4” and 6”).

The assigned sales person will then sell the produced concrete hollow
blocks open to the market in their local area and even to their target
construction companies.

VI. BUDGET REQUIREMENTS

In connection to the production process the following equipment is

needed.

This equipment is requested from the Department of Labor and

Employment under its DOLE Integrated Livelihood and Emergency
Employment Program (DILEEP). Below is the estimated total project cost for
the requested machine

Table 1. Estimated Total Project Cost

 DIAMOND INDIVIDUAL FARMERS COOPERATIVE
Hollow Block Maker Machine
QUANTITY ARTICLE/DESCRIPTION UNIT COST TOTAL COST
1 Hollow Block Maker Machine Php 1,498,782.17 Php 1,498,782.17
GRAND TOTAL Php
1,498,782.17

VII. TIME FRAME

The proposed project shall be executed after completion of it's pre-

implementation phase the time frame for each activities are identified as
follows.
It is assumed that preparation for project proposal will be finished
within one (1) month. Processing and approval of grant will approximately
take three (3) months. Next is the construction of the machine that will take
fifty (50) days or approximately two (2) months. Lastly, the association can
start its operation. Table 3 shows the overall actions to be done.

Table 3. Time Table

Activities 1 2 3 4 5 6 7 Person/Agency
Project Proposal
Preparation DIFCO

Evaluation, Approval and

DOLE
Release of Grant Amount

Construction of the
Proponent
Machine
Start of Business
DIFCO
Operation

VIII. MARKETING

a. Product
 This project will pave the way for the market and operation expansion
of the Cooperative. As they were mainly focused on agriculture and lending
services, they want to widen their scope of operation and venture on the
construction industry by producing concrete hollow blocks.

It will not only give the Cooperative another avenue for revenue, but it
will also impose another channel in conducting business relating to
construction that will surely provide assurance to the continuance of their
business operation regardless of agricultural seasons.

Competitors under the same industry in their area is minimal and the
acquisition of an equipment that will help them for mass production will be
an advantage to the cooperative as construction companies opt to make
bulk orders of concrete hollow blocks.

The cooperative is not only relying on the outside source but also from
the members itself. The Hollow Block Maker Machine can increase
livelihood in the area, provide for a new way to earn from the already
existing products and services, as well as introduce high volume and
quality products to the market which in turn would attract investment in the
industry.

b. Target Market

Hollow Block Maker Machine will be used in mass production of

concrete hollow blocks. Its product is highly in demand due to the
increasing construction activities in the local, provincial and region-wide
area.

The primary target market of the product that the Hollow Block Maker
Machine are the construction companies with an ongoing construction
activity within the vicinity of the Cooperative.
 Locals who are also constructing housing projects and even the
members who patronize the Cooperative’s by-products are also seen as
target buyers of the produced concrete hollow blocks.

It is also possible to expand the market of the hollow blocks to other

municipalities and province due to its growing demand and progressing
construction industry.

c. Demand
According to Hollow Concrete Block Market Size & Share Analysis
- Growth Trends & Forecasts (2023 - 2028), the hollow concrete block
market is projected to register a CAGR of over 5% during the forecast
period. Meanwhile, Market Research for the Philippine Construction
Industry says that the construction industry is projected to grow 21.2%
from 2020 to 2023, and then a further 9.6% until 2025.

Although the COVID-19 pandemic affected the hollow concrete

block market as construction activities were halted. However, the sector
has been recovering well since restrictions were lifted. An increase in
house sales, new project launches, and increasing demand for new
offices and commercial spaces have been leading the market recovery
over the last two years.

The rising demand for the hollow concrete block market due to
increasing construction activities globally is expected to drive the
market’s growth. The growing awareness among consumers for
lightweight materials in modern architecture is likely to deliver
opportunities for the hollow concrete block market over the coming
years.

The residential segment stands to be the dominating segment

owing to the large-scale consumption of hollow concrete blocks for
construction and remodeling activity.
 Refurbishing and renovation of old buildings increased
investments in the building and construction industry. This in turn is
augmenting the demand for hollow concrete blocks.

Considering all the above facts and factors, the usage and
demand of hollow concrete block in commercial construction and
residential-related applications are expected to grow in the forecast
period. Table 4 presents the projected demand for next three years.

Table 4. Projected Demand for Hollow Blocks for 2021 to 2023

Year (based above) Demand in Quantities

Year 2021 *452,000

Year 2022 **484,000

Year 2023 ***678,000

*400,000 x 1.13%
** according to Market Research for the Philippine Construction Industry
***600, 000 x 1.13%

d. Supply

Growing demand for construction goods and services and lengthening

lead times convinced many construction firms during the last two years to
pad their orders with suppliers to maintain sufficient inventories. However,
an examination of monthly inventory and unfilled orders data in both
inflation-adjusted and current dollar terms indicates that the industry began
reducing its true order levels at the start of 2022 even though current
purchasing power levels continue to increase. This indicates a decline in
 the supply chain of construction materials despite an increase in
purchasing power.

By investing in a hollow block making machine the Cooperative becomes

an efficient part of the production and supply chain and if executed
properly should increase the revenue of its members.

Table 4. DIAMOND INDIVIDUAL FARMERS COOPERATIVE (DIFCO)

Projected Supply
Year Supply in Quantities

Year 2021 *350,000

Year 2022 **420,000

Year 2023 ***630,000

*Rounded to nearest whole number

*250,000 multiplied by 1.40%
**300, 000 multiplied by 1.40%
***450,000 multiplied by 1.40%

e. Demand – Supply Gap

The demand-supply gap for concrete hollow blocks are caused by

varying factors such as but not limited to market demand, production
capacity and the efficiency of supply chain. The project intends to improve
the production capacity and efficiency of supply chain within the immediate
reach of the Cooperative. However, a developing municipality such as
carmen or its neighboring municipalities will predictably increase its market
demand for construction materials particularly for concrete hollow blocks,
 pre-identifying this trend is crucial in order to address the potential
demand-supply gap in the near future. Table 5 shows the demand –
supply gap for concrete hollow blocks.

Table 5. DIAMOND INDIVIDUAL FARMERS COOPERATIVE (DIFCO)

Demand – Supply Gap
Particular Year 2021 Year 2022 Year 2023

Demand 452,000 484,000 678,000

Supply 350,000 420,000 630,000

Demand – Supply
102,000 64,000 48,000
Gap

f. Market Share

Using the annual production volume of the machine and the total
demand, the percentage share of 85%, 84%, and 86% was achieved. It
indicates percentage share in the market. Table 6 shows the market
share.

Table 6. DIAMOND INDIVIDUAL FARMERS COOPERATIVE (DIFCO)

Demand – Supply Gap
Particular Year 2021 Year 2022 Year 2023

*Volume Produced *385,944 *408,395 *580,345

Total Demand 452,000 484,000 678,000

Market Share 85% 84% 86%

*based on best estimate for actual production benchmarked from the same industry
Percentages are rounded off to two decimal places.

g. Pricing Strategy
 The Cooperative will sell products based on the competitive pricing
strategy. The selling price is assumed to increase to 3% annually based on
the inflation rate (according to Philippines Statistics Office last February 7,
2020) in the province of Davao de Oro. Table 7 shows the projected prices.

Table 7. DIAMOND INDIVIDUAL FARMERS COOPERATIVE (DIFCO)

Selling Prices
Class Size Year 1 Year 2 Year 3

4” 12.00 13.20 14.52

6” 14.00 15.40 16.94

Amounts are rounded to the nearest two decimal places.

h. Channel Distribution

1. Direct distribution - the proposed project is open to direct distribution

wherein the output product will be delivered to local consumers,
contactors, builders and developers.

2. Retail or wholesale distribution - it can be proposed that output

products are then sold to retail sellers either at wholesale or retail.
This can be done through sales agreements, consignment
agreements or distribution partnerships. The Cooperative benefits
through this distribution method by gaining access to a wider
consumer and retailer network.

Figure 1. Channel of Distribution

DIAMOND INDIVIDUAL FARMERS COOPERATIVE

(DIFCO)
 Construction Companies and Local Consumers of
Concrete Hollow Blocks

i. Possible Profitable By-Product

A hollow concrete block is a block made of concrete that has hollow

spaces between its walls. It is used to build different kinds of walls for different
purposes like retaining walls, decorative walls, classic walls, etc. Hollow
concrete blocks are made of the same ingredients used in poured concrete
walls. The hollow concrete block market is segmented by product type,
application, and geography. By product type, the market is segmented into
split-faced, and smooth-faced. By application, the market is segmented into
residential, commercial, industrial, and other applications.

Beneficial attributes of hollow concrete blocks, like lighter than bricks,

easier to place, and frugal, with respect to base cost and consumption of
cement, are likely to drive the market growth. The air pockets present in
hollow concrete blocks make them an effective heat insulation solution and
high strength provides superior resistance against adverse atmospheric
conditions are anticipated to drive the market growth over the forecast period.

j. Marketing Strategy

The project intends to tap the immediate market (which consists of the
cooperatives members) by promoting its income generating functionality.
External clients such as but not limited to contractors, builders and developers
will primarily be engaged through both an online and a physical presence.
Lastly the Hollow Block Maker Machine shall be promoted as a time and
energy efficient method – of which we can offer its service to others.
Furthermore, this Hollow Block Maker Machine would help us save time and
effort – of which we can offer its service to others.
 Projected sales resulting from the construction of the project are based
on production volume and selling price of the product. Selling price is
assumed to increase by 10% every year. Table 8 indicates the projected sales
of the business for three (3) years.

Table 8. DIAMOND INDIVIDUAL FARMERS COOPERATIVE (DIFCO)

Hollow Block Maker Machine
Projected Sales
Year Volume Produced Selling Price Projected Sales

1 385,944 12* P 4, 620, 000.00

2 408,395 13.20 5,390,814.00

3 580,345 14.52 8,426,609.40

*with a production estimate of 385,000 pieces per year, selling at the proposed selling
price of 12 pesos per piece. Selling price is multiplied by 10% (10% price increase per
year and inflation rate)

IX. MONITORING AND EVALUATION

Upon the release of the proposed project, the Department of Labor and
Employment (DOLE) will monitor and evaluate the project annually within
three (3) years through the following actions:

⮚ Inspect the implementation of the proposed project and verify the

financial records and reports of the beneficiaries.

⮚ Ensure that the approved project cost corresponds to the detailed

implementation plan of the association.

⮚ Ensure continuous operation of the proposed project and contribute to

an additional livelihood to direct beneficiaries.

⮚ Required the proponent to submit monthly and terminal financial report

within 60 days after the completion of the project.

 X. SOCIO ECONOMIC BENEFITS

Upon the approval of the proposed project, the Cooperative will be able to
start the construction of the Hollow Block Maker Machine. The project will benefit
the metal work establishment who will fabricate and install the equipment. Finally,
upon its completion, the members of DIFCO and the residents of Carmen, Davao
del Norte as a whole, can also take advantage of having a hollow block supplier in
their community as it means that aside from suppling quality by-products, the
cooperative can also provide employment as it will need additional workforce for
this business operation.

XI. SUSTAINABILITY MEASURES

To ensure the sustainability of the project, the association should observe the
following:

⮚ Strict monitoring in the fabrication and installation of the machine.

⮚ Proper maintenance of the machine to avoid any damage from it.

⮚ Providing quality product to consumers and securing the safety and

quality product.

⮚ Proper recording of cash receipts and disbursements to monitor cash

inflows and outflows.

⮚ Preparing financial statement to ensure transparency among members

and make coherent financial decision.

⮚ Participation in any enhancement training or seminar related on

production, management and financial conducted by any agency to

 gain more knowledge in managing the business and enhance skills in
production.

Prepared by: Noted by:

LAYSA T. PALBAN MANUEL D. ORAPA
Secretary KMPC Charman

Approved by:

RAYMUNDO G. AGRAVANTE
Regional Director
DOLE Region XI

Recommending Approval: Funds Availability:

ALLAN R. BABAN
Provincial Head ADELA JADE C. TALDO
Davao de Oro Field Office Budget Officer