A PROJECT FEASIBILITY STUDY

PHILIPPINE MALLARD DUCK (ITIK) EGG PRODUCTION AND

PROCESSING

In partial fulfillment of the requirement

for degree of Master in Business Administration
of the University of Cagayan Valley

Presented to:
PROF. LIBAN

Proponents:
MYLA D. BUNAGAN
ERVIN T. DEJUMO
ARLEEN A. GASPAR
ROMEO Q. MALLILLIN
MBA-1

ACKNOWLEDGEMENT

Table of Contents

A. Project Title

B. Project Location .

C. Project Rationale

D. Statement of the Objectives.

1. The Need of the Project.

2. Market Description.

3. Demand .

4. Supply .

5. Demand Supply Analysis.

6. Market Share .

I. MARKET ASPECT

7. Marketing Program.

8. Price Study .

II. TECHNICAL ASPECT.

1. The Product .

2. Manufacturing Process .

3. Plant Size and Production Schedule

4. Machinery and Equipment

5. Plant and Project Location .

6. Plant Layout

7. Building and Facilities

8. Raw Materials and Supplies .

9. Utilities

10.Water Disposal

11.Production Cost

12.Labor Requirements

III. ORGANIZATION AND MANAGEMENT ASPECT .

IV.

FINANCIAL ASPECT

1. Total Project Cost

2. Sources of Fund

3. Preparation of Financial Statements

4. Financial Analysis

V.

SOCIO-ECONOMIC ASPECT

VI.

1. SUMMARY OF FINDINGS

2. CONCLUSIONS AND RECOMMENDATIONS .

A. Project Title
The Project is entitled A Feasibility Study on
Philippine Mallard Duck (Itik) Egg Production and
Processing.

There

are

several

reasons

why

the

proponents choose to venture on this project. Firstly,

duck-raising is a profitable livestock industry in the
Philippines

because

of

its

egg.

Duck

is

second

to

chicken in economic importance as source of egg and

meat. Its most important product, the balut (boiled
incubated

ducks

archipelago
value.

egg)

for

its

Secondly,

is

sold

daily

delicious

duck

is

throughout

flavor

and

considered

as

the

nutritive
the

most

versatile avian specie because it can subsist under a

wide

range

of

climatic

and

nutritional

conditions

(Lambio 2002). Also, duck-raising is inexpensive and

can

start

off

with

minimal

start-up

capital.

It

requires non-elaborate housing facilities, and little

attention,

and

chickens.

More

less

space

for

importantly,

rearing

ducks

are

compared
shown

to

to
be

relatively hardy, resistant to common avian diseases,

and

subsist

researchers

on

endeavor

variety
to

of

study

feeds.
the

Thus,

feasibility

the
of

putting up this business.

B. Project Location
Ducks can be raised in areas near bodies of water
or in areas where there are rice fields to feed on
after harvest.
have

chosen

barangay

As a rural Municipality, the proponents

Solana,

of

Lanna

Cagayan

to

be

the

specifically
main

in

location

of

the
the

proposed project. The lot which will house the farm has
an area of ______. The farm is relatively far from
residential

areas

about

230

meters,

as

required

by

Department of Environment and Natural Resources (DENR).

Municipal Assessors office has provided us the
cost of the lot where the fowl is situated, which range
from ____ to ___ per square meter. Since the farm
occupies

300

square

meters,

the

lot

will

cost

Php

300,000.

C. Project Rationale

D. Statement of the Objectives

This

study

entitled

Feasibility

Study

on

Philippine Mallard Duck (Itik) Egg Production and

Processing

aims

to

explore

the

possibility

of

venturing into Itik Egg Production and Processing in

the Municipality of Solana, Cagayan.

Specifically, the study seeks to:

Present

sufficient

information

and

analyses

regarding the market, technical, financial, management

and organization and socio-economic implications.
In

order

proposed

to

project,

determine
the

the

following

feasibility
questions

of

shall

the
be

answered:

A.

Market Aspect
1. What benefits can be derived from the proposed
project?
2. What are the products to be produced?
3. Are the products competitive as to other goods
in the market?
4. Is

the

production

capacity

of

the

project

adequate for the market?

5. Are

the

products

produced

acceptable

by

the

prospective market?

B.

Technical Aspect
1. Is there ready and adequate location for the
proposed project?
2. Is the location accessible for transportation?
3. Are there available resources of equipment and
other technical requirements like raw materials
needed for the proposed project?
4. Are there qualified technical personnel who can
provide

service

for

the

installation

and

maintenance of the equipment?

5. Are there qualified people to look into the
physical preparation of the proposed project?
6. Are there enough utilities electricity, fuel
and water for the operation of the proposed
project?
7. Is

the

proposed

project

environmentally-

friendly?
8. Are there available methods of waste material
disposal?

C.

Financial Aspect
8

1. What is the total financial requirement of the

proposed project?
2. How will the proposed project be financed?
3. Is the proposed project financially viable?
4. What

kind

of

taxes

and

licenses

will

the

proposed project pay?

D.

Organizational Aspect
1. What form of organizational structure will the
proposed project adapt?
2. Are the enough qualified people to manage the
proposed project?
3. Do we have some assistance from the government
regarding organization and development of the
association that can best manage this type of
project?

E.

Socio-economic Aspect
1. Will the project affect the lifestyle of the
farmers in Solana, Cagayan?
2. Will it generate employment?
3. Will

it

earn

additional

investment

in

the

community?

4. Will

it

improve

the

economic

condition

of

Solana, Cagayan?
5. Will it add income to the government?

10

I.

MARKET ASPECT
1. The Need of the Project
This
putting

study
up

aims

to

ascertain

business

on

Itik

the

feasibility

Egg

Production

of
and

Processing in Lanna, Solana, Cagayan. The need for the

project

could

be

viewed

from

the

effects

it

could

generate to enterprise citizens and to the researchers

in

particular,

who

are

exploring

viable

investment

projects where they could channel their resources. The

study

will

information

provide

comprehensive

on

aspects

all

of

vital
the

background

business.

It

encompasses five major aspects, namely: market aspect,

technical

aspect,

financial

aspect,

management

and

organization aspect, and socio-economic aspect. In as

much as the setting of the study represents a typical
town, the findings of the study may be applicable to
other similar rural communities where ducks could be
grown and raised. Hence, potential entrepreneurs may
find this study useful and applicable.
The project could be implemented by any prospective
investor who can generate the necessary resources to
start the business. Once the project is implemented,
the owner and the community as a whole will enjoy
several economic and social benefits:
11

a. It will generate income to the owner and other

people

who

will

be

directly

or

indirectly

employed in its operations like the farmers,

vendors, and other retailers.
b. It will channel idle resources of investors to
fruitful undertakings.
c. It
will
generate
employment

to

certain

residents of the community and hence contribute

to

the

massive

livelihood

program

now

being

launched by the government.

d. The Municipality of Solana would receive income
from permits, fees, licenses and taxes to be
paid by the investor.
e. The nutritional level of the consumers of the
balut will be improved since the product is a
good source of protein supply and hence, the
product would be readily available and sold at
a reasonable price.

12

2. Market Description
The

proponents

seek

to

penetrate

the

market

as

producers of duck egg. The eggs will be distributed

retailers

and

then

subsequently

sold

to

consumers.

Details of the marketing will be discussed thoroughly

in the Marketing Program (page _). As producers, the
eggs will be used as an input to the production of
balut, penoy and century/salted eggs.
Duck egg production and processing is s profitable
enterprise; even the so-called low quality eggs, such
as those that have thin and cracked shells can still be
sold in the market and used as table egg. The most
popular egg products are balut, penoy, red salted and
century eggs.
As

to

its

competitive

advantage,

duck

eggs

are

larger and more nutritious than chicken eggs (FNRI,

1990).

The

products

composition

gives

the

of

duck

consumers

eggs
more

and

their

calories,

bymore

protein content, more nutritional punch, and contain

more beneficial omega 3s, minerals, and vitamins than
chicken

eggs

(108

Kcal

for

ducks;

75

Kcal

for

chickens). These and more are the contributing factors

why duck eggs are beneficial to the consumers.
13

3. Demand
3.1 Present Demand
At present, marketing of duck eggs is not a problem
since demand is high. In fact, supply is still unable
to meet the demand for balut and other egg products.
In the Philippines, about 90 percent of total duck
egg production is used for processing (BASSRTC 1998).
87 percent of which is processed into balut and another
7 percent is processed into salted eggs. The remaining
6 percent consists of century eggs, penoy, and other
unidentified forms. This means that balut accounts for
about 80 percent of total egg production. This emphasis
on

balut

production

is

unique

feature

of

the

Philippine duck industry. Although unfamiliar to most

foreigners,

balut

Philippines

for

and

their

penoy
unique

are

delicacies

taste

and

in

the

nutritional

content. Cooked balut is sold as snacks in the evenings

by street vendors, either peddling on the street or
stationing on the sidewalk.
3.2

Projected Demand

The table shows the projection of the demand of the

product for the first five years.

14

Table 1. A table showing the Projected Demand of Duck

Egg for 5 years
Year
Projected
Average
Projected
Population
Consumption
Demand
1
2
3
4
5
Source:
Interpretation:

4. Supply
4.1 Present Supply
As mentioned previously, supply is still unable to
meet the demand for balut and other egg products.

4.2

Projected Supply

The table shows the projection of the supply of

the product for the first five years.
Table 2. Projected Supply of Duck Eggs
Year
1
2
3
4
5

Projected Supply
(per annum)
240,000
360,000
400,000
480,000
560,000

15

5. Demand Supply Analysis

Table 3. Demand Supply Analysis
Yea
r
1
2
3
4
5

Total
Demand

Total
Supply

Varianc
e

Percentage of
Satisfied/Dissatisfied

6. Market Share
Year

Total Demand

Target Market
Share

% of Market
Share

1
2
3
4
5

Table 4. Projected Market Share

-assume for the supply annually

7. Marketing Program
7.1 Present Marketing Program
(Marketing program of other producers)
7.2

Proposed Marketing Program

16

The duck egg will be sold to the market at 7.00 per

piece. There are four marketing channels used in marketing
duck eggs. The flow of marketing duck eggs is shown below.
1. Producer

->

assembler-wholesaler

->

retailer

->

consumer
In this type of marketing channel, the assembling of
duck eggs is in the producers area and the eggs are
later sold to retailers in the market.
2. Producer -> assembler-wholesaler -> balut operator ->
retailer(vendor) -> consumer
The

producer

sells

the

duck

egg

to

the

assembler-

wholesaler. The assembler-wholesaler will then sell the

egg to the balut operator and the balut is retailed by
the vendor to the consumer.
3. Producer

->

balut

operator

->

retailer(vendor)

->

consumer
In this instance, the balut operator directly gets duck
eggs

from

the

producer

and

sells

to

the

retailer/

vendor then ultimately to the consumer.

4. Producer -> assembler-wholesaler (century/salted eggs)> wholesaler/retailer -> retailer -> consumer

17

The

producer

retailer

for

sells

the

duck

processing.

egg

The

to

the

assembler-

assembler-wholesaler

engages in century and salted egg production and sells

them to the wholesaler/retailer then to the consumer.

8. Price Study
8.1 Present Selling Price
At present, the selling price of duck eggs in the market is
pegged at 7.00 per piece. The cost of production has an
estimated cost of 3.00 per egg piece.
8.2

Projected Selling Price

Table 5. Projected Selling Price

Yea
r

Present Selling Price

Quantit
y

Descriptio
n

Unit
Pric
e

Projected Selling Price

Tota
l
Pric
e

Quantit
y

Descriptio
n

1
2
3
4
5

II.

TECHNICAL FEADIBILITY ASPECT

1. The Products

18

Unit
Pric
e

Tota
l
Pric
e

The products to be marketed are mainly duck eggs for

distribution to different outlets and balut/penoy/salted egg
processors in Tuguegarao City.
2. Manufacturing Process
The processes involved in the manufacturing the eggs
begins

with

the

breeding,

feeding,

proper

housing

and

handling of the ducks until the ducks are ready to lay eggs.
The

breeding

the

ducks,

several

stages

are

involved;

selection of stocks, sex ratio and mating system, management

of replacement breeder stocks, proper care and handling of
hatching eggs, incubation and hatchery management, candling
and fertility determination, handling of ducklings, hatchery
waste disposal and utilization and culling.

3. Plant Size and Production Schedule

3.1 Plant Size
The

lot

which

is

about

300

square

meters

will

accommodate the farm where the ducks will be grown and

nurtured and a small office space, with an area of 50 square
meters.
3.2

Production Schedule
19

The ducks has an estimated mortality rate of 12% (1%

per month. Simply stated, in every one thousand ducks to be
nurtured, 88% or 880 ducks will live and be utilized for egg
production.

The

12%

will

be

accounted

as

cost

of

the

estimated

egg

business enterprise.
The

880

ducks

which

survived

has

an

production of 70%. Simply put, 70% of 880 surviving ducks is

560 ducks. These 560 duck are capable of producing egg.
4. Machinery and Equipment

5. Plant/Project Location
The farm shall be located in Lanna, Solana, Cagayan where
6. Plant Layout
7. Building and Facilities
The

building

which

will

house

the

office

of

the

management has an area of 300 square meters. The office

space will be constructed with an estimated cost of 200,000.
8. Raw Materials and Supplies
8.1 Initial
Quantity
1000 pcs
300 pcs
20 sacks

Description
Drakes
Ducks
Duck Feeds

Unit Cost

Total Cost

10.00/drake

10,000.00

1,100/sack

22,000.00
20

10 packs

Vetracin
(supplement)
Screen
15x18 tent
12x15 tent

50 meters
2 pieces

8.2
Year

500/pack

5,000.00

Projected Materials/Supplies

Quantity

Descriptio
n

Unit Cost

Total Cost

9. Utilities
10. Waste Disposal
In a duck hatchery or balutan, the primary product is
balut and day-old ducklings. Infertile eggs and penoy are,
likewise, used as food. The fully or partially developed
embryos that was either partly hatched or not hatched are
processed and utilized by pigs for feeds.
11. Production Cost
Raw
Labor
Materia Cost
l Cost

Overhea Operatin Other

Cost of
d Cost
g Cost
Pertinen Producti
t Cost
on

21

12. Labor Requirements

Type/Position

Number of
Workers

Wage Rate

Total

Direct Labor
Sales
Representativ
e
Indirect
Labor
Delivery Boy
Administrativ
e
Manager
Total

Projected Operating Salary

Position

No. of
Workers

Year
1

Year
2

Year
3

Year
4

Year
5

Direct Labor
Indrect Labor
Administrativ
e Labor
Total

Projected Overhead Cost

Overhead
Cost
Electricit
y
Water

Year 1

Year 2

Year 3

Year 4

Year 5

III. ORGANIZATION AND MANAGEMENT ASPECT

1.1 Form of Organization

22

The business venture shall adopt a centralized form of

organization. The following figure shows the organizational
chart of the business enterprise.

1.2

People involved Before and During the Operation

The operation of the business shall be governed by the

co-owners. The manager shall be the overseer of the main
operation in the farm namely, the breeding, raising, care
and handling of the ducks, and production of duck eggs. The
helpers will man the growth of the ducks. They will be
directly involved in all the processes of pasturing the
ducks until it is ready to lay eggs. Upon the laying of the
eggs, proper care and handling of the hatching eggs will be
23

their next task. The distribution of the eggs that are ready
to be sold in the market will also be their function.
1.3

Qualifications and Number of Labour Required

Position

No. of
Labor

Educational Qualification

Age

Experienc
e

Manager

2535
year
s
old

2 years
of
experienc
e in
manageria
l
position

Helper/Farmer
/Delivery Boy

*At least 2 years in

college with units in
agriculture or
agribusiness
* Knowledgeable in proper
breeding, raising, feeding
and handling of ducks and
duck eggs
*must know how to read and
write
*must be knowledgeable in
proper breeding, raising,
feeding and handling of
ducks and duck eggs
*must know how to drive
*must have a drivers
license
*has no derogatory record

20
year
s of
age
or
olde
r

At least
1 year of
experienc
e in
poultry
raising

1.4
1.5

Training and Number of Labour Required

Implementing Strategy
1.5.1
Work Schedule

IDENTIFICATION
OF ACTIVITY
A
B

ACTIVITY DESCRIPTION
Feasibility Study
Preparation
Preparation of other
Supporting Documents

TIME/DURATION
(Month)
3 months
45 days
24

C
D
E
F

G
H

IV.

Plan, Design and

Specification preparation
Site assessment and
appraisal
Purchase and Delivery of
Equipment
Construction and
installation of
facilities, equipment,
furniture and fixtures
Hiring of Personnel
Advertising Campaign

2 months
1 month
45 days
2 months

15-20 days
1 month

FINANCIAL FEASIBILITY ASPECT

1. Total Project Cost

Pre-Operating Cost
Pre-Operating Salaries
Pre-Operating Activity
Fixed Assets
Land/Land Improvement
Building
Machine and Equipment
Installation of Machinery
Working Capital
Labor
Direct
Indirect
Administrative
Total
TOTAL PROJECT COST

5,000.00
10,000.00

2. Sources of Financing the Project

The capital of the business venture will be derived
from

the

cumulative

investments

of

the

owners

of

the

business. Each partner will invest 50,000 as an initial

25

capital of the enterprise. Other fund source will be derived

from loans to bank amounting to ____________.
3. Preparation of Financial Statement
3.1 Income Statement
Table shows the cost and return of producing eggs from ready
to lay ducks, 800-head module (Year 1).
Year
Sales
Sale of eggs
Sale of culls
Sale of empty
feed bags
Total Sales
Less: Cost of
Sales
Pullets/Ducks
Feeds
Medicines and
Supplements
Gross Profit
Less:
Operating
Expenses
Labor
Salaries
Transportatio
n
Light and
Water
Repair and
Maintenance
Insurance
Telephone
Bill
Taxes and
Licences

2015

2016

2017

2018

2019

1,680,0
00

1,680,0
00

1,680,0
00

1,680,0
00

1,680,0
00

26

Miscellaneous
Total
Operating
Expenses
Income from
Operation
Less: Income
Tax
Net Income
3.2
Year
Cash Receipts
Cash
Beginning
Sales
Proceed of
Loan
Intial
Capital
Less: Cash
Disbursement
Operating
Expenses
Purchase of
Fix Assets
Building
Construction
Farm
Construction
Purchases
Payment of
Loan
Amortization
Payment of
Interest
Payment of
Taxes
Total Cash
Disbursement

Cash Flow Statement

2015

2016

2017

2018

2019

1,680,0
00

1,680,0
00

1,680,0
00

1,680,0
00

1,680,0
00

27

Cash Ending

3.3
Year
ASSETS
Current
Assets
Cash
Inventory
on Hand
Total Current
Assets
Fixed Assets
Machinery
and Equipment
Land
Building
Less:
Accumulated
Depreciation
Furniture
and Fixtures
Total Fixed
Assets
Other Assets
Total Assets
LIABILITIES
AND
PARTNERSEQUI
TY
Liabilities
Loans
Payable
Tax Payable
Total
Liabilities
Partners
Equity
Capital
Net Income

Balance Sheet

2015

2016

2017

2018

2019

1,680,0
00

1,680,0
00

1,680,0
00

1,680,0
00

1,680,0
00

28

Total
Partners
Equity
Total
Liabilities
and Partners
Equity
Net Worth

V.
VI.

4. Financial Analyses
4.1 Test of Liquidity
4.2 Test of Profitability
SOCIO-ECONOMIC ASPECT
a. Socio-economic Contribution
b. Employment Opportunity
SUMMARY OF FINDINGS
1. Management Feasibility
2. Market Feasibility
3. Technical Feasibility
4. Financial Feasibility
5. Socio-Economic Feasibility

CONCLUSIONS
1. Management Feasibility
2. Market Feasibility
3. Technical Feasibility
4. Financial Feasibility
5. Socio-Economic Feasibility
RECOMMENDATIONS
Based

on

the

findings

and

conclusions

made,

the

researchers strongly recommend the project for funding and

immediate implementation.

29

30