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Value Chain Development in the Philippines - Organic Rice, Muscovado Sugar


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Presentation by René Guarin (UMFI) during the ICCO workshop on Value Chain Development - 2 December 2009

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Value Chain Development in the Philippines - Organic Rice, Muscovado Sugar

  1. 1. VCD Philippines Organic Rice, Muscovado Sugar
  2. 2. The VC Briefly <ul><li>coop input  farmer  coop (consolidation/milling)  Local /UMFI  Smkts  end consumer </li></ul><ul><li>Organic Rice </li></ul><ul><ul><li>10 communities from 7 provinces, 5MT to 50-60MT/mo sold to supermarkets in the National Capital - Manila </li></ul></ul><ul><ul><li>Number one brand in the markets </li></ul></ul><ul><ul><li>Large market potential – Manila Population = 12M to 19M </li></ul></ul><ul><li>Muscovado </li></ul><ul><ul><li>7 communities from 5 provinces, from 2 MT to 40MT/ month sold to local supermarkets </li></ul></ul><ul><ul><li>Supplier to supermarket private-house brand </li></ul></ul><ul><li>Agrarian Reform Beneficiaries are the primary partner groups </li></ul><ul><li>UMFI </li></ul><ul><ul><li>BDS provider/chain actor – marketing/distributor </li></ul></ul><ul><ul><li>Facilitate access to finance/ provide in house finance </li></ul></ul><ul><ul><li>Product Development </li></ul></ul>
  3. 3. Success Factors <ul><li>Choosing the chain with the Wide Spread = Margins for everyone </li></ul><ul><ul><li>OR = 67% (PhP 18 production cost/kg vs PhP 54 SRP/kg) </li></ul></ul><ul><ul><li>MS = 71% (PhP 20 production cost/kg vs PhP 70 SRP/kg) </li></ul></ul><ul><ul><li>CS = 83% (PhP 25 production cost/kg vs PhP 150 SRP/kg) </li></ul></ul><ul><li>Having the process to understand the chain among the various stakeholders – roles, dynamics, economics-business logic, building trust among the group –continuing process </li></ul><ul><li>Private sector involvement – technology, support services (lab analysis, research), access to markets, getting people from the private sector to work for you </li></ul><ul><li>Knowing the quality definition of the market/ channels – sets the standards and benchmarks across players </li></ul><ul><li>Increasing organizational capacity to become good and reliable chain actors = getting support to attain better efficiency at all levels at all times </li></ul><ul><li>Protecting market shares – barriers to trade (certification, branding, network support – joint business planning) </li></ul>
  4. 4. Potential Pitfalls <ul><li>Market development becomes market take-over  no real new markets developed, might even reduce economic returns to community </li></ul><ul><li>Response time not the same for all = missing/ losing the market = setting the mechanism/ infra faster than partners’ capacities </li></ul><ul><li>Over “empowerment” tendency/ wanting to take over the whole chain, getting more functions/roles  Being overly “biased” for the target groups = losing the business sense or polarize the group </li></ul><ul><li>“ Blind” initiative to involve the private sector </li></ul><ul><li>Absence/ lack of chain finance facilities limits growth or lose the market </li></ul><ul><li>Lose the market by default – inability or refusal to comply - obtain certification due to : costs, varying technology, taxes and licenses </li></ul><ul><li>Too much participation from too many stakeholders at too soon a time </li></ul>
  5. 5. Potential for Scaling it up <ul><li>Big domestic demand untapped still for OR/Muscovado Big potential for scaling up, dependent on the following: </li></ul><ul><ul><li>Organization-Systems  more efficient mechanism to engage the markets (joint planning, group certification) </li></ul></ul><ul><ul><li>Better technology  increasing efficiencies still and explore further value adding opportunities </li></ul></ul><ul><ul><li>Access to Finance  to support increasing trade and facility/equipment upgrades </li></ul></ul><ul><ul><li>Market Development  regular campaigns (tap the private sector) for current markets and initiatives to open new markets segments, tap into industries/institutional markets </li></ul></ul>