organic rice enterprise of pecuaria development cooperative ( pdci )

Strengthening Farmer-led and Farmer-owned Marketing Enterprises through Technical

Assistance and Learning Exchange

Organic Rice Enterprise of Pecuaria Development Cooperative (PDCi)

Lanigpa, Bula, Camarines Sur, Philippines

Contents:1. Background of the enterprise2. Assessment

– Findings– Analysis, conclusion and recommendation

3. Plan of Interventions – Within the project period (Until May 2014)– Beyond project period

4. Initial results of Intervention5. Feedback on the use of assessment tools (suggestion if any for

improvement)

Background of the Enterprise• The Pecuaria Development Cooperative (PDCi) – a

cooperative for agrarian reform established in 1991;• Formerly called the People’s Coalition for Unity on

Agrarian Reform Integrated Action (PECUARIA);• Its start was marked with risk, disunity and

economic instability in a region (Bicol) without modern utilities & with poor supply chain systems;

• Formally registered with the Cooperative Development Authority (CDA) on Sept 30, 1991;

• PDCi envisions a progressive and united agrarian reform community with deep respect for ecology & gender equality & governed through participatory & democratic process rooted in positive Filipino values;

Background of the Enterprise• PDCi consists of 426 members (329 male & 97

women) who own the 817 hectares farm land distributed by government (25 has. Residential at 600 sq.m/farmer & 10% for infra) in 1992;

• PDCi started to adopt organic agriculture in 1994 through the use of the Masipag technology;

• Continued with organic rice farming in 1997 after a series of Farmers’ Field School (FFS) training & same year when PDCi started to enter into rice trading;

• Received certification from the Organic Certification Center of the Philippines (OCCP) in 2007; and

• PDCi businesses include organic rice enterprise, milling & marketing, bio-organic fertilizer production (BOF), organic certification inclusion and organic rice production input loan.

Equivalent Score Stage

1.0 to 1.9 Start-Up/ Building Up

2.0 to 2.9 Strengthening/ Developing

3.0 Consolidating

Result of the Assessment

ELEMENTS Total Ave Weights Stages of development

Organizational Management 2.9

Strengthening

Profitability and Solvency 3.0 Consolidating

Stability 3.0 Consolidating

Market Access 3.0 Consolidating

Inclussivity 2.8 Strengthening

SUSTAINABILITY 2.7 Strengthening

Grand Total average

2.9

Organizational Management – 2.86INDICATORS SCORE FINDINGS

ANALYSIS AND RECOMMENDATION

Legal identity to operate and comply with reportorial requirements

3 PDCi has a committee responsible in ensuring that all legal requirements including reports are complied on a timely basis.

PDCi has ensured its legal identity and has to ensure its regular review and renewal.

Planning

2 Not all of the leaders or officers and members of PDCi are able to articulate the VMGO of the cooperative and their enterprise plan.

Only105 out of 426 farmer members engaged in organic rice farming were able to agree on their strategic plan & enterprise plan as well as targets & were implemented.

While the VMGO of PDCi are clearly defined, its leaders & members may need to review & determine reasons for not being able to articulate and provide support needed.

Membership

3 From the 426 regular members, current membership has now increased to around 570 to include associate members. PDCi managed to develop set of guidelines to differentiate the benefits, privileges, etc. from regular members and plans to continue the recruitment of associate members particularly from among their suppliers. PDCi has plans of expanding operations outside of the Bicol region.

PDCi’s campaign for membership has been successful with its leaders and officers o openness to welcome associate members to the cooperative. To continue with its plan for expansion in the region.

Organizational Management – 2.86INDICATORS SCORE FINDINGS ANALYSIS AND RECOMMENDATION

Leadership, Staffing and their Competencies (KSA)

3

Members are able to pay mandatory fees and dues but are yet to encourage the increase in sharing of capital contribution.

Leaders & members are diligent in complying with their dues and fees but very slow on their additional contribution to the CBU. Intensive follow-up on this has to be done.

The PDCi leaders are divided and designated into to Housing Units 1 to 5 (HU1-5) according to geographical division of their farm lots, with each unit having at least 87 members. The units are all supported by PDCi staff that meets regularly.

The HU approach has continuously promoted participation of both leaders, members & staff to PDCi’s project’s/businesses & activities. To continue regular meetings & conduct a review for further enhancement of the approach.

The leaders themselves are clear that their main functions are focused on policy-making and oversight.

Being fully aware of their main functions, the leaders are able to focus on more strategic issues and concerns of the cooperative. To continue with monitoring on the adoption & strengthening of policies.

Org’l Structure and Governance

3 The leaders claimed that while most of them are able to explain their organizational structure, there are still members who are not able to do so. This is not because members do not know but some just have low level of confidence in articulating in front of other people.

The PDCi’s organizational structure remains functional as adopted in the continued operations of the cooperative. Essential is the review of the structure with members.

The leaders would usually see to it that formal discussions take place to enable them to decide on PDCi matters or concerns.

This interactive approach towards collective decision-making in the cooperative has been effective & useful. It is important to continue.

Organizational Management – 2.86

INDICATORS SCORE FINDINGS ANALYSIS AND

RECOMMENDATION

3 There has been continued representation of women in the BOD and during GA meetings more women are vocal with their views/opinions but are not officially considered since it is their husbands/spouses are the ones entitled to vote.

Women’s representation in PDCi’s decision-making process is low. Oftentimes, attendance in meetings & other gatherings is high but participation in decision-making is low. Encourage women’s representation, occupy leadership positions to articulate their views/opinions on the affairs or concerns of the cooperative.

Systems installed with security

3 Systems were installed but not fully implemented or followed. Just recently, there had been delays, discrepancies and other difficulties encountered in the preparation of the cooperative's financial report that a new bookkeeper (from within PDCi's staff) was assigned giving lesser responsibilities to the previous. The unsettled financial discrepancy is yet to be resolved.

Issues concerning the preparation of financial report including the discrepancy involving the bookkeeper is crucial to PDCi. To some extent this has created doubts that led to discouragement and lost of trust some leaders & members. This concern of PDCi requires serious & urgent attention.


RECOMMENDATION Critical analysis on the Feasibility of enterprise

3 The PDCi had received substantive assistance on this technical requirement during PDAP's period of support and had continued on their own thereafter. However, the General Manager and BOD thinks that there is still a need for TA particularly in evaluating its current status now that there is a law on organic agriculture with funding support from government.

The leaders & officers of PDCi had proven their capabilities in assessing the feasibility of enterprises. They welcome the evaluation of what they have accomplished so far and in line with future projects.

Net Profit Margin (Cost & benefit analysis)

3 The net profit margin is only at this level taking into account PDCi's purpose of promoting the organic rice technology and in enabling farmers to gain more through the cooperative.

Despite the successes achieved by PDCi, the primary focus of its existence remains as priority, that is for the benefit of its farmer members.

The collaborative efforts of the BOD and staff contributed largely to PDCi's ability to implement various internal control instruments except for the use of an effective financial reporting system, as preferred by the designated bookkeeper.

PDCi is complete with the necessary control instruments except that there are those not followed particularly the computerized financial program.

Increase sales and inventory performance

3 Capitalization remains a challenge to PDCi. Apart from the high interest charge that PDCi is faced with whenever they roll-out their existing capital, there were cases that more problems were created as they are unable to pay their obligation. The BOD realized for PDCi to have sufficient capital and ensure that contracts are formalized. PDCi had been lax in this regard as they don't usually do contracts with partners.

As PDCi gets ready for more challenging engagements, they need to have the necessary capitalization. They require technical support in this regard.

Current ratio that measures liquidity of enterprise operation

3

Profitability and Solvency – 3

Stability –3.0


RECOMMENDATION

Visibility of enterprise and promotion

3 In addition to the office of the PDCi, other physical structures established that facilitated its visibility included a warehouse, rice processing complex or RPC, seed bank, organic fertilizer plant, etc.

The cooperative has progressively achieved more infrastructure development projects in collaboration with various partners. This increased their visibility in the area.

Updated and reliable industry information (input suppliers-markets)

3 The BOD and staff were able to prepare and update profiles of input suppliers, and established partnership or engaged them between chain actors.

Regular updating is done and shared with PDCi leaders and members and has to be continued.

Provision of Field/Farm Technical assistance (extension services)

3 The Department of Agriculture (DA), with its competent field extensions continued to support PDCi particularly in the operationalization of the processing complex for the organic rice that is yet to be completed. It is expected to be operational this 2014. In addition, PDCi is yet to set up its rice mill that would require TA from DA. As agreed with DA, there is a need for a color sorter that can easily be facilitated by the National Food Authority (NFA) that will partner with PDCi for a year's operation.

There is continued technical assistance to PDCi’s enterprise to include DA, NFA, CDA, etc. Partnerships have to be increased/strengthened.


RECOMMENDATION

Quality control system that ensures product integrity

3 PDCI has continued to ensure their control systems on their organic rice produce to ensure integrity.

While a quality control system is in place that contributes to PDCi’s integrity, a review may be necessary and strengthened for continuous guidance of all including partners.

Return-on-Assets (RoA)

3 PDCi's assets started at Php 20M and is now Php 51M as of April 2014. Based on their audited financial statements, there were years when PDCi was not able to achieve their targets but in 2013, they targeted for Php 22M and had a Php 25M sale.

Through the years, PDCi is able to set well their targets and managed to be successful with a big margin in 2013. The previous unmet targets had seemingly served as a challenge to the leaders and members to carry on and aim further.

Returns on Equity (RoE)

3 All members of PDCi are always considered as priority in any business undertakings that the cooperative is engaged with. PDCi is able to share profit to members through patronage refund, dividends, 5% incentive from net income, etc. Also, members earn Php 2.00 more per sack following prevailing price of organic rice.

These practices of PDCi on RoE as agreed has been enjoyed by the members and be continued.

Stability – 3.0

Market Access – 3INDICATORS SCORE FINDINGS


Training of farmers on sustainable agricultural techniques to increased yield and improved quality of produce

3 PDCi continued its support to its farmer members through hands-on training on producing or ensuring good quality of produce and better markers. The support included regular visits of extension workers and other more experienced BOD/members to fellow members in need.

Hands-on technical support to farmer members on production and marketing has been useful to farmer members. PDCi is yet to aim more on increasing production surplus with high quality supply of produce both at domestic and export markets.

Competitive Price of products vis marketing contracts

3 PDCi members were always trying to catch up with comparable price ensuring that the quality is worth it. For example, trying to avoid breaks on the rice grains, etc.

PDCi were able to meet premium price that enables farmers to increase income as well as the enterprise operation.

Market intelligent 3 The cooperative has a system in gathering consumer & market information and monitor consumers’ needs at all levels.

Given the relevant consumer and market information obtained, PDCi has to improve and strengthen its use for improving marketing strategies.

Market arrangement and level of engagement with market

3 PDCi was engaged in a robust branding and commercialization strategy with the assistance of Upland Marketing Foundation, Inc. (UMFI). It managed to have a steady and segmented markets, at local & national levels.

Following existing market arrangements/engagements made, there is a need for diverse and segmented markets identified and business, both domestic and export.

Inclusivity – 2.8 INDICATORS SCORE FINDINGS


Quality of women participation in leadership and management

2 Not many of the women who participates in meetings are official members of PDCi. While there are two (2) female in the BOD, their participation in decision-making processes is not that high.

Since the majority of the members & BOD are male farmers, decision-making is dominated by the male members. The women farmers are often times quiet and would rather listen to the views of male farmers. Need for gender sensitive sessions.

Influencing policy for an inclusive and sustainable enterprise

3 PDCi has largely contributed in the formulation of the National Standards on Organic Rice Production and Processing (NSOR) and in the crafting of the National Organic Agriculture Program (NOAB) that was approved in January of 2012 - an initiative that developed a holistic, comprehensive and rolling 6-year program for organic agriculture in the country.

The PDCi has printed its name/track record at local, national and international arena in line with organic agriculture. This high recognition has to be

Equitable risks and benefit sharing

3 The cooperative is able to go into contracts with partners, with clear terms and condition, sharing of risks and benefits, etc. included.

Following the extensive experience of PDCi in entering into marketing contracts, they are now ready to aim for terms and conditions aiming for equitable sharing of risks and benefits, markets and partners.


RECOMMENDATION

Services are responsive to priority needs of members

3 PDCi members are always considered as priority in all of the services and any business undertakings of the cooperative. Continued technical support and fair price of their products are assured.

The PDCi is strategic and conscientious in providing services to its members, though there were instances that they require improvements or strengthening.

Farmers involvement in the supply/value chain

3 With the substantive experience of PDCi in organic rice farming, it has gained many partners and supporters as the cooperative continues to advocate organic agriculture and specifically organic rice farming. The BOD and its staff continues to find every opportunity to build/strengthen farmers' involvement in the supply/value chain through increased and sustained linkages.

The capability of PDCi in establishing enterprise linkages particularly on organic rice is no doubt commendable. This is evident through the formal linkages that the farmers were able to establish. To explore further is on farmers’ engagement at an industry-level (farmer-consumer) and explore more opportunities along the value chain that can be established.

Inclusivity – 2.8

Sustainability – 2.67


RECOMMENDATION

Linkages and Network Building

3 Linkages with various institutions/organizations were established, nurtured and strengthened by PDCi to include community-based structures, government, private suppliers or enterprises, etc.

PDCi has continuously been engaged with various partners particularly those in organic agriculture. Such partnerships have to be strengthened and nurtured.

Human resource development

3 PDCi has provided capacity building support to its leaders and members that included basic coop course, leadership, business management, entrepreneurship in organic farming, value formation, financial management, disaster risk management, etc. Staff members were likewise trained on almost similar sets of topics/areas and specifically adopted to organic rice operations.

As the BOD had cited, most of its farmer members had learned from the training courses given to them especially the hands-on or practicum ones. There is a need to institutionalize the human program aimed at upgrading skills.

Expanded benefits 3 All members are able to get expanded benefits from their engagement in the enterprise.

While PDCi is able to provide optimum benefits, important is aiming at expanded benefits as well.

Sustainability of product supply and markets

3 Oftentimes, farmer members of PDCi just have enough produce to address the need of markets.

Members to now be prepared to be able to meet the supply need by different markets.

Sustainability – 3.0


RECOMMENDATION Product enhancement through technology innovation and expansion of markets

3 As PDCi continues with its organic rice production, it continued to improve based on research results.

The leaders and members of PDCi are capable of improving their technology based on results of researches.

Environmental protection and disaster risk mitigation and promotes health and safety products

3 Most of the farmer members of PDCi are adopting organic farming through one’s own inputs while producing safe food, care for the environment at the same time and ensure that their farm practices are cost-efficient.

While PDCi farmer members are moving towards integrated diversified organic farming, they have to ensure that they are able to produce quality organic products.

Plan of InterventionsELEMENTS INTERVENTIONS TIMETABLE

Org’l.Management

- Regular review of PDCi’s (VGO) during membership gatherings, meetings, training, etc.

- Intensive follow-up of members with focus on membership’s orientation/re-orientation and value formation and strengthening.

- Continue encouragement and implementation of activities with more women representatives contributing in the decision-making process.

- Close follow-up on the financial discrepancy incurred by the former bookkeeper.

- Follow-up training on a most appropriate and effective financial recording/reporting system for PDCi.

- The GM has indicated the possibility of having an Assistant Manager who will provide substantive finance and administrative support to staff.

Within the project period

Within and after the project period


Within the project period


After the project period

Profitability and Solvency

- External evaluation of the PDCi particularly on its profitability and solvency status.

- PDCi needs to have sufficient capital and would therefore require technical support from AFA/PAKISAMA on its expansion. PDCi would like to ensure that contracts with suppliers and other partners are formalized.



ELEMENTS INTERVENTIONS TIMETABLE

Stability- Continued promotion of the importance or

value of organic rice production, within and outside of PDCi.


Market Access

- As articulated by some BOD, they need further technical guidance on business review and in the marketing of their product.


Inclusivity

- Conduct of sessions on gender sensitivity and gender responsiveness in the cooperative, with both women and men farmers as participants.


Sustainability- Continued capacity building of members in

response to KSA competencies identified. After the project

period

Plan of Interventions

Initial Results of Intervention• In line with the issues related financial reporting and discrepancy

in the finances, a re-shuffling of staff was held on April2014. A new staff member was assigned to function as bookkeeper (initially to serve for 3 months and an evaluation be conducted). A professional group has committed to assist the cooperative in establishing effective financial recording/reporting system.

• While PDCi has been preparing FS on their own, the leaders indicated the need for an assessment to improve/strengthen their capacity in dealing more enterprises in the future.

• During the annual General Assembly (GA) gatherings of PDCi, they were able to review their policies related to their rice enterprise and others (the latest GA was conducted March 2014)

Initial Results of Interventiono The intensive follow-up of members and re-orientation helped in the

increase of the commitment to produce more organic rice

o The preparation of the case study became a venue for the cooperative to have initial technical guidance on business review including evaluation of their profitability and solvency status (as articulated by some of the BOD)

o The design of the capability building of members in response to KSA competencies identified

Feedback on the use of assessment tool

• Overall, the AFA assessment tool is comprehensive and can easily be understood so its use for an interview or FGD with targeted groups are easily or smoothly facilitated.

• The tool may need to add a section that reflects the contribution or impact of the enterprise to the cooperative.

• It may be useful if instructional directions or guide are included as introductory part of each sections and examples be added where appropriate.

Thank you!

organic rice enterprise of pecuaria development cooperative ( pdci )

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