PROPOSED

VEGETABLE
FARMING MODEL
1.0 EXECUTIVE SUMMARY

The Philippines is adversely affected by the COVID-19 pandemic. The

country is estimated to lose between three percent and four percent of its gross
domestic product (GDP) this year. In the first quarter of 2020, its GDP shrank by
two-tenths of one percent for the first time in two decades according to
Secretary Sonny Dominguez of the Department of Finance (DOF). However,
given the rising number of positive COVID-19 cases in the country, it is most likely
that the succeeding economic quarters will not be promising, as the Philippine
economy tries to bounce back.

Socio-economic wise, the Philippines, like any other country that has been
hit by the pandemic, has suffered enormously. Due to almost a standstill of
economic activities and taxpayer relief efforts because of the lockdowns, the
government’s projected revenue collection is much lower compared to
previous years.

The COVID-19 pandemic has caused a great impact in Butuan City. The
Local Government Unit (LGU) has implemented measures to prevent the virus
from spreading. Having to balance the economy and the health of the
Butuanons, the spread of the virus has affected every life of an ordinary citizen.
Every sector in the society is affected. Luckily, those in the agricultural areas of
Butuan City has been resilient in producing fruits and vegetables for the people.
The agricultural sector system has been improved by the government to have it
accessible to the market.

The Butuan LGU has initiated various projects to improve the agricultural
ecosystem. This Agribusiness Model Study by the City Trade, Industry and
Investment Promotion Office is a study on the core strategy that will make an
agribusiness profitable. It aims to show stakeholders an improved system of
trading for the benefit of the farmers, the investors and the consumers. This also
provides a mechanism for the farmers or farm entrepreneurs to cope with the
challenging times of the pandemic and even beyond.

1.1 Business Objectives

The business model’s objectives are simple:

 To improve the farmers’ profitability through the farm to table scheme;

 To improve the farmers’ network through market matching;
 To efficiently distribute quality and fresh vegetables around the city.
 To attract investors to commit a sustainable production of vegetables with
the farmers.

1.2 Mission Statement

The Project is designed to uplift the lives of hardworking farmers through a

trading system of vegetables that are farmer and consumer friendly. This
means competitive/fair prices and convenience to household and
establishments by utilizing the farmer registry and delivery services.

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 1.3 Guiding Principles

The Project will be focusing on agricultural development which aims for a

sustainable supply of vegetables throughout the city, guided by the
following principles:

 Local – Sustainable living in the city must start locally. Buying from
local farmers supports the local economy.
 Convenience – Delivery services play a vital role for this project. To
promote convenience to each household and establishments, these
delivery services will deliver fresh vegetables to their doorstep. Online
applications will also be set to assist household and establishments
like restaurants and hotels for convenience.
 Quality Control – To ensure that vegetables are always fresh, a
weekly schedule for harvest and delivery shall be implemented.

1.4 Keys to Success

 Effective Communication –The proponent should closely coordinate

with LGU Butuan and other key stakeholders. They should be updated
on the supply and demand statistics of vegetables in the market to
make sure that price remains competitive/fair.

 Support the Local Economy –The proponent should aggressively

promote to the households and establishments to patronize locally
produced vegetables.

 Personalized Selections–The proponent should be flexible on the

customers’ choice by providing customized offerings of vegetable
choices.

 Convenience. The Proponent will establish weekly delivery schedules

that are convenient for its customers, saving customers time and
transportation expenses. Alternatively customers will also have the
option to pick up directly at the peddling station.

2.0 COMPANY DESCRIPTION

The project is a vegetable farm designed to produce high value crops

which is aimed to help farmers gain higher profits and provide convenience to
consumers by utilizing various delivery service platforms.

2.1 Ownership and Legal Form

The Project can be owned or managed by a private entity or non-

government organizations. The proponent could be sole proprietor, a
corporation or a cooperative.

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3.0 PRODUCTS

3.1 Products/Services Descriptions

The following are the available high value crops/vegetables that are
being produced in Butuan City in Metric Tons:

Table 1. Available Vegetable Crops in Butuan City

Vegetables: 2018
Tomatoes 0.673
Cabbage 51.184
Eggplant 30.259
Ampalaya 7.71
Sweet Pepper 0.523
Pechay 0.012
Raddish 11.673
String Beans 30.45
Squash
Patola 0.15
Mungo 0.305
Kangkong 40.79
Peanut 4.6
Soybeans 31.403
Cucumber 2.946
Okra 15.5189
Hot Pepper 1.126
Baguio Beans
Upo 334.501
Chayote
Cauliflower 0.051
Bulb Onion 0.05
Spring Onion 40.79
Snap Beans 0.897

SOURCE: City Agriculture’s Office

Based on the data provided by Butuan City Agriculture’s Office, the

lucrative vegetable crops are what we call “Pinakbet Vegetables” thus,
the project will be producing the following vegetables: eggplant, okra,
ampalaya, squash, string beans.

Further, the proponent will be partnering with delivery service providers in

the city, as well as the LGU Butuan, to lay the plans of farm to table
concepts.

3.2 Product/Service Sourcing

The products will be sourced out from the production site intended for the
project. A weekly schedule of harvest and peddling around the city shall
be implemented.

Delivery Services shall be catered by any of the following partners:

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 NAME OF ESTABLISHMENT LOCATION
1. Food Panda Butuan City
2. AgriKultura Butuan City
3. Maxim Delivery Butuan City
4. GoFetch Express Butuan City
5. 188 Express Butuan City

4.0 Market Analysis

Butuan City is a highly urbanized City and is home for around 74,972 family
households. Based on the BUTUAN CITY COMPREHENSIVE AGRICULTURE AND
FISHERY DEVELOPMENT PLAN, an average of 8,447.13 metric tons is being
consumed by costumers annually.

As recorded, vegetable production in the city is 2,691 metric tons per year
which could not suffice the demand of 8,447.13 metric tons as mentioned
above. This data surmises a supply gap of 5,756.13 metric tons per year.

4.1 Industry Analysis

The Vegetable Farming Industry is unique because it relies primarily on

seeds as its raw materials. Prices rise and fall as producers plant more in
response to high prices or low supply, and then cease production
depending on the season and climate. The most often cause of price
change is the basic law of supply and demand.

For over the years, vegetables have always been a commodity to every
Butuan household. It serves as primary viand to restaurants, eatery and
household menus. The estimated demand of 8447.13 metric tons of
vegetables annually will boost the local farmers’ morale to produce more
high value crops.

4.1.1 Market Size and Segments

The Project’s potential customers are composed of the following:

a) Household & Population

POPULATION NO. OF HOUSEHOLD

337,063 74,972

b) Accommodation Facility; and

KIND OF ACCOMODATION NO. PER KIND

FACILITY
Hotels 16
Inns 69
TOTAL 85

c) Food Service Industry

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 KIND OF FOOD SERVICE NO. PER KIND
INDUSTRY
Fast Food 39
Carenderia 70
Restaurants 52
TOTAL 161

4.1.2 Farm Cooperatives (Key Partners)

One of the Projects direct and key partners will be from the local
farmers of Butuan City.

No. Farmer's Association President

Antongalon Farmers Association

1 Rebecca D. Amolo
Caraga Incorporated (AFACI)
Barangay Anticala Farmers
2 Arturo A. Corpuz
Association (BAFA)
Sumilihon-Taguibo Farmers
3 Lydia N. Aparre
Association (SUTAFA)
Km.7 Farmers Producers
4 Nilo R. Calipayan
Cooperative (KFPC)
Upper Dumalagan Farmers
5 Francisco Gordo
Association (UDFA)
Pinamanculan-Dalingdingan
6 CeriloAbacahin
Irrigators Association (PIDA IA)
Mandamo Irrigators Farmers
7 NazarioBaslote
Association (MIFA)
Barangay Florida United Farmers
8 Alfredo Cagape
Association (BFUFA)
Los Angeles Curva Farmers
9 TeresitaPesquerra
Association (LACFA)

5.0 BUSINESS STRATEGY AND IMPLEMENTATION

The Project’s strategy and implementation should be guided by the

business model canvas as illustrated under Annex F of this study.

5.1 Infrastructure

5.1.1 Key Activities:

 FARMING: Farming activities will be designed through

sustainable farming which will directly provide vegetable
supply in Butuan City. Production inputs are emphasized on
this model.

 MARKETING: FARM TO TABLE/ESTABLISHMENTS (DELIVERY

SERVICES) – Farm to Table/Establishments Scheme of this

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 model will increase the farm’s profitability because instead of
passing through the traders’ system, farmers’ prices will be on
retail and these freshly produced vegetables will be delivered
directly to the households’ doorstep via delivery services.

 AGRI-TOURISM – When the farm has established the

production during the whole year round, customers may
directly buy from the production area, adding brand to the
vegetables and profit margin by means of entrance fees.

 FARM SCHOOL – After establishing its brand through the agri-

tourism program, the project will then apply for accreditation
to TESDA to become a model farm school for aspiring farmers
or farm entrepreneurs. This kind of activity will not only
enhance the project’s brand but will also generate cash
inflow due to support/grant given by National Government
Agencies in order to defray farm school related expenses.

 The most important activities in executing the enterprise's

value proposition include farming (from land preparation to
planting to harvesting), marketing, delivery of products, agri-
tourism activities (entertaining guests who visit the farm; pick
vegetables and pay for them) and Farm School
(capacitating farmers and farm entrepreneurs).

5.1.2 Key Resources:

 FARMERS OR FARM ENTREPRENEURS - The farmers or farm

entrepreneurs are the key players to this model. Their produce
will be scheduled for harvest and peddling in Government
designated areas.

 ASSETS – Long-term Asset such as a 1 hectare land will serve

as the production site for the “pinakbet vegetables”. The
Land shall be divided in five (5) equal parts to accommodate
the following commodities: eggplant, okra, ampalaya,
squash, string beans.

 OPERATING CAPITAL – Operating capital will be shouldered

by the proprietor (Farmer or Farm Entrepreneur). The
resources that are necessary to create value for the
customers includes farm inputs and equipment (could be
borrowed or rented), farm workers and their technical skills,
and land preparation.

5.1.3 Partner Network:

 In order to optimize operations and reduce risks of a business

model, the enterprise should partner with farmers or farm
cooperatives, delivery service providers or those providing
online applications, households, establishments (hotels and
restaurants) and government agencies like Department of
Agriculture, City Agricultures’ Office, Department of Trade

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 and Industry, City Trade Industry and Investment Promotion
Office.

5.2 Offering

5.2.1 Value Propositions:

 CONVENIENCE FOR CUSTOMERS – Produced vegetables will

be carefully selected and delivered to the households’
doorstep at a certain cost. This scheme enables customers to
save time and effort in buying and selecting their vegetables.

 HIGHER PROFIT FOR FARMERS OR FARM ENTREPRENEUR– This

vegetable trading promotes the Government’s farm to table
scheme, bypassing advantageous traders. So instead of a
kilogram of eggplant being sold at a farm gate price, the
farmer or farm entrepreneur will be able to sell their produce
at the selling retailer price due to direct contact with the
consumers.

 STABLE JOB FOR DELIVERY SERVICES – With the promising of

delivering fresh vegetables to the households’ tables, delivery
services will be expected to be in demand around the city.
Like any highly urbanized cities, these delivery services will
create more job opportunities offering convenience to
consumers.

5.3 Customers

5.3.1 Customer Segments:

To build an effective business model, the enterprise will cater to the

requirements of:

 Households
 Establishments like hotels and restaurants
 Local markets especially those organized by Department of
Agriculture, City Agricultures’ Office, Department of Trade
and Industry, City Trade Industry and Investment Promotion
Office.

5.3.2 Channels:

The enterprise will deliver its value proposition to its targeted

customers through different channels.

 Delivery service providers or those with online apps

 Local markets especially those organized by Department of
Agriculture, City Agricultures’ Office, Department of Trade
and Industry, City Trade Industry and Investment Promotions
Office
 Walk-in farm clients
 Promotion through a Facebook page or a website

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  Promotion through publicity (free advertising on online news
sites, newspapers, magazines, radio programs). Prerequisite
here is a good story.

5.3.3 Customer Relationships:

 FARMER/COOPERATIVE REGISTRY – Farmers or Farm

entrepreneur shall be registered under the RSBSA (Registry
System for Basic Sector in Agriculture). The RSBSA in return will
give farmers or farm entrepreneurs an opportunity to
showcase their produce thereby matching them to potential
buyers and/or customers.

 DELIVERY SERVICES REGISTRY – The Delivery Services Registry

shall be integrated with the RSBSA. This means that farmers
and delivery services will be given an opportunity to
collaborate and implement the farm to table scheme.

 SELF SERVICE AT THE FARM – Farmers or Farm entrepreneurs

shall provide a schedule for harvest a week before
maturation of vegetables. During this period, the farm will be
open for walk-in customers who will be given a chance to
avail fresh vegetables, hand-pick them personally and pay
for it on-site.

 AUTOMATED SERVICES - A system similar to self-service but

more personalized as it has the ability to identify individual
customers and their preferences. These automated services
will be provided by the delivery services company through
social media platforms and online applications.

5.4 Finances

5.4.1 Cost Structure:

 VALUE DRIVEN – This business model has less concern with cost
but focuses more on creating value for products and services.
To achieve quality, enhance the business brand, and provide
convenience to its costumer, the business prioritizes value
rather than minimizing the costs.

 FIXED COSTS AND VARIABLE COSTS – The business will be

expended by the following expenses per annum: a) Fixed
Costs – P98,460.00 composed of Labor and Land Preparation
expense; and b) Variable Costs – P156,990.00 from inputs and
materials.

5.4.2 Revenue Streams:

 MAIN: SALES FROM PRODUCTION – an annual revenue of

P474,000.00 shall be sourced mainly from the sales derived
from the production of eggplant, okra, ampalaya, squash
and string beans.

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  ADDITIONAL: AGRI-TOURISM – On its second year of
operation, the business is projected to be visited by a
minimum of 100 tourists per month or 1,200 tourists per annum.
With a P20.00 entrance fee, a yearly income of P24,000.00 is
projected to be added in the businesses’ annual revenue
stream.

 ADDITIONAL: FARM SCHOOL – On its third year of operation,

the business shall apply for a Farm School accreditation with
TESDA and/or DOLE. This program would provide at least
P300,000.00 annually for the student’s tuition fee which in
return can be use to defray the businesses’ expenses.

6.0 FINANCIAL PLAN

6.1 Start-Up Costs

Funding the Project will be provided primarily by equity from the

proponents. The proponent shall contribute in equal shares from their
savings to launch the Project.

START-UP FUNDING
Land 400,000.00
Farm Animal 30,000.00
Farm Tools (inputs and Materials) 167,990.00
TOTAL COSTS 597,990.00

6.2 Break-Even Analysis

6.2.1 Return on Investment

Year Annual Income

1 218,550.00
2 242,550.00
3 542,550.00
Total 1,003,650.00
Divided by: 3
Average Income 334,550.00
Divided by: Total Project
597,990.00
Cost
Return on Investment Rate 55.94%

The Project’s return on investment rate is at 55.94%. This value is

derived from the project’s average income divided by the total
project cost.

6.2.2 Payback Period

Due to the annual projected sales, overall company break-even is

expected to be in its 2 years and 4 months of operation.

Net Income
Duration
per Year
Year 1 218,550.00 1

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 Year 2 242,550.00 1
Year 3 542,550.00 4 mo.
Total 1,003,650.00 2 yrs. & 4 mo.

6.3 Projections

6.3.1 Projected Profit and Loss

Direct cost of sales reflects the labor cost, land preparation cost, and
cost of inputs and materials.

Gross sales are based on the industry’s existing retail price at the
market multiplied by number of kilograms per commodity.

INCOME STATEMENT Year 1 Year 2 Year 3

Gross Sales 474,000.00 498,000.00 798,000.00
Ampalaya (3,000 kgs x 35/kg) 105,000.00 105,000.00 105,000.00
Eggplant (9,000 kgs x 15/kg) 135,000.00 135,000.00 135,000.00
Okra (7,200 kgs x 15/kg) 108,000.00 108,000.00 108,000.00
Squash (12,000 kgs x 6/kg) 72,000.00 72,000.00 72,000.00
String Beans (3600 kgs x 15/kg) 54,000.00 54,000.00 54,000.00
Entrance Fee (Farm Tourism) (1200 x
24,000.00 24,000.00
20/pax)
Add: Educational subsidy by NGA (Farm
300,000.00
School)
Less: Expenses 255,450.00 255,450.00 255,450.00
A. Labor Cost
Ampalaya 20,640.00 20,640.00 20,640.00
Eggplant 23,880.00 23,880.00 23,880.00
Okra 15,000.00 15,000.00 15,000.00
Squash 5,040.00 5,040.00 5,040.00
String Beans 9,900.00 9,900.00 9,900.00
B. Land Preparaton Cost
Ampalaya 3,900.00 3,900.00 3,900.00
Eggplant 4,800.00 4,800.00 4,800.00
Okra 3,900.00 3,900.00 3,900.00
Squash 6,600.00 6,600.00 6,600.00
String Beans 4,800.00 4,800.00 4,800.00
C. Cost of Inputs and Materials
Ampalaya 44,190.00 44,190.00 44,190.00
Eggplant 27,840.00 27,840.00 27,840.00
Okra 30,240.00 30,240.00 30,240.00
Squash 30,300.00 30,300.00 30,300.00
String Beans 24,420.00 24,420.00 24,420.00
Estimated Net Income 218,550.00 242,550.00 542,550.00

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6.3.2 Projected Cash Flow
The Project will be able to payback its Equity over around the 1st
quarter of its 3rd year of operations.
Preparatory
Particulars Year 1 Year 2 Year 3
Stage
Cash Inflows
Cash Sales 474,000.00 498,000.00 498,000.00
Educational subsidy
300,000.00
(by NGA)
Owner's Equity 597,990.00

Total Cash Inflows 597,990.00 474,000.00 498,000.00 798,000.00

Cash Outflows
Land 400,000.00
Farm Animal 30,000.00
Farm Tools (inputs
167,990.00
and Materials)
Operating Expense 255,450.00 255,450.00 255,450.00
Total Cash
597,990.00 255,450.00 255,450.00 255,450.00
Outflows

Net Cash Flows 218,550.00 242,550.00 542,550.00

Add: Cash,
- 218,550.00 461,100.00
Beginning
Cash Balance,
0.00 218,550.00 461,100.00 1,003,650.00
Ending

6.3.3 Projected Balance Sheet:

The business will increasingly develop means to finance its own

growth in future years. For the first 3 years of the project’s operation,
earnings shall be retained in order to recuperate its start-up cost as
early as possible. Further, the project’s long-term asset shall continue
to appreciate as time goes by.
BALANCE SHEET Year 1 Year 2 Year 3
Assets
Cash 218,550.00 242,550.00 542,550.00
Inventory 296,450.00 296,450.00 296,450.00
Other Current
Assets

Long-term Assets 400,000.00 420,000.00 441,000.00

TOTAL ASSETS 915,000.00 959,000.00 1,280,000.00
Liabilities and Capital
Current Liabilities
Accounts Payable
Current Borrowings
Other Current
Liabilities

Long-term Liabilities

TOTAL LIABILITIES
Owner's Equity
Paid-in Capital 696,450.00
Retained Earnings 696,450.00 716,450.00
Earnings 218,550.00 242,550.00 542,550.00
Other
Comprehensive 20,000.00 21,000.00
Income
TOTAL CAPITAL 915,000.00 959,000.00 1,280,000.00

TOTAL LIABILITIES
915,000.00 959,000.00 1,280,000.00
AND CAPITAL

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 Prepared by:

STEPHEN B. CABALTERA JEUNE ACE E. MUÑOZ

Community Affairs Officer IV Planning Development Associate

Reviewed and Recommending

Approval by:

FREDERICK L. BLANCAS
City Dept. Head II
CTIIPO

Approved by:

Engr. RONNIE VICENTE C. LAGNADA

City Mayor
Butuan City

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