Dr. Nerlita M. Manalili

1. Enhancement Entry Points in the Coconut Value ChainSelected Cases in Quezon Province(A rapid coconut value chain assessment study commissioned by Pakisama under AFA) Dr. Nerlita M. Manalili Managing director NEXUS Agribusiness Solutions Vega Center, College, Los Banos, Laguna

2. Outline • 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. The Study • 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. Study Process

5. Industry situationer

6. Coconut Products among the top 10 Major Agricultural Commodities • Coconut oil (Crude and Refined) • Banana (fresh) • Tuna • Pineapple & Pineapple Products • Dessicated Coconut • Tobacco (manufactured) • Seaweed and Carageenan • Centrifugal sugar • Milk and Cream Products • Fertilizer (Manufactured)

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

8. Region IV, A major Coconut Producer Quezon Province Accounts for more than half of the region’s coconut produce

10. The Primary Concern Coconut Farmers, biggest in Poverty Group

11. In spite of contribution to GVA and Agricultural trade: • Coconut Farmers Form The Biggest Poverty Group • 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. Emerging & Revived Coconut Products Coco Sugar Coco Water Young coconut (Buko) Coco Fiber Others (sugar from shell)

13. Coco Sugar 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. Coco Water • 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 Husks 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. .…there are vast opportunities in farm wastes………… 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. Sugar from coco shell • 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 TsuSho 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. Selected Cases 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. Comparative Cost & Returns • 20 gallons of coco wine per week • sold at P180/gallon • P3,600/week;P14,400 per month gross income • 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 Sap gathered in the evening Sap gathered at 6 a.m. Coco Wine Coco sugar P10, 000.00 annual rent for 65 coconut trees, producing only wine before, now coco sugar is also produced.

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

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

23. Coco Sugar Commercial Operation • 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. Comparative Cost (Buko Marketing) Market tie –up Only Supply arrangement

25. Young Coconut Test Delivery

26. Peter Paul Company • 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 No Market tie –up More of salaried employees

27. Coco Wonder • 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) No Market tie –up More of salaried employees

28. Coco fiber 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 Source: Juliet Escasa, Hagakhakin Gumaca

29. R&D Initiatives Technology Available Quality Standards

30. Available Technology &R& D Initiatives 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. Coconut sap sugar classification

32. Strengthened Positions in the Coconut Value Chain

33. How do we help farmers be integrated in the chain 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

34. Pathways of enhancing farmers’ position in the chain within the Four forms of inclusive chain development 2 4 1 3 Source: Regoverning Market (with modification by NMM)

35. Four Forms of Inclusive Chain Development Enhance quality Add value and Process products Cooperatrive business Product development Branding, marketing Chain activity integrator Chain co owner participating In chain management Chain partner Farmer study groups Specialized activity/ Knowledge & Negotiation Skills get to influence chain decisions Know more about improving Farming systems and quality Of product (to have better Chance at the market and Get better prices) Specialization in farmproduction Source: Regoverning Market (with enhancements by Manalili) NEXUS Agribusiness Solutions

36. Sample Action Plan: Redesign Option for Coconut

37. Strengthened Positions in Coconut Value Chains Integration of Post Farm activities No participation active participant Specializing in Farm production Source: Regoverning Market (with enhancements by Manalili)

38. Questions Asked Other than current livelihood what other initiatives do you need to further improve on your situation How do you see your Community 5 years from now? (other issues) FGD Questions & Outputs • intercropping • ginger, gabi, • rambutann, lanzones • Livestock raising • Ruminants, goat, • native pigs, chicken • (ideas not materializing) • Coco Life • coco levyhildren don’t want to • Go into farming, need to • Look for other • Alternatives, or make • Coconut farming viable • small processing plant • per barangay • Village based mftng • Domestically sold • new coco products • -coco milk • - coco sauce • (copra rejects) • - nata de coco, jam • stable selling of buko • skills devt (identificatn) • Agham sa Pagniiniyog • Certify indiginous • Knowledge • Shellane like fuel prod • (Technical training) Copra Whole Nut Farm gate - traders - market municipal Lucena Any other activities (production, mktg) That you wish to do With your coconut? What stops you from Doing so? your Current products (Major, secondary? How are they sold Brought to market • Product 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 • Training & extension • needed Current with changes Current Entirely new scenario SCENARIO BUILDING Manalili 2002

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