Part III.

Cluster Stories to Share

Part III

Cluster Stories to Tell

Part III compiles and shares the experiences of the different

clusters through stories of the good and bad events that
occurred especially during their infancy. Their experiences
served as worthwhile lessons to the members as these made
them more responsible and more forward-looking
agroentrepreneurs.

It is hoped that these Cluster Stories can give some insights

to those who intend to adopt the clustering approach to
agroenterprise development. A story may find importance in
one or more of the eight steps in the process.

141 ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
 Part III. Cluster Stories to Share

The reality of developing an agroenterprise is complex but

they can be grasped by way of the stories that highlight the
experiences of the different clusters as their members work
together to prepare for a market, access and develop it under
different situations. Part III presents some cluster stories that
tell not only of the opportunities but also the challenges to
eliminate the roadblocks to farmers’ access and hold on the
market.

The initiative of the Maguindanao local traders of sayap

(native hat) to link with the weavers show how two actors in a
market chain can work together. The efforts in tilapia fish
processing is to develop more attractive products so the
farmers can access a higher value market as they take
advantage of seasonal, abundant fish supply from the
Ligawasan Marsh.

The Farmers Field School for Maguindanao rice farmers

shows a first step in market development by improving
farming skills in natural farming methods and reducing
production costs. This will enable farmers to produce and
supply organically grown rice that will be an attractive product
to consumers. In a short market chain wherein the clusters
link directly to the consumers, they can bypass the
entrenched local traders and avoid a situation of conflict in an
already volatile peace and order environment.

The Strawberry Clusters’ story in Sitio Epol (in Davao City)

highlights the experience of farmers working on their existing
market at the roadside for travelers, but confronting the
challenge to come up with more strawberry products available
in regular supply, and without which, their marketing
enterprise will not take off.

The Maragusan Clusters’ story (in Compostela Valley) relate

the perseverance of the farmers to consolidate vegetables per
truckload to make it an economical move given the distance
and the difficult infrastructure constraints. But this learning
from the challenges experience has also given them the

฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
142
 Part III. Cluster Stories to Share

confidence to scale up by gradually moving into an additional

market under a partnership arrangement with a supermarket.

In the Siay Calamansi Cluster story (in Zamboanga Sibugay),

we see the example of clusters that have formalized into a
cooperative after a build up of organizational fund from
marketing. It also presents the reality that success in product
consolidation for markets brings with it its own challenges one
of which is the resistance of the traders who see their hold
threatened if farmers start to participate actively in marketing.

The Impasugong Coffee Cluster story (in Bukidnon) provides

a glimpse of how a cluster is managed for a high value market
like Nestle and Serenity Coffee Corporation, types of markets
that require high discipline because quality, traceability and
delivery reliability are demanded in exchange for high price.
An interesting story is that of the Impasugong Squash
Clusters that demonstrate that through the support of bigger
producers and the influence of an industry group like the
vegetable association, farmers can immediately secure a hold
on the markets that otherwise are reluctant to take in supply
from small farmers.

In all the above stories, we can picture how dynamic is a

market condition, what innovations are called for from the
farmers so that they can respond and cope with the market
situations, and what development interventions from
intermediary organizations can be provided to support
farmers’ needs in their agroenterprise development.

143 ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
 Part III. Cluster Stories to Share

Cluster Story No. 1

REAPING THE FRUITS OF IMPROVED TIMING

AND QUALITY OF DELIVERIES

On June 27, 2007, 133 farmer-members from six communities

in Maragusan, Compostela Valley Province gathered once again
to assess the performance of their vegetable clusters. By that
time, the clusters have already sold more than 150 tons of
assorted vegetable worth about PhP 800,000. The members
discussed the milestones, the good relations with their buyers in
Cagayan de Oro, then planned how they could supply a new
market opportunity that opened for them: a major supermarket
in Tagum City located some 90 kilometers away.

A year earlier, six cluster leaders together with the staff from
Kasilak Development Foundation, Inc., CRS and the Municipal
Agriculture Office went to Tacloban City on May 20 to 23, 2006

฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
144
 Part III. Cluster Stories to Share

to verify the prospective vegetable markets. This market was

considered first because it was the place where most of the
local market agents sent their vegetables. Accompanying them
in the trip was a vegetable market facilitator based in Cagayan
de Oro City but who has market contacts in Sogod, Southern
Leyte. The facilitator was interested in establishing a market in
Sogod as a dropping point of vegetables on the way to Tacloban
City.

In the analysis done after the Tacloban trip, the group saw the
big potential of the Sogod-Tacloban markets in terms of price
margins and volume capacity given that the region is not a
vegetable producing area. However, they were concerned
about the high risk of this particular market given its distance.
The group, instead, decided to undertake trial runs to Cagayan
de Oro to enable them to go through the experience of actual
consolidation and delivery in a wet market. The choice of
Cagayan de Oro was made considering the presence of
NorminVeggies, a potential support system from the vegetable
industry group that could be tapped.

Over the next four weeks after the Tacloban trip, the cluster
leaders with the Kasilak marketing officer met weekly to discuss
the preparations for the test delivery. The plan was a delivery
scheduled to arrive in Cagayan de Oro in the morning of June
28. This date of arrival was targeted because it coincided with
the peak market day in the City when majority of the “viajeros”
from Visayas, Luzon, and the provinces of Butuan, Surigao and
Zamboanga would procure the highest volume for the weekend
market in their respective areas. Plans were made and reviewed
by the group including the logistics, pricing, operational flow and
financial analysis. The test delivery involved clusters from six
barangays, namely: Magcagong, Saranga, Mahayahay,
Parasanon, Tupas and New Albay.

During the consolidation

On the day of consolidation, the leaders confronted several

daunting challenges. The wooden tomato crates that were

145 ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
 Part III. Cluster Stories to Share

supposed to be delivered to the members were sold by the

manufacturer to another buyer. So the leaders had to look for
other sources of crates.

The road leading to the upper barangays of Mahayahay and

Parasanon were rendered impassable due to continuous rains
for the past several days. The truck driver recommended that all
vegetables be consolidated at the roadside in barangay
Saranga, several kilometers away from the source of the
vegetables. The implication was that instead of the truck
passing by the different barangays to pick up the vegetables,
the growers had to bring their products from their areas to the
suggested consolidation site by way of motorcycles or carabaos
and horses.

Then there was a heavy downpour starting at 1 o’clock in the

afternoon which continued throughout the evening. So instead
of the truck departing for the other three barangays at 11 o’clock
in the morning as originally scheduled, it left the roadside
consolidation area for these barangays at 6 o’clock in the
evening. Thirty minutes after, the truck got stuck in the muddy
road and it took volunteers five hours to get it out. In effect, the
truck arrived at Magcagong, the next barangay, around 11
o’clock in the evening to pick up the vegetables from the
clusters. By this time, based on the plan, the truck should have
traveled half the distance to Cagayan de Oro.

At dawn, the truck proceeded to the two remaining barangays,

New Albay and Tupas. Unfortunately, the squash at New Albay
were not yet packed in sacks and weighed. So the leaders had
to work together to facilitate so that it could be done fast.

By the time the group got to Barangay Tupas, the last barangay,
it was already 4 o’clock of June 28 and there was another delay
as the cluster leader had left after waiting for the truck the whole
night. He was located and arrived at the meeting place after
about an hour. It should be noted that by this time, the
vegetables should have already arrived in Cagayan de Oro.

฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
146
 Part III. Cluster Stories to Share

Finally, at 6 o’clock in the morning, the group finally departed for

Cagayan de Oro with the consolidated vegetables.

Along the road in Montevista, Compostela Valley, the inner rear

tire of the truck got flat. The driver and his crew took about an
hour to get the truck on its way. This was followed by another
breakdown in Rosario, Agusan de Sur, caused by the damage
of the rim of the outer rear tire. Altogether, this was a delay of
another four hours.

At the buyer’s stall in the wholesale market

The group finally arrived in Cagayan de Oro at midnight on June

28. The contracted buyers had waited from 6 in the morning to
12 noon. By the time the delivery arrived, the buyers had
procured from other sources because the vegetables were to be
“outshipped” to other provinces as there was a cut-off time. The
vegetables could be marketed only the next day, June 29, or a
24-hour delay from the negotiated delivery time. So the market
facilitator in Cagayan de Oro had to look for new buyers in the
local spot market.

Other buyers came but the price was subjected to the supply-
demand conditions in the spot market for the day. By this time,
tomatoes from the other supply sites in Bukidnon and Misamis
Oriental were arriving and the price was reduced from PhP
180.00 in the morning to only PhP 110.00 per crate later in the
day. A buyer negotiated for the price of PhP 140.00 but upon
close inspection, he did not pursue the transaction as he noticed
mixed sizes, ripened fruits, and presence of fruit damage.

This was the same case with the squash - several buyers had
already negotiated at PhP 7.00 per kilo but upon close
inspection when some sacks were opened, they did not
continue with the purchase. For squash, the problems were:
mixture of small with the big-medium sizes, mechanical damage
with some having molds, and over maturity. In all, reduction of
value was about half of the original intended price.

147 ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
 Part III. Cluster Stories to Share

On the other hand, the five other vegetables, Baguio beans,

ampalaya, sweet pepper, sayote and eggplant, were easily sold
in the spot market at good prices mainly because they were of
good quality.

Assessment

The necessary plans were made by the clusters and the

arrangements with the outshipment buyers were done by a
market facilitator two days before the vegetable delivery in the
Agora wet market of Cagayan de Oro. For this reason, the
market facilitator already gave a price to the Kasilak Marketing
Officer on the basis of her negotiated sale to the outshipment
buyers.

There are two kinds of buyers in the Agora wet market. One is
the group of outshipment buyers who are the “viajeros” from the
other provinces in Mindanao, Visayas and Manila. They
negotiate a price through an Agora-based market facilitator
based on an agreed time of delivery, quality and volume. The
other one represents the spot buyers - the local buyers who
distribute in the neighboring provinces and whose price is
dependent on the prevailing conditions of supply and demand
for the day.

It was unfortunate that the vegetables did not arrive on time.

The outshipment buyers stretched their waiting time from
morning to noontime just to accommodate the request of the
market facilitator. But during the cut-off time at noon in June 28,
there was no way the clusters could deliver the promised
vegetables as they were still in San Francisco, Agusan del Sur,
about halfway to Cagayan de Oro. The outshipment buyers
procured from other sources and when the clusters’ vegetables
were finally unloaded the next day, the market facilitator had to
look for new buyers and had no option but to undertake spot
selling where the prices would fluctuate depending on the actual
supply and demand situation.

฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
148
 Part III. Cluster Stories to Share

The Baguio beans, ampalaya, sweet pepper, sayote, and

eggplant were of good quality so they were immediately sold
within the day but at a slightly lower than negotiated
outshipment price because the prices had to be pegged on the
spot wet market price already. But it was a different case with
the squash and the tomato. Several buyers (both outshipment
and spot) were interested to purchase but because of quality
issues, they did not pursue the transaction. In one case, the
buyer had already paid but called off the deal when the she
found out about the extent of the quality problem in the squash.

Eventually, the clusters had to settle at a price that the buyers

would be willing to pay for all the remaining stocks or risk not
getting any sale at all because the marketing time may catch up
with the deteriorating vegetables. Also, fresh stocks were
coming in every five to ten minutes.

On analysis, the problems can be grouped into two: timing and

quality. Had the vegetables arrived on the agreed time, the
clusters could have gotten the price agreed with the
outshipment buyers. More importantly, had the quality been
good, there would have been bargaining power during
negotiations to sell in the wet market despite a spot market
condition. There were several buyers who had wanted to buy
the squash and tomato to add to their volume of procurement
but their common feedback was the poor quality of the squash
and tomato.

The participating cluster members were immediately convened

to discuss the results of the test marketing where the
circumstances and results were presented objectively. It was
pointed out that most of the challenges like quality control,
timing of harvesting, consolidation and coordination with
suppliers and service providers can be addressed. The rest of
the assessment was devoted to a planning session for the next
delivery where all the improvements and adjustments in the
operational plan were made. It was emphasized to the
members that while agri-marketing is particularly challenging,
they were able to bring a truckload of vegetable out of their

149 ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
 Part III. Cluster Stories to Share

farms to a major trading hub in Mindanao – not a small feat for

small farmers in the uplands.

If the clusters had stopped after the first market delivery given
the challenges they had to go through, they would not have
celebrated their first year of anniversary with 150 tons of
vegetables unloaded to the market. They would not be able to
even consider a new market avenue, the supermarket. A year
after their first market move, they started to enter J.S. Gaisano
Supermarket and are into their 16th weekly delivery to this higher
value market.

Contributed by: Lionel Mendoza, Vicente Gualberto, Ronnie

Fruto, Danylle Ann Pascual, Lily Naldoza and Albert Ventura

฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
150
 Part III. Cluster Stories to Share

Cluster Story No. 2

THE CLUSTER OF HAT MAKERS IN MAGUINDANAO

Keting Acob is a Maguindanaon trader who lives in SK

Pendatun in Maguindanao Province. For almost two years, he
has been buying sayap, the native hat produced by his
Maguindanaon neighbors, and then selling them in the
neighboring city of Tacurong every Wednesday and Sunday,
the designated market days in this capital city.

For each market day, Keting buys 200 pieces of sayap at PhP
5.00 each and then sells them at PhP 6.00. He and his fellow
sayap buyers organized an informal group of their own, and
they connect to the various sayap makers to whom they
supply the raw material needs. Each trader has a group of
sayap makers. As an agreement, the indebted sayap makers
can sell their sayap only to the traders who financed their

151 ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
 Part III. Cluster Stories to Share

respective raw material requirements. The former sets the

buying price.

One day in December 2006 Keting learned that a respected

Community Organizer of the Kadtuntaya Foundation, Inc was
organizing the sayap makers into a cluster under a project
supported by CRS. Keting decided to attend the first meeting.
He saw this as an opportunity for him and his fellow buyers to
be better linked with the suppliers’ end.

The Magungaya sa Ligawasan Multi Purpose Farmers

Association (MALIMU) was formed with Keting and the other
traders joining the sayap makers. With more women
members, MALIMU is composed of clusters, each of which is
led by a trader-member.

Now, Keting and the other trader-members buy sayap at PhP

6.00 a piece, thus, increasing the income of the other
members by PhP 1.00. With this development, the makers of
sayap are increasing in number as children and other
community members are joining the trade. This may not be a
big income but the other benefits are as important: how the
small producers can start to get their acts together and relate
with other market actors such as Keting in the local trade.

CRS and KFI are trying to build on this local initiative. As part
of product support, they have explored the possibility of the
raw material of sayap, which is the leaf of the romblon plant,
to be semi-processed for the needs of the exporters in the
furniture industry capital of the country in the Visayas island of
Cebu. Also, they are studying how Keting’s and other sayap
buyers’ role can be transformed from a trader into a business
service provider, organizing the product supply consolidation
and the quality control for a service fee which could be
generated from the addition earnings from a higher value
market.

Short term objectives have to be secured with long term

concerns. Thus, the project assistance also includes as part

฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
152
 Part III. Cluster Stories to Share

of the Natural Resource Management, the continued planting

of the romblon plant for the sustainable supply of raw
materials for the budding handicraft business in the
community. This effort was foreseen by MALIMU to be a key
in the sustained business. Full of hopes, the sayap clusters
sent their first sample of dried romblon leaves to a Cebu
furniture exporter for product development and designing.
And the effort to plant more romblon is also ongoing.

Contributed by: Marynisa S. Paglala, MALIMU Marketing

Officer, Hai Arap and Floro Israel

153 ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
 Part III. Cluster Stories to Share

Cluster Story No. 3

ORGANIZING AND TRAINING FOR THE

STRAWBERRY MARKET

Baganihan is an upland Barangay of Davao City near the

boundary with Bukidnon Province. Its cool climate supports
the growing of semi-temperate crops which puts this area and
its neighboring barangays in a competitive advantage. Some
of the crops grown are strawberry, potato, crucifers, tomato,
sweet pepper and cutflowers. The asphalting of the national
highway that passes by Baganihan some seven years ago
greatly enhanced the marketing of farm products.

One of the sitios or sub-villages of Baganihan is Epol which is

home to farmers belonging to the B’laan and Matigsalog
tribes. Bilma Fuertes, a Matigsalog, and an elected member
of the Barangay Council, is one of the farmers. Her
membership in the Council gave her the name as Kagawad
Bilma.

฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
154
 Part III. Cluster Stories to Share

With her strong leadership, Bilma paved the way for the
organization a group of women-farmers producing
strawberries in Epol. The group expanded its farming
activities and eventually became the Baganihan Agri-Eco
Venture Cooperative or BAVC. The members decided to
produce and market vegetables, strawberries and ornamental
plants. Through the leadership of Bilma, BAVC received
assistance from different projects.

One of the crops that benefited from external assistance was

strawberry. The trainings provided by the projects initiated a
small strawberry jam processing endeavor.

In 2005, the People Collaborating for Environmental and

Economic Management in Davao (PCEEM) Foundation and
the Catholic Relief Services (CRS) – Philippines through the
Timely Intervention and Natural Approaches to Watershed
(TIN-AW) Management Project provided production
assistance to BAVC and formed clusters among the
members. Upon the approval of the cooperative's Board of
Directors, three clusters were developed representing three
farm commodities to be produced and marketed, namely:
vegetables, cut flowers and strawberries. BAVC also
benefited from institutional development assistance and has
signed a Memorandum of Agreement with PCEEM for a grant
for strawberry production. Thirty one members were able to
avail of the production assistance.

PCEEM and CRS-Philippines also provided training to BAVC

on Biodynamic and Natural Farming Technology Systems or
NFTS. The members also underwent a series of lectures that
gave them helpful tips including study of different types and
climatic requirements of strawberries. They were also taught
the basics of land preparation, strawberry runner segregation,
establishment of nurseries, planting, fertilization, irrigation,
mulching, pruning and disease and pest control, proper
harvest and post-harvest practices, and farm record
management.

155 ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
 Part III. Cluster Stories to Share

Prior to the trainings provided by PCEEM and CRS, the

members were trained by SDC-Asia on the clean and
acceptable ways of processing jams, marmalades and syrups
through a special training on Good Manufacturing Practices or
GMP. They were also given processing equipment for group
use.

With the integration of NFTS in their production practices,

Bilma observed marked improvements in the fruiting patterns
of the strawberry plants even during days of heavy rains.

”Our trainings have made a great difference for our group

from planting to processing. Our products are fast gaining
popularity after they have been introduced in trade fairs.
Motorists plying Davao-Bukidnon route now make it a habit to
stop by and buy strawberry jam, marmalade, syrup, or fresh
strawberries." Bilma proudly said.

Currently, fresh and processed strawberries are in demand at

the roadside in Epol. These products are also becoming
popular during festivals and other celebrations such as
Kadayawan and Araw ng Davao. Other institutional markets
like hotels, restaurants and supermarkets are also lining up at
BAVC’s door asking for consistent supply.

Kagawad Bilma shares that finding a market for strawberry is

not a problem, but rather a challenge to produce it in a
continuous manner in order to respond to the needs of their
buyers not only along the highway but in the expanding and
more stable institutional markets.

Contributed by: Bilma Fuertes, Linus Miranda and Lionel

Mendoza

฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
156
 Part III. Cluster Stories to Share

Cluster Story No. 4

TESTING THE WATERS WITH DRIED FISH

At certain months of the year (May to August), tilapia fish

supply from the Ligwasan Marsh in the Province of
Maguindanao is abundant. Prices would drop, and the small
producers would have to take in whatever prices were given to
them by the local traders. If only tilapia fish could be
processed at the peak supply months. During the community
based research activities conducted as part of the
development support of Catholic Relief Service (CRS) with its
partner, Kadtuntaya Foundation, Inc. (KFI), tilapia fish in
processed form surfaced as a product with an untapped
opportunity.

Twenty (20) small producers decided to pursue this window of

opportunity for processed dried tilapia, tapping an available
product from its natural resource, the Ligwasan Marsh. They
formed a cluster after which the members agreed to

157 ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
 Part III. Cluster Stories to Share

consolidate a portion of their tilapia catch to be dried as their

new product for the market.

CRS and KFI facilitated that appropriate skills and knowledge

in fish drying through hands-on demonstration could be
extended to the cluster from the Department of Agriculture
through its Agricultural Training Institute (ATI) and the Bureau
of Fish and Aquatic Resources). Specific improvements
introduced were the manner of cleaning the fish and the
hygienic handling during processing. It was emphasized
during the training that for processed products, it is extremely
important to assure the customers with food safety.

The first test market was the Kadtuntaya Foundation, Inc.

(KFI) staff and their friends. In the test marketing done, KFI
helped assess the quality of the product in terms of palatability
and pricing. From the assessments done, it was determined
from customer feedback that the visual quality of the dried
product was well received. But the dried fish was found to be
too salty, which necessitated adjustments in the brine solution
(i.e. salt in water) used. Also, the price that the product was
offered at PhP 150/kg was rated by customers as too high
relative to competition.

A careful review led the cluster members to make adjustments

in their fish procurement practice and in the processing
activities to bring down the selling price to only PhP 125/kg.
Then an innovation was discussed to come up with a
diversified product that would be higher value for the high end
market: marinated-deboned-dried tilapia fish and for which
product development assistance was requested from the Food
Technology Center of the Xavier University College of
Agriculture in Cagayan de Oro City. The new product was
also well received during the food tasting activity done.

In anticipation of the abundant tilapia coming up in a few

months, these two directions for dried fish, one that would be
affordable and the other a special, niche product for the high
end market will be pursued. In the meantime, CRS and KFI

฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
158
 Part III. Cluster Stories to Share

have been assisting the community in building awareness of

the ways to protect the ecology of the Ligwasan Marsh for
sustainable supply of fish and other products.

Contributed by: Hai Arap, Jim Dalgan and Floro Israel

159 ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
 Part III. Cluster Stories to Share

Cluster Story No. 5

THE CLUSTER MOVES FOREST COFFEE

(AND OTHER FARMERS) TO THE
MARKET STREAM

Dumalaguing is a highland barangay in Impasugong town,

Province of Bukidnon. It is where Romeo Saplian lives.
Popularly known as Mimi, Romeo is one of the Higaonon tribe
farmers who are growing coffee in the forest.

The hilly terrain and poor roads of Dumalaguing, as well as

the Tagoloan River that divides the barangay from Poblacion,
or the center of the town, make transport of goods into and
out of the community difficult and expensive.

Given this situation, Mimi and over 100 other coffee farmers
in his barangay opted to just sell unsorted coffee beans to the
barangay traders at whatever price is given to them. These

฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
160
 Part III. Cluster Stories to Share

traders in turn transport the coffee across the river on a raft

and bring them to the nearby Poblacion trader. The coffee is
then sorted and re-dried to meet the requirements of Nestle
Philippines located in the nearest commercial center of
Cagayan de Oro City, about 80 kilometers away from
Impasugong. This has been the market chain until the
Catholic Relief Services, or CRS, in partnership with Kaanib
Foundation, Inc., or KFI, and the Local Government Unit
extended development support for these producers and linked
them directly to high value markets.

Mimi is now a coffee cluster leader of Dumalaguing where 25

farmers formed two clusters. Their clusters, together with
those of the neighboring barangays of Guihean and Sayawan,
consolidated 6,600 kilograms of coffee beans during the
recent harvest season, December 2006 to March 2007. The
coffee delivered were all of Grade 1 quality, earning for the
cluster members an additional price per kilogram as incentive.

As cluster leader, Mimi makes sure that his members have a

cluster plan for an agreed market and volume each harvest
season, and that each member has filled up a product
commitment form which he summarizes into a matrix called
the harvest calendar. He convenes several meetings before
the first harvest for the cluster’s agreements on quality,
pricing and payment procedures. He makes them understand
that joining the cluster is a voluntary decision but once a
member; they must abide by their agreements. He makes
sure that they can have regular meetings to discuss their
activities.

The high price that Serenity Coffee Corporation offered in the

recent coffee season, December 2006 to March 2007, was 28
percent higher than the barangay trader. The offer came with
stringent quality standards and procedures for coffee
traceability per farmer. To ensure quality coffee delivery, a
Coffee Consolidator was assigned in each barangay. He/she
is tasked to accept only Grades 1 and 2 coffee, and manage
the physical consolidation and the payments. For marketing

161 ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
 Part III. Cluster Stories to Share

capital, KFI got a PhP 500, 000 short term loan from the
Federation of People’s Sustainable Development Cooperative
of which it is a member. The marketing is operated like a
business, with the Consolidator getting paid with a
management fee equivalent to five percent of the net sale
value.

Given his long experience in coffee and the high trust in him,
Mimi was chosen by the cluster as the barangay’s Coffee
Consolidator. His residence became the collection area and
housed the weighing scale, sacks, needles and twine,
marking pens for labeling and coding, and the receiving forms
that contain information on the quality and sale computation.

Having reached Grade 4 only of formal education, Mimi found

it difficult to compute using the calculator and coefficients for
quality determination. Fortunately, his family can help him.
His daughter who reached high school does the
computations, while his wife acts as the cashier. Mimi focuses
on segregating a sample from each farmer’s delivery and
subjecting it to quality evaluation as he, together with the
Consolidators of other barangays, was trained to do.

Mimi and all the other cluster leaders for coffee, abaca and
vegetables in the municipality are assisted by KFI’s project
staff, the CRS Agroenterprise Coordinator and the Agricultural
Technologists of the local government. Their role in the
project is clear to Mimi. They are just facilitators helping the
clusters do the actual marketing themselves. And this is why
the cluster leaders had to meet the buyers and directly
transact with them.

After assessing their coffee agroenterprise, Mimi reported to

the members their combined sales, costs covering transport,
labor, consolidator’s fee, management fee, and the resulting
net income. Of the net income, 80 percent was returned to
the clusters while the remaining 20 percent was retained as
the cluster fund. Reflects Mimi, “When we think of our total

฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
162
 Part III. Cluster Stories to Share

sales at over half million pesos, then we begin to feel that our
clusters can be as big as the trader.”

Compared to unorganized farmers, Mimi and all the other

farmers in the coffee cluster enjoy more benefits because
they actively participate in the market chain. They are
involved not only in producing coffee but also in value adding
activities like drying, grading, sorting, and labeling before
selling their product. In addition, they are taking more control
over the management of the chain itself by seeking new
markets, controlling product quality, negotiating for a better
price, and building trust through a good track record in
product supply.

The results are encouraging. During the first coffee season,

November 2005 to March 2006, 25 farmers organized in three
clusters in three barangays and agreed to test joint marketing.
Altogether they delivered two tons of Grade 1 quality coffee to
Nestle. In the next season, November 2006 to March 2007,
they increased their membership to75 with a corresponding
three-fold increase in product volume consolidated. These
were of Grade 1 quality and delivered to Serenity Coffee
Corporation. In the coming coffee season, more farmers are
expected to join the clusters with estimated volume of no less
than 15 tons.

It is a long journey of possibilities as the clusters feel

confident to engage in more economic activities. They are
now studying their market moves with new products, namely:
semi-processed non-timber forest products for the Cebu
furniture exporters, and vegetables for the supermarkets.
According to them, this will further diversify and strengthen
their income base. Moreover, they hope that their stories will
echo to other farmers who are still unorganized and realize
that they need not feel so helpless with their “smallness” and
their constraints because clustering can simply make them
big.

163 ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
 Part III. Cluster Stories to Share

Contributed by: Dennis Pace, KFI Project Coordinator; Lou

Ann Gomez, KFI Marketing Officer; and Juanito Barsomo,
CRS Agroenterprise Coordinator for Bukidnon

฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
164
 Part III. Cluster Stories to Share

Cluster Story No. 6

MISSING THE BOAT, MISSING THE MARKET

Calamansi (Citrofortunella microcarpa) is a popular economic

crop in the municipality of Siay in Zamboanga Sibugay
Province. Located in Western Philippines, Sibugay has the
climate favorable for year round production of calamansi.
Sometime in October 2005, a group of 94 calamansi growers
formed themselves into seven clusters distributed in three
barangays. Their objective was to find access to the buyers in
the demand center of Manila market that could absorb their
substantial production from the area. From the clusters,
calamansi volume was as much as 15 tons weekly which they
intended to consolidate for the Manila buyers through a
Cagayan de Oro-based Market Facilitator.

The formation of clusters for common calamansi marketing

was assisted by the Xavier Agricultural Extension Service of

165 ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
 Part III. Cluster Stories to Share

the College of Agriculture Complex of Xavier University and

the Catholic Relief Services - Philippines. Majority of the
cluster members are Visayan growers, predominantly women.
But about 20 percent of the cluster membership was
comprised of an indigenous group, the Subanens.

Despite the extensive planning done, the first four product

deliveries to Cagayan de Oro City, a 10 to 12-hour travel
from Siay, were challenged by problems. During the first
delivery, the truck that the cluster hired was not able to catch
the boat at the Cagayan de Oro port. So discouraged were
the clusters because their calamansi arrived at the port just as
the ship for Manila was departing. The clusters were
compelled to unload the calamansi at the local wholesale
market at only 60 percent of the agreed price with the market
facilitator.

The Facilitators made sure to immediately convene an

assessment because the clusters had doubts they could
make it. A few weeks before their first test marketing, the
local agents and assemblers of the long established trader in
the community had told them it would be too complicated for
the farmers to undertake it. The cluster leaders realized from
the assessment that the main problem was the operational
flow, i.e. the agreed time for the truck departure from Siay at
eight o’clock in the evening was not followed. And this was
traced that not all the clusters could comply with the agreed
consolidation time of six in the evening. The clusters made
improvements in their operational flow that is part of their
clusters’ supply plan.

While the operational flow was improved, the second delivery

a week after was confronted by another problem. The buyers
complained that not all the calamansi sent to them was not
standardized at 25 kg/wooden crate as agreed. This was
costly on their part because they were the ones who paid for
the ship freight from Cagayan de Oro to Manila. Again, the
clusters addressed the problem by ensuring that all cluster
members use a weighing scale to standardize wooden crate

฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
166
 Part III. Cluster Stories to Share

content, and that a label traceable to each grower and cluster

should be implemented to impose discipline because an
agreement with the buyer is a promise to deliver on a
commitment.

On the third delivery, another problem surfaced. The truck

hired broke down in transit. A rescue truck had to be
immediately hired. While the calamansi still arrived in time at
the Cagayan de Oro port, the trucking cost was 50 percent
higher which affected significantly the net returns of the
growers. So in the assessment before the next delivery, a
cluster leader was assigned to survey the different truckers
and ensure that the truck hired would be in good condition.

By the time the clusters made the fourth delivery, most of the
problems were resolved. But a different one came up. The
local trader had reacted with a price war. By this time, the
clusters had already become confident to confront the new
problem. The regular assessments had taught the clusters
that marketing is such a dynamic activity and they would
succeed if their management would be that of constant
improvements. Their early experiences made the cluster more
forward-looking and proactive in its agroenterprise activities.

About two years after the first delivery, the clusters had
delivered a total of 482 tons of calamansi and accumulated a
total of PhP 278,700 organizational funds from the
management fees and the savings. The growers organized a
formal cooperative called Zamboanga Sibugay High Value
Crop Marketing Cooperative (ZASHIVAC) to be able to enter
into business agreements with the institutional market, the
processors. In the course of their marketing experiences over
the past two years, the clusters realized that the wholesalers’
market is not stable because it was always determined by the
market forces of demand and supply. The institutional market
would be a predictable market and they are willing to come up
with two annual “lock in” prices (for the dry and the wet
seasons) as well as commit to a regular supply by adjusting
their farm activities to be able to address the need of this type

167 ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
 Part III. Cluster Stories to Share

of market. And they are hopeful that their organization, the

systems they have installed and their track record of supply
would convince the institutional buyers that they need not
worry in having to deal with small growers.

Contributed by: Earl Villota, Bert Sabar, Mirza Rivas, Analiza

Digdigan and Floro Israel

฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
168
 Part III. Cluster Stories to Share

Cluster Story No. 7

SMALL, STEADY STEPS TO BUILD A MARKETING

ENTERPRISE FOR MAGUINDANAO’S
ORGANICALLY GROWN, TRADITIONAL RICE

The rice farmers of Maguindanao have been growing their

traditional rice varieties, mostly the Kawilan and Tibi-tibi
varieties but have depended entirely on rains as their source
of water. In this condition, they have been so disadvantaged
in the market. Traditional rice varieties are not considered
“premium rice” compared to the new so-called “high yielding”
varieties. Although better tasting, they are assigned a lower
price by the traders compared to the new “high yielding”
varieties. Also, rice millers say that the palay (i.e. the rice in
raw form) from rainfed farms yield low milling recovery
compared to those from the irrigated fields when converted to
milled rice.

Exacerbated by other limitations such as lack of adequate

postharvest facilities like solar dryers, storage building and
transportation, and being unorganized, the farmers are forced

169 ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
 Part III. Cluster Stories to Share

to sell their wet palay during the peak harvest times when the
prices are at their lowest. Without good returns, farmers have
had little incentive to improve production.

In Year 2005, with the support of the Catholic Relief Services

(CRS), Kadtuntaya Foundation, Inc. through the Peace and
Agricultural Development for Sustainable Livelihood in Central
Mindanao (PADSLCM) extended production improvement
and marketing assistance to the rice farmers. The farmers
from 6 barangays (Bulod, Damalusay, Adsoy, Damakling,
Poblacion and U. Idtig), all in 2 municipalities (Paglat and SK
Pendatun) of predominant Muslim Maguindanao Province
were organized into clusters. In this small group, farmers
went through the learning process of understanding their
production and marketing conditions, and then proceeded to
establish improvements in their production practices. This
was a basic important step recognized before the actual joint
marketing is to be done.

The Farmers’ Field School (FFS) was set up using a 1

hectare demo farm. Twenty five farmers representing the
clusters in the 6 barangays involved in the project got
practical knowledge and skills on the Natural Farming
Technology System (NFTS) approach. They were guided by
the CRS Agri Extension Staff from land preparation to post
harvest activities, incorporating the formulation & applications
of organic concoctions as fertilizer, insecticides & pesticides
for crop care and protection.

The learnings in the FFS were applied by the participants in

their own family rice fields that in effect became also the
demonstration sites for other farmers in the community. So
far, of the 34 clusters formed involving 444 rice farmers
distributed in 6 barangays, close to 65 percent have already
adopted NFTS technologies. For the NFTS adoptors, their
production costs have reduced dramatically and they have
also reduced their dependence on outside financing for
inorganic inputs from the traders/financiers. This core of
independently producing rice farmers was envisioned to pave

฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
170
 Part III. Cluster Stories to Share

the way for a collective marketing effort to have more chances

of success.

While the NFTS technology adoption was fast, the marketing

activities were done with much caution. Maguindanao is an
area with well-entrenched traders and it was difficult for a
project to introduce a situation of tension in an area that was
already experiencing a volatile peace and order situation.
Thus, the marketing chain favored in the strategizing was to
work with existing “friendly” traders and market chain actors to
be able to sell the bulk of the wet palay produced by the
clusters, but to also gradually build the market chain of
processing the palay into milled organically grown rice
directed at consumers so that Maguindanao rice as premium
product could be communicated to the consumers.

In the first harvest season of joint marketing last September to

October 2006, only 11,500 kilos (230 sacks) of palay was
consolidated as majority of the farmers are still tied up with
the traders that provided them inorganic inputs. This quantity
of rice was facilitated by KFI to be processed into milled rice
marketed, and were then sold under test marketing to in
Cotabato City where KFI holds its office. The financial
performance of this first marketing venture was however a
loss. CRS staff then assisted that a value chain analysis
could be done to pinpoint the bottlenecks in the marketing
activities that needed to be addressed, as well as to
understand the cost and returns in every product move from
the farms to the consumers.

With the confidence gained from the lessons of the earlier

marketing experience, the cluster leaders for the current
harvest season (September to October 2007) set a higher
target of 2,000 sacks of consolidated palay (with a modest
contribution of about 5 sacks from each cluster member into
the joint marketing venture). This volume targeted would be
10% of the member’s potential harvest but it was a good
target in terms of working out a transition for marketing in a
community long dominated by traders.

171 ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
 Part III. Cluster Stories to Share

Operationally, the 30 clusters are organized into 6 Peoples

Organizations or POs who carried out the purchasing and
consolidation of fresh palay in their respective barangays.
The palay is picked-up by KFI for postharvest processing
utilizing the facility available in the nearby city of Tacurong.
For now, the well-milled rice marketing activity is principally
managed by KFI but along the process, as efficiency levels
are established, the PO Marketing Officer from the barangay
of Adsoy, Marynisa Paglala, is learning the business together
with the KFI staff in preparation for the eventual transfer of
functions to the POs.

In the future, federating the six POs is the logical step to take
to consolidate and market with efficiency, invest economically
in joint postharvest facilities, as well as cater to the demand of
buyers for quality and delivery reliability. On the part of KFI
facilitating market outlets, it has developed its own market
strategy for the fast turn-over of the milled rice. CRS has also
provided small infrastructure support such as solar dryers,
shallow tube wells for water supply, modest storage buildings,
and trailers.

In the midst of challenges, the assessment and reflection

activities on the various activities have been helpful in KFI
staff with the cluster leaders being able to come up with the
necessary improvements. Indeed, teamwork is at work and
this is one of the strengths recognized in the partnership. It
is half way the harvest season, and the clusters have so far
consolidated 30,077 kg (601 sacks), looking ahead that they
can reach their 2000 sack target level of marketable palay.
Small gains but moving towards a clear positive direction in
bringing the farmers actively involved in the market up to the
consumers’ end.

Contributed by: Hai Arap, Nonita Alim, Jim Dalgan and Floro
Israel

฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
172
 Part III. Cluster Stories to Share

Cluster Story No. 8

SMALL IMPASUGONG SQUASH FARMERS

MOVING INTO THE MARKET WITH THE
VEGETABLE INDUSTRY GROUP IN NORTHERN
MINDANAO

The Municipality of Impasugong in Bukidnon is a highland

blessed with cool temperature suitable for vegetable
production. Twenty five (25) small farmers in the municipality
have organized 4 squash clusters in 4 barangays. The
cluster members take turns planting squash beside their corn
plants. Each cluster member is assigned a particular week
when to plant based on a planting calendar so that there is a
weekly harvest. So that the farmer has his farm requirements
at the time of planting, he can borrow production capital for
farm inputs from the local cooperative, the Kauyagan Savers
Cooperative (KSC).

173 ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
 Part III. Cluster Stories to Share

The Catholic Relief Services (CRS) in partnership with Kaanib

Foundation, Inc.(KFI) and the local government through its
Municipal Economic Enterprise Development Office (MEEDO)
has collaborated to assist small farmers in production and
marketing support. CRS provided a fund deposit in KSC
which is used as leverage fund, and KSC directly lends
production capital to the farmers equivalent to two times the
leverage fund.

Every Wednesday morning, a cluster member harvests

squash. This is brought to the nearby City of Cagayan de Oro,
about 2 hours drive from Impasugong. The squash is
unloaded at the consolidation center of the Northern
Mindanao Vegetable Producers Association, Inc. (NVCC).
KFI is a member of the NorminVeggies that owns the facility
established with counterpart support from the vegetable
association’s development partners, particularly the
Department of Agriculture (DA) and the Growth with Equity in
Mindanao Program (GEM-USAID). As member, KFI gets an
allocation of NorminVeggies market for its assisted farmers
not only for squash but for 4 other vegetables, namely: sweet
pea, eggplant, ampalaya and spring onions and for which
clusters have been formed.

Every Thursday, the cluster member’s squash is marketed by

NorminCorp (the marketing group for NorminVeggies’
members) together with 10 other items to a supermarket in
the neighboring island of Cebu. It is loaded in the boat and
upon arrival in Cebu, the supermarket representative
withdraws the vegetables from the port and brings them to the
supermarket’s warehouse where Normincorp’s representative
will have them received, and then will issue a charge invoice
that is the basis for the admin staff to work on the payment
transfers by bank a week after the vegetables are received.
Normincorp forwards all payments to KFI that facilitates that
KSC’s loans are paid and net payments are given to the
cluster members.

฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
174
 Part III. Cluster Stories to Share

For its marketing service, Normincorp charges a service fee

at the rate of 5 percent of the sale value. With the marketing
fee, the cluster member is also charged another 5 percent of
the sale value for the management fee provided by the cluster
in consolidating the product. Based on experience, the
cluster members are willing to pay the fees as long as they
can be covered by the additional earnings generated from
organized marketing to targeted buyers. Normincorp uses its
bargaining influence in handling high volumes of assorted
vegetables to get the best price possible for the supermarket
and wholesale market where price is pegged weekly and
daily, respectively.

On October 11, 2007 when the price of squash negotiated

with the Cebu supermarket reached PhP 9.50 per kilo, the
price of the Cagayan de Oro spot market traders was only at
PhP 5.00 per kilo Deducting Cebu shipping and handling
costs at PhP1.50 per kilo plus the Normincorp marketing fee
(5 percent of sale value) at PhP 0.48 per kilo, as well as that
of the cluster’s management fee at PhP 0.48 per kilo, the
cluster member still has a net price of PhP 7.04 per kilo which
is way above the trader’s price of PhP 5.00 per kilo at the
Cagayan de Oro wholesale point.

Only 2 tons of squash with weight of a minimum of 2 kilos are

sent to the Cebu supermarket. The rest are sold by
Normincorp to its network of 30 wholesaler/buyers from the
neighboring provinces in Mindanao that are not vegetable
producing. At times when the clusters cannot deliver due to
weather problems, Normincorp taps from other
NorminVeggies’ members so that its market supply
agreements to the supermarket can be complied. This back-
up support has been very helpful that the Impasugong
clusters can sustain and hold the markets.

Only about a year ago, the cluster members were individual

producers with no bargaining influence relative to the
markets. Lacking information on market players, and an
understanding of how markets can work to their advantage,

175 ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
 Part III. Cluster Stories to Share

they just involved themselves up to production and sold their

vegetables to the local assemblers or agents of the
wholesaler/traders in the nearby Agora wholesale market in
Cagayan de Oro City.

With the CRS program support where farmers could be

organized into clusters and could undertake production
programs, they have become a part of a value chain. But
while there is benefit in being part of the value chain, there is
also the work, the problems and the risks. And it has not
been easy complying with the supply commitments when
some farmers got affected with the white fly problem that
reduced the yields and when there was too much rain in
September that affected production. These challenges
encountered made it necessary that the clusters work within a
vegetable association where back-up supply could be
provided as the farmers were still learning about their
production systems and when uncontrollable factors like the
climate adversely affected yields.

As part of the chain moving to the supermarket with other

suppliers in NorminVeggies, the Impasugong cluster farmers
could undertake various activities (planting, crop
management, harvesting, sorting, grading, packaging,
shipping, selling to choiced markets) that give them higher
earnings which individually would be difficult for them all to
do. And the more the value chain is studied and discussed
with them, the more incentive is for them to work together to
earn more through joint marketing.

Contributed by Denis Pace, KFI Project Coordinator; Lou Ann

Gomez, KFI Marketing Officer and Juanito Barsomo, CRS
Agroenterprise Coordinator for Bukidnon

฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
176