Feasibility Study of Establishing a Smoked Tilapia Processing Plant in Los Baños, Laguna

Date

4-2012

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Jimmy B. Williams

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Abstract

Smoked fish, popularly known as tinapa, has been a part of the Filipino culture for a very long time. Tinapa, as we know, is a favorite Filipino breakfast served with kamatis and with vinegar and garlic as its dip sauce. The smoked fish industry in the Philippines offers opportunity to small businessmen since engaging in this business only requires a minimal amount of starting capital. It can be a source of supplemental income for families. However, most Filipinos engaged in this type of business, especially those residing near coastal areas, remain operating in micro or small enterprises, mainly due to lack of financial support.

There are many fish species which are suitable for the smoking process. One is tilapia which is quite abundant in Laguna province. The idea of establishing a smoked tilapia processing plant in Brgy. Maahas, Los Baños, Laguna, came from the current livelihood project of Los Baños Municipal Office, One Barangay, One Product (OBOP), where smoked fish was assigned to the said barangay.

Generally, the project aimed to determine the feasibility of establishing a smoked tilapia processing plant in Brgy. Maahas, Los Baños, Laguna Specifically, it aims to: 1.) present the establishment of smoked tilapia processing plant and its planned area of operation, 2.) determine the market, production, organizational, and financial viability of operating the business, 3.) identify possible risks and potential problems to the implementation of the project, and 4.) recommend specific courses of action based on the findings of the study.

A total of 1,200 kilograms of smoked tilapia monthly or 14,400 kilograms annually would be produced by the business. It will be distributed in two public markets in Los Baños, one in Brgy. Batong Malake, and the other one in Brgy. Baybayin. Two vendors from each public market will be supplied with smoked tilapia thrice a week. Twenty-five kilos per delivery at P147.00 per kilo will be supplied to them. Cash on delivery would be utilized, and a mark-up of 15% was used in pricing the product.

The project will need four regular workers who will perform the actual processing of smoked tilapia. Production would be done three times a week, every Monday, Wednesday, and Friday, staring at 5:00 in the morning to 2:00 in the afternoon.

The study proved that the establishment of smoked tilapia processing plant in Brgy. Maahas, Los Baños, Laguna is feasible. With 12% as the discounting rate provided by the Land Bank of the Philippines, the Net Present Value (NPV) is P 792,671.26 and IRR is 114%. The initial investment amounting to P 243,708.13 will be recovered in less than a year (0.86 year).

The critical factor affecting the business was identified to be the price of input (tilapia). Scenarios 1 and 2 resulted to a positive NPV and an IRR higher than the cost of capital. On the other hand, under Scenario 3, the project is found to be infeasible due to a negative NPV.

Given that smoked tilapia is realtively new in the Los Baños market, quality and price of the product needs to be competitive. Good quality can only be achieved if the operation of the business would use good raw material, apply good manufacturing practices and proper and constant monitoring of the production. The project also needs to be cost-efficient in order to set a price that is competitive in the market provided with the stiff competition for smoked fish products.

Language

English

LC Subject

Tilapia, Smoked fish, Business enterprises

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2012 M17 D45

Notes

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Document Type

Thesis

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