Feasibility Study of Establishing a Robusta Coffee Plantation in Brgy. Galalan, Pangil, Laguna

Date

3-2012

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Jewel Joanna S. Cabardo

Committee Member

Arlene C. Gutierrez, Jimmy B. Williams, Hanna D. Miranda, Reynaldo L. Tan

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Abstract

Coffee is one of the most important commodity in which it is second most traded next to petroleum oil. As of now, 80% of the total production of coffee in the Philippines is being processed by Nestle Philippines Inc. According to them, the local production constitutes 20% of their total production in which 80% are sourced from other coffee producing country.

Coffee is a tropical plant which grows between the latitudes of 25° N. and 25° S. Coffee can grow on soils of different depth, pH and mineral content as long as it will have suitable application of fertilizer and a good drainage which is important for the growth, budding and flowering, the pattern of rainy and dry periods.

Coffee industry is declining due to the decreasing area of plantation in the country. The farmers are shifting to other high value crops. In terms of the farmers in Galalan, Pangil, Laguna, they have problems in terms of the technical assistance from the government in which resulted to mismanagement. Now, the government is planning to revive the previous plantations to plant coffee as the main product. Currently, Nestle Philippines has the largest share in terms of utilization and they used for processing. The study was conducted to determine the feasibility of establishing a Robusta coffee plantation in Galalan, Pangil, Laguna. Specifically, it aimed to present the Robusta coffee plantation and its planned area of operation in Galalan, Pangil, Laguna; determine the market, production, organizational and financial viability of operating the business in Galalan, Pangil, Laguna; and, identify the possible risks and potential problems to the implementation of the project; and recommend specific courses of action based on the findings of the study.

The project life is ten years and it is operated by the coffee growers association in Galalan, Pangil, Laguna. It will be established at Brgy. Galalan, Pangil, Laguna. A total of 30 hectares of land is available for the project.

The Robusta Coffee plantation will produce green coffee beans as its product. Ten percent rejection was allotted for the total production. The coffee will be harvested once a year by the owners of the land together with two contractual labourers.

The study is feasible in which a total of P 3,484,839.40 is needed as an initial investment which will be sourced from the government, bank loan, and from the owner’s equity. Financial projections showed that the payback is expected at 3.83 years with an NPV of P1,721,246.34 and an IRR of 24%, which is presented in the third scenario of monocrop which is a 30% decrease in total production with a 10% rejection.

A sensitivity analysis was also conducted to test the project’s viability. The project is viable under the two types of farming, the monocropping and relay cropping. In monocropping, the project is feasible under the three scenarios while in the relay cropping the project is feasible under the first two scenarios. But, the NPV and IRR decreases as the level of production decreases. The third scenario is not viable because of a decrease in production level of 30% with 10% rejection for relay cropping.

Language

English

LC Subject

Coffee industry, Coffee plantations

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2012 M17 S27

Notes

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Document Type

Thesis

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