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Survey on Issue Analysis of Food Value Chain in the Philippines Final Report

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Survey on Issue Analysis of Food Value Chain in the Philippines Final Report REPUBLIC OF THE PHILIPPINES SURVEY ON ISSUE ANALYSIS OF FOOD VALUE CHAIN IN THE PHILIPPINES FINAL REPORT AUGUST 2019 JAPAN INTERNATIONAL COOPERATION AGENCY (JICA) PwC PHILIPPINES RD JR 19-024 Survey on Issue Analysis of Food Value Chain in the Philippines Table of contents Executive Summary ................................................................................................................................ 1 Chapter 1. Background and context ........................................................................................................ 3 1.1. Background of the study .................................................................................................................. 3 1.2. Goal and objectives of the study ...................................................................................................... 6 1.3. Methodology .................................................................................................................................... 6 1.4. Overview of the vegetable sub-sector in the Philippines ................................................................. 8 1.4.1. Importance of vegetable production in Luzon...................................................................... 8 1.4.2. Highland vegetable production ............................................................................................ 8 1.4.3. Lowland vegetable production ............................................................................................. 9 1.4.4. Import and export of vegetables ......................................................................................... 11 1.4.5. Factors driving vegetable consumption .............................................................................. 13 Chapter 2. Involvement of the public and private sectors in the food value chain ............................... 16 2.1. Major corporations in each value chain node ................................................................................ 16 2.2. Japanese companies in the Philippine agriculture business ........................................................... 18 2.3. Trends in the Philippine agriculture and food enterprises ............................................................. 19 2.3.1. Production .......................................................................................................................... 19 2.3.2. Marketing, retail, and distribution ...................................................................................... 20 2.3.3. Processing........................................................................................................................... 21 2.3.4. Logistics ............................................................................................................................. 22 2.3.5. Consumer trends ................................................................................................................. 23 2.4. Relevant projects implemented in the Philippine agriculture sector .............................................. 23 2.4.1. Japanese public institutions ................................................................................................ 23 2.4.2. Japan Agricultural Exchange Council (JAEC) programs ................................................... 24 2.4.3. Related donor organizations ............................................................................................... 25 Chapter 3. Description of the vegetable value chain............................................................................. 30 3.1. Overview of the highland and lowland project areas ..................................................................... 30 3.1.1. Benguet highland vegetable production ............................................................................. 30 3.1.2. Quezon lowland vegetable production ............................................................................... 32 3.2. Vegetable value chain mapping ..................................................................................................... 35 3.2.1. Highland vegetable value chain (HVVC) .......................................................................... 35 3.2.2. Lowland vegetable value chain (LVVC) ............................................................................ 41 3.2.3. Common players for both the lowland and highland vegetable value chains .................... 44 3.3. Regulatory framework and economic policies governing the value chain .................................... 48 3.3.1. Regulatory framework ........................................................................................................ 48 3.3.2. Economic policy ................................................................................................................. 49 3.3.3. Taxation system.................................................................................................................. 50 i Survey on Issue Analysis of Food Value Chain in the Philippines 3.3.4. Quality control standards and certification ........................................................................ 53 3.3.5. Agricultural financing and insurance ................................................................................. 55 3.3.6. Recent policy developments and implementation in the agriculture sector ....................... 58 Chapter 4. Dynamics in the vegetable value chain ............................................................................... 60 4.1. Linkages and relationships of value chain players ......................................................................... 60 4.1.1 Price setting and price trends............................................................................................... 60 4.1.2. Margin distribution ............................................................................................................. 66 4.1.3. Marketing or product strategies .......................................................................................... 67 4.1.4. Value chain governance ..................................................................................................... 70 4.1.5. Vegetable flow ................................................................................................................... 70 4.1.6 Transport route of the vegetable value chain ...................................................................... 75 4.2. Vegetable value chain performance ............................................................................................... 80 4.2.1 Profitability.......................................................................................................................... 80 4.2.2. Supply and production growth trends ................................................................................ 84 4.2.3. Equity ................................................................................................................................. 86 Chapter 5. Constraints in the value chain ............................................................................................. 89 5.1. Input node ...................................................................................................................................... 89 5.1.1. High cost of inputs ............................................................................................................. 89 5.1.2. Lack of access to improved production inputs ................................................................... 89 5.1.3. Lack of private sector involvement in improving agricultural inputs ................................ 89 5.2. Production ...................................................................................................................................... 89 5.2.1. Organizational and management failures ........................................................................... 89 5.2.2. Improper traditional farm practices .................................................................................... 90 5.2.3. Lack of hands-on training and provision of needed materials ........................................... 90 5.2.4. Seasonal price fluctuation of produce ................................................................................ 90 5.3. Processing ...................................................................................................................................... 90 5.3.1. Non-integration of vegetable processing in the vegetable value chain .............................. 90 5.3.2. Lack of processing technology and research prioritization ................................................ 90 5.4. Marketing ....................................................................................................................................... 91 5.4.1. Lack of direct market access .............................................................................................. 91 5.4.2. Lack of access to market information ................................................................................ 91 5.5. Logistics ......................................................................................................................................... 91 5.5.1. Constraints in the farm-to-market roads ............................................................................. 91 5.5.2. Constraints in the transport to other markets .....................................................................
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