Pre-feasibility Study of Producing Industrial Alcohol from the Small Lamabanog Producers – Central Distillery Model

Author : de Monterverde, Joselito Laro
Major Adviser : Lozada, Ernesto P.
Committee Members :
Year : 1990
Month : March
Type : Thesis
Degree: BS
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The study aimed to analyze the feasibility of a rural-based industrial alcohol production model. The model consisted of 20 small “lambanog” producers which produced 72 liters of “lambanog” per day and a central distillery with a capacity to produce 1,000 liters of 95% alcohol per day. The central distillery had large capacity to accommodate 10 more “lambanog” producers.

The calculation for the specifications of equipment in the central distillery were made. The costs of fabrication of the equipment were calculated using the actual price of the materials needed like stainless steel sheet, copper tubes, pipes, etc. The actual price of the materials were canvassed from the different merchandizing in Manila.

The analysis of the factors affecting the economics of small “lambanog” producers were made. It was found that labor cost for sap collection and distillation contributed to the high production cost of “lambanog”. The cost of production per liter of “lambanog” was computed to be P3.39, with labor contributing 68%. “Lambanog” was sold at a retail price of 5.30/liter without bottle or sold to the suppliers at a bulk price of P4.50/liter and would be sold to the central distillery at this price.

The cost of producing 95% alcohol from “lambanog” was estimated to be P13.84 per liter. Based from the selling price of P8.50/liter of 95% alcohol, the value of return on investment (ROI) would be -56% and the value of discounted cash flow rate of return (DCFR) would be -185%. The model would not be feasible for investment with this selling price. However, using sensitivity analysis, the model would be feasible if the cost of raw material would decrease by 35% and the selling price of the product would be P12/liter. With this condition, the value of DCFR would be 24.5% and ROI of 21%.

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