Feasibility Study of Establishing a 2-Hectare Bamboo Plantation in Rodriguez, Rizal

Date

4-2010

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Tricia C. Ascan

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Abstract

Bamboo, a grass abundant in the Philippines is considered one of the most economically important non-timber commodities in the country. With about seventy species growing in the Philippines, bamboo is one of the most versatile and popular materials for housing, furniture and handicraft. The short cycle of bamboo, about 4 to 6 years, creates an advantage over the other trees. Hence it is preferred as an investment. Since bamboo supports many industries, the supply and demand gap for the commodity is widening.

This study focuses on the feasibility of establishing a two hectare bamboo plantation in Rodriguez, Rizal. Specifically, this study sought to: 1) to describe the area targeted of the bamboo plantation; 2) determine the production, organizational, market and financial viability of establishing a bamboo plantation in Rodriguez, Rizal; 3) identify potential problems that may arise during project implementation and; 4) recommend specific courses of action based on the results of this study.

Primary and secondary data were gathered to determine the feasibility of the project. Interviews with bamboo plantation farmers and experts were conducted to determine the technical and operational aspects of bamboo production and marketing, particularly with regard to distribution, pricing and common operational problems. Bamboo furniture manufacturers and potential bamboo poles users were also interviewed to determine the level of demand for bamboo produced in Rizal. Secondary data were collected from Department of Agriculture (DA), Bureau of Agricultural Statistics (BAS), Philippine Council for Agriculture and Resources Research and Development (PCCARD), Forest Product Research and Development Institute (FPRDI) and Ecosystems Research and Development Bureau (ERDB).

The current status of the industry was reviewed. The town’s geographic and topographic, socio-economic and infrastructure profiles were reviewed. The project site was also analyzed. The project site is located in Brgy. San Isidro. The project site is part of two and half hectare which half hectare is currently planted with Mango Trees.

A market analysis to determine of demand for bamboo indicated that bamboo poles will be sold to furniture manufacturers located in Commonwealth, Quezon City. These are wood-based furniture manufacturers who experience shortage in supply of timber and are willing to use bamboo poles as a substitute. The bamboo poles will be sold at Php 120 per pole. The total demand for bamboo poles of the manufacturers is 290 poles per month which is a total of 3,480 bamboo poles annually.

Reviewing bamboo production technology indicated that planting during the rainy season ensure survival of the bamboo plantation. Hence, bamboo planting materials will be obtained from a nursery in Pililla, Rizal on the rainy months for immediate planting on the plantation site which will be maintained in accordance with recommended practice for a bamboo plantation. Harvesting of mature culms will start on the fifth year. Only ten culms per clump will be harvested to allow other culms to reach optimum growth before harvest.

The farm will be managed by the owner. A caretaker will supervise production operations and maintenance of the plantation. Laborers will be hired on a contractual basis. The caretaker will be given Php 3,000 per month while the laborers will be paid Php 250 per day. Orientation on bamboo production will be given to all the farm staff.

The proposed bamboo plantation requires an initial investment of 457,541.96 pesos. 1.28 percent or 5,836.80 pesos for fixed assets; 71.45 percent or 326,898 for and; 27.28 percent or 124,807.20 for working capital.

Sensitivity analysis of the project at a discount rate of 12 percent indicated that the base scenario has an NPV of 1,502,558.42 pesos and an IRR of 79 percent with a payback period of 5.27 years. In scenario 1, assuming a 5% decrease in sales given that labor cost, materials and inputs costs, transportation costs and land rent increases every year, the project has an NPV of 1,346,762.05pesos and an IRR of 77 percent with a payback period of 5.28 years. In scenario 2, assuming a 10% decrease in sales, the project has an NPV of 790,033.41 pesos and an IRR of 71 percent with a payback period of 5.29 years. In scenario 3, assuming a 15% decrease in sales, the project has an NPV of 463,837.29 pesos and an IRR of 65 percent with a payback period of 5.31 years.

The project is only feasible up to a decrease in sales volume equal to 25 percent. If the sales volume decrease by 26 percent as used in Scenario 4, the project would have a negative NPV of 615 pesos and the IRR equal to 11 percent which is lower than the discount rate. It also has the longest payback period of 2.19 years. The proposed plantation is feasible up to a decrease in 25 percent in sales volume even if the expenses increase. It is very sensitive to the changes in sales volume. If the expenses increases and sales volume decreases by more than 25 percent, the project would have a negative NPV and IRR lower than the discount rate.

There are several potential problems identified in the establishment of the bamboo plantation such as 1) lack of inexperienced farmers 2) risk associated in transplanting of bamboo propagules 3) changes in the environment 4) hesitation of other wood based manufacturers in using bamboo as substitute to their raw materials. To reduce the risk of the problems identified, some recommendations were made such as 1) proper screening and training of farmers about bamboo planting techniques 2) handling the propagules with extra care and ordering them in advance to make sure that they are ready for planting once they are picked-up from the nursery and educating the farmers on the proper way of transplanting the bamboo propagules 3) proper monitoring of the plantation and the changes in the productivity of the bamboo plants 4)good relationship with the suppliers of inputs, farm workers and buyers of the product; and proper consumer orientation and information dissemination regarding the many uses if bamboo and how to use them or give consumers flyers and other informative materials that are produced by PCCARD, DENR and other institutions related to bamboo.

Language

English

LC Subject

Bamboo, Tree farms

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2010 M17 M57

Notes

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Document Type

Thesis

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