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kalibojerry

Start A Rice And Corn Milling Business

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kalibojerry    132

I have a question or two

I would like to start a small business in the province where my wife is from, as she owns land there and a couple of houses, I was thinking about starting a small rice and corn mill business.

What I like about this idea is you open in the morning and close in the evening it is not a 24 hr business, like a pig farm, I know you can get busy during rice and corn season, I know you need a building and the equipment which would be the big cost. I am just starting to look in to this and start my research, on the cost of the things I need.

So my question to the Board Members has anyone done this or knows anything about this kind of business and what the start up cost would be. Thank You  Jerry

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chris49    3,086

I have a question or two

I would like to start a small business in the province where my wife is from, as she owns land there and a couple of houses, I was thinking about starting a small rice and corn mill business.

What I like about this idea is you open in the morning and close in the evening it is not a 24 hr business, like a pig farm, I know you can get busy during rice and corn season, I know you need a building and the equipment which would be the big cost. I am just starting to look in to this and start my research, on the cost of the things I need.

So my question to the Board Members has anyone done this or knows anything about this kind of business and what the start up cost would be. Thank You  Jerry

 

Jerry, we live on a farm. We harvest a small amount of rice. We have to buy corn about twice a month,for our pigs, and my wife handles all that, There are about 3 mills in close vicinity.  I have some previous experience in another province as a financer of family land, rice growing.

 

So firstly. Which province? Secondly, 9/10, it's a good idea. Do you have land or need to buy or lease? EDIT: noted your wife owns the land which is good.

 

How about the electricity? The bill will run up.

 

I reckon about 1-1.5 M to put up the building and have the grinder up and running. Assuming you have your own land.  And I think in season you will have to run it more than 12 hours a day, maybe 2-3 months of the year. And maybe a few months to be shut down or limited productivity.

 

If milling rice and corn you get 2 pesos or 2.50 per kg. The farmer brings it in and takes it out by tractor usually. If you actually buy some palay and mill it, you are in another domain. You need a license from the NFA to sell the rice. I know you need it but I don't know the details.

 

I don't currently have extra capital. But another practice around this area, is to have an older pickup truck or larger truck and keep touring the farms here, buyng "wet" palay as it comes from the field. You need a drying area, have you seen how they do that? A large cemented area, or roadside or like here in the barangay plaza, with a roof. You dry it in the sun but store under shelter.  You can dry the palay and sell it to the mill or you can go further and mill it, putting it into bags, selling it under your own name eg Smiths Sinangdomeng Rice in 25 and 50 kg bags. Or you can take it to the market and transact a sale with a rice dealer. If you reserve some palay and it's dry in bags, you can sell it out of season.

 

I will not start a mill. But maybe we will start buying up palay and drying it. We have talked about it. Or buying it dried.

 

For example. A local guy here buys up to 500 x 50 kg bags of dry palay. He fills his whole house with the bags to the point where I think they even use the bedrooms. They buy dry palay at 16-18 pesos.  They can sell that in one lot at 22-23 after a 3 month holding period. They don't do any milling but rent a truck with a driver. The truck charges .70 centavos per kg for transportation and handling.

 

If you calculate that out the investment is 400, 000 pesos and the profit is 125, 000 net. This large quantity is available only once a year in the main harvest season. There are 2 secondary rice crops a year, but the yield is less, they would buy in smaller quantities. The man actually goes around in a tricycle buying dry palay wherever he can for cash, It has to be dry, no single person could dry that large quantity.

 

I have some knowledge, but not complete.

 

I did not add the usual risks and warnings, but there are some.

Edited by chris49
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scott h    6,445

Jerry...Chris really has his head and a** wired together on this type of stuff and I would really pick his brain. Read his stuff on raising pigs.

 

Chris, can you ask your acquaintances about the profit margin? Do they actually make a decent profit? IMHO what will probably really influence Jerry one way or the other is how long it would take to repay his investment and start showing an overall profit.

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chris49    3,086

Jerry...Chris really has his head and a** wired together on this type of stuff and I would really pick his brain. Read his stuff on raising pigs.

 

Chris, can you ask your acquaintances about the profit margin? Do they actually make a decent profit? IMHO what will probably really influence Jerry one way or the other is how long it would take to repay his investment and start showing an overall profit.

 

I would like to know how many kg/day they could mill in season.  I don't have an idea, but if we know we can start to multiply out some profit margins. We need to know the electricity bill and how many labourers. And the machine for sewing/sealing the bags.

 

Give me a few days to get the numbers and then we will calculate.

 

So now there are 2 topics running. Actually setting up a mill.  Or simply trading in palay, which sounds easy but is a lot of work and needs a starter capital. And some kind of vehicle.

Edited by chris49
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scott h    6,445

Should probably consider a 3rd subtopic as well, so Jerry can make a very informed decision. What is the long term goal? Is Jerry planning on setting up a dynastic business, something to leave to wife and kids in the future? Or more of a hobby to keep the brain cells active? Or looking at setting up a business to supplement his pension. Or even as his primary source of income while in the Philippines.

 

We all know about the low margins most small businesses seem to run on here. IMO to create a viable business plan this info would be useful.

 

Sorry Jerry, Chris and I have you on the path to setting up a mega milling business here :thumbsup:  :hystery: .

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Thomas    3,127

I have a question or two

I would like to start a small business in the province where my wife is from, as she owns land there and a couple of houses, I was thinking about starting a small rice and corn mill business.

What I like about this idea is you open in the morning and close in the evening it is not a 24 hr business, like a pig farm, I know you can get busy during rice and corn season, I know you need a building and the equipment which would be the big cost. I am just starting to look in to this and start my research, on the cost of the things I need.

So my question to the Board Members has anyone done this or knows anything about this kind of business and what the start up cost would be. Thank You  Jerry

As most things, the result depend much of COMPETITION, so start researching that.  In some regions farmer unions have OWN mills, so I suppouse they use them. I GUESS that's why a small whole mill was for sale cheap at Bohol recently.

I reckon about 1-1.5 M to put up the building and have the grinder up and running.
I don't know what's the minimum to get a building, but there are ok equipments for sale for not so much.

I have seen USED common type mill mashines for around 50 000p,

and PORTABLE ones for 160 000p plus lorry.

I'm talking about the smaller of the commersial ones.

Some are diesel driven. Lock up if the engine is included or not.

(I don't know if the quality is ok, it seem suspicious cheap for a NEW.   Made in China. Capacity around 800kg/hour.  11 kW. Only 35 000p if the add tell corect. Plus transport.) 

If milling rice and corn you get 2 pesos or 2.50 per kg. The farmer brings it in and takes it out by tractor usually. If you actually buy some palay and mill it, you are in another domain. You need a license from the NFA to sell the rice. I know you need it but I don't know the details.
Yes. Only milling is much easier, but  it's much more money in buy > mill > sell, but then is a GOOD STORAGE needed, which can be costly.  

(From memory without checking for my notes, I believe it's around 400p/sack profit if buy > mill > sell soon WITHOUT WAITING to get higher price,)

NFA has restrictions concerning pricing and it isn't allowed to wait selling a to big part of the storage to get higher price.

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Jake    10,383

Hello Jerry,

 

You're getting a lot of excellent advice about starting an agricultural business -- start ups, competition and maintaining the business year after year.  However, you also need to seriously consider natural and manmade calamities that are so prevalent throughout the PI, which is in the center of typhoon alley.  Not to mention that PI is also part of the Ring of Fire (earthquakes and volcanic eruptions).

 

Do you have enough cash reserves for recovery?  How is your overall health?  Do you have enough patience to work the system?  We are not trying to discourage you at all.  We would rather see another expat be successful in beating the system and also providing food and services to the less fortunate.

 

Respectfully -- Jake

Edited by Jake
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chris49    3,086
and PORTABLE ones for 160 000p plus lorry

 

 

Good point. There are portable grinders EDIT: they are threshers. taken to the field on a truck bed or tractor. However for an ex pat (like Jerry) I think a logistical problem, on the actual volume, and having to to keep moving from farm to farm. It's a viable small business for a local. Probably set up on a tractor or with wheels as I think I have seen. However Gina now says those machines only separate the rice from the stem and stalk and you will still take the palay to the rice mill. The portable machine over a few hours will save a few days labour and is said to be cost effective to the farmer. Rice farm labourers btw are not paid cash. They get a bag of palay for about 3 days work. If using the machine you don't need the 3 days labour.

 

Gina says in season  up to 5000 kg a day at the mill=10, 000 a day. Some discount on the larger volumes, 2 pesos/kg not 2.50. But consider rainy days as for example the last 5 days here, no drying, so no milling, and we are in the middle of the harvest season.

 

We are not in a position to calculate the overheads. For one thing the electricity consumption, the labour. The cost of bagging and who pays that.

Edited by chris49
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kalibojerry    132

Wow some great advise My Wife's family lives just out side of Molave ,  I want to start small and expand later my wife and her sister will be running the operation, I will help them get started up as i really do not want to work anymore i am retired but it would give me something to do, what I have seen so far there is only 1 mill that is close by , and only 1 or 2 threshers in the area is what i;am being told so yes I feel it would be good to get a thresher, that is was were I would start while I get my feet on the ground with the mill and do my research and home work on the mill, and get the feel from the people in the area how they would feel about having a mill near by to take care of the rice and the corn. Thank You for all the good advise so far I know I will be PM some of the board members with questions soon  , as I do my research I will post it here

 Thank You  Jerry  

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Thomas    3,127

If the competition for mills is to high, it can perhaps be worth checking if a DRYER can be good business. In years with dry weather it's no work, but some years it can be very much work, when it rain to much to dry rice as they usualy do.

 

and PORTABLE ones for 160 000p plus lorry

 

Good point. There are portable grinders EDIT: they are threshers. taken to the field on a truck bed or tractor. .

Well. There are BOTH.

/It's common with portable treshers

/but I have seen for sale a few used portable grinders or what they are called  (= Them, which can make the final step to white rice). They are just same as the smaller mills use stationary, but mounted, so they can be put at a lorry. And diesel/petrol driven, not electric.

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