Banana Chips

This provides an ample opportunity to a new entrant as the market is not dominated by some brands and with good quality and competitive pricing, it is possible to capture adequate market share. Production Banana Chips or Crisps are deep fried snack a small or casual meal. Cooking type bananas produce good Chips/Crisps. It is easy to make and the product is very tasty. The small-scale production requires but a few equipment, viz. A stove (Gas, Diesel fired or even a Firewood Stove), Kitchen knives, Peelers, Cutting boards, Plastic buckets, Cooking pots, Containers, Frying pan or Wok, Long Spoons or ladles, Cheese cloth, Colander, Trays and Baskets, Plastic Pouches, Candles amp; old Hacksaw blade or a small Electric Impulse Heat Sealer and Weighing scale. Production steps of Banana ChipsGood large size green cooking bananas slices are cut cross wise to give circular shape. Bigger size fruits are preferred to produce large size slices and an attractive product. Different varieties give products of different colour, flavour and taste. Crosswise slicing gives uniform, circular, attractive, product and is universally adopted for commercial production. This way as the slicing is faster the production increases. The steps involved in Banana Chips processing are: Selection: Good quality, green cooking bananas is preferred. Cutting and Peeling: Using a knife, banana bunches are separated from the main stem and individual bananas hands are separated from the bunches. Using a hand peeler, bananas are peeled and immediately sliced cross wise into thin, round slices. As some varieties with latex cause itching or irritation while handling, it is better to rub the hands with salt before peeling and slicing. Immersion in salt water: Immediately after slicing the slices are placed in salt water @ 3 to 5% of salt to the water. Added salt gets in to the slices and improves taste arid acceptability of the product. If slices are not placed in water, they turn Brown and later give an unacceptable dark product. Frying: Keep a large shallow Frying Pan or wok over a suitable stove (with adjustments for flame/heat control). The frying pan should be thick bottomed and with side rings for easy handling. Good edible vegetable cooking oil is used for frying. Bring the oil to fuming hot temperature. The long spoon or ladle used for taking out the fried chips from the wok can be either a big perforated one, of 8 to 12 inches in diameter and with long handle or of a large diameter wire mesh spoon with bamboo handle. The salt soaked slices are then dropped one by one manually into the hot oil in the frying pan. Never put the slices together in clusters into the oil as the slices being starchy stick to each other and are difficult to separate later. The normal practice followed is: Holding slices in left hand and dropping in rapid succession the separated slices one by one into the hot oil, or Slices taken out from the salt solution, separated and arranged either on a cheese cloth or on the dry big spoon itself and then carefully dropped into the hot oil. The frying temperature is maintained around 150 to 160C (just fuming) and frying time around 3 5 minutes depending on the slice thickness. Slices are deep-fried to golden yellow colour (till the bubbles seize) and taken out immediately using big perforated spoon. Over frying turns the chips dark and this will be considered an unattractive product. Draining of oil: Deep fried chips are put into perforated Colander for the excess oil to drain out and later transferred to a wide plastic or aluminum tray lined with craft paper or kitchen towel which absorbs/removes excess oil in chips and product is allowed to cool. Packing: Chips should never be packed while hot since hot air inside the pack condenses into water, which moistens the crisps resulting in soft, soggy chips. After cooling, chips are packed manually in plastic pouches and scaled airtight using either Hacksaw blade over candle flame or an electric impulse plastic sealer. Market PotentialDemand and SupplyThere is a very large market for banana chips and they can be sold at all such places where people assemble like theatres, picnic spots, bus stands or railway stations, traffic junctions etc. Retailing has to be done through small grocery shops as well as big departmental stores and super markets. There exists a strong demand for banana chips as most people enjoy eating snacks. While fresh cooking bananas are widely available, banana chips are not easily available in many parts of the country. Making chips increases the shelf life of the product in times of abundant harvest. Sales Location The owner has several options for selling the product as follows: At the local market; Through shops; and Through hotels amp; clubs. If the owner wishes to sell direct to the end customer, then the location with the highest traffic should be chosen. This will generally mean higher expenses in the form of rent. If the owner wishes to sell through shops, hotels or clubs, then the business can be started from your house. However, the owner will have to accept a lower mark-up to allow for a margin to be made for the shop owner. Costing the BusinessEquipment cost The following list represents a range of possible equipment needed for establishing a small scale banana chip producing business: Item | Quantity | Estimated Cost (Birr) | Purpose | Equipment | | | | Wok of frying pan | 1 | 500 | Fry chips | Gas Burners | 2 | 3000 | Stove top cooking | Plastic pots with lids | 5 | 200 | Storage | Knives | 3 | 60 | Cutting food | Spoons, wooden ladles | 5 each | 100 | Stirring for uniform frying | Cooling trays | 2 | 100 | Cooling hot fried chips prior to packing | Bag sealer | | 1600 | Packing fried chips | Total Equipment | | 5560 | | The prices used are estimated average cost based on Adama prices at the time this document was prepared. The above capital requirements are based on the principle of starting a small scale banana chip producing operation with minimum outlay of capital. This business can be of larger scale through the introduction of a deep fryer, and slicing machine. Staff CostA basic banana chip operation could be started by an owner helped by a family member. Position | Main responsibility | Monthly salary (Birr) | Owner | Manage business: decide prices, prepare chips, procure suppliers, supervise all staffs | 1500 | Helper | Assist in all areas | 700 | Total Staff Cost | | 2200 | Raw Material costYour major raw material is cooking bananas. Availability and price you pay for bananas will be determined to some extent by the weather conditions. In times of drought, availability will be less and price will be high. We will buy regularly from a few farmers. Once the suppliers know that we will be buying regularly, they will adjust their production to meet our demand and they should be willing to offer us a special price. Based on the costing and pricing part of this document, our raw material cost will be 1. 80 birr per 100 gram package. Raw materials include the raw banana, oil, salt, packaging and label. Raw material cost for one month consumption: Item | Quantity | Estimated Cost (Birr) | Raw Banana | 50kg | 600 | Edible Oil | 30ltr | 850 | Salt | 5kg | 15 | Packaging polythene/plastic | 1package | 200 | Total Raw Material Cost | | 1665 | License or Registration CostThe size and nature of this business does not require company registration and will be set-up as small and micro enterprise. For the purpose of this guide, the annual licence fee is estimated at 200 Birr. Operating CostA banana chip producing business has certain operational costs. Some of these costs are: Paid once when we establish services such as water, electricity ; Some are paid on a monthly basis. When we start our business we will usually need some working capital (money) to establish services, pay certain yearly expenses and to meet some of our monthly operational costs until the business can generate enough income to meet these costs. In the case of a banana chip producing business this should only be for the first month. The size and nature of this business probably will not warrant renting a new place. Electricity is not needed, but water is essential to the operation. Hence the operating costs listed below are on the basis of incremental costs incurred to run the business. For the purposes of this guide, it has been assumed that the product will be sold through a market stall. Below is a table showing the start-up and monthly operating cost associated with a banana chip producing business. Operational Cost | Initial Working Capital (Birr) | Monthly (Birr) | Rent (market stall) | 1000 | 500 | Water charges | 10 | 10 | Electricity | 50 | 50 | Gas | 200 | 200 | Cleaning supplies | 50 | 25 | miscellaneous | 100 | 50 | Total Operating Cost | 1410 | 335 | Startup Costs Item | Total (Birr) | Equipment | 5560 | Staff | 2200 | License and Registration | 200 | Raw Materials (First month) | 1665 | Operating expenses | 1410 | Total Start-up cost | 11,035 | The cost to start a banana chip producing business is around Birr 10,000. Costing and PricingIngredients: Bunch of cooking banana Water Salt Cooking oil Plastic bag Label Costing Ingredients | Quantity | Cost (Birr) | Cooking Banana | 100gms | 1. 35 | Salt amp; Cooking oil | | 0. 15 | Plastic Bag | | 0. 15 | Label | | 0. 15 | Total Cost per 100gm bag | | 1. 80 | Selling PriceObviously our selling price cannot be below Birr 1. 80. To determine our selling price we will try and investigate prices for similar items available. If there is a similar item, then our price will be close to that price. As we will be selling our product through shops, hotels or clubs, so we would have to allow a reasonable margin for the reseller. Probably a reasonable price for the above product will be Birr 2. 50. We will review prices if our product is not selling. ProfitabilityMonthly profit and loss | Breakeven Sales | Sale per day | 175 bags | Sales per month (25 days) | 4335 bags | Cost of raw materials | 1. 80birr/bag*4335 bag=7803 birr | Gross Profit | 2. 50birr/bag*4335bag-7803birr=3035 | Operational expenses/month | | Rent(market stall) | 500 | Wages | 2200 | Electricity | 50 | Gas | 200 | Water | 10 | Cleaning Supplies | 25 | Miscellaneous | 50 | Total | 3035 | Operating profit per month before tax | 0 | If we assume 2. 0 birr per bag unit price then the breakeven sales for this business is 175 bags per day. This means that if you sell less than 175 bags per day, you will make a loss. If you sell more than 175 bags per day at unit price of 2. 50 birr, you will make a profit. Financing the BusinessThe size and nature of this business is such that savings must necessarily be used for financing the business. In addition to our saving we will take a loan from Oromia Micro Finance Enterprise. Source of Finance | Amount (Birr) | Saving | 300 0 | Loan | 9000 | Total | 12,000 |