Abaca - PHP Version 5.6.21 - Philippine Rural Development Project

Transcription

PHILIPPINE RURAL
DEVELOPMENT PROJECT
(PRDP)
I-PLAN Component
Mindanao Cluster
VALUE CHAIN ANALYSIS AND
COMPETITIVENESS STRATEGY:
ABACA FIBER
Mindanao
DEPARTMENT OF AGRICULTURE
Mindanao Regions
Página 0
MB/II.- ABACA VCA STUDY, DA-PRDP- MINDANAO CLUSTER
October 2014
CONTENT“
CONTENTS
Page
EXECUTIVE SUMMARY
7
Section 1: INTRODUCTION
10
A.
Background Information and Objectives
10
B.
VCA Objectives
11
C.
Methodology and Approach
11
Section 2: OVERVIEW OF THE INDUSTRY
13
A.
Production Description
13
B.
Production Trends
15
Section 3: NATURE AND STRUCTURE OF INDUSTRY
25
A.
Value Chain Mapping
25
B
Key Players and Function
26
C.
Nature of Interfirm Relationship
33
D.
Price and Cost Structure
35
Section 4: MARKETS AND MARKET OPPORTUNITIES
38
A.
Markets and Market Trends
38
B.
Price Trends
50
Section 5: SUPPORT MARKETS
53
A.
Financial Services
53
B.
Non-Financial Services
53
Section 6: ENABLING ENVIRONMENT
55
A.
Formal Rules, Regulations, and Policies
55
B.
Informal Rules and Socio-Cultural Norms
56
Section 7: CONSTRAINTS AND OPPORTUNITIES
59
Section 8: COMPETITIVENESS DIRECTIONS
66
A.
Competitiveness Vision
66
B.
Priority Constraints/Opportunities and Interventions
67
Section 9: CONCLUSIONS AND RECOMMENDATIONS
79
Annex 1, 2, 3, 4, 5, AND 6: PRIORITIZATION OF INTERVENTION STRATEGY PER
REGION
81
1
LI“T OF TABLE“
No.
Title
Page
1
Standard Grades of Hand- and Spindle Stripped Fiber
13
2
Uses of Abaca Fiber and Grade Requirements
14
3
Key Abaca Products Produced and Traded by Mindanao Regions
15
4
World Production of Abaca Fiber, 2008 to 2012
15
5
Abaca Production in the Philippines, PhilFIDA and BAS data, 2011 - 2012
16
6
Abaca Production in the Philippines ranked according to Volume. 2013
16
7
Top 10 Abaca Producing Provinces in the Philippines, 2013
17
8
Abaca Production in Mindanao, 2009 and 2013
18
9
Abaca Production Trends in Zamboanga Peninsula, 2009 to 2013
19
10
Abaca Production Trends in Northern Mindanao, 2009 to 2013
20
11
Abaca Production Trends in Davao Region, 2009 to 2013
21
12
Abaca Production Trends in SOCCSKSARGEN, 2009 to 2013
22
13
Abaca Production Trends in CARAGA, 2009 to 2013
23
14
Abaca Production Trends in ARMM, 2009 to 2013
24
15
Volume of Abaca Baling by Grade in Mindanao Regions, Jan – Nov 2013
30
16
Breakdown of Postharvest Facilities in Davao Region, 2014
30
17
Licensed Abaca Intermediaries in Mindanao, 2013 - 2014
31
18
Projected Abaca Fiber Requirement per Month: NPI
32
19
List of Licensed Processors in Mindanao, 2013 to 2014
33
20
Cost and Return Analysis of Low Input System One Hectare Farm in Mindanao
Regions, 2014
35
21
Relative Financial Position of VC Players in the Mindanao Abaca Industry
37
22
World Export Volume of Abaca Fiber and Manufactures, 2008 to 2012
38
23
World Exports in Fiber Equivalent, 2008 to 2012
39
24
World Imports of Abaca and Manufactures, 2008 to 2012
40
25
Philippine Importation of Abaca Fiber
46
26
Annual Domestic Consumption of Abaca Fiber by Subsector, 2003 to 2012
47
27
Projected Consumption of Fiber for Exports
49
28
Weighted Average of Export Prices of Abaca Fiber: HANDSTRIPPED
50
29
Weighted Average of Export Prices of Abaca Fiber: SPINDLE STRIPPED
50
30
Farm Gate Price of Abaca Fiber, 2009 to 2013
51
2
No.
Title
Page
31
GBE Prices of the Different Grades of Abaca Fibers, 2011 and 2012
51
32
Services Provided by Government Agencies
54
33
Tariffs on Abaca and Abaca Products for Selected Major Importers
55
34
Constraints and Opportunities
59
35
Summary of Constraints/Opportunities and Interventions
71
3
LI“T OF FIGURE“
No.
Title
Page
1
Uses of Abaca
13
2
Breakdown of Abaca Production in the Philippines by Island Group, 2013
17
3
Value Chain Map of Abaca Industry in Mindanao
25
4
Geographic Flow Of Abaca Fibers
26
5
Percentage Breakdown of Abaca Fiber Production by Method of Stripping, Jan –
Nov 2013
29
6
Relative Financial Position of VC Players in the Mindanao Abaca Industry
36
7
Percentage Breakdown of World Export of Abaca Fiber by Originating Countries,
2008 to 2012
41
8
Percentage Breakdown of Abaca Fiber Exports by Destination, 2012
42
9
World Abaca Exports by Product Group, 2008 to 2012
43
10
Percentage Distribution of World Abaca Cordage Exports by Destination, 2012
43
11
Percentage Distribution of World Abaca Pulp Exports by Destination, 2012
44
12
Abaca Handicraft Exports – TADECO Livelihood and Training Center
45
13
Glatfelter/New Tech Pulp Sustainability Initiative in Catanduanes
45
14
Ahlstom Sustainability Certification Initiative in the Philippines
46
15
Indicative Percentage Utilization/Consumption of Abaca in the Philippines, 2012
47
16
Denims with 40% abaca by Asia Textile Mills
49
17
Synthesis of Competitiveness Vision, 2014 to 2020
66
4
ACRONYM“
ACEF
ACPC
ACCESS
AFMP
AMCFP
ASEAN
ARMM
BAFPS
BACs
BAS
BAPC
BSWM
BPI
CASI
CSU
DA
DA-BAR
DENR
DOH
DOST
DTI
FAO
FEP
FGD
FSC
GAP
GBEs
GATT
GMP
ha
KRLTC
KII
LBP
LGU
MFIs
MFI
MHT
MLGU
MRDP
MT
NCCAP
PCIP
Agricultural Competitiveness Enhancement Fund
Agricultural Credit Policy Council
Accelerating Change in the Countryside thru Equity Sharing Strategy
Agri-Fishery Microfinance Program
Agro-Industry Modernization Credit Finance Program
Association of Southeast Asian Nations
Autonomous Region in Muslim Mindanao
Bureau of Agricultural and Fisheries Product Standards
Bank-Accredited Cooperatives
Bureau of Agricultural Statistics
Bukidnon Agricultural Productivity Center
Bureau of Soils and Water Management
Bureau of Plant and Industry
Catanduanes Abaca Sustainable Initiative
Caraga State University
Department of Agriculture
Department of Agriculture Bureau of Agriculture Research
Department of Environment and Natural Resources
Department of Health
Department of Science and Technology
Department of Trade and Industry
Food and Agriculture Organization
Farmer Entrepreneurship Program
Focus Group Discussion
Forest Stewardship Council
Good Agricultural Practices (Global GAP)
Grading and Bailing Establishments
General Agreement on Tariffs and Trade
Good Manufacturing Practices
Hectare(s)
Kawiagan sa Ranao Livelihood Training Center
Key Informant Interview
Land Bank of the Philippines
Local Government Unit
Micro Financing Institutions
Most Favoured Nation
Manila Hemp Trading (Abaca Pulp)
Municipal Local Government Units
Mindanao Rural Development Program
Metric Tons
National Climate Change Action Plan
Provincial Commodity Investment Plan
5
PDP
PhilFID
PLGUs
PRDP
PSA
RCEP
SAS
SPMI
SOCCSKSARGEN
SUCs
VCA
WII
Philippine Development Plan
Philippine Fiber Industry Development Authority
Provincial Local Government Units
Philippine Rural Development Project
Philippine Statistics Authority
Regional Comprehensive Economic Partnership
Sustainable Agriculture Standard
Specialty Pulp Manufacturing Incorporated
South Cotabato, Cotabato, Sultan Kudarat, Sarangani and General Santos
City
State Universities and Colleges
Value Chain Analysis
Weather-based index
6
EXECUTIVE “UMMARY
This report provides an overview and analysis of the Abaca industry in Mindanao with the aim of
identifying main leverage points and key strategies to improve competitiveness and promote
development in a pro-poor and sustainable manner. It will provide the basis for the formulation of
the P o i ial Co
odit I est e t Pla a d ill la the fou datio fo P‘DP s oope atio
ith
the private sector and other government agencies active in the Abaca industry.
Abaca fiber is superior over all other natural fibers because of its great strength and its resistance to
the action of water. Considered the strongest of natural fibers, it is three times stronger than cotton.
The p odu t is k o
o ld ide as the Ma ila He p , ith the Philippi es as the top p odu er and
exporter. The country trades five types of Philippine abaca products in the world market, namely:
fiber, pulp, cordage, yarns and fabrics, and fibercraft.
World production of abaca in 2012 reached 77.9 thousand metric tons (MT). The Philippines
accounted for 83% of the world production. The second largest abaca producing country is Ecuador,
where abaca is grown on large estates and production is increasingly mechanized. In the Philippines,
the abaca sector consists mainly of smallholders. Production from other Southeast countries
comprised 2% of the world production. The abaca industry is threatened by serious and aggressive
moves by Indonesia to massively p odu e a a a u de its go e
e t s efo estatio p og a .
In the Philippines, abaca is grown in 56 provinces. According to the Bureau of Agricultural Statistics
(BAS)/Philippine Statistics Authority (PSA) the country produced 68,510.46 MT of abaca fiber in
. As pe PhilFIDA s data, Philippi es p odu ed a total of ,
. MT of a a a fi e . A a a is
cultivated in 138,369 hectares in 2013. Although, Mindanao accounted for 32% of the area planted
to abaca, the highest production was accounted by Bicol Region at 24,078 MT, followed by Eastern
Visayas with 16,597 MT. Three of the six regions in Mindanao namely: Davao Region, Caraga, and
ARMM are among the top 5 abaca producing regions in the Philippines. Mindanao regions
accounted for 34% of the total production.
National average yield in 2013 was 470 kilograms per hectare. The top 3 high yielding regions are
ARMM (620 kg/ha), Caraga (560 kg/ha), and Davao Region (550 kg/ha). Bicol Region ranks 4 th in
terms of average yield. Average yield of all Mindanao regions was at 490 kilograms per hectare,
which is 4% higher than the national average. The top abaca producing province in the Philippines is
Catanduanes. Among the top 10 producing provinces, it also has the highest yield at 820 kilograms
per hectare. Abaca farms in Catanduanes are among the first who have achieved a Rainforest
Alliance Certification on Sustainable Farming.
Between the period 2009 and 2013, Philippine abaca production decreased by 1%. Total production
in Mindanao in 2013, however, decreased by 7% over 2009 performance. Among Mindanao regions,
Davao had the highest percentage decrease in production at 29% due to typhoon devastation. On
the other hand, Zamboanga Peninsula registered the highest percentage increase at 198%.
The abaca supply chain is typified by a multi-layer system of trading. The raw fibers are mostly
collected by the provincial and municipal intermediaries who sell to Grading Baling Establishments
(GBEs) and processors. For abaca farms situated in remote areas, barangay intermediaries
consolidate the raw fibers of neighboring farmers, before selling them to municipal or provincial
traders. For cooperatives engaged in trading, they sell either to GBEs or to higher level traders or
directly to processors or manufacturers depending on the volume they have accumulated.
7
Intermediaries consist of traders, buying stations, and the GBEs. Traders are classified depending on
the volume of fibers traded.
The typical size of abaca farms in Mindanao ranges from 1 to 2 hectares. Many of the farms are
located in upland and secondary forests and cultivated by indigenous people who obtained their
land they are currently toiling from ancestral domain areas. Planting is generally dependent on
available number of seedlings readily accessible to farmers.
Farmers tend to pay less attention to their abaca farms especially during the first 18 months. The
first harvest is done 18 to 24 months after planting. The stalks are considered mature and ready for
harvest when the flag leaf finally appears. Subsequent harvests are done at 3 to 4 month intervals.
Farmers across all regions indicate the lack of mechanical stripping machine and drying facility as the
key constraint in producing high quality fiber.
Tuxying is usually done in the farm. The amount of tuxy recovered by weight of the stalk and the
quantity produced per unit of time are dependent on the skill of the tuxeros. Stripping is done either
by hand or mechanical means. Cooperatives that are into trading have mechanical/spindle stripping
machine provided by various funding organizations. Fiber recovery when spindle stripping machine
is used is about 43% compared to 29% when stripping is done by hand.
There are 6 abaca pulp mills operating in the Philippines; 1 in Laguna, 2 in Bicol; 2 in Leyte and 1 in
Mindanao. These processors consume about 63% of the total abaca fiber produced and account for
71.2% of domestic consumption. Based in Iligan-Northern Mindanao, NewTech Pulp, Inc. (NPI) is the
biggest pulping plant in the world with rated capacity of 60 MT per day.
Out of 7 cordage manufactures operating in The Philippines, 2 companies operates in Davao Region,
while the fibercraft subsector, including handmade papermaking and carpet manufacturing, consists
primarily of micro and small enterprises that cater mostly the domestic market. Most of the
fibercraft exports are located in Bicol and Cebu.
While majority of the abaca farmers are members of associations and/or cooperatives, Relationship
between abaca farmers and trade s, a d t ade s a d GBEs/la ge p o esso s is ge e all a s le gth
although the e is a se la e of lo g-te
elatio ship th ough the suki-system. Market
relationships, in general, did not permit close cooperation between suppliers and buyers and hardly
contributed to the systemic upgrading of the supply chain.
World export volume in 2012 was about 44.5 thousand MT. Philippines accounted for 75% of the
total e po t olu e a d E uado supplied the e ai i g %. E uado s e po ts o sisted ai l of
raw fibers while exports from the Philippines comprised primarily of abaca manufactures, with fiber
comprising only 13% of the exported products. Total export volume in fiber equivalent in 2012 was
about 66.4 thousand MT. Philippines accounted for 83% while E uado s sha e as at %. E uado
recently announced that it would cut down its abaca production by as much as 7,000 MT next year.
Major importers of abaca products are the European countries, United States, and Japan.
The Philippines would need a supply of about 133.3 thousand MT of abaca fiber. This implies the
need to double current production of abaca fiber. More importantly, there is a need to focus
interventions towards the production of excellent and good quality fiber.
To sustain and grow the world market for abaca, the industry has to ensure reliability of supply and
improve its price competitiveness vis-à-vis synthetic substitutes and other natural fibers. Likewise,
industry players also recognize that improved compliance to social and environment standards will
8
play an important role in sustaining and developing new markets as well as in ensuring the long-term
sustainability of the industry. Achievement of these objectives requires a number of priority steps to
be taken:
a)
Adequate supply of disease resistant planting materials, which give higher yields of superior
fiber
b)
Improved soil nutrient management and fertilizer use
c)
Enhanced flow and quality of extension services to facilitate adoption of good agronomic
practices and achievement of sustainability certification
d)
e)
Increased availability and access to mechanized and efficient postharvest technologies
necessary for the consistent production of high quality fiber
Improved physical/infrastructure linkages to input, support, and product markets
f)
Improved incentives to produce quality fiber and pricing transparency and consistency
g)
Improved communication, coordination, and collaboration between and among value chain
players
9
“e tio :
INTRODUCTION
A. BACKGROUND INFORMATION AND OBJECTIVES1
The agricultural sector strategy (Agri-Pinoy) embodied in the Philippine Development Plan (PDP) for
2011-2016 advances the principles of inclusive growth, food staple sufficiency, natural resource
management and area-based development. Agri-Pinoy also includes the following new strategies: (i)
institutionalizing regionally-based, spatial planning (ii) developing a systems approach for both
planning and resource allocation; (iii) providing the critical infrastructure needed by priority value
chains; and (iv) building a more resilient production base to accommodate fluctuations in global
markets and effects of climate change. Complementing the Agri-Pinoy strategy is the National
Climate Change Action Plan (NCCAP) which highlights the priority to be given to the rural sector in
pursuing climate adaptation measures.
The Philippine Rural Development Project (PRDP), a flagship project of the Department of
Agriculture (DA), is aligned with the Agri-Pinoy strategy. It is a six-year project (2013-2019) designed
to esta lish the go e
e t s platfo
fo a ode , li ate-smart and market-oriented agrifishery sector. Externally, it will focus on expanding market access and improving competitiveness.
Internally, it will introduce reforms in operating the DA bureaucracy. Specifically, it aims to achieve
the following development objectives:



At least, five percent (5%) increase in annual real household incomes of farmer beneficiaries;
30% increase in income for targeted beneficiaries of enterprise development
Seven percent (7%) increase in value of annual marketed output
20% increase in number of farmers & fishers with improved access to DA services
To facilitate the achievement of above objectives, the project has four main components, namely:




I-PLAN: Investment for AFMP Planning at the Local and National levels
I-BUILD: Intensified Building-Up of Infrastructure and Logistics for Development
I-REAP: Investments for Rural Enterprises and Agricultural and Fisheries Productivity
I-SUPPORT: Implementation Support to PRDP
The design of PRDP and its implementation aspects draw heavily on the experiences of the
Mindanao Rural Development Projects (MRDP 1 and 2), a program that has been successfully
implemented over the past decade. The project adopts a value chain development approach as a
platform for promoting inclusive, climate resilient, and sustainable growth in key agricultural
subsectors and value chains.
.Abaca is one of the priority products of Mindanao. World production is valued at around USD60
million a year. The Philippines is the top producer and exporter of abaca. In 2013, Mindanao
accounted for 34% of the production. The industry sustains more than 1.5 million Filipinos who,
directly or indirectly, depend on it for a living. Direct dependents include abaca farmers,
classifiers/sorters, manufacturers, traders, exporters and hundreds of fiber craft processors who
provide employment to thousands of Filipinos.
Overview of PRDP was taken from the Program Information Document – World Bank website
1
10
Abaca is a very suitable plant for incorporation in the rain forestation farming system. It can be
successfully used as cover crop especially in former monoculture coconut plantations. Intercropping
of abaca with coconut palms and other tree species on the hillsides will improve the conditions for
biodiversity and prevent soil erosion. The water holding capacity of the soil will be improved and
floods and landslides will also be prevented.
B. OBJECTIVES OF THE VCA
This report provides an overview and analysis of the abaca fiber value chain, linking the international
context to the national, regional, and provincial contexts, with the aim of identifying main leverage
points and key strategies to improve Mindanao s ompetitiveness and promote development in a
pro-poor and sustainable manner. It will provide the basis for the formulation of the Provincial
Co
odit I est e t Pla a d ill la the fou datio fo P‘DP s oope atio
ith the p i ate
sector and other government agencies active in the abaca fiber industry. Specifically, the value chain
analysis aims to:
a)
Provide an in-depth understanding of the range of factors and relationships that affect the
performance of the abaca fiber industry in Mindanao and its regions in general, including end
markets, enabling environment and coordination/cooperation among firms.
b) Identify in a participatory process the systemic chain level issues that hinder or promote the
gainful participation of rural households, sustainability of the chain, and its competitiveness in
general.
c)
Under a participatory process, identify and prioritize interventions needed to overcome
bottlenecks throughout the chain that would foster value chain competitiveness and climate
change resiliency.
d) Identify and explore how to catalyse private and public sector stakeholders in the abaca industry
to collaborate for improved industry performance
C. METHODOLOGY AND APPROACH
An initial desk study was conducted to collect and summarize information from currently available
reports and studies. It provided guidance to issues that needed to be the focus of field research. The
field work component of the study was conducted using qualitative research techniques particularly
Key Informant Interviews (KII) and Focus Group Discussions (FGDs). Key informants and participants
to the FGDs consisted of farmers, traders, manufacturers, converters, and representatives from
relevant government agencies.
Key informant interviews were used for collecting data on
individuals pe spe ti es, e pe ie es, a d ua titati e data. FGDs e e effe ti e i ge e ati g
broad overviews of issues of concerns to the groups or subgroups represented and in the
triangulation/vetting of information obtained from the KII.
Constraints and interventions were identified and further elaborated based on iterative and
inductive analysis of responses during the KII and FGD/Stakeholders Workshop primarily from the
following perspectives:
11




Context of key informants and FGD participants
Third party observations (e.g., government agencies, providers, VC facilitators with
experience in abaca VC development projects, etc.) were important for suggesting
important issues to explore and for substantiating the results of the interviews
Experiences of other abaca producing areas such as Regions V and VIII and Ecuador
Past assessment studies of the Philippine abaca fiber industry
12
“e tio :
OVERVIEW OF THE INDU“TRY
A. PRODUCT DESCRIPTION
The most important part of the abaca is the stalk which is the source of the fiber. Abaca fiber is
superior over all other natural fibers because of its great strength and its resistance to the action of
water. Considered the strongest of natural fibers, it is three times stronger than cotton. The product
is k o
o ld ide as the Ma ila He p , ith the Philippi es as the top producer and exporter.
The official standard grades of abaca fiber are divided into three (3) classes depending on the
manner of extraction, namely: hand-stripping, spindle-stripping and decortication. Quality is
determined by strength, cleaning, color, texture and length of the fiber. In terms of cleaning (which
is a direct result of the stripping knife used), the standard grades for hand- and spindle-stripped are:2
Table 1.- Standard Grades of Hand- and Spindle Stripped Fiber
Classification
Grade
Excellent
S2, S3
Good
I, G, H
2
FIDA Website
13
Table 1.- Standard Grades of Hand- and Spindle Stripped Fiber
Classification
Grade
Fair
JK, M1
Coarse
L
Residual
Y1, Y2, O, T, WS
Spindle-st ipped a a a fi e s a e i di ated
and so on.
the lette “
efo e the official grade, i.e., S-S2, S-I,
Source: Phil FIDA Website
The country trades five types of Philippine abaca products in the world market, namely: fiber, pulp,
cordage, yarns and fabrics, and fiber craft. Table 2 shows the different uses of abaca and their
corresponding grade requirements:
Table 2.- Uses of Abaca Fiber and Grade Requirements
Uses
Grade/Type
Cordage Products: ropes, twines, marine cordage, binders, cord
Pulp and paper manufactures:
Tea bags, filter paper, mimeograph stencil, base tissue, sausage skin,
base paper
Cigarette paper, currency paper, chart file folders, envelopes, time cards,
book binders and parchment paper
S2, S3, I, G, JK, MI, Y
S2, I, G
G, JK, M1, Y, OT
Microglass air filters media, x-ray negative, optical lens wiper, vacuum
filter, oil filter
S2, I, G, JK
Nonwoven: medical gas masks and gowns, diapers, hospital linens, bed
sheets
S2, I, G, JK
Handmade paper: paper sheets, stationeries, all-purpose cards, lamp
shades, balls, dividers, placemats, bags, photo frames and albums, flowers,
table clock
All grades
including wastes
Fiber crafts: handbags, hammocks, placemats, rugs, carpets, purses and
wallets, fishnets, door mats, table clock
S2, G
Handwoven fabrics:
Sinamay, pinukpok, tinalak, dagmay
Sacks, hotpads, hemp, coasters
Baskets
Wallpaper
High grades
S3, H
Lupis and bacbac
S2, G, KJ, Y
Furniture
S2, bacbac
Others - wire insulator
components/composites
and
cable,
automobile,
automobile
JK, M1, Y, OT
Source: PhilFIDA Website
Mindanao is a producer of both abaca fiber and finished products, with Davao Region and Caraga as
its biggest producers in terms of volume and area planted. Key abaca products produced and traded
by Mindanao are presented in Table 3.
14
Table 3.- Key Abaca Products Produced and Traded by Mindanao Regions
Region
Fiber
Pulp
Cordage
Fibercraft
Zamboanga Peninsula


Northern Mindanao

Davao Region

Soccsksargen


Caraga


ARMM





Source: KII/FGD
B. PRODUCTION TRENDS
1. Global Production
World production of abaca in 2012 reached 77.9 thousand metric tons (MT). The Philippines
accounted for 83% of the world production. The second largest abaca producing country is Ecuador,
where abaca is grown on large estates and production is increasingly mechanized. In the Philippines,
the abaca sector consists mainly of smallholders. Philippine abaca has nine grades for each type of
cleaning compared to the five grades of Ecuador. As such, Philippine abaca presents a wider
spectrum of quality choices and answers the various needs of different manufacturers like the
papermaking industry.
Production from other Southeast countries comprised 2% of the world production. The abaca
industry is threatened by serious and aggressive moves by Indonesia to massively produce abaca
u de its go e
e t s efo estatio p og a . It is also said that a a a p odu tio i Ke a a d
Equatorial Guinea is also increasing.
Table 4. World Production of Abaca Fiber, 2008 to 2012
Country
World
Philippines
Ecuador
Other Countries
2008
2009
2010
2011
2012
Volu e MT
91.3
66.9
70.1
85.0
77.9
% Share
100%
100%
100%
100%
100%
Volu e MT
77.4
54.6
57.2
73.3
64.8
% Share
85%
82%
82%
86%
83%
12
10.4
11.1
9.7
11.1
% Share
13%
16%
16%
11%
14%
Volu e MT
1.9
1.9
1.8
2
2
% Share
2%
3%
3%
2%
3%
Volu e MT
Note: Philippine production volume statistics above are not consistent with BAS data. It would seem that the FAO statistical
bulletin took the PhilFIDA statistics.
Source: FAO Statistical Bulletin on Fibers/September 2013
15
In the Philippines, abaca is grown in 56 provinces. According to the Bureau of Agricultural Statistics
(BAS)/Philippine Statistics Authority (PSA), the country produced 68,510.46 MT of abaca fiber in
2012. As per PhilFIDA s data, Philippines produced a total of 64,806.06 MT of abaca fiber. To be
consistent with the other VCA reports, BAS data will be used in this subsection.
Table 5. Abaca Production in the Philippines, PhilFIDA and BAS data, 2011 - 2012
PhilFIDA
BAS/PSA
2011 Production Volume
73,274.00
68,612.68
2012 Production Volume
64,806.06
68,510.46
% Share to World Market
83%
88%
(12%)
(0.15%)
% Change in Production: 2012/11
2. Domestic Production
Table 6. Abaca Production in the Philippines ranked according to Volume. 2013
Region
Volume (MT)
Area (Ha)
Yield (MT/ha)
% to RP Vol
PHILIPPINES
64,952
138,369
0.47
100%
Bicol Region
24,078
44,509
0.54
37.07%
Eastern Visayas
16,597
36,237
0.46
25.55%
Davao Region
7,269
13,187
0.55
11.19%
Caraga
5,828
10,437
0.56
8.97%
ARMM
4,974
8,067
0.62
7.66%
Northern Mindanao
2,244
5,381
0.42
3.45%
Western Visayas
1,741
6,530
0.27
2.68%
Soccsksargen
954
5,924
0.16
1.47%
Zamboanga Peninsula
590
1,965
0.30
0.91%
Central Visayas
415
3,325
0.12
0.64%
Mimaropa
121
1,434
0.08
0.19%
Central Luzon
113
543
0.21
0.17%
Calabarzon
15
331
0.05
0.02%
CAR
13
499
0.03
0.02%
Source: BAS/PSA
Abaca is cultivated in 138,369 hectares in 2013. Collectively, Mindanao accounted for 32% of the
area planted to abaca. Total national production was reported at 64,952 MT with the highest
production in Bicol Region at 24,078 MT followed by Eastern Visayas with 16,597 MT. Three of the
six regions in Mindanao namely: Davao Region, Caraga, and ARMM are among the top 5 abaca
producing regions in the Philippines. Mindanao regions accounted for 34% of the total production.
National average yield in 2013 was 470 kilograms per hectare. The top 3 high yielding regions are
ARMM (620 kg/ha), Caraga (560 kg/ha), and Davao Region (550 kg/ha). Bicol Region ranks 4 th in
16
terms of average yield. Average yield of all Mindanao regions was at 490 kilograms per hectare,
which is 4% higher than the national average.
The low productivity of abaca farms in the Philippines has been attributed to use of poor quality of
planting materials and disease incidence. Viruses such abaca bunchy top, abaca mosaic, and abaca
bract mosaic are the top three diseases affecting abaca farms.
The top abaca producing province in the Philippines is Catanduanes. Among the top 10 producing
provinces, it also has the highest yield at 820 kilograms per hectare. Abaca farms in Catanduanes are
among the first who have achieved a Rainforest Alliance Certification on Sustainable Farming. With
its high volume, lead firms tend to focus more on Catanduanes especially in connection with the
achievement of the Rainforest Alliance certification. Northern Samar and Leyte ranked second and
third, respectively. Six provinces from Mindanao comprised the rest of the top 10 abaca producing
provinces in the country.
Table 7. Top 10 Abaca Producing Provinces in the Philippines, 2013
Province
Volume (MT)
Area (Ha)
Average Yield (MT/ha)
Catanduanes
20,092
24,622
0.82
Northern Samar
7,434
12,033
0.62
Leyte
4,833
11,970
0.40
Surigao del Sur
3,625
5,500
0.66
Davao Oriental
3,484
6,422
0.54
Sulu
3,196
5,250
0.61
Davao del Sur
3,067
6,245
0.49
Southern Leyte
2,498
5,621
0.44
Lanao del Sur
1,696
2,475
0.69
Agusan del Sur
1,674
3,236
0.52
17
Table 7. Top 10 Abaca Producing Provinces in the Philippines, 2013
Other Provinces
12,971
Legend
52,034
0.25
Mindanao Province
Source: BAS/PSA
Between the period 2009 and 2013, Philippine abaca production decreased by 1%. Total production
in Mindanao in 2013, however, decreased by 7% over 2009 performance. The main reasons for the
decline in production according to players and key informants interviewed were the viral diseases
that affected some of the abaca farms and the destruction of farms caused by Typhoon Pablo.
Among Mindanao regions, Davao had the highest percentage decrease in production at -29%. On the
other hand, Zamboanga Peninsula registered the highest percentage increase at 198%, but with the
lowest volume and area planted among Regions in Mindanao.
Table 8. Abaca Production in Mindanao, 2009 and 2013
Regions
Production Volume (MT)
% Change
2013/2009
2009
2013
PHILIPPINES
65825.41
64951.6
-1%
MINDANAO
23594.71
21858.03
-7%
Zamboanga Peninsula
198.11
589.54
198%
Northern Mindanao
1741.23
2243.88
29%
Davao Region
10212.45
7268.63
-29%
Soccsksargen
800.34
953.65
19%
Caraga
5861.19
5827.89
-1%
ARMM
4781.39
4974.44
4%
Source: BAS/PSA
Zamboanga Peninsula
A
Abaca production in the region increased from 198.11 MT in 2009 to 589.54 MT in 2013. Production
was on an increasing trend until 2012 but slightly dipped in 2013 due to decrease in average yield.
The decrease in yield was due to fungal diseases.
Abaca production in the region is more or less evenly spread out among the four provinces.
Zamboanga Sibugay had the highest average yield in 2013. Target area for expansion is about 1000
hectares.
Trends in Zamboanga Peninsula, 2009 to 2013
18
Table 9.- Abaca Production Trends in Zamboanga Peninsula, 2009 to 2013
2009
2010
2011
2012
2013
Annual %
Growth Rate
198.11
230.96
630.77
675.30
589.54
39.52%
Area Planted
1,919.00
1,932.00
1,948.00
1,955.00
1,965.00
0.48%
Average Yield
0.10
0.12
0.32
0.35
0.30
38.12%
Volume
56.89
73.65
160.85
167.10
174.53
41.36%
Area Planted
885.00
894.00
907.00
907.00
910.00
0.56%
Average Yield
0.06
0.08
0.18
0.18
0.19
39.67%
Volume
39.63
38.77
102.48
98.87
111.25
36.14%
Area Planted
300.00
305.00
308.00
310.00
315.00
1.00%
Average Yield
0.13
0.13
0.33
0.32
0.35
33.47%
Volume
71.92
88.23
294.14
302.73
182.59
30.78%
Area Planted
538.00
538.00
538.00
538.00
420.00
-4.39%
Average Yield
0.13
0.16
0.55
0.56
0.43
45.04%
Volume
29.67
30.31
73.30
106.60
121.17
61.68%
Area Planted
196.00
195.00
195.00
200.00
320.00
12.65%
Average Yield
0.15
0.16
0.38
0.53
0.38
30.03%
Indicators
ZAMBOANGA PENINSULA
Volume
Zamboanga del Norte
Zamboanga del Sur
Zamboanga Sibugay
Zamboanga City
Source: BAS/PSA
Northern Mindanao
During the last five years, abaca production in Northern Mindanao increased by an average of 5.77%
per year. From 2009 to 2013, production consistently increased. Percentage increase in yield was
higher than the annual percentage growth in area planted.
Bukidnon and Misamis Oriental are the main abaca producing provinces in Northern Mindanao.
Production in Bukidnon slightly decreased between 2011 and 2012 slightly decreased because some
farms were infested with a disease called virus named alkoheres. Camiguin has the highest average
yield but area planted is very small. Misamis Oriental registered the 2nd highest average yield.
19
Table 10.- Abaca Production Trends in Northern Mindanao, 2009 to 2013
2009
2010
2011
2012
2013
Annual %
Growth Rate
Volume
1,741.23
1,767.88
1,824.77
2,042.71
2,243.88
5.77%
Area Planted
5,036.00
4,834.00
4,816.00
5,376.00
5,381.00
1.37%
Average Yield
0.35
0.37
0.38
0.38
0.42
4.12%
Volume
1,430.00
1,455.00
1,515.00
1,447.00
1,470.00
0.56%
Area Planted
3,090.00
3,090.00
3,100.00
3,100.00
3,105.00
0.12%
Average Yield
0.46
0.47
0.49
0.47
0.47
0.14%
Volume
27.60
18.58
22.14
27.07
27.50
-0.07%
Area Planted
254.00
50.00
30.00
30.00
30.00
-17.64%
Average Yield
0.11
0.37
0.74
0.90
0.92
148.72%
Volume
112.25
98.00
91.00
109.00
119.00
1.20%
Area Planted
648.00
640.00
642.00
842.00
842.00
5.99%
Average Yield
0.17
0.15
0.14
0.13
0.14
-3.68%
Volume
66.33
75.38
77.43
79.64
76.88
3.18%
Area Planted
644.00
654.00
644.00
644.00
644.00
0.00%
Average Yield
0.10
0.12
0.12
0.12
0.12
3.18%
Volume
105.05
120.92
119.20
380.00
550.50
84.81%
Area Planted
400.00
400.00
400.00
760.00
760.00
22.50%
Average Yield
0.26
0.30
0.30
0.50
0.72
34.90%
Indicators
NORTHERN MINDANAO
Bukidnon
Camiguin
Lanao del Norte
Misamis Occidental
Misamis Oriental
Source: BAS/PSA
20
Davao Region
Table 11.- Abaca Production Trends in Davao Region, 2009 to 2013
2009
2010
2011
2012
2013
Annual %
Growth Rate
Volume
10,212.45
10,241.65
9,226.22
8,839.16
7,268.63
-5.77%
Area Planted
10,808.00
12,166.00
13,544.00
14,624.00
13,187.00
4.40%
Average Yield
0.94
0.84
0.68
0.60
0.55
-44.88%
Volume
417.29
466.45
303.29
254.70
233.40
-8.81%
Area Planted
111.00
118.00
134.00
142.00
130.00
2.54%
Average Yield
3.76
3.95
2.26
1.79
1.80
79.54%
Volume
3,205.12
3,134.48
2,930.57
2,979.84
3,067.33
-0.86%
Area Planted
3,295.00
4,598.00
5,756.00
6,845.00
6,245.00
8.95%
Average Yield
0.97
0.68
0.51
0.44
0.49
-50.88%
Volume
5,097.31
5,118.41
4,975.98
4,732.11
3,484.41
-6.33%
Area Planted
6,972.00
6,980.00
7,185.00
7,167.00
6,422.00
-1.60%
Average Yield
0.73
0.73
0.69
0.66
0.54
-45.74%
1,470.74
1,499.88
994.33
847.98
459.62
-13.75%
Area Planted
410.00
450.00
450.00
450.00
369.00
-2.00%
Average Yield
3.59
3.33
2.21
1.88
1.25
24.56%
Volume
21.99
22.43
22.05
24.53
23.87
1.71%
Area Planted
20.00
20.00
19.00
20
21.00
1.00%
Average Yield
1.10
1.12
1.16
1.23
1.14
13.67%
Indicators
DAVAO REGION
Davao del Norte
Davao del Sur
Davao Oriental
Compostela Valley
Volume
Davao City
Source: BAS/PSA
The Davao Region is the leading producer of abaca in Mindanao. Production in the region went
down due to the devastation of farms caused by Typhoon Pablo in 2012. From a production of
10,212.45 MT of abaca fibers in 2009, the region was only able to produce 7,268.63 MT of fibers in
2013. During the last two years, efforts in the region were focused in rehabilitating production areas
devastated by Typhoon Pablo and the expansion of abaca farms.
21
Davao Oriental and Compostela Valley remained the major producers of abaca in the region. Davao
del Norte and Compostela Valley registered the highest yield in the country at 1.80 Mt/Ha and 1.25
Mt/Ha respectively in 2013. Davao City has the third highest yield at 1.14 MT per hectare but area
planted to abaca was only 21 hectares.
SOCCSKSARGEN
Production volume increased from 800.34 MT in 2009 to 953.65 MT in 2013. During the last five
years, area planted to abaca increased by 5.82% per year. Average yield though ranged from 170 to
190 kilograms per hectare.
“outh Cota ato a ou ted fo
% of the egio s p odu tio . Most of the farms are located in the
u i ipalities of Lake “e u a d T oli. Sarangani is the second ranking abaca producing province in
the region. Sultan Kudarat registered the highest average yield at 3.68 MT per hectare but area
planted was only 4.25 hectares.
Table 12.- Abaca Production Trends in SOCCSKSARGEN, 2009 to 2013
2009
2010
2011
2012
2013
Annual %
Growth Rate
800.34
828.15
878.06
916.48
953.65
3.83%
Area Planted
4,589.00
4,582.00
4,615.00
5,899.00
5,924.25
5.82%
Average Yield
0.17
0.18
0.19
0.16
0.16
-1.54%
Volume
13.73
13.29
13.22
24.73
47.70
49.48%
Area Planted
52.00
45.00
35.00
53.00
65.00
11.11%
Average Yield
0.26
0.30
0.38
0.47
0.73
37.12%
208.20
209.50
179.09
170.50
175.00
-3.19%
Area Planted
1,581.00
1,581.00
1,582.00
1,585.00
1,600.00
0.38%
Average Yield
0.13
0.13
0.11
0.11
0.11
-1.13%
548.59
575.96
662.63
700.79
715.33
6.08%
Area Planted
2,945.00
2,945.00
2,989.00
4,255.00
4,255.00
14.12%
Average Yield
0.19
0.20
0.22
0.16
0.17
-8.06%
Volume
29.82
29.40
23.12
20.46
15.62
-9.52%
Area Planted
11.00
11.00
9.00
6.00
4.25
-12.27%
Average Yield
2.71
2.67
2.57
3.41
3.68
14.36%
Indicators
SOCCSKSARGEN
Volume
North Cotabato
Sarangani
Volume
South Cotabato
Volume
Sultan Kudarat
Source: BAS/PSA
22
CARAGA
Caraga is in the process of rehabilitating its abaca plantations after being hit by successive typhoons
during the last two years. The abaca industry in the region also had problems with pest and disease
infestation.
Surigao del Sur is the largest abaca producing province in the region and in Mindanao. In 2013, the
p o i e a ou ted fo
% of the egio s a a a output. Production volume and average yield in
Surigao del Sur has been on a declining trend starting 2011 due to sporadic outbreak of the bunchy
top disease.
Agusan del Sur is another major abaca producer in the region. Production increased by an average
of 4.45% per year. The increasing trend in production volume during the last five years can be
primarily attributed to yield improvement.
Table 13.- Abaca Production Trends in CARAGA, 2009 to 2013
2009
2010
2011
2012
2013
Annual %
Growth Rate
Volume
5,861.19
6,058.64
6,030.78
5,965.03
5,827.89
-0.11%
Area Planted
9,920.00
11,780.00
10,949.00
9,911.00
10,437.00
1.04%
Average Yield
0.59
0.51
0.55
0.60
0.56
-1.10%
542.56
548.08
508.36
529.17
521.24
-0.79%
Area Planted
3,250.00
3,250.00
2,500.00
1,625.00
1,620.00
-10.03%
Average Yield
0.17
0.17
0.20
0.33
0.32
18.55%
Volume
1,369.53
1,392.86
1,509.56
1,505.16
1,674.05
4.45%
Area Planted
3,190.00
3,230.00
3,229.00
3,186.00
3,236.00
0.29%
Average Yield
0.43
0.43
0.47
0.47
0.52
4.10%
Volume
25.42
22.60
17.61
10.70
8.10
-13.63%
Area Planted
360.00
300.00
220.00
100.00
81.00
-15.50%
Average Yield
0.07
0.08
0.08
0.11
0.10
8.32%
Volume
3,923.68
4,095.10
3,995.25
3,920.00
3,624.50
-1.52%
Area Planted
3,120.00
5,000.00
5,000.00
5,000.00
5,500.00
15.26%
Average Yield
1.26
0.82
0.80
0.78
0.66
-9.52%
Indicators
CARAGA
Agusan del Norte
Volume
Agusan del Sur
Surigao del Norte
Surigao del Sur
Source: BAS/PSA
23
ARMM
On the average, the region produced an average of 4,860 MT of abaca fiber per year. Sulu and
Lanao del Sur are the main abaca producing provinces in the region. In 2013, Sulu accounted for
64% of the production. The towns of Patikul Sulu, Indanan, and Talipao are the major abaca
producers in Sulu. During the last five years, farm productivity in Sulu increased by 1.49% per year.
It is said that Sulu has one of the best quality of abaca.
A a a f o La ao del “u o p ised % of the egio s p odu tio . Production decreased from
1,770 MT in 2009 to 1,695.72 MT in 2013. The decrease was brought about by the decrease in yield
due to disease infestation.
Table 14.- Abaca Production Trends in ARMM, 2009 to 2013
2009
2010
2011
2012
2013
Annual %
Growth Rate
Volume
4,781.39
4,767.96
4,886.48
4,887.75
4,974.44
0.81%
Area Planted
7,914.20
7,913.20
8,020.10
8,057.10
8,067.10
0.39%
Average Yield
0.60
0.60
0.61
0.61
0.62
0.41%
Volume
65.04
60.69
55.68
48.54
44.45
-6.33%
Area Planted
241.00
241.00
241.00
241.00
241.00
0.00%
Average Yield
0.27
0.25
0.23
0.20
0.18
-6.33%
Volume
1,770.00
1,805.00
1,730.00
1,625.29
1,695.72
-0.84%
Area Planted
2,460.00
2,460.00
2,460.00
2,460.00
2,475.00
0.12%
Average Yield
0.72
0.73
0.70
0.66
0.69
-0.96%
Volume
54.00
50.20
46.00
58.50
36.97
-6.31%
Area Planted
105.00
104.00
103.00
100.00
95.00
-1.90%
Average Yield
0.51
0.48
0.45
0.59
0.39
-4.87%
Volume
2,890.50
2,850.40
3,053.40
3,154.00
3,196.00
2.11%
Area Planted
5,102.00
5,102.00
5,210.00
5,250.00
5,250.00
0.58%
Average Yield
0.57
0.56
0.59
0.60
0.61
1.49%
Volume
1.85
1.67
1.40
1.42
1.30
-5.95%
Area Planted
6.20
6.20
6.10
6.10
6.10
-0.32%
Average Yield
0.30
0.27
0.23
0.23
0.21
-5.72%
Indicators
ARMM
Basilan
Lanao del Sur
Maguindanao
Sulu
Tawi-tawi
Source: BAS/PSA
24
“e tio :
NATURE AND “TRUCTURE OF THE INDU“TRY
A. VALUE CHAIN MAPPING
The abaca supply chain is typified by a multi-layer system of trading. The raw fibers are mostly
collected by the provincial and municipal intermediaries who sell to Grading Baling Establishments
(GBEs) and processors. For abaca farms situated in remote areas, barangay intermediaries
consolidate the raw fibers of neighboring farmers, before selling them to municipal or provincial
traders. For cooperatives engaged in trading, they sell either to GBEs or to higher level traders or
directly to processors or manufacturers depending on the volume they have accumulated.
There are four main abaca marketing channels or supply chains in Mindanao:
a) GBEs Supply Chain: GBEs, together with the licensed certifiers they employ, are the only entities
duly authorized by the government to sort, grade and distribute baled fibers. These GBEs
operate pressing machines for baling of fibers intended for trading in both domestic and
international markets. The standard bale of fiber is equivalent to 125 kilograms and measures
about 100 cm. X 55 cm. X 60 cm. GBEs sell both to the export market and to domestic
processors/manufacturers.
Among the GBEs operating in Mindanao, Chingbee, a Davao-based company, is the biggest buyer
of a fi e . It is esti ated that the o pa
u s % of the ou t s total a fi e suppl
25
from major abaca – producing provinces in the different parts of the country. A significant
percentage of the abaca fibers that pass through Chingbee is passed on to its sister company,
Specialty Pulp Manufacturing Incorporated (SPMI), a pulp company based in Baybay - Leyte.
b) New Tech Pulp: The pulp manufacturing company is based in Lanao del Norte. The company
works with at least 21 consolidators in Mindanao. About 50% of its supply is sourced from
Mindanao regions. The company also sources from Catanduanes.
c) Davao Cordage Company: The Company, which is based in Davao, sources from GBEs and
traders. It also accepts direct deliveries from farmers. While pulp processors require high grade
fibers, cordage companies buy the low grade fibers.
d) Fibercraft manufacturers: They usually source directly from farmers or farmer groups and small
traders. Their volume requirement is low relative to pulp processors and cordage companies.
The map below shows the geographic flow of products.
B. KEY FUNCTIONS AND PLAYERS
1. Input Provision
The following are the different types of planting materials used by abaca farmers: a) corms; b)
suckers; and c) tissue-cultured plantlets. Majority of the farmers use the corms and suckers due to
26
accessibility and affordability. The corms and suckers are usually sourced from their own farms or
from peers via barter. Problems associated with the use of corms and suckers are low yield and
vulnerability to viral diseases such as the bunchy-top and mosaic virus.
Price of tissue cultured plantlets ranges from PhP 8.00/ piece – PhP 10.00/ piece for newly dislodged
plantlets and PhP 25.00/ piece for potted ready for field planting. There are still many farmers
especially among the indigenous communities who do not fully appreciate the benefits of using
tissue cultured plantlets. Likewise, tissue cultured plantlets are not readily available especially so
that many of the farms are located in upland areas due to limited capacity of existing tissue culture
laboratories and/or lack of nurseries. The following are the existing tissue culture laboratories in
Mindanao:
a) Provincial Government of Bukidnon Plant Tissue Laboratory
b) Abaca Diagnostic Laboratory and the Abaca Tissue Culture Laboratory in Bago Oshiro Fiber
Research and Seed Station in Davao City
c) Agusan del Sur Tissue Culture Laboratory under the Provincial Agriculture Office
d) Plant Tissue Laboratory operated by Caraga State University (CSU) in Ampayon- Butuan City
e) Lanao del Sur Tissue Culture Laboratory which is part of the Kawiagan sa Ranao Livelihood
Training Center (KRLTC),
Fertilizer marketing passes through three levels, namely: importers – manufacturers  distributors
– wholesalers dealers and retailers. Over the past years, fertilizer prices have become
substantially more expensive for farmers. Price of fertilizer also varies depending on distance and
road conditions. Organic fertilizer is also available in Mindanao regions but uptake has been
relatively low due to doubts on its efficacy and the traditional reliance on chemical fertilizer.
2. Farming
The typical size of abaca farms in Mindanao ranges from 1 to 2 hectares. Many of the farms are
located in upland and secondary forests and cultivated by indigenous people who obtained their
land they are currently toiling from ancestral domain areas. Planting is generally dependent on
available number of seedlings readily accessible to farmers. Likewise, accessibility of seedling
materials influence decisions on which variety/abaca specie to plant rather than systematic
screening in terms of yield, fiber quality, site suitability, and disease resistance.
Many of the land areas devoted for abaca are shared with various intercrops like trees, coconut and
others. Farmers generally follow the square and the double row methods of planting. Under the
double row method, cash crops are intercropped. During the recent decade, intercropping of abaca
in coconut and other tree crops is increasingly being promoted by various government agencies and
adopted by progressive farmers. Intercropping not only provides additional income to farmers but
also prevents soil erosion and conserves forest water. Utilizing the open space between
monocultured coconuts also minimizes further forest encroachment and the practice of the
kai gi s ste . Past studies o ost a d eturn of intercropping abaca with established fruit trees
showed that abaca-mango gave the highest net return followed by durian-abaca. Abaca
intercropped with cacao had the highest fiber yields but the total net income derived from both
plants was still lower than the other abaca-fruit tree combinations. Studies also indicated that fruit
trees-abaca integration improved the surface soil acidity and organic matter content of the soil.
27
In preparing the land, underbrush and weeds are removed. Trees are usually retained for shade and
wind protection. For a one (1) hectare land area, land clearing is usually done by five (5) persons in a
span of four (4) days. In forested area, it is sometimes necessary to cut down some trees to avoid
overshading. Farmers use wood or bamboo sticks along the contour line to prevent soil erosion and
to conserve the inherent fertility of the soil. In some cases, leguminous tree species are planted
along the contour line. Some farmers plow and harrow the area to reduce weed population.
Technology and processes employed by farmers are generally based from experience and handed
down from generation to generation. Fertilizer management is primarily guided by cash flows and
price signal. Farmers do not conduct soil analysis to assess soil fertility.
Indigenous communities generally combine the use of chemical inputs with traditional practices such
as the placing of Hawaiian frogs in the farms to eat insects and spiders left in farms to make their
webs. Another method that indigenous communities use to protect their farms from infestation is
to create boundaries of bamboo forests in between corn/rice and the abaca farms. The bamboos
serve as natural screens for flying insects that might bring diseases from the corn to the abaca or
vice versa. Rituals are also performed by indigenous communities to ensure bountiful harvest.
Farmers tend to pay less attention to their abaca farms especially during the first 18 months.
Farmers, especially those who have not attended training on good agronomic practices, do not
adopt improved cultural practices to accelerate growth. Weeding and underbrushing are usually
done near harvest time. Disease infestation is a recurring problem that besieges abaca farmers in
Mindanao.
The first harvest is done 18 to 24 months after planting. The stalks are considered mature and ready
for harvest when the flag leaf finally appears. Subsequent harvests are done at 3 to 4 month
intervals.
3.
Tuxying and Stripping
Tuxying is usually done in the farm. The amount of tuxy recovered by weight of the stalk and the
quantity produced per unit of time are dependent on the skill of the tuxeros. The quality or grade of
abaca fiber is determined by the part of the stalk from which the fiber is obtained, the amount of
serration of the stripping knives and the degree of tension holding the knife against the block, and
the promptness and care exercised during the drying of the fiber. The outer sheaths of the abaca
stalk contain a rather short, strong but discolored fiber; the middle sheaths produce a fiber of
medium color and good strength, the sheaths near the centre of the stalk have a very white, fine
fiber of medium strength. In the process of cleaning abaca fiber, the use of coarsely serrated
stripping knives and the lack of proper tension on the stripping knife result in the production of
coarse low-grade fiber. In many cases, stripping especially if this would be carried out via mechanical
strippers is done only after the strippers have accumulated enough volume to offset hauling costs.
Delayed stripping causes quality deterioration.
Some farmers, however, contend that there are buyers who buy not only inferior quality ti re
but also low grades and spurious abaca mixed with true abaca. Many farmers prefer to produce low
grades of abaca because these are easy to strip and they get more fibers volume wise compared to
high grades and that higher income is derived from its production. When stripping is done manually,
farmers and strippers tend to earn more if they produce the low quality fibers because of the ease
and speed in stripping and more fiber is produced as compared to high grade fibers. In many cases
also, t ade s u all-i at the fa gate. U de a all-in procurement system, a flat price is paid
per kilo regardless of quality and grade. Thus, the general tendency is to go for volume rather than
28
quality. Under the sharing system, strippers receive 40% to 50% of the harvest depending on the
prevailing practice agreed upon.
Stripping is done either by hand or mechanical means. Cooperatives that are into trading have
mechanical/spindle stripping machine provided by various funding organizations. Fiber recovery
when spindle stripping machine is used is about 43% compared to 29% when stripping is done by
hand.
In all regions in Mindanao, manual stripping is still the most dominant practice. About 74% of the
fibers produced from Mindanao in 2013 were hand stripped. Almost always, manual stripping
results to the production of a higher percentage of low quality fibers. As can be seen in Table 15,
only 45% of the hand stripped fibers were of the S2 and S3 grades. With the spindle stripped fibers,
69% of the abaca balings were excellent grade fibers. Likewise, lower grade fibers comprised 21% of
the hand stripped baled fibers compared to only 3% in the spindle stripped fibers. Although it is
possible to produce high quality fibers via manual stripping, the process is laborious.
Fibers are usually dried under the sun. Rainy seasons pose difficulties, as lengthened drying periods
result to loss of quality. Farmers and strippers tend to bale the fibers even when these are damp,
resulting to quality deterioration. Prompt and thorough drying gives the fiber its white and lustrous
color.
29
Table 15. Volume of Abaca Baling by Grade in Mindanao Regions, Jan – Nov 2013
Number of Bales (Bale = 125 kilograms)
Region
S2 and S3
I, G, and H
JK and M1
Y and OT
39,011
29,199
12,636
6,381
% to Total Bales
45%
33%
14%
-7%
Zamboanga Peninsula
666
276
-
-
Northern Mindanao
8,579
3,958
443
251
Davao Region
12,689
11,000
4,752
4,082
SOCCSKSARGEN
3,847
1,348
13
105
Caraga
1,137
6,448
6,261
1,381
ARMM
12,093
6,169
1,167
562
Spindle Stripped
20,927
8,710
222
541
% to Total Bales
69%
29%
1%
2%
Zamboanga Peninsula
594
294
-
125
Northern Mindanao
42
10
-
-
Davao Region
939
1,152
103
101
SOCCSKSARGEN
562
59
-
10
Caraga
7,620
3,255
77
140
ARMM
11,170
3,940
42
165
Hand Stripped
Source: Calculated from PhilFIDA data
Farmers across all regions indicate the lack of mechanical stripping machine and drying facility as the
key constraint in producing high quality fiber. In Davao Region, for example, which is the largest
producer of abaca in Mindanao and is considered to better equipped than other regions, the ratio
between number of farmers and stripping machine is 1:162 (including the traditional stripping
machine). As such, a greater percentage of the fibers produced by the region consist of low quality
fiber.
Table 16. Breakdown of Postharvest Facilities in Davao Region, 2014
Province
No. of
Farmers
No. of Postharvest Facilities
Solar Dryer
Mechanical
Stripping
machine
Davao del Norte
1,082
1
7
Davao del Sur
10.602
7
Davao Oriental
5,778
7
Compostela Valley
2,097
14
Davao City
2,268
23
Traditional
Stripper
(stationary)
77
Source: PhilFIDA
30
4. Trading
Intermediaries consist of traders, buying stations, and the GBEs. Traders are classified depending on
the volume of fibers traded. A Class A trader sells more than 75,000 kilos of fiber per year; Class B
trader – more than 50,000 kilos per year; Class C trader – more than 25,000 kilos per year and Class
D trader – 25,000 kilos and below (PhilFIDA website). There are 13 GBEs in the country. Ching Bee is
the biggest abaca trader in the world.
Main constraint faced by intermediaries is the high degree of variance in terms of volume and
quality of fibers. In addition to problems at the farm and stripping levels, poor storage conditions
also contribute to quality deterioration. Traders who are unable to consolidate at least 15 tons per
delivery sell their fibers to higher level intermediaries.
Table 17. Licensed Abaca Intermediaries in Mindanao, 2013 - 2014
Region
Company Name
Classification
Grading and Baling Establishments (GBEs)
Ching Bee Trading Corporation
1st Class
Tag Fibers, Inc.
3rd Class
Davao Region
Pulp Specialties, Inc.
1st Class
Caraga
Tag Fibers, Inc.
1st Class
Davao Region
Buying Stations
Fiber Traders - Exporters
Northern Mindanao
Caraga
Innovative Traders Multipurpose Cooperative
Class C
NewTech Pulp, Inc
Class C
Innovative Traders Multipurpose Cooperative
Class A
JTC Fibre
Class A
RGR Abaca Trading
Class A
Source: PhilFIDA
5.
Processors
Pulp Mills
There are 6 abaca pulp mills operating in the Philippines; 1 in Laguna, 2 in Bicol; 2 in Leyte and 1 in
Mindanao. These processors consume about 63% of the total abaca fiber produced and account for
71.2% of domestic consumption.
NewTech Pulp, Inc. (NPI) is the biggest pulping plant in the world with rated capacity of 60 MT per
day. The company needs 2,100 metric tons per month for the 24/7 operation of their plant. As of
2013, the company was able to secure only about 1,400 MT/ month from regional and provincial
traders. To augment its supply, it imports abaca fiber from Ecuador.
31
Table 18. Projected Abaca Fiber Requirement per Month: NPI
Year
Abaca Fiber Requirement/Month
2013
21,000
2014
24,000
2015
26,000-28,000
Note: For every 1 ton of fiber, 600-700kilograms of pulp are produced (60% recovery)
Source: KII
Glatfelter, a specialty paper producer based in Pennsylvania USA, and the mother company of
NewTech has obtained a Forest Stewardship Council (FSC) certification from Rainforest Alliance for
its sustai a le a a a fa i g p a ti e i La ao del “u . Glatfelte s F“C e tifi atio is helping boost
the positioning of abaca as a nature-friendly biodegradable fiber with good potentials for promoting
inclusive growth. The company through NPI also assisted in helping farmers in Catanduanes achieve
certification.
Manila Hemp Trading (MHT) and SC Tan Export have also passed the Sustainable Agriculture
Standard (SAS) Certification of the Rainforest Alliance. MHT secured SAS certification in October
2012, covering the barangays under the Catanduanes Abaca Sustainable Initiative (CASI) composed
of four sub-groups from the towns of Bato, San Miguel, Burgos (Viga) and Rizal (Viga).
The Specialty Pulp Manufacturing, Inc. (SPMI) in Leyte is an affiliate company of Ching Bee. SPMI is
engaged in the manufacture, sale, and export of food grade and non-food grade bleached and
unbleached specialty pulp, mainly from abaca, as well as other natural long fibers such as sisal,
kenaf, and jute. The company specializes in abaca pulp which serves as a raw material for
manufacturing high-quality specialty papers.
Cordage Manufacturers
There are 7 cordage firms operating in Metro Manila, Albay, Cebu and Davao. They use abaca as the
principal raw material for rope, cordage, and twine manufacture. They blend abaca with other
natural fibers depending on the specifications of the buyers.
There are two cordage manufacturers in Mindanao, namely: Davao Rope Corporation and Pontmain
Resources. Both companies are based in Davao Region. Davao Rope Corporation sells both to the
export and domestic market. Pontmain Resources caters to the local market.
Fibercraft Producers
The fibercraft subsector, including handmade papermaking and carpet manufacturing, consists
primarily of micro and small enterprises. Most of the fibercraft exports are located in Bicol and
Cebu.
The list of licensed processors in Mindanao is presented in Table 19.
32
Table 19. List of Licensed Processors in Mindanao, 2013 to 2014
Legend
Class C
consuming more than 200,000 kilos a year
Class A
consuming 1 million and above kilos a year
Class D
consuming 200,000 and below kilos a year
Class B
consuming more than 500,000 kilos a year
Class E
all processor-exporters except those
exporting pulp/paper
Region
Company
Product
Category
Classification
Zamboanga Peninsula
Jaymark Handicraft
Fibercraft
Class D
Northern Mindanao
NewTech Pulp, Inc.
Pulp
Class A
Nida s ha di aft
Handicraft
Class D
San Roque Handmade Paper
Papercraft
Class D
Tinabuan Arts and Crafts
Bags and mats
Class D
Valdez Handicraft
Bags and mats
Class D
Cooperative Handicraft In Nabunturan
Fibercraft
Class D
Katakus Inc.
Papercraft
Class D
Fibercraft
Class D
Pontmain Resources, Inc.
Cordage
Class D
Davao Rope Factory, Inc.
Cordage
Class E
Tadeco Livelihood and Training Center
Fibercraft
Class E
Sibagat Abaca Weavers Association
Fibercraft
Class D
Southern Mindanao
Klowil
Agricultural
Multipurpose Cooperative
Caraga
Enterprise
Source: PhilFIDA
C. NATURE OF INTERFIRM RELATIONSHIPS
1. Horizontal Relationship
Majority of the abaca farmers are members of associations and/or cooperatives. Cooperatives are
engaged in any or all of the following businesses:
a) Financial services: small loans to members
b) Management and operation of nurseries
c) Stripping and collective marketing services
Membership in cooperatives helped farmers overcome the fundamental market disadvantage faced
by them due to small size, limited resources, and marginalization. A key problem faced by marketing
cooperatives is polevaulting. Members find it hard to commit their abaca to the cooperative for
various reasons --- outstanding debt to a trader, higher price in the market, etc. Based on
experiences in facilitating collective marketing, it is advisable to allow farmers to only commit a
portion of their harvest to the group. This would give farmers the option to sell to a buyer of their
choice.
Adequate volume of abaca is required for profitable functioning of the groups. Unstable volume of
production is a common problem threatening the economic sustainability of the groups and creating
33
a series of interrelated marketing weaknesses. Cooperatives, for example, are unable to link directly
with NewTech since they could not meet the requirement of 50 MT per delivery. Groups also cannot
afford to keep their inventories until it reach 50 MT due to limited capital and members expect cash
payment after delivery. It may be possible for small cooperatives and associations to join together
and collectively sell their abaca fibers. The dispersed location of farms in difficult terrains with
limited road networks also makes abaca collection and delivery difficult and uneconomical for some
members and groups.
2. Vertical Relationship
Although there are quite a number of intermediaries at the municipality and provincial levels, the
market for abaca fiber is still generally monopsonistic. The large intermediaries and processors of
abaca products generally have the control of the market and have set-up their networks in major
abaca producing areas.
The big players generally are the price makers. Based on the price set by the large producers,
traders at various levels set their buying price. To a significant extent, traders are able to improve
thei a gi s
i stitutio alizi g the all-i (one price for all grades of abaca fibers) procurement
p a ti e. The all-i p o u e e t does ot o l edu e i o e ge e atio pote tial of fa e s ut
also provides disincentives for upgrading. The Philippines has a well-established grading system
which provides a clear definition of the distinguishing quality attributes of abaca fibers as well as
provide the framework or guide for the price of a specific lot of abaca fiber. Unfortunately, however,
the grading system is not strictly enforced at the local trading given the dominance of all-in
procurement.
Relationship between abaca farmers and traders and traders and GBEs/large processors is generally
a s length although there is a se la e of lo g-te
elatio ship th ough the suki-system. The
incentive system in market governance revolves around price. The costs of switching to new
partners are low for both parties. Market relationships, in general, did not permit close cooperation
between suppliers and buyers and hardly contributed to the systemic upgrading of the supply chain.
There is a high degree of information asymmetry with farmers getting the least information about
markets and prices. Asymmetric information occurs when somebody knows more than somebody
else in the market. This can make it difficult for the two people to do business together or to trust
each other. Abaca farmers, for example, are not really aware on the buying price of GBEs or the
large processors and the rationale of the price given to them by traders. Likewise, there is a lack of
information on quality requirements as most of the farmers have been so used to selling low grade
fibers which more or less has become the local norm.
Suki relationships often are strengthened by the provision of credit by trader to farmer or by
u e /GBE to lo al t ade . Lo al t ade s a e the ai sou es of loa s/ ash ad a es . Fa e s ho
sell their fibers on a regular basis to one particular buyer are able to call on that buyer not only for
loans for production but also for family emergencies, a i -ki d asi food o
odities f o sto e
owned by traders). The extension of loans is a way for buyers to ensure loyalty of suppliers and,
consequently, their supply. However, price paid to farmers with debts is sometimes lower to cover
ost of o e i te est ates . I a se se, u e s e e t o opso isti o t ol o e p i es paid to
suppliers with debts. On the other hand, this informal credit mechanism enables farmers and traders
to access financial services.
34
D. PRICE AND COST STRUCTURE
1. Income and Profit
Table 20. Cost and Return Analysis of Low Input System One Hectare Farm in Mindanao
Regions, 2014
Particulars
Year 1
Establishment
Year 2
1 to 2 harvests after
6th month
Year 3
2 to 3 harvests
Amount
(PhP)
%
Amount
(PhP)
%
Amount
(PhP)
%
Materials
13,900
51%
2,000
19%
2,000
12%
Seed pieces
9,600
35%
800
3%
Fertilizer
3,500
13%
2,000
19%
2,000
12%
Labor
12,800
47%
2,200
21%
2,200
13%
Land clearing
4,000
15%
600
2%
Planting
4,000
15%
Underbrushing/ringweeding
4,000
15%
2,000
19%
2,000
12%
Fertilizer applicatio
200
1%
200
2%
200
1%
Transportation
800
3%
800
8%
1,150
7%
Hauling/Transport cost
800
3%
500
5%
500
3%
300
3%
650
4%
5,400
52%
11,700
69%
10,400
100%
17,050
12%
Stakes
Layouting and staking
Transport/Hauling of abaca
Harvesting/Tuxying/Stripping
Total Expenses
27,500
100%
Yield (in kilograms)
300
650
Unit Cost (PhP/kg)
34.67
26.23
Unit Price (PhP/kg)
45.00
45.00
Gross Income
13,500
29,250
Net Income
3,100
12,200
Profit Margin
23%
42%
Source: KII/Workshops
Table 20 shows the cost and returns of a one hectare farm using minimal external inputs. The farm
has yields considered to be above average of typical low input system farm. The farmer attends to
his othe ops i et ee ha est of a a a fi e . The a a a fa fu tio s like a pigg a k from
which farmers draw lump sum income every 3 to 4 months.
During Year 1 or the establishment phase, material costs comprise 51% of the total expense with
planting materials accounting for the highest expense followed by fertilizer. Labor expenses account
for 47% of total expenses.
35
At Year 3 or when the trees are already matured, profit margin is about 42%. Harvesting, tuxying,
and stripping comprise about 69% of the total production cost. Improving the tuxying and stripping
efficiency would increase the efficiency of fiber extraction and the corresponding production income
of the farmer and stripper. Use of a mechanical stripping machine brings down the overall cost of
harvest and postharvest operations by about 20%.
High input farms can technically achieve yields of 3 MT per hectare. Under such scenario, farmers
earn an annual net income of PhP 45,000 to PhP 50,000 per hectare. It is possible for farmers to earn
a net income of PhP 45,000 to 50,000 per hectare with total production cost ranging from PhP
24,000 to 27,000.
2. Relative Financial Position of Players
Farming and stripping account for 84.4% of the production and trading cost of abaca fibers. The
remaining 15.4% of the costs is incurred during the distribution stage. Transportation expenses
comprise about 50% of the distribution costs.
As can be seen in Table 21, fa e s pe e tage sha e to total p ofit (64%) is lower than its
contribution to added unit cost (84%). This implies that farmers had production inefficiencies which
are manifested in the low utilization of improved seeds, low investments in farm maintenance, and
poor postharvest inefficiencies. The trader and the GBE appear to have better profitability and
efficiency reflecting good returns on investments. According to traders and GBEs, volume is critical
in abaca trading and distribution in order to be able to spread out their costs especially
transportation expenses.
36
Table 21. Relative Financial Position of VC Players in the Mindanao Abaca Industry
Player
Farmer
Trader
GBE
Total
Product
One
kilo
abaca
fiber
Costs (in PhP)
Profit (in PhP)
Margins (in PhP)
Total
Unit Cost
Added
Unit
Cost
% Added
Unit
Cost
Unit
Price
Unit
Profit
% Profit
Unit
Margin
% to
Price
27.00
27.00
84%
45.00
18.00
64%
45.00
75%
47.00
2.00
6%
50.00
3.00
11%
5.00
8%
53.00
3.00
9%
60.00
7.00
25%
10.00
17%
32.00
100%
28.00
100%
60.00
100%
Source: KII
37
“e tio :
MARKET“ AND MARKET TREND“
A. MARKETS AND MARKET TRENDS
1. Export Markets
Table 22.- World Export Volume of Abaca Fiber and Manufactures, 2008 to 2012
Exporting Country/Product
2008
2009
2010
2011
2012
Export Volume (in Thousand Metric Tons)
Ecuador
12.0
10.4
11.1
9.7
11.1
Fiber
12.0
10.4
11.1
9.7
11.1
Philippines
40.7
26.0
40.8
48.5
33.4
Fiber
13.4
7.4
11.3
9.8
4.5
Cordage
7.5
5.3
7.0
7.5
5.0
Pulp
18.1
12.0
20.9
29.8
21.5
Others/Fibercraft
1.7
1.3
1.6
1.4
2.4
Total Exports
52.7
36.4
51.9
58.2
44.5
2009/08
2010/09
2011/10
2012/11
Year-on Year % Change
Ave % Change
Ecuador
-13%
7%
-13%
14%
-1%
Fiber
-13%
7%
-13%
14%
-1%
Philippines
-36%
57%
19%
-31%
2%
Fiber
-45%
53%
-13%
-54%
-15%
Cordage
-29%
32%
7%
-33%
-6%
Pulp
-34%
74%
43%
-28%
14%
Others/Fibercraft
-24%
23%
-13%
71%
15%
Total Exports
-31%
43%
12%
-24%
0.06%
World export volume in 2012 was about 44.5 thousand MT. Philippines accounted for 75% of the
total export volume and Ecuador supplied the remaining 25%. As can be seen from Table 22,
E uado s e po ts o sisted of a fi e s hile e po ts f o the Philippines comprised primarily of
abaca manufactures with fiber comprising only 13% of the exported products.
During the period 2009 to 2012, world export volume had an average of 0.06% year-on-year growth.
Philippines posted an average of 2% year-on-year percentage change in export volume during same
period. This was primarily due to significant percentage increase in export volume during 2010 and
2011 which compensated the decline in 2009 and 2012. Market reports from PhilFIDA and FAO
attributed the decline in overall export volume in 2012 to global weakening in demand due to
economic slowdown in major importing countries.
38
Table 23.- World Exports in Fiber Equivalent, 2008 to 2012
In Thousand Metric Tons
Product
2008
Fiber
Cordage
Pulp
Others (include fibercraft)
Total World Exports
Share per Exporting Country
Philippines
Ecuador
Year-on-Year % Change
25.4
7.9
36.2
1.9
71.4
2009
2010
2011
Export Volume (in Thousand Metric Tons)
17.8
22.4
19.5
5.6
7.3
7.9
24.1
41.8
59.5
1.4
1.8
1.5
48.9
73.3
88.4
2012
15.5
5.3
43.0
2.6
66.4
59.4
12.0
38.5
10.4
62.2
11.1
78.7
9.7
55.3
11.1
2009/08
2010/09
2011/10
2012/11
Ave % Change
-30%
-29%
-33%
-26%
-32%
26%
30%
73%
29%
50%
-13%
8%
42%
-17%
21%
-21%
-33%
-28%
73%
-25%
-9%
-6%
14%
15%
4%
62%
7%
27%
-13%
-30%
14%
6%
-1%
World Export Volume
Fiber
Cordage
Pulp
Others (include fibercraft)
Total World Exports
Export Volume by Country
Philippines
Ecuador
-35%
-13%
Total export volume in fiber equivalent in 2012 was about 66.4 thousand MT. Philippines accounted
fo
% hile E uado s sha e as at %. Ecuador recently announced that it would cut down its
abaca production by as much as 7,000 MT next year.
Of the 66.4 thousand MT, pulp accounted for 65% while raw fiber comprised 23%. From the FAO
statisti s, it ould see that all of E uado s fi e p odu tio as e po ted hile fo the Philippi es,
export volume in fiber terms was about 85% of the total fiber production in 2012 (based on PhilFIDA
data).
Average percentage year-on-year change of Philippine exports in fiber terms for the period 2008 to
as a out % hi h is highe tha the o ld s a e age of %. It a e see though that
growth rate i o ld s e po ts see s to e i a de li i g t e d sta ti g
. The pe e tage d op
in export volume in 2012 year-on-year was lower though compared to 2009. Data from the PhilFIDA
showed abaca exports earnings from January to December 2012 fell to US$108.2 million from
US$140 million in 2011 year-on-year.
Final products of fibers can be grouped into three major categories clothing, textiles, and industrial
uses. These final products respond differently to changes in income and prices, depending on
whether they are consumed as necessary goods, luxury goods, or durable goods. Therefore, world
total fiber consumption is exposed to the influence of global economic developments. As can be
seen in Table 24, major importers of abaca products are the European countries, United States, and
Japan. The Great Recession of 2008/09 delivered the worst blow to the global economy since the
39
1930s and the abaca industry was not spared. All of the major importing countries had reduced
imports in 2009. In 2010 and 2011, economies of these countries slightly improved and global trade
of abaca also picked up momentum. In 2012, an economic slowdown was experienced in many of
the European countries and United States which also affected demand for abaca products. With the
global economy now on the upswing and the growing preference for green products, industry
stakeholders are optimistic that export markets for abaca will also be robust.
Table 24.- World Imports of Abaca and Manufactures, 2008 to 2012
Importing Countries
Import Volume (in Thousand Metric Tons)
2008
2009
2010
2011
2012
Fiber
26.60
19.70
26.10
23.70
16.70
Developed
24.20
17.10
22.90
20.90
15.50
Europe (27)
17.1
12.6
15.8
14.1
11.5
Japan
6.9
4.5
7.1
6.8
4
Other Developed Countries
0.2
Developing Countries
2.4
2.6
3.2
2.8
1.2
Manufactures
29.3
20.9
31.4
41.0
30.6
Developed Countries
22.8
15.5
25.9
33.2
22.7
Canada
0.2
0.1
0.1
0.2
0.2
USA
5.8
3.4
6.2
7.5
4.4
Europe (27)
12.5
8.6
14.8
20.4
13.9
Japan
4.0
3.1
4.5
4.5
3.6
Other developed countries
0.3
0.3
0.3
0.6
0.6
6.5
5.4
5.5
7.8
7.9
2009/08
2010/09
2011/10
2012/11
Ave % Change
Fiber
-26%
32%
-9%
-30%
-8%
Developed Countries
-29%
34%
-9%
-26%
-7%
Europe (27)
-26%
25%
-11%
-18%
-8%
Japan
-35%
58%
-4%
-41%
-6%
Other Developed Countries
-100%
-100%
8%
23%
-13%
-57%
-10%
Manufactures
-29%
50%
31%
-25%
7%
Developed Countries
-32%
67%
28%
-32%
8%
Canada
-50%
0%
100%
0%
13%
USA
-41%
82%
21%
-41%
5%
Europe (27)
-31%
72%
38%
-32%
12%
Japan
-23%
45%
0%
-20%
1%
0%
0%
100%
0%
25%
Other developed countries
40
Table 24.- World Imports of Abaca and Manufactures, 2008 to 2012
Importing Countries
Import Volume (in Thousand Metric Tons)
2008
2009
2010
2011
2012
-17%
2%
42%
1%
7%
World fiber consumption in 2012 was approximately 83 million MT. Natural fiber consumption was
at 31 million MT while chemical fiber (cellulosic and non-cellulosic) was at 52 million MT. In many
cases, chemical fibers are cheaper than natural fibers. Cotton accounted for 77% of natural fiber
consumption, while polyester, particularly polyester filament, dominated the chemical fiber
universe. Bast fiber consumption (flax, hemp, jute, ramie, and allied fibers) totalled 4 million MT in
2012, and other natural fibers (abaca, agave, coir, kapok, silk, sisal and wool) added another 2.5
million MT.
Abaca Fiber
Philippine share to total world export of abaca fiber in 2012 was about 29% making Ecuador the
leading supplier of abaca fiber. According to PhilFIDA, from among the four major grades of abaca,
JK and G were the top exports. Share of raw fiber to total Philippine abaca exports dropped from
33% in 2008 to 13% in 2012. This was primarily because major buyers shifted to pulp imports rather
than raw fiber, which is a good development as it promoted value addition which translates to a
bigger share of the value in the chain.
41
The European Union and Japan are the largest importers of abaca fiber, accounting for 93% of the
total in 2012. In Europe, the United Kingdom is the main buyer of abaca fiber. Abaca in the UK is
used mainly for production of pulp and pulp-based products.
In Asia, the biggest buyer of abaca fiber is Japan followed by China. Japan uses the fiber mainly for
the production of the yen. Main use of the abaca in Japan is for the production of tea bags,
capacitor paper, and handicrafts. China is fast becoming a leader in handicraft production due to its
relatively low price compared to the Philippines and the upgrading of its designs with the assistance
primarily from Filipino designers.
Export value of raw fiber in 2012, which had a 9.6% share to total value of abaca exports, fell 59.3%
to US$5 million from US$13.4 million in 2011.
Cordage
Among the intermediate abaca products exported by the Philippines, cordage and allied products
has the smallest percentage share. During the period 2008 to 2012, cordage comprised an average
of 17% of export volume of the Philippines and of the world or an annual average of 6,800 MT in
fiber equivalents. Market for cordage during the same period seems to have not really moved so
much even during 2010 -11 when abaca exports were on an upswing. The cordage subsector face
stiff price competition from synthetic fibers and other natural fiber. Export value of the cordage
sector in 2012 also fell slightly by 4.2% to US$16.2 million from US$16.9 million in 2011
42
According to the FAO Report on market situation of abaca, the United States accounted for about
32%of the total cordage market in 2012. Other key destination markets for cordage products are
Singapore, Canada, the United Arab Emirates, the United Kingdom, Germany, Malaysia and
Australia.
43
Abaca Pulp
Percentage share of abaca pulp to Philippine exports increased from 44% in 2008 to 64% in 2012, or
an average of 54% during the five year period. During the same period, pulp posted an average yearon-year growth of 14%. Annual average volume during 2008 to 2012 in fiber terms was at 40,920
MT. The export value of abaca pulp, which comprised 69% of total export sales in in 2012, fell by
28.3% to US$74.7 million from US$104 million in 2011.
All of the pulp manufactured in the Philippines is shipped out of the country. Many of the specialty
paper manufacturers prefer to export abaca pulp instead of raw fiber because this saves then from
putting up anti-pollution control systems required in their countries. The United Kingdom and
Germany are the top destinations for pulp exports. France is also a key market for pulp in Europe.
The European Union accounted for 64% of export sales of pulp.
The second biggest market for pulp in 2012 was Japan. According to PhilFIDA 2013 abaca factsheet, ,
abaca is processed into yen, capacitor paper, insulation paper, tea bag, masking tape, stencil paper,
filter oil absorbent paper and other speciality paper products. China and Singapore had the third
biggest share at 8% each.
The United States accounted for 6% of the total volume of pulp exported in 2012. One of the key
uses of abaca pulp in the United States is in the manufacture of cigarette filter of the Winston and
Marlboro Lights cigarettes.
Abaca Fibercraft
Fibercraft and allied products comprised about 7% of abaca products exported by the Philippines.
Among the different abaca products being exported by the Philippines, it is the only category which
44
posted a 71% increase in volume in 2012 over 2011 performance. According to PhilFIDA report,
Hong Kong is the biggest market followed by Italy and China. Average annual export volume during
the period 2008 to 2012 was at 1,700 MT (finished products) with a fiber equivalent of 1,840 MT.
Sustainable Certification
Major foreign buyers and users of abaca like the manufacturers of Lipton tea and other food
products using abaca based casing and specialty paper have started to require their suppliers for
product certification from international certifying bodies like Rainforest Alliance. Buyers would like
to be assured that the raw materials that they are using conform to standards that meet certain
economic, social and ecological considerations. The certification will guarantee the future of abaca.
Many of the companies follow the Sustainable Agriculture Network Standard.
45
Philippine and foreign companies that are currently providing assistance to their suppliers to meet
certification standards are New Tech Pulp (in Catanduanes), Ahlstrom (in Albay), Manila Hemp
Trading (Catanduanes), and SC Tan Exports (Catanduanes). New Tech appears to be willing to
expand their certification program in Caraga and other Mindanao Areas.
2. Domestic Market
Philippine Importation of Abaca Fiber
During the period 2008 to 2012, pulp processors imported from Ecuador an average of 354.52 MT of
abaca fiber to fill up the lack of supply of excellent/good grade fiber. Highest levels of importation
were on 2008 and 2009 at 639.4 MT and 631.3 MT, respectively. In 2012, Philippines imported only
95 MT at FOB price of US$ 0.99/kilo or PhP 41.70/kilo (average exchange rate 2012: PhP 42.33).
Table 25.- Philippine Importation of Abaca Fiber
Year
Quantity (in MT)
Value (US$)
FOB Price (US$/kilo)
2008
639.4
961,531
1.50
2009
240.6
431,343
1.79
2010
166.3
193,970
1.17
2011
631.3
1,031,372
1.63
2012
95
93,597
0.99
354.5
542,362
1.42
Five Year Average
Source: National Statistics Office
46
Domestic Utilization/Consumption
In 2012, about 49,503 MT of abaca fiber was consumed by domestic processors of pulp, cordage,
and fibercraft. Pulp processors accounted for 76% of the consumption. Cordage and fibercraft
manufacturers comprised 13% and 11% of the consumption, respectively.
In the domestic market, the acceptable range of fiber moisture content is 12% to 14%. Buyers
though said that at times moisture content of abaca being traded reach 20%. Damp fibers lead to
further quality deterioration that reduces pulp recovery while the presence of contaminants such as
plastics, twigs, cigarette butts, etc. damages the pulp that could result in the rejection of the entire
lot/batch. The practice of knotting the fiber strands damages the combing machine used by cordage
companies and increases the cost of production if used for making pads/mattresses; knotted strand
can also no longer be used for pulp production.
Table 26.- Annual Domestic Consumption of Abaca Fiber by Subsector, 2003 to 2012
Year
Volume (in MT)
Pulp
Cordage
Fibercraft
Total
2003
36,095
12,105
4,360
52,560
2004
37,600
9,250
4,050
50,900
2005
44,470
9,840
4,860
59,170
2006
40,200
10,625
5,350
56,175
2007
30,312
12,950
4,100
47,362
2008
38,702
10,120
2,900
51,722
2009
31,074
7,435
2,175
40,684
2010
35,306
9,151
2,650
47,107
47
Table 26.- Annual Domestic Consumption of Abaca Fiber by Subsector, 2003 to 2012
Year
Volume (in MT)
Pulp
Cordage
Fibercraft
Total
2011
51,779
9,900
2,293
63,972
2012
37,435
6,562
5,506
49,503
Average
38,297
9,794
3,824
51,916
% Share
73.8
18.8
7.4
100
Source: PhilFIDA Region XI
Based on reports from PhilFIDA, the pulp sector consistently remained as the growth area of the
abaca industry. A o di g to Ne Te h Pulp, the o pa s u e t suppl gap is at ,
MT pe
month. The company has set the price of S2 fiber at PhP 57/kilo. They are currently working with 21
Class A traders in Mindanao. SPMI sources their fiber via Ching Bee. Pulp millers require excellent
grade abaca fiber.
The pulp ille s utilizatio le el is highl depe de t o the de a d fo pulp the spe ialt pape
manufacturers abroad as abaca pulp is the principal raw material used in the manufacture of meat
and sausage casings, tea bags, cigarette paper, currency paper and other specialty papers. During
the first quarter of 2014, outbound shipments of abaca pulp totalled 7,862.98 MT, which is about
113% higher over the same period last year. Processing of abaca pulp into specialty papers is done in
Europe, the United States and Japan instead of in the Philippines as there is no available processing
facility in the country.
Cordage and allied products have continuously been facing stiff competition from those made of
synthetic and other cheaper natural materials. The market for cordage products has significantly
weakened during the recent years. Exports from January to March 2014 decreased by 16.5% over
the same period last year. Cordage manufacturers buy the lower grade abaca fiber. It is, thus,
important that farmers and strippers to upgrade the quality of their fibers.
Although there are numerous fibercraft processors, annual fiber utilization traditionally ranges
between 3,000 to 5,000 MT per year. The local market for fibercraft is also limited. The more
successful fibercraft processors are those who targeted the low volume high end or specialty/niche
markets. China dominates the low to medium end markets for handicraft. High grades abaca fiber
a d tinalak o knotted abaca is the most highly demanded products.
The incorporation of abaca in textiles and fabrics may also help the subsector in increasing the
demand for abaca fiber. The Asia Textile Mills Inc. (Asiatex) based in Calamba City is now into the
manufacture of denims made of 40% abaca and 60% polyester. The abaca denims are initially being
exported to Japan but are also available locally. Initially, Asiatex will need 15 Mt of abaca fiber
annually. Aside from fabrics for denims, Asiatex is also developing fabrics made of 10% to 40% abaca
that can be used for everyday wear such as shirts, blouses. Further research is being conducted to
make the fabrics anti- i o ial a d sta ool a d f esh te tile efo e thei o
e ial p odu tio .
In the pipeline is the stretch denim which can be fashioned into jackets, skirts, vests, etc. and
production of abaca yarns for knitted fabrics for cardigans and socks and for the hand weaving
industry. Owing to the lack of spinning facilities in the Philippines, the abaca fiber is processed into
yarns in Japan and then shipped back to the country for conversion into blended yarns and woven
into fabrics in Calamba City.
48
Projected Consumption
Table 27.- Projected Consumption of Fiber for Exports
Ave Year-on
Year %
Change
2012/08
Adjustments
Fiber
-9%
Cordage
Pulp
Product
Fiber Equivalent in Thousand MT
2012
2015
2018
2020
5%
15.5
16.3
18.8
20.8
-6%
5%
5.3
5.6
6.4
7.1
14%
15% (followed
43.0
49.5
75.2
99.5
2.6
3.0
4.5
6.0
66.4
74.3
105.0
projections of
NewTech)
Others/Fibercraft
15%
15%
Total
133.3
Sources: Baseline data from FAO Statistical Bulletin complemented with insights and perceptions of stakeholders
Assuming that pulp and fibercraft exports would increase at an average of 15% per year while fiber
and cordage would have a conservative growth of 5% year-on-year, the Philippines would need a
supply of about 133.3 thousand MT of abaca fiber. This implies the need to double current
production of abaca fiber. More importantly, there is a need to focus interventions towards the
production of excellent and good quality fiber.
49
B. PRICE TRENDS
1. Export Markets
The price of abaca fiber is generally dictated by the prevailing world market price of natural fiber,
which in turn is dependent on the current supply and demand situation for the commodity and
substitutes (natural fiber and synthetics). The highest price was attained in 2008 while the lowest
was in 2010. In 2011 and 2012, price of abaca posted an increase except for hand stripped JK and
spindle stripped G fibers. Among the different grades of fiber exported by the Philippines, JK fiber
(fair) had the highest percentage decrease in price during the period 2008 to 2012. Lower grade
fibers are more vulnerable to price fluctuations than fibers of excellent and good quality.
Table 28.- Weighted Average of Export Prices of Abaca Fiber: HANDSTRIPPED
Year
FOB Price (US$/125 kg Bale)
S2
I
G
JK
2008
239.08
235.17
221.93
202.22
2009
183.16
205.3
160.93
165.37
2010
172.73
159.53
153.87
134.29
2011
188.02
189.7
170.55
157.43
2012
196.69
195.1
173.98
117.62
Year-on-Year Percentage Change
2009/08
-23%
-13%
-27%
-18%
2010/09
-6%
-22%
-4%
-19%
2011/10
9%
19%
11%
17%
2012/11
5%
3%
2%
-25%
Source: PhilFIDA
Table 29.- Weighted Average of Export Prices of Abaca Fiber: SPINDLE STRIPPED
Year
FOB Price (US$/125 kg Bale)
S2
I
G
2008
238.94
227.28
211.05
2009
183.77
193.07
160
2010
164.56
170.06
154
2011
189.87
202.04
181.5
2012
192.25
-
174
2009/08
-23%
-15%
-24%
2010/09
-10%
-12%
-4%
2011/10
15%
19%
18%
2012/11
1%
Year-on-Year Percentage Change
-4%
Source: PhilFIDA
50
2. Domestic Market
Table 30. Farm Gate Price of Abaca Fiber, 2009 to 2013
Province
2009
2010
2011
2012
2013
Bukidnon
50.32
33.83
40.71
42.17
44.07
Davao del Sur
36.02
31.97
35.91
39.19
33.56
Davao Oriental
30.13
35.57
26.81
27.41
25.66
Compostela Valley
43.66
37.46
38.52
42.48
38.10
Sarangani
39.09
39.37
41.69
43.41
39.35
South Cotabato
44.52
32.21
42.23
41.23
35.28
Agusan del Norte
41.53
40.93
42.55
52.10
46.08
Agusan del Sur
40.07
39.76
45.14
48.64
46.66
Surigao del Sur
39.36
35.14
34.71
47.41
45.68
Sulu
36.81
32.48
40.36
44.19
35.32
Average
40.15
35.87
38.86
42.82
38.98
-11%
8%
10%
-9%
Source: BAS/PSA
The strong demand for abaca pulp from 2003 to 2006 caused the escalation of abaca prices. During
those years, price per kilo were generally about PhP 50/kilo. The devastation of many farms in 2006
and the consequent tightening of the supply further drove the prices up. The trend continued until
2008 due to tight supply of abaca. From 2003 to 2006, abaca prices were soaring and reached as
high as PhP 64/kilo. The eake ed glo al de a d due to e essio espe iall i the ou t s ajo
trading partners caused prices to fall y in 2009 and 2010 but improved in the succeeding years. In
2013, price went down due to decline in orders from key buyers especially among European Union
countries. During the recent months, prices increased slightly due to rise in demand for abaca fiber
from pulp processors.
The abaca grading system does not just indicate the quality attributes of the fibers but it also reflect
the price of a specific lot of abaca fiber especially at the level of the GBEs. Between farmers and
traders, it is seldom that abaca fibers are priced based on grades. In most cases, fibers are bought
all-i . The all-i a a a fi e s a e lassified a o di g to the i dust -accepted grades at the GBE
level. At this level, each grade commands different price. Price is a reflection of the demand and
supply situation of different abaca fiber grades in the abaca fiber industry. The method of stripping
also has effect on the price. Generally, hand stripped fibers command a lower price than spindle
stripped fibers.
Table 31. GBE Prices of the Different Grades of Abaca Fibers, 2011 and 2012
Grade
2011
2012
Spindle
Stripped
Hand
Stripped
% Difference
HS/SS
Spindle
Stripped
Hand
Stripped
% Difference
HS/SS
S2
54.24
52.49
-3.2%
55.79
54.33
-2.6%
I
51.47
48.51
-5.8%
50.4
46.74
-7.3%
G
44.36
42.33
-4.6%
43.36
39.47
-9.0%
51
Table 31. GBE Prices of the Different Grades of Abaca Fibers, 2011 and 2012
Grade
JK
2011
2012
Spindle
Stripped
Hand
Stripped
% Difference
HS/SS
Spindle
Stripped
Hand
Stripped
% Difference
HS/SS
37.8
37.78
-0.1%
31.88
31.24
-2.0%
Source: PhilFIDA Region XI
Among the different grades of abaca fibers, S2 commands the highest price. It is followed by I, G,
and JK. G and JK are classified as good and fair grades, respectively. They are considered to be the
cheaper substitutes for grades S2 (excellent grade) and I (good grade).
52
“e tio :
“UPPORT MARKET“
A. FINANCIAL SERVICES
Fa e s fi a es a e e li ited, hi h akes it diffi ult fo the to i est i i puts su h as
seedlings or inputs, and which makes them vulnerable to price fluctuations. The financing needs of
abaca farmers consist of the following: finance for inputs, consumptive credit, and finance for
investment. In many cases, these are sourced from traders and informal money lenders.
Cooperatives and farmer groups also need short and medium term financing for production loans,
purchases of abaca fibers, and investments in postharvest facilities to support their members and to
promote their own sustainability.
Formal sources of financial services in Mindanao for abaca farming are the following: a) Land Bank
of the Philippines; b) Rural Banks; and c) Micro Finance Institutions. Farmers prefer to borrow from
traders/intermediaries over other possible sources such as Land Bank and rural banks due to the
following reasons: a) traders do not charge outright interest rates although some embed interest
rate on price paid for abaca fibers; b) loans are easy available without any collateral and papers; and
c) repayment of loans from collectors is easy, as they do not generally have any terms and conditions
except for a promise to sell the harvest to them. Cash advances and loans from intermediaries
though generally translate to farm gate prices lower than the prevailing market price. Loans from
intermediaries are also constrained by the funds that they own and are able to access. In many
cases, these are also sourced from GBEs.
B. NON-FINANCIAL SERVICES
Abaca players in Mindanao regions access business development and extension services through the
following means:
1. Informal: Information, knowledge and advice available to farmers and other VC actors through
social relationships. This could include information and advice on price, market and technology
trends through social networks or mediation through traditional cultural mechanisms. An
example of this is the i fo al o -the-jo t ai i g p o ided
pa e ts to thei so s a d
daughte s. The eak ess though is that elde s i the o
u it a e ot ge e all a a e of
emerging good practices. On the other hand, they are very much knowledgeable on indigenous
practices which are generally low-cost and environment friendly as well as suited to agronomic
o ditio s i the a ea. “t e gthe i g the apa it of e og ized leade s/e pe ts i the a ea
would enrich the informal learning system.
2. Embedded: Services are provided within a buying or selling transaction, whereby the costs of
the service provision form part of the overall cost calculation of the supplier, while the service
user does not have to pay for service delivery. Embedded services are an added feature to the
main business transaction.
53
Examples
Nursery Operators: Advice and guidance provided to clients on how to set-up and take care of
their farm
Agri-vet Suppliers: Generic advice on how to use fertilizer
Cooperatives/Intermediaries: Advice to farmers and strippers on proper postharvest operations
(e.g., stripping and drying)
3. Fee-based services such as the rental of stripping machine. When farmers avail of the stripping
service, cooperatives get 20% of proceeds as payment for stripping.
4. Standalone Free Services: These are generally provided by government agencies. The services
are generally provided for free. Outreach of above providers is generally limited to farmers who
are members of cooperatives.
Table 32. Services Provided by Government Agencies
Organization
Services
Philippine Fiber Industry
Development Authority
(PhilFIDA)
- Technical assistance to farmers on the proper culture,
management and protection of abaca
- Training and info dissemination on fiber production, fiber
extraction, fiber grading and classification, fiber processing and
handicraft making
- Product and market development
- Technology development and transfer
Agricultural Training Institute
(ATI)
- Training on Good Agricultural Practices (GAP)
Department of Trade and
Industry (DTI)
- Product and market development
- Investment promotion
Department of Science and
Technology (DOST)
- Technology transfer for value adding of abaca
- Funding for value adding projects
State Universities and Colleges
(SUCs)
- Training of farmers
- Research and development in support of the abaca industry
Provincial Local Government
Units (PLGUs)/ Municipal
Local Government Units
(MLGUs)
- Organizational development support
- Extension services
54
“e tio :
ENABLING ENVIRONMENT
A. FORMAL RULES. REGULATIONS, AND POLICIES
1. All countries have set a zero Most Favoured Nation (MFN) duty for most products except for
cordage and ropes of abaca, where the duties range from a low of 1.9% for the United States to
a high of 5% in Egypt (FAO, 2013). A zero MFN duty for cordage may help in arresting the
decline in export sales of cordage.
Table 33. Tariffs on Abaca and Abaca Products for Selected Major Importers
Major Importers
Raw Abaca Fiber
HS 5305
Abaca Cordage
HS 5607.90
4.8
5
European Union
0
7
Japan
0
1.7
Malaysia
0
1.8
Singapore
0
0
Thailand
5
5
United States
0
1.9
China
Source: World Trade Organization
2. Individuals and organizations engaged in any of the following activities are required to secure a
license from PhilFIDA:
-
Grading and baling commercial fibers whether for domestic and/or foreign consumption
Buying fibers for their mother companies
Buying and selling fibers for domestic and foreign consumption
Processing/manufacturing fibers into semi-finished or finished fiber based or finished
products whether for domestic or foreign consumption
Converting semi-finished or finished products into other forms
Classifying fibers at grading/baling establishments (GBEs), Class A traders or processing/
manufacturing plants
Among the requirements for securing a license is for applicants to have the following
equipment/facilities:
Grading and Baling Establishments (GBEs): i) At least one baling press; ii) Storage of not less
than 850 square meters; iii) Storage space with segregation partition for other commodities; iv)
One metric weighing device with certificate of periodic calibration
Buying Station/Trader Exporter/Local Trader: a) Adequate storage for fibers; ii) One weighing
device with certificate of periodic calibration; iii) Certification from mother company that the
firm is under it (if applicable)
55
Processor: i) Adequate processing/manufacturing area and storage for fibers; ii) One licensed
classifier if it will utilize uninspected fibers; iii) Written description on how fibers are utilized
Classifier: i) Certification of good moral character by the Chairman of the Barangay where
applicant resides; ii) Certification of passing the practical examination on fiber classification
conducted by PhilFIDA
The high costs of capital investment for trading and baling operations are the key barriers to
e t fo s all fa e s o ga izatio s that ai to pa ti ipate i the alue hai as t ade s o
GBEs. Aside f o la k of a ess to e ha i al st ippi g a hi e, fa e s oope ati es
generally find it difficult to come up with an adequate storage facility which is one of the
requirements for securing a trading license from PhilFIDA. In many cases, fibers are stored in
makeshift storage areas resulting to deterioration of quality of abaca fiber due to pest
infestation, exposure to rain, etc For GBE operations, cooperatives lack the capacity to set-up
storage, baling, and warehouse facilities. Likewise, they lack the necessary know-how on GBE
operations including the preparation of documentation and accreditation requirements.
Another constraint of cooperatives is the lack of working capital as farmers need payment upon
delivery.
3. In order to boost the utilization of Philippine natural fibers in textiles, Republic Act 9242
othe ise k o
as A A t P es i i g the Use of Philippi e T opi al Fa i s fo U ifo of
Pu li Offi ials a d E plo ees a d fo Othe Pu poses as passed. The esse e of the law is to
strengthen the demand for our natural fibers, specifically abaca, silk, pineapple and banana
fibers.
4. The unstable peace and security situation in Sulu has not significantly reduced the volume of
trade nor did it appear to affect the structure of their trading operations. There is only one area
hi h is diffi ult to sustai as it has e o e a fa ou ite hidi g pla e of i su ge ts. Fo a
of the abaca farmers in this area, their main concern is their limited access to resources that
would help them expand their livelihoods. One of the root causes of conflict is poverty and
hunger with many of the underlying causes coming down to lack of access. Some of the solutions
to the root causes of conflict hinge on providing marginalized communities equitable and
sustainable access to resources, knowledge, and skills to pursue a life of dignity.
5. The poor farm to market roads in many of the abaca producing municipalities result to high cost
of transportation and/or dependence on traders which result to low bargaining power.
B. INFORMAL RULES AND SOCIO-CULTURAL NORMS
1. Although scarcity mentality can push individuals to concentrate on pressing needs and give
people a kee e se se of the alue of a peso, it a also sho te s a pe so s ho izo s a d
narrows his/her perspective. Poverty can create a mindset that perpetuates scarcity which is
exhibited in various ways such as poor farm maintenance, non-application of fertilizer, etc.
There is a fundamental need to increasingly integrate behavior change interventions in
upgrading initiatives and to be sensitive about the role deep poverty can sometimes play in
ei fo i g eha iou s that ill egati el i pa t a i di idual s a ilit to t a sitio up a ds
out of poverty.
56
The types of behavior change that a value chain development project may facilitate can be
segmented as follows:
a) Perform a new behavior—behavior unfamiliar to the target group. The target group does
not know about the issue or is not conscious of their underperformance. In many cases,
facilitating adoption of the new behavior requires three types of interventions over time:
information and capacity building to understand and have the skills to perform, motivation
to take on the new behavior, and support to sustain the behavior.
b)
Perform existing behavior—behavior familiar to the target group but not widely performed.
Projects promote such behaviors to become the rule rather than an exception. The general
objective is to increase the frequency, duration or intensity of the behavior. For example, if
farmers sometimes practice grading and sorting, a project may want to persuade them to
be more conscientious and consistently sort in a particular way. The primary need is for a
supportive intervention, such as the creation of positive consequences through feedback
and recognition. In some cases, value chain actors consciously choose not to perform the
behavior, and then the primary need is for a motivational intervention. If the information
that has been presented regarding the advantages of the new behavior has not produced
the desired result, the target group needs to either be provided with more effective
i fo atio tailo ed to the e e s pe spe ti e, o e e posed to i itiati es that
demonstrate these advantages to motivate them to start taking action. Once started, they
will need motivation to continue. Motivation may be created through the use of incentives
such as premium prices and/or peer pressure.
c) Decrease and ultimately stop behavior—cease ongoing bad behavior. An example of this
may be to decrease the tendency of farmers and strippers to focus on the production of low
grade fibers as these are easier and faster to strip. Possible interventions may include: i)
encouraging traders to strictly enforce quality control with pricing based on abaca grade;
and, ii) access to mechanical stripper.
A basic tenet of behavioral analysis is that behaviors are a function of a person and their
environment—something happens preceding behavior (the antecedent) that causes or
influences the behavior, and the behavior then results in a consequence. A value chain
development project cannot change a person, but it can influence the way they behave by
shaping the environment within which they function. Both desirable and undesirable
behaviors are learned through interactions with the social and physical environment.
One of the models that can be used in framing and structuring behavior change strategies is
the BJ Fogg Behavior Model. In the Bogg Behavior Model, behavior is a product of three
factors:
a)
b)
c)
Incentives/Motivation – a person must be sufficiently motivated to perform a target
behavior
Ability – a person must have the ability to perform the behavior
Trigger – a person must be triggered to perform the behavior
The three factors must occur at the same time or else the behavior will not happen. The
model is also useful in the assessment of strategies that fail to achieve the intended
behavioral outcomes. It is very helpful in thinking systematically about the elements of
motivation and ability and the strategies used for triggering behavior. Using the model, one
can stop a behavior by taking away one of the three factors such as reducing motivation,
57
taking away the ability, or removing the triggers. If a project can do any of these things
successfully, there is a higher chance that the behavior will not occur or at least not in the
same pattern or intensity.
2.
I i t odu i g i p o ed te h ologies a d fa ilitati g upg adi g, the ti gi o pie e eal
mentality may be positively harnessed. Breaking the upgrading or change process into small
steps has a number of advantages. Smaller changes are easier to plan and manage. When VC
players especially farmers look at a big change, they are easily overwhelmed by the size of it.
When things are broken down into smaller pieces, it does not look as something that is really
very difficult to do. A pause between stages gives time to re-think and re-plan. It also helps
create a sense of closure and reduces tendencies to revert to old ways.
3. Resource-poor farmers are generally risk adverse. As such, it is oftentimes important to
demonstrate the viability and benefits of the change initiative or improved technology. For
activities to be effective in resolving doubts and hesitations of farmers and other VC players,
these should: a) provide safe spaces for reflection and sharing; b) build relationships; and c)
develop responses based on personal experiences, abilities, and perceptions. Visits and
interactions with people exhibiting the desired behavior and demonstration farms can be very
helpful in guiding target groups toward an acceptable resolution of their doubts about the
change initiative. VC players especially farmers see information from peers who have undergone
the process as more credible than information from other sources.
4. There is a need to fully understand the logic and functioning of indigenous production systems
before seeking to inject modern or upgraded technologies and knowledge. Likewise, indigenous
communities should be active participants in the upgrading initiative to ensure ownership and,
consequently, commitment to the change process.
58
“e tio :
CON“TRAINT“ AND OPPORTUNITIE“
Table 34.- Constraints and Opportunities
Opportunities
Constraints
Province
INPUT PROVISION
Use of good quality tissue cultured
planting materials of high yielding
varieties can significantly
contribute in increasing production
volume and improving yield.
PhilFIDA provides support for the
production and distribution of
disease free high yielding materials
Lack of access to disease-resistant
high yielding breeds
Low productivity/low production
volume/ Lack of know-how on
standardized protocol for tissue
culture production
Majority of farmers not used to
purchasing planting materials from
nurseries and do not appreciate
benefits of doing so.
ZAMBOANGA PENINSULA
Zamboanga del Norte
Zamboanga del Sur
Zamboanga Sibugay
Zamboanga City
NORTHERN MINDANAO
Bukidnon
Camiguin
Lanao del Norte
Misamis Occidental
Misamis Oriental
DAVAO REGION
Davao del Norte
Davao del Sur
Davao Oriental
Compostela Valley
Davao City
SOCCSKSARGEN
North Cotabato
Sarangani
South Cotabato
Sultan Kudarat
CARAGA
Agusan del Norte/Butuan City
Agusan del Sur
Surigao del Norte
Surigao del Sur
ARMM
Basilan
Lanao del Sur
Maguindanao
Sulu
Tawi-tawi
Disease infestation and low productivity have adversely affected production causing irregularity and
instability in supply of raw materials which contribute to price fluctuation, high cost of production
which has implication on competitiveness of abaca vis-à-vis alternative products, and low income
among farmers. Two of the root causes are the lack of supply of clean high-yielding planting
materials and the prevalent use among farmers of corms and suckers of mixed varieties gathered
from own farm or neighboring farms. The choice of planting material has a significant impact on
oth ield a d fi e ualit . Fa e s de isio o
hi h a iet to pla t is p i a il dete i ed by
accessibility and affordability.
Appropriate nutrient management
High cost of chemical inputs both ZAMBOANGA PENINSULA
59
Opportunities
together with use of clean high
yielding planting materials and
good agronomic practices can
potentially result to 100% increase
in yield
Constraints
to farmers and environment
Low use of fertilizer among
smallholders due to lack of
understanding among farmers on
cost benefits of proper and
efficient use of fertilizer, risk
aversion, and limited purchasing
capacity
Lack of access to soil analysis
services/ Lack of technical knowhow
on
proper
fertilizer
management and application
Province
Zamboanga del Norte
Zamboanga del Sur
Zamboanga Sibugay
Zamboanga City
NORTHERN MINDANAO
Bukidnon
Camiguin
Lanao del Norte
Misamis Occidental
Misamis Oriental
DAVAO REGION
Davao del Norte
Davao del Sur
Davao Oriental
Compostela Valley
Davao City
SOCCSKSARGEN
Sarangani
South Cotabato
CARAGA
Agusan del Sur
Surigao del Norte
Surigao del Sur
ARMM
Lanao del Sur
Sulu
Under fertilization and improper fertilization lead to the depletion of the nutrient reserve in the soil
especially so that abaca is a perennial crop and, thus, causing significant reduction of the fiber yield.
Application of fertilizer is of varying intensities determined mainly by their access to resources and
not necessary related to soil nutrient requirements. Rising cost of chemical inputs make it almost
impossible for farmers to access fertilizers There is a need to institute soil testing in order to provide
information necessary to maintain optimum soil fertility conditions.
Farming
Demand for certified sustainable
abaca farming is increasing and
can potentially be a niche that the
province can explore. This can also
provide the platform for market
driven upgrading.
Good agronomic practices can help
farmers in reducing incidences of
pests and diseases and in
improving farm productivity
NewTech Pulp willing to provide
Low technological capacity and
lack of access to providers/services
to improve agronomic practices,
reduce incidence of insects and
diseases
ZAMBOANGA PENINSULA
Zamboanga del Norte
Zamboanga del Sur
Zamboanga Sibugay
Zamboanga City
Low uptake and adoption of good
agronomic practices/sustainable
farming practices
NORTHERN MINDANAO
Bukidnon
Lanao del Norte
Misamis Occidental
Misamis Oriental
Lack of capacity to comply with
Rainforest Alliance certification
requirements
DAVAO REGION
Davao del Norte
Davao del Sur
Davao Oriental
60
Opportunities
Constraints
Province
Compostela Valley
Davao City
assistance to high volume
suppliers in meeting certification
requirements
SOCCSKSARGEN
North Cotabato
Sarangani
South Cotabato
Sultan Kudarat
CARAGA
Agusan del Sur
Surigao del Norte
Surigao del Sur
ARMM
Basilan
Lanao del Sur
Maguindanao
Sulu
Tawi-tawi
Productivity levels of majority of the farmers are only about 25% of optimum yield. Losses due to
viral and pest infestation are high. Poor agronomic practices are responsible for many of the
productivity issues faced by farmers.
Majority of the abaca growers are smallholders and most of them do not have the resources and
capacity to ensure production of abaca according to the principles of sustainable farming practices
and to achieve certification, which is increasingly becoming important in the trade of abaca fiber
especially to the pulp sector. In the medium term, non-achievement of certification status may
exclude the participation of abaca farmers in Mindanao in the more lucrative and bigger markets
such as the pulp sector.
Although government agencies like ATI and PhilFIDA are providing training on GAP, the depth and
breadth of their outreach is limited. This leaves a large segment of farmers without access to
extension services. Adoption of good agronomic practices and sustainable farming practices among
farmers has been slow and low. In many cases, there is still a lack of understanding among farmers
on cost benefits of adopting GAP and sustainable farming practices. The Filipino farmers are
calculating and generally reluctant to changes in their farming activities for this is their way of life.
They have the "wait-and-see" attitude. Although many farmers are very much open to new ideas
and technology, there are more farmers who would first want to see a working model or system
before they follow the lead. To facilitate upgrading, farmers need both training and on-farm
mentoring and monitoring including assistance in aligning current production system to sustainable
farming practices at the least cost.
Postharvest Operations
Access to mechanical stripping
machine, dryer, and storage will
enable Mindanao abaca industry
to produce better quality fiber and
reduce postharvest losses and,
thereby, increase income
Lack of access to drying and
postharvest facilities
ZAMBOANGA PENINSULA
Zamboanga del Norte
Zamboanga del Sur
Zamboanga Sibugay
Zamboanga City
NORTHERN MINDANAO
Bukidnon
61
Opportunities
Constraints
Province
Camiguin
Lanao del Norte
Misamis Occidental
Misamis Oriental
generation potentials of strippers
and farmers
Rental of mechanical strippers can
be a viable business for farmer
groups
DAVAO REGION
Davao del Norte
Davao del Sur
Davao Oriental
Compostela Valley
Davao City
SOCCSKSARGEN
North Cotabato
Sarangani
South Cotabato
Sultan Kudarat
CARAGA
Agusan del Sur
Surigao del Norte
Surigao del Sur
ARMM
Basilan
Lanao del Sur
Maguindanao
Sulu
Tawi-tawi
Variety and harvest/postharvest handling are main determinants of fiber recovery and quality. The
dominance of manual stripping results to losses in volume and quality. Manual stripping results to
losses in quality and volume. Fiber recovery using a spindle stripping. Is 69% higher than when
stripping is done manually. Manual stripping produces a higher percentage of coarse fiber compared
to spindle stripping. With the use of spindle stripping, about 114 kilograms of fibers can be
produced/stripped per day. Farmers also save on stripping cost when they have access to a
mechanical stripper. When stripping is done manually, the stripper gets 50% to 60% of the output.
Rental of a mechanical stripper usually entails payment equivalent to 20% of the yield.
Lack of access to drying facilities (other than sun and air) extends the drying period during the rainy
season. Almost always, this results to deterioration of fiber.
In some areas, stationary mechanical strippers are available. The problem with stationary strippers
is that these are usually located in areas far from the farm. To save on labor, farmers accumulate
first a substantial volume of tuxied fibers before bringing this down for stripping. This causes loss of
quality.
Good roads will reduce cost of
transaction and postharvest losses
(quality deterioration) as well as
enable farmers to better take care
of their farms
Poor farm to market roads
ZAMBOANGA PENINSULA
Zamboanga del Norte
Zamboanga del Sur
Zamboanga Sibugay
Zamboanga City
NORTHERN MINDANAO
Bukidnon
62
Opportunities
Constraints
Province
Camiguin
Lanao del Norte
Misamis Occidental
Misamis Oriental
DAVAO REGION
Davao del Norte
Davao del Sur
Davao Oriental
Compostela Valley
Davao City
SOCCSKSARGEN
North Cotabato
Sarangani
South Cotabato
Sultan Kudarat
CARAGA
Agusan del Sur
Surigao del Norte
Surigao del Sur
ARMM
Lanao del Sur
Maguindanao
Poor/Lack of infrastructure results to inefficiencies, deterioration of quality, and limited access to
markets. . It also causes delay in stripping as it would be costly to bring down small volume of fibers
from farms to st ippi g e te . Fi e s also get dirty from mud) during transit from farm to
sto age/fa e s ho e. I f ast u tu e i flue es the ost st u tu e as ell as p odu t ualit
Marketing
Demand for good quality fiber
higher than lower grade fiber
Grading system also recognizes
price premium for good quality
fiber
Dominance of all-in procurement
which provides disincentives for
upgrading/Lack of price incentives
to produce quality fibers
ZAMBOANGA PENINSULA
Zamboanga del Norte
Zamboanga del Sur
Zamboanga Sibugay
Zamboanga City
NORTHERN MINDANAO
Bukidnon
Camiguin
Lanao del Norte
Misamis Occidental
Misamis Oriental
DAVAO REGION
Davao del Norte
Davao del Sur
Davao Oriental
Compostela Valley
Davao City
SOCCSKSARGEN
North Cotabato
Sarangani
South Cotabato
63
Opportunities
Constraints
Province
Sultan Kudarat
CARAGA
Agusan del Sur
Surigao del Norte
Surigao del Sur
ARMM
Lanao del Sur
Maguindanao
Basilan
Sulu
Tawi-tawi
The all in procurement provides disincentives for upgrading. This practice contributes to the
deterioration of quality of abaca fiber produced in the province in two primary ways. First, it
eliminates the possibility of using quality as a competitive strategy. Secondly, it fails to send price
signals to farmers, traders and other intermediaries along the supply chain. Proper price signals
would encourage production of quality fiber.
Interfirm Relationships and Supply Chain Governance
Longer term contractual
arrangements can facilitate
chainwide upgrading and improve
flow of benefits to downstream
players
Horizontal collaboration can help
in lowering cost of transactions
both for upstream and
downstream players
Many of the players have been
suki fo uite so e ti e a d this
can provide opportunities for shifts
to longer term contractual
commitment and win-win
relationships
Dominance of spot transactions or
a s le gth elatio ship. In spot
transactions, there is little or no
formal cooperation between
farmers and traders with price as
the main governance mechanism;
spot selling and buying with no
guarantee of future transactions.
As soon as trader and farmer agree
on the price and payment has
been made, the transaction is
considered close.
ZAMBOANGA PENINSULA
Zamboanga del Norte
Zamboanga del Sur
Zamboanga Sibugay
Zamboanga City
NORTHERN MINDANAO
Bukidnon
Lanao del Norte
Misamis Occidental
Misamis Oriental
DAVAO REGION
Davao del Norte
Davao del Sur
Davao Oriental
Compostela Valley
Davao City
SOCCSKSARGEN
Sarangani
South Cotabato
CARAGA
Agusan del Sur
Surigao del Norte
Surigao del Sur
ARMM
Lanao del Sur
Sulu
Trade in abaca in Mindanao is generally characterized by flexible sourcing from diverse locations.
Formation of market linkages that does not permit close collaboration between players contributes
64
Opportunities
Constraints
Province
little to systemic upgrading of the chain. Dominance of spot transactions stifles innovation and
results to weak supply chain governance.
The smaller cooperatives and associations in Mindanao have to work together to come up with the
scale and volume that would make them attractive partners of pulp processors and large buyers.
With the increasing trend among pulp processors and large buyers to integrate backwards into
farming communities with significant volume, farmers and groups who do not have sufficient scale
of production to be able to sell directly to these buyers can become relegated to the position of
residual or top-up suppliers .
65
“e tio :
COMPETITIVENE““ DIRECTION“
A. COMPETITIVENESS VISION
To sustain and grow the world market for abaca, the industry has to ensure reliability of supply and
improve its price competitiveness vis-à-vis synthetic substitutes and other natural fibers. Likewise,
industry players also recognize that improved compliance to social and environment standards will
play an important role in sustaining and developing new markets as well as in ensuring the long-term
sustainability of the industry. Achievement of these objectives requires a number of priority steps to
be taken:
a) Adequate supply of disease resistant planting materials, which give higher yields of superior
fiber
b) Improved soil nutrient management and fertilizer use
c) Enhanced flow and quality of extension services to facilitate adoption of good agronomic
practices and achievement of sustainability certification
d) Increased availability and access to mechanized and efficient postharvest technologies
necessary for the consistent production of high quality fiber
66
e) Improved physical/infrastructure linkages to input, support, and product markets
f)
Improved incentives to produce quality fiber and pricing transparency and consistency
g) Improved communication, coordination, and collaboration between and among value chain
players
B. PRIORITY CONSTRAINTS/OPPORTUNITIES AND INTERVENTIONS
Drawing on findings from the end markets and value chain analysis and the focal points of action
identified by VC actors and stakeholders, below are the proposed intervention strategies and
approaches to improve market competitiveness of the Mindanao abaca industry while promoting
broad based growth and climate change resilience. Prioritization of interventions for each of the key
onion producing provinces is presented in Annexes 1 to 6 while specific approaches for each
province are indicated in Table 35.
INPUT PROVISION
1. Strengthening of local commercial production and distribution of high yielding and disease
resistant planting materials
The main objective of this intervention is to facilitate access of farmers to high yielding and disease
resistant abaca varieties from which high grade and premium quality of fiber can be extracted. This
will contribute to the improvement of farm productivity, support the expansion of abaca farms, and
facilitate the rehabilitation of abaca plantations infested by viral diseases and damaged by typhoons.
This will also address the need for improved fiber quality to support the growing demand for abaca
pulp and fibercraft. Through the development and/or strengthening of local capacity to produce and
distribute high quality planting materials, it is also hoped that it will reduce the cost of planting
materials. Specific interventions proposed under this strategy include the following:
a) Upgrading and/or establishment of tissue culture laboratories
b) Establishment and/or scaling up of existing abaca nurseries including certification/accreditation
assistance
c) Implementation of voucher program, pla t o pa late s he es , i stal e t pa e t
starting the 3rd year, and other similar mechanisms to encourage farmers to use clean planting
materials of the high yielding varieties.
d) Development of capacity of nursery operators to provide technical assistance to their farmer
clients
e) Support the establishment and/or upgrading of seed banks.
f)
Documentation and dissemination of emerging good practices to facilitate widespread adoption
67
2. Reduce cost of fertilizer use through local production and increased usage of certified good
quality organic fertilizer as well as adoption of proper fertilizer application and management
The proposed strategy entails the development of a competitive supply of good quality organic
fertilizer at affordable prices to promote application of fertilizer parallel to helping ensure that
farmers correctly and judiciously use the fertilizer. It involves the establishment and/or
strengthening of local capacity to produce organic fertilizer specifically formulated for abaca.
Proximity of farmers to fertilizer supply will reduce procurement cost. Likewise, organic fertilizer
enterprises may also want to explore the viability of distributing these in small affordable packs in
li e ith the sa het o ti gi
e talit of s allholde s a d thei ash flo . The s all pa k
app oa h is i te ded to e a le s allholde s to a hie e i e e tal gai s i ield and income over
a few seasons and ultimately graduate to using the required fertilizer application.
It is critical that empowering farmers in basic principles of soil nutrition and management underpins
demand creation interventions. Fertilizer use alone does not increase crop yields; it must be used
properly. Promotion of fertilizer use must be complemented with extension services to ensure that
fertilizers have the correct formulation to meet local soil needs, are applied in the correct amount
and at the optimal point in the planting cycle, and are used alongside complementary inputs such as
improved seed. Without proper application, fertilizer use can actually decrease profitability by
creating a significant added cost without a corresponding increase in crop yields. As such, in
addition to assisting fertilizer producers to scale up their production capacities, they must also be
capacitated to deliver advisory services to their farmer clients. It may also be possible to integrate
soil testing services with fertilizer distribution. Fertilizer demand must be promoted with an
integrated approach to increasing the profitable use of fertilizer by farmers through extension
services.
Based on the above rationale, the following are the proposed interventions:
a) Upgrading and scaling up of existing fertilizer enterprises including assistance to get the
necessary certification/ accreditation
b)
Set-up of community-based organic fertilizer plant
c) Implementation of voucher program, barter, or similar market-based mechanisms to stimulate
purchase and use of organic fertilizer/inputs and reduce risk averseness among farmers
d) Develop capacity of organic inputs providers and retailers to deliver technical advice to farmer
clients and basic soil test analysis or via partnership with providers of soil analysis
e) Dissemination of success stories and emerging good practices
FARMING
3. Development of local capacity to provide services that will enable farmers to adopt good
agronomic practices including assistance to achieve sustainability certification (e.g., Rainforest
Alliance certification).
Adoption of sustainable farming practices/good agronomic practices and ultimately the achievement
of sustainability certification can have a number of positive impacts such as improved market access
68
to institutional and export markets, higher yields and profitability, better quality fiber, greater
occupational safety, and lower environmental impacts. On the other hand, compliance also poses
considerable challenges to farmers ranging from cost/affordability issues to lack of technical knowhow and difficulties. To facilitate access of farmers to resources and skills that will enable them to
incrementally upgrade their practices and work towards certification, the following interventions are
proposed:
a) Development of community-based providers/ trainors on sustainable farming practices and
enterprise management including delivery and financial sustainability schemes
b) Support the set-up of model farms as venues for learning and to showcase sustainable farming
technologies including benefits of compliance
c) Support conduct of knowledge transfer including learning and innovation events such as
competitions.
d) Foster closer partnerships with lead firms (e.g., New Tech Pulp) and encourage a shift of
approach to supply chain development from price to capacity building perspective
e) Matching grant to help municipalities achieve certification
POSTHARVEST
4. Establishment and/or strengthening of collective enterprises specializing in postharvest
operations and abaca consolidation
Fa ilitati g fa e s a ess to mechanize and efficient compliant postharvest technologies and
facilities can play a pivotal role in improving productivity and fiber yield and quality. Availability of
portable mechanical stripper within the proximity of farms will also reduce hauling and transport
costs. This strategy involves the set-up and/or upgrading of common service facilities offering the
following services:
-
Rental of portable and efficient abaca stripping machines and on-site/on-farm drying
facilities
GMP compliant storage facilities
Low cost transportation services (e.g., tramcar/tramlines with 500 kg load capacity similar
to those in Catanduanes) to haul fibers from farm to consolidation area or at least to roads
passable by motorized vehicles.
5. Construction and/or repair of farm to market roads in key abaca producing areas
Upgrading of farm to market roads will contribute to reducing postharvest losses and cost of
production. This may also encourage farmers to visit their farms more frequently and undertake
farm maintenance activities (weeding, etc.).
69
MARKETING
6. Harmonization of interpretation of standards and corresponding price differentials including
development of enforcement mechanism
Harmonization of interpretation of standards will help build a common language between and
among buyers and farmers enabling the latter to gain more control over pricing. This will require
coordination up and down the entire chain to get a consensus and effect-key control processes with
the corresponding farm gate pricing structure as part of laying the groundwork for the formation of
an efficient value chain.
INTERFIRM RELATIONSHIPS
7. Promotion of direct/modular relationships between lead firms and key abaca producing
communities
Direct/modular relationships can provide farmers the opportunities to access skills and resources
that will enable them to scale up operations, upgrade products, processes, and functions, and
extend their operations along the chain. Likewise, it can potentially mitigate risks of price
fluctuations. For lead firms, a direct relationship will enable them to secure their supply of abaca
fiber.
It is best to promote vertical collaborations incrementally to allow supply chain partners to commit
themselves in stages to minimize risks and work out the challenges of working together while
proceeding on a small scale. Proposed interventions under this strategy include the following:
a) Broker marketing agreements between cooperatives and lead firms
b) Promotional and investment campaign directed to lead firms highlighting competitive and
comparative advantage of key abaca producing municipalities
c) Product and/or market development support to lead firms as incentive and to ensure
continuous orders for farmers/ farmer groups
For directed relationships to prosper, it may also be necessary to build capacity of cooperatives on
supply chain management and governance. Key preconditions that entice lead firms to enter into
collaborative relationships with farmer groups/cooperatives are the following:
-
Demonstration of capability to meet basic quality requirements, which implies the need for
some upgrading and a good understanding of the required standards.
-
Access to a significant volume, which calls for well-functioning horizontal collaboration.
-
Willingness to invest. Lead firms are more inclined to invest when they see that the groups
have invested their own money or assets. This provides a guarantee that the communities
will work towards making the venture a success.
70
Table 35.- Summary of Constraints/Opportunities and Interventions
CONSTRAINTS/OPPORTUNITIES
PROVINCE
INTERVENTION STRATEGY AND APPROACH
WHO CAN DO IT
PUBLIC
PRIVATE
Input Provision
Lack of access to disease-resistant
high yielding breeds
Low productivity/low production
volume/ Lack of know-how on
standardized protocol for tissue
culture production
Majority of farmers not used to
purchasing planting materials from
nurseries and do not appreciate
benefits of doing so.
Opportunities
Use of good quality tissue cultured
planting materials of high yielding
varieties can significantly
contribute in increasing production
volume and improving yield.
PhilFIDA provides support for the
production and distribution of
disease free high yielding materials
ZAMBOANGA PENINSULA
Zamboanga del Norte (1 to 6)
Zamboanga del Sur (2 to 6)
Zamboanga Sibugay (1 to 6)
Zamboanga City (2 to 6)
NORTHERN MINDANAO
Bukidnon (1 to 6)
Camiguin (3 to 6)
Lanao del Norte (2 to 6)
Misamis Occidental (2 to 6)
Misamis Oriental (2 to 6)
DAVAO REGION
Davao del Norte (1 to 6)
Davao del Sur (1 to 6)
Davao Oriental (1 to 6)
Compostela Valley (1 to 6)
Davao City (1 to 6)
SOCCSKSARGEN
North Cotabato (3 ro 6)
Sarangani (1 to 6)
South Cotabato (1 to 6)
Sultan Kudarat (3 to 6)
CARAGA
(1 to 6)
Agusan del Sur (1 to 6)
Surigao del Norte (3 to 6)
Surigao del Sur (1 to 6)
ARMM
Basilan (2 to 6)
Strengthening of local commercial
DA/PRDP
production and distribution of high yielding - Technical
and
and disease resistant planting materials
financial support
(1) Upgrading and/or establishment of tissue
culture laboratories
(2) Establishment and/or scaling up of
existing abaca nurseries.
(3) Implementation of voucher program or
similar mechanisms to encourage farmers
to use clean planting materials of the
high yielding varieties.
(4) Development of capacity of nursery
operators to provide technical assistance
(5) Support the establishment
upgrading of seed banks.
and/or
(6) Documentation and dissemination
emerging good practices
Cooperatives
- Management
and operations
of nurseries
BPI/PhilFIDA/DOST/
HVCDP
- Technical
assistance
- R and D
PLGU/MLGU
- Coordination
- Monitoring
- Follow-through
extension services
- Organizational
Development
- Management and
operations
of
tissue
culture
laboratories
of
Existing
tissue
culture laboratories
- Mentoring
and
Página 71
PROVINCE
WHO CAN DO IT
PUBLIC
Lanao del Sur (1 to 6)
Maguindanao (2 to 6)
Sulu (1 to 6)
Tawi-tawi (3 to 6)
High cost of chemical inputs both
to farmers and environment
Low use of fertilizer among
smallholders due to lack of
understanding among farmers on
cost benefits of proper and
efficient use of fertilizer,
risk
aversion, and limited purchasing
capacity
Lack of access to soil analysis
services/ Lack of technical knowhow on proper fertilizer
management and application
Opportunity
Appropriate nutrient management
together with use of clean high
yielding planting materials and
good agronomic practices can
potentially result to 100% increase
in yield
ZAMBOANGA PENINSULA
NORTHERN MINDANAO
Bukidnon (1 to 5)
Camiguin (3 to 5)
DAVAO REGION
Davao del Sur (1 to 50
Davao City (1 to 5)
SOCCSKSARGEN
Sarangani (1 to 5)
CARAGA
Agusan del Norte/ Butuan City
(1 to 5)
ARMM
Sulu (1 to 5)
PRIVATE
technical
guidance
Reduce cost of fertilizer use through local DA/PRDP
production and increased usage of certified - Technical
and
good quality organic fertilizer as well as
financial support
adoption of proper fertilizer application and
management
ATI
- Training
and
(1) Upgrading and scaling up of existing
technical
fertilizer enterprises including assistance
assistance
to get the necessary certification/
accreditation
PLGU/MLGU
- Organizational
(2) Set-up of community-based organic
development
fertilizer plant
- Follow
through
extension services
(3) Implementation of voucher program,
- Organization of
barter, or similar tool to stimulate
training
and
purchase and use of organic
similar activities
fertilizer/inputs and reduce risk
- Coordination of
averseness among farmers
voucher program
or
similar
(4) Develop capacity of organic inputs
mechanism
providers and retailers to deliver
technical advice to farmer clients and
basic soil test analysis or via partnership
with providers of soil analysis
Cooperatives
- Management
and operations
of
fertilizer
business
- Promotional
campaign
72
PROVINCE
WHO CAN DO IT
PUBLIC
PRIVATE
DA/PRDP
- Technical
and
financial support
Cooperatives
- Base of delivery
of services
- Management of
demo farms
(5) Dissemination of success stories and
emerging good practices
Farming
Low technological capacity and lack
of access to providers/services to
improve agronomic practices,
reduce incidence of insects and
diseases
Low uptake and adoption of good
agronomic practices/sustainable
farming practices
Lack of capacity to comply with
Rainforest Alliance certification
requirements
Opportunities
Demand for certified sustainable
abaca farming is increasing and can
potentially be a niche that the
province can explore. This can also
provide the platform for market
driven upgrading.
ZAMBOANGA PENINSULA
NORTHERN MINDANAO
Bukidnon (1 to 5)
Camiguin (1 to 5)
DAVAO REGION
Davao del Sur (1 to 5)
Davao City (1 to 5)
SOCCSKSARGEN
North Cotabato (1 to 5)
Sarangani (1 to 5)
Sultan Kudarat (1 to 5)
CARAGA
(1 to 5)
Development of local capacity to provide
services that will enable farmers to adopt
good agronomic practices including
assistance to achieve sustainability
certification (e.g., Rainforest Alliance
certification).
(1) Development of community-based
providers/ trainors on sustainable
farming practices and enterprise
management including delivery and
financial sustainability schemes
(2) Support the set-up of model farms to
showcase good abaca farming
technologies and venue for learning
(3) Support conduct of knowledge transfer
including learning and innovation events
such as competitions.
(4) Foster closer partnerships with lead firms
(e.g., New Tech Pulp) and encourage a
ATI/PhilFIDA
- Training/
technical
assistance
- Support
certification
to
HVCDP
- Training/
technical
assistance
BAFPS
- Technical
assistance
- Development of
low-cost
measures
to
comply
with
73
PROVINCE
WHO CAN DO IT
PUBLIC
Good agronomic practices can help
farmers in reducing incidences of
pests and diseases and in
improving farm productivity
ARMM
Basilan (1 to 5)
Maguindanao (1 to 5)
Sulu (1 to 5)
Tawi-tawi (1 to 5)
NewTech Pulp willing to provide
assistance to high volume suppliers
in
meeting
certification
requirements
shift of approach to supply chain
development from price to capacity
building perspective
(5) Matching grant to help key abaca
municipalities achieve certification
PRIVATE
certification
PLGU/MLGU
- Organizational
development
- Follow
through
extension services
- Organization of
training
and
similar activities
- Support
certification
Postharvest Operations
Lack of access to drying and
postharvest facilities
Opportunities
Access to mechanical stripping
machine, dryer, and storage will
enable Mindanao abaca industry to
produce better quality fiber and
reduce postharvest losses and,
thereby, increase income
generation potentials of strippers
and farmers
Interventions 1 to 3 for all
provinces listed below
ZAMBOANGA PENINSULA
Zamboanga del Norte
Zamboanga del Sur
Zamboanga Sibugay
Zamboanga City
NORTHERN MINDANAO
Bukidnon
Camiguin
Lanao del Norte
Misamis Occidental
Misamis Oriental
DAVAO REGION
Davao del Norte
Establishment and/or strengthening of
collective enterprises specializing in
postharvest operations and abaca
consolidation
(1) Support the upgrading of existing
collective enterprises and/or set-up of
GMP compliant common service facilities
(stripping machine, dryer, storage
facility, and transportation services)
(2) Build capacity of operators of common
service facilities to provide technical
assistance to clients/strippers
DA/PRDP
- Technical
and
financial support
PhilMech/PhilFIDA
- Technology
transfer
- Customization of
equipment/
- facilities to fit in
with terrain and
requirements of
area
Cooperatives
- Management and
operations
of
common service
facilities
74
PROVINCE
WHO CAN DO IT
PUBLIC
Rental of mechanical strippers can
be a viable business for farmer
groups
Davao del Sur
Davao Oriental
Compostela Valley
Davao City
SOCCSKSARGEN
North Cotabato
Sarangani
South Cotabato
Sultan Kudarat
(3) Support the organizational development
of associations/cooperatives including
facilitating increase in membership base
PLGU/MLGU
- Follow through
assistance
- Organizational
development
ATI
- Enterprise
training
CARAGA
Agusan del Sur
Surigao del Norte
Surigao del Sur
PRIVATE
dev
ARMM
Basilan
Lanao del Sur
Maguindanao
Sulu
Tawi-tawi
Poor farm to market roads
Opportunity
Good roads will reduce cost of
transaction and postharvest losses
(quality deterioration) as well as
enable farmers to better take care
of their farms
ZAMBOANGA PENINSULA
Zamboanga del Norte
Zamboanga del Sur
Zamboanga Sibugay
Zamboanga City
NORTHERN MINDANAO
Bukidnon
Camiguin
Lanao del Norte
Misamis Occidental
Misamis Oriental
Construction and/or repair of farm to market
roads in key abaca producing areas
(1) Cost contribution to repair and/or
construction of farm to market roads
DA/PRDP
- Technical
and
financial support
PLGU/MLGU
- Equity
- Technical support
- Monitoring
DAVAO REGION
Davao del Norte
75
PROVINCE
WHO CAN DO IT
PUBLIC
PRIVATE
Davao del Sur
Davao Oriental
Compostela Valley
Davao City
SOCCSKSARGEN
North Cotabato
Sarangani
South Cotabato
Sultan Kudarat
CARAGA
Agusan del Sur
Surigao del Norte
Surigao del Sur
ARMM
Lanao del Sur
Maguindanao
Marketing
Dominance of all-in procurement
which provides disincentives for
upgrading
Opportunities
Demand for good quality fiber
higher than lower grade fiber
Grading system also recognizes
price premium for good quality
Interventions 1 and 2 for
ZAMBOANGA PENINSULA
Zamboanga del Norte
Zamboanga del Sur
Zamboanga Sibugay
Zamboanga City
NORTHERN MINDANAO
Bukidnon
Camiguin
Lanao del Norte
Misamis Occidental
Misamis Oriental
Harmonization of interpretation of standards
and corresponding price differentials
including development of enforcement
mechanism
DA/PRDP
- Technical
financial
assistance
(1) Technical assistance in the harmonization
of interpretation of standards and
pricing structure and its implementation/
enforcement
DTI/PhilFIDA
- Support to info
dissemination and
establishment of
pricing structure
and
quality
(2) Strengthen capacity of existing formal
and
Cooperatives
- Info
dissemination
- Monitoring
76
PROVINCE
WHO CAN DO IT
PUBLIC
fiber
DAVAO REGION
Davao del Norte
Davao del Sur
Davao Oriental
Compostela Valley
Davao City
and informal information systems to
disseminate accurate price information
PRIVATE
assurance system
MLGU/PLGU
- Support to info
dissemination and
establishment of
pricing structure
and
quality
assurance, system
- Enforcement and
monitoring
SOCCSKSARGEN
North Cotabato
Sarangani
South Cotabato
Sultan Kudarat
CARAGA
Agusan del Sur
Surigao del Norte
Surigao del Sur
ARMM
Lanao del Sur
Maguindanao
Basilan
Sulu
Tawi-tawi
Interfirm Relationships and Supply Chain Governance
Dominance of spot transactions
Opportunities
Longer term contractual
arrangements can facilitate
chainwide upgrading and improve
flow of benefits to downstream
Interventions 1 and 2 for
ZAMBOANGA PENINSULA
Zamboanga del Norte
Zamboanga del Sur
Zamboanga Sibugay
Zamboanga City
NORTHERN MINDANAO
Bukidnon
Promotion of direct/modular relationships
between lead firms and abaca communities
DA/PRDP
Technical
and
financial support
Cooperatives
- Mentoring
members
of
(1) Broker marketing agreements between
cooperatives and lead firms
DTI/PhilFIDA
(2) Promotional and investment campaign
- Market linkage
directed to lead firms highlighting
- Investment
competitive and comparative advantage
campaign
77
PROVINCE
WHO CAN DO IT
PUBLIC
players
Many of the players have been
suki fo uite so e ti e a d this
can provide opportunities for shifts
to
longer term
contractual
commitment
and
win-win
relationships
Lanao del Norte
Misamis Occidental
Misamis Oriental
DAVAO REGION
Davao del Norte
Davao del Sur
Davao Oriental
Compostela Valley
Davao City
PRIVATE
of key abaca producing municipalities
(3) Product and/or market development
support to lead firms as incentive and to
ensure continuous orders for farmers/
farmer groups
PLGU/MLGU
- Foster
market
linkages
- Organizational
development
SOCCSKSARGEN
Sarangani
South Cotabato
CARAGA
Agusan del Sur
Surigao del Norte
Surigao del Sur
ARMM
Lanao del Sur
Sulu
78
“e tio :
CONCLU“ION“ AND RECOMMENDATION“
Critical factors for the growth of the Mindanao abaca industry which are both challenges and
opportunities are:
a) Quality.
Quality is yet to be optimized based on the standards already in place and
internationally recognized. Improving the quality of the abaca fiber will be the foundation for
maintaining and expanding markets for raw, intermediate, and finished abaca products and
developing new applications and techniques. Experience with other natural fibers (cotton, flax,
hemp) has shown that fiber quality is crucial to success in technical applications. Farmers need
to be provided with resources and skills that would enable them to improve quality. A qualitybased pricing at the farm gate level will provide farmers (and strippers) the incentives to
produce quality fiber.
b) Volume/Quantity. Processors and exporters require consistent and reliable supply of abaca
fibers throughout the year. Achieving economies of scale is important to improving profitability.
Volume is important in attracting buyers to partners with farmer groups. A stable supply
throughout the year would also reduce price volatility. Focus should be made in reducing disease
infestation, which has continuously adversely affected production causing irregularity and
instability in supply of raw fiber.
c) Price competitiveness. In some applications, abaca can be substituted by other natural fibers
and synthetic substitutes. In pulp, for example, there are end uses in which synthetic pulp
formulations meet the required paper specifications. In vacuum cleaner bags, currency note
paper, and cigarette plug wraps, abaca pulp is not competitive on price grounds with alternative
papers based on wood or synthetic pulps. In these applications, the use of abaca has already
been eroded. The use of abaca pulp though in high quality products (e.g., meat/sausage casings)
seems to be protected by its unique technical characteristics and is not so much vulnerable to
competition from lower priced synthetics. However, price competitiveness is essential to
sustain continued use of abaca pulp and to expand its applications. Abaca-based handicrafts
from China are generally priced lower than the Philippines. China has also been continuously
upgrading their design and quality. In the cordage market, abaca lost the general purpose rope
market and is now confined to the specialty cordage market for which buyers are prepared to
pay a higher price over prices of synthetic ropes. The challenge posed by synthetic cordage was
initially based on technical superiority. Subsequently, other synthetic ropes were developed (e.g.
polypropylene) which were not only technically superior but was also lower-priced than abaca.
This implies the need for improved productivity at all levels of the chain --- from input suppliers
to processors to exporters.
d) Adherence to environmental and social standards. The growth of demand in the more
specialized products and applications such as pulp based products due to environmental and
technological comparative advantages of abaca. With the growing concern on the effects of
li ate ha ge a d e i o e tal deg adatio , it is i po ta t fo suppl hai s to e g ee
and inclusive. A green and inclusive supply chain means that all players work together to bring
products that consumers value at the most effective and efficient way and with the least
ecological impact. The benefits to the communities will derive from greater integration into
value chains resulting in higher and more stable income, improved capabilities to get a higher
Página 79
share of the margin, and diversification of options. Farmers will have to be organized into groups
and cooperatives to be empowered to engage and deal with buyers in a sustainable way. The
st e gth of fa e s g oups i flue es the a fa e s e gage a d deal ith the ultitude of
buyers. Promoting green inclusive business models is a particularly promising approach in
shifting towards more sustainable growth patterns that have a large impact on poverty
reduction. For agri-enterprises, this translates into pursuing a triple bottom line: people, planet,
profit.
80
ANNEX :
PRIORITI)ATION OF INTERVENTION “TRATEGY:
)AMBOANGA PENIN“ULA
Ranking and Prioritization of intervention Strategy per Province
Ranking and Prioritization: Zamboanga Peninsula
Intervention Strategy
ZDN
ZDS
Sibugay
ZC
Strengthening
of
local
commercial
production and distribution of high yielding
1
1
1
1
Reduce cost of fertilizer use through local
production and increased usage of certified
adoption of proper fertilizer application
and management
7
7
7
7
Development and/or strengthening of local
extension services and assistance to
achieve Rainforest Alliance certification
2
2
2
2
postharvest
operations
and
abaca
consolidation
4
4
4
4
Construction and/or repair of farm to
market roads in key abaca producing areas
3
3
3
3
Harmonization of interpretation of
standards and corresponding price
differentials including development of
enforcement mechanism
5
5
5
5
6
6
6
6
81
ANNEX :
NORTHERN MINDANAO
Ranking and Prioritization: Northern Mindanao
Mis Or
Lanao
Bukidnon
Mis Occ
Camiguin
production and distribution of high
yielding and disease resistant planting
materials
3
3
3
3
3
production and increased usage of
certified good quality organic fertilizer as
well as adoption of proper fertilizer
application and management
7
7
7
7
7
Development and/or strengthening of
local extension services and assistance to
1
1
1
1
1
consolidation
4
4
4
4
4
2
2
2
2
2
5
5
5
5
5
between lead firms and abaca
communities
6
6
6
6
6
82
ANNEX :
DAVAO REGION
Ranking and Prioritization: Davao Region
Davao
del Norte
Davao
del Sur
Davao City
Davao
Oriental
Compostela
materials
1
1
1
1
1
6
6
6
6
6
2
2
2
2
2
consolidation
3
3
3
3
3
market roads in key abaca producing
areas
4
4
4
4
4
5
5
5
5
5
Promotion of direct/modular
relationships between lead firms and
abaca communities
7
7
7
7
7
83
ANNEX :
“OCC“K“ARGEN
Ranking and Prioritization: SOCCSKSARGEN
South
Cotabato
North
Cotabato
Sarangani
Sultan
Kudarat
2
2
2
2
and management
6
6
6
6
1
1
1
1
consolidation
4
4
4
4
3
3
3
3
5
5
5
5
7
7
7
7
84
ANNEX :
CARAGA
Ranking and Prioritization: Caraga
Agusan del
Norte/
Butuan
City
Agusan del
Sur
Surigao del
Norte
Surigao del
Sur
1
1
1
1
and management
7
7
7
7
2
2
2
2
consolidation
3
3
3
3
4
4
4
4
6
6
6
6
5
5
5
5
85
ANNEX :
ARMM
Ranking and Prioritization: ARMM
Lanao del
Sur
Basilan
Maguindanao
Tawi-Tawi
materials
2
2
2
2
6
5
6
5
1
1
1
1
consolidation
3
3
3
3
market roads in key abaca producing
areas
4
5
4
5
4
Promotion of direct/modular
relationships between lead firms and
abaca communities
7
6
7
6
4
86

Abaca - PHP Version 5.6.21 - Philippine Rural Development Project

Transcription

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