PROGRESS IN THE CARAGA REGION

#PCCP #Winrock #PhilippineAgriculture #Caraga #CCAP

(Full text of the Opening Message delivered by Dan Gudahl, Chief of Party of the Philippine Cold Chain Project, during the opening ceremony of the 14^th Annual General Meeting and Training Conference of the Cold Chain Alliance of the Philippines)

I would like to thank Tony Dizon and his very capable team for continuing to promote professionalism, information exchange and collaboration as a way to promote the cold chain industry in the Philippines.  I know this is a labor of love for you and that you have more than one full-time job besides this one to take care of and manage. I would also like to thank the #GlobalColdChainAlliance represented today by Richard Tracy.  My challenge for your two organizations today is how to capture all the good work of both organizations to further promote the cold chain industry and its needs within the ASEAN context. I believe that CCAP and GCCA can have a pivotal role in this expansion.

While it is often hard to see inside a cold store and understand what is going on, I firmly believe that an experienced organization like CCAP as a “first in” organization should also be the “first out” to share experiences not only in cold store operations and management but in sharing with others in southeast Asia your experiences in developing and running an effective cold chain association that benefits members and consumers alike.

This is the fifth time I have attended CCAP's annual meeting; two times in Cebu and now three times here in Mindanao.  This meeting gives anyone attending the opportunity to have a look and learn more about logistics for perishable food commodities.  It is a place where members open up their work and their operations to others with the idea that sharing information and experiences will improve the whole industry.  USDA Manila has had a long and consistent focus on helping to improve the cold chain in the Philippines. Ralph Bean and his staff continue to assist and support CCAP and PCCP efforts whenever we ask for help.  Today, please take some time to meet Ralph and his staff and thank them for their efforts on behalf of PCCP and CCAP.

We have put together a dynamic group of subcontractors under PCCP: FICCO (First Community Cooperative), East West Seeds, Pilmico, Seafdec, CCAP, GCCA and Philippine Government agencies like DA (Department of Agriculture), DTI (Department of Trade and Industry), PPA (Philippine Ports Authority), NMIS (National Meat Inspection Service), and others, to implement the PCCP objectives of increasing production and improving marketing of perishable commodities in the Caraga Region.  We have over 70 staff spread over 6 offices in the whole region, assisting over 260 producer groups in fisheries, fruits and vegetables and pork production enterprises.  We also partner with businesses and logistics services groups to try and figure out ways to improve marketing and getting more money into farmer’s pockets.  This would not be possible without a dedicated and hardworking PCCP staff some of whom are here today.  Please stop by our booth or go to our website to learn more about PCCP at www.winrockpccp.org or read my blog.

To effect change and improve efficiencies in how perishable products are produced and marketed, it requires a focus on increasing production of key products. It also requires creation of new pathways and systems to help these products enter into various markets and delivered as clean, healthful and profitable commodity.

Is PCCP assistance necessary? 

First of all, what in your opinion is the biggest issue that the cold chain industry in the Philippines is facing today?  Preventing food loss? Increasing capacity? Energy consumption and cost? Accessibility and ability deliver to plants, ports and markets on time?  Or is it something else?

When I was 5 years old, the world population was 3 billion people.  Today, that number is somewhere in excess of 7.4 billion and growing at a rate of 1.3% annually.  The Philippines is the 12th most populous country in the world today.  I think the biggest challenge facing all of you today is just trying to keep up with handling the demand for fresh, properly handled food.

Top 20 largest countries by population. 
Source: http://www.worldometers.info/world-population/

In the Caraga region, we have found that the region is lagging behind because of its HISTORY of logging and mining which has slowed the investment and progress of less extractive and less profitable commercial agriculture and fisheries, especially for perishable agriculture commodities.  While it is relatively easy (but not necessarily lucrative) for farmers to market coconuts, copra, bananas, cassava, rice and corn in the region, basically the people controlling the main marketing channels for perishable food like pork, fish and vegetables have developed systems where ordering products from General Santos City, Davao or Cagayan de Oro is currently easier and more efficient than creating new production and marketing systems within the Caraga Region.  These existing marketing channels, which may require a fleet of iced or refrigerated trucks to deliver products throughout the region, are impossible for the small scale producer standing alone to break into.

There are numerous government agencies engaged in aspects of marketing of products that include monitoring of food quality and assistance for high value production.  However, despite government’s efforts to help with land redistribution and assistance for the small scale farmer, too often the individual farmer is left on his or her own when it comes to figuring out marketing for produce raised.  This is further complicated in Caraga by the lack of local entrepreneurial investment in market aggregation or clustering and value added manufacturing enterprises producing on a large scale that could bring many small producers into the market.  One example would be the lack of a medium scale boneless bangus processing, freezing, packaging and export facility.  Another example would be the lack of coordinated and clustered mango and vegetable marketing in the region. 

Addressing marketing challenges

PCCP is helping to address the mango marketing issue by assisting local farmers and the municipality of Carmen and other nearby mango producing areas with a facility that includes refrigerated storage capacity designed to help make the municipality of Carmen a value-added and sales hub for mangoes. Likewise, PCCP identified early on the potential of the Nasipit port.  Nasipit port provides the major entry point for goods and a major exit point for manufactured products --primarily plywood-- to and from the Caraga Region. 

Caraga Regional Integrated Marketing Center in Nasipit, Agusan del Norte

The Nasipit port also provides services for banana raisers and marketers in the region.  But these bananas are stuffed and shipped mostly in unrefrigerated containers.  While change is slow in coming, PCCP is making some progress to help improve the banana handling and marketing situation at the port.  Over 100 containers of various types of bananas are shipped from the port weekly.  And currently 100% of these bananas shipped out go out in bulk containers or bulk pallets.  The ones headed to Manila also include block ice in an effort to keep the bananas cool.  Currently, no bananas go out boxed or in refer containers from this domestic port although there is a demand for second-class boxed bananas in Cebu and Manila.  The port authority does have plans to install plug in stalls for refer containers, but as of now there are no plug ins available within the port. 

PCCP obtained permission from the Nasipit LGU to utilize land near the port to construct a regional facility for aggregation and handling of perishable food products like banana.  This is the Caraga Regional Integrated Marketing Center (CRIMC). The Port authority will soon kick out the groups that are currently using the port facility to repack bananas from truck to container or pallet.  With this development, the banana shippers will find an open door at the new PCCP constructed facility in Nasipit.

PCCP partnered with Pilmico, the food arm of Aboitiz Group of Companies, to help bring accessible and improved hog genetics to the Caraga region’s small producers.  We worked with FICCO, a microcredit cooperative, in order to make sure loan packages for hog raising were appropriate and available.  As a result of this effort, Pilmico increased feed sales by over 20%.  The consequence of this is lack of warehouse space.  To address this, PCCP entered into a partnership with Happy Enterprise, an integrated company that sells food for people and also provides warehouse facilities for human and livestock feed.  Our partnership enabled Happy Enterprise to expand their warehouse facilities to include a new and larger storage facility for Pilmico feeds.  The 32,000 cubic meter Safe Food Facility was recently inaugurated by US Deputy Chief of Mission Michael Klecheski and Ralph Bean, the US Ag Attaché (who is here with us today). 

Improvement of slaughterhouse facilities

As a project like PCCP moves along its timeline, it is important that project leadership recognize synergistic opportunities that have come along as a result of project efforts. PCCP has been putting a lot of effort into improving food handing, especially through improvement of local slaughter houses. 

When we first arrived in Butuan, we visited the slaughter house and it was, in very polite terms, a big dirty mess.  On first glance, a consultant we engaged to do training and meat handling recommended that the entire place be bull dozed as the only way such a place could be fixed and brought up to AA status.  However, our friends from St. Jude Slaughter house here in Cagayan de Oro were able to arrange a Public-Private Partnership with the city government of Butuan and have been steadily working on a complete remodel of this facility, including water treatment facility and sales yard.  The facility is now looking very professional.  As a result of this good progress, PCCP has funded a cold room and chiller room to match the capacity of the slaughter plant.  But the linkages did not stop there.  Our hog project partner Pilmico and our retail and warehouse partner Happy Enterprise researched the market for pork in Butuan and the surrounding area.  Pilmico developed a cost-benefit analysis showing what could be done if a meat cutting facility was added alongside the slaughter house here in Butuan. 

Happy Enterprise agreed to add hygienic, prepackaged and cooled pork products at their local supermarket stores and PCCP as an incentive offered to assist with the cost for cooling equipment at the new facility.    This project has just broken ground as of June 7, 2016.  The is effort will also help with hog raisers under PCCP assistance to develop a reliable and regular market for their backyard raised hogs and they will be able to sell their hogs at a price that allows them to repay their loans and make a profit.  This will be the first and largest effort of its kind in the region.  With such a quality facility in place, value added activities and shipping meat products outside the region also become possible.

PCCP has also helped at least 10 municipalities to improve their slaughter facilities with a basic goal of promoting humane handling of pigs and a clean process during butchering.  At the Surigao City slaughter house there is an ongoing renovation and PCCP is supporting the installation of cold storage and chilling facilities there. 

Developing cold chain facilities

From the start of the project, PCCP identified that there are currently no cold store warehouse facilities existing in the Caraga region.  One of our goals has been to help establish a viable and up-to-date “cold chain” in the region.  Having had the opportunity, through CCAP contacts, to visit other cold storage facilities in Manila, Cebu, Davao   and GenSan, it seemed to be a big mystery (at least to me) as to why there is no cold chain warehouse facility in Butuan.  We did manage to locate one cold storage facility in Surigao City but this facility was under-utilized and in bad shape.  We found another small facility near Butuan that had been used to store chicken, but this facility was now un-utilized and cannot be easily repaired.  There was a third facility called INTAQ that was quite large but had shut down when the vannamie industry here collapsed due to white spot disease. 

The cold chain facilities we visited in Cebu and Manila were usually running at 100% or more capacity.  However, here in Butuan, the businesses that could benefit from cold store warehousing were mostly trucking in frozen products from warehouses in Cagayan de Oro, Davao or beyond or just utilizing their own small freezer spaces.  PCCP searched for some organization willing to take on this challenge.  We asked CCAP to come to Butuan to conduct a Cold Chain 101 seminar which was well attended by all the big food marketing enterprises in Butuan. 

Finally after completing the Happy Enterprise dry storage facilities in Butuan, we met a person with warehouse experience who was willing to move forward with a cold store warehouse within the city.  I believe this company has a representative here today at this meeting.  PCCP will partner with this company and help to provide cooling equipment for this cold store.  Please note that this is not a loan but a grant from PCCP (and USDA) in order to help encourage better cold chain practices in the region.  This facility will be located close to the main road in Butuan City and we plan to have a large signboard facing the road to highlight USDA and PCCPs partnership with this first of its kind business in the Caraga region.  If PCCP results follow other similar projects, I predict that this will be the first of several new cold stores to be developed in Butuan in the near future.

Because of our close ties with each of the governors in the Caraga region, we are called upon from time to time to provide advice and assistance.  For a new Agriculture Pinoy Trading Center (APTC) on Siargao Island, which is part of Surigao del Norte, we were contacted by Governor Sol Matugas of Surigao Del Norte to go and have a look.  We visited the planned facility which was designed at the DA offices in Manila and it was immediately obvious to PCCP staff that the small cold storage as outlined in the plan was not utilizing the correct design and equipment and was too expensive as well!

We went back to the governor and suggested that the space provided for a cold store actually have a properly designed cold store installed.  Our project engineer and cold storage consultant made a new design.  This was agreed upon by the governor and then a change order had to be requested from DA who was the primary funder of the project.  The PCCP designed cold store has now been fully installed and it looks like a proper cold storage instead of what was previously proposed.  It was also done for less cost than the previous design even though installers and equipment came from Manila. We are now waiting for this facility to start operations as soon as a transformer is installed. 

We do wish that Troy (Baker) had some more time during his visit as we could use his input in helping to make a recommendation to upgrade the ice plant on Siargao Island.  Currently the ice plant there is functioning but there is a strong smell of ammonia that pervades the facility especially close by the old compressor equipment.  So much so that even an untrained observer like me can identify the urgent need for an upgrade!

 

Developing a cold chain for Siargao is essential as tourism arrivals grow. Siargao is a great place to enjoy surfing, beaches, fishing, nice resorts and good seafood.  Note also that there is a plan on the books to eventually have direct international flights to Siargao!  So buy your lot there soon before prices go up!

PCCP has also put a lot of effort into assistance for the “mystical” island of Dinagat.  Dinagat Islands used to fall under the administration of the province of Surigao del Norte.  As a result, the islands were usually last to get any provincial assistance.  But since Dinagat Islands became the “last” province of the Philippines, this newest province has been improving rapidly with new roads and infrastructure.  However due to its remote location, it has been relatively ignored by development projects and NGOs. PCCP has helped our producer groups there to improve their productivity and have access to FICCO loans primarily through increases in lobster production.  Live tiger lobster are in big demand in places like China. The sea conditions in Dinagat are some of the best in the world for cage raised lobster production.  However, the supply chain for perishable commodities needed on the Islands has long depended on trips to the “mainland” of Surigao City. Pork, vegetables and even ice are bought to Dinagat by boat almost daily.  This is ironic as conditions for growing vegetables on Dinagat are excellent.  Fish catch is good and the potential for cage raising for milkfish and other species is great as well. However, when PCCP arrived, there was no ice plant or cold storage facilities to be found on the island, despite potential for marketing of high value fish catch and other produce. 

Lobsters in Dinagat Island are raised under the kitchen floor.

PCCP worked with the local and provincial governments to set up a plan to improve this situation.  Currently under construction is a combination ice plant and cold storage located on a land right at the waterfront and near the main market of the municipality of San Jose.  When completed, this plant will be operated by a local and longstanding dynamic cooperative group called A and M.  It is a first and important step in improving food quality and helping the people of Dinagat to retain the value of the high value food that is available on the island.

Priority areas for improvement

The Caraga region’s economic performance has been moving steadily upward.  But after years of being near the bottom compared to other regions, the Caraga region has a bit of inferiority complex to get over.  DTI has implemented a “Buy Caraga by Caraga” campaign for locally produced products and some of these products are reaching markets outside the region but volumes and promotion remains low.  When a producer group does promote its products at a trade show or exhibit, often the problem is that they cannot fulfil the order size once a customer decides that they would like to purchase the product in bulk.

PCCP is focused on helping the Caraga region to create a memorable “brand” for the region as a way to publicize the potential this area holds.  From November 7-11 at Robinson’s in Butuan City, PCCP, with the help of local and regional Chambers of Commerce will hold a CARAT or Caraga Agriculture and Trade Exposition.  We have chosen the Tiger Lobster as our brand or logo.  The reason for this choice is that the lobster has not been used by other regions as a brand.  Lobsters also show that this region is rich with seafood and agriculture products.  Lobster also have a big demand abroad, especially live lobster, and can be easily marketed.  PCCP's ultimate goal is to get to the point where people in Manila or Cebu will immediately think of lobster when Caraga is mentioned and identify this region as a place with great wealth and potential for agriculture products. 

In summary, a lot needs to be done to bring up the Caraga region to world standards in food handling and value added processing for sale of products outside the region.  Marketing assistance needs to focus on bringing small holders together so profits can increase and there is adequate volume, quality and regularity of production in place.  Producer groups need to be strengthened as do marketing clusters and there must be a focus on market development before production starts!  Technical knowledge transfer must be emphasized at the farmer and processor and marketing level.  And there is a need for investment in key areas that support the potentially profitable value chains and cold chains in the region such as fingerling production for bangus and crablet production for crabs.

We look forward to the new administration bringing a spotlight to agriculture and food production activities and we remain fully available to collaborate and advise as requested! We would love to hear your ideas too.  Please stop by our PCCP booth or talk to DCOP Jim Orprecio and I anytime during the conference.

Thank you for your attention and more power to CCAP!