SAN ROQUE WOMEN’S ASSOCIATION (SWA) Rice Milling / Warehousing Project Business Plan I. General Description of the Enterprise Proponent Description Name: Forest and Community United Services (FOCUS), Inc. Office Address: Lot 35, Block 17, Phase I, Emenvil Subd., Ambago, Butuan City Type of Organization: Non-Government Organization (NGO) Beneficiaries Description Name: San Roque Women’s Association Address: Sitio San Roque, Brgy. Causwagan, Talacogon, Agusan del Sur Type of Organization: Association Date of Registration: September 2008 Number of Members: 28 Households ______________________________________________________________ _____________ Leave Everything Better Than You Found It Page 1 of 15
Transcript
SAN ROQUE WOMEN’S ASSOCIATION (SWA)Rice Milling / Warehousing Project
Business Plan
I. General Description of the Enterprise
Proponent Description
Name: Forest and Community United Services (FOCUS), Inc.
Office Address: Lot 35, Block 17, Phase I, Emenvil Subd., Ambago, Butuan City
Type of Organization: Non-Government Organization (NGO)
Beneficiaries Description
Name: San Roque Women’s Association
Address: Sitio San Roque, Brgy. Causwagan, Talacogon, Agusan del Sur
Type of Organization: Association
Date of Registration: September 2008
Number of Members: 28 Households
Service Description
Sitio San Roque, like the other communities in Barangay Causwagan, Talacogon, Agusan del Sur is also dependent on rice farming for the livelihood of its inhabitants. The community has about 100 has. of fully cultivated rain-fed lowland rice area but do not have adequate post-harvest facilities particularly rice milling and warehousing. Their farm produce is either immediately sold out to rice traders upon harvest or dried before these are sold out. A certain portion for home consumption is reserved and milled at establishments some 3 kilometers away following rough and rugged roads which are hardly maintained.
This scenario, coupled with the desire of the farmers to take advantage of value added benefits in rice processing, resulted to a proposal to engage in rice milling and warehousing business.
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Market Description
Most of the locally produced palay in the community will consist of the main market of the enterprise. The 100-ha. Rice area of the community has a potential of producing a minimum of 300 tons of palay every crop season (– at the conservative production yield of 60 bags per ha.).. However, since most of the farmers are financed by traders to whom they are obliged to sell their produce, the enterprise assumes conservatively to process only about 30% of the local production – a conservative estimate of 100 tons or about 1,800 bags per cropping period.
Technical Description
The post harvest facility will consist of a rice mill and a warehouse. The rice mill has a capacity to process 12 bags per hour or about 600 kgs., with a recovery of 65% of milled rice and 7% of rice bran.
Palay will be dried to a maximum of 14% moisture content before milling, in order to optimize milling recovery and milled rice quality.
The warehousing unit will serve as a component support for rice milling operations. Under this proposal, it is not considered an income-generating outfit but will serve as a incentive for the farmers to store their palay in the warehouse which will be solely processed by their rice mill.
The community has an extensive solar rice drying facility that can adequately support local rice milling operations.
Expected Financial Performance
At the current milling fee of P1.75 per kilogram of palay, the project will be able to generate P525,000 every cropping season if all of the locally produced palay is milled in the community rice mill. However, the project will target only 30% of this, which will enable them to generate a gross revenue of about P157,500 per cropping period or roughly P315,000 a year.
Management
The San Roque Women’s Association (SWA), a duly registered association of the women folks in the community and which has undergone several capacity building trainings in the previous past, will manage the project. The farmer-husbands of the women will concentrate in farm production, threshing and drying while the women will undertake the management of the milling & warehousing operations.
The association will be assisted in the formulation of their project’s Policies, Systems and Procedures (PSP) in order to streamline and simplify management schemes.
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Management performance will be closely monitored so as to determine further interventions that might be needed to fine-tune the management aspect.
Ownership
The project will be funded by the Philippine Australia Community Assistance Program through its Agusan Marsh FOCAS. The equipment and accompanying facilities will be turned over to the San Roque Women’s Association that will own and manage the Rice Milling / warehousing complex in the Sitio. An Operating Guidelines and Procedures will be promulgated to promote understanding and support of all members and inhabitants of the community.
II. Market Consideration
Target Market
The main market of the business will be the local palay production of the residents who are mostly rice farmers. At the conservative production yield of 60 bags per hectare, the local rice production area of about 100 has. will produce no less than 6,000 bags per cropping season. The project will however target a minimum of only 30% of this or roughly 1,800 bags per cropping season.
Market Analysis
Rice production in the community is mostly financed by the local traders who also purchase the farm product during harvest of the crop. And those who are not beholden in this manner are considered captive market of the project, due to the distance to, difficulty in reaching and expenses involved in transporting their palay to, the nearest rice mill establishment which is no less than 3 kilometers away.
Competitive Position
The sitio has no other rice mill. The nearest rice mill is located no less than 2 kilometers away. The local production will therefore be captive market for the mill, except those that are obligated to traders. In addition, the association will operate a warehouse which will serve as storage for palay owned by the farmers and which will be solely process by the local rice mill.
Projected Revenue
Table below shows the projected revenue of the business for a 3-year period:
Year 1 Year 2 Year 3Revenue 157,500.00 315,000.00 315,000.00
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Marketing Scheme
Selling Price/Milling Fee
Milling fee is pegged at the current local rate at P1.75 per kilogram of palay to be milled. It is assumed that this rate of milling fee will be maintained in the next 3 years, during which time, there will be no price escalation.
Marketing Arrangement
Payment of milling fee will be made on cash basis. To remedy the lack of cash for payment of services which is prevalent in the community, the association will formulate a scheme that will allow payment in kind – in the form of milled rice which will be sold by the association at a certain margin of profit.
III. Technical Considerations
Scheme of Implementation
The association members will be given priority in the services of the enterprise particularly in the warehousing facility because of the probability of its limited capacity. However, customers of the rice mill can all be accommodated readily since its operating hours can be extended indefinitely depending on the availability of palay to be processed.
A milling operations schedule will be determined and posted for adequate dissemination.
A rice mill operator will be trained and will be compensated on percentage basis as the rice mill will operate only upon availability of palay stocks and can not be operated regularly.
Facility
A warehouse and rice mill building complex will be constructed. This will be a single unit where the rice mill will be installed at one end of the building with the remaining larger space or portion, to be utilized as warehouse within which, a small portion will be used as office space.
The rice mill will be provided with an exhaust facility that will deliver rice hull to a storage area from which it will be transported to a separate facility where this is re-cycled or processed for the organic farming project of the association.
Maintenance
This item will be included in the PSP that will be formulated by the association. Maintenance check up will done on a regular schedule to upkeep and optimized performance of the equipments and to prolong its service life. Emphasis
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will be given to the maintenance of the facility to optimize or improve milling recovery.
In addition, to ensure the availability of funds for equipment maintenance, a certain percentage of the gross income will be allocated and reserved for this purpose.
Capacity of Equipment
The proposed rice mill will have a capacity of milling 12 bags of 50 kilograms each every hour of operation. And will have a milling recovery of no less than 65% of milled rice.
Labor Requirements
The rice milling outfit will be manned by an operator who will be solely in charge of ensuring normal operations of the equipment. He will be assisted by an assistant. Both personnel will do the manual tasks like loading and unloading, weighing, hauling, cleaning and other related activities.
The President and the Treasurer of the association will be responsible for the management of the project. The President will be in charged of overall supervision while the Treasurer will be assigned to handle the financial aspect of operations.
Technical Support
San Roque Women’s Association have undergone several capability trainings to include Leadership, Value Formation, Decision Making, Team Building, Organizational/Business Management, Bookkeeping, Control System, and Maintenance of the water facility project that was turned over to the community in the previous quarter. Their association’s capability will be further improved with additional trainings that will give emphasis on the management and technical aspects in the rice milling/warehousing project.
Projected Schedule of Operation
Start-up Activities
Table below shows the activities before the enterprise can start its operation. It will take about 5 months for the project to be realized.
Activities# of Months
1 2 3 4 5Proposal and Business Plan Preparation Processing, Evaluation and Approval of Grant Application Construction of Warehouse and Rice Mill Building Purchase and Installation of Rice Mill Component Capability Building Hiring of Personnel
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Start of Operation
The main activity in project implementation will start with the construction of the warehouse and rice mill building. Before the completion of the building, the rice mill equipment will then be purchased and installed. Simultaneous with the installation will be the training of concerned personnel and officers of the association and the hiring of personnel. A dry run will be executed to test the equipment performance before actual operation will start.
IV. Financial Assumptions
A. Capital and Start up Cost
Construction of warehouse and rice mill building 120,000.00
Purchase & Installation of Rice Milling Equipment 287,000.00
Initial Capital 20,000.00 Land and Improvements 80,000.00 Post Harvest Technical Training 36,166.67 PSP Formulation 14,375.00 Farm Equipment Maintenance 11,250.00 Project Management Share 102,600.00 Admin Expenses Share 64,800.00 TOTAL 736,191.67
B. Fixed Cost (Per Year)
Particulars Cost
Depreciation Expense 81,400.00
V. Financial Statements
Assumptions Used:
The sitio has about 100 has. of rain-fed rice land that is regularly cultivated at 2 cropping seasons per year;
Average farm production yield is assumed at a conservative estimate of 60 bags of 50 kilograms each per cropping;
During the first year, only 30% of the farm yield is assumed to be milled by the project on account of traders who finance farm production and purchase the farm produce – about 1800 bags of 50 kg each – a total of 90,000 kg. per cropping season;
On the second year, this will be increased to 40%;
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On the 3rd Year this is further increased to 50%.
Milled Rice recovery is assumed at 65%.
Milling fee is assumed at P1.50 per kilogram, P0.25 lower than the local current rate of P1.75 per kilogram of palay;
10% of net income before other expenses will be allocated for maintenance reserve fund for the equipment;
10% of net income before other expenses will be allocated for the President and Treasurer of the Association as incentive for their services;
Operating Cost will consist of the following:
- The Mill Operator and his assistant will be compensated on a contractual basis at 10% of the milling fee or gross proceeds (60% for the Operator and 40% for the assistant);
- Cost of fuel, oil and lubricants is assumed P0.20 per kilogram of palay milled.
- Other Operating Expenses which consist of office supplies, communications, travel expenses, etc. is assumed at P2,000 per cropping season or P4,000 per year;
Depreciation of fixed assets is computed at straight line method over a 5-year period.
Projected Income Statement:
Year 1 Year 2 Year 3Sales 270,000.00 360,000.00 450,000.00Less: Operating Expenses Wages of Operator & Assistant 27,000.00 36,000.00 45,000.00
Sub-Total 148,400.00 169,400.00 190,400.00Net Income before other expenses 121,600.00 190,600.00 259,600.00Less: other expenses: Maintenance reserve fjund 12,160.00 19,060.00 25,960.00 Incentive for President & Treasurer 12,160.00 19,060.00 25,960.00 Sub-total 26,802.33 45,552.33 64,302.33Net Income 94,797.67 145,047.67 195,297.67
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Projected Cash Flow Statement:
Pre-Operations Year 1 Year 2 Year 3
Cash Inflows 270,000.00 360000 450000Sales - Grant from PACAP 523,608.33 - - -
Counterpart of FOCUS 71,483.33 - - -
Counterpart of LGU/PO 61,100.00 - - -
Total Cash Inflows 656,191.66 270,000.00 360,000.00 450,000.00
Cash Outflows Construction of warehouse and rice mill building 120,000.00 Purchase & Installation of Rice Milling Equipment 287,000.00 - - -
Cash Balance, End 20,000.00 178,680.00 412,560.00 701,640.00
Financial Ratio Analysis
Profitability Ratios Year 1 Year 2 Year 3
Net Profit MarginNet Income
35.11% 40.29% 43.40%Sales
The table shows that there is an increase in the net profit margin by 35.11% in first year of operation. Despite the assumption that there will be no escalation on selling price, still the business can earn 40.29% and 43.40% respectively in the 2nd and 3rd years of operation.
Return on InvestmentAverage Net Income
19.70%TPC
The total project cost of Php 736,191.67 has a Return on Investment of
19.70% by taking into account the average net income it has generated from its projected three (3) years result of operation and the life of the critical assets.
V. Management and Social Considerations___________________________________________________________________________
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Project Management Team Structure
The officers of the association who are involved in the project implementation will be trained in the documentation processes involved, such as the recording of sales and expenses and other related management functions..
As proposed, the project will be managed by the women folks through their association. They will manage the post-harvest facilities while their husband will concentrate in farm production.
As proposed, this project has no environment threat as the milling waste (rice hull) will be processed into organic fertilizer for the organic farming scheme of the local farmers.
Form of Business Enterprise
The San Roque Women’s Association is duly registered with DOLE. The officers and members will be trained in handling the project since they will manage the operation of the business with the guidance of FOCUS.
Utilization of Projected Income
Income generated will be saved by the association and used as fund for community development. Ten (20%) will be allocated for Environment and General Fund, Twenty (20%) for Patronage Refund and the remaining Sixty (60%) will be for Investment Fund which they can use to finance farm production so that they will be assured of palay input for the rice mill.
Socio Economic Benefits
The project will significantly enhance livelihood in the community as they will be able to enjoy the value added benefits in rice post-harvest processing which could otherwise go to traders and outside millers. In addition, the local farmers will also save on transport cost that they will otherwise spend if they mill their palay in rice mill establishments some 3 kilometers away.
Ownership of Project Inputs
The women’s association shall ultimately be the owners of the project inputs including those that will be funded by PACAP.
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