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NEXUS Agribusiness Solutions
RAPID APPRAISAL OF POST HARVEST FACILITIES IN THE PHILIPPINES
Final Report
Nerlita M. Manalili
Kevin F. Yaptenco
Alessandro A. Manilay
30 March 2016
Study Leader(Value Chain Specialist)
DR. NERLITA M. MANALILI
Asst. Study Leader(Agricultural Engineer)
DR. KEVIN F. YAPTENCO
Economist PROF. ALESSANDRO A. MANILAY
Statistician PROF. NELITA M. LALICAN
Research Support Engr CARISSA JOY E. OZOA
MS. IMELDA V. VALENTON
MS. MARA MICHELLE Q. PANGILINAN
MS. MONINA ANN P. SAGUIN
STUDY TEAM
NEXUS Agribusiness SolutionsSOURCE: Rolle and Mazaud 2003; Bautista and Esguerra 2012; PHILMECH 2012; http://www.gov.ph/2013/06/05/republic-act-no-10601/
1977Launching of FAO Action
Program for the Prevention of Food Losses
and
Establishment of the ASEAN PHTRC in UP Los Baños
1975UN General Assembly resolution to reduce
losses by 50% by 1985
1973UP-Cornell Univ
program introduces postharvest research
and education in UPLB
1968FAO “war on
waste” campaign
1967FAO holds
symposium on crop losses
1978NAPHIRE created
through Presidential Decree 1380
2003FAO Global
Initiative for Post-Harvest
Development
1981NAPHIRE expands
beyond postharvest of rice and corn
2011DA (Regional Offices + PHILMECH) implement
Rice Mech Program1997Agriculture & Fishery
Modernization Act signed into law,
recognizes importance of postharvest
2013RA 10601 (AFMECH
Law) is passed
NEXUS Agribusiness Solutions Source: http://www.fao.org/save-food/en/
… something is wrong with our food supply system …
Establishment of Postharvest Facilities in the Philippines
PROGRAMS OF THE DEPARTMENT OF AGRICULTURE
What are the
impacts of
these projects?
General
• Evaluate effectiveness of postharvest facilities (PHF) and assets
Specific
• Characterize PHF projects (selection, expenditures, assets, impacts)
• Assess a representative set of PHF projects
• Identify strengths, weaknesses in the project cycle of PHF projects
Project Objectives
RAPID APPRAISAL OF POST HARVEST FACILITIES
IN THE PHILIPPINES
• Literature review, initial data gathering
• Prioritization of PHF projects for evaluation
• Initial field assessments
• In-depth field assessments
Methodology
RPC MILLED RICE
INTERVIEW AT A BRGY. FOOD TERMINAL
BFT IN TORIL, DAVAO CITY
FLATBED DRYER
KOICA RICE MILL
Project Highlights
• Four KOICA Rice Processing Centers(RPC)
• Flatbed dryers, food terminals, rice threshers
KOICA Rice Processing Centers
RPC BUILDING
RECIRCULATING DRYERS
RICE HUSKERS / ASPIRATOR
RICE HULLER
COLOR SORTER
LENGTH GRADER
KOICA Rice Processing Centers
Proposal Description Findings
Objectives:1. Increase farmers’
income2. Increase processing
capacity for rice self-sufficiency
Funding• SK gov’t grant = Php648-M• Phil. gov’t counterpart =
Php136-M, with Php20-M operating capital per site (4 sites)
• Farmers’ assoc. counterpart = Php2-M
Reported impact (Tolentino2013)• Reduced system loss by 4-6%• Jobs for 33 professionals, 48
workers• Stable local prices (esp.
during wet season)• High head rice recovery,
milling recovery = 65-68%
Expected impact:1. Reduced post-
harvest losses2. Generated
employment3. Stabilized local
prices4. Improved milled
rice quality
Facilities / services• Mech. dryers , rice mill,
cargo trucks• Storage warehouse • Pickup, delivery service• Custom milling, drying
External assessment• Financial losses / under-
utilization• Suppliers prefer selling wet
paddy to RPC• Improved prices even during
peak harvest• Milled rice is not premium
grade*
*Brokens = 10-26% by weight; based on NFA standards, maximum brokens for Premium grade = 5%
Agri-Pinoy Food Terminals Funding• MFT: Php0.5 – 1.5M for building• BFT: Php150,000 for trading capital,
building improvement, training
Services• MFT – consolidation area, market
prep. / trading area• BFT – retail market, provide clean,
orderly environment
Proposal Findings
Objectives:1.Provide access to markets2.Provide agri-fishery commodities, basic necessities at affordable prices3.Create employment4.Develop entrepreneurship5.Strengthen LGU-private sector partnership
Reported impact (DA-AFMIS 2013)•Lako-lako system eliminated, less transport cost, farmers paid in cash, by barter•Serves daily needs of housewives; organic farming encouraged•Hiring of personnel for BFT, provide support to local businesses•Expansion of production areas, development of additional products
Expected impact:•Increase income of agri-fishery producers•Provide safe, nutritious, affordable food•Create employment•Income generation for LGU
External assessment•Eliminate transport costs, mech. damage•Encourages home gardens, wide variety of produce available•Locals hired to tend BFTs, as workers to expand production•Provides support for small business ventures•BFT collects user fees for maintenance, supplies ingredients to processors•Repair / replacement of equipment difficult
Barangay Food Terminals
Proposal Findings
Objectives:1.Provide access to markets2.Provide agri-fishery commodities, basic necessities at affordable prices3.Create employment4.Develop entrepreneurship5.Strengthen LGU-private sector partnership
External assessment•Lako-lako system eliminated, transport cost reduced, growers obtain better selling prices•Facilitated exchange of goods between growers and traders•Product handling employment opportunities created, trucking/ transport services expanded•Collects market fees from traders, stall rentals•Issues and concerns jointly addressed; Municipal Ordinance issued for sustained patronage of MFTs, and organizing loading unloading areas •Some MFTs unused / underutilized
Expected impact:•Increase income of agri-fishery producers•Provide safe, nutritious, affordable food•Create employment•Income generation for LGU
Municipal Food Terminals
PHILRICE
DA RFU
Check, validate completeness of
documents; endorse to GMA Rice
Program
GMA Rice Program
Compile a short list of recipients
NABCOR
Provide detailed engineering designs and plans for drying
facilities and equipment
Received project funds for transfer to
cooperating agencies
Validate list of recipients
PHILMECH
Fund administration, management and disbursement
Compile list of qualified IAs
NIA
Organize IAs, provide training,
coaching and mentoring
Ensure utilization of drying facilities
IA
Undergo training, provide feedback on utilization, operation
and maintenance
Provide land, storage shed, initial
operating cost, labor
Coordinate, implement and
monitor all GMA Rice Program
activities in each region
Procurement, bidding, delivery, installation of drying facilities and equipment
DISSEMINATION
OF DRYERS
UNDER THE
FIELDS PROGRAM
Aspect Findings of Impact Assessment
Utilization Over-utilized during wet season, especially during simultaneous harvests; underused during dry season
Durability Perforated flooring of grain bin prone to corrosion; replaced with bamboo slat floor overlaid with netting; cracking of concrete lining of biomass furnace
Condition of dryer
Thermometer not operating, flooring deformed
Operator safety
Absence of shields for rotating / moving components
Flatbed Dryers
PHYSICAL LOSSES
Sundrying losses
Milling losses
VALUE (QUALITY) LOSSES
Delay in threshing
Delay in drying
TYPES OF POSTHARVEST LOSSES
without appropriate PH technology
SUNDRYING:
5.8% OF HARVEST
(PhilMech)
WHERE IT OCCURS:
FARMER
TRADER/PRIVATE MILLER
PH PHYSICAL LOSSES IN RICE WITHOUT APPROPRIATE POSTHARVEST FACILITIES
MILLING
1) Broken grains due to
fissuring during
sundrying
2) Use of technically
inefficient mills
LOWER MILLING
RECOVERY
WHERE IT OCCURS:
RICE MILLER
MR = 60% (IRRI, 2014)
MR (%)= Total milled rice X 100
Total rough rice
PH PHYSICAL LOSSES IN RICE WITHOUT APPROPRIATE POSTHARVEST FACILITIES
DRYING
• VALUE LOSS DUE TO
DELAY IN DRYING:
o 75% OF FULL VALUE
(3 DAYS DELAY)
o 6% OF FULL VALUE (1
DAY DELAY)
PH VALUE LOSSES IN RICE WITHOUT APPROPRIATE POSTHARVEST FACILITIES
VALUE LOSS ESTIMATION:
PADDY VALUE(%)= 100 – 3.51D0.35 X (MC-15)0.65
WHERE:
D = no. of days wet paddy was left undried
MC = moisture content
(TETER, 1987)
POSTHARVEST LOSSES IN RICE WITHOUT APPROPRIATE POSTHARVEST FACILITIES
• DELAYS IN THRESHING AND DRYING WERE MINIMIZED (BATCH RECIRCULATING DRYERS-RPCs; FBDs AND THRESHERS – FARMER COOPERATIVES)
• MILLING RECOVERY INCREASED FROM 60% TO 68% (MULTI-PASS RICE MILLS – RPCs)
(PhilMech and IRRI)
WITH THE PH FACILITIES
PH Losses in Rice With and Without Appropriate PH Technologies
0%
10%
20%
30%
40%
50%
60%
70%
80%
3 days delay 1 day delay Zero Delay
% o
f fu
ll va
lue
Value Loss Due To Delay in Drying
0%
1%
2%
3%
4%
5%
6%
7%
Sundrying Mechanical Dryers
Ph
ysic
al L
oss
ess
Physical Lossess Due to Drying
PH Losses in Rice With and Without AppropriatePH Technologies
56%
58%
60%
62%
64%
66%
68%
70%
Single/Double Pass Mills Multi-Pass Mills
Mill
ing
Re
cove
ry
Milling Recovery of Traditional and Modern Rice Mills
• BASED ON ACTUAL PADDY PROCUREMENT OF RPCs:
A) VALUE LOSS - JULY TO OCTOBER 2013 AND 2014: 7,238,178 KG (7.23 MT)
B) QUANTITY LOSSES: TOTAL PROCUREMENT
2013 AND 2014:
58, 444,801 KG (58.44 MT)
• FULL VALUE OF PADDY: PhP 20.50/KG
ESTIMATE OF PREVENTED VALUE LOSSES AND REDUCED PHYSICAL LOSSES USING RPC DRYING &
MILLING FACILITIES
REDUCTION IN VALUE LOSS BY USING RPC DRYER
VALUE OF PADDY WITH ZERO DELAY IN DRYINGFull value:PhP148.38M
VALUE OF PADDY WITH 3 DAYS DELAY IN DRYING (SUNDRYING)75% of full valuePhP 110.85M
VALUE OF AVOIDED LOSS
PhP 37.53M
REDUCTION IN QUANTITY LOSSES BY USING RPC DRYER
RECIRCULATING BATCH-TYPE DRYERS:No significant lossess
SUNDRYING (5.8% LOSSES)PhP 82.88M
VALUE OF AVOIDED LOSSESPhP 82.88M
REDUCTION IN QUANTITY LOSSES USING RPC RICE MILL
RPC MULTI-PASS MILL67.5% MRPhP 1.5B
SINGLE- and DOUBLE-PASS MILL60% MRPhP 1.33B
VALUE OF AVOIDEDLOSSESPhP 166.57M
TOTAL VALUE OF AVOIDED LOSSES PhP 286.97M
ITEM VALUE (PhP) ASSUMPTION
Reduced value loss (delay in drying)
14.8 M PhP 10/Kg (Vietnam, 2003)
Prevented physical losses (recirculating
batch dryer)
40.25 M 2.9% of paddy wt. being dried
Reduced physical losses (multi-pass
mill)
111.05 M 65% MR
TOTAL 166.12 M
ESTIMATED REDUCTIONS IN PADDY VALUE AND QUANTITATIVE LOSSES USING
CONSERVATIVE ASSUMPTIONS
• INCREASE IN FARMERS‘ INCOME: PhP 13.96 M
• COMBINED NET INCOME OF RPCs: PhP 2.07M (2011 to 2014)
ADDITIONAL BENEFITS
• Reduced ph losses P 286.97M
• Farmers’ increase in income P 13.96M
• RPCs net income P 2.07M
P 303.00M
TOTAL ESTIMATED BENEFITS FROM RPCs
• PhP 865 M: PROJECT COST
• PhP 303.00 M: BENEFITS
• CAPITAL RECOVERY APPROACH TREATS THE BENEFITS FROM THE RPC PROJECT AS REPAYMENT TO THE CAPITAL INVESTMENT (PROJECT COST) AND DETERMINES THE PROPORTION OF THE PROJ COST THAT HAS BEEN RECOVERED.
BENEFIT-COST ANALYSIS: CAPITAL RECOVERY APPROACH
CONVERT BENEFIT AND COST TO ANNUITY VALUES
• P 865M (PROJ COST) P 101.21
(15 YEARS USEFUL LIFE OF RPC; 8% OPPORTUNITY COST OF MONEY)
• P 303M (BENEFITS) P 138.5M
(2.5 YRS LENGTH OF RPC OPERATION; 8%)
• CRR = 138.5M/101.21M = 1.37
• AFTER 2.5 YRS OF OPERATION, RPCs GENERATED A NET BENEFIT THAT WAS ABLE TO FULLY PAY ONE YEAR OF THE ANNUITY PLUS AN EXCESS OF 37% OF THE ANNUITY.
CAPITAL RECOVERY RATIO
BENEFITS:
REDUCED PH LOSSES P116.12M
FARMERS’ INCREASE IN INCOME P 13.96M
RPC NET INCOME P 2.07M
P182.16M
ANNUALIZED BENEFITS: P83.26M
CRR = 83.26M/101.21M = 0.82 (BENEFITS DERIVED ONLY RECOVERED 82.3% OF PROJECT COST ANNUITY)
CAPITAL RECOVERY ANALYSIS USING CONSERVATIVE VALUES
THE CR ANALYSIS SHOWS THAT THE RPC PROJECT IS SENSITIVE TO A REDUCTION IN THE ESTIMATED
BENEFITS (CRR = 0.82)
• FARMERS’ BENEFITS FROM FBDs
o FBDs more appreciated during the wet season harvest
o low buying price for wet paddy
o P 1.00/kg premium for dry paddy
o Farmers who use FBDs sell paddy to private traders/millers (Credit-mktg linkage)
FLATBED DRYERS (FBD)
o ONE FBD UNIT CAN ONLY SERVE ONE FARMER AT A TIME
o 8 HRS TO DRY ONE BATCH OF PADDY TO 14% MC
o FBDs are useful only if wet paddy can be dried
immediately (according to farmer respondents)
LIMITATION OF FBD PROGRAM
AN ADDITIONAL THRESHER FOR A FARMING COMMUNITY IS
CONSIDERED BENEFICIAL BECAUSE MOST FARMERS HARVEST
AT THE SAME TIME RESULTING IN SHORTAGE OF THRESHERS
PADDY MUST BE THRESHED SO FARMERS CAN SELL THEIR
HARVEST
THRESHERS
• WT. OF PADDY HARVESTED BY FARMERS WHO USED THE
THRESHERS: 144,920 KG
• COMPARE 1 DAY DELAY IN THRESHING WITH ZERO DELAY
ESTIMATED BENEFIT FROM THRESHERS
VALUE OF PREMIUM PADDY: P 20.50/KG
• VALUE OF PADDY WITH 1 DAY THRESHING DELAY: P 19.23/KG
(20.50 – (20.50 x 6.2%))
• Footnote: Determination of buying price by traders/millers
based on paddy condition is subjective
• PADDY VALUE WITH NO THRESHING DELAY:
• 144,920 KG X 20.50/KG = P 2.97M
• PADDY VALUE WITH 1 DAY DELAY IN THRESHING:
• 144,920 KG X P 19.23/KG = 2.78M
• VALUE LOSS = P190,000
• DELAYS IN THRESHING AND DRYING WERE MINIMIZED
(BATCH RECIRCULATING DRYERS-RPCs; FBDs AND
THRESHERS – FARMER COOPERATIVES)
• MILLING RECOVERY INCREASED FROM 60% TO 67.5%
(MULTI-PASS RICE MILLS – RPCs)
(PhilMech and IRRI)
OVERALL IMPACT OF RPCs, FBDs, THRESHERS
Post Harvest Facilities within The Value Chain
Gaps and OpportunitiesProgram Planning and Implementation
The Rice Value Chain With RPC As A Major Player
GAPS/DELIMITING FACTORS
Operational CapitalPhP 20 million is a small capital vs private millers hundreds of millions
TruckingRPCs 2 vehicles used for delivery, servicing end users more than farmers
Farmers unable to supply RPC and benefit from better pricesCycle of farmer indebtedness:
Tied up with Traders for inputs and marketing; unable to supply RPC/ find better markets
In addition to interest, traders’ purchase price is Php 1 less than prevailing market price.
OPPORTUNITIES
Underutilized RPC capacity Underutilized Service area of
1,000 ha of rice farm
Scheduling of planting andharvest for enhanced benefits
There is potential in Farmerseducation for bettercollaboration
Credit tie ups – Sikap Saka of Land bank (but with limitations)
Basic Commodity Value Chain
With MFT’s and BFTs As Major Players
GAPS/DELIMITING FACTORS
Non Viability of MFTs cold storage
High energy cost of operations
Limited Volume of utilization
Poor site selection
proximity to well functioning markets)
Unmet volume of transactions
Facilities used for other uses
(fast food )
OPPORTUNiTIESTrading group (buyer & seller)
Incentives to produce more; higher market absorbtive capacity
Better prices – direct transaction
Convenience for sellers reduced long walks as peddlers
One stop trading venue with varied commodities
ConsumersMore commodities to choose
Convenience, comparable prices to major markets
Reduce transportation cost
NEXUS Agribusiness Solutions
BFTs Distribution per Region
*Values obtained from DA-AMAS
18
45
132
25
75
126
11
52
75
70
71
60
105
66
72 88
167
*Source::Mapsof.net
Program Planning & Implementation
Planning
Wanting preparatory activities prior to implementation
Beneficiaries unaware of extent of contribution (power, capital)
Confusion as to roles and responsibilities
(spiced with political flavor)
Cushion programs on
political interference
Need to trace back issues to Project cycle
Implementation
*Organization & Management
“champions” who push program cause/objectives are success factor
› Iloilo RPC, Leon MFT & MAO
*Focus: Solutions more than problems
*Coping mechanisms reflects project leadership/teamwork
(PH Mgt team, regional line agencies)
*Balancing facilitating & regulating
roles difficult, but crucial and
works best for farmer’s interest
Conclusions RPCs increase farmer’s income through
production of good quality milled rice and
reduction of postharvest losses.
Potential maximized if paddy procurement capital is increased
FBDs and threshers of the Rice Mechanization Program,
›preserve grain quality and reduce postharvest losses through:
› augmenting existing thresher and dryer capacities.
Food terminals ›well managed; provided market access to agri-suppliers
›Improve availability & variety of commodities/basic goods,
›create employment
›enable operators to become entrepreneurs and
›strengthen partnerships between LGUs and private sector.
ConclusionsFunctioning PHF enhanced rice & basic
commodity value chains
Expanded Production (RPC MFTs BFTs) Enterprise establishment Enterprise management know how rubbed on to
members (BFT); put up own small businesses
(opportunity dependent – Panglao, tourist areas)
Value addingHousehold Processing of produce otherwise marketed fresh given added market options
NEXUS Agribusiness Solutions
Recommendations
Rice Processing Center Increase operating capital from 20 M to
PHP40-80M to scale up procurement
additional cargo trucks for each RPC
for timely pick up and delivery.
Could be the second phase of KOICA project - to ensure RPC sustainability
However, release of additional funds and inputs by DA should be subject to performance of each facility.
NEXUS Agribusiness Solutions
RPCs….
Appropriate Financing and crop insuranceservices reduce farmers’ dependence onprivate traders with high interest rates.
Local Spare part distribution (if not fabrication)
› Train reputable and capable local distributors ofKorean RPC spare parts and equipment for RPC
› Should comply with PAES
Recommendations….
NEXUS Agribusiness Solutions
Flatbed Dryers &Threshers
Closely monitor accredited
fabricators to ensure
quality of disseminated units
specification compliance
proper and timely servicing
if defects are present.
Recommendations
Thorough evaluation of project beneficiaries
proper site selection (maximize use of dryers)
Incorporate design improvements
( safety and durability)
Continuous monitoring and testing by appropriate government agencies :
proper operation
proper maintenance
Recommendations
Flatbed Dryers &Threshers
Recommendations
Food Terminals
Technical improvements
*better lighting
*mechanized handling to:
reduce physical damage
reduce labor requirement
lessen worker’s injury.
Promote hygienic handling
*for food safety.
Project Planning and Implementation Well thought of Proposal: implementation strategy well developed .
Short sighted planning is evident
facilities established and maintained with scarce government funds and without properly trained personnel
Involve beneficiaries/project stakeholder as early as possible
Strict adherence to project guidelines
improve project implementation
minimize political interference
Compliance of RPC products with NFA standards (milled rice)
should be verified by mandated government agencies with
corresponding action to correct violations
Recommendations
Measures of Performance For Better Decision Process
RPC
*Service target areas of 1,000 ha but with limited earnings or service other areas to sustain plant operation
*Cost and Revenue treatment Asset used: free or depreciated
Grant Mgt & Enterprise Mgt different perspective
Added income spread costs or profit add ons
*Sustainability measures Need be clear as early as planning stage
MFT/BFT
Location selection
far from existing trading centers
Farm to market roads a problem
Existence of production areas
within kilometer radius
Management Modality
LGU Managed
Cooperative Managed
Learn from Success and failures of MFT andBFT projects
Document best practices
disseminate results
To ensure maximum utilization,
› Include survey of existing food terminalsand wet markets during site selection stage
Recommendations
Project Planning and Implementation
The study found the evaluated PHFs as worthy government (maybe in future private) investments, however, regular and thorough review should still be carried out to determine their further impact
Selection of sites and beneficiaries be based on a set of suitable criteria rather than a “divide by N”approach (prone to duplication and overlaps)
Strengthen information and education campaign on existing government programs or review if needed -
inspite of years of program existence
not many are availing of the said services.
Recommendations
Recommended Areas for Further Study
Possibility of locally produced RPC equipment, parts and tools
Assessment of other PHF programs
› agricultural tramlines and
› cold chain programs
Documentation of PH best practices andbusiness models for outscaling/upscaling
In-depth evaluation of success failure factors of PHF across regions and organizational types