Profitability Sustainabilityof Vermicomposting Business

ST.
PAUL UNIVERSITY DUMAGUETE

6200 Dumaguete City
Philippines
GRADUATE SCHOOL
CHAPTER I
PROBLEM AND ITS SCOPE
Introduction
Vermicomposting is a promising business. Earthworms can be sold to the
following markets: bait and tackle shops, large-scale vermicomposting facilities, worm
growers just entering the business, institutions and businesses that do on-site
vermicomposting of their food scraps and other organic materials (includes prisons,
hospitals, schools, colleges and universities, restaurants, grocery stores, office
buildings, etc.), farmers desiring to vermicompost animal manure (including livestock
and poultry farms, rabbitries and horse stables), composters, organic gardeners or
fisher people wanting to raise worms for their own use, growers with orders too large to
fill from their own stocks, private laboratories, universities, and high schools for research
and classroom needs.
Businesses that need worms as food for animals:fish hatcheries, tropical fish
stores, pet stores, zoos (w/ exotic fish and birds), game bird breeders, frog farmers and
poultry growers. The vermicompost can also be sold in bulk (by cubic yard) or bagged
in a variety of compost and soil blends to the following: home improvement centers,
nurseries, landscape contractors, greenhouses, garden supply stores, grocery chains,
flower shops and general public (https://composting.ces.ncsu.edu/vermicomposting).
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Vermicompost industry has much fragmented, manufacturers are mostly in the
India and Southeast Asia. Compared to 2014, Vermicompost market managed to
increase sales by 24.89% to 38.09 M USD worldwide in 2015. Overall, the
Vermicompost performance is positive, despite the weak economic environment
(https://www.marketwatch.com/press-release/vermicompost-market-2019)
In the Philippines, there are more than 200,000 stakeholders in the industry with
an estimated value of P500M. The National Vermicompost Production Program (2006-
07) - funded by the NEDA with P17.5 M - conducted by State Colleges and Universities
in 16 regions coordinated by PCAMRD-DOST( Guerrero, 2016). Aside from the private
enterprises, the country has 84 organic fertilizer trading posts which are operated by the
cooperatives, associations and local government units (http://organic.da.gov.ph/index.
php/2016-12-02-08-47-30/vermi-composting-facilities).
The Trade Union Congress of the Philippines (TUCP) has lauded the local governments
of Quezon City and Makati City for their efforts in promoting small-scale vermiculture as
a means to provide a new livelihood opportunity for the unemployed, including idle
housewives and persons with disabilities (PWDs)(https://businessmirror.com.ph/ 2015/
07/13/small-scale-vermiculture-boosts-livelihood). In Barangay Kibudoc, Matalam,
North Cotabato, Vermicomposting has recently become a major source of income
for farmers as they are now producing and selling tons of vermicompost only barely
a year of full operation. The vermicomposting project which jointly funded with
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P400,000 by the Mindanao Rural Development Program (MRDP) of the Department of
Agriculture and the provincial government of North Cotabato. Now, they have local and
national buyers coming from different towns in North Cotabato and provinces in the
Soccsksargen region as well as from the Visayas and Luzon (http://rfu12da.gov.ph/
index.php/21-news).
In Negros Oriental, there are already entrepreneurs that are actively engaged in
vermicomposting business . Saint Paul University Dumaguete and Foundation
University make use vermicomposting for income generating project. Local government
units, particularly Bayawan and Bais Cities are also implementing said project.
Vermicomposting Business is potential in the province specially that it is adopting the
Organic Agriculture Act of 2010 by implementing the Organic Agriculture Ordinance in
Negros Oriental. Said government has allocated some P10 million in funds to support
the organic agriculture program. The local executive wants to make sure there are
enough funds to sustain the organic agriculture program because this will prevent his
constituents, especially the poor in the hinterlands, from similar exposure to unhealthy
foods. The promotion and sustainability of the organic agriculture program is part of the
provincial government’s thrust to bolster food security and continue to improve the living
conditions of its people (https:// businessmirror.com.ph/2014/10/31/gov-degamo-
reiterates-use-of-organic-fertilizers/).
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Vermicompost is one of the best options among organic wastes as a soil
amendment input. It is a feasible alternative to increase farm income, however,
research and situational analysis in operation and marketing of vermicompost fertilizer
in the province is insufficient. Though the sale of organic fertilizer is evident but the
commercialization aspect still needs some information particularly in profitability and
sustainability. Thus, this study is conceptualized to further know the relationships that
exist between the profile of the vermicomposting business and its profitability as well as
business sustainability.
Theoretical Background of the Study
This study is anchored on the Frictional Theory of Profits, Innovations Theory of
Profits, Risk and Uncertainty Bearing Theory of Profits, Managerial Efficiency Theory of
Profits, Sustainability Theory and Social Entrepreneurship Theory.
1. Frictional Theory of Profits:
According to this theory, there exists a normal rate of profit which is a return on
capital that must be paid to the owners of capital as a reward for saving and investment
of their funds rather than to consume all their income or hoard them. In a static
economy where no unanticipated changes in demand or cost conditions occur, in long-
run equilibrium the firms would be earning only normal rate of profit on their capital and
entrepreneurial talent. This explains that shocks or disturbances occasionally occur in
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an economy as a result of unanticipated changes in product demand or cost conditions
which cause disequilibrium conditions. It is these disequilibrium conditions that brings
into existence positive or negative economic profits for some firms. Thus, according to
frictional theory, economic profits exist for some time because of frictional factors which
prevent an instantaneous adjustment of the system to the new conditions. When
economic profits are made in the short run, more firms will enter the industry in the long
run until all economic profits are driven down to zero (that is, firms will be making only
normal return or profits on their capital investment).On the other hand, when firms are
making losses (i.e. negative profits), some firms will leave the industry. This will cause
price of the product to rise so that losses are eliminated and the remaining firms make
only normal profits (Stigler, 1961)
2. Innovations Theory of Profits
This theory of profits explains that economic profits arise because of successful
innovations introduced by the entrepreneurs. It has been held by Joseph Schumpeter
that the main function of the entrepreneur is to introduce innovations in the economy
and profits are reward for his performing this function. His very wide connotation of
innovation is any new measure or policy adopted by an entrepreneur to reduce his cost
of production or to increase the demand for his product(https://business
jargons.com/schumpeters-innovation-theory-of-profit.html).
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3. Risk and Uncertainty Bearing Theory of Profits
This theory explains that profits are necessary rewards of the entrepreneur for
bearing risk and uncertainty in a changing economy. So this is functional theory of
profits. Profits arise as a result of uncertainty of future. Entrepreneurs have to undertake
the work of production under conditions of uncertainty. In advance they have to make
estimates of the future conditions regarding demand for the product and other factors
which affect price and costs. In view of their estimates and anticipations, they make
contract with the suppliers of factors of production in advance at fixed rates of
remuneration (Knight, 1921).
4. Managerial Efficiency Theory of Profits
Lastly, this theory recognizes that some firms are more efficient than others in
terms of management of productive operations and successfully meeting the needs of
consumers. Firms with average level of efficiency earns average rate of return. Firms
with higher managerial skills and production efficiency are required to be compensated
by above-normal profits (i.e. economic profits). Therefore, this theory is also called
compensatory theory of profits(http://www.economics discussion.net/profit/top-5-
theories-of-profit-explained/6101).
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5. Sustainability Theory
Theories of sustainability attempt to prioritize and integrate social responses to
environmental and cultural problems. An economic model looks to sustain natural and
financial capital; an ecological model looks to biological diversity and ecological
integrity; a political model looks to social systems that realize human dignity. Religion
has entered the debate with symbolic, critical, and motivational resources for cultural
change (Jenkins, 2008).
Social Entrepreneurship Theory
The behavioral theory of social entrepreneurship studies the contextual factors
that lead to social venture creation, the underlying organization dynamics and
structures, and how these typologies measure social impact, mobilize resources, and
bring about sustainable social change. Studying the underlying motivations and
conditions upon which social enterprises evolve will help in extending the research on
management of social outcomes and impacts (El Ebrashi, 2013).
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Frictional
FrictionalTheory
Theoryof
ofProfits
Profits(Stigler,
(Stigler,1961))
1961))
Innovations
InnovationsTheory
Theoryof
ofProfits
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1942)
Risk
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andUncertainty
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ofProfits
Profits(Knight,
(Knight,1921)
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Profitability
ProfitabilityAnd
And
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Oriental
Sustainability Sustainability Theory (Jenkins, 2008)
Social Entrepreneurship Theory (2013)
Figure 1. The Theoretical Framework
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Conceptual Framework of the Study
This study sought to determine the profitability and sustainability in
vermicomposting business and its impact towards social entrepreneurship In Negros
Oriental. Five specific questions can be answered from the above problem.
Section 1 will know the profile of the Vermicomposting Business in terms of type of
ownership, average number of bags of Vermicast produced per month, average number
of bags of vermicast sold per month, average number of bags used for own farm, price
of vermicast per bag of 50 kgs., number of employees, raw material used in
vermicomposting, type of customers,
Section 2 inquired on the extent of profitability of the vermicomposting business within
five years.
Section 3. determined the extent of and sustainability of the vermicomposting business
within five years.
Section 4. asked If there a significant relationship between profile of vermicomposting
business and extent of profitability
Section 5. asked If there a significant relationship between profile of vermicomposting
business and extent of sustainability
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Profile
Profile of of the
the Vermicomposting
Vermicomposting Business
Business in in terms
terms of:
of:
Type
Type of of Ownership
Ownership
Family
Family Enterprise
Enterprise Profitabili
Profitabili
Corporation
Corporation ty
tyAnd
And
Educational
Educational Institution
Institution
Cooperative Sustaina
Sustaina
Cooperative
Local
Local Government
Government Unit Unit bility
bility Of
Of
Others
Others (please
(please specify
specify ____________)
____________) Vermico
Vermico
Average
Average NumberNumber of of bags
bags of
of Vermicast
Vermicast produced
produced per per month
month mm
Average
Average NumberNumber of of bags
bags of
of Vermicast
Vermicast soldsold per
per month
month posting
posting
Average
Average NumberNumber of of Bags
Bags used
used for
for own
own farm
farm Business
Business
Price
Price of of Vermicast
Vermicast per per bag
bag of
of 50
50 kgs.
kgs. And
And ItsIts
Number
Number of of Employees
Employees
Raw Impact
Impact
Raw material
material used
used inin vermicomposting
vermicomposting
Type
Type of of customers
customers Towards
Towards
farmer
farmer Social
Social
business
business enterprise
enterprise Entrepre
Entrepre
government
government institution
institution neurship
neurship
cooperative
cooperative In
In Negros
Negros
Others
Others (please
(please specify________________________
specify________________________ Oriental
Oriental
2.
2. What
What is is the
the extent
extent ofof profitability
profitability of
of the
the business
business within
within five
five years?
years?
3.What
3.What is the extent of sustainability of the business within five
is the extent of sustainability of the business within five years?
years?
4.
4. Is
Is there
there aa relationship
relationship between
between profile
profile ofof vermicomposting
vermicomposting business
business and
and extent
extent of
of
profitability?
profitability?
5.
5. Is
Is there
there aa relationship
relationship between
between profile
profile ofof vermicomposting
vermicomposting business
business and
and extent
extent of
of
sustainability?
sustainability?
Figure 2 – Schematic Diagram of the Conceptual Framework
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.Review of Related Literature
The legal basis of the this study were the Organic Agriculture Act of 2010 and the
Organic Agriculture Ordinance of Negros Oriental. The literature covered were the
profitability and sustainability in vermicomposting business and the impacts towards
social entrepreneurship.
1. Vermiculture Business
Vermiculture has two high-value products: earthworms that sell for around P1,000
per kilo, and vermicompost that fetches roughly P800 per 50-kilo sack, according to the
Earthworm Sanctuary, which has been providing free training to would-be
vermiculturists.Buyers of earthworms and vermicompost in the city setting include
commercial growers of decorative plants and flowers, the ornamental fish sector and
other worm breeders.
The Department of Budget and Management report on grassroots participatory
budgeting, said organic-fertilizer production using earthworms and urban gardening are
now regarded as poverty-reduction strategies by many local governments in Metro
Manila. Growing earthworms can be quite gainful, considering that a kilo of live worms
can easily multiply into 32 kilos within a month, Commercial gardeners of ornamental
plants and flowers prefer vermicompost, which is more potent, environment-friendly and
also cheaper compared to chemical fertilizers that cost anywhere from P1,800 to
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P2,500 per 50-kilo sack. Metro Manila is way behind other urban districts around the
world in propagating vermiculture to employ more people and help reduce garbage,
including food and paper scraps and other organic waste produced by households,
restaurants, offices, schools and factories,” said Herrera, former chairman of the Senate
Committee on Labor, Employment and Human Resources Development
(https://businessmirror.com.ph /2015/07/13/small-scale-vermiculture-boosts-livelihood-
generates-employment-tucps-herrera-says/)
1.1 Effects of Vermicomposting to the Land
From ancient times, earthworms are known as the integral friend of farmers.
Considering the importance of earthworm in maintaining the fertility by the reversal of
the land, earthworms are very helpful to the smaller and medium farmers by playing the
vital role of supplying fertilizers which are multiple in quantity than the dung manure. In
soil, annually earthworm build thick surface of 1 to 5 mm as fertilizer using their body
cell.
1.1.1 Improve physical quality of land
Earthworms feed on the available crop residue and carry that residue along with
them on the ground, of which 5 to 10 percent of their food is used up by them and the
rest is excreted through their body cell as compost in the night time. This unused
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excreted material is so much benefit to the soil which is fine structure pellet. These
pellets help in raising the fertility power of soil and also increase the air efficiency of soil.
Research on vermiculture has reported that at every year, earthworms reverses 2 to
250 tons of soil which result as 1 to 5 mm thick surface of the land, increasing annually
by the earthworms.
Permanent pellets like soil particle are generated because of regular plowing of
land by farmer and reversal of soil by the earthworms. These pellets like soil particle
improve the soil structure and air circulation which further help the soil to do some
biological activity, humus formation and the nitrogen fixation of the soil on which they
are implemented.
This improvement in the structure of land increase the storage capacity and also
help to better the drainage power of soil which finally result in increasing the
groundwater levels of land.

Vermicompost also provides favorable soil climate for the crop, since there is the
availability of heat and microenvironment.

1.1.2 Improving Chemical Quality and Fertility of the Land
Soil fertility provides all the nutrient required for the growth of the plant, which
basic potential of any soil to cultivate any crop. Higher the fertility power of soil, greater
is the production as yield. Soil collect that nutrient from the crop residue on the field of
land and from the microorganism, whose combined system result as the nutrient for the
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plant. Micro-organism first decomposes all the biological residue to the degraded
remnant and then that semi degraded remnant is converted to the vermicompost by the
earthworms. So in this way, by incorporating micro-organism and earthworms turns the
biological substance to the optimum fine pellet like compost by decomposing them
which is highly beneficial is raising the soil fertility.
1.1.3 Improve the organic quality of the land
Basically, any land has some specific organic matter present in that land along
with the micro-organism. The quantity may differ from land to land and region to region.
The presence of earthworms is the indication of the fertile land. The fertility depends on
the number and quantity of these earthworms along with their species. There are
various species of earthworms found in different areas.
One can easily measure the biological properties of any land by measuring the
numbers of earthworms, their diversity and their rate of activation along with the
complex series of microorganism present found in that land. The activity of earthworm
with the dissection of the crop residue is the major feature of the land fertility.
Earthworms, with the help of the crop residue available on the field of land, can provide
carbon to the crop as an energy source and supply sustainable nutrient to the plant or to
the soil by creating enzymes, vitamins, amino acids and the humus in the soil. In this
way, earthworm plays a vital role in maintaining the fertility power of soil, since
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earthworms are the best ever friends of the farmers (https://agrifarmingtips.
com/vermicompost-preparation/)
Social ventures measure the fertilizer it also helps improve soil fertility. The
worm castings contain higher percentage of both macro and micronutrients than the
garden compost. Apart from other nutrients, a fine worm cast is rich in NPK which are in
readily available form and are released within a month of application. Vermicompost
enhances plant growth, suppresses disease in plants, increases porosity and microbial
activity in soil, and improves water retention and aeration.
Vermicompost also benefits the environment by reducing the need for chemical
fertilizers and decreasing the amount of waste going to landfills. Vermicompost
production is trending up worldwide and it is finding increasing use especially in
Western countries, Asia-Pacific and Southeast Asia (https://www.bioenergyconsult.
com/tag/benefits-of-vermicompost/).
Vermicomposting provides lots of benefits to the environment. Its process
produce compost by utilizing earthworms to turn the organic waste into high-quality
compost that consists mainly of worm cast in addition to decayed organic matter
( Devi and Prakash 2015). It is an organic fertilizer rich in NPK, micronutrients and
beneficial soil microbes (nitrogen fixing and phosphate solubilizing bacteria and
actinomycetes), is a sustainable alternative to chemical fertilizers, which is an
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excellent growth promoter and protector for crop plants (Chauhan and Singh 2015).
Today vermicompost is an important component of organic farming systems,
because it is easy to prepare, has excellent properties and is harmless to plants.
Because of the many benefits given by vermicomposting becomes an industry
where many are already into business.
2. Profitability
Small firms have been the chief source of creating new jobs in many countries. It
would not be an exaggeration to mention that the overall health of the economy
depends, to a large extent, on the health of the SME sector in a country. According to
the Central Bank of Sri Lanka (1998), the Cottage and Small Scale Industries (CSSI)
sector plays an important role in economic development through creation of
employment opportunities, the mobilization of domestic savings, poverty alleviation,
income distribution, regional development, training of workers and entrepreneurs,
creating an economic environment in which large firms flourish and contribute to export
earnings ( Lingesiya, 2012).
2.1 Frictional Profits
Prof. G.J. Stigler, a winner of Nobel Prize in economics sums up the profits in the
following words: “Firms in a competitive industry may receive profits because of a state
of disequilibrium. These profits can arise even if all entrepreneurs are identical for
disequilibrium can characterize a whole industry. If prices are higher, or costs lower than
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were anticipated, entrepreneurs will receive a return in excess of the alternative product
of their resources.
If prices were lower or costs higher than were anticipated, entrepreneurs will
receive less than the alternative product of their resources i.e., negative profits. Positive
profits may persist for a long time if firms outside the industry are show to enter the
industry and negative profits can persist as long as specialized equipment yields more
when used in the industry than used elsewhere, say as scrap.”
2.2 Innovative Profits
innovations can be divided into two categories. First types of innovations are
those which reduce cost of production. In this first type of innovations are included the
introduction of a new machinery, new and cheaper technique or process of production,
exploitation of a new source of raw materials, a new and better method of organizing
the firm, etc.Second types of innovations are those which increase the demand for the
product. In this category are included the introduction of a new product, a new variety or
design of the product, a new and superior method of advertisement, discovery of new
markets etc. If an innovation proves successful, that is, if it achieves its aim of either
reducing the cost of production or increasing the demand for a product, it will give rise to
profits.Profits emerge because due to successful innovations either cost falls below the
prevailing price of the product or the entrepreneur is able to sell more and at a better
price than before.
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It is here worth mentioning that profits caused by a particular innovation tend to
be competed away as others imitate and also adopt it. An innovation ceases to be new
or novel, when others also come to know of it and adopt it. When an entrepreneur
introduces a new innovation, he is first in a monopoly position because the new
innovation is confined to him only, He therefore makes large profits. When after some
time others also adopt it in order to get a share, profits will disappear. Now if the
conditions prevailing at the time of the sale of output could be known or predicted when
the entrepreneurs enter into contractual relationships with the factors of production
about their rates of remuneration, there would have been no uncertainty and, therefore,
no profits. Thus uncertainty, that is, ignorance about the future conditions of demand
and supply, is the cause of profits.
It should be noted that positive profits accrue to those entrepreneurs who make
correct estimate of the future or whose anticipations prove to be correct. Those whose
anticipations prove to be incorrect will have to suffer losses. Apart from the innovations
which are introduced by the entrepreneurs themselves, changes which cause
uncertainty are:
(1) Changes in tastes and fashions of the people,
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(2) Changes in Government policies and laws especially taxation, wage and labor
policies and laws, liberalization of imports, etc.
(3) Movements of prices as a result of inflation and depression,
(4) Changes in income of the people,
(5) Changes in production technology,
(6) Competition from the new firms that might enter the industry. All these changes
cause uncertainty and bring profits, positive or negative, into existence
((https://business jargons.com/schumpeters-innovation-theory-of-profit.html)
2.3 Risk and Uncertainty Bearing Profit
Risks of factory catching fire, occurrence of any theft or accident which may
cause huge losses to the entrepreneur are the kinds of risk which can be ensured
against on payment of an insurance premium which forms a part of the cost of
production. But there are risks that cannot be insured. These non-insurable risks relate
to the outcome of price-output decisions made by the entrepreneur. Due to uncertainty
his decisions may prove to be right or wrong.
What output he should produce, what price, higher or lower, he should fix for his
output. In view of uncertainty about future conditions he cannot be sure whether, given
his price and output decisions, he will make profits or losses.
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Similarly, he has to bear risk as a result of his decision regarding mode of
advertisement and expenditure made on it, regarding variation in product design. For
taking all these decisions he has to guess about demand and cost conditions and there
is always a risk of incurring losses as a result of his business decisions.
No insurance company can insure the entrepreneur against business losses
which result from his particular price, output, product design, and advertisement
expenditure which fall upon him due to adverse changes that may take place in the
economy. Thus, it is non-insurable risks that involves uncertainty and gives rise to
economic profits, positive or negative.
Risk and uncertainty theory explains why super-normal profits (that is economic
profits) are required by the firms who operate in such fields as petroleum exploration
which involves relatively higher risks. Likewise, expected return on stocks has to be
higher than the interest on bonds because of greater uncertainty and riskiness of
investment in stocks of the companies(http://www.economics discussion.net/profit/top-5-
theories-of-profit-explained/6101).
2.4 Managerial Efficiency
The historical perspective suggests that within scientific management, managerial
effect is a raise in employee productivity (Taylor, 1911) while administrative
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management place emphasis on subordination within a company (Fayol, 1930). The
idea of formalization of management occurs within the quantitative management
perspective so the managerial effect is measured in monetary units. Some researchers
suggest measuring managerial efficiency as the ratio of additional profit company from a
decision to the cost of the decision (Egorshin, 2008). This approach has limited
usefulness as the connection between the decision and financial results is not always
direct. To improve managerial efficiency, Svirina (2010) suggested the balanced
approach should be used. This approach is based on the idea that a single manager
cannot measure all the activities a manager should undertake. Managerial balance
should be achieved in all cases. While creating a balanced measuring system
managers should pay attention not only to the way management functions are
performed but also to the specific features of the industry a company performs in. These
features can be used to identify what company’s activity indicators are to be included in
the measuring system. While there is a relation between the balance of management
and financial results of the company, there also are relations in resources put into
performing different functions. Enterprise’s which management can be described as
balanced or somewhat misbalanced tend to perform better financial results and cover a
larger market share than misbalanced ones. Balanced companies also tend to hold an
acceptable level of EBITDA (Earnings before interest, tax, depreciation and
amortization) to debt which proved to be an important issue during current crisis. The
best companies viewed themselves as putting too much effort into control. That is
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usually due to the fact that there is inter management misbalance, for instance, top-
managers pay no attention to motivation while managers of lowest level spent a lot of
time on that issue. That inner misbalance forces top-management towards losing trust
and thus over performing control. In general when emphasis on motivation increases,
the first function to decrease is control. The more resources that are put into motivation
the more self-organized a company becomes so the need to perform the organizational
function decreases. The same is true for motivation and coordination and organization
and coordination. Thus those functions are to be performed not only towards the inner
environment of the company but also for suppliers and customer relations with which
need balanced managerial performance as well (Svirina, 2010).
3. Sustainability
The challenge many companies face is to condense large amounts of
environmental, economic and social information into a limited number of key indicators.
Sustainability performance indicators (SPIs) or sustainable development indicators are
used to measure a company’s performance and to monitor and report on future
progress. SPIs can be grouped in three areas covering either the economic,
environmental or social aspects of sustainability. The Economic performance indicators
include the company turnover, profit, quantity of products sold, etc. The
Social performance indicators comprise the labor practices, human rights, broader
issues affecting consumers, community, and other stakeholders in society. The
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Environmental performance indicators compose the greenhouse gas emissions, water
consumption, waste output, etc. (https://www.presustainability.com/ sustainability
-consulting/sustainable-practices/sustainability-strategy/sustainability-performance-
indicators)
3.1Economic Models.
Economic models propose to sustain opportunity, usually in the form of
capital. According to the classic definition formulated by the economist Robert
Solow, we should think of sustainability as an investment problem, in which we
must use returns from the use of natural resources to create new opportunities of
equal or greater value. Social spending on the poor or on environmental protection,
while perhaps justifiable on other grounds, takes away from this investment and so
competes with a commitment to sustainability. With another view of capital,
however, the economic model might look di fferent. If we do not assume that
“natural capital” is always interchangeable with financial capital, argue Herman
Daly (1996) and other proponents of ecological economics, then sustaining
opportunity for the future requires strong conservation measures to preserve
ecological goods and to keep economies operating in respect of natural limits.
These considerations complement an ecological model. From a di fferent
perspective of the relation between opportunity and capital, spending on the poor
might be regarded as a kind of investment in the future. According to the economist
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Amartya Sen’s “development as freedom” dictum (1999), we create options for the
future by creating options for today’s poor because more options will drive greater
development. In this political model of sustainability, sustaining opportunity for the
future requires investing in individual dignity today. This approach complements the
political model.
3.2 Ecological Models
Ecological models propose to sustain biological diversity and ecological
integrity. That is, rather than focusing on opportunity or capital as the key unit of
sustainability, they focus directly on the health of the living world (see Rolson
1994). Within this model, there are two major ways of deciding which ecological
goods to sustain. From an anthropocentric point of view essential natural resources
should be sustained, as should those ecological systems and regenerative
processes on which human systems rely. From an ecocentric point of view species
should be sustained for their intrinsic value, as should ecological systems as
generators of creatures with intrinsic value. In policy, as noted above, strong and
weak views may converge.
3.3 Political Models
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Political models propose to sustain social systems that realize human
dignity. Concerned with the way in which local and global environmental problems
jeopardize human dignity, these models focus on sustaining the environmental
conditions of a fully human life. Environmental justice and civic environmentalism
represent one strategy of this model; by focusing on environmentally mediated
threats to human life they point to necessary ecological goods or sustainable
environmental management schemes (see Ageyman 2005). Other strategies within
this model, such as agrarianism or deep ecology, involve more substantive visions
of the human good. Ultimately, these models recommend sustaining the cultural
conditions needed to realize ecological personhood, civic identity, or even personal
faith through ecological membership (see Plumwood 2002, Wirzba 2003). One
subset of the political model takes a pragmatist’s approach and suggests that we
must maintain conditions for keeping open the debate about sustainability (Jenkins,
2008).
4. Social Entrepreneurship
El Ebrashi (2013) cited that the most important criteria for ‘‘qualifying’’ as a
social venture is establishing the organization to create a certain social impact and
measure the success of the organization based on the achievement of this social
impact. Social ventures do not focus on outputs, or in other words, service
provision. Social entrepreneurs create sustainable change and they measure the
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success of their organizations based on the creation of this change. Furthermore,
Candra et.al (2016), suggest that social entrepreneurs rarely adopt a single
strategy but instead combine two or more strategies for their strategic plans.
Second, the diverse strategies can be reduced into strategies and fitted into a
framework that depicts the tangibility/symbolism, specificity/generality, and
elite/mass participation of the strategies. They also stressed that the strategies
vary in importance (i.e., density) across time and fields of practice. Some of the
most popular strategies in recent years include building facilities, using ICT/mobile
technologies, providing loans and financial support, encouraging training/education,
engaging in partnerships with companies promoting sustainable practices,
enforcing legal remedies, engaging with religious and civic leaders for the cause,
and advocating through the media.
Related Studies:
There have been lots of studies that prove that vermicomposting is a good
business. The study on economics of vermicompost production and marketing indicated
that it is profitable enterprise with better net profits and benefit cost ratio. Direct
marketing of vermicompost from producer to consumer was found to be the strongest
marketing channel however marketing through cooperatives and trader was also found
in few instances. Marketing through cooperatives was found to be more efficient as
compared to marketing through trader because both producers' share and marketing
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efficiency index was higher for former as compared to later. From the financial viability
study we can conclude that vermicompost production is feasible enterprise. Appropriate
supply chain of organic waste and cow dung can attract people to produce
vermicompost on a large scale. At present context demand for vermicompost is
increasing and government is also giving subsidy which is appreciative. Based on the
findings of the study, the following suggestions are made: Cooperative marketing
should be promoted and there should be provision for better market information
(Devkota, Deepa et. al, 2014).
The research results of Ceyhan (2015) also showed that the profitability of
vermicompost production facility was high, while the likelihood of loss was less.
Vermicompost production facility with approximately 130 thousands of US dollars initial
investment provided net present value of 1.28 million of US dollars during the economic
life. The internal rate of vermicompost production facility was 23%. Research results
also revealed that production cost of vermicompost was $0.2 per kilogram. Since
vermicompost production facility investment with high profitability and low level of risk
was good investment alternatives facing with low level of competitive in market, the
study suggest to investors who has good back grounding about sector that they should
pay attention to marketing system and market observation about organic input market.
With respect to Social Entrepreneurship, Purkayastha (2012) concluded that
community engaging micro-enterprises based on vermicomposting and vermiculture
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have been proven to be working successfully once implemented. Such units can be set
up in more numbers adapted to local needs and resource bases available to the rural
community, in order to ensure sustainability of livelihood. The small scale, labor
intensive projects, controlled by the local community might be a not much sophisticated
in terms of technology usage and modernism. However, they employ much simpler and
cost effective technologies to engage local communities and are emerging to be less
volatile in economic downturns. It is becoming a worldwide practice to use organic
waste for agricultural purposes, because it not only helps reduce the volume of
landfilled waste and Green House Gas (GHG) emissions but also provides a valuable
agronomic resource. Vermicomposting also helps reduce the problems of chemical
fertilizers which are dangerous to soils, crops and even human health. As it is easier to
set up a vermicompost unit, more and more agri-based communities need to be
involved in such projects which not only would solve the problems of waste
management and chemical pollution but also is a source of income for the producers
which can be sold after being properly packaged and labeled. Reha, et. al. (2018) study
confirmed the benefits of vermicomposting. Their study showed that 50%
vermicompost treatment showed great potential to increase the performance, growth
of chilly plant and improvement of soil quality. Chilly plants grown in vermicompost
amended soil showed enhanced growth rate when compared to plants treated with
plant growth regulators (PGR). The study positively highlights the importance of
organic farming; therefore, vermicompost may be put to good use as a natural fertilizer
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for cereals and vegetable crops for increased production and for sustainable
agricultural systems.Likewise, Sequeira, V. and Chandrashekar, J.S. (2015) also
concluded in their study that vermitechnology of municipal solid waste using the
Eudrilus sp. yields good quality vermicompost that is rich in soil quality enhancing
microorganisms. Though this particular variety of worms are not advisable to the
vermicomposting of food and vegetable wastes separately, when mixed with various
other kinds of organic wastes and treated yield good results. Onwosi et al. (2017) futher
concluded that relevant strategies are required to improve and optimize composting
process for the benefits of the rural communities.
THE PROBLEM
Statement of the Problem
This study seeks to determine the profitability and sustainability of
vermicomposting business and its impact towards Social Entrepreneurship in Negros
Oriental. Specifically, this will answer the following questions:
1.What is the profile of the Vermicomposting Business in terms of:
1.1 Type of Ownership
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1.1.1 Family Enterprise
1.1.2 Corporation
1.1.3 Educational Institution
1.1.4 Cooperative
1.1.5 Local Government Unit
1.1.6 Others (please specify ______________________)
1.2 Average Number of bags of Vermicast produced per month
1.3 Average Number of bags of Vermicast sold per month
1.4 Average Number of Bags used for own farm
1.5 Price of Vermicast per bag of 50 kgs.
1.6 Number of Employees
1.7 Raw material used in vermicomposting
1.8 Type of customers
1.8.1 farmer
1.8.2 business enterprise
1.8.3 government institution
1.8.4 cooperative
1.8.5 Others (please specify___________________________
2. What is the extent of profitability of the business for the last five years?
3.What is the extent of sustainability of the business for the last five years?
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4. Is there a relationship between profile of vermicomposting business and extent of
profitability?
5.Is there a relationship between profile of vermicomposting business and extent of
sustainability?
No test of hypothesis in this since complete enumeration will be initiated.
Significance of the Study
There are lots of stakeholders that can benefit the results of this study:
Vermicomposting Businessmen – The result of the study can help learn information
regarding the status of vermicomposting business in the province. They are the primary
beneficiary of the intervention that can be made as recommended by the result of the
study.
Local Government Units – The result of this study can help the LGU know the best
practices made by other LGUs and make use of the significant factors that can help
enhance the utilization of waste for the betterment of the community.
Farmers – The result of this study may lead to more supply of organic fertilizer that can
help them reduce their cost for fertilization.
Colleges and Universities – The result of this study may enable them to transfer their
technologies to the LGU and the beneficiaries that can provide impact to the
stakeholders.
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Government Agencies – This study can help them be motivated to participate for they
have the important role in making the project sustainable
Future Researchers – The result of this study can help them come up with deeper and
more detailed researches that can provide more impact to the stakeholders.
Scope/Limitations of the Study
This study covered all vermicomposting businesses that were able to sustain for
at least five years in the Province of Negros Oriental. This included the six cities and
nineteen municipalities. This study was limited to the school year 2019-2020.
Research Methodology
Research methodology included the research design, research environment,
research respondents, research instruments, data gathering procedure and statistical
treatment of data..
1. Research Design
This study utilized the qualitative method of research where it relied on direct
communication with the person incharge of the vermicomposting business. This also
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used the quantitative methods where it used statistical analysis techniques to evaluate
data collected via surveys sing using the questionnaires as guide. Complete
enumeration was done to all vermicomposting projects that were used for business.
Correlational research design was also included to deepen the content of the study by
determining the relationships between the profile of vermicomposting business and
extent of profitability and sustainability.
2. Research Environment
Negros Oriental is located in the central part of the Philippines. It occupies the
south-eastern half of the island of Negros, with Negros Occidental comprising the
western half. It has a total land area of 5,402.30 km². A chain of rugged mountains
separates Negros Oriental from Negros Occidental. Unlike its sister province, which
belongs to the Western Visayas region, Negros Oriental belongs to the Central Visayas
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Figure 3. Map of Negros Oriental
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region. Negros Oriental faces Cebu to the east across the Tañon Strait and Siquijor to
the south-east. The Sulu Sea borders it to the south.
The six cities in the province are Bais, Bayawan, Canlaon, Dumaguete,
Guihulngan and Tanjay, The nineteen municipalities include: Amlan, Ayungon, Bacong,
Basay, Bindoy, Dauin, Jimalalud, La Libertad, Mabinay, Manjuyod, Pamplona, San
Jose, Siaton, Sibulan, Sta. Catalina, Tayasan, Valencia, Valle Hermoso and Zamanguita.
3. Research Respondents
The Vermicomposting Businesses were identified by getting information from the
government agencies that had the direct contact with the operators of said business
such as the Provincial/City/Municipal Agriculturist Offices. Other informants were also
the field personnel of the Agriculture Sector of the Philippine Statistics Office as well as
the respondents themselves.
The respondents of this study were the person in charge of the vermicomposting
projects that were actively engaged in business. They were interviewed using the
structured questionnaire as guide and actual observations were also done in the
vermicomposting projects.
4. Research Instruments
Personal Interview using the researcher made questionnaire (Appendix 5) as
guide were the instruments used in the study. This approach enabled the researcher to
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gather more detailed information regarding the business. Personal observation of the
vermicomposting projects was also done to have a clearer scenario of the projects
under study.
5. Data Gathering Procedure
After the approval of the research proposal, the researcher asked permission
from the Office of the University President thru the Dean of Graduate School and the
Vice President of Academic Affairs Saint Paul University Dumaguete to conduct a study
(Appendices 1). After the approval, the researcher tested the reliability of the
questionnaire (Appendix 5) by conducting pre-test in Negros Occidental which covered
from Kabankalan City to San Enrique. With 13 sample respondents, the questionnaire
was found reliable with Cronbach’s Alpha of 0.81 (Appendix 4).
6. Statistical Treatment of Data
The profile of the vermicomposting business was used with the frequency and
percentage distribution given the formula:
P = f /n x 100%
Where: P – percentage
f – frequency
n – number of samples
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The categories of qualitative responses in the extent of profitability and
sustainability of vermicomposting business was interpreted as follows: :
Rating Range Qualitative Description

5 4.21-5.00 Highest Extent
4 3.41-4.20 Higher Extent
3 2.61-3.40 Moderate Extent
2 1.81-2.60 Lesser Extent
1 1.00-1.80 Least Extent
The weighted mean was used in interpreting the extent of practices in
vermicomposting the biodegradable wastes with the following formula:
Weighted mean = Σwx/Σw
where: Σ = the sum of (in other words…add them up!).
w = the weights.
x = the value. (https://www.statisticshowto.datasciencecentral.com/weighted-mean/)
Spearman Rank Correlation was used in determining the relationship between
the profile of the city/municipality and the extent of profitability in vermicomposting. This
will include the average number of bags produced per month, average number of bags
sold per month, average number of bags used per month for own farm, average price of
vermicast per bag and number of employees. This non-parametric test was used to
measure the degree of association between two variables. This test does not carry any
assumptions about the distribution of the data and is the appropriate correlation analysis
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when the variables are measured on a scale that is at least ordinal. The following
formula is used to calculate the Spearman rank correlation:
ρ= Spearman rank correlation
di= the difference between the ranks of corresponding variables
n= number of observations (https://www.statisticssolutions.com/correlation-pearson-
kendall-spearman/).
Eta Correlation was used in determining the relationship between nominal and
scale or ratio data. Eta squared is the proportion of variance associated with one or
more main effects, errors or interactions in Analysis of Variance.
The formula is:
Eta2 = SSeffect / SStotal, where:
SSeffect is the sums of squares for the effect you are studying.
SStotal is the total sums of squares for all effects, errors and interactions in the ANOVA
study.
The formula can equivalently be:
Eta2 = SSbetween / SStotal (https://www.statisticshowto.datasciencecentral.com/eta-squared/)
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(Mukaka, 2012)
Operational Definition Of Terms
Business – is a commercial means of livelihood
Organic Farming - In this study, it means the use of ecologically based fertilizers
derived largely from biodegradable waste.
Profitability –yields good or helpful result in business
Social entrepreneurship- is the development social enterprise that provide solutions
to poverty of people and pollution of biodegradable solid waste.
Sustainability – In this study means being able to survive or continue in the business for
a long period of time
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Vermicomposting - It is a method of using worms to transform biodegradable waste into
a nutrient-rich fertilizer. It only takes two to three months to produce organic fertilizer
known as vermicast.
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CHAPTER II
PRESENTATION OF DATA, ANALYSIS AND INTERPRETATION
This chapter covers the tabulation and presentation of the data gathered, then the
detailed analysis and followed by the interpretation.
1. Profile of the Vermicomposting Businesses
The profile of the vermicomposting businesses includes the type of ownership;
number of bags produced, sold and used for own farm; and type of customers. Only 13
vermicomposting sustainable businesses were identified in the entire province of
Negros Oriental.
Table 1. Profile of Vermicomposting Businesses
Family Educational Cooperative Local Total

Enterprises Institutions /Associations Government
Type of Ownership Units
Frequency 7 2 2 2 13
Percent (%) 55 15 15 15 100
Vermicast Produced Number of 4,595 105 1,205 240 6,145
Per Month Bags(50kgs.)
Percent (%) 75 1 20 4 100
Number of Bags Sold Number of 4,269 32 10 240 4,551
/Month Bags(50kgs.)
Percent (%) 94 1 0 5 100
Number of Bags Used Number of 326 73 1195 0 1,594
for the Farm/Month Bags(50kgs.)
Percent (%) 20 5 75 0 100
Average Price/Bag (P) 258 350 175 168 238
Number. of Workers 33 4 15 21 73
Raw Materials Used 1,2,3,5 1,2,3 1,2,4 6 1,2,3,
5,6
Type of Customers 1,2,3,4 1,5,6 1,2,4 1,2,3 1,2,3,
4,5,6
Raw material used in vermicomposting Type of customers
1. Animal manure 4. Grass/Dry Leaves 1. Farmer 4. Cooperative/Association
2. Crop by product 5. Biodegradable Waste 2. Business Enterprise 5. Students
3. Industrial by product 3. Government Institution 6. Teachers
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Table 1 above shows that 55 percent (7) of the vermimicompost businesses were
owned by Family Enterprises and only 15 percent (2) each were owned by the
Educational Institution, Cooperative/Association and Local Government Units. This
means that majority of the vermicompost businesses were dominated by family
businesses.
These vermicomposting businesses were able to produce 6,145 bags per month.
About 75 percent were produced by the family enterprises and only 1 percent by the
educational institutions.
About 74 percent of the produce were sold and 94 percent were contributed by
the family enterprises with the cooperatives/associations contributed a little in
commercialization.
About 24 percent of the produce were utilized for farm by the producers and
these were led by the cooperatives/associations with a share of 75 percent. The local
government units did not utilize their produce for farm because the City/Municipal
Agriculture Offices had their own vermicomposting project to support their farming
activities.
The average price of vermicast was amounted to P238/bag with the educational
institutions sold at P350/bag and the local government units with the lowest price for
only P168/bag.
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The vermicompost businesses were able to employ 73 workers led by the family
enterprises which employed 33 workers and the least by the educational institutions
which only employed 4 workers.
The common raw materials used for vermicomposting were the animal manure
particularly from cattle and hogs. Crop by products were also utilized such as rice straw,
sugar cane tops, fruits and vegetable peelings and refuse. Biodegradable waste were
used by the local government units and in the case of Bayawan City, said waste were
allowed to decompose and when decomposed they were screened and use as
substrate or food for the vermi.
The common customers of the above businesses were the farmers, business
enterprises and government institutions.
2. Extent of Profitability of the Business for the Past Five Years
The indicators utilized for the extent of profitability were the achievement of
goals, the improvement of life standard, growth of business, market coverage ,
customers, collaborations with other entities and competency of workers.
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Table 2. Extent of Profitability of the Business for the Past Five Years
Weighted Description
Indicators Mean
1.Satisfaction in Business Growth including 4.15 Higher Extent

Achievement of Business Goal
2.Improvement in Life Standard after longer period in 3.69 Higher Extent

the business
3.Growth in Personal Income from the beginning of 4.08 Higher Extent

business
4.Improvement in saving capacity and accumulation of 3.85 Higher Extent

resources from the business
5. Growth in turnover over the past five years 3.85 Higher Extent
6.Enhancement of market coverage of business 3.54 Higher Extent

enterprises
7.Increasing the number of customers from the 4.08 Higher Extent
beginning of Business
8.Overcoming the actions of the competitors over the 4.08 Higher Extent
past 5 years
9.Achievement at business growth by facing the 3.69 Higher Extent

environmental challenge & strong competition
10.Organization enhance organizational performance by 3.77 Higher Extent

being attentive to external changes
11. Engaging in partnership with other 2.92 Moderate Extent

companies/organizations for the cause
12. Enhancement of employees’ competencies by 4.08 Higher Extent

conducting updated trainings
Composite 3.82 Higher Extent

Range Description Range Description
4.21 – 5.00 Highest Extent 1.81 – 2.60 Lesser Extent
3.41 – 4.20 Higher Extent 1.00 - 1.80 Least Extent
2.61 – 3.40 Moderate Extent
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Table 2 presents that the respondents perceived that the Profitability of their
vermicomposting businesses were at Higher Extent for the last five years as evidenced
by the Composite Weighted mean of 3.82. These were particularly displayed in
Satisfaction in Business Growth including Achievement of Business Goal, .Growth in
Personal Income from the beginning of business, Increasing the number of customers
from the beginning of Business, Overcoming the actions of the competitors over the
past 5 years, and Enhancement of employees’ competencies by conducting updated
trainings. These were proven by the weighted means of 5.15 and 4.08 respectively.
However, they were Moderate Extent only in . Engaging in partnership with other
companies/organizations for the cause as cited by the Weighted Mean of 2.92.
The findings of this study confirms with the study of Ceyhan (2015) which
concluded that the profitability of vermicompost production facility was high, while the
likelihood of loss was less Devkota, et. al, (2014) also concluded that vermicompost
production is a feasible enterprise from the financial viability. Appropriate supply chain of
organic waste and cow dung can attract people to produce vermicompost on a large
scale. Furthermore, growing earthworms can be quite gainful, considering that a kilo of
live worms can easily multiply into 32 kilos within a month (https://business
mirror.com.ph/2015/07/13/small-scale-vermiculture-boosts-livelihood-generates-employ
ment -tucps-herrera-says/)
same happen in the budget for 2020. Thus, there is a need for collaboration.
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On the partnership with other companies/organizations, a local government unit
and a family enterprise had the concern where the vermi producers and the agencies
concerned for the use of vermicomposed fertilizer lack collaboration that instead of
buying the organic fertilizer in compliance to the Organic Act of Organic Agriculture Act
of 2010 by implementing the Organic Agriculture Ordinance in Negros Oriental the
concerned agency purchased chemical fertilizer and same happen in the budget for
2020. Thus, there is a need for collaboration.
3. Extent of Sustainability of Vermicomposting Business for the Last

Five Years
Extent of Sustainability of vermicomposting business covered the economic,
social and environmental aspects. The extent of Social entrepreneurship of
vermicomposting projects can also be known.
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Table 3. Extent of Sustainability of Vermicomposting Business for the Last

Five Years
Indicators Weighted Description

Mean
1.Capitalization for the business have improved for the 3.62 Higher Extent
past five years.
2.Increasing in number of employees from the beginning 3.62 Higher Extent
of business
3.Ability of the business to keep the organization's best 3.69 Higher Extent
and most talented people
4.Standard of living of employees have improved 4.00 Higher Extent
5.Sufficient supply of raw materials for the business 4.31 Highest Extent
6.Level of customer satisfaction related to business 4.23 Highest Extent
activities
7.Conducting survey to measure satisfaction of the 4.00 Higher Extent
customers and carry out the necessary changes
8. Business contribution for the production of healthy 4.31 Highest Extent
crops.
9.Income of customers have improved brought by the 4.46 Highest Extent
vermicast they bought from the vermicomposting
business
10.Customers feedback on the improvement of soil fertility 4.54 Highest Extent
of their farm brought by the use of vermicast
11.No complaint of neighbors regarding the vermicompost 4.69 Highest Extent
project
12.Pollution is reduced brought by the vermicompost 4.77 Highest Extent
project.
Composite 4.19 Higher Extent
Range Description Range Description Range Description
4.21 – 5.00 Highest Extent 2.61 – 3.40 Moderate Extent 1.00 - 1.80 Least Extent
3.41 – 4.20 Higher Extent 1.81 – 2.60 Lesser Extent
The table above exhibits that the respondents perceived the Sustainability of their
Vermicomposting Business was at Higher Extent for the last five years as
demonstrated by the Composite Weighted Mean of 4.19. These were specifically true in
the improved standard of living of employees, conducted survey to measure
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satisfaction of the customers and carry out the necessary changes, and the ability of
their business to keep the organization's best and most talented people. These were
supported by the weighted means of 4.00, 4.00 and 3.69 respectively. Impressively, they
perceived that their business was in Highest Extent in reducing pollution, there was no
complaint of neighbors regarding the vermicompost project, and customers positive
feedback on the improvement of soil fertility of their farm brought by the use of
vermicast as cited by the Weighted Means of 4.77, 4.69 and 4.54 respectively.
The result of this study construed with the study of Reha, et. al. (2018) which
showed that 50% vermicompost treatment showed great potential to increase the
performance, growth of chilly plant and improvement of soil quality. The study
positively highlights the importance of organic farming; therefore, vermicompost may
be put to good use as a natural fertilizer for cereals and vegetable crops for increased
production and for sustainable agricultural systems.
4. Relationship Between Profile of Vermicomposting Business and Extent of

Profitability
The correlation between Profile of Vermicomposting Businesses and the Extent
of Profitability were analyzed using Eta Correlation for Nominal Variables and
Spearman Rho for RationVariables.
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Table 4.1 Correlation Between Profile With Nominal Variables and

Extent of Profitability
Eta
Nominal by Interval (Dependent) Variables Strength of Association
Correlation
Type of Ownership - Extent of Ptofitability .116 Negligible Correlation
Raw Materials Used - Extent of Ptofitability .240 Negligible Correlation
Type of Customers - Extent of Ptofitability .984 Very High Correlation
The table above displays that Type of Customers had Very Correlation with Extent of
Profitability as presented by the Eta Correlation of .984 . This indicates that Type of Customers
had the effect on the variation on the Extent of Profitability
Customers are very important for a business to be profitable. This finding conforms
with the study of Devcota, et. al, (2014) which concluded that direct marketing of
vermicompost from producer to consumer was found to be the strongest marketing
channel however marketing through cooperatives and trader was also found in few
instances. Marketing through cooperatives was found to be more efficient as compared
to marketing through trader because both producers' share and marketing efficiency
index was higher for former as compared to later instances. Marketing through
cooperatives was found to be more efficient as compared to marketing through trader
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because both producers' share and marketing efficiency index was higher for former as
compared to later.
Table 4.2 Correlation Between Profile With Ratio Variables and

Extent of Profitability
Spearman's Strength of
Correlated Variables
Rho Association
Produced Per Month Extent of Profitability .456 Low Correlation
Sold Per Month Extent of Profitability .326 Low Correlation
Used for Farm Extent of Profitability -.062 Negligible Correlation
Price Per Bag Extent of Profitability .355 Low Correlation
Number of Workers Extent of Profitability .039 Negligible Correlation
The table above presents that Produced Per Month, Sold Per Month and Price Per Bag had
Low Correlation with the Extent of Profitability as shown by the Spearman Rho Correlation of .
456, .326 and .355 respectively. This implies that said variables had low contribution on the
variation of Extent of Profitability.
Though the influence of Production and Price were low but the findings confirms
with the finding of Ceyhan (2015) which explained that vermicompost production
facility investment with high profitability and low level of risk was good investment
alternatives because it is facing with low level of competitive in market and the study
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suggest to investors who has good back grounding about sector that they should pay
attention to marketing system and market observation about organic input market.
5. Relationship Between Profile of Vermicomposting Business and Extent of

Sustainability
The correlation between Profile and Extent of Sustainability were analyzed using Eta
Correlation for Nominal Variables and Spearman Rho for Ratio Variables.
Table 5.1 Correlation Between Profile With Nominal Variables and

Extent of Sustainability
Eta Strength of
Nominal by Interval (Dependent) Variables
Correlation Association
Type of Ownership - Extent of Sustainability .227 Negligible Correlation
Raw Materials Used - Extent of Sustainability .380 Low Correlation
Type of Customers - Extent of Sustainability .973 Very High Correlation
The table above displays that Type of Customers had Very High Correlation with
the Extent of Sustainability and the latter had Low Correlation with Raw Materials Used
as exhibited by the Eta Correlation of .973 and .380 respectively. This means that Type
of Customers had high effect on the variation Extent of Sustainability with Raw
Materials Used contributing a little only to the latter.
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Customers are very important for the sustainability of vermicomposting business
specially that at present context demand for vermicompost is increasing and
government is also giving subsidy which is appreciative (Devkota, et. al, 2014),
Moreover, commercial gardeners of ornamental plants and flowers also prefer
vermicompost, which is more potent, environment-friendly and also cheaper compared
to chemical fertilizers (https://businessmirror.com.ph/2015/07/13/small-scale-
vermiculture -boosts-livelihood-ge nerates-employment-tucps-herrera-says/ ).
Table 5.2 Correlation Between Profile With Ratio Variables and

Extent of Sustainability
Spearman's Strength of
Correlated Variables
Rho Association
Produced Per Month Extent of Sustainability .407 Low Correlation
Sold Per Month Extent of Sustainability .103 Negligible Correlation
Used for Farm Extent of Sustainability .059 Negligible Correlation
Price Per Bag Extent of Sustainability .378 Low Correlation
Number of Workers Extent of Sustainability -.179 Negligible Correlation
Table 5.2 presents that Produced Per Month and Price Per Bag had Low
Correlation with Extent of Sustainability as exposed by the Spearman Rho Correlation
of .407 and .378 respectively. This connotes that both variables had low effect on the
variation of Extent of Sustainability .
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Though contribute a little to sustainability of vermicomposting business,
Production and Price share their importance because said business have been proven
to be working successfully as cocluded by Purkayastha (2012).
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CHAPTER III
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION
This chapter presents the summary of findings, conclusion and recommendations.
To facilitate the arrangement of presentation of the results, the problem is restated.
Re-Statement of the Problem
This study seeks to determine the profitability and sustainability of
vermicomposting business and its impact towards Social Entrepreneurship in Negros
Oriental. Specifically, this will answer the following questions:
1.What is the profile of the Vermicomposting Business in terms of:
1.1 Type of Ownership
1.1.1 Family Enterprise
1.1.2 Corporation
1.1.3 Educational Institution
1.1.4 Cooperative
1.1.5 Local Government Unit
1.1.6 Others (please specify ______________________)
1.2 Average Number of bags of Vermicast produced per month
1.3 Average Number of bags of Vermicast sold per month
1.4 Average Number of Bags used for own farm
1.5 Price of Vermicast per bag of 50 kgs.
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1.6 Number of Employees
1.7 Raw material used in vermicomposting
1.8 Type of customers
1.8.1 farmer
1.8.2 business enterprise
1.8.3 government institution
1.8.4 cooperative
1.8.5 Others (please specify___________________________
2. What is the extent of profitability of the business for the last five years?
3.What is the extent of sustainability of the business for the last five years?
4. Is there a relationship between profile of vermicomposting business and extent of
profitability?
5.Is there a relationship between profile of vermicomposting business and extent of
sustainability?
SUMMARY OF FINDINGS:
As presented in previous chapter, the following are the summary of findings:
1. Profile of the Vermicomposting Businesses in Negros Oriental are as follows:
a. Only 13 vermicomposting sustainable businesses were identified in the entire
province..
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b. 55 percent (7) of the vermimicompost businesses were owned by Family
Enterprises and only 15 percent (2) each were owned by the Educational Institution,
Cooperative/Association and Local Government Units. This means that majority of the
vermicompost businesses were dominated by family businesses.
c. These vermicomposting businesses were able to produce 6,145 bags per
month. About 75 percent were produced by the family enterprises and only 1 percent
by the educational institutions.
d. About 74 percent of the produce were sold and 94 percent were contributed by
the family enterprises with the cooperatives/associations contributed a little in
commercialization.
e. About 24 percent of the produce were utilized for farm by the producers and
these were led by the cooperatives/associations with a share of 75 percent.
f. The average price of vermicast was amounted to P238/bag with the educational
institutions sold at P350/bag and the local government units with the lowest price for
only P168/bag.
g.The vermicompost businesses were able to employ 73 workers led by the
family enterprises which employed 33 workers and the least by the educational
institutions which only employed 4 workers.
h. The common raw materials used for vermicomposting were the animal manure
particularly from cattle and hogs. Crop by products were also utilized such as rice straw,
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sugar cane tops, fruits and vegetable peelings and refuse. Biodegradable waste were
used by the local government units.
g. The common customers of the above businesses were the farmers, business
enterprises and government institutions.
2. Extent of Profitability of the Business for the Past Five Years
a. The respondents perceived that the Profitability of their vermicomposting
businesses were at Higher Extent for the last five years
b. Particularly, they were at Higher Extent in Satisfaction in Business Growth
including Achievement of Business Goal, .Growth in Personal Income from the
beginning of business, Increasing the number of customers from the beginning of
Business, Overcoming the actions of the competitors over the past 5 years, and
Enhancement of employees’ competencies by conducting updated trainings..
c. They were Moderate Extent only in . Engaging in partnership with other
companies/organizations
3. Extent of Sustainability of Vermicomposting Business for the Last Five Years
a. The respondents perceived the Sustainability of their Vermicomposting
Business was at Higher Extent for the last five years
b. They were specifically at Higher Extent in the improved standard of living of
employees, conducted survey to measure satisfaction of the customers and
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carry out the necessary changes, and the ability of their business to keep
the organization's best and most talented people.
c. They perceived that their business was in Highest Extent in reducing
pollution, there was no complaint of neighbors regarding the vermicompost
project, and customers positive feedback on the improvement of soil fertility
of their farm brought by the use of vermicast
4. Relationship Between Profile of Vermicomposting Business and Extent of Profitability
a. Type of Customers had Very Correlation with Extent of Profitability as presented by
the Eta Correlation of .984 . This indicates that Type of Customers had the effect on the variation
on the Extent of Profitability
b. Produced Per Month, Sold Per Month and Price Per Bag had Low Correlation with the
Extent of Profitability as shown by the Spearman Rho Correlation of .456, .326 and .355
respectively. This implies that said variables had low contribution on the variation of Extent of
Profitability.
5..Relationship Between Profile of Vermicomposting Business and Extent of

Sustainability
a. Type of Customers had Very High Correlation with the Extent of Sustainability
and the latter had Low Correlation with Raw Materials Used as exhibited by the
Eta Correlation of .973 and .380 respectively. This means that Type of Customers
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had high effect on the variation Extent of Sustainability with Raw Materials Used
contributing a little only to the latter.
b. Produced Per Month and Price Per Bag had Low Correlation with Extent of
Sustainability as exposed by the Spearman Rho Correlation of .407 and .378
respectively. This connotes that both variables had low effect on the variation of
Extent of Sustainability .
CONCLUSIONS:
The higher profitability of the Vermicomposting Businesses in the province was
attributed by the satisfaction in growth both in business and personal income including
achievement of business goal (Frictional Theory); increasing the number of customers,
conducted survey to measure satisfaction of the customers and carry out the
necessary changes (Innovations Theory of Profit); overcoming the actions of the
competitors ( Risk and Uncertainty Bearing Theory of Profits); enhancement of
employees’ competencies by conducting updated trainings, and the ability of their
business to keep the organization's best and most talented people (Managerial
Efficiency Theory). The higher sustainability was also attributed by the improved
standard of living of employees (Social Entrepreneurship Theory); business
contribution in reducing pollution, absence of complaint of neighbors regarding the
vermicompost project, and customers positive feedback on the improvement of soil
fertility of their farm brought by the use of vermicast (Sustainability Theory).
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RECOMMENDATIONS:
1. Just like Bayawan and Bais, other local government units are suggested to
properly vermicompost the biodegradable waste and have them commercialized
to contribute in helping improve the fertility of soil in addition to generating
income.
2. Use of vermicomposting project as Sustainable Livelihood Project grant for 4Ps
beneficiaries and have MOA with other government and private entities for the
purchase of the produce.
3. Private and government entities may collaborate to enhance the utilization of
vermocompost fertilizer to help improve soil fertility, help reduce pollution and
enhance profitability in vermicomposting business.
4. Extent of Sustainability of Vermicomposting Business for the Last Five Years
5. Use of vermicompost fertilizer as supplement of chemical fertilizer for grants and
support to farmer beneficiaries to enhance the use of organic fertilizer, thus, help
improve soil fertility.
6. Operators of vermicomposting businesses may establish good relationship and
reach out more customers to enhance their sales and profits.
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QUESTIONNAIRE
This study will determine the profitability and sustainability invermicomposting business:
its impacts towards social entrepreneurship In Negros Oriental. The result of this study
can be an aide on policies for the enhancement in vermicomposting business. Rest be
assured that the information gathered will be treated with utmost confidentiality. Please
fill in the information asked.
Name of Respondent:____________________________________________________
Designation: ____________________________________________
Business Name:________________________________________________________
Address: ______________________________________________________________
1.0 Profile of the Vermicomposting Business
1.1 Type of ownership of business (Please encircle the code)

1. Family Enterprise 4. Local Government Unit
2. Educational Institution 5. Others (please specify
3. Cooperative/Association (_____________________)
1.2Average Number of bags of Vermicast produced per month: ____________
1.3Average Number of bags of Vermicast sold per month: _____________
1.4 Average Number of Bags used for own farm: _____________
1.5 Price of Vermicast per bag of 50 kgs.: ____________
1.6 Number of Employees: ___________________
1.7 Raw material used in vermicomposting (Please fill in the blanks)
1.7.1 Animal manure 1.7.4 Grass/Dry Leaves

1.7.2 Crop by Product 1.7.5 Biodegradable Waste
1.7.3 Industrial by Product 1.7.6 Others (please specify
(__________________________)
1.8 Type of customers (Please encircle the code)

1.8.1 Farmer 1.8.4 cooperative/association
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1.8.2 business enterprise 1.8.5 Others (please specify

1.8.3 government institution ________________________)
5 4 3 2 1
2. What is the extent of profitability of vermicomposting
business for the last five years?
(Please check the column of your choice.)
5. Highest Extent 2. Lesser Extent

4. Higher Extent 1. Least Extent
3. Moderate Extent
1.Satisfaction in Business Growth including Achievement of

Business Goal
2.Improvement in Life Standard after longer period in the business
3.Growth in Personal Income from the beginning of business
4.Improvement in saving capacity and accumulation of resources

from the business
5. Growth in turnover over the pastfive years
6.Enhancement of market coverage of business enterprises
7.Increasing the number of customers from the beginning of
Business
8.Overcoming the actions of the competitors over the past 5 years
9.Achievement at business growth by facing the environmental

challenge & strong competition
10.Organization enhance organizational performance by being

attentive to external changes
11. Engaging in partnership with other companies/organizations for
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the cause
12. Enhancement of employees’ competencies by conducting

updated trainings
3.What is the extent of sustainability of the vermicomposting 5 4 3 2 1

business for the last five years?
(Please check the column of your choice.)
5. Highest Extent 2. Lesser Extent
4. Higher Extent 1. Least Extent
3. Moderate Extent
1.Capitalization for the business have improved for the past five
years.
2.Increasing in number of employees from the beginning of
business
3.Ability of the business to keep the organization's best and most

talented people
4.Standard of living of employees have improved
5.Sufficient supply of raw materials for the business
6.Level of customer satisfaction related to business activities
7.Conducting survey to measure satisfaction of the customers and

carry out the necessary changes
8. Business contribution for the production of healthy crops.
9.Income of customers have improved brought by the vermicast

they bought from the vermicomposting business
10.Customers feedback on the improvement of soil fertility of their

farm brought by the use of vermicast
11.No complaint of neighbors regarding the vermicompost project
12.Pollution is reduced brought by the vermicompost project.
Thank you.
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CARLITO D. ACABAL
Researcher
Appendix B. Pretest Respondents
1. Profile
1.2 Ave. No. 1.4 Ave. 1.7 Raw
1.3 Ave. 1.5 Price /
Sample No. 1.1 Type of of Bags No. of Bags 1.6 No. of Materials Used 1.8 Type of
No. of Bags Bag (50
Ownership Produced Used for Workers In Vermi- Customers
Sold kgs.)
/Month the Farm composting
1 3 400 200 200 500 2 1,2,3, 3
2 1 5 0 5 500 1 2 3
3 4 8 8 0 250 1 2 1
4 1 4 0 4 300 2 1,2,4 1
5 5 1 0 1 500 2 1,2,4 3
6 4 110 100 10 200 1 1, 2,3,4 1
7 1 40 20 20 500 3 1,2, 4
8 2 30 20 10 250 2 1,2,4 1,4
9 4 50 30 20 250 5 1,2,4 1
10 5 30 10 20 250 1 1,2,4 1
11 1 10 0 10 500 4 1,2,4 1
12 1 30 10 20 300 2 1,2,4 1
13 4 15 10 5 300 2 1,2,4 1,3
Legend: Type of ownership of business
1-Family Enterprise 3-Educational Institution 5-Local Government Unit
2-Corporation 4-Cooperative/Association6-Others (please specify _________________________)
Raw material used in vermicomposting

1-animal manure 3- industrial by product5 - Others (please specify________________________)
2 -crop by product 4 -legumenous crops
Type of customers (Please encircle the code)

1- Farmer 3-Government Institution 5-Others (please specify_________________________)
2-Business Enterprise 4-Cooperative/Association
2. Extent of Profitability
2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12
Satis- Improve- Growth Improve- Growth Enhance- Increa- Overco- Facing Enhance Enga-ging Enhance-
faction ment In In ment in ment of sing the ming the Environ- Organiza- in ment of
in Life Personal In Turnov Market Number actions of mental tionalPerf Partner- Emplo-
Business Standard Income Savings er Coverage of Custo- Compe- Chal- or-mane ship yeesCom
Growth mers titors lenges pe-
and tencies
Strong
Compe-
titon
4 4 4 4 4 4 5 3 4 4 4 4
5 4 3 5 4 2 3 5 5 5 5 5
70
6200 Dumaguete City
Philippines
GRADUATE SCHOOL
3 5 5 4 4 4 5 5 5 5 2 5
4 3 4 4 3 3 3 5 4 4 3 3
4 3 3 3 2 3 4 2 4 3 4 3
5 4 3 3 3 4 4 5 5 3 5 5
3 4 3 3 4 5 4 4 4 4 1 4
3 3 3 3 3 3 4 3 4 4 4 4
3 4 4 3 3 4 4 3 3 4 4 4
4 4 3 3 3 4 4 3 3 3 3 3
5 5 4 5 5 3 3 5 5 5 5 5
4 3 3 4 5 5 5 5 5 5 5 5
5 5 5 3 3 4 5 4 3 4 4 4
3. Extent of Sustainability
3.1 Improve- 3.2 In- 3.3 Abi- 3.4 Im- 3.5 Suf- 3.6 Le- vel 3.7 Con- 3.8 Contri- 3.9 Cus- 3.10 Cus- 3.11 No 3.12 Pol
ment of capita- creased lity to proved ficient of custo- duct bution for tomers' tomers' com- lution is
lization No. of keep standard supply mersatisfac- survey to produc-tion income feedback plaint reduced
em- best of living of of raw tion mea- of healthy have im- on from
ployees people em- mate- sure crops proved improve- neigh-
ployees rials satis- ment of bors
faction soil fertility
4 4 5 4 4 5 4 5 4 5 5
3 3 5 5 5 5 3 5 1 1 5
5 3 3 5 2 5 5 4 4 5 5
3 3 3 3 3 4 4 4 4 4 5
3 3 3 4 4 3 2 4 2 3 4
3 3 3 3 3 4 5 4 4 4 5
4 3 3 3 4 4 3 5 5 5 5
3 3 4 3 4 4 3 4 3 4 5
4 4 3 3 4 4 3 4 3 4 4
4 4 4 4 4 4 3 3 3 3 5
5 3 5 5 5 2 2 5 2 2 5
5 3 4 4 3 5 4 5 5 5 5
4 3 5 5 5 5 5 5 5 5 4
71

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ST.

PAUL UNIVERSITY DUMAGUETE

PROBLEM AND ITS SCOPE

Vermicomposting is a promising business. Earthworms can be sold to the

hospitals, schools, colleges and universities, restaurants, grocery stores, office

buildings, etc.), farmers desiring to vermicompost animal manure (including livestock

and classroom needs.

nurseries, landscape contractors, greenhouses, garden supply stores, grocery chains,

flower shops and general public (https://composting.ces.ncsu.edu/vermicomposting).

Vermicompost industry has much fragmented, manufacturers are mostly in the

India and Southeast Asia. Compared to 2014, Vermicompost market managed to

increase sales by 24.89% to 38.09 M USD worldwide in 2015. Overall, the

Vermicompost performance is positive, despite the weak economic environment

an estimated value of P500M. The National Vermicompost Production Program (2006-

in 16 regions coordinated by PCAMRD-DOST( Guerrero, 2016). Aside from the private

cooperatives, associations and local government units (http://organic.da.gov.ph/index.

housewives and persons with disabilities (PWDs)(https://businessmirror.com.ph/ 2015/

07/13/small-scale-vermiculture-boosts-livelihood). In Barangay Kibudoc, Matalam,

North Cotabato, Vermicomposting has recently become a major source of income

P400,000 by the Mindanao Rural Development Program (MRDP) of the Department of

Soccsksargen region as well as from the Visayas and Luzon (http://rfu12da.gov.ph/

vermicomposting business . Saint Paul University Dumaguete and Foundation

Vermicomposting Business is potential in the province specially that it is adopting the

Organic Agriculture Act of 2010 by implementing the Organic Agriculture Ordinance in

conditions of its people (https:// businessmirror.com.ph/2014/10/31/gov-degamo-

Vermicompost is one of the best options among organic wastes as a soil

amendment input. It is a feasible alternative to increase farm income, however,

research and situational analysis in operation and marketing of vermicompost fertilizer

commercialization aspect still needs some information particularly in profitability and

Theoretical Background of the Study

This study is anchored on the Frictional Theory of Profits, Innovations Theory of

Profits, Sustainability Theory and Social Entrepreneurship Theory.

1. Frictional Theory of Profits:

economy where no unanticipated changes in demand or cost conditions occur, in long-

entrepreneurial talent. This explains that shocks or disturbances occasionally occur in

an economy as a result of unanticipated changes in product demand or cost conditions

which cause disequilibrium conditions. It is these disequilibrium conditions that brings

prevent an instantaneous adjustment of the system to the new conditions. When

only normal profits (Stigler, 1961)

2. Innovations Theory of Profits

innovations introduced by the entrepreneurs. It has been held by Joseph Schumpeter

of production or to increase the demand for his product(https://business

3. Risk and Uncertainty Bearing Theory of Profits

bearing risk and uncertainty in a changing economy. So this is functional theory of

profits. Profits arise as a result of uncertainty of future. Entrepreneurs have to undertake

contract with the suppliers of factors of production in advance at fixed rates of

remuneration (Knight, 1921).

4. Managerial Efficiency Theory of Profits

terms of management of productive operations and successfully meeting the needs of

compensatory theory of profits(http://www.economics discussion.net/profit/top-5-

Theories of sustainability attempt to prioritize and integrate social responses to

ﬁnancial capital; an ecological model looks to biological diversity and ecological

change (Jenkins, 2008).

Social Entrepreneurship Theory

The behavioral theory of social entrepreneurship studies the contextual factors

management of social outcomes and impacts (El Ebrashi, 2013).

Sustainability Sustainability Theory (Jenkins, 2008)

Social Entrepreneurship Theory (2013)

Figure 1. The Theoretical Framework

Conceptual Framework of the Study

This study sought to determine the profitability and sustainability in

vermicomposting business and its impact towards social entrepreneurship In Negros

of vermicast per bag of 50 kgs., number of employees, raw material used in