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Business Plan
Love-Love Duck Farm
Submitted to:
THE 2017 NRCO-ISP BUSINESS PLAN COMPETITION
Prepared and Submitted by Nerio La Luna
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Executive Summary
Love Love Duck Farm is located at Bo. 8 Kusan, Banga, South
Cotabato. Will be housing 1,000 heads of Pateros ducks in a 1.5 hectare land
owned by Nerio S. La Luna’s family. After one(1)
month of purchasing the ducks they will lay eggs with an estimate one (1) egg
production per duck every day. Eggs will be put in an incubator for 18 days
before it will be sold to the viajeros or traders in General Santos City for balut
or penoy which will be also be sold to the balut vendors of the City. Fresh eggs
will be sold at ₱13.00 per piece for balut and ₱10.00 per piece for penoy.
The project will have a total capitalization of ₱907,775 pesos with an
existing building which will be used for housing the ducks costing ₱60,000. The
current vehicle of will be used to delivering the eggs in General Santos City
every three (3) days or ten(10) times a month.
The farm will have three employees as caretaker of the duck. They will
do the feeding, harvesting of eggs, cuddling of the eggs and packing. One of
the employees will also be the driver who will go to General Santos City to
deliver the eggs together with the owner.
On its first year the farm will have ₱2,895,795 sales with an income
before tax of ₱837,982.50. After two (2) years the ducks will be sold to the
market for cull and the farms will purchase a four month old ducks one month
before the old ducks will be sold. The business will have a return on investment
on its second year.
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Table of Contents
Business Description 1
Demand and Supply 2
Product Description 3
Pricing 4
Location 5
Production Schedule 5
Projected egg production 6
Equipment and Materials 7
Distribution Channel 8
Target Market 9
Competitors 9
Organization and Management plan 10
Financial Plan 12
Projected Income 13
Balance Sheet 14
Cash Flow 15
Financial assumptions 16
Future Plans 17
Waste Disposal 17
References 19
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Business Description:
The Philippine duck industry is small compared to chicken. However, it is
quite unique and has a special role in the Filipino culture. The uniqueness
comes from the way that duck eggs are being utilised. Unlike other Asian
countries where duck eggs are processed mainly into salted eggs and century
eggs, more than 80 per cent of duck eggs in the Philippines are processed into
“balut”. Balut is sometimes referred to as “embryonated egg” or “incubated
eggs” because the eggs are harvested and consumed when the embryos are
between 14-18 days old. Balut is considered a delicacy by the Filipinos for its
unique taste and nutritional 3 value. It is also unique because balut is available
only from street vendors and only in the late evening. Such a distribution
method, despite its cultural significance, may place limits on the demand. A
second feature of the Philippine duck industry is that duck meat production is
mainly a by-product of balut production, derived from mainly from excess
males and culls. (Chang, H.; Dagaas, C.;de Castro, N. et al, 2003)
Duck is the second largest poultry industry that provides income to farmers
through egg and meat production in the Philippines. Love-love Duck Farm in
Bo. 8 Banga, South Cotabato will raise ducks and its eggs will be used for
balut (boiled embryonated egg).
In the Philippines ducks farming is divided into two schemes. First is the
free range scheme, which is the traditional way of raising native ducks.
Ducks are allowed to graze and scavenge on newly harvested rice fields.
Rice fields are rich in duck feeds such as rice hulls,snails, seeds, grass, fish
and insects. The other scheme for raising ducks is through the confinement
system using a duck house or known as kamalig. In this scheme, ducks are
provided with a balanced diet that includes formulated feeds and clean
drinking water, proper floor space, feeding spaces and other requirements
needed for maintenance, growth and development for egg production. (native
duck raising, 2016)
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Love-love duck Farm will be using the confinement system for this will be
more suitable and productive for laying eggs. Ducks needs clean water and
Banga, South Cotabato where the farm will be situated is abundant with water.
In the Philippines Duck egg production grew by 1.84 percent for balut
production during the period of January-March 2017 (PSA, 2017). However,
in the South Cotabato area alone there is still a shortage. Although there are
many producer of duck eggs in South Cotabato, the supply is still not enough
since this duck growers are small time and the eggs produced by the ducks
cannot cope up with the demand.
Demand and Supply:
According to the Philippine Statistics Authority survey of 2016 which was
conducted January – July of 2016.
As stated above the top five (5) highest producing regions in terms of duck
inventory were Central Luzon, Western Visayas, SOCCSKSARGEN, Cagayan
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Valley and Ilocos Region. These regions accounted for about 72.19 percent of
the total duck inventory of 10.52 million birds. (Authority, 2016)
With this data, Love-love Duck Farm will be one of the contributors to boost
the supply of Ducks in SOCCSKSARGEN. As observed within the region, duck
eggs for Balut or penoy still has a shortage within the streets at night.
Product/ Services:
Love love duck farm will be selling duck eggs to the viajeros or traders for
balut production. The eggs maybe produced by this traders for balut, penoy,
salted eggs and century eggs. Love love duck farm will only be selling a fresh
duck eggs.
Product Description Target Price
Penoy
egg is not fertilized and only
semi-developed, even after going
through the incubation period. It
looks like a mass of plain white
and yellow embryo that solidifies
as you boil the egg.
10.00
18 days
18th day of incubation, the
"second candling" is performed,
and those ready for marketing
are separated from the younger
eggs.
13.00
Pricing:
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Production of duck egg takes time. A four months old duck will be
purchase from the duck raisers. A newly purchased duck will take a month
before it can produce egg. Once it produces egg it can produce one egg per
day.
Cost of Production:
Delivery of eggs to the Balut vendors will be every three (3) days to
augment the cost of transportation and bulk of stocks to deliver.
Farm Location
The business will be located at Bo.8 Kusan, Banga South Cotabato. With a
one(1) hectare land owned by the family of Mr. La Luna. Within Banga South
Cotabato there are about fifteen (15) small duck farmers who raise duck and
sell the eggs as balut, penoy, salted eggs and others. This small farmers
supply the eggs in the within Banga, Surallah and City of Koronadal Area.
Love-love Duck Farm targets to sell the products in General Santos City
since there is the demand in the city is high. Duck eggs for balut came from
outside the city and it can sustain the demand.
Item Unit Cost no. of pcs. Total Cost
Duck 200 1000 200000
Feeds 1200 100 120000
Vitamins 1000 2 2000
322000
Feeds 1200 100 120000
Vitamins 1000 2 2000
122000
Target sales everyday:
Penoy 10 50 500
Balut 13 950 12350
Sales per day 12850
Initial cost for first month
cost per month after 2months
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Production Schedule:
Love-love Duck Farm will buy 1,000 head of Ducks which are at least 4
months old. A building will be constructed for housing. A one-compartment
shed with only the front side open. This side may face the body of water in the
area and serve as the entrance for the flock and its caretaker. Fence an open
area in front of the shed to serve as the flock’s feeding – playing space. Clay or
plastic water tubs or concrete ponds will be provided for the ducks to swim or
wade in. With a measurement of about 10 by 8 feet, with water two feet deep,
for a flock of about 50 ducks. An elevated floor of the shed at least 15
centimeters higher than the level of the ground in the feeding area, then cover
it with a 10-centimeter layer of rice hull litter. Litter will be kept dry and replace
it as often as possible. Ducks should be housed in groups based on age to
facilitate management and to avoid the quarrels common among ducks of
different ages.
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After the ducks were purchase, they will be given one (1) month to adjust in the
confinement area. When the ducks will be able to lay eggs, a target of 1,000
eggs will be produced in a day. Eggs will be incubated for balut production.
Projected egg production:
Balut Production per day:
Qty. Price Total
Penoy 50 10 500
Balut 950 13 12350
12850 sales per day
3 days of production
38550 sales per delivery
From the target egg production of 1,000 pieces per day, it is estimated that
5% of the eggs will be penoy and the 95% will be an 18 day old balut. The
eggs will be sold to the viajeros or traders every three days.
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Equipment and Materials:
The following items are needed for raising ducks.
Equipment Qty. Amount Total
Incubator 1 20,000 20,000
Power Spray 1 8,000 8,000
Total 28,000
Materials Qty. Amount Total
Waterer 55 100 5,500
Federer 45 145 6,525
Light 12 200 2,400
Total 14,425
Materials used for waterer and Federer are linear and can accommodate 8
ducks. With a useful life of two years before it will replaced. Light is used to
provide heat.
Food Qty. Amount Total
Feeds 100 sacks 1,200 120,000
Vitamins 2 bottles 1,000 2,000
Total 122,000
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Distribution Channel:
The fresh duck eggs will be brought by the traders going to the balut
processors or balutan, who produces balut, penoy, salted eggs and century
eggs. Once the eggs are ready for sale, traders bring them to retailers which
then will be sold to consumers on the streets. Generally, balutans accept
orders from the duck raisers, source and hatch the eggs, and then sell them
back to the duck raisers. Soon for future success of the farm being a duck
raiser, balutan, traders and retailer will be rolled into one.
Consumer
Love-Love Duck
Farm
Viajeros
(will buy the eggs
from the farm)
Transport to
General Santos
(sell fresh eggs
direct to vendors)
Balut Vendors
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By-Products
For best egg production, ducks will be sold for cull when they reach two (2)
years old. Culls will be sold to restaurants and night market of Surallah, Banga,
Koronadal, General Santos and other nearby municipalities.
Ducks can be serve to the restaurants barbeque, lechon, patatim and other
delicacies.
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Target Market:
Balut is a popular street food in the Philippines. It consists of a fertilized
duck egg that has been incubated for approximately 18 days; a period of time
which results in the formation of a partially developed embryo within the shell.
Balut is eaten directly from the shell after being hard-boiled or steamed. Balut
is a relatively inexpensive source of protein and calcium, and is considered by
some to be an aphrodisiac for men. However, women also loves to eat balut
and it is relatively available in the market, particularly in the streets, at night.
The eggs will be sold to the viajeros or traders every three (3) days once
the eggs reach 18 days old. All deliveries will be on cash-to-cash basis.
Deliveries will be made to General Santos City approximately 81.2Km or a 1
hour and 30 minutes ride with the use of a private vehicle.
Competitors:
Within in vicinity of Banga, South Cotabato there are about 15 small scale
duck farmers. Who supplies the balut in Banga, Surallah and City of
Koronadal. Adelmita Farm and Dela Cruz farm which is a neighbor of
Love-Love farm, they have 1,500 heads of ducks.
Competition in the market of balut making is not that high since most of the
famers are small scale and cannot supply the demand of balut in the market.
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Organization and Management Plan
The business is a Sole Proprietorship. It will solely be owned by Mr. Nerio
La Luna.
Manpower:
The following manpower will help the success of the business
Personnel Job Description No.
needed
Salary
per
month
Annual
Salary
Caretaker He/she will be the one who is
in-charge in feeding the
ducks
In-charge for collecting the
eggs and putting it to the
incubator
In-charge for cuddling the
eggs until day 18
In-charge for cleaning the
duck house
2 5,000 120,000
Driver/
caretaker
He will help the supervisor in
delivering the eggs (balut) to
General Santos City
Help in collecting the eggs
and putting to the incubator
1 5,000 60,000
Supervisor/
Owner
Monitors the wellness of the
ducks
Give the vitamins
Help collect the eggs
Help feed the ducks
1 15,000 180,000
Total 360,000
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FINANCIAL PLAN
Project Cost
Pre-Operating Expenses
Building 60,000
Materials 15,775
Equipments 28,000
Vehicle 300,000
Livestocks 200,000
Food and Vitamins 14,425
Working Capital (operating expenses, direct labor, raw materials 289,575
Total Project Cost 907,775
Land use for poultry farm is owned by the Mr. Nerio La Luna’s family which worth 1,500,000.00.
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RETURN ON INVESTMENT
YEAR 1 – 28%
YAER 2 – 24%
YEAR 3 – 21%
YEAR 4 –16%
YEAR 5 – 13% The above ratios show the return gained on the invested amount in the
business. This shows a positive return even on the first year of the operations.
The decreasing ratios are affected by the 5% assumed increase in expenses,
without counterpart assumptions as to increase in sales. The 1,000 eggs per
day is limited by the number of ducks the business is planning to maintain in its
operations. Sales may increase if the owner may opt to increase the number of
ducks as investment. This may also improve as the selling price of the eggs
increase trough time.
*assumptions:
Egg production is 90% for 1000 ducks per day with 95% balut and 5% pinoy.
Eggs are available for sale after 18 days of incubation.
One month before the 2nd year, ducks will be replaced with new ducks.
On the 2nd year old ducks will be sold at 130.00 per head for cull.
The owner will purchase a four month old duck for laying eggs.
It will take one month before a duck can lay eggs.
After one month, one duck can lay one egg per day.
Laid eggs in three days (3,000) will be delivered in bulk to save from delivery costs.
Fuel Expenses will be 500.00 per travel. Travel will be 10times per month.
Repairs and Maintenance will be 75,000 per year.
Communication Expense is 1,500 per month.
Vehicle Registration is 15,000 per year.
All expenses are budgeted of 5% increase per year.
All sales are cash sales.
Depreciation of Incubator and power spray are computed according to 10 year useful life.
Federer and waterer are useful for two years.
Lights are changed every year.
Personal drawing of 100,000 per year is assumed.
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Future Plans
Love love ducks foresees to offer other products in the market. With
God’s grace, given the first business venture will prosper, Love love ducks
farm plans to do the following:
salted eggs for the duck eggs and
will be supplied to the public market
and malls
duck ham when the ducks reached the maturity age
and will be supplied to the restaurants and
malls
restaurant with duck delicacies as the specialty product
Waste Disposal
Ducks produces manure and for sustainable environment, this manure will
be use as fertilizer. However, manure is not much from one or two ducks, it
will fertilize the lawn or place where they live. But with a larger group of ducks,
it does accumulate, then the best thing is to compost the manure in a pile,
somewhere it can rot and break down over time, about one year, then it
becomes beautiful rich soil for a veggie or flower garden.
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These manures will be use to the rice farm of the nearby lot of the love love
duck farm and backyard vegetable plants.
Another waste are the duck feathers. This feathers can be use as feather
duster or inner material for pillows.
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References:
Authority, P. S. (2016, May). Duck Performance. Retrieved from www.psa.gov.ph:
https://psa.gov.ph/sites/default/files/DUCK%20Industry%20Performance%20Report%20-%2
0Jan%20-%20Dec%202015%20%281%29.pdf
Chang, H.; Dagaas, C.;de Castro, N. et al. (2003, February 12-14). An overview of the Philippine duck
industry.
native duck raising. (2016, august 1). Retrieved august 15, 2017, from press reader:
www.pressreader.com
PSA. (2017, Jan-Mar). PAR_January-March 2017. Retrieved August 2017, from Philippine Statistics
Authority:
https://psa.gov.ph/sites/default/files/attachments/ird/pressrelease/PAR_January-March_20
17.pdf