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1
MARKET POTENTIAL OF RICE BRAN AS AN INGREDIENT TO NATURAL
PRODUCTS OF SELECTED MANUFACTURERS IN
SELECTED AREAS IN CALABARZON, 2012
ABIGAILE LYNNE EMRADURA AGUILA
Submitted to the Faculty of the Department of Agricultural Economics, College of
Economics and Management, University of the Philippines Los Banos in partial
fulfillment of the requirements for graduation with the degree of
BACHELOR OF SCIENCE IN AGRICULTURAL ECONOMICS
Major in Agricultural Marketing and Prices
August 2012
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BIOGRAPHICAL SKETCH
Abigaile Lynne Emradura Aguila was born in Tondo, Manila on 31stof August
1991. She was the eldest among the four daughters of Ricardo Hernandez Aguila and
Evelyn Emradura Aguila. She pursued her primary and secondary education in North
Marie Montessori Academy in Calamba City, Laguna. She graduated as the class
valedictorian in elementary and as the class salutatorian in high school. She was the
former editor-in-chief of “The Summit,” a school paper. She was a qualifier in the
Division Schools Press Conference (DSPC) and Regional Schools Press Conference
(RSPC) in headline writing and copy reading in 2006 and 2007. She was also a member
of Youth Environmental Steward (YES) - Bayer Calamba and Gawad Kalinga 1 Milyong
Bayani (GK 1MB).
In June 2008, she pursued her tertiary education in University of the Philippines
Los Banos and took up Bachelor of Science in Agricultural Economics Major in
Agricultural Marketing and Prices. She was twice a college scholar (2nd
semester of
2008-2009 and 2011-2014) and an honour roll (2nd
semester of 2009-2010 and 2010-
2011, and 1st semester of 2011-2012). She was also one of the members of the group
finalist of the Entrep Student Challenge, a business plan competition sponsored by
Summit Media Philippines, on October 2010.
After all of her achievements in academics, knowledge skills, principles and
values attained from UPLB, she is looking forward to start and secure a career in the field
of marketing and research, in aim to support her family. She wants to pursue her masters
after gaining relevant experiences regarding her field of studies. She also wants to be an
exemplary entrepreneur two years from now, venturing in the food and natural ingredient
business.
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ACKNOWLEDGEMENT
“If there is no pain, there is no gain.” In life, we have to experience different
kinds of pain, hardships, difficulties and even consequences in order to learn and gain
something from it. I can relate this known quotation to my experiences in doing this
thesis. Honestly, doing this thesis was the hardest challenges that I have encountered in
my college life. I was definitely under stress and pressure upon doing this market
potential study. There were times that I am about to give up but still, my adviser, Dr.
Salvador P. Catelo, always give me inspiring and motivating words, to still continue, do
my best and work beyond my limits.
I believe that all of the challenges that we encounter in our daily lives are puzzle
pieces that complete us as a firm and experienced person. I am so grateful that many
people did not let me down during the time that I am doing this thesis. Thank you for the
moral, financial and intellectual support that these people offered me.
I would like to extend my gratefulness to my dearest adviser, Dr. Salvador
“Dong” P. Catelo, for all the values in life that you have taught me. Thank you for
always boosting my confidence and motivating me especially in times of great pressures.
Thank you for all the patience, time and effort that you gave me. I will never forget the
advices, life stories and principles that you shared to me. I will always treasure the
lessons about decision making, responsibility, professionalism, time management,
opportunity costs, feasibility studies, research, policy making, and even non-academic
matters pertaining to life and love. Sir, you are more than just a professor, you are also a
friend and a mentor to me.
Thank you to my panelists, Dr. Marilyn Elauria and Dr. Al Manilay, for all the
constructive criticisms, suggestions and comments regarding my outline. Thank you for
not making me so nervous and uneasy during my manuscript defense.
Thank you to my dearest scribes, my close friends, Monica Ferrer and Miah
Naanod, for always being there during my outline and manuscript defense. More than
that, thanks for the moral and spiritual support.
Thank you to all the people in CEM library, the AgEcon faculty and staff, the
people in CEM OCS for being kind to me whenever I ask for your assistance. Thank you
to Sir Vista, Sir Gordoncillo, Sir Yorobe, Sir Bates, Ma’am Piadozo, Ma’am Delos
Reyes, and Ma’am Rapera for believing that I can do and finish this thesis.
Thank you to all my friends in UPLB, especially to my co-advisees, Miah,
Monica, ate PH and ate Tin, to my AgEcon batchmates, Kelvin, Efrille, Ka Yan, Jed,
Rovi, Jessica, Matthew, Gab, Joyce, and Alec. You helped me enjoy my academic life
in spite of stress and pressure.
Thank you to my closest friend, Kelvin, for the continuous moral support and
motivation. You are such an optimistic person and a good friend.
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Thank you to Sir Catelo’s RAs, ate Carol and ate Seph, for always being there
for me when I need assistance. Thank you for updating me whenever Sir is around.
Thank you to all the company-respondents who cooperatively participated in the
survey. Thank you for giving me necessary data regarding my study. Thank you for your
time and effort.
Thank you to my best friend, Shaira Regmalos, for always being there for me
when I am down. Thank you for the moral support, encouragement and advices.
Thank you to my special friend, Aaron Noelle, for inspiring and motivating me to
finish my thesis. Thank you for the love and moral support.
Thank you to my siblings, Claudette, Kyla and Yzah, for reducing my stress,
making my day, and supporting me with all of my challenges in life including this one.
Thank you so much to my dearest parents, Mr. Ricardo Aguila and Mrs. Evelyn
Aguila. Ma and Pa were the biggest reason why I am striving so hard to finish this
because I want you to be proud of me. There is no word that can express my deepest
gratitude and appreciation on all of your efforts including moral and financial support. I
dedicate this to you. Thank you for always loving, encouraging and understanding me in
spite of my shortcomings as your daughter. Thank you and I love you both.
Thank you GOD for giving me this rare kind of opportunity. Thank you for being
always at my side. Thank you for all of the blessings, guidance, love, and even the
challenges which make us a better person. Without You, this thesis is not possible. Thank
You so much and I love You GOD!
ABIGAILE LYNNE EMRADURA AGUILA
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ABSTRACT
This study was an effort to determine the market potential of rice bran as
ingredient to natural products of selected manufacturers in selected areas in
CALABARZON, 2012. Specifically, it aimed to: (1) identify the major physical and
business attributes of rice bran that the selected local natural manufacturers consider; (2)
identify the sourcing practices that the selected local natural ingredient manufacturers are
willing to undertake; (3) determine the marketing arrangements that the selected local
natural ingredient manufacturers are willing to engage in; (4) estimate the willingness to
pay (WTP) of selected local natural ingredient manufacturers toward different forms of
rice bran; and (5) recommend measures that can harness the market potential of rice bran
as a natural ingredient.
For the period 2000-2011, total rice bran supply, which was determined as 8-10%
of the total rice paddy production, showed an increasing trend. Moreover, rice bran is
used in the production of feeds, organic fertilizers and natural products.
The WTP was used to determine if rice bran as an ingredient to natural products
has market potential. Moreover, elicitation method was utilized to determine the selected
local natural ingredient manufacturers’ WTP toward the different forms of rice bran.
Moreover, continuous rating on physical and business attributes of rice bran and
descriptive analysis by the aid of frequency counts and measures of central tendency
were employed to primary and secondary data.
It was found out that the majority of the company-respondents belonged to
corporations and have just started in the natural ingredient industry, with 1-5 years of
experience in operation. Huge fragment were into nutraceuticals and non-CHPI members.
Rice bran as an ingredient to natural products has market potential since this
study revealed that majority of the company-respondents were aware that rice bran is a
natural ingredient and has potential to be income-generating. Also, majority of them have
plan to venture into rice bran utilization. With respect to marketability and acceptability
of rice bran as an ingredient to natural products, majority of them prioritized nutritive
value as one of the physical attributes and price as one of the business attributes.
With respect to WTP of the company-respondents’ towards the different forms of
rice bran, refined rice bran oil has the highest minimum and maximum values, amounting
to 286.00 PHP/L- 697.40 PHP/L. It was followed by crude rice bran oil (56.88 PHP/L-
83.33 PHP/L), stabilized rice bran (9.20 PHP/kg- 12.88 PHP/kg) and raw rice bran (4.29
PHP/kg- 6.00 PHP/kg). With respect to perceived demand growth of rice bran in the next
5-10 years, majority of them have aggressive growth perception of 5-10%. For sourcing
practice and marketing arrangement, majority preferred local sourcing and long contract
with local rice bran producers.
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Although rice bran as an ingredient to natural products has market potential, the
company complained of the following problems: (1) lack of information on prices, forms
of rice bran and extractable products from rice bran; (2) lack of available technology on
stabilization and extraction of oil from rice bran; (3) costly investment on the technology
for rice bran utilization; (4) uncoordinated arrangement between rice bran sources
(farmers, millers) and local natural ingredient manufacturers; (5) lack of consumers’
knowledge of rice bran for human consumption/ human use; and (6) lack of studies on
the economic uses and value of rice bran.
Given these, it was recommended to: (1) establish public information sites and
awareness programs regarding rice bran; (2) provide quality preserving-and-enhancing
facilities for rice bran; (3) encourage government to take initiative and encourage private
sectors in funding and commercialization; (4) stimulate tax incentives; (5) promote
contract arrangement; and (6) facilitate further studies on the economic aspect of rice
bran utilization.
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TABLE OF CONTENTS
TITLE PAGE
NO.
Title Page i
Biographical Sketch ii
Acknowledgment iii
Abstract v
Table of Contents vii
List of Tables ix
List of Figures xi
List of Appendices xi
INTRODUCTION 1
Background of the Study 1
Statement of the Problem 5
Significance of the Study 5
Objectives of the Study 6
REVIEW OF RELATED LITERATURE 7
CONCEPTUAL FRAMEWORK 15
HYPOTHESES OF THE STUDY 18
RESEARCH METHODOLOGY 19
Types of Data and Method of Data Collection 19
Selection of Study Area of Respondents 19
Method of Data Analysis 20
Limitations of the Study 24
RESULTS AND DISCUSSION 25
Industry Notes of the Rice Bran-User Industries 25
The Philippine Natural Ingredient Industry 25
Rice Bran-User Industries 26
Rice Bran Utilization 31
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TITLE PAGE
NO.
Local Rice Bran Supply 34
Demographic Characteristics of Company-Respondents 34
Plan to Venture in Rice Bran Utilization 40
Awareness on Rice Bran as a Natural Ingredient and 41
Awareness on Rice Bran as Potential Income Generator
Physical and Business Attributes of Rice Bran 43
Acceptability of the Different Forms of Rice Bran 47
Sourcing Practices of Rice Bran 48
Marketing Arrangements in Rice Bran Utilization 50
Perceived Demand Growth of Rice Bran 51
Willingness to Pay for the Different Forms of Rice Bran 53
Results of Cross Tabulation Analyses 55
Plan to Venture and Awareness on Rice Bran as a 56
Natural Ingredient
Plan to Venture and Awareness on Rice Bran as 59
Potential Income Generator
Ownership Status and Awareness on Rice Bran as a 61
Natural Ingredient
Ownership Status and Awareness on Rice Bran as 63
Potential Income Generator
Years of Operation and Awareness on Rice Bran as a 65
Natural Ingredient
Years of Operation and Awareness on Rice Bran as 67
Potential Income Generator
PROBLEMS ENCOUNTERED 70
SUMMARY AND CONCLUSION 73
RECOMMENDATIONS 79
BIBLIOGRAPHY 83
APPENDICES 86
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LIST OF TABLES
TABLE TITLE PAGE
NO. NO.
1 Total volume of rice paddy and rice bran production 35
(in metric tons), Philippines, 2000-2011
2 Distribution of company-respondents by ownership 38
status, years of operation and membership in selected
area in CALABARZON, 2012
3 Distribution of the company-respondents’ plan to venture 42
in rice bran utilization and awareness on rice bran in
selected areas in CALABARZON, 2012
4 Distribution of the company-respondent s’ consideration 45
on the physical and business attributes of rice bran in
selected areas in CALABARZON, 2012
5 Rating on the physical and business attributes considered 46
by the company-respondents in selected areas in
CALABARZON, 2012
6 Distribution of the acceptability of the different forms 49
and company-respondents’ preference in sourcing
practices of rice bran in selected areas in
CALABARZON, 2012
7 Distribution of the company-respondents’ preference in 52
marketing arrangement in rice bran utilization and
perceived demand growth of rice bran in the next
5-10 years in selected areas in CALABARZON, 2012
8 Measures of central tendency and willingness to pay 55
of the company-respondents towards different forms
of rice bran in selected areas in CALABARZON, 2012
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TABLE TITLE PAGE
NO. NO.
9 Cross tabulation analysis of company-respondents’ 58
plan to venture in rice bran utilization and awareness
on rice bran as a natural ingredient in selected areas
in CALABARZON, 2012
10 Cross tabulation analysis of company-respondents’ 60
plan to venture in rice bran utilization and awareness
on rice bran as potential income generator in selected
areas in CALABARZON, 2012
11 Cross tabulation analysis of company-respondents’ 62
ownership status and awareness on rice bran
as a natural ingredient in selected areas in
CALABARZON, 2012
12 Cross tabulation analysis of company-respondents’ 64
ownership status and awareness on rice bran
as potential income generator in selected areas in
CALABARZON, 2012
13 Cross tabulation analysis of company-respondents’ 66
years of operation and awareness on rice bran as a
natural ingredient in selected areas in CALABARZON,
2012
14 Cross tabulation analysis of company-respondents’ 68
years of operation and awareness on rice bran as
potential income generator in selected areas in
CALABARZON, 2012
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LIST OF FIGURES
FIGURE TITLE PAGE
NO. NO.
1 Conceptual framework of the market potential of rice 15
bran as an ingredient to natural products of selected
manufacturers in selected areas in
CALABARZON, 2012
2 Local rice bran supply by utilization, Philippines 32
3 The processes of stabilizing rice bran and extracting 33
crude and refined rice bran oil
4 Company-respondents by nature of business in selected 45
Areas in CALABARZON, 2012
LIST OF APPENDICES
APPENDIX TITLE PAGE
NO.
A Survey Questionnaire 86
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MARKET POTENTIAL OF RICE BRAN AS AN INGREDIENT OF NATURAL
PRODUCTS OF SELECTED MANUFACTURERS IN SELECTED
AREAS IN CALABARZON, 20121
1Thesis manuscript submitted in partial fulfillment of the requirements for
graduation with the degree of Bachelor of Science in Agricultural Economics, Major in
Agricultural Marketing and Prices from theDepartment of Agricultural Economics,
College of Economics and Management, University of the Philippines Los Baños.
Prepared under the supervision of Dr. Salvador P. Catelo.
ABIGAILE LYNNE E. AGUILA
INTRODUCTION
Background of the Study
According to United States-Food and Drug Authority (US-FDA), natural
ingredients are ingredients extracted directly from plants and animal parts as contrary to
being chemically- processed or synthetically produced. Few examples of these natural
ingredients are Papain from Papaya, Corosolic acid from Banaba, Bixin from Atsuete,
Moringa oil from Malunggay, and Gamma oryzanol and Rice bran oil from Rice bran
(Arroyo, M.A. et al, 2010). There are many different natural ingredients located and
planted in the Philippines and these range from root crops, plants, seeds, nuts, flower,
fruits, grasses, herbs, and even marine life.
Furthermore, natural ingredients are not new in the Philippines since these
ingredients were traditionally used ever since the early Filipino era when pharmaceutical
products have not fully taken off in the Philippine market. Most of these ingredients are
used primarily in feed milling, organic fertilizer making, food processing, cosmetics, and
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pharmaceuticals. However, new categories like nutraceuticals and cosmeceuticals are
continuously expanding the natural ingredient industry.
Natural ingredients are mainly used in three major sectors in the industry namely,
cosmeceutical, pharmaceutical and functional food sectors. Cosmeceutical is one of the
emerging sectors in the natural ingredient industry that caters to cosmetic products. It
includes one or more bioactive ingredients that provide positive psychological effect on
cellular level. These ingredients are used to confer drug-like benefits including vitamins,
phytochemicals, enzymes, antioxidants and essential oils. On the other hand,
pharmaceutical has been long established to produce both chemical and natural-based
products which provide medical benefit to chronic and lifestyle diseases. This sector
includes huge companies that usually use medicinal and aromatic plants, vegetable
alkaloids, herbal medicines and herbal supplements. Functional food industry is also one
of the emerging industries that produce conventional foods that are consumed as part of
usual diet. These functional food products have psychological benefits to consumers. It
could reduce the risk of chronic diseases further than basic nutritional functions. The
natural ingredients used in this sector include natural colours, flavours and sweeteners,
vegetable oils and fats, stabilizers and emulsifiers, preservatives and antioxidants.
Nutraceutical is a subsector under the functional food that caters in purifying and
isolating products from foods that are generally sold in medicinal forms, usually
associated with food. Aside from psychological benefits, they also provide protection
against chronic and lifestyle diseases. The ingredients supply substances that bring health
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and medical benefits, taking account of disease prevention and treat against several kinds
of diseases (Agri Food Trade Service, 2011).
To date, there is confusion among the consumers regarding their understanding of
nutaceuticals and pharmaceuticals. Consumers often mistakenly perceive nutraceutical
products as pharmaceuticals. Hence, Department of Health (DOH) disperses information
on the differences between the two sectors. Accordingly, nutraceuticals refer to naturally-
based supplements while pharmaceuticals can be naturally-based, chemically-based and a
combination of synthetic and natural ingredients. Moreover, in USA, Food and Drug
Authority (FDA) do not approve nutraceuticals since it do not bear with the set standards
regarding quality and encapsulation; whereas pharmaceuticals do (International Quick
Search Directory, 2012).
The natural ingredient industry has a growing global and Philippine market. The
global health and nutrition sector alone has an approximately 4 billion USD sales in
2009. The demand for cosmetics and medicine grows annually by about 10% while the
demand for organic and natural ingredients increases by approximately 3% annually
(Department of Agriculture Biotechnology Program, 2010). More people recognize the
benefits from natural ingredients such as slowing down ageing, enhancing beauty,
promoting digestive health, promoting cognitive health, addressing allergens, and
preventing occurrence and risks of lifestyle and chronic diseases. Every consumer is in
search for wellness due to changing environmental conditions and demographic change.
Nevertheless many local natural ingredient manufacturers are hesitant to embark
on natural ingredient utilization due to their lack of technical and market studies. For
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instance, rice bran is one of the natural ingredients that have potential for business. It has
high fiber, vitamin and mineral, high protein and oil content (Food and Agriculture,
2011). Ironically, a huge proportion of rice bran produced yearly in the country is wasted.
Only 10% is used in the fertilizer industry and 36% in the feed milling industry, leaving
54% of it untapped (Food and Agriculture Organization, 1997). In contrast, rice bran is
efficiently used in Thailand and China as functional food. They extract oil from rice bran
and process them into healthy consumable oil.
According to IRRI (2009), 100 kilograms of rice can approximately generate 8-10
kilograms of rice bran, or an 8%-10% recovery rate. Rice bran can supply a mixture of
proteins, crude fiber, fat, and ash. It has high nutritive value since it is also a source
vitamin B complex, vitamin E, anti-oxidants and it also lowers cholesterol in the
body(International Rice Research Institute, 2009). However, due to non-stabilization of
rice bran, it is still discarded or used as an animal feed despite its high content of
bioactive substances (Helal, A.M., 2009).
Rice bran is slowly getting known in cosmetics, pharmaceuticals, nutraceuticals,
and food processing sectors. It is used in soap, lotion, make-up, and aromatic oil in
cosmetics production. For pharmaceuticals andnutraceuticals, it is commonly utilized in
the production of herbal and dietary products; while in food processing, it is used as
Stabilized Rice Bran (SRB), an ingredient for processed meat products, cereal products,
and pastries. However, most of the manufacturers and/ or processors are sourcing their
rice bran from abroad. (Department of Agriculture Biotechnology Program, 2010).
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Statement of the Problem
A typical setting of rice production in the Philippines is where farmers are paying
for the milling services done by the rice millers and their utmost concern is to have their
rice milled. Under the present set-up, farmers have no concern on the residual of rice
milling as they leave them in rice mills. Actually, rice bran, as a pointed out earlier, can
be utilized as ingredient to feeds and organic fertilizer production. If only rice bran could
be utilized appropriately, the farmers and/ or the millers could generate additional
income. The lack studies particularly, the economic aspect of rice bran, leaves a vacuum
towards its commercialization. Many manufacturers remain reluctant in venturing into
this natural ingredient because of its unclear demand-supply situation (Department of
Agriculture Biotechnology Program, 2010).
Significance of the Study
Conducting a market potential study may establish a new market dimension for
rice bran as input to production and promote its efficient utilization. Creating a new
market for rice bran as a natural ingredient can partly solve the agricultural issue of
underutilization of by-products of agricultural operation. It will also help to understand
better the problems that are encountered by manufacturers and processors. Hence, a better
policy direction and support system can be facilitated in the rice industry.
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Objectives of the Study
The study was conducted to explore the market potential of rice bran as an
ingredient to natural products of selected manufacturers in selected areas in
CALABARZON. Specifically, it aimed to:
1. identify the major physical and business attributes of rice bran that the local
natural ingredient manufacturers consider;
2. identify the sourcing practice that the selected local natural ingredient
manufacturers are willing to undertake;
3. determine the marketing arrangement that the selected local natural ingredient
manufacturers are willing to engage in;
4. estimate the willingness to pay of selected local natural ingredient manufacturers
towards the different forms of rice bran;and
5. recommend measures that can harness the market potential of rice bran as a
natural ingredient.
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REVIEW OF LITERATURE
Philippine Rice Industry: Production
Rice plays a central role in the Philippines. It has social, political, economic,
technical and environmental implications to every Filipino. It is an irreplaceable meal on
every Filipino’s table. However, due to inefficient rice production of the country,
importation is an option to meet the demand of the Filipinos (World Mission Magazine,
2004).
According to Bureau of Agricultural Statistics, rice production has tripled from
2.32 million metric tons in 1970 to 16.82 million metric tons in 2008 which was reported
to be at its peak. However, in 2009 and 2010, rice production fell to 3.27% and 3.04%,
respectively, due to typhoons that damaged palay crops in Central and Southern Luzon.
Still, many Filipinos are engaged in the rice industry since it is the country’s staple crop
and its local rice production is necessary for meeting the increasing demand for rice.
Moreover, the annual per capita rice consumption is 119.080 kg as of 2009 (Bureau of
Agricultural Statistics, 2009).
The general increasing trend of rice production in the country opens the
opportunity of venturing on businesses that will promote food sustainability. Utilization
of by-products of rice production adds profit in the agricultural sector and promotes new
industries which are utilizing these by-products. Moreover, losses are lessened and
additional profits are incurred.
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Rice Bran as Rice Milling By-product
Throughout the modern world, rice is consumed in its polished form and it is a
staple food in most countries in Asia, including Philippines, Thailand, and Vietnam. The
outer-layer of brown rice is the rice bran which is obtained as a by-product of most rice
milling industries. During the process of rice polishing, the rice bran, containing bran
and the germ of the kernel, is removed from the brown rice. It constitutes 10% of the total
rice paddy.
The raw rice bran rapidly becomes rancid, especially when not stabilized right
after 24 hours. The rancidity is due to the active enzyme, “lipase” that is produced during
the milling. The rancidity of rice bran makes way for the underutilization of this by-
product and it also loses its high nutritive value and palatability (Johnson, I. and
Williamson, G., 2003).
A key process to resolve the issue of rapid rancidity of rice bran is by subjecting it
into stabilization, where the lipase enzyme will be destructed, the product will be
dehydrated and sterilized. The advantages of stabilizing rice bran are it reduces bacterial
contamination, fights molds, aflatoxins and yeasts; it ruptures oil cells allowing for
texturization and shaping. Moreover, it enhances palatability without damaging its
nutritive value (Applewhite, T. H., 1989).
Status of Rice Milling and the Use of its By-products
Rice milling industries generate significant quantities of by-products including
rice husks, rice bran and broken kernels. These by-products are usually underutilized and
are subjected to burning and/ or raw ingredients to feed stuffs. (Toriyama, K. et al, 2005)
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cited a report on the aspects of rice milling and processing in developing countries.
Usually, value-addition is the ultimate goal of every business entity involved in the
scenario. With value-addition, different food and feed manufacturers are taking
advantage to utilize the by-products and to produce in-demand food commodities.
In the Philippines, there are several rice millers and most of them are located in
the rice-producing regions of Central Luzon and Western Visayas. (Yoshizaki, S., 2002)
as cited by Toriyama in the report on the scientific perspective for the 21st century. It
provided a list of factors causing inefficient rice milling and processing. The following
factors are the characteristics of the yielding rice variety, limited equipment and facilities,
unsuitable milling equipment, inadequate facility management, and socio-economic
factors highlighting poor farm roads yielding losses during transportation and handling.
The local rice millers are usually the major sources of raw rice bran. They usually
source additional income from selling rice by-products, including rice husks and rice
hulls to feed manufacturers and organic feed utilizers.
In developing countries, rice bran stabilization has become a trend due to the
increasing demand for economical foods with high nutritive value. Food industries utilize
stabilized rice bran as an emulsifier for processed meat products. They already
substituted rice bran to soya or soy since soy has recorded several allergic reactions to the
consumers and it placed second among all allergens recognized worldwide. Processed
meats emulsified with stabilized rice bran (SRB) give adequate nutrient requirement of
every consumer (Hoogenkamp, H.W., 2010).
Moreover, Food and Agriculture Organization (FAO) foresees a price hike on the
dairy and meat products. This will lead to uprising food costs for at least ten years from
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now, especially in the developing countries India and Philippines (Food and Agriculture
Organization, 2009). With this, every food business entity is finding its way to produce
nutritive but economical foods by using by-products of the agricultural production.
The Philippine Nutraceutical Industry
The emergence of nutraceutical industries expanded as the new millennium
started. According to Philippine Council for Health Research and Development (PCHRD,
2011), the nutraceutical market in the country is getting stronger as the trend goes
towards organic and natural foods and medications. Moreover, the growth is due to the
dependence of the third world countries, including the Philippines, to traditional
medicines. Wherein, 40%-80% of the population depends on traditional medications.
The Department of Science and Technology (DOST) through PHCRD has been
undertaking researches on medicines, specifically herbal medicines which led to the
establishment of local herbal medicine processing facilities. The government has took
part on the development of the nutraceutical industry through funding several research
programs that aim to develop organic and herbal food products, food supplements and
medications.
Related Studies on the Utilization of Rice Bran as an Input to Production
One of the objectives of agricultural economists is to utilize the resources well
and to maximize profits given a certain limited amount of resources. Every firm is in line
with the objective of profit maximization. In relation with the situation of rice bran
industry, there is an existing underutilization of rice bran which causes for the
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inefficiency of the available resources used. In order to improve rice bran’s efficiency of
use, appropriate utilization must be employed. There are several studies showing reasons
and ways to utilize rice bran.
(Helal, A.M., 2009) conducted a feasibility study for the prospective of utilizing
rice bran in Egypt which is also a rice-producing country in the Arab region. He cited that
the country has been producing an average volume of 8 million metric tons of rice
annually and given this opportunity, rice bran utilization through stabilization is the
general objective of the study. Rice bran stabilization is planned to be in industrial and
laboratory scale. The specific objective of the feasibility study is to develop rice bran
nutraceutical products as an aid to fight some common illnesses. The study was supported
by the government and it was initiated by the agricultural sector of the Egypt.
(Elmont, R. J., 2010) conducted a pre-feasibility study on adding value to raw rice
bran by stabilization. The specific objective of the study is to develop a competitive
domestic private sector in Suriname that can contribute to sustainable development and to
facilitate gradual integration of Suriname in the regional and International economy. Its
specific objectives are to improve competitive capacity of the rice sector and it by-
products and identify strengths, weaknesses, opportunities, and threats of the agro-food
industry. The initial step of conducting the study was the fact-finding on the data on the
rice processing and availability of rice bran, rice bran prices, and market demand for rice
bran in the region. An interview to the rice millers and major feed producers was
conducted. Moreover, a logic framework was also prepared for the study. The study
found that the through technological aid and laboratory experiments, value addition is
possible for raw rice bran. It is especially through stabilization of the raw rice bran.
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Prospective markets for stabilized rice bran (SRB) are determined and the current
situation of the production side of the study was modeled.
There are concrete evidences of rice bran utilization in the developing countries
such as Thailand and China. The Philippines has conducive environment and economy to
establish a new market for rice bran as an input to nutraceuticals. Primarily, the use of
natural ingredients was initiated by the herbal industry of the Philippines way back 2001.
The country is most likely to follow the footsteps of developing countries in the
utilization of the by-products of agricultural production and the use of natural ingredients
in medicines and food products. The emergence of different herbal entities in the country
has led to influence the Filipinos in consuming products with natural ingredients in light
for prolonging good quality of life.
Willingness to Pay (WTP)
It is an analytical tool for determining the maximum amount that an individual is
willing to pay for a certain good or service. It establishes the price of a certain product
that is not yet available in the market (George, S., 2010). It is usually done with goods
that are not yet available in the market. In the case of goods that are not yet available in
the market, the willingness to pay (WTP) reflects the potential demand for a certain
product. There are several approaches to measure WTP and these are as follows:
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Dichotomous Choice Method
This is the most common approach wherein the data will be collected is
through personal surveys of consumers. Certain questions will be asked regarding
the consumer’s present attitude, awareness and demographic profile in which
questions can only be answered by a yes or a no or a success or failure. This
approach level-offs the awareness and knowledge of the respondents about rice
bran. It is not an outright question about WTP.
Bidding Game Approach
In this approach, respondents will be randomly assigned a particular bid
from a range of predetermined bids. The bid that will be assigned could be higher
or lower level bid. The respondent will be asked to answer yes or no to every
particular bid and proceed until the highest bid will be recorded. One of the
advantages of this approach is that a maximum WTP can be obtained (DelaCerna,
A.K., Undated).
Payment Card Approach- in this approach, the respondent will choose his
maximum WTP value out of the range of WTP values for a certain good.
Benchmark version of the payment cards will be provided containing average
WTP amount for other goods. WTP for a certain good could be affected by biases
(Mitchell & Carson, 1984 as cited by DelaCerna, A.K., Undated).
Open-ended/ Elicitation Method- this method includes asking the respondents of
their maximum WTP for a certain good without any reference value mentioned to
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5
them. This is the most convenient method but could create a wide range of
answers and at worse, no responses (DelaCerna, A.K., Undated).
Regarding the literature cited in this study, it can be observed that there is a lack
of studies regarding the economics, specifically the market potential of rice bran. Most of
the studies in the literature were focusing on the technical aspects of rice bran. Indeed,
there were experiments and technical analysis of rice bran but there were no studies
pertaining to the prices, marketability and acceptability of rice bran. With this, there is
really a need to study the market potential of rice bran in order to establish a glimpse of
what rice bran could offer in the market and also to have clear glimpse of the supply and
demand situations of rice bran.
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CONCEPTUAL FRAMEWORK
Market potential is an interplay between future demand and supply of a certain
product. The demand is primarily dictated by the total number of potential rice bran-users
who are usually affected by the following factors: (1) awareness on rice bran as a natural
ingredient; (2) awareness on rice bran as a potential income generator; (3) marketability
and acceptability by the buying population of rice bran as a natural ingredient; and (4)
availability of good quality rice bran.
The demand of rice bran is directly affected by the respondents’ awareness on rice
bran as a natural ingredient and as potential income generator. It is presumed that the
company-respondents that are aware of characteristics of rice bran can potentially utilize
the product as an ingredient in the natural ingredient industry. Moreover, the physical and
business attributes of rice bran are reflected on its marketability and acceptability as a
natural ingredient. This study focused on the main attributes that the manufacturers
consider in utilizing the rice bran as a natural ingredient in their production. The main
physical attributes include color, scent and purity, nutritive value and storage ability;
while the business attributes include accessibility, price, assured supply, and government
regulations and policies. The assessment regarding these attributes was utilized in order
to aid both manufacturers and producers on what things to prioritize and consider in rice
bran utilization. Also, the sourcing practices of rice bran and the marketing arrangements
in rice bran utilization were determined in order to determine the most preferred sourcing
practice and marketing arrangement of the company-respondents. Importation, local
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5
Supply of rice bran
Market potential of rice bran
as a natural ingredient Demand of rice bran
Milled rice
-Volume of rice production
-Rice bran recovery rate
Marketability &
Acceptability of rice
bran as a natural
ingredient
-Physical attributes
-Color, scent & purity
-Nutritive value
-Storage ability
-Business attributes
-Accessibility
-Reasonable price
-Assured supply
-Government regulations
&policies
Sourcing
practice of
rice bran
-Importation
-Sourcing
from local
producers
-Combination
(both)
Awareness
on rice bran
-As a natural
ingredient
-As potential
income
generator
Number
of rice
bran -
users
Marketing
arrangements
in rice bran
utilization
-Longer contract
with local
producers
-Produce own
supply of inputs
-Produce own
supply of inputs,
process &
distribute mfgd
goods
Figure 1.Conceptual framework of the market potential of rice bran as an ingredient to natural products of
selected manufacturers in selected areas in CALABARZON
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sourcing and a combination of importation and local sourcing were considered the main
sourcing practices of rice bran; while long contract with local producers, production
ofown supply of inputs, and production of own supply of inputs, processing and
distribution of manufactured goods. The type of sourcing practices of rice bran and the
type of marketing arrangements in rice bran utilization can affect the potential demand of
rice bran as a natural ingredient. The more costs incurred in sourcing out and marketing
of rice bran can negatively affect the potential demand of rice bran.
On the other hand, the supply side is directly affected by the volume of rice
production and the rice bran recovery rate; whereas, in the Philippines, the rice bran
recovery rate ranges from 8%-10% (International Rice Research Institute, 2009). The
local rice and rice bran production are lateral with each other.
Obtaining the following data regarding the potential demand and supply of rice
bran, the willingness to pay (WTP) for the different forms of rice bran can be estimated.
The causal relationship between the said factors affecting the demand and supply are very
much important in assessing if rice bran as a natural ingredient has market potential.
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HYPOTHESES OF THE STUDY
1. Nutritive value is the most considered physical attribute of rice bran while
color, scent and purity are the least considered physical attributes of rice bran.
Price is the most considered business attribute of rice bran while government
regulations and policies is the least considered business attribute of rice bran.
2. Company-respondents prefer to source locally rather than to import rice bran.
3. Company-respondents prefer to have long contract with local rice bran
producers; and
4. Refined rice bran oil has the highest willingness to pay, followed by crude rice
bran oil, stabilized rice bran and raw or fresh rice bran.
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RESEARCH METHODOLOGY
Types of Data and Method of Data Collection
This study utilized primary and secondary data. Primary data were obtained
through personal interviews of companies or manufacturers of natural ingredients with an
aid of a pretested questionnaire. Data for collection included the characteristics of the
companies such as type of ownership (OS), years of operation (YO) and nature of the
business. Moreover, other information such as preference of sourcing practices in
utilizing rice bran, marketing arrangement in utilizing rice bran and perceived demand
growth for rice bran in the next five years were gathered.
On the other hand, secondary data focused on the prices of rice bran, number of
rice bran user-industries and the profile of the study areas. The list of the companies were
gathered from the Department of Trade and Industry (DTI), while production and market-
related data were obtained from the Bureau of Agricultural Statistics (BAS), National
Statistics Office (NSO), Central Bank, Food and Agriculture Organization (FAO) and
other international organizations.
Selection of the Study Area and Respondents
This study was done in CALABARZON (Region 4A) since most local natural
ingredient manufacturers are located in that region. Thirty (30) companies were
interviewed via purposive and quota sampling method.
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Method of Data Analysis
Descriptive Analysis
In characterizing the company-respondents, tabular and graphical methods aided
by frequency counts, measures of central tendency and dispersion were employed.
Elicitation Method
Datawere collected through personal surveys of consumers or self-administered
questionnaire. The elicitation method specifically used open-ended question(s) pertinent
to the respondents’ maximum and minimum willingness to pay for the product. There
were no price guidelines or hints used in eliciting the company-respondents’ WTP for the
different rice bran forms. Moreover, before asking the company-respondents’ WTP, they
were informed about the different forms of rice bran and processes in rice bran
utilization. This method also yields the actual value of the respondents’ WTP. It accounts
for willingness to pay without bias.
Rating Scale
A continuous numerical rating scale was employed to determine the company-
respondents’ priority regarding the different physical and business attributes of rice bran.
The rating scale involved a continuous numerical rating with 1 as the highest or most
prioritized and 5 as the lowest or least prioritized. In this rating scale, the company-
respondents can have two or more attributes with the same rating in which, it reflects that
the company prioritizes two or more attributes at the same time.
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Delphi Method
The perceived demand growth for rice bran in the next five years was determined
through the Delphi method. The different operators of local natural ingredient
manufacturing companies were asked about their perception on the growth of rice bran
demand. The perceived demand growth of rice bran that has the highest frequency
reflected the perceived demand growth of rice bran that the local natural ingredient
manufacturers foresee.
Statistical Analysis
The following statistical tests and analyses were carried out to draw a meaningful
inference:
Fisher’s Exact Test of Independence
This methodology is usually done if Pearson Chi square test cannot be utilized in
interpreting for accurate results. Moreover, this test is done if the two major Pearson Chi
square limitations, namely, having an expected frequency of less than 1 and having 20%
of the total cells’ frequency of less than 5, are met. Statistical programs such as STATA
software, SPSS software, SAS software, and QI Macros are needed in running this test.
Furthermore, this test is known to determine if there is an association between the
two variables. In short, this test determines whether one variable is independent of the
other variable. This test is usually done at 5% and 10% alphas. Whereas, when the
probability value of the Fisher’s exact statistic is less than 5% (α=0.05), then the test
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5
allows for the rejection of the null hypothesis; otherwise, the null hypothesis is accepted.
Fisher’s exact test is also known for yielding more accurate results than Pearson Chi
square test. The data used in this test are in a row and column form, usually in a
contingency table. A 2 by 2 table is commonly used in doing this test of independence
since this is the simplest. However, the same test can be done for more than 2 by 2 tables
(McDonald, J.H.2009).
The null and alternative hypotheses for Fisher’s exact test of independence were as
follows:
Ho: the relative proportions of one variable are independent of the second variable
Ha: the relative proportions of one variable are dependent of the second variable
Say, for awareness on rice bran as a natural ingredient (AW1) and plan to venture in rice
bran utilization (VENTURE), the hypotheses were:
Ho: Plan to venture in rice bran utilization (VENTURE) is independent of
awareness on rice bran as a natural ingredient (AW1) or simply, the two variables are
independent of each other
Ha: Plan to venture in rice bran utilization (VENTURE) is dependent of
awareness on rice bran as a natural ingredient (AW1) or simply, the two variables are
dependent of each other
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The probability associated with the occurrence of the respondents’ answer were
obtained and added. The data were group into a 2 by 2 table such as (only for 2
variables):
- + Total
Group I
A
B
A+B
Group II
C
D
C+D
Total
A+C
B+D
N
Moreover, the exact probability was obtained using the formula below:
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Limitations of the Study
The study focused on the market potential of rice bran as a natural ingredient in
selected areas in CALABARZON. Since there is a difficulty in locating the potential and
current users of rice bran in CALABARZON, only 30 company-respondents were
included in the survey in this study. Moreover, there were approximately 100 registered
small, medium and large scale natural ingredient manufacturers in CALABARZON.
Nevertheless, only 30 company-respondents were willing to be interviewed. These
companies were of more or less 30% of the total population of natural ingredient
manufacturers in CALABARZON.
Also, limitations regarding the use of elicitation method in estimating WTP were
considered wherein the estimates might lead to an understatement of WTP due to lack of
knowledge of the prices, costs and benefits, and free-riding (Ahmed, S.U.&Gotoh, K.,
2006).1
1The methodology used was sourced from Ahmed, S.U. & Gotoh, K., 2006. The Choice of Elicitation Method in CVM
and their Impact on Willingness to Pay in Environmental Assessment. Retrieved 25 February 2012 from
http://www.lb.nagasaki-u.ac.jp/reports/kougaku/pdf/37_68_05.pdf.
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RESULTS AND DICUSSIONS
Industry Notes of the Rice Bran-User Industries
The Philippine Natural Ingredient Industry
The Philippine natural ingredient industry is composed of different growers,
producers and manufacturers all over the country who are engaged into the production,
manufacturing and distribution of products that contain ingredients derived directly from
plants or animal sources. It is a huge enlarging industry where rice bran belongs. This
industry has been growing over the past few years due to several factors namely, growing
population, aging population, increasing health-consciousness among the population,
climate change and increasing awareness for a healthy lifestyle. The natural ingredient
industry, dealing with herbal medicine and supplements, can be segmented into three
categories which are the Food Industry or the Functional food nutraceuticals, cosmetics
industry or cosmeceuticals and pharmaceutical industry (Department of Agriculture
Biotechnology Program, 2010).
The three different sectors that mainly utilize natural ingredients are the
cosmeceuticals, pharmaceuticals, and functional food sector. These sectors have inherent
characteristics that make them distinct from each other. Cosmeceuticals refer to cosmetic
products that include one or more bioactive ingredients that provide psychological effect
on cellular level. Cosmeceuticals include the use of natural colours, vegetable oils, fats
and waxes, essential oils and oleoresins, vegetable saps and extracts, and raw plant and
materials. These natural ingredients are utilized in the production of different cosmetic
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products ranging from soap, lotion, fragrance, oils, make-up, beauty enhancers, among
others. Pharmaceuticals refer to medicinal products that can be of natural or
synthetically-based. Pharmaceuticalsinclude medicines and supplements that provide
curative and preventive effect among consumers’ illness. Pharmaceuticals also include
the use of medicinal and aromatic plants, vegetable sap extracts, vegetable alkaloids,
herbal medicines, and herbal supplements. On the other hand, functional foods refer to
ingredients that are consumed as a part of a usual diet. It provides psychological benefits
and aid in prevention of lifestyle and chronic diseases. Functional foods include the
utilization of natural colours and flavours, sweeteners, vegetable oils and fats, emulsifiers
and stabilizers, antioxidants, preservatives, and nutraceuticals. Indeed, nutraceutricals is
under the functional food sector. It refers to product that is in purified form obtained from
foods that usually in medicinal forms. These nutraceutical products are not commonly
associated with food but still, it provides psychological benefit and resistance against
chronic diseases (Natural Ingredients Market and Industry Study, 2012 as cited by
Department ofAgriculture Biotechnology Program, 2010).
Rice Bran-User Industries
The Philippines has been producing rice for more than a century. It is considered
as Philippines’ staple food. With the large production of rice in the country, agricultural
wastes such as rice bran and rice husks/ rice hulls are incorporated. The common practice
of Filipino farmers is to bring their palay harvest into the rice millers.According to
Philippinesrice.com, as of 2010, the rice milling fee isPhp 65.00 / 50-kg bag of rice. Most
of the farmers’ concern is just to have their rice milled. Most of them have no intention
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on the agricultural wastes. On the other hand, the rice millers make money out of it by
selling it to the feed millers for Php 5-12 / kg (International Rice Research Institute,
2009). The feed millers are very particular with the quality of rice bran they are buying.
Most of them only consider good quality rice bran, they neglect low ones. Quality is a
very crucial consideration for the feed millers since the raw (fresh) rice bran will further
be subjected into different kinds of milling process. Most of the time, although rice
millers want to sell all of the rice bran (agricultural wastes), they cannot do it since the
issue of rancidity and quality comes in. Rice bran easily becomes rancid in no less than
24 hours. If the bulk of rice bran becomes rancid or is nearly becoming rancid, the rice
millers usually burn it.
According to International Rice Research Institute (IRRI), the rice bran is 8-10%
of the total rice paddy production. Almost 36% of the rice bran supply of the country
goes to the feed milling industries, 10% for inorganic fertilizer industry and almost 54%
of it is untapped (Food and Agriculture Organization, 1997). It can be seen that there is a
huge untapped volume of rice bran in the Philippines causing the underutilization of
potential agricultural products. Rather than going into a waste, rice bran has potential to
be income-generating. Several studies show that it can be income generating since itcan
be used in many ways as long as it is stabilized.Also, it is high in fiber and a perfect
source of protein.
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Feed Milling Industries
One of the industries that use large amount of rice bran is the feed milling
industries in the Philippines. It is composed of the poultry, livestock and aquaculture sub-
sectors. There are about 494 registered feed manufacturing companies in the Philippines
ranging from commercial (mixed) feed manufacturers, non-commercial feed
manufacturers and feed ingredient manufacturers. Based on (Avilla, H. F. et al, Undated),
37.3% - 38.3% rice bran is utilized for producing huge amount of mixed feeds. Moreover,
50% - 55% of the rice bran used in feed milling is imported (Food and Agriculture
Organization, 1997).
Rice bran is one of the most utilized major feed stuff together with yellow corn,
corn bran, wheat bran, copra meal, soybean oil and fish meal (FAO, 1997). Generally,
manufactured feeds have relatively high prices. The high prices of manufactured feeds
are directly dependent on the import prices of ingredients and feed stuffs, availability and
seasonality of the ingredients.
Fertilizer Industry
The fertilizers known to be used by most farmers are the inorganic fertilizers
which accounts for a huge volume of local fertilizer production. This includes urea,
complete, ammonium sulfate, monoammonium phosphate, potash and diammonium
phosphate production. On the other hand, organic fertilizers are used by some of the
farmers but most of it is used in aquaculture, specifically for fishponds. Animal manures,
agricultural by-products and processing residues are the organic fertilizer ingredients
used in agriculture. Rice bran is one of these organic ingredients, specifically D3 class of
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rice bran (third class). D3 class of rice bran is usually used in fishponds although their
utilization is not common.
Natural Ingredient Industry
The Philippine natural ingredient industry is composed of the different growers,
producers, manufacturers and distributors of ingredient derived naturally from plant and
animal sources. The natural ingredient industry is a growing industry in partnership with
some private and public sectors of the society namely, Chamber of Herbal Industries of
the Philippines, Inc. (CHIPI), Department of Agriculture (DA), Department of Trade and
Industry (DTI), Department of Health (DOH), Food and Drugs Authority (FDA),
University of the Philippines Los Banos (UPLB), University of the Philippines Manila
Institute of Pharmaceutical Sciences, Philippine Institute of Traditional and Alternative
Health Care (PITAHC), and some private herbal companies and wellness companies.
Rice bran is one of the considered potential natural ingredients to be further
utilized by the members of the natural ingredient industry. There are several companies
who could potentially utilize rice bran as ingredient to their products. These companies
could use rice bran in the production of the following: nutraceuticals, cosmeceuticals,
essential and massage oils, extracted cooking oils, food additives and fortificants. For
clearer understanding, there is a need to differentiate the following classifications of use.
The following definitions of the different classifications of use are provided below:
Nutraceuticals- natural food and health products providing health and medical
benefits;
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Cosmeceuticals-cosmetic products with active ingredient having health benefit;
Essential and massage oils-aroma therapeutic oils, scented oil with the purpose of
providing therapeutic or calming effect, oils used in body massage;
Extracted cooking oils- oil intended for consumption, for food preparation, for
cooking;
Food additive and fortificants- ingredients used as emulsifiers or extenders,
additive ingredient with nutritive value
As a matter of fact, Gamma Oryzanol and Rice Bran oil are the second most
frequent natural ingredients based on global demand and interest for several natural
ingredients (Department of Agriculture Biotechnology Program, 2010). Moreover, there
are several unique natural ingredients in the Philippines sourced from marine, fruit and
berries. However, founded studies are more focused on rice since it is our staple crop. We
have here our local credible research centers known in Asia such as the International Rice
Research Center (IRRI) and the Philippine Rice Research Institute (Phil Rice). In the case
of the Philippines, although there is a rice bran product craze, research and development
including the market potential and technical aspect of rice bran is still weak. Unlike any
other natural ingredient, there is no need for it to be propagated since it is a by-product of
rice production. What makes the natural ingredient industry problematic is the fact that
the country has inadequate access to appropriate technologies of processing and utilizing
it.
The most common use of rice bran among these companies are seen on the spa
products, cosmeceutical products, specifically rice bran soap, rice bran essential oils, rice
bran conditioner and rice bran massage cream, etc. (oryspa.com). More than this, rice
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bran has greater potential towards nutraceuticals. There were numerous studies claiming
that rice bran can be further used in oil extraction to produce rice bran oil, emulsifying
agent in processed meat products and stabilized rice bran as supplement in encapsulated
and/ or powdered forms (Kahlon, T.S. et al, 1996).
Rice Bran Utilization
The local supply of rice bran is computed as 8-10% of the total rice paddy. The
usual practice in Philippine rice farming is the selling of recovered rice bran to feed
millers and burning it if it easily becomes subjected to rancidity. There were too few
studies in the Philippines regarding the utilization of rice bran. However FAO provides
an estimated data, wherein, an estimate of 36% of the local rice bran supply goes to the
feed milling industry, an estimate of 10% of it goes to the fertilizer industry while the
remaining 54% is left behind untapped (Food and Agriculture Organization, 1997).
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Figure 2.Local rice bran supply by utilization, Philippines.
Source: Aquaculture Feed and Fertilizer Resource Atlas of the Philippines. FAO
Corporate Document Repository.Food and Agriculture Organization, 1997.
Rice bran can be used in such different forms. It can be subjected into different
processes such as stabilization to deactivate the lipase enzyme causing rapid rancidity and
to keep its nutritive value; solvent extraction to extract crude and refined rice bran oil
with a 0.60% rate of recovery and the enzymatic extraction to extract crude and refined
rice bran oil with 2.80% rate of recovery (Villanueva, R.B. Natural Ingredient Industry:
Status and Needs. Philippine Biodiversity Meets Biotechnology).
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Figure3. The processes of stabilizing rice bran and extracting crude and refined rice bran oil.
Sources: Sirikul,A, Moongngarm, A and Khaengkhan, P., 2009.
RAW (FRESH) RICE BRAN
Stabilization Solvent Extraction Enzymatic Extraction
Acid Treatment
Heating (125-135°C, 1-
3 hrs, hum 11-15%)
Hold heating (97-
99°C, 3 mins)
Cooling
Granulating
Stabilized RB
(granular, fine,
extra fine)
Solvent
Evaporation
Desolvenizing
Toasting
Crude RB Oil Defatted RB
Degumming
Caustic
soda
Neutrali
-zing
Sulfuric
acid
Bleaching
Dewaxin
g
Deodorizing
Wintering
Refined RB Oil
Distilled water
addition
pH adjustment (+NHCl
plus cellulose,
hemicellulose)
Shaking Water Bath
(80rpm)
pH adjustment (7.0
+NNaOH, a-amylase,
protease)
Shaking (overnight)
Hot plate heating
(50°C, 30 mmins)
Centrifugation (8000rpm,
4°C, 20mins)
Scraping
RB Oil Collections
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Local Rice Bran Supply
The Philippines is not accustomed of utilizing rice bran for human consumption.
It is usually utilized for animal feeds and organic fertilizers. The rest of it, especially
those that are rapidly becoming rancid was just burned in bulk. There are no available
data regarding the local supply of rice bran but it can be computed as eight to nine
percent (8.0-10.0%) of the volume of total rice paddy production (International Rice
Research Institute, 2010).
It can be seen that there is an increasing trend of rice and rice bran production in
2000-2008. However, the production of rice in the country during 2009 and 2010
declined which also resulted to a decline in rice bran production. There was a 3.27%
decline in rice bran production in 2009 and 3.04% decline in rice bran production in
2010. However, production increased by 5.78% in 2011.
Demographic Characteristics of the Company-Respondents
The demographic characteristics of the company-respondents include their
ownership status, years of business operation, nature of business, and membership.
Regarding ownership status, the company-respondents have varying statuses which were
ranging from corporation, partnership and sole proprietorship. Furthermore, corporations
are known to have shareholders, who are considered as the owner of the business.
Different persons were known to be the owners who take shares of the organization. It
has the advantages of limited liability, permanency, transferability of ownership and easy
access to capital. On the other hand, partnership is somewhat similar to sole
proprietorship except for the fact that two individuals have the claim
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Table 1.Total volume of rice paddy and rice bran production (in metric tons),
Philippines, 2000-2011.
Year
Rice Paddy
Production
Rice Bran
Used for
Organic
Fertilizers2
Rice Bran
Used for
Feeds2
Untapped
Rice Bran2
Total Rice Bran
Supply3
2000
12,389,412.00
401,416.95
111,504.71
602,125.42
1,115,047.08
2001 12,954,870.00 419,737.79 116,593.83 629,606.68 1,165,938.30
2002 13,270,653.00 429,969.16 119,435.88 644,953.74 1,194,358.77
2003 13,499,884.00 437,396.24 121,498.96 656,094.36 1,214,989.56
2004 14,496,784.00 469,695.80 130,471.06 704,543.70 1,304,710.56
2005 14,603,005.00 473,137.36 131,427.05 709,706.04 1,314,270.45
2006 15,326,706.00 496,585.27 137,940.35 744,877.91 1,379,403.54
2007 16,240,194.00 526,182.29 146,161.75 789,273.43 1,461,617.46
2008 16,815,548.00 544,823.76 151,339.93 817,235.63 1,513,399.32
2009 16,266,417.00 527,031.91 146,397.75 790,547.87 1,463,977.53
2010 15,772,318.55 511,023.12 141,950.87 766,534.68 1,419,508.67
2011 16,684,062.00 540,563.61 150,156.56 810,845.41 1,501,565.58
2Total rice bran supply for feeds, organic fertilizers, and untapped based on Figure 2,
page 32. 3Total rice bran supply computed as 9.0% of the total rice production. Nine per cent was
used for conservative purposes (still in the range of 8-10%).
(Source: Bureau of Agricultural Statistics, 2011)
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of ownership of the business. Profits and losses are shared proportion to the capital
contribution of each partner; while sole proprietorship is the simplest form of business. It
is when a single individual owns the firm. It has unlimited liability and it is not a taxable
business entity unlike corporations.
Majority or 19 (63.33%) of the company-respondents were corporations while 7
(23.33%) of the company-respondents and 4 (13.33%) of the company-respondents were
sole proprietorship firms and partnership firms, respectively. In the natural ingredient
industry, specifically in cosmetics and herbal products production, many of the known
firms were of corporation. There were few partnership and sole proprietorship firms.
Moreover, corporations provide the huge production of cosmetics, herbal products,
essential and massage oils and food additive ingredients in the Philippines.
Regarding years of operation, the interviewed company-respondents have varied
years of operation of their businesses which ranged from 1 to 23 years, with an average 8
years of operation. Since the natural ingredient industry has just started after the
millennium, there were many company-respondents who have just started in the business
with less than 10 years of business operation experience. Moreover, majority or 13
(43.30%) of the companies have no more than five years of business operation; followed
by companies with 6-10 years of business experience which comprised 10 (33.30%) of
them, companies with 11-15 years of business experience which comprised 4 (13.30%) of
them; companies with 16-20 years of business experience which comprised 2 (6.700%)
of them; and company with more than 20 years of experience which comprised only 1
(3.30%) of them.
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The most known association of companies engaged in the production, research
and development, manufacture, distribution and trading of herbal products and natural
ingredients is the Chamber of Herbal Industries of the Philippines Incorporated (CHIPI).
It was organized in 2001 initially by 12 companies. Today, the association accounts for
70% of the local herbal and natural market in the Philippines. It actually made 600 USD
including exports in 2007 as stated by the Department of Trade and Industry. Moreover,
the organization has full support in the local natural ingredient industry. It has the role to
promote responsibility in giving safe and effective quality products to consumers, to
show responsibility in product promotion, to be vigilant against unscrupulous players
destroying the overall reputation of the industry, and to assist and guide young and
starting companies in practicing product responsibility and achieving competitiveness
(Chamber of Herbal Industries of the Philippines Incorporated, 2012).
Regarding the membership of the company-respondents, the survey data shows
that majority or 22 (73.33%) of the company-respondents were non-CHIPI members.
While 8 (26.67%) of the company-respondents were members of CHIPI. The result
obtained from the survey was opposite with what is expected. Furthermore, membership
with CHIPI has several advantages such as trainings, seminars, conventions, and also
connections provided by the organization to its members. Membership with CHIPI also
provides association with the Department of Agriculture in terms of research and
development purposes. Given the following privileges, there were still companies that
were not part of CHIPI but indeed, they were interested to be part of it now knowing the
benefits they can get from it.
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Table 2.Distribution of the company- respondents by ownership status, years of operation
and membership, selected areas in CALABARZON, 2012.
ITEM
Frequency Count
Percentage (%)
Ownership Status
Corporation 19 63.33
Partnership 4 13.33
Sole Proprietorship 7 23.33
Total 30 100.00
Years of Operation
1-5 years 13 43.30
6-10 years 10 33.30
11-15 years 4 13.30
16-20 years 2 6.70
>20 years 1 3.30
Total 30 100.00
Membership
CHIPI Member 8 26.67
Non-CHIPI Member 22 73.33
Total 30 100.00
Regarding the nature of business, every company has different nature of
businesses. Some may only have one nature but some may have several nature of
business, making one company to have several responses regarding nature of its
business. Namely, cosmetic or cosmeceuticals, pharmaceuticals, nutraceuticals,
essential and massage oil production, and food additives and fortificant
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production were the nature of businesses that the company-respondents were
involved. For further discussion, the cosmeceutical sector is involved in the
production of cosmetic products that includes one or more bioactive ingredient
that has affirmative psychological effect in cellular level. The pharmaceutical
sector is involved in the production of medicinal products that can be either of
natural or synthetically-based ingredients. The nutraceutical sector is involved in
the production of food that is usually in medicinal forms. These products have
psychological benefit and it prevents occurrence of chronic diseases. The essential
and massage oil sector is a small sector involved in the production and extraction
of crude and refined oil from natural products. Lastly, the food additive and
fortificant sector is a subsector under the functional food sector which is involved
in the production of stabilizers, emulsifiers and preservatives used in preserving
and lengthening the shelf-life of natural food products (Department of Agriculture
Biotechnology Program, 2010).
Furthermore, the survey data with multiple response, show that the
majority or 18 (60.00%) of the company-respondents were into nutraceuticals. It
was followed by 12 (40.00%) company-respondents who were into cosmetics. On
the other hand, 10 (33.33%) company-respondents were into essential and
massage oil production, 8 (26.67%) were into pharmaceuticals, 4 (13.33%) were
into spirulina and organic rice production and utilization, and only 1 (3.33%) was
into food additive/fortificants/ enhancer production.
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5
Figure 4.Company-respondents by nature of business, selected areas in
CALABARZON, 2012.
Plan to Venture in Rice Bran Utilization
For the companies’ plan to venture, the data were gathered in order to determine
the future users and utilizers of rice bran. Moreover, this determinedif rice bran as a
natural ingredient has a market potential. It was expected that many companies have plan
to venture in rice bran utilization. Moreover, not all of the surveyed companies were
planning to venture into the utilization of rice bran. Majority or 21 (70.00%) of the
company-respondents have plan to venture in utilizing rice bran; while only 9 (30.00%)
of the company-respondents have no plans to venture in rice bran utilization.
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5
Awareness on Rice Bran as a Natural Ingredient and Awareness on Rice Bran as
Potential Income Generator
It was expected that majority of the company-respondents are aware that rice bran
is a natural ingredient and it can potentially be income generating. Likewise, the survey
for the company-respondents awareness that rice bran is a natural ingredient shows that
still 4 (13.30%) of the company-respondents were not aware on rice bran as a natural
ingredient. While majority or 26 (86.70%) of the company-respondents were aware on
rice bran as a natural ingredient. The result of the survey was close to what has been
expected. The same pattern can be seen with the survey on the company-respondents’
awareness on rice bran as potential income generator having a majority or 22 (73.30%) of
the company-respondents believe that rice bran can potentially be income generating and
only 8 (26.70%) of the company-respondents did not believe that rice bran can potentially
be income generating. It can also be noted that most of the 8 respondents that did not
believe on the potential income generating capability of rice bran have the usual
perception that rice bran is a waste that is commonly burned in farms and rice mills.4
4Statement based on the Department of Agriculture’s Biodiversity meets Biotechnology,
Producers, growers and manufacturers summit. 18 February 2012. Sulo Hotel, Diliman, Quezon
City.
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5
Table 3.Distribution of the company-respondents’ plan to venture in rice bran utilization
and awareness on rice bran, selected areas in CALABARZON, 2012.
ITEM
Frequency Count
Percentage (%)
Plan to Venture in Rice Bran Utilization
To venture 21 70.00
Not to venture 9 30.00
Total 30 100.00
Awareness on Rice Bran as a Natural
Ingredient
Aware 26 86.70
Not aware 4 13.30
Total 30 100.00
Awareness on Rice Bran as Potential
Income Generator
Aware 22 73.30
Not aware 8 26.70
Total 30 100.00
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Physical and Business Attributes of Rice Bran
Like consumers, local manufacturers look at the physical and business attributes
of rice bran before venturing into its utilization. The behaviour of every consumer
towards product consumption is basically based on product quality, price, availability and
accessibility (Zeithaml, V.A, 1988). In this study, the local natural ingredient
manufacturersmainly look at the physical attributes of rice bran such as color, scent and
purity, nutritive value and storage ability; and business attributes namely, accessibility,
availability, price and government regulations and policies.
Specifically, for the physical attributes of rice bran, color, scent and purity are
considered since these attributes are the main physical attributes to look for in rice bran.
The local natural ingredient manufacturers prefer light brown brans. In terms of scent,
manufacturers prefer rice bran that has no rancid smell or rancid scent since rice bran
with rancid-like smell promotes rapid rancidity. In terms of purity, manufacturers do not
consider to have adulterated ingredients in processing, what they want is pure rice bran
that is free from sand particles, dirt, dust and adulterants. Nutritive value of the bran is
the manufacturers’ foremost concern; this is mainly the reason why rice bran is
demanded. Nutritive value and rancidity is related whereas, bran that are rancid has lesser
nutritive value. With this, manufacturers prefer fresh rice bran. Rice bran’s storage ability
is also one of the considered attributes. Manufacturers prefer bran with long storage
capacity and this is exhibited by brans that are appropriately dried and stored in mill
houses. For the business attributes of rice bran, accessibility is one of the most important
attribute since manufacturers seek for accessible ingredients. With accessibility, the
43
5
location of the supply of rice bran is always checked. Moreover, availability is also
connected with accessibility. Manufacturers usually look at this attribute with great
importance since this makes production possible. It must be noted that if rice bran has no
stable availability, manufacturers will be too hesitant to venture in utilizing it. On the
other hand, price is also one of the considered attributes and it reflects the quality of the
product; generally, the higher price, the greater quality. If the price of refined rice bran oil
is too high for the manufacturers since its extraction cost is high, they might be hesitant
to venture in rice bran utilization. Lastly, government regulations and policies is also a
considered attribute. If the government regulations and policies regarding the production,
manufacture and trade of rice bran and rice bran products are friendly to all of those
concerned, then, manufacturers will be more willing to venture in rice bran utilization.
Moreover, the consistency of government regulations and policies is also considered by
manufacturers since if there are consistent regulations and policies, they will not
experience difficulty in complying with it.
Looking at the survey regarding considerations on the physical and business
attributes of rice bran, it was found out that all (100.00%) of the company-respondents
considered color,scent and purity, nutritive value, storage availability, accessibility,
availability, and price. Only 17 (61.70%) of the company-respondents considered
government regulations and policies as business attributes of rice bran. The result of the
survey is very helpful for the producers of rice bran since this could be a guide for them
regarding what to consider for in the production of rice bran. If all of these attributes
were met by the producers, then, there could be a concrete agreement between the two
parties: producers and manufacturers.
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5
Table4.Distribution of the company-respondents’ consideration on the physical and
business attributes of rice bran, selected areas in CALABARZON, 2012.
ITEM
Frequency Count
Percentage (%)
Consideration on the Physical
Attributes of Rice Bran
Color, scent and purity 30 100.00
Nutritive value
Storage ability
30
30
100.00
100.00
Consideration on the Physical
Attributes of Rice Bran
Accessibility
Availability
30
30
100.00
100.00
Price
Gov’t regulations and policies
30
17
100.00
60.71
Besides the considerations of the company-respondents on the physical and
business attributes of rice bran, the average rank of each and every attribute was also
considered since this reflects the attributes that the local manufacturers considered
according to priority. Looking at the survey, in terms of the physical attribute of rice
bran, nutritive value is the most prioritized with an average rank of 1.17, followed by
color, scent and purity with an average rank of 1.80 and storage ability, being the least
with an average rank of 2.07. While for the business attributes of rice bran, price is the
45
5
most prioritized attribute among the four with an average rank of 1.28, followed by
assured supply with an average rank of 1.43, accessibility with an average rank of 1.90.
Among the stated business attributes, the least was government regulations and policies
with an average rank of 2.64. Majority of the company-respondents were privately-
owned, only three were of government-owned. This was one of the reasons why majority
of the company-respondents gave least priority to government regulations and policies.
Furthermore, the rank of physical and business attributes of rice bran were all in good
values except for government regulations and policies. The result of this survey is helpful
for the producers since this could be a guide for them on what attribute(s) to prioritize in
order to meet what the manufacturers want. Clearly, if rice bran should prosper as an
industry, producers and manufacturers must see to it that the following attributes
discussed about should be met.
Table 5. Rating of the physical attributes and business attributes considered by the
company-respondents, selected areas in CALABARZON, 2012.
Physical Attributes
Average
Rating
Business Attributes
Average Rating
Color, scent & purity 1.80 Accessibility 1.90
Nutritive value 1.17 Price 1.28
Storage ability 2.07 Assured supply 1.43
Government
regulations & support
2.64
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Acceptability of the Different Forms of Rice Bran
Rice bran comes in different forms and products such as raw or the so called fresh
rice bran which comes directly from rice farms or rice mills, stabilized rice bran which is
a processed form, crude rice bran oil extracted from the raw rice bran, and refined rice
bran oil which is subjected to a longer process.
Every respondent has varied acceptance on the different forms of rice bran. Based
on the survey regarding the acceptability of the different forms of rice bran, wherein
company-respondents provided multiple responses, majority or 20 (66.67%) of the
company-respondents found stabilized rice bran acceptable to be used. It was followed by
19 (63.33%) of them found refined rice bran oil acceptable to be used. While 15
(50.00%) of them found crude rice bran oil acceptable to be used and the least acceptable
form was raw rice bran with 14 (46.67%) of them.
Given this survey results, it can be deduced that many companies or firms are
most likely willing to invest in the utilization of stabilized rice bran and refined rice bran
oil. With this, the government must have concrete measures to support the stabilization of
rice bran and extraction of rice bran oil. Apparently, according to the company-
respondents, there is a need for a concrete technology to stabilize rice bran; whereas,
many manufacturers wanted to invest on it. It can also be noted that most of the
respondents who belongs to those who did not find refined rice bran oil acceptable to be
used, stated that it is expensive for them to invest on the product.5
5Statement based on the Department of Agriculture’s Biodiversity meets Biotechnology,
Producers, growers and manufacturers summit. 18 February 2012. Sulo Hotel, Diliman, Quezon
City.
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5
Sourcing Practices of Rice Bran
There are different sourcing practices in rice bran utilization and these are
importation, sourcing locally from local producers, and both or a combination of the said
two sourcing practices. Surveyed company-respondents have different preferred sourcing
practice. Moreover, the survey data shows that majority or 23 (76.67%) of the company-
respondents preferred to source locally from local producers. While 5 (16.67%) of the
company-respondents preferred to import rice bran ingredients and only 2 (7.00%) of the
company-respondents preferred to practice both or combination of local sourcing and
importation. Most company-respondents preferred to source from local producers in
order to help local farmers/ producers to generate income. Importation is a resort if there
is no assurance of supply yet the there is a concrete demand for rice bran. In aim to aid
the producers of rice bran, specifically, the farmers, the government must support the
marketing arrangement that the local manufacturers desire by giving incentives for
producers to produce and incentives for manufacturers to source out.
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5
Table 6.Distribution of the acceptability of the different forms and company-
respondents’ preference insourcing practices of rice bran, selected areas in
CALABARZON, 2012
.
ITEM
Frequency Count
Percentage (%)
Acceptability of the Different Forms of
Rice Bran
Raw rice bran 14 46.67
Stabilized rice bran
Crude Rice Bran Oil
Refined Rice Bran Oil
20
15
19
66.67
50.00
63.33
Sourcing Practices of Rice Bran
Importation
Local sourcing from producers
5
23
16.67
76.67
Both
Total
2
30
7.00
100.00
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5
Marketing Arrangements in Rice Bran Utilization
There are different marketing arrangements in utilizing rice bran and these are
contract with local producers, producing own supply of inputs (backward integration),
and producing own supply of inputs, process and distribute manufactured goods (vertical
integration). Every respondent has different preferred marketing arrangement which fit
their nature of business. Moreover, the survey data shows that majority or 16 (53.33%) of
the company-respondents preferred to have longer contract with local producers,
followed with 10 (33.33%) of the company-respondents who preferred to produce own
supply of inputs, process and distribute manufactured goods; while only four (13.33%) of
the company-respondents preferred to produce own supply of inputs. Majority of the
company-respondents preferred to have longer contract with local producers in order to
help local farmers/ producers in uplifting their current situation.6
With the marketing arrangement that the local manufacturers want regarding rice
bran utilization which was to have a longer contract with local producers, the government
must be in full support of this since this will generate consistent income for the farmer or
miller producers. However, before going with a certain king of agreement between the
producer and the manufacturers, it is essential to consider the physical and business
attributes of rice bran that the producers must met. In order for the producers and
manufacturers to have a longer contract, a full cooperation between the two parties
including the government is a must.
6Statement based on the Department of Agriculture’s Biodiversity meets Biotechnology,
Producers, growers and manufacturers summit. 18 February 2012. Sulo Hotel, Diliman, Quezon
City.
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5
Perceived Demand Growth of Rice Bran
There is difficulty in assessing the fate of rice bran in the next five to ten years
and with this, Del Phi method was used. The experts in the industry were asked about
their perceived demand growth of rice bran in the next 5 to 10 years. Moreover, the
survey data shows that majority or 12 (29.30%) of the company-respondents perceived
that the growth of rice bran in the next 5-10 years will be 5-10%. Seven (17.10%) of the
company-respondents perceived that the growth of rice bran in the next 5-10 years will be
11-15%; five (12.20%) company respondents forecasted that it will be 16-20%; three
(7.30%) of the company-respondents perceived that it will be greater than 20% and only
two (4.90%) forecasted that rice bran will be growing less than 5% in the next 5-10 years.
There was no perception that rice bran’s growth will neither remain the same nor
decrease in the next 5-10 years.
All of the perceived demand growth of rice bran in the next 5-10 years was all of
increasing pattern. There was no forecast that it will remain nor decrease since the early
2010, rice bran has been increasingly recognized globally. This is also because of the
increasing health-consciousness and eager for proper lifestyle of Filipinos through time
(Hoogenkamp, H.W., 2010).
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5
Table 7.Distribution of the company-respondents’ preference in marketing
arrangement in rice bran utilization and perceived demand growth of rice bran in
the next 5-10 years, selected areas in CALABARZON, 2012.
ITEM
Frequency Count
Percentage (%)
Marketing Arrangement in Rice Bran
Utilization
Longer contract with local rice bran
producers
Produce own supply of inputs
Produce own supply of inputs, process
and distribute manufactured goods
Total
16
10
4
30
53.33
33.33
13.33
100.00
Perceived Demand Growth of Rice in
the Next 5-10 Years
Remain the same
<5%
5-10%
11-15%
16-20%
>20%
Decrease
Total
0
2
12
7
5
3
0
29
0
6.90
41.38
24.14
17.24
10.34
0
100.00
52
5
Willingness to Pay for the Different Forms of Rice Bran
In a desire to establish a potential market for rice bran, there is a need to
determine the willingness to pay of the respondent-companies for the different forms of
rice. Specifically, there is a need to determine their minimum and maximum willingness
to pay. This will determine if there is really a demand for the different forms of rice bran.
The willingness to pay for the different forms of rice bran was obtained through
elicitation method or open-ended question. This was done since it yields actual minimum
and maximum WTP of the respondents. The WTP values for the different forms of rice
bran were obtained by asking the company-respondents to provide the value that they are
willing to give up in order to use different forms of rice bran.
The survey data show that the average minimum WTP for raw rice bran was 4.29
Php/kg; 9.20 Php/kg for stabilized rice bran; 56.88 Php/L for crude rice bran oil and
286.00 Php/L for refined rice bran oil. On the other hand, the average maximum
willingness to pay was 6.00 Php/kg for raw rice bran, implying that the cost of utilizing it
should not exceed 6.00 Php. For stabilized rice bran, the cost of utilizing it must not
exceed 12.88 Php/kg; while for crude and refined rice bran oil, the cost of utilizing these
ingredients should not exceed 83.33 Php/L and 607.40 Php/L, respectively. It can be
observed that refined rice bran oil has the highest minimum and maximum WTP,
followed by crude rice bran oil, stabilized rice bran and raw rice bran. The values that the
company-respondents provided were based on the quality and processing phases that rice
bran forms and products were subjected. The higher their WTP reflects the complexity
and longer process that the ingredients are subjected to and this also reflects the value of
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5
the ingredient. The WTP for the different forms of rice bran provides ideal acceptable
prices for the different forms of rice bran.
Moreover, the company-respondents’ minimum and maximum WTP deviated
with their mean at a range of only 2.21-2.53 for raw rice bran, and 28.65-28.75 for crude
rice bran oil. On the other hand, company-respondents’ minimum and maximum WTP
deviated widely with their mean at a range of 3.22-5.49 for stabilized rice bran, and
128.94-438.21 for refined rice bran oil. It was observed that refined rice bran oil was
widely deviated from the mean, accounting that the several of the company-respondents
have no enough knowledge of the price(s) of refined rice bran oil. However, the
deviations of the WTPs were found to be acceptable, having values that did not exceed
the mean WTPs.
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Table 8.Measures of central tendency and willingness to pay of the company-respondents
towards different forms of rice bran, selected areas in CALABARZON, 2012.
Forms of Rice
Bran
WTP1
Mean
(WTP-Php/kg or
L)
Standard
Deviation
Raw (Fresh) Min 4.29 2.21
Max
6.00
2.53
Stabilized Min 9.20 3.22
Max
12.88
5.49
Crude Rice Bran Oil Min 56.88 28.65
Max
83.33
28.75
Refined Rice Bran
Oil
Min 286.00 128.94
Max
607.14
438.21
1- Willingness to pay in peso (Php) terms
Cross Tabulation Analyses
The relationship between variables was determined through Chi square analysis of
independence. However, there were limitations with the procedure; first, there were
expected frequencies that were less than and second, greater than 20% of the overall cells
have expected frequencies less than 5. In order to resolve the limitations of Chi square
analysis of independence, the Fisher’s exact test of independence was used. Still, the
interpretation is the same with Chi square test of independence.
Different cross tabulations were made for the hypothesized significant variables
and these variables were as follows:
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1. Plan to venture in rice bran utilization (VENTURE) and Awareness on rice bran as a
natural ingredient (AW1)
Plan to venture in rice bran utilization’s association with awareness on rice bran
as a natural ingredientwas determined in order to guarantee the hypothesis that there is an
association between the said two variables (VENTURE and AW1). For these variables,
Fisher’s exact test of independence was utilized. It yielded an exact value of 0.026 which
was less than 5% level of confidence (α=0.05), allowing for the rejection of the null
hypothesis. Thus, we can state that the company-respondents’ plan to venture on rice
bran utilization (VENTURE) is associated/ dependent on their awareness on rice bran as
a natural ingredient (AW1). Simply, the two variables are associated with each other at
5% and 10% alpha. It can be concluded that the awareness on rice bran as a natural
ingredient determines the company-respondents’ plan to venture in rice bran utilization.
It can be observed that still, there were 9 company-respondents who were aware
of rice bran as a natural ingredient. However, even if they were aware of it, they have no
plan to venture in rice bran utilization most probably due to the following factors:
Specialization – the company concentrates and focuses only in producing one
product that has stable and/ or increasing trend of demand;
Capital and credit constraints- companies may experience restrictions regarding
the capital and credit that they need in order to venture in rice bran utilization.
Even if they want to venture in rice bran utilization, they cannot since they have
the said constraints;
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Acceptability of rice bran- some companies may be aware that rice bran is a
natural ingredient but they do not consider rice bran acceptable to be utilized in
their production;
View about profit- some companies have certain view about rice bran that it has
no potential to be income generating; and
Manufacturers’ perception that rice bran is not yet an established industry- though
there were companies that were aware that rice bran is a natural ingredient, some
of these companies were still hesitant to venture in rice bran utilization since they
thought that rice bran is not yet a founded industry in the country.
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Table 9.Cross tabulation analysis of company-respondents’ plan to venture in rice
bran utilization and awareness on rice bran as a natural ingredient, selected areas
in CALABARZON, 2012.
Awareness on rice bran
as a natural ingredient
Plan to venture in rice bran utilization
Venture
Not to venture
Total
Aware
17a
(14.70)b
9
(11.30)
4
Not aware
0
(2.30)
4
(1.70)
26
Total
13
17
30
Value Df Asymptotic sig.
(2-sided)
Exact sig. (2-
sided)
Pearson Chi
square
6.016c 1 0. 014 0.026
Fisher’s exact - - 0.026**
a- Values of observed frequencies
b- Values of expected frequencies are inside the parenthesis
c- 2 cells (50.00%) have expected frequencies of less than 5. The minimum expected
frequency is 1.73.
* - significant at 1% alpha;
** - significant at 5% alpha; and
*** - significant at 10% alpha
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2. Company-respondents’ plan to venture in rice bran utilization (VENTURE) and
awareness on rice bran as potential income generator (AW2)
Generally, the company would venture into a business mainly because of its profit
motive. In this study, it was hypothesized that the company-respondents’ plan to venture
in rice bran utilization is dependent on their awareness that rice bran has potential to be
income generating. Simply, knowing that rice bran can generate income, they would plan
to venture in rice bran utilization. Furthermore, the survey results show that the Fisher’s
exact test yielded an exact p-value of 0.049 which was less than 5% (α=0.05), allowing
for the rejection of the null hypothesis. Thus, we can state that the company-respondents’
plan to venture on rice bran utilization (VENTURE) is associated/ dependent on their
awareness on rice bran as potential income generator (AW2). Simply, the VENTURE and
AW2 are associated with each other at 5% and 10% alpha. It can be concluded that
awareness on rice bran as potential income generator determines the company-
respondents’ plan to venture in rice bran utilization. The result of the survey regarding
VENTURE and AW2 supports what was stated in the literature, that profit motive is the
primary reason why firms venture in a certain kind of business.
It can be observed that still, there were 7 company-respondents who were aware
of rice bran as potential income generator. However, even if they were aware of it, they
have no plan to venture in rice bran utilization most probably due to the following factors
mentioned in the prior cross tabulation (see page 54).
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Table 10.Cross tabulation analysis of company-respondents’ plan to venture in
rice bran utilization and awareness on rice bran as potential income generator,
selected areas in CALABARZON, 2012.
Awareness on rice bran
as potential income
generator
Plan to venture in rice bran utilization
Venture
Not to venture
Total
Aware
15a
(12.50)b
7
(9.50)
22
Not aware
2
(4.50)
6
(3.50)
8
Total
17
13
30
a- Values of observed frequencies
b- Values of expected frequencies are inside the parenthesis
c- 2 cells (50.00%) have expected frequencies of less than 5. The minimum expected
frequency is 3.47.
* - significant at 1% alpha;
** - significant at 5% alpha; and
*** - significant at 10% alpha
Value Df Asymptotic sig.
(2-sided)
Exact sig. (2-
sided)
Pearson Chi
square
4.455c 1 0. 035 0.049
Fisher’s exact - - 0.049**
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3. Ownership status (OS) and Awareness on rice bran as a natural ingredient (AW1)
This study hypothesized that the company-respondents’ ownership status has an
association with their awareness on rice bran as a natural ingredient. Specifically, it was
hypothesized that corporation is more aware of rice bran since it has facilities and
research and development department that could provide them updates and information
about innovative products. On the other hand, partnership and sole proprietorship were
not that aware since they might lack on facilities and research and development
department that could update and provide them information regarding new products.
However, the survey results show that Fisher’s exact test yielded a value 1.667
with an exact p-value of 0.578 which was greater than 5% (α=0.05), allowing for the
acceptance of the null hypothesis. Therefore, the company-respondents’ awareness on
rice bran as a natural ingredient is not associated with their ownership status. Simply, OS
and AW1 are independent of each other. It is sufficient to say that the awareness of the
company-respondents on rice bran is not determined by their ownership status.
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Table 11.Cross tabulation analysis of company-respondents’ ownership status and
awareness on rice bran as a natural ingredient, selected areas in CALABARZON,
2012.
Ownership status
Awareness on rice bran as a natural ingredient
Aware
Not aware
Total
Corporation
16a
(16.50)b
3
(2.50)
19
Partnership
3
(3.50)
1
(0.50)
4
Sole proprietorship
Total
7
(6.1)
26
0
(0.90)
4
7
30
a- Values of observed frequencies
b- Values of expected frequencies are inside the parenthesis
c- 4 cells (66.70%) have expected frequencies of less than 5. The minimum expected
frequency is 0.53.
* - significant at 1% alpha;
** - significant at 5% alpha; and
*** - significant at 10% alpha
Value Df Asymptotic sig.
(2-sided)
Exact sig. (2-
sided)
Pearson Chi
square
1.647c 2 0. 439 0.578
Fisher’s exact 1.667 - - 0.578
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4. Ownership status (OS) and awareness on rice bran as potential income generator
(AW2)
It was hypothesized priorly that the company-respondents’ awareness on rice bran
as potential income generator has an association with their ownership status. The
hypotheses between the two variables, OS and AW2 were the same as above (see page
61). However, the survey results show that the Fisher’s exact test it yielded a value of
0.796 with an exact p-value of 0.833, allowing for the acceptance of the null hypothesis.
Thus, the company-respondents’ awareness on rice bran as potential income generator is
not associated with their ownership status. Simply, OS and AW2 are independent of
each other. It is sufficient to say that the awareness of the company-respondents on rice
bran is determined by their ownership statuses.
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Table 12.Cross tabulation analysis of company-respondents’ ownership status and
awareness on rice bran as potential income generator, selected areas in
CALABARZON, 2012.
Ownership status
Awareness on rice bran as potential income generator
Aware
Not aware
Total
Corporation
13 a
(13.90) b
6
(5. 10)
19
Partnership
3
(2.90)
1
(1. 10)
4
Sole proprietorship
Total
6
(5. 10)
22
1
(1.90)
8
7
30
a- Values of observed frequencies
b- Values of expected frequencies are inside the parenthesis
c- 3 cells (50.00%) have expected frequencies of less than 5. The minimum expected
frequency is 1.07.
Value Df Asymptotic sig.
(2-sided)
Exact sig. (2-sided)
Pearson Chi
square
0.789c 2 0. 674 0.833
Fisher’s exact 0.796 - - 0.833
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5. Years of operation (YO) and awareness on rice bran as a natural ingredient (AW1)
This study hypothesized that the company-respondents’ number of years of
business operation (YO) is associated with awareness on rice bran as a natural ingredient
(AW1). Specifically, as the number of years of operation increases, the more that the
company-respondent is aware of rice bran. However, the survey results show that the
Fisher’s exact test yielded a value of 5.473 with an exact p-value of 0.205 which was
greater than 5% (α=0.05), allowing for the acceptance of the null hypothesis. Thus, the
company-respondents’ awareness on rice bran as a natural ingredient is not associated
with their years of operation. Simply, the two variables YO and AW1 are independent of
each other. Then, it is sufficient to say that the company-respondents’ awareness on rice
bran is not determined by their years of operation.
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Table 13. Cross tabulation analysis of company-respondents’ years of operation
and awareness on rice bran as a natural ingredient, selected areas in
CALABARZON, 2012.
Years of operation
Awareness on rice bran as a natural ingredient
Aware
Not aware
Total
1-5 years
10 a
(11.30) b
3
(1.70)
13
6-10 years
10
(8.70)
0
(1. 30)
10
11-15 years
16-20 years
>20 years
Total
4
(3.50)
1
(1.70)
1
(0.90)
26
0
(0.50)
1
(0.30)
0
(0.10)
4
4
2
1
30
Value Df Asymptotic sig.
(2-sided)
Exact sig. (2-
sided)
Pearson Chi
square
5.703c 4 0.222 0.250
Fisher’s exact 5.473 - - 0.205
a- Values of observed frequencies
b- Values of expected frequencies are inside the parenthesis
c- 8 cells (80.00%) have expected frequencies of less than 5. The minimum expected
frequency is 0.13.
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6. Years of operation (YO) and awareness on rice bran as potential income generator
(AW2)
This study hypothesized that the company-respondents’ years of operation has an
association with their years of operation. The specific hypotheses between YO and AW2
were the same as mentioned above (see page 65). However, the survey results show that
the Fisher’s exact yielded a value of 2.325 with an exact p-value of 0.770, allowing for
the acceptance of the null hypothesis. Therefore, the company-respondents’ awareness on
rice bran as potential income generator is not associated with their years of operation.
Simply, YO and AW2 are independent of each other. It is sufficient to say that the
company-respondents’ years of operation do not determine their awareness on rice bran.
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Table 14. Cross tabulation analysis of company-respondents’ years of operation
and awareness on rice bran as potential income generator, selected areas in
CALABARZON, 2012.
Years of operation
Awareness on rice bran as potential income generator
Aware
Not aware
Total
1-5 years
10 a
(9.50) b
3
(3.50)
13
6-10 years
7
(7.30)
3
(2.70)
10
11-15 years
16-20 years
>20 years
Total
2
(2.90)
2
(1.50)
1
(0.70)
22
2
(1.10)
0
(0.50)
0
(0.30)
8
4
2
1
30
Value Df Asymptotic sig.
(2-sided)
Exact sig. (2-
sided)
Pearson Chi
square
2.347a 4 0.672 0.770
Fisher’s exact 2.325 - - 0.770
a- Values of observed frequencies
b- Values of expected frequencies are inside the parenthesis
c- 8 cells (80.00%) have expected frequencies of less than 5. The minimum expected
frequency is 0.27.
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Indeed, given the results above between the different variables, it can be
concluded that the only variables to be associated with the company-respondents’ plan to
venture in rice bran utilization (VENTURE) are their awareness on rice bran as a natural
ingredient (AW1) and awareness on rice bran as potential income generator (AW2). The
results of the survey regarding AW, AW2 and VENTURE, were close to what was
expected. It was confirmed that the company-respondents will venture in rice bran
utilization because of profit motive. Moreover, the profit-motive in this study is reflected
by the company-respondents’ awareness on rice bran as potential income generator. The
results of the survey regarding OS, YO, and awareness on rice bran, were far from what
was expected. Wherein, it is sufficient to conclude basing from the non-parametrical
statistical test(s), that ownership status (OS) and years of operation (YO) are not
associated or with awareness on rice bran as a natural ingredient and as potential income
generator.
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PROBLEMS ENCOUNTERED
The local natural ingredient manufacturers encountered a host of problems, to include
among are the following:
Lack of information regarding prices, forms of rice bran, and extractable
products from rice bran
Based on the survey, majority of the company-respondents mentioned the
lack of accessibility of price information on different products that can be
extracted from rice bran, especially rice bran oil.7As a matter of fact, few
government institutions are allowing for the access regarding the information on
rice bran and its prices. These institutions include Department of Agriculture and
other public sectors.
Lack of available technology on stabilization and extraction of oil from rice bran
Three of the company-respondents admitted that there was lack of
technology to utilize rice bran.7Only Thailand, a major rice and rice bran oil-
exporting country, has efficient technology in rice bran utilization. The
government of Thailand subsidizes Thailand’s rice and rice bran oil production.
On the other hand, the Philippines, which only started to discover the wonder of
rice bran oil, has no means to avail the efficient technology in rice bran
utilization.
Costly investment on the technology for rice bran utilization
7Statistics were based on the survey and the problems were raised and opened up by the
company-respondents. Not all of the company-respondents stated and mentioned problems
regarding rice bran utilization.
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Three of the company-respondents stated that investment on technology
for rice bran utilization is costly.8
Since the technology has been introduced just recently in the country, the
costs involved may be relatively higher compared to Thailand and India.
Moreover, these countries invested on a costly technology in rice bran utilization
but through time, it pays them to have the technology, especially in specializing in
production of rice bran oil.
Uncoordinated arrangement between rice bran sources (farmers/ rice millers)
and local natural ingredient manufacturers, who are the potential users of rice
bran as a natural ingredient.
Based on the survey and the summit on natural ingredients, six of the
company-respondents opened up their foreseen and experienced problem in the
natural ingredient industry that could also be found in rice bran utilization and this
is the unreliability of the producers.8
The usual problem in the Philippines is the lack of trust of the local natural
ingredient manufacturers to the local producers, who are the farmers and rice
millers. Manufacturers stated that the producers become unreliable in terms of
supplying rice bran. Some of these producers are only after profit and not after
quality.
8Statistics were based on the survey and the problems were raised and opened up by the
company-respondents. Not all of the company-respondents stated and mentioned problems
regarding rice bran utilization.
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5
Consumers’ perception on rice bran which is only for feeds makes the local
natural ingredient manufacturers and also the consumers hesitant on using/
utilizing the product for human consumption/ human use.
Half (50%) of the company-respondents raised their thoughts regarding
rice bran. 9Specifically, they said that consumers are bombarded with their
perception that rice bran are only for animal consumption. However, as science
and technology evolves, things innovate and things differ. It is hard for several to
accept that rice bran can also be consumed by humans.
Lack of public or government-funded and private funded studies on the economic
uses and value of rice bran.
Different pieces of information are needed to determine the market
potential of rice bran as a natural ingredient. However, there are only few local
studiesthat were done to understand better the economic importance of rice bran.
In turn, many remain undecided whether to venture or not.
9Statistics were based on the survey and the problems were raised and opened up by the
company-respondents. Not all of the company-respondents stated and mentioned problems
regarding rice bran utilization.
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5
SUMMARY AND CONCLUSION
This study was conducted in order to determine the market potential of rice bran
as an ingredient to natural products of selected manufacturers in selected areas in
CALABARZON. Specifically, it aimed to: (1) identify the major physical and business
attributes of rice bran that the local natural ingredient manufacturers consider; (2) identify
the sourcing practices that the selected local natural ingredient manufacturers are willing
to undertake; (3) determine the marketing arrangements that the selected local natural
ingredient manufacturers are willing to engage in; (4) to estimate the willingness to pay
(WTP) of selected local natural ingredient manufacturers towards the different forms of
rice bran; and (5) recommend measures that can harness the market potential of rice bran
as a natural ingredient.
To meet the objectives, a total of 30 local natural ingredient company-respondents
were interviewed. Results of the interview revealed the following: (1) while six for every
10 respondents belonged to corporations, two were sole proprietors and the rest operated
a business partnership with others; (2) their years of operation ranged from 1 to 23 years,
with an approximately 8 years of operation; (3) companies who have 1-5 years of
business operation comprised 43.30% of them, companies with 6-10 years of operation
comprised 33.30% of them, companies with 11-15 years, 16-20 years and greater than 20
years of operation comprised 13.30%, 6.70% and 3.30% of them, respectively; (4)
companies have varying nature of business and some were specializing on one product
while others have diversified mode of production wherein, they were into several nature
of businesses. The company-respondents have provided multiple responses regarding
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5
their nature of business. Furthermore, a huge percentage of production in the herbal
industry can be accounted for the nutraceutical industry, a blooming industry in the
Philippines; (5) among the company-respondents, 18 of them were into nutraceuticals, 12
were into cosmetics, 10 of them were into essential and massage oil production, 8 of
them were into pharmaceuticals, and 4 of them were into spirulina and organic rice
production; while only 1 of them was into food additive/ fortificants/ enhancers
production; and (6) not all of the surveyed companies were members of Chamber of
Herbal Industries of the Philippines, Inc. (CHIPI) since 73.33% of them were CHIPI-
members and the remaining 26.67% were non-CHIPI members. Moreover, CHIPI
members have several advantages than non-CHIPI members and these were the trainings,
seminars, conventions, and even connections provided by the organization in exchange of
an annual fee and cooperation.
Companies who have plan of venturing into rice bran utilization comprised
56.67% of them.Some companies who have plan to venture in rice bran utilization have
diversified mode of production, specifically, out 17 companies, 64.71% comprised them.
Companies who were aware of rice bran as a natural ingredient comprised of
86.70%; while companies who were not aware of it comprised 13.30% of them.
Moreover, awareness on rice bran as potential income generator was also determined.
Companies who were aware of rice bran as potential income generator comprised 73.30%
of them.
The marketability and acceptability of rice bran as a natural ingredient was
assessed by considering the different physical and business. For physical attributes,
nutritive value was the most considered attribute with an average rank of 1.17. It was
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5
seconded by color, scent and purity with an average rank of 1.80; while storage ability
was third with average rank of 2.07. For business attributes, the most considered attribute
was price with an average rank of 1.28. It was followed by assurance of supply with an
average rank of 1.43, and accessibility with an average rank of 1.90. The least of the
business attribute was government regulations and policies with an average rank of 2.64.
The company-respondents provided the value that they are willing to give pay in
order to use different forms of rice bran. It was observed that refined rice bran oil was
highly valued, having the highest minimum and maximum WTP of Php286.00/kg and
Php607.40/kg, respectively. It was followed by crude rice bran oil with minimum and
maximum WTP of Php56.88/kg and Php83.33/kg, respectively; stabilized rice bran with
minimum and maximum WTP of Php9.20/kg and Php12.88/kg, respectively; and raw rice
bran with minimum and maximum WTP of Php4.29/kg and Php6.00/kg, respectively.
The minimum and maximum WTP of the company-respondents deviated with their mean
at a range of only2.21-2.53 for raw rice bran, and 28.65-28.75 for crude rice bran oil;
while for stabilized rice bran and refined rice bran oil, minimum and maximum WTP
deviated widely at a range of 3.22-5.49 and 128.94-438.21, respectively. It can be
observed that refined rice bran oil was widely deviated from the mean, accounting that
the several of the company-respondents have no enough knowledge of the price(s) of
refined rice bran oil. The company-respondents’ WTP values suggest that refined rice
bran oil has the highest market potential, yielding the highest minimum and maximum
WTP values of Php286.00/kg and Php607.40/kg, respectively.
Companies have varying choices of the forms of rice bran to use. Based on the
survey, 66.67% of the companies found that stabilized rice bran (SRB)was acceptable to
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be used; while63.33% of the companies found that refined rice bran oil was acceptable to
be used. Fifty percent of them found that crude rice bran oil was acceptable to be used
and the other 46.67% found that raw rice bran was acceptable to be used.
Companies have different preferences regarding sourcing practices in rice bran
utilization. Companies who preferred to source locally from producers comprised 76.67%
of the; while companies who preferred to import rice bran comprised 16.67% of them.
Companies who preferred to practice a combination of the two prior practices comprised
only 7.00% of them. Still, majority (76.67%) of them wanted to help local producers of
rice bran in the country. Companies who resorted to import rice bran expected to have
uninsured supply and/ or unreliable sources in the country. Different marketing
arrangements in rice bran utilization were provided to the local natural ingredient
manufacturers. Every company-respondent has different choice of marketing
arrangement. Companies who preferred to have longer contract with local rice bran
producers comprised 53.33% of them; while companies who preferred to produce own
supply of inputs comprised 33.33% of them. Moreover, companies who preferred to
produce own supply of inputs, process and distribute goods comprised 13.33% of them.
For the companies that preferred for longer contract with local producers of rice bran,
they aim to help local producers regarding income generation and at the same time to cut
down costs of production.
There is a need to determine the demand of rice bran in the future, specifically in
the next 5-10 years. This is also needed to assess the market potential of rice bran as a
natural ingredient in the Philippines. All of the respondents believed that the demand for
rice bran will keep on growing in the future. Almost five percent of them anticipated that
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rice bran will grow less than 5% in the next 5-10 years; while 29.30% of them anticipated
that rice bran will grow 5-10%. Others were more aggressive with their forecast, seeing
that17.10% of them see that rice bran will grow 11-15% in the next 5-10 years, 12.20%
of them see that rice bran will grow 16-20% in the next 5-10 years, and 7.30% of them
see that rice bran will grow higher than 20% in the next 5-10 years. The optimistic
estimates of the foreseen demand growth of rice bran encourage further and continuous
production and utilization of rice bran in the natural ingredient sector of the society.
Cross tabulation analysis, Pearson chi square test of independence and Fisher’s
exact test of independence were conducted to determine any association between
ownership status (OS) and awareness levels (AW1 and AW2) and years of operation
(YO) and awareness levels (AW1 and AW2). The analysis was also made to determine if
there were difference on the choices among the different ownership status and years of
operation. Based on the results, the company-respondents’ plan to venture on rice bran
utilization is dependent on their awareness on rice bran as a natural ingredient and as
potential income generator.
The Fisher’s exact test revealed that the company-respondents’ ownership status
and years of operation have nothing to do with their awareness on rice bran as a natural
ingredient and as potential income generator.
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With the furnished data on the market potential of rice bran, it can be concluded
that rice bran has the market potential since many of the respondents have plan to venture
in rice bran utilization in the near future. Also, a rough forecast was made, seeing that
many manufacturers and individuals will be interested In rice bran. Nevertheless, the
market potential of rice bran is still in risk if the following constraints and problems
regarding technology and information will not be resolved. Moreover, with respect to the
attributes of rice bran, the producers and manufacturers should focus with the main
considerations that could make their way to successful utilization of rice bran.
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RECOMMENDATIONS
Public information sites and Awareness program regarding rice bran
Since the government wants to emphasize the economic use of rice bran, it would
be better to establish a public website solely for the information regarding rice bran. This
kind of information scheme will benefit the producers of rice bran, the local natural
ingredient manufacturers and other entities that are interested with it. Moreover, this kind
of strategic plan could promote the physical and business attributes of rice bran.
Furthermore, it is suggested that membership in the website will be implemented in order
to determine and track the following entities who have interest in rice bran utilization. In
order to have unlimited access of the website, the interested groups/individual must sign
in the information sheet which requires for their primary profile. Furthermore the content
of the website could dwell with information such as different forms or grades of rice
bran, current prices of rice bran, supply of rice bran, products extracted from rice bran,
products made of rice bran, nutritive value of rice bran, technology in utilizing rice bran,
etc. Also, this kind of information scheme could aid the government with its aim to
promote natural ingredients and biotechnology. This kind of strategy may entail costs but
this could bind the government and the private sector towards one goal, which is to
promote natural ingredients, including rice bran in the country.
After the strategic information scheme, the government in cooperation with the
private sector, specifically, natural ingredient sector, could conduct a series of seminar
regarding awareness on rice bran and rice bran utilization. The seminars could obtain the
insights and perceptions of the participants regarding rice bran and its utilization.
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Enhancing facilities for rice bran
In preparation for utilizing rice bran, its attributes namely, color, scent and purity,
nutritive value and storage ability must be enhanced. This could only be possible if the
producers/ suppliers of rice bran have appropriate and enhanced storage and
transportation facilities. Having an enhanced storage and transportation facilities could
make way for a better quality of rice bran. This recommendation is most important to
secure the nutritive value of rice bran through proper storage. Proper storage of rice bran
lessens the occurrence of rancidity. With this, the major quality of rice bran is being
prolonged. In order to have a premium quality of rice bran, the producers must invest on
enhanced storage and transportation facilities. However, if producers cannot provide the
facilities solely, the government must aid them to do so.
Government initiative and private sector’s funding and commercialization
In order to have the means for the technology for rice bran utilization such as
stabilizing facilities, extracting facilities and dryers, the government is encouraged to
make an initiative for the research and development (RND) of rice bran and rice bran
utilization. The government is suggested to fund studies and researches regarding rice
bran in order to have a glimpse of what is in store for them. Also, RND is barely needed
in order for the private sector, specifically the natural ingredient industry, to decide on
whether to venture on rice bran utilization. With enough RND initiated by the
government, it will be the private sector’s turn to do the action towards the findings
regarding the potential of rice bran and rice bran utilization. As long as there is an
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opportunity for them to gain profit from rice bran utilization, the private sector could
partly fund the technology for it. Furthermore, if the RND and technology becomes
successful as it initially take off, the private sector could commercialize the technology
for utilizing rice bran and other interested groups will be encouraged to venture in this
kind of business.
Tax incentives
In order to have the means for the technology for utilizing rice bran such as
stabilizing facilities, extracting facilities and dryers, the government could offer tax
incentives for the private entities that will be investing and pioneering on the said
technology. Specifically, a tax holiday could be done in order to encourage the natural
ingredient manufacturers in investing for the technology for rice bran utilization.
Technology is a must weapon for successful production. This kind of government tax
incentive(s) could alleviate the costs or burden for the interested group of local natural
ingredient manufacturers.
Contract arrangement
One of the problems in utilizing rice bran is the unorganized arrangement between
local producers of rice bran and local natural ingredient manufacturers. In order to
resolve this problem, local producers of rice bran and local natural ingredient
manufacturers could embark into a contract arrangement in supplying rice bran. With
this, the quality standards can be considered by the producers since in contract
arrangement, the manufacturer sets specified quality standards in a certain amount of
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money that the two parties would agree on. A failure of meeting the standards set by the
manufacturers would be a loss incurred by the producers. Furthermore, this kind of
arrangement between producers and manufacturers could establish consistency with the
quality of rice bran. However, for this kind of marketing arrangement to happen, there
must be a stable rice bran supply and the producers must have the capacity to meet the
manufacturers’ standards.
Further studies on the economic aspect of rice bran utilization
Studies regarding the technical aspect, specifically the nutritional information of
rice bran are found to be numerous. However, there are only few studies which pertain to
the economic side of rice bran utilization. With the government’s goal of assessing the
real market potential of rice bran in the country, further studies is proposed to be
conducted in cooperation with the potential companies who desire to utilize rice bran.
Thorough surveys and research is indeed needed in assessing the fate of rice bran
utilization in the country. This could also benefit the government in terms of prioritizing
programs in agriculture. If studies would conclude that rice bran for human consumption
in the Philippines has no market potential, then the government will have a glimpse of the
reality. It will not risk allocating budget on rice bran utilization.
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Yoshizaki, S., 2002. Report on the Local Survey on Rice Distribution and Management
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APPENDIX A.
SURVEY QUESTIONNAIRE
UNIVERSITY OF THE PHILIPPINES LOS BANOS
College of Economics and Management
College, Laguna
MARKET POTENTIAL OF RICE BRAN AS
AN INGREDIENT TO NATURAL PRODUCTS OF SELECTED
MANUFACTURERS IN SELECTED AREAS IN CALABARZON, 2012
Disclaimer: All the information that will be provided by the company-respondents will be treated
with great confidentiality and for academic purposes only.
Note: Kindly furnish thequestionnaire completely. Please provide specific answers to the blanks
provided and check on the choices given for each question.
I. Plan to Venture
1. Knowing that rice bran is a natural ingredient and has the potential to be income-
generating, are you planning to venture into rice bran utilization?
( ) YES ( ) NO
2. Are you planning to venture into rice bran utilization in the next 5-10 years?
( ) YES ( ) NO
II. Awareness on Rice Bran
1. Are you aware that rice bran is a natural ingredient? ( ) YES ( ) NO
2. Are you aware that rice bran has potential to be income ( ) YES ( ) NO
generating?
III. Physical and Business Attributes of Rice Bran
Interview Schedule No. _____
Date: ____________________
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1. What are the important attributes that you consider for your rice bran? Based from your
preference, kindly rate the given attributes below with 1 as most important attribute and 5
as the least important one.
Attributes Rating
Physical
Color, Scent and Purity
Nutritive Value
Storage Ability
Business
Accessibility
Price
Assured Supply
Government support and policies
III. Acceptability of the Different Forms of Rice Bran
1. Which of the following forms of rice bran is acceptable to be used in your future
natural ingredient production?
*Kindly check on the following choices. You can select more than one answer.
( ) Raw (Fresh Rice Bran) ( ) Crude Rice Bran Oil
( ) Stabilized Rice Bran (SRB) ( ) Refined Rice Bran Oil
2. For the rice bran forms you did not choose in question no. 1 of III, what are the possible
reasons why you find them not acceptable to be used in your future natural ingredient
production?
________________________________________________________________
________________________________________________________________
________________________________________________________________
IV. Willingness to Pay on the Different Forms of Rice Bran
1. Without having prior information and guide on the market prices of the different
forms of rice bran, kindly indicate the minimum and maximum amount that you would be
able and willing to pay (WTP) for a kilogram of the different forms of rice bran.
Forms of Rice Bran
Minimum WTP
(Php/kg or L)
Maximum WTP
(Php/kg or L)
Raw (Fresh) Rice Bran
Stabilized Rice Bran (SRB)
Crude Rice Bran Oil
Refined Rice Bran Oil
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V. Sourcing Practices and Marketing Arrangements in Rice Bran Utilization
1. Which of the following sourcing practices do you prefer to practice in rice bran
utilization? ( ) Import ( ) Buy from local producers ( ) Both
Why do you think so? ______________________________________________
2. Which of the following marketing arrangements do you prefer to engage in rice
bran utilization?
( ) Long contract with local rice bran producers
( ) Production of own supply of inputs
( ) Production of own supply of inputs, processing and distribution of
manufactured good
VI. Perceived Demand Growth of Rice Bran
1. Based on your experience/ knowledge of the pharmaceuticals, nutraceuticals,
cosmetics and food industries, how do you assess the growth of demand for the
rice bran in the next 5 years?
( ) will remain the same ( ) will increase by ≤5%
( ) will increase by 6-10% ( ) will increase by 11-15%
( ) will increase by 16-20% ( ) will increase by ≥20%
( ) will decrease
2. What could be the limiting factor(s) for the production and growth of the demand of rice
bran? (Please Check)
Limiting Factor/s
Forms of Rice Bran
Raw
(fresh)
Stabilized
rice bran
Rice
bran
oil
(crude)
Rice bran oil
(refined)
Others, please
specify
Production
Quality and purity
concerns
Unstable ingredient
supply
Unreliable producers
of raw materials
Lack of affordable
technology solutions
Others, please specify
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VII. Problems Encountered in Rice Bran
1. What are the current problems that you encountered in the utilization of rice bran?
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
VIII. Company Profile
1. Name of the Company: ______________________________________
2. Contact Number:___________________________________________
3. Email address: _____________________________________________
4. Years of operation _____________
5. Nature of the Company (Please Check)
( ) Cosmetics (soap, lotion & other personal care products)
( ) Pharmaceuticals (medicines and health benefits products derived from
chemicals)
( ) Nutraceuticals (dietary supplements with medical benefits derived from
food such as citrus, turmeric)
( ) Food additive/ Fortificants (ingredients for sausages, hotdogs, patties, etc.)
( ) Cooking oils (vegetable oil, rice bran cooking oil, etc)
( ) Essential and Massage Oils (citronella oil, pili oil, etc)
( ) Others, please specify: ___________________________________
7. Places of Operation
( ) Within the province/city/town ( ) Abroad
( ) Outside the province/city/town
8. Ownership Status_______________________________
9. Estimated No. of workers ________________________
10. Is your company a member of CHIPI? ( ) Yes ( ) No
If yes, please include the date of membership (optional) ______________
THANK YOU FOR YOUR COOPERATION & GOD BLESS!
Abigaile Lynne Emradura Aguila
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