Farmer Alliances for Resource-Strengthening and Marketing (FARM) Program

1. R4.1: Cluster Organization Presentation Farmer Alliances for Resource-Strengthening and Marketing (FARM) Program Step 4 Cluster Organization

2. 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

3. Step 2Step 3 Step 4 CLUSTER Organization Product Supply Assessment (PSA) Market Chain Study (MCS) Step 1 Site Working Group (SWG)

4. 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)

5. 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

6. 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

7. Guidelines for Clusters

8. 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

9. 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

10. 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

11. 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

12. 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

13. Clusters: Leadership – a cluster should have some or all of the following

14. 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

15. 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

16. 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.

17. 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

18. Product Commitment of Cluster Members Coffee Delivery Calendar

19. Product Commitment of Several ClustersExample: Consolidated Coffee Delivery Calendar

20. Sample of Supply Plan

21. 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)

22. 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.

23. 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)

24. Step 4- Cluster Organization Facilitator’s Process Guide Rpt 012 - Cluster Record