clustering small vegetable producers for the big, urban markets

8/9/2019 Clustering Small Vegetable Producers for the Big, Urban Markets

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Clustering Small Vegetable

Producers for the Big, Urban

Markets

Business Development Service Workshop

May 14-16, 2008 (Sugarland Hotel, Bacolod City)

Joan C. UyVice-President for Marketing, NorminVeggies

Marketing Consultant, Catholic Relief Services

Jessan Catre

Agroenterprise Specialist and Project Team Leader, Catholic

Relief Services


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ContentContentContentContent

1. NorminVeggies Experiences

2. Clustering as a Response to Market Challenges

3. Inclusion of Small Farmers

4. The Case of CRS Assistance to Small Farmers in

partnership with the NGOs and the LGUs

5. Synthesis - Learnings

6. Suggestions for Action


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The Market Divide

Traditional Market - Traders

Fastfood chains

Processors

Modern, dynamic market chains

Hotels & Restaurants

Supermarkets

Consolidators


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THE VEGETABLE SUPPLY CHAIN

The traditional chain (wet market)where the traders dominate

About 80% of growers nationwide

But there is a new trend The modernchain is emerging driven by increasingurban consumers with higher incomes

and changing lifestyle.


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Supermarkets Fastfoods

Hotels & restaurants

Institutional markets

consolidators/distributors, processors, caterers

Specialty markets organic, fair trade

Modern markets


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Understanding the Requirements of a

Modern Market Chain

PRODUCT QUALITY(High Recovery)

Quality became our unique selling point to

differentiate our growers.


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The usual handling in

Agora Wet Market


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NVCC Handling


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NorminVeggies handling for the

consolidators servicing institutional buyers

At the FarmAt the Farm


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Emphasis is on Quality

Handling at the Farm

At the FarmAt the Farm


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Understanding the Requirements of

a Modern Market Chain

Not just quality but also

Quantity Economical Volumes

Competitive Pricing

Reliability Production Plans,Postharvest management, GoodCommunication, Discipline (Boils down

to good organizing)

---Clustering---


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Opportunity: The buying power of modern markets

& the possibility of supply chain cooperation

Implication:Those who are not organized will be left out

(dependent only on the traditional market

chain)


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Implication:

Those who are organized and are willing tomake adjustments in their farm production

activities to be able to supply quality and

volume with reliability and competitive priceoffers can participate in the modern chains.


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What is clustering?

Individual growers who commit to work

together for an agreed market and

become a product supply unit.

Market


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Grouping of 5-15 growers who commit to

undertake collective marketing and tofollow a common quality managementplan.

It is product-based

The cluster is a product supply unit

Strong emphasis on commitment and organizational

discipline to deliver quality, volume on the schedule aspromised


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Lettuce Cluster


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Diversified Product Cluster


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Quality Management Plan that guides a

grower in every clusterTransport/Cold Storage

transport

Packing Shed Post harvest tools, packing

& labeling materials

Harvest containers, tools

Fertilizer, insecticide/fungicide, bio-con, irrigation

Seeds/seedling medium

Tools/Equipment

QualityManagement

Plan (QMP)

Transport for Consolidation

Hauling/Sorting/GradingPacking

Harvesting

Cultural Management

Planting/Transplanting

Land Preparation/Seedling Prep

Market

Dalan Irrigation CommunicationsSystem

Financing


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Benefits for the growers Better bargaining power

quality

volume & variety regularity

Diversified and more predictable markets

Traditional Modern

Better income

Higher price

Reduced losses/higher recovery

Better relations among growers

Good image in the business community for

the small producers


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1/6. NorminVeggiesExperiences


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Location of NorminVeggies

members in Northern Mindanao

Lanao del Norte

Sugbongcogon

Claveria

Manolo Fortich

Sumilao

Impasug-ong

Malaybalay City

Lantapan

Kibawe

Valencia City

Maramag

Opol

Iligan City

Marawi CityTubod, Lanao del Norte

BaungonLibona

Talakag

Gingoog City

Farm locations of

NorminVeggies members


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The organization: Northern Mindanao Vegetable

Producers Association, Inc. (NorminVeggies)

Why was it organized?

Provide venue for growers tointeract with the intention of

increasing income.

Relate with government and privateresource groups in an organized

way.

Be involved in the pro-activedevelopment of the vegetable

industry.


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Membership - 85

Producers

Independent Growers

NGOs & POs Small Farmers

Corporate Farms

Input/Service Providers

Honorary Members


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Producers in Collective Marketing

Independent growers

o Financially independent & have

other sources of incomeo Small & medium sized firms

o Can access technologies

o High educational background

o More confident to take risks

Small farmerso Farmer owned & family operated farms

o Need assistance to access technologies,financing and markets

o Assisted by NGOs and LGUs (e.g. a

CRS pilot project in Bukidnon with

Kaanib Foundation, Inc.)


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(service)

Independent growers

NGOs & POs-

(Small farmers) Corporate farms

Input/service

providers

Honorary members

(Marketing)

Sweet pea SquashLettuce

Tomato

Wongbok

CLUSTERS

Bell pepperCabbage


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Weekly Cluster Commitments(July 2007 onwards)

2,50010,000Table Tomato

8,00016,000Squash

2,200

1,800

3,300

3,000

300

700

1,000

3,000

600

12,000

30,000

6,000

Weekly Target (Kgs.)

Total

1,700Eggplant

1,000Cucumber

1,500Sweet Pepper

2,000Bitter Gourd (Ampalaya)

150Broccoli

700Salad Tomato

1,000Bell Pepper

Baguio Beans

250Sweet Peas

10,000Chinese Cabbage (Wongbok)

20,000Cabbage

4,200Iceberg Lettuce

Current

ProductionCommodity Cluster


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Products from Marketing ClustersIndependent Growers capabilities

Small Farmers capabilities


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Dualistic Vegetable Supply Chain

Ve

getableG

rower

Consume

rs

Market Agentdicers

Local Trader/assembler Wet market

Wholesalers

Local Trader/assembler Consolidators

Processors

Supermarkets

Hotels &Restaurants

Fastfood

chains


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Objective: Participation in both the

traditional and dynamic supply chains.

NorminVeggies

Members

NorminCorp(Market

Facilitator)

Wet Market(Wholesaler)

Consolidators(for institutional buyers:

hotels, restaurants,

supermarkets)

Processors(Fastfood chains)

Wet MarketRetailers


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NVCC POSTHARVEST FUNCTIONS

Storage

Order takingSorting

Packing

Facilitate shippingBilling & collection

Payment remittance to growers

Price monitoring

growers pay service fees


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247,700.00 ,27%

525,000.00 ,

58%

140,000.00 ,

15%

NorminVeggies(Operating Capital, lease and

Building Improvement)

Dept. of

Agriculture(Building & planning)

GEM-USAID(equipment & counterpartsupport for 1 staff)

Note: Additional DA & GEM Support in the Pipeline

Computerization1 ton Digital Weighing Scale

Cold Rooms & Packaging Materials (Crates)


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camiguin, gingoog,butuan, surigao,

iligan, ozamiz,

dipolog, pagadian,

zamboanga, jolo

Min

cebu, iloilo, bacolod,

bohol, tacloban,

dumaguete, ormoc

Vis

metro manilaLuz

ilo2

MM

bac

cebboh

orm

tac

dum

sur

bor

igndip

pag

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butcam

NVCC Market

Destinations:


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3/6. Inclusion of the

Small Farmers (theExperience of CRS in

organizing vegetable

farmers for marketing

(clustering approach)


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Situation & Challenges to Farmers

Rapid market changes farmers arenot prepared to respond

Farmers need new knowledge, attitudes,

skills and approaches to successfully

engage the market


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Situation

Farmers are production-focused, not

market-oriented

They need new knowledge, skills, ways of

doing things

Challenge

Preparing farmers for market engagement

Linking farmers with dynamic, modern

markets

Development Challenge


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Farm Business+

AGROENTERPRISE

Not just farming.

But farming profitably.

And working with markets.


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CRS Phils. has started to provide theappropriate development interventions through

the Agroenterprise Clustering Approach that

helps increase the level of capacity of smallfarmers.

This has brought the opportunities of modern

market chains within the reach of small

farmers.


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3,500 farming households assistedto:

Increase the productivity of

their marketable farm products

Participate actively in the

market chains

Small Farms Marketing Project (SFMP)Funded by the USDA


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GSKP and Paglat,

MaguindanaoKadtuntaya

Foundation, Inc.

Siay, Zamboanga

SibugayXavier Agriculture

Extension Service

Impasugong,

BukidnonKaanib Foundation, Inc.

Maragusan,

Compostela ValleyKasilak Development

Foundation, Inc.

Davao CityPCEEM Davao

Foundation

SFMP Project SitesSFMP Project Sites

Mindanao

Island


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Datu Paglat & SK Pendatun,Maguindanao

Siay, Zamboanga Sibugay Impasugong, Bukidnon

Maragusan, Compostela

Valley

Davao City

ProductsProducts

Squash Agroenterprise Cluster


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Squash Agroenterprise Cluster

Impasugong, Bukidnon

NorminVeggiesKalabugaoLa FortunaPoblacion

NVCC - Agora(Outshipment/Local Buyers)

Cluster LeadersPartners: Kaanib Fdn.CRS, LGU Impasugong,

NorminVeggies

Manila & Cebu(Supermarket Consolidator)

NorminCorp(Market Facilitator)

Roadside Market -

Impasugong


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Wet Market(Wholesaler)

Food

Processors

Supermarket

Consolidator

Wet MarketRetailers

NorminCorp(Market

Facilitator)Small Farmers ClustersSweet Pea ClustersSquash Clusters

NorminVeggiesIndependent Growers

Sweet PepperLettucesCabbageSweet PeaSquash

Kaanib

Fdn.


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Step 1: Partnership Building


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Working group formation (LGU, NGO, business, etc)

Orientation & planning sessions

Step 1: Partnership Building


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Step 3: Market Chain Study


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Training on market chain study and use of tools

Market visits

Participatory analysis of research results

Initial market negotiation

Step 3: Market Chain Study

Step 4: Cluster Formation


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Inputs on Marketing Basics

Orientation on clustering

Leadership identification

Visioning

Step 4: Cluster Formation

Step 5: Cluster Plan Formulation


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Agroenterprise planning

Operational planning

Product/supply programming (with technologies)

Step 5: Cluster Plan Formulation

Step 6: Test Marketing


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Enabling financial assistance (innovations

& quality management)

Assessment sessions

Step 6: Test Marketing

Step 7: Scaling Up


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Review of cluster plans and adjustments

Installation of business operating systems

Regular product supply

Step 7: Scaling Up

Step 8: Cluster Strengthening


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Regular meetings

Task-oriented trainings

Periodic assessments & reflection

Networking (with other clusters & partners)

Step 8: Cluster Strengthening


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5/6. Synthesis - Learnings

Learnings


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Learnings

The biggest strength is in the combination of theindependent growers and small farmers.

The independent growers with

financial base and access to

technologies and market

provide the internal muscle forthe marketing enterprise to take

off.

The small farmers

have production

potential because of

their number andspread


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Thank You

clustering small vegetable producers for the big, urban markets

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