Value addition and constraints in the coconut market chain: lessons learned from coconut-producing municipalities, Quezon Province, Philippines

This paper investigated the coconut market chain in Quezon Province focusing on value addition and market development options as well as the constraints faced by farmers in adopting such options. Specifically, it (1)analyzed the value addition processes taking place in the coconut market chain and determined possibilities for farmers' adoption of these processes, (2)identified the various constraints that prevent coconut farmers from obtaining the gains from value addition, and (3)recommended initiatives that may help farmers overcome the constraints and support enterprise and market development efforts in the area. The coconut market chain is complex due to the multiplicity of coconut products being produced and traded and the large number of intermediaries involved. The chain show (a) the movement of the coconut from the source (towns of Sariaya and Tayabas) to outside town outlets and (b)the transformation of the raw material (husked nuts) into other products such as coconut oil (CNO), dessicated coconut (DCN), coconut milk, and virgin coconut oil (VCO). The various activities performed (including transportation, storage, packaging, labeling distribution) add value to the product as indicated by the increasing prices as products move from lower to higher stages of the market chain. Participation of majority of coconut farmers in the market chain activities is generally limited to producing husked nuts of processing these into copra which they sell usually to village traders. This situation results to low income due to the low value farmers receive for their products and their small maketable surplus. Quezon, they country's largest coconut producing province, has poverty incidence of 39.8%. Several value adding-activities and marketing options provide opportunities for increasing farmers' income. These include: (1) selling husked nuts or copra directly to the town traders or processing plants within or outside town, (2) processing the husked nuts into VCO and selling to town buyers, and (3) producing coco wine and selling to higher-level markets. However, farmers are constrained from undertaking these activities due to the following: inadequate technical knowledge and capital for processing equipment and operations, lack of access to favorable markets, and limited coconuts output for economic scale of transport to outside markets and processing into high-value products, among others. Assistance needed by farmers is related to those that would enable them to engage in new coconut-based enterprises, improve their products in order to get better prices, and obtain information on production and marketing. The critical needs are capital, technical assistance, equipment and tools, and market information. They also need to increase their harvest to support the raw material needs of the new enterprises and to be able to produce high quality products. They need reliable price information and access to other possible outlets for their products. The following courses of action could help address the market development needs of farmers: 1) Re-orientation of the coconut extension program for a holistic package of services on technology, information credit, markets, and entrepreneurship a) Institutionalize current efforts and strategies of PCA through on going poverty reduction programs (b) Provide the necessary administrative facility for the refocused extension program based on the proposed re-structuring under the Rationalization Plan of PCA which provides greater focus on marketing assistance and other for support to farmers. The necessary budget and re-tooling of staff should be provided. (c) Formulate and implement the necessary training program on market development, livelihood and entrepreneurship in coordination with relevant agencies (d) Institute a comprehensive VCO training program covering skills, technology, product standard and development, marketing and business plan (e) Formulate and adopt product standards for coco wine (f) Provide investment and credit support for equipment for VCO and coco wine to ensure adherence to good manufacture practices for food products (g) Ensure implementation of product standards for copra and VCO (h) Provide a built-in mechanism for monitoring and impact assessment of the refocused extension program 2) Full support for the strengthening of FOs to enable them to undertake viable coconut-based enterprises and enhance their role in market development (a) Assess present FO program to identify problems, overlaps and areas for improvement (b) Support the training needs of FOs in terms of better organization and management, development of business plans, linkage to credit institutions and markets and other follow-up activities (c) Organize coconut FOs into homogeneous units or clusters to address common concerns and effect efficient delivery of support services (3) Improvement of farm-to-market roads and effective use of market facilities for efficient marketing of coconut products (a) For local officials to coordinate and prioritize road network improvement (b) For local officials to resolve problems regarding use by farmers of newly- constructed trading post in Tayabas town (c) For FOs to pursue plan to use the newly-constructed trading post in Sariaya town.