Enhancement Entry Points in the Coconut Value Chain (Selected Case Studies in Quezon Province)

1. Dr. Nerlita M. Manalili
Managing director
NEXUS Agribusiness Solutions
Vega Center, College, Los Banos, Laguna

2.  Background and Process of the Study
 Industry Situationer
 The Primary concern
 Emerging Products
 Selected Cases
 Constraints and Potentials
 Possible entry points
 Strengthened positions in the Coco chain
 Validation of Identified Options: built Scenarios
 Concluding Remark

3.  Done In preparation for a Regional Knowledge
Sharing workshop on enhancing farmers’ market
power in the value chain in Asia (AFA’s initiative)
 About successful (and promising) cases of
marketing arrangements in a commodity chain
 Focus on selected coconut value chain in Quezon
( the intention is one that will later on be
applied/adopted or out scaled in the near future)

4. Secondary
Information
Scenario
Building
Assessment
& Validation
Process
Key
informant

6. 1. Coconut oil (Crude and Refined)
2. Banana (fresh)
3. Tuna
4. Pineapple & Pineapple Products
5. Dessicated Coconut
6. Tobacco (manufactured)
7. Seaweed and Carageenan
8. Centrifugal sugar
9. Milk and Cream Products
10. Fertilizer (Manufactured)

7. Philippines - 2nd largest producer in volume & value

8. Quezon Province Accounts for more than half
of the region’s coconut produce

10. Coconut Farmers,
biggest in Poverty Group

11.  Coconut Farmers Form
The Biggest Poverty Group
In spite of contribution to GVA and
Agricultural trade:
 Income From Copra is P900-
P1000 per hectare/month
 With 2 Hectare Ave. per
Family of six, Income per
month is P2,000
Source: Dr Justino Arboleda

12. Coco Sugar
Coco Water
Young coconut (Buko)
Coco Fiber
Others (sugar from shell)

13. 92.78 percent increase in 2011 exports volume of coco sap
sugar with 70,000 kilograms (km) compared with 36,310 km
in 2010.
Tremendous leap of 224.20 percent increase in exports
volume from a low of 11,200 km in 2009 compared with
2010 figures.
“Exports was driven by global health concerns specifically
diabetes and obesity,” the PCA Administrator bared. The
World Health Organization (WHO), 2011 statistics revealed
that 346 million people are diabetic worldwide.
Coco sap sugar has a low glycemic index (GI) of 35 compared
to regular cane sugar, thus it can be recommended for
diabetics (FNRI, DOST).
Exported to 11 countries namely: Japan, USA, Middle East,
Korea, Hongkong, Norway, Canada, Switzerland, France,
Australia, and New Zealand. Among these countries, USA
ranked as the number one exporter (PCA).

14.  second biggest non-traditional export
USD1.445 million from sale of 1,450,129 liters.
 United States was major destination controlling
969,164 liters or 66.8% of total business (PCA)
 Said to be cost effective in bigger scale of
operation
 Need to be processed immediately to avoid
spoilage

15. Coco husk as goldmine –
 Philippines produces 15 billion nuts a year,
meaning also 15 billion coconut husks.
 Only a very small portion of this is processed
into something of value. In fact the Philippines
exports only about 4,500 metric tons of coconut
coir a year.
 Kerala, India earns $600 million a year from
different products out of coconut husk.
 PCA

16. Largest Farm Waste
in the Philippines
8 Billion Husks are
burned or thrown
away
3 Billion Husks
Used as Fuel to
make Copra
Source: Dr Justino Arboleda

17.  a new kind of coconut sugar can be extracted from the
shell of mature coconut? It looks unimaginable but the fact
is that a P2-billion company has been set up at the DADC
Economic Zone in Sta. Cruz, Davao del Sur, to produce the
novel product.
 The company is called CJ Toyota Tsu Sho Philippines, Inc.,
said to be a joint venture of Japan’s biggest car company
and a Korean partner. The company has a huge processing
facility that was inaugurated about a couple of months
ago.
 The product is called Xylose coco sugar and is said to be
for export to Japan and Korea. The product comes in very
fine powder form that is immaculate white. It is very sweet
and is said to be used for the manufacture of toothpaste,
chewing gum and possibly other products that need
sweetener.
Source: Zac Sarian
Agri Plain talk

18. Coco sugar
backyard ( Armida Monghe)
commercial (Pasiolco Agri Ventures
Young coconut
Peter Paul Phils Corp
Coco Wonder
Coco Coir (husks)l

19. Armida Monghe
Coco Sugar Producer
Lopez, Quezon
Rosauro Monghe
Coco Wine (Tuba) Producer
Lopez, Quezon

20. Coco Wine
 20 gallons of coco
wine per week
 sold at P180/gallon
 P3,600/week;P14,400
per month gross
income
Coco sugar
 2 gallons coconut sap = 1
kilo coco sugar
 Sold at P250/kilo
(produce 4 times a week
 P1,000/week; P4,000 per
month gross income
P10, 000.00 annual rent for 65 coconut trees,
producing only wine before, now coco sugar is also produced.
Sap gathered in the evening Sap gathered at 6 a.m.

21. Pascioclo Agri Ventures
Maureen Pasciolco , Owner
Tiaong, Quezon

22. Producer
Producer
Wholesaler
/Retailer
Lopez Tiaong
Production trial & error procedural- own /contract out
4-5 hrs cooking 6hrs -10 hrs cooking
Selling price P250/kilo selling price P280n -320/kilo
Ordinary plastic packaging specialized packaging
no brand branded
What
Account for
differences
Market
Knowledge/In
fo
Technical
know how
Packaging
Production cost ??? Production cost < 190/kilo
Non Quezon
Producer/Wholesal
er
Organic, package
sizes local, export
Limited market there is market

23.  initial investment of P1.42 million.
 annual net profit of P201, 762.48.
◦ Based on the projected 10-year income
statement and cash flow, before financing
◦ income is realized at first year of operation
◦ initial investment fully recovered in 3.64 years.
Source: PCAARRD

24. UGMA URBAN Poor
Selling price P12 20-25 (22,5)
No of Pcs 2,000 2,000
Revenue P24,000 P 45,000
Cost buko
P 6-9 = 7.5
15,000 P 24,000
Hauling
transpo (elf – 7,000pcs) 8,500
Hauler.driver 850.00
Storage P1.00/nut 2,000
Concerns
High Reject - Improper selection of
young coconut - (training needed)
Appropriate tool
Storage
Short supply
(specially with
rejects)
High transpo cost
(maximize load/trip

25. Train harvesters
Ensure
consistency of
delivery
Ensure continous
supply
Target transpo
cost efficiency
UGMA
Collection
efficiency to
enusre timely
payment
Manage storage
concern to reduce
unnecessary
overheads
Target for just in
time delivery to
avoid shortages
and overstocking
URBAN
POOR

26.  Have buying stations with accredited farmer
supplier per station
 Usually sourcing coconuts from Catanuan,
Calauag, Padre burgos, Bondoc Peninsula &
Lopez
 Have one coop currently supplying the Co.
(could be a future possibility

27.  Private Enterprise Working with a group of small
farmers and local workers in the provinces.
 built small Processing Facilities in Provinces of
Luzon, Visayas and Mindanao providing livelihood
to small farmers and local workers.
 We implement sustainability-oriented on organic
farming, quality and farm productivity improvement.
Some percentage of sales are given back to the
farmers as incentives in form of organic fertilizer,
coconut and cacao seedlings in order them to plant
more and some are provided with monetary
incentives to promote continues organic farming
activity.
 More of salaried employees (not cooperative)

28. Source: Juliet Escasa,
Hagakhakin Gumaca
Utilizing coco waste for fiber
Income from Labor:
P1.50 /coi about 20-30 pcs/day
P550 /10 meter net,
2 persons in a day
P275/person/day

29. Technology Available
Quality Standards

30. Oven Type Drier - produce white hygienic copra
(Copra) P200,000 – 250,000 investment
250 kg/day capacity(C/o Coco wonder)
Ohmic heating method - pasteurization of Coco water
(coco water) P2.3 million budget alloted in
2013 for laboratory scale
research on a pre-processing
method for coconut water to
minimize production loses due
to fermentation & mishandling.
Coco Sap Sugar - Hands- on Training offered
by Pasiolco Agri ventures
Coco fiber - Dr. Justino Arboleda of Bicol
offering technical assistance

31. Classification Specification Tolerance
Premium (superior
quality)
Cream to light yellow
Moisture content is <4%
5.0%
Class I (good quality) Light brown to brown
Moisture content is not >4%
10.0%
Class II Includes the coconut sap sugar
that did not qualify as Class I
and premium but satisfied the
minimum requirements of the
product standards
10.0%

33. In terms of activities
 To improve on his current
segment as chain participant
 To add more activities and
move to other chain
segments
(if within their competencies)
Vertical integration
In terms of coordination
& management
 To participate in decision
process
 In setting norms and
standards
 Through innovation
Horizontal Integration
33

34. 34
Integration
of post-farm activities
no
participation in
chain
Management
CHAIN
Activity integrator
CHAIN
(CO-) OWNER
participation
in chain
mnagement
CHAIN
Participant
CHAIN
Partner
Specialization
in farm production
Source: Regoverning Market (with modification by NMM)
1
2
3
4

35. Chain activity
integrator
Integration
of post-farm activities
no
participation
in chain
Management
CHAIN
(CO-) OWNER
Chain
Participant
CHAIN
Partner
Source: Regoverning Market
(with enhancements by Manalili)
Know more about improving
Farming systems and quality
Of product (to have better
Chance at the market and
Get better prices)
NEXUS Agribusiness Solutions
Enhance quality
Add value and
Process products
Chain co
owner
Chain partner
Cooperatrive business
Product development
Branding, marketing
Farmer study groups
Specialized activity/
Knowledge & Negotiation
Skills get to influence
chain decisions
Specialization
in farm production
participating
In chain
management

36. Objectives Strategies Entry Points Identified
Market
SC Model
1.Chain
Optimization
Increase capacity to
comply with standards
to ensure quality
 Continuous farmers’
training
 Farmers’ Commitment
to adhere to good
agricultural Practices
Sustain farmers
education and
value formation
through NGOs
collaborative
assistance to
farmer groups
Modern
retailers (like
supermarkets
hypermarkets,
groceries,
specialty shops)
Coco Sugar
Pasiolco Agri
Ventures
Coco fiber
Dr. Arboleda
2.Integral Chain
Care
Meet grade/certification
requirements (organic)
Quality
 of international
standards
Organic
Certification
Continuous
quality upgrading
Quality - user-
recognized
Modern
Retailers
Export markets
Coco Wonder
Pasiolco Agri
Ventures
Coco fiber
Dr. Arboleda
3.Chain
Differentiation
Premium Positioning
New marketing concepts
E- commerce
Agency selling
Well
differentiated
Product/product
delivery system
International
Markets
Institutional
Markets
Coco wonder
Coconut house
Ugma-Urban poor
model
Sample Action Plan: Redesign Option for Coconut

37. • Chain
partner
• Chain
Participant
• Chain co-
owner
• Chain
Activity
Integrator Enhance quality
of copra
Add value
(sugar, sauce,
juice
Cooperative
Branding
Innovative
marketing
(Buko Alliance
Farmer study
Group
Agham sa
Pagniniyog
Improve on
production
Farm mgt
Intercropping
Specializing in Farm production
Integration of Post Farm activities
No participation active participant
Source: Regoverning Market (with enhancements by Manalili)

38. Copra
Whole Nut
Farm gate
- traders
- market
municipal
Lucena
Current Current with changes Entirely new scenario
oProduct enhancement
• Explore new methods
- of Cooking copra
(standard coco drier
PCA, DOST DTI)
- processing coco milk
centrifugal
- of trading (copra,buko,
•Product development
-Sauce, Juice, sapal
--coconut virgin oil
-Ubod ( program planting
oTraining & extension
needed
o intercropping
• ginger, gabi,
• rambutann, lanzones
oLivestock raising
• Ruminants, goat,
• native pigs, chicken
(ideas not materializing)
oCoco Life
• coco levyhildren don’t want to
Go into farming, need to
Look for other
Alternatives, or make
Coconut farming viable
Other than current
livelihood what other
initiatives do you
need to further
improve on your
situation o small processing plant
per barangay
o Village based mftng
oDomestically sold
new coco products
-coco milk
- coco sauce
(copra rejects)
- nata de coco, jam
o stable selling of buko
skills devt (identificatn)
oAgham sa Pagniiniyog
oCertify indiginous
Knowledge
oShellane like fuel prod
(Technical training)
How do you see
your Community
5 years from now?
(other issues)
SCENARIOBUILDING
FGD Questions & Outputs Questions Asked
Manalili 2002
your Current
products (Major,
secondary?
How are they sold
Brought to market
Any other activities
(production, mktg)
That you wish to do
With your coconut?
What stops you from
Doing so?

39. Concluding Insights
No existing marketing arrangements (beyond
the usual arms length buyer seller relationship
were observed in the coconut commodity chain,
given the selected cases studied.
though there are a number of promising buyer –
farmer supplier relationship if given proper
impetus for development, (brokering-in, guidance,
collective marketing, enabled environment