An Analysis of Philippine Commercial Animal Feed Mills: the Case of ABC Feed Mill

Date

6-2023

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Maria Noriza Q. Herrera

Committee Member

Jeanette Angeline B. Madamba, Juan Paulino S. Trespalacio, Junior, Mar B. Cruz

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

The feed milling industry is crucial to the livestock industry. Its compound annual growth rate is approximately 5.5% to 6%. In the Philippines, there are currently 604 registered feed mills, 48% of which are small feed mills, 25% are medium feed mills, and 26% are commercial feed mills. Despite this, the Philippine feed milling industry is still dominated by commercial feed mills. There are numerous challenges faced by Philippine commercial feed mills, such as the high and volatile feed ingredient prices, low quantity and quality of domestic crop production, and issues in logistics and transportation.

This study analyzed the business operations of ABC Feed Mill. The specific objectives of the study were: (a) to present the macroenvironment and microenvironment of ABC Feed Mill; (b) to describe the profile and business functions of ABC Feed Mill; (c) to evaluate the strengths, weaknesses, opportunities, and threats of ABC Feed Mill; and (d) to formulate recommendations that could solve such issues and challenges and improve the business operations of ABC Feed Mill. A descriptive research design was employed in the study. Primary data was collected by sending questionnaires to the employees of ABC Feed Mill. A key informant interview (KII) was also conducted to gain additional information regarding the external environment of ABC Feed Mill. Other secondary data were collected from credible sources. Generally, the case study analysis and integrated analysis were used to formulate the conclusions and recommendations of the study.

For the macroenvironment, the study found that the primary political-legal factors affecting ABC Feed Mill were geopolitical events (particularly the Russia-Ukraine war), tariff and tax regulations, and the licenses and certifications that the company has to acquire. The primary economic factors that it was concerned with were the supply, demand, and prices of meat and poultry products, as well as the required feed ingredients. For socio-cultural factors, the consumption of Filipinos and the increased usage of e- commerce platforms by Filipinos were identified. For environmental factors, the seasonality of commodities affects their production and prices. Livestock and poultry diseases were also affecting the demand for animal feed products. For the microenvironment, suppliers have a significant role as animal feed production is dependent on the procurement of the required feed ingredients. ABC Feed Mill prefers engaging with global suppliers as they offer lower commodity prices. Furthermore, animal feed customers and buyers are price sensitive. ABC Feed Mill also only engages with domestic customers and buyers. As for competitors, the feed milling industry is a highly competitive industry with many players. Most of the feed mills in the Philippines are located in Visayas and Mindanao. Further, industry players who are vertically integrated in both the supply and value chains have a significant advantage.

ABC Feed Mill was founded on June 26, 1958. They were initially engaged in flour milling. It was only in 2004 that they established a feed mill in Lapu-Lapu, Cebu. Despite this, the company has risen to become one of the leading feed mills in the Philippines. The two feed mills have an aggregate milling capacity of 1,200 MT per 8-hour shift. Thus, the company has a high animal feed production capacity. The procurement department is responsible for purchasing the feed ingredients required for its animal feed production However, an issue in the procurement department is that they only have four employees, not including those employed in the procurement support team under the finance department. ABC Feed Mill has 29 animal feed products. For the distribution of their animal feed products, they has a subsidiary company that is responsible for this.

The primary strengths of ABC Feed Mill were its ownership of two wharves and two feed milling plants and its forward integration in the supply chain. Its primary weakness is its significant decrease in profitability. The company’s primary opportunities were the high consumption and production of fish in the Philippines, its lack of backward integration in the supply chain, and the price sensitivity of customers. Further, its primary threats were livestock and poultry diseases, high and volatile commodity prices, and low quantity and quality of domestic crop production. From all of these, there were seven alternatives that were created and the recommended alternative was the third alternative which was to employ the product development strategy and the contingency plan was the sixth alternative which was to employ the concentric diversification strategy. The recommended alternative was projected to have a Php 5,821,575,000 income over the course of five years.

Language

English

LC Subject

Animals--Food, Feeds--Research

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2023 M17 D47

Document Type

Thesis

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