A Feasibility Study of Establishing An Agro-Tourism Farm in Barangay Sicsican, Puerto Prinsesa City, Palawan

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

The study focuses on the feasibility of establishing a 4-hectare agro-tourism farm in Barangay Sicsican, Puerto Princesa City, Palawan, with the goal to provide visitors a chance to rest, relax and enjoy the view of nature with their family and friends while experiencing agricultural life. The focus of the study is the four business functions Technical, Marketing, Organization and Finance. The study would be a pioneer project in the City of Puerto Princesa.

The concept of agro-tourism is a direct expansion of eco-tourism, which encourages visitors to experience agricultural life at first hand. Agro-tourism is gathering strong support from small communities as rural people have realized the benefits of sustainable development brought about by similar forms of nature travel. Visitors have the opportunity to work in the fields alongside real farmers and wade knee-deep in the sea with fishermen hauling in their nets.

The general objective of the study is to know the investment viability of establishing an agro-tourism farm in Puerto Princesa City, Palawan. With its specific objectives: 1.)To be able to present an agro-tourism farm which would be of benefit to people who are interested and have the means to establish such; 2.) To evaluate the technical, marketing, organizational and financial feasibility of the project; 3.) To present the socio-economic and environmental impact of an agro-tourism farm; 4.)To identify potential risks and problems in establishing the agro-tourism farm 5.) To give recommended courses of action to be under taken by people who would want to establish an agro-tourism farm.

In order to evaluate the investment viability of the project, different measures were used. In the marketing viability of the project, the target market of the project which is the family and the young professionals was surveyed, to know their knowledge about agro-tourism and to know whether they are interested in the said project. Stratified Random Sampling was used to come up with the number of respondents needed, to represent the entire target market population. The respondents are just locals of the City. An interview with a key informant, the Chief of the Research and Statistics Division, City Planning Office in Puerto Princesa was also done to be able to know whether there is still a place for an agro-tourism farm in the City, and what sector is availing of tourism services of the City. In the financial viability of the project, projected income statements and cash flow statements was used. Also, financial tools such as Internal Rate of Return, Net Present Value and Payback Period were also computed to measure the financial viability of the project. While in the technical viability, most of the technical requirements are from PCARRD, and to evaluate the project area, most of the data was gathered from the Socio-Economic and Physical Framework (2007) of the City.

Rancho Ordillo would be the business name, with the mission statement “Rancho Ordillo aims to provide guests a place for rest and recreation, away from the stress brought about by the city life in the course of being with nature. At the same time, promote agro-tourism in the city and the whole country to protect the quality of environment and practice a sustainable development” and vision statement of “Rancho Ordillo envisions to become the premier agro-tourism farm in the City of Puerto Princesa and in the Philippines by becoming widely known for the comfort and excitement of the farm tours that it offers.” It would be a leisure farm with the theme, rest and recreation.

The activities offered to its guests are vegetable, fruit and flower picking. Cottages are made available for guests who would want to stay overnight. A special amenity is the therapeutic stone pathways which is only available in Rancho Ordillo. Picnic grounds, carabao tour and other amenities are available to make the stay more enjoyable.

Based on the results of the market survey, majority of the respondents (56%) have not heard about agro-tourism but the project is generally accepted by the public, 94% of the total number of respondents are willing to go in the proposed project, and most of them thinks that the establishment of an agro-tourism farm is important. Their top motivation of visiting the place is for rest and vacation purposes which is in line with the theme of the proposed agro-tourism farm and also for the farm activities that the respondents are interested to do are, fruit, vegetable and flower picking and do marketing direct from the farm. There would be a standard operating procedure in each area in the farm to be followed by each worker to facilitate the business.

The business would be a sole proprietorship since it is a good business organization for an individual starting a business that will remain small, does not have great exposure to liability, and does not justify the expenses of incorporating and ongoing corporate formalities. Rancho Ordillo would have 15 workers in the farm.

The initial investment that the project would be needing to start its operations amounts to P5,994,168, with an NPV of P5,896,623.34, 43% IRR and 3.05 years as its payback. All business expenses will be financed from the equity of the owner.

Establishing an agro-tourism farm will generate employment within the City. It will also be an additional tourist destination since Puerto Princesa is very much known for the beauty of its nature. This will also increase awareness on the importance of agriculture in the society and additional supply of agricultural products will be available. Other benefits that agro-tourism brings is it helps combat bad practices such as slash-and-burn and also combat nature deficit disorder and other illness and diseases.

Some risks and problems that one can encounter in establishing such kind of business is; a need for a big sum of money needed for its initial investment, but it can still be controlled by the owner depending on what he would offer to its target market; other risks and problems are loss of privacy, management skills of farmers, increased responsibilities, labor needs, and liability risk. Other problems which are beyond the owners control are climate change, typhoons or drought, change of demand by the market.

After doing the research, it can be concluded that the business is viable in all four business functions, but the problem is, it would be very difficult to establish such kind if business if one lacks management skills needed to run the business, this shows that farmers will have a hard time in implementing this business idea if they only have the knowledge in the technical part. The capital needed for the business also is vey high and some people may not be able to take such big investment.

The project is recommended on people who have available land or an existing farm which they can convert into an agro-tourism farm to generate more profit. Farmers or other people who would want to venture into agro-tourism should take note that even though the project is viable in all aspects, they should make sure that they have enough management skills, land resources, and enough capital to make the business run.

Language

English

LC Subject

Agritourism, Farm management--Research

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2010 M17 O73

Notes

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Document Type

Thesis

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