banana flour production

BANANA FLOUR PRODUCTION

Written by MASICAP TEAM 2010Friday, 14 October 2011 10:50 -

RATIONALE

Philippines is among the top five producers of fresh bananas in the world. Its fresh bananas areexported mostly to Japan, China, Korea, Taiwan, as well as the Middle East. That is whybanana is the country’s prime fruit commodity in terms of their commercial value and the size ofthe area they are planted. (pinoybusiness.org)

Banana fruit is a horticultural commodity that can be processed and preserved to expand itsmarketing value. Various processed banana products have already been developed, such as,sun-dried banana and banana crisps. A new product with a potential commercial value is thebanana flour. Banana flour can be used as a mixture material for various cakes/breads (wet anddry cakes), and for infant feeding. Banana flour contains low gluten, so it could not be used asthe main cake material. Therefore, to produce high quality cake, banana flour must be mixedwith wheat flour. It is made from rejected fresh and ripe banana. With that, rejects bananasafter harvest are converted into useful product that creates a positive effect in the economy.

OBJECTIVE

The project aims to utilize the Cavendish banana rejects by producing new product which has acommercial value that can lead to investment and create employment.

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PROJECT DESCRIPTION

The produced banana flour will come into different grades: food grade and feed grade. Foodgrade banana powder is primarily used as raw material on ketchup and some bakery productssuch as cakes and pastries. While the feed grade banana powder will be used as raw materialfor animal feed preparation and could also be used for industrial purposes such as glueextender. Food and feed grade banana powder is packed in a 50-kg sack bag except that thefood grade has a plastic liner on its sack for assurance of its quality which is sold at P 15.00 andP 6.00 respectively.

Production process begins by weighing banana rejects and then washed thoroughly to removesap and grime. It will then be sliced into chips. Afterwards, banana chips are placed inside themechanical dryer for eight (8) hours. After which, the dried banana chips will be classifiedaccording to its color. Dark-colored banana chips are further processed into feed grade powderwhile the white-colored or clean in appearance will be processed as banana food grade powder.After that, these chips will be pulverized and sifted. The flour is now ready for packing. Then thefood-grade powder is packed in a 50kg-capacity sack with plastic liner inside to assure quality ofproduct produced. And the feed-grade powder, on the other hand, is also packed in a 50kgsack.

For the first month of operation, the business will earn P 139, 047.00. It is also suited in theregion for the reason that primary raw materials are abundant. Further, this type of investment

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requires P 1, 055, 584. 72 with a working capital of P 93, 784.72. It will then have 27% and 33%as net and gross profit ratio. In addition, the investment will be recovered in one (1) year, eleven(11) months, and ten (10) days having a return on investment of 43%. Thus the project isworthwhile to embark on.

TRENDS AND MARKET OPPORTUNITIES

The Philippines is one of the top 5 major producers of banana in the world providing 1% of thetotal world exports.

Philippines have Cavendish, and Banana chips for export. For the local market, are cardaba,lakatan, latundan. The demand for organic banana chips, Cavendish and bongulan for export isalso growing. In fact in the region, SOCCSKSARGEN banana is one of the varieties of fruitwhich are considered as export winners. Region XII has 24,200 hectares planted regiowide.Organic Cavendish is grown by Marsman Drysdale for the Japan market. ( www.investinr12.net)

Other export products processed from banana are banana sauce (catsup) and banana flour,meal and powder. A total of 1,474 metric tons of banana catsup valued at US$1.3 million wasexported in 1998. Biggest export market is the US capturing almost half of total export volume,followed by Canada, Saudi Arabia and United Arab Emirates. The banana flour, meal andpowder were exported solely to the Japanese market at a volume of 2.2 metric tons valued at

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US$14,771 in 1998. ( http://www.philonline.com.ph/~webdev/da-amas/banana.html )

Due to the escalation of various food establishments including fast-food chains, demand forfood-grade banana powder increases because there is also an increasing demand forbanana-based products such as catsup and sauces. In addition, to sustain the livestock andpoultry sub sector, farm inputs such feeds must be assured and thus there is a niche also forthe feed-grade banana powder.

FACILITIES AND EQUIPMENT NEEDED

Peeling paraphernalia, weighing scale, chopping board, food grade basin, dryer trays,mechanical dryer, sifter (mesh #80), sifter (mesh #100), hammer mill, and building are therequired fixed assets of the business.

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http://www.philonline.com.ph/~webdev/da-amas/banana.html



FINANCIAL REQUIREMENT

Banana Flour Production

Total Project Cost

Particulars

Amount

Fixed Assets

Building

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350,000.00

Peeling Paraphenalia

2,000.00

Chipping Equipment

2,000.00

Food Grade Basin

4,800.00

Sifter Mash #80

15,000.00

Sifter Mash #100

15,000.00

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Hammer Mill

300,000.00

Pulverizer

100,000.00

Hot House

70,000.00

Dryer Table

3,000.00

Mechanical Dryer

100,000.00

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Total

961,800.00

Working Capital (1 month)

Direct Materials

50,271.12

Direct Labor

21,113.60

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Overhead Expense

15,000.00

Operating Cost

7,400.00

Total

93,784.72

TOTAL PROJECT COST

1,055,584.72

ASSUMPTIONS

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- Purchase of Raw Material is every week at the volume of 13,300/purchase

- Out of the purchase, 80% are for food grade and the remaining 20% is for feed grade

- Recovery rate for the drying process is 20% and 99% for milling and sifting

- Actual Capacity is 75% of the rated Capacity

- Plastic liner is only for food grade banana flour

- Kilo per sack is 50

- Depreciation Expense is computed based on straight line method

Projected Income and Sales (1 month)

Particulars

Amount

Sales

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Food Grade (8, 427 kilos @ P 15.00/kilo)

126,405.00

Feed Grade (2, 107 kilos @ P 6.00/kilo)

12,642.00

Gross Sales

139,047.00

Less: Cost of Sales

Direct Materials

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Dried Banana:

Food Grade (8, 512 kilos @ P 5.00)

42,560.00

Feed Grade (2, 128 kilos @ P 2.00)

4,256.00

Sack (211 pieces @ P 10.00)

2,106.80

Plastic Liner (169 pieces @ P 8.00)

1,348.32

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Subtotal

50,271.12

Direct Labor

Packers (2 workers @ P 0.20 per kilo)

4,213.60

Machineries Operators (2 workers @ P 175.00 per day in 26 days in a month)

9,100.00

Helpers (2 workers @ P 150.00 per day in 26 operating days in a month)

7,800.00

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Subtotal

21,113.60

Overhead Expense

Indirect Labor

6,000.00

Utilities

8,000.00

Repair and Maintenance

1,000.00

Depreciation Expense

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7,458.33

Subtotal

22,458.33

Cost of Sales

93,843.05

Gross Profit

45,203.95

Less: Operating Expenses

Freight Out

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5,000.00

Office staff

200.00

Office Supplies

200.00

Communication Expense

2,000.00

Operating Expenses

7,400.00

Net Income

37,803.95

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Net Profit Ratio

27%

Gross Profit Ratio

33%

Return On Investment

43%

Payback Period

1 yr, 11 mths, & 10 days

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For Inquiries, please contact:

National Economic Research and Business Assistance Center

SOCCSKSARGEN (Region 12)

Ground Floor, RA Bldg., South Osmena St., General Santos City

Telefax No. 083-5528250

Email Address: nerbac@ dti12.org

Visit: www.investinr12.net

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banana flour production

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