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Value Chain Assessment of Coconut-Intercropping Systems of Smallholders in

Southern Mindanao, Philippines: Options for Improvement

Presentation · August 2018

DOI: 10.13140/RG.2.2.34634.88000

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Value Chain Assessment of Coconut-Intercropping

Systems of Smallholders in Southern Mindanao,
Philippines: Options for Improvement

Prof.Teodoro C. Mendoza, PhD

Mr. Rogelio G. Teves
Mr. Noel R. Miciano
UP at Los Baños
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An Assessment of Coconut-based Diversified Farming Systems of Smallholders in

Southern Mindanao, Philippines: Options for Improvement

EXECUTIVE SUMMARY

Next to Indonesia, the Philippines ranks second highest producer of coconut

earning more than a billion dollars from exports every year . There are 3.4 million
coconut farmers planting coconuts in 3.5 million hectares of the 68 provinces (the
Philippines has 81 provinces).About 71% of the coconut farmers own less than 3
hectares. Changing agro-climatic conditions and using appropriate agro-technology to
exploit the untapped potentials of coconut agroecosystesm are twin challenges facing
the coconut industry to address the widespread poverty of smallhold farmers in Southern
Mindanao, Philippines .

IRDF (Integrated Rural Development Foundation), a local non-government

organization with funding support from L3F seeks to develop a “best-in-class sustainable
coconut project in Southern Mindanao” in collaboration with Franklin Baker based in
Sta. Cruz, Davao del Sur. IRDF will be in charge of implementing field activities to build
capacities of smallholder coconut farmers by helping them increase their coconut
productivity, diversifying their production system through inter-cropping and generating
added value products through processing and better marketing systems. Before the
project start, L3F and its partners wanted to carry out an assessment to identify the best
inter-cropping combination based on agronomic, social and economic criteria in order to
propose the most viable and profitable solutions for the farmers. The initial appraisal of
common inter-cropping patterns of areas covered by the Study revealed five (5) major
crops ( Cacao, coffee, rubber, mangosteen, banana).Farmers in Makilala and Kidapawan
in North Cotabato are more keen in practicing inter-cropping as compared to monoculture
plantation approach in Magsaysay, Davao del Sur .There is a vast potential for improving
the agronomic practices of inter-cropping currently practiced by small holders in terms of
farming system components, inputs, adoption of good agronomic practices (GAP), post-
harvest and marketing practices.

Due to this , IRDF has commissioned a team of agronomy and farming systems
specialists from the University of the Philippines at Los Baños to conduct this sudy
“Assessment of Livelihood Options for Coconut-based Diversified Farming Systems of
Smallholders in Southern Mindanao”. The specific objectives are as follows:
1)Characterize the conditions of adoption by farmers in terms of investment capacities,
workload and time availability as well as management capacities in the long term;
2)Establish profitability profiles of the best options identified and provide an analysis of
 3

the potential outlets for each solution, with operational recommendations;3)Identify and
rank the best potential crops to be associated with coconuts in terms of adaptability to the
local context, technical feasibility and productive performance, social acceptability, food
processing potential and market opportunities.

This document presents the major finding and recommendations in the study.

The low income from coconut attributed to low price of copra (P21-24/kg) is
inaccurate. It is mainly due to low yield of copra/ha which in turn is due to low
population of coconuts/ ha (100-150 plants/ha) and low nut yields (46 nuts/
tree).Increasing nut yield (doubling copra yields 1 kg copra = 3-4 nuts) will not make the
farmer earn income above poverty threshold (P360,000/ha) at 1.5 ha average farm size.
At least 20-25 ha is necessary for coconut monoculture (at 46 nuts/tree and 100 trees/ha).
Doubling the yields would still require 10-12 hectares. Technologies to increase yield is
available. However, it can be reasonably applied in favorable / accessible areas (good
roads) and not in slopes 45 degrees or more and hardly accessible areas to carry and
apply purchased yield increasing inputs.
Coconut is there to provide food and as condiment for various food preparations.
Coconut, the tree of life, is a valuable gift that must be treasured. It should not be treated
as a major sources of revenues in coconut farm agroecosystems. Coconuts should be seen
as gift or bonus crop providing reliable and continuous source of income small as it
maybe (3 months harvesting cycle which can be shortened to 1.5 months ) .Coconut is
providing several ecosystems services , a microclimate modifier giving “shading effect”
favorable to understorey fruit trees namely: coffee, cacao, mangosteen, durian, banana
and even rubber trees. Even at farm gate, the added income from these fruit trees can
increase income from copra 2.36 -12.56 times more.
On coconut intercropping, our calculations showed that the highest revenue
yielding intercrop combination is coconut + banana( Lakatan cv.), coconut + mango
coconut + durian, coconut + mangosteen, coconut + cacao and coconut coffee. The
lowest revenue yielding combination is coconut + rubber. As a whole , intercropping fruit
trees increase the net revenue using monoculture coco-copra revenue as base revenue
@P 18,251/ha , intercrop combinations coconut + banana 12.56 X increase in revenues,
coco + mango led to 9.37X increase in revenue ; coco + durian 7.83X ; coco
+ mangosteen 5.34X ; coco + cacao 2.83X ; coco + coffee 2.36X increase in
revenue. Income increase progressively as the product move across the value chain.
Revenues multiply 10 times (coffee, cacao) and as high as 32 times in coco + mango.

However, it is imprecise to declare one crop is profitable over the others. Cacao
dried beans sells higher @ P120/kg than coffee bean at P85/kg. When Starbucks sells
coffee, the gross earnings could go as high as P8.4 million worth of coffee per ha.
Cacao made into chocolate (too many brands, tradenames are available) could yield
 4

million (more than P2 million ha).For durian and mangosteen, farm gate sales of
mangosteen and/or durian are relatively low. But retailing them, income increases 2.15
times (durian) to 3.5 times .Mangosteen leaves to fruit peelings could be processed and
substantial income could be earned .Processed durian candies, cakes and pastries abound
in the market. Mango (Carabao cv.) is exclusive for Magsaysay due to its unique
microclimate .

Rubber is also a good intercrop or companion crop in coconut agroecosystems.

Profit wise, it is the lowest due to the low price of cup lump (P21-24/kg). But the
Philippines need to grow rubber to supply the local demand. There are many products
that require rubber. Furthermore, we have now close to 4 million 4- wheel vehicles and
around 6 million motorbikes which all use rubber tires. The recommendation is to do
detailed feasibility study for the construction or rubber – factory to be processed into
various rubberized products. Using high yield rubber varieties and technologies, rubber
yields could go as high as 2,000kg/ha from the current average yield of 500 kg/ha. For
banana , a tissue-culture technology for producing plantlets is available in the area. Per
our case study farmer, banana as intercrop to coconut can provide good income.
Planting-harvesting must be linked to the buyers to avoid over ripening (wastage) hence,
reduced income.

The challenge : helping farmers achieve the benefits accruing across the “value
chain” i.e. selling coffee, chocolate. It will spell the differences between the past (20th
century) to the present – the 21st century. The 20th century supply chain approach where
the farmers are simply the producer/ supplier of raw materials (feedstock) for the
processor/ manufacturer of finished/ processed high value products should now
metamorphose into “value chain approach.” For farmers to gain the major benefits from
their money, talent and efforts poured in growing crops, value chain approach is putting
under the control and ownerships of the farmer/ producers the full interrelated –
interactive – interdependent process in finishing the products so any added value that
accrue through the process shall be theirs. A detailed feasibility study is recommended to
construct processing plant for rubber ,durian, mangosteen in North Cotabato, and dried
mangoes and mango fruit juice concentrate factory in Magasaysay.

The central feature of value chain approach is achieving scale of operations by

forming farmers’ cooperative. Implementing value chain approach requires many service
& technology providers/ group .Credit institutions (banks) granting reasonable, and
affordable interest rates since above 6% interest rate, the interest expense alone will eat
up the added profit due to increase income which would otherwise be enjoyed by the
farmers. Due to risks, credit must be insured (crop insurance that pays the crop value and
not simply the credit value). Promoting agriculture value chain comprise a life cycle
approach. It should equally emphasize the need to produce quality raw materials
 5

(feedstock) to feed the factory – machines along with processing technology set up .
R4D institutions( academe, S/T or R& D institutions should help/assist the farmers on
their technology needs from production, processing, packaging, up to marketing.
Constructing factory needs capital (amortization + interest), skilled labor (training),
professional management (commitment& dedication), tools & equipment (locally
fabricated ), hauling trucks( logistics ), all weather road net works( high priority).

1.0. Introduction

1.1. Emerging Realities in Philippine’s Coconut Industry

While Philippines ranks second highest producer of coconut oil in the world after
Indonesia, earning more than a billion dollars from exports every year the status of the
industry has lately gathered serious concern and required closer examination due to
several developments. For one, over 3.4 million coconut
farmers who ironically form the backbone of the industry,
live mostly below the poverty line. Of the 81 provinces, 68
are coconut growing areas. Moreover, recent pest infestations
e.g. cocolisap as well as devastating typhoons such as
Yolanda and Pablo1 have flattened large swathes of coconut
plantations particularly along coastal areas in the provinces
of Bicol, Leyte, Samar, Caraga and Davao Oriental, thus,
reducing total volume and quality of coconut production in
the country and further impoverished the vulnerable coconut farming communities.

Although extreme rainfall patterns and changing weather conditions are quite
common in tropical countries such as the Philippines and which affects only certain
regions of the country at a time, nonetheless, there are emerging realities that these agro-
climatic and agronomic problems of the industry may not be easily resolved. This is
evident particularly in monoculture coconut plantations in Magsaysay, Davao del Sur and
certain parts of Makilala and Kidapawan City in North Cotabato which suffered from
three (3) droughts in
1992-1993, 1997-
1998, and 2015-20162
as well as several
flooding episodes in
recent years. Since,
these farms relied
mostly on coconuts,
failure of the main
crop has left many
small holders with
1
Source: http://takvera.blogspot.com/2012/12/death-toll-from-typhoon-bopha-rises-as.html
2
Source: https://ipad.fas.usda.gov/highlights/2016/03/Philippines/Index.htm
 6

almost no alternative livelihoods and pushed them further in debt and poverty. The
problem due to the long dry spells has in fact, forced the declaration of calamity areas in
North Cotabato and even the cancellation of the annual Fruit Festival in Kidapawan City.

Doubts surrounding the effectiveness of existing programs and services of the

government to address widespread poverty and changing agro-climatic conditions as well
as other agro-technical challenges facing the coconut industry apparently arises from
several decades of seeming complacency and inertia. According to authoritative studies,
this is reflected in the largely untapped potential and laggard performance of the industry.
For example, according to statistics from the Philippine Coconut Authority (PCA) the
average annual yield of 45 nuts per tree is very low considering that in India, the average
is 250 nuts, Mexico 300 nuts and Brazil 400 nuts3. Moreover, inter-cropping, which is the
growing of intercrops in coconut lands to produce more food and agricultural products as
well as generating jobs and livelihoods, thus enhancing farm income and alleviating
poverty in farming communities has not been vigorously promoted. The lack of
responsiveness to the problems and challenges of the industry is further highlighted by
the fact that, it has not adequately responded to over three (3) decades of bad propaganda
campaign against coconut and other tropical oils which began in the early 1980’s. This is
according to an article entitled “State of the PH coconut industry and what must be done”
by William Dar in the August 2017 issue of The Manila Times in which Dar described the
industry ... “as a sick man and needs help, a lot of help”. However, there are still other
institutional and policy factors that need to be considered on the local and regional level.

IRDF (Integrated Rural Development Foundation), a local non-government

organization with funding support from L3F seeks to develop a “best-in-class sustainable
coconut project in Southern Mindanao” in collaboration with Franklin Baker, the largest
coconut manufacturer in the Philippines based in Sta. Cruz, Davao del Sur. The NGO will
reportedly be in charge of implementing field activities to build capacities of smallholder
coconut farmers by helping them increase their coconut productivity, diversifying their
production system through inter-cropping and generating added value products through
processing and better marketing systems. However, before the project start, L3F and its
partners wanted to carry out an assessment to identify the best inter-cropping solutions
with coconut based on agronomic, social and economic criteria in order to propose the
most viable and profitable solutions for the farmers.

Due to institutional limitations, IRDF has commissioned a team of agronomy and

farming systems specialists from the University of the Philippines at Los Baños to
conduct a Study entitled: “Assessment of Livelihood Options for Coconut-based
Diversified Farming Systems of Smallholders in Southern Mindanao”. This document
presents the results of this Study. Aside from IRDF’s own limitations as well as the
agro-climatic conditions described above, there are however, other challenges for
improving livelihoods and well-being of coconut farmers. For one, the Philippine
Coconut Authority (PCA) Provincial Offices reported that officially, it no longer has

3
Accessed from: http://pca.da.gov.ph/index.php/2015-10-26-03-15-57/2015-10-26-03-22-41
 7

financial and material support allocated for coconut farmers for this year (2018) unlike
last year when salt and some fertilizers were reportedly alloted and distributed to farmer
beneficiaries of the program.

To further illustrate the challenges posted to NGOs and development institutions

concerned with sustainable livelihoods in coconut growing areas, the government
declared (faster) poverty reduction as one of its strategic goals in 2011 (refer Regional
Development Plan for 2011 to 2016) which was further stressed in the recent Philippine
Development Plan (PDP) for 2017 to 2022 specifically targeting an increase in Per capita
income from USD 3,550 in 2015 to at least USD 5,000 in 2022 to reach the country’s
overall goal of becoming an “upper middle income country by 2022.

Despite the lofty goals and recent achievements, official estimates indicate that
although target reduction in poverty levels have been achieved by the past administration
[from a target of 22.5% to 21.6% poverty incidence in 2015] this was traced largely to
the expansion of the widely criticized “dole-out” type conditional cash transfer
program under Pres. Aquino’s PPP. Even the government acknowledged that the past
record it has achieved is an insufficient barometer of real change. This is reflected in the
stark contrast in Gross Regional Domestic Product (GRDP) whereby the National Capital
Region (NCR) achieved not only the highest but several times higher GRDP compared to
that of other regions i.e., around 7 times higher than Region XI. This resulted to
livelihood outcomes whereby significant sections of society felt “either too little is being
done or they have been completely bypassed by government”. Thus, the PDP under the
new administration of Pres. Rodrigo Duterte admitted that this cannot be allowed to
persist as “the door is opened for opportunists promising quick fixes that could only lead
to far worse outcomes” (Source: PDP 2017 to 2022).

Figure 3. Per Capita GRDP in Constant Prices, 2009 and 2015

There are a host of external factors that may have contributed to the failure of past
government programs to achieve substantial improvements in the lives of the people.
These may include climate change (droughts/typhoons) as discussed earlier, outbreak of
armed conflicts (between government forces and communist rebels and/or Muslim
extremists) and even developments in international financial systems (financial crisis).
However, based on the survey of literature, it was found that failure of most local aid
related programs of government often stem from inherent problems and constraints that
 8

were not properly accounted for during the planning of specific development
interventions. For example, according to end of project evaluations of various financial
assistance programs of the Asian Development Bank 4 targeting poor farmers and
fishermen, these failure were often underscored by three main categories described
briefly as follows: (i) Financial: such as ineligibility of beneficiaries (farmers/fisherfolk)
to avail credit because of limited assets for collateral; high or sudden increases in
operating costs and/or risks, inability to absorb losses, and rising debts; (ii) Technical:
inadequate and substandard supply of raw materials, poor farm management, and
inadequate site selection; limited skills and experience with newly acquired technology
and management practices; and, lastly, (iii) Policy and Implementing Processes: these
include inflexible and unresponsive institutions; and inappropriate policies e.g. with
regards to land tenure security.

In lieu of these findings, it is apparent that IRDF and its partners are now faced with
many but not insurmountable challenges in developing the coconut industry. It goes
without saying that the NGO needs to expand its areas of concern and that the intention to
target small farmers as end beneficiaries of its development work would be insufficient
unless the livelihood options and socio-economic conditions available to the different
stakeholders in the industry are matched with fair and equitable terms that would not
necessarily impinge on the co-existence, creativity and valuable contribution of each
player in the supply chain of not only coconut but, various other inter-crops that may be
produced in the coconut growing areas.

1.2 Rationale and Focus of the Assessment

As discussed in the previous section, livelihood interventions in terms of inter-

cropping and improving productivity of coconut farms has not figured prominently in
government as well as most farm development thrusts over the past three decades. In
terms of promotion of Income Generation Projects (IGPs), NGOs as well as similar non-
profit organizations often narrowly viewed this as the primary concern of financial
agencies and adopted largely by economic specialist groups especially those with a
(legal) mandate to engage in various profitable businesses. Such views frequently
dominate despite growing concerns within the NGO community that continuity of its
social development initiatives and projects has become precarious due to dwindling
sources of reliable and substantial NGO (grant) funds observed in recent years 5 . The
narrow view of income generation as outside the scope of NGOs hides the potential of
livelihood projects, particularly in the context of sustainable development of farm lands
under coconut plantations.

A review and initial appraisal of common inter-cropping patterns of areas covered by the

4
ADB. 1997. The Bank’s Policy on Fisheries. Manila.
5
Based on personal knowledge and sharing of experiences among NGO practitioners, workers and
representatives of foreign funding agencies e.g. Oxfam UK grant funds are moving in favor of less .
 9

Study suggested the importance of five (5) major crops (i) Cacao, coffee, rubber,
mangosteen, banana as alternative sources of income of households and as a means to
help reduce dependence on coconut for their livelihoods; (ii) farmers in Makilala and
Kidapawan in North Cotabato are apparently more keen in practicing inter-cropping as
compared to monoculture plantation approach in Magsaysay, Davao del Sur and, (iii)
there is a vast potential for improving the agronomic practices of inter-cropping currently
practiced by small holders in terms of farming system components, inputs, post-harvest
and marketing practices. It was also found that there is a need for close coordination of
personnel of both executing and participating agencies as well as transparency in the
implementation of pro-poor assistance programs of the Department of Agriculture and
consistency in the enforcement of pertinent laws and regulations governing such matters
like environmental pollution, labor and employment, taxation and incentives and other
similar socio-economic concerns.

Given these initial findings and insights, identifying suitable income generating
development approaches that offers realistic alternative livelihood opportunities for
coconut farmers remains a challenge. The small holders usually face serious constraints
and limitations to engage in Diversified and Integrated Farming Systems (DIFS) due to
lack of access to capital and required resources e.g. Land. They also need appropriate and
additional skills to become successful and organized entrepreneurs, this in addition to
infrastructure support, and proper equipment, and machinery necessary to produce value
added products and services. Unlike the poor in urban areas, the rural poor in Mindanao
are exposed to armed conflicts between armed rebels and government forces, in addition
to pollution from agro-chemicals as well as social ills including use of illegal drugs,
alcoholism, gambling, sex trafficking, etc. The landless and those lacking access to
natural resources on the other hand are often forced to seek employment even in
hazardous and low paying jobs. There are, however, considerable opportunities for the
rural poor to engage in more dignified and improved livelihoods through low cost and
environmentally sound technologies and to help secure their access to pro-poor programs
of government and NGO projects and services. This, however, is not merely a question of
focusing on smallholders engaged in coconut farming. It demands a comprehensive
understanding of socio-economic conditions of various stakeholders in the coconut
industry i.e., the various entrepreneurs’ operating environments and enabling factors.
Knowledge gaps mostly concern social and economic aspects and alternative livelihood
options in rural communities including barriers to access and adoption of DIFS as well as
the different potential cooperatively owned, large scale sustainable livelihood projects
and/or undertakings that may be considered in the future.

1.3. Purpose, Objectives and Expected Outputs

This assessment study for DIFS options of coconut farmers is designed to identify
and assess DIFS and income generating options and the different factors that influence
attainment of desired outcomes of IRDF’s target beneficiaries in three (3) selected
Municipalities in Southern Mindanao. It identified specific agricultural components and
 10

interventions ideally suited to existing agro-ecological and socio-economic conditions in

selected smallholder communities.The results of the Study clarified and outlined possible
measures that would help IRDF’s DIFS livelihood interventions become more relevant
and responsive to the needs of its farmer beneficiaries.

The specific objectives and general outline of the Study stated briefly are as
follows:

1) Characterize the conditions of adoption by farmers in terms of investment capacities,

workload and time availability as well as management capacities in the long term.
2) Establish profitability profiles of the best options identified and provide an analysis
of the potential outlets for each solution, with operational recommendations.
3) Identify and rank the best potential crops to be associated with coconuts in terms of
adaptability to the local context, technical feasibility and productive performance,
social acceptability, food processing potential and market opportunities.

The Study include specific recommendations on the feasible strategies to develop

DIFS and household livelihood capacities, identify common livelihood assets and
outcomes that should be considered in planning development interventions, and ways and
means to hasten access to available livelihood and employment opportunities for the
small holders and coconut growing communities.

2.0 Methodology

For the analysis, the Assessment follows the sustainable livelihood framework 6 and
examined the different ways industry players, primarily small holders are affected in their
livelihood operations such as access to livelihood assets, markets, employment
opportunities and/or labor market, access to services and facilities, infrastructure, and key
transforming processes, including government institutions, programs and policies. The
Study used an array of data gathering methods that include survey of literature, ocular
inspection of selected farms/facilities, key informant interviews, participatory Focus
Group Discussions and/or workshops, household interview surveys using prepared survey
instruments as well as case studies of households who have adopted diversified or
enhanced livelihood options to gain insights on motivating factors on one hand, and the
constraints and barriers to adoption on the other.

Two (2) FGDs were conducted, the first for the adjacent areas of Kidapawan City and the
municipality of Makilala in North Cotabato. The second was devoted to participants from
the municipality of Magsaysay in Davao del Sur. Each were participated by
representatives 8 resident farmers of each selected barangays plus a number of additional
participants representing post-harvest operators, processors and marketing as well as

6
See: https://www.soas.ac.uk/cedep-demos/000_P528_RF_K3736-Demo/unit1/page_22.htm
 11

service providers and/or representatives from private companies and local government
agencies e.g. LAO Farm, PCA, DA. The participation of male and female participants
was also considered in selecting FGD and workshop participants. However, participation
of males being the main bread winner of most beneficiary households was rather low as
many were reportedly engaged in their daily employment or livelihood chores. FGDs
maximized the use of participatory moderation methods following prepared guide
questions.

Initial ocular visits and survey of sample household livelihood conditions were
undertaken prior to conduct of FGDs in order to refine and focus FGD inquiry. A case
study approach was adopted in examining the status of selected households adopting
common DIFS or inter-cropping livelihood components and/or income sources. This was
made in order to deepen understanding of those options and for analysis of potentials for
scaling up, diversification and/or enhancements if and when viability of each option is
indicated.

The Study also combined rapid appraisal tools as a means to increase coverage and
improve reliability of results to include qualitative and quantitative methods such as rapid
market surveys and statistical analysis of means and percentages, for estimating raw
demand and supply conditions and organizing and data presentation purposes,
respectively. In addition, the Team gathered as much information available from
government agencies concerned with the coconut industry and inter-crops players in the
value chain of selected products and commodities.

To clarify and establish the perceived level of acceptability of each DIFS options, the
FGD participants were asked to rate the level of importance (High, Moderate, Low) of
the following set of criteria for 1) Time availability (for the specific crop/inter-crop); 2)
Relative Access to required resources (for the specific crop/inter-crop); 3) Profitability;
and, 4) Potential for value addition. In terms of priorities, the participants were also asked
to list the most important problems and also identify the main strategy towards improving
their livelihood options.
 12

Figure 4. Sustainable Livelihoods Framework

Livelihood assets: H= Human, N= Natural, S= Social, P= Physical, F- Financial

In brief, , the team adopted combinations of appraisal tools ( participatory appraisal, key
informants interview, case study approach for unique situations/ outstanding farmers ,
secondary data/information from Dept. of Agriculture, Phil.Coconut Authority).

Series of calculations were done ( field level production for each crop components (
coconut the main crop and the various intercrops cited above).

For value chain calculations, there are2 stages, namely :in the 1st stage ,we calculated
the movement of the products concerned from raw fruit to processed product and as it
reached the consumer as shown below ….
Farmer sells to Local / Village BuyerLocal / Village Buyer sells to Processor1 Processor1 sells
processor2/wholesale- Wholeseller sells to retail consumer

The 2nd stage assumed that the farmers through their Cooperative do notsellanymore to
Processor1
the sells, do
local buyer processor2/wholesale- Wholeseller
the necessary processing sellsup
/packaging to toretail consumer
retailing as shown
below…
Processor1 sells processor2/wholesale- Wholeseller sells to retail consumer
Farmer sells to Processor1 ( no more Local / Village Buyer)Farmer --> processor2 ( farmers through their
Coop do the processing)Farmer through their Coop do the retailing ( process or fresh fruits as in
Lakatan bananas )
 13

3.0. Current situation : Coconut-based Integrated Diversified Farming System for

Smallholders in the 3 towns of Southern Mindanao

Coconut farmers in the 3 towns (Magsaysay, Davao del Sur; Makilala and
Kidapawan, North Cotabato) had adopted multiple cropping systems. Despite their
initiatives, coconut farmers have low income and so they are poor. Three (3) major
reasons were identified and they are as follows: Small farm size, Low yield in terms of
quantity and quality and low farm gate prices of their produce ( copra, cacao, banana,
coffee beans, rubber latex lanzones, rambutan) . These factors in addition to the high
poverty incidence in the coconut growing areas more or less underscore the low
investment capacity of majority of coconut farmers in selected project sites7.

Small Farm size (0.5-2.0 ha, only few farmers cultivate more than 3.0 ha). Th

There’s not much that can be done on farm size although some famers creatively solve
this by renting lands (leasing/ sub-leasing) to other farmers to increase their size of
operations (See Annex 2. Case Study). Land area and population are the 2 intertwined
factors – too small a land to be redistributed to rightful beneficiaries. Our ideal
population had been achieved in the 1960’s at 27 million population ( 0.41 land per
capita, CIA, 2004).Our population now is about 105 million and it will reach 140 million

7
Reference: Philippine Statistics Authority (2015)
 14

by 2040 (PSA,2016). Moreover, the latest data showed our agricultural land decreased
by 2.4 M ha from 9.6 million ha agricultural lands before to about 7.2Mha only
(Bautista, 2018). The farm size requirement for a family of 5 if they rely solely on
income from coconut monoculture is about 25 ha .

3.1.Low Yield. Yield is a function of level of management, inputs or technology that is

being adopted. Coconut monoculture in almost all the sites (Makilala, Kabankalan,
Magsaysay) is a rarity. It is a tinge of the past . This can be attributed to small farm size
and mostly because the coco-farmers are migrants (Visayas, Luzon) who carried with
them the mixed-multiple cropping practices where they came from ,and the multiple
cropping program promoted by the government (Philippine Coconut Authority). While
this is true, multiple cropping practices could be characterized into various mixes (cacao,
lazones, rambutan, rubber) and at random spacing (very wide to very narrow space
between crops species and within the crop species). Furthermore, good agricultural
practices (discussed in section ___) remain to be adopted which means that crops grow
on their own or no systematic crop-specific husbandry practices are done like; a )No
de- branching, pruning of excess branches for cacao, lanzones, rambutan, rubber, coffee.
Excess branches should be removed for they serve as “useless metabolic sinks” and
they do not contribute positively to the economic yield (Mendoza, 2014). Although it is a
form of weed control since excess branches suppress light transmission down the lower
canopy;2) there is no adequate weed growth suppression especially the vines; and 3)
inadequate –to- zero nutrient application of fertilizer (organic or in-organic).This results
to fewer and smaller fruits per tree (yield/ha = number and size(weight) of fruits per tree
x number of trees her ha).In some cases, the number of trees per ha is greater than the
optimum which leads to overcrowding. This also affected fruit yields since the number
of fruits per tree are few and fruits are smaller in size. The following table presents the
production profile for coconuts in the three areas:

Table 3.1. Coconut production

3.2.Farm gate price of their produce is relatively low. The prices of farm produce are
affected by road condition, quantity and quality of produce, fruiting season and prior
arrangements to buyers. Only the main roads are well-paved. Village (barangay) roads
are narrow and rough which make vehicle movement slow. This road condition lead to
high fuel (li diesel oil) and depreciation costs for the hauling vehicles (jeepney or small
 15

trucks). Bulk purchase of coconuts is being done by big traders/ processor provided their
10-wheeler trucks could be adequately filled up .But oftentimes, this could not be
satisfied by disorganized harvesting schedules among farmers. The road condition which
leads to high fuel and maintenance cost of vehicles owned by the traders/ buyers is
obviously deducted from the farm gate prices of farm produce they buy from the
farmers. Some farmers do direct marketing of their produce . Using tricycle or jeepney ,
they haul their produce to market centers for dual purposes (buying household
necessities, selling their produce) . The price difference is not so significant (P1-2/kg).
Total price (quantity x price/unit) of produce is also low due to small quantity being sold.
This is not to overemphasize that farmers produce (copra, fruits) are already traded (sold)
as collateral for loans, in turn, the agreement is to sell their produce to the trader/ loan
donor at harvest time. Supply is at the highest at harvest time, with constant demand , the
price dip so low, limang piso na lang kada kilo ang rambutan at lanzones! The effects
of road condition, small quantity and advanced trading add up together in depressing the
prices. How quality is affected is discussed in more detail in section__ as it is crop-
specific but mainly, this is due to non-compliance or adoption of good agricultural
practices from production-to-post harvest.

3.3.Crop Specific Factors

Dominant crops grown with coconut are site or town specific as follows: cacao,
banana in Makilala; cacao, rubber, banana in Kidapawan City, and mangoes, banana in
Magsaysay. Coffee is grown in limited areas. Jackfruit and guyabano are grown only
for household consumption. Same is true for mangosteen, rambutan,and lanzones. We
did not see any longan, pomelo, atis ,and citrus. Durian is not also widely grown in the 3
municipalities. In general, yields of coconuts and also the fruit trees grown under
coconuts are low. Crop specific factors or reasons are briefly described below :

Coconut .Many coconuts are tall and old and/or they have exceeded their optimum nut
bearing age. Height is a factor for 2 reasons: excess and dried coconut fronds are not
removed and they simply fall with time. Old and high trunk of trees require much food
(photosynthetic product) to be maintained. Non-application of fertilizer and soil
compaction contribute to the low yield performance of coconuts. Tree age and
inadequate to no-fertilization jointly influenced yield. But why do we expect the farmers
to exert efforts to increase yield when price of coconuts (copra) is low (P21-24 per kg).
Farmers are complaining on the low price of copra mainly because the prices of
consumer goods they buy in the market are high including the transport/ marketing costs
of their produce if they are the ones who will sell their produce. In view of this, we
explained why copra prices may not increase in the near term. First, there are so much
plant oil in the market sourced globally from corn, canola, soybean . Here in Southeast
Asia (Malaysia, Indonesia),there is abundant oil manufactured from palm . Oil produced
form oil palm is 4-5 times more than coconuts. Per unit weight, palm oil is cheaper to
produce plus free trading, palm oil is sold in the market 20-30% cheaper relative to
 16

coconut oil. On the other hand, the recent lowering of tariff duty for imported palm oil
(5%) even makes it relatively cheaper to import than to produce palm oil in the country!8

In the medium-to-long-term, coconut farmers should consider the following:

a) Planting other varieties of coconut (macapuno, dwarf/sweeter coconut for
coco-juice)
b) Expanding/maximizing the food uses of coconut- buko pie, coco candies, rice
cakes/ kakanin using gata (coco milk )
c) Maximizing the use of all coconut parts
Coco food fuel
Coco husks coco fiber several uses
Coco coir dusts potting media, for modified hydrophonics

Importance of coconuts to higher priced fruit tree inter-crops.

Cacao needs partial shade. Cacao will not perform well under full-sun (100%
sunlight). Same is true for coffee. Under strictly rainfed condition, durian, banana, grow
better under tall coconut. While tall coconuts are low nut-yielding, their role on
microclimate moderation/ enhancement to their associated intercrops is unique.

In all the 3 towns (Makilala, Kabankalan, Magsaysay), cacao is being grown. There are
2 points for cacao – low yield and low price of bean despite the high labor in fermenting,
cleaning and drying cacao beans The low bean yield could be attributed to low or non-
adoption of good agricultural practices. Listed below are the good agricultural practices
(GAP)for cacao.
- Planting of location adapted high yielding varieties
- Proper seedling preparation
- Planting seedling at optimum age in weed-free, soil-improved holes (with
organic fertilizer/ compost and liberal amount of readily available and soluble
inorganic fertilizer)
- Regular maintenance weeding
- De-branching/ removal of excess non-fruiting branches
- Adding nutrients regularly
- Fruit bagging to avoid fruit-sucking insects to improve fruit quality and yield

Cacao yields in the corporate farm (Formacor) was exceptional as cacao GAP are
satisfactorily done. Cacao planting , care and management is supervised by a technical
person besides the inputs required are adequately provided and properly applied. Despite
the high yield obtained from their fruit bearing cacao, the complaint is still the low cacao
bean price.

8
Reference: http://tariffcommission.gov.ph/eo-83
 17

We met one exceptional farmer (Mr. Rogelio Geneosas) practicing organic

farming. Yields for copra is 2-3 times higher than the average (Annex A).

Banana. Grown under matured/tall coconuts, bananas exhibit good growth in well cared
farms of Kidapawan (Annex B). Only, these farms are few. In general, bananas grown as
intercrop to coconuts in the 3 towns were planted under random/mixed planting pattern
(no fixed spacing) and care and maintenance as in de-leafing and de suckering or
maintaining 3 to 4 bananas per hill are not done. Hence, the resulting bunch of bananas
are small and fruit yield is low, so with the income from bananas. The income is
considerably low. Again, the low market price of fresh bananas is the common complaint
especially when the classes are over. Demand for bananas is low, hence, price of fruits is
also low . During summer , since it is hot and rains are scanty or minimal, yield of
bananas is low.. We did not meet any farmer practicing organic banana culture .

Rubber. Intercropping rubber between the large space of coconut is a common practice.
The current mayors of Kidapawan City and Makilala has keen interest on rubber and
they are actively campaigning for rubber growing under coconut. Below shows the
production profile for rubber in the three areas.

Table 3.2. Rubber Production

GAP for rubber production is apparently not followed. This includes spacing, planting
of seedlings (plastic bags are not removed restricting root growth), maintenance weeding
and nutrient application are not regularly done. One critical aspect is latex extraction
from latex producing trees. Quality latex extraction practices must be adopted. Simply
stated, current latex (cup lump) quality is low (dirty). There are 2 interlinked factors:
1)Latex price now is low @ P21-23/kg but who will buy at a high price if rubber latex
has poor quality (dirty);2) In turn, since the price is low, it does not motivate farmers to
improve quality. This leads to chicken and egg issue.

Reviewing the price of rubber showed that the low price is occurring globally.
When the price of rubber was so high (it reaches about P90/kg in the Philippines), many
planted rubber. Presumably, there is so much rubber supply. The Philippines case is
unique! Except one, all rubber tire companies left the Philippines and moved elsewhere.
This obviously triggered the low demand for rubber latex, hence, prices. One company
stayed but this company is importing most of the rubber they used in rubber tire
manufacturing. The reason given is that the Philippines’ produced latex is of low quality.
 18

There are 2 challenges and they are 1) improving the yield of rubber per tree as
the current yield (less 1.0 kg latex per tree per year while well managed tree could yield
up to 3.0 kg/tree) and 2) improving the quality of latex (clean & free of dirt). The first
could be done by adopting GAP and the second could be achieved by practicing proper
latex extraction procedure (adequate training and supervision/monitoring) and the use of
clean latex catchment (not the dirty coconut shell). The low current price of latex (cup
lump) is no excuse for producing the low quality latex. Who will buy at fairly higher
price latex which is dirty? Dirty latex requires expensive processing to remove the dirt
to the point that it can not be used for rubber tire manufacture. Hence, our rubber latex is
used for low value rubber products. In turn, the rubber manufacturing companies will buy
the latex at low price.

Despite the gloomy picture of rubber production at present, there is sound basis
for the Kidapawan Mayor to motivate farmers to plant rubber due to the following
reasons:
1) The 15-day interval of latex harvest is similar to the 15 day pay schedule. It satisfies
the regular pay day of the farm workers. Scheduled properly, the weekly payroll is
satisfied for both the farmer owner and the workers involved.
2) Properly maintained, the rubber tree can be productive up to 30 to 50 years. The long
wait (5 years) for the rubber tree to be latex producing is more than compensated by its
long productive period.

Mango. Mango can be grown anywhere in the Philippines. We have one unique variety
(carabao cv) which is grown in Magsaysay town of Davao del sur. The microclimate
requirement (hot summer months) of carabao mango is satisfied in Magsaysay.
Mountains surrounding Magsaysay prevent orographic precipitation (Magsaysay is on the
lee ward side of the mountain, hence, dry-air reaches Magsaysay). Only the usual frontal
and conventional precipitation occur in this town making carabao mango production
favorable. The advantage of mango production in Magsaysay over Guimaras Islands, and
Zambales of Luzon is that it is typhoon-free. Breakage of fruiting branches and falling of
ready-to-harvest fruits never happened in the past. This situation had changed in recent
years as Mindanao is also visited by typhoon and super heavy rains if not strong winds
also happen. This could also adversely affect mango fruits.

To summarize : Coconut farmers in the 3 towns (Makilala, Kabankalan,N.Cotabato &

Magsaysay, Davao del sur) have low income and so they are poor despite having
adopted multiple cropping systems. Three (3) major reasons were identified ( Small farm
size, Low yield in terms of quantity and quality and low farm gate prices of their produce
( copra, cacao, banana, coffee beans, rubber latex lanzones, rambutan) . There are
exceptional farmers who had remedied their situations. On small fam size, some are
renting( leasing) additional lands and adopt good agricultural practices to increase their
ytields. On the low farm gate prices of their produce, some farmers have learnt how to
process their produce ( cacao beans tablea ). Small farm size is a reality but low
 19

coconut agroecosystems yield can be remedied with the current agricultural technologies
and knowhow. Technologies , systems and practices for increasing yield and improving
quality of farm produce are available.

Road networks and/or infrastructure can also be improved. But farmers should learn
how to increase the value of their raw farm produce by transforming them into
finished/processed products to address spoilage and perishability of fresh fruits and to
increase their prices (ie. Dried cacao beans is sold at P120/kg while tablea is sold at
P400/kg, well packaged chocolate is sold in supermarkets at P2000/kg @85% cacao
content ). A value chain analyses for coconut and the intercrops are discussed below..

4.0. Value Chain Analysis of Coconut and Selected Inter-crops

Shown below (Table 4.0) are the summarized value chain calculations for coconut,
coffee , cacao,mangosteen, mango, durian, banana rubber and the relative increase
income across the value chain .

Table 4.0. Summary Table: Value Chain Calculations coconut, coffee,cacao,mangosteen, mango, durian,
banana,rubber and the relative increase income across the value chain .

Coconut(Copra)* Coffee* Cacao*

Price of Price of Cost to Profit Price of Cost to Profit
Cost to produce Profit margin
Copra/oil* Coffee produce margin Cacao produce margin
In Philippine peso (PhP)
24 8.06 15.94 85 29.74 55.26 85 10.5 74.5
28 24.26 3.74 100 87 13 95 85.9 9.1
77* 60.63 16.7 250 161 89 280 154.89 125.11
88* 79.5 8.5 320 270 50 320 294 26
110* 94.2 15.8 520 351 169 400 344 56
Income per ha Relative % Relative % Relative %
Income Income Income
Incr.Income Incr.Income Incr.Income
(PhP (PhP) (PhP)
copra 18251 100 24867 100 33525 100
oil 22534 126 30717 24 37620 112
oil 33402 186 83940 238 93920 280
oil 44357 247 130005 423 130820 390

Mangosteen Mango Durian

Price of Price of Cost to Profit Price of Cost to Profit
Cost to produce Profit margin
Mangosteen Mango produce margin Durian produce margin
30 7.81 22.19 30 9.07 20.93 6.91 23.09
38 31.67 6.33 38 33.01 4.49 31.1 5.9
45 39.67 5.33 45 38.96 6.04 36.04 5.96
33.85 31.46 34.95
60 46.67 13.33 60 51.1 8.9 42.87 7.13
 20

120 75.11 34.89 110 74.55 35.45 52.37 7.63

Relative % Relative % Relative %
Income Incr. Income Incr. Income Incr.
(PhP) Income (PhP) Income (PhP) Income
79884 100 152789 100 124686 100
102672 128.5263632 185566 121 156870 126
121860 152.546192 229658 150 227232 182
295452 369.8512844 553413 362 268434 215
4.1.The main crop: Coconut value chain analysis
Shown in AppendixTable 4.1 is the detailed coconut value chain calculations. The
values are summarized in Table 4.0. In the 3 towns appraised, the main players or
stakeholders are: farmer/producer, local/village buyer, assembler/processor 1, wholesaler/
processor 2, distributor/retailer and finally the consumer.
Based from the prevailing price of copra at P24/kg and 1,120 kg-copra average
yield per ha and P18.06/kg costs to produce copra, the profit margin per kg copra is
P15.94. This in turn gives P18,251/ha net income. The average farm sizes for
Kidapawan. Makilala, Magsaysay ranged from 1.0 to 1.5 ha only. At an average of 1.5
ha, net income from copra is merely P27,376 per year. Distributed monthly, the income
is only P2,281/mo. Obviously, the coconut farmer has to look for other sources of
income to survive.

Shown in Table 4.1 are the earnings ( profit margin) of the farmer/producer and
the other key players earn when copra is processed into oil and where at the end, the
consumer buys oil at P110/kg-oil. This is summarized below:

Farmer/producer ----------------- P15.94/kg copra

Local/ village buyer ----------------- P3.74/kg copra
Assembler/ processor 1 ----------------- P16.7/kg copra
Assembler/processor 2 -----------------P8.2/kg copra
Distributor/ retailer -----------------P15.8/kg copra

The local/ village buyer pays the farmer/producer at P24/kg ;adds P4.00/ kg
copra when he/she sells it to the assembler/ processor 1. This increase the price of copra
to P28/kg. From the farmer to the assembler /processor1 , process copra into oil and make
P16.7 profit which is P0.76 /kg higher than what the farmer earns. The wholesaler
processor 2, increase further the price of copra derived oil and earns P8.5/kg, then , the
oil is bought by the retailer and sells oil at P110/kg to the consumer earning P15.8/kg
which is almost the same to what the farmer earns.

Options for the farmer to increase income from coconut

1) To do direct marketing of copra - sell it directly to the assembler/ processor
1 instead of selling it to the local/village buyer. This shall add P3.74/kg copra
(P28.00/kg). But he/she may spend more for transport at P1.00/kg .The trader
 21

spent less for transport ( P0.30/kg) he/she uses bigger hauling trucks. The
farmer hires tricycle or jeepney that charges higher per unit weight . But
direct marketing shall add to processor increase his/her yearly income to
about P22,540 or about P1,878/month. But doing direct marketing lessen
his/her time in the field. Yes, but the wife also needs to go to the market to
buy household necessities.
2) To do the processing of copra to oil and selling oil to consumer. This shall
increase their income to as much as P44,357/ha or 66,535.This was initiated
in the past. Many Civil Society Organizations (CSO) put up small oil mills
but these were not sustained due to technical difficulties that they were not
able to fix. Others tried virgin coconut oil (VCO). Not much is being heard
now on VCO production increase.
Schumacer concept “small is beautiful” as applied to small scale oil
processing did not apply well. But failures in the past should not be the
reason to explore it now.
3) To increase net yield per ha, past studies showed that the net yield of
coconuts can be increased up to 100 nuts/tree through fertilizer application
and salt (NaCl). If the farm fully adopts the recommended fertilizer
application (+ NaCl), it may double the net income the farmer from P22,540
to P45,080. And if he/she does direct marketing, its P6,890/ha/yr. the new
total farm income is P22,540 x 2 = P45,080 @1.5 ha average farmsize , the
new income shall be P67,620 or P5,635/ month. It is still very low income/ha.
Good manage sugarcane fields (@ 100 tons/ha x could have a net income of
P98,000/ha/yr (Sandosval, 2018), price of sugar is P1,600/bag.
At the current average yields of 46 nuts/tree and P24/kg copra, a coconut
farmer needs 20 ha to earn P360,000/year or P1,000/month or about 10 ha by
increasing nut yields to about 100 nuts/tree @ 100 coconuts/ha).

Assuming farmers (best light) form cooperative and put up now a

medium size coco oil mill, they will earn what the processors are earning. At
P88/kg oil, and 1.58 kg copra is needed to produce 1 kg oil, the price of copra
is P36.60/kg: But what are costs items….

 Installing oil mill

 Capital (amortization + interest)
 Labor
 Professional management
 Hauling trucks
 Tools & equipment

A detailed feasibility must be done to determine the costs of oil mill &
its operating costs (labor, power, maintenance + repair; costs of money etc.) as
CSO before were not able to sustain a viable operation of small coco-oil mill.

Coconut as a crop
 22

Declared as coconut lands are lands planted to the tree-crop (getting as tall as 50-
100 ft, Laguna Tall Co) even if on the ground there are about 100 trees per ha only.
Calculating the area occupied per tree leads to only 300-400 m2 or approximately 3-4%
of the 10,000 m2 1 .0 ha land. (There are some declared coconut lands which have only
50 although some may have 150 trees per ha; average = 100). This is being pointed out to
explain why yield is low at 4,000 (40-50 nuts/ tree/year x 1000 = 4,000 to 5,000
nuts/ha/year). At 4 nuts per kg – copra, the copra yield is 1,000 kg – 1,250 kg/year. In
Table 4.1, pro-rated profit margin per ha at 1,145 kg-copra/yr is only 17,993.0. To earn
an income of P1,000 per month or P350,000 per year, the farmer should have 45 ha (45
nuts/tree, P24/kg copra). If the farming households will solely depend on coconut, then
they shall be poor at 2.0 (the average farm size redistributed). Doubling the yield at 100
nuts/tree is being obtained on trial/experimental farms,

(1) The farmer needs 20-25 ha to earn P1,000/day (P360,000/year)

(2) Owning 5.0 ha is still not substantial area if income will be obtained from
coconut alone.

Why coconut area reached 3.5 million ha if the income is low and there are many
‘coconut farmers’ now? It’s the nature of coconut “the tree of life” as a crop”.

1) Propagation is simple and easy especially before when soil is fertile in log-
over areas. “Halamang tamad” as the expression goes! After planting, it
requires very minimal attention, except removing the weeds that cling to the
growing seedlings (1-2 years). Why Laguna tall became popular is it’s weed
competitiveness (it is so tall, pilferage is also minimal). The tree bears up to
18 flowers a year. Even at 12 flowers per year, there is maturing bunch of nuts
(4-8 nuts/bunch) every month.

2) The nature of crop became good for absentee – farmer. At 45 days harvesting
interval (the common practice), the owner can just go to the field to supervise/
monitor harvesting (let those nuts falling to the designated care taker, workers
for their household needs!)! At P18,000 per ha, owning 1,000 ha coconut
makes a capital endowed earn millions ; it enticed those who have access to
financing institutions in the early part of 20th century to buy or own 500 ha to
30,000 hectares.

3) Nuts is a versatile fruit (botanically speaking, coconut is a fibrous – one

seeded drupe). But it is loosely called as “fruit, nut, and a seed. The nut can
be processed into copra where oil can be processed. Copra is utilized as food,
source of nutrients including vitamins, minerals. Oil into soap, coconut oil
has many uses, 101 uses or more! Even before (early part of 20th century),
coconut had been recognized as a versatile feedstock for many processes-
transformed “industrial” products. This explains why it became one of our
major export. In 1926, more than 90% of US demand for desiccated coconut
 23

was supplied by the Philippines. In 1905, the Philippines had only 210,000 ha
with 42 million trees; 1960 – 1.60 million ha, 2.283 million ha in 1975, 3.164
Mha in 1995, 3.517 Mha by 2015 with 329.9 M fruit bearing trees; yielding
14.902 billion nuts/year at 45 nuts/tree. In sum, it is a versatile crop (many
uses) easy to manage, can be exported large scale planting is best , became a
very political crop, political leaders emerge/ grow from it.

4) Where it is planted though in most areas, is where other crops (rice, corn,
sugarcane, pineapple) do not thrive or adapt . By origin, it is a coastal plant
which explains why coconuts grow and thrives in coastal areas .Salt (NaCl)
containing chlorine is part of the nutrient required for good nut yields

About 71% of planters own less than 5.0 ha, its low yield and low
income nexus. Should not be a surprise if farmers depend on coconut drupe
aloneThey will be poor!

The pragmatic role of coconut should have been the appreciated earlier
(set aside the role it played as the Philippines as supplier of raw materials for
the Industrial imperial North – U.S.; Europe, Japan . After the Philippines was
ceded by Spain to U.S. , Coconut became the replacement tree for log-over
areas). Reforestation took a backseat in favor of coconut planting in the
terrain where trees (logs for export again to US, Europe, Japan) are cut.

The ecosystem services of coconut must be treasured and fully

recognized as follows:

a) Coconut tree as a gift crop (for food, shade, fuel, the “tree of life”)
b) Coconut trees enhances microclimate for the inter- crops, and
sequesters carbon in the stem for 50- 100 years
c) Coconut drupe should be treated as a “bonus” crop to the farmers
as it keeps fruiting for the next 60 years, starting to bear 4-5 years
after planting (3 years for new dwarf – hybrids at present).

As pointed out earlier, even if the smallhold farmers shall go to the end process –
milling and retailing, the income per ha is relatively low at P44,357/ha (2.47 times
increase our copra @ P18,000/ha). Doubling the yield is asking the farmers to do the
impossible in those terrain that are hardly accessible even through horseback riding
(slope greater than 45 degrees) and traversing 7 rivers or more .

In coconut agroecosystems, which is easier (sustainable) to do ? a) Increase the

yield of coconut through fertilizer application or b) increase the coconut equivalent yield
(CEY) through intercropping fruit trees and vegetables? On the first, increasing farmers
income by increasing nut yield through fertilizer application. The Basic Principle!
Nutrientin = Nutrientout
 24

There is no way to increasing crop yield without increasing crop nutrient uptake.
But where will nutrients come from? Internal or external? External nutrient input is
associated with purchased chemical fertilizer. Chemical fertilizing while they provide
nutrients, they lead to many unecological effects. On the economic side, they make the
farmers dependent. Many lowland farmers (corn, sugarcane, rice) believe now that they
can not grow crops anymore without using them (“agricultural addiction to chemicals”
crept in). Applying external chemical inputs may be justified in favorable coco-areas
(accessible, flatlands) but they are not many!

From agroecological point of view, there is no need to purchase chemical

fertilizer input. The coconut agroecosystem, if grown to coconut alone or even
intercropped with fruit trees (the case of Rogelio Genosas, Annex A) can be self-
sufficient in nutrients. When decomposed, coconut fronds , coconut husks and many
weed biomass if placed as mulch near the base of coconut could provide or more than
offset the nutrients absorbed and taken out through the dehusked drupe finally dried into
copra. In the process of decomposition, bacteria fixes nitrogen, solubilize phosphorus,
synthesize plant growth promoting hormones and pytoalexins, and microbial nano
elicitors that confer resistance to crops against pest infestation.

Biological nitrogen fixation (both symbiotic and agrobiotic) can be harnessed in

coconut agro-ecosystem. Planting around the trunk of coconut (1.0 -1.5 around)
Flemengia or Gliricidia, and branches are periodically cut and placed around the trunk
increase nut yields. Only seeds, labor in cutting are the costs. Around the “fenced” coco-
trunk put all the cocohusks, trashes and weeds biomass. External input (i.e. chemical
fertilizer) free or organic coconut production harvesting 100 nuts per tree could be
achieved.

The second is increasing the coconut equivalent yield (CEY) through

intercropping fruit trees and vegetables. This is the more pragmatic, practical, doable
approach : to utilize the 96-97% area unoccupied by the tree. There is less light
transmission but other crops (understorey species) tolerate or require some shade (copra,
coffee). This is being done by majority of coconut farmers : planting intercrops is
discussed in section 4.2 below.

4.2.Intercrops under coconut

A value chain analysis for coffee, cacao, rubber, banana are covered in this
section.

4.2.1.Coffee

Coffee Production
 25

The detailed value chain calculations for coffee are shown in Appendix Table
4.2.1. The calculations considered the following:

PhP 85.00/kg - prevailing price of dried bean

450 kg/ ha - average yield of dried beans/ha (cy. Robusta)
As in coconut value chain calculations, the players/ stakeholders start from the
farmer/producer  local/ village buyer  assembler processor 1  wholesaler/
processor 2 retailer  end user.

At the farmer level, the costs to produce a kilo of coffee is about P29.74 (dried
bean). With the prevailing price of PhP 85.00/kg, the profit margin per kg is PhP 55.26
and 450 kg/ha coffee bean yield, the net income per ha is about PhP 24,867.00.

The local/ village buyer adds P15/kg, when he/she sells to the assembler/
processor 1 who roasts and grinds the dried beans. Thus, the local/ village buyer earns
P13/kg after deducting handling and transporting costs. The P13/kg is 23.5% of what the
farmer earns per kg. This is indicative of the additional income if farmer/ producer
directly sells dried coffee beans to the assembler/ processor. At P13/kg x 450 kg/ha, the
additional income amounts to P5,850 plus PhP 24,867.00= PhP30717( a 24% increase in
income .)

The assembler/ processor: 1) sells it to the wholesaler at P205/kg and earns

P80/kg. By roasting and grinding (at 90% grinding recovery). The assembler/ processor
earns 45% more (PhP 24.74) than what the farmer earns per kg. The ground coffee beans
bought by the wholesaler/ processor is sold to the retailer at P288/kg and earns P45/kg
which is about 80% (P55.26) of what the farmer earns.

The retailer sells it at P520/kg and have a profit margin of P169/kg which is 3
times more than what the farmer earns. The retailer just needs to sells 147 kg to equal
what the farmer earns who did back breaking, sun-bleaching job of weeding, de-
branching, harvesting, drying and cleaning the coffee beans.

In brief, coffee value increased from P85/kg to P520/kg as it moved from the farm
gate to the end user/ consumer coffee drinker. The value increase 6.11 times. The farmer
only earns (gross) 16% of the consumer price of ground coffee beans.
 26

There are at least 2 options for the coffee farmer. One is to stop all along planting
coffee to end the injustice and sufferings. This is what many coffee farmers did which
explains why growers had decreased in numbers during the past years. They were
discouraged. Moreover, the inroad of coffee analogues (3 in 1 and many other soluble
coffe preparations ,and they come in many brands/ tradenames), had diminished the
share of ground coffee beans for brewing or kapeng barako. In Davao and Cotabato, it
was hard to find ordinary store selling kapeng barako. All they have are the coffee
analogues sold in sachet.

Two, the better and more rewarding option is for them to roast and grind dried
beans (Note No.1) and find a way to directly market the ground coffee beans in different
ways:
1) whole sale at P250 – P300/kg , gross sale: P112,500 – P135,000/ha
2) retail at P450 – P500, gross sale: P202,500 – P225,000/ha

Retailing is done in various ways. Packing the ground beans in various weights
:100 grams, 250 grams, 500 grams or 1 kg. Prices will differ to account for the cost of
packaging (materials & labor). Just like production at the farm level which has many
details, marketing has equally if not more challenging details. It is a saying “the devil is
in the detail!”

Or, ground coffee beans can be packed into sachet “Coffee tea bag,” where 1 kg
of ground coffee may produce up to 160-200 bags sold at P5/bag the price shall P800-
1,000/kg. Gross sale shall be P350,000 – P450,000/ ha.

The final option is opening store to sell coffee among coffee drinkers. Starbucks
is a global phenomenon. It is a billion dollar business selling coffee which made the
owners billionaire without planting coffee. ( 1 kg coffee can brew 150 mugs @
P120/mug = P180,000/kg ; 1.0 ha coffee farm gross sale is P8.1 million pesos).

The vision is not to compete with Starbucks, price wise, but to offer option to
those who can not afford Starbucks coffee at P120/mug. Farmers can earn P3,000/kg –
ground coffee (@P20/mug x 150 mugs/kg). This translate to P1.35 million gross sale per
ha. Even selling it at P10/mug , it translates to P0.75 million per ha gross sale.

Selling coffee in mug is enriching, but selling raw coffee dried beans is
impoverishing!

The challenge is to provide support to coffee farmers (capital to procure the

machines for roasting, grinding) , capability building (training on roasting/ grinding) to
obtain quality coffee and link to market.

This shall end the injustice unintentionally being done to coffee farmers by
making them grow coffee and buy from them at a very cheap price the coffee bean they
produce. “Justice delayed is justice denied” we have been saying all along.
 27

The challenge for the coffee farmers does not end there. The yield considered in
the calculations was only 450 kg/ha. In Cavite, Philippines, coffee farmers obtain an
average yield of 750 kg (67% higher) .By adopting good agricultural practice for coffee
production as described below could increase yield from 450 kg to more than 1.0 ton per
ha or 2.2 times higher yields.
Procedure for coffee upgrading technique From the highly productive coffee trees, collect
vertical shoots to become the source of scion
Evaluate the coffee farm during the pre- to be grafted into the selected stems.
harvest stage and identify the best 50 trees. Continue the process until all low producing
Further, identify the coffee plants which are not trees are rejuvenated and grafted with better
bearing coffee cherries or are bearing small coffee scions.
amount of fruits.
Tag low producing trees and cut 30 cms from Over a period of 2-3 years this procedure can
the ground. be done to an existing coffee farm with an
Allow three selected shoots to grow to become annual output of 450 kg dried coffee beans per
new stems. hectare per year. 800-1,000 kg production can
be attained after.

There are increasing number of coffee drinkers as they realize that natural coffee
can not be compared with coffee analogues. (There are many reasons why drinking
coffee may be healthier; https://www.onemedical.com/blog/newsworthy/10-healthy-
reasons-to-drink-coffee-2/).

Evidently, coffee value chain should be farmer-driven rather than coffee store/
processor-driven. This shall differentiate the new millennium (21st century) to the past
several millenniums. Is this not transferring imperial coffee store (i.e. Starbucks) to
imperial farmers. What was considered in the VC calculations, per coffee cup is only P20
much less than the P120/cup from the imperial store!

The value chain analysis provides clear basis why coffee farmers’ interest in
growing coffee sold as coffee bean had declined. This is due to the low income
(P24,867/ha). But the prospects of earning 4.23 times higher (P130,000) if the coffee
beans are roasted, ground, packed and retailed even at 450 kg per ha coffee bean only.
Taking good care of them could increase yield up to 1,000 kg/ha. It is coffee that can
make the farmer a millionaire.. Who does not want to be a millionaire ?

4.2.2.Cacao

Cacao Production

Available data on cacao production and yield in the 3 study areas are shown in
the table below:
 28

Details of Cacao value chain calculations are shown in Appendix Table 4.2.2.
Values considered in the calculations are as follows: P120/kg dried cacao beans, 500
kg/ha dried cacao bean yields per ha.The profit margin per kg enjoyed by stakeholder are
summarized below:

Profit margin
(PhP)/Kg
Farmer Producer 74.50
Local/village buyer 9.10
Assembler/ processor 1 125.11
Wholesaler/ processor 26.0
Retailer 56.0

The accumulated profit margin after dried cacao bean was bought by the local/
village buyer summed up to P9.1/kg which was 22.3% higher than what the farmer gets
at PhP 74.50/kg. The assembler/ processor 1 earns the highest at PhP125.11/kg (1.68 x
the farmer).

When the end user/consumer buys tablea, the price is already P400/kg. The cacao
farmer is only getting 30% of the gross revenue for the efforts.

First question, is P120/kg dried cacao beans a reasonable or just price? Consider
the following works/ process

 1 kg dried beans comes from 30-40 fruits

 To harvest fruits free from insect bites, they should be wrapped/ bagged @
250 fruit per person per day
 Upon harvest, fruits are hauled in shade, chopped to get the seeds from pods
 Seeds are fermented for 7days
 Seeds are washed thoroughly to remove the pulp ( Notes No.2)
 Clean – washed seeds are dried. It’s good if the farmer has all-weather drier.
Sun-drying can be done but it could be laborious to save seeds getting wet
when it rains
 29

Agroecology wise, cacao is one of the best intercrops under coconut. It produces
a lot of leaves, releasing much nutrients upon decomposition. Bacteria are fixing
nitrogen while the beans are decomposing, synthesizing plant growth promoting
hormones, solubilizing phosphorus making it available for crop uptake: many insects are
preying the decomposing leaves which serves as feeds for native chicken that defecate
donating nutrients to the crop. Giving eggs and high protein - delectable meat to the
farmer household and for sale.

Monetary wise, ( cacao is one of the best intercrops under coconut as stated
above) if the farmer could transform the process of cacao production and processing-
cum-marketing ( the value chain calculations).

What is shown in the calculations in grinding cacao beans (P120/kg), and

moulding them into tablea , the price shoots up to P400/kg. Ground cacao beans can
also be processed into chocolate. By weight, cacao is 70-80% of chocolate. Chocolate
are priced from : P1,200 – P2,000/kg @ 70% cacao, the value of cacao in the chocolate
ranged from P840-P1,600/kg. Cacao  chocolate increases its value 7-13 times.

Just like coffee, cacao growers need not be poor or impoverished if they can
convert/ process their cacao beans into chocolate (solid or liquid).

At P840/kg chocolate x 500kg/ha = P420,000/ha

1,600/ kg chocolate x 500kg/ha = P800,000/ha

Getting 20% of the value added, farmers income is P80,000 – P160,000/ha (2.3x
– 4.32 x increase in income relative to P37,000/ha raw dried, unprocessed beans.

Likewise, cacao yield of 500 kg/ha can still be increased up to 1,000 kg/ha
following good cacao growing/ rearing practice (Annex A).

4.2.3.Mangosteen

Mangosteen Production in the 3 study areas is shown below :

Mangosteen value chain calculations (VCC) are shown. Appendix Table 4.2.3
and summarized in Table 4.2.7. Again, it is the retailer that earned the most (profit
 30

margin of P34.89/kg when retailed at P120/kg). The profit margin of the farmer is only
P22.19/kg after deducting the average costs to produce at P7.81/kg. Farm gate price is
P30/kg (25% of P120/kg). How did it happen? It is summarized below.

The local buyer buys at P30/kg to the farmer/grower. In turn, the local buyer sells
it at P38/kg to the assembler, earning P6.33/kg after deducting transport and handling
costs. The assembler sells it P45/kg to the wholesaler/ processor. In turn, sells it at
P50/kg to the retailer. The retailer double the price at P120/kg when retailing to buyers.
These are shown below:

Earnings/ kg (PhP)
Farmer/ producer 22.19
Local village buyer 6.33
Assembler 5.33
Wholesaler/ processor 13.33
Retailer 34.89

Options for mangosteen farmer/growers

Option 1. Instead of selling mangosteen to the local village buyer, he/she sells
mangosteen directly to the assembler and gain additional sale of P11.68/kg. This
increase his/her income from P79,884/ha/yr to as much as P121,860/ha/yr which
corresponds to 153% increase in farm income.

This assumes that (1) the farmer did not pre-sell his/her produce to the
local/village buyer or to the assembler who might have kept an arrangement to the local
buyer by providing capital for the advance payment to the farmers, (2) the farmer
known how to connect to the wholesaler/ processor. Supporters (CSO) and LGU staff
may want to facilitate the connections or transaction to the wholesaler.

Option 2. The farmer/grower sells their produce directly to the consumer. They
should train/hire someone who could retail their produce. In many places , roads side
selling of fruits is being done. The farmers shall organize (fruit grower association –
cum- cooperative) to handle marketing of their produce. Their children of legal age can
be trained to do the direct selling. Marketing costs incurred starting from the local/
village buyer to retailer amounts to P40/kg. This is the starting marketing costs, and it
can be reduced .The retail price @ P120 can be reduced to P100/kg to sell faster.

4.2.4.Mango

Mango thrives well in the town of Magsaysay, Davao del Sur as explained earlier.
It is a “gift” crop in this town. Fruit tree yield (mango fruits) is relatively high (7.3
tons/ha , the average yield). Also, mango farmers do not gain benefit adequately from
 31

their mangoes. While retail price is high (P110/kg), farm gate price is low at P30/kg (only
27% of the retail price).The ones earning most are the retailers at P35.45/kg. They earn
P14.52/kg more (70%) than the farmers, as the calculation showed (Appendix Table
4.2.4).

Why retailers have to sell fruits higher could be attributed to the following
reasons: fruit decays is quick. To offset fruit loss due to decay (infestation) is to sell
high.

As in mangosteen, the options is for the farmers to sell their mangoes directly to
consumers or fruit buyer. Surely, they will also encounter fruit decay problem.

Preventing infestation and delayed ripening technology available. (Use of 1-

MCEP that prevents ethylene excretion in ripening fruits, and soaking seeds to
fungicides). But these are dangerous and health hazardous chemicals. We do not
recommend them. Instead, what we are recommending is Option 2.Local buyers,
assemblers, retailers are there to make money. Raising the price of the product is part of
marketing a livelihood or enterprise on their part. So long as consumers buy at the price
they set, they will explore that price level.

Options for mango growers is centered on increasing the yield of mangoes. As

explained earlier, despite climate change, the town of Magsaysay is relatively a better
agroenvironment for mango compared with Guimaras island and Zambales or Central/
Northern Luzon. This is because Magsaysay is typhoon free although heavy rains occur.
But heavy rains is not as damaging as super typhoons (150-200 kph).

Increasing mango yield (15,000 kg/ha) will fully benefit the farmers if mango
fruit processing will be done. Processed products may include a) dried mangoes, b)
mango fruit juice concentrate. 1 kg dried mangoes require 3 kg fresh mango. Price wise;
from P30/kg, the material costs is P90 to process 1 kg dried mango. Dried mango sells at
P500/kg or more. This means fresh mango price increase up to P167/kg less 30% costs,
the net price of mango is P116/kg. But the risks of fruit decay are overcome through
processing. Processing mango fruit juice concentrate is another processing option.
Mango juice concentrate is typically available at 64.0 - 66.0°Brix. The juice concentrate
is processed to remove a defined proportion of the natural water content found in the fruit
to produce a concentrated product which can greatly reduce the costs required for
transportation . But they require higher level of skills and optimization process.
Technology for processing mangoes into juice concentrate is available
(http://lib.icimod.org/record/13692/files/1975.pdf). A detailed feasibility study is
necessary if a mango processing plant will be established in Magsaysay, Davao del Sur.

The mango farmers directly selling or retailing their mangoes shall enable
them to earn about P553,413/ha at 7300 kg/ha fruit yield. This is based on the
consumption that there are no fruit loss due to fruit decay.
 32

But processing them to dried fruits shall increase their net revenues to as much as
P846,800/ha. Increasing the yield to 15,000 kg/ha, shall increase their revenue to as
much as P1.74 million per ha. The 30-46,000 net revanues from coconut (copra are still
there).

It is obvious that mango is the fruit crop to grow with coconuts in Magsaysay.
The high fruit yield level is yet to be optimized and stabilized.

4.2.5.Durian

Davao is noted for durian. Where it was grown earlier, durian grows well also in
Kidapawan City and Makilala town of North Cotabato. Per our study visit, durian is
sparsely grown. Since it is marketed as fresh fruits and it passes many channels, durian
farmer growers do not earn as much as those who process durian into various products.

Durian fruit is bought at P30/kg from the farmers less costs of production at
P6.91/kg, they net P23.09/kg or about P124,686/ha (Appendix Table 4.2.5). But if they
will directly market the fruit or retail it at P60/kg and deducting the costs (P10.29/kg),
they shall increase their net above farm gate at P49.71/kg or earn P268,434/ha, a 2.15
times increase compared to the P124,686/ha if they sell durian to the local/village buyer
selling it only at P30/kg. There are numerous processed products in the market where
durian is used as the main material or simply a flavoring material.

The P60/kg is the average price we obtained, but durian fruit price in Davao could
go as high as P120/kg. It remains to be a fruit tree crop to be grown under coconuts.

4.2 .6 .Banana is one of the most important fruit crops in the Philippines both for
domestic and export markets. It is grown in all parts of the country with the export
banana grown mostly in southern Philippines.Itis also one of the most popular intercrop
under coconut. About 446,371 ha is the reported area grown to bananas with a total
production of 9.01 million metric tons valued at about 16 billion pesos (BAS, 2010). It is
no surprise that most of these areas are found also in coconut areas .More than 75% of
the banana producers are small-scale farmers engaged in local or domestic production.
The three major banana cultivars ( Fig.2 below) are Saba (BBB) a cooking banana for
domestic and export market (banana chips), followed by Cavendish banana (AAA)
dessert banana mainly for export, and Lakatan (AA) dessert banana grown for domestic
market and as novelty banana for the export market. Of the total banana production of the
country, Saba cultivar contributes about 41.5%, Cavendish 17.4% and Lakatan 12.6%.
Lakatan is the most popular dessert banana grown for domestic market with a total area
of production of about 57,000 hectares and production volume of 0.92 million metric tons
 33

(BAS, 2010). The area planted to Lakatan has increased by more than 3,000 has in the
last three years (BAS, 2010). Major banana cultivars grown in the Philippines Pisang
Raja (AAB) Pisang Tanduk (AAB) Pisang Relong (AAB) Saba (cooking banana)
Cavendish (dessert banana) Lakatan (dessert banana) .

In our study, we used Lakatan ( as an intercrop under coconuts) for value chain
calculations(VCC) as shown in Appendix Table 4.2.6.These are summarized below :

Banana alone Coco+banana % Incr.

PhP/ha PhP/ha PhP/ha

1)275,760 298294 1634

2)312,960 346362 1898

3)360 ,960 405317 2221

1. The income earned by the farmer by selling bananas right there in the farm.
He/she earnsPhP 275 ,760 additional income from coconut or 16.34 times increase
income.

2. If he/she decides to market directly to wholesaler in Metro Manila, he/she earns

additional income of PhP 37, 200 or a total of PhP 312,960 ha or 18.98 times increase
income.

3. Retailing bananas in Metro Manila shall give them additional income of PhP 32,640

In short, if the farmer and his family so decide to pass through all the market chain of
Lakatan bananas, they will be earning additional income of PhP 69,640 ( 1ha
=12,000kg bananas).

Alone, it may not be practical for the farmer to retail bananas in Metro Manila. If they
could do it in group or through their COOp, the added income which means
additional costs in renting stalls and time lost as they will be leaving the farm
should be estimated.
 34

Fig.2.Different varieties of bananas grown in the Philippines

Lakatan Banana

Saba banana

Cavendish banana

4.2.7.Rubber
 35

The value chain calculations for rubber are shown in Appendix Table 4.2.7.The
price of rubber cup lump is low at P24 per kg. The low price of cup lump had been
explained earlier. To recall, it is simply attributed to over supply of rubber which was
triggered by over planting rubber trees in the past of (year 2000 and above). Even if the
price of cup lump is low, still it is a good crop grown with coconut. The reason is
simple: it is giving rubber latex continuously and harvesting is done every 15 days. It
provides money inflow for paying labor and buying household necessities. There are 2
lean months (wintering months) but some amount of latex can still be harvested.
Despite the unattractive revenues from rubber latex, nurturing the tree-crop is
necessary. The local domestic demand for rubber is huge. The country has 4.0 million 4
– wheel vehicles and 6.0 million motorbike plus pedaled bikes. There are many
manufactured products using rubber. From planting, care and latex extraction up to
processing, many jobs are generated. Not growing rubber implies importation which will
use the country’ dollar reserves. It is positive to the national economy due to employment
generation and saving dollar to be used for importation. Even at low price , rubber still
provide net income, though, small to the farmers. .
For farmers in North Cotabato it is worth studying to complete the rubber value
chain. As an example, we did a VCC up to the manufacture of tire where the rubber
value of rubber cup lump increases 13.3 times. Net of all costs in the value chain, the net
added value is P 130/kg ( P 319 – P 189). Per ha net revenue is P 64,900 (P 130/kg x 500
kg rubber latex/ha ).
Obviously, the prospect is to increase latex yield. In pure rubber plantation, the
obtainable yield can be as high as 2.5 tons/ha. As an intercrop to rubber, half of the
monoculture high yield should be obtainable, which is about 1.25 tons/ha .This shall
double the income of the farmer.
The suggestion is to process rubber latex on site. At feasibility study is necessary
to find out the optimum factory capacity, and coconut areas to be intercropped with
rubber. The ultimate goal and outcome is to locally manufacture rubber tires. There are
local manufacturer making rubberized products (rubber slippers, shoes/foot wear, gloves,
boots, etc.)

Value Chain Calculation Limitations . The high income from intercrops earned even at
the farm gate is due to the assumed yield: 500 kg bean for cacao, 12,000 kg/ha for
banana (Lakatan), 7,300 kg/ha mango (Table 4.7). Yields are lower in many farms due to
non-adoption of good agricultural practice associated with the crop as stated earlier, and
incidence of heavy pests infestation in mangoes.
 36

5.0 Comparative profitability of fruit trees grown as an inter-crop under coconut

for smallhold farmers in Southern Mindanao.

For the purpose of determining the best intercrop combination (per results of value
chain calculations), we calculated the revenues from different coconut intercrop
combinations i.e 1) coconut + coffee; 2) coconut + cacao; 3) coconut + mangosteen; 4)
coconut + mango; 5) coconut + durian; 6) coconut + rubber (Table 5.1).
The highest revenue yielding intercrop combination is coco + banana ,coconut
+ mango followed by coconut + mangosteen, coconut + durian, coconut + cacao, coconut
coffee. The lowest revenue yielding combination is coconut + rubber.
As a whole , intercropping fruit trees increase the net revenue several times using
monoculture coco-copra revenue as base revenue @P 18,251/ha even at the farm gate as
summarized below:
coco + banana P 229251 12.56 X increase in revenue
coco + mango P 171,040 , 9.37X increase in revenue
coco + durian  P 142,937 ,  7.83X increase in revenue
coco + mangosteen  P 98,135 5.34X increase in revenue
coco + cacao P 51,776 2.83X increase in revenue
coco + coffee P 43,118 - 2.36X increase in revenue
 37

A progressive increase in income occur as the farmers plant X intercrop and as the
product move accross the value chain. Revenues multiply 10 times (coffee, cacao) 22
times in coco+ bananas and as high as 32 times in coco + mango.
However, it is imprecise to declare one crop is profitable over the others. Below
are the comparative features of comparable crops.

a. Cacao dried beans sells higher @ P120/kg than coffee bean at P85/kg. Bench
marking Starbucks coffee , earnings could go as high as P8.4 million worth of coffee
per ha. Cacao made into chocolate (too many brands, tradenames are available)
could yield million (more than P2 million ha).
b. Between durian and mangosteen, comparison is also difficult. Farm gate sales of
mangosteen and/or durian are relatively low. But retailing them, income increases
2.15 times (durian) to 3.5 times .For mangosteen , leaves to fruit peelings could be
processed . Even if no income projections were made, it is reasonable to believe it
can be done and substantial income could be earned (R/D for this is necessary).
Those who is on the know keep it as “secret” for c.b.i..

Table 5.1. Increase in income as the farmers plant X intercrop and the product move across the value chain

% %
Coconut Coconut
incr. Incr.

Income Cocon Income

Coconut Coffee +coffee Cacao +Cacao
ut

PhP/ha PhP/ha
%
Farmer sells to
1 18251 24867 43118 236 18251 33525 51776 284
local buyer
Farmer sells to
2 22534 30717 53251 292 22534 37620 60154 330
Processor1
Farmer -->
3 33402 83940 117342 643 33402 93920 127322 698
processor2
4 Farmer retail 44357 130005 174362 955 44357 130820 175177 960
Coco+mang % Cocon Coco+ma %
Coconut Mangosteen Mango
osteen Incr. ut ngo Incr.
PhP/ha PhP/ha Income
Income
1 Farmer sells 18251 79884 98135 538 18251 152789 171040 937
 38

Farmer sells
2 direclty 22534 102672 125206 686 22534 185566 208100 1140
assembler
Farmer -->
3 33402 121860 155262 851 33402 229658 263060 1441
whole saler
4 Farmer retail 44357 295452 339809 1862 44357 553413 597770 3275
Coco+duria % Cocon Coco+ban %
Coconut Durian Banana
n Incr. ut ana Incr.
PhP/ha PhP/ha Income
Income
1 Farmer sells 18251 124686 142937 783 18251 211000 229251 1256

Farmer sells
2 direclty 22534 156870 179404 983 22534 275760 298294 1634
assembler
Farmer --> 33402 312960 346362 1898
3 33402 227232 260634 1428
whole saler
4 Farmer retail 44357 268434 312791 1714 44357 360960 405317 2221

c. Processed durian candies, cakes and pastries abound in the market. Fortunately,
even ripe fruits for durian and mangosteen alone could provide commendable
income to farmers/ growers provided:
 They plant the right variety adopted to their soil
 Variety that yields quality fruits preferred by buyers (ripe fruits for consumption
and for processing).
d. Rubber is also a good intercrop or companion crop in coconut agroecosystems.
Profit wise, it is now the lowest due to the low price of cup lump (P21-24/kg). When
rubber price shoot up as high as P120/kg , many planted rubber all over the world.
As discussed earlier, only one (1) rubber company stayed in the country. The rest re-
established their factories elsewhere. But we need to grow rubber to supply the local
demand. There are many products that require rubber. Furthermore, we have now
close to 4 million 4- wheel vehicles and around 6 million motorbikes which all use
rubber tires. The recommendation is also to do detailed feasibility study for the
construction or rubber – factory to be processed into various rubberized products.
Using high yield rubber varieties and technologies, rubber yields could go as high as
2,000kg/ha from the current average yield of 450 kg/ha as used in the VCC.
e. Banana. Tissue-culture technology for producing plantlets of banana is available in
the area. Per our case study farmer, banana as intercrop to coconut can provide good
income. It is high capital requiring starting from tissue cultured - seedlings @
P20=25/piece.
Planting-harvesting must be linked to the buyers to avoid over ripening
(wastage) hence, reduced income. Only ripened fruits appeared economically viable.
 39

Smallhold farmers engaging into processing should be studied. What are the
processed products (banana paste is popular!).
f. Mango (Caravao cv.) is exclusive for Magsaysay due to its unique microclimate
favorable for mangoes. As a whole carabao mango production in Magsaysay town is
good due to its favorable microclimate and lesser climatic/ weather or typhoon-risks
relative to Luzon and Visayan areas. Mango yields could be as high as 10 tons/ha for
well managed crop. As usual, when yields are high, price of mango fruits is low. The
high yield (10,000 kg/ha) and high income from mangoes in Magsaysay is threatened not
by climatic extremes (super typhoons,heavy rains). While coco+ mangoes showed the
highest profitability across stages of value chain , it is the most complex to handle .
This is can be explained in the following way: Just like Guimaras and Luzon grown
carabao mangoes, off-season mango fruiting is being practiced by mango growers in
Magsaysay. Off-season mango production led to heavy spraying of pesticides –
insecticides and fungicides, which in turn, led to pest resistance forcing farmers to mix 3
– 5 pesticides cocktail . Complex reactions of pesticides may lead to higher toxicity .
But mixing is also leading to “under dosing” since only small amount of each pesticides
is done. Interviewing farmers on the declining effectivity of pesticides can be due to
underdosing or insects resistance to pesticides of the targeted pests. But pesticides
spraying reaching 26 times by all standards is over spraying (almost every other day)
which will lead to pesticide resistance.
The challenge is how to sustain high yield that will not lead to pesticide
overdosing and pesticides complexes. The suggestions forwarded (Medina 2018) is to
apply “habitat” management to approximate balance of nature. If there are damaging
pests, there are friendly pests (parasites, predators in the food web). The other option is
making the environment unfavorable to the pests. Two options can be done together :

1.Identify the vegetation ie.weeds –plant species that are serving as food/habitat
of the predators, and the parasites. This may lead to a) widened spacing to allow light
transmission below mango canopies (avoid overlapping of branches/twigs/leaves) to
allow weeds to grow , b) the same spacing but there must be periodic pruning of
branches which leads to 2 benefits, namely: 3) photosynthates used by big branches for
maintenance serving only as “useless metabolic sinks” will now be used for fruit
formation and c) less, branches twigs would allow light transmission , in turn, makes the
environment unfavorable to the pests .
2. Follow the natural mango fruiting that will stop the use of flower inducer (in
Magsaysay, they use CaNo3 instead of KNO3). Off-season mango flower induction leads
to flowering/fruiting time (high moisture/rains, cloudy/high relative humidity), the
environmental conditions favorable to the pests (insects – hoppers, fungi – anthracnose)
Fortunately, the mango good agricultural practices (GAP) are known.

5.0 Achieving the benefits accruing across the “value chain”

 40

But how do we help farmers achieve the benefits accruing across the “value
chain” i.e. selling coffee, chocolate. The expression “It is easier said than done” the
response to this expression is… all easy approaches are done! What remains are the
challenging ones. It will spell the differences between the past (20th century) to the
present – the 21st century. The 20th century supply chain approach where the farmers are
simply the producer/ supplier of raw materials (feedstock) for the processor/
manufacturer of finished/ processed high value products should now metamorphose into
“value chain approach.” In agricultural crop production, value chain approach is putting
under the control and ownerships of the farmer/ producers the full interrelated –
interactive – interdependent process in finishing the products so any added value that
accrue through the process shall be theirs.

The central feature of value chain approach is achieving scale. Scale of operations
could be done by forming farmers’ cooperative. This is shown in the Figure 1 .
Scale of operations is necessary as it involves processing and processing requires
tools, equipment for processing, technologies for the following:

a) Coffee roasting – grinding – packing devices

b) Cacao drying – grinding- to making tablea – chocolate
c) link to the market etc (logistics).

Figure 1. The central feature of value chain approach

Coconut,Cacao Credit
, coffee Institution
Farmer
(Land Bank

Academe or Farmers’
Research
InstItution Cooperative

Government
Agencies Crop Insurance

(Agriculture,
Trade

Increasing Farmers’ Income

 41

Implementing value chain approach requires many service providers/ group

a) Capital . Credit institutions (banks) must (1) grant reasonable, and affordable
interest rates. In related studies ,we have analyzed that above 6% interest rate,
the interest expense alone will eat up the added profit due to increase yield
which would otherwise be enjoyed by the farmers. (2) Due to risks, credit
must be insured (crop insurance that pays the crop value and not simply the
credit value.
b) Technology . farmers had been plating crops for 2, 3, 4 decades of their life
(which also present difficulties in changing their current practices aimed at
improving the outcome- increase yield . If they are to engage in processing,
there must be adequate and sustained supply of raw material (coffee/ cacao
beans, mangosteen, durian jackfruit, guyabano). Organizing farmers into
COOPs to promote value chain approach should equally emphasize the need
to produce quality raw materials (feedstock) to feed the factory – machines.
Production technology improvement should go hand-in-hand with processing
technology set up . R4D institutions( academe, S/T or R& D institutions
should help/assist the farmers.

Who are the technology providers?

They vary from crop-to-crop. What if there are already existing factories in the
local/ village or town? Is it still logical/ practical for farmers to organize and dream to
construct their own processing factory? A pre-feasibility study should be initiated before
a detailed feasibility be conducted.

In the 3 study sties, there are no coffee, cacao, durian factory. The pre-feasibility
study should determine/ quantify 1. The current yield levels  the total quantity being
produced for coffee, cacao, durian etc. 2. If a factory will be built, how much yield more
(feedtock) are necessary to operate profitably the factory. This will give them data how
much more to produce (increase yield), expanding the area to be planted or both.

There are various technology know-how and skills needed that the farmers do not
have on top of the capital required! (The coconut levy is about P72 billion!)

This is a chicken – and – egg issue! Who will do the pre-FS without finance?
Will there be volunteer scientists/ technologists/ engineers/ economists working as a team
to do the Pre-FS and detailed FS later on?

6.0 Synthesis/ conclusion

 42

1. Coconuts should be seen as gift or bonus crop providing several ecosystems services
,reliable and continuous source of income (3 months harvesting cycle which can be
shortened to 1.5 months).
2. Copra price at P21-24/kg is a price influenced by abundant supply of plant oil derived
from palm oil, soybean, corn, and canola plus oil from animals. Its price is low for
the farmers selling copra.
3. Low income from coconut attributed to low price of copra is incomplete or
inaccurate. It is mainly due to low yield of copra/ha which in turn is due to:
a) Low population of coconuts/ ha (100-150 plants/ha) and low nut yields (46 nuts/
tree).
b) Increasing nut yield (doubling copra yields 1 kg copra = 3-4 nuts) will not make
the farmer earn income above poverty threshold (P360,000/ha) at 1.5 ha average
farm size. At least 20 ha is necessary for coconut monoculture (at 46 nuts/tree
and 100 trees/ha). Doubling the yields would still require 10 hectares.
Technologies to increase yield is available. However, it can be reasonably
applied in favorable / accessible areas (good roads) and not in slopes 45 degrees
or more) and hardly accessible.
4. Coconut is a microclimate modifier giving “shading effect” favorable to understorey
fruit trees namely: coffee, cacao, mangosteen, durian, banana and even rubber trees.
Even at farm gate, the added income from these fruit trees can increase income from
copra 6-10 times more. Coconut is there to provide food and as condiment for
various food preparations. Coconut, the tree of life, is a valuable gift that must be
treasured. It should not be treated as a major sources of revenues in coconut farm
agroecosystems.
5. For farmers to gain the major benefits from their money, talent and efforts poured in
growing fruit trees, the supply chain approach – the farmers merely supply raw
materials to the factories should now metamorphose into value chain approach – the
farmers, through their joint efforts through their association turned cooperatives,
processed their raw products (coffee/cacao beans, durian, mango fruits) into high
value priced processed finished products. But the capital, tools/equipment, logistics,
technology and local/farmers’ capability must be provided in addition to enabling
environment ( infrastructure, supportive policies etc.)

References

ADB. 1997. The Bank’s Policy on Fisheries. Manila.

Bureau of Plant Industry Durian Production Guide

https://www.bpi.da.gov.ph/.../Production_guide/.../DURIAN%20PRODUCTION%20GUIDE%20u.

City of Kidapawan High Value Crops Development Program. Statistics (2017)

DFID (2000): Sustainable Livelihoods Guidance Sheets. Department for International

Development. http://www.livelihoods.org/info/info_guidancesheets.html
 43

Castillo, E. 2013. The role of cooperativism across value chain in enhancing ARBs farm
productivity and Income. Discussed during the National Conference Climate Smart
Agriculture held at ATI, Q.C. Philippines.

CIA. 2006. Philippines. World Factbook. 11 July 2006, Accessed 27 September 2006.
https://www.cia.gov/library/publications/the-world-factbook/geos/rp.html

Donovan, J., Cunha, M., Franzel, S., Gyau, A. & Mithöfer, D. 2013. Guides for Value
Chain Development – A Comparative Review, CTA & World Agroforestry Centre,
Wageningen, The Netherlands.

Duke University, Center on Globalization, Governance and Competitiveness at the Social Science
Institute. Technical Report, April, 2017. The Philippines in the Natural Rubber Global Value
Chain.
https://www.researchgate.net/publication/320258550_The_Philippines_in_the_Rubber_GVC

Makilala. HVCDP Municipal Consolidated Monitoring Report (2018)

Magat, S.S.2007. Enhancement of Economic Benefits from Selected Coconut-based

Farming Systems (CBFS) Practices and Technologies. PHILIPPINE COCONUT
AUTHORITY Elliptical Rd, Diliman, Quezon City 1101, Email: sev_magat@yahoo.com
part of the paper “Coconut Farming Systems for Social, Ecological and Economic
Benefits”, presented at the 2nd International Coconut Summit 2007, Kochi City, India,
May 2007.

Mendoza TC, D A. de los Santos , F H. Corpuz & P Sandoval.2014.A Value Chain

Analysis of Sugar Production : Its Implications on R&D and Supportive National
Industrial Policy. ASIA LIFE SCIENCES 23(2): 507-531, 2014

Mendoza, T.C. 2010 . Organic Agriculture: The Logical sequence to Chemical

agricuture . Annals of Tropical Research 32(1)112-12.

National Economic Development Authority: Philippine Development Plan (2017 to 2022)

NEDA (2017) Regional Development Council: Davao Regional Development Plan,

http://nro11.neda.gov.ph/wp-content/uploads/2017/07/Davao-Regional-Development -Plan-
2017-2022.pdf

NEDA (2017) Regional Development Council: Davao Regional Development Plan,

http://nro11.neda.gov.ph/wp-content/uploads/2017/07/Davao-Regional-Development-
Plan-2017-2022.pdf

Pabuayon I.M., Rowena D. Cabahug, Stella Villa A. Castillo and Marlo D.

Mendoza.2009. Key Actors, Prices And Value Shares In The Philippine Coconut Market
Chains: Implications For Poverty Reduction J. ISSAAS Vol. 15 No. 1: 52-62.
 44

Philippine Statistics Authority (2016): .https://psa.gov.ph/content/philippine-population-

density-based-2015-census-population

Philippine Rural Development Project Final Report, Value Chain Analysis and Competitiveness
Strategy: Crumb Rubber, Department of Agriculture.
http://drive.daprdp.net/iplan/vca/VCA%20of%20Crumb%20Rubber%20(Mindanao).pdf

The Philippine Agribusiness Investment Opportunities

https://www.dole.gov.ph/files/Philippine%20Agribusiness%20Investment%20Opportunities%20
by%20Department%20of%20Agriculture%20.pdf

Philippine Coconut Authority (2017) Coconut Statistics Magsaysay. Davao del Sur

Philippine Statistics Authority (2016): . https://psa.gov.ph/content/philippine-population-

density-based-2015-census-population

The Manila Times. Willam Dar. State of the PH Coconut Industry and What Must be Done
(August 25,2017) http://www.manilatimes.net/state-ph-coconut-industry-must-done/346624/

Rodolfo, K. 2008. “Peak Oil: The Global Crisis of Diminishing Petroleum Supply and Its
Implications for the Philippines.” Asian Studies Journal 41(1):41-101.

Annex A . Case Studies of Coconut with Inter-crops

Case Study A. Coconut-based farming system: Cacao Inter-crop

Rogelio “Boy” Genosas, 65 is a staunch organic farming advocate who successfully

developed a unique model of Integrated Diversified Farming System (IDFS) on his
family’s 2.0 hectare farm in Barangay Luvimin, Kidapawan City. Although finishing
only 2nd year High School , this did not prevent him from acquiring knowledge and
experience on improved agro-techniques and scientific principles through formal
trainings on various topics on Sustainable Agriculture, Livestock Raising, Vegetable
Production and Organic Rice Farming from the Basic Ecclesiastical Communities
Training Center in Tagaytay, Mindanao Baptist Rural Life Center in Bansalan and Don
Bosco in Kidapawan City, respectively.

Prior to Cacao production which reportedly contributes 80% to his current

household income, while the remaining balance are derived from coconut (main crop)
and other fruit trees and livestock.He admitted that goat raising was formerly his biggest
 45

source of income. In fact, he reportedly owes much of his capital assets including
acquisition of farm lands, farm machinery and equipment e.g. grinding and milling
machines, from sales of live goats aged 6mos old and above. However, sometime in 2010
Mr. Genosas suffered health problems which reportedly forced him to abandon the
enterprise, heeding the advice of his doctor.

Genosas now focuses on maintaining around 500 fruit bearing cacao trees dispersed
under coconuts with average distance of planting at 3m x 4m. Cacao cultivars include
UF18, W10, BR25 Crollo and Trinitario. Most fruits of these hybrids are often sold as
dry beans for the nursery and seedling producers market. But, for the high value semi-
processed “artisan” or dark chocolate product called Tablea, he prefers Trinitario variety
as its taste and consistency suit most of his customers.
Genosas’ farm have many different features compared to adjoining areas. These are
reflected in terms of components, production inputs, agro-techniques as well as post-
harvest processing and mode of marketing farm produce. Whereas surrounding areas
mostly practice mono-culture with coconut as dominant crop, Genosas integrates cacao,
bananas, coffee and other fruit trees under fully grown coconuts > 20 yo (var, Laguna
Tall).

In terms of farm inputs, Genosas produces his own organic fertilizer utilizing farm
wastes, manure. compost and vermicast. One could observe free range poultry species
like geese and native chicken feeding on insects and leaving behind manure that fertilize
his crops. In addition, he also concocts various bio-active ingredients and liquid sprays
such as Fermented Plant Juice (FPJ) that are used as nutrient supplement, as pest and
disease repellent as well help induce flowering and fruiting response of fruit trees. In
terms of agro-techniques, Genosas practices minimum tillage often leaving the whole
underbrush undisturbed, where grasses and fallen leaves and detritus remain on the soil
surface for long periods of time. These apparently serve to conserve soil moisture and
attract predators and natural enemies of insect pests, inhibiting disease outbreaks thus,
reducing need for expensive agro-chemicals and dependence on supplemental irrigation
water

Barangay Luvimin lies approximately 5.6 km from the Public Market. It has well
paved farm to market roads and enjoys the amenities of a continuous electricity and water
connection and is accessible by public utility vehicles from the National highway
connecting it to Kidapawan City Center via the Kidapawan-Magpet- Panganoan Road 6
km south. These location factors favors his cacao processing and marketing business
being close to main market for cacao seedling nurseries and the Tablea consumers.
 46

A common feature of
farm enterprise here is
that majority do not
engage in processing
farm produce preferring
to follow the traditional
practice of selling
copra if not whole nuts
and whatever harvest of
raw fruits are available
in season. Moreover, as
revealed in a “Value
Chain Analysis” the
level of engagement of
farmers associations are
mostly limited to
accessing training and
other services of
government with little
bulk buying and trading
at the village much less
on the Municipal/City scale. Thus, gross profit margins and net earnings of individual
farms remain very small.

Mr. Genosas apparently recognized this pitfall of most farm enterprises hence he
decided to invest in processing cacao into Tablea and sell other cacao seeds to the
increasing number of nurseries engaged in producing cacao seedlings for the ever
expanding cacao plantations in the province of North Cotabato.

Through his own experimentation, he has developed a protocol for producing

organic chocolate products which earned wide acceptance in Kidapawan City reaching as
far as Davao CIty and Caraga Region.initially by word of mouth. Below shows that
compared to selling dried cacao seeds at only PhP120.00 per kilo, Boy sold his Tableas at
PhP400.00 per kilo. Thus, for last year alone, he reportedly earned PhP132,000.00 from
Tablea alone.

Total Sales PhP 180,000.00

Less Variable Cost PhP47,500.00 (labor and

processing cost)

Net returns PhP132,500.00

 47

Gross Margin 74%

From 2.0 hectares, the Genosas was able to buy 3.0 hectares. His five hectares (5
has) farmland is much larger than the 1.5 average farmsize in Kidapawan or all over the
country ,in general. This 5 hectares is divided into two parcels; one covering the 2 ha
coconut-cacao farm and other a 3 ha is still under coconut mono culture. As the family
own the farms, they have the right to decide on how the farming system would be
developed.

The farm owner views his IDFS scheme as very promising as any surplus
production from fruit trees other inter-crops, organic fertilizers and livestock can be a
source of alternative and sustainable livelihoods. He foresees the complete establishment
of the envisioned IDFS farm enterprise with the assistance of government and the NGO
(IRDF) in terms of additional skills training and marketing assistance in particular
attaining an organic certification from a reputable organic certifying agency. Mr. Genosas
would like to have his farm certified to enable him sell organically grown Tablea and
cacao seeds to add value to his farm produce as shown in the certificate 14ha Lao Farm in
Bansalan.

Case Study B. Coconut-

based farming system: Banana inter-crop

The case of farmer Sancho Caniedo Jr. and his wife Raquel Caniedo highlights how
farmers can easily plant additional areas of local bananas var Binangay through leasehold
arrangements with various land owners in the vicinity of their 2 ha farm in Manungol,
Kidapawan City. A former tricycle driver, Mr. Caniedo conceived of this scheme noting that,
coconut farms are ideal for inter-cropping bananas as they provide partial shade and
protection from strong winds, and that many large land owners often just leave bare the under
story of their coconut plantations. Interview of various farmers reveal that this may be due to
 48

the fact that most farmers in Kidapawan lack capital and are risk averse in venturing to other
crops.

Not so with the Sancho as he reportedly had more than 14 years of experience in planting
bananas, vegetables and other crops under coconut and various fruit trees since his youthful
years living among the Bagobo Indigenous Peoples (IP) tribe along the foot slopes of Mt.
Apo. This approach allows him to earn more and achieve economies of scale while the
average farmer cannot attain from his own farm measuring only around 2 has. At the same,
time Mr. Caniedo is aware that his business also benefits land owner’s by providing
additional nutrients from fertilizers he applies on his bananas thus, boosting the yield of both
crops.

There are reportedly two (2) modes of leaseholding

arrangements or arriendo systems common in the area.
These consists of (a) lease of either coconut trees alone
or (b) lease of the land under coconut or whatever crops
are grown in the farm. In the case of Caniedo, he prefers
b. This peculiar arrangement is further broken down into
three sub-leaseholding arrangements described briefly as
follows:
1. Arriendo type 1: (Prenda patay) means that the land
has a five (5) year fixed lease rate currently set at
PhP15,000.00 per hectare per year.
2. Arriendo limitado (Prenda-lukat): a more flexible lease holding arrangement in which the
land owner sets the price and may revert back in less than five (5) years time.
3. Arriendo endono (Rematado): a long term lease agreement spanning from 10 to 15 years.

The Caniedo’s follow the 2nd type of sub-leaseholding arrangement. This is in

consideration of the fact that bananas are harvested within 10 months with peak productivity
of around two (2) years or less than three years of the fixed Arriendo Type 1. Moreover,
interview reveals that they also try to avoid risks of soil borne diseases and help restore soil
fertility by practicing new plantings that are usually made alternate to previous rows of
bananas.

Similar to Boy Genosas farm (Case Study 1) Mr. Caniedo practices minimum tillage and
“abre puno” or ring weeding but, particularly avoid disturbing the soils around “bunchy top”
infected bananas in order to arrest its spread in the field. However, unlike the latter, Caniedo
resorts to use of chemical fertilizers which results to faster release of nutrients to his crop but
tend to reduce net income as compared to use of organic fertilizers.

Notes per crop

Notes No.1.ROASTING COFFEE BEANS

 Dried coffee beans moisture content is around 9-10%

 Roasting is done at around 180⁰ Celcius for approximately 12 minutes
 49

 Weight loss during roasting is around 10%

 Mechanical grinders reduce roasted coffee beans to desired particle sizes without any further
weight loss
 Mechanized roasters vary is sizes, capacity and cost
o A Probat Roaster with a loading capacity of 12 kgs costs around P 600,000.
o A UPLB-designed roaster with a 1-kg load cost around P50,000
 Manual roasting using a wok and wood or charcoal for fuel can produce unique brewing taste
profiles
 Roasting costs can range from P10 to P20 per kg
 Packaging costs can range from P20 – P25 per kg of roasted coffee beans.

Notes No.2. Cacao Pulp- the next Coconut water

Joseph Montgomery of Agro Innova Co. (Weston, FL) had launch in 2013 launch Suavva, the
first commercial-scale juice smoothie from cacao pulp. “like most fruits, the pulp is where the
sweetness (fruit sugar) is found in cacao.” But sweetness alone might not warrant a business focused
solely on pulp. Luckily, cacao pulp can fall back on many healthful nutrients.
A single serving of Suavva contains 270% of the daily reference intake (DRI) for vitamin E, 395% for
vitamin D, 81% for magnesium, and high amounts of B vitamins. Other pulp ingredients are
presumably as nutritious, but nutrient declarations are hard to come by at this early stage in the
industry. If cacao juice really picks up, its combination of exotic origin, taste, and nutrition has all the
makings of the “next” coconut water.
http://www.nutritionaloutlook.com/herbs-botanicals/cacao-pulp-its-not-just-waste-product-cocoa-
anymore

Notes No.4. MANGO VALUE CHAIN CALCULATIONS

 The Philippine Agribusiness Investment Opportunities

https://www.dole.gov.ph/files/Philippine%20Agribusiness%20Investment%20Op
portunities%20by%20Department%20of%20Agriculture%20.pdf reports were
used as the bases for the production figures in the mango value chain analysis
 The average fruit yield of 7,300 kgs per hectare from years 10-15 was used for the
calculations.
 The farm gate price was placed at P30 per kg. of fruit.
 The production cost was estimated at P66,200.
 Independent mango contractors’ interviewed have stated that their production costs can reach
P100,000 per hectare.
 Harvesting to sorting to transport are shouldered by the first buyer. This is the common
practice in the mango industry.
 The usual practice is for farm owners enter into an contract production agreement with a
contractor engaged in mango fruit production. The farm owner is assured a 30 % share of the
gross fruit production. The contractor finances the cost of production from Cul Tar (maturity
accelerator hormone) application to Flower induction to pest management to harvesting and
transport to the first buyer/consolidator.

Notes No.3. MANGOSTEEN VALUE CHAIN CALCULATIONS

 In Mangosteen value chain calculation , the same DA report Philippine Agribusiness

Investment Opportunities was used as as reference.
https://www.dole.gov.ph/files/Philippine%20Agribusiness%20Investment%20Opportunities%2
0by%20Department%20of%20Agriculture%20.pdf
 50

 The establishment cost was spread over 12 years. Then manpower required for maintenance
and an average fertilizer cost for 8 bags 14-14-14 per year.
 Harvesting cost estimates were separated.
 The number of trees with an existing coconut farm is 90 trees per hectare. An average tree
yield of 40 kgs/year. Tree yield may reach more than 70 kg. fruit.
 Farm gate prices may dip lower than P30/kg when over-all fruit production is high and are
harvested in the same month. However, off-season fruiting can command a very high farm
gate price as retail prices can reach up to P400/kg in Davao City. During lean months,
mangosteen fruits are transported to the manila markets by air. Retail prices can go as high
as P600/kg. When supply is low, farm gate prices are about P60/kg fruit.

Notes No.5. DURIAN VALUE CHAIN CALCULATIONS

 The Bureau of Plant Industry Durian Production Guide

bpi.da.gov.ph/.../Production_guide/.../DURIAN%20PRODUCTION%20GUIDE%20
u. and the Philippine Agribusiness Investment Opportunities
https://www.dole.gov.ph/files/Philippine%20Agribusiness%20Investment%20Op
portunities%20by%20Department%20of%20Agriculture%20.pdf reports were
used as the bases for the production figures in the value chain analysis
 Plant density under coconut is estimated at 90 trees compared to 156 per
hectare monoculture.
 The price of the fresh fruits was estimated across from the farm to the retail end
 The farm gate price used is P30/kg
 Retail prices can skyrocket to P400/kg during lean months.

Notes No.6. RUBBER VALUE CHAIN CALCULATIONS

 A Yokohama Assurance Duraplus 185/60R14 passenger car tire sells for P3,193 each
 The assumed discount for the tire retailer is 30% of the tire’s selling price.
 A gross margin of 30% is applied on the retailer’s discounted price to cover manufacturing
costs.
 Another 20% of the manufacturer’s costs is applied to cover management costs.
 The discounted amounts brings the manufacturing cost of a Yokohama Duraplus tire to
P1,261
 A 47% natural rubber content is assumed foreach yokohama Duraplus tire (Rubber content in
a 10-kg tire is around 4.7 kg) http://www.wrap.org.uk/sites/files/wrap/2%20-
%20Composition%20of%20a%20Tyre%20-%20May%202006.pdf;
 The cost of the natural rubber component in the Yokohama Duraplus at the manufacturer’s
plant is estimated at P588.09
 The actual cost of 4.7 kg natural rubber/ crumb rubber is only P361.90 showing an added
margin of P226.19 or 38% more than actual raw material cost
This report was written by:

Teodoro Mendoza, PhD, 09266260252, ecofarm.mndz2011@gmail.com

Rogelio G. Teves, 0926 1333490; r.g.t.davao@gmail.com
Noel Miciano , 09984997072, noramiben@gmail.com

Submitted to:
 51

Integrated Rural Development Foundation Incorporated. (IRDF) holding office at Rm. 503 Fil
Garcia Tower,#140 Kalayaan Ave., Brgy. Central, Quezon City, represented by their Executive
Director Ms. Arze Glipo

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