Feasibility Study of Establishing and Developing Cacao Plantation in Brgy. San Pedro, Luisiana, 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

Cocoa beans, fermented or dried are highly demanded by processors and traders locally and internationally. Most of the cacao producers are located in Visayas and Mindanao. Region IV-A also produced cocoa beans but in lower volume.

The study aimed to determine the feasibility of establishing and developing cacao plantation in San Pedro Luisiana Laguna. The specific objectives are: (1) present the Establishment and Development of Cacao Plantation and its planned area of operation; (2) determine the market, production, organizational and financial viability of operating the business in Luisiana Laguna; (3) identify potential risks and problems involve in the business; and (4) recommend specific courses of action based on the findings of the study.

Primary data were obtained from the interviews with the key informants and respondents. On the other hand, secondary data were obtained from books, journals, and undergraduate special problem report in the department. Descriptive type of research design was used in the study. In analyzing the data of the project, financial measures like NPV, IRR, Payback period were used.

In addition to this, the suitability of the project in the land area was evaluated by assessing the profile of the farm. The project site is suitable since it met the technical requirements for cacao production.

The one-hectare cacao farm will produce fermented dried cocoa beans and it will be sold to its target market in Taguig City for a price of P160 per kilo.

A total of 500 cocoa seedlings will be grown in the farm, 200 cocoa seedlings will be provided by the DA-RFU (Regional Field Unit) while the rest will be bought by the farm owner in the nursery in Sto. Tomas Batangas. The seedling will be planted in coconut interrows at a distance of 2.5 x 2.5 m.

The initial yield of the farm is 2000 kg of fermented dried cocoa beans and will increase by 500 kg per year. The peak production is in the 10th year where it can produce 6500 kg of fermented dried cocoa beans.

The business will operate as a single proprietorship and will be managed by the farm owner/manager. Farm laborers will be hired on a contractual basis.

Based from the financial aspect of the project, the initial investment required is P1,415,362.86 and this amount will come from the owners’ equity. In evaluating the financial viability of the project, NPV, IRR, and Payback period was used as financial indicators. Based from this analysis, the project is proven feasible. The result showed that the project will generate NPV P1,144,302.10, IRR of 23%, and payback period is 5.49 years in the base scenario.

Based from the sensitivity analysis, the net income is highly affected by the decrease in the production yield and increase in the operating expenses. In scenario one, even though there is a decrease in the production yield and the operating expenses continuously increasing, the generated net income and net cash flow is positive making it the most desirable scenario. The generated NPV is 1,245,508.66, IRR is 23%, and payback period of 5.90 years

Under scenario 2 and 3, the production yield was decreased by 20 and 30% respectively. Operating expenses are still increasing per year. The generated NPV for scenario 2 is P847,526.66, IRR is 20%, and the payback period is 6.50 years. In scenario 3, NPV is P427,786.52, IRR is 17%, and payback period of 8.42 years. Given the financial indicators, the project can tolerate up to 30% decline in the production.

Potential risks and problems for the business were identified. These include varying prices of the product, increased in the price of farm inputs, pests and diseases infestation, and inappropriate farm practices. To help the farm prevent those risks and problems, some recommendations are also included.

Language

English

LC Subject

Cacao, Cacao beans, Farm management

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2012 M17 M37

Notes

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Document Type

Thesis

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