A Feasibility Study of Establishing a Cocoyam (Xanthosoma Sagittifolium) Plantation in Brgy. Sumucab Cavinti, Laguna

Date

5-2024

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Arlene C. Gutierrez

Committee Member

Eliza C. Aquino, Fitz D. Jimenez, Camille Anne E. Mendoza, Melodee Marciana E. De Castro

Restrictions

Restricted: Not available to the general public and for consultation with the author/thesis adviser. Access is available only to those bound by the confidentiality agreement.

Abstract

Cocoyam (Xanthosoma sagittifolium) is experiencing a surge in popularity within the Philippine food processing sector. This trend is evident in the emergence of various processed cocoyam products, including chips, frozen goods, delicacies, and flour. The growing consumer interest in cocoyam can likely be attributed to its economic affordability and potential health benefits.

Although Laguna province produced 385.31 metric tons of cocoyam in 2023, current supply levels remain inadequate for processors and buyers. To address this shortfall, they source cocoyam from regions like Mindanao and Manila, known hubs for cocoyam and agricultural produce. This situation presents a compelling opportunity for Laguna-based farmers, particularly those interested in crop diversification, to venture into cocoyam production. By capitalizing on the rising demand and potential economic benefits, Laguna farmers can contribute to bridging the supply gap within the Philippine cocoyam processing industry.

This study investigates the feasibility of establishing a 1.5-hectare cocoyam plantation in Barangay Sumucab, Cavinti, Laguna. The study's primary objectives are to analyze the proposed business through assessing the market, production, organizational, and financial viability, identify challenges associated with the project implementation, and to create recommendations.

A descriptive research design was employed to comprehensively assess the project's feasibility. This approach involved the collection of data to describe the characteristics and potential of establishing a 1.5-hectare cocoyam plantation in Brgy. Sumucab, Cavinti, Laguna. Primary and Secondary data were used in this study. Primary data collection involved gathering firsthand information through interviews and communication with key informants. These key informants likely included individuals with experience or expertise in cocoyam production, agricultural management, or the local market landscape. Their insights were essential for understanding the practical considerations and potential challenges associated with the project. Secondary data collection involved the use of existing data sources to supplement the primary data. Relevant information was obtained from government agencies, published articles, agricultural books and manuals, reputable internet websites, and academic theses. By incorporating this secondary data, the study was able to leverage established knowledge and data related to cocoyam production and the broader agricultural sector.

The proposed cocoyam plantation will operate as a subsidiary of A. Nocon Realty and Development Corporation, marking their initial venture into the agricultural sector (agriventure). The corporation holds ownership of the 1.5-hectare project site, conveniently located in Cavinti, Laguna, approximately 1 hour and 30 minutes from the company's office in Los Banos.

Global Food Solutions, a recognized processor and exporter of cocoyam products, has been identified as the primary target market. This established buyer demonstrates consistent demand that exceeds the anticipated production capacity of the proposed project. To capitalize on this opportunity, the project's pricing strategy will be directly aligned with Global Food Solutions' prevailing market rates.

The project will utilize 15,000 cocoyam setts as planting materials for the designated 1.5 hectares of land. A staggered planting approach will be implemented to ensure a continuous weekly supply of produce. To support these operations, a 20-square meter infrastructure will be constructed to serve as an office, cleaning area for the harvested corm, and storage facility for the tools and equipment. Cocoyam corms will reach maturity for harvest approximately 7 months after planting. August has been identified as the optimal planting window due to the scheduled delivery of planting materials and the ideal rainfall patterns in Cavinti during this period, which promote optimal cocoyam growth. The first harvest is anticipated in February 2025. Following harvest, the cocoyam corms will

undergo a thorough cleaning and sorting process before immediate transportation to Global Food Solutions. Weekly deliveries will be implemented to ensure product freshness. The projected yield per cropping cycle is approximately 15,000 kilograms of cocoyam corms. Translated into weekly harvests, this translates to an anticipated 536 kilograms. While this falls short of Global Food Solutions' weekly demand of 2,000 kilograms, it presents a strong foundation for establishing a reliable supplier relationship and potential for future production expansion.

The project's initial investment is estimated at PhP 578,995, encompassing both working capital (PhP 383,495) and fixed asset investments (PhP 195,500). Four scenarios were developed to evaluate the project's performance under various market conditions. Base scenario assumes constant pricing for inputs and outputs throughout the project's lifespan. Under these conditions, the project is expected to generate a Net Present Value (NPV) of PhP 205,755.28, an Internal Rate of Return (IRR) of 15%, and a Payback Period (PP) of 5.271 years. Scenario 1 incorporates potential inflation rates and a 8% decrease in price of cocoyam. Despite the projected sales decline, the consideration of inflation in output prices leads to a higher NPV (PhP 937,355.73) and IRR (27%) compared to the base scenario. The Payback Period remains favorable at 4.53 years. Scenario 2 assumes a 12% decrease in the selling price of cocoyams and 5% decrease in yield, resulting in a decline in total sales. Consequently, the project's NPV (PhP 535,752.67) and IRR (20%) are higher than the base scenario. However, the Payback Period (5.59 years) in Scenario 2 is slightly extended. Scenario 3 explores a substantial price reduction of 20% and greater yield reduction of 8% due to pests, diseases, mishandling and other factors affecting the production. While the project remains feasible with an NPV (PhP 32,201.29) and IRR (10%) exceeding the assumed cost of capital (9.5%), the Payback Period (7.50 years) is the longest among the scenarios. Further price reductions beyond 20% with yield reduction beyond 8% would likely render the project to be financially infeasible.

The financial analysis indicates that the proposed cocoyam plantation project is feasible under three of the four scenarios considered. Across the scenarios, the NPVs and IRRs surpass the project's cost of capital (9.5%), demonstrating feasibility. Even Scenario 1, which incorporates inflation and reduced sales, presents a favorable outcome. Only Scenario 3, with a significant price decrease of 20% with 8% yield reduction, exhibits a longer Payback Period, suggesting a slightly extended timeframe to recover the initial investment. Overall, the financial analysis provides a strong foundation for proceeding with the project, with the understanding that market fluctuations and potential price reductions should be closely monitored and mitigated through effective production practices and sales strategies.

While the feasibility analysis indicates promising prospects for the cocoyam plantation project, it is essential to acknowledge and address potential risks that could hinder its success. The projected production volume might not fully satisfy Global Food Solutions' weekly demand of 2,000 kilograms of cocoyam corms which may lead to rejection in sourcing corms in the proposed project. Unforeseen weather events like typhoons, floods, or droughts could disrupt production and lead to crop losses. Cocoyam crops can be susceptible to various pests and diseases, impacting yields. Ineffective farm management practices could negatively affect production efficiency and quality. Poor staff training, low morale, or ineffective communication within the workforce could hinder productivity. To mitigate the risks the following are recommended. Gradually increasing the production area overtime will enable the project to progressively meet the buyer's demand. Identifying and establishing relationships with additional buyers including pig growers for feeds and buyers of small corms can provide alternative markets for the cocoyam corms, reducing reliance on a single buyer and mitigating the risk of supply rejections. Implementing a comprehensive Integrated Pest Management program that incorporates preventive measures, monitoring techniques, and targeted interventions will minimize the risk of pest and disease outbreaks. Investing in training programs for the farm manager and caretaker on best practices for cocoyam cultivation, soil management, and irrigation will optimize production yields and overall farm efficiency. Providing regular training to staff on proper farming techniques, safety protocols, and effective communication will enhance their skills and foster a positive work environment. Maintaining open communication and building a strong relationship with Global Food Solutions will promote collaboration and address any potential concerns regarding supply volumes or quality standards. Encouraging teamwork and fostering positive relationship among employees will contribute to a more productive and collaborative work environment. By proactively implementing these mitigation strategies, the project can effectively manage these risks and ensure the long-term success of the cocoyam plantation venture.

Language

English

LC Subject

Coconut products

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2024 M17 D45

Document Type

Thesis

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