University of Southeastern Philippines

Tagum-Mabini Campus

College of Agriculture and Related Sciences

Bachelor of Science in Agriculture and Biosystems Engineering

TAGUM AGRO-INDUSTRIAL RICE

MILLERS: A FEASIBILITY STUDY
OF A RICE MILLING BUSINESS

Members:

Arieta, Darell S.

Bawingan, Ay-ay M.

Caguitguit, Novem Jay V.

Jamaani, Ramila

Legara, Henster Frian S.

Libaton, Jenifer

Roble, Stephanny Claire A.

Tabor, Therese

Tutor, Rey Francis

Engr. Sheila C. Cogay

BES 106 – Engineering Economics Instructor

December 2020

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 INTRODUCTION

Brief Description of the Project

The proposed business named Tagum Agro-Industrial Rice Millers (TA-

IRM) is a sole proprietorship or unincorporated business of rice millers. The

researchers highly consider the importance of rice in the lives of Filipino people.

As the basic commodity of every individual, it demonstrates the probability to

cater the demand of every Filipino household.

The project will be at Pioneer Avenue, Magugpo West, Tagum City, Davao

del Norte. Expected consumers are from the retailers, residents and

households of the said province.

The business will provide wide variety of rice options such as 1-6-0,

Masipag, 7-Tonner, and Banay-banay. The proponents believe that this type of

business is feasible for it will provide quality rice product, reasonable price with

distinct and one of a kind valuable customer service.

Objective of the Study

The researchers aim to find out the feasibility of the proposed business

called Tagum Agro-Industrial Rice Millers (TA-IRM) in Pioneer Avenue,

Magugpo West, Tagum City. The proposed business will also assess the status

of demand and supply of the product in order to help the proponents decide to

engage in the business.

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Methodology

To know the nature, profitability, and other related aspects of the business,

interview and observational research methods will be used in this study. Direct

competitors were identified. Information such as location, operation hours, price

list, operating cost, and estimated number of clients were collected.

Survey will be conducted to determine how often consumers brought the

product as well as their buying capacity. The target market are present

households in the area.

Scope and Limitations of the Study

In conducting the research, we need to take into consideration the number

of consumers of the proposed location where the business will actually be

located at Pioneer Avenue, Magugpo West, Tagum City. The study focuses on

the Marketing, Management, Technical and even Financial aspect of the

business. Results of this study will be limited only up to the information gathered

by the proponent from the business firms and government agency that have

pertinent knowledge of the proposed business.

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 MARKETING PLAN

Description of Product and Services

Tagum Agro-Industrial Rice Miller (TA-IRM) is a rice milling plant that

provides a high-quality of vast varieties of local rice product such as 1-6-0,

Masipag, 7-Tonner and Banay-banay. The company aims to be the forefront of

producing top-quality and pure Philippine milled rice for the local rice retailers

of Tagum City local market, wholesalers, and for its localities’ consumption. As

also the aim of the company is to meet not only the local standards but also to

meet the national standards, the company ensures to provide excellent

performance on commercial rice milling operations by using high class quality

machines, maintaining workplace cleanliness and abiding working etiquettes.

Comparison of the Product with Its Competitors

In comparison to other rice milling companies, TA-IRM always consider the

welfare of all of its employees and stakeholders from the beginning process

(buying rice paddy) up until to the end process, the product (packaging).

Additionally, the company provides reasonable price system that will surely

benefit to our local farmers to secure profitability on their harvest. Moreover,

among all, TA-IRM ensures to maximize the production rate (yield) without

affecting the quality of the product in a reasonable price with distinct and one

of a kind customer service.

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Location

The proposed business, Tagum Agro-industrial Rice Millers (TA-IRM), is

located at Pioneer Avenue, Magugpo West, Tagum City, Davao del Norte.

Market Area

Tagum Agro-Industrial Rice Millers (TA-IRM) is the main supplier of rice all

over Tagum City. Specifically, the said company supplies mostly the barangays

in Tagum City as well its nearby municipalities.

Main Costumer

The main target of this company is the restaurants, fast food chains, public

market, wholesalers, retailers, residents and households of the said

municipality and perfect opportunity for customers who wants to start a grain

farming business, dealer, wholesale or retail grain selling or rice mill business

in Tagum City.

Total Demand

The proponents gathered the data through conducting research and

interviews to the Local Government Unit (LGU) of the said location. This is in

gathering the total rice wholesalers in Tagum City Public Market and Food

Company/Chain. Since, the demand of the product is very essential in starting

up the business, it is important to have this kind of vital information.

Historical demand

Table 1 shows the year 2005, 2010, 2015 historical demand of Rice

Milling Business at Tagum City Davao del Norte. The data below show the

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number of households in three (3) different years. Among the total number of

households 85% are getting its rice supplies to different rice wholesalers and

retailers. According to Philippine Statistics Authority, there is an average of 9.5

sacks of rice consumed a year for every household. So, there will be total

demand in sacks of 6,843,078 in year 2005; 7,572,611 in year 2010; and lastly

8,611,674 in year 2015.

TABLE 1. HISTORICAL DEMAND

YEAR HOUSEHOLD % OF AVERAGE TOTAL

POPULATION TARGET CONSUMPTION DEMAND IN
COSTUMER PER YEAR SACKS
(85%) PER 5
YEARS

2005 847,440 720,324 9.5

6,843,078

2010 937,785 797,117 9.5

7,572,611

2015 1,066,461 906,492 9.5

8,611,674

Projected Demand

Table 2 shows the total projected demand in every 5 years, In Annex A, it

shows the calculation of getting the percentage increase as well as the

projected demand using the Moving Average Method in computation. In getting

the projected demand, the based year is multiplied by the average increase of

12.18%. Then it is added back to the based year to get the projected demand.

Therefore, there is a projected demand of 9,660,576 in year 1, 10,837,234 in

year 2 and 12,157,209in year 3.

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 TABLE 2. PROJECTED DEMAND (IN SACK)

Average % Total Projected

Year Based Year
Increase Demand

1 8,611,674 12.18% 9,660,576

2 9,660,576 12.18% 10,837,234

3 10,837,234 12.18% 12,157,209

Historical Supply

Table 3 shows the historical supply of the competitors from year 2005,

2010, and 2015. This data is based on the gathered research and observation

of the existing competitors that is present in the market place. Observe that

there is a larger part of the historical supply that belongs to competitors. These

competitors are those mill owners from the area

TABLE 3. HISTORICAL SUPPLY (IN SACK)

Competitors 2005 2010 2015

Alben Rice Mill 32514 35168 41190

Dela Pena Rice Mill 22318 32204 39234

Reasonable Rice Mill 35413 37175 42204

Bautista Rice Mill 33319 35219 40248

Total 123,564 139,766 162,876

Projected Supply

Table 4 shows the projected supply. As per computation, there is an

average increase of 14.82% per year using the moving average method.

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 TABLE 4. PROJECTED SUPPLY (IN SACK)

Average % Total Projected

Year Based Year
Increase Supply

1 162,876 14.82% 187,014

2 187,014 14.82% 214,730

3 214,730 14.82% 246,553

Demand and Supply Analysis

Table 5 below shows the Demand and Supply Analysis, presenting the

historical and projected data of demand and supply. It is observed that there is

an increase of the latter for the past in every five (5) years and of the present

years due to the increasing population. For the past years, there is a great

number of households that needs to be catered. However, in preceding years

the unsatisfied demand is decreasing because of the increase in the availability

of supply made by the Tagum Agro-Industrial Rice Millers (TA-IRM).

TABLE 5. DEMAND AND SUPPLY ANALYSIS

Unsatisfied
Year Demand Supply
Demand

Past

2005 6,843,078 123,564 6,719,514

2010 7,572,611 139,766 7,432,845

2015 8,611,674 162,876 8,448,798

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 Projected

1 9,660,576 9,473,562
187,014

2 10,622,504
10,837,234 214,730

3 11,910,656
12,157,209 246,553

Market Share

Table 6 shows the market share of Tagum Agro-Industrial Rice Millers (TA-

IRM). It is expected that proponents can produce 947,356 sacks on the first

year, which is equivalent to 10% approximate market share. An increase of 1%

to production capacity is assumed per year as the capital of the business

increases.

TABLE 6. MARKET SHARE

Year Unsatisfied Demand Production Capacity Market Share

1 9,473,562 947,356 10%

2 10,622,504 1,168,475 11%

3 11,910,656 1,429,279 12%

Historical Selling Price per Sack

Table 7 shows historical selling price of rice as being observed among the

competitors. The historical selling price is one of the bases also in putting price

for the product of the proposed business.

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 TABLE 7. HISTORICAL SELLING PRICE

2005 (Per 2010 (Per 2015 (Per

Particulars
Sack) Sack) Sack)

1-6-0 ₱1,653.00 ₱1,740.00 ₱1,815.00

Masipag ₱1,540.00 ₱1,685.00 ₱1,733.00

7-Tonner ₱1,488.00 ₱1,578.00 ₱1,650.00

Banay-banay ₱1,256.00 ₱1,348.00 ₱1,485.00

Projected Selling Price

Shown in Table 8 is the projected selling price of rice per sack. The price is

dependent upon on the variety of rice. As per interview conducted, the price of

rice will increase by about 5% per year.

TABLE 8. PROJECTED SELLING PRICE

Particulars Year 1 (Per Sack) Year 2 (Per Sack) Year 3 (Per Sack)

1-6-0 ₱1,815.00 ₱1,906.00 ₱2,001.00

Masipag ₱1,733.00 ₱1,820.00 ₱1,911.00

7-Tonner ₱1,650.00 ₱1,733.00 ₱1,820.00

Banay-banay ₱1,485.00 ₱1,559.00 ₱1,638.00

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Sales Revenue – Year 1

Table 9 presents the sales revenue for the year 1. Each particular

contributed to the expected sales revenue of ₱1,582,443,228 in the initial year.

The total sales of each particular is computed based on the projected selling

price per sack of the total sacks sold.

TABLE 9. SALES REVENUE – YEAR 1

Selling
% Number of Sack
Particular Price per Total Sales
Share (Sold)
Sack

1-6-0 30% ₱1,815.00 281365 ₱510,677,475

Masipag 25% ₱1,733.00 234471 ₱406,338,243

7-Tonner 25% ₱1,650.00 234471 ₱386,877,150

Banay-banay 20% ₱1,485.00 187576 ₱278,550,360

Total 100% ₱ 6,683.00 937,883 ₱1,582,443,228

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Sales Revenue – Year 2

Table 10 shows the sales revenue of Tagum Agro-Industrial Rice Millers for

year 2. The highest grossing particular is the 1-6-0 with total sales of

₱661,454,428. Based from the conducted interview, 1-6-0 takes the lead when

it comes to rice variety so the proponents maximize its potential by giving it the

highest percentage of share.

TABLE 10. SALES REVENUE – YEAR 2

Selling
%
Particular Price per Number of Sack Total Sales
Share (Sold)
Sack
1-6-0 30% ₱1,906.00 ₱661,454,428
347,038

Masipag 25% ₱1,820.00 ₱526,338,540

289,197

7-Tonner 25% ₱1,733.00 289,198 ₱501,180,134

Banay-banay 20% ₱1,559.00 231,358 ₱360,687,122
Total 100% ₱7,018.00 1,156,791 ₱2,049,660,224

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Sales Revenue – Year 3

Table 11 presents the sales revenue of the proposed business for the year

3. Apparently, the consisting lowest grossing variety of rice is Banay-banay with

only ₱463,549,086 as per revenue. Having that being said, the proponents will

still give it 20% share to attend the needs of consumers in the prospected area

of the business.

TABLE 11. SALES REVENUE – YEAR 3

Selling
% Number of Sack
Particular Price per Total Sales
Share (Sold)
Sack

1-6-0 30% ₱2,001.00 424,496 ₱849,416,496

Masipag 25% ₱1,911.00 353,747 ₱676,010,517

7-Tonner 25% ₱1,820.00 353,746 ₱643,817,720

Banay-banay 20% ₱1,638.00 282,997 ₱463,549,086

Total 100% ₱7,370.00 1,414,986 ₱2,632,793,819

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Summary of Sales

Table 12 shows the summary of sales in the next three years. It can be

seen in the table that sales are increasing. It implies the potential of the

proposed rice business in the proposed location provided it would be coupled

with proper management.

TABLE 12. SUMMARY OF SALES

Year Amount

1 ₱1,582,443,228

2 ₱2,049,660,224

3 ₱2,632,793,819

MARKETING STRATEGY

Distribution Strategy

TA-IRM uses a direct channel distribution. As rice millers, the business

directly offers the product to the retailers and wholesalers who will come directly

to the business location.

Pricing Strategy

The pricing strategy of the business will depend upon the law of demand

and supply. However, it rarely increases since it is basic needs of man, if in

case it increases, only minimal.

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Promotional Strategy

The proposed business will just simply place a signage in a strategy

location of the TA-IRM to let the customers be able to know the existence of the

business. There will be less amount of expense in the promotion considering

that the goods to be sold are basic needs. One important point of consideration

is to sell a high quality new rice at a profitable price. The amount of signage is

budgeted at an amount of ₱1,000 in the first year and assumes to increase 10%

per year.

TABLE 13. PROMOTIONAL EXPENSE

Year Amount

1 ₱1,000.00

2 ₱1,100.00

3 ₱1,210.00

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 TECHNICAL PLAN

A. PRODUCT

Rice, (Oryza sativa), edible starchy cereal grain and the grass plant
(family Poaceae) by which it is produced. Roughly one-half of the world
population, including virtually all of East and Southeast Asia, is wholly
dependent upon rice as a staple food; 95 percent of the world’s rice crop is
eaten by humans.

Rice has also fed more people over a longer time than has any other
crop. It is spectacularly diverse, both in the way it is grown and how it is used
by humans. Rice is unique because it can grow in wet environments that other
crops cannot survive in. Such wet environments are abundant across Asia. The
domestication of rice ranks as one of the most important developments in
history and now thousands of rice varieties are cultivated on every continent
except Antarctic

Global rice production more than tripled between 1961 and 2010, with a
compound growth rate of 2.24% per year (2.21% in rice-producing Asia). This
increase was slightly greater than that for wheat (2.02% per year), but
substantially less than that for maize, which grew at 2.71% per year. Most of
the increase in rice production was due to higher yields, which increased at an
annual average rate of 1.74%, compared with an annual average growth rate
of 0.49% for area harvested. In absolute terms, paddy yields increased at an
annual average rate of 51.1 kg/ha per year, although this rate of increase has
declined in both percentage and absolute terms.

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B. MANUFACTURING PROCESS

Harvesting

⚫ Once the plants have reached full growth (approximately three months after
planting) and the grains begin to ripe. the ideal harvest time lies between
130 and 136 days after sowing for late, 113 and 125 for medium, and 110
days for early-maturing varieties. For dry season harvesting, an optimum
time is 28 to 35 days after heading.

⚫ Rice can be harvested by a mechanized hand harvester or by a

tractor/horse-drawn machine that cuts and stacks the rice stalks. In the
United States, most operations use large combines to harvest and thresh—
separate the grain from the stalk—the rice stalks. If the rice has been
harvested by hand or by a semi-automated process, threshing is completed
by flailing the stalks by hand or by using a mechanized thresher.

Drying

⚫ Before milling, rice grains must be dried in order to decrease the moisture
content to between 18-22%. This is done with artificially heated air or, more
often, with the help of naturally occurring sunshine. Rice grains are left on
racks in fields to dry out naturally. Once dried, the rice grain, now called
rough rice, is ready for processing.

Hulling

⚫ Hulling can be done by hand by rolling or grinding the rough rice between
stones. However, more often it is processed at a mill with the help of
automated processes. The rough rice is first cleaned by passing through a
number of sieves that sift out the debris. Blown air removes top matter.

⚫ Once clean, the rice is hulled by a machine that mimics the action of the
handheld stones. The shelling machine loosens the hulls from the rice by

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 rolling them between two sheets of metal coated with abrasives. 80-90% of
the kernel hulls are removed during this process.

⚫ From the shelling machine, the grains and hulls are conveyed to a stone
reel that aspirates the waste hulls and moves the kernels to a machine that
separates the hulled from the unhulled grains. By shaking the kernels, the
paddy machine forces the heavier unhulled grains to one side of the
machine, while the lighter weight rice falls to the other end. The unhulled
grains are then siphoned to another batch of shelling machines to complete
the hulling process. Hulled rice grains are known as brown rice.

Milling

⚫ Since it retains the outer bran layers of the rice grain, brown rice needs no
other processing. However along with added vitamins and minerals, the
bran layers also contain oil that makes brown rice spoil faster than milled
white rice. That is one of the reasons why brown rice is milled further to
create a more visually appealing white rice.

⚫ The brown rice runs through two huller machines that remove the outer
bran layers from the grain. With the grains pressed against the inner wall of
the huller and a spinning core, the bran layers are rubbed off. The core and
inner wall move closer for the second hulling, ensuring removal of all bran
layers. The now light-colored grain is cooled and polished by a brush
machine.

⚫ The smooth white rice is conveyed to a brewer's reel, where over a wire
mesh screen broken kernels are sifted out. Oftentimes, the polished white
rice is then coated with glucose to increase luster.

Enriching

⚫ The milling process that produces white rice also removes much of the
vitamins and minerals found primarily in the outer bran layers. Further
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 processing is often done in order to restore the nutrients to the grain. Once
complete, the rice is called converted rice.

⚫ White rice is converted in one of two ways. Prior to milling, the rice is
steeped under pressure in order to transfer all the vitamins and minerals
from the bran layers to the kernel itself. Once done, the rice is steamed,
dried, and then milled. Rice that has already been milled can be submersed
in a vitamin and mineral bath that coats the grains. Once soaked, they are
dried and mixed with unconverted rice.

Grain Grading

⚫ Grain grading is a set of standard procedures and methods in quality

determination which is essential in marketing, quality assurance operations
and in the varietal improvement program of the country and other research
projects involving paddy and milled rice.
⚫ With better crops procured, quality assurance in the other post-harvest
operations becomes more manageable. With grades and quality standards,
quality evaluation or quality assessment operations aimed at preventing
quality deterioration and reducing post-harvest losses becomes more
uniform.
⚫ Grading is necessary in the development of quality standards that define
the relationship between grades and prices in the assessment of the value
of grains. Official standards are important in the marketing process because
they furnish the means of describing variations in quality and condition.
They also provide a basis for merchandising contracts, for quoting prices,
for loans on product in storage and for sorting and blending by producers
to meet market requirements. Grading then provides for an orderly
marketing and trading system.

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Packing and Marking

⚫ Milled rice shall be packed in durable jute or plastic sacks without patches
to give maximum protection from normal hazards of transportation and
handling and shall weigh 50 kilograms net. Smaller packages may be
allowed provided the net weight be one or two kilograms or multiple of five
kilograms subject to buyer/seller agreement.

Figure 3. FUNCTIONING OF RICE MILL

C. PLANT SIZE AND PRODUCTION SCHEDULE

1. By considering factors brought by climate change, rising fuel pricing,

shrinking of farmlands due to the establishment of new residential area built
in agricultural lands, for the next one decade, the estimated rate for
volume of rice production will increase up to 11-12% or 1.2% per annum

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 given by increasing the productivity of the farm and lowering the production
cost without affecting the quality of the product

2. Tagum Agro-Industrial Rice Miller (TA-IRM) is using a rice milling machine

that can mill 1 ton of raw and parboiled paddy per hour that operates 9
hours a day. Considering that TA-IRM uses 10 operational rice mill, it can
process up to 90 tons of raw and parboiled paddy a day and up to 23,400
tons for 260 working days a year. For the next ten years, estimated
2340000 tons can be process using the number of operational rice milling
machines.

D. PLANT LAYOUT

Tagum Agro-Industrial Rice Millers (TA-IRM) should be located at a safe

location to perform best production of rice free from any barriers that can
hindrance the production of good rice. The plant must be located at high level
ground to avoid floods. The plant layout should be organized by this function
first is cleaning followed by hulling, milling, polishing, grading, sorting and
packing/storage.

Figure 4. LAYOUT OF A CONE TYPE RICE MILL

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⚫ Type of rice mill having an under-runner stone disc huller and vertical
cone whitener

Figure 5. LAYOUT OF A CONE TYPE RICE MILL

⚫ Type of rice mill using rubber roll huller and utilizes friction and/or
combination of other types of whitener

E. PLANT LOCATION

Tagum Agro-Industrial Rice Millers (TA-IRM) will be located at Pioneers

Avenue, Magugpo West, Tagum City. In this busy location offers a wide variety
of potential customers. Cross section of many different demographics pass by
in this location every day and give us the chance to offer wider variety of
products that can improve our profit margin. And with this location which is
located near in the national highway it gives benefits to the potential customers
in terms of transportation.

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Figure 6: The projected location of Tagum Agro-Industrial Rice Millers

F. STRUCTURE

The following building or civil works are considered in this study:

1. Raw paddy godown

2. Cleaning unit- similar to rice paddy godown

3. Drier and other supporting structures such as boiler/blower system

4. Milling section
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5. Finished product storage

6. Auxiliary structures such as office, lab and other

The total area estimated in this project is 3000 sq. m. Cost of materials
around Php 800,000 and additional expenses including labor amounting to Php
100,000. Hence, the total construction cost for built up area is estimated to Php
1,000,000-1,500,000 including the cost for legal permits.

G. RAW MATERIALS

1. The rice milling is the process that helps in removal of hulls and brans from
paddy grains to produce polished rice. The raw materials from guaranteed
sources plays an important role for the process. The method to be used to
obtain raw materials is to purchase rice grains from farmers or using the
farmers’ market. In this way of buying rice from farmers is hugely affected by
the market price.

2. When considering good quality raw material, the starting quality of the
paddy should be good and must be at the right moisture content (14%) to insure
a high purity.

H. RICE MILL MACHINERY

There are two kinds of rice mill machine: commercial rice milling
production line using multi-stage grinding process allowing the production of
high quality rice; modern single rice mill machines using sing-stage milling
process according to the special requirements. The entire process has a
number of machines that perform different functions.

1. Paddy rice huller machine is used to break and release bran (husk). Input
materials of this machine is a un-hulled rice with a moisture content of about
14% and output in the form of brown rice (pure white).

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2. Husk separator is used to separate grain of rice and husk using a blower
system. The system utilizes the difference in specific gravity between rice
and husk. Husk which has a smaller specific gravity to be sucked by the
blower, while rice tend not to be affected by the air blower and straight out
through the rice outlet.

3. Rice polisher is used to remove the epidermis (aleuron) on brown rice to

produce white rice that is ready to be marketed or cooked. This machine
uses the screw extruder system in the cylinder which has the inner surface
uneven. When brown rice fed into the cylinder it will jostle and rub against
the cylinder surface which causes the epidermis to be eroded.

4. Rice shifter is used to separate the rice based group quality such as whole
rice (best quality) and broken rice (second quality). This machine uses a
filter screen plate or cylinder shaped. Rice with some sort of quality level
will be mixed again with a certain ratio to determine the selling price before
the rice is packaged to be marketed.

I. UTILITIES

Sarda (1966), Mukharjee (1984) and De (2002) suggested that all the
unit operations in rice milling needed a mechanical energy, which was mainly
imparted by electric motors. Mechanical energy requirement alters from 18–55
kWh/t in different types of rice mills. While the energy consumption in modern
rice mills generally vary from 18–26 kWh/t for raw and 20–30 kWh/t for
parboiled paddy, sheller and huller mills needed higher energy. Rice mills
having parboiling and drying consumed 24–25 kWh/t of mechanical energy.
Considering the fact that the price of Davao del Norte Electric Cooperative Inc.
(DANECO) is 7.725 pesos per kilowatt in average since year 2013. Water
supply is also added in this plan because the operation involves various step
like cleaning, hulling, brans separation from shelled rice and parboiling.

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J. WASTE DISPOSAL

1. Treatment/processing of Rice Mill Waste (methods):

- Mechanical treatment
- Heat treatment

2. Rice husk is put in the dump site or an area for the waste of the milling
company. When it comes to rice husk utilization, it can be used for soil
fertilization.

3. Rice bran utilization (application within poultry industry) is useful energy

source and a viable source of feed ingredient for broilers chickens and can
also be fed to other livestock.

4. Broken rice utilization is processed into flour and utilized as a food additive.

5. Waste water can still be used for parboiling.

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 PRODUCTION PLAN

Production Aspect

This chapter discusses the production process aspect in which involves the

preparation of the rice products to sell. The proponents consider that this is a

very important aspect because it involves procedure on how to come up with a

good quality rice product.

Production Process

Tagum Agro-Industrial Rice Millers (TA-IRM) is a rice milling business.

Figure 7 shows the process of acquiring the raw materials from point of

purchase from the farmers down to the acquisition of the ultimate consumer.

Figure 7. PROCESS FLOW CHART

Purchasing of Raw Rice

From Farmers

Storing & Processing of Product Segregation

Purchased Rice according to its Variety

Accepting Orders
Product Selling
from Customers

Receiving of
Preparing of Order
Payments from Final 27 | P a g e

Customers
 Tools and Equipment

The establishment has various fixed assets. The costs of quantity of these

assets are shown in Table 14.

TABLE 14. TOOLS AND EQUIPMENT

Particulars Quantity Unit Cost Total Cost

Tools and Equipment

Portable Beam Scale 1 ₱30,000 ₱30,000.00

Rice Destoner 1 ₱100,000 ₱100,000.00

Paddy Huller 1 ₱50,000 ₱50,000.00

Rice Mill Machine
5 ₱100,000 ₱500,000.00
500kg/hr
Subtotal ₱680,000.00

Furniture and Fixture

Wood Pallets 45 ₱200.00 ₱9,000.00

Monoblock Chairs 10 ₱236 ₱2360

Mini Cabinet 1 ₱1,500.00 ₱1,500.00

Cashier Table 1 ₱1,800.00 ₱1,800.00

Ceiling Fan 2 ₱750.00 ₱1,500.00

Rice Mill Ventilator 6 ₱9000 ₱54,000

Subtotal ₱70,160.00

Total ₱750,160.00

28 | P a g e
 TABLE 15. DEPRECIATION

Estimated
Particulars Total Cost Life of Year 1 Year 2 Year 3
Assets

Tools and Equipment

Portable
₱30,000.00 5 ₱10,000.00 ₱10,000.00 ₱10,000.00
Beam Scale
Rice
₱100,000.00 5 ₱33,333.33 ₱33,333.33 ₱33,333.33
Destoner
Paddy
₱50,000.00 5 ₱16,666.00 ₱16,666.00 ₱16,666.00
Huller
Rice Mill
Machine ₱500,000.00 5 ₱166,666.67 ₱166,666.67 ₱166,666.67
500kg/hr

Subtotal ₱680,000.00 ₱226,666.67 ₱226,666.67 ₱226,666.67

Furniture and Fixture

Wood
₱9,000.00 5 ₱3,000.00 ₱3,000.00 ₱3,000.00
Pallets
Monoblock
₱2360 5 ₱786.67 ₱786.67 ₱786.67
Chairs
Mini
₱1,500.00 5 ₱500.00 ₱500.00 ₱500.00
Cabinet
Cashier
₱1,800.00 5 ₱600.00 ₱600.00 ₱600.00
Table

Ceiling Fan ₱1,500.00 5 ₱500.00 ₱500.00 ₱500.00

Rice Mill
₱54,000 5 ₱18,000 ₱18,000 ₱18,000
Ventilator

Subtotal ₱70,160.00 ₱23,386.67 ₱23,386.67 ₱23,386.67

Total ₱750,160.00 ₱250,053.33 ₱250,053.33 ₱250,053.33

29 | P a g e
Depreciation

Table 15 illustrates the depreciation expense of the proposed business.

The proponents use the straight-line method of depreciation, which is total cost

over its estimated economic life.

SOURCE OF EQUIPMENT

Some equipment are available in Tagum City or in Davao. The purchase

of equipment is assumed to be on cash basis to avail discounts.
TABLE 15. SOURCE OF EQUIPMENT

PARTICULARS SOURCE OF EQUIPMENT

Tools and Equipment

Portable Beam Scale SCALES GALORE

Rice Destoner BRT MACHINERY

Paddy Huller BRT MACHINERY

Rice Mill Machine 500kg/hr BRT MACHINERY

Furniture and Fixture

Wood Pallets TAGUM CUTY

Monoblock Chairs TAGUM CITY

Mini Cabinet CEPRIANO’S FURNITURE SHOP

Cashier Table CEPRIANO’S FURNITURE SHOP

Ceiling Fan DAVAO CITY

Rice Mill Ventilator DAVAO CITY

30 | P a g e
Terms and Condition of Purchasing Equipment

The business terms and condition of purchasing equipment is on cash

basis.

Business Layout

Figure 8 shows the layout of the business.

31 | P a g e
Supply Capacity

The production capacity is based on the capacity of the proposed business

to how much it can produce or supply the unsatisfied demand of target market.

This will be based on its capitalization available after considering other

necessary equipment and utensil needed in the proposed business operation.

Table 16 presents the details.

TABLE 16. SUPPLY CAPACITY (BY SACK)

Supply Capacity per Number of Supply Capacity

Year
Month Months per Year per Year

1 78,946.3 12 947,356

2 97,372.9 12 1,168,475

3 119,106.6 12 1,429,279

32 | P a g e
Cost of Purchases – Year 1

Presented in Table 17 is the cost of purchases of rice supplies to be sold

for year 1. The cost per sack is expected to increase by roughly 5% per year

based on the conducted interview.

TABLE 17. COST OF PURCHASES – YEAR 1

% Cost per Number of

Particular Total Cost
Share Sack Sack

1-6-0 30% ₱1100.00 284207 ₱312,627,700

Masipag 25% ₱1050.00 236839 ₱248,680,950

7-Tonner 25% ₱1000.00 236839 ₱236,839,000

Banay-banay 20% ₱900.00 189471 ₱170,523,900

Total 100% ₱4050.00 947,356 ₱968,671,550

33 | P a g e
Cost of Purchases – Year 2

Table 18 explains the cost of purchases for the year 2 of operation. An

increase of roughly 5% per sack at each year is expected to rise normally

because of inflation rate and other factors.

TABLE 18. COST OF PURCHASES – YEAR 2

% Cost per Number

Particular Total Cost
Share Sack of Sack

1-6-0 30% ₱1155.00 350543 ₱404,877,165

Masipag 25% ₱1103.00 292118 ₱322,206,154

7-Tonner 25% ₱1050.00 292119 ₱306,724,950

Banay-banay 20% ₱945.00 233695 ₱220,841,775

Total 100% ₱4253.00 1,168,475 ₱1,254,650,044

34 | P a g e
Cost of Purchases – Year 3

Table 19 presents the cost of purchase for the year 3. Apparently, the total

cost for the third year is the highest among the first three years of operation.

The owner of the existing establishment’s points out that there is such

increased in production cost, still they can earn at its expected profit margin as

long as the operation of the business is not interrupted by fortuitous events.

TABLE 19. COST OF PURCHASES – YEAR 3

% Cost per Number of

Particular Total Cost
Share Sack Sacks

1-6-0 30% ₱1213.00 428784 ₱520,114,992

Masipag 25% ₱1158.00 357320 ₱413,776,560

7-Tonner 25% ₱1103.00 357319 ₱394,122,857

Banay-banay 20% ₱993.00 285856 ₱283,855,008

Total 100% ₱4467.00 1,429,279 ₱1,611,869,417

35 | P a g e
 Ending Inventory – Year 1

Table 20 shows the ending inventory for the initial year of the proposed

business. It is expected to be 1% based on purchases per year. The data are

based on the interview proponents with the existing competitors. The

information is collectively gathered and below shows the closest assumption of

inventory of unsold rice at the end of the year.

TABLE 20. ENDING INVENTORY – YEAR 1

Ending
Beginning Ending Unit
Particulars Purchase Sold Inventory
Inventory Inventory Cost
In Peso

1-6-0 0 284207 281365 2842 ₱1100.00 ₱3126200

Masipag 0 236839 234471 2368 ₱1050.00 ₱2486400

7-Tonner 0 236839 234471 2368 ₱1000.00 ₱2368000

Banay-banay 0 189471 187576 1895 ₱900.00 ₱1705500

Total 0 947,356 937,883 9,473 ₱9482.00 ₱9,686,100

36 | P a g e
 Ending inventory – Year 2

Table 21 reflects the ending inventory for the second year of the business

operation. The unsold rice inventory for this year is not too different from the

preceding year since the data given by the respondents are consistent and

purely based on usual ending inventory, they have each year.

TABLE 21. ENDING INVENTORY – YEAR 2

Ending
Beginning Ending Unit
Particulars Purchase Sold Inventory
Inventory Inventory Cost
In Peso

350543
1-6-0 2842 347038 6347 ₱1155.00 ₱7,330,785

292118
Masipag 2368 289197 5289 ₱1103.00 ₱5,833,767

292119
7-Tonner 2368 289198 5289 ₱1050.00 ₱5,553,450

233695
Banay-banay 1895 231358 4232 ₱945.00 ₱3,999,240

1,168,475
Total 9,473 1,156,791 21,157 ₱4253.00 ₱17,719,136

37 | P a g e
 Ending Inventory – Year 3

Presented in Table 22 is the ending inventory of ₱43,523,405 for the third

year of operation. Like the previous years, the difference is not really visible

because of the consistency of the data given by the existing competitors. The

respondents, however, conducted further interview with the other rice millers in

town to prove the validity of the information of the previews respondents.

Finally, the new information gathered is proved to be quite similar.

TABLE 22. ENDING INVENTORY – YEAR 3

Ending
Beginning Ending Unit
Particulars Purchase Sold Inventory
Inventory Inventory Cost
In Peso

428784
1-6-0 6347 424496 10635 ₱1213.00 ₱12900255

357320
Masipag 5289 353747 8862 ₱1158.00 ₱13806996

357319
7-Tonner 5289 353746 8862 ₱1103.00 ₱9774786

285856
Banay-banay 4232 282997 7091 ₱993.00 ₱7041368

1,429,279
Total 21,157 1,414,986 35,450 ₱4467.00 ₱43,523,405

38 | P a g e
Operating Expenses

Salaries Expense

Table 23 the projected salaries expense budgeted for the proposed

business. In retrospect, there are a total of 14 workers that Tagum Agro-

Industrial Rice Millers is expected to hire.

TABLE 23. SALARIES EXPENSE

Rate per
Yearly rate
No. of Rate per
Rate Month expenses per
Position year per
Workers per day worker’s
(20 working worker
position
days)

Mill
1 1160.00 23 200.00 278 400.00 278 400.00
Engineer

Mill packer 3 385.00 7 700.00 92 400.00 277 200.00

Utilities 2 381.00 7 620.00 91 440.00 182 880.00

Mill
Machine 2 400.00 8 000.00 96 000.00 192 000.00
Operator

Cashier 1 381.00 7 620.00 91 440.00 91 440.00

Helper/Lab
5 385.00 7 700.00 92 400.00 462 000.00
orer

Total 14 ₱61,840.00 ₱742,080.00 ₱1,483,920.00

39 | P a g e
Projected Salaries Expense

The projected salaries expense is assumed to increase by 5% annually.

Table 24 shows the projected expenses for the Salaries and wages. Tagum

Agro-Industrial Rice Millers is assumed to have 14 workers whose

compensation is fair enough based on the amount of work they will exerted in

the business. Table 24 shows the projected amount.

TABLE 24. PROJECTED SALARIES EXPENSE

Year Amount

1 ₱1 483 920.00

2 ₱1 558 116.00

3 ₱1 636 022.00

40 | P a g e
 Utilities Expenses

This portion describes the amount, cost, and sources of electricity, waste

disposal, water, internet services and communication services required. This

must be determined in relation to the production schedule and capacity

utilization defined. Alternative sources of these utilities and the feasibility of their

use must also be described.

TABLE 25. UTILITIES EXPENSES

UTILITIES Source Basis Rate per Month Total

EXPENSES Amount per
Year
Water Tagum City Per cubic ₱ 11,588.7 ₱ 139,064.4
Water District meter
Mechanical DANECO Per kilowatt ₱ 8762.75 ₱105,153
Energy Hour (installed lights)
(electricity) ₱30,566.85 ₱366,802.2
(5 rice mill
machine)

₱ 405.56 ₱4,866.75
(Rice destoner)

₱347.625 ₱4,171.5
(Paddy hulling)

₱ 6.9525 ₱83.43
(Router)
Communication Philippine Long Per kilowatt ₱1,899 ₱22,788
Services and Distance hour
Internet Services Telephone
(PLDT)
Waste Disposal ₱150 ₱1800

TOTAL ₱53,727.4375 ₱644,729.28

EXPENSES

41 | P a g e
Projected Utilities Expenses

The table show that the annual projected utility cost in the next three

years. It is assumed to increase by 5% in the next succeeding years.

TABLE 26. PROJECTED UTILITIES EXPENSES

YEAR AMOUNT
1 ₱644,729.28
2 ₱676,965.744
3 ₱710,814.0312

Rice Mill Supply Expense

the table show the details of the plant supplies needed in the proposed

rice milling business. Initially, the estimated amount is ₱123,831.75 and it

assumed to increase by 5% in the year after.

TABLE 27. SUPPLIES EXPENSE

Particulars Quantity Unit Cost Total Cost

Calculator 2 ₱420.00 ₱840.00

Ball Pen 10 8.00 80.00

Receipts 15 20.00 300.00

Record Book 1 69.75 69.75

Columnar 1 25.00 25.00

Marker 3 34.00 102.00

Stapler 2 45.00 90.00

Staple Wire No.10 5 boxes 10.00 50.00

42 | P a g e
 Sacks 40000pcs 3.00 120000.00

Rake paddle 4pcs 150 600.00

Tie Box 3 rolls 60.00 180.00

Rice Scoop 3 50.00 150.00

Pencil 10 5.00 50.00

5 130.00 650.00
Machine Lubricants
Rags 5 20.00 100.00

Solvents 5 100.00 500.00

Papers 3 pads 25.00 75.00

TOTAL ₱123,831.75

Projected Supplies Expense

Shown in Table 28 is the projected annual supplies expense in the next

three years. It assumed to increase by 5% per year.

TABLE 28. PROJECTED SUPPLIES EXPENSE

Year Amount

1 ₱123,831.75

2 ₱130,023.34

3 ₱136,524.51

43 | P a g e
Transportation Expense

Table 29 shows the estimated transportation expense that a proposed

business will possibly spend. As per assumption, a monthly transportation

expense of ₱10,000.00 is considered or a total of ₱120,000.00 per year, it is

further assumed to increase by 5% per year.

TABLE 29. TRANSPORTATION EXPENSE

Year Amount

1 ₱120,000.00

2 ₱126,000.00

3 ₱132,300.00

Rent Expense

Table 30 shows the rent expense of the area only for ₱165,000 per month
or a total of ₱1,980,000.00 in year 1. It is assumed to increase by 5% per year.

Table 30. Rent Expense

Year Amount

1 ₱1,980,000.00

2 ₱2,079,000.00

3 ₱2,182,950.00

44 | P a g e
Repair and Maintenance Expenses

The table below shows the total expenses cost from repairs and

maintenance of the tools and equipment. The prices are the estimated cost that

were inquired from Jay Machine Shop in Panabo City.

TABLE 31. REPAIR AND MAINTENANCE EXPENSES

REPAIR AND MAINTENANCE

Particulars
EXPENSES
Tools and Equipment
Portable Beam Scale ₱2,000
Rice Destoner ₱5,000
Paddy Huller ₱5,000
Rice Mill Machine 500kg/hr 10,000x5 = ₱50,000

SUB-TOTAL ₱62,000
Furniture and Fixture
Rice Mill Ventilator 1,000x6 = ₱6,000
SUB-TOTAL ₱6,000
TOTAL ₱68,000

LICENSE AND BUSINESS PERMIT EXPENSES FOR TAGUM AGRO-

INDUSTRIAL RICE MILLERS

According to the National Food and Authority, based on Regulation IV

Section 2 or the Application Fees, application for new/renewal application for a

license registration shall pay an application fee of One Hundred and Ten Pesos

(₱110.00).

In addition to the application fees, the applicant shall also pay License

fees and charges under on the Regulation V, Section 1 which is the Licensing
45 | P a g e
Fees. For the manufacturing company. When the company capitalization

exceed to ₱750,000-1M will have to pay of Eight Thousand and Two-Hundred

Fifty Pesos (₱8,250.00).

Owners/operators of processing/manufacturing establishments for rice

mill shall pay Nine Thousand and Six Hundred Eighty Pesos (₱9,680.00) for

multi-pass rice mill exceeding 60 up to 80 kaban ng palay input capacity per

hour operation. For the transportation fees, applicant shall pay Two Hundred

and Twenty Pesos (₱220.00) for transportation truck with 4 to 6 wheels/unit.

For business name registration for rice mill instead of DTI application,

you must have to register on the Securities and Exchange Commission (SEC).

There are necessary fees indicated like filing, research, and name reservation,

documentary stamp tax on registration and for the issuance of shares fees to

pay. For the deposit fee you shall have to pay Two-Hundred Pesos (₱200.00).

All businesses are required to register with the Bureau of Interval

Revenue (BIR), this will allow taxpayers to pay their tax dues. The annual

registration fee is Five Hundred Pesos (₱500.00). It was recommended to

increase by about ₱500.00 per year in the next succeeding year.

46 | P a g e
 TABLE 32. SUMMARY OF LICENSE AND BUSINESS PERMIT EXPENSES

License Fees License Fees

Application Fees ₱110.00 Transportation Fees ₱8,250.00/unit

License Fees ₱8,250.00 SEC Deposit Fee ₱200.00

Establishments Fees ₱9,680.00 BIR ₱500.00

Subtotal ₱18,040 ₱8,950

Total ₱26,990

Table 33. Projected Permit Expenses

Year Amount

1 ₱26,990

2 ₱27,490

3 ₱27,990

47 | P a g e
Summary of Operating Expenses

Table 34 presents the summary of projected operating expense and

overhead for the next three years of operation.

TABLE 34. SUMMARY OF OPERATING EXPENSES

Particulars Year 1 Year 2 Year 3

Promotional Expense ₱1,000.00 ₱1,100.00 ₱1,210.00

Depreciation Expense ₱250,053.33 ₱250,053.33 ₱250,053.33

Repairs & Maintenance ₱68,000.00 ₱68,000.00 ₱68,000.00

Utilities Expense ₱644,729.28 ₱676,965.74 ₱710,814.03

Supplies Expense ₱123,831.75 ₱130,023.34 ₱136,524.51

Business Permit ₱26,990.00 ₱27,490.00 ₱27,990.00

Rent Expense ₱1,980,000.00 ₱2,079,000.00 ₱2,182,950.00

Transportation
₱120,000.00 ₱126,000.00 ₱132,300.00
Expense
Salaries & Wages ₱1,483,920.00 ₱1,558,116.00 ₱1,636,022.00

Total ₱4,698,524.36 ₱4,916,748.41 ₱5,145,863.87

48 | P a g e
 FINANCIAL PLAN
Financial aspect is very important in putting up business because it shows

the performance of the business. Through the financial statements, the

researchers are able to know the status of the business, its stability, solvency,

and liquidity.

This chapter shows the projected income statement, projected cash flow,

and projected balance sheet. It will determine the operation of the business with

profitability for the next three years.

Major Assumption

Market share is assumed 15% and increases 1% per year of the total

unsatisfied demand per year.

1. Projection is computed using the Moving Average method.

2. Purchase price is assumed to increase 5% per year.
3. On the purchase price, 65% mark-up is assumed to be added on the
selling price per sack.
4. Ending inventory is assumed to be 1% based on purchases per year.
5. Depreciation is computed using the straight-line method.
6. Salaries and Wages is assumed to increase by 5% per year.
7. Utility expense is assumed to increase by 5% per year.
8. Maintenance and Repairs is assumed to be steady per year.
9. Rent expense is assumed to increase by 5% per year.
10. Supplies expense is assumed to increase by 5% per year.
11. Business permit expenses is assumed to increase ₱500.00 per year.
12. Transportation expense is assumed to increase by 5% per year.

49 | P a g e
Total Projected Cost

The proposed business needs a total capital requirement of

₱81,879,671.06 to start the business operation.

Pre-operating Expense

Permit and Licenses ₱26,990.00

Initial Fixed Capital Cost

Tools and Equipment ₱680,000.00

Furniture and Fixture ₱70,160.00 ₱750,160.00

Initial Working Capital (One-month operation)

Cost of purchases of rice products ₱80,722,629.17

Operating Expense (One-month)

Promotional Expense ₱1,000.00

Rent Expense ₱165,000.00

Salaries and Wages ₱123,660.00

Utilities Expense ₱53,727.44

Repair and Maintenance ₱5,666.67

Supplies Expense ₱20,837.78

Transportation Expense ₱10,000.00 ₱379,891.89

Total ₱81,879,671.06

Add: Cash on Hand ₱60,000,000.00

Total Investment Cost ₱82,000,000.00

50 | P a g e
FINANCIAL RATIO ANALYSIS

GROSS PROFIT RATIO

This ratio is the percentage of sales peso left after subtracting the cost of

goods sold from net sales. It measures the percentage of sales of sales peso

remaining (after or product of goods sold) available to pay the overhead

expenses of the company. Comparison of the business ratios to those of similar

business will reveal strengths or weaknesses of Tagum Agro-Industrial Rice

Millers (TA-IRM). The Gross Profit Ratio is calculated as follows:

Gross Profit Rate = Gross Profit

Net Sales

This means that every peso sales of Tagum Agro-industrial Rice Millers

(TA-IRM), there is a 39.40% gross profit rate in first year and 39.24% for the

second year, and 39.76% for the third-year projection.

TABLE 35. GROSS PROFIT RATIO

Year 1 Year 2 Year 3

Gross Profit 623,457,778 803,043,216 1,046,728,671

Net Sales 1,582,443,228 2,049,660,224 2,632,793,819

Gross Profit Rate 39.40% 39.24% 39.76%

51 | P a g e
Rate of Return on Sales

This ratio is the percentage of sales peso left after subtracting the cost of

goods sold and all expenses, except income tax. It provides a good opportunity

to compare the Tagum Agro-Industrial Rice Millers “return on sales” with the

performance of other companies engage in rice milling business. It is calculated

before income tax because tax rates and tax liabilities vary from company to

company for a wide variety of reasons, making comparison after taxes much

more difficult. The rate of return on sales is calculated as follows:

Net Profit Rate = Net Income

Net Sales
This means that in every peso of sales of Tagum Agro-Industrial Rice

Millers, there is a 39.10% return of sales for the first year, 39.84% for the second

year, and 39.56% for the third year of projection.

TABLE 36. NET PROFIT RATIO

Year 1 Year 2 Year 3

Net Income ₱618,759,253.64 ₱798,126,467.59 ₱1,041,582,807.13

Net Sales
₱ 1,582,443,228 ₱2,049,660,224 ₱2,632,793,819

39.10% 38.94% 39.56%

52 | P a g e
 Return on Investment

The ROI is perhaps the most important ratio of all. It is the percentage of

return of funds invested in the business by its owners. In short, this ratio tells

the Tagum Agro-Industrial Rice Millers whether or not all the effort put into the

business has been worthwhile. The ROI is calculated as follows:

Return on Investments = Net Income

Average Total Assets
This ratio will determine the risk of Tagum Agro-Industrial Rice Millers

compare to the other rice retailing business. The Tagum Agro-Industrial Rice

Millers’ ROI for the first year is 88.29%, for the second year is 72.57%, and for

the third year is 52.13%.

TABLE 37. RETURN OF INVESTMENT

Year 1 Year 2 Year 3

Net Income ₱618,759,253.64 ₱798,126,467.59 ₱1,041,582,807.13

Average Total Assets ₱700,759,253.64 (Y1 ₱700,759,253.64 (Y2 ₱1,498,885,721.23

Y2 ₱1,498,885,721.23) Y3 ₱2,540,468,528.36

2 2

88.30% 72.57% 51.57%

53 | P a g e
 SOCIO-ECONOMIC PLAN

As rice as the basic commodity of every individual, Tagum Agro-

Industrial Rice Millers (TA-IRM) has aimed to become a widely known Rice

miller that offers high quality rice and affordable as well. It also aimed to offer a

great opportunity to many farmers by buying their products at reasonable price.

Furthermore, the proposed business also provides more fund to the

government in the form of taxes and other mandatory government fees. In this

project, the proponents have specified the benefits and possible outcomes the

business could offer and acquire once it started to operate. The customers, the

community, employment and its corresponding status, the environment and the

government are the five areas in which are expected to have an impact as the

project progresses over time.

Customers play an important role in this project. In this project location,

it offers a wide variety of potential customers. And with this location which is

located near in the national highway it gives benefits to the potential customers

in terms of transportation. Impact on community is also discussed regarding on

the benefits and opportunities it may offer.

Employment is also discussed concerning the contribution of this project

to reduce the unemployment rate, by giving opportunity for the man power

needed by the venture in providing services. Furthermore, a better working

environment is the target for the development and progress in years to come.

54 | P a g e
 Lastly, the effects of this operation to the government are also specified.

To be able to attain the business’s goal, this project will contribute in the welfare

of the economy as a whole.

Customer

Customers play a crucial role in any type of businesses. Without them, we

can’t determine the success of having a business. They possess the power to

see a company prosper or fail. Additionally, customers are the backbone of why

the businesses exist.

Tagum Agro-Industrial Rice Millers aims to attract customers especially

rice wholesalers and retailers from Tagum City. Since customer is the key to a

business success, Tagum Agro-Industrial Rice Millers will develop a market that

will definitely sustain the demand ad fulfill their satisfaction. Since business

would not run without customers, Tagum Agro-Industrial Rice Millers will

continue to set a competitive practice that will surely love by the customers and

ensuring repetitive buyers without affecting the quality of the product in order

for the business to grow and develop.

Community

A community emerged as a group of people with diverse characteristics

who are linked by social ties, share common perspectives, and engage in joint

action in geographical locations or settings. Moreover, it is a key for a business

55 | P a g e
as they usually have shared the same interests and needs, its involvement is

an effective way for the business to expand.

The community, as the target and part of the business is important. It is

absolutely essential to have, as it will make marketing become easier. It

increases the income, brand awareness and reputation of the company. The

connection of the company towards the groups uses a channel to definitely sell

the goods to the people. We supply through partnering with farmers,

wholesalers, retailers, and extend the distribution to costumers or to the public.

The Rice milling group main goal is to have a high income and to extend the

business throughout the community. The “Tagum Agro-Industrial Rice Millers”

is committed to being responsible to the whole part of the business and the

people we impact within our communities to provide and sustain for the demand

of the society.

Tax Contribution

The rice mill business is expected to give a great contribution to the

government in the form of taxes. To foster economic growth and development

governments need sustainable sources of funding for social programs and

public investments. Programs providing health, education, infrastructure, and

other services are important to achieve the common goal of a prosperous,

functional and orderly society. Taxation not only pays for public goods and

services; it is also a key ingredient in the social contract between citizens and

the economy.
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Employment

The accomplishment of this task is straightforwardly influenced by the

presentation of the employees. The advocates of this task comprehend the

effect of their representatives' exhibition are better in dealing with workers' yield

and profitability. Workers are picked to grandstand their latent capacity and

remarkable exhibition to offer an interesting assistance and high-caliber item.

Surveying and assessing the exhibition of the representatives will help identify

issues prior that might sabotage all the advancement of the venture. The

significance of representative execution is difficult to downplay yet it is

profoundly thought of and cautiously evaluated with appropriate direction.

Profoundly connected with workers are more beneficial, they stay, they

speak to the organization better, they convey more to the client and, at last,

they give a more noteworthy degree of profitability. With this sort of business,

a well-educated worker will be creating all the more effectively. In this game-

plan, after business constant and reliable field classes, venture gatherings, and

show will be offered to the workers to determine a constant getting the hang of

amplifying the information on the laborers. Further, this would give them a

higher likelihood to offer answers for specific issues or issues that may emerge

over the long run.

Business Environment

Business Environment is sum or collection of all internal and external

factors such as employees, customers’ needs and expectations, supply and

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demand, management, clients, suppliers, owners, activities by government,

innovation in technology, social trends, market trends, economic changes, etc.

These factors affect the function of the company and how a company works

directly or indirectly. Sum of these factors influences the companies or business

organizations environment and situation. Business environment helps in

identifying business opportunities, tapping useful resources, assists in

planning, and improves the overall performance, growth, and profitability of the

business.

Any factor that causes a reduction in the strength of kernels and the

ability of kernels to withstand the hulling and milling processes will impact

milling yield. These factors include those during production, such as diseases,

insects, and high nighttime air temperatures. The moisture content at which

rice is harvested can also have a dramatic effect on milling quality, with head

rice yield reductions occurring by harvesting at moisture contents greater or

lower than optimal.

Legal regulatory factors are important dimensions of business

environment. By studying business environment intelligently, management can

avoid legal consequences which many arise due to non-adherence to legal

provisions applicable to the business enterprise. It is better to swim with the

current than against it. A study of business environment is a great aid in

ensuring survival and growth of the business enterprise amidst volatile and

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turbulent environmental factors (Volatile and turbulent factors are those which

are likely to change suddenly and easily becoming dangerous).

Government

The Philippine government plays a crucial role in the rice market. It

intervenes in the production of rice with the goal of increasing the production of

the country and achieving self-sufficiency in the production of rice. How is the

policy of the government affecting the production of rice? This paper explores

the political influence of government aid on the development of rice in

Southeast Asian countries and argues that the less likely the government is to

place tax barriers on the rice sector and regulate prices, the more likely it is to

impose tax barriers on the rice industry.

Not only can these operations lead to expanding and enhance the price of

agri-business outputs. However, the output of agri-business also contributes to

inclusive growth and infrastructure development. The Philippine government's

program. Through this business rice mill companies are the most demand

company in our country because it can add value for the development of the

Agri-economy.

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 ORGANIZATION AND MANAGEMENT PLAN

Form of Business Enterprise

The proposed business will adopt the Sole Proprietorship form of business

organization. Since this form of organization is easy to establish and the overall

control and the management of the business entirely lies on the hands of the

owner and the income of the business is direct to the sole proprietor.

Management and Organization Structure

The organization structure shows the important aspect of the business. It

shows the relationship between the owner and the workers. It also shows the

duties and functions of the workers in the organization to achieve an effective

management of the business. The Management and Organizational Structure

is shown in Figure 9.

FIGURE 9. ORGANIZATIONAL STRUCTURE

Supervisor/Manager/
Owner

Mill
Mill Engineer machine Utilities Cashier Laborer
operator

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Management Qualifications and Functions

Every goal of business firm is to generate profit but this could be impossible

without the help of the organization’s manpower. As this people is one of the

important elements in the business having the skills and abilities needed in the

nature of work. Presented below is the positions needed in the business as well

as its qualifications and functions.

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 Table 38. Management Qualifications and Functions
Job
Descript Qualification
ion
▪ Graduate of bachelor’s degree
in engineering or other
technical discipline from an
accredited university.
▪ Effective communication skills
both written & verbal,
Mill analytical ability, detail
Engineer orientation, teamwork,
technical leadership, and
technical understanding
▪ Proficiency with personal
computers and application
software desirable; specifically,
MS Office & Project.
▪ Excellent planning, organizing
and decision-making skills.
▪ Basic reading, writing, and
math skills.
▪ Ability to work at a fast pace
with hands.
Mill
▪ Ability to set up pack
Packer
line for variety changes.
▪ Work well under pressure in
order to meet multiple, and
sometimes, competing
deadlines.
Function
▪ Responsible for
implementing the day-to-
day operations &
maintenance of the rice
milling tandems.
▪ Responsible for shipping
and maintaining tracking
documents of large mill
equipment.
▪ Maintains records,
prepares reports, budgets
and composes
correspondence relative
to work.
▪ Develop standard
procedures for operation
and maintenance
activities as needed.
▪ Maintain a thorough
working knowledge of all
processes and
equipment. Operate and
maintain all packing
equipment in good
working condition.
▪ Maintain legible code
dates on all packaged
products produced.
▪ Transfer rice from holding
tanks to pack lines, as
required.
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▪ A graduate of high school
degree or equivalent
Utilities educational experience.
▪ Ability to work any shift.
▪ Must wear all required
personal protective equipment
▪ Computer literate
▪ High school graduate, or other
equivalent experience or
Mill education
machine ▪ Able to follow policies and
operator procedures in conducting job
tasks.
▪ Able to work with a team and
independently.
▪ Computer literate
▪ Basic reading, writing, and
Cashier
math skills.
▪ Ability to work at a fast pace
with hands.
▪ Can follow working etiquettes
▪ Ability to physically stand,
bend, squat, and lift at least 50
Laborer kg
▪ Must be comfortable climbing
up ladders, working at
elevated levels
▪ Ensuring that the working
area is clean at all times.
▪ Packing the different
products into the relevant
areas
▪ Runs errands, picks up
supplies and materials;
▪ Reporting to the
supervisor on any
anomalies in the
packaging plant
▪ Cleaning up after work or
in case of any spills.
▪ Setup, operation of the
mill, high speed
packaging line, and
automated palletizer as
well as cleanup of
machinery.
▪ Ensure proper package
weights, materials, and
labeling as required.
▪ Perform preventative
maintenance by
monitoring the condition
of the mill, rolls, sifters.
▪ Entertains the customer’s
order.
▪ Assists the customer.
▪ Responsible for the
collection of payments
from the customer.
▪ Arrange the rice sacks in
the storage.
▪ Transfer supplies
received to their
appropriate storage
location area
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 Annex A

Computation of Average Percentage Increase

Projected Demand

7,572,611 - 6,843,078 = 10.66%

6,843,078

8,611,674 - 7,572,611 = 13.7%

7,572,611

10.66% + 13.7% = 12.18%

2

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 Annex B

Computation of Average Percentage Increase

Projected Supply

139,766 - 123,564 = 13.11%

123,564

162,876 - 139,766 = 16.53%

139,766

13.11% + 16.53% = 14.82%

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