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R 4.1: Cluster Organization Presentation. Farmer Alliances for Resource-Strengthening and Marketing (FARM) Program. Step 4 Cluster Organization. The Clustering Approach to AE Development. 8. Sustained Enterprises. 1. 7.
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R4.1: Cluster Organization Presentation Farmer Alliances for Resource-Strengthening and Marketing (FARM) Program Step 4 Cluster Organization
The Clustering Approach to AE Development 8 Sustained Enterprises 1 7 Site Selection, Partnership Building and Formation of Working Group Test Marketing New Products, New Markets 2 6 Product Supply Assessment and Product Selection Production/Product Supply Organizing New Farmers 3 5 Business Planning and Mobilization Market Chain Study 4 Cluster Organization
Step 2Step 3 Step 4 CLUSTER Organization Product Supply Assessment (PSA) Market Chain Study (MCS) Step 1 Site Working Group (SWG)
Clusters: barangay based small groups of farmers that are the “building blocks” in successful marketing For successful marketing, farmers need to learn new knowledge & skills --- the enabling processes takes place more easily in small groups (e.g. production programming, technology upgrading, quality management procedures, etc)
Farmers Organizing for AE - Clustering Traditional Markets– TRADERS Business partnership in a value chain Alternative Markets (MODERN) Several clusters In cooperation Barangay-based Farmer clusters Individual Farmers Below the line improvements
Why the clustering approach? Understanding the requirements of modern market chains is actually addressing the costs & risks from dispersed small producers: • Consistent Quality • Economical Volumes • Packaging & Traceability • Competitive Pricing • Delivery Reliability ---Through organized growers as barangay based- product supply units---Clusters
Clusters: are the product supply units • 10 to 15 members • Members are self-selected • Decisions are made as a group democratically • Core values: sharing, discipline, commitment, self reliance • Shared goal: • Are in constant communication to help one another – hold monthly meetings • Come up with cluster agreements and impose them
Clusters: in existing farmers organizations versus new structures • Can start as informal and later become formal business entity (such as cooperative) - Cluster leaders become the coop board • As much as possible, work with existing organization to save on time and build local resources and skills - Clusters are special structures within the coop for product consolidation and marketing
Processors Traders JFC Marketing group Tarlac Alabat SWG: LGU. MFI, NGO, Academe Cluster Leader Cluster Leader Cluster Leader Cluster Leader Cluster Leader Cluster Leader Cluster Leader Cluster Leader Informal group: The calamansiagroenterprise clusters
Farmers Organization (COOPERATIVE) CLUSTERS Cluster 1 C3 C4 C2 C6 C5 C7 Formal group: Clusters as part of a cooperative Clusters as special structure for product consolidation and marketing
When is it necessary to form a new organization? If the existing farmer’s coop is beset with serious problems of governance, particularly: • Poor leadership • Weak rules • Lack of recordkeeping • Financial mismanagement • Dominance of a few “influential” individuals or groups
Clusters: Leadership – a cluster should have some or all of the following
Clusters: Agreements • Product Quality to be followed • Product Volume/Delivery Schedule • Contingency Supply (Deficiency) • Product Flow (Farm to Consolidation Point and Labeling) • Marketing service fees to be paid • Capital build-up/savings • Meeting attendance
Cluster Agreement • I, (farmer’s name), of legal age and a resident of (address), am willing to become part of the (cluster’s name) Cluster and commit to: • Contribute (indicate volume) kilos/pieces of (product) to the cluster every (indicate frequency); • Provide more products to cover the deficiency of the other members due to unforeseen reasons; • Follow the production and marketing quality management guide of the cluster; • Pay to the cluster the marketing service fee (indicate %) based on sale value every delivery; • Save the amount of (indicate amount) every (indicate schedule). • Attend all the cluster meetings; • Abide by the decisions and policies set forth by the cluster. • I have affixed my signature below as a sign of my commitment to the cluster. • _________________ • Member • _________________ • Cluster Leader Cluster Agreement
Clusters: Supply Plan • For successful marketing, farmers need to work together to produce and/or consolidate products, and to sell. • The cluster facilitates this with the commitment in the SUPPLY PLAN. • This commitment in the supply plan becomes the basis in the business planning.
For successful marketing, farmers need to work together to produce and/or consolidate products, and to sell. The cluster facilitates this with the commitment in the SUPPLY PLAN
Product Commitment of Cluster Members Coffee Delivery Calendar
Product Commitment of Several ClustersExample: Consolidated Coffee Delivery Calendar
Clusters: Concept of Market Facilitation • Clusters only acts as the “bridge” to connect farmers to the market and business service providers. • The cluster member (farmer) owns the product up to the buyer’s end. She/he gets the price but is also accountable for quality. She/he pays for the marketing costs. • Practice of traceability (through product labeling by cluster and member)
Clusters: Access to Financial Support • Clusters assist MFI Facilitators to secure required loan required documents from cluster members. • Cluster leaders acts as co-maker of loans if so required by MFIs • Cluster leaders eventually prepare proposal for financing access • Cluster leaders act as disbursement and collection officers of farmer individual loans.
Clustering: Not for all farmers! • Farmers satisfied with their own local market • Farmers not comfortable working in a group • Farmers that are physically isolated, collective marketing difficult to establish • Farmers with no surplus for marketing (farm production just for household needs)
Step 4- Cluster Organization Facilitator’s Process Guide Rpt 012 - Cluster Record