FEASIBILITY STUDY ON QUAIL EGG PRODUCTION

A PROJECT FEASIBILITY STUDY

PHILIPPINE MALLARD DUCK (ITIK) EGG PRODUCTION AND PROCESSING

In partial fulfillment of the requirementfor degree of Master in Business Administration of the University of Cagayan Valley

Presented to: PROF. LIBAN

Proponents:MYLA D. BUNAGANERVIN T. DEJUMOARLEEN A. GASPARROMEO Q. MALLILLINMBA-1

ACKNOWLEDGEMENT

Table of Contents

A. Project Title........B. Project Location........C. Project Rationale.......D. Statement of the Objectives......I. MARKET ASPECT1. The Need of the Project......2. Market Description.......3. Demand.........4. Supply.........5. Demand Supply Analysis......6. Market Share ........7. Marketing Program.......8. Price Study........II. TECHNICAL ASPECT........1. The Product........2. Manufacturing Process......3. Plant Size and Production Schedule...4. Machinery and Equipment.....5. Plant and Project Location.....6. Plant Layout.......7. Building and Facilities.....8. Raw Materials and Supplies.....9. Utilities........10. Water Disposal.......11. Production Cost.......12. Labor Requirements......

III. ORGANIZATION AND MANAGEMENT ASPECT....IV. FINANCIAL ASPECT.......1. Total Project Cost......2. Sources of Fund.......3. Preparation of Financial Statements...4. Financial Analysis......

V. SOCIO-ECONOMIC ASPECT......VI. 1. SUMMARY OF FINDINGS......2. CONCLUSIONS AND RECOMMENDATIONS....

A. Project TitleThe Project is entitled A Feasibility Study on Philippine Mallard Duck (Itik) Egg Production and Processing. There are several reasons why the proponents choose to venture on this project. Firstly, duck-raising is a profitable livestock industry in the Philippines because of its egg. Duck is second to chicken in economic importance as source of egg and meat. Its most important product, the balut (boiled incubated ducks egg) is sold daily throughout the archipelago for its delicious flavor and nutritive value. Secondly, duck is considered as the most versatile avian specie because it can subsist under a wide range of climatic and nutritional conditions (Lambio 2002). Also, duck-raising is inexpensive and can start off with a minimal start-up capital. It requires non-elaborate housing facilities, and little attention, and less space for rearing compared to chickens. More importantly, ducks are shown to be relatively hardy, resistant to common avian diseases, and subsist on a variety of feeds. Thus, the researchers endeavor to study the feasibility of putting up this business.

B. Project LocationDucks can be raised in areas near bodies of water or in areas where there are rice fields to feed on after harvest. As a rural Municipality, the proponents have chosen Solana, Cagayan specifically in the barangay of Lanna to be the main location of the proposed project. The lot which will house the farm has an area of ______. The farm is relatively far from residential areas about 230 meters, as required by Department of Environment and Natural Resources (DENR).Municipal Assessors office has provided us the cost of the lot where the fowl is situated, which range from ____ to ___ per square meter. Since the farm occupies 300 square meters, the lot will cost Php 300,000.

C. Project Rationale

D. Statement of the ObjectivesThis study entitled A Feasibility Study on Philippine Mallard Duck (Itik) Egg Production and Processing aims to explore the possibility of venturing into Itik Egg Production and Processing in the Municipality of Solana, Cagayan.

Specifically, the study seeks to:Present sufficient information and analyses regarding the market, technical, financial, management and organization and socio-economic implications.In order to determine the feasibility of the proposed project, the following questions shall be answered:

A. Market Aspect1. What benefits can be derived from the proposed project?2. What are the products to be produced?3. Are the products competitive as to other goods in the market?4. Is the production capacity of the project adequate for the market?5. Are the products produced acceptable by the prospective market?

B. Technical Aspect1. Is there ready and adequate location for the proposed project?2. Is the location accessible for transportation?3. Are there available resources of equipment and other technical requirements like raw materials needed for the proposed project?4. Are there qualified technical personnel who can provide service for the installation and maintenance of the equipment?5. Are there qualified people to look into the physical preparation of the proposed project?6. Are there enough utilities electricity, fuel and water for the operation of the proposed project?7. Is the proposed project environmentally-friendly?8. Are there available methods of waste material disposal?

C. Financial Aspect1. What is the total financial requirement of the proposed project?2. How will the proposed project be financed?3. Is the proposed project financially viable?4. What kind of taxes and licenses will the proposed project pay?

D. Organizational Aspect1. What form of organizational structure will the proposed project adapt?2. Are the enough qualified people to manage the proposed project?3. Do we have some assistance from the government regarding organization and development of the association that can best manage this type of project? E. Socio-economic Aspect1. Will the project affect the lifestyle of the farmers in Solana, Cagayan?2. Will it generate employment?3. Will it earn additional investment in the community?4. Will it improve the economic condition of Solana, Cagayan?5. Will it add income to the government?

I. MARKET ASPECT1. The Need of the ProjectThis study aims to ascertain the feasibility of putting up a business on Itik Egg Production and Processing in Lanna, Solana, Cagayan. The need for the project could be viewed from the effects it could generate to enterprise citizens and to the researchers in particular, who are exploring viable investment projects where they could channel their resources. The study will provide comprehensive vital background information on all aspects of the business. It encompasses five major aspects, namely: market aspect, technical aspect, financial aspect, management and organization aspect, and socio-economic aspect. In as much as the setting of the study represents a typical town, the findings of the study may be applicable to other similar rural communities where ducks could be grown and raised. Hence, potential entrepreneurs may find this study useful and applicable.The project could be implemented by any prospective investor who can generate the necessary resources to start the business. Once the project is implemented, the owner and the community as a whole will enjoy several economic and social benefits:a. It will generate income to the owner and other people who will be directly or indirectly employed in its operations like the farmers, vendors, and other retailers. b. It will channel idle resources of investors to fruitful undertakings.c. It will generate employment to certain residents of the community and hence contribute to the massive livelihood program now being launched by the government.d. The Municipality of Solana would receive income from permits, fees, licenses and taxes to be paid by the investor.e. The nutritional level of the consumers of the balut will be improved since the product is a good source of protein supply and hence, the product would be readily available and sold at a reasonable price.

2. Market DescriptionThe proponents seek to penetrate the market as producers of duck egg. The eggs will be distributed retailers and then subsequently sold to consumers. Details of the marketing will be discussed thoroughly in the Marketing Program (page _). As producers, the eggs will be used as an input to the production of balut, penoy and century/salted eggs. Duck egg production and processing is s profitable enterprise; even the so-called low quality eggs, such as those that have thin and cracked shells can still be sold in the market and used as table egg. The most popular egg products are balut, penoy, red salted and century eggs.As to its competitive advantage, duck eggs are larger and more nutritious than chicken eggs (FNRI, 1990). The composition of duck eggs and their by-products gives the consumers more calories, more protein content, more nutritional punch, and contain more beneficial omega 3s, minerals, and vitamins than chicken eggs (108 Kcal for ducks; 75 Kcal for chickens). These and more are the contributing factors why duck eggs are beneficial to the consumers. 3. Demand3.1 Present DemandAt present, marketing of duck eggs is not a problem since demand is high. In fact, supply is still unable to meet the demand for balut and other egg products.In the Philippines, about 90 percent of total duck egg production is used for processing (BASSRTC 1998). 87 percent of which is processed into balut and another 7 percent is processed into salted eggs. The remaining 6 percent consists of century eggs, penoy, and other unidentified forms. This means that balut accounts for about 80 percent of total egg production. This emphasis on balut production is a unique feature of the Philippine duck industry. Although unfamiliar to most foreigners, balut and penoy are delicacies in the Philippines for their unique taste and nutritional content. Cooked balut is sold as snacks in the evenings by street vendors, either peddling on the street or stationing on the sidewalk. 3.2 Projected DemandThe table shows the projection of the demand of the product for the first five years.

Table 1. A table showing the Projected Demand of Duck Egg for 5 years YearProjected PopulationAverage ConsumptionProjected Demand

1

2

3

4

5

Source:Interpretation:

4. Supply4.1 Present SupplyAs mentioned previously, supply is still unable to meet the demand for balut and other egg products.

4.2 Projected SupplyThe table shows the projection of the supply of the product for the first five years. Table 2. Projected Supply of Duck EggsYearProjected Supply(per annum)

1240,000

2360,000

3400,000

4480,000

5560,000

5. Demand Supply AnalysisTable 3. Demand Supply AnalysisYearTotal DemandTotal SupplyVariancePercentage of Satisfied/Dissatisfied

1

2

3

4

5

6. Market ShareYearTotal DemandTarget Market Share% of Market Share

1

2

3

4

5

Table 4. Projected Market Share

-assume for the supply annually

7. Marketing Program7.1 Present Marketing Program(Marketing program of other producers)7.2 Proposed Marketing ProgramThe duck egg will be sold to the market at 7.00 per piece. There are four marketing channels used in marketing duck eggs. The flow of marketing duck eggs is shown below.1. Producer -> assembler-wholesaler -> retailer -> consumerIn this type of marketing channel, the assembling of duck eggs is in the producers area and the eggs are later sold to retailers in the market. 2. Producer -> assembler-wholesaler -> balut operator -> retailer(vendor) -> consumerThe producer sells the duck egg to the assembler-wholesaler. The assembler-wholesaler will then sell the egg to the balut operator and the balut is retailed by the vendor to the consumer.3. Producer -> balut operator -> retailer(vendor) -> consumerIn this instance, the balut operator directly gets duck eggs from the producer and sells to the retailer/ vendor then ultimately to the consumer.4. Producer -> assembler-wholesaler (century/salted eggs)-> wholesaler/retailer -> retailer -> consumerThe producer sells the duck egg to the assembler-retailer for processing. The assembler-wholesaler engages in century and salted egg production and sells them to the wholesaler/retailer then to the consumer.

8. Price Study8.1 Present Selling PriceAt present, the selling price of duck eggs in the market is pegged at 7.00 per piece. The cost of production has an estimated cost of 3.00 per egg piece. 8.2 Projected Selling PriceTable 5. Projected Selling PriceYearPresent Selling PriceProjected Selling Price

Quantity DescriptionUnit PriceTotal PriceQuantity DescriptionUnit PriceTotal Price

1

2

3

4

5

II. TECHNICAL FEADIBILITY ASPECT1. The ProductsThe products to be marketed are mainly duck eggs for distribution to different outlets and balut/penoy/salted egg processors in Tuguegarao City.2. Manufacturing ProcessThe processes involved in the manufacturing the eggs begins with the breeding, feeding, proper housing and handling of the ducks until the ducks are ready to lay eggs. The breeding the ducks, several stages are involved; selection of stocks, sex ratio and mating system, management of replacement breeder stocks, proper care and handling of hatching eggs, incubation and hatchery management, candling and fertility determination, handling of ducklings, hatchery waste disposal and utilization and culling.

3. Plant Size and Production Schedule3.1 Plant SizeThe lot which is about 300 square meters will accommodate the farm where the ducks will be grown and nurtured and a small office space, with an area of 50 square meters.3.2 Production ScheduleThe ducks has an estimated mortality rate of 12% (1% per month. Simply stated, in every one thousand ducks to be nurtured, 88% or 880 ducks will live and be utilized for egg production. The 12% will be accounted as cost of the business enterprise.The 880 ducks which survived has an estimated egg production of 70%. Simply put, 70% of 880 surviving ducks is 560 ducks. These 560 duck are capable of producing egg.4. Machinery and Equipment

5. Plant/Project LocationThe farm shall be located in Lanna, Solana, Cagayan where6. Plant Layout

7. Building and FacilitiesThe building which will house the office of the management has an area of 300 square meters. The office space will be constructed with an estimated cost of 200,000. 8. Raw Materials and Supplies8.1 InitialQuantityDescriptionUnit CostTotal Cost

1000 pcs300 pcsDrakesDucks10.00/drake10,000.00

20 sacksDuck Feeds1,100/sack22,000.00

10 packsVetracin (supplement)500/pack5,000.00

50 metersScreen

2 pieces15x18 tent12x15 tent

8.2 Projected Materials/SuppliesYearQuantityDescriptionUnit Cost Total Cost

9. Utilities10. Waste DisposalIn a duck hatchery or balutan, the primary product is balut and day-old ducklings. Infertile eggs and penoy are, likewise, used as food. The fully or partially developed embryos that was either partly hatched or not hatched are processed and utilized by pigs for feeds. 11. Production CostRaw Material CostLabor CostOverhead CostOperating CostOther Pertinent CostCost of Production

12. Labor RequirementsType/PositionNumber of WorkersWage RateTotal

Direct Labor

Sales Representative

Indirect Labor

Delivery Boy

Administrative

Manager

Total

Projected Operating SalaryPositionNo. of WorkersYear 1Year 2Year 3Year 4Year 5

Direct Labor

Indrect Labor

Administrative Labor

Total

Projected Overhead CostOverhead CostYear 1Year 2Year 3Year 4Year 5

Electricity

Water

III. ORGANIZATION AND MANAGEMENT ASPECT1.1 Form of OrganizationThe business venture shall adopt a centralized form of organization. The following figure shows the organizational chart of the business enterprise.

1.2 People involved Before and During the OperationThe operation of the business shall be governed by the co-owners. The manager shall be the overseer of the main operation in the farm namely, the breeding, raising, care and handling of the ducks, and production of duck eggs. The helpers will man the growth of the ducks. They will be directly involved in all the processes of pasturing the ducks until it is ready to lay eggs. Upon the laying of the eggs, proper care and handling of the hatching eggs will be their next task. The distribution of the eggs that are ready to be sold in the market will also be their function.1.3 Qualifications and Number of Labour RequiredPositionNo. of LaborEducational QualificationAgeExperience

Manager1*At least 2 years in college with units in agriculture or agribusiness* Knowledgeable in proper breeding, raising, feeding and handling of ducks and duck eggs25-35 years old2 years of experience in managerial position

Helper/Farmer/Delivery Boy 2*must know how to read and write*must be knowledgeable in proper breeding, raising, feeding and handling of ducks and duck eggs*must know how to drive*must have a drivers license*has no derogatory record

20 years of age or olderAt least 1 year of experience in poultry raising

1.4 Training and Number of Labour Required1.5 Implementing Strategy1.5.1 Work ScheduleIDENTIFICATION OF ACTIVITYACTIVITY DESCRIPTIONTIME/DURATION (Month)

AFeasibility Study Preparation3 months

BPreparation of other Supporting Documents45 days

CPlan, Design and Specification preparation2 months

DSite assessment and appraisal1 month

EPurchase and Delivery of Equipment45 days

FConstruction and installation of facilities, equipment, furniture and fixtures 2 months

GHiring of Personnel15-20 days

HAdvertising Campaign1 month

IV. FINANCIAL FEASIBILITY ASPECT1. Total Project CostPre-Operating Cost Pre-Operating Salaries Pre-Operating Activity5,000.0010,000.00

Fixed Assets Land/Land Improvement Building Machine and Equipment Installation of Machinery

Working Capital

Labor Direct Indirect Administrative

Total

TOTAL PROJECT COST

2. Sources of Financing the ProjectThe capital of the business venture will be derived from the cumulative investments of the owners of the business. Each partner will invest 50,000 as an initial capital of the enterprise. Other fund source will be derived from loans to bank amounting to ____________.3. Preparation of Financial Statement3.1 Income StatementTable shows the cost and return of producing eggs from ready to lay ducks, 800-head module (Year 1).Year20152016201720182019

Sales

Sale of eggsSale of cullsSale of empty feed bagsTotal Sales1,680,000

1,680,000

1,680,000

1,680,000

1,680,000

Less: Cost of Sales

Pullets/DucksFeedsMedicines and Supplements

Gross Profit

Less: Operating Expenses

LaborSalariesTransportationLight and WaterRepair and MaintenanceInsuranceTelephone BillTaxes and LicencesMiscellaneousTotal Operating Expenses

Income from Operation

Less: Income Tax

Net Income

3.2 Cash Flow StatementYear20152016201720182019

Cash Receipts

Cash BeginningSalesProceed of Loan1,680,000

1,680,000

1,680,000

1,680,000

1,680,000

Intial Capital

Less: Cash Disbursement

Operating ExpensesPurchase of Fix AssetsBuilding ConstructionFarm ConstructionPurchasesPayment of Loan AmortizationPayment of InterestPayment of Taxes

Total Cash Disbursement

Cash Ending

3.3 Balance SheetYear20152016201720182019

ASSETS

Current Assets Cash Inventory on Hand1,680,000

1,680,000

1,680,000

1,680,000

1,680,000

Total Current Assets

Fixed Assets Machinery and Equipment Land Building Less: Accumulated Depreciation Furniture and Fixtures

Total Fixed Assets

Other Assets

Total Assets

LIABILITIES AND PARTNERSEQUITY

Liabilities Loans Payable Tax Payable

Total Liabilities

Partners Equity Capital Net Income

Total Partners Equity

Total Liabilities and Partners Equity

Net Worth

4. Financial Analyses4.1 Test of Liquidity4.2 Test of ProfitabilityV. SOCIO-ECONOMIC ASPECTa. Socio-economic Contributionb. Employment OpportunityVI. SUMMARY OF FINDINGS1. Management Feasibility2. Market Feasibility3. Technical Feasibility4. Financial Feasibility5. Socio-Economic FeasibilityCONCLUSIONS1.Management Feasibility2.Market Feasibility3.Technical Feasibility4.Financial Feasibility5.Socio-Economic FeasibilityRECOMMENDATIONSBased on the findings and conclusions made, the researchers strongly recommend the project for funding and immediate implementation.

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