MABS APPROACH TO AGRICULTURAL MICROFINANCE
Module 1, Session 2
Designing the Market for Agricultural Microfinance
Small Farmers with ME’s &
other sources of income, no land
titleBOP
Market Segmentation by Agri-Activities and Ownership of Legal Title
Small farmers with ME’s & other
sources of income, with
land title,
Large Agri Operators, and Land owners
MAP Survey, MAP Survey, June 2006June 2006
1 hectare, 31%
1.1 - 2.0 has., 22%
2.1 - 3.0 has., 16%
< 1 ha., 13%
> 5.0 has. 7%
3.1 - 4.0 has., 4%
4.1 - 5.0 has., 3%
0%
20%
40%
60%
80%
100%
1
Landholding Sizes
n = 318
SMALL FARMERS DEFINEDSMALL FARMERS DEFINED
Small farmers and fisherfolk constitute 90% of all farmers and fisherfolk in the country.
DEFINITION OF SMALL FARMERS:Small farmers and fisherfolk are “natural persons dependent on small-scale subsistence farming and fisheries activities as their primary source of income.”
-Modernization Act (AFMA) or Republic Act (RA) 8435 of 1997. ACPC Monitor, Issue No. 2, Series of 2003. Definition from Agriculture and Fisheries
WHO ARE THE SMALL FARMERS?WHO ARE THE SMALL FARMERS?
• Land: Actual tiller of lands not over 5 hectares, whether land owner or tenant• Hog: Raisers of 10 sows or 20 fatteners• Poultry: Raisers of 1,000 layers or 5,000 broilers• Cattle: Raisers of 10 fatteners or 5 breeders• Goat: Raisers 50 heads• Fisher folk: Operators of fishing vessels 3 gross tons or less (Fisher folk include fish workers or helpers in fishing boats, fishponds, hatcheries or fish processing establishments) • Aqua culture: operating fishponds or seaweeds, oyster or mussel farms are those with less than 5 hectares; or fish cages of less than 400 square meters in size.
- Land Bank of the Philippines
Examples of Agricultural Products Financed Under MAP
ABACA VEGETABLE
COPRA POULTRY
SMALL FARM TOOLS and EQUIPMENT
FRUITS
MARINE PRODUCTS
RICE
FARM ANIMAL
• Market diversification (Study the agri sub-sectors in the locality)• Value Chain analysis
– Universities– Farmer Associations– Input suppliers– Traders– Existing clients
• Existing Clients of the bank (microenterprise clients with agri activities, depositors, etc.)
MARKETING STRATEGIES
1. What is a Value Chain?– A Value Chain describes the activities that take
place in a business and relates them to an analysis of the competitive strength of the business.
2. What is Value Chain Analysis?– A VCA is one way of identifying which activities
are best undertaken by a business and which are best provided by others ("out sourced"). What activities a business undertakes is directly linked to achieving competitive advantage.
VALUE CHAIN ANALYSIS
As a Marketing Tool
A thorough discussion on the value chain will be presented on the succeeding session
ASSESS MARKETS WITH VCAASSESS MARKETS WITH VCA
• Demand: Focuses on most relevant financial services demanded because they help targeted enterprises to take advantage of opportunities for growth
• Supply: Identifies range of service providers, building on their records, perspectives and relationships