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SAN ISIDRO SAMAHANG NAYON MULTIPURPOSE COOPERATIVE (SISNMC)

I. PROJECT BRIEF

Project Title: Cacao Processing Project

Project Location: Purok 2, San Isidro, Nabunturan, Davao de Oro
Proponent
Beneficiaries: San Isidro Samahang Nayon Multipurpose Cooperative
(SISNMC)
Contact Persons:
Name: Restituto M. Turing
Designation: BOD
Contact Number: 0907-930-9665

Name: Floravilla S. Barnido

Designation: Bookkeeper
Contact Number: 0910-359-7404
Total Project Cost: Php 1, 495,420.00
Grant Amount Requested to DOLE: Php 995,420.00
Proponent Beneficiary Equity (20%): Php 500,000.00

Table 1. Estimated Total Project Cost

SAN ISIDRO SAMAHANG NAYON MULTIPURPOSE COOPERATIVE
Cacao Processing Project

QUANTITY ARTICLE/DESCRIPTION UNIT COST TOTAL COST

1 Cacao Roasting Machine 230, 000.00 230, 000.00
1 Roasted Cacao Bean Cooler 130,000.00 130, 000.00
1 Cracker and Winnower Machine 380, 500.00 380, 500.00
1 Cacao Grinding Machine 120,000.00 120, 000.00
2 Table 40, 000.00 80, 000.00
1 Cacao Serving Tray Rack 20, 250.00 20, 250.00
500 Cacao TableyaMolder 29.50 14, 750.00
20 Tray 996.00 19, 920.00
GRAND TOTAL 995, 420.00

Funding Institution: Department of Labor and Employment (DOLE)

Funding Program: DOLE Integrated Livelihood and Emergency
Employment Program (DILEEP)
Grant Purpose: Fabrication and Installation of Cacao Processing
Machines & Equipment
Proposed ACP: SAN ISIDRO SAMAHANG NAYON MULTIPURPOSE
COOPERATIVE (SISNMC)
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SAN ISIDRO SAMAHANG NAYON MULTIPURPOSE COOPERATIVE (SISNMC)

II. BACKGROUND
a. Organization Overview

San Isidro Samahang Nayon Multipurpose Cooperative (SISNMC) was

registered under Cooperative Development Authority (CDA) with Registration No.
9520 - 11011860 dated March 22, 2010. It provides quality consumer goods,
services and other needs of members at reasonable prices; it is also engage in
farming, planting rubber, cacao and banana production inputs and that the goal
of this cooperative is to help improve the quality of life of its members and in
furthermore shall aim:

 To attain increased in income, savings, investments, production, and

purchasing power, and to promote among themselves equitable
distribution of net surplus through maximum utilization of economics of
scale, cost sharing and risk sharing;
 To provide optimum social and economic benefits to its members;
 To encourage and promote self-help or self-employment as an engine for
economic growth and poverty alleviation; and
 To adopt such other plans that may help foster the welfare of the member,
their families, and the community.

The cooperative has 56 members headed by the following officers:

Chairperson: Evelia S. Ibarnido

Vice Chairperson: Celso M. Malacora
BOD Member: Restituto M. Turing
Marcelino V. Albelda
Rodrigo P. Gementiza
Felecidad M. Dormaso
Raymundo P. Pañamogan
Secretary: Melrose A. Borgania
Treasurer: Anicel M. Amoren
Assistant Treasurer: Catalino P. Bancairen
Auditor/bookkeeper: Floravilla S. Barnido
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SAN ISIDRO SAMAHANG NAYON MULTIPURPOSE COOPERATIVE (SISNMC)

b. History

Before, SISNMC was known as San Isidro Samahang Nayon Primary

Multipurpose Cooperative. It was organized in the year 1972, thru bayanihan for
the purpose of highlighting the spirit of unity, harmony and cooperation among
members for the economic, social and environmental concerns.

The cooperative was registered under Registration/Confirmation No. CR-

311-DVO dated Dec. 31, 1990, and that time they created a small store and
undergone a number of capability skills training and programs extended by both
the government and non-government organization. The training include (FLUP)
Forest Land Use Planning Training, Reforestation training extended by the
DENR, and more grants and equipment given by the Department of Agriculture,
and one of this project is the MRDP-CFAO planted cacao seedlings worth
P250,000.00, and more cacao seedlings given by the barangay thru DA.

As days go by, the Cooperative has complied with the requirements

prescribed by the Authority for the issuance of New Certificate of Registration
under Article 144 or RA 9520 otherwise known as the Philippine Cooperative
Code of 2008, so the Cooperative has CDA registration No. 9520 – 11011860
dated March 22, 2010.

The Cooperative continued its business such as Consumer

store/barangay Food Terminal, retailed NFA rice, and buy and sell of dried cacao
beans.

Presently, the cooperative was accredited at Sangguniang Bayan of

Nabunturan and Sangguniang Panlalawigan of Davao de Oro and received loans
worth P150, 000.00 as an additional capital for buy and sell of Dried Cacao
beans.

III. RATIONALE

One of the primary objectives of the San Isidro Samahang Nayon

Multipurpose Cooperative (SISNMC) is to increase the income of its members.
But all that they can do for now when it comes to cacao beans is to buy and sell
it. Farmers, who are SISNMC members, would deliver cacao beans to their store,
the Coop buys it, and then sells it. More often than not, their products are sold at
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SAN ISIDRO SAMAHANG NAYON MULTIPURPOSE COOPERATIVE (SISNMC)

low prices due to various quality concerns. The profit they get ranges from P2.00
to P5.00 only. That’s why they wanted to venture into another business, which is
from buying and selling Cacao beans, they wanted now to sell these cacao
beans into the market as a processed good known as tableya.

With the aforementioned situation, the Cooperative would like to avail the
grant of the Department of Labor and Employment (DOLE) under its DOLE
Integrated Livelihood and Emergency Employment Program (DILEEP). With the
financial assistance, the Cooperative would be able to achieve its objective via
the Cacao Processing Machine.

IV. PURPOSE AND OBJECTIVE OF PROPOSED PROJECT

The Cacao Processing Machine that the Cooperative proposes to

construct achieves the objective of increasing the income of its members by
bringing the Cacao beans in the market as a finished product – tableya – in its
highest quality.

Accordingly, current milling rates for cacao beans are at 30 pesos per
kilo. The end product of this process is then molded into the preferred forms of
tableya.

Table 1 presents the Estimated Income each member gets in cacao buy
and sell (but not included in this table are the other income they get from being a
registered retailer of NFA rice, farming and planting rubber, banana productions,
and their consumer store/Barangay Food Terminal). The income from buying and
selling of dried cacao beans for each member is often not compensatory, unlike
the other products the Cooperative is selling. If seen in an overall perspective,
every member of the cooperative will receive an individually average estimate of
only Php 848.21 per member within 6 months, and that is P141.37 per month, as
presented below.

Table 1. Estimated Income per Member for Buy and Sell of Cacao beans

Sale
(*10, 000 kls x **P100.00/kilo) P 1, 000, 000.00
Cost of Sales
Cacao beans 10, 000 x P95.00 (P950, 000.00)
Commission of storekeeper 5% of income (P2, 500.00)
Net Income
Divide by number of members ÷ 56 P47, 500.00
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SAN ISIDRO SAMAHANG NAYON MULTIPURPOSE COOPERATIVE (SISNMC)

Average Income per member P848.21

*Based only on estimated cacao beans available for them to buy during harvest season provided, farmers
will give all the harvested cacao beans to them,
**Refer to Table 2. Most often, the cacao beans delivered to them are Class B.

Table 2. Market Price of Cacao

Class Price in Pesos per Kilo

A 105.00
B 100.00
C 95.00

And because of this, the cooperative wanted to apply vertical integration, since
our number one aim is to increased income, savings, investments, production, and
purchasing power, and to promote among themselves equitable distribution of net
surplus through maximum utilization of economics of scale, cost sharing and risk
sharing, they don’t want to settle on buying and selling dried cacao beans, instead they
want to venture into another form of business of which processing these dried cacao
beans into a – tableya, and for this reason, the cooperative wanted to create a situation
where each member would not have to go through such a long and arduous process (to
cut their cost, e.g. labor, and of course to save time and effort)

The proposed Cacao Processing Machine will be able to perform all the major
phases of the conversion process with little to no manual labor; save all the repetitive
expenses mentioned above, and they can also offer cacao processing service to non-
members in exchange for a payment.

To achieve this, the following are also aimed by this venture:

 Avail the grant from the Department of Labor and Employment
(DOLE) under its DOLE Integrated Livelihood and Emergency
Employment Program (DILEEP) amounting to Php 996, 570.00 for
the fabrication of the Cacao Processing Machine.
 Buy the entire cacao produced by all members of the association
(they can also buy the harvest of non-members, to achieve or
surpass any estimated production, and help their neighbourhood at
Bgry. San Isidro), process them through the said machine, sell the
finished product, and divide the profits among the members.
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SAN ISIDRO SAMAHANG NAYON MULTIPURPOSE COOPERATIVE (SISNMC)

V. PRODUCTION

The process of making tableya from cacao involves four major phases.
Fermenting and Drying; Roasting; Winnowing; and Grinding.
The fermentation of cacao beans is crucial to the production of quality
cocoa. Fermentation brings out the chocolate flavour that one is familiar with.
Before fermentation cacao beans have a very bitter taste and without
fermentation, the rich chocolate flavour wouldn't exist. It involves cracking open
the bean pods and laying out the cacao beans, checking and mixing and turning
them to allow proper fermentation.

Roasting the cacao beans after it has been left to ferment and dry is the
one of the two most arduous phases of this entire process as it requires manual
labour, it involves constantly mixing the cacao beans in a large pan in low fire to
prevent it from burning. It usually takes an hour to roast two kilos of cacao beans.

Winnowing is the other difficult phase in the process as it also requires

manual labour. It involves separating skin from the meat of the cacao beans. It
even requires a longer time than roasting as it takes at least an hour to finish a
kilo.

Grinding is the easiest part of the process since there are machines for
which it only takes 15 minutes per kilo. However, these machines are hardly
owned by small farmers and are only accessible to them through commercial
millers.

VI. BUDGET REQUIREMENTS

In connection to the production process the following equipments and

materials are needed.

This equipment and materials are requested to Department of labor and

Employment below id the list with corresponding quantity and price.
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Table 1. Estimated Total Project Cost

SAN ISIDRO SAMAHANG NAYON MULTIPURPOSE COOPERATIVE
Cacao Processing Machine

QUANTITY ARTICLE/DESCRIPTION UNIT COST TOTAL COST

1 Cacao Roasting Machine 230, 000.00 230, 000.00
1 Roasted Cacao Bean Cooler 130,000.00 130, 000.00
1 Cracker and Winnower Machine 380, 500.00 380, 500.00
1 Cacao Grinding Machine 120,000.00 120, 000.00
2 Table 40, 000.00 80, 000.00
1 Cacao Serving Tray Rack 20, 250.00 20, 250.00
500 Cacao Tableya Molder 29.50 14, 750.00
20 Tray 996.00 19, 920.00
GRAND TOTAL 995, 420.00

VII. TIME FRAME

The proposed project will be implemented after a series of activities

necessary for the execution of the project. It is assumed that preparation for
project proposal will be finished within one (1) month. Processing and approval of
loan will approximately take three (3) months. Next is the construction of the
machine that will take fifty (50) days or approximately two (2) months. Lastly, the
association can start its operation. Table 3 shows the overall actions to be done.

Table 3. Time Table

Activities 1 2 3 4 5 6 7 Person/Agency
Project Proposal
Preparation SISNMC

Evaluation, Approval and

DOLE
Release of Grant Amount

Construction of the
Proponent
Machine
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Start of Business
SISNMC
Operation

VIII. MARKETING

a. Product

The project fits the Cooperative perfectly as we deal with agricultural

produce from seedlings worth Php 250,000.00 provided by the Department of
Agriculture, it was given to the cooperative, and the cooperative distributed it
to their members. Some but not all were successfully planted due to Bagyong
Pablo last December 3, 2012. The harvest coming from the cacao seedlings
planted successfully is now being bought by the cooperative from the
members, and these are the cacao dried beans subject to the buy and sell
business. The raw materials are no longer bought from an outside source and
therefore become a tool to our advantage. The Cacao Processing Machine
can make it possible to increase livelihood in the area, provide for a new way
to earn from the already existing produce, as well as introduce high quality
Cacao products to the market which in turn would attract investment in the
industry.

b. Target Market

The primary target market of the Cacao to be produced by the proposed

project is the local market of chocolate-makers and tableya consumers in the
locality, and if would be given a chance, they want to offer their produce to the
other municipalities, national and international markets, since, as per study by
DTI (Department of Trade and Industry) global demand for cocoa is estimated
to reach between 4.7 million to 5 million metric tons by 2020, but a cocoa
global shortage is also predicted at 1 million MT this year.
c. Demand

According to the Department of Agriculture, the local average

consumption for cacao is at 50,000 metric tons every year up until 2020
where there is an increase of 13% starting from 2017. In addition, according
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to DTI, this year, the local consumption of cocoa in our country is at 50, 000
MT every year, but the local supply is only around 10, 000 MT. Report from
CNN Philippines, By 2022, the county hopes to produce 100,000 MT of
cacao, a move that will strategically position the Philippines as a key regional
player in the business of this underserved commodity.
Table 4 presents the projected demand for next three years.

Table 4. Projected Demand for cacao up to 202

Year(based above) Demand in Kilos

Year 2021 *56, 500
Year 2022 **100,000
Year 2023 ***113, 000

*50, 000 x 1.13%

**given from Dep’t of Agriculture estimation (via CNN Philippines)
***100, 000 x 1.13%

d. Supply

According to the proponent, there are very few established processor of

high quality cacao in the area. As most of the cacao supply come from small
farmers as well, there is not enough supply for the product in the years to
come, despite the efforts of the Department of Agriculture to increase supply
by 40%, according to CNN Philippines report, the local supply is said to be
10,000 MT. Table 4 reflects the supply within three (3) years.

Table 4. Projected Supply according to www.statista.com

Year Supply in Kilos
Year 2021 *14, 000
Year 2022 **19, 600
Year 2023 ***27, 440
*rounded to nearest whole number
*10, 000 multiplied by 1.40%
**14, 000multiplied by 1.40%
***19, 600multiplied by 1.40%

e. Demand – Supply Gap

Despite the increase in quality cacao that the proposed project could
create, there would still be demand for more as it would keep increasing, at
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an average annual deficit of 75% in 2021, 80% and 76%, for 2022 and 2023,
respectively. Table 5 shows the demand – supply gap of cacao.

Table 5. SAN ISIDRO SAMAHANG NAYON

MULTIPURPOSE COOPERATIVE (SISNMC)
Demand – Supply Gap
Particular Year 2021 Year 2022 Year 2023
Demand 56, 500 100, 000 113, 000
Supply 14, 000 19, 600 27, 440
Demand – Supply
42, 500 80, 400 85, 560
Gap

f. Market Share

Using the annual production volume of the machine and the total demand,
the percentage share of 25%, 20%, and 24% was achieved. It indicates
percentage share in the market. Table 6 shows the market share.

Table 6. SAN ISIDRO SAMAHANG NAYON MULTIPURPOSE

COOPERATIVE (SISNMC)
Demand – Supply Gap
Particular Year 2021 Year 2022 Year 2023
*Volume Produced *14, 500 *20, 000 *28, 000
Total Demand 56, 500 100, 000 113, 000
Market Share 25% 20% 24%
*based on actual produced from past experiences
Percentages are rounded off to two decimal places.

g. Pricing Strategy

The Association will sell products based on the competitive pricing

strategy. The selling price is assumed to increase to 3% annually based on the
inflation rate (according to Philippines Statistics Office last February 7, 2020) in
the province of Davao de Oro. Table 7 shows the projected prices.

Table 7. SAN ISIDRO SAMAHANG NAYON MULTIPURPOSE

COOPERATIVE (SISNMC)
Selling Prices
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Class Year 1 Year 2 Year 3

A 105.00 108.15 111.39
B 100.00 103 106.09
C 95.00 97.85 100.79
Amounts are rounded to the nearest two decimal places.

h. Channel Distribution

Produce by the proposed project will be delivered to the local market of

chocolate-makers and tableya consumers in the locality, and if would be
given a chance, they want to offer their produce to the other municipalities,
national and international markets, since, as per study by DTI (Department of
Trade and Industry) global demand for cocoa is estimated to reach between
4.7 million to 5 million metric tons by 2020, but a cocoa global shortage is
also predicted at 1 million MT this year.

The Cooperative has been contemplating in reaching out to other

government entities, like DTI, to check if they can help them close deals with
other establishments where in need of the new product.

Figure 1. Channel of Distribution

SAN ISIDRO SAMAHANG NAYON MULTIPURPOSE

COOPERATIVE (SISNMC)

Chocolate-makers and Other Consumers

i. Possible Profitable By-Product

First, the cacao skin shed after undergoing the process of Winnowing –
incorporated in the Cacao Processing Machine - has a possible market in
Calinan, Davao del Sur. Although the shed skin may have to undergo another
process, it can be sold as fertilizer. Second, we can offer the service of the
Cacao Processing Machine to the neighbourhood, or even to
organizations/businesses outside the Barangay. These two could be another
venture after the current proposed project is implemented.

j. Marketing Strategy
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The project will fit the cooperative because our barangayproduces more
than enough number of cacao. In promoting the product, the project is adhering
as a leading quality producer of processed cacao. Our advantage is that there
are only very limited processor in the area, and the Cacao Processing Machine
can make it possible to provide for a new way to earn from the already existing
produce, as well as introduce high quality Cacao products to the market which in
turn would attract investment in the industry. Furthermore, this Cacao Processing
Machine would help us save time and effort – of which we can offer its service to
others.

Projected sales resulting from the construction of the project are based on
production volume and selling price of the product. Selling price is assumed to
increase by 10% every year. Table 8 indicates the projected sales of the
business for three (3) years.

Table 8. SAN ISIDRO SAMAHANG NAYON MULTIPURPOSE

COOPERATIVE (SISNMC)
Projected Sales
Year Volume Produced Selling Price Projected Sales
1 14, 500 105* P 1, 522, 500.00
2 20, 000 118.65 2, 373, 000.00
3 28, 000 134.07 3, 754, 086.00
*since, we aim to provide tableya with rich chocolate flavour, we will use the
best quality cacao beans, and that’s class A with price of P105.00. Selling Price
is multiplied to 13% (10% increase every year and 3% inflation rate)

IX. MONITORING AND EVALUATION

Upon the release of the proposed project, the Department of Laborand

Employment (DOLE) will monitor and evaluate the project annually within three
(3) years through the following actions:

 Inspect the implementation of the proposed project and verify the financial
records and reports of the beneficiaries.
 Ensure that the approved project cost corresponds to the detailed
implementation plan of the association.
 Ensure continuous operation of the proposed project and contribute to an
additional livelihood to direct beneficiaries.
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 Required the proponent to submit monthly and terminal financial report

within 60 days after the completion of the project.

X. SOCIO ECONOMIC BENEFITS

Upon the approval of the proposed project, the Association will be able to
start the construction of the Cacao Processing Machine. The project will benefit a
metalwork establishment and upon its completion, the members of SISNMC and
the residents of Barangay San Isidro as a whole.

XI. SUSTAINABILITY MEASURES

`To ensure the sustainability of the project, the association should observe the following:

 Strict monitoring in the fabrication and installation of the machine.

 Proper maintenance of the machine to avoid any damage from it.
 Providing quality product to consumers and securing the safety and quality
product.
 Proper recording of cash receipts and disbursements to monitor cash
inflows and outflows.
 Preparing financial statement to ensure transparency among members
and make coherent financial decision.
 Participation in any enhancement training or seminar related on
production, management and financial conducted by any agency to gain
more knowledge in managing the business and enhance skills in
production.

Prepared by:

Noted by:

MELROSE A. BORGANIA
Secretary
RESTITUTOM. TURING
SISNMC BOD

Approved by:

EVELIA S. IBARNIDO
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Recommending Approval:

ALLAN R. BABAN
Provincial Head Funds Availability:
Davao de Oro Field Office
Approved by:

ADELA JADE C. TALDO

Budget Officer
RAYMUNDO G. AGRAVANTE
Regional Director
DOLE Region XI