MABS APPROACH TO AGRICULTURAL MICROFINANCE

Module 1, Session 2

Designing the Market for Agricultural Microfinance

THE MAP TARGET MARKET

Small Farmers with ME’s &

other sources of income, no land

titleBOP

Market Segmentation by Agri-Activities and Ownership of Legal Title

Small farmers with ME’s & other

sources of income, with

land title,

Large Agri Operators, and Land owners

MAP Survey, MAP Survey, June 2006June 2006

1 hectare, 31%

1.1 - 2.0 has., 22%

2.1 - 3.0 has., 16%

< 1 ha., 13%

> 5.0 has. 7%

3.1 - 4.0 has., 4%

4.1 - 5.0 has., 3%

0%

20%

40%

60%

80%

100%

1

Landholding Sizes

n = 318

SMALL FARMERS DEFINEDSMALL FARMERS DEFINED

Small farmers and fisherfolk constitute 90% of all farmers and fisherfolk in the country.

DEFINITION OF SMALL FARMERS:Small farmers and fisherfolk are “natural persons dependent on small-scale subsistence farming and fisheries activities as their primary source of income.”

-Modernization Act (AFMA) or Republic Act (RA) 8435 of 1997. ACPC Monitor, Issue No. 2, Series of 2003. Definition from Agriculture and Fisheries

WHO ARE THE SMALL FARMERS?WHO ARE THE SMALL FARMERS?

• Land: Actual tiller of lands not over 5 hectares, whether land owner or tenant• Hog: Raisers of 10 sows or 20 fatteners• Poultry: Raisers of 1,000 layers or 5,000 broilers• Cattle: Raisers of 10 fatteners or 5 breeders• Goat: Raisers 50 heads• Fisher folk: Operators of fishing vessels 3 gross tons or less (Fisher folk include fish workers or helpers in fishing boats, fishponds, hatcheries or fish processing establishments) • Aqua culture: operating fishponds or seaweeds, oyster or mussel farms are those with less than 5 hectares; or fish cages of less than 400 square meters in size.

- Land Bank of the Philippines

Examples of Agricultural Products Financed Under MAP

ABACA VEGETABLE

COPRA POULTRY

SMALL FARM TOOLS and EQUIPMENT

FRUITS

MARINE PRODUCTS

RICE

FARM ANIMAL

• Market diversification (Study the agri sub-sectors in the locality)• Value Chain analysis

– Universities– Farmer Associations– Input suppliers– Traders– Existing clients

• Existing Clients of the bank (microenterprise clients with agri activities, depositors, etc.)

MARKETING STRATEGIES

1. What is a Value Chain?– A Value Chain describes the activities that take

place in a business and relates them to an analysis of the competitive strength of the business.

2. What is Value Chain Analysis?– A VCA is one way of identifying which activities

are best undertaken by a business and which are best provided by others ("out sourced"). What activities a business undertakes is directly linked to achieving competitive advantage.

VALUE CHAIN ANALYSIS

As a Marketing Tool

A thorough discussion on the value chain will be presented on the succeeding session

ASSESS MARKETS WITH VCAASSESS MARKETS WITH VCA

• Demand: Focuses on most relevant financial services demanded because they help targeted enterprises to take advantage of opportunities for growth

• Supply: Identifies range of service providers, building on their records, perspectives and relationships

Thank you