HOI.V AIIGE1 UTIUERilrY

HOI.V AIIGE1 UTIUERilrY

A PROJECT FEASIBILITY STUDY ON BROILER CONTRACT GROWING IN BICAL,

MABALACAT, PAMPANGA

A Business Research Presented to the Faculty of the Graduate School of Business

Holy Angel University Angeles City

ln Partial Fulfillment

of the Requirement for the Degree Master of Busine6s Management

RoLAN D

LANsANGAN#?rff iij[o

May 5, 2003

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Abstract

This study was

onducted

to ascertain the viability of broiler contract growing

in ^Bical,

Mabalacat,

Pampanga. lt aims to

^{provide retevant}

information

as to the

feasibility

of the folloring

areas: Marketing Aspect, Technical/Production Aspect, Financing and Financial Aspects, Management and Organization, and Social Desirability of the ^project.

The project feasibility study utilized both descriptive and quantitative methods

of research. The direct

respondents

of the study are:

the proponents of the project, farm ownerc/managers of existing poultry farms, technical representative

of the

integrators, fiaculty member

of

^Pampanga

Agricultural College

-

^in-charge of Animal Science Study and

offiers

from different govemment agencies

in

Pampanga such

as the

Department of Agriculture, Provincial Veterinary,

and the

Department

of

Science and Technology

ilarketing Aspect. ^'The

determined

market'for

broiler contract growing are the six (6) commgrcial integrators in the country, namely, Swift Foods, lnc., Vitarich Corporation, Purefoods Corporation, San Miguel Foods, lnc., Universal Robina and Tysons Agro-Venture,

inc.

There are more than 200 broiler contract growers

and

more

than 30

independent growers in Pampanga. These growerc arc considered as the main competitors of the project.

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The World Trade Organization Agreement on Agriculture (WTO AoA), smuggling

of

poultry meat and shot-term mntract agreement prcvided by integrators to growers were determined as the threats to the project. WTO AoA and smuggling of poultry meat provide the local

prcduers

with greater exposure to unfair competition. With the short-term contract agreement with integrator,

the

project

has

other viable options, however these

are

also coupted with risks and uncertainty.

It was proven in the study that there is still oonsiderable unsatisfied demand for poultry rneat. From this situation, it can be concluded that there

is still enough room for the ^project to operate.

Technical

Aspect

^The integrator will provide day old chicks, feeds, vaccines, and medical and technical assistance, while the ^grower will provide the land, poultry housing, equipment, manpower and management, and will shoulder the overhead cost in raising the chicks. Brooding of chicks usually takes 3 weeks while finishing lasts up to the 6fr week <if age of broilers. At 37 to 42 daysold, broilers are. ready for market. Broilers at this time should be weighing an average

of

1.5 kilograms. The ideal feed mnversion is 2.0 and the

@uency

of cropping is six times a

year.

The ideal time interval to reload another batch

of

flock

is 2 - ^{3 weeks.}

^During

^this

^{period, proper}

sanitation and disinfection should be properly administered.

Financial

Aspect.

The sourcing of funds for the project is from the equity capital of the proponents. They will invest from their personal funds a

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totalamount of P3,750,000.00. The total cost comprises investment costs of P3,625,000.00 and

an

initial cash reguirement

of

P125,000.00. Projected Financial Statements such as Balance Sheet, Retained Earnings Statement, lncome Statement and Statement of Cash Flows were ^prepared to determine the adequacy

of

capital and the financial soundness

of the

^projec,t. The assessment on liquidity, solvency and profitability of the project provided the following results: Cunent Ratio

aI

42.22:1 .0, Quic* Ratio of 41.44:1 .0, Debt-

Eguity Ratio of

0.0108:1.0,

Debt Ratio of

^0.0107:1,

Equity Ratio

of

0.9893:1.0, Return on lnvestment of 6.06%, Return on Assets of 7.71%, Net Present Value

of

P-1,536,160.02, lnternal Rate

of

Retum

of

4.73o/o and PresentValue Payback of more than 10 years.

Management and

Organization:

The proponents consist of five ⁽⁵⁾ individuals with equal equity share in the project. The proposed name of the firm is AGRI-MMERJ Corporation. The proponents believed that the most suitable

form of

organization

for the

^proposed project

is a

corporation because of

tfil

several advaritages that it would bring

them.

The farm is located

in

Bical, Mabalacat,

Pampanga. The

^place

is an

ideal farm site because it is located in an agro-industrial zone of the town Mabalacat and it is very accessible. The project head office is located at No. 1 Panday Pira, Dau, Mabalacat, Pampanga. The project requires one (1) farm manager and four,

(4) _farm

workers

for its operation. The

integrator

will

provide the

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technical and medical services to the ^projec{ and an accountant will be hired on a retainer basis to provide accounting and tax services to the ^project.

Social

Desirability.

The ^project will provide income and employment

to

individuals,

it will

promote industry linkages because

of the

^project's

demand for other ^products that will be used in its production activity, and the govemment will generate additional revenue ftom the

taxes.

The total taxes

that will be

^generated

from the ^project are:

Local/Municipal

taxes

of P11A,775.44 and National taxes of P831 ,258.28 for five-year ^period.