LEALYN A. RAMOS Department of Agriculture June 29, 2009

1. The Importance of Commodity-Based Associations of Small Producers in Addressing Competitiveness and Successful Market Engagements LEALYN A. RAMOS Department of Agriculture June 29, 2009

2. Outline of Presentation Overview of the Philippine Farm Sector Where Do We Want to Go Demands and Challenges to be Competitive, Sustainable and Efficient Trends of Agri-related Organizations Commodity Based Organizations in the Region and its importance and Advantages Marketing Clusters DA Interventions for Commodity-Based Organizations

3. 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

4. The Philippine Farm Sector 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)

5. WHERE DO WE WANT TO GO? Globally competitive, sustainable and efficient agriculture

6. Demands and Challenges to be Competitive, Sustainable and Efficient- • 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.

7. 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

8. Trends of Agri-Related 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)

9. Trends of Agri- Related 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.)

10. Existing Industry Associations in Northern Mindanao under CAFFINORMIN

11. Existing Industry Associations in Northern Mindanao under CAFFINORMIN

12. Other Commodity Clusters • Rice Hybrid Clusters and Inbred Clusters in most rice area in the region • Corn Clusters in four provinces

13. In Commodity - Based Organizations - The farmer-members have common needs, concerns and problems from pre-production, production, post production/post-harvest and marketing.

14. Advantages of Commodity-Based Organizations • Facilitates 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

15. Advantages of 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

16. Advantages ofCommodity-Based Organizations • Can do Joint Marketing Strategy -enables producers to meet market demand, reduce costs, as well as maximize grower’s profits

17. The Normin Veggies Experience • Formally 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.

18. The NORMIN VEGGIES Experience • 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”

19. The Normin Veggies Experience • 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.

20. The Normin Veggies Experience • 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

21. Packinghouse Loading in 2Go refvan Farm to Plate: NORMIN Vegetables to Manila Fresh Valley (Manolo Fortich) Tomato: P 4.00 (Cost of Production) P 6.00 (Farm gate price/kg) BFT Holy Spirit BFT Margin:10% of selling price P 9.30 Transport and Handling Cost (RORO) Tomato: P 20.00 (Selling Price/kg) Total Farmer’s Margin: P 4.70 Other Markets: P 25.00 (Selling Price/kg) Total Farmer’s Margin: P 2.00

22. The Normin Veggies Experience • Interventions from DA- -Bagsakan Center at Agora -Reefer trucks and van -Cold Storage Facility -Small Irrigation Systems -Rain Shelters -Trainings and Techno Demos

23. DA’s Various Interventions to Clusters or Organizations • Hand/Farm Tractors • Rain Shelters • Flatbed Dryers • Village Corn Cob dryers • Packing houses • Screenhouses • Trading Posts/Bagsakan Centers • Barangay Bagsakan • Trainings, Demos, Seeds, Bio-control Agents, • Laboratory services

24. Thank you.