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)

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Enhancement Entry Points in the Coconut Value
ChainSelected 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
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Outline

• 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

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The Study

• Done In preparation for a Regional Knowledge
  Sharing workshop on enhancing farmers market
  power in the value chain in Asia (AFAs
  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)

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Study Process
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Industry situationer
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Coconut Products among the top 10 Major
Agricultural Commodities

1. Coconut oil (Crude and Refined)
2. Banana (fresh)
3. Tuna
4. Pineapple Pineapple Products
5. Dessicated Coconut
6. Tobacco (manufactured)
7. Seaweed and Carageenan
8. Centrifugal sugar
9. Milk and Cream Products
10. Fertilizer (Manufactured)

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Philippines - 2nd largest producer in volume
value
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Region IV, A major Coconut Producer
Quezon Province Accounts for more than
half of the
regions coconut produce
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(No Transcript)
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The Primary Concern

• Coconut Farmers,
• biggest in Poverty Group

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In spite of contribution to GVA and Agricultural
trade

• Coconut Farmers Form The Biggest Poverty Group

• Income From Copra is P900-P1000 per hectare/month

• With 2 Hectare Ave. per Family of six, Income per
  month is P2,000

Source Dr Justino Arboleda
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Emerging Revived Coconut Products

• Coco Sugar
• Coco Water
• Young coconut (Buko)
• Coco Fiber
• Others (sugar from shell)

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Coco Sugar

• 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).

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Coco Water

• 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

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Coco Husks

• 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

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.there are vast opportunities in farm wastes
Largest Farm Waste in the Philippines
8 Billion Husks are burned or thrown away 3
Billion Husks Used as Fuel to make Copra
Source Dr Justino Arboleda
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Sugar from coco shell

• 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
  Japans 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 Sarian Agri Plain talk
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Selected Cases

• Coco sugar
• backyard ( Armida Monghe)
• commercial (Pasiolco Agri Ventures
• Young coconut
• Peter Paul Phils Corp
• Coco Wonder
• Coco Coir (husks)l

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Armida Monghe Coco Sugar Producer Lopez, Quezon
Rosauro Monghe Coco Wine (Tuba) Producer Lopez,
Quezon
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Comparative Cost Returns

• 20 gallons of coco wine per week
• sold at P180/gallon
• P3,600/weekP14,400 per month gross income

• 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

• Coco Wine

• Coco sugar

Sap gathered in the evening Sap
gathered at 6 a.m.
P10, 000.00 annual rent for 65 coconut trees,
producing only wine before, now coco sugar is
also produced.
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Pascioclo Agri Ventures Maureen Pasciolco ,
Owner Tiaong, Quezon
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COCO Sugar Production Marketing in Quezon

• Lopez Tiaong

What Account for differences Market
Knowledge/Info Technical know how Packaging
Limited market
there is market
Selling price P250/kilo
selling price P280n -320/kilo
Production cost ???
Production cost lt 190/kilo
Market tie up Supply arrangement
Production trial error
procedural- own /contract out 4-5 hrs
cooking
6hrs -10 hrs cooking
Ordinary plastic packaging
specialized packaging no brand

branded
Non Quezon Producer/Wholesaler Organic, package
sizes local, export market
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Coco Sugar Commercial Operation

• 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

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Comparative Cost (Buko Marketing)
UGMA URBAN Poor
Selling price P12 20-25 (22,5)
No of Pcs 2,000 2,000
Revenue P24,000 P 45,000
Cost buko P 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
Concerns High Reject - Improper selection of young coconut - (training needed) Appropriate tool Storage Short supply (specially with rejects)
High transpo cost (maximize load/trip
Market tie up Only Supply arrangement
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Young Coconut Test Delivery
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Peter Paul Company

• 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 Market tie up More of salaried employees
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Coco Wonder

• 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 Market tie up More of salaried employees
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Coco fiber
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
Source Juliet Escasa, Hagakhakin Gumaca
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RD Initiatives

• Technology Available
• Quality Standards

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Available Technology R D Initiatives

• 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 ventures
• Coco fiber - Dr. Justino Arboleda of
  Bicol
• 
  offering technical assistance

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Coconut sap sugar classification
Classification Specification Tolerance
Premium (superior quality) Cream to light yellow Moisture content is lt4 5.0
Class I (good quality) Light brown to brown Moisture content is not gt4 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
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Strengthened Positions in the Coconut Value Chain
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How do we help farmers be integrated in the chain

• 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 Integration

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Pathways of enhancing farmers position in the
chain within the Four forms of inclusive chain
development
Integration of post-farm activities Integration of post-farm activities
no participation in chain Management CHAIN Activity integrator CHAIN (CO-) OWNER participation in chain mnagement
no participation in chain Management CHAIN Participant CHAIN Partner participation in chain mnagement
Specialization in farm production Specialization in farm production
2
4
1
3
Source Regoverning Market (with modification by
NMM)
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Four Forms of Inclusive Chain Development
Enhance quality Add value and Process products
Integration of post-farm activities Integration of post-farm activities
no participation in chain Management CHAIN (CO-) OWNER
no participation in chain Management Chain Participant CHAIN Partner

Cooperatrive business Product development Branding
, marketing
Chain activity integrator
Chain co owner
participating In chain management
Chain partner
Farmer study groups Specialized
activity/ Knowledge Negotiation Skills get to
influence chain decisions
Know more about improving Farming systems and
quality Of product (to have better Chance at the
market and Get better prices)
Specialization in farm
production
Source Regoverning Market (with enhancements by
Manalili)
NEXUS Agribusiness Solutions
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Sample Action Plan Redesign Option for Coconut
Objectives Strategies Entry Points Identified Market SC Model
1.Chain Optimization Increase capacity to comply with standards to ensure quality Continuous farmers training Farmers Commitment to adhere to good agricultural Practices Sustain farmers education and value formation through NGOs collaborative assistance to farmer groups Modern retailers (like supermarkets hypermarkets, groceries, specialty shops) Coco Sugar Pasiolco Agri Ventures Coco fiber Dr. Arboleda
2.Integral Chain Care Meet grade/certification requirements (organic) Quality of international standards Organic Certification Continuous quality upgrading Quality - user-recognized Modern Retailers Export markets Coco Wonder Pasiolco Agri Ventures Coco fiber Dr. Arboleda
3.Chain Differentiation Premium Positioning New marketing concepts E- commerce Agency selling Well differentiated Product/product delivery system International Markets Institutional Markets Coco wonder Coconut house Ugma-Urban poor model
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Strengthened Positions in Coconut Value Chains
Integration of Post Farm activities
No participation

active participant
Specializing in Farm production
Source Regoverning Market (with enhancements by
Manalili)
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Questions Asked
FGD Questions Outputs
Any other activities (production, mktg) That you
wish to do With your coconut? What stops you
from Doing so?
your Current products (Major, secondary? How are
they sold Brought to market

• Product 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 planting
• Training extension
• needed

Current with changes
Current
Entirely new scenario
SCENARIO BUILDING
Manalili 2002
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• 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