Farm

AECO 112: Management

Practice
Department of
Agricultural Economics,
College of Economics
and Management,
UPLB

[A CASE STUDY: ATO BELEN’S

Kristine Lea G. Climaco
Section C-2L
Prof. Salvador P. Catelo
FARM, 2009]
This case study serves as a partial fulfillment in Agricultural Economics 112: Farm Management
Practice under the supervision of Dr. Salvador P. Catelo of the Department of Agricultural Economics,
College of Economics and Management, UPLB. 2nd Semester, A.Y. 2009-2010.
I. GENERAL FEATURES OF THE FARM

The commercial name of the farm is Ato Belen’s Farm, named after its proprietor, Mr. Renato
“Ato” Belen. In 1987, Mr. Belen inherited a 1.4-hectare land from his father-in-law and used a starting
capital of 5,000 pesos to establish his own farm. During the early years after the farm was established,
the only goal of the farm is to gain profit to be able to cover all the expenses from home consumption
and farm inputs. But later on, as Mr. Belen’s four sons graduated in college, he realized that his farm is
more than just a profit-gaining business. He recognized that there is a need to promote organic farming,
and that many farmers are not well-informed about its great benefits. He wanted to search more
efficient farm practices, more ways of minimizing the cost of inputs while producing high-value of farm
produce. And to be able to prove that organic farming is really advantageous, Mr. Belen is determined
to maintain and expand his business.
Ato Belen’s Farm is located in Brgy. San Juan, San Pablo City (see Figure 1 for the directions on
how to get to the farm).
 Figure 1. Map with directions to Ato Belen’s Farm.

Its front gate lies along the San Juan Road, which is southwards of the farm itself. It is bounded
by residential areas in the west, north & east directions. The San Juan Church is about 20 meters across
the front gate, while the National Highway that leads to San Pablo City proper and to the town of
Calauan is just 1 kilometer away, perpendicular to San Juan Road. The farm is located in an area that has
a climate of Type 1 wherein dry season is distinct from the months of November to April and wet season
from May to October. The soil is loamy, ideal for wide varieties of crops to produce. Record-keeping
only includes the transactions involving inputs and outputs which are all written in a logbook on a daily
basis. Crop rotation is being implemented and every 2-3 months, there are changes with the distribution
of planted crops in the area. The farm is very famous for its plant materials or seedlings. These include: 7
varieties of Rambutan (Maharlika, Kalbo, Super Red, Gina, Rongrien, R162 & R5), 5 varieties of Mango
(Mangapple, Carabao, Guimaras, Indian & Pajo), 8 species of Citrus (Calamansi, Daranghita, Lemon,
Perante, Pomelo & Pongkan), 3 varieties of Lanzones (Duka, Longkong, Paete and Native), and other
crops, namely, Chico, Lychee, Mabolo, Paminta, Sampaloc, Abiu (Mediterranean Caimito), Atis, Avocado,
Balimbing, Caimito, Champaca, Coco Nino, Duhat, Durian, Guava Apple, Guyabano, Latexless Langka,
Longgan, Macopa, Mahogany, Mangosteen, Marang, Santol, and Papaya. In addition to crops, there
exists also the livestock and the organic compost enterprises. Livestock includes swines (gilts, pregnant
gilts, piglets & boars), toy dogs (breeds: Shih-tzu, Pug, Dachshund and Mini-pincher), aquarium fish and
chickens (for home consumption). Organic Compost enterprise includes: the Ato Belen’s Farm LactoBac
LAS-1, EM (Effective Microorganism) Activated Compost, All-in-One Vermi-Activated Compost and
VermiTea. These enterprises all started as an outlet for Mr. Belen’s interest. When the farm was
established, he was only inclined in doing plant propagation to sell plant seedlings to other farms in San
Pablo. As time passed by, his field of interest broadened and his goal of expanding the business
intensified, making sure that each enterprise is really profitable and can easily adapt to its location.

II. PHYSICAL RESOURCES

The total land area of Ato Belen’s Farm is 1.4 hectares. See Figure 2 below for the land distribution per
item/enterprise:

Fig. 2. Farm Land Distribution

19%

5%
Crops

Livestock
12% Organic Compost
64%
Others (pathways, garage, seminar
room,office and family house)
The buildings and infrastructures are enumerated as follows (see Table 1 for a summarized account of
buildings and infrastructures including land):

1.) Man-made Covered Fish Pond (10 x 50 ft2) – found at the northernmost part of the farm and built in
1990, this is formerly a greenhouse. It was converted into a fish pond to serve as the hatchery of
aquarium fishes used to produce LactoBac LAS-1 Concentrate and EM (Effective Microorganism)
Activated Compost. An estimate of Php10,000 of costs was spent in building this facility and is expected
to last for 3 more years.

2.) Piggery (2,000 m2) – this L-shaped building costs Php200,000 during the time when it was built in
1988 at the northwest part of the farm and is expected to last for 15 more years. It has the ability to
accommodate at most 50 pigs.

3.) Sleeping quarters (2 units) – the first one is located 3 meters away from the piggery and was formerly
the quarters of the man-in-charge with the piggery. At present, it was left unused. It is 18 x 20 feet and is
acquired at Php10,000 in 1988. The second quarters is located 5 meters away from the seminar room
and has the function of accommodating college students who live in a faraway province and has no
place to temporarily live as they gather data from the farm. It was built in 1987, costing Php10,000. Mr.
Belen emphasized that he does not allow female students to be accommodated in the quarters; they are
strictly for males only.

4.) Old greenhouse (40 x 40 feet)– built in 1994 at Php40,000, it was used to house crops that are grown
using the technology of hydroponics. Now, it serves as a storage facility and is expected to lasts for 15
more years.

5.) Seminar Room (40 x 60 feet) – located southwards of the farm, this is where the visitors, having a
population of 10-50, are brought in and where discussions/lectures with Mr. Belen are made. It costs
Php30,000 when put up and is expected to lasts for 30 more years.

6.) Vermiculture House (1200 sq. ft.2) – built in 2007 and is expected to last for 5 more years, the
materials used on it was from the poultry house that was destroyed by the massive typhoon, Milenyo.
There are 9 chickens in it for home consumption only and their cage is located right above the pool of
soil, where thousands of worms are being taken care of by Mr. Belen. The feces of chickens feed the
worms.

7.) Greenhouses (14 x 50 feet) – 2 units were given by the Department of Agriculture this year as part of
their extension project with Mr. Belen. Each unit is worth Php15,000 and serves as the “incubator” of
plants seedlings and seedlets. They may last for 20 years.

8.) Office (40 x 40 feet) – acquired in 1999 for Php50,000, this place has a huge desk and lot of chairs
where business transactions are made. It would take about 15 more years for it to last.

9.) Potting area (40 x 24 feet) –right beside the office is where sacks of organic composts are stored and
the planting materials are prepared. The seedlings are transferred into the black bags and are
propagated. At the back, a room for storing farming tools and equipment can be found. It costs
Php20,000 when built in 2004 and is expected to last for 15 more years.

10.) Garage (20 x 30 feet) – it is located in front of the office and can accommodate 2 medium-sized
vehicles. There is an extending cemented area to its right side where a table and 2 benches are placed. It
was built in 2004 costing Php20,000 and may last for 25 more years.

Tools and equipment are accounted in Table 2. Irrigation installations include the water supply
from the NAWASA plus the two deep well water pumps. There are no post-harvest facilities in the farm
simply because crops are purchased in its fresh condition such that buyers are even allowed to harvest
and choose the vegetables that are planted on the vegetable area. Also, planting materials, when
prepared via propagation, does not require any post-harvest facility.

III. Human Resources

The organizational structure of the people who works in the farm has three levels (See Figure 2).
The first level is Mr. Belen, the farm manager and proprietor. He is the one who decides as to what to
do, when to do it, how to do it and what things are needed in doing it. He may frequently ask for a
second opinion or approval from his wife Eleanor, but the final decisions are always on his hands. The
second level consist the wife and a son of Mr. Belen. Eleanor Belen is the record keeper. She jots down
every farm-related transaction that has occurred in a logbook on a daily basis. She is also in-charge with
preparation of plant materials. She can be found regularly in the potting area during weekdays and in
the office on weekends because it is during weekends that many buyers or customers come to the farm
to purchase their goods. Their son, who happens to be a U.P. graduate of Agriculture major in Animal
Science, is the one who takes care of the fishes and the toy dogs. He performs the stud service when a
client wishes to acquire a crossbreeding procedure for his dog. The third level consists of one driver,
who also serve as the messenger and during idle times, a crop laborer, and five farm laborers (2 for
livestock enterprise and 3 for crop enterprise). The driver is responsible for using the delivery truck or
van to transport the purchased goods to the customers. Therefore, the driver must have a legal driver’s
license and also, possesses the requirements of a farm worker. A farm worker has the following
requirements:
 he must be living near the farm because it opens at 6 o’clock in the morning and closes
at 6 oclock in the evening. There is less chances of tardiness if he lives nearby, thus,
making the farm operations more efficient,
 he must be at least an undergraduate in high school,
 he must be willing and able to learn some basic agricultural methods used in operating
the farm; and
 he must be a hardworking and a good-natured person.

The duties and responsibilities of a farm laborer are: to follow instructions from the first and second
level in the organizational structure and to come on time in the farm.
 Figure2. Organizational Structure of Labor & Management of Ato Belen’s Farm

IV. Financial Resources

The starting capital of the farm is Php5,000 and since then, the source of funds has almost
always been from what has been earned from selling the commodities. There have been little financial
problems that hit the farm business operation. Ato Belen’s Farm is accredited by the Bureau of Plant
Industry (BPI) under the Department of Agriculture, giving them the opportunity to apply easily for loans
with a very low interest rate. Also, Mr. Belen seriously practices sustainable agriculture ever since the
farm was established, and by doing so, his costs are mostly at its minimum. For instance, instead of
spending money from time to time to buy fertilizer, Mr. Belen used the technology of vermiculture to be
able to produce organic fertilizer. Not only did it reduce the cost of inputs for his crops, but it also
increased the farm’s net income by selling the excess in the production of organic compost. Because of
sustainable agriculture and being a diversified farm, Ato Belen’s Farm has almost always been successful
in avoiding losses. The only instance that the farm has to apply for a loan in the BPI was when Mrs.
Eleanor Belen had a kidney operation 10 years ago. During that time, the suffered from losses because
of the hospital fees that need to be paid so Mr. Belen borrowed Php100,000 at 2% interest rate per
annum. This loan has been paid after two years and the operation of the farm went back to normal.
V. Marketing/Trading

The products/commodities are sold right at the farm itself. Buyers either freely enter the farm; send
orders via text messaging to Mr. Belen; or call the landline in the farm’s office and transactions are easily
done. Note that the last two options in purchasing products can only be done by buyers whom Mr.
Belen personally knew. Orders via those two options may imply that the buyers would want the
products to be delivered to them. If the products are to be delivered within the boundaries of San Pablo
City, Mr. Belen will charged a transport cost between Php150-200, depending on the distance from the
farm. But if they are to be delivered beyond San Pablo City, a transaction has to be made.
Buyers consist of retailers and consumers. Reasons for the existing market channels are:

 the products of the farm are all-natural and perishable goods, their value will decrease if they
are not consumed immediately; and
 Each product has its own specific purpose, it would be impossible to convert the products into
another form.

Manner of payments are strictly by cash, but exceptions are applied to those who are proven by Mr.
Belen to be trustworthy. He allows them to give down payments first, and then pay the rest afterwards,
depending on the agreement. The pricelist of most of the products of Ato Belen’s Farm is attached in
this report (see the last page). A problem with regards to storage has been encountered two years ago
when the typhoon Milenyo hit the farm and washed away all the stored organic fertilizers in the potting
area. This problem occurred simply because a part of the roofing of the potting area went off, allowing
the heavy downpour of water into the facility.
For the year 2009, the sales report of the farm is enumerated in Table 3.

VI. INCOME STATEMENT

________________________________________________________________________________
Income Statement
Ato Belen’s Farm
Period: Year 2009
________________________________________________________________________________
Income value, Php
crop sales 239,610.00
livestock sales 140,000.00
organic compost sales 81,500.00
greenhouses a & b 30,000.00

Total income 491,110.00

Expenses
Farm supplies 20,000.00
Farm equipment 300.00
Seeds expense 600.00
Hired labor expense 192,000.00
electricity expense 6,000.00
Repairs and maintenance expense 10,000.00
Fuel and oil expense 1,500.00
Tax expense 40,000.00
Depreciation - 113,935.17

Total expenses 384,335.17

________________
Net Income 106,774.83
________________________________________________________________________________

VII. BALANCE SHEET

ASSETS LIABILITIES
 Current Assets Current Liabilities
cash on hand 50,000.00 tax payable 40,000.00
cash on bank 68,600.00 monthly bills 1,300.00
accounts receivable 2,000.00 salaries & wages 18,000.00
payable
unused supplies 243.68
merchandise inventory 40,000.00

Total current assets 160,843.68 Total current liabilitites 59,300.00

Fixed Assets EQUITY

land 7,000,000.00 Capital 7,729,364.16
tools and equipment 1,151,560.00 Net income 106,774.83
buildings 430,000.00
less depreciation 846,964.69

Total fixed assets 7,734,595.31 Total equity 7,836,138.99

_____________ ___________
_ _
Total assets 7,895,438.99 Total liability + equity 7,895,438.99

VIII. SWOC ANALYSIS AND RECOMMENDATION

Table 4. SWOC Analysis on Ato Belen’s Farm.2009

 INTERNAL STRENGTHS WEAKNESSES

 the farm is easy to access  Piggery is being underutilized

 Input costs and production losses
are minimized because of practice of
organic farming (e.g. use of own
vermicompost instead of buying
commercial fetilizers)
 The farm owner loves what he is
doing
 Family’s support and cooperation
EXTERNAL OPPORTUNITIES
 Prices of goods are almost half the price
compared to other nurseries/farm in San
Pablo City
 There is not much reliable analysis on the
performance of the farm business
because of poor record-keeping.
CONSTRAINTS

 Projects/programs supported by the  Extreme weather conditions due to

Dept. of Agriculture climate change
 Better breed of swine  Production losses due to pest and
 More high value crops diseases
 Available land for farm expansion
 Recognitions from the public sectors

RECOMMENDATIONS:

 Increase farm land area (for vermiculture)

For example, since the vermiculture enterprise at present occupies 200m 2 in the farm,
the farm will acquire again another 200m 2 (1 m2 costs Php1,800.00) piece of land to double the
size of the enterprise itself. Another vermiculture house costing Php15,000.00 and a starting
amount of 1kg of African night crawler which costs Php200.00. Assuming that the fixed costs will
lasts for 10 years, so they divided into 10. Below is the computation for the partial budgeting if
the vermiculture enterprise is doubled:

Additional Costs Additional Returns

(fixed, divided by 10 yrs)
Land 36,000 Vermicompost sales 81,500
Vermiculture house 1,500
Worms 20
 (variable)
Labor 12,000
Reduced Returns Reduced Costs

total 49,520 total 81,500

NET CHANGE 31,981

 Have a better recordkeeping system