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SUPPLY CHAIN IMPROVEMENT FOR THE BANANA (SABA) INDUSTRY

IN CAGAYAN VALLEY: AN EVALUATION RESEARCH

Donnie C. Bacud

Instructor, Provincial Technical Institute of Agriculture,


Isabela State University, Cabagan, Isabela

ABSTRACT

The study was conducted to provide an overview of the banana industry, develop the supply chain
maps for saba in Region II, analyze the performance of the supply chain, identify areas for
improvement in the supply chain, and recommend specific policies and programs and projects to
improve the industry. The study showed that banana supply chain in Region II (Cagayan Valley) is
characterized by its being heavily dependent on canvassers. Canvassers practically do not spend a
single centavo and uses only their network and transactional ability; therefore they are what we call
the necessary evil in the supply chain. Saba (banana) marketing in the region does not follow a
standard quality specifications and quantity is based on manual counting of saba fingers. This
marketing practice, which they coined karate system sometimes results in confusion and
miscommunication among chain players. From the farm it takes saba two to three days to reach the
end user passing through two to five intermediaries. Marketing margin ranges from 20 percent to 150
percent depending on the scope of responsibility taken by the intermediary and operating cost.
Transportation problems such as poor farm to market road, increasing cost of fuel, kotong, traffic
due to landslide and road constructions, high tax, and other fees. Foremost in banana farmers
complain is the incidence of Banana Bunchy Top Virus (BBTV). Bugtok also has affected the
quality of saba as revealed by a trader from Divisoria. The main reason why BBTV and bugtok are
prevalent in the region is the poor cultural management practices of banana farmers in the region.
Saba supply chain inefficiencies are caused by the prevalence of diseases and poor marketing
practices. To manage these inefficiencies, the following steps should be adopted: (a) establish a
standard measurement and classification system, (b) organize farmers into clusters, and (c) conduct
trainings and seminars on disease eradication and prevention.

Keywords: supply chain, supply chain analysis, trader, banana industry,

INTRODUCTION

Banana (popularly known as saba) is one of the most important fruit crops in the
Philippines. It is grown and harvested all year round, mostly preferred by fruit buyers
and sought after by consumers as its prices are relatively lower compared to other fruits
available in the market. In 2006, banana was planted in 428,804 hectares producing 6.8
million metric tons of which 41 percent were Cavendish, 34 percent Saba, 12 percent
Lakatan, eight percent Latundan, and three percent Bungulan (PCARDD, 2008).

The importance of banana was recognized in the crafting of the Philippine


Agriculture (PA) 2020 in 2004-2006 considering it as one of the major fruit crops under
the export fruit cluster and consequently, in the formulation of the Integrated Philippines
S&T Agenda in agriculture, forestry and natural resources (AFNR, 2008-2010). In
addition, the S&T Anchor Program for Banana (Lakatan, Latundan, and Saba), funded by
the Department of Science and Technology (DOST) and the Philippine Council for
Agriculture, Forestry and Natural Resources Research and Development (PCARRD)
from 2004-2008, was an integrated program consisting of research and development
interventions, technology promotion and utilization, and socio-economic policy studies.

Marketing inefficiencies found by Lantican, et. al. (2004) and Esguerra (undated)
revealed the weak market integration between farm and wholesale or retail markets
primarily attributed to limited access to reliable and updated market information and poor
farm-to-market roads leading to high cost of transporting and handling banana, inefficient
pricing system, and unfair counting of banana. Hence, it would be useful to undertake a
research project that would analyze the supply chain of bananas and identify key
improvement areas in the chain by determining where in the chain interventions may be
applied to address poor practices of farmers and traders in bringing the bananas from the
production sites to the consumers. Coordination of the various players of the banana
industry is needed to attain a more efficient, cost-effective, profitable and sustainable
industry. Undertaking this research on the supply chain improvement for the banana
industry was also identified in the National Integrated RND Program for CY 2008-2010
packaged by PCARRD in collaboration with its partners in the regions. The research
supply chain improvement for the banana industry in Cagayan Valley (Region 02) was
therefore conducted as a component of a national banana supply chain improvement
research study funded by PCARRD.

Specifically, the objectives of the study are the following: (a) provide an overview of
the banana industry in Region II, (b) develop the supply chain maps for Saba in Region II
that show the activities and services in their production, (c) identify the key players
involved and the logistics and issues as well as external influences and the flow of
product, information and payments, (d) analyze the performance of the supply chain for
these bananas in terms of efficiency, flexibility, and overall responsiveness, (e) identify
areas for improvement in the supply chain such as behavioural, institutional, and
processes, and (f) recommend specific policies and programs or projects to improve the
industry, in general, and the specific supply chain in particular.

METHODOLOGY

Data Needs and Data Sources

Secondary data on production, area, and yield were gathered from the Bureau of
Agricultural Statistics (BAS) and related published and unpublished documents while
export data was obtained from the National Statistics Office (NSO) or its publications.
This was supplemented by a review of studies (Quicoy and Requisa, 2007, Tyndall, 1998,
and Soliven et al., 2008) and other documents dealing with production, cultural practices,
technologies practiced and developed, post-harvest processing, marketing, and
distribution of the saba banana cultivar.

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Primary data were gathered by doing consultations, key informant interviews,
survey of the industrys stakeholders (e.g., farmers, traders, Provincial Agriculturists,
Municipal Agriculturists, Local Government Unit Officials, logistic suppliers).
Purposive sampling was used as the supply chain has to be traced from the production
sites to the ultimate market.

From the key informant interviews, the following data were generated: (a) key
customers and product requirements, (b) product information and money flow, (c)
activities and services rendered at each stage in the chain and key players and four
respective roles, and (d) critical logistic issues and external influences.

For each stage of the chain from every province, at least one shipment from the
product source to the ultimate destination in the Philippines was traced to: (a) validate all
information in the supply chain map initially drawn based on the interviews, (b) monitor
and document all practices at each stage of the chain, (c) determine and quantify all costs
and margins associated with such practices, and (d) track changes in product volume and
quality along the chain.

Study Sites

The project covered major production areas of bananas in Region II as identified


in the National Integrated Banana R&D Program (PCARRD, 2008). Priority areas
include Maddela, Nagtipunan and Cabaruguis in the Province of Quirino and San
Mariano, Jones and San Agustin, in the Province of Isabela. Metro Manila and other key
demand centers for banana in the Region 3 (Central Luzon) were likewise studied for the
product flows.

Analytical Technique

To know the current state of the banana industry, trend analysis in production and
exports and SWOT (strengths, weaknesses, opportunities, and threats) analysis were
used. To evaluate the performance of the banana supply chain as to efficiency, flexibility
and responsiveness, a set of indicators was used, namely: efficiency in terms of cost
(production cost, distribution cost, transaction cost), profit, return on investment, and
inventory (warehousing, capital, damage, and losses); flexibility by the interaction among
volume, quality, and delivery of products; and responsiveness by customer satisfaction of
the price, quality of product, volume delivered, and other social concerns (environment,
equity, and fairness). Efficiency was assessed using marginal cost and profit analysis,
Return on Expense (ROE) analysis, and minimization of inventory cost while flexibility
was assessed by using inventory turnover analysis.

The areas for improvement of the supply chain were identified based on the
information pertinent to the study, the current state of the industry, supply chain maps,
and performance. The identified areas that need improvement were validated through
discussions with the industrys key players.

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RESULTS AND DISCUSSIONS

Overview of the Industry

Banana production areas for Region II (Cagayan Valley) are concentrated on the
foot of the Sierra Madre Mountain Range which cuts across the region from Cagayan up
north to Quirino and Nueva Vizcaya in the south, covering a large area for banana
growers to plant. Production area for the study is concentrated on the five municipalities
of Isabela and Quirino namely; San Mariano, Jones, and San Agustin in Isabela while
Maddela and Nagtipunan in Quirino.

Although ranked 4th among the 16 regions in terms of production (BAS, 2008),
Region II banana production volume pales in comparison to the top three regions (i.e.,
Regions X, XI and XII). With an average production volume of 378,201 metric tons
(MT), Region II is way behind the production of Region XII (3rd) with 998,634 MT
(Figure 1).

Figure 1. Volume of Banana Production by Region, in Metric Tons, 1999-2008


(Source: BAS, 2008)

Banana Supply Chain and Key Players Roles

As shown in Table 1, banana industry in Region II is highly trader-dependent with


wholesaler/shipper (WS) playing the major role. The chain starts from the farm located
mostly in the foot of Sierra Madre Mountain accessible only by rugged four-wheel
vehicles and passing through narrow dirt roads and rivers. From these far-flung locations,
bananas are traded through canvassers assigned by the WS to buy banana for him/her.
These canvassers get cash advances from the WS to be given to the banana growers.
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Table 1. Banana supply chain key players in Region II

KEY PLAYERS DESCRIPTION


BANANA Banana growers are farmers that plants banana as their main or secondary crop,
GROWERS maintains the banana plantation, provide the needed labor and tools, and harvest
banana.
CANVASSER These traders procure banana on behalf of the wholesaler/shipper who provide
them with cash advances. Canvassers often occupy 1-2 barangay as territory
where he/she can buy banana. The wholesaler/shipper pick up the bought banana
on a scheduled day, thus harvesting is also synchronized to the pick-up date. As
payment of their services, the wholesaler/shipper pays the canvasser on a
commission or mark-up basis.
ASSEMBLER Similar with canvasser, assemblers procure banana in behalf of the
wholesaler/shipper who also provide them with cash advances. The difference of
assembler to that of canvasser is that assembler have a place (usually beside their
house) to assemble the banana before the Wholesaler/Shipper pick it up. Some
assemblers have their own jeep/truck to deliver banana to the wholesaler/shipper
in the town proper thus getting a higher mark-up or commission. There are also
assemblers who finance their own banana purchases for them to be able to get to
choose whom to sell it. Some assemblers sell their banana to their co-assemblers
who have ventured into shipping or assembler/shipper (AS).
WHOLESALER/ Locally known as viajeros, these middlemen have the financial and logistical
SHIPPER (WS) capacity to procure banana either directly from the grower or through the
assistance of canvasser and assembler and transport these commodity to major
demand centers.
WHOLESALER/ These middlemen maintain a retail outlet in a major demand center to sell banana
SHIPPER/ on a wholesale or retail basis. WSR do the buying of banana from the province
RETAILER through a canvasser or assembler, transport it and then sell it in his/her own outlet.
(WSR) Oftentimes WSR rents truck to transport his/her banana.
WHOLESALER/ Largely concentrated in public markets in major trading centers, WS procure
RETAILER banana mainly from deliveries of wholesaler/shipper. Most of them have
(WR) permanent stalls, and sell either in bulk or small quantities to retailers, banana
cue/fritters and turon processors and household consumers.
ASSEMBLER/ Are banana traders who previously are just assembler but have obtained the ability
SHIPPER (AS) to transport banana. AS get their banana directly from farmers, canvassers and
other assemblers from other areas then transport them to the nearest market
centers such as Urdaneta, Tarlac and Gapan.
RETAILER This type of trader sells small quantities of banana and operates either as roadside
retailer or occupies stalls in public markets.
PROCESSOR Process saba into banana chips and do marketing functions such as product
(Banana Chips) development, packaging, labeling, distribution and promotion.
INSTITUTIONAL The Institutional Buyer is a concessionaire in large supermarkets such as SM and
BUYER Robinsons and sells fruits and vegetables in the fruit and vegetable section of the
(DIZON FARMS) supermarket. Institutional buyer gets the bulk of its saba requirements from
wholesaler/shipper but sometimes purchases from the stalls of wholesaler/shipper/
retailer when immediate need arises.

After the grower harvested banana on a scheduled date, the bananas are then picked up by
the WS. These bananas are then transported to the town proper to be loaded to the WSs
forward truck ready to be transported to the wet market centers such as Metro Manila,
Urdaneta City, Tarlac City, Bulacan, Pampanga, and Gapan City. At the wet market in
the destinations indicated above, the bananas are then delivered to the wholesaler/retailer

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(WR) who in turn sells it to retailers and directly to consumers. In many cases, a trading
agreement between the WS and WR already existed, wherein the WS delivers banana to
WR on a regular basis at an agreed price, payment of which is on cash basis or through
bank transmittal.

There is another chain which is a shorter version of the first. It involves a


wholesaler/shipper/retailer (WSR) chain. The WSR takes the responsibility of both the
wholesaler/shipper and wholesaler/retailer thus shortening the distance between the farm
and end consumer. WSR usually are residents of the region who have established a
banana retail business in Metro Manila. These maverick banana traders do the shipping,
wholesaling and retailing, thus getting more of the profit in the end. It is only the
canvassers whom he/she cannot do away with since it entails talking to many growers.
Most WSR has limited financing and so they are just renting the trucks for their shipping
needs.

There are canvassers however, who sometimes have saved enough money to buy
their own trucks and venture into shipping banana directly to the market centers. These
traders are called assembler/shipper (AS). AS usually try first to deliver banana to nearest
market centers in the region and other markets outside Metro Manila such as Pangasinan,
Bulacan, Pampanga, Tarlac and Nueva Ecija. According to them, penetrating Metro
Manila for them is costly and risky because of high transactional cost and transportation
cost.

The shortest identified banana supply chain in the region is from grower to
processor. The identified banana processor in Isabela and Quirino directly buys banana
from contacted banana grower at a little less than prevailing retail market price in the
province thus increasing the profit margin of the farmer and at the same time providing a
steady source of quality banana (saba) to the processor. Banana processing industry in
the region is limited to banana chip manufacturing that is still micro-scale and home-
based.

Another identified chain involves an institutional buyer as shown in Table 1.


Dizon Farms, a well-known concessionaire in large supermarkets in Metro Manila such
as SM, Robinsons, Ayala Malls, Gaisano Mall, and others, has been identified to source
out their saba requirements from Isabela, specifically from Jones, Isabela.

Marketing Channel, Marketing Margin and Geographical Flow

Figure 2 shows that saba from Region II passes through several intermediaries
before reaching the end consumer. From the farm, saba is sold to canvassers, assemblers
or assembler/shipper. A processor in San Mariano purchases her saba directly to a farmer
contact. Canvassers in return sell their saba to the WS which is the source of their
purchasing capital. Marketing margin of canvassers is 20-30 percent. Usually, canvassers
buy at 50-55 pesos per one hundred pieces and sell it at 70-80 pesos.

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Canvassers and assemblers sell to assembler/shipper, wholesaler/shipper or
wholesaler/shipper/retailer. Assemblers/shipper on the other hand sells to retailer and
wholesaler retailer. For wholesaler/shipper, there is one who trade with an institutional
buyer (Dizon Farms) aside from the traditional wholesaler/retailer and retailer. Among
the group of shippers the Wholesaler/shipper/retailer has the highest marketing margin of
150-208 percent since they assume a bigger responsibility. Wholesaler/shipper has the
lowest margin with 30-71.4 percent while the assembler/shipper has a little higher margin
with 83.33-100 percent, the reason of which is that assemblers do not rely too much on
canvassers because they have farmers who sell directly to them.

INSTITUTIONAL
B
ASSEMBLER/ BUYER
A
N SHIPPER
A 83.33%-100% 42.8%-78.5% C
N O
WHOLESALER/ N
A CANVASSER WHOLESALER/
RETAILER S
F SHIPPER
A 20%-30% 30%-71.4% U
R 25%-108.3% M
M E
WHOLESALER/
E R
ASSEMBLER SHIPPER/ RETAILER RETAILER
R
33%-66.6%
27.3%-40% 150%-208%

PROCESSOR

Figure 2. Marketing Channels of Saba in Region II

From the shippers saba goes to the sellers to consumers, these are the institutional
buyer, wholesaler/retailer and retailer. Noticeably, the wholesaler/retailer has the biggest
range of margin from 25 to 108.3 percent this is because selling on wholesale they only
get a marketing margin of 25 percent while when selling on retail they get as much as
108.3 percent. Institutional buyer, although has fixed buying price of Php 14 per kilo,
sells at varied prices depending on the quality of saba thus marketing margin ranges from
42.8-78.5 percent. Retailers have the lowest margin of 33-66 percent.

Banana (Saba) Supply Chains in Region II

The banana (saba) supply chain in Region II, shown in Tables 2 and 3, is
characterized by heavy dependence on canvassers especially in the Province of Isabela.
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San Mariano, for example, has at least four canvassers in every barangay. Canvassers
play a vital role as the purchasing arm of the wholesaler/shipper especially, in areas that
have problems on accessibility.

Supply Chain 1.I. Janeth Gelacio Supply Chain to Gapan City Wet Market
Supply Chain 2.I. Janeth Gelacio Supply Chain to Pasig City Central Market

Janeth Gelacio is one of the major players in the banana (saba) trading industry in
San Mariano, Isabela. She maintains three Forward Trucks that transport saba to Gapan
City and Pasig City on a weekly basis (Table 3). Each truck has a capacity of 60,000
pieces of saba (counted by fives & solo doble). Janeth has already established a good
business relation with contacted buyers in Gapan and Pasig some of whom are also her
kababayan. She maintains regular communication with her buyers through cellular
phones, especially regarding prices. Payment is usually done through bank transfer. To
ensure that Janeth is able to deliver 180,000 saba weekly, she maintains around 10
canvassers scattered in the different Barangays of San Mariano. Janeth also provides cash
advances to her canvasser for them to use in buying banana. The canvassers are free to
decide how much will they buy the banana, to include their mark-up, as long as they are
to sell it at Janeths price which is 70 centavos per piece (value during the time of the
interview sometime on January 2010).

Supply Chain 3.1. Felicidad Cenit Supply Chain to Tarlac City Public Market

Another key player in the saba supply chain in Isabela is Felicidad Cenit of San
Mariano, Isabela. Felicidads operation is similar to Janeth Gelacio in a way that she is
also dependent on canvassers in procuring saba. She however, has the capacity to buy
saba from assemblers in the farm site since she maintains a small truck and a jeepney for
this purpose. Although maintaining four forward trucks, Felicidad sometimes only
managed to fill up three trucks weekly with a capacity of 60,000 each truck. She markets
her saba to market centers in Central Luzon such as Public Markets of Tarlac, Camiling,
Mangaldan, Bolinao and Pampanga. Cash payment for saba delivered is after one week
or during the succeeding delivery.

Supply Chain 4.I. Lasam Supply Chain from San Mariano to Pasig City

The Lasam supply chain of San Mariano, Isabela involves the operation of
Rogelio Lasam and Dominic Lasam, a father and son business tandem. The two can be
called a wholesaler/shipper/retailer since they do the retailing and wholesaling of saba in
their stall at Pasig public market and they also do the purchasing of saba that they sell
from assemblers in San Mariano Isabela. The father, Rogelio, buys saba once a week
from a contact assemblers and canvassers using a jeepney to reach farflung barangays,
then transport the saba to Pasig through their new forward truck. The Pasig stall is
manned by his son, Dominic, who sells the saba on wholesale and retail basis.

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Table 2. Supply Chain Maps of Saba Banana, Isabela, 2010
Supply Chain 1.I. Janeth Gelacio Supply Chain to Gapan City Wet Market
Grower Canvasser Wholesaler/Shipper Wholesaler/Retailer -Daisy Eugenio-
(San Mariano) (Janeth Gelacio) (Gapan City)
BP: BP: 63.12/100 pcs BP: 70.00/100 pcs BP: 115 /100 pcs
SP: 62.04/100 pcs SP: 72.15/100 pcs SP: 115.00/100 pcs SP: Wholesale
Small
Unit Price (P)
0.60/pc
Retail
Small
Unit Price (P)
1.00/pc
Medium 1.25/pc Medium 5.00/3pc
Large 1.50/pc Large 2.00/pc
Vol 2,757.14 pcs
Vol. 10,777.78/wk Vol. 180,000pcs/ week Vol. 120,000 pcs/wk
Supply Chain 2.I. Janeth Gelacio Supply Chain to Pasig City Central Market
Grower Canvasser Wholesaler/Shipper Retailer -Oscar Bostos-
(San Mariano) (Janeth Gelacio) (Pasig City)
BP: BP: 63.12/100 pcs BP: 70.00/100 pcs BP: 115-120/100 pcs
Small 0.60/pc
SP: 62.04/100 pcs SP: 72.15/100 pcs SP: 115.00/100 pcs SP: Medium 1.50/pc
Large 2.00/pc
Vol 2,757.14 pcsVol. 10,777.78/wk Vol. 180,000pcs/ week Vol. 40,000pcs/week
Supply Chain 3.I. Felicidad Cenit Supply Chain to Tarlac City Public Market
Grower Canvasser Wholesaler/Shipper Retailer -Alex Lacerna-
(San Mariano) (Felicidad Cenit) (Tarlac City)
BP: BP: 63.12/100 pcs BP: 70.00/100 pcs BP: 100-110/100pcs
Small 1.00/pc
SP: 62.04/100 pcs SP: 72.15/100 pcs SP: 100.00/100pcs SP: Medium 1.50/pc
Large 1.80/pc
Vol 2,757.14 pcs Vol. 10,777.78/wk Vol. 180,000 pcs/week Vol. 20,000 pcs/week
Supply Chain 4.I. Lasam Supply Chain from San Mariano to Pasig City
Grower Assembler Wholesaler/Shipper/Retailer (Rogelio Lasam -Dominic Lasam-)
(San Mariano) (Pasig City)
BP: BP: 63.12/100 pcs BP: 65/100 pcs
Small 1.00/pc
SP: 62.04/100 pcs SP: 72.15/100 pcs SP: Medium 1.50/pc
Large 2.00/pc
Vol 2,757.14 pcs Vol. 10,777.78/wk Vol. 60,000pcs/week
Supply Chain 5.I. Divisoria Supply Chain from San Agustin, Isabela
Grower Canvasser Assembler/Shipper Retailer -Mila Roxas-
(Jones/Sn. Agustin) -Juliet Guieb- (Divisoria Market)
BP: BP: 63.12/100 pcs BP: 95.00/100pcs BP: 120/100 pcs
Small .60/pc
SP: 62.04/100 pcs SP: 72.15/100 pcs SP: 135.00/100pcs SP: Medium 1.50/pc
Large 2.00/pc
Vol 2,757.14 pcs Vol. 10,777.78/wk Vol. 40,000/week Vol. 10,000pcs per week
Supply Chain 6.I. Limbauan Supply Chain from San Mariano to Pasig City
Grower Canvasser Assember/Shipper Whoesaler/Retailer -Irene Limbauan-
(San Mariano) (Rovito Cabasag) (Pasig City)
BP: BP: 63.12/100 pcs BP: 70.00/100pcs BP: 120/100pcs
Wholesale Unit Price (P) Retail Unit Price (P)
SP: 62.04/100 pcs SP: 72.15/100 pcs SP: 120/100pcs SP: 150/100pcs (finger count) Small 1.00/pc
Medium 5.00/3pc
Large 2.00/pc
Vol 2,757.14 pcsVol. 10,777.78/wk Vol. 60,000pcs/week Vol. 60,000pcs per week
Supply Chain 7.I. Bernie Martinez Supply Chain from San Mariano to Pasig City
Grower Canvasser Assember/Shipper Wholesaler/Retailer -Bernie Martinez-
(San Mariano) (Domiciano Martinez) (Pasig City)
BP: BP: 63.12/100 pcs BP: 70.00/100 pcs BP: 120/100 pcs
Wholesale Unit Price (P)
SP: 62.04/100 pcs SP: 72.15/100 pcs SP: 100/100 pcs SP: 150/100pcs (finger count)
Retail Unit Price (P)
Small 1.00/pc
Medium 1.50/pc
Large 2.00/pc
Vol 2,757.14 pcs Vol.
10,777.78/wk Vol. 40,000/week Vol. 40,000/week
Supply Chain 8.I. Supply Chain from Grower to Processor
Grower (San Mariano) Processor (Banana Chips) -Marines Gelacio-
BP: BP: 60/100 pcs
SP: 62.04/100 pcs SP: 35.00/pack
Vol. 2,757.14 pcs Vol. 400 packs per month
Supply Chain 9.I. Dizon Farms Supply Chain
Grower Canvasser Wholesaler/Shipper Institutional Buyer
(Jones/Sn Agustin) (Jones) (DIZON Farms)
BP: BP: 63.12/100 pcs BP: 70.00/100pcs BP: 14.00/kilo
SP: 62.04/100 pcs SP: 72.15/100 pcs SP: 14/kilo SP: 20.00-25.00/kilo
Vol 2,757.14 pcs Vol. 10,777.78/wk Vol. 60,000 pcs/week Vol. 2-2.5 tons /day
Note: finger count (by fives) and solo-doble manner of counting is used in each level except for wholesaler/retailer and retailers count in selling to end user.

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Table 3. Supply Chain Maps of Saba Banana, Quirino, 2010.
Supply Chain 1.Q. Urdaneta City Supply Chain 1
Grower Canvasser/ Assembler Wholesaler/Shipper Wholesaler/Retailer -Clarita Baguilat-
(Concepcion Lanuza) (Urdaneta City)
BP: BP: 65.00/100 pcs BP: 75/100 pcs BP: 105/100pcs
SP: 61.47 SP: 75.00/100 pcs SP: 105/100 pcs SP: Retail
RR
Unit Price (P)
6.00/5 pcs
Wholesale Unit Price (P)
115/100pcs (finger count)
Small 1.00/pc
Medium 1.50/pc
Large 2.00/pc
Vol 4,588.23 pcs Vol. 60,000 week Vol. 60,000 /week Vol. 100,000 pcs/wk
Supply Chain 2.Q. Urdaneta City Supply Chain 2
Grower Assembler/Shipper Wholesaler/Retailer -Clarita Baguilat-
(Estelita Seriosa) (Urdaneta City)
BP: BP: 60/100 pcs BP: 105/100pcs
SP: 61.47 SP: 105/100 pcs SP: Retail
RR
Unit Price (P)
6.00/5 pcs
Wholesale Unit Price (P)
115/100pcs (finger count)
Small 1.00/pc
Medium 1.50/pc
Large 2.00/pc
Vol 4,588.23 pcs Vol. 20,000/week Vol. 100,000 pcs/wk
Supply Chain 3.Q. Balintawak Supply Chain
Grower Canvasser Wholesaler/Shipper -Joy- Wholesaler/Retailer -Mario Rodriguez-
(Cabbaroguis, Quirino) (Balintawak)
BP: BP: 60.00/100 pcs BP: 70/100 pcs BP: 120/100 pcs
SP: 61.47 SP: 70.00/100 pcs SP: 120/100 pcs SP: Retail
Small 1
Unit Price (P)
.50/pc
Wholesale Unit Price (P)
130/100pcs (finger count)
Small 2 .75/pc
Large 1.00/pc
Large 2 1.70/pc
Vol 4,588.23 pcs Vol. 20,000-30,000/week
Vol. 60,000/week Vol. 60,000 pcs/week
Supply Chain 4.Q. Tarlac City Supply Chain
Grower Canvasser Wholesaler/Shipper Wholesaler/Retailer -Joseph Torres-
(Daisy Rante) (Tarlac City)
BP: BP: 60.00/100 pcs BP: 70/100 pcs BP: 115/100pcs
SP: 61.47 SP: 70.00/100 pcs SP: 115/100pcs SP: Retail
RR
Unit Price (P)
1.25/pc
Wholesale Unit Price (P)
130/100pcs (finger count)
Small 1.50/pc
Medium 2.00/pc
Large 2.50/pc
Vol 4,588.23 pcs Vol. 20,000-30,000/week
Vol. 60,000 pcs/week Vol. 100,000 pcs/wk
Supply Chain 5.Q. Gapan Supply Chain
Grower Canvasser Assembler/Shipper Wholesaler/Retailer -Daisy Eugenio-
(Verdan Matildo) (Gapan City)
BP: BP: 60.00/100 pcs BP: 70/100 pcs BP: 115 /100 pcs
SP: 61.47/100pcs SP: 70.00/100 pcs SP: 115/100 pcs SP: Wholesale
Small
Unit Price (P)
0.60/pc
Retail
Small
Unit Price (P)
1.00/pc
Medium 1.25/pc Medium 5.00/3pc
Large 1.50/pc Large 2.00/pc
Vol 4,588.23 pcs Vol. 20,000-30,000/week
Vol. 180,000 pcs/week Vol. 120,000 pcs/wk
Supply Chain 6.Q. Divisoria Supply Chain
Grower Canvasser Assembler/Shipper Wholesaler/Retailer (Divisoria)
-Joel Jamias- -Ceasar Castillo-
BP: BP: 60/100 pcs BP: 70/100 pcs BP: 130/100pcs
SP: 61.47/100 pcs SP: 70.00/100 pcs SP: 130/100 pcs SP: Retail
RR
Unit Price (P)
1.00/pcs Large 2.50/pc
Small 1.50/pc XL 3.00/pc
Medium 2.00/pc
Vol 4,588.23 pcs Vol. 20,000-30,000/week Vol. 60,000 pcs/wk Vol.: 30,000/wk
Supply Chain 7.Q. Processor Supply Chain
Grower Assembler Processor -Melizabeth Food Products-
(Cabbaruguis, Quirino)
BP: BP: 60.00/100 pcs BP: 70/100 pcs
SP: 61.47 SP: 70.00/100 pcs SP: 50 grams: 9-10/pack; 100 grams: 18-20/pack
Vol 4,588.23 pcs Vol. 20,000-30,000/week Vol. 1,000 pcs saba/ month; 100g- 440 packs/month
50 g- 340 packs/month
Supply Chain 8.Q. DIZON Farms Supply Chain
Grower Canvasser Wholesaler/ Shipper Wholesaler/ Retailer
-Lenlen Bartolome-(Balintawak)
DIZON Farms
BP: BP: 60/100 pcs BP: 70/100 pcs BP: 70/100 pcs BP: 14.00/kilo
SP: 61.47 SP: 70.00/100 pcs SP: 120/ 100pcs SP: Wholesal-14/kilo
Retail-
SP: 20.00-25.00/kilo
RR-1.25/pc Medium-2.00/pc
Small- 1.50/pc Large-2.50/pc
Vol 4,588.23 pcs Vol. 20,000-30,000/wk Vol 60,000/ week Vol 60,000/ wk Vol. 2-2.5 tons /day
Note: finger count (by fives) and solo-doble manner of counting is used in each level except for wholesaler/retailer and retailers count in selling to end user

33
With a relatively more activities undertaken by the Lasams, they understandably
have incurred a higher cost per piece of saba. This however, is offset by a better gross
mark-up since they buy directly to canvassers.

Supply Chain 5.I. Divisoria Supply Chain from San Agustin, Isabela

Mila Roxas, a saba retailer with a prominently large stall in Divisoria Market,
Manila, purchases most of her saba from traders coming from San Agustin, Isabela. San
Agustin is located at the boundary of Quirino and Isabela, and thus traders like Juliet
Guieb (Assembler/shipper) purchases her saba from canvassers either from Quirino or
Isabela. The Sierra Madre Mountain, where San Agustin is located, is traversed by rivers
and it would be impossible to get saba from interior barangays during heavy rains. From
San Agustin two routes are available in transporting saba to Manila; that is, through
Maddela, Quirino or through Jones Isabela. Traders however, prefer going back to
Isabela (longer route) because of presence of checkpoints in Quirino. As a retailer in
Metro Manila, Milas primary customers are banana cue and turon makers that sell their
products in the many colleges and universities in the university belt.

Supply Chain 6.I. Limbauan Supply Chain from San Mariano to Pasig City

The Limbauan Family as a whole owns 17 stalls in the Pasig market selling solely
saba banana. The different stalls are being managed by the Limbauan siblings headed by
Irene Limbauan Martinez who has her own five stalls. The Limbauans hail from San
Mariano, Isabela. Thus, it is assumed that most of their products come from San Mariano.
Irene however, revealed that some of their saba comes from Mindoro, Quirino and Jones.
Through one of their siblings, saba is bought, counted and sorted from the trucks and
then delivered to all their stalls and stalls of other retailers that have previously ordered
from them. From truck price of Php 120 per100 pieces, when delivered to stalls, the price
become Php 150 per 100 pieces accounting for the cost of hauling, counting, sorting and
a small mark-up. In this method, only one person is required to deal with deliveries
indicating that this manner is more organized. One of the major traders delivering to the
Limbauans is Rovito Cabasag from San Mariano, Isabela. Rovito has three canvassers
working for him to ensure a weekly delivery of a truckload of saba (60,000 pieces) to
Pasig market. Irene and Rovito had been doing business for five years, thus, both have
trust on each other especially on giving payment terms.

Supply Chain 7.I. Bernie Martinez Supply Chain from San Mariano to Pasig City

Bernie Martinez, just like Irene (supply chain 6.I.) operates as a


wholesaler/retailer in the Pasig Public Market. But what is distinct with Bernie is that he
has in a way made a quasi-backward integration by financing a saba assembling and
shipping operations which is being run by his brother Domiciano Martinez. Domiciano is
able to transport 60,000 pieces (finger count by fives and solo doble) of saba weekly to
Bernie which he bought through canvassers.

Supply Chain 8.I. Supply Chain from Grower to Processor


34
The only saba banana chips processor in San Mariano, Isabela, is Marines
Gelacio with a production volume of 1,000 pieces of saba per month. Miss Gelacio buys
her saba directly to banana growers in the nearby barangay who delivers the saba directly
to her processing area. She employs two housewives as helpers for 2-3 days processing of
one batch banana chips.

Miss Gelacio has attended trainings and seminars sponsored by DOST and DTI
regarding banana chips processing. She relates that the training did help in improving her
product but she also suggested that after the training, the government should have
provided them the equipments and capital to expand their current production. This way,
she will be able to provide marketing alternative to saba banana farmers in the locality.
Miss Gelacio markets her product with the brand name SMILE which stands for San
Mariano Industrious Ladies Enterprise. The 400 packs (160 grams each) monthly
production is marketed through direct selling to government employees and teachers, and
through a market outlet (Amity Hotel at Cauayan City). To increase sales, Miss Gelacio
extends credit to her clients which are collected when they receive their salary. Miss
Gelacio proudly narrated that her product is of high quality and the most seek out
pasalubong by balikbayans.

Supply Chain 9.I. Dizon Farms Supply Chain

Dizon Farms, which requires two to three tons of saba per day for their outlets as
a concessionaire of large supermarkets, procures their daily needs of saba from deliveries
of traders to their warehouse at Bicutan and the rest of their needs is procured from
Balintawak wholesalers. Dizon is only buying Class A saba that are large in size with a
wholesale price of Php 14 per kilo by Bureau of Agricultural Statistics standards) which
is equal to Php 2.00 per piece. Although selling saba to Dizon is also profitable,
wholesaler/shippers refrain from doing it because of Dizon Farms quality requirements
(which is Class A and large size) and the method of measurement is by kilo and not by
piece. As such, it entails the wholesaler/shipper additional cost and delay in delivery due
to sorting of saba bought from canvasser on big-small classification (solo-doble).

Supply Chain 1.Q. and Supply Chain 2.Q. Urdaneta City Supply Chain 1 & 2

Shown here in Supply Chains 1.Q and 2.Q are the supply chains with same origin
and destination but different intermediary. Clarita Baguilat is a wholesaler/retailer of
banana, primarily saba, in Urdaneta, Pangasinan. Although majority of her saba banana
comes from Quirino, Clarita revealed that there are times that she orders saba from
Davao because of unavailability of quality saba from Quirino and Isabela, especially
during typhoon season. Clarita sells on wholesale and retail basis. Wholesale price
(Php105 per 100 pieces) is given to retailers coming from Mangaldan, Manaoag, and San
Fabian, Pangasinan. Counting for wholesale buying-selling is by fives (finger count)
while for retail is per piece sorted into RR, small, medium and large.

For Supply Chain 1.Q, saba passes through assembler and wholesaler/shipper
while Supply Chain 2.Q saba passes only through assembler shipper. While it seems that
35
customers would be better off with Supply Chains 2.Q than 1.Q due to lesser
intermediaries, this is not the case since the earnings that is supposed to go to assembler
and wholesaler/shipper is taken by assembler/shipper only. This indicates that, though
Supply Chain 2.Q is a shorter chain, the wholesaler/retailer, retailer, and end users are not
better-off than in 1.Q.

Supply Chain 3.Q. Balintawak Supply Chain

The saba trader interviewed in Balintawak was Mr. Mario Rodriguez. Mr.
Rodriguez is a wholesaler/retailer selling wholesale to bangketa retailers with a mark-
up of 10 centavos per piece. On retail, Mr. Rodriguez has a unique classification of saba:
small 1, small 2, large 1 and large 2. Small 1 are those saba that passed as RR or given
for free while small 2 are those smaller banana classified on double (doble) counting.
Large 1 are larger saba banana classified on double counting while Large 2 are saba
classified on single (solo) counting.

Supply Chain 4.Q. Tarlac City Supply Chain

Region 02 banana (saba) going to Tarlac City Public Market passes through
regular intermediaries like canvassers and wholesaler/shipper. With this common route in
the chain, wholesaler/shipper corners the biggest gross margin of Php 40-45 per 100
pieces as compared to assembler with 20-10-20 pesos, respectively per 100 pieces and
wholesaler/retailer of Php 15-30.

Supply Chain 5.Q. Gapan Supply Chain

From grower to end user in Gapan City, saba passes through canvasser,
assembler/shipper and wholesaler/retailer. Assembler/shippers, like Mr. Verdan Matildo,
although purchases directly from growers, still depends on canvassers to fill their weekly
need for saba. Without the canvassers, it would be impossible for assembler/shipper to
fully load their Forward Truck and it is not advisable to wait for a truck to be fully loaded
since the saba would have started ripening. Among the three intermediaries, the
assembler/shipper has the biggest gross margin of 40-45 percent.

Supply Chain 6.Q. Divisoria Supply Chain

Divisoria supply chain has similar route of intermediaries as that of Gapan supply
chain. However, the assembler/shipper has a higher gross margin of Php 60 per hundred
pieces for the Divisoria supply chain. The higher gross margin is accounted for, the
higher cost in delivering to Metro Manila as compared to Gapan which is nearer and has
no other costs such as toll fee, parking fee, road tax and delivery tax.

Supply Chain 7.Q. Processor Supply Chain

Compared to the identified processor in Isabela (Supply Chain 8.1) in which she
procures saba banana directly from the grower, the processor from Quirino procures saba
36
from assemblers which delivers it to her processing area. Processing and packaging
technology is adopted from the Department of Trade and Industry (DTI) since the
processor is being assisted by DTI. Packaging is by 50 grams and 100 grams per pack,
respectively. Marketing is through market vendors and stalls.

Chain Performance Analysis

1. Cost and Return Analysis

Banana (saba) farmers in Isabela generally have a 29 percent Return on Expense


(ROE) based on annual sales of Php 64,800. The ROE is estimated based on sales from
average harvest of 10,000 pieces per month. Likewise, five percent is allotted for
talsik/palyo (counting by fives and solo doble) while another five percent for spoilage
due to physical damage during harvesting and transport, pilferage during transport and
during counting (karate counting). Hired labor are for harvesting and hauling while
family labor are for maintenance such as cleaning and replanting dead and diseased
plants. Imputed land rent is one third of the total sales (tertia), the prevailing rate in the
locality. Depreciation is calculated from tools such as bolo, hoe, and scythe, and farm
equipment such as animal drawn cart.

In case of saba banana farmers in Quirino, ROE is averaged at 39 percent. Total


cost is Php 50,333.20, with 25 percent of the total cost is represented by cash costs, the
rest are non-cash costs. It was noticed that farmers selling price in Quirino is higher than
that of their counterpart in Isabela which has resulted in a higher ROE. Another reason
for a higher ROE in Quirino is the high labor cost in Isabela at Php 15,240.00. Of this
amount Php 13,680 or 90 percent are cash cost and the rest (i.e., 10 percent) are non-cash
labor cost. Labor cost in Quirino is only Php136,000 per annum wherein Php 13,000 are
cash cost and Php 600 are non-cash costs. Non-cash costs are typically for cleaning and
general maintenance activities.

2. Efficiency Analysis

For banana (saba) supply chains in Isabela, the bulk of supply chain inefficiencies
are shouldered by the saba banana growers with only 77-88 percent efficiency. The
source of inefficiency of banana farmers comes mainly from marketing or more
specifically, from the manner of counting and grading of their saba banana.
Approximately five percent of their product output is not taken by traders because of its
size and maturity and physical appearance. It is also noticed that among the three banana-
producing municipalities in Isabela, saba banana farmers in San Mariano has the lowest
efficiency of 77 percent while Jones and San Agustin has 88 percent. This may be
attributed to poor farm to market roads in the area and prevalence of diseases. Although
there have been improvements in recent years, farm to market roads in San Mariano is the
worse among the six banana-producing municipalities studied.

Second to saba banana growers are the wholesaler/shipper and assembler/shipper


with 94-96 percent efficiency. May it be wholesaler/shipper or assembler/shipper,
37
inefficiencies of shippers are from spoilage, pilferage, and informal fees. Assembler/
shipper has higher inefficiency than wholesaler/shipper since they have comparatively
smaller operations but they incur higher spoilage for not having filled their load
requirements on time resulting to ripening of saba in transit.

Canvassers are unique players in the saba banana supply chain since they are not
experiencing any inefficiency in their transaction. Canvassers are just go betweens of
WS, having no or very minimal cost since they are using capital fund from the WS. They
are what we call laway lang ang puhunan (i.e., saliva is just the capital) which mean
that their only capital is their transactional ability. The only cost they incur is their fare
going to and from the house of the WS to get capital and report problems.

Wholesaler/retailers and retailers were among those supply chain key players that
incur a minimal inefficiency of only about one percent which comes mainly from
spoilage due to over ripening. But most retailers control this risk by buying raw saba and
doing the ripening in consonance with the demand and the level of their stocks. Dizon
Farms, which retails saba in large malls and supermarkets, has perfected this and narrated
that they do not incur spoilage if their saba is bought from traders from Region II or from
Balintawak. According to them, the bulk of their losses due to spoilage are from saba
bought from Davao since the saba usually ripened during transit. They actually have
experienced 50 percent loss due to spoilage with saba coming from Davao.

The most efficient chains are the supply chains leading to the processors and
institutional buyers. The probable reason is that the processor supply chain is relatively
shorter while institutional buyers have established quality and quantity standard since
they are buying on a per kilogram basis and are only buying Class A (with no stains)
bananas and large sized saba. The saba supply chain in Quirino is a good case example.
This supply chain has the highest efficiency with 99 percent and growers have the lowest
efficiency level of 87 percent while canvassers also have 100 percent efficiency. The
lowest net income recorded is a wholesaler/retailer in Urdaneta with 90 centavos income
per piece. The wholesaler/retailer purchases saba at Php 1.05 per piece and sells at
wholesale price of Php 1.15 per piece. Although this seems to indicate a low income, the
wholesaler/retailer has a 46 percent ROI considering all aspects of the supply chains
operations with a monthly net income of Php 36,142.00. The highest income was
garnered by a processor with an income of Php 6.24 per piece of saba processed,
seconded by Dizon Farms with an income of Php 1.45 per piece. Among the
wholesalers/retailers, wholesaler/retailer from Tarlac city has the highest ROI of 1.11
pesos per piece accounting for the higher retail prices.

The least efficient supply chain is the Divisoria Supply Chain with the grower and
assembler/shipper as the source of efficiency with grower having 87 percent efficiency
and assembler/shipper with 90 percent. Accordingly, assembler/shippers inefficiencies
comes from their inability to fill up their trucks leading to spoilage and illegal fees such
as grease money for parking, MMDA and checkpoints.

38
Logistics Issues and Concerns

Inbound

Since banana farming in Cagayan Valley is concentrated in the steep slopes of


Sierra Madre Mountain, transporting bananas from the production areas to the consumers
entail hurdling a lot of logistic problems. In most cases, transporting bananas from the
barangays to the Poblacion is done by the traders. Seldom do farmers do the
transportation function in the banana industry not only because they do not have the
capability but also since most banana farms are small ranging from two to four hectares.
The road network is the main problem in banana marketing in Region II although there
have been significant developments recently. There are already noticeably new concrete
pavements connecting some barangays of San Mariano, Isabela and Maddela, Quirino.
Still, for most banana producing barangay roads are still those used by logging
concessionaires in the 1980s.

The primary complains by farmers in both Provinces of Isabela and Quirino is the
prevalence of Banana Bunchy Top Virus (BBTV). Its symptoms include drying-up of
leaves, stunted growth, and blackening of fruit. Infected banana plants eventually die in
just a few weeks. Another disease which infected banana fruits in the region, especially
the Isabela province is the Bugtok. It caused retailers from Divisoria to stop purchasing
saba from traders coming from Isabela. Prevalence of BBTV and Bugtok can be traced
to the traditional production practices of banana farmers in the region. That is, banana
farmers in the region are not doing enough field maintenance activities as well as not
applying fertilizer and pesticide and not doing bagging and irrigation. With BBTV and
Bugtok infesting banana farms, a considerable number of banana farmers have already
shifted to corn production. With the introduction of the no-till technology using
glyphospate herbicide, areas that used to be planted only with banana (such as in sloppy
areas), ravines and crevices can now be planted with corn.

Outbound

This study observed that some assemblers have ventured into shipping banana to
market centers. Since most assembler/shipper truck (Elf type) capacity is smaller than
that of WS, assembler/shipper mostly delivers their bananas to peripheral market centers
of Metro Manila and not directly to Metro Manila. They reasoned out that, although
buying price of banana in Metro Manila is higher, it also entails higher cost from formal
(road user tax from LGU) and informal tax (kotong cops and MMDA traffic enforcers).
Furthermore, they also pay a toll fee in North Luzon Expressway (NLEX) relative to the
volume of the transported banana.

Aside from the kotong cops and MMDA traffic enforcers, banana trucks are
also being flagged down or being stopped through numerous checkpoints from Diadi,
Nueva Vizcaya up to Caranglan, Nueva Ecija. These checkpoints are dubbed
cashpoints by the viajeros since people manning these checkpoints are often asking
grease money.
39
The general travel complaints by the traders who do the transportation of banana
are: (a) perpetually increasing cost of gasoline, high cost of toll fees, (b) availability of
parking area and high cost of parking fee, and (c) frequent close traffic conditions in
Diadi and Sta. Fe Nueva Ecija due to road repairs and landslides (February to October
2010) causing additional 2-4 hours travel time. Most traders interviewed also point out
that there was no formal financing available for them. Some have gotten financial help
from their family members to finance their banana trading.

Counting system used from farmer up to retailer is by fives and solo-doble. One-
is-to-one counting is only being used to the end user (Tables 2 and 3). Dizon Farms on
the other hand use weight (kilogram) in purchasing. By fives counting is usually done
divisible by 5 and in excess to that is given free. Through solo-doble counting, good sized
banana are counted one per piece while small sized banana are counted one for two
pieces. With this system, traders would not complain since the manner of counting for
their purchasing is also the same as in their selling. Retailers would benefit with this
system since they sell it one-is to-one counting and buy at by fives counting. However,
they also sort the banana into small, medium and large wherein small are sold lower than
the buying price while large are sold at a higher price compared to buying price. Farmers
are at the losing end because they end up giving saba for free. Worse, with the karate
system (described as classifying done very fast in a not so organized manner), farmers
losses increase due to deception in counting. With this manner, farmers are not aware on
how many are counted solo or double but would just accept whatever the counting is and
just take the payment without question. Furthermore, rejects are not included in the count
but are also taken by the traders which are probably sold. With the karate system,
farmers do not have a way to know which are counted reject, solo or doble.

CONCLUSIONS AND RECOMMENDATIONS

Saba banana supply chain in Region II (Cagayan Valley) is characterized by its


being heavily dependent on canvassers. Canvassers procure banana on behalf of the
wholesaler/shipper and assembler/shipper who provide them with cash advances. Thus,
they do not need a capital for their activity and they are usually called laway lang ang
puhunan. This intermediary can be eliminated from the supply chain as long as farmers
can assure the wholesaler/shipper and assembler/shipper of a fully loaded truck upon
leaving the production area.

With no standard quality considerations of banana, quantity is based on manual


counting of saba fingers. This marketing practice results in confusion and
miscommunication among chain players since classification is based on perception of
each classifier. Farmers suspect that they are short charged since they are not aware on
how classifiers arrived at their count. They even coined this counting system as karate.
There are wholesaler/shippers that also complain that the saba count that their canvassers
give to them is different from the count of wholesaler/retailer when they deliver the saba.
This method result to about four to five percent inefficiency.

40
Inefficiencies of saba farmers are caused by the prevalence of diseases. Foremost
of which is the incidence of Banana Bunchy Top Virus (BBTV) which has eradicated
most of lakatan and latundan varities in Quirino. Bugtok also has affected the quality of
saba coming from the region which has affected its marketability as revealed by a trader
from Divisoria. The main reason why BBTV and bugtok are prevalent in the region is
the poor cultural management practices of banana farmers wherein there are practically
no crop maintenance activities in their banana farms except for occasional cleaning and
replanting.

From the farm, it takes saba two to three days to reach the end user passing
through two to five intermediaries. Marketing margin ranges from 20 percent to 150
percent depending on the scope of responsibility taken by the intermediary and operating
cost. The prevalence of transportation problems such as poor farm to market roads,
increasing cost of fuel, kotong, traffic due to landslides and road constructions, and
high tax and other fees, are badly affecting the banana industry.

Although government assistance is evident in saba processors and on promotion


of banana pest eradication technologies, overall intervention on the saba industry is
wanting. To make the saba supply chain more efficient, there must be a coordinated
effort from the government and non-government sectors in eliminating the sources of
inefficiency. The bulk of inefficiencies originated from the farm. Thus, the focus of
intervention must be on farmers production and marketing activities. Canvassers,
though, are important to traders in ensuring their purchases of saba, can be removed to
shorten the saba supply chain thereby making the chain more efficient (Lantican, 2008
and Lantican et al., 2004)

The second major source of farmers inefficiency is from marketing, more


specifically on the finger method of measuring and solo-doble counting. There is a need
therefore for a region-wide information campaign or group discussions on this aspect of
banana marketing.

To manage these inefficiencies the following steps should be adopted:


1. Establish a standard measurement and classification system;
2. Organize farmers into clusters. The role of the cluster will be to:
Assume the role of the canvassers and assemblers thus getting a fair classification
of their saba.
Provide venue for training and information dissemination.
Conduit for financing and government financial assistance.
Conduit for other government assistance such as disease free seedlings and
fertilizer grant.
Provide negotiation and bargaining power.
3. Conduct training/seminar on disease eradication and prevention.

41
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