Food security experts looking for innovative ways to connect smallhold farmers to increasingly competitive and fast-moving modern markets turned for answers recently to a group of Mindanao growers.
Agribusiness leaders and senior officials from 30 countries listened closely as Joan Cua Uy, vice president for marketing of the Northern Mindanao Vegetable Producers Association, Inc. (NorminVeggies), described how her group of smallhold farmers created economies of scale, ensured efficient market delivery, and made effective use of partnerships to attract quality-conscious institutional buyers.
Uy was a speaker at Food for All, an international investment forum for food security in Asia and the Pacific organized by the Asian Development Bank (ADB), UN’s Food and Agriculture Organization (FAO) and International Fund for Agricultural Development (IFAD), and co-sponsored by the U.S. Agency for International Development (USAID) and Asia Foundation.
NorminVeggies, which began with a dozen grower-members with farms of two to 10 hectares each, now has 177 core members working with about 7,000 affiliate growers in the provinces of Bukidnon and Misamis Oriental.
Through its “private-private” partnerships with these affiliate growers, it supplies bulk-buying institutional clients in Visayas and Luzon with approximately 70 metric tons of vegetables weekly, in addition to supplying more traditional markets in Mindanao.
Its institutional buyers include a major supermarket chain and a high-end hotel, consolidators for fast food chains like KFC, and hotel and restaurant distributors.
This was made possible, Uy said, through NorminVeggies’ use of “commodity clustering,” in which groups of farmers focus on the production of a specific commodity and program their harvests to coincide with shipment schedules agreed upon by both buyers and growers.
This creates economies of scale and helps growers to negotiate better prices for their produce.
“The cluster provides the mechanism for quality control, for quick response to buyer feedback, as well as for implementation of market-related innovations as needed,” said Uy.
Commodity clustering is not new to Mindanao , where it has long been practiced through contract-growing agreements between farmers and large multinational agribusiness firms.
What makes NorminVeggies’ approach different is that it builds on partnerships between relatively small-scale “independent” growers with other sources of income, and some access to capital and technology—its core members—and what it refers to as “small” growers with tiny family-operated farms, of which Mindanao has thousands.
To ensure the efficient product flow from the farms to the buyers, NorminVeggies assumes the role of supply chain manager that coordinates, for a fee, the interaction among the small farmers, buyers, service providers—such as seed and logistics companies—and other market actors.
“We see ourselves as growers who are also able to provide business development services for which other growers are prepared to pay,” Uy said.
NorminVeggies developed its value chain with the help of USAID’s Growth with Equity in Mindanao (GEM) Program, which works with industry associations and chambers of commerce to accelerate economic growth in the region.
The GEM Program provided NorminVeggies with training in Good Agricultural Practices (GAP), improved post-harvest handling techniques, marketing and logistics assistance, and other key interventions as the association developed.
Uy said that GEM’s assistance in strengthening NorminVeggies’ market value chain was what enabled the association to “break through” as a supplier to institutional buyers.
She added that NorminVeggies’ clusters always produce fifty percent more than required by their contracts. In this way, any deficiency in the production of one grower can be covered by the other growers. After the vegetables are sorted and graded for the contracting buyer, the surplus is sold in traditional wet markets. –-more-
Today, NorminVeggies is working under new private-private partnerships to expand its markets. Recently it collaborated with the Vegetable Industry Council of Southern Mindanao (VICSMIN) to supply vegetables to an international chain hotel in Davao City .
NorminVeggies also partnered with the Department of Agriculture (DA) and the GEM Program in creating the Northern Mindanao Vegetable Consolidaton Center (NVCC) in Cagayan de Oro City, which serves as the association’s trading platform for collecting and distributing produce to various buyers. The DA has provided rain-shelters to NorminVeggies’ grower-members to help them produce good-quality, high-value vegetables on a consistent basis.
Uy said that despite NorminVeggies’ pragmatic, market-oriented approach, it remains a non-stock, non-profit organization whose members are taking the long view in strengthening the sector and increasing the capability of Mindanao’s small farmers to participate in market supply chains.
“After my presentation at ADB, participants came up to me to say that NorminVeggies’ experience validated the theory that small growers cannot do it alone, and cannot depend only on government. There has to be collaboration within the private sector itself,” she said.
Echoing the observations of other ADB presenters, Uy pointed out that small farmers need about two years’ “nurturing” before they can venture into the modern market supply chain on their own.
They need to fully understand their production/supply capacity, plan their course of action, and conduct test marketing before venturing into a supply arrangement, she added.
NorminVeggies is now working with NGOs such as Catholic Relief Services and Philam Foundation, and with local government units, to further increase small farmers’ capabilities in this area. It is also establishing relationships with academic and financing institutions.
It continues to collaborate with the DA, GEM, and other industry groups like VICSMIN in holding industry events to promote commodity clustering and updated agriculture technologies in Mindanao. (GEM)
