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Business Plan

Love-Love Duck Farm

Submitted to:

THE 2017 NRCO-ISP BUSINESS PLAN COMPETITION

Prepared and Submitted by Nerio La Luna

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Executive Summary

Love Love Duck Farm is located at Bo. 8 Kusan, Banga, South

Cotabato. Will be housing 1,000 heads of Pateros ducks in a 1.5 hectare land

owned by Nerio S. La Luna’s family. After one(1)

month of purchasing the ducks they will lay eggs with an estimate one (1) egg

production per duck every day. Eggs will be put in an incubator for 18 days

before it will be sold to the viajeros or traders in General Santos City for balut

or penoy which will be also be sold to the balut vendors of the City. Fresh eggs

will be sold at ₱13.00 per piece for balut and ₱10.00 per piece for penoy.

The project will have a total capitalization of ₱907,775 pesos with an

existing building which will be used for housing the ducks costing ₱60,000. The

current vehicle of will be used to delivering the eggs in General Santos City

every three (3) days or ten(10) times a month.

The farm will have three employees as caretaker of the duck. They will

do the feeding, harvesting of eggs, cuddling of the eggs and packing. One of

the employees will also be the driver who will go to General Santos City to

deliver the eggs together with the owner.

On its first year the farm will have ₱2,895,795 sales with an income

before tax of ₱837,982.50. After two (2) years the ducks will be sold to the

market for cull and the farms will purchase a four month old ducks one month

before the old ducks will be sold. The business will have a return on investment

on its second year.

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Table of Contents

Business Description 1

Demand and Supply 2

Product Description 3

Pricing 4

Location 5

Production Schedule 5

Projected egg production 6

Equipment and Materials 7

Distribution Channel 8

Target Market 9

Competitors 9

Organization and Management plan 10

Financial Plan 12

Projected Income 13

Balance Sheet 14

Cash Flow 15

Financial assumptions 16

Future Plans 17

Waste Disposal 17

References 19

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Business Description:

The Philippine duck industry is small compared to chicken. However, it is

quite unique and has a special role in the Filipino culture. The uniqueness

comes from the way that duck eggs are being utilised. Unlike other Asian

countries where duck eggs are processed mainly into salted eggs and century

eggs, more than 80 per cent of duck eggs in the Philippines are processed into

“balut”. Balut is sometimes referred to as “embryonated egg” or “incubated

eggs” because the eggs are harvested and consumed when the embryos are

between 14-18 days old. Balut is considered a delicacy by the Filipinos for its

unique taste and nutritional 3 value. It is also unique because balut is available

only from street vendors and only in the late evening. Such a distribution

method, despite its cultural significance, may place limits on the demand. A

second feature of the Philippine duck industry is that duck meat production is

mainly a by-product of balut production, derived from mainly from excess

males and culls. (Chang, H.; Dagaas, C.;de Castro, N. et al, 2003)

Duck is the second largest poultry industry that provides income to farmers

through egg and meat production in the Philippines. Love-love Duck Farm in

Bo. 8 Banga, South Cotabato will raise ducks and its eggs will be used for

balut (boiled embryonated egg).

In the Philippines ducks farming is divided into two schemes. First is the

free range scheme, which is the traditional way of raising native ducks.

Ducks are allowed to graze and scavenge on newly harvested rice fields.

Rice fields are rich in duck feeds such as rice hulls,snails, seeds, grass, fish

and insects. The other scheme for raising ducks is through the confinement

system using a duck house or known as kamalig. In this scheme, ducks are

provided with a balanced diet that includes formulated feeds and clean

drinking water, proper floor space, feeding spaces and other requirements

needed for maintenance, growth and development for egg production. (native

duck raising, 2016)

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Love-love duck Farm will be using the confinement system for this will be

more suitable and productive for laying eggs. Ducks needs clean water and

Banga, South Cotabato where the farm will be situated is abundant with water.

In the Philippines Duck egg production grew by 1.84 percent for balut

production during the period of January-March 2017 (PSA, 2017). However,

in the South Cotabato area alone there is still a shortage. Although there are

many producer of duck eggs in South Cotabato, the supply is still not enough

since this duck growers are small time and the eggs produced by the ducks

cannot cope up with the demand.

Demand and Supply:

According to the Philippine Statistics Authority survey of 2016 which was

conducted January – July of 2016.

As stated above the top five (5) highest producing regions in terms of duck

inventory were Central Luzon, Western Visayas, SOCCSKSARGEN, Cagayan

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Valley and Ilocos Region. These regions accounted for about 72.19 percent of

the total duck inventory of 10.52 million birds. (Authority, 2016)

With this data, Love-love Duck Farm will be one of the contributors to boost

the supply of Ducks in SOCCSKSARGEN. As observed within the region, duck

eggs for Balut or penoy still has a shortage within the streets at night.

Product/ Services:

Love love duck farm will be selling duck eggs to the viajeros or traders for

balut production. The eggs maybe produced by this traders for balut, penoy,

salted eggs and century eggs. Love love duck farm will only be selling a fresh

duck eggs.

Product Description Target Price

Penoy

egg is not fertilized and only

semi-developed, even after going

through the incubation period. It

looks like a mass of plain white

and yellow embryo that solidifies

as you boil the egg.

10.00

18 days

18th day of incubation, the

"second candling" is performed,

and those ready for marketing

are separated from the younger

eggs.

13.00

Pricing:

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Production of duck egg takes time. A four months old duck will be

purchase from the duck raisers. A newly purchased duck will take a month

before it can produce egg. Once it produces egg it can produce one egg per

day.

Cost of Production:

Delivery of eggs to the Balut vendors will be every three (3) days to

augment the cost of transportation and bulk of stocks to deliver.

Farm Location

The business will be located at Bo.8 Kusan, Banga South Cotabato. With a

one(1) hectare land owned by the family of Mr. La Luna. Within Banga South

Cotabato there are about fifteen (15) small duck farmers who raise duck and

sell the eggs as balut, penoy, salted eggs and others. This small farmers

supply the eggs in the within Banga, Surallah and City of Koronadal Area.

Love-love Duck Farm targets to sell the products in General Santos City

since there is the demand in the city is high. Duck eggs for balut came from

outside the city and it can sustain the demand.

Item Unit Cost no. of pcs. Total Cost

Duck 200 1000 200000

Feeds 1200 100 120000

Vitamins 1000 2 2000

322000

Feeds 1200 100 120000

Vitamins 1000 2 2000

122000

Target sales everyday:

Penoy 10 50 500

Balut 13 950 12350

Sales per day 12850

Initial cost for first month

cost per month after 2months

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Production Schedule:

Love-love Duck Farm will buy 1,000 head of Ducks which are at least 4

months old. A building will be constructed for housing. A one-compartment

shed with only the front side open. This side may face the body of water in the

area and serve as the entrance for the flock and its caretaker. Fence an open

area in front of the shed to serve as the flock’s feeding – playing space. Clay or

plastic water tubs or concrete ponds will be provided for the ducks to swim or

wade in. With a measurement of about 10 by 8 feet, with water two feet deep,

for a flock of about 50 ducks. An elevated floor of the shed at least 15

centimeters higher than the level of the ground in the feeding area, then cover

it with a 10-centimeter layer of rice hull litter. Litter will be kept dry and replace

it as often as possible. Ducks should be housed in groups based on age to

facilitate management and to avoid the quarrels common among ducks of

different ages.

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After the ducks were purchase, they will be given one (1) month to adjust in the

confinement area. When the ducks will be able to lay eggs, a target of 1,000

eggs will be produced in a day. Eggs will be incubated for balut production.

Projected egg production:

Balut Production per day:

Qty. Price Total

Penoy 50 10 500

Balut 950 13 12350

12850 sales per day

3 days of production

38550 sales per delivery

From the target egg production of 1,000 pieces per day, it is estimated that

5% of the eggs will be penoy and the 95% will be an 18 day old balut. The

eggs will be sold to the viajeros or traders every three days.

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Equipment and Materials:

The following items are needed for raising ducks.

Equipment Qty. Amount Total

Incubator 1 20,000 20,000

Power Spray 1 8,000 8,000

Total 28,000

Materials Qty. Amount Total

Waterer 55 100 5,500

Federer 45 145 6,525

Light 12 200 2,400

Total 14,425

Materials used for waterer and Federer are linear and can accommodate 8

ducks. With a useful life of two years before it will replaced. Light is used to

provide heat.

Food Qty. Amount Total

Feeds 100 sacks 1,200 120,000

Vitamins 2 bottles 1,000 2,000

Total 122,000

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Distribution Channel:

The fresh duck eggs will be brought by the traders going to the balut

processors or balutan, who produces balut, penoy, salted eggs and century

eggs. Once the eggs are ready for sale, traders bring them to retailers which

then will be sold to consumers on the streets. Generally, balutans accept

orders from the duck raisers, source and hatch the eggs, and then sell them

back to the duck raisers. Soon for future success of the farm being a duck

raiser, balutan, traders and retailer will be rolled into one.

Consumer

Love-Love Duck

Farm

Viajeros

(will buy the eggs

from the farm)

Transport to

General Santos

(sell fresh eggs

direct to vendors)

Balut Vendors

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By-Products

For best egg production, ducks will be sold for cull when they reach two (2)

years old. Culls will be sold to restaurants and night market of Surallah, Banga,

Koronadal, General Santos and other nearby municipalities.

Ducks can be serve to the restaurants barbeque, lechon, patatim and other

delicacies.

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Target Market:

Balut is a popular street food in the Philippines. It consists of a fertilized

duck egg that has been incubated for approximately 18 days; a period of time

which results in the formation of a partially developed embryo within the shell.

Balut is eaten directly from the shell after being hard-boiled or steamed. Balut

is a relatively inexpensive source of protein and calcium, and is considered by

some to be an aphrodisiac for men. However, women also loves to eat balut

and it is relatively available in the market, particularly in the streets, at night.

The eggs will be sold to the viajeros or traders every three (3) days once

the eggs reach 18 days old. All deliveries will be on cash-to-cash basis.

Deliveries will be made to General Santos City approximately 81.2Km or a 1

hour and 30 minutes ride with the use of a private vehicle.

Competitors:

Within in vicinity of Banga, South Cotabato there are about 15 small scale

duck farmers. Who supplies the balut in Banga, Surallah and City of

Koronadal. Adelmita Farm and Dela Cruz farm which is a neighbor of

Love-Love farm, they have 1,500 heads of ducks.

Competition in the market of balut making is not that high since most of the

famers are small scale and cannot supply the demand of balut in the market.

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Organization and Management Plan

The business is a Sole Proprietorship. It will solely be owned by Mr. Nerio

La Luna.

Manpower:

The following manpower will help the success of the business

Personnel Job Description No.

needed

Salary

per

month

Annual

Salary

Caretaker He/she will be the one who is

in-charge in feeding the

ducks

In-charge for collecting the

eggs and putting it to the

incubator

In-charge for cuddling the

eggs until day 18

In-charge for cleaning the

duck house

2 5,000 120,000

Driver/

caretaker

He will help the supervisor in

delivering the eggs (balut) to

General Santos City

Help in collecting the eggs

and putting to the incubator

1 5,000 60,000

Supervisor/

Owner

Monitors the wellness of the

ducks

Give the vitamins

Help collect the eggs

Help feed the ducks

1 15,000 180,000

Total 360,000

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FINANCIAL PLAN

Project Cost

Pre-Operating Expenses

Building 60,000

Materials 15,775

Equipments 28,000

Vehicle 300,000

Livestocks 200,000

Food and Vitamins 14,425

Working Capital (operating expenses, direct labor, raw materials 289,575

Total Project Cost 907,775

Land use for poultry farm is owned by the Mr. Nerio La Luna’s family which worth 1,500,000.00.

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RETURN ON INVESTMENT

YEAR 1 – 28%

YAER 2 – 24%

YEAR 3 – 21%

YEAR 4 –16%

YEAR 5 – 13% The above ratios show the return gained on the invested amount in the

business. This shows a positive return even on the first year of the operations.

The decreasing ratios are affected by the 5% assumed increase in expenses,

without counterpart assumptions as to increase in sales. The 1,000 eggs per

day is limited by the number of ducks the business is planning to maintain in its

operations. Sales may increase if the owner may opt to increase the number of

ducks as investment. This may also improve as the selling price of the eggs

increase trough time.

*assumptions:

Egg production is 90% for 1000 ducks per day with 95% balut and 5% pinoy.

Eggs are available for sale after 18 days of incubation.

One month before the 2nd year, ducks will be replaced with new ducks.

On the 2nd year old ducks will be sold at 130.00 per head for cull.

The owner will purchase a four month old duck for laying eggs.

It will take one month before a duck can lay eggs.

After one month, one duck can lay one egg per day.

Laid eggs in three days (3,000) will be delivered in bulk to save from delivery costs.

Fuel Expenses will be 500.00 per travel. Travel will be 10times per month.

Repairs and Maintenance will be 75,000 per year.

Communication Expense is 1,500 per month.

Vehicle Registration is 15,000 per year.

All expenses are budgeted of 5% increase per year.

All sales are cash sales.

Depreciation of Incubator and power spray are computed according to 10 year useful life.

Federer and waterer are useful for two years.

Lights are changed every year.

Personal drawing of 100,000 per year is assumed.

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Future Plans

Love love ducks foresees to offer other products in the market. With

God’s grace, given the first business venture will prosper, Love love ducks

farm plans to do the following:

salted eggs for the duck eggs and

will be supplied to the public market

and malls

duck ham when the ducks reached the maturity age

and will be supplied to the restaurants and

malls

restaurant with duck delicacies as the specialty product

Waste Disposal

Ducks produces manure and for sustainable environment, this manure will

be use as fertilizer. However, manure is not much from one or two ducks, it

will fertilize the lawn or place where they live. But with a larger group of ducks,

it does accumulate, then the best thing is to compost the manure in a pile,

somewhere it can rot and break down over time, about one year, then it

becomes beautiful rich soil for a veggie or flower garden.

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These manures will be use to the rice farm of the nearby lot of the love love

duck farm and backyard vegetable plants.

Another waste are the duck feathers. This feathers can be use as feather

duster or inner material for pillows.

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References:

Authority, P. S. (2016, May). Duck Performance. Retrieved from www.psa.gov.ph:

https://psa.gov.ph/sites/default/files/DUCK%20Industry%20Performance%20Report%20-%2

0Jan%20-%20Dec%202015%20%281%29.pdf

Chang, H.; Dagaas, C.;de Castro, N. et al. (2003, February 12-14). An overview of the Philippine duck

industry.

native duck raising. (2016, august 1). Retrieved august 15, 2017, from press reader:

www.pressreader.com

PSA. (2017, Jan-Mar). PAR_January-March 2017. Retrieved August 2017, from Philippine Statistics

Authority:

https://psa.gov.ph/sites/default/files/attachments/ird/pressrelease/PAR_January-March_20

17.pdf