A

PROJECT FEASIBILITY STUDY ON

SWEET POTATO FLOUR MILL

Dulag, Leyte

Prepared by:
Marissa Abobo
Rosemarie Gerones
Nina Rica Sabulao

INTRODUCTION

If there is something that Filipinos have in common, it would have to be

their insatiable gastronomic pleasure. Filipinos love foods! Foods are their
energy, relief, comfort, life. Every good deed has to be quantified with a good
meal; every job well done has to be rewarded with a good merienda. And
when it comes to snacks, nothing beats the soft and warm Pinoy pandesal,
the deliciously firm Pinoy spaghetti, the crispy, melt-in-the-mouth sensation
of Pinoy pastries and the sweet and fluffy Pinoy cake.
These foods have so many variations. They could be baked, steamed,
made salty or tangy, easy as pie or complicated as chemistry, small as a
babys fist or big enough to fill Goliaths stomach; however they may be
made, theres one thing that all these foods have to have, a fine white
powder called FLOUR.
Flour or (scientific name) is ___.
There is a big market for flour in the Philippines. (State facts). Recently,
there have been issues about Turkey flour which is to be introduced to the
Philippine

market

which

have

threatened

Pinoy

flour

manufacturers.

(Describe Turkey flour and its possible effect on the flour economy of the
Phils.)

OBJECTIVES OF THE STUDY

The study aims to:
1. Conduct research and analysis to ascertain the viability and
feasibility of establishing a Sweet Potato Flour Mill;
2. Identify the extent of the on-site infrastructure needed to support
the industry;
3. Come up with a realistic financial requirement for the
establishment of the anchor industry.

SCOPE AND LIMITATIONS OF THE STUDY

The study explores the marketing, technical, financial and operational
viability of establishing a Sweet Potato Flour Mill in Dulag Cluster.

METHODOLOGY
Data gathering was conducted through interviews and research at the
different government agencies in the province.

The technical aspect was based on the research studies conducted by

the Philippine Rootcrops Research and Training Center (PRCRTC) in VISCA,
Baybay, Leyte.
The demographic statistics were taken from the recent NSO
publications and the 1990 Leyte Provincial Profile which was prepared by the
PPDO.
Almost 95% of the data gathered were based on secondary sources.

EXECUTIVE SUMMARY

A. PROJECT NAME: Sweet Potato Flour Mill

B. PROJECT SITE: Brgy. San Vicente, Dulag, Leyte
C. PROPONENT: 2Dozen Incorporation
D. BRIEF DESCRIPTION OF THE PROJECT:
The project involves the processing of sweet potato or camote into
flour as substitute for cake flour to be used in bakery products. It is proposed
to be established in Dulag, Leyte where raw materials are abundant and the
location is accessible. Sweet potato flour is made from fresh sweet potato
roots which are peeled, chipped, dried, and milled.

The proposed Sweet Potato Flour Mill will be managed by 2Dozen

Incorporation, an organization based in Dulag, Leyte. It will employ a total of
ten (10) personnel.

E. PROJECT COST:

F. SOURCE OF FUND: Equity Financing & Loan

G. PROPOSED LOAN
1. Amount of Loan
2. Accomodation
3. Interest Rate
4. Repayment Schedule
5. Loan Collateral
H. SUMMARY OF FINDINGS
1. Organization & Management Study
The success of the project is hinged on the leaders of
2Dozen Incorporation, who are tasked to manage the project. They
are a group of professionals and businesswomen who have a proven
track record of managing business and leading an organization. The
day to day operations will be handled by a team to be led by a
General Manager and assisted by an administrative staff, a
marketing officer and a 6-man production crew.
2. Market Study
This project is a pioneering venture in the production of SP
flour on commercial scale in the region. Hence, a primary key to its
success is an aggressive, well-coordinated marketing campaign to
be handled by the company itself with the help of concerned
agencies.
The SP flour has a price advantage over the leading brands of
cake flour and SP flour produced in Cebu. It will be sold at P30.00
per kilo, a price which is 42% lower than existing brands.

It is targeted to conquer 12% of the market share of the

assumed of the assumed cake flour in the region.
3. Technical Study
The SP flour will be produced using the root crop
technologies. Machineries and equipment can be fabricated locally
and outside the region. The raw materials requirement of the
project will only comprise 50% of the clusters annual production of
sweet potato.
The plant will be strategically located in Brgy. San Vicente,
Dulag, Leyte which is accessible, where electricity is available and
raw materials are abundant.

4. Financial Study
The project will generate an ROI of 43.78% and a payback
period of 2.28 years.

5. Socio-Economic Study

The project will provide direct employment to 10 persons,

indirect employment to more than 300 farmers and agricultural
workers involved in SP production. It will increase the income of SP
growers, the LGUs who will earn an income of PPPPPPPP in income
taxes and permits and licenses fee on the first five (5) years of the
project. It will likewise promote the growth of related industries,
increase international reserves through the non-usage of imported raw
materials as well as help develop the community where the project will
be located.

MARKETING ASPECT

1.1 MARKET DESCRIPTION

The primary market of the flour is the whole province of Northern
Leyte. As of May 2013, the province has a total population of 1.484 million
with an annual growth rate of 1.3%. The total number of households is
284,061.
The major and biggest users of flour are the bakeries. Based on the
1990 Environmental Scanning Study on the Manufacturing Sector in Region
VIII, there are a total of one hundred thirty (130) bakeshops in Leyte of which
31% or 40% are found in Tacloban City (Appendix A). Per primary data
gathered in the study, this sector consumes an average of 201,245 kilograms
of flour per month.
At present, bakery products (bread, cookies, cakes, and pastries)
produced by the commercial sector are made from wheat, all purpose and
cake flour. The use of sweet potato flour as substitute for wheat and cake
flour is being promoted by the Philippine Rootcrops research and Training
Center (PRCRTC) of VISCA, Baybay, Leyte with the assistance of the
Department of Trade and Industry (DTI) and the Department of Science and
Technology (DOST).

1.2 DEMAND SITUATION

According to the Port Traffic Statistics of the Philippine Ports Authority
(PPA) in Region 8, Tacloban City imported a total of 21,283.54 metric tons
(see Appendix B) of wheat flour over a period of twenty-one (21) months
from 1990-1992. These shipments averaged a total of 1,013.5 metric tons
per month, of which 4% are transported to the other parts of the region while
the remaining 96% are distributed in Tacloban City and the nearby towns.
This means that the province needs an average of 972.96 metric tons of flour
per month.
Results of experiments conducted by PRCRTC at VISCA, Baybay, Leyte,
showed that flour from sweet potato can substitute up to 100% in butter and
chiffon cakes but only up to 20% in pandesal and 10% in loaf bread (see
Appendix C).
Assuming that only 10% of the monthly demand for flour in the
province is used for cakes, the existing demand for cake flour is therefore
48.65 metric tons or 48,648 kilograms per month.

1.3 SUPPLY SITUATION

There is no local production of flour. The flour requirements of the
province are being supplied by the General Milling Corporation in Lapu-Lapu
Cuty, Pillsbury-Mindanao Flour Corporation in Iligan City, Island Feedmills in
Cebu City and the RFM Corporation in Metro Manila.
The supply of flour, however, can be adversely affected by the lack of
transportation facilities (cargo vessels) conveying shipments of various
commodities from other regions to Tacloban City.
Thus, there is a need for the region to be self-sufficient. The sweet
potato flour is accessible to the market and can substitute the more
expensive brands of wheat and cake flour.

1.4 DEMAND SUPPLY ANALYSIS

Based on the demand situation, the present demand for cake flour is
48.65 metric tons or 48,648 kilograms per month. Since there is no firm in
the region which produces flour substitutes in commercial quantities, the
proposed sweet potato flour mill can serve up to twelve percent (12%) of the
cake flour needs of bakeshops in the province.

1.5 TARGET MARKET SHARE AND COMPETITIVE POSITION

Shown below are the existing prices of cake and sweet potato flour
presently available in the market:
Brand

4. Wooden Spoon Cake Flour

1. Sweet Potato Flour (from Cebu)

5. White King Cake Flour

2. Cake Flour (ordinary)

3. Pillsbury Cake Flour

38.70
Price/kg

34.00

40

41.70

17.50

On the other hand, the sweet potato flour to be manufactured by the

Dulag Sweet Potato Flour Mill will cost P550.00 per 25-kilogram sack or
P22.50 per kilo.
Aside from the bakeshops, the sweet potato flour can be distributed
through the groceries and supermarkets who are the biggest retailers of flour
and other commodities. The project can also tap the soy sauce makers as
potential users of their product. The 12% targeted market share would easily
be

realized

demonstration,

through

an

taste

tests,

aggressive
information

marketing
caravan,

campaign
etc.)

to

(cooking
be

jointly

undertaken by the PRCRTC of VISCA, DTI, DOST with the cooperatives and
NGO sector as partners.

1.6 PROJECTED SALES

The annual production of sweet potato flour is expected to increase by
10% per annum with the corresponding increase in its selling price at 5% per
year. Hence, the projected sales of the Sweet Potato
Flour Mill for the first five years is as follows:
Year 1

P1,171,293.98

Year 2

P1,406,316.66

Year 3

P1,624,295.74

Year 4

P1,876,061.58

Year 5

P2,166,851.12

For detailed computation of the projected sales, please refer to

Schedule 1 of this study

1.7 COMPETITIVE POSITION

The project is a milling industry which uses sweet potato or kamote on
manufacturing flour as proposed by the Duha ka Dosena Company owned by
the aforementioned proponents.
The mill is proposed to be built in Dulag, Leyte where kamote are
abundant and land lease costs less as Dulag is a non-commercial area. Such
factors are expected to affect positively the manufacturing cost of the
product making it more affordable than most flour offered in the market
today.

1.8 MARKETING MIX

The pre-contracted customers were achieved by conducting interviews
with randomly picked bakery, patisserie and restaurant owners who are
within 60km range of Dulag Leyte. The product was made known to the
market through web advertising and giving away flyers and pamphlets.

1.9 MARKET DESCRIPTION

The proposed product is to be supplied to pre-contracted bakery,
patisserie and restaurant owners in the province of Leyte.

TECHNICAL ASPECTS
2.1 PRODUCT DESCRIPTION
The proposed product is fine white flour made out of sweet potato. The
proposed product can substitute for the more highly priced cake flour and
70% of all purpose flour. The price of the proposed product is expected to be
reasonably lower than the flour available in the market because the raw
material to be used can be directly purchased from the farmers of Dulag,
Leyte.
Pre-contracted customers, most of whom are bakery, patisserie,
restaurant, dry market stall and grocery owners, are the target market of the
proposed product. Schedule of delivery will be every two weeks starting from
the contract date. Manner of Shipment will be land tracking since customers
are expected to be within Region VIII only.

2.2 PRODUCTION PROCESS

fres
h
root
s

drying
drying

washin
washin
g
g

chippin
chippin
g
g

grindin
grindin
g
g

sealing
sealing

weighi
weighi
ng
ng

peeling
peeling

sieving
sieving

patchin
patchin
g
g

storing
storing

SP
Flou
r

2.3 PROJECT SITE

The proponents decided to strategically situate the project in Dulag,
Leyte where sweet potato, which is the main ingredient of the proposed
product, is abundant.
Through research, the proponents found out that Dulag, Leyte has still
vast areas of idle land which are most suitable for mill sites. The nearest
residential area to the project site is ____ kilometer away which is presumed
to be a safe distance, or the distance between mill sites- or any other factory
that manufactures product which might cause allergic reactions to residents
near it, and areas that are safe for habitation.
The proponents also found out, through research, that Dulag, Leyte has
a high percentage of unemployed workers. Establishing the proposed
business within the place is expected to provide employment to a number of
Dulags unemployed workers because the proposed business will be in need
of farmers for the production of sweet potatoes.

2.4 PROJECT LAYOUT

The needed area of the proposed project will measure 150sq meter.
(See annex _ for Project Layout)
Floor Plan
(See annex __ for Floor Plan)

2.5 UTILITIES
Electricity
Electric power will be supplied by DORELCO. The project is estimated
to consume at least 45.83 kilowatts per month based on the electric
consumption of the peeler, chipper, dryer, and the lighting fixtures and
ventilation fixtures (see Table 3). Other equipment is manual operated.

Water
The source of water supply is a deep well. The estimated cost of
installation of a deep well water pump is Fifteen thousand five hundred Pesos
(P15,500.00) inclusive of labor and materials.

2.6 RAW MATERIALS REQUIREMENT

The main ingredient of the proposed project which is sweet potato will
be purchased from the local farm of Dulag, Leyte. Other raw materials will
also be purchased from the local market of Dulag.
At 50% production capacity, the project will need a total of 30,571.69
kilos of sweet potato every month since a kilo of SP flour would need at least
5.69kgs of raw sweet potatoes. These raw materials will b e procured from
Dulag Cluster. Fresh sweet potatoes will be supplied by farmers and will be
delivered to the project site. Table 2 shows the production of sweet potato of
the Dulag Cluster.

2.7 WASTE DISPOSAL REQUIREMENT

The proposed product uses organic raw materials. The biodegradable
wastes generated from the production process, e.g. sweet potato peelings,
will be sold as fertilizer to the local farms. Non-biodegradable wastes will be
placed in garbage cans which will be deposited to the nearest compost pit.

2.8 MACHINES AND EQUIPMENT

The machines and equipment to be used for the production will
purchased from Manila and Tacloban City.
The project will also need one drop side pickup which will be used to
transport and deliver the finished products to the market. This will be
purchase from Tacloban City.

2.9 STRUCTURES

The Center will be composed of three (3) structures, namely: office and
store, working area of the plant and the SP storage hut.
The office and store with a floor area of 40sq. meters will made semiconcrete materials. The plant, also Made of semi-concrete materials will have
a floor area of 150 sq. meters. The SP storage hut will be made of bamboo

and cogon or coconut fronds with an area of 216cm. x 135 cm. and 264 cm.
high. (Appendix)
The estimated cost of the buildings is P1500 per square meter or P
285000.

MANAGEMENT ASPECTS
3.1 TYPE OF BUSINESS ORGANIZATION
The project will be managed by the Dulag Economic Foundation, Inc.
(DEF), a corporation duly registered with the Securities and Exchange
Commission (SEC). The DEF is a non-stock, non-profit organization composed
of civic-minded professionals and businessmen in Dulag, Leyte. It was
registered with the SEC last March 13, 1990 with Registration No. 175148.
The

Dulag

Economic

Foundation

was

chosen

by

the

Cluster

Consultative Cluster (CCC) of the Dulag Cluster to manage the proposed

Sweet Potato Flour Mill per CCC Resolution No. 92-03 dated April 13, 1992.

3.2 ORGANIZATIONAL STRUCTURE

The project shall be headed by a General Manager who will be
responsible for the day-to-day operations of the project. Policy making is
vested on the Board of directors who will be elected by the General
Assembly.
The proposed organizational structure of the project is illustrated in
Figure 1

3.3 FUNCTIONS
Discussed below are the specific functions of the personnel to be
employed by the project.
General Manager1. Responsible for the day-to-day operations of the
project.
2. Formulates and enforces personnel policies.
3. Designs and conducts trainings to personnel.

4. Establishes linkages with resource institutions for

technical, financial and marketing assistance.
5. Conducts research to improve operations and the
quality of the products.
6. Supervises production activities.
7. In charge of plant maintenance and utilities.
8. Ensures quality control of the products.

Cashier Clerk

1. In charge of collections and disbursements.

2.

Maintains

3.

Renders

office

correspondence

and

other

records.
clerical

assistance

to

the

General

Manager.

Bookkeeper

1. Keeps an account of the financial transactions of

the project.
2. Prepares financial statements and other periodic
reports as maybe required by the manager.

Machine Operators

1. Operates the machineries and equipment

assigned to them.
2. Performs specific tasks required in the production
of the products, e.g. washing, chipping, packaging,
etc.

Helper

1. Provides janitorial services to the project.

2. Performs other functions as may be assigned by
the manager or the supervisors from time to time.

Marketing Officer 1. Conducts market research and planning.

2. Procures raw materials and supplies.
3. Overall responsible for the advertising/promotion
and selling activities of the project.
4. Keeps, maintains and issues raw materials and
supplies.

3.4 PERSONNEL REQUIREMENTS AND COMPENSATION

The project will employ a total of nine (9) fulltime and one (1) part-time
personnel. The fulltime personnel will be entitled to a basic salary, 13 th
month pay, SSS, Pag-ibig, and Medicare benefits. With the approval of the
partners, incentives can likewise be given to increase employee productivity
and boost their morale.
Schedule 3 presents the breakdown of the personnel requirements and
corresponding compensation.

FINANCIAL ASPECT

4.1 TOTAL PROJECT COST AND SOURCES OF FINANCING

The total project cost is xxxxxxxx of which xxxxxxxx will be obtained
from loans and xxxxxxxx represents owners equity. The loan will be secured
from the Land Bank of the Philippines (LBP) which offer loans at an interest
rate of 17% per annum. Other sources of financing like the GSIS-MADE and
the SSS-MADE can also be tapped.

4.2 TOTAL PROJECT COST AND SOURCES OF FINANCING

The total project is xxxxx pesos of which xxxxx will be obtained from
loans

and xxxxx represents the owners equity. The loan will be secured

from the Land Bank of the Philippines which offer loans at an interest of 17%
per annum.

4.3 PLANT SIZE AND PRODUCTION SCHEDULE

The plant will operate from 50-90% capacity on its first five years of
operation. On its initial year, the monthly production will be 5,372.03 kilos of
flour at 26-days operation per month. The flour recovery rate from fresh
roots is 17.57%. a detail of the production schedule is shown in Table 1.

Table 1
PRODUCTION
SCHEDULE
RECOVER

NO.

OF

DAILY RM
PROCESS

Y
INPUTS
RATE

(kg)

DAYS
REQUIRE

MONTHLY OUTPUT

(kg)
30,571.69 fresh SP
roots
26,542.34 fresh SP

2,
Washing
Peeling

86.82%

491.58

&

12.27
1,

roots
22,295.57 fresh SP

25
Chipping

84%

061.69

Drying
Grinding

25.57%

857.52

94.23%

219.27

roots
5,700.98 fresh SP
26
roots
5,372.03 fresh SP

&

Milling

26

Recovery Rate = (Monthly Output/ Input) / no. of

days
Monthly Output = ( Daily Input x No. of Days) x
recovery rate

roots

SOCIO-ECONOMIC ASPECT
The proposed project will provide additional income to camote farmers
in Dulag, Leyte, and employment to some of the unemployed population of
Region VIII who can successfully make it through trainings and additional
revenue to the government of Dulag from the collected taxes.
With the establishment of the Dulag Sweet Potato Flour mill, the
following socio economic benefits will be generated:
1. Direct employment for 10 persons to be employed by the project and
indirect employment to more than 300 farmers involved in sweet
potato production and hundreds of agricultural workers who will be
hired by the farmers as farm hands.
2. Increase in income of sweet potato growers from sales of sweet potato
in the total amount of P4,692,205.48 for the first 5 years of the
projects operation.
3. Increase in revenues of the local government units concerned which
will earn a total of P328,763.59 in income tax payments for the first 5
years of the flour mills operation and another P2,762.82 in permits
and licenses.
4. Development of the community where the project will be located since
the LGUs with the revenues generated from the project will have the
capability to implement their community socio-economic projects in
response to the needs of the people.

5. Increase in international reserves through the non-usage of imported

raw materials such as wheat and utilizing the indigenous camote as
cake flour substitute.
6. Growth of related industries like fertilizers, insecticides, and pesticides
producers; cottage/home industries like basket-making (kaing); breadpastries making and delicatessens made from sweet potato flour.