Sustainable smallholder farming clusters in the

Philippines
J.A. Oakeshotta
University of Queensland, Brisbane, Australia.

Abstract
The context for this paper is the problem of smallholder farmers in the
Philippines who face a range of livelihood challenges. Smallholders are family units
that exist in a family-labour intensive system with low capital input. These farmers
generally have limited opportunities for livelihood improvement because of limited
farm size, poor knowledge in production and marketing, and difficulties accessing
finance. In the Philippines, a common practice of development agencies in maximising
the reach and impact of a farmer focussed assistance program is to organise
smallholder farmers for collective action into agricultural clusters. These clusters are
geographic concentrations of interconnected smallholder farmers who collaborate in
production and/or marketing of the same produce in the same supply chains. A
cluster can benefit smallholders through increased profits by encouraging innovation,
reducing costs, sharing risks and increasing production; however, the management,
decision making, and cohesion of smallholder farming clusters is complex, and many
of these clusters have failed. The success or failure of clusters can be related to how
the cluster farming members respond, adapt and draw on their existing resources and
supporting network to become a competitive supplier in their unique and dynamic
environments. Analysing interviews from 22 facilitators of agricultural clusters in the
southern Philippines, this paper explores the social capital influences on the
sustainability and capacity of smallholder agricultural clusters to adapt to their
dynamic environments.

Keywords: development, rural, agricultural cluster, smallholder farmer

INTRODUCTION
Food security is constantly being challenged. Farmers are constantly challenged to be
more effective and efficient in production systems to supply a market that demands a
uniform, high quality and safe product. Markets are also becoming more complex as the
population rapidly increases in countries with low standards of living (PRB, 2014) that place
a demand on accessibility of a daily minimum calorie intake; whereas nations with a high
standard of living and lower population growth have markets increasing in segmentation
and diversification. Some countries will have increased personal disposable income
generating a demand for a more diverse food diet, quality, food safety, and convenience
(Shepherd, 2007). This implies harvesting products that require a more intensive production
system; such as horticultural products, dairy, and oils (Gehlhar and Regmi, 2005).
This increased segmentation, diversification, and overall demand for food will force
the introduction of more efficient and effective agricultural production systems. These
changes will be significant to the estimated 2 billion smallholder farmers living on 500
million farms of less than 2 ha (Thapa and Gaiha, 2011) and who provide up to 80% of the
food supply in Asia and sub-Saharan Africa (FAO, 2012). The significance of smallholders is
not only their numerical size, but also their important contribution towards national food
security, rural social stability, rural poverty reduction, cultural heritage, biodiversity and
environmental conservation. This financially poor and vulnerable group of farmers will be
tested for their resilience and ability to adapt to change in order to survive.

a
E-mail: John.oakeshott1@gmail.com

Acta Hortic. 1205. ISHS 2018. DOI 10.17660/ActaHortic.2018.1205.12 109

Proc. International Symposia on Tropical and Temperate Horticulture
Ed.: R. Drew
 In the Philippines, the agricultural sector contributes 20% of gross national domestic
product and 37% to the national labour force (Habito, 2012). Within this agricultural sector
there are 4.5 million farms (Moog, 2006) directly supporting 25 million Filipino farmers and
families (Philippine Statistics Authority, 2015). Most of these farmers are poor smallholders
in rural communities where some poverty rates are as high as 70% (AusAID, 2009). The
smallholder farmers not only contend with community poverty, but are also disconnected
from the markets and have few opportunities for livelihood improvement (Murray-Prior and
Rola-Rubzen, 2011). Many rely on traders to organize the harvest and transport their
produce to the markets. The smallholder growers are paid according to the daily market
prices which are volatile (Notarte, 2011) and when the prices are low, harvesting is
unprofitable and the produce are left to rot on the trees (Fresh Plaza, 2012) or in the fields.
A recent study of smallholder mango growers in the southern Philippines (Aguinaldo et al.,
2013) confirmed that the farmers’ terms of trade were decreasing faster relative to
wholesale and retail prices; and they received the lowest financial benefit amongst all the
actors in the supply chain.
The creation of smallholder agricultural clusters is a development practice used by
many agencies as a forum for group training (JICA, 2012; Landcare Foundation of the
Philippines Inc., 2009; Louis Berger, 2012). The attraction to agricultural cluster facilitation
for development agencies is the notion of ‘agglomeration economics’ (Monteiro et al., 2011).
This refers to efficiency gains which may benefit production, marketing and other activities
in a situation where there is close proximity of a group of smallholders and an external
facilitating organisation with limited human resources.
Agricultural clusters in the southern Philippines have increased profits of smallholder
farmers (Rola-Rubzen et al., 2012) by improving their economies of scale, sharing
knowledge and risks, and innovations encouraged (Brown and Sander, 2007; Murray-Prior,
2008; Proctor and Vorley, 2008; Reardon and Berdegue, 2008; Shepherd and Cadilhon,
2008). Another cluster advantage is overcoming the lack of support services, access to
finance, infrastructure, quality improvements, intra-chain coordination and access to
markets that can be overcome by providing facilitators and service providers a point of
access to a large group of organized smallholders (Moustier, 2013; Rola-Rubzen et al., 2012).
Whilst agricultural clustering is practiced in the Philippines and promoted by many
development agencies, they unfortunately have a high failure rate (Briones, 2003; Castillo et
al., 2003). Any alliance involving a collaboration for joint accomplishment of individual goals
involves a range of complexities, and Zaman and Mavondo stated that alliances of
organisations forming Public Private Partnerships show high failure rates ranging from 30-
70% (as cited in Baxter, 2016). Alliances of any size have similar issues to overcome, but
smallholder agricultural clusters have some unique obstacles. The reasons for failure of
clusters in the Philippines have been cited as loss of independence, corruption, poor
knowledge of production, management, insufficient capital, marketing issues, poor
leadership (and facilitation), lack of trust and accessing finance (Batt, 2008; CRS-Philippines,
2007; Gá lvez-Nogales, 2010; Kanter, 1994; Murray-Prior, 2008).
This paper explores the social capital influences on the sustainability and capacity of
smallholder agricultural clusters to adapt to their dynamic environments from the analyses
of interviews from 22 agricultural cluster facilitators in the southern Philippines. Social
Capital examines the value of a social network with benefits accruing from the norms of
reciprocity from the operating environment and within the agricultural cluster.

MATERIALS AND METHODS

There are many thousands of agricultural clusters being facilitated across the
Philippines by many different organisations; consequently only a sample of the facilitator
population could be interviewed due to constraints on finance, time, and security
precautions. The geographic area selected was the south-eastern area of the Philippines;
specifically Leyte, Bohol, and Mindanao; since this area is the agribusiness centre of the
country (Dy, 2014).
The facilitators interviewed came from three organisation types; private sector, non-

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government organisations (NGO), and local government units (LGU)/public sector (Table 1).

Table 1. Agriculture cluster facilitator interviews (and informant codes).

Facilitator No. of
LGU/Govt Private NGO
organisation interviews
Island Mindanao 1 2 6 9
group (DL1) (DP1, DP2) (DN1, CDN1,
CN1, MN1, MN2, ZN1)
Bohol 2 2 4
(BL1, BL2) (BN1, BN2)
Leyte 5 3 1 9
(LL1, LL2, LL3, (LP1, LP2) (LN1)
DAR1, DAR2)
22
Each of these organisation types differs in their approach to cluster facilitation. The
selection of the three organisation types was to ensure a cross section of opinions was being
captured in the interviews; it was not to make any comparison between their facilitation
methods. The three organisation types working with agricultural clusters can be described
as;
1. Local government units (LGU): funded and with administered oversight from the
government, these cluster facilitation organisations implement government
programs and policies. Composed of local government units (Provincial
Agricultural Office, Municipal Agricultural Office), Department of Agrarian Reform
and other government agencies facilitating agricultural cluster development.
2. Non-government organisation (NGO): in this study NGOs are regarded as
organisations that are generally non-profit, but independent from regional and
governmental agencies, with an orientation in agricultural development.
3. Private sector: organisations that are not controlled by the government and run as
an enterprise for profit. The cluster facilitators generally come from rural-farm
input suppliers and large corporate farming organisations which cluster farmers to
increase supply of raw materials (i.e., cacao, coffee).
One-on-one interviews of 22 facilitators of agricultural clusters were undertaken until
a point of data repetition was achieved. After each interview, the transcripts were coded and
a list of topics were generated that related to sustainable agricultural clusters. Data
repetition was achieved when no new topics were being added to the list. Interviews were
semi-structured, and as each interview was completed it was transcribed and coded before
the next interview commenced. A core series of questions was maintained; however, as the
interviews progressed, new questions were included following analysis in a ‘snowballing’
technique. The interviews were digitally recorded, transcribed, and coded using NVivio®
software.

RESULTS AND DISCUSSION

All interviews were conducted in English. The twelve female and ten male facilitators
interviewed were all university graduates, with four holding postgraduate degrees. Six of the
facilitators were graduates in community development, whilst the sixteen other facilitators
were agricultural science or business graduates. The average age of the facilitators
interviewed was 45 years old. The interviewees were experienced, with an average of 13
years as cluster facilitators. The cluster sizes ranged from 10 to 60 members; and the
facilitators preferring a size of 15 members. The type of membership depends on the Region,
with the ethnic diversity ranging from Cebuanos, Bisaya, Boholanos, Warays, Hiligaynon,
Illocanos, and Mindanao Lumads (Bla’an, T’duray).
The semi-structured open-ended interviews were coded to look for topics and
generate a list of topics under the main headings of social (Table 2). When interviewees

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were asked to list the important topics for a sustainable agricultural cluster, the link and
activity associated with support networks appeared in 91% of the lists generated from the
interviews.

Table 2. Percentage of interviewees discussing a social capital topic.

Capital Topic Percent
Social Support Network 91
Relationships 73
Membership 68
Leadership 55
Trust 55
Politics 41
Empowerment 36
A support network in the context of agricultural clusters according to their facilitators
refers to any organisation that is willing to provide development assistance to the
agricultural cluster as volunteer, non-profit, or for profit capacity. The facilitators regard
themselves as part of the support network and in the initial stages of a cluster they develop
the links to organisations such as government agencies, non-government organisations and
private sector partners. The majority of the facilitators, particularly those with training in
community development expressed the importance of their role in developing identification
for the cluster, through the Department of Labor and Employment (DOLE), and then linking
the cluster with support networks to enable other organisational support once their
facilitation ended... ‘...need to have the assistance from the LGU to sustain...’ (BN1 – refer to
Table 2). Obtaining the cluster identification from DOLE is required for the cluster to enter
into any official contract, obtain official receipts, and opportunity to apply for government
projects, and receive ‘dole-outs’ (grants) of farm inputs such as fertiliser, seed, implements
from the Local Government Units. Once officially identified and embedded within the
barangay (village) administration, the facilitators agreed the cluster would be resilient to
changes in local government and improve their potential to be sustainable.
Regarding the importance of building working relationships, the sentiments of the
facilitators could be surmised by ‘…with humans it’s hard…it’s not a technology or building
something, it’s really unique in a particular way, it’s a relationship, building trust takes
time…’ (DN1). The facilitators discussed three types of relationships which they regard as
important in the development of clusters; (1) facilitator-cluster members, (2) bonding
(between cluster members), (3) bridging (between cluster members and its support
network).
Firstly, the important relationship between the facilitator and cluster members is
developed by spending informal time with the members to establish trust (BN1). All
facilitators discussed the importance of ‘trust’. Where trust exists, the facilitators observed
cluster members were more motivated and had a higher level of participation (BNG2).
Facilitators could also learn more about the essential needs and problems facing the cluster
(DAR2). Similarly, CN1 said, ‘if you go there just to facilitate without any heart or passion…if
you go there for just a salary or just work …nothing will happen’. A facilitator will quickly
realize they have a relationship problem if the farmers are not following their
recommendations (LP1).
Secondly, the importance of developing strong relationship bonds between cluster
members is essential because they need to ‘...have a willingness to work as a group’ (CDN1);
this is because the farming cluster involves a lot of resource sharing such as the tangible
farming tools, and the intangible sharing of wisdom and knowledge (DL1). LP1 made an
observation on the importance of the farmer to farmer relationships and how farmers were
generally ashamed of just being farmers; however, when they join a group and socialize with
other farmers their attitude can change and their self-esteem can improve.
Thirdly, developing and bridging relationships with support organisations was

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described as an advantage in sustaining any cluster. BN2 stated that ‘many projects collapse
without the support of the LGU’. Developing relationships with the support network is
beyond just providing technical information via formal meetings; as BN2 observed, farmers
also require moral support and want informal visitations, and this helps develop a trusting
relationship.
Facilitators mentioned the importance of finding farmers ‘who would really like to
join’ and are ‘really active’ and enthusiastic (BN1). The facilitators search for new
smallholder cluster members who can work together effectively; which means they are
possibly from the same clan, related, family, like-minded (LN1), active farmers, in good
health (BN1) and live in close proximity to each other (BL2). As best as possible, the
facilitators validate the farmers prior to inviting them to participate; however, the true
nature of the farmer is unknown until later (LP1). Ensuring the new cluster is within the
nature and interests of the farmers is a time consuming but essential process, ‘...because it
takes a lot of their time, would take them out from their livelihood, and it is a waste of time’
if they are not active members (BN1).
The importance of leadership was brought up as a topic by 55% of the facilitators; as
there is a high dependence on the ‘person in charge’ for their motivation and group
organizational skills (DL1). The right leader can motivate the cluster members and sustain
the cluster post-facilitation. Leader selection is done by the members, but the process is at
times facilitated, for a leadership group to fulfil the roles of ‘President, Vice-President,
Secretary, and Treasurer’ (MN2). Where there are difficulties in selection, the facilitators will
list the characteristics of the leader required while trying to ensure a democratic and fair
election with the members taking responsibility ‘because they know who they want to trust’
(CN1). The types of leaders ‘...are not selfish and will work hard for the organisation’ (DAR2).
It is important the leader is transparent and trustworthy (DN1). ‘Once they did not trust the
leaders, the groups didn't work’ (DP1). ZN1, who facilitates a cluster in a conflict area, noted
the unusual situation of a cluster with 16 Christian and 4 Muslim members. The group
decided to elect a Muslim leader ‘because they believe that person can help and has the
capacity and capability potential’.
The importance of trust cannot be understated since the facilitator will bring many
changes and expect the members to work together. Developing trust within the cluster and
amongst the farmers is undertaken through open group discussions, being clear on
everyone’s intentions and activities; and this openness ensures there is no suspicions ‘that
could break trust’ (CN1); and also developing a management system that keeps the cluster
members well informed with ‘…transparency…with good financial records, good financial
management’ (DP1). Keeping trust is important, as DAR2 said, ‘…once they lose the
trust…wala na’ (nothing) ….’Nothing will happen and you’ll no longer be effective in that
barangay ...’ DL1 mentioned ‘...I observed is the complaining attitude’ as an indicator of a lack
of trust developing along with an increasing number of complaints.
The facilitators generally implied that their approach to developing any cluster
involves engaging with the community as well. It is important to gain community support,
‘because if we will not involve the community, usually a program will fail...’ (BL1). Involving
the wider community will require engagement with the elected officials of the barangay and
municipal government which then opens the influence of ‘politics’ on the cluster. Having
political support from the Government agencies can be a positive influence on clusters
sustainability; however, it does need to be a carefully managed process of engagement. The
facilitators are concerned about the community viewing the cluster as an arm of a specific
political party, or being ‘… used for political reasons by politicians’ (LN1). It is a balancing
act, ‘…politicians are a big factor in the development of clusters’ (CDN1); without the cluster
committing to any political party and ensuring the politicians value the clustering process
can be difficult. It is also within the cluster that politics can be divisive ‘…sometimes have a
very good organisation but because they support the liberal party or the other party that’s
one source (of failing clusters)…because they quarrel’ (DAR1); and then these problems with
politics ‘take a long time to heal’ (DAR2). Once the community views the cluster with
distrust, the lack of community support can cause the project to fail (BL1).

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 DN1 refers to empowerment, and this is a general definition used by other facilitators,
as increasing knowledge and confidence of the farmers when dealing with traders… ‘they
should know what they want and how do they negotiate’; and LP1 added ‘…so that he or she
won’t be dependent on the sponsor or donor or the project partner …’. An observation was
that empowerment and ownership of decisions makes farmers happy and can make the
cluster sustainable (CN1 & BN2).
For this group of facilitators, social capital was the focus since they regarded this as
the overwhelming influence on sustainable clusters. Good relationships can develop into
trust, empowerment, and good leadership.

CONCLUSION
Agricultural clusters can benefit smallholders to increase profits by sharing risk,
encouraging innovation, reducing their costs and increasing production; however, many of
these clusters fail. Influences on sustainability of an agricultural cluster can be grouped
under social, human, natural, financial, and physical capitals. Analyses of 22 semi-structured
interviews from cluster facilitators indicate they regard social capital as the main influence
on cluster sustainability. The facilitators highlighted the importance of developing and
maintaining good relationships with fellow cluster members, between the facilitator and the
members, and between the cluster members and their support network. Under social
capital, relationships are essential for sustainable agricultural clusters.

ACKNOWLEDGEMENTS
The author wants to thank the support received from the Australian Centre for
International Agricultural Research (ACIAR); and also the author’s doctoral supervisors at
the University of Queensland, namely, Dr. Gomathy Palaniappan, Dr. Helen Ross, and an
external supervisor Dr. Leslie Baxter.

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