DTI-IFAD RAPID GROWTH PROJECT RCU XI

Detailed Investment
Plan
For the Kennemer Foods International Supply Chain in Region 11

April 2022
Table of Contents
Rationale 3
DIP Scope and Supply Chain Development Model 4
Supply Chain Development Model 6
Roles of the Value Chain Stakeholders in the DIP 8
Opportunities and Constraints of the Value Chain 13
Objectives of the DIP 15
Summary of Proposed Strategic Investments and Interventions 15
Financial Viability Assessment 17
Methodology of Delivery of Strategic Investments and Interventions 25
Risk Assessment 28
Implementation Timelines 30
Annexes 0

List of Tables
Table 1: List of FOs under KFI Supply Chain 5
Table 3: Comparative Production Volume (Wet Beans) 8
Table 4: Status of Commercial Partnership Agreements 11
Table 5: DIP Objectives of the FOs under the KFI Chain 16
Table 6: Summary of RAPID Interventions and Investments 17
Table 7: List of Proposed FMRs 18
Table 8: Summary of Financial Viability Indicators 19
Table 11: Projected Cost and Return for Farm Rehab and Expansion (1 hectare) 20
Table 12: Risk Assessment Table 29

List of Figures
Figure 1: Supply Chain Development Model of KFI 7
Figure 3: Implementation Timeline 31

Annexes
Annex 1: Stakeholders’ Profile (Inventory)
Annex 2: Productive Investment and BDS
Annex 3: Farm to Market Infra
Annex 4: DIP Summary
Annex 5: Business Plans
Annex 6: Farm Plans

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Glossary of Terms
Term Definition

CPA Commercial Partnership Agreement

DILG Department of the Interior and Local Government

DIP Detailed Investment Plan

DOST Department of Science and Technology

FO Farmers’ Organization

FMI Farm-to-Market Infrastructure

FMR Farm-to-Market Road

FSP Financial Services Provider

GAP Good Agricultural Practices

IFAD International Fund for Agricultural Development

IP Indigenous People

KFI Kennemer Foods International

LGU Local Government Unit

MG Matching Grant

NO No Objection

NPCO-PMU National Project Coordination Office-Project Management Unit

RAPID Rural Agro-Enterprise Partnership for Inclusive Development

RCU Regional Coordinating Unit

RIA Road Influence Area

RTWG Regional Technical Working Group

PCU Provincial Coordinating Unit

PDMU Planning, Development, and Management Unit

PHF Post-Harvest Facilities

SALT Sustainable Agriculture Land Technology

SARAI Smarter Approaches to Reinvigorate Agriculture as an Industry in the

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Philippines

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Rationale
This detailed investment plan details the gaps and opportunities of the supply chain of the
Kennemer Foods International (KFI) in Region 11 and the proposed investments and interventions of
RAPID Growth Project to harness the economic potentials of the chain to spur economic growth and
consequently alleviate poverty in the 5 provinces of Davao Region.

As a brief background of the Anchor Firm, Kennemer Foods International (KFI) is a Filipino
agribusiness that is operating in more than 30 provinces in the Philippines in its 9-year existence
since the year 2012. KFI is most notable for its promotion of sustainable growing programs and
sourcing of various high quality agricultural products and is considered to be the country’s leading
exporter of dried fermented cacao beans to the international market. The company’s development
model for smallholder farmers are to provide access to financing, high quality farm inputs,
technology transfer, and continuous technical support from field technicians. As of today, KFI has
worked with more than 15,000 farmers all over the country and is targeting to further support at
least 22 Farmers’ Organizations which covers approximately 4,000 smallholder farmers in Region XI
alone.

KFI’s demand for cacao beans is virtually unlimited due to its strong market links with the
international market specifically Puratos Chocolate, Mars Chocolate, and others. The sheer demand
for cacao beans of KFI is an opportunity for smallholder farmers to take advantage of. However, the
cacao production of the country in general is marred by various production issues of which obstructs
the cacao bean producers to fully take advantage of the market opportunities that KFI offers. Even
during the height of the pandemic, KFI remained to be steadfast and provided consistent support to
its partner FOs by consistently buying wet or dried cacao beans at a decent price.

As of March 2022, this DIP covers FOs from Davao del Norte, Davao de Oro, and Davao Oriental
totaling to 2,437 smallholder farmers for the 3 provinces and will be expanded approximately up to
4000 smallholder farmers upon the enrollment of FOs under the provinces of Davao del Sur and
Davao Occidental. The RAPID PCUs in Region 11 will also strengthen the consolidation activities of
the enrolled FOs by encouraging non-member smallholder farmers to deliver their beans to their
nearest KFI partner-FOs respective to their geographical locations.

In this light, this detailed investment plan aims to bridge the production gap of KFI’s partner
FOs/Cooperatives by providing a holistic intervention to its supply chain and to maximize the
economic opportunities of KFI’s virtually unlimited demand of cacao beans. The interventions will be
comprised of various technical assistance, productive investments, and business development
interventions of which are detailed in the attached Stakeholder and Investment matrices.

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DIP Scope and Supply Chain Development Model

As of March 2022, this detailed investment plan is proposed to cover 2,437 smallholder farmers all
under the KFI Value Chain in Region XI. Although this DIP only features FOs/Coops which already
have an existing trade relationship with KFI or have executed the RAPID Growth Project’s
Commercial Partnership Agreement (CPA), the DIP scope and costs is expected to be updated in the
forthcoming months as the PCUs endorse new FOs/Cooperatives and new farmers to add to the
current number of membership to the already identified FOs to the KFI Value Chain particularly
from all the provinces in Region XI which could increase the scope of the DIP from 2,437 to
approximately 4,000 smallholder farmers. The table below is the list of FOs that is being covered by
this DIP as of date, and their basic production profiles.

Table 1: List of FOs under KFI Supply Chain

Ave. Yearly
Size of Pot. Exp.
Name of Farmers’ No. of No. of WB Prod. Area for
LOCATION Area Area in
Organization Yrs. members Volume Rehab
in Hectares Has.
(IN TONS)
(1) Kapalong
Municipality
Cooperative
of Kapalong,
(the subsequent FOs 57 55 303 MT 118 118 55
Davao del
in gray cells are
Norte
member-coops of KC)
(2) Dacudao San Isidro,
Upland Farmers Davao del 8 87 89 MT 50 50 56
Association Inc. Norte
(3) Datu Balong Kapalong,
Farmers Davao del 9 71 37 MT 200 100 46
Organization Norte
(4) Ginsawaan Kapalong,
Farmers Davao del 9 136 83 MT 300 269 22
Association Norte
San Isidro,
(5) Cacao Farmers
Davao del 3 76 15 MT 144 72 76
of Linao
Norte
(6) Dugayan
Kapalong,
Okapan Kimataan
Davao del 7 99 89 MT 97 97 53
Igang Farmers
Norte
Association
(7) Langan-Gupitan Kapalong,
Farmers Davao del 9 67 31 MT 128 64 21
Association Norte
San Isidro,
(8) Sawata Farmers
Davao del 10 265 21 MT 320 160 183
Association
Norte
(9) Mamangan San Isidro,
Farmers Davao del 13 74 7.5 MT 140 70 54
Association Norte
Brgy. Kipalili,
(10) Kipalili Farmers San Isidro,
9 128 24 MT 80 80 128
Association Davao del
Norte
(11) New Santiago Assuncion, 8 93 40 MT 50 75 93
Farmers Association Davao del

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 Norte
(12) Del Monte New Corella,
Coconut Farmers Davao del 7 104 27 MT 150 100 104
Association Norte
(13) Sta. Fe Coconut New Corella,
Farmers Association Davao del 7 50 75 MT 40 50 50
Norte
(14) Tagum City Cacao Tagum City,
Farmers Association Davao del 7 36 8 MT 37 37 37
Norte
New Bataan,
(15) COMVAL MPC 24 103 24 MT 103 20 10
Davao de Oro
(16) Dumlan
Maco, Davao
Association of Cacao 3 36 2 MT 23 10 -
de Oro
Planters
(17) LAMPCO -Laak
Laak, Davao
Multi-purpose 28 259 190 MT 221 63 74
de Oro
Cooperative
Talisay St.,
(18) MAMPCO -
Poblacion
Maragusan Multi- 29 303 94 MT 114 2 80
Maragusan,
purpose Cooperative
Davao de Oro
Barangay
Mayo, City of
(19) MAGREBCO 8 148 65 MT 185 20 150
Mati, Davao
Oriental
Barangay
Taguibo, City
(20) TATABUFLA of Mati , 10 159 228 MT 326 48 48
Davao
Oriental
Cateel, Davao
(21) CAFFPROCO 9 88 - 100 82 89
Oriental
TOTAL: 21 FOs - - 2437 1452.52 2926 1587 1374
*Full organizational profiles of the FOs are detailed in the attached firm level business plans.

The following farmer organizations that may account for more than 3000 smallholder farmers will
also be targeted to be enrolled in the DIP in the forthcoming years of project implementation:
No. Farmers’ Organizations Province

1 Maragusan Growers Multipurpose Cooperative (MAGROW MPC) Davao de Oro

2 PBCI Davao de Oro Cacao Growers Davao de Oro

3 Camansi Cacao Farmers Association Davao de Oro

4 Agrigrow Live Davao Oriental

5 PCCPA Davao Oriental

6 PBCI Lupon Cacao Growers Davao Oriental

7 Limot Mandaya Tribal MPC (LIMTRIMCO) Davao Oriental

8 Calapagan Cacao Farmers Association Davao Oriental

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9 Maragatas Small Cacao Farmers Association Davao Oriental

Davao Oriental Coconut & Cacao Development Coalition Inc.

10 Davao Oriental
(DOCCIDEC)

11 Kalaparan Agrarian Reform Beneficiaries Cooperative (KARBENCO) Davao Oriental

12 Mayo Agrarian Reform Beneficiaries Association (MMAGREBA) Davao Oriental

13 PKPPA Davao Oriental

14 Agrigrow Live Davao Oriental

15 Malalag Cacao Growers Association (RBDI - MACAGROA) Davao del Sur

16 Sinabadaw Ka Sta. Cruz Multipurpose Cooperative (SKSMPC) Davao del Sur

17 Kiblawan Multipurpose Cooperative Davao del Sur

18 ND Food Processing Davao del Sur

19 PBCI Kapalong Cacao Growers Davao del Norte

20 Sua-on Farmers Association Davao del Norte

21 Napunggas Farmers Association Davao del Norte

22 Macgum Integrated Farmers Association Davao del Norte

23 Limbaan Coconut Cacao Farmers Association Davao del Norte

24 Ladeca Farmers Association Davao del Norte

25 1st United Farmers Association Davao del Norte

26 Talaingod Cacao Farmers Association Davao del Norte

27 Sambayon Small Coconut Farmers Association Davao del Norte

28 San Jose SLP Tsokolate Association Davao del Norte

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Supply Chain Development Model

Figure 1: Supply Chain Development Model of KFI

The supply chain development model for KFI value chain in Region XI is anchored on the opportunity
of having a virtually unlimited buying capacity of KFI from cacao-producing provinces in the region.
The interventions of the RAPID Growth Project is aimed to strategically maximize the benefits from
such opportunity by providing investments, matching grants, and various business development
support to the smallholder farmers and their respective farmers’ cooperative/associations to further
increase their cacao production which will consequently increase all the stakeholders’ incomes.

To be more specific, in the level of smallholder farmers, the project will be providing the following
interventions thru their respective cooperatives/associations:
 Seedlings to expand production areas that will cover a total of 1587 hectares (SALT and
mixed/flat lands) for the 21 cooperatives covered in the Detailed Investment Plan (DIP).
 Farm tools to be used in rehabilitation/rejuvenation of unproductive cacao trees that will
approximately cover 1374 hectares for the 21 FOs covered in the DIP.
 Business Development Support such as trainings from cacao farm and crop establishment to
post-harvest handling and processing based on the production protocol of KFI, financial
literacy, etc.

For the cooperatives/associations, the project will be providing investments thru the project’s
matching grants:
 Post-Harvest Facilities that are in accordance to the standards of KFI such as fermentary and
drying facilities.

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  Business Development Support such as Organizational Development, Business Development
Trainings which will include capacitating identified cooperatives or associations to effectively
consolidate wet cacao beans from their farmer members.

As for KFI, since KFI is categorized as a Tier 1 Anchor Firm which is generally considered as a “Large”
business entity, KFI is no longer eligible for matching grants since it is assumed that the institution is
already financially and administratively capable in developing all aspects of their business
operations. However, with the sheer size of the supply chain of KFI, the project is proposing to
subsidize the salary of a Supply Chain Manager which will be embedded in Kapalong Cooperative
which oversees 8 smaller FOs, to oversee the smooth operation of the supply chain and to conduct
regular monitoring and evaluation for the project.

With the portfolio of interventions and investments to be provided by the Project, the table below
shows the projected comparative production capacity of the FOs before and after the rollout of
project investments and activities:

Table 3: Comparative Production Volume (Wet Beans in Metric Tons)

2021 2026
Name of FO
(Before RAPID) (Target Volume with RAPID)

Kapalong Cooperative 303 MT 1,157 MT

Dacudao Upland Farmers Association Inc. 89 MT 200 MT

Datu Balong Farmers Organization 37 MT 112 MT

Ginsawaan Farmers Association 83 MT 198 MT

Cacao Farmers of Linao 15 MT 77 MT

Dugayan Okapan Kimataan Igang Farmers

89 MT 200 MT
Association

Langan-Gupitan Farmers Association 31 MT 89 MT

Sawata Farmers Association 21 MT 239 MT

Mamangan Farmers Association 7.5 MT 73 MT

Kipalili Farmers Association 24 MT 35 MT

Sta. Fe Coconut Farmers Association 40 MT 75 MT

New Santiago Farmers Association 27 MT 40 MT

Del Monte Coconut Farmers Association 75 MT 115 MT

Tagum City Cacao Farmers Association 8 MT 15 MT

COMVAL MPC 24 MT 50 MT

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 Dumlan Association of Cacao Planters 2 MT 12 MT

LAMPCO -Laak Multi-purpose Cooperative 190 MT 305 MT

MAMPCO -Maragusan Multi-purpose

94 MT 150 MT
Cooperative

MAGREBCO 65 MT 89 MT

TATABUFLA 228 MT 285 MT

CAFFPROCO N/A 140 MT

Total 1,452.50 MT 3,656 MT

Roles of the Value Chain Stakeholders in the DIP

Roles of the Identified Operators in the Input Provision Function

Operators Role in the Value Chain

BPI Accredited nurseries in Davao Region shall be the priority

BPI Accredited Nurseries source of seedlings for the farm expansion interventions of the
project.

The local agri supply shops present in the respective

geographical locations of the proponents under this DIP may
Local Agri Supply Shops provide a convenient source of crucial input materials such as
farm tools and fertilizers as the farmers rehabilitate and expand
their production areas.

Landbank of the Philippines serves as the conduit of the

matching grant amounts to be given to the DIP Proponents and
Landbank of the Philippines
may also provide loans to the FOs and smallholder farmers to
be used in their business operations and production activities.

Agronomika Finance Corporation is the financing arm of KFI. The

Agronomika Finance DIP Proponents especially those with CPAs may access loans
Corporation from AFC to be used in their business operations and
production activities.

Established cooperatives such as Kapalong Cooperative and

Established Cooperatives such Maragusan MPC also offers financial instruments to their
as Kapalong Cooperative members that can be used for the production activities of the
smallholder farmers.

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Roles of the Identified Operators in the Farming Function

Operators Role in the Value Chain

The smallholders belonging to the 21 identified FOs in this DIP

Small Holder Farmers produces the wet and dried beans and supplies directly to their
respective FOs.

The 21 FOs in this DIP mainly consolidates the wet and dried
beans from their member and non-member farmers. Some FOs
also have production areas that are owned and managed by the
cooperatives especially those Agrarian Reform Beneficiaries that
Farmers’ Organizations has consolidated ownership of an awarded land.

Most FOs solely buy wet beans and collectively ferment and dry
the cacao beans for quality control purposes. Some FOs also
provide loans to their member-farmers for production and
personal purposes.

Roles of the Identified Operators in the Marketing Function

KFI as the most prominent trader of cacao beans in the Philippines buys both wet and dried cacao
beans from the farmers. KFI also provides various production and business development support to
its partner farmers which will be engaged in the RAPID Growth Project through a cost-sharing
scheme. KFI has virtually an unlimited demand of cacao beans due to its strong forward linkages
which is mainly Mars Chocolate and Puratos Chocolate.

As of November 2021, this DIP is only focusing on Kennemer Foods International as the Anchor Firm
of the 21 identified FOs. However, this DIP will also be expanded to other Anchor Firms that may
complement KFI especially those direct processors of cacao-based products from Davao Region.
These potential Anchor Firms may provide a higher buying price for dried and fermented cacao
beans (DFCB). In this arrangement, KFI serves as the backbone of the value chain positioning itself as
the consistent buyer of cacao beans, and the other direct processors as the buyers who can give
extra income to the smallholder farmers who can provide quality DFCB.

Salient Features of the Commercial Partnership Agreement Between KFI and its Partner
FOs

Section 2: Duties and Responsibilities of the Parties

Section 2.1: The First Party (KFI)

1. In coordination/collaboration with the DTI-RAPID Growth Project assist in the provision of
technical assistance in the production and postharvest processes based on the First Party’s
production protocol to ensure compliance to the market/buyer’s quality requirements;
2. Provide sustainable marketing support to Second Party subject to the terms and conditions
as described in Section 3 and product specifications and quality requirements;
3. Abide with the terms and condition and commits to carry out its duties and responsibilities.

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Section 2.2: The Second Party (Farmer Organization)
1. Encourage its member/farmers to participate in the technology transfer program to be
initiated by the First Party in coordination with the DTI RAPID Growth Project and allow
access to its production areas and facilities;
2. Agree to supply at least (70%) of its production output to the First Party;
3. Abide with the terms and condition and commits to carry out its duties and responsibilities;
4. Closely monitor its farmer/members to ensure consistent compliance to quality
requirements and on time delivery of its production

Section 2.3 The Third Party (DTI- RAPID Growth Project)

1. In coordination with all the parties commits to provide necessary value chain-based
development interventions to support the realization of this partnership agreement, i.e.
Technical Trainings/Consultancy, Product and Market Development, Institutional
Strengthening and Financing Facilitation, among;
2. Provide conditional matching grants to both parties to finance the procurement of
production, postharvest, processing and logistic support equipment/facilities;
3. Facilitate credit brokering and financing facilitation to finance the proponent’s counterpart
of the matching grant;
4. Monitor the execution of the partnership agreement and may hire and assign a Supply Chain
Manager detailed with the First Party or with the Second party to manage the Supply Chain;

Section 3: Terms and Conditions

This Tripartite Commercial Partnership Agreement was agreed by and between the Cooperators with
the following terms and conditions;

a. The buying price shall be pegged based on the prevailing World Market Price or Local Market
Price subject for discussion and agreement by both parties;
b. Terms of Payment and Delivery schedules will be agreed upon by the First and Second
Parties;
c. That the Second Party shall not enter into other marketing agreement that will affect its
supply commitment without the consent or notice to the Anchor Firm and DTI- RAPID;
d. That both the First Party and the Second party shall religiously abide with its commitments,
duties and responsibilities and the terms and condition of this Commercial Partnership
Agreement.

Table 4: Status of Commercial Partnership Agreements

Name of Farmers’ Organization
Kapalong Cooperative
(the subsequent FOs in gray cells
are member-coops of KC)
Dacudao Upland Farmers
Association Inc.
Datu Balong Farmers
Organization
Ginsawaan Farmers Association
Cacao Farmers of Linao
Dugayan Okapan Kimataan Igang
Farmers Association
Langan-Gupitan Farmers
Association
LOCATION CPA Status
Has CPA with KFI and has just
Municipality of Kapalong,
recently sold dried fermented beans
Davao del Norte
to KFI.
Has CPA with Kapalong Cooperative.
San Isidro, Davao del Norte
Only sells wet beans to KC.
Kapalong, Davao del Norte
Kapalong, Davao del Norte
San Isidro, Davao del Norte
Kapalong, Davao del Norte
Kapalong, Davao del Norte

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 Sawata Farmers Association
Mamangan Farmers Association
Kipalili Farmers Association
Sta. Fe Coconut Farmers
Association
New Santiago Farmers Association
Del Monte Coconut Farmers
Association
Tagum City Cacao farmers
Tagum City, Davao del Norte
Association
COMVAL MPC
Dumlan Association of Cacao
Planters
LAMPCO -Laak Multi-purpose
Cooperative
MAMPCO -Maragusan Multi-
purpose Cooperative
MAGREBCO
TATABUFLA
CAFFPROCO
San Isidro, Davao del Norte
San Isidro, Davao del Norte
Brgy. Kipalili, San Isidro,
Davao del Norte
New Corella, Davao del
Norte
Assuncion, Davao del Norte
New Corella, Davao del
Norte
New Bataan, Davao de Oro
Has CPA with KFI. KFI buys both dried
Maco, Davao de Oro and wet beans from the FOs.
Laak, Davao de Oro
Talisay St., Poblacion
Maragusan, Davao de Oro
Barangay Mayo, City of
Mati, Davao Oriental
Barangay Taguibo, City of
Mati , Davao Oriental
Cateel, Davao Oriental

Roles of the Identified Industry Enablers of the Value Chain

RAPID Growth Project as the lead implementor of the upscaling investments and interventions of the
supply chain of KFI, will mainly provide the following support to the proponents of this DIP:

Quality Seedlings and Tools for Farm Productive Investments through Conditional
Expansion and Rehabilitation Matching Grants

Business Development Support/Services Farm-to-Market Roads

Cost-sharing and/ or complementation arrangements with the RTWG members in the delivery of
various technical assistance to the DIP proponents will be pursued in the implementation phase to
foster convergence among industry enablers and maximize the utilization of resources. The possible
complementation support by the following identified industry enablers are as follows:

Name of Office/Agency Possible Complementation

● Fertilizers and pesticides for routine farm maintenance

Provincial/Municipal
Agriculturist Office ● Regular monitoring and extension services to smallholder
farmers

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 ● Quality cacao seedlings for the smallholder farmers

● Additional farm rehabilitation tools for the small holder

farmers

● Fertilizers and pesticides

Department of Agriculture
● Technical and/or funding assistance to the smallholder
farmers during the implementation of farm expansion and
rehabilitation

● Financial grants for smallholder farmers under the Kadiwa

Program.

● Cost-sharing arrangements with the project in conducting

organizational and business development interventions to
ARBOs.
Department of Agrarian
● Facilitate the provision of agri-insurance through the DAR-PCIC
Reform
partnership.

● Facilitation in the Registry System for Basic Sectors in

Agriculture

Department of Technical assistance and/or cost-sharing arrangements with the

Environment and Natural project in the implementation and promotion of SALT and soil and
Resources water conservation practices.

● Assistance in the project’s acquisition of the Free Prior and

Informed Consent
National Commission on ● Technical assistance and/or cost-sharing arrangements with
Indigenous People the project in conducting organizational and business
development interventions to FOs located in ancestral domain
areas

Philippine Crop Insurance Provision of crop and equipment insurance to the smallholder
Corporation farmers.

● Provision of technical and/or funding assistance to BARBCO in

Department of Science acquiring certifications such as GMP and HACCP
and Technology ● Provision of technological innovations related to cacao
production

Land Bank of the Provision of credit support to the DIP Proponents and its
Philippines smallholder farmers.

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Development Bank of the Provision of credit support to the DIP Proponents and its
Philippines smallholder farmers.

Mindanao Development Provision of Investment Promotion and Market Development

Authority support to the BIMP-EAGA.

Department of Public Technical assistance in the implementation of FMR projects of the

Works and Highways project.

Department of the Interior Lead agency in the implementation of RAPID’s FMR projects.
and Local Government

Small and Medium ● Provision of business development interventions to the DIP

Enterprise Development proponents through full grants or cost-sharing arrangements
Council ● Provision of market development assistance to BARBCO

Provision of business development interventions and/or funding

Small Business
assistance for productive investments of the DIP proponents
Corporation
through grants or cost-sharing arrangements with the project.

Opportunities and Constraints of the Value Chain

Value Chain Proposed RAPID
Constraints Opportunities
Function Investments/Interventions

● Production of supply base ● Demand of cacao beans ● Strengthening of its

is inadequate
● Inconsistent quality of
Marketing dried cacao beans
(KFI) ● Pole-vaulting of partner
FOs
● Limited transport
capabilities of FOs
is virtually unlimited due
to KFI’s strong and
established forward
markets
supply base through
RAPID’s CPAs and
interventions and
investments on increasing
the production capacity of
its partner FOs and
smallholder farmers

Consolidation ● The FOs have CPAs with ● Provision of PHFs and

● Underutilized post-
and
harvest and processing
Processing facilities and/or lack of it
(FOs) ● Limited storage facilities
● Lack of capital and access
to financing
● Inefficient transport
means in consolidating
products from
smallholder farmers
KFI which has a virtually Processing Equipment to
unlimited demand for FOs thru Matching Grants
cacao beans
● Provision of technical
● Presence of direct trainings and business
processors of cacao- development support to
based product in Davao FOs in collaboration with
Region which offers a KFI
relatively higher buying
price of DFCB ● Linking of DIP proponents
to RTWG members to
● RAPID’s assistance in gather technical and

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 ● Pole-vaulting of
smallholder farmers
● Limited administrative
and fiscal management
capabilities of FOs
● Limited knowledge in
quality control practices
● Bad condition of FMRs
● A number of FOs have
bad loan repayment
records
● Price fluctuations
Production
● Underutilized post-
(Smallholder harvest facilities and/or
lack of it
Farmers)
● Limited storage facilities
● Lack of financing
● Low productivity of trees
due to lack of proper
maintenance
● Less productive old cacao
trees of farmers
● Pole-vaulting
● Limited means of
PHFs and Processing capital assistance
Equipment thru Matching
Grants ● Provision of consultants
or a Supply Chain
● RAPID’s business Manager to provide
development support for consistent guidance to
administrative and fiscal FOs in their cacao bean
capdev of FOs consolidation and
marketing activities
● Technical assistance from
KFI to FOs ● Facilitation of loan
applications of FOs to
● Available Technical and FSPs
Capital assistance from
other industry enablers ● Provision of crucial FMRs
such as DA, DAR, NGOs,
and et.al
● Significant available farm
lands for cacao
production expansion
● Various loan programs
are available to FOs and
smallholder farmers of
which RAPID may help
facilitate
● Most FOs are
experienced in cacao
beans consolidation
practices
● RAPID’s FMR sub-projects
● RAPID Growth’s Project’s ● Dispersal of seedlings to
assistance on farm the smallholder farmers
rehabilitation and through their respective
expansion and technical FOs
trainings on production
● Technical and capital
● RAPID’s FMR sub-projects assistance for farm
rehabilitation
● KFI’s technical assistance
to smallholder farmers ● Technical trainings on
on cacao beans GAP and SALT
production
● Crop insurance will be
● Available Technical and strongly recommended to
Capital assistance from the smallholder farmers
other industry enablers
such as DA, DAR, NGOs, ● Financial literacy and farm
and et.al management trainings
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 transportation and bad
FMRs
● Lack of capital and access
to financing
● Lack of chemicals for pest
and disease control
● Lack of fertilizers
● Lack of technical know-
how or knowledge – on
cacao trees
● Low quality of beans
● Farmers attend trainings
for free and also given
free seedlings but do not
actually plant the
seedlings ● Most smallholder farmers
are experienced cacao
● Unstable peace and order
beans producers
situation
Input ● Low quality seedlings
Provision
● Damages during seedling
(Nurseries, production and
Agri-Supply, transportation
et. al)
● Lack or delayed
fertilization
● FOs tend not to seriously
plan/ maintain seedlings
distributed to farmers
due to high cost of labor
● Lack of fertilizer support
● Unproductive nurseries
● Lack of financing options
● Limited training for
nursery development
● Use of tarpaulin seed bed
for sun drying
● Lack of depth of research
in cacao varieties
● Cacao production and other Business
technicians are available Development Support
in the region to be
● FMR sub-projects
tapped as consultants to
oversee and guide the
smallholder farmers in
their cacao production
practices
● Significant available farm
lands for cacao
production expansion
● Various loan programs
are available to
smallholder farmers of
which RAPID may help
facilitate through their
respective FOs
● Sources of quality ● Technical Trainings to FOs
seedlings are existing in on Nursery Establishment
Davao Region and Management
● Qualified technicians in ● Identification of sources
nursery development and of quality seedlings in
management are Region 11
available in Davao Region
● Identification of qualified
● Technical support from technicians in nursery
various industry enablers development and
such as the DTI-RAPID management
Growth Project is
available to assist FOs in ● Technical Innovations
Support on Nursery
establishing their
nurseries and to provide Establishment and
free seedlings to Management
smallholder farms
● Linking of FSPs to FOs for
● Various loan programs loans for nursery
are available to FOs such establishment
as the PLEA Program and
P3 Program
● Technicians on organic
fertilization are available
17
 ● Prolonged dry season in Davao Region

Objectives of the DIP

In light of the supply chain’s constraints and opportunities mentioned in the previous section of this
DIP, The overall objectives of the proposed investments and interventions to upscale the supply
chain of the proponents under this DIP are:

Economic Social Environmental

To upscale the business To establish gender equality To promote environmentally

operations of the DIP
proponents in the context of
production volume, product
quality, and overall
profitability
and socially inclusive project
implementation and inculcate
gender sensitivity in the
business operations of all the
proponents in the DIP
sustainable and climate
change resilient agricultural
and manufacturing practices
and technology to all of the
proponents in the DIP

Table 5: DIP Objectives of the FOs under the KFI Chain

Sustainability
Objectives
Dimensions

● To increase the volume of cacao beans produced by the partner

FOs/Cooperatives under the KFI Value Chain by at least 50% by the end
of the project in 2025

● To stabilize the supply base of KFI

● To increase the generation of direct and indirect jobs of their value

chain by 100% by the end of the project in 2025
Economic ● To increase the household income of cacao farmers under the KFI
Value Chain by 60% by the end of the project

● To strengthen the partner FOs/Cooperatives of KFI through technical

trainings and other business development support services

● To promote value chain finance and crop and agro-processing loans to

expand the value chain actors’ capacity to deliver and market larger
volumes of good quality products

Social ● To mainstream gender equality in the project implementation ensuring

a gender sensitive value chain/sector

● To promote inclusiveness of the project to all sectors of the society

18
 including the indigenous people

● To promote of Sustainable Agroforestry Production Systems such as

SALT
Environmental
● To introduce of climate risk management such as promotion of high-
yield and climate adapted cacao varieties and crop insurance.

Summary of Proposed Strategic Investments and Interventions

With the series of consultations conducted by the project’s Provincial Coordinating Units to identify
the needed investments and interventions to improve the supply chain, the aggregate amount
needed for the investments and interventions amounted to Php 55,716,670.00 of which Php
35,001,197.00 of the amount are for matching grants. The table below summarizes the proposed
investments and interventions and is detailed in the attached Forms 1-4 of the Stakeholders and
Investments matrices (Annexes 1-4).

19
 Table 6: Summary of RAPID Interventions and Investments
Source of Funds
Proposed RAPID Investments & Verifiable Indicators Implementation
Objectives of the DIP Total Cost Matching FO
Interventions (by the year 2025-2026) Timeline
Grant Counterpart
Expansion of Production Area:
● To increase the volume of cacao beans produced
Cacao farm expansion by SALT and in ● 100% increase of production and June 2022-June
by the partner FOs/Cooperatives under the KFI 31,725,000 31,495,000 230,000
mixed/flat lands for the 21 FOs, total of marketed output 2023
Value Chain by at least 50% by the end of the
1,587 hectares ● At least 60% increase of cacao
project in 2025
Rehabilitation of Production Area: farmers’ incomes
● To increase the household income of cacao
Cacao rehabilitation by SALT and in ● Active labor pool for farm March 2022-June Excluded in
farmers by 60% by the end of the project. 5,962,500 -
mixed/flat lands for the 21 Coops, total related activities in the provinces 2023 MG
● To promote of Sustainable Agroforestry
of 1,374 hectares
Production Systems such as SALT to KFI’s
● Increase of cacao bean
producer members and backward linkages
Productive Investments for the FOs: consolidation (wet and dried)
● To increase the generation of direct and indirect March 2022-
Productive Investments such as post- capacity 4,912,800 2,947,680 1,965,120
jobs of the FOs by 100% by the end of the March 2023
harvest and processing equipment ● Increase of frequency and
project
volume of marketed DFCB
Supply Chain Manager at Kapalong ● Enhanced supply chain March 2022-
● To stabilize the supply base of KFI 1,216,370 558,517 657,853
Cooperative management system March 2025
● Enhanced productivity of Cacao
● To strengthen the partner FOs/Cooperatives of
Trees
KFI through technical trainings and other
● Minimized mortality of cacao
business development support services by year
trees and enhancement of
2025
Business Development Support for the quality of cacao beans due to
● To promote value chain finance and crop and
21 FOs: adherence to GAP and pest and
agro-processing loans to expand the value chain
Trainings on Rehab & Maintenance, GAP, diseases practices February 2022- Excluded in
actors’ capacity to deliver and market larger 11,900,000 -
Post-Harvest, Institutional Development, ● Strengthened bookkeeping and Decmeber 2023 the MG
volumes of good quality products
Financial Literacy Trainings, GAD, and records mgt. practices
● To mainstream gender equality in the
etc. ● Increase in cooperative
operations of the FOs
membership
● To introduce of climate risk management such
● Strengthened participation of IPs
as promotion of high-yield and climate adapted
and women in the operations of
cacao varieties and crop insurance.
the FOs
TOTAL 55,716,670 35,001,197 2,852,973

Table 6 summarizes the proposed investments and interventions and is detailed in the attached Forms 1-4 of the Stakeholders and Investments matrices (Annexes 1-4),
and the analysis as to which the investments and interventions were derived are detailed in the attached proponents’ business plans and Farm Plans ( Annexes 5-6).
Proposed Farm to Market Infrastructure:
To further complement the supply chain upscaling investments and interventions for the identified
FOs under the KFI chain, four (4) proposed crucial FMRs was identified to support to the production
areas of the proponents in this DIP. One out of the 4 proposed FMRs already received IFAD’s No
Objection no. 2 which prompts the proponent LGU to commence the procurement process. The
already approved FMR proposed in this DIP as of March 2022 is the Mabantao to Capungagan FMR,
Kapalong, Davao del Norte. The full list of proposed FMRs as of March 2022 is as follows:

Table 7: List of Proposed FMRs

Proposed Project Location Specifications

Improvement of Mabantao to 2.7 kilometers FMR

Capungagan Farm-to-Market Road New Agno, Mabantao (Purok Sampalok)
to Mabuhay (Purok 6A) Capungagan, TPC: P47,368,300
Kapalong, Davao del Norte
LGU: P2,500,000

Improvement of Kipalili (Purok 4-9) Farm Barangay Kipalili, San Isidro, Davao del
3 kilometers FMR
to Market Road Norte

Improvement of Purok 3 to 12,

Purok 3 to 12, Camanlangan, New
Camanlangan, New Bataan, Davao de 1.5 kilometers FMR
Bataan, Davao de Oro
Oro

Improvement of Mayo Farm to Market

Mayo Farm to Market Road , Barangay
Road , Barangay Mayo, City of Mati , 1.5 kilometers FMR
Mayo, City of Mati , Davao Oriental
Davao Oriental

The proposed FMR highlighted in orange has been endorsed by the RTWG FMR Sub-Committee but
hasn’t received IFAD’s No Objection yet. As for the proposed FMRs highlighted in yellow, these will
be subjected to field validation by Team DILG-PDMU, PCU, and LGU. RTWG FMI Sub-Committee will
then review, evaluate, and approve shortlisted FMIs and submit to NPCO-PMU joint review for final
approval and to separately endorse to IFAD for No Objection (NO).

Financial Viability Assessment

To justify the proposed investments and interventions detailed in this plan, the subsequent
information provides the summary of quantitative and qualitative assessment of the socio-economic
benefits that will be derived from the proposed investments and interventions. To quantify the
economic benefits of the project, this DIP have prioritized the following financial indicators which
will be extracted from the firm level business plans of the proponents:
 Projected Net Income of FOs for 5 years
 Return of Investment (ROI)
 Payback Period (PP) of investments

The table below summarizes the quantitative financial viability assessment of the investments and
interventions.
 Table 8: Summary of Financial Viability Indicators

*Total Project Cost (TPC) include costs attributed to Business Development Services/Capacity Development
Trainings to be provided by the RAPID Growth Project.

As summarized in the table above, the strategic investments will yield a positive ROI for all FOs and
the payback period for the costs to be incurred by FOs will be well within the project period. The
incomes of the FOs are expected to drastically increase in the 3 rd year of project implementation
(year 2024) since the benefits of the rehabilitation and expansion of farm areas are conservatively
projected to materialize on the 3 rd year. Collectively, the Php 55,716,670.00 worth of investments
and interventions will yield a NPV of Php 46,843,090.54; IRR of 28%; and ROI of 49.21%.

Other projected key performance ratios within a five year period such as liquidity, profitability, and
efficiency ratios are detailed in the respective business plans of the proponents.

As to the overall feasibility of the project, the total project cost for the 21 FOs amounted to Php
55,716,670.00 excluding the proposed FMRs that is estimated to amount to a total of Php
195,750,000.00. Should the proposed FMRs be approved, this DIP will have a total project cost of
Php 251,466,670.00 and will generate a total of Php 135,272,000.00 (3656MT of wet beans by
2025 X Ph37/kilo) of annual gross sales from the 21 FOs by the year 2026 onwards should the
project achieve its productivity enhancement targets.

22
 Socio-Economic and Environmental Benefits of the DIP

Employment Generation
Should the proposed investments and interventions be approved, the improved and strengthened
supply chain of KFI is perceived to generate and sustain a total of 180 direct jobs comprised of
administrative and production related positions. No less than 500 indirect and non-permanent jobs
are also expected to be employed during the expansion and rehabilitation of the cacao farms of the
initially identified 2,437 cacao member farmers of the 21 FOs.

Improvement of the Technical Capabilities of Smallholder Farmers

The various technical assistance of the project are designed to increase the production capacity of
the proponents and develop their respective organizations. These soft interventions coupled with
the proposed hard investments will consequently lead to contributing to the overall objectives of the
project which are to increase the household income of smallholder farmers and generation of direct
and indirect jobs.

The list of technical assistance to be provided to the proponents are detailed in Annex 4: DIP
Summary.

Increase of Household Income of Smallholder Farmers

The proposed investments in expansion and rehabilitation of the cacao farms of the 21 FOs are
projected to increase the production capacity of its member-farmers which will directly influence the
increase of household income of the cooperatives’ member-farmers through direct purchase of wet
beans and dividends/patronage refunds of which is commonly set as P.25 cents per kilo sold.

As for the profit enhancement at the farmer level, the following table summarizes the costs and
returns for the rehabilitation of a hectare of their existing cacao farm and another hectare of
expansion (600 trees/ha.) within 5 years:

Table 11: Projected Cost and Return for Farm Rehab and Expansion (1 hectare)
Particulars Year 1 Year 2 Year 3 Year 4 Year 5
WB in Kg (Rehab) 640.51 640.51 640.51 640.51 640.51
WB in Kg (Expansion) 0 0 655.00 2,618 3927
Total WB in Kg. 640.51 640.51 1295.51 3258.51 4567.51
Price per Kg 32 33.6 35.28 37.04 38.9
Gross Revenues 20,496.32 21,521 45,705.59 120,695 177,676
Deductions (Expansion Costs):
Total Material Cost -25,645 -5,828 -8,500.76 -16,532 -20,141
Total Labor Cost -10,800 -6,300 -11,552.73 -36,802 -53,253
Deductions (Production Cost for 40-50 yr old Cacao Trees):
Production Cost -15,000 -16,500 -18,150.00 -19,965 -21,961.50
Net Income before
7,502.10
PR -30,948 -7,107 47,397 82,321
Patronage Refund at
160.13 160.13 323.88 814.63 1,141.88
P.25 per kilo
Net Income -30,787.87 -6,946.87 7,825.98 48,211.63 83,462.88
% Increase of Income - +77% +213% +516% +73%
Cumulative -30,787.87 -38,055 -30,552.94 17,658.69 101,121.57

23
Based on the projections above, the projected net income and net cash of the FOs significantly
increases by the year 3 since it takes approximately three (3) years for the full economic benefits
from the expansion and rehabilitation of the production areas to materialize.

Table 11 solely describes the cost and return of a hectare of farm rehab and expansion; this
table does not describe the entire economic activities of the smallholder farmers. Most of
the smallholder farmers does not rely on income from cacao production alone. Majority of
them have other sources of income such as tricycles, sari-sari stores, engages in
construction labor, and whatnot. According to the RCU’s profiling records, the average
annual income of the smallholder farmers from farming activities is Php 90,000.00 and Php
60,000.00 from other activities aside from farming, totaling to Php 150,000.00 average
annual income for the last three (3) years.

A hectare of cacao expansion will cost a smallholder farmer an average of Php 31,601.49
(Materials and Labor Costs) annually from year 1 to 3 assuming that the farmer will
appropriately fertilize and maintain a hectare of cacao farm. The smallholder farmers under
KFI’s Supply Chain have understood these costs as detailed in their respective
Business/Farm Plans. Smallholder farmers that have the capacity to undertake such
investments have only signified to undergo farm expansion and they also understand that
RAPID Growth Project will only provide initial fertilization and NOT for the routine
fertilization and maintenance of the cacao trees. With such policy, the FOs will be seeking
assistance from DAR, DA, and other industry enablers to provide them the capital or in-kind
assistance for the routine maintenance of their cacao trees. As advised by the RTWG
representative of the Department of Agriculture (DA), the PCUs are strongly encouraged to
enroll the smallholder farmers to the Registry System for Basic Sectors in Agriculture and
closely coordinate with the municipal and provincial agriculturists office to access the
assistance from DA on fertilization and other important farm inputs.

In summary, if the farmers will not invest in routine maintenance, rehabilitation, and
expansion of their cacao farms; their economic status will not improve and imminently
further decline due to continued negligence and prevalence of unproductive cacao trees.

Improvement of Vegetation and Soil and Water Conservation

The proposed expansion of cacao plantations under the KFI supply chain will cover 1,587 hectares of
mixed sloping and flat lands. A hectare will have an average planting density of 500-600 trees which
in total would translate to 793,500 to 952,200 trees to be planted; a significant number of trees
which will greatly contribute to slope stabilization and water conservation.

The planted cacao trees will also serve as additional carbon sink that can contribute to the reduction
of carbon dioxide in the locality which is one of the greenhouse gases that contribute to global
warming.

24
Promotion of a Socially Inclusive Value Chain Development Approach
The implementation of the project intervention and activities are ensured to mainstream gender
equality and will also prioritize indigenous people especially in capacity development activities. In
this plan, a total of 368 farmers from the indigenous peoples are identified and will receive
investments and technical assistance from the project. It was also identified that a total of 845
women are involved in the cacao bean production for the 21 FOs in this DIP.

S/N Province Name of Coop/Association Women IPs

1 DN Kapalong Cooperative 34 21
2 DN Dacudao Upland Farmers Association, Inc. 27 0
3 DN Datu Balong Farmers Organization 34 61
4 DN Ginsawaan Farmers Association 56 11
5 DN Cacao Farmers of Linao 28 0
Dugayan Okapan Kimataan Igang Farmers 34 99
6 DN
Association (DOKIFA)
7 DN Langan-Gupitan Farmers Association 31 65
8 DN Sawata Farmers Association 125 10
9 DN Mamangan Farmers Association 34 0
10 DN Kipalili Farmers Association 36 0
11 DN Sta Fe Coconut Farmers Association 16 0
12 DN New Santiago Farmers Association 15 7
13 DN Tagum City Cacao Farmers Association 6 0
14 DN Del Monte Coconut Planters Association 63 0
15 DDO Comval Multipurpose Cooperative 30 0
16 DDO Dumlan Association of Cacao Planters 15 3
17 DDO Laak Multipurpose Cooperative 103 14
18 DDO Maragusan Multipurpose Cooperative 73 3
Mayo Agrarian Reform Beneficiaries Cooperative
19 DO 34 10
(MAGREBCO)
Taguibo Tagbinonga Buso Forestland Farmers
20 DO 24 9
Association (TATABUFFLA)

21 DO Cateel Farmers and Fisherfolks Producers 27 55

Cooperative (CAFFPROCO)
Total as of March 2022 845 368

As of date, this DIP has yet to account the number of differently-abled direct beneficiaries. This will
be cross-checked with the profiling records of the Provincial Coordinating Units and shall be
reported to the M&E system of the project.

25
Improvement of Farm-to-Market Roads

Proposed Improvement of New Agno, Mabantao (Purok Sampalok) to Mabuhay (Purok 6A)
Capungagan, Kapalong, Davao del Norte
[With IFAD’s No Objection No. 2 and is scheduled for procurement]

The proposed road section is classified to be a Core Local Access Road and Farm to Market road and
is considered to be a major vein or passage of this Municipality’s Agriculture Industry. Purok 2a, 2b,
and 6a of Barangay Capungagan, Kapalong, Davao del Norte are a few of those interior Puroks which
are considered as agricultural area. Moreover, the paths going to these Puroks from around
Capungagan lead to Kapalong Cooperative’s Cacao Production and Beans Marketing Storage and
Receiving Facilities.

The following tables and annotations describes the expected socio-economic benefits of the FMR
improvement project:

Estimated Beneficiaries within Road Influence Area (RIA)

Barangays Farmers Non-Farmers Total

Brgy. Capungagan 135 753 888

Brgy. Mabantao 128 654 782

Major Crops within the Road Influence Area

Major Crops Location Area Planted Annual Ave. Yield/Ha

Coconut 75 has. 187.5 tons

Cacao 30 has. 60 tons

Brgy. Capungagan
Rice & Corn 262.5 has. 790 tons

Banana (Cardava) 118 has. 9.6 tons

Estimated Traffic, Travel Time, and Fare Passing along the Proposed Roads
Type of Improvement
Route Freq. Distance Fare Savings
Transport in Travel Time

Habal2x Mabuhay- 35/week 8.2 kms. 25→20mins. ₱60→₱50

Poblacion
Light Trucks 30→25mins.
3/month ₱100→₱80
(Cacao)

Light Trucks
16/year ₱90→₱70
(Rice & Corn)

Light Trucks 1/week ₱80→₱60

26
 (Cardava)

 With a concrete paved road, it is expected that travel time will be reduced giving the
households more time for productive endeavors.
 Travel convenience and safety of no longer having to deal with potholes, sharp curves, and
narrow road sections.
 Residents along the road will have less dust to contend with, translating to less effort in
household keeping.
 The 15-20% reduction in transport cost will result to savings for which the households may
use for essentials. To put it in perspective, the RIA produces an average of 1,047 tons of farm
products annually. For a savings of Php 0.23 to 0.31 per kilo in transport cost, they would
generate Php243,450 to Php324,601 annual savings.
 For owners of motor vehicles, the paved road will redound to savings in vehicle operating
cost like fuel and tires.
 Smoother pavement is easier to walk on for people who have difficulties in walking.
 The Cacao Processing Facility does not only serve the farmers within the RIA but as far as
Barangay Gupitan as well. The improved road would make the transport of cacao beans
from these areas much easier, faster, with lesser losses giving the cacao farmers better
return of investment for their produce. On account of higher net income from their crops,
cacao farmers would be encouraged to step up their cacao production by increasing area
planted and applying more inputs for higher yield.
 More cacao beans coming in would maximize the processing capacity of the facility resulting
to more efficient operation. This in turn will translate to increased sales for Kapalong
Cooperative that would eventually provide financial benefit to its members.

Proposed Improvement of Kipalili (Purok 2 – Purok 12) FMR, San Isidro, Davao del Norte
[Longlisted and still waiting for IFAD’s No Objection No. 1]

The proposed road section is an existing barangay road traversing from Purok 2 – Purok 12 in
Barangay Kipalili, San Isidro, Davao del Norte. Farming communities within the RIA of the proposed
road section often complain that absence of better roads hamper timely transportation of farm
products to markets. Most of the farmers say that their farm produce suffers serious losses during
transportation to markets due to the existing damage road, rough and narrow pavements width, and
that they had to sell their produce to local traders at below market rates.

Rehabilitated/concreted road makes a crucial contribution to the barangay’s economic development

and growth and bring important social benefits. It provides access to employment, social, health and
education services. Sixty five (65%) percent of the total uncultivated, open grassland, and areas
planted to cash crops of trivial values will be utilized as expansion areas of major crops after the
successful implementation of the subproject. Reduction in transport cost for passengers and goods
by at least 20% after completion of the subproject. Reduction in travel time from the subproject area
to trading centers by at least 15 minutes. Improved access to agricultural inputs thereby increasing
production volume and quality of agricultural produce from below national standards in 2020 to
above the national standards in 2030, thereby increasing monthly household income by at least Php
5,000.00.

27
The following tables and annotations describes the expected socio-economic benefits of the FMR
improvement project:

Estimated Beneficiaries within Road Influence Area (RIA)

Barangays Farmers Non-Farmers Total

Brgy. Kipalili 315 546 861

Major Crops within the Road Influence Area

Major Crops Location Area Planted Annual Ave. Yield/Ha

Coconut 42.19 has. 6 tons

Cacao 34.60 has. .75 tons

Rice 145.20 has. 8.5 tons

Brgy. Kipalili
Corn 5 has. 1.2 tons

Banana (Cardava) 85.50 has. 5 tons

Fruit trees 8.82 has. 3 tons

Estimated Traffic, Travel Time, and Fare Passing along the Proposed Roads
Type of Improvement
Route Freq. Distance Fare Savings
Transport in Travel Time

₱50→₱40

(Cargo)
Habal2x Farm to 7/week 45→25mins.
trading 15 kms. ₱30→₱25
centers
(Passenger)

Light Trucks Once/week 30→15mins. ₱150→₱100

✔ The direct beneficiaries of the Improvement of Purok 2-12, Barangay Kipalili FMR, San
Isidro, Davao del Norte subproject are the residents of the locality of which their means of
livelihood are totally dependent on farming. These areas are considered productive
agricultural areas, however, socioeconomic status of the people are low due to their
difficulty in transporting farm products especially during rainy season. Practically, most of
the people living in the area are poor and vulnerable to various social and physical risks.
Development in the areas is also hindered due to poor access to transportation and utilities.

✔ Two percent (2%) of the population in Brgy. Kipalili belong to Indigenous Cultural Minorities
or Mandaya Dibabawon Tribe. Their present source of income is derived from agricultural
farming which support their daily family needs. With the improvement of the proposed
road, the indigenous population will greatly benefit from the decrease of transport costs of

28
 farm products and the improvement of delivery of services from the MLGU and National
Government Agencies.

Proposed FMR(s) to submit Brief Profile and Validation Report:

Proposed Improvement of Mayo Farm to Market Road , Barangay Mayo, City of Mati , Davao
Oriental

Proposed FMR(s) to be validated by DILG, NPCO, and RCU XI:

Proposed Improvement of Purok 3 to 12, Camanlangan, New Bataan, Davao de Oro

29
Methodology of Delivery of Strategic Investments and Interventions
Should the proposed investments and interventions in this DIP be approved, the delivery of the
matching grants and business development supports shall be in accordance to the prescribed
procedures of the RAPID Growth Project. The figures below describes the prescribed procedure of
the transfer of Matching Grant fund to the Project Proponents:

For Matching Grants on Seedlings and Productive Investments:

Identification of potential suppliers of proposed

productive investments.

Execution of Financing Facilitation Agreement with FSPs.

With this agreement, the counterpart funds cannot be
withdrawn without the consent and approval of the
project.

The project proponent shall open a bank account

exclusive to the project and shall deposit the required
cash counterpart amount of the investments

Transfer of Matching Grant amount to the proponent's

bank account upon presentation of proof of deposit of
cash counterpart or guarantee from partner financial
institutions for financing the said required counterpart.

Procurement of Productive Investments

(Seedlings, Equipment, and Post-Harvest Facilities)

The technical trainings on Good Agricultural Practices and Farm Management shall be conducted
prior to the procurement of seedlings for the expansion of farm production areas – No training, no
seedling policy.

For the provision of Rehabilitation Tools:

Provision of rehabilitation tools to the smallholder farmers shall be in the form of training kits during
the conduct of rehabilitation and productivity enhancement trainings and will not require a cash
counterpart from the project proponents.

For the provision of Business Development Support:

30
Procurement of consultancy services and logistical arrangements in conducting the various business
development support for the DIP proponents shall strictly follow the government procurement
process.

As for the technical trainings related to cacao bean production, the trainings shall be in partnership
with KFI as specified in the Commercial Partnership Agreement. KFI as the anchor firm of the
identified FOs, is responsible in capacitating their backward links in the production of quality cacao
beans and in accordance to KFI’s quality standards. A Training of Trainers (TOT) strategy will be
pursued to ensure the accessibility of local technical experts for every partner-supplier of the Anchor
Firm. RAPID funds allotted for the technical trainings is preferred to be contracted out through a
MOA with KFI’s extension services department to minimize the administrative processes required
in implementing all required production related trainings. Should the procurement laws disallows
the downloading of funds directly to KFI, the RAPID Implementation Units shall contract the
production related trainings through public bidding. The technical specifications elaborated in the
Invitation to Bid shall explicitly state that the winning bidder shall closely coordinate and involve
the agricultural technicians/extensionists of Kenemmer Foods International in the planning and
implementation of the technical trainings.

Cost-sharing and/ or complementation arrangements with the RTWG members in the delivery of
various technical assistance to the DIP proponents will also be pursued in the implementation phase
to foster convergence among industry enablers and maximize the utilization of resources. The
possible complementation support by the following identified industry enablers are as follows:

Name of Office/Agency Possible Complementation

● Fertilizers and pesticides for routine farm maintenance

Provincial/Municipal
Agriculturist Office ● Regular monitoring and extension services to smallholder
farmers

● Quality cacao seedlings for the smallholder farmers

● Additional farm rehabilitation tools for the small holder

farmers

● Fertilizers and pesticides

Department of Agriculture
● Technical and/or funding assistance to the smallholder
farmers during the implementation of farm expansion and
rehabilitation

● Financial grants for smallholder farmers under the Kadiwa

Program.

Department of Agrarian ● Cost-sharing arrangements with the project in conducting

Reform organizational and business development interventions to
ARBOs.

● Facilitate the provision of agri-insurance through the DAR-PCIC

partnership.

31
 ● Facilitation in the Registry System for Basic Sectors in
Agriculture

Department of Technical assistance and/or cost-sharing arrangements with the

Environment and Natural project in the implementation and promotion of SALT and soil and
Resources water conservation practices.

● Assistance in the project’s acquisition of the Free Prior and

Informed Consent
National Commission on ● Technical assistance and/or cost-sharing arrangements with
Indigenous People the project in conducting organizational and business
development interventions to FOs located in ancestral domain
areas

Philippine Crop Insurance Provision of crop and equipment insurance to the smallholder
Corporation farmers.

● Provision of technical and/or funding assistance to BARBCO in

Department of Science acquiring certifications such as GMP and HACCP
and Technology ● Provision of technological innovations related to cacao
production

Land Bank of the Provision of credit support to the DIP Proponents and its
Philippines smallholder farmers.

Development Bank of the Provision of credit support to the DIP Proponents and its
Philippines smallholder farmers.

Mindanao Development Provision of Investment Promotion and Market Development

Authority support to the BIMP-EAGA.

Department of Public Technical assistance in the implementation of FMR projects of the

Works and Highways project.

Department of the Interior Lead agency in the implementation of RAPID’s FMR projects.
and Local Government

Small and Medium ● Provision of business development interventions to the DIP

Enterprise Development proponents through full grants or cost-sharing arrangements
Council ● Provision of market development assistance to BARBCO

Provision of business development interventions and/or funding

Small Business
assistance for productive investments of the DIP proponents
Corporation
through grants or cost-sharing arrangements with the project.

32
As for the trainings related to organizational and human capacity development of the farmers’
organizations, the Project’s Capacity Development Framework Tools shall be administered to
determine the specific gaps in the FOs competencies and capacities. The results shall then be the
basis for the final design of the capacity building programs to be given to the FOs under this DIP.

The delivery of such trainings shall also be contracted out through public bidding under the Quality-
Cost Based Evaluation to ensure the quality and credence of the consultants to be hired. The
coverage of Business Development trainings are perceived to cover the following:

 Entrepreneurial Mind setting and Values Formation

 Marketing Mindset
 Business Model Canvass
 Production Techniques
 Operations Management
 Digitalization
 Supply and Value Chain Management
 Accounting and Finance for Small Businesses and Farming Ventures
 Human Resource Management
 Market-Driven Innovation I: Product Development
 Market-Driven Innovation II: Market Expansion and Internationalization
 Good Governance and Ethics
 Institutional Development

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Risk Assessment
The risk assessment of this detailed investment plan is based on the five (5) general types of risks inherent to the agriculture sector and in the context of the
implementation of the RAPID Growth Project. The table below enumerates the most notable risks and its respective mitigating measures.

Table 12: Risk Assessment Table

Risk At Risk Probability Impact Mitigating Measures

Production Risks

 Propagation of climate resilient cacao varieties which will be provided by RAPID

RCU 11 in consultation with the Anchor Firm

 FOs will be required to avail crop insurance by the Project

 Crop diversification practices will be introduced to mitigate losses of crop

failures thru trainings from RAPID RCU 11

 Securing water supply through installation of storage tanks and water

Erratic weather conditions FOs High High
catchment systems with the proposed assistance from other industry enablers

 FOs to utilize DOST’s Project SARAI for weather projections

 FOs to plant buffer trees will be planted around farm areas to protect crops
from strong winds during typhoons

 Smallholder farmers will be encouraged and trained by the Project to apply

proper farm drainage systems to mitigate excessive water runoffs

 Adoption of Good Agricultural Practices by the farmers which will be taught by

the project in partnership with the Anchor Firm
Pests and Diseases FOs Moderate High
 Comprehensive trainings on pests and diseases management by the project in
partnership with the Anchor Firm

Natural Disasters such as major land FOs Low High  Application of Sloping Agricultural Land Technologies (SALT) in the farm
 expansion interventions of the project

erosions, flood, and etc.  FOs to utilize DOST’s Project SARAI for weather projections

 FOs to utilize DOST’s Hazard Hunter Application

FOs and
Inadequate supply of cacao seedlings for  RAPID RCU 11 will pre-identify seedling suppliers and will pre-order if the
Project High High
dispersal procurement policies of the project will allow.
Team

 RAPID RCU 11 will ensure that the pre identified suppliers will only commit
FOs and realistic amounts of seedlings. These numbers must then be thoroughly
Unsuitable timing of delivery of seedlings
Project Moderate High planned into phases of delivery of which is timed to the optimum planting
from supplier to FO to FO members
Team season. Suppliers are required to replace bad quality seedlings found during
delivery.

Unsuitable soil conditions of proposed  A soil test will be conducted by the project prior to the planting/farm expansion
FOs Moderate High
expansion areas activities.

Misdeclaration of FOs in their technical FOs and  RAPID RCU 11 to thoroughly consult and plan the farm expansion activities of
and financial capacity to cultivate the Project High High the proponents. Amount of hectarage to be planted may be in multiple phases
seedling given by RAPID Team depending on the administrative and financial capacities of the proponents

 The project will encourage the FOs to buy in bulk of farm inputs (cluster
Volatility of prices of inputs FOs Low Moderate
method) to avail wholesale prices

Market Risks

Drastic price drops of the world market FOs and  RAPID RCU 11 will encourage FOs to have a portfolio of cacao bean buyers and
Low High
price of cacao beans AF not just sell all their beans to a single firm. The project will also strive to engage
chocolate processors thru B2B activities since they are usually not dictated by
FOs and fluctuations of the world market price of cacao beans.
Volatility of USD exchange rate Moderate Moderate
AF
 The project will encourage the FOs to explore the possibility of engaging into
Unstable costs in logistics due to the FOs and Moderate High

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pandemic AF

Micro-processors have slowed down in

buying cacao beans due to the economic FOs High High Futures (a type of financial contract that obligate parties to transact at a
impacts of the pandemic predetermined future date and price)

 FOs will be encouraged by the project to Invest in a proper warehouse facility to

ensure that every delivery of cacao beans are maximized to the truck’s capacity.
Financial Risks

No guarantee that loans of FOs for their FOs and

 RAPID RCU 11 will ensure that the business plans are based upon truthful
required matching grant equity will be Project High High
information and is prepared competently to suit the FSPs appraisal standards.
approved by their partner FSP Team

 RAPID RCU 11 will ensure that the FOs are only borrowing based on their actual
financial capacity
Volatility of interest rates due to
FOs Low High
economic uncertainties of the pandemic  Diligent monitoring and provision of technical advice from the project team to
ensure the productivity of the FOs which consequently leads to the increase of
their profitability.

 Historical financial data from FOs will be gathered by RAPID RCU 11 as this will
FOs and greatly influence the appraisal processes of FSPs
Some FOs may have restricted credit
Project Moderate High
ratings/availability
Team  If a certain FO is found to have a negative standing, matching grant applications
must be thoroughly assessed by the project team.

36

Probable revision of tax laws on
FOs
cooperatives
Newly established cooperatives may not
FOs
have audited historical financial data
Prevailing issue on the limited availability
FOs
of farm labor in some target areas
Aging cacao farmers which are not
physically fit to adequately maintain their
FOs
cacao farms or expand their production
sites
Lack of interest of farmers in farm
FOs
rehabilitation and expansion
Lack of interest from non-affiliated FOs and
farmers to join cooperatives/associations Project
Institutional Risks
The project will capacitate the FOs on basic accounting applications to establish a
proper financial recording system to appropriately manage and monitor their
Low High
finances. This will enable them to apply tax avoidance measures (tax avoidance and
not tax evasion).
The Project team to advise FOs that does not have audited financial data to at least
High High prepare their financial data for at least the past 3 years. This will then be reflected in
the FO’s Business Plan.
 Under the guidance of the project and the Anchor Firm, the FOs will commission
a workforce that will handle expansion and rehabilitation activities should
farmer-members have difficulties in finding farm labor in their respective areas.
High High  The project to explore possible outsourced arrangements with Anchor Firm on
the expansion and rehabilitation of farms.
 Farmer household beneficiaries to ensure availability of farm labor within their
family/household especially during planting and/or harvesting.
Human/Personal Risks
 Under the guidance of the project and the Anchor Firm, the FOs will commission
a workforce that will handle expansion and rehabilitation activities should
Moderate Moderate farmer-members have difficulties in finding farm labor in their respective areas
 The project to explore possible outsourced arrangements with Anchor Firm on
the expansion and rehabilitation of farms.
 Pursue premium buyers of cacao beans that offer high buying prices to
Moderate High encourage farmers to increase their productivity through farm rehabilitation and
expansion
Low Low  Leverage the RAPID interventions and investments to encourage non-affiliated
farmers to join the beneficiary cooperatives/association.
37
 Team

To further emphasize the importance of the identified mitigating measures, these measures are adopted and is explicitly detailed in each of the proponents’
business plans accordingly to ensure the feasibility and success of all the stakeholders in this supply chain.

As for the project implementation units, a risk mitigation plan shall be prepared concurrent to the approval process of this DIP as highly encouraged by
NEDA XI.

38
Implementation Timelines
The project will be implemented from the 1st Quarter of 2022 until 2024. The crucial steps to undertake are the vetting of the DIP by the RTWG and IFAD.
Once the IFAD’s No Objection has been issued, the conduct of business development support interventions will immediately commence until 2024. As to
the provision of productive investments, preparatory works shall commence on the 3 rd quarter of 2021 and rolled-out until the last quarter of 2022.
Monitoring and Evaluation activities shall be implemented intermittently from the last quarter of 2021 until 2024.

Figure 3: Implementation Timeline

Implementation timelines of specific activities are detailed in ANNEX 4: DIP Summary.

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Annexes