“Establishing an Oil Mill in Talahiban, San Juan, Batangas: Ensuring a Future from Copra”

INTRODUCTION

Brief History of the Project

In beauty and utility no other tree can surpass the coconut tree. It is the most extensively grown nut in the world, the most important palm. It provides people basic needs such as food, drink, shelter, fuel, furniture, medicine, decorative materials and much more. They are a necessity and a luxury.

It is the “heavenly tree”, “tree of life”, “tree of abundance” and “nature’s supermarket. Of the world production of coconut, more than 50 percent is processed into copra. While a small portion is converted into desiccated coconut and other edible kernel products, the rest is consumed as fresh nuts. The coconut palm also provides a series of by-products such as fiber, charcoal, handicrafts, vinegar, alcohol, sugar, furniture, roofing, fuel among others, which provide an additional source of income. Diversified local uses of the coconut palm number over 200. Coconut oil and copra come from the fruit of the coconut palm tree, which originated in Southeast Asia.

Coconut oil has been used for thousands of years as cooking oil, and is still a staple in the diets of many people living in tropical areas. Copra, or the dried meat of the coconut’s (Cocos nucifera) nut, is valued as the source of coconut oil and copra cake. It is an oil-rich pulp with a light, slightly sweet nutty flavor. Copra is used mainly as a source of coconut oil and is also used shredded for baking. The nuts are harvested from the tree by cutting them of with a sickle attached to a long bamboo pole or by bringing them down manually.

The nuts are then husked and cracked often to expose the meat, which is roughly 50% water and 30-40% oil. The quality copra contains about 65% to 72% oil, and oil made from the copra is called crude coconut oil. Crude coconut oil is processed from copra by expeller press and solvent extraction. It is not considered fit for human consumption until it has been refined, which consists of neutralizing, bleaching and deodorizing it at high heat with a vacuum. The remaining oil cake obtained as a by-product is used for livestock feed. Coconut oil accounts for approximately 20% of all vegetable oils used worldwide.

Coconut oil is used in margarines, vegetable shortening, salad oils, confections, and in sports drinks to boost energy and enhance athletic performance. It is also used in the manufacture of soaps, detergents, shampoos, cosmetics, candles, glycerin and synthetic rubber. Coconut oil is very healthy, unless it is hydrogenated, and is easily digested. Copra cake or copra meal is also used as fodder for horses, cattle, and other animals. Its high oil levels and protein are very fattening for stock and it is popular among the horse enthusiasts. The copra meal has unique benefits for the animals.

The protein in copra meal has been heat treated and provides a source of high quality bypass protein for cattle, sheep and deer. Copra meal has the advantage of being a highly palatable carrier and ‘taste masker’ for carrying anionic salts which are bitter tasting – Copra supplies magnesium, phosphorus and calcium among other vital trace minerals and vitamins.

Statement of the Problem

The researchers want to evaluate the viability of establishing an Oil Mill in Talahiban, San Juan, Batangas. Below are sub questions they want to solve regarding their study.

1. Is their a future for copra?
2. What are the products that copra can make?
3. Is there a problem in terms of law of supply and demand?
4. Can the business have the capacity to grab the market share?
5. Is business used modern machineries to make production fast and easy?
6. Is the business liquid in terms of settlement of accounts?
7. Can business has the capacity to produce more than the needs of their customers?

Objectives

This study aims to determine the viability and feasibility of the proposed business enterprise. Specifically, objectives from the point of view of the four functional areas of management are as follows:

Marketing

1. To provide a clear description of the proposed project
2. To investigate the competitive position of the firm in the industry
3. To determine the demand of a proposed project
4. To identify the competitors of the proposed project
5. To compare the market share of the proposed project
6. To formulate marketing strategies for a successful business operation

Technical 

1. To know the product itself and its uses
2. To determine the manufacturing process of the product
3. To determine the plant size and production schedule
4. To determine the plant location of the business and its proposed business plan layout
5. To know the machineries needed in the business and their corresponding cost
6. To determine the facts concerning raw materials
7. To indicate specific utilities and waste disposal

Management

1. To determine the appropriate business organization
2. To determine the persons involved or to be involved both before and during the operating periods of the enterprise
3. To identify an organizational chart and functions of each unit management personnel
4. To know the number of people required to manage the firm effectively
5. To identify the qualifications to be considered in hiring employees
6. To determine employees compensation and fringe benefits to be given
7. To know the time table of the project to be taken in consideration

Financial

1. To determine the profitability level of the project
2. To cover all of the monetary information of enterprise
3. To identify the sources of financing
4. To analyze the financial health and condition of the business through the financial statements.

Significance of the Study

This study intends the readers to gain knowledge about establishing a business entity. The study would be of great importance to the following: The researchers, this study would be a means of completion in their course, by the application of what they have learned in establishing a business. The community, this would be a big contribution of employment in San Juan, Batangas. On the other hand, it is capable in inviting willing investors to invest their capital.

Scope and Limitation

The study entitled “Establishing an Oil Mill in Talahiban, San Juan, Batangas: Ensuring a Future from Copra”. The target markets of the researcher are the feed mills, human consumption, soap factories and industrial uses. The valuable and resourceful ways of managing the proposed business is based on the full reflection of marketing strategies, technical, financing and organizational management. The time covered by this study is for the first five year period of the operation.

Definition of Terms

For the purpose of presenting a clear understanding of this study, the following terms are defined operationally: Coconut palm – (Cocos nucifera) is a member of the family Arecaceae (palm family). It is the only species in the genus Cocos, and is a large palm, growing to 30 m tall, with pinnate leaves 4–6 m long, pinnae 60–90 cm long; old leaves break away cleanly leaving the trunk smooth. Coconut – refers to the seed of the coconut palm. Copra – is the dried meat, or kernel, of the coconut. Crude coconut oil (CNO) – oil made from the copra Copra cake/meal – is the solid residue of the copra after it has been mechanically pressed to extract the coconut oil.

MARKET STUDY

Coconut is one of the major products in the Philippines. A brief description of the social and economic bearings of this industry will give an idea of the magnitude of the country’s dependence upon it. The Philippine coconut oil industry is not a new venture.

It is an old industry inured more or less to the rigors of competitive trade. Based on our study there are only 23 coconut oil mills in the Philippines with a crushing capacity of 1. 45 million tons annually. The three feed mills that we interview: Fortune Feedmills Inc. , Masuerte Feeds Inc. Sizemore Feedmills, acquire copra cake from the same supplier named A & G Coconut Enterprise located at Silangang Mayaw, Lucena, City, of about 84 tons per month and a total of 1008 tons a year. While in coconut oil they gain of about 16. tons per month and a total of 200 tons a year.

The totality of the tons of the said three feed mills is a proof that copra cake and coconut oil as an agricultural product is highly in-demand in the industry. As a result of our interview, we can say that entering in this kind of business is feasible and can be competitive in the market. Therefore, JMARF Oil Mill will be introduced to the market with the capacity to sustain the needs for copra cake and coconut oil within the industry. The firm is located at Talahiban, San Juan, Batangas.

The whole area measures two thousand (2000) square meters which includes the production area where the business operates, the head office and the warehouse. Their channels of distribution are done through wholesaling and retailing. The business assumes that they would cover the supply given by their competitors. Based on the data that JMARF Oil Mill gathered, the business can produce more than their competitors can do. The estimated number to produce of copra cake in a month is about 79,800 kls. While in oil is about 136,800 kls. in a month.

Business Description

JMARF decided to establish oil mill because they came up with the idea that San Juan, Batangas is known for having an abundant supply of coconut and the leading commodity in the area. The business offers a good quality of crude coconut oil and copra cake. The coconut oil milling plants operated by the firm boast of up-to-date machineries and modern technological controls, with a combined annual rated crushing capacity of 2880 metric tons of copra. JMARF is committed to the enhancement of its organizational competitiveness, as well as to the upliftment of the coconut industry.

Industry Profile (Coconut Industry)

The Philippines is the world’s second largest producer of coconut products, after Indonesia. In 1989 it produced 11. 8 million tons. In 1989, coconut products, coconut oil, copra (dried coconut), and desiccated coconut accounted for approximately 6. 7 percent of Philippine exports. About 25 percent of cultivated land was planted in coconut trees, and it is estimated that between 25 percent and 33 percent of the population was at least partly dependent on coconuts for their livelihood. Historically, the Southern Tagalog and Bicol regions of Luzon and the Eastern Visayas were the centers of coconut production.

In the 1980s, Western Mindanao and Southern Mindanao also became important coconut-growing regions. In the early 1990s, the average coconut farm was a medium-sized unit of less than four hectares. Owners, often absentee, customarily employed local peasants to collect coconuts rather than engage in tenancy relationships. The villagers were paid on a piece-rate basis. Those employed in the coconut industry tended to be less educated and older than the average person in the rural labor force and earned lower-than-average incomes.

Land devoted to cultivation of coconuts increased by about 6 percent per year during the 1960s and 1970s, a response to devaluations of the peso in 1962 and 1970 and increasing world demand. Responding to the world market, the Philippine government encouraged processing of copra domestically and provided investment incentives to increase the construction of coconut oil mills. The number of mills rose from twenty-eight in 1968 to sixty-two in 1979, creating substantial excess capacity. The situation was aggravated by declining yields because of the aging of coconut trees in some regions.

In 1973 the martial law regime merged all coconut-related, government operations within a single agency, the Philippine Coconut Authority (PCA). The PCA was empowered to collect a levy of P0. 55 per 100 kilograms on the sale of copra to be used to stabilize the domestic price of coconut-based consumer goods, particularly cooking oil. In 1974 the government created the Coconut Industry Development Fund (CIDF) to finance the development of a hybrid coconut tree. To finance the project, the levy was increased to P20.

Also in 1974, coconut planters, led by the Coconut Producers Federation (Cocofed), an organization of large planters, took control of the PCA governing board. In 1975 the PCA acquired a bank, renamed the United Coconut Planters Bank, to service the needs of coconut farmers, and the PCA director, Eduardo Cojuangco, a business associate of Marcos, became its president. Levies collected by the PCA were placed in the bank, initially interest-free. In 1978 the United Coconut Planters Bank was given legal authority to purchase coconut mills, ostensibly as a measure to cope with excess capacity in the industry.

At the same time, mills not owned by coconut farmers–that is, Cocofed members or entities it controlled through the PCA–were denied subsidy payments to compensate for the price controls on coconut-based consumer products. By early 1980, it was reported in the Philippine press that the United Coconut Oil Mills, a PCA-owned firm, and its president, Cojuangco, controlled 80 percent of the Philippine oil-milling capacity. Minister of Defense Juan Ponce Enrile also exercised strong influence over the industry as chairman of both the United Coconut Planters Bank and United Coconut Oil Mills and honorary chairman of Cocofed.

An industry composed of some 0. 5 million farmers and 14,000 traders was, by the early 1980s, highly monopolized. In principle, the coconut farmers were to be the beneficiaries of the levy, which between March 1977 and September 1981 stabilized at P76 per 100 kilograms. Contingent benefits included life insurance, educational scholarships, and a cooking oil subsidy, but few actually benefited. The aim of the replanting program, controlled by Cojuangco, was to replace aging coconut trees with a hybrid of a Malaysian dwarf and West African tall varieties.

The new palms were to produce five times the weight per year of existing trees. The target of replanting 60,000 trees a year was not met. In 1983, 25 to 30 percent of coconut trees were estimated to be at least sixty years old; by 1988, the proportion had increased to between 35 and 40 percent. When coconut prices began to fall in the early 1980s, pressure mounted to alter the structure of the industry. In 1985 the Philippine government agreed to dismantle the United Coconut Oil Mills as part of an agreement with the IMF to bail out the Philippine economy.

Later 1988 United States law requiring foods using tropical oils to be labeled indicating the saturated fat content had a negative impact on an already ailing industry and gave rise to protests from coconut growers that similar requirements were not levied on oils produced in temperate climates. C. Demand and Supply Analysis As the business analyzes the demand of their product and by-product, they realized that their consumers are willing and able to buy their product with each possible price.

They found out that there is a big demand of crude coconut oil and copra cake in the Philippines especially in the San Juan,Batangas where they decided to situate JMARF OIL MILL. The need of copra cake is very indemand in feed millers and even hog racers. While the demand for crude coconut oil is very high in human consumption, soap and shampoo factories, industrial uses and even in feed mills. This analysis shows that the business will become feasible because of the demand of crude coconut oil and copra cake in the market.

After analyzing the demand of crude coconut oil and copra cake, the researchers discovered that if they put up an oil mill they can cover the needs of the market.

Strategy

JMARF Oil Mill has adopted for its Corporate Strategy a practical checklist of “must do’s” to ensure and maintain its superior and efficient operations: Strategic acquisition of appropriate equipment and machinery. Adoption of effective operational methods and systems. Continuous procurement of cost-efficient and quality-upgraded products. Continuous creation of an elite, well-motivated and value-driven workforce through a well-maintained and enhanced training program.

Marketing Plans 

Is a vegetable oil extracted from dried coconut meat (Copra – scientifically known as cocos nuciferas which contains about 65% oil, 6-8% moisture content and dry matter rich in fibrous protein, carbohydrates, minerals and vitamins).

The production process consists of copra cutting, flaking, cooking and mechanical pressing using expellers and solvent extraction process with normal-hexane. Crude Coconut Oil is extracted from copra. It constitutes 7% of the total export income of the Philippines, the world’s largest exporter of the product. Crude Coconut Oil can be further processed for making soap, margarine, vegetable lard and cosmetics. Coconut Oil is one of the most stable of all oils. It is slow to oxidize and is resistant to rancidity, lasting up to two years.

It is best stored in solid form, below 24. 5°C (76°F) in order to extend the shelf life. However, unlike most oils, coconut oil will not be damaged by warm temperatures. Coconut oil has been tested for use as a feedstock for biodiesel to be used as a diesel engine fuel. In this manner, it can be applied to power generation and transport using diesel engines. Coconut oil is blended to make biodiesel but can also be used straight, without blending. However, only blends with 10% or less of coconut oil can be safely used in unmodified engines.

Copra Cake and Copra Meal is the solid residue of the copra after it has been mechanically pressed to extract the coconut oil. It is used mainly as an ingredient in the production of animal feeds and other types of feeds for poultry and aquaculture. Copra meal is also used also as fodder for horses and cattle. Its high in oil levels and protein are very fattening for stock and it is popular among horse enthusiasts. The unique benefits of copra meal for horses and cattle have been researched.

The protein in copra cake and copra meal has been heat treated and provides a source of high quality bypass protein for cattle, sheep and deer. It is a perfect high protein animal feed and the dairy cattle farmers like it because of the residual oil, it increases the butterfat content and as a result, the cow’s milk becomes more valuable. Crude coconut oil is still further refined and various derivatives are produced in the process which has various applications as well.

1. Transforms to refined, bleached and deodorized (RBD) Coconut oil.
2. Used in specialty oil products such as shortening, baking fats and margarine.
3. Intermediate chemical derivatives are manufactured from these products which are used in the production of soap, detergents, cosmetics, toiletries, surfactants, foam-boosters, industrial cleaning agents, emulsifiers, lubricants, plasticizers, pharmaceuticals and explosives.
4. Used as a feedstock of biodiesel for diesel engine fuel. In this manner it can be applied to power generation and transport using diesel engines.

Coconut oil has a long shelf life compared to other oils, lasting up to two years due to its resilience to high temperatures. However, unlike other most oils, coconut oil will not be damaged by warmer temperatures. Among the most stable of all oils, coconut oil is slow to oxidize and thus resistant to rancidity.

Coconut Oil is produced by further processing the crude coconut oil. It is first refined, bleached and then deodorized (RBD) to make it suitable for food applications. The resulting RBD coconut oil is bland in taste, light in colour, lacks off-flavors and has resistance to oxidation, imparting superior tasting and keeping qualities on finished products. RBD Coconut Oil is used in manufacturing of coconut based specialty fats such as margarine fats, shortening, creaming fats, ice cream fats, candy and sweets, commercia baked goods, whipped toppings, and non-dairy coffee creamers. Coconut oil is excellent as cooking oil. It can withstand high temperature and it does not breakdown easily compared to other oils.

Unlike polyunsaturated oils that easily combine with oxygen in air to become rancid, coconut oil has a natural resistance to oxidation. Coconut oil is also one of the cheapest vegetable oils available in the market, being significantly cheaper than other popular vegetable oils such as corn, soya bean, canola and sesame oil.

Is processed Crude Coconut Oil by controlled acidification with phosphoric acid and addition of water to precipitate phosphatides called “gums” and subsequently separated by hermetic separators. Degummed oil is bleached for color reduction, and then steam distilled or stripped to lower down free fatty acid and odor. Low Acid Oil is also used in the production of edible oil, and specialty oil products such as lard, shortening, baking fats and margarine.

Is processed Crude Coconut Oil by neutralization with caustic soda to remove its free fatty acid as soap from its neutral oil through hermetic separators. The neutralized oil is bleached using bleaching earth and activated carbon in effective proportion. Refined Bleached Oil or Cochin Oil is an ideal raw material in the production of edible oil, and specialty oil products such as lard, shortening, baking fats and margarine.

Is processed Crude Coconut Oil by neutralization with caustic soda to remove its free fatty acid as soap from its neutral oil through hermetic separators. Neutralized oil is bleached for color reduction, then steam distilled or stripped to remove further traces of free fatty acid and odor. Being a fully refined and cholesterol free coconut oil, it has both food and non-food uses. It is primarily used as cooking oil and other confectioneries It is also used in the manufacture of special oil products such as lard, shortening, baking fats, margarine and a s a raw material for high quality cosmetics, soap, detergents, and other toiletries.

Also known as Acid Oil, is by-product in the refining process of Crude Coconut Oil to Cochin Oil or RBDO. Acidulated Oil mainly consists of free fatty acids condensed from steam strip pining and acid from acidulation of soap stock with sulfuric acid. Acidulated Oil is used as fat source in animal feeds.

Is the meal produced after crude coconut oil is extracted by the use of screw shaft expellers. With its high-protein, carbohydrates and fat content, copra expeller meal is mainly used in animal feeds.  Is the meal produced after residual oil in expeller cakes is partially removed by solvent extraction with normal-hexane. With its high protein, carbohydrates and fat content, copra extraction meal/pellet mainly used in animal feeds.

The company identifies the distribution channels functions and takes each one into consideration to serve as their guide. From there, the company selects the appropriate number of channel levels that they would use to help them in distributing their products.

Promotion in the broad sense consists of coordinated seller-initiator effort to establish channels of information and persuasions to foster the sale of a good or service, or the acceptance of ideas or points of views. To promote our product, JMARF decided to make advertisement through banners or tarpaulins and fliers. JMARF’s ultimate goal of doing some advertisement is to increase the company’s profitability by selling our products.

The following are the aims of JMARF’s advertising:

1. To support personal selling program
2. To reach inaccessible to salesmen.
3. Enter a new geographic market or to attract new groups of customers
4. Introduce new products.
5. Build a positive business image.

Pricing strategies usually change as a product passes through its life cycle. In pricing innovative new products, the company can follow a skimming policy by initially setting prices high or it can use penetration pricing by setting low price in order to penetrate the target market as deeply and as widely as possible.

People refer to the customer service staff and the attitude and appearance that are reflective to JMARF’s organization, or perceived by their customer. Perception plays a large part in marketing, creating a corporate image and maintaining that image can be the most effective marketing tool ever imagined. JMARF should have a strong corporate image with good people; good people that listen to the customers, and good people that communicate those comments, concerns, and needs to the entire organization.

SWOT Analysis

JMARF OIL MILL analyzed the strengths, weaknesses, opportunities and threats of the business to identify the strategies to exploit external opportunities, counter threats, build on and protect company strengths and eradicate weaknesses. StrengthsWeaknesses Good Market ReputationLack of diversification Wide Product RangeStaff lack of motivation Quality productsProduct line too narrow Professional Management Good relationship with your customers Have of access to the best natural resources Exclusive access to high grade natural resources

A new and advance machineries Quality processes and procedures. Strong Market Image Motivated employee OpportunityThreat Little competitionUnable to Meet Demand An investment opportunityEntrance of new firm Product development and innovationChange of supplier Expand product lineEmergence of substitute products Increased trade barriers Price wars with competitors. Price fluctuations. Day by day changing gov’t.

TECHNICAL STUDY

This section identifies whether the product could be produced at the highest possible quality level with minimum cost. In a manufacturing firm, the items that are taken into consideration are the product itself, raw materials, the manufacturing process, machinery, furniture and equipment, building, plant location and layout, structure, production schedule, utilities, waste disposal and other information deemed necessary in determining technical feasibility.

The principal part of the dehusker is a sharp-pointed shard of steel (a part of the native plow) positioned vertically with the point up and the broader part firmly placed on the ground. The farmer-operator impales the coconut on the sharp point with a strong determined downward movement. A few impaling strokes loosen the husk, making it come off (usually) in one piece.

Impaling requires accuracy and nerve. Since dehusked coconut is an important article of commerce locally, husking therefore becomes mandatory. The coconut husks are left with the farmer. In the places where there is a coir fibre industry, the husks may be sold to this industry. Most often the husks are not sold but are used as fuel for drying copra. If little or no copra is made, there is an accumulation of coconut husks.

Since the coconut meat is found well inside the nut and is firmly attached to the shell, certain steps are necessary before drying the coconut kernel. Nut Splitting After the coconut is dehusked, the hard but brittle shell is exposed and can be split open into two halves using a machete. The coconut water is drained off leaving the cups ready for the drying stage. The meat is still attached to the shell. During the drying process, the meat shrinks and is easily detached or scooped out from the shell. These cups of coconut meat are then dried further.

Some farmers also practice nut splitting using a heavy machete even without dehusking the coconut. After nut splitting, the water is allowed to drain off. With meat still attached to the shell and the shell to the husk, the halved nuts are dried under direct sunlight. During the drying process the meat becomes detached or is scooped out from the shell with a scooping knife. The cups of meat are then further dried into copra. Copra Processing Copra is produced after drying the coconut kernel. The quality of copra and copra cake is influenced by the method and the manner of drying the coconut kernel.

Improperly dried copra gives rise to certain moulds, the most harmful of which is the yellow green mould called Aspergillus flavus and other aflatoxin related moulds. Aflatoxin is harmful both for man and animals. It is therefore extremely important that the coconut kernel be properly dried to prevent the attack of aflatoxin related moulds. Processing of mature nuts to copra has several problems. Improper processing results in low oil yield and incidence of aflatoxin. Proper post-harvest practices, as well as proper drying and storage can increase the oil yield to about 20 percent.

Proper drying of coconut results in copra with lower moisture content and lower incidence of aflatoxin. Copra is mainly produced by small coconut holders using sun drying or smoke-kiln methods. Hot-air dryers are also used to a limited extent. Copra making involves different steps between harvesting and marketing of the produce. Of these, drying the coconut kernel or reducing its moisture content from 50 percent to 6 percent most influences the quality of the product. The following are ten guidelines for producing aflatoxin-free copra:

1. Harvest only fully matured (brown) nuts. These are the 12-month old or older nuts;
2. Do not pay the harvester for immature (green) nuts; instead penalise them for picking green nuts;
3. For producers selling husked nuts to desiccated coconut factories, segregate the “fouls” for processing into copra. Never mix the “regular copra” with the copra from “foul” nuts. They tend to have high mould growth;
4. When preparing copra, split the nuts and expose the meat only when certain that drying can start immediately or within four hours from splitting (exposure) to prevent mould formation. When there is the threat of bad weather, defer nut splitting;
5. If the weather suddenly turns bad during the sun-drying period and is expected to remain so for some time, use of mould inhibitors is recommended;
6. For producers practising sun drying, maintain cleanliness in the drying area. Clean pavement or floors before spreading fresh coconut meat. Make sure that soil and other extraneous matters are not mixed with the meat. Plastic sheeting may be used under the coconut meat to avoid direct contact with the ground;
7. Have on hand a portable cover (plastic sheeting) to protect coconut meat from rain and dew. These are shaped like roofing (inverted Vs) to allow aeration. On extended downpours, heat and dry the copra within 24 hours;
8. Continuous sun drying for four to five days (in good sunlight) shall achieve 6 percent moisture content;
9. For producers using smoke, kiln dryers, and other types of dryers, a drying temperature of 35oC to 50oC should be maintained for the first 16 hours of drying followed by 50oC during the next phase until a final moisture content of 6 percent if reached. It is important that drying should begin four hours after the nuts are split to prevent mould contamination;
10. Pressing the copra between the thumb and forefinger, the thumb against the whitemeat is a quick test for 6 percent moisture content. If the copra kernel (white portion) does not stick to the thumb, and readily drops when released, the 6 percent (approximately) moisture level has been achieved. Drying There are several methods and practices in drying the coconut kernel or in making copra. The methods vary from that which is considered primitive and traditional to one that adheres to certain scientific principles of drying.

The three common methods of drying are:

1. sun drying or solar drying;
2. kiln drying which is either direct on semi-direct drying;
3. indirect drying using hot-air dryers.

Sun Drying

Sun drying can produce good quality copra. This method is used only during the dry season and when drying only small quantities of nuts. Since sun drying requires no expenses for fuel, the overall drying cost is considerably cheap compared to other copra drying methods using fuel-fed dryers. Fuel saved could mean possible additional farm income when sold or transformed into high value products like coconut shell charcoal, activated carbon, coir, etc. leading to the maximum utilization of farm resources. Because the dryer is capable of producing clean, white and edible copra, copra produced should command a premium price. Moreover, its adoption could promote a high degree of consciousness in the production of superior quality export products.

Kiln Drying

There are two types of smoke dryers commonly used by coconut farmers, namely: the direct and semi direct types. Primarily, both types have the same heating principle but differ only in design and manner of firing or charging fuel. The direct dryer is designed in such a way that the fire bed is directly located below the copra bed. On the other hand, the design of semidirect dryer is superior to the direct type. The hearth where fuel charging/feeding is done is located on one side of the dryer, connected to the drying bed by a tunnelike flue.

Underneath the platform is a fire hearth where coconut shells and husks are burned slowly to provide the heat for vaporising the water from the coconut meat. Generally, there is no chimney. The coconut meat shrinks upon drying and may be removed or scooped out from the shell. The meat is then further dried in the smoked dryer. The basic features which make the direct smoke dryer preferred by farmers are the high thermal efficiency of the dryer (the coconut meat is directly heated), the low cost of construction (the component parts are available on the farm), the simplicity of the design and the low cost of fuel.

However, copra produced from this dryer are usually dark, sooty with smoke and at times scorched. Since the fuel is burned inside a pit underneath the drying bed, the dryer has to be attended when it is in operation to prevent the dryer from burning. It is a simple structural design, cheap and easy to build. The dryer has a combustion pit located about 3 feet away from the drying bed. The hot combustion product is channeled to the drying bed via an underground tunnel. The dimension of the excavation pit is 6 feet in width, 12 feet in length and a depth of 4 feet.

The pit floor of the firing chamber is slightly inclined upward toward the end portion, which is designed to direct the flow of heated air. Dry coconut husks are used for fuel. It has a capacity of 2,000 nuts which are dried after 20 to 25 drying hours with resultant moisture of 6 percent. Due to the ease of structural design and operation, needing only inexpensive and locally available construction materials, this dryer is deemed to be socially adaptable and economically ideal for small coconut farmers.

Since the total construction cost is within the reach of small coconut farmers with minimal fuel costs, the over-all production cost per kilo of copra would be much cheaper. Reflecting that fuel consumption per batch is approximately 50 percent of nut capacity, the savings per coconut husk (50 percent) plus coconut shell has a higher commercial value. This would mean additional financial benefits for the coconut farmers.

In drying copra using hot-air dryers, the coconut meat is dried by means of uncontaminated hot air that passes through the copra bed. Since the smoke does not come in contact with the kernel, the copra produced is clean and white. If properly done, copra-drying using hot-air dryers produces good quality copra with 6 percent moisture content. There are quite a few hot-air dryer designs.

Its heat exchange is made up of three standard oil drums welded together with five semi-circular baffles installed alternately inside the drums at distance of 0. 46 m. The furnace measures three feet in length and two feet in width and is made of steel plastered with 6 cm thick cement-ash mixture inside. The furnace is provided with a slanting grate and door to regulate air entry. A butterfly valve is also provided at the chimney to control the temperature. About 30 hours are needed to dry one batch to 6 percent moisture content. Based on a 10 hours operation time per day, drying takes three days.

About 8. 7 minutes are needed to produce one kilo copra with the modified Kukum dryer. The Modified Kukum dryer produces good quality copra. However, maintenance and repair costs are the high. The metal parts of the dryer, which start to corrode as soon as the dryer is being constructed. Frequent use of the dryer will reduce corrosion, but never stop it. Since copra is a low price product, the use of stainless steel or even the application of primer is not economical. The exposure to high temperatures, aggressive fumes and water induce corrosion of the metal dryer components.

The Cocopugon is a further improvement of the modified Kukum Dryer. Instead of using metal drums as the heat exchanger common in Kukum Dryers, the Cocopugon uses bricks. Bricks are known for their high strength, durability and dimensional stability. The proportions of the Cocopugon are 260 cm in width, 360 cm in length and 200 cm in height. Standard fire bricks and 2. 5″ crown bricks are used for the chimney and the heat exchanger, respectively. The dryer can accommodate 2,000 average sized nuts per batch (volume of drying bed: 3. 3 m3). To facilitate ease of loading and unloading, the right side of the drying bed wall is removable.

A one step stair and platform is also provided on the same location. Unlike dryers with metal heat exchangers, this dryer needs to be preheated. Firing should be done first before loading the split nuts. The burner can accommodate about 200 to 300 husks. Refuelling has to be done every 3 to 5 hours. The heat stored in the bricks will be released slowly after the last firing on the first drying day, such that drying will continue for several hours without adding fuel (husks).

After a preheating time of 3. 5 hours and a loading time of two hours, the average temperature in the bottom layer is 66. 3? C. The burner then has to be fed five to seven times for the whole drying period. Formerly, this could only be accomplished in one day at a feeding interval of about three to four hours assuming a constant fuel feed rate. Unloading could be done after the dryer has cooled down on the second day. If operated on a two days schedule, five firings are needed on the first day and another two to three firings on the second day.

Unloading will be done the next morning to utilize the heat stored in the bricks. If the baffle in the chimney is closed during nighttime, embers can still be found inside the burner on the following morning making it easy to continue firing. The temperature curve for the burner has several small peaks indicating the maximum temperature per feeding interval. The effect on the drying bed temperature is minimal, thus having an almost constant drying temperature. Even if the burner is fully loaded, the resulting temperature in the drying bed does not exceed 90 to 95.

C, thus eliminating the risk of producing scorched copra. Since the heat exchanger or the burner covers almost the whole area inside the dryer body, the temperature distribution is very uniform. The difference in temperature between the highest and lowest value is less than 5 Kelvin. A standard deviation of 3 Kelvin indicates a very constant temperature. During operation, the dryer operator spends two hours per batch at the dryer, meaning the labour requirements are cut down by more than 50 percent to 4. minutes per kilogram copra compared with the modified Kukum dryer.

The farmer can therefore leave the dryer in between fuel feedings and use his time for other activities. B. Manufacturing Process Dry processing of meat for oil production involves the conversion of coconut meat into copra prior to expelling and refining. This process is however done off-farm, in an oil mill. From the farm, the copra goes through a series of traders. Storage in warehouses range from two weeks to two months. At the mill, the copra undergoes the following steps.

• Cleaning: Copra is transferred from the warehouse to a mill by a series of floor conveyors, rotor-lift and overhead conveyors. Copra is cleaned of metals, dirt and other foreign matter manually by picking or through the use of shaking or revolving screens, magnetic separators and other similar devices;
• Crushing: Copra is broken into fine particle sizes of about 1/16″ to 1/8″ by high speed vertical hammer mills to facilitate oil extraction;
• Cooking/Conditioning: The crushed copra that has about 5-6 percent moisture is passed through a steam-heated cooker.This brings the temperature of the copra to the conditioning temperature of about 104oC (220oF). At the conditioner, the copra is maintained at about 104-110oC (220-230oF) for about 30 minutes to insure uniform heat penetration before oil extraction. Moderately high temperature facilitates the expelling action. Oil is able to flow out more easily due to decrease in viscosity proteins and other substances present in the copra. Heating dries and shrinks these substances. Moisture content of copra is about 3 percent when it leaves the conditioner.
• Oil extraction: In the expeller, the milled copra is subjected to high-pressure oil extraction, first by a vertical screw, and finally by a horizontal screw. To control the temperature during extraction, the main shaft is provided with water-cooling and cooled oil is sprayed over the screw cage bars. The temperature of the oil should be kept at about 93-102oC (200-215oF) to produce light coloured oil and effect good extraction.
• Screening: The oil extracted in the expeller flows into the screening tanks to remove the entrained foots from the oil. The foots settle at the bottom and are continuously scooped-out by a series of chain-mounted scrapers which lift the foots to the screen on top of the tank. While travelling across the screen, oil is drained out of the foots. The filtered oil flows into a surge tank from where it is finally pumped to the coconut oil storage tank.
• Filtration: The oil is passed through a plate and frame filter press to further remove the solids in the oil. Two filter presses are provided – one on duty while the other is being cleaned and dressed.

Production/General and Administration Schedule

The proposed business will operate for 6 days a week. Production hours will be Monday to Saturday from 8 a. m to 4 p. m. while office hours will also be scheduled from Monday to Saturday, 9 a. m to 4 p. m. H. Utilities and Other Operating Expenses The operating expenses of the proposed business are the following: depreciation of equipment as well as furniture and fixtures, office supplies, salaries and benefits of employee, repair and maintenance and miscellaneous.

Electricity is charge to utilities expense. I. Waste Disposal In this particular oil mill, there will be no problem regarding the disposal of waste since it has very minimal waste composing of a class C residue copra cake and oil which is considered as feeds for horse that can create another income for the business. The extracted class C oil serves as lubricant for some stocked parts of the machine that’s why there are no problem regarding in waste disposal.

Organization and Management Study

It is to determine the appropriate business organization, the people who will be involved and manage both before and during the operating periods of the enterprise, and then functions, pointing out the firms or persons involved or to be involved in studying the different aspects of the project, the type of business organization, organizational chart and functions of each unit management personnel, skills and numbers of labor required specifying the duties and time to be devoted to the project, qualifications, compensations, fringe benefits and facilities. A. Form of Business Organization

The proposed business will adopt corporation form of business organization. Corporation is the most common form of business organization, and one which is chartered by a state and given many legal rights as an entity separate from its owners. It is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence.

It may acquire, own, and dispose property in its corporate name. It may also incur liabilities and enter into other types of contracts according to the provisions of its charter. Continuity of life It has a continuous life regardless of changes in the ownership of their stock. Sales or transfer of stocks by stockholders does not affect the continuity of the corporation. Liability of stockholders is limited to their paid investment

A stockholder has limited liability to the extent of his or her subscription and paid investment in the corporation. Ease of transferability of shares Stockholders may transfer their stocks as they wish. They may sell or trade the stock, give it away, bequeath it in a will, or dispose of it in any way they desire.

Findings, Conclusion and Recommendation

The chapter concludes the study on the feasibility and viability of the proposed business. The findings are restated, the conclusion is constructing and the recommendation for the proposed project is evaluated The study is about “Ensuring a Future from Copra: A Quality Product of Crude Coconut Oil and Copra Cake to compete within Industry”

The data gathered and presented in the preceding chapters are summarized and systematically presented in this segment to prove that there is an opportunity in establishing an Oil Mill in San Juan, Batangas.  We conduct an oral interview to the three (3) feed mills, which are our target market for us to determine the demand and supply of products as well as raw materials and its analysis. The total demand of crude coconut oil that acquired of the said feed mills from their supplier is 200. 4 tons and the supply was determined to be 328. 32 tons. The total demand in peso of the operation amounted to Php 7,635. 24 and the supply was determnined to be 12,508. 00. The researchers find out that the demand for their product is high, therefore the business can supply more than the needs of customers.

The proposed business will be located at Barangay Talahiban, San Juan, Batangas. It is operated for 6 days a week and it is 8 hours operated per day. The building was constructed and its office with an amount of 1. 7 million. The machineries, furniture and equipment, shall be acquired at the amount of Php 2,546,600. 00.An office supply has a monthly expense of Php 5,000 and has annual expense amounted to Php 60,000. Annual salary expense is Php 1,752,000. 00, Php 426,393. 34 for the annual depreciation expense and Php 12,000 for the miscellaneous expense.

After scrutinizing and studying all concerns regarding the organization and management of the proposed business, the researcher decided to adapt the Corporation type of business, which is the most common form of business organization. The stockholders are the owner of the business; also will be the managers and hold overall control over the workforce. The proposed business will have twenty six workers for five years including supervisor, accountant and auditor which will prepare the financial statements annually.

This study revealed the profitability, liquidity and solvency of the proposed business in its operation within the first year of operation. The capital investment is Php 11,500,000. 00. The net income for the first year of operation is Php 5,899,091. 77 with the payback period of 1. 95 years with an increasing ratio. The return on sales of 0. 10 on the first year indicates a better revenue performance.