Clustering Small Vegetable

Producers for the Big, Urban

Markets

Business Development Service Workshop

May 14-16, 2008 (Sugarland Hotel, Bacolod City)

Joan C. Uy
Vice-President for Marketing, NorminVeggies
Marketing Consultant, Catholic Relief Services

Jessan Catre
Agroenterprise Specialist and Project Team Leader, Catholic
Relief Services
 Content

1. NorminVeggies Experiences
2. Clustering as a Response to Market Challenges
3. Inclusion of Small Farmers
4. The Case of CRS Assistance to Small Farmers in
partnership with the NGOs and the LGUs
5. Synthesis - Learnings
6. Suggestions for Action
2/6. Clustering is a Response
to Market Challenges
The Market Divide
Fastfood chains

Processors

Hotels & Restaurants

Supermarkets

Consolidators

Traditional Market - Traders Modern, dynamic market chains

THE VEGETABLE SUPPLY CHAIN

The
traditional chain (wet market)
where the traders dominate

 About 80% of growers nationwide

Butthere is a new trend – The modern

chain is emerging driven by increasing
urban consumers with higher incomes
and changing lifestyle.
 Modern markets

Supermarkets

Fastfoods

Hotels & restaurants

Institutional markets –
consolidators/distributors, processors, caterers

Specialty markets – organic, fair trade
Understanding the Requirements of a
Modern Market Chain

PRODUCT QUALITY
(High Recovery)

Quality became our unique selling point to

differentiate our growers.
The usual handling in
Agora Wet Market
NVCC Handling
NorminVeggies handling for the
consolidators servicing institutional buyers

At the Farm
Emphasis is on Quality
Handling at the Farm

At the Farm
 Understanding the Requirements of
a Modern Market Chain

Not just quality but also …

Quantity – Economical Volumes

Competitive Pricing

Reliability – Production Plans,
Postharvest management, Good
Communication, Discipline (Boils down
to good organizing)
---Clustering---
Opportunity: The buying power of modern markets
& the possibility of supply chain cooperation

Implication:
“Those who are not organized will be left out
(dependent only on the traditional market
chain)”
 Implication:

Those who are organized and are willing to

make adjustments in their farm production
activities to be able to supply quality and
volume with reliability and competitive price
offers can participate in the modern chains.
What is clustering?

Market

Individual growers who commit to work

together for an agreed market and
become a product supply unit.
 Grouping of 5-15 growers who commit to
undertake collective marketing and to
follow a common quality management
plan.

It is product-based

The cluster is a “product supply unit”

Strong emphasis on commitment and organizational
discipline to deliver quality, volume on the schedule as
promised
Lettuce Cluster
Diversified Product Cluster
 Quality Management Plan” that guides a
grower in every cluster
Market Transport/Cold Storage

“Quality
Management Transport for Consolidation  transport
 Packing Shed
Plan (QMP)”  Post harvest tools, packing
& labeling materials
Hauling/Sorting/Grading
Packing
Harvest containers, tools

Harvesting
Fertilizer, insecticide/
fungicide, bio-con, irrigation
Cultural Management

Seeds/seedling medium
Planting/Transplanting

Land Preparation/Seedling Prep Tools/Equipment

Dalan Irrigation Communications Financing

System
Benefits for the growers

Better bargaining power
 quality
 volume & variety
 regularity

Diversified and more predictable markets
 Traditional
 Modern

Better income
 Higher price
 Reduced losses/higher recovery

Better relations among growers

Good image in the business community for
the small producers
1/6. NorminVeggies
Experiences
Location of NorminVeggies
members in Northern Mindanao
Sugbongcogon
Gingoog City

Claveria

Opol
Libona
Baungon
Iligan City
Talakag
Manolo Fortich

Lanao del Norte Sumilao

Tubod, Lanao del Norte Impasug-ong
Marawi City
Malaybalay City
Valencia City
Lantapan

Maramag

Kibawe

Farm locations of
NorminVeggies members
The organization: Northern Mindanao Vegetable
Producers’ Association, Inc. (NorminVeggies)

Why was it organized?

Provide venue for growers to
interact with the intention of
increasing income.

Relate with government and private
resource groups in an organized
way.

Be involved in the pro-active
development of the vegetable
industry.
Membership - 85

Producers
 Independent Growers
 NGOs & POs– Small Farmers

 Corporate Farms

Input/Service Providers

Honorary Members
 Producers in Collective Marketing

Independent growers
o Financially independent & have
other sources of income
o Small & medium sized firms
o Can access technologies
o High educational background
o More confident to take risks

Small farmers
o Farmer owned & family operated farms
o Need assistance to access technologies,
financing and markets
o Assisted by NGOs and LGUs (e.g. a
CRS pilot project in Bukidnon with
Kaanib Foundation, Inc.)
 (service)

•Independent growers

•NGOs & POs-

(Small farmers)
(Marketing)
• Corporate farms
CLUSTERS
• Input/service
Sweet pea Lettuce Squash Wongbok providers
Tomato Cabbage Bell pepper
•Honorary members
Weekly Cluster Commitments
(July 2007 onwards)

Current
Commodity Cluster Weekly Target (Kgs.)
Production
Iceberg Lettuce 6,000 4,200
Cabbage 30,000 20,000
Chinese Cabbage (Wongbok) 12,000 10,000
Sweet Peas 600 250
Baguio Beans 3,000
Bell Pepper 1,000 1,000
Salad Tomato 700 700
Broccoli 300 150
Bitter Gourd (Ampalaya) 3,000 2,000
Sweet Pepper 3,300 1,500
Cucumber 1,800 1,000
Eggplant 2,200 1,700
Table Tomato 10,000 2,500
Squash 16,000 8,000
Total 89,900 53,000
Products from Marketing Clusters
Independent Grower’s capabilities

Small Farmer’s capabilities

 Dualistic Vegetable Supply Chain

Market Agent Local Trader/

“dicers” assembler Wet market
Wholesalers
Vegetable Grower

Consumers
 Supermarkets
Local Trader/  Hotels &
assembler Consolidators
Restaurants
 Fastfood
chains

Processors
Objective: Participation in both the
traditional and dynamic supply chains.
Wet Market
(Wholesaler)

Wet Market
Retailers

NorminCorp Consolidators
NorminVeggies (Market (for institutional buyers:
Members Facilitator)
hotels, restaurants,
supermarkets)

Processors
(Fastfood chains)
NVCC – POSTHARVEST FUNCTIONS

•Storage
•Order taking
•Sorting
•Packing
•Facilitate shipping
•Billing & collection
•Payment remittance to growers
•Price monitoring

growers pay service fees

 NorminVeggies
(Operating Capital, lease and
Building Improvement)
247,700.00 ,
Dept. of 27%
Agriculture
(Building & planning)
GEM-USAID
525,000.00 , (equipment & counterpart
58% support for 1 staff)

140,000.00 ,
Note: Additional DA & GEM Support in the Pipeline
Computerization 15%
1 ton Digital Weighing Scale
Cold Rooms & Packaging Materials (Crates)
NVCC Market
Destinations:

Luz metro manila MM

Vis cebu, iloilo, bacolod,

bohol, tacloban,
dumaguete, ormoc bor
tac
orm
Min camiguin, gingoog, ilo2 bac

butuan, surigao, ceb

boh
sur
dum cam
iligan, ozamiz, but
dip
dipolog, pagadian, ign
pag
zamboanga, jolo zam

jol
3/6. Inclusion of the
Small Farmers (the
Experience of CRS in
organizing vegetable
farmers for marketing
(clustering approach)
Situation & Challenges to Farmers

Rapid market changes – farmers are

not prepared to respond

 Farmers need new knowledge, attitudes,

skills and approaches to successfully
engage the market
Development Challenge
Situation

Farmers are production-focused, not
market-oriented

They need new knowledge, skills, ways of
doing things

Challenge

Preparing farmers for market engagement

Linking farmers with dynamic, modern

markets
 AGROENTERPRISE

Farm + Business

Not just farming.

But farming profitably.
And working with markets.
CRS Phils. has started to provide the
appropriate development interventions through
the Agroenterprise Clustering Approach that
helps increase the level of capacity of small
farmers.

This has brought the opportunities of modern

market chains within the reach of small
farmers.
Small Farms Marketing Project (SFMP)
Funded by the USDA

3,500 farming households assisted

to:

 Increase the productivity of

their marketable farm products
 Participate actively in the
market chains
 SFMP Project Sites

Mindanao Impasugong,
Island Bukidnon
Kaanib Foundation, Inc.

Siay, Zamboanga Maragusan,

Sibugay Compostela Valley
Xavier Agriculture Kasilak Development
Extension Service Foundation, Inc.

GSKP and Paglat,

Maguindanao Davao City
Kadtuntaya PCEEM Davao
Foundation, Inc. Foundation
Products
Siay, Zamboanga Sibugay Impasugong, Bukidnon

Maragusan, Compostela
Valley

Datu Paglat & SK Pendatun, Davao City

Maguindanao
Squash Agroenterprise Cluster
Impasugong, Bukidnon

Manila & Cebu NVCC - Agora Roadside Market -

(Supermarket Consolidator) (Outshipment/Local Buyers) Impasugong

NorminCorp
(Market Facilitator)

Partners: Kaanib Fdn.

Cluster Leaders CRS, LGU Impasugong,
NorminVeggies

Poblacion La Fortuna Kalabugao NorminVeggies

 Wet Market
NorminVeggies
(Wholesaler)
Independent Growers
 Sweet Pepper
 Lettuces Wet Market
 Cabbage Retailers
 Sweet Pea
 Squash NorminCorp
(Market Food
Small Farmers Clusters Facilitator) Processors
Sweet Pea Clusters
Squash Clusters
Supermarket
Consolidator

Kaanib
Fdn.
Step 1: Partnership Building
Working group formation (LGU, NGO, business, etc)
Orientation & planning sessions
Step 2: Product Supply Assessment &
Product Selection
Trainings on participatory action research
Data gathering and analysis
Selection of Products
 Step 3: Market Chain Study

Training on market chain study and use of tools

Market visits
Participatory analysis of research results
Initial market negotiation
Step 4: Cluster Formation

Inputs on Marketing Basics

Orientation on clustering
Leadership identification
Visioning
Step 5: Cluster Plan Formulation

Agroenterprise planning
Operational planning
Product/supply programming (with technologies)
Step 6: Test Marketing

Enabling financial assistance (innovations

& quality management)
Assessment sessions
Step 7: Scaling Up

Review of cluster plans and adjustments

Installation of business operating systems
Regular product supply
Step 8: Cluster Strengthening

Regular meetings
Task-oriented trainings
Periodic assessments & reflection
Networking (with other clusters & partners)
5/6. Synthesis - Learnings
 Learnings

The biggest strength is in the combination of the

independent growers and small farmers.

• The small farmers • The independent growers with

have production financial base and access to
potential because of technologies and market
their number and provide the internal muscle for
spread the marketing enterprise to take
off.
Thank You