bamboo shoot and pole
TRANSCRIPT
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Philippine Council for Agriculture, Forestry and Natural Resources Research and DevelopmentDepartment of Science and Technology
Providing science solutions for a vibrant agriculture and sustainable environment
Profi tability Analysis:Bamboo Shoot and Pole
Production
Profi tability Analysis No. 04/2007
The Philippine Council for Agriculture, Forestry and Natural Resources Research and Development (PCARRD) is one of the sectoral councils under the Department of Science and Technology (DOST).
Established in 1972, PCARRD formulates policies, plans, and programs for science and technology-based development in the agriculture, forestry, and natural resources (AFNR) sectors. It coordinates, evaluates, and monitors the national research and development (R&D) efforts in AFNR. It also allocates government and external funds for R&D and generates resources to support its programs.
The first DOST council to earn an ISO 9001:2000 certification for its quality management system, PCARRD is engaged in active partnerships with international, regional, and national organizations and funding institutions for joint R&D, human resource development and training, technical assistance, and exchange of scientists, information, and technologies.
The Council supports the National Agriculture and Resources Research and Development Network (NARRDN), composed of national multi- and single-commodity and regional R&D centers, cooperating stations, and specialized agencies. As such, PCARRD has been a potent arm in catalyzing the Philippine AFNR sectors toward self-sufficiency and global competitiveness.
MAILING ADDRESS PHILIPPINE COUNCIL FOR AGRICULTURE, FORESTRY AND NATURAL RESOURCES RESEARCH AND DEVELOPMENT Los Baños, LagunaTELEPHONES Los Baños - (63) (049) 536-0014 to 536-0015/ 536-0017 to 536-0020 & 536-0024FAX Los Baños - (63) (049) 536-0016/536-0132 DOST Bicutan, Tagig, Metro Manila (63) (02) 837-1651E-MAIL [email protected] http://www.pcarrd.dost.gov.ph
About PCARRD
Profitability Analysis:Bamboo Shoot and Pole
Production
Philippine Council for Agriculture, Forestry and Natural ResourcesResearch and Development (PCARRD)
Department of Science and Technology (DOST)
Los Baños, Laguna2007
First Edition 2007
ISSN: 1908-8043
Bibliographic Citation:Philippine Council for Agriculture, Forestry and Natural Resources Research and
Development. Profitability analysis: bamboo shoot and pole production. Los Baños, Laguna: PCARRD, 2007. 17p. -(Profitability Analysis No.04/2007)
iii
I congratulate PCARRD-DOST for coming up with this Profitability Analysis, which is not just a publication, but more importantly, a science and technology (S&T)-
based solution. PCARRD has put together the necessary information that would make agribusiness venture more technically and financially viable.
The tested package of technology (POT) that PCARRD and its research and development (R&D) partners have developed and included in this publication, together with the encouraging financial projections, highlights the role of S&T in achieving our national development goals.
I am optimistic that with the dissemination of the Profitability Analysis, which PCARRD has prepared for a significant number of priority commodities and products, our people will develop greater appreciation of S&T-based entrepreneurship in agriculture and natural resources sectors.
Hon. ESTRELLA F. ALABASTROSecretaryDepartment of Science and TechnologyRepublic of the Philippines
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Agribusiness is among the flourishing enterprise in the country today. However, many of our people, particularly the small and medium entrepreneurs could
not easily engage in agribusiness due to constraints in the establishment process.
This publication, the Profitability Analysis, is a very laudable initiative by PCARRD-DOST having put together a set of solutions addressing startup constraints. Specifically, this publication contains key technical and financial information necessary to start, operate, and profit from a science and technology (S&T)-based agribusiness enterprise.
I commend PCARRD for pursuing the development of this publication. This very important contribution will definitely help boost entrepreneurship, especially in the rural sector; create additional income and job opportunities; and promote then production of high quality agribusiness products.
Cong. LUIS R. VILLAFUERTEChair, Committee on Aquaculture and FisheriesMember, Committee on Science and TechnologyMember, Committee on AgricultureHouse of Representatives
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This year, the Philippine Council for Agriculture, Forestry and Natural Resources Research and Development (PCARRD) offers a new technology publication that
promises to be fully utilizable and handy.
The Profitability Analysis (PA) arose from our yearning to address your needs as small and micro entrepreneurs, farmers and growers. More than just a handout, this innovative package of information provides tools to help you gain and secure a niche in your business enterprise.
The PA series is based on our study of selected commodities. Here you will find the technical and financial data you will need to put up an agricultural enterprise. It presents analytical tools you can use in project planning and in predicting how the business would operate under a set of assumptions. Thus, it ensures that your projects are technically and economically feasible for implementation. Through the profitability analysis and other information, we at PCARRD, hope to contribute substantially in providing livelihood options for Filipinos, especially those in rural communities.
Specifically, this PA contains information on bamboo pole and shoot production, soil type requirements, vegetative propagation, plantation establishment, harvesting of shoots and poles, and clump management. It also details the cost-and-return analysis in bamboo pole and shoot production.
Feel free to use the information in these pages. Contact us for any further information you may need or better yet, for any suggestions on how we can make this publication better. Together, we can improve the agricultural production system for bamboo poles and shoots and seal their importance in our national economy.
PATRICIO S. FAYLONExecutive Director
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Message from Secretary Estrella F. Alabastro iiiMessage from Congressman Luis R. Villafuerte ivForeword v
Introduction 1
Package of Technology 13
Profitability AnalysisProjected income statement, bamboo production (shoot and pole
production) 3Projected cash flow, 1-ha bamboo plantation, (before financing) 5Projected cash flow, 1-ha bamboo plantation, (after financing) 5Capital investments, 1-ha bamboo plantation 7 Working capital and other startup costs, 1-ha bamboo plantation 7Initial investment 9Depriciation table (Straight Line Method, zero salvage value) 9Production and sales projection, 1-ha bamboo plantation 9Annual labor requirement 11Amortization schedule, 19% p.a. (includes service charge of 3% p.a.) 11Technical and financial assumptions 12
Co
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The Kawayan tinik is an important bamboo resource for the Philippine rural population. Aside from being a premium species for edible shoot
production, it also provides raw materials for construction, furniture, handicraft, and other novelty items.
With its distinct characteristics and wide utility, kawayan tinik has become an indispensable raw material for high-value furniture and handicrafts.
Experts estimate the demand for poles would increase to 3.5 million for furniture making and 575,000 for handicrafts.
This makes bamboo shoot and pole production a good investment option for small and medium entrepreneurs.
A 1-ha, 275-seedling bamboo plantation, is a profitable investment requiring a relatively small initial capital of P92,254. Income is realized on the first year of harvest (year 5) while the total initial capital is fully recovered the following year (year 6).
The estimated internal rate of return (IRR) based on ten-year cash flow projection stands at 26% while the net present value (NPV) at 19% discount rate is P58,275.65.
The package of technology (POT) for kawayan tinik pole and shoot production was developed and tested in strategic pilot plantation sites in Luzon, Visayas, and Mindanao. The cost and yield estimates of the POT were based on plantations developed in openland/grassland areas using culm cutting propagules.
Initial Capital P92,254.00
Net Present Value (basedon a 10-year cash flow projection at 19% discount rate) P58,275.65
Internal Rate of Return (based on a 10-year cash flow projection) 26%
Payback Period 5.2 years
Projected income statement, bamboo plantation (shoot and pole production).Year 1 2 3 4 5 6 7 8 9 10
Income from Sales of Bamboo Poles 0.00 0.00 0.00 0.00 47,250.00 63,000.00 78,750.00 78,750.00 78,750.00 78,750.00
Income from Sales of Bamboo Shoots 0.00 0.00 0.00 0.00 44,100.00 73,500.00 73,500.00 73,500.00 73,500.00 73,500.00
Gross Sales 0.00 0.00 0.00 0.00 91,350.00 136,500.00 152,250.00 152,250.00 152,250.00 152,250.00
Less: Production Cost
- Fertilizer 850.50 850.50 850.50 850.50 850.50 850.50 850.50 850.50 850.50 850.50
- Farm Labor 4,050.00 7,500.00 7,500.00 7,500.00 7,500.00 7,500.00 7,500.00 7,500.00 7,500.00 7,500.00
Total Production Cost 4,900.50 8,350.50 8,350.50 8,350.50 8,350.50 8,350.50 8,350.50 8,350.50 8,350.50 8,350.50
Gross Income from Sales -4,900.50 -8,350.50 -8,350.50 -8,350.50 82,999.50 128,149.50 143,899.50 143,899.50 143,899.50 143,899.50
Less: Overhead Expenses
- Repair of Equipment and Facilities (10% of depreciating assets)
129 129 129 129 129 129 129 129 129 129
- Depreciation 129 129 129 129 129 129 129 129 129 129
- Land rent 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000
Total Overhead Expenses 10,258.00 10,258.00 10,258.00 10,258.00 10,258.00 10,258.00 10,258.00 10,258.00 10,258.00 10,258.00
Net Profit (before interest) -15,158.50 -18,608.50 -18,608.50 -18,608.50 72,741.50 117,891.50 133,641.50 133,641.50 133,641.50 133,641.50
Less: Interest Expense 12,269.78 10,588.21 8,587.13 6,205.85 3,372.13
Net Profit (before tax) -15,158.50 -18,608.50 -18,608.50 -18,608.50 60,471.72 107,303.29 125,054.37 127,435.65 130,269.37 133,641.50
Projected cash flow, 1-ha bamboo plantation (before financing).
Projected cash flow, 1-ha bamboo plantation (after financing).
Year 0 1 2 3 4 5 6 7 8 9 10
Before Financing
Inflows
Gross Income from Sales 0.00 0.00 0.00 0.00 91350.00 136500.00 152250.00 152250.00 152250.00 152250.00
Total Cash Inflows 0.00 0.00 0.00 0.00 91350.00 136500.00 152250.00 152250.00 152250.00 152250.00
Outflows
Cash Flow from Investment Activities 92254
Production Cost 4900.50 8350.50 8350.50 8350.50 8350.50 8350.50 8350.50 8350.50 8350.50 8350.50
Overhead Expenses (less: depreciation) 10129.00 10129.00 10129.00 10129.00 10129.00 10129.00 10129.00 10129.00 10129.00 10129.00
Total Outflows (before financing) 92254 15029.5 18479.5 18479.5 18479.5 18479.5 18479.5 18479.5 18479.5 18479.5 18479.5
Net Cash Flow (before financing) -92254 -15029.5 -18479.5 -18479.5 -18479.5 72870.5 118020.5 133770.5 133770.5 133770.5 133770.5
Year 0 1 2 3 4 5 6 7 8 9 10
After financing
Inflows
Gross Income from Sales 0.00 0.00 0.00 0.00 91350.00 136500.00 152250.00 152250.00 152250.00 152250.00
Loan 64,577.8
Total Cash Inflows 64577.8 0.00 0.00 0.00 0.00 91350.00 136500.00 152250.00 152250.00 152250.00 152250.00
Outflows
Cashflow from Investment Activities 92254
Production Cost 4900.50 8350.50 8350.50 8350.50 8350.50 8350.50 8350.50 8350.50 8350.50 8350.50
Overhead Expenses (less: depreciation) 10129.00 10129.00 10129.00 10129.00 10129.00 10129.00 10129.00 10129.00 10129.00 10129.00
Loan Amortization:
- Principal 8850.40 10531.97 12533.05 14914.33 17748.05
- Interest 12269.78 10588.21 8587.13 6205.85 3372.13
Total Outflows (before tax) 92254 15029.5 18479.5 18479.5 18479.5 39599.680 39599.680 39599.680 39599.680 39599.680 18479.5
Net Cash Flow (before tax) -27676.2 -15029.5 -18479.5 -18479.5 -18479.5 51750.319 96900.319 112650.319 112650.319 112650.319 133770.5
NPV (before financing) 58275.65
Payback (before financing) 5.2 years
IRR (before financing) 26%
Note: NPV, Payback, and IRR before financing are the preferred indicators of profitablity.
Capital investments, 1-ha bamboo plantation.Particulars Unit Price Quantity Cost
Seedlings 75 275 20,625
Farm Equipment
- weighing scale 430 1 430
- shovel 200 1 200
- rake 200 1 200
- grass shears 460 1 460
Total Capital Investment 21,915
Particulars Cost
Repair of Equipment and Facilities (10% of depreciating assets; Year 2-4) 387.00
Land Rental (first 4 years) 40,000.00
Unit Quantity Unit Price
Materials
- Fertilizer (first 4 years) kg 63 13.5 3,402.00
Labor
- Land preparation** mds 150 15 2,250.00
- Planting/replanting md 150 10 1,500.00
- Fertilizer application (first 4 years) md 150 2 1,200.00
- Maintenance (Year 2-4) md 150 48 21,600.00
Total Working Capital and Startup Cost 70,339.00
* To cover initial operating costs until there is a steady flow of income.
** Sketching, staking, field layout and clearing, hole digging.
*** Weeding, cleaning, thinning, mounding, watering.
Working capital* and other starup costs, 1-ha bamboo plantation.
Initial investment.
Particulars Cost Life Span Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Weighing scale 430 10 43 43 43 43 43 43 43 43 43 43
Shovel 200 10 20 20 20 20 20 20 20 20 20 20
Rake 200 10 20 20 20 20 20 20 20 20 20 20
Grass shears 200 10 46 46 46 46 46 46 46 46 46 46
Total 129 129 129 129 129 129 129 129 129 129
Particulars Cost
Capital Investment 21,915
Working Capital and Startup Costs 70,339
Total Initial Investment 92,254
Year 1 2 3 4 5 6 7 8 9 10
Bamboo Poles
Production 0 0 0 0 630 840 1,050 1,050 1,050 1,050
Price 75 75 75 75 75 75
Sales 47,250 63,00 78,750 78,750 78,750 78,750
Bamboo Shoots
Production 0 0 0 0 630 1,050 1,050 1,050 1,050 1,050
Price 70 70 70 70 70 70
Sales 44,100 73,500 73,500 73,500 73,500 73,500
Total Gross Sales 91,350 136,500 152,250 152,250 152,250 152,250
Depreciation table (Straight Line Method, zero salvage value).
Production and sales projection, 1-ha bamboo plantation.
Year 5 6 7 8 9 Totals
Balance 64,577.8 55,727.402 45,195.43 32,662.3789 17,748.051 0
Rate 1 1.19 1.4161 1.685159 2.0053392 7.2965982
Principal 8,850.40 10,531.97 12,533.05 14,914.33 17,748.05 64,577.80
Interest 12,269.78 10,588.21 8,587.13 6,205.85 3,372.13 41,023.10
Amortization 21,120.18 21,120.18 21,120.1802 21,120.18 21,120.18
Amortization schedule, 19% p.a. (includes service charge of 3% p.a.).
Year 1 2 3 4 5 6 7 8 9 10
Land Preparation 2,250
Planting/replanting 1,500
Fertilizer application 300 300 300 300 300 300 300 300 300 300
Maintenance 7,200 7,200 7,200 7,200 7,200 7,200 7,200 7,200 7,200
Total 4,050 75,00 7,500 7500 7,500 7,500 7,500 7,500 7,500 7,500
Annual labor requirement.
Technical Assumptions
Yield per ha
- bamboo pole 1050 poles
- bamboo shoot 840 kg
Seedling per ha 275 seedlings
Bamboo clumps per ha 210 clumps
Fertilizer Requirement 0.3 kg/clump or 63 kg/ha
Labor Requirement
- Land preparation 15 man-days
- Planting/replanting 10 man-days
- Fertilizer application 2 mand-days
- Maintenance (weeding, cleaning, thinning, mounding,watering)
48 man-days
- Harvesting 48 man-days
No. of years before first harvest 4 years
Financial Assumptions
Total Investment Cost 92,254
Equity (30%) 27,676
Loan (70%, payable in 5 years) 64,578
Grace Period 4 years
Source of Loan Quedancor
Rate of Interest on Capital 19%
- Interest Rate per Annum 16%
- Service Charge per Annum 3%
NPV Discounting Rate 19%
Depreciation Method Straight line, 0 salvage value
Selling Price of Bamboo Pole P75/pole (farmgate price)
Selling Price of Bamboo Shoot P70/kg (farmgate price)
Cost of Bamboo Seedling P75/seedling
Cost of Fertilizer P13.5/kg
Labor Rate P150/man-day
Land Rent P10,000/year
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Profitability Analysis: Bamboo Shoot and Pole Production 13
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Bamboo Species Kawayan Tinik (Bambusa blumeana)
Pole Production Clump/plantation age for initial commercial harvest • 5 years old Pole maturity for harvest • 3 years old Pole/culm height • 15–25 m Pole/culm basal diameter • 6–10 cm Average yield/clump • 3–5 poles or culms Average yield/ha • 1050 poles
Shoot Production Shoot basal diameter • 6–10 cm Shoot height • 8–10 cm Shoot fresh weight • 1 kilo/shoot Average yield/clump • 3–5 shoots Average yield/hectare • 630–1050 shoots
Soil Type Requirement • Attains optimum growth in well drained soil, sandy loam, and clay loam soil
• Most suitable pH of 5.0–6.0, while nonsuitable for saline soils and water-logged areas
Climate • Optimum temperature ranges from 8.80C to 360C
• Rainfall: 150-200 mm/month; Optimum growth requires more than 200 mm/month
14 Profitability Analysis: Bamboo Shoot and Pole Production
Vegatative Production Selection and collection of planting stock • Select healthy mother clump from which 1–2 year-old culms shall be taken as sources of cuttings for propagation • Cut the 1–2 year old culm into either 2-node or 1-node
culm cutting • Choose nodes with well-developed buds • Cut 5–8 cm below the node and 10•13 cm above the node.
A sharp crosscut saw or knife may be used for this purpose Potting and rooting • The culm cuttings can be planted directly in
18 cm x 18 cm x 28 cm polyethylene bags with ordinary clay-loam soil and about 10% organic fertilizer (chicken dung)
• An alternative is to set the cuttings in a misting bed. The misting bed is a rooting bed enclosed with a single line of hollow blocks and filled with river sand. Use fine river sand as the rooting medium
• Keep the misting bed moist using a mist sprayer or sprinkler
• Transfer the rooted cuttings to black plastic bags with ordinary clay-loam soil and about 10% organic fertilizer (chicken dung) within 20–25 days
Care and maintenance of planting stocks in the nursery • Water the potted cuttings daily (at least twice a day (in the morning and in the afternoon) • Place potted cuttings under partial shade • Water the plants regularly • After 2 months, transfer the plants into the open to
harden the newly developed shoots by exposing them under the sun
• The plants should be ready for planting after 6 months
Profitability Analysis: Bamboo Shoot and Pole Production 15
Plantation Establishment Selection of planting site • Select suitable plantation site in grassland/openlands
with well-drained soil. Flat land with well-drained soil is preferable. Hillside with suitable slopes and exposure may be considered
• Sketching, staking, and final layout Preparation of plantation site • Clear weeds • Dig planting holes of 60 cm x 60 cm. The top soil is used as
bed soil to the propagules when planted Planting operations • To ensure high survival, outplanting should be done at the
onset of the rainy season • Employ a 7 m x 7 m spacing Fertilization at planting planting time • Each propagule is fertilized at 200-300 g of complete fertilizer Plantation maintenance • The sustainable development of planted propagules
requires the following activities : (1) replacement of dead propagules; (2) weed control; (3) watering; (4) fertilization and thinning; and (5) protection
• Mark every culm as soon as it emerges from the ground to monitor the culm age
Harvesting of Shoots • The shoots during the first half of the shooting period are healthy and expected to survive until fully grown into culm. Twenty-five percent (25%) of the shoots during the first half of the shooting period may be harvested. Seventy- five percent (75%) of the shoots are allowed to grow into poles. All the shoots that occur during the last half of the shooting period may be harvested as their survival for poles are very low
16 Profitability Analysis: Bamboo Shoot and Pole Production
Harvesting of Poles • For clump yield sustainability, harvesting of poles requires the application of Culm Selection System (CSS). During harvest time (dry season or summer time) only culms of 3-year old and above should be harvested. The CSS application, therefore requires marking of emerging shoots during shooting period to monitor/determine culm age for harvesting
• Marking of emerging shoots is a component scheme in clump management
Clump Management • Clump productivity should be regularly improved or maintained to hasten sustained shoot/culm yields. This could be attained through the application of regular tending operations which includes cleaning, thinning, mounding, mulching and fertilization
Possible loan sources QUEDANCOR Program for Agri-Fishery Small and Medium Enterprises (QP-ASME)
• 16% interest rate with 3% service fee • The borrower must have equity equivalent to 20% of the
project cost. The borrower’s equity can be in the form of agri-fishery machinery and equipment, inputs or labor
• Collateral requirements: 1. At least 80% Real Estate Mortgage(REM) or 80%
combination of REM, non-interest bearing cash trust fund, bank/time deposits, LandBank/government bonds/ securities and similar investments
2. Deed of Assignment of Receivables supported by a Marketing Contract/Agreement, if applicable.
Profitability Analysis: Bamboo Shoot and Pole Production 17
LANDBANK Easy Pondong Pang-Asenso (EPPA) • Interest rate is based on the prevailing market rate • Up to 80% of the total project cost; borrower has to put up
the remaining 20% as equity, either in cash or in kind • Collateral requirements:
1. Real Estate/Chattel Mortgage (REM/CM) 2. Hold out on deposits 3. Assignment of receivables and/or inventories 4. JSS Principal Stockholders/Officers 5. Guarantee cover from Small Business Guarantee and
Finance Corporation (SB Corporation), if applicable
Credits
Production: PCARRD Secretariat with the support of the forestry and environment research, planning and development, and the applied communication divisions
Lead Expert and Science and Technology Consultant: Felizardo D. Virtucio Content Analyst: Nimfa K. Torreta Investment Analyst: Felizardo D. Virtucio with Don Joseph M. MedranaEditor: Joel Eneristo A. JovenDesign: Paul Jersey G. LeronPhoto Credits: Stanley C. Malab (plantation, plants); Gene C. Bautista (seedlings)Production Assistant: Carmelita B. Alamban
Special thanks to: Patricio S. Faylon, Leah J. Buendia, Romulo T. Aggangan, and Lily Ann D. Lando
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