““ENHANCING TABLE BANANA ENHANCING TABLE BANANA PRODUCTION AND MARKETING IN PRODUCTION AND MARKETING IN ANGAS”: A Resource-Based and ANGAS”: A Resource-Based and

Community-Managed Social Community-Managed Social EnterpriseEnterprise

PAPASMAPAPASMA( Panaghiusang Pundok Alang ( Panaghiusang Pundok Alang sa Malahutayong Agraryo) sa Malahutayong Agraryo)

Angas, Sta. Josefa, Agusan del SurAngas, Sta. Josefa, Agusan del Sur

PAPASMAPAPASMA• Organized in May 2000

• Members : 24 Banana Farmers, now 37

• Area – Started 12 hectares, now -24

• Registered – SEC in 2003

• Problems/Gains

1. Low buying price of table banana (Latundan variety) at P2.25.00 per kilo ONLY , now P6.00/k

2. Low income generated from banana production- only 600/mo-family, now 2,500/mo

InitialInitial EffortsEfforts1. Sought technical assistance from the

Local NGO – HEED Foundation for orientation seminar, leadership, and fiscal management.

INITIAL EFFORTSINITIAL EFFORTS

• Established Marketing Scheme – pooling/assembling of farmer’s banana produce in one place (max. of 2,000 kls), negotiating with local traders and making for collective sale.

• Put-up working capital for banana trading operation at Php 800.00/member

INITIAL EFFORTSINITIAL EFFORTS

• Raised money (from the enterprise income and members’ contributions) amounting to Php. 10,000.00 to buy a 1,200 sqm of land and built a small buying station made of indigenous materials.

SOME BAD EXPERIENCESSOME BAD EXPERIENCES

• the trader did not pay for the bananas that he had bought on consignment basis;

• More commonly, trader buying prices were often volatile, fluctuating downwards to the detriment of the banana producers.

• Leadership and management crisis: the project (including financial operation) was dominated/manipulated by the Project Manager –

ACHIEVING THE MARKETACHIEVING THE MARKET

• PAPASMA implemented the scheme for number of years and become the model group in practicing resource-based and community-managed social enterprise.

• gained control over individual dicers - (dicers organize the harvesting process

- arranging the schedule of the harvest of bananas and designating the assembly points where the farmers will bring their produce.

- also provided advance payments to producers which are repaid at the conclusion of the marketing transaction).

WITH PACAP GRANT ASSISTANCEWITH PACAP GRANT ASSISTANCE

• PAPASMA applied and received a grant fund of P 855,039. for the ff. components:

a)Construction permanent building for the buying station;

b)Additional working capital for banana trading operations;

c)Production support for on an additional 24 hectares, per household level;

d)Training/capability building;e)Administration costs.

PROJECT COUNTERPARTSPROJECT COUNTERPARTS

• PAPASMA has provided counterpart in the following items:

a)Building constructionb)Banana productionc)Project management and

administration

AGREEMENTS WITH LOCAL AGREEMENTS WITH LOCAL TRADERSTRADERS

• PAPASMA invited the local traders to a bidding conference during PO assembly in 2006. (Four traders came to the bidding conference, a testimony to the bargaining power of PAPASMA as a marketing agent);

• The bidding conference resulted in the selection of one buyer with whom PAPASMA negotiated a formal supply agreement that remains in force up to the present time.

MAIN FEATURES OF THE SUPPLY MAIN FEATURES OF THE SUPPLY AGREEMENTAGREEMENT• The trader must buy the bananas in high price;• The trader must not buy directly from the

farmers;• The trader must pay for the bananas in cash;• The trader must not overly strict about product

quality (in terms of size and the number of bananas per bunch;

• The trader must pay the entire volume of bananas that has been negotiated with PAPASMA.

ENTERPRISE STATUSENTERPRISE STATUS• CURRENT OPERATIONS:

• PAPASMAs banana trading operation (buying and selling scheme) is proceeding smoothly;

• PAPASMA buys the banana produce of its members and non-members in a high price (@ P 6.00 – 8.00/kilo) and re-sells it at a premium of P 0.50/kilo to a trader and this will be treated as organization’s share;

• PAPASMA also provides cash advance to producers three days before the marketing schedule.

ENTERPRISE STATUSENTERPRISE STATUS

• PAPASMAs building has been expanded to include a kitchen,

• A communal toilet is being constructed, and

• The conference area is also currently being rented out for meetings and workshops, thus earning miscellaneous income.

ENTERPRISE STATUSENTERPRISE STATUS

• Started new venture (in March 2007), the buy-and-sell of de-husked coconuts produced by its members because many of its members are into diversification farming;

• Constructed a copra dryer in anticipation of a copra production and trading venture in the future;

• The coconut trading is similar to its banana operations.

• PAPASMA re-sells the de-husked nuts at a premium of P 0.20-0.50/kilo to a trader

FINANCIAL PERFORMANCEFINANCIAL PERFORMANCE

Financial Status as of 31 December ’08

Total Assets: P 790,004.96Current Assets - P 293,155.21N/Current Assets-P 496,849.75

Capital Investment 19,193.00Development Fund 11,621.25Net Income 18,164.29No outstanding liabilities

PROJECT INCOMEPROJECT INCOMEas of December 31 2008as of December 31 2008

Banana Trading Coconut Trading

Sales P1,097,149.70 P541,655.25 Cost of Sales 1,040,855.66 520,470.22

Net Sales 56,294.04 21,185.03

UTILIZATION OF NET INCOMEUTILIZATION OF NET INCOME

Allocations % Banana Trading

Coconut Trading

General Fund 60%

33,776.44 12,711.02

Development Fund 15% 8,444.10

3,177.75

Dividend 15% 8,444.10

3,177.75

Patronage Refund 10%

100%

5,629.40

56,294.04

2,118.50

21,185.02

MANAGEMENTMANAGEMENT

• Banana Trading is a Resource-Based and Community/PO-Managed Social Enterprise;

• Run and Managed through committee system;• The Executive Committee serves as the

General Manager;• Institutionalized Participatory Governance

through Collective Leadership• Operationalized Policy, systems and

Procedures

•

SOCIAL EQUITY IMPACTSOCIAL EQUITY IMPACT

• PAPASMA has had a major impact on the marketing and overall pricing of bananas in the area for both members and non-members. The problem on low market prices (of banana produce in the area) is being addressed;

• With the collective trading, banana farmers including the neighboring communities have gained control over manipulation of local traders

• High emphasis on service orientation

SOCIAL EQUITY IMPACTSOCIAL EQUITY IMPACT• Patronage Refunds and dividends, increases

incomes of members;

• Provided honorarium/incentives to project committee in-charge although the organization’s mandate is to provide service to its members;

• PAPASMA is considered as one of the functional organizations where many groups come to visit and observe how its dynamics evolved.

CHALLENGES AND OPPORTUNITYCHALLENGES AND OPPORTUNITY• PAPASMA continues earning a positive net income

from its trading operation but the income is small and enterprise growth is slow. The association is planning to engage another level of livelihood projects;

• The incentives of the committee in-charge/ members is small compared to the required efforts to be performed by the committee. They are receiving 20% from the net income. Increase of incentives is difficult since this will cut into the income benefits of the members.

•

CHALLENGES AND OPPORTUNITYCHALLENGES AND OPPORTUNITY• The banana production is going down as

producers diversify into other crops such as coconuts and assorted fruits. Over time, PAPASMA needs to diversify its trading operations in accordance with the crop diversification efforts of its members.

• To maintain its supply for banana trading operation, PAPASMA is planning to acquire separate area for communal production.

LESSONS LEARNED/GOOD PRACTICESLESSONS LEARNED/GOOD PRACTICES

• Understanding the importance of market research particularly the concept of “value chain or economies of scale is essential in the success of PAPASMAs social enterprise;

• PAPASMA enable to buy high price (from its members) and sell higher (to traders). With collective marketing, farmers can no longer be manipulated by the middle traders;

LESSONS LEARNED/GOOD PRACTICESLESSONS LEARNED/GOOD PRACTICES• Strong leadership is a great factor to the success of

the social enterprises. A culture of strict organizational discipline, where members have internalized the rules and procedures of the organization;

• A successful social enterprise whose activities, including financial management are carried out effectively by knowledgeable and highly motivated committees and project in-charge;

• The importance of external support entity is also essential in the process.