FEASIBILITY STUDY

LLC FEED MILL

BUHI, CULASI, ANTIQUE

Prepared by:
Lanelyn T. Belicena
Loida Grace A. Pacete
Clarence Francis Y. Polido

EXECUTIVE SUMMARY
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 • Corn, Yellow (Local)
Agricultural
• Soybean Meal
production in the Philippines is considered as one of the country's
essential commodities. It mainly consists
• Ossolac • Rice
of livestock
Bran farming, forest management, and crop
production. The Philippines' major agricultural
• Limestone products include rice, coconuts, corn,
sugarcane,
• Coprabananas,
Meal pineapples, and mangoes. Additionally, livestock production across the
country and all animal groups have been • Coco
growing to support the needs of the changing diet
Oil, Refined
• MDCP
patterns of the populations, particularly in the developing markets. An increase in demand for
• Ovinocid
various animal products, such as milk, dairy products, meat products, eggs, and other non-
• Mollasses
food items, has led to the growth in the•usage of feed products, thereby, boosting the market
Nufotox
for feeds in the
• Nufomold country.
• Lysine
• DI-methionine
Technical Aspect
• PIG GF 5%
• LACTOMIX 10%
• PIG BREEDER
Since 5%
the proposed project is a feed mill, the process of feed milling is hardly a
complex procedure hence, technical training of high order is not required. The supplier of the
machinery will provide initial guidance in running the machinery and equipment. The power
consumption of the attached motor is reasonably economical.

Implementation Schedule

The sales campaign is expected to take six (6) months to (1) year from the project
approval to the launch of production.

Objectives of the Project.

1. LLC aims to provide our customers with affordable high-quality feed products
2. To increase profit margin.
3. To capture a bigger market share in a span of 5 years.

Current Market Trend

The demand for quality livestock and poultry products is growing over the last years
with an increasing demand on these products comes an increasing demand on feeds produce
respectively. It is expected to continue to increase along with the changes in people’s diet and
the growth of the population.

Environmental Aspect

The construction of the feed mill possess no real harm in the environment. All solid
wastes are known to be compostable. The feed production might produce some noise and
certain odours thus the proprietors chose an area relatively far from any residential areas. The
projects can potentially provide job opportunities and government revenue through taxes.
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 TABLE OF CONTENTS

I. INTRODUCTION…………………………………………………………….………1
II. PRODUCT/SERVICE DESCRIPTION…………………….……….….…………….3
1. Feed Products…………………………………………………………….…….….3
2. Raw Materials…………………………………………….……………………….3
a. List of Materials……………………………………………….………………3
b. Procurement of Raw Materials…………………………………….………….4
c. Storage and Maintenance…………………………….………….…………….4
d. Volume………………………………………….……………….…………….5
e. Inventory………………………………………………………………………5
f. Flow Chart of Feed Processing……………………………………………......5
III. TECHNOLOGY
CONSIDERATIONS……………………………………………….6
1. Equipment………………………………………………………………………....6
IV.
SCHEDULE………………………………………………………………………...…9
1. Target Milestones………………………………………………………………….9
V. ENVIRONMENTAL IMPACT……………………………………………………….9
1. Site............................................................................................................................9
2. Building………………………………………………………………………........9
3. Project Location and ……………………………………………………………....9
4. Applicable National Policies and Strategies………………………………….….10
5. Environmental Impacts Assessment………………………….……………….….10
VI.
MARKETING…………………………………………………………………….….11
1. Marketplace……………………………………………………………………....11
2. Target Market…………………………………………………………………….11
3.
Competition……………………………………………………………………....11
Distribution………………………………………………………………….……11
VII. ORGANIZATION &
STAFFING………………………………………………..….12
1. Staffing Positions………………………………………………………………...12
2. Organizational Structure…………………………………………………………14
VIII. FINANCIAL
ASPECT………………………………………………………………14
1. Assumptions………………………………………………………………….….14
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 2. Financial Statements………………………………………………………….….18
IX. CONCLUSION/RECOMMENDATIONS…………………………………………..
X. ANNEXES……...……………………………………………………………………
22
1. Forms…………………………………………………………………...……22

I. INTRODUCTION

Agricultural production in the Philippines is considered as one of the country's

essential commodities. It mainly consists of livestock farming, forest management, and crop
production. Major agricultural systems include lowland irrigated farming, rain-fed farming
and upland farming. Irrigated farm areas mainly grow rice and sugarcane whereas rain-fed
areas are planted with coconut, corn and cassava. The Philippines' major agricultural products
include rice, coconuts, corn, sugarcane, bananas, pineapples, and mangoes.

One sector that benefits greatly from the agricultural products is the feedmill industry.
Production of livestock contributes 12.7 percent to the total agricultural output in the
Philippines. The feedmill industry is a crucial component of the agriculture and fisheries
sectors as it provides inputs to the various industries that require high quality feeds. Its ability
to produce stable and reasonable prices will help minimize the cost of production and
improve the profitability of the businesses.

This study aims to identify the pros and cons of a Feedmill project in Buhi, Culasi,
Antique. And to thoroughly understand all aspects of the project and predict possible
problems that the organization might encounter upon the implementation of the project.
Further, to analyze data whether the benefits outweigh the disadvantages to determine if the
project is worth undertaking after considering all significant factors.

II. PRODUCT AND SERVICE DESCRIPTION

1. Feed Products

Due to the Philippines’ rich natural resources, crop production is one of the county’s
main commodities. Because of this, the feedmill industry have a vast supply of raw materials.
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 Many industries benefit from the feeds production. In addition to the large farms are
backyard farmers. Aside from being a huge source of food, backyard farmers play a huge role
in the local economy by participating in cock fights. These competitions are conducted in
various parts of the country and are very profitable for the owners. Whether it be food
necessities or for entertainment and hobbies, feed production is highly in demand.

LLC Feedmill aims to produce a variety of feeds to cater the consumers’ various feed
needs. The Feedmill will produce Boosters, Pre-starters, Starters, Growers, Gestating and
Lactating. These feed products are able to cater different livestock.

2. Raw Materials
A. List of
Raw

Materials
B. Procurement of Raw Materials

Procurement of raw materials will be based to competitive market price. The

marketing officer shall ensure the timeliness of the procurement not to compromise the
quality of the raw materials. It is more workable if a marketing agreement with supplier will
be signed to ensure stable supply and price of raw materials especially locally available raw
materials like corn and rice bran. Corn must be dried with at least 14% moisture content and
rice bran must always newly processed to ensure the quality.

Allotted time for purchase of raw materials is two (2) months to ensure enough time
for the transport of the raw materials. However, raw materials to be purchased in other areas
must be ensured of 6 months allowance for procurement and storage.
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 Figure 1. Procurement of Raw
Materials Flow Chart

C. Storage and Maintenance

Regular fumigation with corn will be done to ensure quality of corn kernel starch
against rice bugs. For other materials, proper ventilation and stocking must be maintained to
avoid damage of the said raw materials.

D. Volume

Volume of raw materials of different variant will be based on the projected volume of
feeds to be processed to avoid over stocking of raw materials. However, raw materials with a
guaranteed shelf life like the based mixed could be procured in a large volume.

E. Inventory

Inventory of purchase material must be checked and be updated to ensure volume of

raw materials used and the ending volume inventory to be considered the procurement of raw
materials to ensure the needed volume for processing. This will be done by the Feed Mill
Operator to be submitted to Marketing Officer to initiates the procurement process.

F. Feed Processing

The number of bags for processing to be purchased will depend on the number of
bags and variance requested by the Marketing Officer. Marketing Officers will give the order
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 slip to Mill Processor for processing. Mill Processor will prepare the raw materials based on
the approve formulation for feed processing. The Mill Processor will submit to Marketing
officer the value of raw materials used and the different variance of feed process for
marketing officer to be delivered to project participants.

Figure 2. Feed Processing Flowchart

Color Codes for Feeds Packaging

Feeds Color Content per bag

Booster White 10 kg.
Pre-Starter Blue 50 kg.
Starter Red 25 kg.
Grower Green 50 kg.
Gestating Purple 50 kg.
Lactating Yellow 50 kg.

III. TECHNOLOGY CONSIDERATIONS

Upgraded technological capability is required for LLC to move toward offering high
quality and cost-efficient feed products. Feed production demand a simple an easy way of
manufacture and it is imperative that all processes are conducted in a safe and efficient
manner. The following equipment will enable LLC to produce feeds products efficiently and
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 effectively.

1. Equipment

A. Mixing Machine

The mixer plays a vital role in the feed production process, with efficient
mixing being the key to good feed production. If feed is not mixed properly,
ingredients and nutrients will not be properly distributed when it comes time
to extrude and pelletize the feed, or if the feed is to be used as mash. This means that
not only would the feed not have nutritional benefit, it would be bad for the animals
that are eating it.

Purpose: SHW Double Ribbon Mixer machine widely used in medium and
small-scale feed mill, for mixing powder materials, guarantee uniformity and quality
of complete feed.
Figure 3. Mixing Machine

B. Hammer Mill

A hammer mill is essentially a steel drum containing a vertical or horizontal

rotating shaft or drum on which hammers are mounted. The hammers are free to
swing on the ends of the cross, or fixed to the central rotor. The rotor is spun at a high
speed inside the drum while material is fed into a feed hopper. The material is
impacted by the hammer bars and is thereby shredded and expelled through screens in
the drum of a selected size.

Purpose: A hammer mill is a mill whose purpose is to shred or crush

aggregate material into smaller pieces by the repeated blows of little hammers.
Figure 4. Hammer Mill
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 C. Platform Weighing Scale

Platform Scale is an industrial weighing instrument consisting of a platform

coupled to an automatic system of levers and adjustable weights used to weigh large
or heavy objects. A platform scale is a weighing machine with a platform to hold the
object or objects being weighed. Platform scales also form part of the weighing
scales. Platform scales offer many weighing instrument or scales. These platform
scales adjust weigh carefully and measure the object accurately. Platform scales are
designed specifically from top to bottom and provide a perfect measure. Platform
scales are designed as per the requirements of the customers. These platform scales
are offered in different sizes, capacities, styles and models.

Purpose: Platform scales are the essential scales required to measure the
weight of the object kept in the platform.
Figure 5. Platform Weighing Scale

D. Digital Weighing Scale

A digital weighing scale is the most accurate and precise analog front-end
(AFE) instrument that uses force sensors to measure the load of an object. These
scales find application in myriad areas, including wide-ranging use in industry.

Purpose: This is used to measure the weight of raw materials in small

quantity.
Figure 6. Digital Weighing Scale

E. Bag Closer

Fastest single-needle bag closing machine on the market (2700 rpm). Simple,
enclosed oil-bath lubrication system and sealed moving parts for optimum
performance in dusty environments. Well-balanced rotational parts for minimum
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 vibration and requires low maintenance. Works in both manual and automatic lines
and fits on most pedestal units with no modification needed. Equipped with air
cylinder driven, guillotine-type cutter knife with double springs to ensure fast, smooth
cutting for both plain and crepe-tape bound closings. Can handle a wide range of
bagging material including paper, woven cloth and jute and sews a single or double-
thread chain stitch. Available with an optional thread break detector, single-thread,
easy open stitch and needle thread oiler.

Purpose: Primarily, bag closing machine is used

to close sacks after being filled with feeds.
Figure 7. Bag Closer

IV. SCHEDULE

1. Target Milestones

The LLC sales campaign is expected to take six months to one year from project
approval to the launch of production. Many of the foundations for this feedmill, such as the
land and equipment, are already available. The following is a high level schedule of some
significant milestones for this initiative.

Jan. 1, 2022 : Initiate Project

Feb. 1, 2022 : Project kickoff meeting
Mar. 1, 2022 : Complete building construction
Apr. 1, 2022 : Launch Feeds Production

Upon approval of this project a detailed schedule will be created by the assigned
project team to include all tasks and deliverables.

V. ENVIRONMENTAL IMPACT ASSESSMENT (EIA)

1. Site Selection

The ideal site for the establishment of the project must meet the following citeria:

• Accessibility
The road network of the building must be accessible and with all-weather
terrain and road system.
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 • Area
The land must be 2000 square meters, 800 sq. m. for the building and 1200 sq.
m. for social drain and access road. It must also be 500 meters away from
residential area.

• Utilities
The area must possess a source of water, either a natural source of provided by
a water service provider.

2. Building

The structure must be built following the standard of building code of the
municipality with proper ventilation. The floor area of the structure must be well ventilated to
ensure room temperature to prevent damage of raw materials on storage. The roof must have
at least 15 meters from the flooring to ensure proper ventilation lighting. Facilities should
also be available. There should be two (2) doors opening for the entrance of raw material and
exit for the processing feeds ready for distribution.

3. Project Location and Area

The LLC Feed Mill is found along the Buhi-Bita-San Gregorio Barangay road
approximately 1km from the nearest residential area. The LLC Feed Mill will be located in
the Province of Antique, Barangay Buhi in the Municipality of Culasi. The mill is surrounded
by riceland. In order to process the product, store raw materials and products, office space etc
800 sq. m. will be used.

4. Applicable National Policies and Strategies

The most relevant policies which stipulate the need for an impact assessment study
and provide directives on how projects of this nature should be carried out.

A. Presidential Decree No. 1586

The EIA will be conducted pursuant to Presidential Decree No. 1586 or the Philippine
Environmental Impact Statement System, the main law that governs the EIA in the country.
During the course of the study, various laws and legal orders should be considered. These
regulations and orders are the following:

Legislative and Regulatory Considerations

Standards Governing Environmental Quality DAO 34, 35, 14, 29. PD 984, RA 8731, etc.
Health and Safety OSHS(DOLE) and HIA (DOH), P.D. 856, etc
Protection of Sensitive Areas, endangered PD 1067 (Water Code)
species, etc.
Land Use/Coastal Classification Local Government Code/BFAR-DA
Sewerage and Drainage System PD 856, PD 1067 (Water Code)
Toxic and Hazardous Waste RA 6969

5. Environmental Impact Assessment

During consultation with a personnel of Department of Environment and Natural

Resurces on the impacts of feed mill production process on the bio-physical and human
environments in the project area, we have come to identify potential physical, biological and
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 socio-economic environmental impacts as a result of the project.

A. Negative Impacts

The major adverse environmental impacts expected as a result of the feed mill
project were problems on solid waste, noise and offensive odour.

B. Positive Impacts

Potential positive impacts include job opportunities for locals which generate
income and earn considerable profit to the proponent as well as to the municipal
administration through tax.

C. Mitigation Measures

After identifying the negative impacts of a project, its proponent should

implement the following mitigation measures.

i. Make separate provision for storing sale return or expired products.

ii. Keep floors, walls and walkways clean, dry and free of any
obstructions.
iii. Place sinks and bathrooms away from premix storage area.
iv. Keep the area free from pests and rodents.
v. No bag should be stored without any label.

VI. MARKETING

1. Marketplace

Livestock production across the country and all animal groups have been growing to
support the needs of the changing diet patterns of the populations, particularly in the
developing markets. Although the livestock sector in the country is increasingly becoming
industrial, with a large number of farmers remaining small and marginal. The demand for
quality food is increasing such as meat, eggs and milk are increasing. These changes in
consumption and the growth in population have led to large increase in demand for animal
products and it is expected to continue in the succeeding years. An increase in demand for
various animal products, such as milk, dairy products, meat products, eggs, and other non-
food items, has led to the growth in the usage of feed products, thereby, boosting the market
for feeds in the country.

2. Target Market

A. Demographics

• Commercial livestock raisers of the municipality of Culasi plus nearby towns

• Contract supply arrangement with large farms.
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 • Smallholder (backyard) livestock raisers.

B. Psychographics

• Raisers who are open-minded in trying another source of feeds for their
livestock.
• Cooperatives that has future plan of expanding their existing dairy.

3. Competition

There are 4,979 number of feed products registered to date from about 400 different
brand names of the 389 registered feed millers nationwide. Market niching is notably feasible
for the high value emerging markets like the aquaculture, game fowl and ostrich operation.

4. Distribution

The marketing and distribution channel of the feed mill industry passes through
several market intermediaries either via feed miller-owned delivery trucks or private haulers
or truckers. Feeds are sold to poultry and livestock growers directly to growers but majority
through this channel. The distributor normally charged 2% to 3% of the market price while
the dealer or retailer charged a 5% to 10% margin.

Figure 8. Sales Flowchart

VII. ORGANIZATION AND STAFFING

1. Staffing Positions

A. Marketing Officer
Nature of Employment: Permanent
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 Requirements:
• 4 years course related to marketing
• 25-35 years old
• Willing to work overtime with a minimal supervision
• Computer literate-MS word, MS excel, MS PowerPoint
• With driving skilled (professional driver license/4 wheel vehicles)

Job Description
• Responsible in the procurement of raw materials needed by the Feed Mill
• Prepares financial document required in the procurement process
• Responsible in marketing of the products of the farm to individual and
delivery to the target market
• Submit monthly report to the owners to include activity and financial report
• Do other function required by the Owners

Compensation and benefits

• Monthly Salary of ₱25,000.00
• SSS/PhilHealth/Pag-ibig Contribution
• Load Allowance P 500.00

B. Feed Mill Operator

Nature of Employment: Permanent

Requirements:
• High School Graduate/ Vocational with background and knowledge in small
scale machine
• 25-40 years old
• With good bony built for load handling

Job Description
• Responsible in the preparation of Raw materials for feed processing
• Maintain the inventory of raw materials
• Submit to marketing officer the purchase report of raw materials
• Prepare report of volume of feeds products
• Responsible in the maintenance of Feed Mill and Bodega Storage for raw
materials
• Do other function assigned by the Marketing Officer

Compensation and Benefits

• Monthly Salary of ₱15,000.00
• SSS/PhilHealth/Pag-ibig Contribution
• Load Allowance P 500.00
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 C. Laborer/Driver

Requirements:
• High School Graduate/ Vocational with background and knowledge in small
scale machine
• 21-35 years old
• With good bony built for load handling
• With Driver’s License

Job Description
• Per job order as assigned by Marketing Officer
• Works under the supervision of the Marketing Officer

Compensation and Benefits

• Daily Wage of ₱350.00

2. Organizational
Structure

VIII. FINANCIAL ASPECT

1. Assumptions:

➢ The Percentage of Cost of Raw Materials, Cost of Production and Net

Income are presented below:

70% Cost of Raw Materials

20% Cost of Production (labour/equipment/power and lights)
10% Net income
100% Total

➢ The projected daily sales of feeds in quantity is summarized in the table

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 below:

Product No. of Bags

Booster 10
Pre-Starter 10
Starter 10
Grower 10
Gestating 10
Lactating 10
Total 60

➢ Feeds Formulation

➢ Cost per Bag of Feeds

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 ➢ Production Cost
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 ➢ Property Plant and Equipment

➢ Owners Capital

➢ Salaries and Wages

➢ Loans Payable

Amount of Loan : P2, 000,000.00

Terms : Payable in 5 yrs
Interest : 6% per annum
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 2. Financial Statements

Projected financial statements, with supporting computations and subsidiary

assumptions

A. Projected income statement

B. Projected cash flow statement

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 C. Projected Balance Sheet
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 3. Financial Analysis

A. Break-even Point

i. Profit break-even point – volume and selling price

ii. Debt – Equity Ratio

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 B. Payback Period – Payback period of the project is less than a year

IX. CONCLUSION/RECOMMENDATION

Based on the information presented in this feasibility study, it is recommended that

LLC Feed Mill be approved and start the project initiation. The findings of this feasibility
study show that this initiative will be highly beneficial to the organization and has a high
probability of success. Key findings are as follows:

Technology:

• Will utilize existing technology which lowers project risk.

• Once in place the technology is simple to operate and maintain for a
relatively low cost.

Marketing

• This project will reach a large number of target groups at a low cost.
• LLC can expand customer base where the mill is located.
• The marketplace for feed sales is in steady growth.
• LLC will be able to differentiate itself from its competitors and will utilize
incentive programs to target new consumers.

Organizational:

• Minimal staffing are required with no changes too organizational structure.

Financial

• Break even point occurs in (point of time) of operation.

• Projections show sales accounting for % of total sales
• LLC will be in position to capture greater market share by maintaining
market presence.
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 X.ANNEXES
2. Forms
i. Voucher
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 ii. Canvass
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 iii. Delivery Receipt

iv. Cash Invoice

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 v. Stock card
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