Improving the efficiency of the agribusiness supply chain and quality management for small agricultural producers in Mindanao

ASEM/2000/101: Improving the efficiency of the agribusiness supply chain and quality management for small agricultural producers in Mindanao

Philippines

Curtin University of Technology, Australia

Roy Murray-Prior
Phone: 08 9690 1595
Fax: 08 9690 1500
Email: R.Murray-Prior@curtin.edu.au

http://www.curtin.edu.au/curtin/muresk/aciarmindanao/

• University of the Philippines, Mindanao, Philippines

$342,613

01/01/2001 - 30/06/2003

01/07/2003 - 31/12/2004

Dr Ken Menz

The establishment of cooperative marketing groups is one mechanism by which small farmers can improve the marketing of their produce and potentially add value to it, and can also reduce their dependence on rural traders. This project targeted a group of around 3000 farmers in Mindanao working farms located at mid-elevation on mountain slopes. They supply tomatoes and other temperate vegetables to the Luzon and Visayas markets during the typhoon season and to the Mindanao market all year round. Farmers' incomes were low, partly due to poor marketing practices and poor access to markets and information. They were also vulnerable to the market power of rural traders, retailers and processors.

In Mindanao and other areas of the Philippines many cooperatives have failed, due to problems such as poor infrastructure, lack of market information, poor management and inadequate quality control. However, the Philippine government, recognising the social benefits arising from establishment of cooperatives, has given a high priority to their development.

This project was established to find ways to improve the success rate of cooperatives in the Philippines. It aimed to demonstrate that the marketing system used by a group of farm families in Mindanao might be improved through the establishment of well run producer cooperatives.

The first phase of the project undertook a baseline study of the marketing system for fresh vegetables in Mindanao. The second phase sought to implement appropriate strategies to improve the efficiency of the supply chain and assist the flow of timely market information, by developing long-term buyer-seller relationships. It also aimed to establish and manage successful cooperative farmer groups, establish and manage quality management systems among leading farmers and cooperative farmer groups, and identify Government programs and policies that would improve the integrity of the supply chain.
In conjunction with the University of the Philippines, staff from Curtin University of Technology developed research tools for the project. These included rapid appraisal, case study methods, and personal interviews with farmers, rural traders, wholesalers and retailers. Researchers identified product requirements as well as production and marketing constraints, and documented the attitudes of both farmers and market intermediaries to cooperative marketing and quality management.
Using both qualitative and quantitative data, mathematical programming techniques were used to construct product flow pathways, conduct a gap analysis and demonstrate where and how the marketing system might be improved for the benefit of the many small farmers.
A series of training programs, workshops and seminars were conducted, to facilitate the adoption of cooperative marketing and quality management systems and to improve the success rate among agricultural cooperative groups.

The impacts of the project can be seen at the farm-household level (higher income, changes in marketing and agronomic practices), the institutional level (improvements in farmer groups/cooperatives and vegetable industry councils) and the community level (increased awareness of vegetables). A key component of the project has been the encouragement and support it has provided to farmer groups and cooperatives. The impact of this is reflected in the changes occurring in the operations of the Vegetable Industry Council of Southern Mindanao (VICSMIN), KALIDECO Cooperative (which at the beginning of the project was the only remaining cooperative and on the verge of collapse), Maharlika Farmer's Cooperative and Kapatagan Upland Farmers' Development Cooperative.

Farmers who were members of cooperatives or were participants in the workshops now have higher incomes than the farmers without direct involvement in the project. Newly established Maharlika Cooperative is lifting prices to farmers and improving use of pesticides. The councils of Davao City implemented a vegetable awareness campaign, a village vegetable garden program and a vegetable garden contest. VICSMIN has also registered a marketing and trading arm.

Key findings of the agronomic work in Kapatagan were low soil pH, overuse of phosphorus and potassium fertilisers, low soil organic matter and micronutrient deficiencies (e.g. boron). Discussion with farmers resulted in a dramatic increase in the use of lime to lift the pH. Farmers are now soil testing (with the encouragement of the local council), they make better use of fertilisers, and micronutrient use has increased. Follow-up soil tests conducted in 2004 found a shift towards optimum pH values in the soils in Barangay Kapatagan. Use of boron helped overcome defects in cauliflowers and broccoli.

The project staff assisted the Department of Agriculture to promote the use of biocontrol agents such as the diadegma parasitic wasp as a strategy for environmental sustainability, product differentiation and cost reduction. Kapatagan project data on pesticides and prevalence of natural enemies were useful in support of the strategies.

The University of the Philippines in Mindanao has lifted its capacity to conduct research on complex agribusiness systems. Project members from the University have been asked to participate in a number of Mindanao Policy Review Forums, make recommendations to the President on policy changes and to participate in Mindanao Vegetable Congresses.

This is thought to be the first study in the world to address agricultural development issues using the concept of a supply chain embedded in a dualistic agribusiness systems framework. It is also the first study to develop and implement a methodological framework that integrates diverse methodologies to analyse an agribusiness supply chain and its associated systems. The project provided the first research on supply chain management of agricultural product produced by smallholders in the Philippines. Previous studies were done only by multinational companies for their own corporate use and were not available to policy makers. And it was the first detailed investigation of the impact of vegetable farming and different soil management practices on soil properties in Mindanao.
A number of popular myths were found to have no basis. These were:
Pesticide use is a serious health risk to consumers: residues are at relatively low levels and the pesticides used tend not to be ones that cause serious health problems,
Low crop productivity is due to use of low inputs: on the contrary, farmers tended to put on excess of the wrong inputs, and insufficient of other inputs,
Farmers are being taken advantage of by financiers: this was not a major issue. Farmers prefer to transact with those market intermediaries who pay cash and, with many traders to choose from, they may also act opportunistically, and
Market information is lacking: farmers talk amongst themselves, and while information on the prevailing market prices is widely known they are often unable to respond.