Business Plan in Organic Rice Trading

BBUUSSIINNEESSSS PPLLAANN

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Business Name La Paz Multi-Purpose Farmers and Community Cooperative (LAMPUFACCO)

Proposed Business Organic Rice Trading

Business Location Poblacion, La Paz, Agusan Del Sur

Executive Summary

LAMPUFACCO is cognizant of the present global concern on climate change. It has therefore taken the task of contributing to the world. What it can save to repair or improve our environment. To this end, the coop believes that organic farming should be supported, promoted or be advanced considering that Philippines is an agricultural country. Organic rice trading will encourage farmers to shift to organic farming because of the expected income especially that consumers are now more health conscious. It can help farmers increase income through producing organically grown rice which has a minimal cost of production. The organization can generate income from this enterprise that eventually helps farmers uplift their living condition.

Rationale LAMPUFACO is the cooperative whose members are mostly farmers. It has a total membership of 198 individuals in which 10 of them are presently adapting organic farming at an average of 1 hectare per farmer individuals. The coop engages in rice milling, hauling, solar dryer and rice retailing, selling of organic inputs. Most of the member was applying organic inputs to their farm. The value of this organic rice was still the same to the value of the conventional farm product since most of the consumer is not conscious about the benefit of this organic rice. (marketing for organic rice) In the other side the unscrupulous traders still taking advantage since the organic farmers still delivering their product to them. Since LAMPUFACO has owned Post Harvest Facilities, they are looking forward to engage in trading of organic rice in their locality. Other areas that should be considered are the following: - 19 years of existence, experience in managing conventional rice trading, propose enterprise will

focus on organic rice farming and marketing - Previously assisted by pacap - DAR ARSP assisted - 2 million assets - Set of officers and management staff

Objective

1. To increase farmers’ income through adaption SA/organic farming technology;

2. To increase consumers’ awareness/ consciousness on the benefit of organic products

3. Access to better market of farmers’ organic

To save the environment in pollution and poison (eco-friendly technology)


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Expected Results

1 % increase of farmers’ income from organic rice farming and access to better price (lessen cost of production, premium price for organic products)

2 Increase awareness on the benefits of organic resulted to increase demand for organic products

3 Access to better price of product

Generate income from the enterprise – expand enterprise/service to members

4 Healthy community with healthy people eating healthy food

Resources/Assets

Skills/Ability LAMFUPACO has able to trained their members particularly farmer in using and formulating organic inputs (managing business, trainers/practitioners on OA/SA}, Technology on production of inputs such as organic fertilizers, IMOs, FAA, FPJ,

Skills in financial preparation and analysis as aid in decision-making

Assets Ten (10) hectares area planted to rice/organic rice

PHF (warehouse, rice mill, solar and mechanical dryer, hauler truck and concoction center with organic inputs) this entire project has formulated PSP and it is well implemented.

Functional Officers and staff/ full-time operations staff

Areas of Improvement Lack of business plan of organic rice, timely preparation of reports:

cash flow, income statement, manager’s operations report

Lack of expertise in product packaging and development.

Lack of product promotion

Market

Target Market

1. Target market is the government employee of La Paz, Agusan del Sur; Other institutional market

2. Health conscious individuals

Local market : within the municipality

Demographic Description

This organic product is good for food in all ages particularly in health conscious customers. Class a, b, c

Competitors Local market, vendors, rice traders in La Paz, Agusan del Sur

Strikers during harvest season

Pricing

Per Kilo 35 pesos per kilo

Per Sack 1,750 pesos per sack

Distribution

Form From the farmer, the LAMFUPACO will buy their organic product and process it to rice. The LAMFUPACO promote and canvass it to the local government


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employee and distribute to the interested costumers.

Location La Paz, Agusan del Sur

Organizational Plan

Form of Organization Cooperative

Organizational Chart

Job Description

Board of directors Policy making body

Project Manager Oversee the project

Project Implementing team :assistant manager bookkeeper, cashier, rice mill operator, helper, driver

Responsible for day-to day operations of the project. Keep records of the day-to-day operations of the project pre

component. Recommend to the manager concerning additional/amendments

of the policies for the improvement of the project concern. Submits report to the manager twice a month. Report to the meager problems, issues and concerns, as their

maybe arise. Attend consultation meeting twice a month.

Marketing in charge/ assistant manager

Helper

In charge in buying and milling of rice Scales and issues slip indicating the number of kilos scaled to the

customers. Keep all records regarding all transactions of the project

component?

G.A.

SAIC ELECOM. BOD CRECOM.

EDCOM. SECRETARY

TREASURER

MANAGER

FINANCE

DEPT.

MEMBERSHIP

DEPT.

ADM

DEPT. IGP


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Controls on marketing operations/transactions. Take an inventory with the treasurer every afternoon regarding

the transactions conducted. Facilitates in the collection of sold out rice. Submit regular reports to the manager regarding the status of the

project. Drives the hauling vehicle for the transportation activities of the

coop. Performs regular check-up and maintenance of the vehicle Reports to the Marketing In-charge the condition of the vehicle. Assist the laborer. Facilitates the hauling activities of the project.

Technical/Production Program Materials and Equipment

Costing

Particulars Price/kilo

Palay ( Farm Gate Price) 14.00

Hauling fee .10

Labor cost .10

Drying fee .20

Milling fee 1.75

Empty sack .20

Tie box .04

Total cost per kilo 16.39

Farmer

Organic

palay

Purchase of

organic

palay

(Capital)

Labor Hauling and

weighing Stocking

of organic

palay

Drying and

packing

Stockie

st of

organic

rice

Deli

very

Bookin

g/canva

s to

gov’t

emp./

interest

ed

consum

er

Packing

(50kls)

Sack

Tie box

Milling

and

repackin

g (50kls)

Payment

scheme

(COD)

Delive

ry /

labor


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Assumptions: 1. Recovery of Palay

o Recovery from drying is 80% o Recovery in milling is 62%

2. 100 farmers are given financial assistance of the cooperative at 10,000.00/ha. This has a

total of 1,000,000.00 total exposures.

3. Average production per hectare is 70 bags per ha. Less allocated for consumptions 15 bags shall have a 55 bags net for sales of the farmers.

4. Fifteen bags of palay per farmer shall be retaining at the farmers for their consumptions.

5. Purchases of fresh rice is 14.00/kg.

6. Sales of the product shall be milled rice with a price of 37.00/liko.

Computations in pricing

o Total cost of 1 kl palay is 16.39 pesos o Recovery in drying will be 80 percent o Recovery in milling will be 62 percent o To get the price for rice: 16.39/.62 it will be 26.44 o 26.44 is the break-even cost of milled rice per kilo. o Considering the overhead expense of the organization and the prevailing price of

commercial rice in the local market, the decision price of the organization for the organic rice is 37.00 per kilo

Computation:

- Purchases- 100 has. X 70 sacks/ha = 7,000 bags less, 1,500 for consumptions = 5,500.00 x 55 kgs./bag = 302,500 kgs. X 14.00/kg. = Php 4,235,000.00

- For consumptions is 15 bags/ha. X 100 has = 1,500 bags - Overhead expenses of production to Milling are 2.39/kg. - Recovery on drying is 80% of 302,500 kgs = 242,000 kgs. - Recovery of milling is 62% of 242,000 kgs. = 150,040 kgs - A sale is 150,040 kgs. X 37.00/kg. = Php 5,551,480.00


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Financial Projection

Income Statement In one (1) cropping season only (6 mos.)

Sales 150,040 kls. @ 37 pesos/kl 5,551,480.00 Less: Cost of good sold Beg inventory 0 Purchases 4,235,000.00 Total 4,235,000.00 Less: inventory end 0_____ 4,235,000.00 Gross Income 1,316,480.00 Less: Operating expense Hauling 30,250.00 Labor 30,250.00 Drying fee 60,500.00 Milling fee 423,500.00 Misc. Exp. (.24) 58,080.00 Administrative cost Salaries and wages (10T/mo) 60,000.00 Repair and maintenance 12,000.00 Overhead expense 60,000.00 734,580.00 Income before other income Php 581,900.00 Add other income (Tahop- 20%) 48,400.00 Net income Php 630,300.00

Profitability:

Gross Profit Margin = Gross Income = 23.7% Sales

Net Profit Margin = Net Income = 11.35% Sales Sensitivity Analysis: At 5% reduction of selling price = 35.15/kg. At 10% reduction volume = 272,250 kgs. At 5% reduction of buying price = 13.30/kg.


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Business Opportunities and Challenges

The total rice area of La Paz, Agusan del Sur is about 300 hectares. Most of the farmers was using commercial inputs for their farm. The LAMFUPACO farmers initiate to use organic inputs and it was found out that it is good. Though it is laborious but it require minimal amount of money to spend. It was also found out that due to the continuing taking advantage of unscrupulous traders, the organic product was still the low price and the unscrupulous trader has enjoying the very high price of rice. The cooperative see this situation, therefore they want to engage in organic rice trading. The LAMFUPACO provide organic inputs to the farmers and the market of this organic rice will be in LAMFUPACO. The income of this was in the cooperative, and the members was benefited the income. Other benefit is to provide safety food and to care and balance eco-system.

d Development Impact

Farmers: continuing trainings in formulating organic inputs, require minimal amount of farm

inputs, generate income, provide safety food and contribute care to the environment.

Cooperative: generate income; provide appropriate price of organic rice, control/option

unscrupulous traders, contributes care to the environment.

Communities: Food security (healthy/ poison free food), improved.

Industry : Good quality, food security,

Documents

Business Plan in Organic Rice Trading