RAPID GROWTH

Project IFAD-GOP
Midterm Review
Mission Visit to
Davao del Norte

PROJECT VISIT BRIEFER

TABLE OF CONTENTS

• KFI-KC DIP Cacao Supply

Chain Model in Davao del Norte
(pp.1-3)
• NC Participation in the RAPID
Growth Project Implementation
(p.3)
• Significance of Farm-to-Market
Road Project in the Supply
Chain (p.4)
• Itinerary of Project Visit (p.5)
• Weather Condition (p.5)
RAPID GROWTH Project IFAD-GOP
Midterm Review Mission Visit to Davao del
Norte
KFI-KC DIP Cacao Supply Chain Model in Davao del Norte

Kennemer Foods International (KFI) is a Filipino agribusiness that is operating in more

than 30 provinces in the Philippines in its 11 years in 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 is to provide access to financing, high quality farm inputs, technology
transfer, and continuous technical support from field technicians.
Under RAPID Growth Project in Davao del Norte, KFI is identified as one of the anchor
firms of Kapalong Cooperative being its major institutional buyer of dried fermented beans.
Kapalong Cooperative (KC) is one of the largest cooperatives in Davao del Norte. It engages
in cacao beans buying and provides assistance through farmer financing to their members.
Currently, KC has around 882 farmers owning more than 1,200 hectares of planted cacao
from their *eight (8) farmer associations located at the different barangays in the Municipality
of Kapalong and San Isidro, Davao del Norte. Cacao in these areas is intercropped with
coconut, fruit trees, and banana. Cacao beans produced from the farms of their members are
sent directly to their fermentation area in Sitio Mabuhay, Brgy. Capungagan, Kapalong, Davao
del Norte for consolidation and primary processing. After primary processing, the dried
fermented cacao beans are sold to Kennemer Foods International. In 2019-2020, around 70%
of KC’s properly fermented beans are bought at a Php120/kg by KFI while non-fermented
beans are sold to an average local market price ranging from Php90-100/kg to KFI as fairly
average quality (FAQ) and to other local traders in Davao Region.

Despite the onset of the COVID-19 Pandemic in 2021, Kapalong Cooperative

continued to purchase cacao beans for their farmer-members. However, due to the high cost
of fuel and other logistics in their cacao bean trading, Kapalong Cooperative decided to look
for other cacao fermented bean buyers because KFI's buying price could no longer provide
them with a favorable revenue. In addition, Kapalong Cooperative implemented a value
addition strategy in which they began processing their cacao beans into tableya and selling it
to their members. Currently, Kapalong Cooperative sold cacao fermented beans to Filipinas
Auro de Cacao (FODC), Theo & Philo in Luzon, and other premium cacao processors in the
Philippines since 2021. KC is presently working on improving their tableya products and
developing chocolate to further strengthen their cacao value-added products, which will result
in increased revenue for their cooperative. Furthermore, according to KC, demand for their
cacao fermented beans is extremely high, but they only have limited capacity due to low
productivity of the farmers' cacao farms. It is also seeing an increase in demand for their
tableya and chocolate as it embarks on product development and product certification.
On the side of the small holder cacao farmers especially to the members of the eight
farmers associations, the evolution of the business model provides them more options on
where to sell their cacao wet beans. Usually, a cacao-farmer member sells his/her cacao wet
beans to a buyer that offers higher price to them. For past years, the farmers sold their cacao
beans to only a few buyers usually local traders who offered them low prices. Kennemer Foods
International and Kapalong Cooperative that were both looking for high-quality cacao beans
to make premium cacao products are now competing to offer fair prices to the farmers. As the
number of cacao buyers increased, so did the bargaining power of the farmers. They were no
longer dependent on a few buyers who offered them low prices. Instead, they had many buyers
who were willing to pay fair prices for their hard work. The farmers could now negotiate better
prices and sell their cacao beans to the buyer who offered the best price.

*Sawata Farmers Organization, Cacao Farmers Association of Linao, Mamangan Farmers Organization, Dacudao
Upland Farmers Association, Datu Balong Farmers Association, Ginsawaan Farmers Asssociation, Langan-
Gupitan Farmers Association and Dugayan-Okapan-Kimataan-Kawayan-Igang Farmers
1
 The RAPID Growth Project approved the DIP Supply Chain for this model last May
2022. It aims to bridge the production gap of KFI and KC’s partner farmer organizations by
providing a holistic intervention to its value chain and eventually contribute to the project goal
of increasing income of small holder farmers by 60% and increase the sales of MSMEs by
100% at the end of the project. Below are the interventions that were provided to Kapalong
Cooperative and small holder cacao farmers since the DIP was approved.

For Kapalong Cooperative (As MSME and Intermediary Anchor Firm)

• Provided Business Development Services on Marketing, Technology, Product
Development and Compliance to Standards
o Technology Training on Cacao Fermentation
o Branding, Packaging, and Labelling
o Coaching and Mentoring on Marketing Cacao Products
o Business Planning (SWOT Analysis)
o Product Development on Tableya and Chocolate
o Consultancy on Acquiring FDA-LTO Certification

For Small Holder Cacao Famers

• Provided Productive Investment on Farm Expansion and Rehabilitation
o Provision of High-Quality Cacao Seedlings and Basal Fertilizers Equivalent to
344.3 Hectares to 487 Small-Holder Cacao Farmers
o Provided Cacao Rehabilitation Tools to 325 Small-Holder Cacao Farmers

• Conducted Extension Support Services for Farm Management

o Training on Ecosystem Services and Biodiversity and Soil Fertility Management
o Training on Good Agricultural Practices and Cacao Crop Rehabilitation
o Training on Cacao Farm Establishment and Management under SALT System

• Facilitated A Business Development Services on Entrepreneurship and Organization

Development
o Training on Cacao Farming as a Business and Optimizing Cacao Farm
Profitability

Figure 1. KFI-KC Cacao Supply Chain Development Model

BEFORE

INTERNATIONAL MARKETS

FARMER ORGANIZATIONS

Markets
Services/Interventions
2
 PRESENT

INTERNATIONAL
DOMESTIC MARKETS
MARKETS

FARMER ORGANIZATIONS

Markets
SCAN ME TO
Services/Interventions
SEE
COMPLETE
DETAILS OF
THE KFI-KC
DIP
IMPLEMENTA
TION

NC Participation in the RAPID Growth Project Implementation

In crafting of the Detailed Investment Plan, Negosyo Center Business Counselors
(NCBC) in the concerned municipalities/cities are part of the technical team in preparing the
farm plans and business plans. They are heavily involved in the data gathering, profiling and
focus group discussion process. During the implementation stages, NCBC are the focal
person of RAPID Growth Project in their assigned municipality/city in close coordination with
the Value Chain Facilitators (VCFs). VCFs prepare and submit the final activity design for
budgetary purpose and together with the NCBCs will facilitate of the conduct of the
productivity, technology, marketing, and skills training activities. Also, NCBC on their regular
functions, facilitated credit brokering, business consultancy and product development to cacao
MSMEs in their locality especially those micro-enterprises that are into processing cacao
products.
In addition, the NCBCs also assist in matching farmers/farmer organizations with
potential buyers using the profiling database, in close coordination with the VCF.
In turn, the project also enhanced the Negosyo Centers’ capacities so that they can
better respond to the clients’ needs in accordance with their mandate. NCBCs have attended
several capacity building programs initiated by the project such as a short course on
entrepreneurial farming, a training on exporting, enterprise management and value chain
analysis and among others.

3
Significance of Farm-to-Market Road Project in the Supply Chain
Kapalong Cooperative had been working as a cacao wet beans buyer and processed
it into dried-fermented cacao beans for five years. Their agribusiness venture required them
to travel to different cacao-producing barangays in the Municipalities of Kapalong and San
Isidro to purchase high-quality cacao beans that would be used to make premium cacao
products. The products that they are buying were dropped at their cacao processing facility
located in Sitio Mabuhay, Brgy. Capungagan, Kapalong, Davao del Norte, but the road
conditions leading to the facility before were poor. The bumpy and unpaved roads made it
difficult for them to transport the cacao beans from the farmers to the processing facility,
resulting in longer travel times and higher transportation costs.
The implementation of a farm-to-market road under RAPID Growth Project adjacent to
their cacao processing facility provided a significant improvement in the transportation of their
cacao beans from the farmers to the processing facility. The smooth and concrete road will
allow for faster and safer transportation. This, in turn, meant that the beans arrived at the
processing facility in a higher quality, which was essential for the cacao processing process.
The reduced transportation costs resulting from the new road infrastructure also meant that
Kapalong Cooperative could negotiate better prices with the farmers located near their
processing area, as they no longer needed to account for the additional transportation costs.
Moreover, the new road infrastructure made it favorable for Kapalong Cooperative to
access larger markets for high-quality cacao beans. The improved transportation conditions
allowed them to visit more farmers and cacao-producing sitios and barangays in the area,
resulting in a wider selection of cacao beans for the cooperative. The farm-to-market road
infrastructure ultimately benefited not only the farmers but also the Kapalong Cooperative and
its stakeholders.

Figure 2. Locators Map Showing the RAPID FMR, Kapalong Cooperative Processing Facility
and the Farmer Associations

4
ITINERARY OF PROJECT VISIT

TIME ACTIVITY LOCATION

07:00 AM – 09:00 AM Travel to Kapalong, Davao del Norte

Turn-Over Ceremony of the RAPID Growth Project FMI in

Kapalong, Davao del Norte (Mabantao-Capungagan FMR)/Visit Brgy. Capungagan,
to Completed Mabantao-Capungagan FMR Project (09:00AM- Kapalong, Davao del
09:00 AM - 11:00 PM 10:30AM); and Norte
Visit to Kapalong Cooperative Processing Facility (10:30AM-
11:00AM)

11:00 AM – 11:20 AM Travel to Maniki, Kapalong, Davao del Norte

Meeting with Kapalong Cooperative, LGU-Kapalong and Other DA Training Center,

11:20 AM – 12:20 PM
Stakeholders Maniki, Kapalong,
12:20 PM – 01:00 PM Lunch Davao del Norte

01:00 PM – 01:30 PM Travel to San Isidro, Davao del Norte

Farm Visit to Sawata Farmers Organization (01:30PM-02:15PM); Brgy. Sawata, San

and Isidro, Davao del
01:30 PM – 03:30 PM Norte
Meeting to Sawata Farmers Organization and Kennemer Foods
International, Inc (02:15PM-03:30PM)

03:30 PM – 04:30 PM Travel to Tagum City, Davao del Norte

Brgy. Mankilam,
Visit to KFI Tagum City Buying Station and Cacao Nursery
04:30 PM - 05:00 PM Tagum City, Davao
(Optional)
del Norte

05:00 PM – 07:00 PM Travel to Davao City

WEATHER CONDITION