Cocoa Value Chain Growth and Agricultural Finance in Mindanao.
Presentation will cover… <ul><li>Introduction to ACDI/VOCA and its programs in the Philippines. </li></ul><ul><li>Cocoa In...
<ul><li>ACDI/VOCA is an international economic development firm dedicated to improving lives and livelihoods worldwide thr...
ACDI/VOCA has Global  Cocoa Value Chain experience:
2. Cocoa Industry development progress, opportunities and finance needs
Recent Philippines Cocoa Development Projects Project/Activity Location Duration Value USD SUCCESS Alliance Phase I Palawa...
<ul><li>SUCCESS Alliance Philippines Phase II, Jan 2007 to Aug 2009 in the PHILIPPINES. </li></ul><ul><li>15,000 farmer be...
Activity concepts and standards CoCoPAL Project
 
The Virtues of producing cocoa in the Philippines <ul><li>Cocoa is SMALLHOLDER friendly </li></ul><ul><li>It’s  great in d...
What the Cocoa Industry  needs most now: <ul><li>Coordinated and certified plant production of at least 7,000,000 clones p...
Cocoa is  competitive  with major crops
Putting it all together with cocoa…… an example
THE COCOA CHALLENGE 2020 Annual rate cocoa replanting:  7 million clones per year Tree profile 2020 58 Million bearing tre...
To meet the 2020 Challenge  we need inputs: Major Input supply needs acc to 2020 Equals 9 billion pesos over next 10 years...
Changes in cocoa farmers  for 100,000 t by 2020
3 . How Cocoa farmers get credit now and the problems they face .
Starting premise…. <ul><li>The Gap between micro finance  SUPPLY  and  DEMAND  is huge for cocoa farmers .  (Demand >>Supp...
<ul><li>VERY SLOW UPTAKE OF CREDIT BY FARMERS DUE TO: </li></ul><ul><ul><li>High interest rates (often >18%)   </li></ul><...
WHY the slow UPTAKE??? <ul><li>The CURRENT state of play </li></ul><ul><ul><li>Few farmers have accessed credit services  ...
Some indicative products and conditions Provider Product/ Service Conditions GREEN BANK OF CARAGA Agri Loan type 1 3 years...
4. Aligning CoCoPAL to facilitate micro finance value chain growth for cocoa farmers
Approach of CoCoPal <ul><li>Value chains framework to development:  Cocoa, Coconut and Rice </li></ul><ul><li>Diversified ...
Changing mindsets of farmers <ul><li>Farmers/ farms as MICRO ENTERPRISES, not simply livelihoods or lifestyles </li></ul><...
Value Chain Approach
We plan to work more on… <ul><li>Farmer groups and clusters development for scale and to improve access to MF </li></ul><u...
LBP-ACSP  Cocoa   FOCUS GROUP DISCUSSION May 2011
N.Richards COP ACDI/VOCA [email_address] DAVAO CITY Daghang  salamat
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Nic Richards Presentation

  1. 1. Cocoa Value Chain Growth and Agricultural Finance in Mindanao.
  2. 2. Presentation will cover… <ul><li>Introduction to ACDI/VOCA and its programs in the Philippines. </li></ul><ul><li>Cocoa Industry development opportunities and finance needs to 2020. </li></ul><ul><li>How cocoa farmers get credit now, and the obstacles they face. </li></ul><ul><li>Aligning CoCoPAL to facilitate micro finance value chain growth for cocoa farmers </li></ul>
  3. 3. <ul><li>ACDI/VOCA is an international economic development firm dedicated to improving lives and livelihoods worldwide through </li></ul><ul><ul><li>Agribusiness Systems </li></ul></ul><ul><ul><li>Enterprise Development </li></ul></ul><ul><ul><li>Financial Services </li></ul></ul><ul><ul><li>Community Development </li></ul></ul><ul><ul><li>Food Security </li></ul></ul>A non Profit that means business 1. Intro to ACDI/VOCA …
  4. 4. ACDI/VOCA has Global Cocoa Value Chain experience:
  5. 5. 2. Cocoa Industry development progress, opportunities and finance needs
  6. 6. Recent Philippines Cocoa Development Projects Project/Activity Location Duration Value USD SUCCESS Alliance Phase I Palawan, Nth Luzon, Zamboanga del Norte 2002-2005 USAID: 0.5 million SUCCESS Alliance Phase II Palawan, Nth Luzon, Western Mindanao, Davao City, Panay, Sth Luzon 2006-2010 USDA: 2.6 million CoCoPAL Farming Systems Project: cocoa, coconuts, food crops. Southern and western Mindanao 2010-2013 USDA:5.4 million Project/Activity Location Duration Value USD SUCCESS Alliance Phase I Palawan, North Luzon, Western Mindanao 2002-2005 USAID: 0.5 million CocoaPhil and HVCCDP Palawan, Cebu, Luzon, SMIN 2006-onwards ?? SUCCESS Alliance Phase II Palawan, N & S Luzon, Western Mindanao, Davao City, Panay, 2006-2010 USDA: 2.6 million CoCoPAL Farming Systems Project: cocoa, coconuts, food crops. Southern and Western Mindanao 2010-2013 USDA: 5.4 million
  7. 7. <ul><li>SUCCESS Alliance Philippines Phase II, Jan 2007 to Aug 2009 in the PHILIPPINES. </li></ul><ul><li>15,000 farmer beneficiaries of T&E package in six areas </li></ul><ul><li>179 Trainers trained </li></ul><ul><li>69 nurseries established and supported, with 72 bud wood gardens </li></ul><ul><li>858,000 predominantly cloned cocoa plants distributed </li></ul><ul><li>4985 FFS sessions </li></ul><ul><li>Established 29 demo farms </li></ul><ul><li>400,000 cocoa tees were rehabilitated </li></ul><ul><li>Philippine national cocoa bean quality standards introduced </li></ul><ul><li>Market linkages greatly enhanced </li></ul><ul><li>20 post harvest facilities supported </li></ul><ul><li>Support of DA, LGUs, private sector was enabled, to enhance the project and address sustainability issues </li></ul>
  8. 8. Activity concepts and standards CoCoPAL Project
  9. 10. The Virtues of producing cocoa in the Philippines <ul><li>Cocoa is SMALLHOLDER friendly </li></ul><ul><li>It’s great in diversified farming systems </li></ul><ul><li>It’s has a proven record here </li></ul><ul><li>It offers good income from expanding domestic and export markets </li></ul><ul><li>It’s agro-forestry compatible </li></ul><ul><li>Some income most months </li></ul><ul><li>Different scales of investment are feasible </li></ul>
  10. 11. What the Cocoa Industry needs most now: <ul><li>Coordinated and certified plant production of at least 7,000,000 clones per year, for next 8 years </li></ul><ul><li>Rehabilitation and new improved post harvest processing centres and facilities </li></ul><ul><li>Farmer clustering and grouping for efficiency and scale </li></ul><ul><li>Equitable and low cost finance for input supplies especially seedlings, fertiliser for farmers </li></ul><ul><li>Agribusiness investment and Corporate </li></ul><ul><li>agricultural investment </li></ul>
  11. 12. Cocoa is competitive with major crops
  12. 13. Putting it all together with cocoa…… an example
  13. 14. THE COCOA CHALLENGE 2020 Annual rate cocoa replanting: 7 million clones per year Tree profile 2020 58 Million bearing trees Farmer Profile 2020 130,000 cocoa farmers Cocoa production DBE 100,000 tonnes Value production at USD 2500/t USD 250 million Estimated value major inputs USD 38 million Number of Cocoa Driers 1900 Number Cocoa Fermentaries 270 Number of Organic Fertiliser Facilities 355 Number of cocoa nurseries 2013 65 Number Bud wood gardens 69
  14. 15. To meet the 2020 Challenge we need inputs: Major Input supply needs acc to 2020 Equals 9 billion pesos over next 10 years conservative estimate of inputs needed
  15. 16. Changes in cocoa farmers for 100,000 t by 2020
  16. 17. 3 . How Cocoa farmers get credit now and the problems they face .
  17. 18. Starting premise…. <ul><li>The Gap between micro finance SUPPLY and DEMAND is huge for cocoa farmers . (Demand >>Supply) </li></ul><ul><li>Access to micro finance is poor </li></ul><ul><li>Uptake of MF is slow </li></ul>
  18. 19. <ul><li>VERY SLOW UPTAKE OF CREDIT BY FARMERS DUE TO: </li></ul><ul><ul><li>High interest rates (often >18%) </li></ul></ul><ul><ul><li>Terms and conditions cannot be met by the farmers </li></ul></ul><ul><ul><li>Loan procedures often lengthy and overwhelms the poor farmers, with little education </li></ul></ul><ul><ul><li>Rural borrowers are often overburdened in terms of slow release of funds and higher transaction costs </li></ul></ul><ul><ul><li>Loan features may also restrict farmers like: </li></ul></ul><ul><ul><ul><li>Limited scope of credit (only to a specific commodity, eg. in Davao, many banks only cater to banana growers) </li></ul></ul></ul><ul><ul><ul><li>Collaterals / requirements – borrowers do not have the assets to support their credit </li></ul></ul></ul><ul><ul><li>In some cases, many remote areas lack banking and other institutional facilities and credit services </li></ul></ul><ul><ul><li>Information about credit/available financial services that farmers can access is limited </li></ul></ul>
  19. 20. WHY the slow UPTAKE??? <ul><li>The CURRENT state of play </li></ul><ul><ul><li>Few farmers have accessed credit services </li></ul></ul><ul><ul><li>Those who accessed credit services are usually not the poor farmers </li></ul></ul><ul><li>Poor farmers who have accessed credit services are usually the following: </li></ul><ul><ul><li>Member of an ARB cooperative who have accessed technical/financial support that benefited its members </li></ul></ul><ul><ul><li>As a beneficiary of a program/project that offers financial/credit services for farmers </li></ul></ul><ul><ul><li>There are poor farmers who may have accessed credit from informal providers (neighbors, traders, Bombai) but credits are not usually for production since re-payment period are very short </li></ul></ul>
  20. 21. Some indicative products and conditions Provider Product/ Service Conditions GREEN BANK OF CARAGA Agri Loan type 1 3 years, 5 million, 15%, land title ONE NETWORK BANK Farm loans 18%, land title, for existing crops only, not new crops DEVELOPMENT BANK OF THE PHILIPPINES SEED High Value Crops Financing Programs Priority crops inc cocoa, 10-12%, SEC /CDA registration with land title ENTERPRISE BANK Small Business Loan 18%, with security, 3 mths to 60 mths, numerous reqs to be met LAND BANK Agriculture Credit Support Project (ACSP): Production loan Prevailing comm. rates of interest, short/long term, collateral can include produce (deed of assignment)
  21. 22. 4. Aligning CoCoPAL to facilitate micro finance value chain growth for cocoa farmers
  22. 23. Approach of CoCoPal <ul><li>Value chains framework to development: Cocoa, Coconut and Rice </li></ul><ul><li>Diversified farming systems T&E support </li></ul><ul><li>Market linkages facilitation </li></ul><ul><li>Food security on farm enhancement </li></ul><ul><li>Post harvest support </li></ul><ul><li>Farming as a business framework </li></ul><ul><li>Plant production facilitation: qty, quality, price </li></ul><ul><li>Use of cheaper / safer farming inputs linked to agri-enterprise development </li></ul>
  23. 24. Changing mindsets of farmers <ul><li>Farmers/ farms as MICRO ENTERPRISES, not simply livelihoods or lifestyles </li></ul><ul><li>MICRO ENTERPRISES need MICRO FINANCE </li></ul><ul><ul><li>Business planning </li></ul></ul><ul><ul><li>Financial Planning, Market Development </li></ul></ul><ul><li>ME s can cluster to form SMEs for scale, market opps, effcy. </li></ul><ul><li>START WITH: Farmer Field School Groups </li></ul>
  24. 25. Value Chain Approach
  25. 26. We plan to work more on… <ul><li>Farmer groups and clusters development for scale and to improve access to MF </li></ul><ul><li>Get more involved in the Micro Finance Value Chain, to influence access for farmers and other agribusiness. </li></ul><ul><li>Lobbying institutions for farmer friendly products and loan conditions </li></ul><ul><li>Working with credit providers to engage farmers into formal credit and micro-finance options </li></ul>
  26. 27. LBP-ACSP Cocoa FOCUS GROUP DISCUSSION May 2011
  27. 28. N.Richards COP ACDI/VOCA [email_address] DAVAO CITY Daghang salamat

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