The Importance of The Importance of Commodity-Based Commodity-Based

Associations of Small Associations of Small Producers in Addressing Producers in Addressing

Competitiveness Competitiveness and Successful Market and Successful Market

EngagementsEngagements

LEALYN A. RAMOSDepartment of Agriculture

June 29, 2009

Outline of PresentationOutline of PresentationA. Overview of the Philippine Farm SectorB. Where Do We Want to GoC. Demands and Challenges to be Competitive,

Sustainable and EfficientD. Trends of Agri-related OrganizationsE. Commodity Based Organizations in the Region and its

importance and AdvantagesF. Marketing ClustersG. DA Interventions for Commodity-Based Organizations

The Philippine Farm Sector The Philippine Farm Sector • Consist predominantly of small

unorganized farm holdings planted to crops

• 4.8 Million farms covered 9.7Million has. with average farm size of 2 has.

• 40% of the farms were less than 1 ha. in size and occupied 8.6% of total agri area

• 41% was from 1 to <3 has. in size and occupied 31% of total area

• 10.6% was 3-5 has. covering 18.4% of total area

• 6.3% was from above 5 to <10has. accounted to 19.8% of total area

In effect, about…

90% of the farmers have less that 5 has. which was 58% of the total area.

97% of farms, occupying 94% of total agricultural area was owned by individuals while less than 0.2%, accounting for 2.2% of total area was owned by corporations;

Most farms were owner-operated, with nearly 79% (83% of the area) being owned; less than 13% tenanted (12% of the area) and 2.3 % leased (2% of area)

The Philippine Farm Sector

WHERE DO WE WANT TO WHERE DO WE WANT TO GO?GO?

Globally competitive,

sustainable and

efficient agriculture

Agriculture is the backbone of the economy.

Agriculture and fishery are the main occupations in the rural sector. Rural poverty remains high. By government accounts, half of the rural folks are poor; while 70% of the poor reside in the countryside. Indeed, poverty is an agricultural phenomenon.

Demands and Challenges to be Competitive, Sustainable and Efficient-

• Agreements under the GATT-WTO-we have to open our markets with decreasing tariffs-we have to access foreign markets

• Speed and sophistication of production and post production technologies

• Need to protect and improve productivity of our dwindling production areas

• Global climate change

Demands and Challenges to be Competitive, Sustainable and Efficient-

Trends of Agri-Related Trends of Agri-Related Organizations with DA-Organizations with DA-

RBOs based on gender and age - Farmers Associations (Male Farmers)

that soon transformed into Samahang Nayons and Coops

- Rural Improvement Clubs (Mothers or Single Matured Women)

- 4 H Clubs (youths both male and female)

Trends of Agri- Related Trends of Agri- Related Organizations with DA-Organizations with DA-

Multi- Purpose Cooperatives

Industry Associations and Federations-composed of producers, processors of common

commodity -first in the country at Region 10

CAFFINORMIN (Chamber of Agriculture, Fisheries and Food Industries in Northern Mindanao)

which is composed of 23 Industry Associations

Farm Clusters (Hybrid Rice Clusters, Corn Clusters etc.)

Existing Industry Associations in Existing Industry Associations in Northern Mindanao Northern Mindanao under CAFFINORMIN under CAFFINORMIN

Commodity

Association

Vegetables Northern Mindanao Vegetable Producers Association, Inc. (NMVPIA or NorMinVeggies)

Banana Banana Industry Development Association, Inc. (BIDA)

Mango Greater Northern Mindanao Mango Industry Development Foundation, Inc. (GNMMIDFI)

Papaya United Papaya Growers Association (URGA)

Pineapple Pineapple Producers Association of Northern Mindanao (PAPANORMIN)

Durian Durian Growers Association (DGA)

Lanzones Lanzones Growers Association of Northern Mindanao (LGANM)

White Potato

Patatas Farmers Association of Northern Mindanao, Inc. (PFANMI)

Cashew Northern Mindanao Kasoy Industry Association (NMKIA)

Peanut Northern Mindanao Peanut Industry Association, Inc. (NMPIA)

Cassava Northern Mindanao Cassava Industry Association, Inc. (NORMINCIA)

Corn Northern Mindanao Corn Industry Association, Inc. (NORMINCORN)

Existing Industry Associations in Existing Industry Associations in Northern Mindanao Northern Mindanao under CAFFINORMIN under CAFFINORMIN

Commodity Association

Food Processors

Food Processors Association of Northern Mindanao (FOPANORMIN)

Rubber United Rubber Planters and Processors Association (URPA)

Ornamentals Northern Mindanao Ornamental Horticulture Foundation, Inc. (NMOHFI)

Fiber Northern Mindanao Agro-Industrial Fiber Association, Inc.

Fishpond Misamis Oriental Fishpond Operators Association (MOFOA)

Commercial Fishing

Camiguin Commercial Fishing Association Industry (CCFAI)

Cattle Federation of Cattle Ranchers Association of the Philippines (FCRAP)

Hog Northern Mindanao Hogs Industry Association, Inc. (NORMINHIA)

Egg Northern Mindanao Egg Producers Assocaition (NORMEGG)

Poultry Northern Mindanao Poultry Association (NMPIA)

Fisherfolk Fisherfolk Association of Northern Mindanao

Other Commodity Clusters Other Commodity Clusters

Rice Hybrid Clusters and Inbred Clusters in most rice area in the region

Corn Clusters in four provinces

In Commodity - Based In Commodity - Based Organizations -Organizations -

The farmer-members have common needs, concerns and problems from

pre-production, production, post production/post-harvest

and marketing.

Advantages ofAdvantages of Commodity-Based Organizations Commodity-Based OrganizationsFacilitates techno transfer and other extension services

Facilitates distribution of various deliverables

Facilitates monitoring and control of pests and diseases

Maximizes the use of their facilities and equipment

Prioritized as beneficiary to government interventions

The members can share their best production and post-harvest practices for better product quality

Advantages ofAdvantages of Commodity-Based Organizations Commodity-Based Organizations Can access credit

Can consolidate production for bigger volume

Economies of scale

Will have access to market information

May supply the commodity continuously to the market and even stabilize price through production programming

Better bargaining power and better access to diversified and more predictable markets

Advantages ofAdvantages ofCommodity-Based Commodity-Based OrganizationsOrganizations

Can do Joint Marketing Strategy

-enables producers to meet market demand,

reduce costs, as well as maximize grower’s profits

The Normin Veggies The Normin Veggies ExperienceExperienceFormally organized on April 14, 1999 with 15 founding

members from Bukidnon and Misamis Oriental. Present membership reached 141 small growers and independent anchor farms in Region 10 with aggregate vegetable area of 750 hectares.

The organization aims to become a competitive vegetable industry producing high value, high quality and safe vegetables for the domestic and international markets.

The NORMIN VEGGIES The NORMIN VEGGIES ExperienceExperience NorminVeggies continues to bring growing microenterprises into the

mainstream markets guided with the principles on good agricultural practices, organization, clustering, customer satisfaction, value chain approach and entrepreneurship.

Applied Industry Clustering Approach in Year 2002. They transformed the vegetable farms from fragmented, smallholder farm production to market focused and competitive business operation along with converting products from “low value” to “high value”.

Their buzz phrases are “Not just farming, but farming profitably, and working with markets” and “Consolidate to compete”

The Normin Veggies The Normin Veggies ExperienceExperience A marketing cluster is a small group of 5-15 producers headed by a

cluster leader who commit to market collectively to an agreed buyer(s) and to follow a common quality management program.

Depending on the intended buyer, a cluster can be a one product

cluster like the iceberg lettuce for fastfood chain processors and the carrot cluster. It can also be a diversified-product cluster, like assorted vegetables for supermarket consolidators.

The Normin Veggies The Normin Veggies ExperienceExperience Since 2007, their average monthly outshipment reaches 57,889

kilos with an estimated value of P1.4 Million pesos Through the clusters, vegetables continue to be marketed jointly by

independent and small growers. The Association was awarded by Pres. Gloria Arroyo with Model

Regional Cluster Award and Specific One-Town-One-Product Citation Award

Farm to Plate: NORMIN Vegetables to Manila

Tomato: P 4.00 (Cost of Production)

P 6.00 (Farm gate price/kg)

Other Markets: P 25.00 (Selling Price/kg)

Fresh Valley (Manolo Fortich)

Loading in 2Go refvanPackinghouse

BFT Holy Spirit P 9.30 Transport and Handling Cost (RORO)

BFT Margin:10% of selling price

Total Farmer’s Margin: P 4.70

Total Farmer’s Margin: P 2.00

Tomato: P 20.00 (Selling Price/kg)

The Normin Veggies The Normin Veggies ExperienceExperienceInterventions from DA-

-Bagsakan Center at Agora-Reefer trucks and van-Cold Storage Facility-Small Irrigation Systems-Rain Shelters-Trainings and Techno

Demos

DA’s Various Interventions to DA’s Various Interventions to Clusters or OrganizationsClusters or OrganizationsHand/Farm TractorsRain SheltersFlatbed DryersVillage Corn Cob dryersPacking housesScreenhousesTrading Posts/Bagsakan CentersBarangay BagsakanTrainings, Demos, Seeds, Bio-control Agents, Laboratory services

Thank you..