INTRODUCTION

Project Rationale

The project is envisioned to create a program for the farmer, non

working house wifes in the locality of village by expanding the irrigable area

for a regular and continuous production schedules among the farmers in the

village.

The project will be constructed in Barangay Palusapis Science City of

Muñoz, Nueva Ecija, where 90% of its residents are rice farmer and where

30% of village lands are planted of banana trees.

The project aims to have banana processing facilities for the farmer

and non working housewife of the Barangay. Project helps the village and

can be known as the one of the mango and banana processing in the Nueva

Ecija.

The increased economic activities in the village will necessitate the

employment of 50-60% of its residents who are non-working housewife and

farmer.

Primarily, this project will fund of Local Government Unit. This project

requires about Php.4,500,00.00 to construct the necessary features and

equipment.

1

The existence of a Barangay’s Officials shall help to facilitate the

maintenance, management and operations of the Project.

2

MARKETIG ASPECT

There is no doubt that the market of tilapia fingerlings remains bright.

Banana, being as popular as an economic in agriculture is faced with

problems and sufficient supply and quality fruit. Most of banana farm in

Central Luzon just to scout quality source banana. In Nueva Ecija, the

demand and supply gap remained unfilled.

A.Market Assessment

Demand and Supply Analysis

Banana is one of the most common and widely grown fruit

crops in the Philippines. It is also one of the country’s major

dollar earners, and has consistently ranked next to coconut oil

and prawns in terms of value earnings during the last five years.

Banana has various uses. The ripe fruit is pureed, candied,

and preserved in various forms when not eaten fresh. Its extract

is used in the manufacture of catsup, vinegar,and wine. The

unripe fruit is powdered and chipped.

In rural areas, the young leaves are pounded to suppress

bleeding and treat wounds. The leaves are also widely used as

packing materials for fruits and vegetables in market centers.

3

Banana fiber is manufactured into rope, sack, and mat. Sheets of

paper and paper boards are also made from banana peel.

Banana blossom is exported dried.

Competitor Analysis

Philippine is one of the world’s largest banana exporters.

Large contiguous areas are devoted for commercial production in

four provinces in Mindanao, namely Davao del Norte, Davao del

Sur, South Cotabato, and Misamis Oriental.

Consumer/Client Analysis

Target consumer will be children and old, who was a good

buyer, that can make bought a banana product like chips, catsup

and jam and other more products came from the processing

project.

B.Marketing Program

The proposed project marketing program are composed of

Product Feature/Design, Pricing Scheme, Promotion and Advertisement

Strategy, Product Distribution Strategies, and Target Market Share and

Profit Objectives

Product Feature/Design

4

The proposed project will feature the banana products like

Banana puree, Banana Chips and Banana jam.

Pricing Scheme

The proposed project will classify its product based on the

sizes (small, medium and large). All transaction shall be done on

“cash on pickup” basis or “cash on delivery” basis. These sizes

will be sold as follows:

Size of Banana Puree Price per Piece25g Php. 2050g Php. 35100g Php. 65

Size of Banana Chips Price per Piece25g Php. 1050g Php. 17100g Php. 30

Size of Banana Jam Price per Piece250ml Php. 85500ml Php. 120

Promotion and Advertisement Strategies

Marketable size of banana products will be packed using

transparent or durable plastic packs and glass bottle. The

finished product will put in box to prevent the accidents in

transportation of finish product safely.

Product Distribution Strategies

5

The proposed project will primarily serve the banana

products requirement of Banana Growers Cooperative of Science

City Munoz farmer-members. Any production excesses will be

sold to non-coop members. Job orders will be accept accepted in

a case basis, depending on the availability of disposable banana.

Target Market Share and Profit Objectives

The proposed project target the market share at 30%

supply in municipality market in Nueva Ecija and 5% supply in

nationwide market in Philippines.

TECHNICAL ASPECT

6

Strictly, the project will comply with recommended to techno guide for

modern banana processing operation. To ensure operational effectiveness,

the support agencies (BAS, PhilMech) and/or consultant(s) will be tapped

from time to time for such purpose.

Plant/Farm Description

The proposed project is developmental-oriented for the

Municipality of Science City of Munoz, Nueva Ecija, envisioned to

produce banana by-products and to help the banana growers of

Science City of Munoz. The project put in Brgy Palusapis Science

City of Munoz near at the large population of the banana

growers.

The main row material of proposed project is banana.

Banana has Dietary fiber, fats, protein, vitamin A, Calcium,

Vitamin C, Iron and Calories good for the human.

Production Schedule

7

The proposed project produces a Banana product (Puree, Jam

and Chips). The banana chip are producing every day, banana puree

are produce thrice a week and the banana jam produce twice a week.

Target Volume Yearly2013 2014 2015 2016 2017 2018

Puree

8640 9072 9525.6

10001.88

10501.97

11027.07

chips

10080 10584

11113.2

11668.86

12252.3

12864.92

jam 12960 13608

14288.4

15002.82

15752.96

16540.61

Production Process (es)

8

Banana Puree

Banana Chips

9

Recieving/ Sorting Washing Sanitizing Peeling

SlicingTreatmentCookingBottling

Sealing Storing

Banana Jam

Fixed Assets and Facilities

10

Recieving/ Sorting Washing Sanitizing Peeling

SlicingTreatmentSoakingSweating

Frying Quality Control Sealing Storing

Recieving/ Sorting Washing Sanitizing Peeling

SlicingTreatmentSweatingCooking

Bottling Quality Control Sealing Storing

The proposed projects have a fixed assets and facilities like

buildings, delivery car, land, office equipment and processing

equipment and facilities.

Raw Materials and Other Key Inputs

The main row material of proposed project is banana. Banana

has Dietary fiber, fats, protein, vitamin A, Calcium, Vitamin C, Iron and

Calories good for the human.

Waste Disposal System

The proposed project waste material can be decomposed. It can

be use for organic fertilizer making and it can useful for banana

growers member of the Science City of Munoz.

ORGANIZATION AND MANAGEMENT ASPECT

11

Management during the Operating Period

Types of Organization

The proposed project will be held be held by a C.E.O. or

Manager who will be acting as the banana inspector. Under the

supervision of manager will be 0ne (1) accountant, one (1)

salesman, one (1) equipment maintainer-operator and one (2)

Production ire/researcher

Organizational Set-up

Job Description and Job Specification

Chief Executive Officer. The highest ranking executive in a

company whose main responsibilities include developing and

implementing high-level strategies, making major corporate

decisions, managing the overall operations and resources of a

company, and acting as the main point of communication

between the board of directors and the corporate operations. The

12

Chief Executive Officer or Manager

Sales/SellerProduction/ResearcherFinance/Accountant

Equipment Maintainer Workers

BAS PhilMech

CEO will often have a position on the board, and in some cases is

even the chair.

Finance/Accountant. An accountant is a practitioner of

accountancy or accounting, which is the measurement,

disclosure or provision of assurance about financial information

that helps managers, investors, tax authorities and others make

decisions about allocating resources.

Production/Researcher. A programme researcher provides

support to the producer and production team. Researchers

contribute ideas for programmes, source contacts and

contributors and collect, verify and prepare information for

business.

Sales/Seller. The provider of the goods or services completes a

sale in response to an acquisition or to an appropriation or to a

request.

Worker/Laborer. A laborer or labourer is a person who does one

of the construction trades, traditionally considered unskilled

manual labor, as opposed to skilled labor.

Personnel Compensation and Fridge Benefits

13

The proposed project will have fringe benefits for all of

employee of the project. They must have a life assurance,

PhilHealth, SSS and etc.

Project Timetable

The proposed project processes will start at 7:00am to 5:00pm

Monday to Friday. And if have improvement of facilities or production

and additional product will proposed in the project it will acquired in

Saturday and Sunday.

FINANCIAL ASPECT

14

With its existing fixed assets the proposed project will require an

operating capital of at least Php 1000000 for a start. This will be used to

initially finance its proposed Banana Processing Project (Phase of its

proposed overall Village-Based Banana Production Project).

Total Project Costs

The budgetary requirement of the proposed project will is estimated as

follows;

Particulars 2014 2015 2016 2017 2018 2019Sales Of Product

13444800

14117040

14822892

15564036

16342238.

17159350.

Pre-Operating Expense

Preparation Of Feasibility Study

130,000.00

Business Permit

38,350.00

38,350.00

38,350.00

38,350.00

38,350.00

38,350.00

Land 750,000.0

Building 1,400,000

Machine 120,000Training Of Staff

27,000

Delivery Truck

120,000

Contingency 245,535.00

Operating ExpenseRaw 201825 2078797. 21411 220539 227155 233970

15

Materials(Banana)

0 5 61. 6. 8.1 4.9

Other Ingredients

113000 124300 136730

150403 165443.3

181987.63

Salaries And Wages

528,000 528,000 528,000

554400 554400 554400

Fringe Benefits

11520 11520 11520 11520 11520 11520

Packaging Materials

319600 335580 352359

369976.9

388475.79

407899.58

Depreciation: Equipment

56,000.00

56,000.00

56,000.00

56,000.00

56,000.00

Depreciation: Utensils

6444 6444 6444 6444 6444

Repair And Maintenance

108,820.00

108,820.00

108,820.0

108,820.0

108,820.0

108,820.0

Electricity And Water

264,000 264,000 277200

277200 291060 291060

Fuel And Oil 79200 79200 83160 87318 91683.9 96268.095

Advertising Expenses

50,000 50,000 50,000 50,000 50,000 50,000

Sss And Philhealth

10,000 10,000 10,000 10,000 10,000 10,000

Utilities Expense

60,000 60,000 60,000 60,000 60,000 60,000

Contingencies

178119.5

185633.075

191069.7

197373.9

203270.25

208705.21

Total Expenses

6,571,394.

3,936,644.58

4,050,814

4,183,202

4,307,025.

4,421,159.

Net Income 6,873,405.

10,180,395.4

10,772,077.8

5

11,380,834.47

12,035,213.02

12,738,190.93

3740509.5

3898294.57

4012464.146

4144852.129

4268675.4

4382809.4

Financing Scheme and Sources

16

The proposed project will be financed through loan and coop

equity. About 90% of capital will be financed from outside sources and

10% of capital from internal sources. The budgetary allocation and/or

percentages contribution are presented as:

Items Amount PercentageACEF Loan P5940,000.00 90%Coop Equity Counterpart

P660,000.00 10%

-------------------------------------

-------------------------------------

TOTAL CAPITALIZATION P6,600,000.00 100%

List of Financial Assumptions

17

1. Sales volume is expected to increase by 5% yearly.

2. Since mushroom processing are build, other mushroom growers will be encourage to sell their products therefore Yearly production should increase at 3%.

3. Selling prices are assumed to increase by two pesos a year

4. Other ingredients for processing are projected to increase 10% yearly.

5. SSS and Phil Health are expected to increase by 5% on the fifth year.

6. Price contingency are assumed to increase at 5%

7. Employees’ salaries and wages are expected to increase 5% every 3years.

8. Electricity and water are expected to increase 5% every 2 years.

9. Fuels, oils and lubricants are expected to increase 5% every 2 years.

10. Packaging materials are projected to increase 5% yearly

11. Tools were accounted for using the replacement method in which the cost of tools is capitalized when originally purchased and as replacement tools are purchased, they are charged as current expense. All other assets under Property, Plant, and Equipment, except land are depreciated using the straight line method.

12. One fourth of Mushroom raw materials are come from the processing plant.

13. 5kg are assumed to increase of mushroom supply during cold season(dec-feb) and rainy season(jun-july)

Projected Financial Statements

18

Initial cash balance of the project is equivalent to the cash

deposit of the cooperative. With the financing support from donor

agencies and loaning institution, start-up operating capital of the

project is therefore budgeted 1ooooooo. The projected income, cash

flow and balance sheet statements of the proposed project over its

three-year lifespan are estimated are estimated and summarized as

follows:

Projected Income Statement

19

Particulars 2014 2015 2016 2017 2018 2019

Sales of Product

134448001411704

0148228

92155640

36.6163422

38.43

17159350.

35Pre-Operating Expense

Preparation FS130,000.0

0Business Permit 38,350.00

38,350.00

38,350.00

38,350.00

38,350.00

38,350

Land750,000.0

0Building 1,400,000Machine 120,000training of Staff 27,000delivery truck 120,000

Contingency245,535.0

0Operating Expenseraw materials(Banana) 2018250

2078797.5

2141161.425

2205396.268

2271558.156

2339704.9

Other ingredients 113000 124300 136730 150403

165443.3

181987.63

salaries and wages 528,000 528,000

528,000 554400 554400

554400

Fringe benefits 11520 11520 11520 11520 11520

11520

Packaging materials

319600 335580 352359369976

.95388475.

7975

407899.58

74Depreciation: Equipment

56,000.00

56,000.00

56,000.00

56,000.00

56,000.00

Depreciation: Utensils 6444 6444 6444 6444 6444

Repair and maintenance

108,820.00

108,820.00

108,820.00

108,820.00

108,820.00

108,820.00

Electricity and water 264,000 264,000 277200 277200 291060

291060

20

Fuel and oil79200 79200 83160 87318 91683.9

96268.095

Advertising Expenses 50,000 50,000 50,000 50,000 50,000

50,000

sss and philhealth 10,000 10,000 10,000 10,000 10,000

10,000

utilities expense 60,000 60,000 60,000 60,000 60,000

60,000

contingencies

178119.5185633.0

75191069

.7213197373

.9109203270.

2577

208705.21

06

Total expenses

6,571,394.50

3,936,644.58

4,050,814.15

4,183,202.13

4,307,025.41

4,421,159.

42

NET INCOME

6,873,405.50

10,180,395.43

10,772,077.85

11,380,834.47

12,035,213.02

12,738,190

.93

Projected Cash Flow Statement

21

Particular Year 0

Year 1

Year 2

Year 3

Year 4

Year 5

Beginning Cash Balance

2,830,885

12,674,945

23,040,973.5

34,004,121

45,582,329

57,820,812.73

Cash Flow: Sales Receipt

13444800

14117040

14822892 15564036.6

16342238.4

17159350.35

Cash OutflowRaw Materials(Banana)

2018250 2078797.5

2141161.42

2205396.2

2271558.15

2339704.9

Other Ingredients

113000 124300 136730 150403 165443.3

181987.63

Salaries And Wages

528,000 528,000 528,000 554400 554400 554400

Fringe Benefits

11520 11520 11520 11520 11520 11520

Packaging Materials

319600 335580 352359 369976.95

388475.797

407899.9

Depreciation: Equipment

56,000.00

56,000.00

56,000.00

56,000.00

56,000.00

Depreciation: Utensils

6444 6444 6444 6444 6444

Repair And Maintenance

108,820.00

108,820.00

108,820.00

108,820.00

108,820.00

108,820.00

Electricity And Water

264,000 264,000 277200 277200 291060 291060

Fuel And Oil

79200 79200 83160 87318 91683.9 96268.095

Advertising Expenses

50,000 50,000 50,000 50,000 50,000 50,000

Sss And Philhealth

10,000 10,000 10,000 10,000 10,000 10,000

Utilities Expense

60,000 60,000 60,000 60,000 60,000 60,000

Business Permit Renewal

38,350.00

38,350.00

38,350.00 38,350.00

38,350.00

38,350.00

Contingencies

178119.5

185633.07

191069.7213

197373.910

203270.257

208705.2106

22

Total Cash Outflows

3600740 3751011.5

3859744.425

3985828.21

4103755.15

4212454.213

Netcash Flow

12,674,945

23,040,973

34,004,121

45,582,329

57,820,812

70,767,708.87

Financial Analysis

23

5.5.1Benefits and Cost (B/C) Schedule and Measure of project worth

GB GC NB ANB DNB at 12%

DNB at 60%

YEAR2014-0 37405

10-

3740510

-3740509.

5

-3740509.

52015-1 14117040 38982

95102187

45647823

69123879.

8444924855.

4252016-2 14822892 40124

64108104

28210291

738618006.

8995251843.

3542017-3 15564036

.641448

52114191

84222296

128127949.

9535582670.

7462018-4 16342238

.4342686

75120735

63234927

477672967.

5695945223.

6082019-5 17159350

.3543828

09127765

41248501

047249752.

4466341784.

546

IRR 278%Payback period

0.4Years

NPW@12%

7249752.446

Financial Sensitivity Test

24

A. Assumption #1What if the gross Cost increase by 5% during the Actual Operation period(year1-5); Gross benefits remain the same forecasted

B.

Assumption #2

What if there will be a 5% shortfall in Gross Benefits yearly due to drop in its selling Gross costs remain the same as budgeted price

YEAR GB GC NB DNB@12% DNB@60%0 0 4377867 -4377867 -4377867 -43778671 12772560 4567983 8204577 7325515 51278612 13411188 4758505 8652683 6897866 33799543 14785835 4897543 9888291 7038291 24141344 15525127 5112492 10412634 6617417 15888425 16301383 5311001 10990382 6236238 1048124

IRR 194%

25

YEAR GB GC NB DNB@12%

DNB@60%

0 0 4596760

-459676

0

-4596760 -4596760

1 13444800

4796382

8648418

7721801 5405261

2 14117040

4996430

9120610

7270894 3562738

3 15564037

5142420

10421616

7417901 2544340

4 16342238

5368117

10974121

6974253 1674518

5 17159350

5576551

11582799

6572391 1104622

IRR 194%

c. Assumption 3What if there will be 1% a shortfall in gross benefits and 1% cost overrun during the actual operating period (simultaneous occurrence)

YEAR GB GC NB DNB@12% DNB@60%0 0 4596760 -4596760 -4596760 -45967601 12772560 4796382 7976178 7121587 49851112 13411188 4996430 8414758 6708193 32870153 14785835 5142420 9643414 6863992 23543494 15525127 5368117 10157010 6454963 15498375 16301383 5576551 10724832 6085558 1022800

IRR 180%

Financial Feasibility Findings

The project is financially feasible based on the IRR that is 278%, since it is greater than hurdle rate. It is also acceptable based on the Net present worth of 7,249,752 pesos since it is positive.

26

SOCIO-ECONOMIC ASPECT

The project will benefit not only Muñoz Banana Processing Cooperative,

Inc. (MBPCI) farmers-members but also the Nueva Ecija banana growers in

general. Likewise, the community residents and the banana consumers will

be benefited in items of increased banana product supply to reduced banana

product prices.

Since the general goal and objective of the cooperative is upgrade the

standard living of its farmer-members, the proposed project will help boost

the income-generating capacity of its primary beneficiaries. With assured

source of banana and technical assistance, this will encourage MBPCI

members to engage in banana farming or multi-cropping in one season to

augment their income from crop cropping.

The project can be likewise tapped as training ground and orientation

for enterprising individuals and as venue for banana technology

improvement researches.

27