Change has come in BUENASCAR and Butuan City

#Caraga #PhilippineAgriculture #PhilippineColdChain #PCCP

The Caraga Region has been a hub for logging, wood manufacturing and mining for many years.  Even today mining provides the most jobs of any employment sector in the region.  Because of this type of employment, people focused on wage earning jobs and food supply chains for the region developed mostly through connections with other more agriculturally developed regions to the south and west.

Caraga has the potential to be a food basket and agro tourism hub for the Philippines.  It has a long coastline, beautiful mountains and island locations that have a high potential for tourism.  Caraga has rich soils and water resources that could be developed for the benefit of agriculture.  If Caraga region is to develop its agriculture potential and become a hub for ASEAN activity in food production and export a lot of development and education must occur.

Winrock International is implementing a multi-year program called the Philippine Cold Chain Project.  Funded by the United States Department of Agriculture, this project aims to help improve production and marketing of higher value perishable food in the Caraga region.  The program has just started its 4th year of work and is starting to have some high impact projects to show for its efforts.

If we take a trip down the road from Butuan City, we enter the BUENASCAR area.  This is short for the towns of Buena Vista, Nasipit and Carmen.

Starting with Carmen, a town on the coast and next to the mountains.  The climate and soils here are ideal for mango production.  But there is a lot of work to do with the over 60,000 mango trees in the municipality.  Pruning, fertilization and irrigation are needed as well as more education for farmers on how to manage mango farms efficiently.  Traditionally mangos have been shipped out by boat or plane to Cebu or Manila and very little promotion has been done to give Carmen mangos the branding attention they deserve.  Carmen has worked with and Spanish NGO to develop a small processing facility for puree and dried mango production.  But more needed to be done.  PCCP has worked with the municipality on developing producer groups and developing a first class food handling facility that, when completed, will be able to handle large volumes of mangos and enable them to be sorted and processed locally in order to improve farmer incomes and keep hard earned money here in the Caraga region.

Moving on to Nasipit, we find the Nasipit Port where weekly, over 120 containers of various types of bananas arrive from all over Mindanao and  are shipped to Manila and Cebu.  The handling of these bananas is still done in a way that has not changed for several decades.  Inside the port, bananas are “stuffed” into hot containers and block ice is used to try and keep them from getting too hot or becoming over ripe before they reach their destination.  PCCP has helped the LGU of Nasipit and the Philippine Ports Authority come up with a solution for banana and other food shippers on a one hectare parcel near the port.  This building and lot, called the Carara Regional Integrated Marketing Center will serve as a food hub for shipments of perishable food being shipped out of and into the Nasipit port.

Just down the road from Nasipit we arrive at Buena Vista.  This LGU is one of the recipients of equipment and training to help improve municipal slaughter facilities.  The previous facility, located near the city market was in complete disrepair.  This joint effort will help ensure humane handling of animals and keep the carcasses clean and up off the floor during slaughtering and processing.  

Just outside of Butuan City not far from the Bancasi Airport is a new warehouse facility operated by Happy Enterprise.  Actually two warehouses were constructed with help from PCCP.  Even through these are dry store warehouses, they provide benefits to PCCP partners.  Happy Enterprise is the warehouse provider for Pilmico Feeds.  Because of increases in volume of feed demand in the region, a new feed warehouse was needed.  Happy and PCCP partnered to build one warehouse for human food and one warehouse for animal al feeds that now help to meet the increases in feed demand as a result of PCCP activities.

Just a short drive to Libertad in Butuan we pass by a construction site.  After three years of looking for the right partner, PCCP has located a businessman who is willing to partner in putting up the first cold store warehouse in the Caraga Region.  PCCP has championed the need for Butuan as a regional hub to have cold store warehouse facilities available as can be found in Cagayan de Oro, Davao, Cebu or Manila.  With PCCP support, finally such a facility will be available in Butuan City to service the cold storage needs of the Caraga Region!

Turning to the left from Libertad we reach Masao. Masao has a high potential for fish cage production.  Currently PCCP is helping local groups to improve production and marketing of milk fish.  Areas to be improved include availability of milk fish fry or garungan and improve clustering of fish producers to facilitate marketing. Additionally more reliable supplies of ice for harvesting milk fish must be secured.

Driving back into town we pass by a FICCO branch office. FICCO provides coop membership in a micro credit bank.  FICCO is working with PCCP in order to provide agriculture loans to individual farmers and suppliers.  These loans are facilitated though a guarantee fund provided by PCCP that enables FICCO to take a risk on a new business venture such as agriculture loans.

Traveling into Butuan City we visit the Butuan City slaughter facility.  A company from Cagayan de Oro has entered in to a public private partnership with the city in order to rehabilitate this facility which coincidentally is located next to the offices of the National Meat Inspection Service.  What was previously a low standard facility has been upgraded to near AAA status.  PCCP is assisting with establishment of a first class chilling and freezing room connected to this plant.

Just across the fence from the slaughter house in Butuan, even more construction is occurring.  In this case PCCP, Happy Enterprise and Pilmico are partnering to develop a meat cutting plant.  This plant will provide hygenic packaged meat for sale in Happy stores or to other commercial customers.  It will also provide a regular demand for pigs that will be met by PCCP farmer groups in the Caraga Region.

If we continue our journey north or south in the region, we will find many groups of farmers and fisherfolks who are benefitting from PCCP partnerships.  With the assistance of the DA, DTI,  East West Seeds, SEAFDEC , Pilmico, VPO Farms, LGUs and other partners, PCCP is seeking to help farmers understand how to work toward producing high value perishable commodities that are in high demand throughout the region.  Shrimp, crabs, lobster, grouper, banana, mangoes, vegetables, pork, tilapia, milkfish, are commodities where PCCP is striving to reach a level where production matches demand and value addition can be done within the region and not outside.  The ultimate goal is to promote good agriculture practices where properly sorted and packaged commodities can, through the proper use of the cold chain, reach consumers in a fresh and healthy state and command the best prices possible.  

What About Marketing?

With reference to the DevEx article on July 19th, 2016:

https://www.devex.com/news/the-early-agenda-for-the-mcc-s-second-philippine-compact-88441

The Millenium Challenge Corp. (MCC) Philippines has agreed to go on to a Phase II in the Philippines which should be good news for the 26% of people here living under the poverty line.  It is very interesting for me to see that the MCC has focused on many of the same areas that PCCP addresses in its work.  Truth be told,  early on, I did not foresee all the pitfalls that we have since encountered in this project but certainly by now I have a very good idea of the macro problems that are facing the small scale producer here in the Philippines-and a major one involves support for marketing.

One of these problems is that along with having many disputes about who owns and controls what land, there is also the problem of land reform.  The Philippines has been engaged in land reform and trying to break up large plantations for several decades now.  The Department of Agrarian Reform (DAR) has been in charge of this effort. 

However, in general what has happened is that land reform has occurred at a snail’s pace and when land has been turned over, there has been an gross inadequacy of thought and effort devoted to how a large group of small farmers should work together to create marketing opportunities for the products that they grow.   In fact, DAR-supported farmers should have been engaged in education about marketing and farming as a business prior to receiving any land titles.  Also it is my observation that there are very few successful groups working as full-fledged cooperatives that have engaged their members in successful marketing systems, especially for perishable commodities.  On the macro scale, perishable commodities are still marketed by the few business people that have always controlled the market.  Also there are loopholes in the land reform law that make allowances for exported crops like lacatan banana…so it is still easy to see large tracts of monoculture bananas owned by corporate entities here in the Philippines that remain untouched by DAR.  Small farmers continue to be price takers and victims of middleman exploitation with little idea on how to cluster and enter into the big domestic markets.  Trying to get small farmers connected to ASEAN markets seems almost unreachable.  Also promotion of plantation crops like oil palm do little to help small farmer enterprises.  Coconut-occupied lands are somewhat more equitably owed.   In fact, if the Philippine government really wanted to help small farmers, the money that has been taken from coconut farmers under the coconut levy requirement should be used to subsidize a Philippine wide “logging” of senescent, overly tall and barely productive coconut trees planted 50 years ago or longer and then give a second subsidy for planting of improved varieties of disease resistant coconuts that will produce more nuts and give a greater profit per hectare.  Additional training could also be given on growing other crops within these areas and for value added processing and marketing of coconut and secondary crops.   It is unfortunate that the Coconut Levi funds remain tied up in litigation.

So then the question is asked: How does one reach economies of scale when trying to develop markets with the rural poor? 

I think such an effort will require a grand paradigm shift in cultural practice and values here in the Philippines. 

The individual farmer will have to clearly see the benefit of working together in groups and marketing together in groups as a way to promote greater income and stability.  This may include some cooperative owned value adding activities and certainly will need to include a lot of training for the farmers involved.  There will also probably be a need for incentives offered by government or through price structuring and support to these farmers to develop and maintain loyalty to their cluster and cooperative.  But right now, most of these small farmers and the government workers that are supposed to support marketing efforts have no idea what their market value chain consists of or what the end consumer wants or how to effectively deal with post-harvest requirements in order to tap the most lucrative markets here and abroad.  Most small farmers still are thinking “small”.  They visualize their vegetables, fish, meat, fruits etc. being sold on a blanket on the ground or on at table at a stall at the local market once a week or sold to a middle man at the farm gate.  They certainly don’t visualize their products being chilled or frozen and packed and sold in an attractive box to a large supermarket chain where it is retailed at a high price and consumed by a middle class family in Manila, Taiwan or Japan!

So yes, small farmers are desperate and disadvantaged…and acceptance of land under a land reform program may make them even more so. 

I believe this is the case mainly because status quo, large scale marketers don’t want to have the competition that educated and organized growers could bring to the market place.  They are content with offering the lowest price for class C produce and reaping the profits while continuing to drive down prices at the farm gate whenever possible.  A lack of training for DAR and DA assisted farmers in market development may only be a result of not understanding the need to understand marketing before you plant or raise or catch anything.  On the other hand, it almost reaches a level of conspiracy by those currently controlling and profiting from existing market chains since land reform “continues” while small farmer market education and reform remains ignored.

Photo Lifted from: http://3.bp.blogspot.com/

PCCP has worked and partnered with FICCO to address the available of agriculture loans for small farmers.  However, this is no easy task as we are plowing new ground trying to learn were and how to best promote successful agriculture based loan packages.  As a result, our current loan default rate is higher than we would like to see.  But as we learn the ins and outs of agriculture productivity, marketing and profitability in the Caraga region, we believe the number of successful loan repayments will dramatically improve.

We are also tackling the need for improved infrastructure with an expanded Carmen mango facility, a new trading hub near the Port of Nasipit, new dry and cold storage warehouse facilities in Butuan and a number of improved slaughterhouse and ice plant/storage facilities throughout the Caraga Region.

Our doors are open and we are ready to share our knowledge and experiences regarding how best to assist small farmers and what needs to be done to improve marketing opportunities for them.  PCCP would welcome a visit from MCC staff and consultants any time as we have a lot to offer regarding small farmer aid and intervention knowledge! -------------------------------------------------------------------------------------------------------------------------

Excerpt of a DevEx article on plans for MCC compact II in the Philippines…($435 million USD)

More than two decades ago the Philippines passed sweeping agricultural reform laws that limited the maximum size of farms in an effort to break up to the monopoly of large plantation owners and more equitably distribute farmland to the rural poor. An indirect consequence has been the loss of efficiency and productivity that come with larger tracts of land, where mechanized farming, for example, is incentivized.

“Without turning back the clock to pre-agrarian reform, the challenge is how to work within the law so that you can get the economies that large-scale cultivation offers,” a member of the compact team, who declined to be identified by name, told Devex.

Rural agriculture is also hampered by limited access to finance, which affects smallholder farmers around the world. In the Philippines, commercial banks are required to allocate 25 percent of their loans to the agricultural sector, 10 percent of which must specifically go to the smallholder beneficiaries of the land distribution reforms. But most banks don’t meet that threshold for smallholder lending, choosing instead to pay a regulatory fine rather than take on what they see as risky investments. 

On the demand side, few Philippine farmers have direct access to the modern food and retail industry, selling either to local markets or at low prices to traders who sell to large companies.

“It is an informal collector’s model where farmers are desperate and will sell to any middle man,” said Jenny Costelloe, director of country partnerships for Grow Asia, a multistakeholder platform for sustainable agriculture in Southeast Asia. “It’s the complete opposite end of empowerment.”

The compact development team is considering a number of projects including various interventions to improve many of these market inefficiencies, including farmer training and extension services, improved access to credit and better market access.

Also needed, the team said, are better and more transparent information services that improve the business of agricultural — digital and data platforms, for example, that provide farmers with real-time information on commodity production, crop pricing and land availability.

The compact team is also considering dedicating a large portion of funds to large-scale infrastructure projects that would improve physical transport and market connectivity. One potential project is port upgrades in the Visayas region — a heavy clustering of island provinces in the central Philippines whose local economies rely mainly on agriculture.

Ultimately, the compact development team is aiming for aid and interventions in agriculture that feed into other strategic industries.