Friday, March 27, 2009

Rice Business

I got an email from "Reli":

Good day, sir!

Matagal na po akong nagbabasa sa blog nyo at gusto ko pong malaman nyo na isa kayo sa inspirasyon ko na pasukin ang pagbibusiness. Nabasa ko po ang isang post nyo sa rice business at interesado po ako na subukan ito sa aming lugar. Hindi ko na po makita ang post about sa rice business nyo ngunit sa pagkakantanda ko, nagshare po kayo kung paano ito sisimulan. Maaari po bang maibahagi ninyo kung ano ang mga dapat kong ihanda sa pagsisimula ng business na ito o sagutin po ang aking mga katanungan.Sana mabigyan nyo din po ako ng mga pointers na dapat sundan sa para mamanage ito ng maayos.

1. Ano pong mga permits ang dapat ihanda?
2. Kailngan po ba ng isang bodega para sa ganitong business?
3. Kanino po kayo kumukuha ng supply ng bigas? (diretso po ba sa magsasaka/rice milling/agent)
4. Maganda po ba ang kita sa pagbibigasan?

Salamat po ng marami. Godbless and more blessings po sa inyo.


Hi Reli,

1. You would need a local business permit issued by your LGU; and you have to visit NFA for permits on rice retailing. Check their website as well as permits for warehousing, milling and retailing are different.

2. I would say it would depend on how much capital you have. A huge advantage on this business is on warehousing/bodega - just by doing so, and bidding (waiting) for a good timing (price) you can easily earn a 20% or more mark up. Remember last year? It was a bonanza.

3. I get from both. Of course, you earn more if you get it from farmers.

4. I would say, yes, do both retail and wholesale.


My advise:

a. Run your business yourself - do not trust anyone as possible, including relathieves, hehehe. You will learn the basics fast, i.e. how many kilos a sack of palay is, how many kilos it would become if milled, and how much would it be if sold retail/whole sale; and the costs along the way.

b. Test the business first with less volume and capital - then evaluate, and evaluate.

c. To give you an idea: a sack of palay (37-39 kg) as of today can be bought at 14.10 per kilo from farmers, two sacks of the same palay (more or less) can give you a 50 kg of rice which would, if sold retail, can fetch 37-38 pesos per kilo. You will also earn from "ipa" and "binlod" which is used as feeds.


How it all started:

Years ago (2003), a farmer approach me, wanting to mortgage his rice land. I agreed, for 100K pesos, I got his land ( 10 years contract, which means he can redeem it only after 10 years). He farmed it and paid me a rent of 70 sacks of palay every cropping, twice a year.

The first cropping in 2003, the price of palay was 5.80 pesos per kilo, and for every sack, there's 37 kgs., so I earned around 15,000 per cropping, since it was twice a year, I earned around 30,000 per year on my 100K investment.

Today, the a kilo of palay is 14.10 to 15.00 pesos. I still have the rice land with me since it is redeemable only on 2013. Last year alone, I earned more than 100K from the rice land.

In this business, you got to have an appetite for profit. Pag na konsensya ka - donate more to charity.

Expand the business, and diversify.

Today...what I have in hectares of rice land is unmentionable (nakakahiya) to think na squatter lang ako dati at walang ka lupa lupa hahaha.

Just keep on patronizing/giving to charity on your way to wealth.

Good luck.


PS: I still tell my friends I am unemployed/retired since I left my jobs in KSA around 3 years ago. This business is kind of boring as you will only be busy 2 months in a year, more or less. So diversify, make a blog, travel more, go into other businesses etc.

I also have a transportation business, overtime, maintenance cost (spare parts, gasoline etc.), and depreciation costs eats up you're capital. But in this business, I would say, there is no depreciation costs, as rice prices, and land values just keep on going up.