Business Model Canvas NMSPI7.Key Partners

Providing Legal, Regulatory, Financial, Technical and Business Development ServicesGovernment: Department of Trade and Industry (DTI) Department of Agrarian Reform (DAR) Department of Science and Technology (DOST) Department of Agriculture (DA) Food and Drug Administration (FDA) Sugar Regulatory Administration (SRA) Office of the Provincial Agriculturist, Negros Occidental Office of the Mayor, La Castellana, Negros Occidental

Industry Associations: Negros Organic Muscovado Industry Association (NOMIA)

International Agencies: ICCO Oikocredit World Banks Philippine Rural Development Program (PRDP)

Local NGOs, MFIs and Cooperatives: Task Force Mapalad, Inc. (TFM) Negros Island Savings and Credit Cooperative (NISCO) Upgrading Performance for Sustainable Capacities and Livelihood Enterprises (UPSCALE) - Negros Federation of Peoples Sustainable Development Cooperative (FPSDC) Pag-inupdanay Inc. (PI) Balay Pag-inupdanay Foundation, Inc. (BPFI) Foundation for a Sustainable Society, Inc. (FSSI)

Suppliers Farmers/ARBs in the municipalities of La Castellana, Pontevedra, and La Carlota in the province of Negros Occidental Negros Island Savings and Credit Cooperative (NISCO) TFM Provincial Federation - Negros Agrarian reform beneficiaries organizations (ARBOs) in the municipalities of La Castellana, and Pontevedra , and La Carlota City BuyersSupermarkets: Shopwise

Food product distributors: Upland Marketing Foundation, Inc. (UMFI) Sharmila, Inc. Global Organic and Wellness Corp. (GlowCorp) Los Ricos Compania Corporation (Coco Natura Sugar)

5.Key Activities

NMSPI and TFM personnel regularly inspect farm lots of sugarcane growers to ensure steady supply of good quality sugarcanes as raw materials to the mill for muscovado sugar production. They supervise the actual harvest, hauling and weighing of canes delivered to the mill

Basically, NMSPIs muscovado sugar production activities consist of:1. Cane harvesting. A truckload (5-10 tons) of freshly cut canes is delivered to the mill for immediate crushing. Or this may be stockpiled for some hours while waiting for the canes to be delivered by other cane growers.2. Cane crushing. For squeezing the juice out of the canes, the mill employs mechanized crushing using cast-iron three-roller mills driven by a motorized engine. About two hours of crushing could yield enough juice for a single cooking batch of 3 cast iron vats.3. Juice transfer. To transfer milled juice directly to the cooking vats a hose or a PVCpipe traverses from the mill outlet to the vats. 4. Juice cooking. The furnace is slowly fired to heat the juice in all the coking vats. Cane juice boils at 100 105 degrees centigrade. Cooking time is usually 3-4 hours. Evaporationensues leaving only about 30% volume of concentrated juice. The thickened juice is gradually scooped to the succeeding vats from the last to the first vat where the final cooking takes place. Scum removal during ebullience (juice boiling) is done through skimming.5. Juice Hardening. Only a minimal amount of slaked lime is added for purposes of hardening the concentrated juice (technically termed asmassecuite) further. 6. Curing. For powdered muscovado sugar, the massecuite is immediately transferred to the tubs, and vigorous stirring using spades/paddles ensues. Air cooling renders this operation easier. The lumps are oowdered to the desired consistency and texture. Color changes frombrown to yellow, which is the more desired color for marketability. 7. Sieving: This operation consists of separating the big particles from the rest of the powdered muscovado sugar. 8. Storage. 50 kg. bags are used for powdered muscovado storage. 9. Packing & Cooling down: This operation takes places in the packaging area.

10. Marketing. Through Bacolods seaport, NMSPI may ship its muscovado sugar to Metro Manila market outlets such as supermarkets and food distributors. NMSPI may store also store some of its muscovado sugar for better sale period, usually during peak demands in November and holiday seasons. 1.Value Propositions

Muscovado is unrefined brown sugar made from sugarcane through a natural process. It thus retains many of the essential dietary vitamins and minerals present in the sugar cane plant such as potassium, calcium, magnesium and iron, among other useful compounds.

Muscovado is pure whole, unrefined, non-centrifugal cane sugar. Muscovado retains all of the natural ingredients of sugarcane, making it wholesome and healthy. Only pure bee's honey can compare to muscovado for natural goodness. The nutritional qualities alone are quite exceptional and can be compared with honey. Muscovado is also a natural high energy food source that quickly replaces lost vigor.

Unlike centrifugal and refined sugar, the presence of molasses gives muscovado sugar its color, aroma as well as desirable mineral content and natural flavor.

The absence of sugar crystals qualifies muscovado as soft sugar, suited for cooking as well as for confectionaries. Because of its distinct qualities, it has gained wide acceptance as health food particularly as sweetener for hot beverage.

Generally, muscovado sugar production poses high income opportunities because of its high value product image / market positioning, high demand and high end target markets, thereby alleviating the standard living of sugarcane producers.

Product Features and Benefits: Product quality is assured at three stages: the use of selected sugarcane varieties at the inbound stage; strict quality control and food safety management with traceability at the production stage; and independent laboratory tests by regulatory bodies at the outbound stage.

Unique Selling Proposition: NMSPI Brand - high quality muscovado produced with traceable compliance with food safety measures.

Packaging:NMSPI will continue to sell muscovado in bulk (50 kilo bags) and packaged according to the buyers specifications. UPSCALE brand will be needed in serving the local retail market segment.4.Customer Relationships

The demand for muscovado sugar is growing locally and internationally as the number of health foods consumers increases. This budding market niche presents an opportunity to the Philippine muscovado sugar producers and farmers. Despite the positive, supply has not caught up with the demand both in the domestic and world market.

Because market niche already exists for muscovado sugar, farmers supplying canes to NMSPI continue using the conventional farming method over organic farming unless the whole market niche begin to clamor for organically produced sugarcane. Only exporters have become sensitive to the market for organically certified muscovado sugar because these are the segment of traders who are in touch with markets requiring organically grown products. Local traders do not discriminate over organically grown sugar.

2.Customer segments

Bacolod/Negros customer segment includes local coffee shops, hotels, restaurants and supermarkets Metro Manila supermarkets Metro Manila hotels, restaurants and coffee shops Industrial customer segment Export and fair trade market

The export market is the largest customer segment due to the relatively high prices.

Locally, the Negros and Metro Manila supermarket segment is the largest customer segment in terms of market volume.

The Negros and Metro Manila hotel and restaurant segment has small quantity requirement per account but is still significant in market size on the aggregate.

The Metro Manila coffee shop segment is easier to serve as purchases may be made at the central commissary level.

Demand of the industrial segment for muscovado sugar is limited due to its preference for the cheaper refined sugar and artificial sweeteners

6.Key resources

Physical Resources:1. Plant housing. Under GI sheets and a floor area of 500 sq. meters with a store-room (bodega) within the plant-house.2. Leased land for the mill (5,000 sq. m.). 25 years lease contract duration from 20008 to 2033.3. Machinery Equipment. Juice extractor. These are three-roller cast-iron mills provided with accessories as cogs, gears and belts and is driven (rotated) by a motorized engine. PVC pipes lead the milled juice from the base of the mill to the cooking vats. Cooking Vats. Locally called kawa are made of mild steel measuring 30 deep and about 50 top diameter. Curing tubs. Made of stainless steel, the rectangular curing tub serves for crystallizing, solidifying, the concentrated syrup through vigorous mixing using spades and paddles.4. Furnace. Directly below the cooking vats is a furnace with cement lining.5. Miscellaneous/ Consumables: Other materials for muscovado hardening, curing and bagging such as: lime and sacks.

Human Resources:The mill requires 8-10 workers to run the mill. It will also need to fill up the managerial, technical, and administrative posts with the corresponding duties and responsibilities:1. General Manager Makes decisions related to program implementation Exercises control and supervision of all mill staff and workers.

2. Plant Operations Manager Oversees the operation of the mill at the production and marketing aspects. Provides regular monthly report on the mill operations to the CEO.

3. Quality Control Officer/ Production Supervisor Inspects, monitors and evaluates the sugarcane delivered to the mill Ensures that the process flow critical control points are observed and implemented; Ensures that the quality control procedures or standard sanitation and operating procedures implemented ( equipment and utensils, personnel hygiene, working areas and pest control); Responsible for quality assurance of products for shipment to various outlets.

4. Administrative and Finance Staff Manages the mills administration, finance and logistic; Handles all financial transactions in accordance with standard accounting procedures and the mills approved budget.3.Channels

Promoting the Product and Value Propositions

At present, NMSPI muscovado is sold using the label of its institutional buyers. Through NMSPI, a product brand name shall be developed and registered to raise customer awareness of the product and the companys value propositions. The brand name will communicate a quality image based on compliance with current Good Manufacturing Practices (cGMP) and installation of Hazards and Critical Control Points (HACCP) in the mill.

Distribution Strategy: Both domestic and export markets will be explored. For the international market, the indirect entry mode will be preferred, using agents/traders who specialize in the export and distribution of muscovado sugar abroad.

For the domestic market, a direct marketing approach will be used, utilizing the house brand of supermarkets and re-packers. Other institutional or industrial markets will be explored. Upon the development of its own brand name, NMSPI will target coffee-shops, restaurants, bakeries, small neighborhood stores, confectionaries, cooperatives, schools, commissaries, and offices.

Promotional Strategies, Customer Awareness:

Participation in international trade fairs held in the Philippines as a strategy to enter the export market. Promotional mix which will include: Participation in annual trade fairs and expositions, outbound selling missions, and in-store promotions Use of internet and online social media Direct marketing through telephony and personal communication with prospective buyers

9.Cost structure

Capacity building, marketing and promotion: PhP1,485,000.00 Mill upgrading and working capital: PhP13,580,000.00

Cost of Capability-Building and Marketing & Promotion:

ParticularsAmount (PhP)

Capability-Building (Organizational)

Consultations, orientations, & meetings75,000

Financial audit60,000

Planning90,000

Corporate governance trainings100,000

Incorporation and registration25,000

Systems installation60,000

Capability-Building (Technical)

Technical audit120,000

Technical trainings (5)200,000

Research & development120,000

Installation of hazard critical control points45,000

Training, systems installation, & organic certification545,000

Marketing & Promotion

Negotiations for supply contracts30,000

Training on marketing & sales45,000

Formulation of marketing strategy45,000

Creation & maintenance of UPSCALE website120,000

Establishment of outlet in Bacolod City25,000

Participation in trade fairs/expositions & selling missions300,000

Search for buyers & client calls60,000

Total2,065,000

Cost of Mill Upgrading and Working Capital:

ParticularsAmount (PhP)

Old crusher - repair150,000

New crusher - fabrication, shipment, & installation 1,500,000

Building extension1,000,000

Furnace extension250,000

Purchase, shipment, & installation

New settling vats (2)300,000

New mixing troughs (2)160,000

New packaging tables (2)40,000

New engine300,000

New cooking vats (6)450,000

Tools30,000

Truck800,000

Working Capital8,600,000

Total13,580,000

8.Revenue stream

Revenues will come from the prospective buyers of NMSPIs muscovado sugar, based on sales targets for the 2014-2015 milling season are as follows:

BuyerVolume of Annual Purchase

Upland Marketing Foundation, Inc. (major buyer for the past 2 years) / FPSDC50 tons

Shopwise (retail chain with 28 outlets in Metro Manila)100 tons

Global Organic Wellness Corp.50 tons

Sharmilah100 tons

Coco Natura50 tons

A total of 350 tons will be sold to these identified buyers and additional 150 to 200 tons will be sold to other distributors and the local market.

A competitive pricing scheme will be adopted by NMSPI. The prevailing market price shall be regularly monitored and be the basis for setting the price for the NMSPI Muscovado which shall always be 10% cheaper than the competitors price. Upon confirmation of purchase order, a 50% down payment will be required from the buyer while the remaining 50% shall be demandable upon receipt of the goods by the buyer.

Moreover, the muscovado sugar that will be processed and marketed by UPSCALE and NMSPI will be positioned in the local market as substitution to relatively high priced brown sugar in the market, which majority of Philippine sugar consumers presently use based on the Philippine Sugar Withdrawals[footnoteRef:2] from 2009-2010 of 162,296MT Raw Sugar and 125,338MT [2: SRA CY2009-2010 Sugar Supply and Demand Situation. Highlights of SRA Sugar Production Bulletin.www.sra.gov.ph]

Refined Sugar. It will not initially compete with the prevailing high-priced muscovado sugars available in the market but rather position itself in the market as a healthy sugar for the masses.