business plan on vermicomposting

Japan Social Development Fund The World Bank

JSDF Grant Social Inclusion and Alternative Livelihoods for the Informal Waste Sector Project (JSDF Grant No. TF012037)

No. 7-A South J Street, Quezon City http:/www.swapp.org.ph

Vermicomposting Project of San Jose Sico Landfill Multi-Purpose Cooperative

BUSINESS PLAN

San Jose Sico Landfill, Brgy. San Jose Sico, Batangas City

Prepared by: Carlos O. Tulali

May 1, 2014

(For internal use only)

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Contents Page Introduction ... 3 Background Summary of Financial Needs Estimated Investment Costs Executive Summary ... 4 Market Opportunity Benefits to the Community ..... 6 Community Development Human Development Company Analysis .. 9 Form of Business Ownership About the Cooperative Industry Analysis .. 10 Management Team .. 11 Organizational and Management Structure Manufacturing and Operations Plan ... 13 Location and Space Requirements Inventory Control Labor Force .. 14 Labor Requirements Marketing Plan .. 15 Target Market Market Size Distribution Plans Pricing Financial Plan .. 16 Estimated Investment Costs Source of Funds .. 17 Financial Analysis ..... 18 Projected Sales and Income APPENDIX 1. Vermicomposting Procedure ..... 20

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INTRODUCTION Background The solid waste problem and its detrimental impact on the environment and peoples health have been the major concerns of local government units (LGUs) since the enactment of Republic Act 9003 (Ecological Solid Waste management Act of 2001. This vermicomposting project supports the enactment of R.A. 9003 in which LGUs have the primary responsibility of implementing the law with proper segregation, collection, storage, treatment and processing (composting, recycling, reuse, recovery, etc.) in appropriate and environmentally-sound solid waste management facilities in accordance with ecologically sustainable development principles. RA 9003 also strategically envisions that all stakeholders, whether government institutions, private entities in commercial/industrial establishments, and every household must implement the solid waste management scheme. There are various methods of composting municipal and farm solid wastes or biomass applied in the Philippines. One such method that has become widely applied because of its simplicity, practicality and cost-effectiveness is vermicomposting, the process of composting with the use of earthworms. The increased adoption of vermicompost technology would lead to savings in farm inputs and an increase in environmental consciousness. Vermicomposting is a mesophilic process, utilizing microorganisms and earthworms, in which organic waste passes through the earthworm gut, whereby the resulting earthworm castings (worm manure) are rich in microbial activity and plant growth regulators, and fortified with pest repellence attributes as well. Earthworms consume various organic wastes and reduce the volume by 4060%. Vermicompost provides all nutrients in readily available form and also enhances uptake of nutrients by plants. Based on the increasing trend in the number of vermicompost technology adoptors, it was popularized among local entrepreneurs for the reason that it is considerably profitable and furthermore maximizes the flow of materials within the farm level.1 2 The process of utilizing the organic wastes within the farms leads to a more sustainable farming practices. The nutrients are retained and returned back to the soil through vermicompost application. Such practice would make the soil suitable for crop production and increases crop yield since the soil quality is improved.3 Agronomical studies show that earthworm-produced fertilizer is richer in plant nutrient than the soil, containing five times more nitrogen, seven times more phosphorus, 11 times more potassium, three

1 Aldridge, N. 2003. Black Gold: A guide to vermicomposting. Agriculture. Nov. pp. 24-25. 2 Felix, R.C. 2005. Vermiculture - Sugarcane producer casts his luck with earthworm castings. The Philippine Star. May 1, 2005. 3 Aranda, E., Barois, I., Arellano, P., Irisson, S., Salazar, T., Rodriguez, J. and J.C. Patron. 1999. Vermicomposting in the tropics. In: Earthworm Management in Tropical Agroecosystems. P. Lavelle, L. Brussard & P. Hendrix, Eds., CABI Publishing, United Kingdom, pp. 253-287.

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times more exchangeable magnesium, and one and a half times more calcium. It contains a high percentage of humus, which helps soil particles form into clusters creating channels for the passage of air and water. This kind of humus is found to be more effective compared to ordinary compost and chemical fertilizers and its use can lead to higher crop yield over a longer period of time. EXECUTIVE SUMMARY Vermicomposting is a waste management technology utilizing earthworms to convert organic wastes into high quality castings and vermicomposts of high economic values. Through the vermicompost production project, the proponent cooperative, San Jose Sico Landfill MPC, with members belonging to the informal waste sector (IWS), further supports the enactment of R.A. 9003 (Ecological Solid Waste Management Act of 2000) by working in partnership with their respective LGUs in implementing the law with proper segregation, collection, storage, treatment and processing (composting, recycling, reuse, recovery, etc.) in appropriate and environmentally-sound solid waste management facilities in accordance with ecologically sustainable development principles. RA 9003 also strategically envisions that all stakeholders, whether government institutions, private entities in commercial/industrial establishments, and every household must implement the solid waste management scheme. Vermicomposting is defined as the production of compost with the use of worms. It is a fast way to convert farm waste and biodegradable municipal waste into organic fertilizer. It degrades waste as vermi or earthworm (African night crawler) feed on and digest waste materials. Vermicomposting results in a better quality product that is produced in only 4-6 weeks compared to ordinary compost that is produced in 8-12 weeks. Revenues or earnings derived from the vermicomposting systems be it primary benefits or secondary were valued and treated as benefits. Primary benefits are those outputs directly produced by the project while secondary benefits are those stemming from the direct outputs. The Benefits that can be derived from this project are the following:

selling of earthworms and vermicompost; utilization of vermicompost as organic supplement and soil conditioner as substitute for

inorganic fertilizers; production of organic crops; and minimization of wastes through recycling into usable forms; increase in employment and greater economic activity in the farm level; increased value of adjacent properties as a result of a cleaner environment; decrease wastes movement to dump sites; increase savings/revenues for the government; good neighbor relations due to increase job availability; consumption of safe organically produced crops; and, pollution abatement.

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The San Jose Sico Landfill Multi-Purpose Cooperative, one of the World Bank-JSDF projects beneficiary cooperatives, would establish a vermicompost production project at the San Jose Sico Landfill, Brgy. San Jose Sico, Batanga City. Through this project, the cooperative, aims to provide alternative livelihood for its 200 members and at the same time, support the National Organic Agriculture Program (NOAP) of the Department of Agriculture (DA) in its goal to promote organic farming. The project will also be able to help protect the environment in support of the countrys Ecological Solid Waste Management Act of 2000. The biodegradable municipal and household wastes, aside from the farm wastes from nearby communities, will serve as sources of substrates for the worms in the coops vermicompost production facility. The total investment for the project amounts to Php 1.803,000.00 to cover start-up capital and operating expenses of the coop-managed vermicomposting facility and backyard composting projects of members. The initial capitalization in starting a vermicomposting business will depend on the scale (small-small-scale/backyard: Php 6,000.00, large-scale: Php 50,000.000). Aside from the establishment of the organization-managed vermicomposting facility, members of the coop may undertake backyard vermicomposting, the process where organic municipal wastes and farm wastes are transformed into organic fertilizer by the worms, with only P6,000 (P5,000 for 10 kilos of earthworms and P1,000 for hollow blocks and nets). Typically 5,000-7,500 metric tons (MT) mix of animal manure and organic waste is required to produce 3,000 MT vermicompost. Animal manures, biogas sludge, baggase, municipal solid waste and range of agricultural residues serve as good raw materials for vermicomposting. MARKET OPPORTUNITY Vermicomposting technology has been in the country since 1978. However, only few people adopted it and some ceased their operation. Its low adoption until now is due to the lack of market linkages and high cost of earthworms. But once the market have been identified, then its potential would be tremendous since the vermi products command high prices in the market. Vermicompost can be sold from Php 10.00 to 25.00 per kilogram while earthworms are from Php 500.00 to Php 1,500.00 per kilogram. Some sellers repackage their products with starter kits and reading materials but with higher price. Some vermicomposting adoptors, aside from producing and selling their products, are also engaged in conducting training and producing other products (i.e. vermitea, vermimeal) derived from the main vermi products. With such activities, they received more benefits than selling vermicomposts and compost worms. Even during the promotion of the technology, these people get paid for just sharing their experiences and practices in vermicomposting. The existing local market for vermicompost are mainly agricultural producers and farmers who slowly but increasingly use this as an alternative to chemical fertilizers because demand for organically produced food crops is also increasing. Organic fertilizer has likewise increased in use as result of steep increases in the price of commercial fertilizer. These developments work in favor of

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vermicomposting. Aside from the fact that no imported inputs are required in vermicomposting, producing their own fertilizer makes the farmers less vulnerable to changes and fluctuations in the prices of other commodities particularly chemical farm inputs. There is practically no risk at all in producing vermicompost whether for one's use or surplus production. The following are the other potential markets for vermicompost:

Direct sale to end users. This includes farmers groups and subdivisions in nearby cities and municipalities;

Bulk sale to producers and distributors of organic fertilizer that needs vermicast as one of its primary components; and

High-end market in urban areas due to the popularity of organically grown farm produce among the rich residing in posh villages and other high-end residential areas.

It is in the marketing and utilization of vermi-based products that has the most impacts that encompasses both socio-economic and environmental dimensions. Farmers can save on the use of chemical fertilizers and pesticides. They have the opportunity to improve the condition of the soil, increased yield of high quality crops resulting to more profit, help the environment by replenishing natural resources, plus helping many people by giving them jobs in vermi farms. In addition, excess vermicompost can be marketed commercially, while the surplus growth of earthworm biomass can also be sold to other farmers and households who wanted to start their own vermicomposting venture. Such practice would lead to economic development in the countryside and savings for the government through reduction in the use of imported fertilizers. Equitable distribution of income among the farmers would result to economic growth with equity. BENEFITS TO THE COMMUNITY Economic Development Aside from the establishment of the coop-managed vermicomposting facility, members of the cooperative, especially the waste pickers and sorters from the informal waste sector (IWS), may undertake household vermicomposting. After six months, 10 kilos of worms can produce 300 kilos of vermicompost. Assuming a farm gate selling price of P10 per kilo, a monthly revenue of P3,000 is earned. Less monthly expenses of P1,500, monthly net income reaches P1,500. Worms double every six months with a corresponding doubling of the vermicompost business. This means a yearly net return of P28,680.00 from an investment of P6,000 per vermi bed per year or a 368.63 percent return on investment (ROI). One can opt to sell the worms at P500 a kilogram. A higher financial and social ROI can be achieved if vermicomposting is used for organic agriculture. Compared to inorganic fertilizers, vermicompost is less expensive, improves rather than destroys soil fertility, increases the value of farm produce and provides healthier food for the consumers.

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In terms of economic viability, vermicomposting will be a good source of income aside from the various benefits which can be derived from its various products. Aside from the economic gains, savings will also be derived by using the product itself and its derivatives. The vermicompost contain higher percentage (nearly twofold) of both macro and micronutrients than the garden compost. It has good sale potential over range of crops i.e. agricultural, horticultural, ornamental, vegetables, etc. Vermicompost has the added advantages of being more convenient, practical and economical than other similar composting systems. For one, it can be done at either the household or commercial level with minimal labor and capital requirements. The tools and implements needed for the operation are available locally and are sold by many commercial firms. Local agro-machinery shops can also fabricate the necessary equipment (e.g. mechanical shredder). Community Development During the production stage, large volume of wastes is needed to produce large amount of vermicompost needed to fertilize large tracts of agricultural lands. These wastes can be derived from all possible sources: households, farms, communities, markets, and industries. In the vermicomposting process, wastes are not dumped or transported to dumpsites. Wastes are managed effectively by reducing waste transport and elimination of burning waste in the backyards or farmlands. Therefore, pollution and greenhouse gas emission are reduced that would result to improved environmental management and ecological integrity maintenance. Through the vermicompost production project, it is expected that the cooperative will be able to promote equal opportunities for its most vulnerable members, the waste pickers and sorters, especially the women beneficiaries, to establish backyard vermicomposting and their household members to benefit from project services. These benefits will include training and employment to be provided through the coops vermicomposting project. As agribusiness opportunities in production, processing, and marketing of the vermicompost increase, there is an incentive for the waste pickers and sorters and women in the community to participate and benefit from income-generating opportunities and employment through the project. Vermicompost or the castings of the earthworms is an excellent soil enhancer and bioactive fertilizer for organic farming. Earthworms can also be made into feed for fish or other domesticated animals. Vermicomposting can also help reduce the amount of biodegradable wastes in the San Jose Sico landfil. The production of vermicompost will also contribute to the promotion of organic farming and in restoring the fertility of acidic soils resulting from organic matter depletion and overuse of chemical fertilizers in Batangas and nearby provinces. Through vermiconposting, adoptors can recycle their own resources and create an effective fertilizer in the process. The extra worms that are produced can be used as feed for poultry and fish, thus helping other local businesses.

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The advantages of this technology for the community include:

1. Recycling of organic wastes. 2. Production of energy rich resources. 3. Reduction of environmental pollution. 4. Provision of job opportunities for women and jobless members of the coop and the IWS

community. 5. Improvement of soil pH. (vermicompost acts as a buffering agent). 6. Improvement in the percolation property of clay soils (from the compost's granular nature). 7. Improvement of the water holding capacity in sandy soils. 8. Release of exchangeable and available forms of nutrients. 9. Increase of oxidizable carbon levels, improving the base exchange capacity of the soil. 10. Improvement of the nitrate and phosphate levels. 11. Encouragement of plant root system growth. 12. Improvement in the size and girth of plant stems. 13. Early and profuse plant flowering 14. Creation of a substitute protein in poultry and fish feed.

After project financing, the sources of raw materials needed in producing vermicompost will be cheaper and always available in the project communities. With its low production cost, its selling price can be cheaper compared to inorganic fertilizer, making it more competitive in the market. As a result, farmers will be able to buy their farms needed fertilizer and increase their production volume. Human Development The stages of technology can be divided into three stages, namely, (1) vermicomposting knowledge dissemination through trainings, seminars and exposures; (2) production of different vermi-based products; and, (3) vermi-based products marketing and/or utilization. As early as knowledge dissemination, the target beneficiaries receive benefits which affect their way of thinking with regards to managing their wastes and soil fertility. The adoptors will be given options on ways to manage their wastes efficiently and they will not be forced to adopt the technology but through their own will. With the process, the target beneficiaries will be empowered through the provision of various opportunities to choose from. Even without technology adoption, target beneficiaries will gain much knowledge through the process of information technology transfer that they can use in one way or the other with regards to waste management and farming. Through informal education will equip the target beneficiaries with new knowledge and better opportunities in farming system and waste management. Vermicomposting is safe and is not hazardous to the health of the farmers. In fact, the farmers' health is promoted because by using vermicompost, they avoid exposure to toxins and other harmful chemicals.

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The project shall promote beneficiary participation to trigger grassroots mobilization and social inclusion of the target beneficiaries from the informal waste sector (IWS) around specific themes like enterprise formation, organic farming, poverty alleviation, and womens participation. COMPANY ANALYSIS Form of Business Ownership The vermicompost production project shall be undertaken by the San Jose Sico Landfill Multi-Purpose Cooperative that is duly registered with the Cooperative Development Authority (CDA). In the cooperative, member share capital represents individual member commitment to the cooperative form of business. It also identifies the individual members financial stake. It is withdrawn only when the member leaves the cooperative. Some other forms of member contributions, usually related to patronage, are more variable but once given cannot be withdrawn and hence are a particularly useful form of cooperative capital. In addition to institutional capital and member capital, the cooperative can make use of external sources of funds to run its vermicomposting operations. These non-member sources of funds may include cooperative or commercial banks, suppliers, government or donor agencies. External funding for the vermicomposting business may be provided in different ways:

as a grant as a short-term loan as a long-term loan as trade credit offered by a supplier.

About the Cooperative The San Jose Sico Landfill Multi-Purpose Cooperative (SJSL MPC) is duly registered with the Cooperative Development Authority (CDA) under RA 9520 (Cooperative Code of 2008). As of end 2013, the SJSL MPC has a total membership of 212, with a total capital build up (CBU) amounting to PhP1,051,443.00. In 2013, the coop has applied for amendments of its bylaws and articles of cooperation with the CDA, to increase its authorized capital from 1 million pesos to PhP5 million and the individual members subscribed capital from PhP1,000.00 to PhP5,000.00. Selling of recyclables from the municipal solid wastes that they collect is the coops main source of income. The coop supports the solid waste management program of Batangas City by providing garbage collection services to select commercial establishments in the city. Currently, the coop also provides rice and productive loans to its members. Other income-generating activities of the coop include concrete hollow blocks production and provision of agricultural production loan to members.

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The coops gross revenues in 2013 was PhP3,218,673.00 (compared to PhP3,336,071.00 in 2012) with a net surplus of PhP893,124.11 (before statutory allocations for the reserve fund, education & training fund, and optional fund). The coop has acquired a lot located in the San Jose Sico landfill where they established their principal office, and concrete hollow blocks factory. They propose to establish their vermicompost production facility within the same lot. INDUSTRY ANALYSIS Vermiculture or the science of breeding and raising earthworms was introduced in the Philippines in the late 1970s4 and gained popularity in the 1980s5. It started when Dr. Rafael D. Guerrero, the Executive Director of the Philippine Council for Marine Research and Development (PCAMRD) became interested with the technology because of the need for alternative high-protein feeds for fish. In the 1980s, the dissemination of the technology was focused on boosting worm production basically for fishmeal, however, the cost of worms was still too high and becoming too expensive as feeds for the fishermen and hatchery owners because during that time the cost of commercial feeds was still comparatively low. The environment-friendly method of vermicomposting became popular again in recent years because it provided the opportunity for worm raisers to produce a good source of protein for feeds and at the same time convert farm and household wastes into organic fertilizers or vermicompost. Vermicompost or vermicast is an odorless, organic material containing adequate quantities of nitrogen, phosphorous and potassium (NPK) and several micronutrients, which are essential for plant growth. It became popular with organic farmers because it helps plants grow faster and more vigorous even without the application of commercial fertilizer.6 Although, the vermiculture industry collapsed in 1984 due to the absence of an appropriate technology according to Tan (1985), producers of organic fertilizers and commercial farms are now utilizing the technology to produce high quality bio-organic fertilizers and highly demanded organically-produced high value crops. Based on the guidelines issued by the Fertilizer and Pesticide Authority (FPA), organic fertilizer refers to any product of plant and or animal origin that has undergone decomposition through biological, chemical and or any other process as long as the original materials are no longer recognizable, free from plant or animal pathogens, soil like in texture. It contains not less than 20% organic matter (o.m) oven-dry basis and can supply nutrients to plants. All other materials that fall short of these requirements shall be classified as soil conditioners or amendments whichever is applicable.

4 Guerrero, Rafael III. 1979. The Potential of Earthworm Culture. Greenfields (August 1979). 5 Tan, Narciso. 1985. Vermiculture in the Philippines. 6 http//www.jains.com

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According to the FPA, 6,271 metric tons of organic fertilizers were produced and 6,309 metric tons were sold in 2006 by 48 companies, most of them in Metro Manila. Actual production and sales vary from year to year and 1992 was a record breaking year with a production of 73,212 metric tons (MT) but sales for the year was only 17,138 MT. The record breaking sale was in 1995 at 28,090 MT tons with production figures of only 21,769 MT. MANAGEMENT TEAM Structural characteristics of the cooperative show how the business will be managed and how it differs from other types of business:

a) Nature of the coop enterprise i) User-benefit principle: benefits are transferred to the members based upon the

percentage of use or patronage ii) User-ownership principle: members own the organization and they are obliged to

provide financing (CBU) in proportion to their use of the coop services because their organization has to acquire assets in order to operate and expand

iii) User-control principle: governance of the coop remains with the owner-member implying that the members have to be aware that the achievement of their coops objectives does not depend solely on the hired managers but also on their own behavior and active participation

b) The coordination process: coordination is attained through the flow of information as having a continuity that is stable (the coop is organized to provide goods and services to its members who delegate power to the Board of Directors (BOD) who in turn hire management and delegate power

c) Democratic decision making: ensures that the coop operates in members interest. Key members of the cooperative management team (COMAT): 1. General Manager

The general manager shall: Oversee the overall day to day business operations of the cooperative by providing general

direction, supervision, management and administrative control over all the operating departments subject to such limitations as may be set forth by the board of directors or the general assembly;

Formulate and recommend in coordination with the operating departments under his/her supervision, the coops annual and medium term development plan, programs and projects, for approval of the board of directors, and ratification of general assembly;

Implement the duly approved plans and programs of the cooperative and any other directive or instruction of the board of directors;

Provide and submit to the board of directors monthly reports on the status of the coops operation vis-a-vis its target and recommend appropriate policy or operational changes, if necessary;

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Represent the cooperative in any agreement, contract, business dealings, and in any other

official business transaction as may be authorized by the board of directors; Ensure compliance with all administrative and other requirements of regulatory bodies; and Perform such other functions as may be prescribed in the by-laws or authorized by the

general assembly. 2. Accountant

The accountant of the cooperative, who shall be under supervision and control of the general manager shall: Install an adequate and effective accounting system within the cooperative; Render reports on the financial condition and operations of the cooperative monthly,

annually or as may be required by the board of directors and/or the general assembly; Provide assistance to the board of directors in the preparation of annual budget; Keep, maintain and preserve all books of accounts, documents, vouchers, contracts and

other records concerning the business of the cooperative and make them available for auditing purposes to the chairperson of the audit committee; and

Perform such other duties as the board of directors may require. 3. Bookkeeper

The bookkeeper of the cooperative who is under supervision and control of the accountant shall: Records and update books of accounts; Provide assistance in the preparation of reports on the financial condition and operations of

the cooperative monthly, annually or as may be required by the board of directors and/or the general assembly;

Keep, maintain and preserve all books of accounts, documents, vouchers, contracts and other records concerning the business of the Cooperative and make them available for auditing purposes to the chairperson of the audit committee; and

Perform such other duties as the board of directors may require. 4. Cashier

Handles all the cash transactions Receives payments to the coop by cash and cheques Checks daily cash accounts Guides and solves queries of customer Maintains monthly, weekly and daily report of transactions Receives loan payments (in cash or checks) Issues official receipts (ORs) for every payments Makes sure that all cash/checks received are deposited to the bank within the day of

payment (or on the next banking day if payment is received after banking hours) Acts as petty cash custodian Prepares and submits petty cash replenishment in an imprest petty cash system Issues checks and releases for payments, duly approved by the general manager Keeps petty cash vouchers (PCV) and other documents

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Prepares summary report for petty cash replenishment below 1,000.00 Maintains all issued blank checks and official receipts Issues ORs for all cash received by the Office Maintains an updated Cash Book Facilitates payment for all cash/check disbursements Shall stamp PAID all checks/cash vouchers and supporting documents every after

transaction that has been paid. Organizational and Management Structure:

GENERAL ASSEMBLY

Board of Directors Audit Committee

Accoun-tant

Cashier

Election Committee

Mediation & Conciliation Committee

Ethics Committee

Education & Training

Committee

Admnis-trative Officer

Other staff

Treasurer Secretary

Other staff

Book-keeper

Coop Management Team

General Manager

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MANUFACTURING AND OPERATIONS PLAN Location and Space Requirements The coops 300 square-meters vermicomposting facility shall be established within the lot owned by the cooperative located within San Jose Sico landfill. Backyard vermicomposting shall be undertaken by members who would be adoptors and are qualified to apply for enterprise or productivity loan from the cooperative. The loan shall be utilized by the member-borrower as working capital and for the construction of his/her backyard vermicompost production unit and purchase of needed raw materials, tools and equipment. Facilities Needed and Other Requirements Site Selection - select a site that is shaded and well-drained with availablewater supply. Temperature requirement is 25C-29C undershade. Worms die when direct to sunlight.

Small Scale Production - Fixed capital needed would consist of hoes and spade, bolos and scythes and the worm bins.

Commercial Production - provision of working space for drying andbagging Materials

Worms African night crawlers Worm bins or worm beds - used worm bins/worm beds which are made of any material

available whether iron bars with plastic lining, old plastic basins, bamboo slats or concrete hollow blocks. Precautions should be taken to ensure that they are protected from direct sunlight, too much water and natural predators.

Tools

Gardening gloves Strainer/Sifter Spading fork Shovel

Raw Material/Packaging Material

Vermi (Worms) Foodwastes, fruit/vegetable trimmings and peelings, dry leaves and stems, animal manure Vermi Bed or earthworm bed (Dimension: 2x1x0.3m) Black plastic garbage bags Plastic sacks (50-kg. capacity)

Equipment

Mechanical shredder (optional)

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LABOR FORCE Labor Requirements During the production stage, different products are derived from the vermicomposting system but the main products are vermicompost and compost worms that can further be transformed into other usable products such as animal feed and vermin tea. In the production process, vermicomposting will require much labor if mechanical shredder is not available. From segregation, chopping, bin preparation, maintenance until harvesting, vermicomposting requires at least one part time worker for a small scale vermicomposting system. Most members of the cooperative are waste pickers or sorters who can also work at the coop-managed vermicompost production site while their household members can help in the production activities of their backyard vermicompost. MARKETING PLAN Target Market The existing local market for vermicompost are mainly agricultural producers and farmers who slowly but increasingly use this as an alternative to chemical fertilizers because demand for organically produced food crops is also increasing. Organic fertilizer has likewise increased in use as result of steep increases in the price of commercial fertilizer. These developments work in favor of vermicomposting. Aside from the fact that no imported inputs are required in vermicomposting, producing their own fertilizer makes the farmers less vulnerable to changes and fluctuations in the prices of other commodities particularly chemical farm inputs. There is practically no risk at all in producing vermicompost whether for one's use or surplus production. The following are the other potential markets for vermicompost:

Direct sale to end users. This includes farmers groups and subdivisions in nearby cities and municipalities;

Bulk sale to producers and distributors of organic fertilizer that needs vermicast as one of its primary components; and

High-end market in urban areas due to the popularity of organically grown farm produce among the rich residing in posh villages and other high-end residential areas.

Market Size According to the Fertilizer and Pesticide Authority (FPA), 6,271 metric tons of organic fertilizers were produced and 6,309 metric tons were sold in 2006 (so far their latest figure) by 48 companies, most of them in Metro Manila. Actual production and sales vary from year to year and 1992 was a record

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breaking year with a production of 73,212 metric tons (MT) but sales for the year was only 17,138 MT. The record breaking sale was in 1995 at 28,090 MT tons with production figures of only 21,769 MT. By establishing vermiculture/vermiconposting units, entrepreneurs can recycle their own resources and create an effective fertilizer in the process. The extra worms that are produced can be used as feed for poultry and fish, thus helping other local businesses. Distribution Plans The vermicompost can be directly sold to farmers groups or cooperatives who are engaged in organic farming, industrial plants and real estate developers (subdivisions and condominiums) with landscaping and organic food production activities, and the Department of Agriculture. Pricing Vermicompost can be sold from Php 10.00 to 25.00 per kilogram while earthworms are from Php 500.00 to Php 1,000.00 per kilogram. Some sellers repackage their products with starter kits and reading materials but with higher price. Some vermicomposting adoptors, aside from producing and selling their products, are also engaged in conducting training and producing other products (i.e. vermitea, vermimeal) derived from the main vermi products. With such activities, they received more benefits than selling vermicomposts and compost worms. Even during the promotion of the technology, these people get paid for just sharing their experiences and practices in vermicomposting. Advertising and Promotion Efforts The cooperative will actively participate in organic agriculture promotion activities carried out by organic food products and organic farming enthusiasts, in partnership with the DAs organic agriculture program at the LGU and national levels. FINANCIAL PLAN Estimated Investment Costs The total investment for the project amounts to Php 1.803,000.00 to cover start-up capital and operating expenses of the coop-managed vermicomposting facility and backyard composting projects of members. (Table 1). The initial capitalization in starting a vermicomposting business will depend on the scale (small-small-scale/backyard: Php 6,000.00, large-scale: Php 50,000.000). Aside from the establishment of

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the organization-managed vermicomposting facility, members of the coop may undertake backyard vermicomposting, the process where organic municipal wastes and farm wastes are transformed into organic fertilizer by the worms, with only P6,000 (P5,000 for 10 kilos of earthworms and P1,000 for hollow blocks and nets). Table 1. Budgetary Requirements and Sources of Funds for the Proposed Vermicomposting Project

Component/Activity DA Funds Counterpart

Fund (SJSL MPC)

Total

EXTENSION SERVICES AND TRAINING Salaries and travel expenses of 1 extension worker @ 5,000.00/month x 36 months

Php180,000.00 Php180,000.00

Training and workshops @ P100/day x 200 pax x 3 days

Php60,000.00 Php60,000.00

Subtotal A Php60,000.00 Php180,000.00 Php240,000.00 HOUSEHOLD LEVEL VERMICOMPOSTING Material and biological inputs: Hollow blocks and nets for 200 units worm beds @ Php250/unit

Php50,000.00 Php50,000.00

10 kg. worms @ Php500/kg x 200 members Php1,000,000.00 Php1,000,000.00 Direct Costs: Labor @ Php300 x 2 laborers x 100 days Php60,000.00 Php60,000.00 400 units shovel @ Php 300/unit Php120,000.00 Php120,000.00 Subtotal B Php1,170,000.00 Php60,000.00 Php1,230,000.00 VERMICOMPOST PRODUCTION FACILITY Equipment: 1 units mechanical shredder @ Php 150,000/unit Php150,000.00 Php150,000.00 3 units weighing scale for 500 kg. @ Php 10,000.00/unit

Php30,000.00 Php30,000.00

3 units weighing scale for 40 kg. @ Php 5,000/unit Php15,000.00 Php15,000.00 3 units bag closer @ Php 6,000/unit Php18,000.00 Php18,000.00 Subtotal C Php213,000.00 Php213,000.00 Land and Building: 300 sq. m. open shed warehouse @ Php20,000.00/sq. m.

Php57,000.00 Php3,000.00 Php60,000.00

Land (Php20,000/year x 3 years

Php60,000.00 Php60,000.00

Subtotal D Php57,000.00 Php63,000.00 Php120,000.00 GRAND TOTAL Php1,500,000.00 Php303,000.00 Php1,803,000.00

SOURCE OF FUNDS With a total project cost of Php 1,803,000.00, the cooperative shall request for grant funding from the Department of Agriculture (DA) amounting to Php 1.5 milion. The cooperatives counterpart or equity shall amount to Php 303,000.

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The cooperative may also derive project funds from any or all of the following sources:

a. Members share capital contribution; b. Loans and borrowings including deposits; c. Revolving capital build-up which consist of the deferred payment of patronage refund or

interest on share capital; d. Subsidies, grants, legacies, aids, donation and such other assistance from any local or foreign

institution, public or private; e. Retentions from the proceeds of services acquired /goods procured by members; and f. Other sources of funds as may be authorized by law.

Borrowing The board of directors, upon approval of the general assembly, may borrow funds from any source, local or foreign, under such terms and conditions that best serve the interest of the cooperative. Revolving Capital To strengthen the capital structure of the cooperative, the general assembly may authorize the board of directors to raise a revolving capital by deferring the payment of patronage refunds and interest on share capital, or such other schemes as may be legally adopted. To implement this provision, the board of directors shall issue a revolving capital certificate with serial number, name, rate of interest, date of retirement and such other privileges or restrictions as may be deemed just and equitable. Retentions The general assembly may authorize the board of directors to raise additional capital by deducting a certain percent on a per unit basis from the proceeds of services acquired and/or goods procured by members. FINANCIAL ANALYSIS Projected Sales and Income Aside from the establishment of the coop-managed vermicomposting facility, members of the cooperative, especially the waste pickers and sorters from the informal waste sector (IWS), may undertake household vermicomposting. After six months, 10 kilos of worms can produce 300 kilos of vermicompost. Assuming a farm gate selling price of P10 per kilo, a monthly revenue of P3,000 is earned. Less monthly expenses of P1,500, monthly net income reaches P1,500. Worms double every six months with a corresponding doubling of the vermicompost business. This means a yearly net return of P28,680.00 from an investment of P6,000 per vermi bed per year or a 368.63 percent return on investment (ROI). One can opt to sell the worms at P500 a kilogram.

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Table 2. Projected Production Cost, Revenue and Income per Vermi Bed per Year through for Backyard Vermicomposting

Particulars Amount in Php A. Annual Revenue (1 Vermi bed) 90 kg. vermicompost x 12 cycles = 1080 kg. of vermicompost @ P10 00/kg. 10,800.00 Additional Revenue from selling worms from 1 vermi bed: 4 kg. of vermi x 12 cycles = 48 kg. of vermi @ P500.00/kg.

24,000.00

TOTAL REVENUE 34,800.00 B. Annual Production Cost African Night Crawler Worms 2 kg. @ Php 500.00/kg. 1,000.00 Labor (12 cycles @ Php 250.00/cycle) 3,000.00 Sack (2 sacks x 12 cycles @ Php 4.00/pc.) 120.00 Shovel 500.00 Spading fork 500.00 Strainer/sifter 200.00 Gardening gloves 200.00 Black plastic bags 100.00 Fixed Investment: Vermi Bed (2x1x0 3 m.) 400.00 ESTIMATED TOTAL PRODUCTION COST 6,020.00 Revenue 34,800.00 Less: Production Cost 6,120.00 ESTIMATED NET INCOME 28,680.00 Assumptions: - 1 vermi bed = 12 harvests in a year. - Vermi bed (Dimension: 2x1x0.3 m.) - African Night Crawlers is sold at P500/kl. - Harvesting is done every after 30 days. - 150 kilos of biodegradable wastes + 2 kilos of worms = 90 kilos of vermicompost - Compost sells at P10.00/kl. - 2 kg. of vermi per bed would yield 4 kg. of additional vermin

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APPENDIX 1. Vermicomposting Procedure 1. Collect biodegradable materials such as food wastes, fruit/vegetable trimmings, peelings, and

dry leaves and stems. 2. Shred/grind the food wastes, fruit/vegetable trimmings, peelings, and dry leaves and stems. 3. Mix old animal manure and chicken droppings (2 months old) with shredded vegetable waste.

This will improve the nutrient content of the finish product. Do not use fresh manure for the ammonia produced will give discomfort to the worms.

4. Sun-dry these materials for at least three days and let them undergo partial fermentation. 5. Weigh the shredded grinded materials before putting in the compost bed to determine ratio of

compostables and worms. 6. Before stocking the earthworms, make sure that all materials in the vermi bed are prepared. 7. Moisten the bedding with water and cover it with black plastic garbage bag, old sacks, net, or

banana leaves to start "anaerobic process", which is completed after 1-2 weeks. 8. After the anaerobic process, remove the cover and stock the vermi bed with earthworms. 9. Maintain the vermi beds' moisture content and temperature through regular checking. Protect

the worms from predatory animals. 10. Vermicompost is harvested when most of the materials have been consumed by the worms. This

takes about 30-45 days depending on environmental and culture conditions. 11. In harvesting, separate the "vermi" from the vermicompost either manually (handpicking) or

using a strainer/sifter. 12. Properly pack vermicompost in sacks and store in a cool dry place. 13. Harvested/sifted vermi from the vermi beds may either be used for the next vermicomposting

cycle or for expansion by constructing additional vermi beds. 14. The offspring or produce of the initial vermi in the vermi bed can also be sold to would-be

vermicompost producer or to fish pond owner as fish meal.

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BUSINESS PLANIntroduction ... 3Executive Summary ... 4Company Analysis .. 9About the CooperativeIndustry Analysis .. 10

Management Team .. 11Manufacturing and Operations Plan ... 13Inventory ControlLabor Force .. 14Marketing Plan .. 15Financial Plan .. 16Source of Funds .. 17Financial Analysis ..... 18INTRODUCTIONEXECUTIVE SUMMARYCOMPANY ANALYSISAbout the CooperativeINDUSTRY ANALYSIS

MANAGEMENT TEAMMechanical shredder (optional)LABOR FORCEMARKETING PLANFINANCIAL PLANFINANCIAL ANALYSIS

business plan on vermicomposting

Documents

solid waste management

solid waste problem

japan social development

organic waste

quezon city http

alternative livelihoods

south j street

financial analysis