Reanne's Farm: A Case Study

Date

2010

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Reynaldo L. Tan

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Abstract

The case study is about Reanne’s Farm which is an aqua farm consisting of a tilapia hatchery, tilapia grow-out farm and feeds dealership business. The farm was established way back in year 2004 as a monoculture farm of tilapia. The current farm has a total land area of 22 hectares in which majority of the land is utilized for tilapia production. The farm is divided into three different locations in Pampanga. The main farm is located at San Juan, Santa Rita Pampanga. It is a 5 hectare farm mostly composed of tilapia hatchery farm, breeder and grow-out ponds. The second farm is located at Balas, Bacolor. It is a 13 hectare farm that is purely engaged in tilapia grow-out operations. It consists of 14 fishponds that are supplied with stream water. Just recently, a new 4.5 hectare farm was established in San Simon. The farm is intended for another grow-out operation.

Specifically, the case research was conducted to present and discuss noteworthy business issues which had implications on the farm as a whole; evaluate the farm's business environment prevailing at a particular time of the case; evaluate the farm in terms of the four business functions; define the problem relevant to farm issue(s) being studied; generate and evaluate alternative solutions to the identified problem; identify the best solution using appropriate criteria; and design an implementation plan for the chosen solution.

For data collection, the author used both primary and secondary data. Secondary data were obtained from textbooks, journal papers, published articles, official documents, statistical records, internet websites, undergraduate special problems and theses. Primary data were collected through personal interviews with the owner, feeds supplier, buyers, key personnel and workers. Other data were gathered through observation and even actual experiences. Financial statements were derived from the farm’s existing records.

Tilapia ranks third in terms of volume of production by major aquaculture species. Right next to milkfish, tilapias are among the widely cultured species in the country. The culture of tilapia in freshwater ponds and cages has been a commercial success. Production of tilapia must be intensified in order to meet the demand of the increasing Filipino population and at the same time generate additional jobs in the agricultural sector. Technological, political and socio-cultural developments were also analyzed. Key industry players such as large-scale hatchery farms, tilapia seeds supplier, tilapia farmers, traders, brokers and consumers were described. Market channels, key raw material suppliers and financial intermediaries were also described. To further analyze the industry, Porter’s 5 Forces model was used. For the tilapia industry, it was identified that the bargaining power of suppliers is low, bargaining power of customers is high, threat of new entrants is low, threat of substitutes is low and competitive rivalry between existing players is high.

Reanne’s Farm was first described through its historical background. The farm’s vision, mission and values were also identified. Furthermore, each of the four business functions were presented, discussed and analyzed. The major problem of Reanne’s Farm in the production area is unfavorable weather conditions. In relation to unfavorable weather condition is the poor pond preparation. As a result, the farm sometimes experiences a low harvest. Also, the farm has limited area for tilapia hatchery that is why sometimes the farm cannot supply to large volume of demand by its clients. Under human resource area, one of the problems of the farm is insufficient number of workers. This results in lack of monitoring of worker’s duties. Also, the farm has no mandatory benefits to its workers like SSS and PhilHealth contributions. In the marketing area, the farm has unstable supply of tilapia from time to time. Another problem is the poor credit and collection policy by the owner to his clients. This results to uncollected receivables which lead to losses. Under the finance area, the main problem of Reanne’s farm is the lack of formal accounting system. Moreover, this leads to poor cash management which eventually results to low income. In general, the different problems encountered by Reanne’s farm lead to low income.

To generate alternative strategies addressing the problem, SWOT analysis was used. The identified strengths of the farm were (1) Reanne’s farm is the sole distributor of FeedMix in the area; (2) The farm sources its breeder stocks from reliable and established sources like

NBC-NFFTC in Munoz, Nueva Ecija; (3) The farm acts as an inputs provider to other grow- out farms; (4) The farm offers quality (SRT) sex-reversed tilapia fingerlings; (5) The owner

was able to build reputation in tilapia farming; (6) The property of owner is located within the farm’s premises. The weaknesses were (1) Reanne’s farm lacks formal accounting system; (2) The farm has insufficient number of workers; (3) Lack of monitoring of workers in Balas, Bacolor and San Simon farms;(4) Poor credit and collection policy; (5) unstable supply of treated fingerlings; (6) Lack of farm security in Balas and San Simon. Opportunities were (1) The demand for tilapia is increasing; (2) There are still undeveloped lahar affected areas in Pampanga which can be used for expansion; (3) There is a potential market for tilapia abroad ;(4) Organic tilapia raising. Threats identified were (1) unfavorable weather condition ; (2) Increasing number of farmers venturing in tilapia farming and; (3)High cost of inputs; (4) The owner rents majority of the farm’s land area.

To address the problems, the following alternatives were formulated: (1) Market Development; (2) Market Penetration; (3) Overall Cost Leadership and; (4) Intensified Forward Integration. The four alternatives were evaluated based on ease and cost of implementation, long-term effects and benefits as well as profitability. Based on the rating of strategy attractiveness using Preference Matrix, it is therefore recommended that Reanne’s Farm should engage to market development strategy to address its problem. Through market development, Reanne’s Farm can explore other locations which can be their potential markets. The level of risk will also be minimized because the farm will have additional markets aside from Pampanga. In connection with this strategy, the farm must first evaluate its current financial status to know whether the farm is capable of implementing and sustaining the given strategy. The owner can use his personal resources or even seek the aid of external financing from an institution like QUEDANCOR or Land Bank. The farm can also avail of subsidies deemed by the government like DA-BFAR as well as other forms of extension services.

After evaluating its production capacity, Reanne’s Farm can decide which geographical areas to enter. A basis for deciding the best strategic location is the level of disposable income and the degree of saturation in terms of tilapia. The areas with high levels of disposable income are the ones which are attractive for the farm to enter. A good location is also the areas which are not saturated with tilapia farming so that when the owner decides to invest in that area, there is not much competition in tilapia. The farm may conduct competitor analysis in order to identify rivals and evaluate their relative sizes. These factors will help the farm in deciding which potential areas to enter.

Language

English

LC Subject

Fish Culture, Aquaculture industry

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2010 M17 O23

Notes

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Document Type

Thesis

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