BUSINESS PLAN FOR CORN PRODUCTION

I. General Information

Title of Business Project : CORN PRODUCTION ENTERPRISE

Name of Cooperative : Lapad Agrarian Reform Community Multi Purpose

Cooperative (LARFACO)

Name of Chairperson : _____________________________

Complete Address : Zone ____, Lapad, Laguindingan, Misamis Oriental

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 Table of Contents

Page No.

Executive Summary 3

Business Description/The Company 3

Vision 4

Mission 4
Business Objectives 4
Major Strategies 5
The Management Team 5

The Board of Directors 5

Marketing Aspects
Market Overview 6
Market Segment and Growth Potentials 6
Target market 6
Supply and Demand Analysis 6
Analysis of Competition 7
Product/Service Features 7

Pricing Strategy 7

Marketing and Sales Strategy 7

Operational Aspect
Supply of Raw Materials 8
Raw Material Procurement and Strategies 8
Production Strategy 8
Crop Production plan 8
Warehouse, Storage and Equipment 8
Facility Plan 10
Processing Plan 10
Equipment Plan 11
Manpower
General Administration Policy 11
Manpower Requirement 13
Manpower Hiring Schedule 14
Schedule of Salaries and Benefits 14

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 Financials
Financial Plan 15

Income Statement 15
Cash Flow Statement
Funds Sought and Usage
Capital Expenditures
Appendices

Executive Summary

The increasing demand of ________ encouraged more farmers to engage into corn production.

Staple food of the local.

Major crops in the ARBO

Consolidation of finished products.

Value Chain Management

implementation

Expansion

Creating a separate management group who will handle the agriculture and enterprise
development activities of the cooperative called as the Agricultural Development.

Business Description/ the Company

The Lapad Agrarian Reform Community Multi Purpose Cooperative (LARFACO) is a duly
registered cooperative at the Cooperative Development Authority dated__________. Its area of
operation is within the municipality of Lapad, Laguindingan, Misamis Oriental. It has a total
membership of ______________________with a total Capital Build up of Php ___________and
a savings mobilization of ______________ as of ____________. Total assets as of date
amounting to _____________________ As of ___________________, the cooperative has an
ROI of forty eight percent _______________________.

Vision

Mission

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Business Objectives

Generally, the proposed enterprise aims to improve farm productivity and increase framers’
income. Specifically, it aims to:

1. To become a consolidator of shelled corn

2. To institutionalize corn production of about ____ hectares in the municipality for the next
five (5 years).
3. To produce _______ tons of corn per hectare
4. To process quality shelled corn and deliver to buyers on time
5. To provide farmers with appropriate knowledge and skills in corn production, drying and
warehousing.
6. To establish a demonstration farm as a show window to corn growers of ____ hectares
corn production;
7. To provide the cooperative with the necessary equipments needed for processing the corn
and transportation facilities to transport the goods;
8. To strengthen and mobilize coop members;
9. To institutionalize proper coop management of different economic activities through
enforcement of Policies, Systems and Procedures;
10. To enhance marketing activities of the cooperative and the ARC as a whole.
11. To provide the coop members of the entrepreneurial skills

II. Objectives

With this specific objectives are laid down below:

a. To present the market, technical and financial viability of the proposed project.
b. To apply financial assistance to government and other funding institutions to expand
production and increase volume to meet the market demand.
c. Enhance business skills to provide the high quality products through improvement of the
processing and storage facilities in conformance with International Standards
d. Apply new technologies to improve production efficiencies.
e. To provide fair trade price for the local end-users
f. Strengthen the established local, national and export market and tap new market
opportunities.
g. Utilize forward and backward linkages utilizing local and community resources.

III. Project Description

Corn is the most important source of income other than remittances and economic assistance for
the majority of the members of LARFACO. The soil _______ propelled the organization to
venture in the corn production.

The enterprise will widely contribute in the income generating of the member households who
consider the corn production as the main source of their incomes. The business purchase shelled
corn from the farmers. It induced the farmers to increase their volume through backward
integration of the supply chain to further boost their income. The investment undertaken

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influenced in having a relatively high profitability, increase health awareness, create new
employment opportunities or greater number of direct and indirect beneficiaries since it will also
benefit the non-coop members that are part of the value chain.

Enterprise Vision

To create a Social Enterprise Organization that will promote fair trade and transparency to
strengthen the farmer members through the enterprise product and system enhancement.
Innovate healthy products and promote health awareness in the country and to globally compete
with the sugar industry.

Enterprise Mission

a. The Kaagapay Innoventures sugar enterprise will provide high-quality, high-value and
organically produced and processed product to consumers.
b. Practice transparency and advocate fair trade in the whole value chain
c. Complements the mandates & advocacies of the members of the governance structure,
government supporting agencies and other major stakeholders of the enterprise.
d. Provide a rewarding career to its employees and members of the organization.

Expected Output

a. Additional income of direct and indirect beneficiaries and are part of the business chain.
b. Enhanced quality and meet market demand.
c. Enhanced business and technical skills
d. Improved production efficiencies
e. Fair trade price for the local end-users
f. Strengthened the established local, national and export market

Major Strategies

The Public, Private, Partnership Approach is one major strategy employed in this endeavor to
achieve the abovementioned goals and objectives. The partnership between DAR,DA and the
LGU of Balingoan to support the cassava production and processing of KAMADA ARC could
enhance their technical capability including operations and management in the production and
processing of cassava thus giving added value to its product. The partnership between San
Miguel Foods Inc.(SMFI), and KMARC MPC could ensure the market of their product. Much
more that SMFI not only provides support as its sole market outlet but it also provides
technology transfer in the production and processing aspect to ensure product quality acceptable
by both parties.

The Management Team

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This enterprise will be managed by a competent full time Management staff who will handle the
operations from production, processing until marketing activities. As of date, the Board of
directors are on the process of formulating the qualification standards of management team and
recruitment follows to qualified staff to manage the enterprise.

Board of Directors

The cooperative is composed of seven (7) Board of Directors (BODS) as amended whom are
elected last March 2012 during their general assembly. These BODs are the policy making body
who deliver maximum services to its members and shall be responsible to the over-all welfare of
the cooperative.

The elected KMARC MPC BODs are as follows:

Chairperson - Erlinda Cagmat

Vice- Chairperson - Emma Dagondon
BOD Members - Jose Weny Enterina
- Salvador Agway
- Lourdes Aligsao
- Marlon Alaba
- Carmen Man- Inyao

Marketing Aspects

Market Overview

San Miguel Foods Inc., is the major market of cassava granules in Misamis Oriental. It has
several accredited cassava assemblers in the province, of which two assemblers are located in the
Municipality of Salay and Sugbongcogon, four and one municipality away from Balingoan
respectively, that consolidates cassava chips produced by individual farmers and process it into
granules before selling it to B-MEG, the processing center of SMFI located at Baloy, Cagayan de
Oro city, approximately seventy kilometers away from KAMADA ARC. These assemblers have

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no definite production areas but is only dependent on the individual farmers whom they have
extended credit assistance. Demand of cassava granules in Misamis Oriental by SMFI is very
high considering that they are still looking for cassava production areas to as much as 10,000
hectares.

Market Segment and Growth Potentials

The accreditation of KMARC MPC to SMFI as one of its cassava assemblers could enhance
their margin of profit since direct market price for cassava granules given by SMFI to its
assemblers will now be enjoyed by the cooperative. With the twenty hectares cassava production
area as the minimum area requirement by SMFI to become an assembler, KAMADA ARC MPC
has a great potential to become the major assembler in the province. The twenty hectares
production area that will be provided by ARISP III as its initial area as accredited SMFI
assembler could multiply to as high as 500 hectares in the span of five years. The provision of a
PHF facility including its processing equipment by ARISP III could also ensure continuous
processing of cassava chips and granules.

Target Market

San Miguel Foods Inc., will be the sole market of cassava granules produced by KMARC MPC.
With the accreditation of KMARC MPC to SMFI as its cassava assembler, all cassava granules
produced by the ARC will be sold to B-Meg Processing Plant located at Baloy, Cagayan de Oro
City which is generally used as feed ingredients for poultry and livestock.

Supply and Demand Analysis

With the initial twenty hectares cassava production of KMARC MPC this year, it is expected to
supply SMFI with 197 Tons of cassava granules within two months after harvest. Considering
the 10,000 hectares cassava production requirement of SMFI in the province, the 500 hectares
cassava production projection of KMARC MPC within the next five years can only contribute
around twenty percent of its requirements.

Analysis of competition

Accredited Cassava Assemblers in the province are the only considered competitor in cassava
granules processing. However, these assemblers have no specific production areas since they
only depends on individual cassava growers whom they have provided credit assistance. Besides,
their strategy is to just to canvass cassava growers within the province just to comply their

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requirement as an assembler. With the organized production area of KMARC MPC, and the
presence of an appropriate PHF and processing facilities, continuous and steady supply of
cassava granules can be assured. One major advantage of KMARC MPC in cassava production
and processing is that their member cassava growers can be shared of the profit derived as an
assembler through dividends.

Product or Service Features

The product of KMARC MPC is unpeeled cassava granules with 14% moisture content. Cassava
chips are sold from its members before processing it to granules in the PHF of the cooperative.

Pricing Strategy

Prices are dictated by SMFI, however, based on the cost and returns computations, the
cooperative and its member growers have an acceptable margin of profit.

Marketing and Sales Strategies

Since cassava is a perennial crop, it can only be harvested once a year. To ensure continuous
supply of cassava granules, staggard planting is established on the second year based on tolerable
weather especially during harvest time. While waiting for the initial twenty hectares to be
harvested in the first year of operation, the coop planned to purchase cassava chips two months
before the expected harvest time of the twenty hectares up to the year end to enhance its sales.
The cassava chipper of the coop can be utilized by the member growers charged to crop. The
coop can also extend its solar drier to its member growers in drying their cassava chips.
Purchasing of chips will be done by the purchaser of the cassava processing enterprise of the
cooperative.

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Operational Aspects

Supply of Raw Materials

Cassava chips are sourced from its member growers located at Barangays Mapua and
Kabangasan for the initial twenty hectares cassava production. With the scheduled planting on
July 2012, expected harvest is scheduled on May to June 2013. However, the cooperative plans
to purchase chips starting March 2013 since there is already an existing crop production by
individual farmers in Mapua and Kabangasan of approximately ninety hectares. The provision of
a PHF with dryer and office, chipper and granulator by ARISP III, can facilitate supply of raw
materials. Buying price from member growers is priced at 6.50 per kg., which is the prevailing
price of accredited cassava assemblers. A hauling truck is needed to procure raw materials which
will be sourced out from ARCCESS Project.

Raw Materials Procurement Strategies

Planting materials are sourced out from Manolo Fortich at 35.00 per bundle, as well as Lime
priced at 36.00 per 40 Kg. bag, delivered at KAMADA ARC. Chicken Dung can be sourced out
within the Municipality of Balingoan at 100.00 per 40 kg. bag, while complete fertilizer priced at
1,400 per bag, plastic twine at 80.00 per roll and PP sacks at 5.00 per piece can be sourced out
either from Gingoog or Cagayan de Oro City. All of these prices are delivered at KAMADA
ARC.

Production Strategy

Crop Production Plan

The cooperative will have an initial cassava production of 20 hectares this July of 2012. Farmer
cooperators will shoulder the labor cost, while the KMARC MPC will access funds from ARISP
III to finance the farm inputs or materials on a roll over scheme to the farmer cooperators.
The MLGU will provide tractor and other farm implements for the land preparation for the
twenty (20) hectares initial production.

In the succeeding year, a target of 120 hectares will be planted by cassava and in the year 2014,
about 160 hectares will be fully developed also.

The harvesting schedule will be set by KMARC MPC to accommodate the products in the PHF.

Farmer cooperators will take charge of the chipping thru manual method. They should observed
the standard chipping specification which is ½ in thickness. Unpeeled cassava chips will be
dried up to 15% moisture content. Then packed the dried chips using the used bags except
fertilizer bags and will be delivered to the cooperative PHF.

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The chips will be checked by the warehouseman according to the quality control standards
and will processed into granules, then will be packed and lastly will be delivered to SMFI in
Cagayan de Oro city within two (2) days.

Below are the lists of farmers cooperators who will produce the crop with corresponding area to
be planted and location of their farm lots:

Barangay Kabangansan

1. Samuel Asilo
2. Gedeon Asilo
3. Mario Amoguis
4. Alfredo Purol
5. Amador Abatay
- 1 ha
- 1 ha
- 1 ha
- 1 ha
- 1 ha

Barangay Mapua

6. Erlinda Cagmat
7. Ildefonso Baldo
8. Mario Toyhorada
9. Benito Toyhorada
10. Lourdes Aligsao
11. Osias Aligsao
12. Harold Aligsao
13. Adventur Macamay
14. Genoveva Gasque -
15. Cezar Gasque
- 1 ha
- 1 ha
- 1 ha
- 1 ha
- 1 ha
- 1 ha
- 1 ha
- 1 ha
1 ha
- 1 ha

Barangay Dahilig

1. Roque Llagas
2. Zebred Aligsao
3. Ricardo Sin-ayao
4. Alfonso Lupoy
5. Carlito Macabudbud
- 1 ha
- 1 ha
- 1 ha
- 1 ha
- 1 ha

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 Warehousing, Storage and Equipment

Facility Plan

KMARC MPC owned a lot of about 1000 square meters at Purok 2, Mapua, Balingoan, Misamis
Oriental. This area is the proposed site of Post Harvest Facilities. The access road to the PHF site
and site development will be done by the MLGU within the month of July, 2012 as well as the
negotiation of the road right of way. On going negotiation on Electricity line connection is done
now by the Barangay Council and hopefully will be installed within the 3 rd quarter of 2012. The
water connection will be tapped from the barangay water system.

Processing facilities:

A processing building will be constructed within the year 2012. It consists of warehouse of about
of 180 square meters, 10 x 18 meters dimension for fresh roots, chips and granules. A raised
metal platform inside the warehouse will be constructed to allow the workers in pouring the
chips to granulator machines. Details of the dimension and size will be discussed in the sketch
plan portion. Further, to reduce accumulation of dust inside the warehouse, an industrial exhaust
will be provided for ventilation.

In addition, a cooperative office will be constructed with an area of eighty four (84) square
meters for the use of cassava and lending office transactions, records keeping and production
stock room for fertilizers and other inputs. This office will provided with comfort room.

Another facility is the solar dyer with 450 square meters. This is used for chips drying and for
loading and unloading of trucks delivery.

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 Equipment Plan

KMARC MPC will acquire the following equipment:

Equipment No. of Capacity Source Estimated Time

Units Cost frame

Mechanical 2 2 tons/hr DAR ARISP 65,000 Jan.

granulator w/ III/ each 2013
engine ARCCESS

Mechanical 2 2 tons/hr DAR ARISP 45,000 Jan.

Chipper III/ARCCESS each 2013

Tractor & 1 90 hp DAR- 1.2 M Jan.

Implements ARCCESS 2013

Transport/Truck 1 DAR- 350,000 Jan.

ARCCESS 2013

Motorcycle 1 Coop 85,000 Jan.

2013

Mechanical Dryer 1 DA 1.8 M Jan.

2013

Weighing 1 DAR ARISP 20,000 Jan.

/Platform scale- 1 III 2013
ton

Weighing/Platform 2 DAR ARISP 15,000 Jan.

scale- 500 kls III each 2013

Moisture Tester 1 DAR ARISP 20,000 Jan.

III 2013

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Manpower Plan

General Administration Policy

This enterprise will be supervised by the Board of Directors but will be managed by a competent
Management staff who will handle the day to day operations of the project from the production,
processing and marketing. They will also implement the policies set by the BODs. For the
moment, the Board of Directors are on the process of formulating the qualification standards of
these staff and hiring will follow before October of this year.

Below is the cooperative structures that will facilitate the flow of activities, roles and functions
of each officers and business enterprise.

KMARC MPC STRUCTURE

GENERAL
ASSEMBLY

Election BOD Audit & Inventory

Committee Committee

Credit Ethics Mediation Education

Committee Committee Committee Committee

Treasurer Secretary

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 General
Manager

Consumer Production/ Lending

Processing Dept.

Manager

Bookkeeper Clerk

Marketing/ Production Processing

Trading Dept. Dept. Dept.

Operator/
Mechanic

Material Material
Handler Handler

Manpower Requirement

The management staff will be run by a Production & Processing Manager who will manage the
entire operation from production to marketing. He/she will supervise all the management staff
and report to the BODs for the results of the operations. With him/her are the staff of the three
(3) departments namely:

Production and supply (PS) Department with a PS officer ( 1 staff only)

Functions:
- Identification of farmer grower and recommend to the Manager & BODs
- Conduct Production planning for expansion
- Prepares production documents such as Farmers-grower contracts, and
other legal documents
- Purchase and distribution of supplies
- Crop monitoring/farm visits which includes application of fertilizers
- Scheduling of land preparation (tractor services) planting, harvesting,
chipping, drying etc…
- Coordinate MLGU-MAO, SMFI, DA regarding crop production

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 - Analysis of operation/performance evaluation
- Coordinate training on crop production/ analysis of operations/performance
Evaluation
- Ensure safe delivery of chips to the warehouse
- Safekeeping/Maintenance of production equipment
- Prepares and submit reports to the Manager

Processing Department: Headed by a Processing warehouse officer with 1 operator/mechanic

and two (2) material handlers

Functions:

- Received, storage of chips

- Dry chips again if necessary
- Process chips into granules
- Quality control
- Budgeting and planning
- Inventory of stocks raw and finished products
- Packaging
- Repairs and Maintenance of the equipment
- Prepares and submit reports

Sales/Trading department with one staff, a Sales/Trading officer

- delivers stocks on time

- Sales planning and budgeting
- In charge for the trucking
- Collection and remittances
- Coordinate with the processing dept for volume and quality
- Prepares budget for the Department and other legal documents
- Coordination with the buyer (SMFI) from time to time
- Promotions and advertisement
- Prepares and submit reports

Manpower Hiring Schedule

Position Number Hiring Date

Production and Processing 1 End of June

Manager 2012

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Production and supply officer 1 1st wk July
2012

Processing and warehouse 1 January 2013

officer

Operator/Mechanic 1 -do-

Material Handler 2 -do-

Sales/trading officer 1 -do-

Bookkeeper 1 Already hired

Clerk 1 1st wk July

2012

Schedule of Salaries and Benefits

Philhealth
Position Total Basic SSS
Salary/Month

Production and 1 5,500.00 150.00 100.00

Processing Manager

Production and supply 1 4,400.00 150.00 100.00

officer

Processing and 1 4,400.00 150.00 100.00

warehouse officer

Operator/Mechanic 1 3,900.00 150.00 100.00

Material Handler 2 6,600.00 300.00 200.00

Sales/trading officer 1 4,400.00 150.00 100.00

Bookkeeper 1 3,500.00 150.00 100.00

Clerk 1 3,300.00 150.00 100.00

TOTAL 36,000.00 1,350.00 900.00

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Financial Plan

Assumptions:

 First year of operation, 20 hectares will be planted which will start on July 2012.
 Expected harvest is 9 to ten months. So the first harvest schedule in on May 2013.

 Expected production yield is 25,000 kilograms or 25 tons per hectare.

 Forty percent (40%) is the recovery for chips

 98.5% recovery for granules

 Production cost is P 5.80

 The coop will also engaged in buying chips by March 2013 at P6.50 buying price. The
estimated chips to be purchased is about 15 tons weekly.

 Granules of about 59.1 (98.5% recovery) tons will be sold to SMFI monthly.

 Depreciation used a straight line method with an estimated life of twenty years (20).

Below is the projected Income Statement ( 2012 – 2014) and the start- up capitalization and fund
sources.

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Capital Expenditures

The following are the required facilities and equipment for the business.

Items Qty/size Total Time Table Source

Cost, P

Land & Land

Devt

Lot 1000 sq.m 150,000 2010 Coop

Land 1,000,000 July-Sept MLGU

development 2012

Solar dryer 450 sq.m 450,000 Oct-Dec DAR-

2012 ARISP

Buildings &
structures

Warehouse and 180 sq m, 3,600,000 Oct-Dec DAR-

office 84 sq. m 2012 ARISP/LG
U
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Machineries &
Equipment

Mechanical 2 65,000 Jan 2013 DAR-

granulator w/ each ARISP/D
engine AR
ARCCESS

Mechanical 2 45,000 Jan 2013 -do-

Chipper each

Tractor & 1 1.2 M Jan. 2013 DAR-

Implements ARCCESS

Mechanical Dryer 1 1.8 M Jan. 2013 DA

Weighing /Platform 1 20,000 Jan. 2013 DAR-

scale- 1 ton ARISP

Weighing/Platform 2 15,000 Jan. 2013 DAR-

scale- 500 kls ARISP

Moisture Tester 1 20,000 Jan. 2013 DAR-

ARISP

Vehicles

Transport/Elf 1 350,000 Jan. 2013 DAR-

ARCCESS

Motorcycle 1 85,000 Jan. 2013 Coop

Office Equipment

Computer set 1 55,000 Coop

Typewriter 1 5,000 Coop

Cell phone 5 25,000 Coop

Furniture &
Fixtures

Office tables & 5 5,000 Coop

chairs

Computer table 1 2,000 Coop

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 Working table 2 3,000 Coop

Monoblock chairs 12 3,600 Coop

Filing Cabinets 2 12,000 Coop

Capitalized Items

Tarima 10 5,000 Coop

Tools 5,000 Coop

IV. Marketing Plan

a. Product Description

Coconut sugar is produced from the sweet, watery sap that drips from cut flower buds. The sap is
collected every day and boiled in huge woks until a sticky sugar remains and then removed from
the flame. Air drying with constant mixing follows. Because it is not highly processed like brown
sugar, the color, consistency, flavor and level of sweetness can vary from batch to batch, even
within the same brand.

The production of coconut sugar starts on the sap collection. The major component of coconut
sugar is sucrose (78-89%) followed by glucose (2-3%) and fructose (1-4%). Minor variations in
sugars between samples were observed, probable due to differences in processing, raw material
quality and variety of coconut. There are two types of sugar formed: (1) the coconut sugar and
(2) the molasses / treacle or coconut syrup. Coconut sugar is light to dark brown, in powdered
forms. The crystals have various shapes and sizes. It has the characteristic flavor of the coconut
and the sugar content is approximately 80% (TSS or Total Soluble Solids).
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Based on our export buyer standard specification, the color can be as light as creamy beige to
brown. The moisture content should be 1.3 % and 0.70% water activity. Crystals should pass the
100 micron strainer. No traces of metals and microbial contents and should be packed in Poly-
Ethylene (PE) bag as the primary packaging and white sack as the secondary packaging. 1 sack
weighs 40 kilogram net weight. For the local market around Cagayan de Oro City and Misamis
Oriental, coconut sugar will be packed in Poly-Ethylene (PE) bag in 1 and ½ kilogram sizes.

It is used primarily for making sweets and desserts. The creamy, caramel-like sweetness also
enhances the flavor of curries and rich sauces for savory dishes. Since the degree of sweetness
may vary from batch to batch, add enough "to taste." In cooking, coconut sugar is used
preferably. Brown sugar is a poor substitute. It is also best in brewed coffee. It will enhance the
aroma of the coffee and will give you a different experience of flavor to taste.

Coconut sugar keep well when stored in a cool dry place and do not need to be refrigerated. They
are great sweeteners, balancing agents and flavor enhancers for curries and robust sauces and
many more to discover. The recent innovation will come out very soon is the healthy chocolate
of our industrial buyer.

b. Target Market

Kaagapay Innoventures has linkages in the mainstream market such as supermarkets, hotels,
restaurants, industries and export buyers. We market high quality, high value, fair price healthy
food products from the community based enterprises.

Aside from local regular costumer, target market of the product also includes government and
non-government stalls and even tourist destinations where we can find our customers.

c. Situation

Coconut sugar is one of the preferred sweetener in the country and mostly, in the world market.
The global market realized the beneficial effect of coconut sugar to our health. The leading
countries that are currently supplied with coconut sugar are United States of America, Japan and
the Middle East.

Data gathered from the World Health Organization shows that diabetes is the 4 th leading causes
of death in the world. In the Philippines, 3% of the total population deaths were caused of
diabetes or 11 persons per day die because of the said disease. In fact, an estimated number of six
million Filipinos know they have diabetes, and another six million is estimated to have the
disease but are not aware they have it. With this, Filipinos become more aware and conscious of
their health, which led them to prefer all natural food diet together with proper exercise and
constant weight monitoring.

El Salvador is a growing industry of organic dwarf coconut farming and having Cagayan de Oro
City and nearby cities with crowded schools, malls, hotels, restaurants and industries as well
stores that lined both the main city street and main roads leading out of the province. There are
also local souvenir stores in Cagayan de Oro City and nearby cities that sell native
goods/handicrafts, shirts and accessories but very few outlets sells locally processed Community
Based Enterprise products like coconut sugar.

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We have visitors in the city which include those who go on leisure in our very known tourist
spots like Camiguin Island, white water rafting, the adventures in Bukidnon and more. Visitors
who come for business trips and attend seminars/workshops since most of the highly established
global businesses are found in Cagayan de Oro City. It is the gateway of all products and a
booming city for business opportunities.

Competitors

There are 3 existing local competitors of the coconut sugar production in Balingasag. Tryp Bali
that can produce in an average of 3 tons per month, Spythe global that can produce in an average
of 10 tons per month and LAMPCO with an average of 5 tons per month. Thus, it only shows
that the supply is so small knowing the fact that only few tropical countries worldwide has the
capacity to produce high quality coconut sugar versus the unsaturated global market such us
Europe and United States.

Enterprise Bottlenecks

Working Capital

The business will buy the pre-processed sap which we call coconut syrup with corresponding
standard specification, and process the syrup to sugar. To increase the volume of production with
the target of 5 tons for the year 2011, the company needs additional working capital to support
farm owners for the opening of new coconut sap production which will cover manpower for sap
harvesting and pre-cooking, pre-processing facility, maintenance, tools and equipment and
overhead cost. The Company also needs additional 3 months working capital to purchase pre-
processed coconut sap, storage, packaging materials and labels, overhead and operation cost.

Pre-processing Facility

The GMP/HACCP compliant pre-processing facility is the main bottleneck to pass the USDA
certification. Kaagapay Innoventures could not pursue the schedule of the inspection due to the
pre-processing facilities had not been properly installed.

Final Processing Facility

Drainage facilities should also be constructed in the final processing facility designed without
posing risk of contaminating food and potable water. Facilities should also be designed to allow
trapping of solid matters for easy disposal, and cleaning. Drainage effluent should be in
conformance with the requirements of BFAD before it is released into the public drainage
system.

Food Hygiene Facility

Personal hygiene facilities should also be provided to maintain the desired degree of personal
hygiene to reduce the risk of food contamination. Appropriate facilities should include hand
washing and hand drying facilities adequately provided in every toilet at production entry and at
production area where necessary, liquid soaps and disinfectants and adequately and suitably
located cloth changing and storage facilities for personal belongings.

Marketing Strategy
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Product Promotion
 Bombo Radio, FM stations
 Brochures
 Trade fairs
 Word of mouth
 Product samples

Supply Chain Strategy

 15 days payment
 Provide insurance
 Rice supply

Financial Aspect

Basic Assumptions

Production per day

Conservative Maximum

Number of hectare 5 5

Number of Trees/heactare 100 100.00

Total number of Trees 500 500

30
Number of days of production 30
0.55
Coconut sap produced/tree/day (gal) 0.75

Total Sap Volume/day (gal) 275 375

Total Sap Volume /month (gal) 8,250 11,250

Coconut Sugar produced /gal (kg) 0.50 0.50

Foil Pack packing at 12.5
Packing Description kg per pack

Conservative
Daily Monthly Yearly
kgs Packs kgs Packs kgs Packs
12.5
Coco
sugar
4,125. 3 49,500. 3,9
137.50 11 00 30 00 60
Maximum
Daily Monthly Yearly
23
 kgs Packs kgs Packs kgs Packs
12.5
Coco sugar
5,625. 4 67,500. 5,4
187.50 15 00 50 00 00

WORKPLAN

ACTIVITIES Jan Feb Ma Ap Ma Jun Jul Au Sep Oct No De

r r y g v c
Dwarf Coconut
Production
Tree Planting For
Firewood Consumption
Organizational
Diagnosis
SWOT Analysis
Detailed Workplan for
2012
CBE Profiling
Linkaging and
Networking
Resource Mobilization
Product Enhancement/
Innovation
Review Costing and
Income Objective
Renewal of Business
Permits and Licenses
Laboratory Analysis
Production System/
Monitoring and
Evaluation
BFAD Accreditation
Review of business
Policy, revision and
deletion
Review of Marketing
Plan, Revision, and
deletion
Review of Financial
Plan, Revision and
deletion

24
Business Systems
Monitoring and
Evaluation
Field Exposure
(Benchmarking)
Trainings and Seminars

MONITORING PLAN

Please Refer to the Workplan and the business policy below.

a. Project Management Team

Board Of
Directors

Administrative

Consultancy Product Development Logistics Marketing

Production

Business Policy

A. Production Aspect

Sap Collection Process

a. Selection of coconut for tapping

1. Coconut trees which bear very well and are not too young or old.
2. A younger/tender spadix is selected for tapping and this is indicated by a swelling at the
base of the spadix due to the development of the flowers. A spadix suitable for tapping
will be about 600 mm long.

b. Tapping and collection of sap

1. The selected unopened spadix is wrapped with abaca string or rattan strip along its length
to prevent it splitting open.
2. The spadix is gently tapped using a hardwood mallet so as to carefully bruise and rapture
the tender tissues of the floral branch. The spadix is gradually bent downward without
braking the stem. The tip is tied down with abaca string to a nearby petiole (leaf branch).
3. The bending procedure is repeated daily for one to two weeks until the spadix droops.
When the bending down is more than half done the tip is cut open with a sharp knife.
4. Three days later, the sap flows out. The daily slicing of the tip of the spadix allows the
sap to flow continuously and the drooping position prevents the sap from entering the
inflorescence and enables a bamboo receptacle or plastic container to collect the sap.
5. The slicing is done one in the morning and once in the evening. The finer the slice, the
longer is the life of the spadix.

25
 6. The plastic gallon (1/2 gallon capacity) is kept in position by fastening it to the spadix
with the use of abaca string.
7. The mouth of the plastic gallon is covered with a net or piece of fibrous network of light
brown stipules locally called “guinit”. This keeps out rainwater, insects, mice and lizards.
8. During collection, the tube is transferred to the new collection plastic gallon. With the
crook near the neck of the collection plastic gallon, it is hung on the back of the climber
while moving up and down the palms.
9. The collected tuba is strained prior to pre-processing/ pre-cooking.
10. The sweet sap must be processed immediately after collection to avoid loses due to
fermentation.
11. Harvesting is done 4 times a day. Safest time of harvest is 4- 5 hours from the first drop
in the collection plastic gallon.
12. The syrup is filtered twice, first during the pre-processing (in the field) and again during
the final processing (boiled before evaporation). Cooking temperature must not exceed
120ۨ C.

Process Flow

Design Control
26
a. Raw Material and Packaging Specifications

Prior to receiving, conduct inspection based on the product specification agreement. Check the
container of the supplied coconut syrup. Establish regular communication with the supplier.

Document raw material and ingredient specifications which include supplier’s name, address of
the supplier, internal code number, production date and action and reject levels

Packaging Specifications document should include supplier’s name, address of the supplier,
name of packaging and specification, internal code number and packaging statement.

b. Approved Supplier List

All raw materials and packaging should be coming from the approved supplier list. Purchasing
officer and quality control officer must have a copy of the list. For approving alternate sources,
ensure that product meet the existing or needed specifications and provide the same or desired
finished product.

Process Control

a. Production management

Know what is happening with the product and process during manufacturing. Plan the production
target based on the sales forecast, manpower requirement and other resources needed. Review
the records at the end of working day to identify problem areas and to make changes to prevent
reoccurrence. Production manager should make special instructions to the line worker or quality
control officer.

b. Quality Control and Production Personnel

Maintain traceability and efficiency, proper documentation from lot-to-lot, day-to-day of the
product. Know the critical process steps that will affect the yield and quality. Monitor the
specific product weight, temperature, size and shape, product yield, scrap or waste, material
balance, rework and equipment efficiency and submit a report at the end of the shift.

Changes or mistakes can cause the finished product to be a health hazard, illegal or costly to the
business.

In-Process Records

In-process record keeping is a way of obtaining the information. Both quality control and
production personnel should participate in maintaining a daily manufacturing log. The specific
product weight, time, temperature, size and shape, ingredient usage, product yield, scrap or
waste, material balance and rework are examples of measurements made during the
manufacturing process. Base the in-process measurements to the established critical control
limits.

Inspection and Testing

27
a. Receiving inspection and testing

Inspect incoming raw materials and verify conformance to specs and establish a positive recall
procedure

b. In-process inspection and testing

Inspect and test products at all points as specified in the IQCS.

c. Final Inspection and testing

Conduct final inspection and testing of products according to IQCS.

Control of Inspection, Measuring and Test Equipment

Define responsibilities and establish and maintain documented procedures for control, calibration
and maintenance of test calibration records

a. Control procedures

Determine accuracy required of measurements and maintain calibration records

b. Inspection and test status

Identify inspection and test status of products

Control of Non-conforming products

Review and disposition of non-conforming products in accordance with documented procedures

for rework, acceptance by concession, regarding, rejection/scrap

Recall Plan

Products are recovered from distribution as a result of voluntary action by a business firm or
involuntary action due to Food and Drug Administrative (FDA) action. The basic reasons for
recall are best described by the FDA recall classifications:

CLASS 1 As a result of a situation where there is reasonable probability that the use or
exposure to a defective product will cause a serious public health hazard
including death.

CLASS II As a result of a situation where the use of or exposure to a defective product

may cause a temporary adverse health hazard or where serious adverse public
health hazard (death) is remote.

CLASS III As a result of a situation where use of or exposure to a defective product will
not cause a public health hazard.

28
The plan should include:

• An effective product coding system. Coding should be simple, yet broad enough to
minimize financial loss. Date of manufacture, date code plus shift code, lot code or
various combinations are possible.
• A record keeping system to identify and associate specific product, product code, carrier
and destination.
• A list of key personnel and their assigned responsibilities for a recall. Select key
personnel from each of the following areas: production, quality control, marketing,
shipping/receiving and legal counsel.
• A communication system within the organization and a system into the distribution,
marketing, shipping/receiving, channels and legal counsel. A communication system is
critical to minimize rumor and the exaggeration or misstatement of the facts in and out of
the business.
• Established procedures for evaluating and correcting situations.

A good recall program is like an insurance policy. The program will not prevent an adverse
situation from occurring. It will, however, help the business and personnel prepare for a possible
recall.

Corrective and Preventive Action

a. Corrective action

Maintain documented procedure for effective handling costumer complaints and report of
product nonconformities

b. Preventive action

Maintain documented procedures for use of information to detect, analyze and eliminate causes
of nonconformities and initiate preventive action and application of effective control.

Handling, Warehousing, Packaging and Labeling and Delivery

a. Handling

Good Manufacturing, Standard Sanitation Practices and Pest Control Program

1. Individuals with communicable diseases cannot work in areas where food contamination
is possible. This includes individuals with boils, sores or infected wounds.
2. Food handlers must follow good personal hygiene practices.
a. Wear protective clothing.
b. Clean and sanitize hands and gloves.
c. No jewelry and accessories.
d. Use effective hair restraints and covering.
e. Eat, drink or smoke only in designated areas.

Submit Basic requirement for food processing like medical certificate and food handlers
certificate.
29
 3. Know the required pest control program for your product and establish regular schedule.
4. Along with GMPs, a cleaning and sanitizing program is essential. Cleaning and sanitizing
should address three basic areas:
a. Exterior facility and grounds.
b. Internal facility including floors, walls, ceilings and ventilation system.
c. Equipment and all food contact areas.

b. Warehousing

Warehousing involves three activities; receiving, storage and shipping. Guidelines for incoming
shipments are:

1. Be sure the storage space is clean and consistent with the first-in-first-out rotation
principle. FIFO or first-in- first-out rotation is the removal of inventory from storage in a
systematic way where earlier stock items are used first. This can be accomplished by date
coding the inventory according to the date of receipt.
2. Before unloading, inspect the condition of the carrier. Measure temperature, observe and
note foul odors, spills, and insects.
3. Observe the condition of the containers for damage which could be a source of
contamination.
4. Collect random samples for the shipment and analyze or evaluate the samples in relation
to specifications.
5. Before shipment, inspect the condition of the carriers and notice the condition of the
floors and walls. Nonconforming carrier should be replaced.
6. Do not accept coconut syrup and packaging shipments combined with chemicals or
poisonous substances.
7. If the delivery does not meet specifications, be prepared to reject all or part of the load.
8. Minimize dock time immediately move items directly into storage.
9. Date code all received raw materials directly on the container or pallet load for stock
rotation.

Improper storage can adversely impact upon the quality of coconut syrup and coconut sugar.
Storage in an orderly manner under proper conditions of temperature and humidity is essential to
quality.

c. Packaging and Labeling

One of the first items that influence the consumer is the appearance of the package and the label.

• Primary Packaging

Poly ethylene bag (PE) - direct contact with the coconut sugar.

• Secondary package

Clean/brand new white sack- Assemble multiple packaged food items for shipment.

30
d. Delivery

Control measures during transport should be in place. This includes sorting of raw materials.
Protect food from physical, chemical and micro-biological contaminants as well as from other
objectionable substances. Maintain storage facilities in a manner that will decrease the possibility
of cross contamination. Use clean and well maintained vehicles to transport raw materials.

Location and Premises

Processing facility is located away from polluted or prone to flooding and prevented from
environmental pollution or pest infestation and harbourage areas which carry higher risks of
imparting serious food contamination.

Premise constructed to prevent cross-contamination during operations and provide adequate

working space. Adequate natural or artificial lighting, wall, ceiling, and room partitions should
be made from durable, non-absorbent, nontoxic and easy to clean materials. Floors allow
adequate drainage and easy cleaning. Separate rooms for each process operation to prevent cross
contamination.

Layout is designed such that forward progression from raw materials receipt to finished product
packing is depicted to prevent cross contamination.

Sufficient ventilation should be provided to minimize air-borne food contamination of food, for
example, from aerosols and condensation droplets, control ambient temperatures and humidity,
control odors which might affect food suitability and prevent air flowing from contaminated to
clean areas.

Equipment

Equipment and containers are located and constructed to facilitate easy cleaning and
maintenance, clean and free from contaminants and made of materials that is durable, rust
resistant, non-toxic and easy to clean.

Separate containers should be provided for waste, by-products and inedible and dangerous
substances should be put in specific areas to prevent food cross contamination. Containers for
dangerous substances should be made of impervious material and should be labelled, securely
closed to prevent intentional or accidental food contamination.

Facilities

a. Food Hygiene Facilities

Facilities that supply adequate amount of potable water constructed in compliance with the food
hygiene provisions for food production establishments. Proper maintenance of facilities and
water quality control are necessary to ensure hygienic food production.

Potable water should be regularly checked for compliance to BFAD guidelines. Clean water is
used to pre-wash processing tools and equipment, clean floors and other areas that will not be in
contact with foods.
31
Lighting facilities – Where necessary, lighting should not be such that the resulting colour is
misleading, should be designed and provided to allow operation to proceed in a hygienic manner.
Light protection should be provided to ensure that food is not contaminated by breakages.

Storage facilities - Adequate storage facilities should be provided and maintained to store food,
water, ingredients, packaging material and non-food chemicals (e.g. cleaning materials,
lubricants, fuels). Storage facilities should:
• permit adequate maintenance and cleaning
• prevent pest access and harbourage
• enable food to be effectively protected food from contamination during storage
• provide an environment which minimizes food deterioration (e.g. temperature and
humidity controlled room).

Document and Data Control

Appropriate records of processing, production and distribution should be kept and retained for a
period that exceeds the shelf life of the product. Review and approved by authorized personnel
and made available per distribution list and define responsibilities and procedures for document
data approval and issue.

B. Operations and Management Aspect

Management Responsibilities

End-user satisfaction is paramount to inspiring total quality and how this affects to all employees
and members of the company and assisted organization is the responsibility of the management,
and for a food business to be successful, it should be under the supervision of persons who has
sufficient knowledge of food hygiene principles and practices to be able to judge potential risks,
take appropriate preventive and corrective actions, and ensure effective monitoring and
supervision including self-inspection to ensure compliance to the principles of food hygiene.

Management should regularly conduct strategic planning on quality marketing, operations and
provide required trainings to all personnel performing research and development and quality
assurance activities.

Section 1: Service Management

A. Overview of the Program/Service

1. History of the service/program
2. VMGO
3. Objectives

B. Standards, Rights & Responsibilities

1. Service Standards
2. Organisation Code of Conduct
3. Organisation Rights & Responsibilities
4. Volunteer Rights & Responsibilities
5. Staff rights & Responsibilities

32
 6. Advisory Committee rights & Responsibilities
7. Policy on Conflict of Interest

C. Incorporation
1. A copy of the constitution
2. A copy of the Association’s Incorporation Act
3. Information on the requirements of the Incorporation
4. A copy of the register of Member Organisations
5. A copy of the register of Management Committee Members
6. Annual General Meeting requirements
7. Copies of forms such as:
a. Application for membership8
b. Agenda
c. Notice of Annual General Meeting
d. Election of Officers
e. Proxy
f. Nominations

D. Board/Management Committee
1. Committee responsibilities
a. legal responsibilities
b. Policy & Planning
c. Financial
d. Staff
e. Other committee responsibilities

2. Roles and responsibilities of Board/Management Committee Members

- Chairperson
- Secretary
- Treasurer
- Other Management Committee Members

3. Orientation Kit for new Board/Committee Members

1. Terms of Agreement for Board/Committee Members
5. Code of Behaviour for Management Committee members
6. Agenda format for Board/Management Committee Meetings
- Time
- Attendance
- Agenda
- Quorum
- Role of Coordinator/Manager at Management Committee Meetings
- Minutes proforma

E. Organisational Structures
1. Organisational Chart/Diagram
2. Accountability Chart
3. Organisation Meetings and Processes

F. Planning and Evaluation

33
(Evaluation attempts to answer questions about such matters as effectiveness, efficiency,
adequacy and appropriateness of services)
1. Evaluation Policy & Plan
2. Evaluation Questions
3. Evaluation Strategies
- Ongoing monitoring
- Annual presentation of data
- Consumer feedback
- Feedback from other community groups
- Planning day
- Agenda

4. Data Collection Sheets

5. Data Reporting Format
6. Client/consumer questionnaires
7. Community group questionnaires

G. Insurance

(Covers the cost that may result from action or inaction of organisational members during the
course of their work)
1. Policy regarding Insurance
2. Insurance and Indemnity policies
- Students
- Volunteer Personal Accident
- Public Liability
- Professional Indemnity
- Directors & Officers (Management Committee)
- Organisation vehicle
- Volunteer vehicle

3. Register of Insurance Policies detailing all current Insurance Policies

H. Assets Management
1. The Assets Register

I. Funding Agreements
1. Summary of current funding
2. Copies of current funding agreements
3. Details of accountability requirements for each Funding source (including reporting
requirements)
4. Polices and Procedures on applying for grants/funds
5. Policy & Procedure on Fundraising10

J. Financial Management
1. Role of the committee and Treasurer
2. Principles of Financial Management
3. Bank Account details
4. Financial Report Formats
5. Project Budget Sheet
34
 6. Project Reconciliation Sheet
7. Financial information – Recording and Reporting timeframes
8. Categories of Receipts and Payments

K. Use of Equipment & Vehicles

1. Policy on use of Private Vehicles
2. Policy on use of Organisation Vehicles
3. Policy on Depreciation
4. Register of Motor Vehicles
5. Motor Vehicle Log Sheet
6. Motor Vehicle Accident Procedures
7. Policy on Traffic Infringements incurred during service delivery
8. Policy on Transporting clients in vehicles
9. Procedure for Transporting clients in vehicles
10. Motor Vehicle Breakdown Procedures
11. Motor Vehicle Maintenance

L. Occupational Health, Safety & Welfare

1. Policy on Health & Safety
2. Workplace Health & Safety Act 1995 and Amendments
3. OHS checklist
4. Workplace accident procedures
5. Accident Reporting Form
6. OHS Incident Register
7. Injury/Insurance Record
8. OHS Communication Procedure
9. Certificate of Registration of a Workplace
10. Smoking Control Policy
11. Employee Safety Awareness Questionnaire
12. Manual Handling Procedures
13. Workplace Health & Safety Representative
14. Fire Control and Evacuation Procedure
15. Health & Safety Training on the causes and prevention of work related illnesses and
injuries
- Furniture & Equipment
- Visual Display Units and Eye Strain
- Stress
- Worker security on home visits
16. First Aid Station
17. Compensation
18. Volunteer Personal Accident Insurance

M. Service Delivery
1. Promotion of services – Community Brochure
2. Consumer Information – Client Handbook
3. Prioritising Requests for Assistance
4. Client Assessment:

Decision:
If Service is refused
35
 If the Client is placed on a waiting list
Clients With Special Needs
Non-English Speaking Clients
Aboriginal Clients
Clients who cannot read or write
Clients with disabilities – physical/intellectual

5. Assessment Records
6. Principles to be observed in Assessments
7. Privacy & Confidentiality in the Assessment Process
8. Privacy & Confidentiality of Information
9. Records – length of time Records are held
10. Identification
11. Training
12. Clients Rights & Responsibilities
13. Dealing with suspected carer or care recipient abuse
14. Suitability checks/Police checks for service delivery staff
15. Client Reviews:

Client Complaints Procedure

Clients Record Form
Dispute Resolution Process between clients and staff
Confidentiality of Complaints
Service Delivery completion/Exit
16. Referral
17. Referral Privacy & Confidentiality
18. Client Care Plans – Coordination with other Services
19. Care Plan Reviews
20. Care Plan protocols
21. Fees
- Capacity to pay
- Payment of fees
- Scale of fees
- Transport Services
- Services for which fees are not charged
- Clients in receipt of other services
- Collection of fees
- Appeals mechanism
19. Safety Precautions in Service Delivery
- Back Care
- Health & Hygiene Procedures
- In House Safety Precautions

Section 2: Human Resources

N. Staff Recruitment

1. Policy & Processes for recruitment of staff

2. Equal Employment Opportunity/Workplace Harassment Policies
3. Anti-Discrimination Laws
36
 - Federal Racial discrimination Act 1975
- Federal Sex Discrimination Act 1984
- Federal Disability Discrimination Act 1992
- Queensland Anti-Discrimination Act 1991
4. Recruitment process for Paid Staff
- Advertisements for staff positions
5. Short listing
- The Short listing and Interview Panel
6. Interviewing policy and processes
7. Standard Interview Questions
8. Procedure for starting a new member of Staff
9. Appointments & Contracts
10. Suitability checks/police checks for employees
11. Staff Orientation Kit
12. Staff Personal File

O. Role Outlines & Conditions of Employment

1. Role Outlines
2. Selection Criteria
3. Agreements of Employment
4. Copies of relevant Awards
5. Code of Behaviour for Staff
6. Confidentiality Agreement
7. Reporting requirements – Superannuation, Workers Compensation

P. Staff Management & Development

1. Staff reporting Procedures and Formats

2. Staff travel
3. Staff Work at home
4. Timesheets
5. Record of Annual Leave
6. Policy on Staff Supervision and Performance Development
7. Policy on Training and Development of Staff13
8. Team meetings
9. Performance Appraisals
10. Staff Performance Dispute and Grievance Procedure
- Staff Performance Dispute
- Staff Grievance Dispute
- Appeal
- Misconduct
11. Staff Performance Interview Note Sheet
12. Employee Exit Procedure
13. Exit Interview Record

Q. Volunteers
1. Policy regarding volunteer involvement in the organisation
2. Volunteer Code of Conduct – Policy
3. Volunteer Code of Conduct
37
 4. Recruitment Policy
5. Role Outlines for Identified Volunteer Positions
6. Initial Contact/Volunteer Application Forms
7. Registration
8. Reference Checks
9. Placement
10. Induction
11. Introductory Period
12. Statement of Understanding
13. Volunteer Personnel Record
14. Volunteer Training – Policy and Process
15. Rights of Volunteers
16. Responsibilities of Volunteers
17. Confidentiality of work done on behalf of the organisation
18. Confidential Information
19. Confidentiality Agreement
20. Recognition of Volunteer by paid staff
21. Performance Review
22. Volunteer Awards and acknowledgement
23. Reimbursement of expenses
24. Use of Motor Vehicles
25. Occupational Health & Safety
26. Suitability checks/police checks for volunteers
27. Personal Insurance Cover
28. Equal Opportunity
29. Sexual Harassment
30. Dispute/Grievance Resolution Polices and Procedures
- Where a staff member has a dispute with a volunteer
- Misconduct
- Unsatisfactory performance
31. Inappropriate Behaviour and Volunteer Dismissal
32. Resignation
33. Volunteer Program Evaluation

R. Administration and Office Procedures

Office Policy Document:
- Office Hours
- Absences and Lateness
- Attendance
- Dress Code
- Bulletin Board
- Computer Software (Unauthorised copying)
- Copyright/Ownership Issues
- Representing the Organisation
- Resources
- Personal Phone calls
- Gifts and Soliciting
- Office Security
- Using office equipment

38
 CODE OF BUSINESS CONDUCT AND ETHICS

Introduction

This Code of Business Conduct and Ethics covers a wide range of business practices and
procedures. It sets out basic principles to guide all employees of the Company. It is
supplemented by our Corporate Policies, Guidelines and Procedures, which, collectively, provide
a framework for prudent decision-making. All of our employees must conduct themselves in
accordance with this Code and seek to avoid even the appearance of improper behaviour. In this
respect, ______ is that we will engage in no business or political arrangement that would be
embarrassing to us if it were published on the front page of the local paper.

An Enterprise can create a more restrictive policy if the enterprise head believes such a policy
would enhance the spirit and intent of this policy.

This Code also should be provided to and followed by the company’s agents and representatives,
including consultants.

If a law conflicts with a policy in this Code, you must comply with the law; however, if a local
custom or policy conflicts with this Code, you must comply with the Code. If you have any
questions about these conflicts, you should ask your supervisor how to handle the situation.

Employees who violate the standards in this Code will be subject to disciplinary action. If you
are in a situation that you believe may violate or lead to a violation of this Code, follow the
guidelines described in Section 11 of this Code.

1. Compliance with Laws, Rules and Regulations

Obeying the law, both in letter and in spirit, is the foundation on which this company’s ethical
standards are built. All employees must respect and obey the laws of the cities, states and
countries in which we operate. Although not all employees are expected to know the details of
these laws, it is important to know enough to determine when to seek advice from supervisors,
managers or other appropriate personnel. The company holds information and training sessions
to promote compliance with laws, rules and regulations, including insider trading laws.

2. Conflicts of Interest

A “conflict of interest” exists when a person’s private interest interferes in any way with the
interests of the company. A conflict situation can arise when an employee, officer or director
takes actions or has interests that may make it difficult to perform company work objectively and
effectively. Conflicts of interest also may arise when an employee, officer or director, or family
member, receives personal benefits from third parties as a result of his or her position in the
company. For example, loans or guarantees of obligations of loans to employees and their family
members may create conflicts of interest.

It is almost always a conflict of interest for a company employee to work simultaneously for a
competitor, customer or supplier. You are not allowed to work for a competitor as a consultant or
board member. Any employee who wishes to perform consulting services of any kind must
inform and obtain prior approval from his or her publisher and respective operating president. In
no event may an employee perform consulting services for a competitor.
39
Additionally, outside consulting is viewed as a conflict of interest for salaried employees who are
expected to devote their professional efforts solely to the company.

The best policy is to avoid any direct or indirect business connection with our customers,
suppliers or competitors, except on our behalf.

Acceptance of gifts in a business relationship can also result in a conflict of interest. No gift or
entertainment should ever be accepted by any company employee, directly or indirectly through
a family member or agent unless it: (1) is not a cash gift, (2) is consistent with customary
business practices, (3) is not excessive in value, (4) cannot be construed as a bribe or payoff and
(5) does not violate any laws or regulations. Please discuss with your supervisor any gifts or
proposed gifts that you are not certain are appropriate. Any gift given or received that is valued
in excess of Php ____ must be reported to the Human Resources Department.

Conflicts of interest are prohibited as a matter of company policy, except under guidelines
approved by the Board of Directors. Conflicts of interest may not always be clear-cut, so if you
have a question, you should consult with higher levels of management or the company’s
corporate attorneys. Any employee, officer or director who becomes aware of a conflict or
potential conflict should bring it to the attention of a supervisor, manager or other appropriate
personnel or consult the procedures described in Section 11 of this Code.

3. Insider Trading

Employees who have access to confidential information are not permitted to use or share that
information for stock trading purposes or for any other purpose except the conduct of our
business. All non-public information about the company should be considered confidential
information. To use non-public information for personal financial benefit or to “tip” others who
might make an investment decision on the basis of this information is not only unethical but also
illegal. If you have any questions, please consult the company’s General Counsel.

4. Corporate Opportunities

Employees, officers and directors are prohibited from taking personal gain through the use of
corporate property, information or position without the consent of the Board of Directors. No
employee may use corporate property, information or position for improper personal gains, and
no employee may compete with the company, directly or indirectly. Employees, officers and
directors owe a duty to the company to advance its legitimate interests when the opportunity to
do so arises.

5. Competition and Fair Dealing

We seek to outperform our competition fairly and honestly. We seek competitive advantages
through superior performance, never through unethical or illegal business practices. Stealing
proprietary information, possessing trade secret information that was obtained without the
owner’s consent, or inducing such disclosures by past or present employees of other companies
is prohibited. Each employee should endeavour to respect the rights of and deal fairly with the
company’s customers, suppliers, competitors and employees. No employee should take unfair
advantage of anyone through manipulation, concealment, abuse of privileged information,
misrepresentation of material facts, or any other intentional unfair-dealing practice. To maintain
40
the company’s valuable reputation, compliance with our quality processes and safety
requirements is essential. In the context of ethics, quality requires that our products and services
be designed and produced to meet our obligations to customers. All inspection and testing
documents must be handled in accordance with all applicable regulations.

The purpose of business entertainment and gifts in a commercial setting is to create good will
and sound working relationships. No gift or entertainment should ever be offered, given, or
provided by any company employee, directly or indirectly through a family member of an
employee or agent unless it: (1) is not a cash gift, (2) is consistent with customary business
practices, (3) is not excessive in value, (4) cannot be construed as a bribe or payoff and (5) does
not violate any laws or regulations. Please discuss with your supervisor any gifts or proposed
gifts that you are not certain are appropriate. Any gift given or received that is valued in excess
of Php____ must be reported to the Vice President of Human Resources.

6. Payments to Government Personnel

The Philippine Corrupt Practices Act prohibits giving anything of value, directly or indirectly, to
officials of foreign governments or foreign political candidates in order to obtain or retain
business. It is strictly prohibited to make illegal payments to government officials of any country.

In addition, the Philippine government has a number of laws and regulations regarding business
gratuities that may be accepted by U.S. government personnel. The promise, offer or delivery to
an official or employee of the U.S. government of a gift, favor or other gratuity in violation of
local governments, as well as foreign governments, may have similar rules. The company’s
Corporate Counsel can provide guidance to you in this area.

7. Record-Keeping

Honest and accurate recording and reporting of information is required of all employees. Records
should always be retained or destroyed according to the company’s record retention policies. In
accordance with those policies, in the event of litigation or governmental investigation please
immediately consult the company’s Corporate Attorney, Sheri Curran, as set forth in the
company’s legal policy. Maintain all records related to the matter until after consultation with
corporate legal counsel and your operating vice president.

All of the company’s books, records, accounts and financial statements must be maintained in
reasonable detail, must appropriately reflect the company’s transactions and must conform both
to applicable legal requirements and to the company’s system of internal controls. Unrecorded or
“off the books” funds or assets should not be maintained unless permitted by applicable law or
regulation and approved by the company’s Audit Committee.

Business records and communications often become public, and we should avoid exaggeration,
derogatory remarks, guesswork, or inappropriate characterizations of people and companies that
can be misunderstood. This applies equally to e-mail, internal memos and formal reports.

8. Confidentiality

Employees must maintain the confidentiality of confidential information entrusted to them by the
company or its customers, except when disclosure is authorized by the company’s General or
Corporate Counsel or required by laws or regulations. Confidential information includes all
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nonpublic information that might be of use to competitors, or harmful to the company or its
customers, if disclosed. It also includes information that suppliers and customers have entrusted
to us. The obligation to preserve confidential information continues even after employment ends.

9. Protection and Proper Use of Company Assets

All employees should protect the company’s assets and ensure their efficient use. Theft,
carelessness and waste have a direct impact on the company’s profitability. Any suspected
incident of fraud or theft should be immediately reported for investigation. Company equipment
should not be used for non-company business, though incidental personal use is permitted.

The obligation of employees to protect the company’s assets includes its proprietary information.

Proprietary information includes intellectual property such as trade secrets, patents, trademarks
and copyrights, as well as business, marketing and distribution plans, engineering ideas, designs,
databases, records, salary information and any unpublished financial data and reports.

Unauthorized use or distribution of this information would violate company policy. It also could
be illegal and result in civil or even criminal penalties.

10. Statements to the Public

No public statements may be made as a representative of the company without prior

authorization from the Chairman, President and Chief Executive Officer, Vice President, Chief
Financial Officer and Treasurer, or Vice President of Communications.

Any employee who wishes to speak at a public event or submit an article for a publication in a
trade magazine or other publication must obtain prior approval from his or her publisher and
respective operating president. While we recognize and support your right to engage in legal
activities while you are not working, we also must be careful to (1) avoid the employee's position
being mistaken for the position of the company, (2) avoid an interpretation that the company in
any way endorses the employee’s position, and (3) avoid a violation of any other policies of the
company, including those related to conflict of interest and confidentiality of company property
and information.

11. Waivers of the Code of Business Conduct and Ethics

Any waiver of this Code for executive officers or directors may be made only by the Board or a
Board committee and will be promptly disclosed as required by law or New York Stock
Exchange rules.

12. Reporting any Illegal or Unethical Behavior

We all must work to ensure prompt and consistent action against violations of this Code. In some
situations, however, it is difficult to know right from wrong. Since we cannot anticipate every
situation that will arise, it is important that we have a way to approach a new question or
problem.
These are the steps to keep in mind:

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  Make sure you have all the facts. In order to reach the right solutions, we must be as fully
informed as possible.
 Ask yourself: What specifically am I being asked to do? Does it seem unethical or
improper? This will enable you to focus on the specific question you are faced with, and
the alternatives you have. Use your judgment and common sense; if something seems
unethical or improper, it probably is.
 Discuss the problem with your supervisor. This is the basic guidance for all situations. In
many cases, your supervisor will be more knowledgeable about the issue and will
appreciate being brought into the decision-making process. Remember that it is your
supervisor’s responsibility to help solve problems.
 Seek help from Company resources. In the rare case where it may not be appropriate to
discuss an issue with your supervisor, or where you do not feel comfortable approaching
your supervisor with your question, discuss it with your General Manager or Human
Resources manager. If that alternative also is not appropriate, call _____________, the
company’s Open Door Line. If you prefer to write or call directly, you may address your
concerns to our VP of Human Resources or our independent General Counsel’s office
listed below or to any other officer of the company listed in the Lee Corporate Directory:

You may report ethical violations in confidence and without fear of retaliation. The company
does not permit retaliation of any kind

PROCESS FLOW FOR INTERNAL CONTROL

A. Purchase Requisition
Preparation of Certified Approval by Preparation Preparation
Purchase Funds the Canvassing of Abstract of Purchase
Request by the Available by General of Canvass Order
Purchasing the Treasurer Manager
Officer

Verification of
Purchase Disbursing Officer
Materials and Disbursement
of Funds

B. Wages
Preparation of Preparation Approved by Payment by Receiving
DTR/Summary of Payment the the Treasurer by the
of Output by the by the General concerned
Operation Mgr Treasurer Manager person

C. Incentives/honorarium
43
 Preparation of Preparation Approved by Payment by Receiving by
Attendance by of Payment the the the concerned
the Secretary by the General Treasurer Person
Treasurer Manager

D. Cash Advances for travels

Request T.O. Prepare T.O. Approved Requesting party Certified Approved
(attached by the by the should prepare Funds by the
invitation Secretary General summary of Available by General
letter) Manager expenditure the Treasurer Manager

Receiving of Releasing of
money by the Money by
concerned the
person Treasurer

E. Cash Advances for Salary

Request Certified Recommendin Approved Releasing of Receiving of

for Cash Funds g Approval by by the Funds by the Cash by the
Advance Available by Production General Treasurer Concerned
the Treasurer Manager Manager Person

F. Liquidations

Prepare Submit to Approved Return to

OR/AR, Cert Treasurer by the treasurer
of Appearance for General for filing
& Trng. Report Verification Manager

G. Reimbursements

Prepare Trng Submit to Treas To General To the Cash will Documents

Report, OR/AR for Availability of Manager disbursing go to the will go back
& Cert of Funds and for Officer for concerned to Treasurer
Appearance Accuracy of Docs. Approval the Release person for Filing
of Cash

H. Financial Statements

Prepare by Noted by Approved by Return to

the Treasurer the the General the
Operation Manager Treasurer
Manager for Filing

I. Inventory Reports

To the Return to the

BOD Bookkeeper 44
for Filing
 Prepare by Noted by Approved by
the the the General
Bookkeeper Production Manager
Manager

J. Sales Reports

Prepare Verification Noted by To the To the

Report by the by the the General BOD Treasurer for
Marketing Treasurer Manager Filing
Officer

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