CHAPTER 1

Background of the Study (Profitability)

Businesses set objectives that directs the operation of business, ant its ultimate goal is to

maximize profit at least cost. The use of high end technology is the most cost efficient factor of

production. The production of coffee in Casile, Cabuyao employed the combination of human

agricultural skill and machines in the process of production. The profitability of a business measures the

financial success of a company or business entities. It is an important tool for an investor to understand

whether the business is financially sound or poised for growth. It is used to determine the scope of a

company’s profit in relation to the size of a business. Profitability is a business ability to produce a return

on an investment based on its ability to produce a return on its resources in comparison with an

alternative investment. Profitability is directly linked to productivity, high profitability means lower cost

of production.  A company can generate a profit, but does not necessarily mean that the company is

profitable. For coffee producers, profit is influenced by four main factors: the price they are paid,

the cost of production, and the yield and quality of their crop. As minimizing costs is difficult, and

because coffee producers are mostly “price takers”, the only two internal factors which producers can

influence are the yield and quality of their plants. Improving the yield of their coffee plants will directly

improve farmers’ total revenue per hectare, and increase profitability as a result.

https://perfectdailygrind.com/2021/01/exploring-yield-profitability-for-coffee-farmers

Theoretical Framework

Conceptual Framework

Objective of the Study

Significance of the Study

The following will be benefited from the results of the study.

Casile- Guinting Cooperative. This study will be their guide on how to enhance their
promotional activities as their business tends to grow.

City Government of Cabuyao. This will help in the city to achieve entrepreneurship in terms of
agriculture and help the city be known as one of the new coffee havens of CALABARZON.

Farmers of Casili. This study will help the coffee farmers to increase their revenue and gain a
wider market in the coffee industry.

Consumers. The study may serve as a basis in selecting their coffee brands that gives satisfaction
in terms of taste, aroma of a coffee, and nutritive value.

Retailers. Additional brand of coffee in their store will increases their market and sales.

College of Business Administration and Accountancy – This study can provide information that
can be used by the college students as guide to develop learning skills that could use to produce more
competitive and competent graduates.

Researchers. The study will serve as a self- fulfillment to the researchers in their completion of
their study. It will provide them additional learning and understanding that they can use in the future in
terms of promotion.

Future Researchers. This will serve as their reference in conducting the same study. It may help
them to come up with a better research through the provided evidences.

Definition of Terms

The following terms were define conceptually and operationally as used in this study:

Advertising. An audio visual form of marketing communication that includes newspaper,

magazine, TV commercial, radio commercial, social media, tarpaulin, store signs, window display,
billboard and leaflets.

Arabica. It is the most popular species in the coffee industry. It has a sweet and rather soft taste
compared to the other types. Arabica is believed to the first species of coffee to be cultivated.

Antioxidants. It is a substance that inhibits oxidation, especially one used to counteract the
deterioration of stores food products.

Barangay Casile. An upload barangay and one of the eighteen (18) urbanized barangays
comprising the City of Cabuyao in the province of Laguna, Philippines. It lies for about twenty- three
(23) kilometers away from the city proper of Cabuyao and is situated at the western and high elevation
portion of the city.

Caffeine. It is an alkaloid compound which is found especially in tea and coffee plants and is a
stimulant of the central nervous system.
 Cellulite. It is a persistent subcutaneous fat causing dimpling of the skin, especially on women’s
hips and thighs.

Detoxify. It means to remove a toxic substance.

Exfoliate. It means to remove the dead cells from its surface.

Fragrance Oil. It is an oil that is undiluted and long lasting – surrounding the wearer with aromas
which may last for seven days.

Hydration. It means it is the process of causing something to absorb water.

Laguna Agriculture Department. It is the principal agency of the Philippine government (in
Laguna) responsible for the promotion of agricultural development growth. In pursuit of this, it provides
the policy framework, helps direct public investments, and in partnership with local government units
(LGUs) provides the support services necessary to make agriculture and agri-based enterprises
profitability and to help spread the benefits of development to the poor, particularly those in rural
areas.

Marketing Strategy – An organization’s strategy that combines all of its marketing goals into one
comprehensive plan.

Melanoma. It is a tumor of melanin-forming cells, especially a malignant tumor associated with

skin cancer.

Rejuvenate. It means to restore to youthful vigor or appearance; make young again.

Robusta. It is a sturdy specie of coffee bean with a low acidity and high bitterness; it has a
primary used in instant coffee, espresso, and as a filler in ground coffee blends. Robusta contains as
much as caffeine and therefore tastes much stronger and harsher.

CHAPTER 2: Review of Related Literature and Studies

Foreign Literature

Production Efficiency

The process of production begins if unprocessed coffee seeds are planted, they
can germinate and grow into coffee plants. The seeds are normally planted in large shaded beds. After
sprouting, the young seedlings are left to grow for a few days before moving them to individual pots
with carefully formulated soils for optimal growth. Advances in machinery have expanded the scale,
speed, and productivity of farm equipment, leading to more efficient cultivation of more land. Seed,
irrigation, and fertilizers also have vastly improved, helping farmers increase yields. Okt 9, 2020
mckinsey.com

Today's agriculture routinely uses sophisticated technologies such as robots, temperature and moisture
sensors, aerial images, and GPS technology. These advanced devices and precision agriculture and
robotic systems allow businesses to be more profitable, efficient, safer, and more environmentally
friendly. Automation is broadly used in coffee production to reduce labor costs and provide producers
with more time during harvesting and processing. Perfect Daily Grind .com 2021 Old industries must
embrace a digital, connectivity-fueled transformation in order to overcome increasing demand and
several disruptive forces.

The agriculture industry has radically transformed over the past 50 years. Now, agriculture is in the
early days of yet another revolution, at the heart of which lie data and connectivity. Artificial
intelligence, analytics, connected sensors, and other emerging technologies could further increase
yields, improve the efficiency of water and other inputs, and build sustainability and resilience across
crop cultivation and animal husbandry.

Demand of Coffee Product

Demand for food is growing at the same time the supply side faces constraints in land and
farming inputs. The world’s population is on track to reach 9.7 billion by 2050, 1 requiring a
corresponding 70 percent increase in calories available for consumption, even as the cost of the inputs
needed to generate those calories is rising. 2 By 2030, the water supply will fall 40 percent short of
meeting global water needs,3 and rising energy, labor, and nutrient costs are already pressuring profit
margins. About one-quarter of arable land is degraded and needs significant restoration before it can
again sustain crops at scale.4 And then there are increasing environmental pressures, such as climate
change and the economic impact of catastrophic weather events, and social pressures, including the
push for more ethical and sustainable farm practices, such as higher standards for farm-animal welfare
and reduced use of chemicals and water.

Global demand for coffee continues to rise, but climate change is expected to shrink suitable
land for Arabica coffee beans by 50 percent by 2050 – just 30 years away. Japan’s Key Coffee, Inc. is
working to protect the future of coffee and coffee farmers, starting in Tana Toraja, Indonesia.
https://sustainablebrands.com/

Local Studies

Production function is applied to the relationship between a firm’s input of resources and its output of
goods or services per unit of time leaving prices aside.” It is the maximum amount of output that can be
produced and the input required to make that output under a given technical state of knowledge. The
researches would like to measure the production efficiency of Casile Guinting Cooperative that
produces a high yield for profitability.

The total land area planted with coffee is 32.62 hectares. There were two varieties of coffee
widely planted in the area, namely: (1) Robusta and (2) Liberica. The Office of the City of
Agriculturalist conducted monitoring of trees in the area, as of now, there were 31, 638 total of
Robusta trees, bearing and non-bearing and a total of 4, 185 trees of Liberica, bearing and non-
bearing. The upland community of Casile has a long thrived on agriculture and with the
opportunities brought by the Department of Agriculture, Department of Trade and Industry,
Department of Labor and Employment and other agencies in partnership with the City
Government of Cabuyao. As of 2016, it is consisted of 107 members; 69 female and 38 males.
Out of these 107 members, 62 are farmers.
Cafe de Cabuyao started year 2011 and started selling coffee products year 2014 and up to the
present, the Casile-Guinting Upland Marketing Cooperative (CGUMC) distributed it in different
coffee shops and stores inside and outside the local community. They also supplied coffee in
the City Government Office, in the Local University and in different coffee shops outside the
local community of Cabuyao which is the Wakeywakey coffee in Sta. Rosa and in Palace in the
sky in Tagaytay City. Every week they are earning Php 17,000 - 20,000 and producing 5-7 tons of
coffee beans in a year. Cafe de Cabuyao is earning every year ranging from Php 816,000 -
960,000; which is their income only in retail and bulk selling and the income for the coffee
shops that they are supplying outside Cabuyao is not included. It is been running for at least 8
years and as of 2018, their income is only Php 1,400,000. And in the end of the present year,
the income is expected to boost at least double the income earned in previous year because
the coffee bean produced is almost three times the number of coffee bean produced in year
2017-2018.
The total coffee consumed in the Philippines in 2020 was about 3.3 million 60 kg bags.
This reflects a long-term increase in coffee consumption over the years.
https://www.statista.com/statistics/314989/philippines-total-coffee-consumption/
While the Philippines consumes as much coffee as countries such as the United States,
Brazil, Japan and the European Union (EU), the country is also looking to be one of the top
producers of top-grade coffee around the world.
To make this a reality, President Duterte on March 7, 2017, signed the Philippine Coffee
Industry Roadmap 2017-2022 to boost the country’s domestic coffee output in the next five
years—a huge lift for coffee farmers, producers and traders.

Trade Secretary Ramon M. Lopez said the Department of Trade and Industry (DTI) is
working closely with the Department of Agriculture (DA) to ensure the Philippine coffee
industry would be at par with the world’s top producers such as Brazil, Vietnam, Columbia,
Indonesia and Honduras.

The Philippine Coffee Industry Roadmap 2017-2022 will guarantee a coffee industry that
is cost-competitive, aligned with global-quality standards, reliable and environment-friendly,
that will provide sustainable benefits to farmers, processors, traders, and exporters, and attain
food security and poverty alleviation. Coffee is the second most-traded commodity in the world
and is grown in 50 countries along the equatorial zone called “The Bean Belt,” located between
latitudes 25 degrees north and 30 degrees south. Interestingly, the Philippines lies within the
Bean Belt. Due to this advantageous location and favorable, although tropical, climate, the
country produces four varieties of coffee: Robusta, Arabica, Excelsa and Liberica.

Currently, the top 5 regions in producing coffee are Soccsksargen (Region 12) with 25,100.77
MT, Davao with 11,429.78 MT, Autonomous Region in Muslim Mindanao  with 10,341.59 MT, Northern
Mindanao with 5,604.95 MT, and Western Visayas with 4,356.25 MT.
With the Philippine Coffee Roadmap as guide, the trade and agriculture departments together with the
private sector  and other coffee stakeholders held on March 20 and 21 the third Philippine Coffee
Conference in Baguio City and presented the coffee industry’s performance on the first year of the
implementation of the road map.
 The conference also discussed the strategies to achieve the goals of the Philippine Coffee
Roadmap, trends in coffee—brewing methods, quality coffee farming of Arabica and fine Robusta,
retailing a coffee business, financing for coffee business, and coffee business models.
Source: https://businessmirror.com.ph/dti-sees-bright-prospects-ahead-for-philippine-coffee-industry/

CHAPTER 3

CHAPTER 4 Presentation and Interpretation of Data

Financial Aspect

CASILE-GUINTING UPLAND MARKETING COOPERATIVE

STATEMENT OF FINANCIAL CONDITION
As of December 31, 2020 and 2019
(in Philippine peso)

2020 2019
ASSETS
Current Assets
Cash and Cash Equivalents 190,443 71,686
Receivables 525,000 185,816
Other Assets 121,365
Inventory 80,000 56,375
Total Current Assets 795,443 435,242

Non-Currents Assets
Property and Equipment 2,957,849 4,296,931
Total Assets 3,753,292 4,732,173

LIABILITIES AND OWNERS EQUITY

Current Liabilities
Trade and Payables 135,000 1,124,791
Total Current Trade Payables 135,000 1,124,791

Total Liabilities 135,000 1,124,791

Members Equity
Share Capital 279,750 198,900
Donated Capital 4,927,000 4,927,000
Statutory Funds -1,588,458 (1,518,458)
Total Equity 3,618,292 3,607,382
TOTAL LIABILTIES & MEMBERS’ EQUITY 3,753,292 4,732,173
Financial Statements shows how healthy a business is. You can read and interpret financial statements
to find ways to make profit, expand business operation and address problems before they grow.
Financial ratios can use to compare the business performance from previous year to current year or
comparing it to competitors. It also represent how well the business can cover its debts, or how much
profit it’s earning.

1. Current ratio = Current Assets/Current Liabilities

2020: 795,443/135,000 2019: 435,242/1,124,791

The current ratio measures your liquidity-how easily your current assets can be converted to
cash in order to cover short-term liabilities. The higher the ratio, the more liquid your assets.
Current ratio that is less than 1:1, means you don’t have enough current assets to cover your short term
debts, means the business is in a tight position. The higher the current ratio, the better able you are to
cover liabilities.

2. Quick ratio = (Cash and Cash Equivalents + Accounts Receivables) / Current Liabilities

2020: 190,443 + 525,000 + 80,000 2019: 71,686 + 185,816 + 121,365 + 56,375

135,000 1,124,791
795,443/135,000
:
= 5.89:1
The quick ratio (also called acid test ratio) is like the current ratio- it measures how well a
business can pay off its debts. It only looks on highly liquid assets such as cash or assets that can easily
be converted to cash. Equipment is not included because selling off equipment isn’t a quick way to raise
cash. So long that the quick ratio is higher than one, you’ve got enough easy-to-liquidate assets to cover
all your assets.

3. Debt to equity ratio = Total Debt/ Owner or Shareholder’s Equity

The debt to equity ratio tells you how much your business depends on equity versus borrowed
money that includes long term debts but not trade/accounts payable. Café Guinting is doing well in 2020
and also with 2019 as they have no long term debt and the cooperative has enough money to pay trade
payables. With all its retained earnings, it shows that the retained earnings runs the business largely
using its own money.
PRICING

Sales:

18,500/week x 4 (monthly) x 12 (yearly)

= Php 888,000

Production:

6 tons or 6,000 kg annually

SELLING PRICE

Sales/Production

888,000 yearly / 6,000 kg

Php 148/kg