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1. PROJECT SUMMARY
Project Proposal
MODERN RICE FARM AND PROCESSING CENTER
Project Proponent
Climate Change Agricultural Technical Management Corporation
(Company Name)
Unit – E MR Building, 1084 Quirino Avenue, San Dionisio, Paranaque City, Philippines
(Company Address)
Project Description
The proposed Modern Rice Farm and Processing Center is a corporate farm that will
utilize hybrid seeds with proven yield of about ten (10) tons of paddy rice per hectare.
Moreover, the project will use advanced and efficient irrigation system resulting in
dramatic reduction of water consumption per crop, will employ a production process that
is fully mechanized, will implement a weekly salary scheme for the farmers, and will sell
the finished products on a wholesale basis.
This project will consolidate around 100 hectares of land which ownership will remain with
the farmers, will be leased from the farmers, and will make the farmers work on their land
with a new system of remuneration designed to improve their income.
Project Goals and Objectives
The main goal of this project is to establish a corporate rice farm and processing center
that utilize modern technology to increase production, to improve the quality of finished
products, and to uplift the lives of farmers.
The objectives of this project are: (1) to produce around 2,000 metric tons of paddy rice per
annum, (2) to plant alternate crops during off seasons such as soya beans with yield of about 400
tons of fresh beans per year; (3) to fortify market position by producing high quality products,
satisfying and retaining valued clients, and establishing long term business relationship; (4) to
participate, contribute, and capitalize on the development efforts of the government by
promoting investments and creating employment opportunities for the local farming
communities; (5) to help attain rice sufficiency in the Philippines; (6) to tap the export market in
the medium term, and (7) to practice and promote social responsibility by assisting worthy
projects, programs and causes in the local community.
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2. Project Location
The proposed corporate farm is a fertile agricultural land located in Barangay Partida Dos,
Municipality of Guimba, Province of Nueva Ecija. Water is available throughout the year
from the manmade irrigation system and from deep wells. Vital infrastructures and utilities are in
place including highways and roads, communication lines, and supply of electricity and potable
water.
Project Highlights, Summary of Findings, and Conclusions
Market Study
Product and Market Descriptions: The Rice Farm and Processing Center (RFPC) will produce
high grade milled rice. The varieties of rice selected for the project are SL-8H, SL-12H, and SL-
18H; these varieties are proven to produce the high yield per hectare, and likewise these varieties
have excellent tastes that will surely satisfy the demand of both local and foreign consumers. The
project has an established captive buyer, SL Agritech Corporation (SLAC), an agribusiness
corporation that sells different varieties of rice product is ready to purchase all milled rice to be
produced from the farm. SLAC is the largest local hybrid rice seed company in the Philippines
and tropical Asia as well as one of the leading distributors of premium quality rice both in the
local and foreign markets.
Demand and Supply: Rice is the primary staple food in the Philippines. With the population of
the country growing by almost two percent (2%) annually, the domestic demand for rice is
projected to increase. The Philippines consumed 13, 250,000 Metric Tons (MTs) of milled rice in
2015 as compared to 11,737,710 MTs in 2005- the demand grew by an average of 1.41% per
annum. Using these historical figures, the Philippines is projected to consume about 13,436,830
MTs of rice in 2016. However in 2015, domestic demand exceeded the domestic production as
imports from foreign suppliers provided 1,800,000 MTs of rice. Rice importation is expected to
continue in the coming years until local production meets the local demand.
Rice production and rice processing remain as high prospects in terms of business viability. The
strong demand for rice products, especially in metropolitan areas pushed the national
government to import rice in the past ten years. The presence of the large volume of imported
rice in the Philippines is a clear indication of low supply and high demand of rice in the country.
Competitive Assessment: The existing rice millers establish market linkages with local retailers
and strong cooperatives, private companies, schools, government offices, and other institutions.
Others are mixing the locally processed high quality milled rice with the low quality imported
rice and/or low quality rice produced in other regions in order to lower cost and increase their
income. They offer credit sales term of ten (10) calendar days with post-dated check issuance
from retailers and free product delivery. Majority of the rice millers in Central Luzon are not
spending money for promotional activities or advertisement but rather push their products
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3. through their in-house sales team. They normally package their rice products in 50 kilogram
bags.
Marketing Plan and Programs: The Rice Farm & Processing Center (RFPC) will sell its
products to its captive market. It will establish an in-house marketing team who will maintain its
good relationship with the captive client and explore other options for further sales growth. It
will also assure its consumers that the milled rice will come from pure and fresh produce of the
corporate farm and are not mixed with low grade milled rice from other provinces and/or poor
quality imported rice. Added value is through the use of the modern system and state of the art
facilities designed to produce high quality milled rice. The RFPC will follow the market trend of
offering credit sales term of ten (10) calendar days with post-dated check issuance from the
captive wholesale buyer. The price of the product will be set at the same price of the leading
competitors in the same category.
The RFPC will grow alternate crops during off seasons such as soya beans. The demand for soya
bean is growing steadily. Vegetable dealers in Metro Manila and feeds companies in Luzon are
the target markets for the alternate crops.
The selling price for both products is projected to increase by an average of three percent (3%)
per annum over the period under study. This rate is the annual average rate of increase in prices
for the past five years (2010-2014) based on the data provided by the Bureau of Agricultural
Statistics.
Conclusion: Upon careful consideration and analysis of the products and markets, the demand
and supply situation, the competitive position, and the marketing plans and programs, the
demand for high quality milled rice in the target market exists and such demand can be supported
by the implementation of the marketing plan and programs. Having answered the crucial
questions in the affirmative, pursuing the proposed project is feasible marketing-wise.
Technical Study
Site Description: The proposed corporate farm consists of 100 hectares of agricultural land
situated in the Barangay Partida Dos, Municipality of Guimba, Province of Nueva Ecija. The
plantation area boasts of availability of water supply for agriculture from the irrigation system
and from deep wells throughout the year. The farm is strategically located where vital
infrastructures and utilities are in place such as highways and roads, communication lines, and
supply of electricity and potable water.
Land: The land will be leased from farmers. The farmers shall have a share of ten percent (10%)
of the gross sales in the first five years as payment for the use of their land. From the sixth (6th
)
year onwards, after the cost of investment is recovered, the share of the farmers will be increased
to twenty percent (20%) of gross sales.
Raw Materials: CCATMC will plant three (3) different varieties of hybrid rice, (1) SL-8H; (2)
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4. SL-12H; (3) SL-18H. These varieties will ensure stable yields, good milling quality, and strong
resilience to natural disasters. Other raw materials will be purchased such as fertilizers and
insecticides. The cost of raw materials per hectare per season-year amounts to PHP 18,100.00 or
PHP 1,810,000.00 for the entire 100 hectares.
During off seasons, soya beans will be planted as an alternate crop which is expected to harvest 4
MTs per hectare per annum. The raw materials cost for the soy beans is projected to reach PHP
6,800.00 per hectare per season-year or PHP 680,000.00 for the entire 100 hectares.
For the period under study, the procurement cost is estimated to increase by 2.5% per annum.
This rate is the annual average rate of increase in prices for the past five years (2010 – 2014)
based on the data provided by the Bureau of Agricultural Statistics.
Machineries and Equipment: CCATMC will purchase the major machines and equipment from
CTMEL, a company based in Shanghai, China. The auxiliary equipment will be purchased from
local suppliers. The total cost of farm machineries and processing equipment is estimated to
reach PHP 17,480,000.00.
Building and Processing Center: The annual rent for the administrative office and processing
center is estimated to be PHP 552,000.00. Minor renovations will be done at an estimated cost of
PHP 103,400.00.
Office Equipment, Furniture, and Fixtures: The cost of equipment such as computers and
communication gadgets; furniture and fixtures such as tables, chairs and cabinets is estimated to
reach Two Hundred Thirty Five Thousand Pesos (PHP 235,000.00).
Waste Disposal: Rice husk and stalk are the waste materials from the rice farm. These waste
products can be sold to companies needing biomass materials. These waste products could also
be used as fuel for biomass power plant in nearby locations.
Production Process: (1) Seed selection - this is crucial for the reason that good seed produces
good harvest, (2) Land Preparation - will be done to ensure ideal soil condition for the plant.
After the land is cleared of unnecessary elements and properly plowed and leveled, (3)
Herbicide Application - can commence. (4) Nutrient Management - subsequently, fertilizers
will be applied to the soil - this will secure excellent growth of plants.
Crops will be sown or established after all the land preparation and conditioning has been done.
(5) Crop Establishment - will make use of a tractor with a mounted spreader. Once the seeds
are sown, (6) Installation of Sprinkler Irrigation - can take place, then a system of (7) Water
Management - proceeds from this process during the basal to flowering stages of the plants.
Then, (8) Mechanical Harvesting - can start when 90 – 95% of grains are already ripe. Once
harvested, the processing center will receive the paddy rice and will be moved to the (9) Drying
section using the mechanical dryer. Once the moisture of the palay reached the milling level, it is
moved to the (10) Milling section using rice mill, then to the (11) Bagging section - 20 kilo
bags, and finally to the (12) Hauling section ready for delivery to the buyer/s.
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5. PRODUCTION PROCESS
Timetable: It will take around two (2) months (from the receipt of the proceeds of the loan) to
set up the corporate rice farm which includes land preparation, installation of irrigation system,
and planting. After 110 days, or more than 3 months, harvest of matured rice will commence.
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Seed Selection Herbicide Application
Nutrient Management
Installation of Sprinkler
Irrigation
Land Preparation
Installation of Sprinkler
Irrigation
Water Management Mechanised Harvesting Drying
Delivery to Client Bagging Milling
Crop EstablishmentInstallation of Sprinkler
Irrigation

6. Conclusion: Upon careful consideration and analysis of the facts given above, the resource
availability and accessibility is present, the legal and economic considerations are incorporated,
and the optimal use of resources is expected to lead to an efficient way of allocation which will
produce the desired output at the lowest possible cost. Having established the basic issues in the
affirmative, pursuing the proposed project is feasible from the technical viewpoint.
Management and Organization Study
Pre-operating Period: The firms involved during the pre-operating period are:
(1) Climate Change Agricultural Technical Management Corporation (CCATMC) will
provide the technology and the management expertise, and will operate both the farm
and the processing plant. CCATMC team has a proven competence in agribusiness
including growing of crops, food production, packaging and marketing of agri-products,
and managing agricultural lands.
(2) CTMEL will provide the necessary equipment that guarantees superior product quality
and low maintenance cost. These equipments will be used in the land preparation and
harvesting of crops. CTMEL, having years of accomplishment in farming technology,
will ensure efficiency and productivity of the operations.
(3) PRIMEX Business Advisors, Inc. will provide its expertise for the preparation of the
feasibility study and for the arrangement of the loan package to finance the project.
Operating Period: CCATMC will establish a separate corporation which will manage the
operation of the rice farm and processing center. This corporation will be led by the Board of
Directors (BOD) which exercises corporate powers, conducts business, and controls all assets of
the corporation. Under the BOD is the Executive Management Group (EMG) which is
responsible for the efficient and effective administration and direction of the day-to-day business
affairs of the corporation. The BOD will be headed by the Chairman while the EMG will be led
by the President and Chief Executive Officer (CEO). The EMG consists of the President, CEO
and the two (2) Vice Presidents who are heads of the two (2) divisions namely: (1) Operations
Division, and (2) Administration Division. The Vice President for Administration is responsible
to plan and to conduct continuing training and development programs for the employees of the
company subject to the approval of the President. The Board of Directors will allocate the budget
for the training and development of personnel.
The RFPC will employ 100 farmers and 3 administrative staff with 6-day working days per week
with salaries and benefits totaling to PHP 66,282.00 to be paid on a weekly basis and a total sum
of PHP 3,206,664.00 for the first year of operation. Nueva Ecija has an abundant supply of
required manpower for the project.
Conclusion: Upon careful consideration of the competence of the investors and the firms
involved during the pre-operating period, and likewise the sound management and organization
plan during the operating period which covers the type of business organization, the
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7. organizational chart and functions of each division, the skills and numbers of labor required
specifying the duties and time to be devoted to the project, the qualifications, compensations, and
fringe benefits, the sources and availability of human resource inventory, and the training and
development of employees. Having established the basic issues in the affirmative, pursuing the
proposed project is feasible in the aspect of management and organization.
Financial Study
Total Project Cost: The total project cost (Initial Capital Outlay) of One Hundred Thirty-Two
Million Eight Hundred Thirty-One Thousand and Four Hundred Pesos (PHP 132,831,400.00)
which includes the capital expenditures (PHP 103,973,400.00) which is 78% of total investment,
the working capital requirement (PHP 22,560,000.00) which is 17% of total investment, and
miscellaneous (PHP 6,298,000.00) which is 5% of total investment.
Sources of Financing: Equity infusion from Investor/s of PHP 44,277,133.33 and Term Loan
from same Investor/s or Bank of PHP 88,554,266.67. The Term Loan is payable in 5 years at
bank rate of 8% with 1 year grace period on principal payment.
Financial Analysis: Having established the capital structure, the sources of financing and the
relevant assumptions, financial projections were prepared and evaluated in terms of profitability,
liquidity, payback, sensitivity, and break-even point. The tools of analysis using discounted cash
flows such as Net Present Value (NPV) and Internal Rate of Return (IRR) were also employed to
provide more objective basis for evaluating the proposed project. The below summarizes the
result with the criteria set at the start of the financial study.
Comparison of the Average Projected Result with the Benchmark Rates
Analytical Tools Benchmark Rate Average Result Decision
(Accept/Reject)
Net Profit Margin (NPM) 30% 78.80% Accept
Return on Total Assets (ROTA) 20% 22.82% Accept
Current Ratio 2 times 2.27 times Accept
Debt Ratio 60% 13.94% Accept
Payback Period (PP) 5 years 2 yrs. 7 mos. 20 days Accept
Net Present Value (NPV) Positive 154,812,557.09 Accept
Internal Rate of Revenue (IRR) 20% 31.77% Accept
Sensitivity Analysis: The sensitivity analysis will determine how the NPM, PP, IRR, and NPV
are affected by a change in the selling price. This is done by changing the value of the selling
price while holding all other input variable constant. (For the Optimistic Scenario, a price
increase of 20%. For the Pessimistic Scenario, a price reduction of 20%)
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8. *Average sales and rates for ten years
The results of financial projections for both Optimistic and Pessimistic Scenarios still satisfy the
financial feasibility criteria as far as NPM, PP, IRR, and NPV are concerned.
BEPAnalysis: Year 1 and onwards Figure at 100% of Normal Capacity
 Break-even Point (Volume)
Milled Rice: 1st
Crop = 164,349 kilograms
2nd
Crop = 164,349 kilograms
Soya Beans = 109,566 kilograms
 Break-even Point (Sales)
Milled Rice: 1st
Crop = PHP 7,395,724.23
2nd
Crop = PHP 7,724,423.08
Soya Beans = PHP 4,119,692.31
 Break-even Point (Selling Price)
Milled Rice: 1st
Crop = PHP 28.65
2nd
Crop = PHP 29.93
Soya Beans = PHP 23.94
Conclusion: The results of financial projections and analysis reveal that the proposed project is
very profitable, will remain liquid over the period under study, will operate efficiently, will be
able to service its debt on time without resorting to additional borrowings, and will remain
profitable even though the projected figures are subjected to the time value of money and
discounted at 10% per annum. Having established the foregoing results, pursuing the project is
very feasible from the point of view of finance.
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Variable Most Likely Scenario Optimistic Scenario Pessimistic Scenario
Net Sales* 47,166,825.00 62,115,965.00 32,217,685.00
NPM* 78.80% 81.16% 74.25%
PP 3 yrs & 20 days 1 yr. 11 mos. & 22 days 3 yrs. 9 mos. & 27 days
IRR 30.62% 42.30% 22.52%
NPV 109,321,800.58 234,471,051.44 75,154,062.74

9. This Presentation Memorandum of the Modern Rice Farm and Processing Center Project
is prepared for Investors, Creditors, and Partners at the initiative of PRIMEX Business
Advisors.
PRIMEX BUSINESS ADVISORS, Inc.
Unit 601 Prestige Tower, F. Ortigas, Jr. Road,
Ortigas Center, Metro Manila, Philippines
Tel. No.: +63 2 631 1041
Mobile No.: +63 917 422 4367
E-mail: info@primex.ph
Website: www.primex.ph
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10. This Presentation Memorandum of the Modern Rice Farm and Processing Center Project
is prepared for Investors, Creditors, and Partners at the initiative of PRIMEX Business
Advisors.
PRIMEX BUSINESS ADVISORS, Inc.
Unit 601 Prestige Tower, F. Ortigas, Jr. Road,
Ortigas Center, Metro Manila, Philippines
Tel. No.: +63 2 631 1041
Mobile No.: +63 917 422 4367
E-mail: info@primex.ph
Website: www.primex.ph
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