FEASIBILITY STUDY ON QUAIL EGG PRODUCTION

A PROJECT FEASIBILITY STUDY

“PHILIPPINE MALLARD DUCK (’ITIK’) EGG PRODUCTION AND PROCESSING”

In partial fulfillment of the requirement for degree of Master in Business Administration of the University of Cagayan Valley

Presented to: PROF. LIBAN

Proponents: MYLA D. BUNAGAN ERVIN T. DEJUMO ARLEEN A. GASPAR ROMEO Q. MALLILLIN MBA-1

ACKNOWLEDGEMENT

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Table of Contents

A. Project Title

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B. Project Location .

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C. Project Rationale

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D. Statement of the Objectives.

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1. The Need of the Project.

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2. Market Description.

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3. Demand .

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4. Supply .

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5. Demand Supply Analysis.

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6. Market Share .

I. MARKET ASPECT

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7. Marketing Program.

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8. Price Study .

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II. TECHNICAL ASPECT.

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1. The Product .

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2. Manufacturing Process .

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3. Plant Size and Production Schedule

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4. Machinery and Equipment

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5. Plant and Project Location .

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6. Plant Layout

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7. Building and Facilities

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8. Raw Materials and Supplies .

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9. Utilities

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10.Water Disposal

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11.Production Cost

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12.Labor Requirements

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III. ORGANIZATION AND MANAGEMENT ASPECT .

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IV.

FINANCIAL ASPECT

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1. Total Project Cost

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2. Sources of Fund

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3. Preparation of Financial Statements

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4. Financial Analysis

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V.

SOCIO-ECONOMIC ASPECT

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VI.

1. SUMMARY OF FINDINGS

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2. CONCLUSIONS AND RECOMMENDATIONS .

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A. Project Title The Project is entitled “A Feasibility Study on Philippine Mallard Duck (’Itik’) Egg Production and Processing”.

There

are

several

reasons

why

the

proponents choose to venture on this project. Firstly, duck-raising is a profitable livestock industry in the Philippines

because

of

its

egg.

Duck

is

second

to

chicken in economic importance as source of egg and meat. Its most important product, the “balut” (boiled incubated

duck’s

archipelago value.

egg)

for

its

Secondly,

is

sold

daily

delicious

duck

is

throughout

flavor

and

considered

as

the

nutritive the

most

versatile avian specie because it can subsist under a wide

range

of

climatic

and

nutritional

conditions

(Lambio 2002). Also, duck-raising is inexpensive and can

start

off

with

a

minimal

start-up

capital.

It

requires non-elaborate housing facilities, and little attention,

and

chickens.

More

less

space

for

importantly,

rearing

ducks

are

compared shown

to

to be

relatively hardy, resistant to common avian diseases, and

subsist

researchers

on

a

endeavor

variety to

of

study

feeds. the

Thus,

feasibility

the of

putting up this business.

4

B. Project Location Ducks can be raised in areas near bodies of water or in areas where there are rice fields to feed on after harvest. have

chosen

barangay

As a rural Municipality, the proponents Solana,

of

Lanna

Cagayan

to

be

the

specifically main

in

location

of

the the

proposed project. The lot which will house the farm has an area of ______. The farm is relatively far from residential

areas

about

230

meters,

as

required

by

Department of Environment and Natural Resources (DENR). Municipal Assessor’s office has provided us the cost of the lot where the fowl is situated, which range from ____ to ___ per square meter. Since the farm occupies

300

square

meters,

the

lot

will

cost

Php

300,000.

5

C. Project Rationale

6

D. Statement of the Objectives This

study

entitled

“A

Feasibility

Study

on

Philippine Mallard Duck (’Itik’) Egg Production and Processing”

aims

to

explore

the

possibility

of

venturing into Itik Egg Production and Processing in the Municipality of Solana, Cagayan.

Specifically, the study seeks to: Present

sufficient

information

and

analyses

regarding the market, technical, financial, management and organization and socio-economic implications. In

order

proposed

to

project,

determine the

the

following

feasibility questions

of

shall

the be

answered:

A.

Market Aspect 1. What benefits can be derived from the proposed project? 2. What are the products to be produced? 3. Are the products competitive as to other goods in the market? 4. Is

the

production

capacity

of

the

project

adequate for the market?

7

5. Are

the

products

produced

acceptable

by

the

prospective market?

B.

Technical Aspect 1. Is there ready and adequate location for the proposed project? 2. Is the location accessible for transportation? 3. Are there available resources of equipment and other technical requirements like raw materials needed for the proposed project? 4. Are there qualified technical personnel who can provide

service

for

the

installation

and

maintenance of the equipment? 5. Are there qualified people to look into the physical preparation of the proposed project? 6. Are there enough utilities – electricity, fuel and water for the operation of the proposed project? 7. Is

the

proposed

project

environmentally-

friendly? 8. Are there available methods of waste material disposal?

C.

Financial Aspect 8

1. What is the total financial requirement of the proposed project? 2. How will the proposed project be financed? 3. Is the proposed project financially viable? 4. What

kind

of

taxes

and

licenses

will

the

proposed project pay?

D.

Organizational Aspect 1. What form of organizational structure will the proposed project adapt? 2. Are the enough qualified people to manage the proposed project? 3. Do we have some assistance from the government regarding organization and development of the association that can best manage this type of project?

E.

Socio-economic Aspect 1. Will the project affect the lifestyle of the farmers in Solana, Cagayan? 2. Will it generate employment? 3. Will

it

earn

additional

investment

in

the

community?

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4. Will

it

improve

the

economic

condition

of

Solana, Cagayan? 5. Will it add income to the government?  

10

I.

MARKET ASPECT 1. The Need of the Project This putting

study up

aims

a

to

ascertain

business

on

Itik

the

feasibility

Egg

Production

of and

Processing in Lanna, Solana, Cagayan. The need for the project

could

be

viewed

from

the

effects

it

could

generate to enterprise citizens and to the researchers in

particular,

who

are

exploring

viable

investment

projects where they could channel their resources. The study

will

information

provide

comprehensive

on

aspects

all

of

vital the

background

business.

It

encompasses five major aspects, namely: market aspect, technical

aspect,

financial

aspect,

management

and

organization aspect, and socio-economic aspect. In as much as the setting of the study represents a typical town, the findings of the study may be applicable to other similar rural communities where ducks could be grown and raised. Hence, potential entrepreneurs may find this study useful and applicable. The project could be implemented by any prospective investor who can generate the necessary resources to start the business. Once the project is implemented, the owner and the community as a whole will enjoy several economic and social benefits: 11

a. It will generate income to the owner and other people

who

will

be

directly

or

indirectly

employed in its operations like the farmers, vendors, and other retailers. b. It will channel idle resources of investors to fruitful undertakings. c. It will generate employment

to

certain

residents of the community and hence contribute to

the

massive

livelihood

program

now

being

launched by the government. d. The Municipality of Solana would receive income from permits, fees, licenses and taxes to be paid by the investor. e. The nutritional level of the consumers of the “balut” will be improved since the product is a good source of protein supply and hence, the product would be readily available and sold at a reasonable price.

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2. Market Description The

proponents

seek

to

penetrate

the

market

as

producers of duck egg. The eggs will be distributed retailers

and

then

subsequently

sold

to

consumers.

Details of the marketing will be discussed thoroughly in the Marketing Program (page _). As producers, the eggs will be used as an input to the production of balut, penoy and century/salted eggs. Duck egg production and processing is s profitable enterprise; even the so-called ‘low’ quality eggs, such as those that have thin and cracked shells can still be sold in the market and used as table egg. The most popular egg products are balut, penoy, red salted and century eggs. As

to

its

competitive

advantage,

duck

eggs

are

larger and more nutritious than chicken eggs (FNRI, 1990).

The

products

composition

gives

the

of

duck

consumers

eggs more

and

their

calories,

bymore

protein content, more nutritional punch, and contain more beneficial omega 3s, minerals, and vitamins than chicken

eggs

(108

Kcal

for

ducks;

75

Kcal

for

chickens). These and more are the contributing factors why duck eggs are beneficial to the consumers. 13

3. Demand 3.1 Present Demand At present, marketing of duck eggs is not a problem since demand is high. In fact, supply is still unable to meet the demand for balut and other egg products. In the Philippines, about 90 percent of total duck egg production is used for processing (BASSRTC 1998). 87 percent of which is processed into balut and another 7 percent is processed into salted eggs. The remaining 6 percent consists of century eggs, penoy, and other unidentified forms. This means that balut accounts for about 80 percent of total egg production. This emphasis on

balut

production

is

a

unique

feature

of

the

Philippine duck industry. Although unfamiliar to most foreigners,

balut

Philippines

for

and

their

penoy unique

are

delicacies

taste

and

in

the

nutritional

content. Cooked balut is sold as snacks in the evenings by street vendors, either peddling on the street or stationing on the sidewalk. 3.2

Projected Demand

The table shows the projection of the demand of the product for the first five years.

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Table 1. A table showing the Projected Demand of Duck Egg for 5 years Year Projected Average Projected Population Consumption Demand 1 2 3 4 5 Source: Interpretation:

4. Supply 4.1 Present Supply As mentioned previously, supply is still unable to meet the demand for balut and other egg products.

4.2

Projected Supply

The table shows the projection of the supply of the product for the first five years. Table 2. Projected Supply of Duck Eggs Year 1 2 3 4 5

Projected Supply (per annum) 240,000 360,000 400,000 480,000 560,000

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5. Demand Supply Analysis Table 3. Demand Supply Analysis Yea r 1 2 3 4 5

Total Demand

Total Supply

Varianc e

Percentage of Satisfied/Dissatisfied

6. Market Share Year

Total Demand

Target Market Share

% of Market Share

1 2 3 4 5

Table 4. Projected Market Share

-assume for the supply annually

7. Marketing Program 7.1 Present Marketing Program (Marketing program of other producers) 7.2

Proposed Marketing Program 16

The duck egg will be sold to the market at 7.00 per piece. There are four marketing channels used in marketing duck eggs. The flow of marketing duck eggs is shown below. 1. Producer

->

assembler-wholesaler

->

retailer

->

consumer In this type of marketing channel, the assembling of duck eggs is in the producer’s area and the eggs are later sold to retailers in the market. 2. Producer -> assembler-wholesaler -> balut operator -> retailer(vendor) -> consumer The

producer

sells

the

duck

egg

to

the

assembler-

wholesaler. The assembler-wholesaler will then sell the egg to the balut operator and the balut is retailed by the vendor to the consumer. 3. Producer

->

balut

operator

->

retailer(vendor)

->

consumer In this instance, the balut operator directly gets duck eggs

from

the

producer

and

sells

to

the

retailer/

vendor then ultimately to the consumer. 4. Producer -> assembler-wholesaler (century/salted eggs)> wholesaler/retailer -> retailer -> consumer

17

The

producer

retailer

for

sells

the

duck

processing.

egg

The

to

the

assembler-

assembler-wholesaler

engages in century and salted egg production and sells them to the wholesaler/retailer then to the consumer.

8. Price Study 8.1 Present Selling Price At present, the selling price of duck eggs in the market is pegged at 7.00 per piece. The cost of production has an estimated cost of 3.00 per egg piece. 8.2

Projected Selling Price

Table 5. Projected Selling Price Yea r

Present Selling Price Quantit y

Descriptio n

Unit Pric e

Projected Selling Price Tota l Pric e

Quantit y

Descriptio n

1 2 3 4 5

II.

TECHNICAL FEADIBILITY ASPECT 1. The Products

18

Unit Pric e

Tota l Pric e

The products to be marketed are mainly duck eggs for distribution to different outlets and balut/penoy/salted egg processors in Tuguegarao City. 2. Manufacturing Process The processes involved in the manufacturing the eggs begins

with

the

breeding,

feeding,

proper

housing

and

handling of the ducks until the ducks are ready to lay eggs. The

breeding

the

ducks,

several

stages

are

involved;

selection of stocks, sex ratio and mating system, management of replacement breeder stocks, proper care and handling of hatching eggs, incubation and hatchery management, candling and fertility determination, handling of ducklings, hatchery waste disposal and utilization and culling.

3. Plant Size and Production Schedule 3.1 Plant Size The

lot

which

is

about

300

square

meters

will

accommodate the farm where the ducks will be grown and nurtured and a small office space, with an area of 50 square meters. 3.2

Production Schedule 19

The ducks has an estimated mortality rate of 12% (1% per month. Simply stated, in every one thousand ducks to be nurtured, 88% or 880 ducks will live and be utilized for egg production.

The

12%

will

be

accounted

as

cost

of

the

estimated

egg

business enterprise. The

880

ducks

which

survived

has

an

production of 70%. Simply put, 70% of 880 surviving ducks is 560 ducks. These 560 duck are capable of producing egg. 4. Machinery and Equipment

5. Plant/Project Location The farm shall be located in Lanna, Solana, Cagayan where 6. Plant Layout 7. Building and Facilities The

building

which

will

house

the

office

of

the

management has an area of 300 square meters. The office space will be constructed with an estimated cost of 200,000. 8. Raw Materials and Supplies 8.1 Initial Quantity 1000 pcs 300 pcs 20 sacks

Description Drakes Ducks Duck Feeds

Unit Cost

Total Cost

10.00/drake

10,000.00

1,100/sack

22,000.00 20

10 packs

Vetracin (supplement) Screen 15x18 tent 12x15 tent

50 meters 2 pieces

8.2 Year

500/pack

5,000.00

Projected Materials/Supplies

Quantity

Descriptio n

Unit Cost

Total Cost

9. Utilities 10. Waste Disposal In a duck hatchery or balutan, the primary product is balut and day-old ducklings. Infertile eggs and penoy are, likewise, used as food. The fully or partially developed embryos that was either partly hatched or not hatched are processed and utilized by pigs for feeds. 11. Production Cost Raw Labor Materia Cost l Cost

Overhea Operatin Other Cost of d Cost g Cost Pertinen Producti t Cost on

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12. Labor Requirements Type/Position

Number of Workers

Wage Rate

Total

Direct Labor Sales Representativ e Indirect Labor Delivery Boy Administrativ e Manager Total

Projected Operating Salary Position

No. of Workers

Year 1

Year 2

Year 3

Year 4

Year 5

Direct Labor Indrect Labor Administrativ e Labor Total

Projected Overhead Cost Overhead Cost Electricit y Water

Year 1

Year 2

Year 3

Year 4

Year 5

III. ORGANIZATION AND MANAGEMENT ASPECT 1.1 Form of Organization

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The business venture shall adopt a centralized form of organization. The following figure shows the organizational chart of the business enterprise.

1.2

People involved Before and During the Operation

The operation of the business shall be governed by the co-owners. The manager shall be the overseer of the main operation in the farm namely, the breeding, raising, care and handling of the ducks, and production of duck eggs. The helpers will man the growth of the ducks. They will be directly involved in all the processes of pasturing the ducks until it is ready to lay eggs. Upon the laying of the eggs, proper care and handling of the hatching eggs will be 23

their next task. The distribution of the eggs that are ready to be sold in the market will also be their function. 1.3

Qualifications and Number of Labour Required

Position

No. of Labor

Educational Qualification

Age

Experienc e

Manager

1

2535 year s old

2 years of experienc e in manageria l position

Helper/Farmer /Delivery Boy

2

*At least 2 years in college with units in agriculture or agribusiness * Knowledgeable in proper breeding, raising, feeding and handling of ducks and duck eggs *must know how to read and write *must be knowledgeable in proper breeding, raising, feeding and handling of ducks and duck eggs *must know how to drive *must have a driver’s license *has no derogatory record

20 year s of age or olde r

At least 1 year of experienc e in poultry raising

1.4 1.5

Training and Number of Labour Required Implementing Strategy 1.5.1 Work Schedule

IDENTIFICATION OF ACTIVITY A B

ACTIVITY DESCRIPTION Feasibility Study Preparation Preparation of other Supporting Documents

TIME/DURATION (Month) 3 months 45 days 24

C D E F

G H

IV.

Plan, Design and Specification preparation Site assessment and appraisal Purchase and Delivery of Equipment Construction and installation of facilities, equipment, furniture and fixtures Hiring of Personnel Advertising Campaign

2 months 1 month 45 days 2 months

15-20 days 1 month

FINANCIAL FEASIBILITY ASPECT 1. Total Project Cost

Pre-Operating Cost Pre-Operating Salaries Pre-Operating Activity Fixed Assets Land/Land Improvement Building Machine and Equipment Installation of Machinery Working Capital Labor Direct Indirect Administrative Total TOTAL PROJECT COST

5,000.00 10,000.00

2. Sources of Financing the Project The capital of the business venture will be derived from

the

cumulative

investments

of

the

owners

of

the

business. Each partner will invest 50,000 as an initial 25

capital of the enterprise. Other fund source will be derived from loans to bank amounting to ____________. 3. Preparation of Financial Statement 3.1 Income Statement Table shows the cost and return of producing eggs from ready to lay ducks, 800-head module (Year 1). Year Sales Sale of eggs Sale of culls Sale of empty feed bags Total Sales Less: Cost of Sales Pullets/Ducks Feeds Medicines and Supplements Gross Profit Less: Operating Expenses Labor Salaries Transportatio n Light and Water Repair and Maintenance Insurance Telephone Bill Taxes and Licences

2015

2016

2017

2018

2019

1,680,0 00

1,680,0 00

1,680,0 00

1,680,0 00

1,680,0 00

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Miscellaneous Total Operating Expenses Income from Operation Less: Income Tax Net Income 3.2 Year Cash Receipts Cash Beginning Sales Proceed of Loan Intial Capital Less: Cash Disbursement Operating Expenses Purchase of Fix Assets Building Construction Farm Construction Purchases Payment of Loan Amortization Payment of Interest Payment of Taxes Total Cash Disbursement

Cash Flow Statement

2015

2016

2017

2018

2019

1,680,0 00

1,680,0 00

1,680,0 00

1,680,0 00

1,680,0 00

27

Cash Ending

3.3 Year ASSETS Current Assets Cash Inventory on Hand Total Current Assets Fixed Assets Machinery and Equipment Land Building Less: Accumulated Depreciation Furniture and Fixtures Total Fixed Assets Other Assets Total Assets LIABILITIES AND PARTNERS’EQUI TY Liabilities Loans Payable Tax Payable Total Liabilities Partners’ Equity Capital Net Income

Balance Sheet

2015

2016

2017

2018

2019

1,680,0 00

1,680,0 00

1,680,0 00

1,680,0 00

1,680,0 00

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Total Partners’ Equity Total Liabilities and Partners’ Equity Net Worth

V. VI.

4. Financial Analyses 4.1 Test of Liquidity 4.2 Test of Profitability SOCIO-ECONOMIC ASPECT a. Socio-economic Contribution b. Employment Opportunity SUMMARY OF FINDINGS 1. Management Feasibility 2. Market Feasibility 3. Technical Feasibility 4. Financial Feasibility 5. Socio-Economic Feasibility

CONCLUSIONS 1. Management Feasibility 2. Market Feasibility 3. Technical Feasibility 4. Financial Feasibility 5. Socio-Economic Feasibility RECOMMENDATIONS Based

on

the

findings

and

conclusions

made,

the

researchers strongly recommend the project for funding and immediate implementation.

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