Profitability Analysis No.

05/2007

Profitability Analysis:
Abaca Fiber
Production

Philippine Council for Agriculture, Forestry and Natural Resources Research and Development
Department of Science and Technology
ISO 9001:2000
Providing science solutions for a vibrant agriculture and sustainable environment
About PCARRD
T he Philippine Council for Agriculture, Forestry and Natural Resources Research and Development
(PCARRD) is one of the sectoral councils under the Department of Science and Technology (DOST).
Established in 1972, PCARRD formulates policies, plans, and programs for science and technology-
based development in the agriculture, forestry, and natural resources (AFNR) sectors. It coordinates,
evaluates, and monitors the national research and development (R&D) efforts in AFNR. It also allocates
government and external funds for R&D and generates resources to support its programs.

The first DOST council to earn an ISO 9001:2000 certification for its quality management system,
PCARRD is engaged in active partnerships with international, regional, and national organizations
and funding institutions for joint R&D, human resource development and training, technical
assistance, and exchange of scientists, information, and technologies.

The Council supports the National Agriculture and Resources Research and Development Network
(NARRDN), composed of national multi- and single-commodity and regional R&D centers, cooperating
stations, and specialized agencies. As such, PCARRD has been a potent arm in catalyzing the Philippine
AFNR sectors toward self-sufficiency and global competitiveness.

MAILING ADDRESS PHILIPPINE COUNCIL FOR AGRICULTURE,

FORESTRY AND NATURAL RESOURCES
RESEARCH AND DEVELOPMENT
Los Baños, Laguna
TELEPHONES Los Baños - (63) (049) 536-0014 to 536-0015/
536-0017 to 536-0020 & 536-0024
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DOST Bicutan, Tagig, Metro Manila
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 Profitability Analysis:
Abaca Fiber Production

Philippine Council for Agriculture, Forestry and Natural Resources

Research and Development (PCARRD)
Department of Science and Technology (DOST)

Los Baños, Laguna

2007
First Edition 2007

ISSN: 1908-8043

Bibliographic Citation:
Philippine Council for Agriculture, Forestry and Natural Resources Research and
Development. Profitability analysis: abaca fiber production. Los Baños, Laguna: PCARRD,
2007. 24p. -(Profitability Analysis No.05/2007)
 Icongratulate PCARRD-DOST for coming up with this Profitability Analysis, which

Message
is not just a publication, but more importantly, a science and technology (S&T)-
based solution. PCARRD has put together the necessary information that would
make agribusiness venture more technically and financially viable.

The tested package of technology (POT) that PCARRD and its research and
development (R&D) partners have developed and included in this publication,
together with the encouraging financial projections, highlights the role of S&T in
achieving our national development goals.

I am optimistic that with the dissemination of the Profitability Analysis, which

PCARRD has prepared for a significant number of priority commodities
and products, our people will develop greater appreciation of S&T-based
entrepreneurship in agriculture and natural resources sectors.

Hon. ESTRELLA F. ALABASTRO

Secretary
Department of Science and Technology
Republic of the Philippines
 A gribusiness is among the flourishing enterprises in the country today.
Message
However, many of our people, particularly the small and medium
entrepreneurs could not easily engage in agribusiness due to constraints in the
establishment process.

This publication, the Profitability Analysis, is a very laudable initiative by PCARRD-

DOST having put together a set of solutions addressing startup constraints.
Specifically, this publication contains key technical and financial information
necessary to start, operate, and profit from a science and technology (S&T)-based
agribusiness enterprise.

I commend PCARRD for pursuing the development of this publication. This very
important contribution will definitely help boost entrepreneurship, especially in
the rural sector; create additional income and job opportunities; and promote the
production of high quality agribusiness products.

Cong. LUIS R. VILLAFUERTE

Chair, Committee on Aquaculture and Fisheries
Member, Committee on Science and Technology
Member, Committee on Agriculture
House of Representatives
 T his year, the Philippine Council for Agriculture, Forestry and Natural Resources

Foreword
Research and Development (PCARRD) offers a new technology publication that
promises to be fully utilizable and handy.

The Profitability Analysis (PA) arose from our yearning to address your needs as
small and micro entrepreneurs, farmers, and growers. More than just a handout,
this innovative package of information provides tools to help you gain and secure
a niche in your business enterprise.

The PA series is based on our study of selected commodities. Here you will find the
technical and financial data you will need to put up an agricultural enterprise. It
presents analytical tools you can use in project planning and in predicting how
the business would operate under a set of assumptions. Thus, it ensures that your
projects are technically and economically feasible for implementation. Through
the profitability analysis and other information, we at PCARRD, hope to contribute
substantially in providing livelihood options for Filipinos, especially those in rural
communities.

This PA on abaca aims to guide you in establishing and managing an enterprise on

abaca fiber production. Specifically, it contains the projected income statement
and projected cash flows for a 1-hectare plantation. Also, it contains the package
of technology for abaca fiber production. This information includes site selection,
planting material selection, land preparation, fertilizer application, pest and disease
management, harvesting, postharvest handling, and marketing.

Feel free to use the information in these pages. Contact us for any further
information you may need or better yet, for any suggestions on how we can make
this publication better for your use. Together, we can improve the production
system for abaca fiber and seal its importance in our national economy.

PATRICIO S. FAYLON
Executive Director
 Message from Secretary Estrella F. Alabastro iii

Contents
Message from Congressman Luis R. Villafuerte iv
Foreword v

Introduction 1

Package of Technology 13

Profitability Analysis
Projected income statement, 1-ha abaca fiber production 3
Projected cash flow, 1-ha abaca fiber production (before financing) 5
Projected cash flow, 1-ha abaca fiber production (after financing) 5
Capital investment, 1-ha abaca plantation 7
Working capital and other startup costs, 1-ha abaca plantation 7
Initial investment, 1-ha abaca plantation 7
Depreciation table (Straight Line Method, zero salvage value) 9
Yield projection 9
Sales projection 9
Annual material, fertilizer, and chemical requirement 11
Annual labor requirement 11
Amortization schedule, 19% p.a. (includes service charge of 3% p.a.) 11
Technical and financial assumptions 12
Introduction T he Philippine abaca industry is a major player in the world abaca
market, accounting for 84% of the world’s production.

The local abaca industry is economically important as it supports the

livelihood of about 140,000 abaca farm workers and 78,000 small
farmers with more than 430,000 dependents.

Abaca’s durability and aesthetic value make it a top raw material for
fibercrafts like bags, rugs, placemats, hats, hot pads, coasters, yarns;
and hand-woven fabrics. Abaca remains popular in cordage and
fibercraft industries despite the advent of synthetic fibers.

Initial Capital P64,030.00

This makes abaca fiber production
a viable investment option for small
Net Present Value (based and medium entrepreneurs.
on a 10-year cash flow
projection at 19% discount rate) P16,013.93
A 1-ha abaca plantation is a
Internal Rate of Return (based profitable investment requiring
on a 10-year cash flow projection) 22% a relatively small initial capital of
P64,030. Income is realized on the
Payback Period 4.4 years third year and the total initial capital
is fully recovered in about 4 ½ years.

The estimated internal rate of return (IRR) of this agribusiness

enterprise based on a ten-year cash flow projection stands at 22%
while the net present value (NPV) at 19% discount rate is P16,013.93.

The package of technology (POT) for abaca fiber production has

been tested and proven by PCARRD’s research and development
network.
Projected income statement, 1-ha abaca fiber production.
Year 1 2 3 4 5 6 7 8 9 10
Income from Sales of Abaca Fiber 0.00 9,828.00 45,864.00 73,710.00 98,280.00 98,280.00 98,280.00 98,280.00 98,280.00 98,280.00
Gross Sales 0.00 9,828.00 45,864.00 73,710.00 98,280.00 98,280.00 98,280.00 98,280.00 98,280.00 98,280.00
Less: Production Cost
- Materials 1,100
- Fertilizer 3,360.00 4,740.00 9,480.00 9,480.00 9,480.00 9,480.00 9,480.00 9,480.00 9,480.00 9,480.00
- Chemicals 630.00 630.00 630.00 630.00 630.00 630.00 630.00 630.00 630.00 630.00
- Farm labor 8,300.00 20,400.00 20,400.00 20,400.00 20,400.00 20,400.00 20,400.00 20,400.00 20,400.00 20,400.00
Total Production Cost 12,290.00 25,770.00 30,510.00 30,510.00 30,510.00 30,510.00 30,510.00 30,510.00 30,510.00 30,510.00
Gross Income from Sales -12,290.00 -15,942.00 15,354.00 43,200.00 67,770.00 67,770.00 67,770.00 67,770.00 67,770.00 67,770.00
Less: Overhead Expenses
- Repair of Equipment and Facilities (10% of 200 200 200 200 200 200 200 200 200 200
depreciating assets)
- Land Rent 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000
- Depreciation 200 200 200 200 200 200 200 200 200 200
Total Overhead Expenses 10,400.00 10,400.00 10,400.00 10,400.00 10,400.00 10,400.00 10,400.00 10,400.00 10,400.00 10,400.00
Net Profit (before interest) -22,690.00 -26,342.00 4,954.00 32,800.00 57,370.00 57,370.00 57,370.00 57,370.00 57,370.00 57,370.00
Less: Interest Expense 8,515.99 7,348.87 5,960.00 4,307.25 2,340.47
Net Profit (before tax) -22,690.00 -26,342.00 4,954.00 24,284.01 50,021.13 51,410.00 53,062.75 55,029.53 57,370.00 57,370.00
Projected cash flow, 1-ha abaca fiber production (before financing).
Year 0 1 2 3 4 5 6 7 8 9 10
Before Financing
Inflows
Gross Income from Sales 0.00 9,828.00 45,864.00 73,710.00 98,280.00 98,280.00 98,280.00 98,280.00 98,280.00 98,280.00
Total Cash Inflows 0.00 9,828.00 45,864.00 73,710.00 98,280.00 98,280.00 98,280.00 98,280.00 98,280.00 98,280.00
Outflows
Cash Flow from Investment Activities 64,030
Production Cost 12,290.00 25,770.00 30,510.00 30,510.00 30,510.00 30,510.00 30,510.00 30,510.00 30,510.00 30,510.00
Overhead Expenses (less: depreciation) 10,200.00 10,200.00 10,200.00 10,200.00 10,200.00 10,200.00 10,200.00 10,200.00 10,200.00 10,200.00
Total Outflows (before financing) 64,030 22,490 35,970 40,710 40,710 40,710 40,710 40,710 40,710 40,710 40,710
Net Cash Flow (before financing) -64,030 -22,490 -26,142 5,154 33,000 57,570 57,570 57,570 57,570 57,570 57,570

Projected cash flow, 1-ha abaca fiber production (after financing).

Year 0 1 2 3 4 5 6 7 8 9 10
After Financing
Inflows
Gross Income from Sales 0.00 9,828.00 45,864.00 73,710.00 98,280.00 98,280.00 98,280.00 98,280.00 98,280.00 98,280.00
Loan 44,821.0
Total Cash Inflows 44,821.0 0.00 9,828.00 45,864.00 73,710.00 98,280.00 98,280.00 98,280.00 98,280.00 98,280.00 98,280.00
Outflows
Cashflow from Investment Activities 64,030
Production Cost 12,290.00 25,770.00 30,510.00 30,510.00 30,510.00 30,510.00 30,510.00 30,510.00 30,510.00 30,510.00
Overhead Expenses (less: depreciation) 10,200.00 10,200.00 10,200.00 10,200.00 10,200.00 10,200.00 10,200.00 10,200.00 10,200.00 10,200.00
Loan Amortization:
- Principal 6,142.73 7,309.84 8,698.71 10,351.47 12,318.25
- Interest 8,515.99 7,348.87 5,960.00 4,307.25 2,340.47
Total Outflows (before tax) 64,030 22,490 35,970 40,710 55,368.715 55,368.715 55,368.715 55,368.715 55,368.715 40,710 40,710
Net Cash Flow (before tax) -19,209 -22,490 -26,142 5,154 18,341.284 42,911.284 42,911.284 42,911.284 42,911.284 57,570 57,570
NPV (before financing) 16,013.93
Payback (before financing) 4.4 years
IRR (before financing) 22%
Note: NPV, Payback, and IRR before financing are the preferred indicators of profitablity.
Capital investment, 1-ha abaca plantation.
Particulars Unit Price Quantity Cost (P)
(P)
Seedlings 1.5 2,200 3,300
Farm Equipment
- Stripping Knife 200 2 400
- Tuxying Knife 200 2 400
- Other Farm Tools and Equipment 1,200

Working capital1 and other startup costs, 1-ha abaca plantation.

Particulars Cost (P)
Repair of Equipment and Facilities (10% of depreciating assets.; Year 1) 200.00
Land Rent (Year 1–2) 20,000.00
Unit Quantity Unit Price
(P)
Materials (Year 1)2
- Stakes pcs 2,200 0.5 1,100.00
Fertilizer2 kg
- Ammonium Sulfate (Year 1) bags 6 560 3,360.00
- Complete (Year 2) bags 6 790 4,740.00
Chemicals (Year 1–2)2
- Insecticide liter 2 315 630.00
Labor (Year 1–2)3 28,700.00
Total Working Capital and Startup Cost 58,730.00
1
Covers initial operating costs until there is a steady flow of income.
2
Refer to Annual Materials, Fertilizer and Chemical Requirements.

Initial investment, 1-ha abaca plantation.

Particulars Cost
Capital Investment 5,300.00
Working Capital and Startup Costs 58,730.00
Total Initial Investment 64,030.00
Depreciation table (Straight Line Method, zero salvage value).
Particulars Cost Life Span Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
- Stripping Knife 400 10 40 40 40 40 40 40 40 40 40 40
- Tuxying Knife 400 10 40 40 40 40 40 40 40 40 40 40
- Other Tools and Equipment 1,200 10 120 120 120 120 120 120 120 120 120 120
Total 200 200 200 200 200 200 200 200 200 200

Yield projection.
Average
Population Wet Fiber Fiber Dry Fiber Total Yield/
Multiplier Weight
Density Weight Recovery Weight yr (kg)
of stalk
1st Harvest 252.0
(after 24 months) 2,000 0.6 14 16,800 0.015 252.0
3rd Year 1,176.0
1st harvest 2,000 0.8 14 22,400 0.015 336.0
2nd harvest 2,000 1.0 14 28,000 0.015 420.0
3rd harvest 2,000 1.0 14 28,000 0.015 420.0
4th Year 1,890.0
1st harvest 2,000 1.5 14 42,000 0.015 630.0
2nd harvest 2,000 1.5 14 42,000 0.015 630.0
3rd harvest 2,000 1.5 14 42,000 0.015 630.0
5th Year onwards 2,520.0
1st harvest 2,000 2.0 14 56,000 0.015 840.0
2nd harvest 2,000 2.0 14 56,000 0.015 840.0
3rd harvest 2,000 2.0 14 56,000 0.015 840.0

Sales projection.
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Production 252 1,176 1,890 2,520 2,520 2,520 2,520 2,520 2,520
Selling Price 39.0 39.0 39.0 39.0 39.0 39.0 39.0 39.0 39.0
Gross Sales 9,828.0 45,864.0 73,710.0 98,280.0 98,280.0 98,280.0 98,280.0 98,280.0 98,280.0
Annual material, fertilizer, and chemical requirement.
P/Unit Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Materials
- Stakes 0.5 1,100
Fertilizer
- Ammonium Sulfate 560 3,360
- Complete 790 4,740 9,480 9,480 9,480 9,480 9,480 9,480 9,480 9,480
Chemicals
- Insecticide 315 315 315 315 315 315 315 315 315 315 315
Total 4,775 5,055 9,795 9,795 9,795 9,795 9,795 9,795 9,795 9,795

Annual labor requirement.

QTY (md) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Land preparation 1
2,000.00
Planting2 12 1,800
Maintenance3 30 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500
Harvesting4 25 3,750 3,750 3,750 3,750 3,750 3,750 3,750 3,750 3,750
Handstripping 75 11,250 11,250 11,250 11,250 11,250 11,250 11,250 11,250 11,250
Drying, sorting and bundling 6 900 900 900 900 900 900 900 900 900
Total 8,300.00 20,400.00 20,400.00 20,400.00 20,400.00 20,400.00 20,400.00 20,400.00 20,400.00 20,400.00
1
Contract: Clearing, tumbling of unnecessary trees, uprooting of stumps, lining and staking, and digging of holes.
2
Distribution of seedpieces and planting.
3
Underbrushing, ringweeding, fertilization, plant protection.
4
Tumbling, topping, tuxying, and hauling.

Amortization schedule, 19% p.a. (includes service charge of 3% p.a.).

Year 4 Year 5 Year 6 Year 7 Year 8 Total
Balance 44,821.0 38,678.274 31,368.431 22,669.717 12,318.248 0
Rate 1 1.19 1.416 1.685 2.005 7.296
Principal 6,142.73 7,309.84 8,698.71 10,351.47 12,318.25 44,821.00
Interest 8,515.99 7,348.87 5,960.00 4,307.25 2,340.47 28,472.58
Amortization 14,658.715 14,658.715 14,658.715 14,658.715 14,658.715
Technical and financial assumptions.
Technical Assumptions
Planting Distance 2.5 m x 2 m
Plant Population Density 2,000 hills or plants
Average Weight per Stalk 14 kg
Fiber Recovery 1.5 %
Yield (1 ha)
- Year 1 0 kg
- Year 2 252 kg
- Year 3 1,176 kg
- Year 4 1,890 kg
- Years 5-10 2,520 kg
Financial Assumptions
Total Investment Cost 64,030
Equity (30%) 19,209
Loan (70%, payable in 5 years) 44,821
Source of Loan Quedancor
Grace Period 3 years
Rate of Interest on Capital 19%
- Interest Rate per Annum 16%
- Service Charge per Annum 3%
NPV Discounting Rate 19%
Depreciation Method straight line, 0 salvage value
Sales 100%
Selling Price of Abaca Fiber P39
Cost of Abaca Planting Materials P1.50
Tota Number of Planting Materials Required 2,200
Cost of Fertilizer
- Ammonium Sulfate 560
- Complete 790
Labor Rate P150
Land Rent P10,000
 Profitability Analysis: Abaca Fiber Production 13

Distinguishing features

Package of Technology
and characteristics • Abaca is a member of the Musaceae
family to which banana also belongs
• It produces one of the sturdiest natural
fibers
• Abaca stalks are more slender, the
leaves are smaller, narrower, and more
pointed than those of bananas
• A distinguishing dark line on the right-
hand side of the upper surface of the
leafblade is pronounced in abaca
• Fruits of abaca are smaller, non-edible,
and contain many seeds
• The trunk, heart, and fruit are smaller
than those of banana
• It grows to an average height of 2.44 m

Site Selection
Soil Type Requirement • Volcanic in origin
• Rich in organic matter, loose, friable,
and well drained, clay loam type, and
should be 0.6 m to 1 m deep
• pH of 6.0–7.0
Climate • Optimum temperature 20oC during
cool months and 27oC on warm
months
• Humidity of 78% to 85%
• Annual rainfall of at least 1.5 m at
higher elevation of 300–500 m above
sea level
Topography • Rolling-to-hilly or mountainous areas
not more than 500 m above sea level
with fair-to-good drainage conditions
• Well-drained flat plains (abaca plants
cannot withstand water-logged soil
conditions)
14 Profitability Analysis: Abaca Fiber Production

Planting Materials
Tissue cultured (TC)
plantlets • TC plantlets are preferred to minimize or eliminate the
incidence of viral diseases
• Buy planting materials from reputable and accredited tissue
culture laboratories
• The materials from these laboratories are expected to be
clean, healthy, robust, hardened, and ready to plant
• Schedule planting during the onset of the rainy season to
minimize watering and ensure higher survival
• Water plantlets for at least 2 weeks in the absence of rain
Seedpieces
(corms or rootstocks) Using seedpieces provides the following advantages:
• Withstand long period of transit and can be handled easily
• Plants from corms or rootstocks are more stout and stocky
• Grow more peepers that develop into mature plants
If seedpieces are used, consider the following:
• To ensure high germination percentage, get seedpieces
from mature (flagleaf ) stage rather than immature
or over-mature plant
• Must contain at least 3 viable eyes
Eyebuds • Select harvestable stalks that are easy to tumble down
• Remove first the leaves with a topping knife to minimize
damage to nearby plants
• Tumble down the plant by pulling the stalk from side to side
to loosen roots
• Cut the corm from the stalk and pile separately
• Divide the corm into pieces measuring 50 cm x 50 cm to
70 cm x 70 cm. Each piece should have one prominent
eyebud
• Pile the eyebuds in a shaded area to minimize drying
• Observe care in handling and transporting to avoid damage
to the growing point
 Profitability Analysis: Abaca Fiber Production 15

• Plant 1 m x 1 m for nurseries and from 2 m x 2 m,

2.0 m x 2.5 m to 3 m x 3 m for plantation depending on the
size of the variety
• Prepare the land the same way when corms or suckers are
used. This should be done before preparing the eyebuds
• Time the planting at the onset of rainy season for higher
germination and survival rate
• Plant at the depth of 21.4–26.5 cm (8 to10 inches) with the
growing tips pointing upward
• Practice shading, underbrushing, and ring weeding
• Apply fertilizer

Land Preparation
Clearing • Cut shrubs, bushes, and grasses close to the ground
preferably during the dry season
• Cut trees if they shade a wide area and if they deter
mechanization. However, get approval from DENR prior to
cutting
• Do not leave debris scattered and unburned in the field. Pile
the debris properly and burn them carefully. Pests such as
termites, rats, weevils, and other insects might live in them
• Allow tree stumps to rot naturally
• In open cogonal areas, cut the grasses very close to the
ground
• Pile thrashes to rot or burn them carefully to avoid wild fires
Cultivation • Deeply plow the area to incorporate organic wastes into the
soil to serve as humus. If available, use a tractor
• In open or under coconut areas where plowing can be
undertaken, deeply plow once or twice to loosen the soil and
break the densely-matted coconut roots
Staking and Holing • Prepare a field layout in a straight line orientation
• Put sticks about 1.0 m in length in places where the abaca
planting materials are to be planted
16 Profitability Analysis: Abaca Fiber Production

• When planting in a coconut farm, the abaca should be about

2.0 m from each coconut tree
Distance of Planting • Quincunx or triangular method – Hills are set at 2.0 m each
way and can accommodate 2,822 hills/ha or 322 hills more
than the square method
• Double row or avenue method – A set of two rows planted at
2.0 m or 2.5 m each way are distanced 3.0 m apart
• Square method – This method is generally recommended.
The hills are set at 2.0 m apart each way and can
accommodate 2,500 hills/ha

Fertilizer Application
Recommendation • Six bags ammonium sulfate and six bags complete fertilizer
Time of application • Apply two bags of ammonium sulfate at the time of planting
• Four bags ammonium sulfate eight months after planting
• Six bags of complete fertilizer 12 months after planting·
Method of application • For established plantation, apply 12 bags of complete
fertilizer per hectare once before or after the rainy season
• Apply fertilizer depending on the appearance of the plant
• Apply in ring or band about 2.0 cm from the base but closer
to newly established hills
• Apply lime to soil with pH 6.0 and below

Pest and Disease

Management
Major insect pests • Root or Corm Weevil
- Soak abaca seedpieces in green-labeled insecticide
solutions before planting
- Provide attractant to the adults by putting freshly split
abaca stalks in suspected areas, then spray with insecticide
- Use existing grasses along boundaries 96.5 m wide as
barriers for entry of weevil
• Spray with appropriate contact and systemic insecticides
 Profitability Analysis: Abaca Fiber Production 17

• Keep plantation clean and soak abaca seedpieces in

recommended insecticide before planting
• Spray with equally effective insecticides
• Spray insecticides to vectors and infected plants including
the surrounding weeds before rouging and burning infested
plants
• Slug Caterpillar
- Cultural method by picking
- Chemical spraying using appropriate green-labeled
insecticides
- Encourage multiplication of predators such as birds,
spiders, and friendly insects
• Abaca Leaf Roller
- Cultural method by picking
- Chemical spraying using appropriate green-labeled
insecticides
- Encourage multiplication of predators such as birds,
spiders, and friendly insects
Diseases General
• Select and plant resistant varieties
• Use clean planting materials
• Control vectors
• Practice field sanitation
Specific
• Abaca Mosaic
- Spray insecticide to vectors and infected plants including
the surrounding weeds before rouging and burning
infected plants
• Abaca Bunchy-Top
- Spray infected plants with insecticides to kill vectors before
rouging and burning diseased plants
• Bract Mosaic
- Chop infected plant parts into pieces. Spray them with
herbicide and bury
18 Profitability Analysis: Abaca Fiber Production

• Abaca Wilt
- Treat seedpieces with copper fungicides before planting
- Spray infected plants with fungicides
- Bury or burn them
• Dry Sheath Rot
- Destroy or rogue diseased plants
- Establish proper drainage
• Stem Rot
- Rogue and destroy infected plants immediately
- Practice proper distancing, field sanitation, and timely
harvesting

Harvesting Some major points to consider in harvesting

• Abaca in higher altitude matures later than in lower
elevation due to high relative humidity that enhances longer
vegetative growth and delays the appearance of the flagleaf
• Under normal conditions, the first harvest can be done
between 18 and 24 months after planting
• When the flagleaf appears, the stalk is considered matured
• Harvest mature stalks
• Longer and heavier stalks produce more fibers
• Good fiber recovery extends to more than 1 month from
flagleaf to early inflorescense
• Do not let the stalks become over-mature because the fiber
from outer leafsheath will be difficult to extract
Topping • Done to avoid inconvenience to the harvester
• Minimize damage to young and immature plants
Tumbling • The topped stalk is tumbled down with the use of a bolo
• The stalk is cut slantingly to avoid water accumulating in the
cut portion
Tuxying • This is the method of separating the outer layer from the
inner layer of the leafsheath. The outer layer contains the
fibers while the inner layer contains the secondary fibers and
pulpy material. The two methods of tuxying are:
 Profitability Analysis: Abaca Fiber Production 19

a. Bacnis
- Consists of separating the inner layer of the leafsheath
from the outer layer by flattening the whole leafsheath
- Using a specially made tuxying knife, a slanting incision
is made through the middle-inner layer of the leafsheath
about 2 feet from the butt end
- Then holding the cut portion of the inner layer, a hand pull
is applied to separate it from the outer layer
b. Locnit
- The leafsheath is not separated from the stalk, but the stalk
is laid flat on the ground
- The tuxying knife is inserted between the outer and
middle layer at the butt end of the leafsheath
- The outer fibrous layer is pulled off in 2–3 sections;
2–3 inches wide, depending on the curvature of the sheath
- The remaining layers of the leafsheath are then pulled off
and discarded to expose the next sheath for similar process
- A tuxero can tuxy around 60 stalks/day or an average of
25 kg abaca stalks

Postharvest Handling
Stripping • It is the process of extracting the fibers from the tuxy. There
are three methods, namely, handstripping (manual), spindle
stripping (mechanical), and decorticating (mechanical).
Factors affecting the quality of hand and spindle stripped
fibers:
- Immaturity or overmaturity of abaca stalks
- Delay of more than 21 days in tuxying of stalks
- Overnight delay of stripping the tuxies
- Improper adjustment of machine or irregular serrations of
the stripping knife
- Delayed and improper drying of fibers
- Improper handling and storage of fibers
20 Profitability Analysis: Abaca Fiber Production

Drying of fibers All fibers must be dried before storing

• Hand- and spindle-stripped fibers may be sun-dried
or air-dried
• In drying, the tips of the fresh fibers must neither touch the
soil nor mixed with foreign matters such as cigarette butts,
twigs, etc.
• The fibers should be thoroughly dried at 12–14% moisture
content to avoid growth of mold and bacteria
• The rank of fibers in tensile strength from the different
groups of leaf sheaths of an abaca stalk are as follows:
1st - 6 –11
2nd - 12–18
3rd - 1–5
4th - 19–23
• Failure to dry the fresh fibers thoroughly will result in
bacterial action, mold growth, and fermentation that
increases acidity, lowers tensile strength, causes change in
color, and decreases luster.
Bundling • The hanks of fibers are bundled manually at an average of
50 kg/bundle. The size and weight of a bundle vary
according to the capability of the farmer to carry it on his
shoulder for hauling or transporting
• Hand-twisted abaca twine are used as ropes
• Two to three ropes are laid down on a clean pavement
parallel and equidistant to each other and long enough
to tie tightly the bundle that would have an approximate
circumference of 4–6 feet
• Thereafter, the hanks are arranged in such a way that all butt
ends of the fibers are in the same position
• Then these are laid down across the ropes and folded in
halves until the desired size of the bundle is met and tied
securely
 Profitability Analysis: Abaca Fiber Production 21

Marketing
Direct Marketing • Farmers should do direct marketing to grading-baling
firms/exporters, processors and other end-users, not with
middlemen. Sellers can easily arrange with regular buyers
for the specific quality, volume, and price and the delivery
schedules of the particular fiber needs. This set-up assures a
good market as well as good prices for the commodity.The
more direct the sale of fiber is, the higher share of profit the
farmer receives from his product. Selling through several
channels of fiber intermediaries erodes farm prices because
of the cumulative premium each intermediary gets
Collective
and Cooperative
Marketing • Individual selling of fiber is uneconomical on the part of
the farmer. A farmer who markets his produce singly is
confronted with several constraints such as:
a) lack of bargaining power;
b) higher marketing expenses;
c) lack of storage and transportation facilities;
d) limited know-how in the quality standardization of their
individual products; and,
e) lack of money with which to bring his own product to the
best market
• Farmers with small abaca farms should form a cooperative
for their products so that they can market their fiber
collectively. The cooperatives enable farmers to establish
trading centers which give greater benefits
• Associations or cooperatives for abaca farmers ensure higher
reasonable price from abaca fiber buyers. Seeking a better
market is one of the primary objectives of cooperative
marketing. The farmers free themselves from the control
of middlemen who buy their products at a much lower
price. Cooperative marketing unites the farmers for the
improvement of crops for the purpose of selling their
produce to the best possible market
22 Profitability Analysis: Abaca Fiber Production

• Farmer associations or marketing cooperatives also

serve as channels for both receiving and transmitting
farm information between service agencies and farmers.
They help farmers learn agribusiness techniques and
entrepreneurship
Marketing Factors
and Strategies There are several factors in marketing that the abaca farmers
should consider in order to realize a profitable flow in the
fiber business. These are as follows:
1. Demand. It is always advisable for fiber producers to sell
their produce in classified form because they command
better prices that lead to higher incomes. The price of
fiber differs according to grade; the higher the grade, the
higher the price. Although lower grade fibers are easier to
produce, their physical values are less because of reduced
cleaning, texture qualities, and fiber characteristics.
Moreover, the demand for a particular grade depends on
the use of the fiber. This means that if the demand is for
lower grades then production should be geared towards
the current demand. It is therefore necessary for fiber
producers to familiarize themselves with the system of
fiber grading and classification. Systematic production
should be observed in order to cope with the demand for
greater volume with higher prices
2. Seasonality. February, March, April, October, November,
and December are months of high abaca fiber prices.
Stripping abaca during the dry months of February to
May results in the best quality fibers and better prices.
The higher volume of fiber demanded by foreign buyers
towards the end of the year also serves to trigger rise in
fiber prices.
Fibers should be sold during the periods of low
production when demand is greater such that it surpasses
the available supply
 Profitability Analysis: Abaca Fiber Production 23

3. Supply. Sell fiber in big volumes. The bigger the volume

of fiber sold, the higher the profit. But if the farm size is
small, a profitable volume is still possible with cooperative
marketing
4. Buyers. Fiber produced can be sold to the following levels
of traders and/or manufacturers:
a. Barangay traders - those who buy fibers from
plantation laborers, strippers, and/or tenants
b. Town traders - those who buy fibers from barangay
level middlemen of barangay traders
c. Provincial traders - those who buy fibers from a
network of town traders
d. Regional traders - those who hold regional or branch
offices of fiber trading companies operating in the
Philippines with baling and warehousing facilities
e. Processors or semi-finished fibercrafts - those who
manufacture or process semi-finished fiber items like
abaca braids or twines and pulp
f. Fibercraft manufacturers - those who sell or export
finished fibercraft products
Direct Marketing Direct marketing arrangements with buyers such as the
grading and baling establishments (GBEs), exporters and
processors should be effected
Joint Cooperative
Marketing Better transaction can be achieved through a cooperative
marketing network for economies of scale operation
24 Profitability Analysis: Abaca Fiber Production

Possible loan sources QUEDANCOR Program for Agri-Fishery Small and Medium
Enterprises (QP-ASME)
• 16% interest rate with 3% service fee
• The borrower must have equity equivalent to 20% of the
project cost. The borrower’s equity can be in the form of agri-
fishery machinery and equipment, inputs, or labor
• Collateral requirements:
1. At least 80% Real Estate Mortgage (REM) or 80%
combination of REM, non-interest bearing cash trust
fund, bank/time deposits, LandBank/government bonds/
securities and similar investments
2. Deed of Assignment of Receivables supported by a
Marketing Contract/Agreement, if applicable.

LANDBANK Easy Pondong Pang-Asenso (EPPA)

• Interest rate is based on the prevailing market rate
• Up to 80% of the total project cost; borrower has to put up
the remaining 20% as equity, either in cash or in kind
• Collateral Requirements:
1. Real Estate/Chattel Mortgage (REM/CM)
2. Hold out on deposits
3. Assignment of receivables and/or inventories
4. JSS Principal Stockholders/Officers
5. Guarantee cover from Small Business Guarantee and
Finance Corporation (SB Corporation), if applicable
Credits

Production: PCARRD Secretariat with the support of the crops research, planning and
development, and the applied communication divisions
Lead Experts and Science and Technology Consultants: Josephine B. Regalado
and Gregorio S. Antaran
Content Analysts: Ester L. Lopez and Felicidad E. Bautista
Investment Analysts: Gregorio S. Antaran with Don Joseph M. Medrana
Editor: Joel Eneristo A. Joven
Layout and Design: Paul Jersey G. Leron
Photo Credits: Fiber Industry Development Authority (FIDA)
Production Assistant: Carmelita B. Alamban

Special thanks to: Patricio S. Faylon, Jocelyn E. Eusebio, Leah J. Buendia,

and Lily Ann D. Lando
ISO 9001:2000