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0 Project Title : Broiler Contract Growing

2.0 Category : Income – Generating

3.0 Type : Broiler Production

4.0 Proponent :

4.1 Type(s) : Private Sector Group

4.2 Name/Organization : Rowil G. Batan

4.3 Address : Barangay Belen, Leyte-leyte

5.0 Coverage :

5.1 Main project activities is located at Sitio Marag-ing, Brgy. Belen, Leyte-
Leyte.
5.2 Intended market : meat shops, wet markets, Grocery stores, Talipapa,
5.3 Type/kind of agricultural/fishery product/s commodity/ or support service the
Project shall be involve with: Contract growing of Broilers

6.0 Duration :

6.1 Pre – implementation – 12 months

6.2 Implementation - 10 years

7.0 Funding Requirements :

7.1 ACEF Loan : P 10,303,603.27

7.2 Equity : P 4,422,725.83 (Counter part of the proponent)

7.3 Total : P 14,726,331.10

The Project

8.1 Justification

8.1.1 A brief description of the current state of development of the Agricultural

product/commodity and/or support services sub-sector which the proposed
project intends to support.

Tacloban City is located at the eastern side of the island of Leyte. It is the center of
trade and commerce of the whole island. Its socio- economic development is mainly
supported by trading, banking, and commerce. The city is very dependent on its food
supply of agricultural products from nearby municipalities including fish. The prices of
pork in the market is expensive because of the very high cost of handling and transport
of hogs from Mindanao to Region VIII, not to mention the series of middle men
distributors and dealers who pass on the cost to the consumers. Hog raisers and dealers
from Mindanao are earning more than 10 million a month just for Tacloban City alone.

The people of Tacloban City have been trying to find ways to substitute pork meat
with other meat specially the average and low income families. The demand for chicken
has risen steadily for the past fifteen years. Chicken meat has always been the cheaper
alternative to pork and the people have been more and more conscious about this fact.
With the increasing population of the city and the series of positive economic
development. The demand for chicken is very high and there are several companies who
are looking for investors who are very willing to be partners in the business . With the

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introduction of Contract Growing Business by these companies, there is now a present
solution to the problem of the supply of chickens in the region which this project intends
to support.

8.1.2 The potential for the development of sub-sectors involved in the project area,
including the level and kind of demand for agricultural products/commodities
and/or services involved which the projects intend to meet or create.

The potentials for the development of sub-sectors in the project area is vast. The
need for breeder farms, hatchery, dressing plants, feed mills, meat shops, and meat
dealers will be very vital for the sustainability of the project.

8.1.3 Existing efforts/interventions of government and private sector groups to

develop the sub-sectors involved.

Currently the private companies are holding trainings and seminars to investors to
upgrade various technologies in meat processing, dressing plant operation, hatchery
operations, and breeder operations. The Government sector particularly the Department
of Agriculture is training farmers to meet the demand for yellow corn which is seventy
percent of the feed component for Broiler feeds, and trainings and seminars on the use of
organic fertilizer using chicken dung.

8.1.4 The proposed projects consistency with the policy and priority thrusts of the
DA Plans and Programs and its support to, and/or complementation with,
the regularly funded activities of DA.

The proposed project is consistent with the Department of Agriculture food security
programs and to make region VIII sustainable and to create more job opportunities for
the people. The project will continue to provide job opportunity for the community and
food security after project financing has been completed. Strategies to make the project
sustainable after project completion includes regular personnel training and updates in
Broiler Production Technology, strict bio-security, and supervision.

8.1.5 The perceived problems and/or constraints, which the project intends to
address, including the cause and evidences of these problems/constraints.

The project aims to achieved maximum bird capacity and attain not less than six grow
outs in one year. This can be achieved by proper forecasting and good management with
hands on technical supervision. Mortality of birds must not exceed the average rate of 3
percent. This can be prevented by implementation of effective medication and
vaccination program with regular monitoring, clinical evaluation and examination of
healthy and sick birds.

To address the negative impact of the project to the environment, the proponent has
seek the help of the DENR to help established a very effective waste management
system based on the sound advise of environmental engineers and advisers.

8.1.6 Relevant information on how the intended beneficiaries will directly or

indirectly benefit from the project, including the direct and indirect benefits
which the projects may have on the proponent as well

The project will enable the people in the community in which the project is located to
have job opportunity. The farmers in the project area will benefit from the abundant
supply of chicken dung form the project. Which could help cut down the cost of their
production and farm inputs. Production of Broilers shall increase activities from the
upward and downward linkages that provide more jobs and businesses to others The
proponent itself will be able to gain profit and can in the future expand its capacity
adding more job and business opportunity to the community.

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9.0 Project Description :

The project is Broiler Production in which the proponent will enter into a contract
with a private company to grow chickens until they are ready to be marketed. The
company will provide the chicks, feeds, medicines, and the marketing of the birds. While
the proponent will provide the housing of chickens, water, electricity, labor and other
vital role in the production. The private company will pay the proponent a corresponding
fee for the growing of the birds after all the expenses on their part is deducted.

9.3 Objectives :

9.3.1 Development Objective

The project aims to increase supply of good quality chickens to the region through
Contract Growing scheme with a private company who supplies all the necessary inputs
and technological assistance.

9.3.1 Immediate Objective

a. To supply the demand for chicken meat in Leyte thru Contract Growing
Scheme.
b. To help farmers have access to cheap source of organic fertilizer using chicken
dung.
c. To provide job opportunity to the community and businesses to other
downward linkages.

9.4 Beneficiaries :

9.4.1 Primary

a. The proponent and company partner that provides the inputs for the
production.
b. The employees to be hired by the project.
c. The farmers who will have access to cheap source of organic fertilizer.

9.4.2 Secondary

a. Indirect jobs and their multiplier effects that the project may create such as
breeder farms, hatcheries, feed mills, and meatshops and meat dealers.
b. The government for helping reduce unemployment and alleviate poverty.

9.5 Location :

The project shall be located at Sitio Marag-ing, Barangay Belen, Leyte-Leyte.

The facilities will have a maximum capacity of one hundred thousand birds and
will cover approximately five hectares of land.

9.6 Scope :

9.6.1 Components

Monitor Type Broiler Building : Eight (08) units of 12 X 42 square meters

monitor type broiler house with a maximum capacity of ten thousand birds
(10,000).

Automatic Water Drinkers : An equipment that provides automated and easy

access of water for the birds.

Automatic Feeders : An equipment that provides and automated system of feed

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 distribution and feeding of birds.

Infra – red Lamps : An equipment that provides artificial heating and

brooding of chicks or young birds.

9.6.2 Strategies

Building Facilities : Eight units of Broiler houses will be constructed with a

capacity of ten thousand birds (10,000) having an area of 12 X 42 square meters
with a total capacity of eighty thousand (80,000) birds. The building facility
including all its equipments shall be made available for the birds to be supplied
by the Contract company. An agreement between the proponent and the
company shall be made to assure the use of the facilities for the growing of birds
until they are ready to be harvested.

Production and Harvest : The proponent shall assure the Contract company
that it will provide all the necessary inputs such as labor, water and electricity for
the grow outs of the birds. The proponent will also help the company in the
harvesting of the birds.

Management : The proponent and the contract company will have a dual role
in the production. The proponent will implement all the programs forwarded by
the company such as the feeding , medication , and vaccination programs. The
company will evaluate and oversee the production thru constant monitoring and
evaluation and provide all the technical support.

9.7 Implementation Schedule :

ACTIVITIES Qtr. 1 Qtr. 2 Qtr. 3 Qtr. 4 Year 1 - N

1. Construction of Temporary Facilities

2. Land Development

a. Filling & Grading of Low lying areas

b. Estab. of access road & drainage
fac.

c. Perimeter Fencing

3. Construction of Broiler Houses

4. Construction of Bodega/Warehouse

5. Establishment of Office/Quarter's bldg.

6. Water system Establishment (Depth
well)

6. Purchase of Stocks & Equipment

7. Operationalization

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 9.7 Budgetary Requirements :

PROJECT NAME: BROILER PRODUCTION (80,000 Birds - Capacity)

LOCATION: Sitio Marag-ing, Brgy. Belen, Leyte - Leyte

PROJECT INVESTMENT CAPITAL:

FIXED INVESTMENT:
QTY. Unit PARTICULARS UNIT COST ACEF LOAN EQUITY TOTAL COST
1,000,000.0 2,000,000.0
2 has. Land Acquisition/Development 0 0 2,000,000.00
222,500.0 222,500.0
1 LS Perimeter Fencing 0 0 222,500.00
4,079,212.8 8,158,425.7
2 units Broiler House (12 x 42 sq.m.) 5 0 8,158,425.70
33,585.0 33,585.0
1 unit 1.5HP Motor Centrifugal Pump 0 0 33,585.00
Deepwell with Elevated 154,790.0 154,790.0
1 unit
StainlessWater Tank (2000 lit. cap) 0 0 154,790.00
7,500.0 7,500.0
1 unit Refrigerator (4 cu.ft. cap.) 0 0 7,500.00
158.0 112,812.0
714 pcs. Feeders 0 0 112,812.00
853.0 213,250.0
250 units Waterers (Bell drinkers) 0 0 213,250.00
78.9 157,800.0
2000 units Galloners 0 0 157,800.00
Infrared Lamps w/ pipes & 4,950.0 247,500.0
50 units Accessories 0 0 247,500.00
4,500.0 72,000.0
16 units LPG Tank (50 kgs. Cap.) 0 0 72,000.00
497.0 4,970.0
10 units Shovel 0 0 4,970.00
1,450.0 2,900.0
2 units Wheel Borrow 0 0 2,900.00
1,680.0 3,360.0
2 units Push cart 0 0 3,360.00
1,195.0 19,120.0
16 pcs. Plastic Drum (200 liters cap.) 0 0 19,120.00
9,410,512.7 2,000,000.0 11,410,512.7
SUB-TOTAL 0 0 0
OPERATIONAL/WORKING CAPITAL:
PARTICULARS TOTAL COST
1,224,000.0
Salaries & Wages: 0 1,224,000.00
10,000.0 120,000.0
1 Person Farm Supervisor 0 0
4,500.0 864,000.0
16 Person Animal Caretakers 0 0
10,000.0 240,000.0
2 Person Security Personnel 0 0
5,850.0 70,200.0
12 monhtly Electricity 0 0 70,200.00
2,750.0 33,000.0
12 monhtly Water Utilities 0 0 33,000.00
2,120.0 610,560.0
288 tanks LPG (50 kgs.) 0 0 610,560.00
57.5 103,500.0
1800 m. Laminated plastic sheet 0 0 103,500.00
Building Maintenance Cost (10% Bldg. cost) 838,092.57 838,092.57
55,000.0
Licenses and Permit Fees 0 55,000.00
Miscellaneous Expenses (13% Above of the items) 381,465.83 381,465.83
893,092.5 2,422,725.8 3,315,818.4
SUB-TOTAL 7 3 0
10,303,605.2 4,422,725.8
TOTAL PROJECT COST: 7 3 14,726,331.10

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9.9 Project Analysis

9.9.1 Competitiveness aspect

The proponent shall be supplying live broiler birds to the Contract Growing
Company. The Company will sell the birds as live or dressed to its respective
dealers.

9.9.2 Market Aspect

The Contract Growing Company that will provide all the farm inputs shall be the
immediate client.

9.9.3 Technical Aspect

Broiler birds

Day old broiler chicks will be delivered to the farm. The day old birds will stay in
the brooding area for two weeks until it is ready to be move out to the entire pen.
The growing period will be 35 days or until the birds achieved the desired market
weight. Total population of birds is 80,000 and averages of eight (08) grow outs
per year.

Equipment and facility

The contract Growing Company shall check the construction and installation of
all the feeders, waterers , infrared lamps in accordance with the instruction of the
manufacturer and standard requirements for Broiler bird production practice as
suggested by the Technical consultants.

9.9.4 Financial Aspect

The financial statement and its financial analysis (attached Projected IS/CS/BS)
were conducted with the following basic information assumptions:

Project Duration : Ten (10) years

Broiler Contract Growing Operation :

Volume of production per cropping : 80,000 birds

Annual production : 8 croppings
No. of days production period : 35 days
Mortality Rate : 5%

Equipment and Facilities :

Broiler House Floor Area : 504 square meters

No. of Buildings : 8 units

Capacity :

- 10,000 birds per building

- 8 croppings per year

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Operating Expenses :

AMOUNT
PARTICULARS (PhP)
1,224,00
Salaries & Wages: 0.00
10,00 120,000.
Farm Supervisor 0.00 00
4,50 864,000.
Animal Caretakers 0.00 00
10,00 240,000.
Security Personnel 0.00 00
5,85 70,20
Electricity 0.00 0.00
2,75 33,00
Water Utilities 0.00 0.00
2,12 610,56
LPG (50 kgs.) 0.00 0.00
5 103,50
Laminated plastic sheet 7.50 0.00
838,09
Building Maintenance Cost (10% of Building cost) 2.57
55,00
Licenses and Permit Fees 0.00
381,46
Miscellaneous Expenses (13% of the above items) 5.83
3,315,81
TOTAL 8.40

Revenue:

Projected Production/Sales

Mortality Grower's Fee No. of Cycle Income per

Year No. of Birds
(%) (PhP) per year Year (PhP)
1 80,000.00 5.0 13.00 8.00 7,904,000.00
2 80,000.00 5.0 13.65 8.00 8,299,200.00
3 80,000.00 5.0 14.33 8.00 8,714,160.00
4 80,000.00 5.0 15.05 8.00 9,149,868.00
5 80,000.00 5.0 15.80 8.00 9,607,361.40
6 80,000.00 5.0 16.59 8.00 10,087,729.47
7 80,000.00 5.0 17.42 8.00 10,592,115.94
8 80,000.00 5.0 18.29 8.00 11,121,721.74
9 80,000.00 5.0 19.21 8.00 11,677,807.83
10 80,000.00 5.0 20.17 8.00 12,261,698.22

Financial Assumptions:

1. The grower’s fee is assumed to increase 5% annually.

2. Salaries and wages of workers is 5% increase annually.
3. Power and water utilities will increase at 5% per annum.
4. Building maintenance cost (10% of building cost), miscellaneous
expenses (13% of operating cost), licensing and other operating cost
(e.g.LPG, plastic sheets) will be 5 % increase per annum.

Financial Analysis:

The projected financial statement for contract growing of broiler production using
a 16 percent discounting factor for a period of 10 years resulted a Net Present

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 Value (NPV) of PhP 5,692,254.39 with a Benefit Cost Ratio (BCR) of 1.17 at 16
percent and an Internal Rate of Return (IRR) of 26.05%. It also reveals that the
project would have a payback period of 3.05 years with a Return of Investment
(ROI) of about 32.80 %.

Sensitivity Analysis:

Financial sensitivity (Table 1) indicates that increasing the cost of production

from 5% to 10% showed that the NPV is PhP 4,658,057.80 pesos and PhP
3,623,861.22 pesos, with a BCR of 1.14 and 1.10 at 24.30% and 22.53% IRR,
respectively. However, decreasing the net benefits from 5% to 10% the NPV is
PhP 3,738,689.43 pesos and PhP 1,785,124.48 pesos, with a BCR of 1.11 and
1.05 at 22.74% and 19.30%, respectively. This indicates that the proposed project
is financially viable and could repay its financial obligation.

Sensitivity Analysis Summary

Condition NPV BCR IRR

5,692,254.3
Base Situation 9 1.17 26.05%
5% increase in cost 4,658,057.8
0 1.14 24.30%
10% increase in cost 3,623,861.2
2 1.10 22.53%
5% decrease in benefit 3,738,689.4
3 1.11 22.74%
10% decrease in benefit 1,785,124.4
1.05 19.30%
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9.9.5 Socio-economic Aspect

The proposed project could generate employment and provide opportunities to

increase the income of the neighboring farmers through the utilization of the
chicken manure as organic fertilizer to agricultural crops and likewise it stabilize
the supply and consumer price of poultry meat products in the locality.

9.9.6 Organization/Management Aspect

DA Proprietor/Owner

Farm Supervisor

Animal Caretakers
Security Personnel

ORGANIZATIONAL STRUCTURE

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Duties and Responsibilities:

1. The Farm Supervisor, shall:

a) Manage the day-to-day business operation;

b) Take charge of the property and equipment of the company;
c) Exercise general supervision and direction of the broiler
production operation;
d) Prepare the Annual Plan and Budget of the operation and submit
the same to the proprietor/owner for review and approval; and
e) Formulate policies of all production operation activities such as
organizing, scheduling and supervision of animal caretakers and
supply and distribution of input requirements and etc.;
f) Perform such other functions delegated to him/her by the
proprietor/owner.

2. The Animal Caretakers, shall

a) Undertakes periodic vaccination and other preventive measures for

proper poultry husbandry;
b) Conduct periodic cleaning of the project vicinity and proper waste
disposal (chicken manure) to provide sound and suitable
environment.

3. The Security personnel, shall

a) Provide safekeeping of all properties and other business interest in

the project area;
b) Report to the management of any untoward incidence that may
occur in the project operation.

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To Tacloban

Vicinity Map
Broiler Production
Sitio Marag-ing, Brgy. Belen, Leyte-Leyte

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BROILER CONTRACT GROWING PROJECT
So. Marag-ing, Brgy. Belen, Leyte-Leyte

Mr. Rowil G. Batan

Proponent

AGRICULTURAL COMPETITIVENESS ENHANCEMENT FUND

(ACEF)
Department of Agriculture

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