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Enhancement Entry Points in the Coconut Value Chain Selected Cases in Quezon Province (A rapid coconut value chain assessment study commissioned by Pakisama under AFA). Dr. Nerlita M. Manalili. Managing director NEXUS Agribusiness Solutions Vega Center, College, Los Banos, Laguna. - PowerPoint PPT Presentation
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Dr. Nerlita M. Manalili
Managing directorNEXUS Agribusiness SolutionsVega Center, College, Los Banos, Laguna
Background and Process of the Study Industry Situationer The Primary concern Emerging Products Selected Cases Constraints and Potentials Possible entry points Strengthened positions in the Coco chain Validation of Identified Options: built Scenarios Concluding Remark
Done In preparation for a Regional Knowledge Sharing workshop on enhancing farmers’ market power in the value chain in Asia (AFA’s initiative)
About successful (and promising) cases of
marketing arrangements in a commodity chain
Focus on selected coconut value chain in Quezon ( the intention is one that will later on be
applied/adopted or out scaled in the near future)
1. Coconut oil (Crude and Refined)2. Banana (fresh)3. Tuna4. Pineapple & Pineapple Products5. Dessicated Coconut6. Tobacco (manufactured)7. Seaweed and Carageenan8. Centrifugal sugar9. Milk and Cream Products10. Fertilizer (Manufactured)
Philippines - 2nd largest producer in volume & value
Quezon Province Accounts for more than half of the region’s coconut produce
Coconut Farmers, biggest in Poverty Group
Coconut Farmers Form The Biggest Poverty Group
Coconut Farmers Form The Biggest Poverty Group
In spite of contribution to GVA and In spite of contribution to GVA and Agricultural trade:Agricultural trade:In spite of contribution to GVA and In spite of contribution to GVA and Agricultural trade:Agricultural trade:
Income From Copra is P900-P1000 per hectare/month
Income From Copra is P900-P1000 per hectare/month
With 2 Hectare Ave. per Family of six, Income per month is P2,000
With 2 Hectare Ave. per Family of six, Income per month is P2,000
Source: Dr Justino Arboleda
Coco SugarCoco WaterYoung coconut (Buko)Coco FiberOthers (sugar from shell)
92.78 percent increase in 2011 exports volume of coco sap sugar with 70,000 kilograms (km) compared with 36,310 km in 2010.
Tremendous leap of 224.20 percent increase in exports volume from a low of 11,200 km in 2009 compared with 2010 figures.
“Exports was driven by global health concerns specifically diabetes and obesity,” the PCA Administrator bared. The World Health Organization (WHO), 2011 statistics revealed that 346 million people are diabetic worldwide.
Coco sap sugar has a low glycemic index (GI) of 35 compared to regular cane sugar, thus it can be recommended for diabetics (FNRI, DOST).
Exported to 11 countries namely: Japan, USA, Middle East, Korea, Hongkong, Norway, Canada, Switzerland, France, Australia, and New Zealand. Among these countries, USA ranked as the number one exporter (PCA).
second biggest non-traditional export USD1.445 million from sale of 1,450,129 liters.
United States was major destination controlling 969,164 liters or 66.8% of total business (PCA)
Said to be cost effective in bigger scale of operation
Need to be processed immediately to avoid spoilage
Coco husk as goldmine – Philippines produces 15 billion nuts a year,
meaning also 15 billion coconut husks. Only a very small portion of this is processed
into something of value. In fact the Philippines exports only about 4,500 metric tons of coconut coir a year.
Kerala, India earns $600 million a year from different products out of coconut husk.
PCA
Largest Farm Waste in the Philippines8 Billion Husks are burned or thrown away3 Billion Husks Used as Fuel to make Copra
Source: Dr Justino Arboleda
a new kind of coconut sugar can be extracted from the shell of mature coconut? It looks unimaginable but the fact is that a P2-billion company has been set up at the DADC Economic Zone in Sta. Cruz, Davao del Sur, to produce the novel product.
The company is called CJ Toyota Tsu Sho Philippines, Inc., said to be a joint venture of Japan’s biggest car company and a Korean partner. The company has a huge processing facility that was inaugurated about a couple of months ago.
The product is called Xylose coco sugar and is said to be for export to Japan and Korea. The product comes in very fine powder form that is immaculate white. It is very sweet and is said to be used for the manufacture of toothpaste, chewing gum and possibly other products that need sweetener.
Source: Zac SarianAgri Plain talk
Coco sugar backyard ( Armida Monghe) commercial (Pasiolco Agri VenturesYoung coconutPeter Paul Phils CorpCoco WonderCoco Coir (husks)l
Armida MongheCoco Sugar ProducerLopez, Quezon
Rosauro MongheCoco Wine (Tuba) ProducerLopez, Quezon
Coco Wine
20 gallons of coco wine per week
sold at P180/gallon
P3,600/week;P14,400 per month gross income
Coco sugar
2 gallons coconut sap = 1 kilo coco sugar
Sold at P250/kilo (produce 4 times a week
P1,000/week; P4,000 per
month gross income
P10, 000.00 annual rent for 65 coconut trees, producing only wine before, now coco sugar is also produced.
Sap gathered in the evening Sap gathered at 6 a.m.
Pascioclo Agri VenturesMaureen Pasciolco , OwnerTiaong, Quezon
Lopez Tiaong
Production trial & error procedural- own /contract out 4-5 hrs cooking 6hrs -10 hrs cooking
Selling price P250/kilo selling price P280n -320/kilo
Ordinary plastic packaging specialized packaging no brand branded
What Account
for difference
s
Market Knowledge/
Info
Technical know how
Packaging
Production cost ??? Production cost < 190/kilo
Non Quezon Producer/Whole
salerOrganic, package sizes local, export
market
Limited market there is market
Mark
et tie
–
up
Supply
arrangem
ent
initial investment of P1.42 million.
annual net profit of P201, 762.48.
◦ Based on the projected 10-year income statement and cash flow, before financing
◦income is realized at first year of operation
◦ initial investment fully recovered in 3.64 years.
Source: PCAARRD
UGMA URBAN Poor
Selling price P12 20-25 (22,5)
No of Pcs 2,000 2,000
Revenue P24,000 P 45,000
Cost bukoP 6-9 = 7.5
15,000 P 24,000
Hauling
transpo (elf – 7,000pcs) 8,500
Hauler.driver 850.00
Storage P1.00/nut 2,000
ConcernsHigh Reject - Improper selection of young coconut - (training needed)Appropriate tool
StorageShort supply (specially with rejects)
High transpo cost(maximize load/trip
Mark
et tie
–
up
Only S
upply
arrangem
ent
Have buying stations with accredited farmer supplier per station
Usually sourcing coconuts from Catanuan, Calauag, Padre burgos, Bondoc Peninsula & Lopez
Have one coop currently supplying the Co. (could be a future possibility
No Mark
et tie
–up
More
of s
alarie
d
emplo
yees
Private Enterprise Working with a group of small farmers and local workers in the provinces.
built small Processing Facilities in Provinces of Luzon, Visayas and Mindanao providing livelihood to small farmers and local workers.
We implement sustainability-oriented on organic farming, quality and farm productivity improvement. Some percentage of sales are given back to the farmers as incentives in form of organic fertilizer, coconut and cacao seedlings in order them to plant more and some are provided with monetary incentives to promote continues organic farming activity.
More of salaried employees (not cooperative)
No Mark
et tie
–up
More
of s
alarie
d
emplo
yees
Source: Juliet Escasa, Hagakhakin Gumaca
Utilizing coco waste for fiber
Income from Labor:
P1.50 /coi about 20-30 pcs/day
P550 /10 meter net, 2 persons in a day P275/person/day
Technology AvailableQuality Standards
Oven Type Drier - produce white hygienic copra (Copra) P200,000 – 250,000 investment 250 kg/day capacity(C/o Coco wonder)
Ohmic heating method - pasteurization of Coco water(coco water) P2.3 million budget alloted in
2013 for laboratory scale research on a pre-processing method for coconut water to minimize production loses due to fermentation &
mishandling.Coco Sap Sugar - Hands- on Training offered by Pasiolco Agri venturesCoco fiber - Dr. Justino Arboleda of Bicol offering technical assistance
Classification Specification TolerancePremium (superior quality)
Cream to light yellow
Moisture content is <4%
5.0%
Class I (good quality) Light brown to brown
Moisture content is not >4%
10.0%
Class II Includes the coconut sap sugar that did not qualify as Class I and premium but satisfied the minimum requirements of the product standards
10.0%
In terms of activities
To improve on his current segment as chain participant
To add more activities and move to other chain segments
(if within their competencies)
Vertical integration
In terms of coordination & management
To participate in decision process
In setting norms and standards
Through innovation
Horizontal Integration33
34
Integrationof post-farm activities
no participation in
chainManagement
CHAIN Activity integrator
CHAIN (CO-) OWNER
participation in chain
mnagement
CHAIN Participant
CHAIN Partner
Specializationin farm production
Source: Regoverning Market (with modification by NMM)
1
2
3
4
Chain activity integrator
Integrationof post-farm activities
no
participation in chain
Management
CHAIN (CO-) OWNER
Chain Participant
CHAIN Partner
Source: Regoverning Market (with enhancements by Manalili)
Know more about improvingFarming systems and qualityOf product (to have betterChance at the market and Get better prices)
NEXUS Agribusiness Solutions
Enhance qualityAdd value and Process products
Chain co owner
Chain partner
Cooperatrive businessProduct developmentBranding, marketing
Farmer study groups Specialized activity/Knowledge & Negotiation Skills get to influence chain decisions Specialization
in farm production
participatingIn chain management
ObjectivesObjectives StrategiesStrategies Entry PointsEntry Points Identified Identified MarketMarket
SC ModelSC Model
1.Chain 1.Chain OptimizationOptimization
Increase capacity to Increase capacity to comply with standards comply with standards to ensure qualityto ensure quality Continuous farmers’ Continuous farmers’ trainingtraining Farmers’ Farmers’ Commitment to adhere Commitment to adhere to good agricultural to good agricultural PracticesPractices
Sustain farmers Sustain farmers education and education and value formation value formation through NGOs through NGOs collaborative collaborative assistance to assistance to farmer groups farmer groups
Modern Modern retailers (like retailers (like supermarkets supermarkets hypermarkets, hypermarkets, groceries, groceries, specialty specialty shops) shops)
Coco SugarCoco Sugar
Pasiolco Agri Pasiolco Agri VenturesVentures
Coco fiberCoco fiber
Dr. ArboledaDr. Arboleda
2.Integral Chain 2.Integral Chain CareCare
Meet grade/certification Meet grade/certification requirements (organic) requirements (organic) QualityQuality of international of international standardsstandards
Organic Organic CertificationCertification
Continuous Continuous quality quality upgradingupgrading
Quality - user-Quality - user-recognized recognized
Modern Modern RetailersRetailers
Export marketsExport markets
Coco WonderCoco Wonder
Pasiolco Agri Pasiolco Agri VenturesVentures
Coco fiberCoco fiber
Dr. ArboledaDr. Arboleda
3.Chain 3.Chain DifferentiationDifferentiation
Premium Positioning Premium Positioning
New marketing New marketing conceptsconcepts
E- commerceE- commerce
Agency sellingAgency selling
Well Well differentiateddifferentiated
Product/product Product/product delivery systemdelivery system
InternationalInternational
MarketsMarkets
InstitutionalInstitutional
MarketsMarkets
Coco wonderCoco wonder
Coconut houseCoconut house
Ugma-Urban Ugma-Urban poor modelpoor model
Sample Action Plan: Redesign Option for CoconutSample Action Plan: Redesign Option for Coconut
Specializing in Farm production
Integration of Post Farm activities
No participation active participant
Source: Regoverning Market (with enhancements by Manalili)
Copra Whole Nut
Farm gate - traders - market municipal Lucena
Current Current with changes Entirely new scenario
oProduct enhancement• Explore new methods - of Cooking copra (standard coco drier PCA, DOST DTI) - processing coco milk centrifugal - of trading (copra,buko,•Product development-Sauce, Juice, sapal--coconut virgin oil -Ubod ( program plantingoTraining & extension needed
o intercropping • ginger, gabi, • rambutann, lanzonesoLivestock raising• Ruminants, goat, • native pigs, chicken(ideas not materializing)
oCoco Life• coco levyhildren don’t want to Go into farming, need toLook for other Alternatives, or makeCoconut farming viable
Other than current livelihood what other initiatives do you need to further improve on your situation o small processing plant
per barangayo Village based mftngoDomestically sold new coco products -coco milk - coco sauce (copra rejects) - nata de coco, jamo stable selling of buko skills devt (identificatn)oAgham sa PagniiniyogoCertify indiginous KnowledgeoShellane like fuel prod(Technical training)
How do you see your Community5 years from now?(other issues)
SCENARIO BUILDING
FGD Questions & Outputs
Questions Asked
Manalili 2002
your Current products (Major, secondary?How are they soldBrought to market
Any other activities(production, mktg)That you wish to doWith your coconut?What stops you fromDoing so?
Concluding Insights
No existing marketing arrangements (beyond the usual arms length buyer seller relationship were observed in the coconut commodity chain, given the selected cases studied. though there are a number of promising buyer – farmer supplier relationship if given proper impetus for development, (brokering-in, guidance, collective marketing, enabled environment