Feasibility Study of Establishing a Coconut Shell-Based Activated Carbon Plant in Tayabas, Quezon, Philippines

Date

5-2024

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Maria Noriza Q. Herrera

Committee Member

Gemma U. Reyes, Ma. Teresa A. Acda, Melodee Marciana E. De Castro

Abstract

The Philippines is a significant producer and exporter of coconut shell-based activated carbon and charcoal. As a byproduct of the coconut industry, activated carbon production from coconut shells maximizes the use of the raw material by converting it into a useful product to what would otherwise be discarded, leading to more efficient resource utilization. According to Markets and Markets, the industry is growing at a CAGR of 9.8% and is expected to be worth USD 8.4 billion in 2030. In 2022, the Philippines had a total net trade of USD 151 million in the activated carbon industry alone with Germany, Japan, the USA, China, and South Korea as the major destinations.

The intended market for the proposed product encompasses entities involved in water treatment and purification. Based on conducted market research, the demand for CSAC in the CALABARZON Region is estimated at 3,750 kilograms per month. Most respondents are inclined to purchase the product within the price range of PHP 100 to PHP 125 per kilo or PHP 2,500 to PHP 3,125 per sack, aligning closely with the prevailing market price range of PHP 80 to PHP 200. Agro-manufacturing industries could also be a potential target market for this project.

The production process of CSAC is a complex operation that involves several meticulous steps. The sourcing of raw materials can be conducted locally, while the necessary machinery will be imported from China, a leading supplier of equipment for the activated carbon industry. The business will operate from Monday to Friday, with an eight-hour workday. The direct labor required for CSAC production will include a supervisor responsible for overseeing the entire production process, a mechanical engineer in charge of ensuring the optimal functioning of the plant's equipment, a chemical engineer tasked with conducting various tests to ensure product quality, and laborers responsible for assisting the machinery in the plant. The business will have a total of nine (9) employees, including five (5) regular workers, and the remaining four (4) workers who will be required to report to work following their respective schedules.

Furthermore, the sensitivity analysis revealed that the project is unviable across all three scenarios. In the Base Scenario, the net present value (NPV) is calculated at PHP -2,711,345.64 with an internal rate of return (IRR) of 12.15% and an estimated payback period of 5.626 years. In Scenario 1, the NPV and IRR are PHP -1,941,433 and 18.18% respectively, with a projected payback period of 4.99 years. Conversely, Scenario 2 yields an NPV of PHP -4,162,670.66 and an IRR of -2.03%, resulting in a lengthy payback period of 11.054 years while Scenario 3 yielded an NPV of PHP -5,963,900.55.

Upon completing an extensive analysis of the four business functions, it has been determined that establishing a coconut shell-based activated carbon processing plant in Tayabas, Quezon, Philippines is not currently feasible. Despite the potential benefits that the project could bring, several significant concerns need to be addressed before pursuing this project.

One of the major concerns is the inconsistent supply of coconut shells. Sourcing these shells from the vicinity of the plant site could prove to be challenging and unreliable. Fluctuating raw material prices may also present an issue. Furthermore, the necessary skills for operating the processing plant machinery would require training, which is presently unavailable in the Philippines due to the equipment's origin in China.

Strong market competition is a significant concern for the proposed project. Existing CSAC manufacturers currently hold a significant market share, placing small-scale processors at a distinct disadvantage and making it difficult for them to thrive in this competitive landscape. In addition, the projected demand for the project does not demonstrate the ability to cover the associated manufacturing costs according to the break-even analysis.

Furthermore, the proposed project necessitates a substantial investment, posing a challenge for potential entrants into the industry. The high costs of equipment, materials, and labor could present significant barriers to financing the project, particularly for small-scale entrepreneurs with limited access to necessary resources.

Given these factors, it can be concluded that establishing a coconut shell-based activated carbon processing plant in Tayabas, Quezon, Philippines is not feasible.

Language

English

LC Subject

Coconut Product

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2024 M17 A74

Notes

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Document Type

Thesis

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