Banana Flour Production

BANANA FLOUR PRODUCTION
Written by MASICAP TEAM 2010 Friday, 14 October 2011 10:50 -
RATIONALE
Philippines is among the top five producers of fresh bananas in the world. Its fresh bananas are exported mostly to Japan, China, Korea, Taiwan, as well as the Middle East. That is why banana is the countrys prime fruit commodity in terms of their commercial value and the size of the area they are planted. (pinoybusiness.org)
Banana fruit is a horticultural commodity that can be processed and preserved to expand its marketing value. Various processed banana products have already been developed, such as, sun-dried banana and banana crisps. A new product with a potential commercial value is the banana flour. Banana flour can be used as a mixture material for various cakes/breads (wet and dry cakes), and for infant feeding. Banana flour contains low gluten, so it could not be used as the main cake material. Therefore, to produce high quality cake, banana flour must be mixed with wheat flour. It is made from rejected fresh and ripe banana. With that, rejects bananas after harvest are converted into useful product that creates a positive effect in the economy.
OBJECTIVE
The project aims to utilize the Cavendish banana rejects by producing new product which has a commercial value that can lead to investment and create employment.
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PROJECT DESCRIPTION
The produced banana flour will come into different grades: food grade and feed grade. Food grade banana powder is primarily used as raw material on ketchup and some bakery products such as cakes and pastries. While the feed grade banana powder will be used as raw material for animal feed preparation and could also be used for industrial purposes such as glue extender. Food and feed grade banana powder is packed in a 50-kg sack bag except that the food grade has a plastic liner on its sack for assurance of its quality which is sold at P 15.00 and P 6.00 respectively.
Production process begins by weighing banana rejects and then washed thoroughly to remove sap and grime. It will then be sliced into chips. Afterwards, banana chips are placed inside the mechanical dryer for eight (8) hours. After which, the dried banana chips will be classified according to its color. Dark-colored banana chips are further processed into feed grade powder while the white-colored or clean in appearance will be processed as banana food grade powder. After that, these chips will be pulverized and sifted. The flour is now ready for packing. Then the food-grade powder is packed in a 50kg-capacity sack with plastic liner inside to assure quality of product produced. And the feed-grade powder, on the other hand, is also packed in a 50kg sack.
For the first month of operation, the business will earn P 139, 047.00. It is also suited in the region for the reason that primary raw materials are abundant. Further, this type of investment
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requires P 1, 055, 584. 72 with a working capital of P 93, 784.72. It will then have 27% and 33% as net and gross profit ratio. In addition, the investment will be recovered in one (1) year, eleven (11) months, and ten (10) days having a return on investment of 43%. Thus the project is worthwhile to embark on.
TRENDS AND MARKET OPPORTUNITIES
The Philippines is one of the top 5 major producers of banana in the world providing 1% of the total world exports.
Philippines have Cavendish, and Banana chips for export. For the local market, arecardaba, lakatan, latundan. The demand for organic banana chips, Cavendish and bongulan for export is also growing. In fact in the region, SOCCSKSARGEN banana is one of the varieties of fruit which are considered as export winners. Region XII has 24,200 hectares plantedregiowide. Organic Cavendish is grown by Marsman Drysdale for the Japan market. ( www.investinr12.net )
Other export products processed from banana are banana sauce (catsup) and banana flour, meal and powder. A total of 1,474 metric tons of banana catsup valued at US$1.3 million was exported in 1998. Biggest export market is the US capturing almost half of total export volume, followed by Canada, Saudi Arabia and United Arab Emirates. The banana flour, meal and powder were exported solely to the Japanese market at a volume of 2.2 metric tons valued at
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US$14,771 in 1998. ( http://www.philonline.com.ph/~webdev/da-amas/banana.html )
Due to the escalation of various food establishments including fast-food chains, demand for food-grade banana powder increases because there is also an increasing demand for banana-based products such as catsup and sauces. In addition, to sustain the livestock and poultry sub sector, farm inputs such feeds must be assured and thus there is a niche also for the feed-grade banana powder.
FACILITIES AND EQUIPMENT NEEDED
Peeling paraphernalia, weighing scale, chopping board, food grade basin, dryer trays, mechanical dryer, sifter (mesh #80), sifter (mesh #100), hammer mill, and building are the required fixed assets of the business.
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FINANCIAL REQUIREMENT
Banana Flour Production
Total Project Cost
Particulars
Amount
Fixed Assets
Building
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350,000.00
Peeling Paraphenalia
2,000.00
Chipping Equipment
2,000.00
Food Grade Basin
4,800.00
Sifter Mash #80
15,000.00
Sifter Mash #100
15,000.00
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Hammer Mill
300,000.00
Pulverizer
100,000.00
Hot House
70,000.00
Dryer Table
3,000.00
Mechanical Dryer
100,000.00
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Total
961,800.00
Working Capital (1 month)
Direct Materials
50,271.12
Direct Labor
21,113.60
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Overhead Expense
15,000.00
Operating Cost
7,400.00
Total
93,784.72
TOTAL PROJECT COST
1,055,584.72
ASSUMPTIONS
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Purchase of Raw Material is every week
at the volume of 13,300/purchase
Out of the purchase, 80% are for food
grade and the remaining 20% is for feed grade
Recovery rate for the drying process
is 20% and 99% for milling and sifting
Actual Capacity is 75% of the rated
Capacity
Plastic liner is only for food grade
banana flour
Kilo per sack is 50
Depreciation Expense is computed based
on straight line method
Projected Income and Sales (1 month)
Particulars
Amount
Sales
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Food Grade (8, 427 kilos @ P 15.00/kilo)
126,405.00
Feed Grade (2, 107 kilos @ P 6.00/kilo)
12,642.00
Gross Sales
139,047.00
Less: Cost of Sales
Direct Materials
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Dried Banana:
Food Grade (8, 512 kilos @ P 5.00)
42,560.00
Feed Grade (2, 128 kilos @ P 2.00)
4,256.00
Sack (211 pieces @ P 10.00)
2,106.80
Plastic Liner (169 pieces @ P 8.00)
1,348.32
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Subtotal
50,271.12
Direct Labor
Packers (2 workers @ P 0.20 per kilo)
4,213.60
Machineries Operators (2 workers @ P 175.00 per day in 26 days in a month)
9,100.00
Helpers (2 workers @ P 150.00 per day in 26 operating days in a month)
7,800.00
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Subtotal
21,113.60
Overhead Expense
Indirect Labor
6,000.00
Utilities
8,000.00
Repair and Maintenance
1,000.00
Depreciation Expense
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7,458.33
Subtotal
22,458.33
Cost of Sales
93,843.05
Gross Profit
45,203.95
Less: Operating Expenses
Freight Out
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5,000.00
Office staff
200.00
Office Supplies
200.00
Communication Expense
2,000.00
Operating Expenses
7,400.00
Net Income
37,803.95
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Net Profit Ratio
27%
Gross Profit Ratio
33%
Return On Investment
43%
Payback Period
1 yr, 11 mths, & 10 days
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For Inquiries, please contact:
National Economic Research and Business Assistance Center
SOCCSKSARGEN (Region 12)
Ground Floor, RA Bldg., South Osmena St., General Santos City
Telefax No. 083-5528250
Email Address: nerbac@ dti12.org
Visit: www.investinr12.net
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Banana Flour Production

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BANANA FLOUR PRODUCTION

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