Meeting the Challenge

Linking Small Vegetable Farmers to the Mainstream Markets

Presented by: Joan C. UyChair, Resource Mobilization Committee, NorminVeggiesandPresident/Gen. Manager, NORMINCORP

(service)• 114 producers

• Small growers (independent)

• Small farmers groups

• Corporate farms

• Input/service providers

• Academe

(Northern Mindanao Vegetable Corp.)

“NORMINCORP”

(Marketing)

cabbage carrots

lettuce

tomato

strawberry

CLUSTERS

broccoli

LEGONG ProjectVegetable Growers (Municipality of Impasug-ong, Bukidnon Province, Philippines)

Core Group of vegetable farmers in 4 barangays (villages)

Marketing Services (Northern Mindanao Vegetable Corp.)

“NORMINCORP”

Infrastructure

KAANIB Foundation

Lutheran World Relief (LWR)

Kauyagan Savers CoopLeverage Fund/

Financing

•Mgt. Assistance•Input Source/Credit•Techno devt.•Prodn & Post Harvest

Mainstream market access of small farmers to increase income and reduce poverty with NorminCorp

NorminCorp Key Products Independent Growers

Small Farmers

Iloilo

Zamboanga

Gen. Santos

Product Flow thru NorminCorp‘s marketing facilitation

“A good market is the key to increase farm income”

Unsorted, unwashed, packed in sacks

Washed, air dried, sorted, packed in boxes, sweet tasting varieties, deep orange color and small inner core

Last week’s prices; May 2005 (Php/kg.) 10.00 – big08.00 – med06.00 – standard04.00 – small02.00 – super small

Wet market Supermarket Distributor (e.g. Iloilo)

18.00 – big/med13.00 – small

Vegetable Markets

Wet/Mass Market•Agora (Cag. de Oro City)

wholesale traders •Retail wet market stall

operators

Numerous, dispersed traders

Arbitrary quality standards

Highly fluctuating prices

Spot trading (fluctuating volumes)

Vegetable Markets

Institutional Market(Differentiated Market)

• Fast food/Quick service establishments

• Hotels and restaurants

• Food distributors (supermarkets, hotels & restaurants)

• CaterersBig name customersWell defined, clear quality

specsWith Quality Control

procedures for acceptance/rejection

Needing vegetables with regular frequency and long-term arrangements

The concept of best value

Institutional Market

Growers

Buyers: who among the growers/suppliers would give the best value?

• Quality – Recovery

• Delivery & Reliability – Timeliness

• Prices – Value for money

Implication: “Quality management and operational efficiency needs to be established at the farm & post harvest concerns”

Growers: Does quality Management and operational efficiency give best value? Is it worth doing the work?

“$?”

The Value Chain Analysis

Farmgate Price

Labor

Packaging

Transport

Freight

Facilitation Fee

Buying Price

The Institutional Market is the driving factor in developing a value chain system

Wet Market price

Added Value

NorminCorp is just a facilitator. Since grower is given the buyer’s price, he/she is accountable for the product up to the buyer’s end.

Transport/Cold Storage

transport Packing Shed Post harvest tools,

packing & labeling materials

Harvest containers, tools

Fertilizer, insecticide/ fungicide, bio-con, irrigation

Seeds/seedling medium

Tools/Equipment

“Quality Assurance

Plan (QAP)”

Transport for Consolidation

Hauling/Sorting/Grading Packing

Harvesting

Cultural Management

Planting/Transplanting

Land Preparation

Market

Roads Irrigation Communications System

Financing

Getting growers’ acts together through the Clustering approach

A grouping of producers who undertake a common marketing plan for a particular products for identified market

It is product based

It is a strategy to respond to the challenge to transform fragmented, smallholder farm production to market-focused and highly competitive business operations

Buyer’s visit

In the cluster, growers share best practices to attain a relatively homogenous quality of products

Land prep

Thorough land prepPlastic Mulch

BedsMulch

Nursery

Plastic Seed Tray

Indigenous seed trays

Irrigation

Flooding

Sprinkler

Drip irrigation

Watering

Tropical Rain shelters

Trellis Open field

Planting

Compost

Harvest

Post Harvest

Packing House

Sorting, cleaning, treatment

Packing

Packing

Transport from the farm

Regular Truck

Reefer Truck

Animal Hauling

Transport for outshipment(Manila, Cebu, Etc.)

Break BulkClosed Container Van

Reefer Van Perforated Container Van

When we assist small farmers, we confront these production and postharvest situations

Lack of Integrated Pest Management (IPM)

Production

Lack of irrigation

Choice of plant varieties not always preferred by buyers

Post Harvest

Transport

The Challenge to transform small farmer’s practices …

From this To this

Steps in Assisting Small Farmers 1/3

1. Organization of a core group in a barangay (village)

2. Data gathering at the production site:- products - production practices- cost - yields- prices - buyers & market players- the growers (area) - Resources & limitations

3. Shortlist five (5) main products

Steps in Assisting Small Farmers 2/3

4. Data gathering beyond the production site (Market)

5. Show quality management to reach the market

opportunities (product match with potential buyers) Analyses of the four(4) areas of enterprise to screen

the most promising products Selection of two(2) to three(3) promising products

Objective: raise awareness for the needed work to be done (responsibility for quality)

Objective: raise awareness for the need to work together (core group Cluster participation)

Steps in Assisting Small Farmers 3/3

6. Decision point: Core Group joins the Cluster vis-à-vis NorminVeggies

7. Development interventions

• Budget per economic module• Production protocol and QAP “what to do in the farm”• Production scheduling for the group (harvest calendars)• Cost and returns (packing lists, farmers’ ledgers)

a. Tools

b. Creditc. Extension

• Farm visits (visit cluster areas)• Technical assistance (production guide)• Trainings

d. Marketing assistance

Conclusions

A good market is the key to increased farm income, a viable farm enterprise, and for small farmers, poverty alleviation

Institutional markets provide the good market because they give growers the opportunity to develop a value chain system that brings additional earnings

Conclusions The value chain system

empowers growers for they own the product up to the buyer’s end. But with it is the corresponding accountability for the output in terms of quality and delivery reliability

The key to success is constant innovation that increase quality, build operational efficiency and lower cost, and also the management of the relationship among supply chain participants

• Growers• Service providers• Buyers• Development partners

(government and private)

Conclusions Meeting the challenge to

link small farmers with the institutional markets require development interventions that build their capacities for new or expanded production with value addition:• Technology

• Management assistance in production and post harvest

• Input sources (credit)

• Market linkage and services)

ConclusionsThe clustering approach of NorminVeggies where small farmers can exist side by side with the independent, better-resourced growers provide the “short-cuts” for farmers to build competencies.

They can enjoy the advantage of collective know how, resources, and market contacts, otherwise, inaccessible to small individual growers.

CONCLUSIONSTo be a significant market player,

Size is not everything!

• We can be small but act large through the cluster (volume growth)

• We can be small but act sophisticated relative to institutional market demand (value growth)

Thank you