Commercialization of UPLB-DA Bar Onion Leaves Product: Market and Financial Viability of the Onion Leaves Powder

Date

1-2022

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Glenn Navarra Baticados

Committee Member

Glenn Navarra Baticados, Jewel Joanna S. Cabardo, Marjorie S. Florentino

Abstract

Even though the Philippines is considered an agricultural country, the fact the Filipino farmers often face unsecure income cannot be denied. Given the disproportionate amount of risk and barriers smallholder farmers face, it is imperative for these agricultural workers to secure an alternative source of livelihood. The changing climate that brings about larger number of pests and irregular weather patterns coupled with adverse market practices such as importation only cause these issues to escalate. One such crop greatly affected by these conditions is the onion.

Onion (Allium cepa L.) is one of the most indispensable crops in the Philippines and a valuable ingredient in the Filipino cuisine. It is a major crop produced by Central Luzon with Nueva Ecija as the top producing province. The crop has a one-cycle harvest every year which happens around January to April. After harvesting, the crop’s roots and leaves a trimmed and these are commonly left in the fields and end up as waste products. Through the collaboration of the Department of Agriculture and the University of the Philippines Los Banos in a project led by Dr. Myra Borines, a Professional Chemical Engineer and a Professor of the Chemical Engineering Department at the University of the Philippines Los Baños, various applications of waste onion leaves were developed with the aim of increasing the income of onion farmers. Among the 5 packages of technologies (POTs) that were created from the project, the onion leaves powder was deemed most suitable to be transferred to the target farmers’ cooperatives located in Nueva Ecija, the KALASAG Farmers Producers Cooperative and the New Magilas Primary Multipurpose Cooperative.

The technology was assessed following the Quicklook® Methodology. The onion leaves powder is made from onion leaves which are dehydrated and pulverized in contrast to onion powder which is manufactured using the onion bulb. The product has several applications. It can be used as a seasoning for different kinds of dishes or as an ingredient for spice mixes, sauces, soups, and salad dressing. It can also be further processed to be used as an ingredient for noodles, bread, and snacks. The technology is seen to mitigate the environmental impact caused by phytopathogens (plant pathogens) the easily proliferate in the “waste” onion leaves and provide economic benefit to farmers. Ultimately, the onion leaves powder has the potential to boost the competitiveness of the country’s onion Industry.

The onion leaves powder is still undergoing additional tests to come up with the optimized version of the product. These experiments aim to verify the product’s shelf life, enhance its blending properties and determine its ideal storage condition. The product will apply for an intellectual property (IP) registration as a utility model since the product lacks an “inventive step” which is necessary for registration as a patent. The onion leaves powder offers a high-quality and low cost food product that can be procured through a short and efficient B2B supply chain.

Production of the onion leaves powder follows a simple process. The onion leaves are collected on the same day that the bulbs are harvested. Once the bulbs are harvested, cut, and packaged, the onion leaves that were cut from the bulb are sorted, and transported to a processing facility. The sorted onion leaves are then washed and cut once again into smaller sizes. Afterwards, these are processed in a dehydrator/dyer which removes the moisture content of the leaves. The percentage yield from drying is 8.11% which significantly reduces the volume of onion leaves that can be produced. The dried onion leaves are then powdered and finally packaged for selling.

The main challenges in the production of the onion leaves powder are quality of leaves (directly affected by the level of armyworm infestation) and the capacity of the dryer/dehydrator, as the equipment’s current projected capacity is 14 kg of fresh onion leaves every 9 hours. The dryer used for onion leaves production was designed by Engr. Jose D. De Ramos. Similar models are already being used for the processing of other crops such as turmeric. Lastly, the main constraint of production is the capacity of the dryer/dehydrator, as the equipment’s current projected capacity is 14 kg every 9 hours. This is a staggering difference when compared to the projected amount of available raw materials which is 4,483 kg per hectare, with each cooperative having around 40 hectares of onion plantation. Several strategies to deal with these constraints were determined and considered, including storing the onion leaves in a cold storage or onion hanger to prolong its freshness, and increasing the capacity of the dryer by doubling the batches of onion leaves processed per day.

Market interest for the product was verified through key informant interviews with representatives from companies including the CTCGroup Philippines, an international ingredients-sourcing company and Molinos de la Especia Inc., a spice house based in Cebu, Philippines. Both companies expressed significant interest in the product, with representatives from the CTCGroup stating that the product “has potential” and expressing intent in forming a partnership with the farmer cooperatives. Molinos on the other hand is keen on marketing locally sourced products and supporting local farmers and stated that the onion leaves powder can be easily incorporated into their all-spice mix powder. CTCGroup has yet to test the product to determine how it can be best marketed. It was also noted that a steady supply of the product must be ensured in order to be able to cater to the demands of B2B customers. FDA registration and a certificate of analysis from an accredited laboratory are also necessary.

Financial viability of the commercial production of the onion leaves powder was determined through projected income and cash flow statements and financial analyses. Two cases were examined: Case A which caters to the wholesale market and Case B which caters to the cooperative market. In both cases, varying numbers of units and types of dehydrator were considered. From the results of the financial analysis, an LPG-powered dehydrator is better than an electric dehydrator especially in terms of production cost. In addition, it would initially be best for the target cooperatives to focus on the cooperative market as this is the most feasible option as of present. For Case A or the wholesale market,

the scenario with the best outcome was scenario 8 with an NPV of PHP 4,430,202 and an IRR or 35% while for Case B or the cooperative market, the scenario that showed the best results was scenario 4 with and NPV PHP 441,327 and an IRR of 21%.

Overall, the onion leaves powder is worthy of further development and commercialization, based not only on its perceived financial benefit but also on the overall economic benefit that the product might generate. Aside from generating additional income for the cooperative from sale of the onion leaves powder, it also provides livelihood opportunities brought about by the increase in demand for labor due to production activities and an additional income of PHP 31,381 can be earned added to the PHP 100,000 typically earned per hectare from onion farming. Lastly, potential community-based partnerships between

the industry and the farmers cooperatives will prove to be beneficial in the future. In addition to all of these, the onion leaves powder has the potential to boost the competitiveness of the onion industry and minimize agricultural waste and postharvest losses in onion farming.

Language

English

LC Subject

Marketing, Farm produce

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2022 M17 B45

Document Type

Thesis

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