agribusiness roadmap february 2009

Private Sector Promotion (SMEDSEP) Program

Agribusiness RoadmapDraft for Discussion | February 2009

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AuthorsLydia Martinez [email protected] Mojica-Sevilla [email protected]

ResponsibleUwe Sturmann [email protected]

PublisherThe Private Sector Promotion ProgramSMEDSEPsmedsep.ph

10F German Development CenterPDCP Bank Center BuildingV A Rufino St cor L P Leviste StSalcedo Village, Makati City 1227PHILIPPINES

Volker Steigerwald, Program [email protected]

February 2009

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Private Sector Promotion (SMEDSEP) Program

Agribusiness RoadmapDraft for Discussion | February 2009

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Contents Overview ................................................................................................................. 4

Background .......................................................................................................... 4

Objectives ............................................................................................................ 4

Guide for LGUs in Assessing the Potential of and Enhancing the Competitiveness of Agri-business Activities in their Locality .................................................................. 5

Step 1: Ascertain Public and Private Sector Commitment to Competitiveness Initiative in Agribusiness through LRED ................................................................ 7

Step 2: Conduct Participatory Resource Assessment or Rapid Economic Assessment (REA) for Agribusiness Development ................................................. 8

Horticulture .................................................................................................... 11

Agronomy ....................................................................................................... 13

Livestock/Poultry ............................................................................................ 16

Fisheries and Aquaculture ............................................................................... 18

Step 3:Value Chain Analysis by Commodity/Industry Cluster .............................. 26

Step 4: Formulation of Strategic Objectives for Competitiveness ........................ 30

Annexes ................................................................................................................ 31

Annex 1 Industry Cluster Framework ................................................................. 32

Annex 2 Mango Agro-Industrial Cluster Framework ........................................... 33

Annex 3 Banana Agro-Industrial Cluster Framework .......................................... 34

Annex 4 Rubber Agro-Industrial Cluster Framework .......................................... 35

Annex 5 Feed Hogs Agro-Industrial Cluster Framework ..................................... 36

Annex 6 Tuna Agro-Industrial Cluster Framework .............................................. 37

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Figures Figure 1 4-Step Approach in Assessing Potential and Enhancing Competitiveness ... 6 Figure 2 Schematic diagram of working group members and their linkages. ............ 9 Figure 3 Illustration of Resource Map .................................................................... 24 Figure 4 Schematic Supply Chain ........................................................................... 26

Tables Table 1 Convening Agent and Commitment ............................................................ 7 Table 2 Horticulture Attributes / Pillars ................................................................. 12 Table 3 Cereal Crops Attributes/Pillars .................................................................. 14 Table 4 Industrial Crops Attributes/Pillars ............................................................. 15 Table 5 Livestock and Poultry Attributes/Pillars ..................................................... 17 Table 6 Fisheries/Aquaculture Attributes/pillars ................................................... 19 Table 7 Other Attributes that can Provide LGUs Comparative Advantages .............. 20 Table 8 Key elements of a Resource Survey ........................................................... 23 Table 9 •Examples of Strategic Objectives ............................................................ 30

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Overview

Background The National Competitiveness Council (NCC) is a public-private partnership created through Executive Order No. 571 Series of 2006 with the primary objective of improving the Philippines’ standing in international ranking projects (i.e., IMD, World Economic Forum) from the bottom third to the upper third by 2010.

The NCC is co-chaired by Secretary Peter Favila of the Department of Trade and Industry and Former Ambassador Cesar Bautista. The NCC has focused its efforts on six areas of competitiveness which are expected to bring about the intended results, which include:

a. Transaction costs and flows b. Efficient public and private sector management c. Infrastructure d. Energy Efficiency e. Human Resource Management f. Improving access to financing for small and medium enterprises (SMEs)

As part of its activities under the Efficient Public and Private Sector Management Working Group, the NCC organized the Local Government Unit (LGU) Conference last October 8-9, 2008, with the theme “Harnessing LGU Leadership for Sustained Philippine Competitiveness”. The objectives of the event are to:

a. Work towards a common acceptance of the concept of competitiveness as applied to LGUs;

b. Showcase best practices in attaining competitiveness; and c. Forge commitment to action by the government, both national and local, and

the private sector to vigorously pursue the objective of improving the competitiveness of the country in order to promote economic growth in general and local economic development in particular.

Objectives The GTZ Private Sector Promotion Program (SMEDSEP) is provided support to the NCC in carrying out the LGU Summit, specifically in the development of a guide for assessing LGU competitiveness in Agri-business.

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The Guide intended for use by local government units in developing their potential for agribusiness activities. It includes a checklist of attributes of competitiveness in the agribusiness sector, a list of guide questions and indicators to assess their potential in agribusiness as a whole, and an overall framework for developing the local agribusiness industry to steer local initiatives towards enhancing their competitiveness.

Guide for LGUs in Assessing the Potential of and Enhancing the Competitiveness of Agri-business Activities in their Locality Agribusiness is defined as the sum total of all operations involved in the manufacture and distribution of farm supplies; production activities in the farm; and the storage, processing, and distribution of farm commodities and items derived from them.

The chain of activities includes:

a. supply of farm inputs, b. production of farm products, c. postharvest handling, storage, processing and transport of farm products, d. supply of packaging materials, e. marketing and distribution of fresh, processed and packaged goods, and f. financing of various activities.

This Guide is intended for use by local government units in assessing and developing their potential for agribusiness activities. It includes:

a. a checklist of attributes of competitiveness in the agribusiness sector b. list of guide questions and indicators to assess potentials in agribusiness as

a whole c. an overall framework for developing the local agribusiness industry to steer

local initiatives towards enhancing their competitiveness.

The Guide suggests a 4-step approach. It is by no means prescriptive, such that the actual techniques and the manner in which they are used may be adjusted to suit the local conditions.

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•identify convening agents•hold municipal competitiveness conferenceStep 1:

Ascertain Public-Private Sector Commitment

Figure 1 4-Step Approach in Assessing Potential and Enhancing Competitiveness

Step 2:Participatory

Resource Assessment

•form the working group•identify and provide financial and other resources•conduct biophysical and socioeconomic survey•collect secondary data•collect primary data•write report

•prepare resource map•define area zones

Step 3:Supply Chain Analysis

•value chain mapping•quantify and describe value chains in detail•economic analysis of value chain

•Based on competitiveness analysis attributes•cost•supply reliability•customer service•quality•appropriate innovation

Step 4:Formulate Strategic

Objectives

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Step 1: Ascertain Public and Private Sector Commitment to Competitiveness Initiative in Agribusiness through LRED

a. Identify appropriate convening agents and hold a municipal competitiveness conference.

b. The convening agents are ideally business people and government officials respected at the provincial and regional levels who are influential enough to attract the participation of key business and government leaders. Examples of convening agents and possible commitments are presented in Table 1 below.

c. The purpose of the conference is to assess whether there is genuine interest and commitment among local stakeholders and agents of change. The activity will also encourage transparency in the decision making for priorities in development initiatives.

d. The expected results are: 1. Public and private sector consensus on the need to develop a

participatory Competitiveness Initiative; 2. A high-level working group or committee that will help lay the

groundwork for future consensus on local competitiveness strategy; and

3. An understanding that competitiveness requires the private sector to modernize its approaches and the public sector to undergo certain reforms.

Table 1 Convening Agent and Commitment

Convening Agent Commitment Local Government Unit Political will and commitment to promote agri-

business development Regional Officers (DA, DTI, DOST)

Encourage participation of key business leaders Provide needed assistance to competitiveness

initiatives that will be formulated Business People/Entrepreneurs

Readiness and commitment to cooperate with other stakeholders in agri-business

Chambers of Commerce and Industry


Encourage interests in agribusiness development activities in the Municipality/City/ Province among constituents and business leaders

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Convening Agent Commitment Agriculture & Fishery Council (AFC)

• Regional (RAFC) • Provincial (PAFC) • Municipal (MAFC) • City (CAFC) • Barangay (BAFC)

Commitment to perform as advisory and consultative body towards development of the sector

Commitment to monitor agri-business projects as mandated by them

Industry Association • Provincial • Municipal


Encourage interests in agribusiness development activities in the Municipality/City/ Province among constituents and business leaders

Step 2: Conduct Participatory Resource Assessment or Rapid Economic Assessment (REA) for Agribusiness Development Resource Assessment is learning about - -

• local resources and assets that are primary means through which communities can effect agribusiness development outcomes, and

• the local people’s perspectives of the potential and current contribution to development goals.

Form the Working Group1

• The Working Group is a loose association of partners from government, non-government and private sectors with a common interest in agribusiness development in the area. Possible members of the working group are:

o LGU (Planning & Development Office, Program Officer, Provincial Agriculture Office, Municipal Agriculture Office)

o Agriculture and Fishery Councils o Farmer Associations o Chamber of Agriculture and Food o Industry Associations

1 Lundy, M. MV. Gottrett, R. Best and S. Ferris. 2007. A Participatory Guide to Developing Partnerships, Area Resource Assessment and Planning Together, CIAT Publication No. 356: CIAT Rural Agroenterprise Development, Good Practice Guide 2. CIAT, Cali, Columbia

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o State and Private Colleges and Universities o State Research Institutions

• The members will help synchronize efforts in agribusiness development and highlight synergies between the participating groups.

• Often comprises of non-government organizations and representation from farmer groups, business groups, and participation of the public and other private sector.

• The local government unit may be or may not be the lead organization (Figure 2).

• The members of the assessment/survey team shall be selected from among the members of the working group.

• In most cases, the assessment/survey team would be guided and supported technically by professional groups as those in the local universities or research institutions.

Figure 2 Schematic diagram of working group members and their linkages.

FG = farmer groups typically clustered around a specific commodity; FA = farmers associations; BDS = business development service providers; NGO = nongovernmental organization; PA = partner agencies; Working Group = consortium of partners.

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Identify and Make Available Financial and other Resources for the REA

Possible sources of funds are:

• Municipal funds • Private sector contribution/donation • NGO co-financing • On-going local development programs • Donor agencies

Define the Assessment Area

• The first decision to be made is the assessment area limits. • The area may be defined in terms of the political boundaries, e.g., the whole

municipality, a barangay, a cluster of barangays, or particular communities.

Conduct Biophysical and Socio-economic Survey of the Area

• The next step is to conduct a REA to evaluate the assets and social skills available for agribusiness development. Members of the Research Team could come from:

o LGU (Planning and Development Office) o Local Universities and Colleges o Chamber of Commerce and Industry o Agriculture and Fishery Councils o Farmers Associations o Local public and private research institutions o Industry associations

• A survey organized in a checklist format is a suggested tool for this purpose. • The checklist is intended for use by the members of the Research Team in

determining the potential for agribusiness development in their locality. This can provide LGUs with an indication if their locality has the “ideal attributes” to support a particular agribusiness development. Included in the below checklist are items that can be LGU owned or privately run facilities available for rent or as service provider for a fee.

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• Given the broad range of activities in agri-business, they have been divided into four major subsectors:

a. Horticulture b. Agronomy c. Livestock and Poultry d. Fisheries/Aquaculture

• Each of the sub-sectors are defined below and the checklist of “must-haves or ideal” vis-à-vis the pillars/attributes identified as follows:

a. Infrastructure b. Land inputs c. Logistics d. Markets e. Extension Services f. Business Environment

Horticulture Definition

Horticulture is the art, industry and science of plant cultivation. Horticulturists work and conduct research in the disciplines of plant propagation and cultivation, crop production, plant breeding and genetic engineering, plant biochemistry, and plant physiology.

Crops

particularly involves fruits, berries, nuts, vegetables, flowers, trees, shrubs, and turf.

Requirements

The unique requirements of the horticulture industry that are MUST HAVE in order for it to thrive are as follows

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Table 2 Horticulture Attributes / Pillars

Infrastructure • Credit / Financing facility available for farmers and SMEs • Irrigation facilities • Production facilities (e.g. tractor) • Farm to market road • Cold chain / Storage and distribution facilities (e.g.

freezers, refrigerators, coolers, cold rooms, refrigerated vans) for highly perishable fruits and vegetables

• Processing facilities (e.g. canning, drying). For example canning facility for toll processing of preserved fruits

• ICT (to access farm vs. market price movements, demand-supply situation)

• Access to local/international ports, airports Land inputs Horticultural crops have varied characteristics and thus, the

requirements in terms of land size, elevation, soil, temperature and topography depend mainly on the type and variety of crop

• Land size: also depends on the market to be served. Can be small patches of land for backyard/home production; relatively big areas for commercial production

• Elevation: for fruits, specifically, mango, the ideal elevation is lower than 400 meters above sea level. Higher elevation delays fruit maturity.

• Soil requirements: e.g. well-drained clay loam or lighter soil texture for mango; well-drained, loamy soil for banana; very deep, well drained soil preferably sandy loam for carrots, rich heavy loamy soils for cauliflower; some vegetables (e.g. lettuce, tomato, etc.) can also be grown using soil-less technologies (e.g. hydroponics)

• Temperature: e.g. semi-temperate vegetable varieties like cauliflower, broccoli, cabbage, carrots, lettuce thrive in relatively cool highland climate (e.g. Mt. Province, Tagaytay, Bukidnon); others like squash, eggplant, ampalaya, okra, sitao require relatively normal or warm weather

• Topography: relatively flat to rolling terrain for most crops Others • Access to the right seeds/planting materials (through

accredited nurseries or established private seed companies)• Pest and disease management program

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Logistics • Transport facilities. For example trucking for fruits and vegetables

• Warehousing facilities • Cold chain for highly perishable fruits and vegetables • Packaging facilities • Handling facilities (truck scale, conveyor, forklift) • Access to international ports, shipping

Markets • Volume and quality requirements vary depending on the market served / type of buyer

• Key factors: cost, quality and supply reliability • Access to local buyers • Access to exporters • Access to processing companies

Extension Services

• Presence of knowledgeable agriculturists/ agricultural technicians working under the MAO or PAO

• Availability of updated modern technologies • Access to tri-media IEC materials • Access to agri R&D firms and SUCs

LGU Business Environment

• One-stop shop agribusiness center • Established clear-cut and coherent business policy • Investment incentives (tax holiday, etc.) • Organized farmers’ groups/associations • Comprehensive land use plan • Security of land tenure

Agronomy Definition

Agronomy is the science and technology of using plants for food, fuel, feed, and fiber. Agronomy encompasses work in the areas of plant genetics, plant physiology, meteorology, and soil science. Agronomy is the application of a combination of sciences like biology, chemistry, ecology, earth science, and genetics. It involves many issues including producing food, creating healthier food, managing environmental impact of agriculture, and creating energy from plants.

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Crops

Based on the definition and adapting it to Philippine agriculture, agronomy can be generally classified into cereal crops and industrial crops. Cereal crops include rice and corn while industrial crops are composed of coconut, oil palm, sugarcane, rubber, coffee, cacao, abaca, root crops (cassava), and jatropha.

Requirements

The requirements of the agronomic crops that can indicate comparative advantage for an area include climate, good infrastructure, etc.

Table 3 Cereal Crops Attributes/Pillars

Infrastructure • Credit facility available for farmers and SMEs • Irrigation facilities • Production facilities (tractor, seeder, harvester, combine) • Farm to market road • Processing facilities (thresher, sheller, drier, mill). For

example mechanical drier facility accessible for a fee • ICT (to access farm vs. market price movements,

demand-supply situation) Land inputs • For rice, soil types with slowly permeable sub-soil with

clay or plow pan • Relatively level land but gently sloping toward drainage

canal • Temperature, solar radiation, and wind considered at

different growth phases • For rice, evenly distributed rainfall of 200-300 mm per

month is enough • For corn, well drained soil with a texture of silt loam; high

moisture holding capacity and high amount of organic matter. The optimum soil pH is from 6.0 to 7.0.

• Corn requires a rainfall of not less than 200 mm. Logistics • Transport facilities. For example trucking services for rice

and corn • Warehousing facilities. For example common warehousing

facility for palay storage. • Handling facilities (truck scale, conveyor, forklift)

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Markets • Harvest yields per hectare of 4 tons for rice and 2 tons for white corn and 4 tons for yellow corn

• Access to buying stations Extension Services

Presence of knowledgeable agriculturists/ agricultural technicians under the MAO and PAO Availability of updated modern technologies Access to tri-media IEC materials Access to agri R&D firms and SUCs


One-stop shop agribusiness center Established clear-cut and coherent business policy Investment incentives (tax holiday, etc.) Organized farmers’ groups/associations Comprehensive land use plan Security of land tenure

Table 4 Industrial Crops Attributes/Pillars

Infrastructure • Credit facility for farmer groups • Irrigation facilities • Production facilities (tractor) • Farm to market road • Processing facilities (drier, mill, refinery) • For biofuel feed stocks, extraction plant and biofuel plant • ICT (to access farm vs. market price movements,

demand-supply situation for both local and global) Land inputs Industrial crops need large areas since these are usually

plantation crops. Small areas of out-growers are consolidated to support requirements of processing facilities

• For sugarcane-ethanol, at least 7,500 hectares or as small as 10 hectares for out-grower sugar production

• Widely adapted to a wide range of tropical and semi-tropical climate, soils and cultural conditions

• For oil palm, 3 hectares for out-grower oil production • Grows well in warm climates at altitudes less than 1,600

feet above sea level

• For coconut, 3 hectares for copra production • Thrives in most soil types although perceived to grow well

in beach sand types

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• For jatropha-biodiesel, at least 1,000 contiguous hectares

from several out-growers • Soil types may be loamy or sandy, rich or marginal • Idle flatland or rolling hills

Logistics • Transport facilities • Warehousing facilities • Handling facilities (truck scale, conveyor, forklift) • Access to international ports, shipping

Markets • Harvest yields per hectare of 900-1,000 kg copra for coconut; 20 tons fresh fruit bunches for oil palm; 70 tons cane for sugarcane

• Access to mills and processing facilities • Access to international markets

Extension Services

• Presence of knowledgeable agriculturists/ agricultural technicians under the MAO or PAO

• Availability of updated modern production and processing technologies

• Availability of by-products and waste material utilization technologies

• Access to tri-media IEC materials • Access to agri R&D firms and SUCs



Livestock/Poultry Livestock is the term used to refer (singularly or plurally) to a domesticated animal intentionally raised for subsistence or for profit. It includes domestic animals, such as swine, cattle, carabao, goat or horses, raised for home use or for profit, especially on a farm.

Poultry on the other hand are domestic fowls, such as chickens, ducks, or geese, turkeys, pigeons and ostrich for meat or eggs.

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Table 5 Livestock and Poultry Attributes/Pillars

Infrastructure • Credit / Financing facility for SMEs • Access to good roads, bridges, FMRs • Efficient transport system • Drainage and sewerage system • Water treatment facility • Potable water supply • Telecommunication • Power and Fuel • Slaughterhouse for hogs and cattle • Access to Animal Laboratory • Warehousing facilities. For example, for feeds storage • Available inter-island transport system • Cold chain / Storage and distribution facilities (e.g.

freezers, refrigerators, coolers, cold rooms, refrigerated vans)

• Processing facilities (e.g. smoking, canning) • ICT (to access farm vs. market price movements, demand-

supply situation) • Access to local/international ports, airports

Land inputs • Available land preferably far (10km radius) from housing communities

• Cooler areas for breeding farms (14-24 C) • Flat areas for livestock and poultry raising • With zoning under local government regulatory powers

Logistics • Transport facilities. For example trucking services for live swine transport

• Cold chain. For example refrigerated van for transport of slaughtered animals

• Handling facilities (truck scale, conveyor, forklift) • Access to international ports, shipping

Markets • Volume and quality requirements vary depending on the market served / type of buyer

• Key factors: cost, quality and supply reliability • Access to local buyers • Access to meat exporters • Access to meat processing companies • Public markets, terminal markets • Market information system

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Extension Services

• Active veterinary office within the LGU with knowledgeable veterinarians and animal technicians

• Availability of private veterinary clinics and services in the locality

• Access to tri-media IEC materials • Access to R&D firms and SUCs • With available modern technology which can achieve the

desired technical parameters (i.e. for hog • ADG (kg) 0.505: FCR (birth to finish, kg) 2.5: PSSY 18)

Fisheries and Aquaculture Definition

Fisheries refers to all activities relating to the act or business of fishing, culturing, preserving, processing, marketing, developing, conserving and managing aquatic resources and fishery areas, including the privilege to fish or take aquatic resource thereof. The major fish species caught in the Philippines are roundscad, indian sardines, frigate tuna, yellowfin tuna, skipjack and big-eyed scad.

Aquaculture is fishery operations involving all forms of raising and culturing fish and other fishery species in fresh, brackish and marine areas. The major domestic commodities produced are seaweeds, milkfish, tilapia, shrimp, oysters and mussels in extensive, semi-intensive and intensive culture systems in ponds, pens, cages and open coastal waters.

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Table 6 Fisheries/Aquaculture Attributes/pillars

Infrastructure • Farm to market road • Landing wharf • Net/Fishing gear mending yard • Freezer facilities • Fish market • Fish processing area • Drying facilities (seaweeds) • Ice plant/Ice making facilities • Fuel depot facilities • Wastewater treatment plant • Laboratory services (fish quality control) • Maintenance shop • ICT • Credit facilities

Inputs • Power/water supply • Quality raw material inputs (ships, boats, fishing gears,

fingerlings, skilled labor, etc.) • Prime land ready for lease • Area for commercial and industrial fishery based industries • Flat terrain for fish farming • For pond culture, clay, clay loam and sandy loam soils with

deposits of organic matter of about 16% & pH from 7 to 9 • For cage culture, water protected from strong wind action

and water current with good circulation, dissolved oxygen concentration on the water is at least 3ppm with temperature range from 20oC to 30oC and pH level from 6.8 to 8

Logistics • Transportation facilities • Cold storage facilities • Warehousing facilities • Hauling and handling equipment • Access to international airport and port

Markets • Harvest yields per ha per yr of > 3 tons (pond culture) or > 1.5 tons/crop yr (9 m2 cage culture) for milkfish; > 5 tons (pond culture) or > 20 tons ( 10x10x5 to 12x12x8 cage culture) for tilapia; > 46 tons for seaweeds; > 0.5 ton for tiger prawn

• Access to international fish and fisheries products trade • Access to drying and processing facilities

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Extension Services

• Fisheries and aquatic resources office within the LGU • Fishery/Aquaculture technicians • Modern fishing, fish processing and aquaculture

technologies • Access to tri-media IEC materials • Access to fisheries/aquaculture R&D firms and SUCs



There are other attributes that can provide comparative advantage for LGUs as follows:

Table 7 Other Attributes that can Provide LGUs Comparative Advantages

• Technology and R&D Capability

• Indigenous/Homegrown techniques • Existing production systems • Globally sourced technology • Available information systems and

processes • Human Resources • Available manpower for labor requirement

• Quality • Quantity • Responsiveness

• Critical Business Support Services

• Available Repair and Maintenance Service • Education and Training Services • R&D Services

• Availability of major businesses with agricultural links

• wholesale sorting and packing facilities • processing firms • export firms, etc.

Support services • Raw material input

supply • Availability of input suppliers • Available Planting materials (seeds,

seedlings) or nearness to supply of raw materials

• Fish fry supply and source • Available animal breed supply or nearness

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to source • Availability or nearness to supply of feeds,

fertilizer, pesticides, flower inducer, animal health products

• Primary processing supply

• Available supply of ingredients and other additives

• Available processing technology • Nearness to machinery & spare parts supply

source • Nearness to source of packaging supplies • Available utilities

• Secondary Processing • Processing and storage equipment source • Packaging and processing supplies • Distribution Stations

Communities • Location of

communities and their relative populations

• Location of different ethnic groups, or other defined social groups, and their identification

• Land tenure structure • farmers who are owners, day laborers or share croppers

• Level of social organization

• do farmer groups exist, do they work collectively

• Level of business organization

• do business groups exist, do they work collectively)

With sound development management, especially with the following elements: • Accountability • with public officials answerable for

government behavior, and responsive to the public from which their authority is derived

• Participation • involvement of citizens in the development process

• Predictability • fair and consistent application of laws and implementation of government policies

• Transparency • availability of information to the general public and clarity about government rules, regulations, and decisions

• The survey should start with collection of secondary data as needed in the REA, then proceed to collect primary data to fill the information gaps.

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Secondary data can be collected from the local, provincial, regional and national offices of the different government agencies as follows:

o Municipal, provincial, regional and national offices of the government agencies Department of Public Works and Highways (DPWH) Department of Agriculture(DA) Department of Environment and Natural Resources Department of Trade and Industry Department of Agrarian Reform National Economic Development Authority Department of Transportation and Communications Department of Finance

o On-going donor projects

Primary data can be sourced from value chain participants through: o Key informants interview o Focus groups discussion o Interview of key business people, local administrators, and lead NGOs

• To make the survey a rapid process, use key informants and focus groups to

gather information. • This is in addition to routine visits to major employers, local administrators,

lead NGOs. • The study should be accomplished within two weeks of fieldwork and two to

three weeks of documentation of findings. • The report is typically between 15 to 30 pages, written in a simple style with

a focus on information useful for the subsequent agroenterprise development.

• The resource survey should include key elements as presented in Table 8

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Table 8 Key elements of a Resource Survey

Resource Key elements Natural Resources Land

• General Topography altitudes: steep, less sloping flat areas arable land land use

• Productivity Good Medium, and Poor soils

• Water sources (rainfall; rivers, streams, springs, dams and their flows throughout the year)

• Climate Seasons (wet and dry) Productive resources

• Roads paved, improved/gravel, dirt and their respective usability during the year

• Infrastructure electricity, phone coverage, IT infra, potable water, irrigation, storage facilities

• Major businesses with agricultural links

wholesale sorting and packing facilities, processing firms, export firms, etc.

• Support services input suppliers, internet cafes, machinery suppliers, banks and other financial institutions, educational institutions, research and development institutions, etc.

• Transport for produce frequency, costs and quality • Markets area’s produce including location or roads

leading to them Communities

• Location of communities and their relative populations

Location of different ethnic groups, or other defined social groups, and their identification

• Land tenure structure farmers who are owners, day laborers or share croppers

• Level of social organization

do farmer groups exist, do they work collectively

• Level of business organization

do business groups exist, do they work collectively)

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Place the Information on a Resource Map

Figure 3 Illustration of Resource Map2

Define Zones for the Area (Municipality)

• Zoning is important for prioritizing interventions for competitiveness. The resource map can be overlaid on the existing.

• Use the following criteria for zoning: 1. Agroecosystem – if this has implications on crops or potential

economic activities in a zone. Agroecosystem is land used for crops, pasture, and livestock; the adjacent uncultivated land that supports other vegetation and wildlife; and the associated atmosphere, the underlying soils, groundwater, and drainage networks. (US Environmental Protection Agency)

2 Source: Ferries, S.; Best, R.; Lundy, M.; Ostertag, C.; Gottred, M.; Wandschneider, T. 2006. Strategy Paper for Agroenterprise Development: Good Practice Guide 1). CIAT: Cali, Colombia

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2. Access to roads or markets – especially if this factor changes during the year because of rainy seasons or if it affects the product that can be taken to the market.

3. Land tenure - is an important consideration as it greatly influences the type of crops planted and the possibility of introducing new ones. Forms of land tenure: Landowner Leaseholder Tenant Share cropper

4. Access to water and how it fluctuates during the year can be a means

of distinguishing between areas with good, regular, or poor access. Irrigation should also be included here. Modes of access to water: Primary Secondary Tertiary

5. Productive orientation zones already producing for markets require

different strategies than those oriented towards household consumption or food security. Productive orientation zones are areas already producing agricultural products for a particular market (e.g. municipal trader, provincial trader, regional trader, spot trader, local processor, urban center market).

6. Types of existing production systems. The presence of a particular crop (e.g., sugar cane) will significantly affect a zone’s economic dynamics.

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Step 3:Value Chain Analysis by Commodity/Industry Cluster A value chain is a market-focused collaboration between different businesses that work together to produce and market the products.

SCHEMATIC SUPPLY CHAINSCHEMATIC SUPPLY CHAIN

PROCESSORSINPUT SUPPLIERS

GROWERS/PRODUCERS

CONSUMERSDISTRIBUTORS RETAILERS

Seed supplierSeed supplierBreederBreederResearcherResearcherPropagator, etc.Propagator, etc.

AbbatoirAbbatoirCanneryCanneryMill, etc.Mill, etc.

FarmerFarmerGrowerGrowerGrazierGrazierPastoralistPastoralist

WholesalerWholesalerImporterImporterExporterExporterTransport company, etc.Transport company, etc.

You and meYou and me

RestaurantRestaurantSupermarketSupermarketHotel, etc.Hotel, etc.

PROCESSORSINPUT SUPPLIERS

GROWERS/PRODUCERS

CONSUMERSDISTRIBUTORS RETAILERS

Seed supplierSeed supplierBreederBreederResearcherResearcherPropagator, etc.Propagator, etc.

AbbatoirAbbatoirCanneryCanneryMill, etc.Mill, etc.

FarmerFarmerGrowerGrowerGrazierGrazierPastoralistPastoralist

WholesalerWholesalerImporterImporterExporterExporterTransport company, etc.Transport company, etc.

You and meYou and me

RestaurantRestaurantSupermarketSupermarketHotel, etc.Hotel, etc.

SOURCE: New Industrial Development Program (NIDP) SOURCE: New Industrial Development Program (NIDP) ––MADE IN AUSTRALIA, Number 1, Series 3, AFFA (2003). MADE IN AUSTRALIA, Number 1, Series 3, AFFA (2003).

Figure 4 Schematic Supply Chain

An agri-business development plan must work within a framework wherein the value chain is the core. A major tool is the industry cluster (Annex Figure 4). An industry cluster is a strategic framework that provides a cohesive and integrated approach for analyzing industrial development and competitiveness. A cluster is a grouping of key and support industries, infrastructure and institutions that are inter-linked and interdependent. It emphasizes the importance of support industries, institutions and the links between such industries and the leading firms (Porter 1990).

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Industry Cluster

• A grouping of key and supporting industries, infrastructure and institutions that are inter-linked and interdependent.

• defined by vertical, horizontal and connective relationships • emphasizes the importance of the supporting industries and institutions as

well as links between them and the key leading firms

The major components that constitute an industry cluster are:

Tier 1 Component: Core Companies

Tier 2 Component: Related and Supporting Industries and Services

Tier 3 Component: Foundation Providers

Tier 1: Core Companies

• The dominant companies within the industry. (Analysis will follow the supply/value chain approach)

Tier 2: Related and Supporting Industries

• Firms that provide immediate goods or raw materials and services to the core companies.

• Suppliers of machinery and equipment, packaging materials, animal feeds, insecticides, industrial chemicals, containers, etc.

• Service providers such as transportation, marketing and consultancy services.

The supplier industries provide raw materials (e.g. seeds, fertilizer for crops or feeds, biologics, for animals), processing supplies, packaging, machinery and equipment, utilities, etc. The related and allied industries and services include banking and finance, research and development, education and training, industry/trade association as well as government and non-government institutions that can affect the cluster performance.

Industry associations and institutions are key elements in a cluster. Industry associations (e.g. National Federation of Hog Farmers in the Hog Industry, and

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Chamber of Agriculture Fisheries and Allied Industries in Northern Mindanao) are implementing institutions, and also the investors. In the public sector, the Department of Agriculture and its agencies implements sectoral policies, support services and regulation, the Department of Public Works and Highways is charged with construction and maintenance of national roads, the Maritime Industry Authority sets shipping rates, the Philippine Ports Authority sets shipping rates and regulates the ports, the Land Transportation and Franchising Board for land freight rates and regulation, Department of Trade and Industry for foreign trade and incentives, etc.

Tier 3: Foundation Providers

• The regulatory environment and the infrastructure that support the industry. Regulatory environment consists of the set of regulations that govern the industry which includes the business and industry rules and regulations and industrial relations.

Cluster analysis enables the missing capacities within the cluster structure to be addressed and the building of competitive advantage through the provision of superior economic foundations. The competitiveness of an industry cluster depends not only on the industry itself but also equally important, what is happening or what will happen to the supplier industries, support and related industries as well as the institutions that influence them. Industry cluster framework and examples are presented in Annex Figure 4.

a. Value chain analysis is undertaken as follows3: 1) Value chain mapping

• Draw a visual representation of the value chain system • Identify business operations (functions), chain operators and

their linkages, as well as the chain supporters within the value chain

• Chain maps are the core of any value chain analysis. 2) Quantify and describe the value chain in detail

• Attaching numbers to the basic chain map・

3 Value links Manual, First Edition

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o numbers of actors o volume of produce or the market shares of particular

segments in the chain o specific chain analyses “zoom in” on any relevant aspect,

including characteristics of particular actors services political, institutional and legal framework

conditions enabling or hindering chain development.

3) Economic analysis of value chains • assessment of chain performance in terms of economic

efficiency o determine the value added along the stages of the value

chain o determine the cost of production and, to the extent

possible, o estimate income of operators.

• Determine the transaction costs o Doing business o Collecting information o Enforcing contracts

• “Benchmark” the economic performance of a value chain o Compare the value of important parameters with those

of competing chains in other areas or similar industries).her countries or similar industries.

o An enterprise gains competitive advantage by performing strategically important activities more cheaply or better than its competitors.

b. The process will also include identification of issues and challenges in the supply/value chain that will shape the agribusiness outcomes desired which will be considered in the planning process.

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c. The cost estimates of each stage such as in the production, primary processing and marketing will be generated based on the consultation with the key industry players of the agribusiness supply chain.

d. This step could also make use of the Value Chain Analysis Manual developed by GTZ. This could serve as the LGU reference in conducting value chain promotion of the identified agribusiness products to focus on.

Step 4: Formulation of Strategic Objectives for Competitiveness • Strategic objectives are written statements that describe an intended

outcome. They clearly describe measurable targets of achievement. • Examples of strategic objectives by value chain segment/function based on

competitiveness attributes are as follows:

Table 9 •Examples of Strategic Objectives

Value Chain Segment / Function

Competitiveness Attribute

Strategic Objective

a. Input Supply Example: Cost Decrease cost of feeds by 10%

next year (2009) b. b. Production Example: Supply Reliability Increase hog production by 20%

next year (2009) c. c. Processing

d. d. Marketing

e. e. Logistics

f. f. Consumption

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Annexes

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Annex 1 Industry Cluster Framework

Main Raw Material Input Supply SystemExampleSeeds/ Breeds/ FryFeeds, FertilizerAnimal Health ProductsProduction Technology

Primary Processing Supply SystemProcessing TechnologyMachinery and Spare PartsPackaging and Processing SuppliesUtilities

Secondary/Tertiary Processing Supply SystemDownstream Processing TechnologyProcessing Storage EquipmentPackaging and Processing SuppliesDistribution StationsUtilities

Supplier IndustriesEconomic Foundation

Technology and R&D capabilityIndigenous/homegrownGlobally Sourced Information Systems and Processes

Natural EndowmentsLand ResourcesWater ResourcesClimate/WeatherEnvironment

Physical InfrastructureEnergyTransportCommunication

Human ResourcesQuality QuantityAvailability and Responsiveness

Business Policy & Environment

Capital Resources and Financing

InvestmentBankingPrivate SectorPrivate BanksRural Banks

R&D ServicesPrivate SectorDOSTDASCUs

Education/Training ServicesCHEDSCUsDA

Machinery Repair and Maintenance

Other critical business support servicesConsulting ServicesPrivate Sector

Industry/Trade AssociationsMango Industry AssociationExportersPhilFOODEX, Infomap, etc.

Marketing and Distribution ServicesPrivate SectorDADPWHLGUPPAMARINA Bureau of CustomsRelated and Allied Industries and Systems

Logistics Focal Logistics Downstream Logistics

Processed Product, Storage Handling

and Shipping

Domestic Distribution

Upstream Market

Domestic

Export

Handling and

Transport System

Main Raw Material Supplies

Handling, Transport and Storage

Secondary and Tertiary Processing

Primary Processing

By‐Products and Waste Utilization

Industry Cluster Framework*

*Adapted from the World Bank / MADECOR Model on the Study of Restructuring Agro‐Industries in Indonesia (2001)

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Annex 2 Mango Agro-Industrial Cluster Framework Main Raw Material Input Supply SystemPlanting MaterialsFlower InducerFertilizer/Chemicals

Primary Processing Supply SystemAdditivesProcessing TechnologyMachinery and Spare PartsPackaging and Processing SuppliesUtilities

Secondary/Tertiary Processing Supply SystemDownstream Processing TechnologyProcessing Storage EquipmentPackaging and Processing SuppliesDistribution Stations

Economic Foundation(Factor Endowment)







Supplier Industries






Industry/Trade AssociationsMango Industry AssociationExportersPhilFOODEX, Infomap, etc.


Logistics FocalPrimary

Processing

Logistics DownstreamSecondary and

Tertiary Processing

Logistics


and Shipping


Upstream Market

Domestic

Export

Main Raw Material Supplies (Fresh Mango)

•Drief•Frozen•Puree•Nectar/ Juice•Other by‐products

Fresh Mango Handling

and Transport System

Buying Station / Packing House /

Marketing Centers


Commercial ProducersSmall/

Backyard

Hot Water Treatment (HWT) / Vapor Heat Treatment (VHT) (Japan / South Korea)

Mango Agro‐Industrial Cluster Framework

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Annex 3 Banana Agro-Industrial Cluster Framework

Main Raw Material Input Supply SystemPlanting MaterialsFertilizer/ChemicalsTissue Culture LaboratoriesPackaging MaterialsWater (Irrigation and Washing)

Primary Processing Supply SystemProcessing TechnologyPackaging and Processing SuppliesUtilities


Supplier IndustriesEconomic Foundation(Factor Endowment)












Industry/Trade Associations Banana Industry AssociationExportersPhilFOODEX, Infomap, etc.



Processing


Tertiary Processing

Logistics


and Shipping


Upstream Market

Domestic

ExportMain Raw Material Supplies (Fresh

Bananas)

•Banana Chips•Puree•Powder/ Flour•Other by‐products

Fresh Banana Handling


Buying Station / Packing House / Marketing Centers


Banana Agro‐Industrial Cluster Framework


Backyard

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Annex 4 Rubber Agro-Industrial Cluster Framework

Main Raw Material Input Supply SystemPlanting MaterialsFertilizer/ChemicalsFarm tools and equipment

Primary Processing Supply SystemProcessing TechnologyBuying StationsPackaging and Processing SuppliesUtilities

Secondary/Tertiary Processing Supply SystemDownstream Processing TechnologyProcessing Storage EquipmentPackaging and Processing SuppliesUtilities








Supplier Industries


R&D ServicesPrivate SectorCMUDA

Education/Training ServicesCMUFARBECODA



Industry/Trade AssociationsPRIAURPPAFARBECOOthers

Marketing and Distribution ServicesPrivate SectorDPWHLGUPPAMARINA Bureau of Customs

Related and Allied Industries and Systems


Processing


Tertiary Processing

Logistics


and Shipping


Upstream Market

Domestic

Export•Crumb rubber•Crepe 1, 2•2x brown•SPR 20, 5•Rubber boots and working shoes

Main Raw Material Supplies Raw Rubber

Handling and

Transport System

Raw Rubber Handling, Transport and Storage

Rubber Agro‐Industrial Cluster Framework

Buying Stations

Small Growers

Core Industries

*Adapted from the World Bank / MADECOR Model on the Study of Restructuring Agro‐Industries in Indonesia (2001)

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Annex 5 Feed Hogs Agro-Industrial Cluster Framework Main Raw Material Input Supply SystemBreedsFeeds (Corn, Cassava, Wheat, Camote, Etc.)Animal Health ProductsProduction Technology

Primary Processing Supply SystemProcessing TechnologyMachinery and Spare PartsPackaging and Processing SuppliesUtilities









Supplier Industries


R&D ServicesPrivate SectorDOSTBAINMIC

Education/Training ServicesCHEDSCUsNMICBAI



Industry/Trade AssociationsNFHFPAHRIOthers

Marketing and Distribution ServicesPrivate SectorDPWHLGUPPAMARINA Bureau of Customs

Related and Allied Industries and Systems


Processing


Tertiary Processing

Logistics


and Shipping


Upstream Market

Domestic

Export

Main Raw Material Supplies (Hog

Production)

•Canned Meat•Fresh Processed Meat (Hotdog, Sausage, etc.)•Other By‐Products

AbbatoirLive HogsHandling


Carcass Handling, Transport and Storage

Feed‐Hogs Agro‐Industrial Cluster Framework

IntegratorsLarge


Backyard

Storage


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Annex 6 Tuna Agro-Industrial Cluster Framework

Main Raw Material Input Supply SystemTechnologyShips/BoatsFishing GearFuelIce

Primary Processing Supply SystemTechnologyEquipmentPower/ElectricityWaterFuel

Secondary/Tertiary Processing Supply SystemTechnologyProcessing Supplies (oil, etc.)Packaging Materials (cans, pouches)Primary labelsElectricityWater

Machinery and Equipment Inputs and Services SystemTechnologyEquipmentElectricityFuel








Supplier Industries

Domestic

Market

Export

InvestmentBankingCreditInformal LendersLandbankQuedancorPrivate SectorPrivate BanksRural Banks

R&D ServicesPrivate SectorDOSTBFARBAFPS

Education/Training ServicesPrivate SectorSCUs

Cold Storage ServicesIce Plants

Transport and Comm. ServicesDPWHDOTCLGUPrivate Sector

Industry/Trade AssociationsSFFAAIITCAPPhilippine Tuna Industry Association

Marketing and Distribution ServicesPrivate SectorPPAMARINA Bureau of Customs


Export Services

Other Business Support ServicesConsulting ServicesPrivate Sector

Other Critical Business Support ServicesRelated and Allied Industries and Systems

Logistics

Chilled and Frozen Storage and Transport

Warehousing and

Distribution

FocalPrimary

Processing

LogisticsUpstream

Fish ProductionCommercial

Fish Capture

Fish Collection from Small

and Medium Fishermen

Chilled and Frozen Products

Handling , Transport and Storage

Cold Storage

Sea to Land Transport

Inter‐Island Transport

Chilling

Tuna Cluster Framework

Canned Products

Freezing


Core Industries

Fresh Fish Market

Fish Meal

Canning

GTZ Office ManilaGerman Development Center10F PDCP Bank Centre V A Rufino St cor L P Leviste StSalcedo Village, Makati City 1227, PHILIPPINES

Private Sector Promotion (SMEDSEP) Program GTZ Office Manila, P O Box 2218 MCPOMakati City 1200, PHILIPPINES(+63 2 812 31656+63 2 753 1441*[email protected]

Private Sector Promotion (SMEDSEP) Program Cebu GF LDM BuildingLegaspi St cor M J Cuenco AveCebu City 6000, PHILIPPINES(+63 32 412 22566+63 32 254 4958*[email protected]

agribusiness roadmap february 2009

Technology

industry cluster framework

d annex

commodityindustry cluster

c ft step

private sector commitment

d r u annex

step approach

competitiveness initiative