Feasibility Study Essay

* 1. A Feasibility Study on the Establishment of a Semi-Commercial Hogs Farm in Alfonso, Cavite The LGD Farms * 2. CHAPTER I INTRODUCTION * 3. In the Philippines, pork is one of the basic foods which Filipinos eat. It is one of the best sources of protein needed by the body to be strong and healthy. That is why a need for a farm arises. Introduction * 4. Hog raising business has been a very popular and dependable business in the Philippines. In fact, Hog raising business had dominated the swine industry as a healthy and viable commercial sector.Even in our traditional Filipino Festival/Occasion, Filipinos always crave for cuisine with â€Å"PORK†. â€Å"Di kompleto ang Okasyon kung walang handang baboy†. * 5. This statement had marked our traditional way of celebrating special occasions in our lives, and it proved our undying taste for pork. The Philippine Department of Agriculture’s vision is to modernized smallholder agriculture and fisheries to a diversified rural economy which would be dynamic, technologically advanced and internationally competitive. * 6. As of July 2008, it was recoded at 35.6% of the labor force, roughly around 12 million people, are employed in the agriculture industry, which includes the hunting and forestry sectors. The situation being such, the agriculture sector aims for security, sustainability of the natural resource base, social equity and global competitiveness. * 7. The Philippines takes specific measures to achieve these goals through the protection and development of watersheds; proper management of agricultural land and water resources; establishment of biogas facilities; providing marginalized sectors preferential access to productive assets and providing essential measures and support services. * 8. Vision The LGD Farms envisions itself as a hog raising farm promoting and maintaining environmental friendly identity to its employees, customers and to to the community. LGD Farms also envisions itself to be a naturally independent source of BioGas which can be used as a substitute for LPG to be used in the farm. The LGD Farms also envisions for the expansion of hog operation.The LGD’s Vision/Mission Statement * 9. Mission The LGD Farms will create an environmentally friendly identity through undertaking the proper and efficient way of waste disposals to avoid harming and distorting others. The LGD Farms will introduce its environmental friendly BioGas facility through using the hogs’ waste, by converting these waste into useful mathaine gas. * 10. The LGD Farms will undergo expansion after  five years through constructing additional building and adding parent stocks for the purpose of increasing their productiion to supply larger amount in the demand supply gap * 11. CHAPTER III PROJECT BACKGROUND * 12. Name of the Proposed Business: LGD FarmsNature of the business: Hogs ProductionType of business organization: Sole ProprietorshipLocation of the project: Kaysuyo, Alfonso, CaviteProject Background * 13. Source of Capital Funding of LGD Farms’ general operation and other financial demands will be sourced from the savings of the proprietor. Mr. Jandel A. Gimeno will invest P 4,600,000 in the business. * 14. Proposed Name of the Business â€Å"LGD Farms† will be the name of the business as agreed upon by the proponents. The proponents adopted the letters E and J from the name of the proprietor’s parents, Efren and Jovita Gimeno. * 15. The project will adopt a sole proprietorship type of business organization. Sole proprietorship type of business organization is one which is owned and run by an individual and where there is no legal distinction between the owner and the business. Type of Business Organization * 16. All assets of the business are owned by the pr oprietor and all the debts of the business are proprietor’s debts and he/she must pay it from his/her personal resources which will result to unlimited liability. * 17. The proponents opt to form the business under sole proprietorship type of business organization as they see it fit considering the nature and capital requirements of the project. Moreover, it is subject to fewer regulations unlike the other type of business organization, the owner has full autonomy with regard to business decisions. * 18. The proposed location had been chosen by the prponents considering such factors as the availability of resources, accesibility to the potential customers, location cost and the environment of the business which fall under agro – industrial land type as being classified by the DENR which is the only approved land type and location for the establishment of a Hog Farm. Location of the Firm * 19. According to the very nature of the proposed project, which is in line with the livestock type of business, a none-residential area has been the prime consideration of the proponents in choosing the site of the business. The LGD Farms will be situated at Kaysuyo, Alfonso, Cavite. * 20. Management and Personnel Feasibility Summary LGD Farms will implement a democratic style of  management. This means that all employees will have the privilege and will be allowed to participate in the decision-making concerning the farm. The employees as well as the general manager will peform multi-tasking jobs for easy flow of operation. * 21. CHAPTER IVORGANIZATION AND MANAGEMENT FEASIBILITY * 22. With regard to the business operations, the proposed business will have a total of four (4) persons including the General Manager, Technical Operations Manager and two (2) Farmhands. Each of them must have knowledge about the production processes of hogs. They will be trained and oriented properly and will be given some seminars regarding hog farming.Administration and Management Feasibility * 23. Management Proposals The General Manager will be the one to plan and will be in charge of the overall supervision of the farm. He will be the one to screen the applicants to be recruited and hired. The Technical Operations Manager will oversee the efficiency and effectiveness of the farmhands. He will also be responsible for the general care of the pigs, maintaining the herd health and environment of the pigs. * 24. Organizational Chart * 25. In an organization, policies and principles play an important role because these help organization to become more efficient and effective. These will guide the whole business and help to achieve the company’s goals.Company Policies * 26. The proprietor will be the general manager of the firm. His compensation will be through withdrawals from the business. 20% of the Net income will be drawn from the farm.Policies on Drawings * 27. Policies on Hiring LGD Farms will announce job vacancies. The proposed business will recruit and employ workers on the basis of their qualifications of work. Referrals from trusted people will also be entertained. Qualified applicants will then pass the necessary requirements to the management such as:Barangay, Police and NBI ClearanceCopy of Birth CertificateHigh School/College Diploma/Form 137Medical CertificateDriver’s License * 28. Security Measures The E&J Farm will construct fence around the farm to prevent the entrance of unauthorized person despite the safety of the location against possible threats. * 29. Policies on Days of Work Employees will work six (6) days a week The compensation will be on  a daily basis. The employees are entitled to one (1) rest day a week. * 30. Work Schedule All employees are entitled to one (1) rest day. The Farmhand 1 will take his rest day on Saturday and the Farmhand 2 will take his rest day on Sunday. The Technical Operations Manager will take his rest day every Friday. * 31. PhilHealth, PAG-IBIG, SSS and 13th month pay will be provided for all employees.Seminars/ Trainings Seminars and trainings will be conducted for the farmhands to gain additional knowledge that will enhance their abilities and skills to become more productive and more efficient.Employee Benefits * 32. CHAPTER VMARKETING FEASIBILITY * 33. This chapter will discuss all the marketing aspects of a Hog Farm. The discussion will include the general market description, the target markets, the general marketing practices, demand, supply, the demand supply analysis, the propose marketing program and the marketing strategy. The data and other figures were gathered through research using both primary and secondary data. MARKETING FEASIBILITY * 34. The primary data came from the results of the conducted survey by the proponents and the secondary data were gathered from several government agencies and offices such as Provincial Veterinary Office (PVO), Department of Environment and Natural Resources (DENR), Bureau of Agricultural Staistics (BAS), Department Of Agriculture (DA), and Alfonso Municipal Office. * 35. The use of marketing strategies and promotional activities such as word-of-mouth advertising, referrals and transit advertisement are highly sufficient to increase the number of customers and to increase the level of revenue. * 36. Alfonso, Cavite is an upland town situated at Southwest portion of the province. It is one of the highly recommended place for the establishment of Hog Farms as approved by the Provincial Veterinary Office. According to Alfonso Zoning Map, the said town provides preferable locations for the possibility of opening business operations in line with agriculture. MARKET DESCRIPTION * 37. According to the Provincial Veterinary Office, there were about 20 commercial farms and 70 backyard farms operating in areas of Alfonso, Indang, Mendez, Tagaytay, and Silang, Cavite as of 2009 Provincial Veterinary Office official count. In Alfonso, there are about 3 commercial farms and 20 backyard farms. * 38. The proposed business will be established at Kaysuyo, Alfonso, Cavite. The target market will be the  public markets of Alfonso, Tagaytay City, Mendez, Indang and Silang, Cavite. The selected five towns of Cavite has a total of 130 meat vendors operating in their respective public markets. TARGET MARKET * 39. Table 1. Freaquency of Selling operation in Silang, Tagaytay City, Indang, Alfonso and Mendez, Cavite * 40. Table 2. Quantity of meats sold per selling operation * 41. Table 3. Source of Pork Supplies of Vendors * 42. Table 4. Availability of meat supplies * 43. Table 5. Vendor’s willingness to buy * 44. GENERAL MARKETING PRACTICES The LGD Farm will seek accreditation from Cavite Livestock Poultry Farming Association Incorporated (CALIFPAI), Department of Environment and Natural Resources (DENR) and Provincial Veterenary Office (PVO). The farm will follow all the rules and regulations and will comply with the standards set by these organizations and agencies to ensure the proper operations of the farm. * 45. The farm will also get updates and reviews and other useful information for better hog farm operation. As to operation security, The LGD Farms will secure its necessary requirements such as the Certificate of Non-Coverage (CNC)/ Environmental Compliance Certificate, Licenses and business permits. * 46. The farm will also actively participate on some different livelihood programs such as Hog Raising Seminars, Civic Welfare Programs and other Community Development related activities to gain market awareness. By these practices, the farm is expecting to establish a good public relations with different haulers and meat vendor to whom the farm will transact with. * 47. DEMANDHistorical Demand for pork in Selected Five Towns in Cavite (in kilograms) * 48. Projected Demand for Pork in Selected Five Towns in Cavite (in kilograms) * 49. Historical Supply for Pork in Selected Five Towns in Cavite (in kilograms)SUPPLY * 50. Projected Supply for Pork in Selected Five Towns in Cavite (in kilograms * 51. DEMAND – SUPPLY ANALYSIS * 52. CAPACITY TO SELL * 53. The farm will be advertised through word-of-mouth promotion, referrals and transit advertising. It will also join CALIFPAI (Cavite Livestock Farming Poultry Association Incorporated) to meet representatives of various sectors including Department of Agriculture. Proposed Marketing  Program * 54. The local government officials of Alfonso will also be a great help since the proposed business will contribute for the betterment of the community. LGD will also engage itself in organizing seminars/workshop for other hog raisers and for those who aspire to put up their own hog farms. This will also serve as a promotion of the farm. * 55. Growing Period and Feed Consumption Average Daily Gain- This Refers to the average gain in weight of pigs in kilograms per day. Weaners should have an ADG of at least .350 kg. And fatteners should have an ADG of .800-.825 kg. The higher the ADG the better because it means faster growth of pig and lower fattening period. COMPETITIVE ADVANTAGE * 56. Feed Conversion Ratio- This refers to the amount of feeds consumed by the pig per kilogram gain in weight. The lower the FCR the better. It means lesser feeds per gain. Weaners should have an FCR of 1.5 and fatteners should have an FCR of 3.0. * 57. The LGD Farms will use tarpaulin in its introductory stage as well as Transit advertising, which means the use of vehicles to carry the advertising material for the clients to be aware of the existence of the proposed business. Deliveries to clients will be available everyday.MARKETING STRATEGY * 58. The LGD Farms will also reach out to different charitable institutions such as orphanage, churches and government hospitals, charity and organizations. Help will be extended to those chosen charity by means of goods and financial help. * 59. CHANNELS OF DISTRIBUTION The products will undergo channels of distribution. These will be done by the E&J Farms through selling of hogs to slaughter houses and haulers which will serve as the middlemen or resellers. Next, the slaughter houses will deliver the meats to different public markets in selected towns and city for retailing purposes. * 60. These group of meat vendors wiil sell the meats to household who are considered as the consumers /end-users of meats for final consumption purposes. * 61. CHAPTER VIPRODUCTION/TECHNICAL FEASIBILITY * 62. The proposed business LGD Farms falls under a production type of business providing the resellers quality pigs for their reselling purposes, particularly those meat vendors and even haulers in different market in Cavite, especially in Alfonso and near-by towns. LGD will establish 50 sow level hogs farm, producing 100 heads of hog a month. PRODUCTS * 63. A  variety of Landrace strains originated from famous Danish Landrace hogs which were developed in Denmark in 1895. The Landrace is characterized by its long body length, short legs, and medium to large drooping ears. Landrace swine is meaty on the food especially on the rail. Their hams are plump but trim. Their sides are long and uniform in depth. BREEDER STOCKS * 64. Landrace sows are prolific and are known to be excellent mothers and having a good litter size. This breed’s sows have been known for their milk producing abilities, reaching their top milk after five weeks of lactation which is much latter when compared to other breeds. * 65. Large White is a white-colored meat type of pig with medium, erect ears, curved back and body in dining forward. The face is slightly dished. It is fast –growing, a good feed converter, highly prolific and excellent milkers with superior mothering ability. Its carcass is also suited for bacon production. It can adapt well in confinement but not in rugged condition. * 66. Breed the sows.FarrowingWeaning of pigletsPiglets in the NurseryTransfer to fattening sectionHogs at market weightPRODUCTION PROCESS * 67. Purchase of Piglets.Disinfection and Quarantine. Transfer of Purchased piglets to the nursery pen.Transfer to the Fattening Section. Hogs at market weight.ALTERNATIVE PROCESS (1) * 68. Breed the sows.Farrowing.Weaning of piglets.Piglets in the nursery.Piglets at market weight. ALTERNATIVE PROCESS (2) * 69. PROJECT SITE * 70. The first factor that must be considered is the availability of resources or location where the project will be situated. Other considerations also include; the location cost and other legal requisites and also for all of this to be possible, a non-residencial area must be chosen as the location of the business for it to operate. * 71. PROJECT SITE DESCRIPTIONThe proposed project, LGD Farms will be located at Kaysuyo, Alfonso, Cavite. * 72. Building The E&J Farms will construct three major buildings which would be essential for the operation of the farm, the Dry pen building, Farrowing pen and nursery pen building and the Fattener pen building.BUILDING AND FACILITIES * 73. Dry Pen BuildingFarrowing and Nursery Pen BuildingFattener Pen BuildingHolding PenStorage RoomArtificial Insemenation LaboratoryFarm House * 74. LGD Farms has a biogas facility that treats pig wastes and generate enough methaine gas that is used for  cooking at the farm house. This facility has made the commercial farm environmentally friendly as it minimizes pig odors from farm wastes. Also, after biogas processing of effluent wastes, wastewater is discharged to irrigate the grass paddocks within the farm premises.BIOGAS FACILITIES * 75. The farm will create no waste but pieces of plastic packaging of medicines for hogs, that will be placed properly on a trash bin. The pig waste will undergo the biogas facility that treats pig waste and generate enough methaine gas that is used for cooking at the farm house. WASTE AND WASTE DISPOSAL * 76. This facility has made the commercial farm environmentally friendly as it minimizes pig odors from farm wastes. Also, after biogas processing of effluent wastes, wastewater is discharge to irrigate the grass paddocks within the farm premises. * 77. The quality of each pig will be maintained through proper care and treatment. Control of virus should be taken into consideration as to avoid diseases. The farm will have a record of every pig for monitoring and evaluation purposes. This will be done from the dry period to the farrowing day for the sows and from the day 1 of the piglets to market weight for fatteners.QUALITY CONTROL * 78. There will be a technician for the sows from the supplier of the parent stocks and a feed technician from the supplier of the feeds. Both of them will serve as farm consultant on an on-call basis. * 79. CHAPTER VIIFINANCIAL FEASIBILITY * 80. CAPITAL REQUIREMENTSCASH P 154,178.50PROPERTY AND EQUIPMENT Farming Tools And Equipment 50,080.00Delivery Equipment 270,000.00Office Equipment 18,200.00Furniture And Fixtures 18,720.00INVENTORIESFarm Supplies P2,401,136.50Office Supplies 485.00Land 450,000.00Pre-Operating Expense 17,200,00TOTAL CAPITAL REQUIMENTS P4,600,000.00 * 81. Selling price is computed using statistical parabolic projection method.Sales are 100% of the yearly production.Gas and oil expense, promotion and advertisement, repair and maintenance are assumed to increase by 5% annually.Contingencies are 3% of net sales.Drawing is 20% of net income.OTHER FINANCIAL ASSUMPTIONS * 82. Other benefits like seminars and trainings are assumed to increase by 5% annually.Audit fees, permits and licenses are assumed to increase by 5% annually.The initial capital requirement is good for 3 months consumption.Production will be maintained at 100 heads per month for the  next 5 years. * 83. Pre-Operating Cash FlowCash Inflow Capital Contribution P4,600,000.00Cash Outflow Farm Tools And Equipment 50,080.00 Delivery Equipment 270,000.00 Office Equipment 18,200.00 Furniture And Fixtures 18,720.00 Farm Supplies 2,401,136.50 Office Supplies 485.00 Land 450,000.00 Building And Facilities 1,222,000.00 Pre-Operating Expense 17,200.00Net Cash Flow 154,178.50 * 84. The E&J FARMS Pre Operating Statement Of Financial PositionASSETSCURRENT ASSETS Cash And Cash Equivalent 154,178.50Inventories 2,401,621.50NON CURRENT ASSETSPROPERTY AND EQUIPMENT 357,000.00BUILDING AND FACILITIES 1,222,000.00LAND 450,000.00OTHER ASSETSPre Operating Expense 17,200.00TOTAL ASSETS P4,600,00.00LIABILITIES AND OWNER EQUITYOWNER’S EQUITY P4,600,000.00TOTAL LIABILITIES AND OWNER’S EQUITY P4,600,000.00 * 97. CHAPTER VIIISOCIO ECONOMIC FEASIBILITY * 98. This chapter will discuss the different sectors that would benefit from the proposed business. The purpose of putting up a business is not just to generate profit but to give importance to social and economic benefit that it can provide.SOCIAL DESIRABILITY * 99. The proposed business will be located at Kaysuyo, Alfonso, Cavite. 72% of its residents are engaged in agriculture, taking advantage of its good location which best suits the proposed business. The said business will increase rate of employment through providing job opportunities to those people who were unable to attain higher education. * 100. In putting up a business, registration of business is necessary to have permits and license from the government office. These, along with taxes are then paid as the business operates. Taxes form part of the government revenues that help to support the needs of the public. INCREASE IN GOVERNMENT REVENUE * 101. The proposed business will employ people who have knowledge about agriculture preferably those who are living within the adjacent area of the location of the proposed business. These employees will receive fair compensation according to their qualifications and performance. Salaries are based on the minimum wage set by the government.GENERATION OF EMPLOYMENT * 102. Increase in population will result in increase in demand for food, which also means an increase in demand for pork in the area. With the continuous operation of the business, the employees will be helped to uplift the standard of their living.DEVELOPMENT OF RELATED STUDY * 103. In order for the business to  operate legally, it must comply with the government requirements as follows:Mayor’s Permit, Business Permit, Certificate of Non-Coverage and other Municipal Licenses.Environmental Compliance CertificateRegistration with the SSS, Philhealth and PAG-IBIG.Registration with Bureau of Internal Revenue.LEGAL ASPECTS * 104. It will satisfy the customers’ need.It will ensure the customers the of the Farm’s product.OTHER BENEFITS * 105. CHAPTER IX CONCLUSION * 106. After studying the different aspects in establishing a Semi-commercial Hogs Farm, proponets concluded that the study is feasible and viable. The study shows the initial investment of the proposed business will be P4,600,000 with a minimum payback period of 2.54 years. * 107. The increase in the demand for pork in Alfonso, Mendez, Indang, Silang and Tagaytay City Cavite shows thatt there is still a need for the proposed business. Thus, the business is profitable.