The International Plant Genetic Resources Institute (IPGRI) is an independent international scientific organization that seeks to advance the conservation and use of plant genetic diversity for the well-being of present and future generations. It is one of 15 Future Harvest Centres supported by the Consultative Group on International Agricultural Research (CGIAR), an association of public and private members who support efforts to mobilize cutting-edge science to reduce hunger and poverty, improve human nutrition and health, and protect the environment. IPGRI has its headquarters in Maccarese, near Rome, Italy, with offices in more than 20 other countries worldwide. The Institute operates through three programmes: (1) the Plant Genetic Resources Programme, (2) the CGIAR Genetic Resources Support Programme and (3) the International Network for the Improvement of Banana and Plantain (INIBAP). The international status of IPGRI is conferred under an Establishment Agreement which, by January 2003, had been signed by the Governments of Algeria, Australia, Belgium, Benin, Bolivia, Brazil, Burkina Faso, Cameroon, Chile, China, Congo, Costa Rica, Côte d’Ivoire, Cyprus, Czech Republic, Denmark, Ecuador, Egypt, Greece, Guinea, Hungary, India, Indonesia, Iran, Israel, Italy, Jordan, Kenya, Malaysia, Mauritania, Morocco, Norway, Pakistan, Panama, Peru, Poland, Portugal, Romania, Russia, Senegal, Slovakia, Sudan, Switzerland, Syria, Tunisia, Turkey, Uganda and Ukraine. Financial support for IPGRI’s research is provided by more than 150 donors, including governments, private foundations and international organizations. For details of donors and research activities please see IPGRI’s Annual Reports, which are available in printed form on request from [email protected] or from IPGRI’s Web site (www.ipgri.cgiar.org). The geographical designations employed and the presentation of material in this publication do not imply the expression of any opinion whatsoever on the part of IPGRI or the CGIAR concerning the legal status of any country, territory, city or area or its authorities, or concerning the delimitation of its frontiers or boundaries. Similarly, the views expressed are those of the authors and do not necessarily reflect the views of these organizations. Mention of a proprietary name does not constitute endorsement of the product and is given only for information.
Citation: Batugal, Pons and Rodolfo E Coronel, editors. 2004. Poverty Reduction in Coconut Growing Communities, Volume II: Mobilizing for Action. International Plant Genetic Resources Institute – Regional Office for Asia, the Pacific and Oceania (IPGRI-APO), Serdang, Selangor DE, Malaysia.
ISBN 92-9043-628-X IPGRI-APO PO Box 236, UPM Post Office Serdang 43400 Selangor Darul Ehsan Malaysia
Cover pictures: Ajith Samarajeewa, Kamlesh Puran, Jayashree Kanniah, Rudy Coronel, & Jeffrey T Oliver Cover design: Rodolfo E Coronel and Jeffrey T Oliver
© International Plant Genetic Resources Institute, 2004
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Contents
Foreword
Introduction
Chapter 1: Preparatory Activities Organizing the Project Management Team Identifying and Selecting the Project Sites (Communities) in Each Country Designing and Conducting the Baseline Survey Establishing and/or Strengthening Community-based Organizations Establishing a Microcredit System and a Revolving Fund Conducting Market Surveys and Developing Market Channels Developing Farmers’ and Women’s Action Plans Sourcing, Documenting and Testing Village-level Technology and Machinery Assessing Training Needs and Conducting Appropriate Training Establishing an Input Supply System Identifying and Characterizing Suitable Coconut Farmers’ Varieties and Establishing Community-managed Seedling Nurseries Establishing Institutional Linkages and Support System
Chapter 2: Supporting Strategies and Technologies Establishing and Managing Community-based Organizations in Coconut Growing Communities Developing Microcredit System in Coconut Growing Communities Establishing and Managing a Microcredit System: The Grameen Bank Experience Analyzing the Profitability of Coconut-based Farming Systems Conducting Market Surveys and Developing Market Channels Machineries and Equipment for Processing Coconut By-Products Producing High-Value Coconut Fibre-Based Products Producing High-Value Coconut Wood-Based Products Producing High-Value Coconut Shell-Based Products Producing Coconut Candy and Confectionery Products Producing Coconut Sugar Evaluating the Performance of Village-level Coconut Oil Mills Intercropping in a Coconut-Based Farming System Livestock and Feed/Fodder Production in a Coconut-Based Farming System
Chapter 3: Monitoring and Evaluation Project Monitoring and Reporting System Project Awards
Foreword
The strength of the International Plant Genetic Resources Institute (IPGRI) lies on technical expertise in plant genetic resources (PGR). Current strategic thinking of the Institute, however, dictates finding a way to clearly demonstrate the “link” between conserving plant genetic resources with food security, enhancing income, especially of small farmers and protecting the environment. Lessons from the past have taught us that poor farmers cannot conserve plant diversity unless they directly benefit from them. Hence, innovative model/s has/have to be tried to find this “missing link”. The challenge is: how to translate PGR conservation and use to poverty reduction and environmental enhancement. The International Coconut Genetic Resources Network (COGENT) implements “Developing Sustainable Coconut-based Income Generating Technologies in Poor Coconut Growing Communities” dubbed as “Poverty Reduction in Coconut Growing Communities” (PRCGC). This project is a pioneering initiative of IPGRI to demonstrate the link between conserving plant genetic resources (focusing on coconut) and food security, sustainable livelihoods and incomes. In the process, COGENT documents its experiences and observations in the project for sharing to other institutions or organizations, hoping that they can pick-up lessons relevant to their line of work. Herein, COGENT tries to briefly describe the major activities and processes before embarking on coconut-based income generating activity (IGA) trials and enhancing coconut genetic diversity through on-farm conservation and utilization. This publication may not be complete, but it can serve as a guide or reference for future similar projects of IPGRI or other organizations. Interested parties are encouraged to innovate, modify, adapt and be creative in their approach(es) depending on the sociocultural and political situations where they intend to implement similar projects. The preparatory activities include organizing project management team in every country (Bangladesh, Fiji, India, Indonesia, Papua New Guinea, Philippines, Sri Lanka and Vietnam) to manage field project implementation; selecting the project sites to pilot test the income generating technologies and strategies that will demonstrate that “farmers need not be poor”; design and conduct of baseline data gathering to establish the status of the partner-beneficiaries and of the community, in general, so that changes or improvements can be measured towards the end of the project support; organizing farmers so that they can benefit from the strengths of one another and build their institutional capacity and confidence to play a major role in their community development and influence policy reforms; establishing microcredit system and revolving loan funds to provide opportunities to resource poor farmers and women to access capital to be used for their productive and entrepreneurial skills; market survey to identify the potential high-demand products to produce and develop market channels to attain maximum profits. From here, development of action plans by the farmers and women member of the CBO follows to focus on producing products they find profitable and of potential high market demand. Technology transfer and training to build capacity and skills, and increase opportunities of the farmers and their household to enhance food security and incomes are being promoted across communities and countries. Technologies and simple, low-cost village-level machineries identified and tested in the previous IFAD funded projects are being tested and evaluated in selected community project sites for economic viability, technical feasibility, environmental soundness and sociocultural acceptability. Establishment of community-managed nurseries in every community is included to sustain propagation and distribution of suitable coconut
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varieties and other plant cultivars for intercrops, including feeds and fodder for livestock raising. Inherent to this is the characterization, identification and paint- marking of coconut farmers’ varieties that are high-value and high-yielding where seednuts are being sourced out for propagation in the nurseries and eventual distribution to CBO members and other interested farmers. Networking and linkages is also emphasized to explore and access support from other organizations for technologies, materials, equipment, funds and others. The generic manuals on supporting strategies and technologies for project implementation are also featured in condensed form. Supporting strategies are provided on community-based organizing, microcredit establishment, conducting market survey and developing market channels, conduct of profitability analysis for identified income generating activities and oilmill evaluation. The supporting technologies are focused on processing of coconut kernel and by-products such as shell, husks, wood, and sap, technologies on intercropping and livestock and feed/fodder production. Each manual presents the description and rationale, and most importantly the “How-To’s” or steps and procedures in implementing or undertaking each strategy or technology. The monitoring and evaluation system is likewise presented to measure achievements and potential impacts. Forms are annexed, their rationale enumerated and how and when to use them are explained. It is our hope that others will find this publication as a useful guide and reference. We also encourage users to document their experiences and share them to others, so that eventually, we can develop a compendium of “best practices” in demonstrating and translating the “link” of plant genetic resources conservation to poverty reduction and environmental enhancement.
Percy E. Sajise Regional Director International Plant Genetic Resources Institute Regional Office for Asia, the Pacific and Oceania (APO)
Introduction
Coconut farmers are poor due to declining productivity of ageing coconut palms and unstable markets and low prices of copra (dried kernel), their traditional product. A wide range of coconut diversity exist which, if strategically conserved and used, could support sustainable production. But these are threatened by genetic erosion and farmers could not afford to conserve nor plant more coconuts unless they earned more from the crop. There are also a lot of value-adding income generating opportunities that could enhance their incomes. COGENT believes that farmers can earn more and would not abandon their “tree of life” if, in addition to producing the raw materials, they also engaged in income- generating activities in the processing, marketing and consumption stages of the commodity chain. However, resource-poor farmers do not have access to appropriate village-level technologies and machineries, capital and markets which are needed to make this possible. The ADB-funded project of COGENT entitled “Poverty reduction in coconut growing communities” is testing this hypothesis - that coconut farmers need not be poor. This test will be conducted in 24 coconut growing communities in eight Asia Pacific countries, namely: Bangladesh, India, Sri Lanka, Indonesia, Philippines, Vietnam, Fiji and Papua New Guinea. The first volume of the publication series entitled “Poverty Reduction in Coconut Growing Communities, Volume I: The Framework and Project Plan” describes the project components and principles upon which the project approach is based and the implementation plan in each of the participating countries. This second volume entitled “Poverty Reduction in Coconut Growing Communities, Volume II: Mobilizing for Action”, describes the village-level technologies and machineries; ways by which the community livelihoods capital can be generated and managed as a sustainable microcredit system and how markets can be identified and market channels established. It also describes the preparatory activities such as training, community organizing, baseline socioeconomic surveys and the proposed system for monitoring and evaluation. The summary of planned activities and target outputs of the project are contained in Annex 1 which will be the basis of the third volume of this publication series entitled “Poverty Reduction in Coconut Growing Communities, Volume III: Achievements and Impact”, which will be published soon.
Pons Batugal Coordinator International Coconut Genetic Resources Network (COGENT)
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Annex 1. Summary table of activities and target outputs of the eight countries participating in the ADB-funded “Poverty Reduction in Coconut Growing Communities” Project (January 2002 - December 2004)
TARGET OUTPUTS PROJECT India Papua New ACTIVITIES Sri Lanka c/o CPCRI c/o Peekay Bangladesh Indonesia Philippines Fiji Vietnam Guinea (2 sites) Tree (1 site) I. CAPACITY BUILDING A. Establishment of Community-Based Organizations (CBOs) (CBO incorporated and 3 CBOs 2 CBOs 1 CBO 3 CBOs 3 CBOs 3 CBOs 3 CBOs 3 CBOs 3 CBOs registered with appropriate government agency) B. Training of Per project Per project Per project Per project Per project Per project Per project Per project Per project officers/leaders and site: site: site: site: site: site: site: site: site: members on : 10 officers/ 10 officers/ 10 officers/ 10 officers/ 10 officers/ 10 officers/ 10 officers/ 10 officers/ 10 officers/ (1) CBO leaders leaders leaders leaders leaders leaders leaders leaders leaders management and at least 100 at least 100 at least 100 at least 100 at least 100 at least 100 at least 100 at least 100 at least 100 responsibilities; members members members members members members members members members and (2) Microcredit system and management C. Identification of Per project Per project Per project Per project Per project Per project Per project Per project Per project marketable products site: site: site: site: site: site: site: site: site: At least: At least: At least: At least: At least: At least: At least: At least: At least: 3 high value 3 high value 3 high value 3 high value 3 high value 3 high value 3 high value 3 high value 3 high value coconut coconut coconut coconut coconut coconut coconut coconut coconut products products products products products products products products products 3 crop 3 crop 3 crop 3 crop 3 crop 3 crop 3 crop 3 crop 3 crop products products products products products products products products products 3 livestock 3 livestock 3 livestock 3 livestock 3 livestock 3 livestock 3 livestock 3 livestock 3 livestock products products products products products products products products products D. Evaluation of oil Per country: Per country: - Per country: Per country: Per country: Per country: Per country: Per country: extraction machines 2 machines 2 machines 2 machines 2 machines 2 machines 2 machines 2 machines 2 machines
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TARGET OUTPUTS PROJECT India Papua New ACTIVITIES Sri Lanka Bangladesh Indonesia Philippines Fiji Vietnam c/o CPCRI c/o Peekay Guinea (2 sites) Tree (1 site) E. Evaluation of other Per project Per project Per project Per project Per project Per project Per project Per project Per project processing machines site: site: site: site: site: site: site: site: site: (Each country should At least 1 At least 1 At least 1 At least 1 At least 1 At least 1 At least 1 At least 1 At least 1 evaluate at least 3 of 5 machinery for machinery for machinery for machinery for machinery for machinery for machinery for machinery for machinery for machines for meat, meat, fibre, meat, fibre, meat, fibre, meat, fibre, meat, fibre, meat, fibre, meat, fibre, meat, fibre, meat, fibre, fibre, shell, leaf & wood shell, leaf or shell, leaf or shell, leaf or shell, leaf or shell, leaf or shell, leaf or shell, leaf or shell, leaf or shell, leaf or products) wood product wood product wood product wood product wood product wood product wood product wood product wood product F. Development of action plans for income- generating activities 1 per project 1 per project 1 per project 1 per project 1 per project 1 per project 1 per project 1 per project 1 per project 1. Farmers’ action plan site site site site site site site site site 2. Women’s action plan 1 per project 1 per project 1 per project 1 per project 1 per project 1 per project 1 per project 1 per project 1 per project site site site site site site site site site G. Fabrication of selected Per country: Per project site: Per project site: Per country: Per country: Per country: Per country: Per country: Per country: inexpensive processing 1-3 machines 1-3 machines 1-3 machines 1-3 machines 1-3 machines 1-3 machines 1-3 machines 1-3 machines 1-3 machines machines from (E) above II. TRAINING OF FARMERS AND WOMEN A. High-value products Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: 100 100 100 100 100 100 100 100 100 participants participants participants participants participants participants participants participants participants with at least with at least with at least with at least with at least with at least with at least with at least with at least 20% women 20% women 20% women 20% women 20% women 20% women 20% women 20% women 20% women at least 2 at least 2 at least 2 at least 2 at least 2 at least 2 at least 2 at least 2 at least 2 researchers & researchers & researchers & researchers & researchers & researchers & researchers & researchers & researchers & 4 extension 4 extension 4 extension 4 extension 4 extension 4 extension 4 extension 4 extension 4 extension workers workers workers workers workers workers workers workers workers B. Intercropping Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: 100 100 100 100 100 100 100 100 100 participants participants participants participants participants participants participants participants participants with at least with at least with at least with at least with at least with at least with at least with at least with at least 20% women 20% women 20% women 20% women 20% women 20% women 20% women 20% women 20% women at least 2 at least 2 at least 2 at least 2 at least 2 at least 2 at least 2 at least 2 at least 2 researchers & researchers & researchers & researchers & researchers & researchers & researchers & researchers & researchers & 4 extension 4 extension 4 extension 4 extension 4 extension 4 extension 4 extension 4 extension 4 extension workers workers workers workers workers workers workers workers workers
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TARGET OUTPUTS PROJECT India Papua New ACTIVITIES Sri Lanka c/o CPCRI c/o Peekay Bangladesh Indonesia Philippines Fiji Vietnam Guinea (2 sites) Tree (1 site) C. Livestock production Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: 100 100 100 100 100 100 100 100 100 participants participants participants participants participants participants participants participants participants with at least with at least with at least with at least with at least with at least with at least with at least with at least 20% women 20% women 20% women 20% women 20% women 20% women 20% women 20% women 20% women at least 2 at least 2 at least 2 at least 2 at least 2 at least 2 at least 2 at least 2 at least 2 researchers & researchers & researchers & researchers & researchers & researchers & researchers & researchers & researchers & 4 extension 4 extension 4 extension 4 extension 4 extension 4 extension 4 extension 4 extension 4 extension workers workers workers workers workers workers workers workers workers D. Feed formulation Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: At least 5 At least 5 At least 5 At least 5 At least 5 At least 5 At least 5 At least 5 At least 5 farmers trained farmers trained farmers trained farmers trained farmers trained farmers trained farmers trained farmers trained farmers trained in item (C) in item (C) in item (C) in item (C) in item (C) in item (C) in item (C) in item (C) in item (C) above above above above above above above above above III. PRODUCTION AND MARKETING A. Identification, Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: production and At least 3 At least 3 At least 3 At least 3 At least 3 At least 3 At least 3 At least 3 At least 3 marketing of high- different high- different high- different high- different high- different high- different high- different high- different high- different high- value coconut value coconut value coconut value coconut value coconut value coconut value coconut value coconut value coconut value coconut products products (one products (one products (one products (one products (one products (one products (one products (one products (one from meat, from meat, from meat, from meat, from meat, from meat, from meat, from meat, from meat, fibre, shell, leaf fibre, shell, leaf fibre, shell, leaf fibre, shell, leaf fibre, shell, leaf fibre, shell, leaf fibre, shell, leaf fibre, shell, leaf fibre, shell, leaf or wood) or wood) or wood) or wood) or wood) or wood) or wood) or wood) or wood) IV. INTERCROPPING TRIALS A. Cash crops Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project 3 types of 3 types of 3 types of 3 types of 3 types of 3 types of 3 types of 3 types of site: annuals annuals annuals annuals annuals annuals annuals annuals 3 types of at least 1 at least 1 at least 1 at least 1 at least 1 at least 1 at least 1 at least 1 annuals perennial perennial perennial perennial perennial perennial perennial perennial at least 1 crop crop crop crop crop crop crop crop perennial at least 50 at least 50 at least 50 at least 50 at least 50 at least 50 at least 50 at least 50 crop farmers farmers farmers farmers farmers farmers farmers farmers at least 50 involved involved involved involved involved involved involved involved farmers involved
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TARGET OUTPUTS PROJECT India Papua New ACTIVITIES Sri Lanka c/o CPCRI c/o Peekay Bangladesh Indonesia Philippines Fiji Vietnam Guinea (2 sites) Tree (1 site) B. Food security crops Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: 3 types of 3 types of 3 types of 3 types of 3 types of 3 types of 3 types of 3 types of 3 types of crops crops crops crops crops crops crops crops crops at least 50 at least 50 at least 50 at least 50 at least 50 at least 50 at least 50 at least 50 at least 50 farmers farmers farmers farmers farmers farmers farmers farmers farmers involved involved involved involved involved involved involved involved involved C. Sourcing and CRISL (for CPCRI Coconut BARI Agricultural PCA Wainigata PNGCCRI SOFRI propagation of quality coconut Kerala Agri. Development BADC University Research NARI Other certified plant materials for seednuts) University Board DAE and State Station DAL agencies Agrarian (KAU) CPCRI Hort Centre Government local intercrops identified in (A) and (B) above services Tamil Nadu Agricultural extension centers Agri. University services University Department compound (TNAU) State Gov’t Centers V. LIVESTOCK A. Livestock production Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: 3 types of 3 types of 3 types of 3 types of 3 types of 3 types of 3 types of 3 types of 3 types of livestock livestock livestock livestock livestock livestock livestock livestock livestock involving at involving at involving at involving at involving at involving at involving at involving at involving at least 50 least 50 least 50 least 50 least 50 least 50 least 50 least 50 least 50 farmers farmers farmers farmers farmers farmers farmers farmers farmers B. Pasture, fodder and Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: legumes At least 1 type At least 1 type At least 1 type At least 1 type At least 1 type At least 1 type At least 1 type At least 1 type At least 1 type
each of each of each of each of each of each of each of each of each of pasture, pasture, pasture, pasture, pasture, pasture, pasture, pasture, pasture, legume & legume & legume & legume & legume & legume & legume & legume & legume & fodder, fodder, fodder, fodder, fodder, fodder, fodder, fodder, fodder, involving at involving at involving at involving at involving at involving at involving at involving at involving at least 50 least 50 least 50 least 50 least 50 least 50 least 50 least 50 least 50 farmers farmers farmers farmers farmers farmers farmers farmers farmers
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TARGET OUTPUTS PROJECT India Papua New ACTIVITIES Sri Lanka c/o CPCRI c/o Peekay Bangladesh Indonesia Philippines Fiji Vietnam Guinea (2 sites) Tree (1 site) C. Local feed Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: formulation by each At least 1 feed At least 1 feed At least 1 feed At least 1 feed At least 1 feed At least 1 feed At least 1 feed At least 1 feed At least 1 feed CBO formulation per formulation per formulation per formulation per formulation per formulation per formulation per formulation per formulation per type of type of type of type of type of type of type of type of type of livestock livestock livestock livestock livestock livestock livestock livestock livestock D. Sourcing and CRISL KAU KAU Livestock Livestock DAR cattle Animal Dept. of Authorized multiplication of VRISL TNAU Animal Research State dispersal Health & Agri. & agencies quality livestock for Local State Husbandry Institute Government programme Production Livestock from the loan or distribution livestock Government Department Center Division research government distribution Centers National private Suggestion: CBOs programmes banks’ loan sectors should explore the programmes possibility of linking Nabard with appropriate NGOs for this activity VI. COCONUT DIVERSITY A. Characterization of CRISL CPCRI Survey to be BARI scientists RICP and PCA-ZRC to Taveuni Survey to be OPI scientists existing coconut scientists to scientists to conducted to characterize CRIEC conduct Coconut Center conducted to characterize varieties in each characterize characterize coconut scientists to varietal & Wainigata coconut project site using: coconut coconut varieties in characterize surveys in Research varieties in 1. Farmers’ protocol varieties in varieties in each each site using coconut each site Station each site (to be provided by each site site the varieties in each scientists to COGENT) STANTECH site characterize 2. STANTECH Manual coconut protocol varieties in each 3. Molecular markers site - COGENT to provide additional * * budget (except those with asterisk*)
B. Identification of high- Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: yielding (HY) and 3 HY 3 HY 3 HY 3 HY 3 HY 3 HY 3 HY 3 HY • 3 HY high-value (HV) 2 HV 2 HV 2 HV 2 HV 2 HV 2 HV 2 HV 2 HV
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TARGET OUTPUTS PROJECT India Papua New ACTIVITIES Sri Lanka c/o CPCRI c/o Peekay Bangladesh Indonesia Philippines Fiji Vietnam Guinea (2 sites) Tree (1 site) coconut varieties • 2 HV
C. Establishment of Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: community-managed 2 coconut 2 coconut 2 coconut 2 coconut 2 coconut 2 coconut 2 coconut 2 coconut 2 coconut nurseries for nurseries nurseries nurseries nurseries nurseries nurseries nurseries nurseries nurseries propagation and sale 1 integrated 1 integrated 1 integrated 1 integrated 1 integrated 1 integrated 1 integrated 1 integrated 1 integrated of : nursery for nursery for nursery for nursery for nursery for nursery for nursery for nursery for nursery for 1 Coconuts intercrops intercrops intercrops intercrops intercrops intercrops intercrops intercrops intercrops 2. Intercrops and pasture/ and pasture/ and pasture/ and pasture/ and pasture/ and and pasture/ and pasture/ and pasture/ 3. Pasture/Fodder/ fodder/ fodder/ fodder/ fodder/ fodder/ pasture/fodde fodder/ fodder/ fodder/ Legumes legumes legumes legumes legumes legumes r/ legumes legumes legumes legumes D. Planting of 5 coconut Per project Per project Per project Per project Per project Per project Per project Per project Per project seedlings per year site per year: site per year: site per year: site per year: site per year: site per year: site per year: site per year: site per year: 5 seedlings 5 seedlings 5 seedlings 5 seedlings 5 seedlings 5 seedlings 5 seedlings 5 seedlings 5 seedlings per 100 per 100 per 100 per 100 per 100 per 100 per 100 per 100 per 100 farmer/ farmer/ farmer/ farmer/ farmer/ farmer farmer/ farmer/ farmer/ women women women women women /women women women women participants participants participants participants participants participants participants participants participants
VII. DISSEMINATION AND PROMOTION OF RESEARCH RESULTS A. Development of Per project Per project Per project Per project Per project Per project Per project Per project Per project Techno guides (TGs) site per year: site per year: site per year: site per year: site per year: site per year: site per year: site per year: site per year: / Extension Bulletins 3 TGs (in 6 TGs/EBs 3 EBs (local 2 TGs (local 2 TGs/ EBs 15 TGs 2 TGs/EBs at least 3 2 TGs (EBs) English & relevant language) dialects) (relevant (local (relevant TGs/EBs 2 EBs national languages 2 EBs languages/ dialects) languages/ (national language) dialects) dialects) language) 1 brochure on HVP B. Seminar/presentation At least once At least once 2 seminars 4 seminars At least once At least once At least once At least once At least once about project a year a year per year per year a year a year a year a year a year C. Publication of At least 1 At least 1 At least 1 At least 1 3 scientific 2 scientific 3 scientific 3 scientific At least 1 scientific paper scientific scientific scientific paper scientific paper papers a year papers a year papers a year papers a year scientific paper a year paper a year a year a year paper a year
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TARGET OUTPUTS PROJECT India Papua New ACTIVITIES Sri Lanka c/o CPCRI c/o Peekay Bangladesh Indonesia Philippines Fiji Vietnam Guinea (2 sites) Tree (1 site) D. Publication of public At least 2 per 6 in the local 3 in the local & At least 2 per 6 in the local & 6 in the local & 3 in the 3 in the local & 3 – 5 in the awareness materials year & national national dailies year national dailies national dailies national national dailies local and in the national dailies dailies per per year per year per year dailies per per year national dailies year year per year E. Field days At least twice At least twice At least twice At least twice At least twice At least twice At least twice At least twice At least twice per year per per year per per year per site per year per site per year per site per year per per year per per year per site per year per site site site site site VIII. PROJECT MEETINGS/ SITE VISITS A. Meeting of CBO Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: officers/ leaders Once a month Once a month Once a month Once a month Once a month Once a month Once a month Once a month Once a month with report with report with report with report with report with report with report with report with report submitted submitted submitted submitted submitted submitted submitted submitted submitted B. Meeting of CBO Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: members Once per year Once per year Once per year Once per year Once per year Once per year Once per year Once per year Once per year with report with report with report with report with report with report with report with report with report submitted submitted submitted submitted submitted submitted submitted submitted submitted C. Site visits by project Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: Per project site: leader At least once At least once At least once At least once At least once At least once At least once At least once At least once every 2 months every 2 months every 2 months every 2 months every 2 months every 2 months every 2 months every 2 months every 2 months D. Group meetings of country project Twice a year Twice a year Twice a year Twice a year Twice a year Twice a year Twice a year Twice a year Twice a year leader and three (semiannual) (semiannual) (semiannual) (semiannual) (semiannual) (semiannual) (semiannual) (semiannual) (semiannual) community coordinators E. Meetings of project Twice a year Twice a year Twice a year Twice a year Twice a year Twice a year Twice a year Twice a year Twice a year leader with project (semiannual) (semiannual) (semiannual) (semiannual) (semiannual) (semiannual) (semiannual) (semiannual) (semiannual) technical support team IX. REPORTING A. Report of community 30th of every 30th of every 30th of every 30th of every 30th of every 30th of every 30th of every 30th of every 30th of every coordinator to month month month month month month month month month project leader B. Technical and Every year: Every year: Every year: Every year: Every year: Every year: Every year: Every year: Every year: financial report of 15 June and 15 June and 15 June and 15 June and 15 June and 15 June and 15 June and 15 June and 15 June and
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TARGET OUTPUTS PROJECT India Papua New ACTIVITIES Sri Lanka c/o CPCRI c/o Peekay Bangladesh Indonesia Philippines Fiji Vietnam Guinea (2 sites) Tree (1 site) project leader to IPGRI 15 Dec 15 Dec 15 Dec 15 Dec 15 Dec 15 Dec 15 Dec 15 Dec 15 Dec C. Integrated donor 30th June and 30th December of every project year report of IPGRI to ADB X. PROVISION OF EQUIPMENT A. Computer 1 1 unit - 1 unit 1 unit 1 unit 1 unit 1 unit 1 unit 1 unit B. Motorcycles 2 3 units 2 units - 3 units 3 units 3 units 3 units 3 units 3 units 1 The computer and colour printer are for the exclusive use of the project leaders for official communications/e-mail, report preparations, design and printing of Technoguides/Extension Bulletins (with coloured cover pages), production of training materials and other public awareness materials and/or for other purposes related to the implementation of the project. If the project leader is changed or replaced, the said equipment must be turned over to his/her replacement. 2 The motorcycles are intended for the exclusive use of the community coordinators for organizing, monitoring and implementing project activities in their respective project sites. The country coordinators are expected to maintain and use the motorcycle for purposes related to the project only. In case the community coordinator is changed or replaced, the motorcycle should be turned over to his/her replacement.
Chapter 1 PREPARATORY ACTIVITIES
• Organizing the Project Management Team • Identifying and Selecting the Project Sites (Communities) in Each Participating Country • Designing and Conducting the Baseline Survey • Establishing and/or Strengthening Community-Based Organizations • Establishing a Microcredit System and Revolving Fund • Conducting Market Surveys and Developing Market Channels • Developing Farmers’ and Women’s Action Plans • Sourcing, Documenting and Testing Village-Level Technologies and Machinery • Assessing Training Needs and Conducting Appropriate Training • Establishing an Input Supply System • Identifying and Characterizing Suitable Coconut Farmers’ Varieties and Establishing Community-Managed Seedling Nurseries • Establishing Institutional Linkages and Support System
CHAPTER 1: PREPARATORY ACTIVITIES 3
Preparatory activities
Introduction Several preparatory activities were planned and implemented to prepare the participating communities in testing the viability and promoting the use of income- generating technologies. These activities were conducted to address the four major constraints of resource-poor communities in the adoption of income-generating technologies for enhancing incomes, namely: lack of access to capital, markets, machineries and technologies. These preparatory activities also addressed the need to identify and conserve on farm the important coconut diversity that could provide sustainability to coconut production in each of the participating coconut growing communities. Finally, they provided the needed institutional support to planning, mobilizing and evaluating the project. The latter, in addition to the baseline survey, will be used as a basis for impact assessment of the project. The preparatory activities which are discussed in this section serve as the general guideline for the implementation of the project. However, as socioeconomic and political situations vary in the eight participating countries, specific details may differ depending on the conditions in each particular community. The activities conducted are enumerated below and described in the article that follows: 1. Organization of the Project Management Team 2. Selecting communities as project sites 3. Design and conduct of baseline survey 4. Establishment and strengthening of community-based organizations 5. Establishment of a microcredit system and revolving fund 6. Conduct of market surveys and development of market channels 7. Development of farmers’ and women’s action plans 8. Village-level technology and machinery sourcing, documentation and testing 9. Training needs assessment and conduct of appropriate training 10.Establishment of input-supply system 11.Identification and characterization of suitable farmers’ varieties and establishment of community-managed nurseries 12.Establishment of institutional linkages and support system
Organizing the project management team
The COGENT Secretariat The Secretariat of the International Coconut Genetic Resources Network (COGENT) is the executive body tasked to oversee and coordinate the activities of the participating member countries in the implementation of the Asian Development Bank (ADB)-funded Poverty Reduction in Coconut Growing Communities (PRCGC) project. The Secretariat is based in the International Plant Genetic Resources Institute, Regional Office for Asia, the Pacific and Oceania (IPGRI-APO), Serdang, Selangor Darul Ehsan, Malaysia. It is headed by a Project Coordinator supported by Scientific, Programme, Communications, and Training Assistants, and a Secretary (see Annex 1 for the organizational chart and list of staff).
Identifying and selecting the participating countries COGENT initially identified 15 prospective countries that qualified as sites for the PRCGC Project, from which eight (Bangladesh, Fiji, India, Indonesia, Papua New Guinea, Philippines, Sri Lanka and Vietnam) were finally selected. These countries were selected based on the following criteria: 4 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
1. Economic status of coconut farmers; 2. Hectarage/ Area planted to coconut; 3. Number of coconut farmers; 4. Willingness to share technologies with other countries; 5. Prospects for developing bilateral investment projects; 6. Willingness to conduct research for possible application; and 7. Availability of support from a regional organization (e.g. Secretariat of the Pacific Community for the Pacific countries)
Identifying the Implementing Agencies An Implementing Agency or Agencies (IA), which would oversee the implementation of the project for each participating country, was/were identified and commitment for counterpart funding and management support was sought. These IAs are institutions that have the mandate to promote coconut research, development and related activities. The following are the IAs of each of the participating countries:
Bangladesh • Bangladesh Agriculture Research Institute (BARI), Joydedpur, Gazipur 1701 Bangladesh Fiji • Ministry of Agriculture, Sugar and Land Resettlement (MASLR), Koronivia Research Station, PO Box 77, Nausori, Republic of Fiji Islands Papua New Guinea • Cocoa and Coconut Research Institute (CCRI), PO Box 1846, Rabaul, East New Britain, Papua New Guinea Philippines • Philippine Coconut Authority (PCA), Elliptical Road, Diliman, Quezon City, Philippines India • Central Plantation Crops Research Institute (CPCRI), Kudlu PO, Kasaragod, Kerala, S. India 671124 • Peekay Tree Crops Development Foundation (PTCDF), MIG-141, Gandhi Nagar, Kochi 682020 Kerala, India Indonesia • Central Research Institute for Estate Crops (CRIEC), Jl. Tentara Pelajar No. 1 Bogor 16111 West Java, Indonesia Sri Lanka • Coconut Research Institute of Sri Lanka (CRISL), Bandirippuwa Estate, Lunuwila 61150, Sri Lanka Vietnam • Oil Plant Institute (OPI), 171-175 Ham Nghi St., District 1, Ho Chi Minh City, Vietnam
Forming the Country Project Management Teams Upon identification of the countries which will participate in the PRCGC project, a Country Project Management Team for each country was formed composed of one Country Programme/Project Leader (PL), three Community Coordinators (CC) (one for each site) and a Technical Support Group (TSG). The CCs and TSG are under the supervision of the PL who is a Senior Officer of the IA. CHAPTER 1: PREPARATORY ACTIVITIES 5
Roles and responsibilities of the parties involved
The Executing Agency (IPGRI-COGENT) • Serves as the executing agency which issues the Letters of Agreement (LOAs) with the participating countries and releases funds to the implementing agencies; • Organizes the project management team for each country participant; • Assists in sourcing funds for the participating countries of the project and in providing village-level technologies, machinery and equipment to the project sites; • Assists in organizing regional meetings, trainings and seminar; • Assists in fund raising, i.e. develops project proposals and coordinates with potential donors; • Provides technical advice and backstopping during project implementation; • Designates technical staff to coordinate with the national (country) programme/ project leader; and • Submits technical and financial progress reports to donor agencies and stakeholders of the project.
The Implementing Agency (or Partner Institution): • Provides sufficient counterpart budget and needed institutional support to the project to enable the agency to conduct effective planning, implementation, monitoring and evaluation; • Designates a Country Programme/Project Leader who is the over all in-charge of project implementation; • Appoints a multi-disciplinary project team to advise the Country Project Leader in implementing the project; and • Appoints full time Community Coordinators, preferably residing in each pilot community.
Country Programme/Project Leader The Country Programme/Project Leader is the lead person responsible to COGENT and to the Implementing Agency on the overall management, supervision and monitoring of the project implementation nationwide. Specifically, he/she: • Oversees effective implementation of the project • Develops the annual work plans and budgets; • Establishes linkages with national and international research and development organizations, government and private agencies for sourcing of technical, financial or material support to the project and sharing of experiences and lessons learned; • Facilitates effective operational and policy support to the project within the implementing agency and with collaborating institutions; • Provides leadership in implementing and monitoring the project; • Supervises the conduct of feasibility and market surveys, and impact studies; • Ensures the full participation of non-government organizations (NGOs), government institutions and socio-economically disadvantaged women groups in project implementation; • Provides effective quality control of project outputs and reports prior to submission to the Executing Agency; and • Prepares six-monthly progress reports, financial reports, and simplified quarterly summary tables. 6 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Community Coordinators Community Coordinators are the persons tasked to manage, supervise and monitor the activities of the project at the community level and are answerable to the PL. Each CC is assigned one community or project site. Specifically, the CC: • Establishes close linkages with local government units, private sectors, non- government and other development organizations in the project area to seek support for the project; • Provides leadership in implementing and monitoring the day to day activities of the project in the community; • Helps establish or strengthen existing community-based organizations (CBOs) through training; • Coordinates the development of farmers’ and women’s action plans for income- generating activities; • Keeps a logbook of activities, outcomes, constraints and recommendations for better project implementation; • Monitors the status of the revolving fund to ensure sustainability of the microcredit system; • Submits simplified tabular monthly reports to the Country Project Leader; and • Furnishes the CBO with copy of the progress reports.
Technical Support Group The Technical Support Group (TSG) is composed of multi-disciplinary specialists responsible in providing the PL and CCs with technical advice and backstopping. Specifically, the TSG: • Provides technical assistance/advice to the project to ensure its technical soundness; • Reviews progress of work and proposed work plans; • Provides support, data and information to enable the country project leader to effectively implement the project; and • Develops, publishes and disseminates extension bulletins and training materials for the project.
Identifying and selecting the project sites (communities) in each participating country The IA of each country initially identified about 10 coconut growing communities as prospective project sites. The IAs then conducted a socioeconomic survey of all these communities and, subsequently, chose three as project sites. These communities were selected based on the following criteria: • Socio-economic status of the community; • Presence of opportunities for sustainable livelihoods; • Hectarage/ Area under coconut and number of poor coconut farmers; • Peace and order situation; • Local government support; • Accessibility; • Willingness to share technologies with others; and • Willingness to conduct research for possible application.
A total of 24 coconut growing communities in eight countries were identified as project sites which represent different agroclimatic and ecological zones. The following are the 24 communities, each with a short socio-economic description: CHAPTER 1: PREPARATORY ACTIVITIES 7
Bangladesh
Bandabila, Bagharpara, Jessore This community has an average household size of five members. Household income is mostly derived from agriculture (41%) and the rest from business, services, rickshaw/ van pulling, band party and sewing katha (quilt). Average household income is US$ 43.17/month. Men generally work in the field cultivating rice, jute, sugarcane, and vegetables. During harvesting, women get employed tending to the field of well- off farmers. For most part of the year though, majority of community members are unemployed. It is accessible by bus, train or streamer.
Chandrapara, Babugonj, Barisal Chandrapara is a community with a average household size of five. Income is mostly derived from agriculture, business, making baskets from bamboo, labour and services such as barber and shoe mending/sewing. Average household income is US$ 41.67/ month with on-farm activities contributing 23%. Men generally work in the field and women do household chores. However, during harvesting, women also get employed tending to the field of well off farmers. For most part of the year though, majority of the farmers are unemployed or do odd jobs such as rickshaw/van pulling. There is generally a surplus agricultural labour in the community. The community is accessible by bus, steamer and baby taxi (3-wheel vehicle).
Jamira, Phultalam, Khulna The average household size in Jamira is six. Household income is derived from agriculture, business, services, labour, rickshaw/van pulling and making baskets from bamboo. Average household income is US$ 41.67/month with farming contributing 23%. Divorced women and those whose family are very poor work in road construction or in other farmers’ houses. Women sometimes get only two-thirds of the recommended wages. Agricultural activities like taking care of poultry and livestock, processing food, sewing clothes (quilt), etc. are usually undertaken by women. Men on the other hand, sell household products and control the families’ income. Jamira is accessible either by bus or baby taxi (three-wheeled vehicle).
Fiji
Tukavesi, Cakaudrove The community is situated in the North-western part (Buca Bay) of Vanua Levu along the coconut belt of Fiji. It is classified as lowland and the inhabitants are mostly living near the seashore. The soil is recent alluvial with moderate to high fertility. It is characterized by distinct dry season. Average farm size per household is two hectares. Forty percent (40%) of the community’s farms are devoted to coconut monoculture, while 60% are interplanted with various intercrops. The average household income is US$ 130/month, 80% of which comes from coconut farming. The major products from coconut are copra, coconut oil and rope. Other major sources of income are fishing (10%) and employment (10%). The average size of the family is eight. About 30% of the community is literate.
Belego, Wailevu Belego’s geography is generally flat to gentle undulating. The community is comprised of 66 households in eight settlements. It is also multi-racial, with Indians, Fijians and Europeans as inhabitants. Most of Belego’s members have only recently settled there when they were evicted from sugarcane and rice farming areas due to expiring land leases. All members have bought lands in this estate, which are mostly covered by 8 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
coconuts. The average farm size is 2.02 ha with a household average income of US$ 150/month derived from farming (90%) and fishing (10%). Only 26% of the total farming area is devoted to coconut monoculture while the rest (74%) are coconut with intercrops and livestock. Literacy rate is 70%.
Cicia Island Cicia is a small island comprising of five villages with a total population of 1083. It is about 46 meters above sea level with a total area of 33.4 sq km. Sixty percent (60%) of farmland are devoted to coconut monoculture and the rest are coconut with various intercrops. The average household farm size is 4.85 ha. The island has no central electric system. Majority of the communities use kerosene and benzene lamps. People of Cicia are traditionally makers and weavers of ‘magimagi’1 . The average size of the family is six with an average income of US$ 50 a month. The major sources of income are agriculture (70%), fishery and tending small retail shops. Literacy rate is 90%.
India
Palikkara, Kasaragod, Kerala State Palikkara is a community where livelihoods are mostly derived from coconut farming and related enterprises. Major livelihoods depend on agriculture (70%) though land for farming is declining. Twenty percent of the households depend on services for their livelihood and 10% from other sources such as animal husbandry, employment and other manual jobs. Income derived from coconut farming averages Rs 18 000/ annum (US$ 360). About 93% constitute landholdings of below one hectare. The rest are between one to two hectares (5.5%) and more than two hectares (1.5%). While coconut farming is a major livelihood, the yields of the palms are low compared with other communities because only a small portion of the plantation is being irrigated (17%).
Ariyankuppam, Pondicherry Ariyankuppam is a traditional coconut belt in the East Coast of India and classified as coastal ecosystem. It is located about 10 km south of Pondicherry Town. It has a rainfall of 1060 mm/year and boasts of having irrigated coconut farming, 50% of which are under contract for producing tender nuts. The other major product derived is copra for making oil, mostly for domestic consumption. The community consists of 850 households, 90% of which derive their livelihood on farming, animal husbandry and other manual jobs. The upper 10% of the population are engaged in small enterprises, cultivation and services. Eighty five percent represent marginal and small coconut farmers, 5% have relatively larger farms and 10% are landless. The average farm size is 0.4 ha. The average annual farm gross income is US$ 229.60. Most of the farmers reached only primary schooling. Residents are generally classified as poor.
Vayalar, Kerala Vayalar community lies in the West Coast Region of India. It falls under the Pattanakkad Block of Alappouzha district. It is located about 45 km south of Kochi. The major sources of income are farming, daily wage employment, animal husbandry and other manual jobs. Around 74% of the farmers practice intercropping, while 38% raise livestock under coconut. While the community predominantly depends from agriculture, it is mainly
1 ‘Magimagi’ is a filament fiber from husks of Nui ni Magimagi coconut variety. It is usually used for cushions, mattresses and ropes. CHAPTER 1: PREPARATORY ACTIVITIES 9
rainfed. The average farm size is 0.28 ha. The average annual farm income is US$ 228. Most of the farmers reached secondary level of education. The community is classified as poor.
Indonesia
Wori, Wori District, Minahasa Regent, North Sulawesi Province Wori community is located some 15 km from Manado in North Sulawesi. The average household is comprised of five members. The average farm size per family is 3.2 ha. Copra production is 1.7 t/ha/year, which is higher than the national average. However, because of low and fluctuating prices of copra, coconut farmer’s income in this area is still low. Other products derived from coconut are oil and charcoal from shell. Average annual household income is US$ 319, with an average per capita income of US$ 113. Fifty six percent of the farmers practice intercropping such as banana, corn, cassava, sweet potato and clove, and 29% raise livestock. The community is generally classified as poor. Most farmers have reached tertiary level of education.
Nonapan I, Poigor District, Bolaang Mongondow Regent, North Sulawesi Province Nonapan is located some 100 km from the provincial capital city of Manado. The average size of the family is four while the average farm size per family is 1.6 ha. Copra production is 1.35 t/ha/year. Aside from copra, farmers produce coconut oil and charcoal for their livelihood. The average annual farm income is US$ 156 and the reported average off-farm income is US$ 870, though not stable. Forty nine percent of the farmers practice intercropping such as corn, banana and cassava, and 17% raise livestock. The community is classified as average in socioeconomic standing.
Desa Huntu, Bongomeme District, Donggala Regent, Donggala Province Desa Huntu is situated about 25 km away from the provincial capital of Gorontalo. The average size of farm per family is 0.75 ha. Copra is the main product from coconut, with farmers producing an average of 1.15 tonnes of copra per year. About 30% of the farmers also intercrop cacao and corn, while others raise livestock, mostly goats, under coconut. The average annual income from farming is US$ 220 while non-farm activities give community members about US$ 260/ year in income. The per capita income of the community is only US$ 120/year, and it is therefore classified as poor.
Papua New Guinea (PNG)
Murukanam, Madang Murukanam is classified as generally poor with families owning a farm averaging 2.1 ha in size. Households have an average annual income of US$ 222.30. A vast majority of the farmers only reached primary educational level. Most of them (91.7%) practice intercropping while 41.6% also raise small livestock. Copra yield averages 0.3 t/ha.
Transgogol, Madang The Transgogol area has a socioeconomic rating of poor to average. The average farm size in the community is 2.7 ha giving a mean annual income of US$ 413.84. Most of the farmers only reached primary schooling level. Coconut yields are less than 0.3 t/ha although average yields of 3.0 t/ha have been obtained in experimental stations. The farmers also practice intercropping (66.7%) and rearing small populations of livestock (66.7%), which contribute significant income for their households. 10 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Last Karkar, Madang The Last Karkar community is considered to be the poorest among the three pilot sites in PNG. Half of the farmers are involved in some form of intercropping while only a small proportion of the farmers are involved in small livestock rearing. Most of the farmers have only basic education. The average farm size is 0.51 ha and the annual average farm income is US$ 97.50.
Philippines
Malapad, Real, Quezon This is a coastal barangay (village) located in the eastern part of Luzon Island, with slightly sloping interiors and a total land area of 4647 ha. Average farm size per household is 2.5 to 3 ha. Average annual income is Php 28 270 (US$554), with an average per capita income of Php 7067 (US$139). Fifty three percent (53%) of the population is female; with 82% of the farmers have elementary to secondary level of education. The farmers primarily depend on trading copra and nuts but husks are left unutilized. Other crops grown under coconut are banana, pineapple, taro, fruit trees and vegetables.
Linabu, Balingasag, Misamis Oriental Linabu is another predominantly coconut-dependent community. Average farm size is 2.37 ha. There are 73 owner-cultivators and 22 leaseholders with an average annual household income of Php 12 245 (US$240) and a per capita income of Php 4918 (US$96). Eighty eight percent (88%) of the farmers live below the poverty line.
Caliling, Cauayan, Negros Occidental This is a predominantly coconut-based community with a total land area of 3052 ha. Average farm size per household is 2–3 ha. Most coconut palms are non-bearing of which 84% are new plantings, i.e. below one year old. Average household income is Php 13 853 (US$272) per year, while average per capita income is Php 2308 or US$40 per year. Caliling is one of the poorest barangays in the Visayas region.
Sri Lanka
Dodanduwa, Galle District Dodanduwa is a predominantly fibre products-producing community, with 66% of women engaged in the process. Fishing is the major source of income (33%) of chief householders or heads of the family, followed by white fiber manufacturing or yarn spinning. Average farm size per family is 0.2 ha producing an annual average income of US$ 261. Majority of the community’s members reached only secondary level of education. Majority of the population receive ‘Samurdhi2 ’ from the government for subsistence.
Thuththiripitigama, Hettipola, Kurunagala District The community is a predominantly livestock farming community where almost all of the households are engaged in. The average size of farmland per household is 1.04 ha and 76% of the chief householders cultivate their own lands. The average annual farm income is US$ 420. Most of the community reached secondary school. Most of the people are classified as poor, with Samurdhi received from the government helping a number of villagers for subsistence.
2 ‘Samurdhi’ is a programme introduced by the government of Sri Lanka in 1995 to support the poor by way of income transfers in kind or in cash. CHAPTER 1: PREPARATORY ACTIVITIES 11
Wilpotha, Puttalam District Wilpotha is a coconut bract handicrafts-producing community. The average farm size is 1.47 ha and the annual farm income is US$ 445. Twenty seven percent (27%) of the chief householders (head of the family) obtain their income as salaried employees, while 19% are full-time farmers. Thirteen percent (13%) are engaged in other farm- related enterprises and only 9% are engaged in coconut bracts handicrafts. However, majority (72%) of the women get their main income from producing coconut bract/ stipules handicrafts. The community members have, in general, secondary level of education and are classified as poor. The government also provides Samurdhi to a number of villagers for subsistence.
Vietnam
Hung Phong Commune, Giong Trom District, Ben Tre Province This is a coconut farming community with an average landholding of 0.45 ha/ household. Average yield of coconut trees is 56.7 nuts/tree/year, equivalent to 0.8 t of copra/year for the 0.45 ha. Average farm income stands at US$40/month. Other sources of income (80%) come from intercropping, livestock raising and producing handicrafts from coconut leaves and shell. Sixty percent (60%) of the population have attended secondary grade school.
Xuan Dong Commune, Cho Gao District, Tien Giang Province The community is located in the Mekong Delta. An average household has four to five members and owns a farm averaging 0.65 ha each. Farmers harvest 45 nuts/tree/ year, which is equivalent to 0.6 t of copra/year. About 60% of the farmers practice coconut monoculture while the rest practice intercropping. Forty-nine percent (49%) of households also raise livestock under coconut. The community is also producing handicrafts from coconut fibre, wood and leaves. The average monthly income per family ranges from US$34 to US$60. Forty-seven percent (47%) of the farmers have attended secondary school while the rest reached only primary level.
Tam Quan Nam Commune, Hoai Nhon District, Binh Dinh Province Tam Quan Nam is located in Central Vietnam along the coast. It is the most famous coconut growing site in the region, with ecological conditions suitable for growing coconuts and a long history of coconut cultivation. The average household has 5-6 members and owns an average of 0.45 ha of agricultural land. Ninety-three percent (93%) of the farmers grow coconut as a monocrop while the rest practice intercropping. About 28% of the households process coconut producing copra and dehusked nuts. Other traditional products include ropes, doormats and snow mats. The average monthly income of households ranges from US$39.50 to US$93.30, with 31% coming from coconut.
Project Inception and Orientation meeting On 25-28 February 2002 in Ho Chi Minh City, Vietnam, COGENT held the PRCGC Project Inception Meeting with all the Programme/Project Leaders of each of the participating countries and selected participants. The meeting was conducted to level off the participants’ understanding of the project: its rationale, objectives, strategies, components, duration, roles and responsibilities of the parties involved and to prepare each of the country’s workplan and budget, among others. (Details of the meeting can be found in the “Poverty Reduction in Coconut Growing Communities. Volume I: The Framework and Project Plan” edited by Pons Batugal and Jeffrey Oliver). 12 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Securing commitment from the communities Orientation meetings were also held in all the identified project sites/communities in each country. In these meetings, it was always emphasized that the project aims to “help people help themselves”. The community itself must do the work, with the institutions behind the project (i.e., the IAs, IPGRI-COGENT, etc) only providing support as needed. During the meeting, the community’s agreement and commitment to the project were sought, which were not necessarily in the form of a written document but a verbal consensus from the project participants and beneficiaries. Securing the community’s commitment to the project is essential to ensure its smooth and successful implementation. As a process, providing the people with the option of accepting or rejecting the project being proposed to them is good a way of promoting active participation, empowerment and ownership
Designing and conducting the baseline survey A baseline survey form (Annex 2) for individual farmers was developed, pre-tested and conducted in the project sites. The survey form contains basic data and information indicating the current socioeconomic status and resources of each farmer’s household. As such, the survey was conducted before or at the start of the project intervention. The information gathered serve as the database in establishing the status or conditions of the partner-beneficiaries before the project starts. At the end of the project, the same survey form shall be used to determine the improvement, if any, among the farmers and their households. The forms filled-up by the farmers or with the help of the Community Coordinators, before and at the end of the project, shall be compared to determine the outcome of the project (i.e., whether there have been changes – either positive or negative – in the quality of lives of the project participants).
Establishing and/or strengthening community-based organizations Implementing a project with an organized group is advantageous. Community-based organizations (CBOs) serve as the ideal vehicle or conduit for carrying out the project’s interventions in the project sites. Each site is required to have a CBO, whose members come from the coconut farming households within the community. Members are either the husbands or wives or both. Where there is an existing CBO, the project helps to strengthen it; where there is none, the project has provisions for organizing one. The CBOs are registered with the appropriate government body of the respective participating country to give them legal personality, legitimise their operations and consequently entitle them to privileges from the government, which vary from country to country. This also opens up more opportunities to access resources and assistance from other support institutions such as NGOs, private sector enterprises, donor agencies, government instrumentalities and other development organizations. The CBOs are also envisioned to eventually continue the activities that had been initiated by the project in partnership with them, sustain and hopefully expand the activities and benefits to the members and to other communities beyond the project duration. The project sites in each of the eight countries and the CBO or farmers’ association in each community are listed in Table 1. CHAPTER 1: PREPARATORY ACTIVITIES 13
Table 1. The pilot sites and CBOs in each of the project’s country participants (as of 31 December 2003) Number Country and Name Registered Name of CBO of of Community with Members Bangladesh Bandabila, Bandabila Coconut Community 100 Social Welfare Bagharpara, Jessore Department of Bangladesh Chandrapara, Chandrapara Coconut Community 100 -do- Babugonj, Barisal Jamira, Phultalam, Banchte Shekha (BS) Coconut 100 -do- Khulna Community Subtotal for Bangladesh 300 Fiji Tukavesi, Tukavesi Development Association 128 Government Cakaudrove of Fiji Belego Wailevu Belego Multiracial Farmers 106 -do- Association Cicia Island Cicia Women’s Group 220 -do- Subtotal for Fiji 454 India Vayalar, Kerala Vayalar Community Development 800 Literary, Project Scientific and Charitable Societies Act Ariyankuppam, Ariyankuppam Commune Coconut 320 Registration of Pondicherry Farmers Association Societies Act of Pondicherry Pallikara, Kasaragod Pallikara Community Coconut 472 Registration of Development Centre Societies Act of Kerala Subtotal for India 1592 Indonesia Wori, Wori District, Kelompok Tani Kelapa Harapan Wori 257 Local Minahasa Regent Government Agency Nonapan, Poigor Kelompok Tani Kelapa Momosad 353 -do- District, Bolaang Nonapan I Mongondow Regent Huntu, Bongomeme Kelompok Tani Kelapa Huyula 104 -do- District, Donggala Huntu Regent Subtotal for Indonesia 714 Papua New Guinea Murukanam, Madang Barem Community Association 226 Government of Papua New Guinea Transgogol, Madang Transgogol Community Association 198 -do- Last Karkar, Madang Last Karkar Community Association 64 -do- Subtotal for Papua New Guinea 378 14 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Number Country and Name Registered Name of CBO of of Community with Members Philippines Malapad, Real, Malapad Integrated Livelihood 115 Cooperative Quezon Cooperative Development Authority (CDA) Caliling, Cauayan, Bahay Patol ARB (Agrarian Reform 124 CDA Negros Occidental Baneficiaries) Multi-purpose Cooperative Linabu, Balingasag, Linabu Coconut Planters 105 Department of Misamis Oriental Association Labor and Employment Subtotal for Philippines 344 Sri Lanka Dodanduwa, Galle Dodanduwa Women’s Collective 350 Divisional District Secretariat (Special Act for NGO) Thuththiripitigama, Thuththiripitigama Entrepreurship 160 -do- Hettipola Development Society Wilpotha, Puttalam Women’s Savings Effort 173 -do- District Subtotal for Sri Lanka 683 Vietnam Hung Phong and Hung Phong and Phong Nam 153 Provincial Phong Nam, Giong Coconut Communities Governments Trom, Ben Tre Xuan Dong, Tien Xuan Dong Coconut Community 100 -do- Giang Tam Quan Nam, Tam Quan Nam Coconut 115 -do- Binh Dinh Community Subtotal for Vietnam 368 GRAND TOTAL 24 CBOs/ farmers’ associations 4833 (8 countries)
Establishing of a microcredit system and revolving fund Microcredit is the extension of small loans to farmers and for those who would be entrepreneurs too poor to qualify for traditional formal financial facilities. While credit is not an absolute solution to poverty, it is essential as one of the effective and popular measures in the ongoing struggle against poverty. Microcredit enables those without access to formal lending institutions to borrow investment funds to start small business. The potentials and capacity of the poor for entrepreneurship are encouraged with the availability of small-scale loans under the project. This allows the poor to be more self-reliant, create employment opportunities and at the very least, engage members of the households, more particularly women/wives and capable youth members of coconut-based households, to economically productive endeavours. In the context of COGENT’s poverty reduction project, the availability and mobilization of microcredit is imperative in carrying out the intercropping trials, livestock and fodder production, and coconut high-value product processing and marketing that are involved in the development of a viable coconut-based farming system. CHAPTER 1: PREPARATORY ACTIVITIES 15
The project allocated revolving loan funds for intercropping trials. These include planting food security crops intended for home consumption to satisfy nutritional requirements of family members; cash crops to augment income of farmers; and fodder and pasture crops for livestock nutrition. Likewise, loan funds are allocated for livestock production and processing coconut high-value products. The revolving loan funds from the project are released to the Implementing Agency, which in turn transfers the funds to the CBOs. As such a Memorandum of Agreement (MOA) is entered into by and between the CBOs and the Implementing Agency to formalize the transfer of funds. A pro-forma of the MOA is shown in Annex 3. All these released funds form part of the revolving loan fund of the microcredit system being managed by the CBO. The funds are loaned out to qualified, interested members to undertake productive and income generating activities (IGA). Loans are extended to CBO member-borrowers either in kind or in cash, whichever is appropriate. Borrowers are charged with appropriate interest rate to cover the operating cost. The member-borrowers pay the CBO either in kind or in cash, whichever is convenient for both the CBO and the member-borrowers. The initial revolving funds provided by the project are augmented by membership fees, savings mobilized and other donor funds. Each CBO organizes a team, as appropriate, to manage the microcredit system. Initially, a credit officer and an assistant are designated on a part time basis. As the system grows, the team is transformed into full time staff. The Board of Directors of the CBO also serves as the governing body of the microcredit system with the Community Coordinator as ex-officio member. The CBO(s) in each project site, with the facilitation of the Community Coordinator(s) and the help of other development institutions formulate the microcredit systems’ policies and procedures to ensure smooth implementation of the system. The basic policies spell out clearly the following: • Criteria of project(s) or activity(ies) to be financed; • Criteria of member–borrower to be provided loans; • Interest rate; • Repayment scheme; and • Security of loan(s) and sanction(s) in case of loan default (What to do in case of force majeure, among others).
Conducting market surveys and developing market channels A market survey aids in the selection of the most reasonable, practical and viable undertaking/s from an array of alternative options, say planting the most in-demand vegetables, or raising the most saleable livestock for meat, etc. Market survey also indicates where these products are commonly sought after, by whose kind of buyers and when. The results arising from the market survey are likewise useful for formulating better strategies to take advantage of the market opportunities, minimize risks and help address constraints. It warrants that only the potentially viable and sustainable mix of marketing undertakings is done such that the chances for generating favourable project impact remain high. A market survey was conducted by designated researchers with selected members of each of the CBO to identify marketable products for each community. Where and when feasible, existing markets shall be expanded or new markets identified, demand created, and market channels developed. Only marketable products are being produced by each community. A marketing strategy is also being developed for each community. Table 2 shows the identified marketable products in each of the communities in the eight participating countries, based on simple market surveys done by the IAs. 16 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Table 2. Summary of marketable products identified based on market surveys Country/Project Site Products Identified Bangladesh Bandabila, Bagharpara, High-value products (HVP): vinegar, coconut milk, chutney powder, Jessore aromatic coco oil, roasted coconut grating & confectionery products, coir products/handicrafts, rope, doormats, tendernut Intercrops: banana, papaya, guava, vegetables (bitter gourd, ribbed gourd, snake gourd, teasel gourd, aroid, bean, bottle gourd, tomato, etc.), potato, spices (chilli, zinger, turmeric) Livestock: goat, chicken Chandrapara, Babugonj, HVP: vinegar, coconut milk, chutney powder, aromatic coco oil, Barisal roasted coconut grating & confectionery products, coir products/ handicrafts, tendernut Intercrops: banana, papaya, guava, vegetables (bitter gourd, ribbed gourd, snake gourd, teasel gourd, aroid, bean, bottle gourd, tomato etc), potato, spices (chilli, zinger, turmeric) Livestock: goat , chicken Jamira, Phultalam, HVP: vinegar, coconut milk, chutney powder, aromatic coco oil, Khulna roasted coconut grating & confectionery products, coir products/ handicrafts, tendernut Intercrops: banana, papaya, guava, vegetables (bitter gourd, ribbed gourd, snake gourd, teasel gourd, aroid, bean, bottle gourd, tomato etc), potato, spices (chilli, zinger, turmeric) Livestock: goat, chicken, duck Fiji Tukavesi, Cakaudrove HVP: coconut shell products, coconut oil Intercrops: vegetables, taro Livestock: poultry, pork, sheep Belego, Wailevu HVP: coconut shell products, doormats, ropes Intercrops: taro, other vegetables Livestock: sheep, poultry, cattle Cicia Island HVP: coconut shell products, doormats, ropes Intercrops: vegetables Livestock: pork, poultry (eggs, meat) India Pallikkara, Kasaragod HVP: coco chips, coconut milk, snowball tendernuts, coconut candies Intercrops: turmeric, pineapple, banana, tapioca, colocasia, yam, banana, pachouli, pepper,and other vegetables Livestock: poultry (eggs ,meat), goat Ariyankuppam, HVP: coco chips, coconut milk, snowball tendernut, coconut candies Pondicherry Intercrops: cassava, ragi, rice and vegetables Livestock: goat, turkey, chicken (eggs,meat) Vayalar, Kerala HVP: vinegar, tendernut juice, coco milk, chutney powder, homemade aromatic coco oil, roasted coconut grating & confectionery, coconut shell-based products Intercrops: pepper, banana, spices, amaranthus, vanilla, ginger, turmeric, banana, nutmeg, curry leaves, papaya, pineapple, snake gourd, bottle gourd, bitter gourd, chili, areca nut, palm, beetle leaf, ridge gourd, ladyfinger, tomato, brinjal, cassava, ragi, rice, stylosanthes, turmeric, tapioca, colocasia, yam Livestock: chickens (meat & eggs), ducks, cow (milk), goat (meat & milk) CHAPTER 1: PREPARATORY ACTIVITIES 17
Country/Project Site Products Identified Indonesia Wori Village, HVP: cooking oil, nata de coco Wori District Intercrops: banana, peanut Livestock: swine, chicken Nonapan Village, HVP: nata de coco, shell charcoal Poigor District Intercrops: banana, peanut Livestock: chicken, duck Huntu Village, HVP: nata de coco, shell charcoal Bongomeme District Intercrops: corn, banana, peanut Livestock: chicken/poultry products Papua New Guinea Murukanam, Madang HVP: virgin oil, cooking oil, soap, doormat Intercrops: taro, vanilla, cacao, sweet potato, corn, banana Livestock: duck, rabbit, chicken (eggs, meat) Transgogol, Madang HVP: virgin oil, cooking oil, soap, doormat Intercrops: taro, vanilla, cacao, sweet potato, corn, banana Livestock: duck, rabbit, chicken (eggs, meat) Last Karkar, Madang HVP: virgin oil, cooking oil, soap, doormat Intercrops: taro, vanilla, cacao, sweet potato, corn, banana Livestock: duck, rabbit, chicken (eggs, meat) Philippines Barangay Malapad, HVP: bukayo (sweetened grated coconut), buko pie, white oil, coco Real, Quezon Province milk, coco lumber, coco shell products, broomsticks Intercrops: string beans, eggplant, bitter gourd, squash, cassava, banana, citrus, mango Livestock: pork, chicken, carabao, cattle Barangay Caliling, HVP: vinegar, bukayo, boat tart, young tender nut juice, coco milk, Cauayan, Negros coco oil, toddy, coco shell products Occidental Intercrops: squash, potato, sayote, bitter gourd, latundan, saba, pineapple, jackfruit, papaya, mango, carrots Livestock: broiler, cattle, swine, native chicken (eggs, meat) Barangay Linabu, HVP: young tendernut, toddy, bukayo and other food products, Balingasag, Misamis sugar, sap products, shell products, dehusked nuts, dried copra Oriental Intercrops: chayote, bitter gourd, string beans, eggplant, squash, rambutan, lanzones, solo papaya, mango, cabbage, onions, pineapple, melon, carrots Livestock: swine, cattle, native chicken (eggs, meat), broiler, goat Sri Lanka Dodanduwa, Galle HVP: doormats, geotextiles, thawashi brushes District Intercrops: banana, papaya, vegetables, pineapple Livestock: goat, chicken Thuththiripitigama, HVP: broom/broomstick, toddy, coconut oil, soap, treacle, coir and Hettipola, Kurunagala ekel products, husk chips, thawashi brushes, doormat District Intercrops: vegetables, banana, papaya, maize, Solanum xanthorcarpum (medicinal plant) Livestock: honeybee products, chicken (eggs, meat) Wilpotha, Puttalam HVP: bracts handicrafts, shell handicrafts, coconut oil, coconut District candy and confectionery products Intercrops: groundnut, papaya, vegetables, Solanum xanthorcarpum Livestock: chicken (eggs, meat), goat 18 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Country/Project Site Products Identified Vietnam Hung Phong & Phong HVP: art-crafts from leaves, shell & fibers, caramel from ripe coconut Nam, Giong Trom district water, glutinous rice with coco milk Intercrops: durian, pomelo, mangosteen, cocoa Livestock and others: goat, chicken, honeybee products, shrimp Xuan Dong, Tien Giang HVP: coir/fiber products, coco candy, copra, charcoal Intercrops: pomelo, cocoa, banana, lanzones Livestock and others: cattle, goat, duck, swine, shrimp, fish Tam Quan Nam, Binh HVP: coir products, coco candy, snow mats Dinh province Intercrops: lanzones, legumes, cocoa Livestock: cattle, chicken, goat, rabbit
Developing of farmers’ and women’s action plans Based on the identified marketable products, pre-feasibility analyses of promising income generating activities are being undertaken. For this purpose, a profitability analysis protocol was developed. The Project Leaders and Community Coordinators were trained on its use to enable them to guide the CBO members in the selection of income generating activities. Based on these analyses, farmers’ action plan and women’s action plan were developed for each community containing priority income generating activities for implementation by the CBO members. Selected income generating activities are supported through small loans from the revolving fund of the microcredit system established by each CBO. More details on conducting profitability analysis are contained in COGENT’s manual on “Analyzing the profitability of coconut-based farming systems”. The manual, in condensed form, could be found in Chapter 2, Section 4 of this publication. Simple profitability analysis forms that can be used for ex-ante analysis and for actual analysis are also attached as Annexes 1–3 of Chapter 3 of this publication. These forms are intended to be used for high-value products processing and marketing, livestock raising and intercrops.
Sourcing, documentating and testing village-level technologies and machinery One of the causes of rural poverty is the lack of access to efficient village-level machineries and equipment for producing high-value products. Often, the available machineries are too big and expensive and CBOs cannot afford to use them, relegating them to the role of suppliers of raw materials with marginal profit. Likewise, a CBO or country may not have access to other countries, which have these machineries and equipment. Depending on the products to be produced in each community, COGENT helps source these machineries and equipment locally or from COGENT’s 38 member countries. Some of these would have been previously tested and piloted by COGENT in 14 Asia-Pacific countries and the experiences gained in these initial tests are being used to ensure the project effectiveness. Another cause of poverty is the lack of access to appropriate and affordable technologies that can improve productivity of the farms and increase income of farmers. Again, efficient village-level technologies can be found in different countries and individual country may not have access to them. Through the project, technologies are being sourced from across the 38 member countries of COGENT and shared with those without them, or exchanges are being promoted and facilitated. The initial collaborative work of COGENT with 38 countries across the globe identified and documented appropriate and affordable technologies and inexpensive equipment. Social approaches and mechanisms to augment the network’s activities CHAPTER 1: PREPARATORY ACTIVITIES 19
to pursue research and development for the ultimate benefit of the poor coconut farmers and their households have also been developed into generic manuals. These manuals were distributed to implementing agencies, project leaders, other researchers, extension and development workers of both government and non-government organizations. Copies in CD-ROM were also distributed to other institutions that are implementing or planning to implement similar projects. These manuals, while not perfect nor complete, are useful guide and reference for researchers, extension workers and even for farmers on how to: get organized; establish and manage microcredit system; improve farming systems; process coconut-based high value products; raise livestock and produce feeds and fodder; among others. All these are envisioned to help coconut households increase their livelihoods and move out of poverty, and consequently enhance plant genetic diversity, particularly coconut diversity, in their farms. The following manuals are presented in Chapter 2 of this publication in condensed form: 1. Establishing and managing community-based organizations in coconut growing communities 2. Microcredit system in coconut growing communities 3. Establishing and managing microcredit system: The Grameen Bank Experience 4. Profitability analysis of coconut-based farming systems 5. Conducting market surveys and developing market channels 6. Machineries and equipment for processing coconut by-products 7. Production of high-value coconut fiber-based products 8. Production of high-value coconut wood-based products 9. Production of high-value coconut shell-based products 10.Production of coconut candy and confectionery products 11.Production of coconut sugar 12.Performance evaluation of village-level oil mills 13.Coconut-based intercropping 14.Livestock and feed/fodder production in coconut farming systems
The technologies on intercropping, livestock and feed/fodder production, among others, are being tested by farmers after appropriate training has been provided. The identified inexpensive machineries and equipment for processing coconut-based high- value products are being or have been fabricated, installed and evaluated in selected sites. These testing and evaluation are being conducted in all the participating countries. Based on the results, selected technologies, machineries and equipment, including processes, will be documented. These documents, or ‘technoguides’, will then be shared with interested parties of each participating country for replication. There shall also be opportunities for sharing experiences across participating countries of the project as well as with member countries of COGENT.
Training needs assessing and conducting appropriate training Simple training need survey was conducted to determine from each country their priority training subjects or topics that will ensure their attainment of the project objectives. The major areas identified as priorities are: 1. Community-based organization and management 2. Microcredit systems’ organization and management 3. Raising of intercrops 4. Raising of livestock and feed/fodder production 5. Nursery establishment and management 6. Processing of non-edible coconut-based high-value products 7. Processing of high-value coconut products 20 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
These capacity building training activities are being implemented to empower resource- poor farmers and socioeconomically disadvantaged women, and transform them from being mere raw materials suppliers to village-level entrepreneurs. The training includes participatory approaches to strengthen the skills of village leaders and ensure the maximum participation of all members of the community in income-generating activities. Researchers, extension and development officers have also been trained to enable them to effectively provide technical support to Community Coordinators, farmers and women in implementing various village-level income-generating activities. The PLs used COGENT’s generic training manuals in preparing simplified local training materials suitable for their respective countries and project sites. The training activities conducted at the CBO level in the eight participating countries, as of December 2003, are presented in Table 3.
Table 3. Summary of training conducted in eight countries under the Poverty Reduction project (as of 31 December 2003) Topic/Subject and number of participants CBO & Nursery Coconut Livestock Country/ Microcredit Management High-Value Inter- & Feed/ Total Project Site Systems & Plant Products cropping Fodder Management Propagation Processing Production Bangladesh Bandabila, 300 200 104 300 300 1204 Bagharpara, Jessore Chandrapara, 300 200 104 300 300 1204 Babugonj, Barisal Jamira, Phultalam, 300 200 104 300 300 1204 Khulna Fiji Tukavesi Dev’t 138 128 150 416 Association Belego Multi- 116 106 113 335 Racial Farmers Cicia Women’s 243 220 218 679 Association India Pallikkara in 212 90 8 310 Kasaragod Ariyankuppam 322 175 108 605 in Pondicherry Vayalar in Kerala 661 119 222 223 1225 Indonesia Wori, Wori District 138 67 53 50 36 344 Nonapan, Poigor 233 74 53 53 30 443 District Huntu, 144 35 46 46 47 318 Bongomeme District CHAPTER 1: PREPARATORY ACTIVITIES 21
Topic/Subject and number of participants CBO & Nursery Coconut Livestock Country/ Microcredit Management High-Value Inter- & Feed/ Total Project Site Systems & Plant Products cropping Fodder Management Propagation Processing Production Papua New Guinea Mukukanam 11 11 11 11 11 55 Community Transgogol 11 11 11 11 11 55 Community Karkar Community 11 11 11 11 11 55 Philippines Barangay Malapad 38 14 46 132 41 271 Real, Quezon Province Barangay Caliling, 129 10 41 13 18 211 Cauayan, Negros Occidental Barangay Linabu, 164 24 40 17 – 245 Balingasag, Misamis Oriental Sri Lanka Dodanduwa, Galle 39 – 50 182 45 466 District (150 field day) Thuththiripitigama, 49 34 116 40 110 340 Hettipola, Kurunagala District Wilpotha, Puttalam 55 33 79 200 50 417 District (field day) Vietnam Hung Phong, Giong 112 100 93 25 27 357 Trom District (field observation) Xuan Dong, in Tien 107 10 100 51 53 321 Giang province (field observation) Tam Quan, Binh 120 100 240 20 32 512 Dinh province (field observation) TOTAL 3953 1309 1511 2438 2242 11 453
In addition, the project’s Secretariat had also organized regional and national training as shown in Table 4. 22 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Table 4. Summary of regional and national training conducted under the poverty reduction project (as of 31 December 2003) as organized by the project Secretariat Participants/ No. Venue Title of Training of Country(ies) Represented Philippine Coconut Training Course on Poverty Reduction in 33/3 Authority, Bago Oshiro, Coconut Growing Communities Davao City, Philippines Oil Plant Institute of Training Course on Communication, 23/1 Vietnam, Vietnam Documentation, Public Awareness and Facilitation Skills Development Sarangani, Philippines Training Course on Machineries and 116/1 Equipment for Producing High-value Products from Coconut Fiber Serdang, Malaysia Training Course for the Production of 32/1 Coconut Candy Manado, Indonesia Training Course for the Production of 20/1 Coconut Candy Manado, Indonesia Training Course on Communications and 11/1 Public Awareness Skills Development Davao, Philippines Training Course on Producing Coconut- 75/8 based Food Products (Bokayo, Buko Pie, Sugar, Candies, Ice cream) Davao, Philippines Training Course on Producing Coconut 23/1 Fiber-based Products Total No. of Participants 333
Establishing an input-supply system Several sources, suppliers and fabricators of simple machineries, tools and equipment have already been identified. Simple machineries for: coconut sugar production had been identified from Thailand; coconut-based candy from Ben Tre Province in Vietnam; coconut fiber-based products also from Vietnam and the Philippines; coconut shell- based products from Cebu in the Philippines; extracting coconut milk and oil from Sri Lanka and India; and drying copra also, from India. COGENT and the project’s Implementing Agencies shall continue to explore suppliers and fabricators for related machineries, tools and equipment to further improve the processing of coconut-based high-value products. Sharing of these information and making the machineries and equipment available to other member countries of COGENT are also being promoted. Sources of planting materials, especially of high-yielding, high-value adaptable coconut varieties are being identified from among the farmers’ field. Exchanges of planting materials that are of high value and high yielding are also being promoted among the project sites and coconut growing communities, as appropriate. Initially, the coconut research centres in each country are the potential suppliers for seednuts. Local governments and agricultural line agencies or departments are also identified sources of livestocks and planting materials. Commercial seed growers are also being tapped as suppliers of high value and high quality seeds, especially for intercrops. Other input supply sources for information and stocks are: the International Livestock Research Institute (ILRI) for livestock feeds and fodder crops; the International Institute for Banana and Plantain (INIBAP) for banana and other international and regional commodity research and development (R&D) centres. CHAPTER 1: PREPARATORY ACTIVITIES 23
The other inputs/tools for agricultural production such as feeds and medicines for livestock; and fertilizers, chemicals, seeds, farm implements, etc. for crops are being sourced from local stores and dealers either individually, coinciding with their marketing for household consumer goods, or in small group. The most innovative way, however, is organized marketing being done by the CBO. The CBO, either in credit or in cash is buying in bulk from registered distributors or dealers to supply the requirements of the members. This provides savings in terms of discounts and transport costs for hauling the goods from the warehouse to the community. The CBO also derived profit by retailing the goods (with minimal price marked-up) to members and non-member farmers from the community.
Identifying and characterizing suitable farmer’s varieties and establishing community-managed seedling nurseries At least one coconut nursery in each project site is established. The CBO owns and manages the nursery. A team selected from the CBO members directly manages the establishment and operations of the nursery. COGENT/IPGRI developed a farmers’ protocol and a molecular marker method for characterizing farmers’ coconut varieties. The former protocol is farmer- participatory, which includes village-level coconut diversity fair. The molecular characterization protocol involves coconut research institutions which are mandated to help the project communities in characterizing their farmers’ varieties for in situ/ on-farm conservation and use. Characterization of farmers’ coconut varieties are being done in each of the 24 communities. High-yielding, high-quality adaptable palms are marked, from which seednuts are being harvested and germinated in the nursery. Owners of the marked palms are paid accordingly for all the seednuts taken from their marked palms. Other high-yielding, adapted and high-value varieties are also introduced when appropriate. When germinated, seedlings from the nursery are sold, either in cash or on credit, to the CBO members and others who may be interested. Each member of the CBO is required to plant at least five coconut seedlings a year. The profit from selling these seednuts and seedlings shall form part of the revolving fund of the Nursery Project to be used in improving the nursery facilities, purchase of more and better coconut seeednuts, acquisition of seeds and planting materials of other crops, management and administrative expenses, and contribution to the CBO general fund. The summary of the nurseries established in eight countries, and the coconut varieties identified and/or characterized as suitable in each of the 24 communities are shown in Table 5.
Table 5. Summary of nurseries established, and suitable coconut varieties identified and characterized in the community (as of 31 December 2003) No. of nurseries Country/Project (Coconut/ Suitable Local Varieties Identified and Characterized Site Integrated) Bangladesh Bandabila 2 BARI Narikel-1, BARI Narikel-2, Green, Red/Sundhi, White/Dudhunhuna Chandrapara 2 BARI Narikel-1, BARI Narikel-2, Jamira 2 BARI Narikel-1, BARI Narikel-2, Fiji Tukavesi 1 Fiji Tall, Niu Leka, Rotuman Tall Belego 1 Fiji Tall, Niu Leka, Rotuman Tall Cicia Fiji Tall, Niu Ni, Magimagi 24 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
No. of nurseries Country/Project (Coconut/ Suitable Local Varieties Identified and Characterized Site Integrated) India Pallikkara 3 West Coast Tall, Pallikkara Red Tall, Koottakkani, Round Tall, Alakode Tall, Pallikkara Orange Dwarf Ariyankuppam 3 “Elite varieties”, East Coast Tall, Medium Tall Green, Sevvelanir, Orange Dwarf, Palm Coconut, Tall x Dwarf Mixed, Koorkane Vayalar 1 West Coast Tall, Chowghat Orange Dwarf, WCT x Chowghat Green Dwarf Indonesia Wori Village 3 Wori tall, Mapanget tall, Wori River Tall 1, Wori River Tall 2, Wori River Tall 3 Nonapan Village 3 Local tall, Mapanget Tall, Nonapan Tall, Kudoi Tall and Mololombog Tall Huntu Village 3 Mapanget tall, Local Tall, Huntu Tall, Batudaa Tall, and Butukiki Tall Papua New Guinea Murukanam 1 Local Tall, Markam Tall, Renell Tall, Sepik Tall, 3 hybrid Transgogol 1 Local Tall, Markam Tall, Renell Tall, Sepik Tall Karkar 1 Local Tall, Markam Tall, Renell Tall, Sepik Tall Philippines Barangay Malapad 1 MRD x MAKT, Aromatic, Pilipog, Laguna Tall, SYNVAR, PCA 15-4 Barangay Caliling 1/1 SYNVAR, Laguna, PCA 15-1, MRD x MAKT, Aromatic, Pilipog Barangay Linabu 1/1 MRD x MAKT, Pilipog, Aromatic, Baybay, TAG x MRD, PCA 15-4, TAC x TAG Sri Lanka Dodanduwa 2 Ram Pol, Renell Pol, Thatin Pol, Juan Pol, Bhotal Thambak Thuththiripitigama 2/1 Ram Pol, Renell Pol, Thatin Pol, Juan Pol, Bhotal Thambak, 10 Dikiri Pol, Wilpotha 2/1 Ram Pol, Renell Pol, Thatin Pol, Juan Pol, Bhotal Thambak, Dikiri Pol, Vietnam Hung Phong 1/1 Ta Green Tall, Ta Yellow Tall, Dau Green Tall, Dau Yellow Tall, Lua (fire) Tall, Xiem Green Dwarf, Xiem Button Dwarf, Eo Green Dwarf, Dua Dwarf (Aromatic), Num Dwarf, other fruit crops Xuan Dong 1/1 Dau Green Tall, Ta Green Tall, Ta Yellow Tall, Xiem Green Dwarf, Dua Dwarf Tam Quan Nam 1/1 Local Ta Green Tall, Local Dau Green Tall, Xiem Green Dwarf, Dua Dwarf TOTAL 38/7
Establishing institutional linkages and support system COGENT recognizes the importance of stakeholders’ participation in every activity it is undertaking. Moreover, the Network believes it can not do the task of poverty reduction in community all by itself. Poverty is a multi-faceted phenomenon; hence it requires contributions from every organization or institutions that the Network and the project’s Implementing Agencies can tap for resources, either in cash or in kind. CHAPTER 1: PREPARATORY ACTIVITIES 25
The Network and the Implementing Agencies spearheaded by the Programme/ Project Leaders are exploring every opportunity to link with others: government instrumentalities, educational institutions, private sectors, NGO, donors and other development organizations to access support. The support can be in the form of funds, information, material contributions (such as planting materials/seeds, livestock, machineries, tools and equipment), technical advice, training, administrative/ management backstopping, and facilities. The Project Team at the country level explores other networks, especially trading networks and exporters to support marketing of products being produced at the farms and at the community processing centres. These trade networks could also provide information on new products or new designs, and market trends and opportunities. They could also help in connecting the CBO to both the suppliers of materials and the buyers of produce. They could also open the window of opportunities for CBO to access markets through trade fairs and shows that will be organized by the trade network. Training opportunities for product development and improvement could also be accessed through this network. The government instrumentalities, particularly the local government units are being approached, when appropriate, to put up or improve basic infrastructure in areas of operations, i.e. farm to market road improvement, electrical facilities, irrigation, etc. Other government agencies, that have special programmes for the poor communities, also provide resource base opportunities for training, acquisition of simple processing machineries, and infrastructure among others. NGOs and donors can accommodate proposals that especially address their interests and agenda. The Implementing Agencies are being encouraged to know what are the specific interests of donors and develop a proposal around those interests, i.e. the United Nations Global and Environment Facility Small Grants Programme (GEF SGP), which could provide up to US$50 000 to a project that addresses both the livelihoods and environmental enhancement of a community. European countries, through their embassies, are providing modest funds to support microenterprise development initiatives of community groups. Others have special focus on gender and development, participation, and local governance. Some of the major collaborating institutions approached by the country project team in each country are shown in Table 6.
Table 6. Major collaborating institutions and nature of linkages Country Organizational link and nature of linkages Bangladesh ❖ Directorate of Agricultral Marketing (Market survey and marketing assistance) ❖ Krishi Katha-Agricultural Information Services and The Daily Star Magazine (public awareness) ❖ Department of Cooperative (CBO training, monitoring and audit) ❖ Directorate of Livestock (technologies, training on livestock raising, medicines and stocks) ❖ Directorate of Agricultural Extension (technical services) ❖ Banchte Shekha-NGO (training and funds for processing especially for Jamira project site) ❖ Bangladesh Livestock Research Institute (livestock feeds/fodder seeds) ❖ BADC (seeds, intercrops) ❖ Northwest Bangladesh Crop Diversification Project (training, seeds) Fiji ❖ Secretariat of the Pacific Community (SPC) PGR Section (technical support, financial assistance through advances) ❖ Coconut Industry Development Authority (technical advise, funds) ❖ Department of Cooperative (training and monitoring of CBOs) ❖ Fisheries Department Aquaculture (funds for fish ponds) ❖ Ministry of Fijian Affairs Provincial Offices (monitoring of CBOs) 26 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Country Organizational link and nature of linkages India ❖ Krishi Vigyan Kendra, Kerala Agricultural University), State Department of Agriculture (training programmes on inter and mixed cropping, vegetable seeds) ❖ Department of Animal Husbandry, (training on cattle feed formulation, livestock raising) Indonesia ❖ BPTP Manado (Research Institute for Assessment Technology Agriculture), and Livestock Extension Service Gorontalo District (technology transfer-livestock and poultry production) ❖ Local Governments (funds, infrastructure) ❖ Global Environment Facility Small Grants Programme (funds for livelihood and environmental enhancement) Papua New ❖ Department of Agriculture and Livestock (planting materials and livestock) Guinea ❖ Cocoa and Coconut Extension Agency (extension/ technology transfer) ❖ Department of Primary Industries (project management assistance) ❖ PNG Rural Bank (training) ❖ PNG Cocoa and Coconut Institute (training) ❖ Secretariat of the Pacific Community (SPC) (technical support) Philippines ❖ Local Government Unit (training and equipment) ❖ Department of Agriculture-Agriculture Training Institute (training on food processing, livestock production and intercrops) ❖ Philippine Carabao Center (stocks and training on carabao raising and management) ❖ Department of Agrarian Reform (support for participation on training) ❖ Department of Science and Technology ❖ University of the Philippines-Los Baños (technology transfer) ❖ United Coconut Planters Bank (capital funds) ❖ INIBAP (planting materials) ❖ East West Seed Company (training on vegetable production) ❖ Viking Seed Company (training on livestock raising) ❖ CREDO (training on cooperative management) ❖ Cooperative Development Authority (cooperative monitoring and audit) ❖ Global Environment Facility Small Grants Programme (funds for livelihood and environmental enhancement) Sri Lanka ❖ Siyath Foundation (Local NGO) (training on technologies and project management, marketing of produce) ❖ National Engineering Research & Development Center (NERDC) (testing, fabrication and supply of machineries and equipment, processing technologies) ❖ Voluntary Service Organization (VSO) (capacity building-project management) ❖ Sri Lanka Association of the Advancement of Science ❖ University of Ruhuna, Matara, Sri Lanka (sharing of experiences, public awareness, training on beekeeping technologies) ❖ Southern Province Rural Economic Advancement Project (training) ❖ Global Environment Facility Small Grants Programme (funds for livelihood and environmental enhancement) ❖ Gospe; House (religious-based NGO) (training) ❖ Trade Craft of UK (training on design, pricing and marketing) ❖ SANASA Rural Banking System (loan funds) ❖ British High Commission (health facilities i.e. potable water and sanitary toilets) ❖ Department Animal Production, Department of Agriculture, Veterinary Research Institute (technical support, livestock) Vietnam ❖ Ministry of Agriculture & Rural Development (technologies) ❖ Radio Broadcasting of Ho Chi Minh City (public awareness) ❖ Peoples’ Council (advise, facilities) ❖ ACIAR, Canada, Asian Development Bank, MRC, Department for International Development (DFID), Global Environment Facility Small Grants Programme (GEF SGP) (potential project funds) CHAPTER 1: PREPARATORY ACTIVITIES 27
Annex 1. Organizational and management set-up of the PRCGC Project 28 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Annex 1.A. Organizational and management set-up of the Country Project Management Team CHAPTER 1: PREPARATORY ACTIVITIES 29
Annex 1.B. Project Management Teams
1. COGENT Secretariat
Dr Pons Batugal COGENT/ PROCORD Coordinator Email: [email protected]
Ms Jayashree Kanniah Scientific Assistant Email: [email protected]
Mr Yeow Giap Seng Programme Assistant Email: [email protected]
Mr Rodolfo E Coronel Training Assistant Email: [email protected]
Mr Jeffrey T Oliver Communication Assistant Email: [email protected]
Ms Zulyana Mohd Nor Secretary Email: [email protected]
2. Country Project Management Teams
Bangladesh
Bangladesh Agriculture Research Institute (BARI) Dr. Safiul Alam Bhuiyan/Mr. Abdur Rashid/Md Nazirul Islam, Project Leaders Dr. Babul Chandra Sarker, Associate Project Leader
Technical Support Group: Dr. Babul Chandra Sarker, Horticulture/Coconut Breeder Dr. M. A. Quayyum, Farming System Specialist Dr. S. C Barman, Rural Sociologist and Economist Md. Nurul Amin, Farm Machinery and Post-harvest Process Engineering Division Dr. Sharif Ahmed Chowdhuri, Animal Production and Research Division
Community Coordinators: Md. Mizanur Rahman, Bandabila Coconut Community, Bandabila, Jessore Mr. Swopan Roy, Banchte Shekha Coconut Community, Jamira, Khulna Mr. Ashaful Alam, Chandrapara Coconut Community, Chandrapara, Barisal 30 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Fiji
Ministry of Agriculture, Sugar and Land Resettlement (MASLR) Mr. Jai Kumar (Director Research), Project Manager Mr. Tevita Kete/Mr. Kamlesh Chand Puran, Project Leaders
Technical Support Group: Mr. Vijendra Kumar, WRS Mr. Manoa Iranacola, TCC Mr. Sanaila Turaga, A/SAO Cakaudrove Mrs. Susana Yalikanacea, Cicia Mr. Viliame Yabakivou, PAO Eastern Mr. Jai Kumar, Director Research Mrs. Una Naikatini, Acting Director Extension Mr. Aliki Turagakula, PRO Agronomy Mr. Sakeo Matakaruru, Veterinary Officer Mr. Jone Robo, Cooperative Officer
Community Coordinators: Mr. Manoa Iranacola/Mr. Shandeep Sharma, Tukavesi Community Mr. Vijendra Kumar, Belego Community Mrs. Susana Yalikanacea, Cicia Community
Papua New Guinea
Cocoa and Coconut Research Institute (CCRI) Mr. Will Akus, Project Leader
Technical Support Group: Mr. Tore Ovasuru, Plant Breeder Mr. Masayan Moat, Research Scientist, Livestock Dr. Mathias Faure, Plant Breeder, Coconut Mr. Paul Tumun, Extension Officer Mr. Geno Genolamah, Food Technologist Mr. Jeffrey Marfu, Plant Breeder, Cocoa Mr. Titus Kakul, Entomologist Mr. Joachim Lumani, Economist
Community Coordinators: Mr. Waike Yasinge, Murukanam, Madang Mrs Serah Aloysius, Transgogol, Madang Mr. Donald Laho and Mr. Kurengen Sik Messah, Last Karkar, Madang
Philippines
Philippine Coconut Authority (PCA) Mr. Carlos Carpio, Programme Leader Ms. Rhoda Althea P. Prudente, Project Leader CHAPTER 1: PREPARATORY ACTIVITIES 31
Technical Support Group: Dr. Severino S. Magat, Soil Fertility & Crop Nutrition Mr. Romulo N. Arancon,Jr., Training & Knowledge Management Mr. Gerardo A. Santos, Breeding & Genetics Ms. Dina M. Masa, Food Processing Technology Engr. Divina Bawalan, Village-level Processing Dr. Dennis J. Calub, Socioeconomics Mr. Jose S. Cruz, Livestock Ms. Lidelia M. Astete, Research Management Ms. Erlene C. Manohar, Community Development & IPM
Community Coordinators: Mr. Rolando Paril, Mapalad, Real, Quezon Ms. Joy Aster Gamolo, Linabu, Balingasag, Misamis Oriental Mr. Henry Alvarez, Caliling, Cauayan, Negros Occidental
India
Central Plantation Crops Research Institute (CPCRI) Dr. V. Rajagopal, Project Leader Dr. S. Arulraj, Co-Project Leader
Technical Support Group: Dr. P. M. Kumaran, Head of Division (Crop Improvement) Dr. Rohini Iyer, Head of Division (Crop Protection) Dr. R. Dhanapal, Sr. Scientist (Agronomy) Dr. C. V. Sairam, Sr. Scientist (Agricultural Economics) Dr. S.J. D. Bosco, Sr. Scientist (Post Harvest Technology) Shri C. Thamban, Scientist (Senior Scale) (Agricultural Extension) Dr. Samsudeen, Scientist (Senior Scale) (Economic Botany)
Community Coordinators: Dr. C. Thamban and Dr. K. Samsudeen, Pallikkara, Kasaragod, Kerala Dr. C.V. Sairam and Dr. S.J.D. Bosco, Ariyankuppam, Pondicherry
Peekay Tree Crops Development Foundation (PTCDF) Mr. P.K.Thampan, Community Coordinator, Vayalar, Kerala Mr. V.Venkitachalam, Project Associate Mr. K.V.Raveendran, Community Organizer Ms. Omana Banerjee, Secretary Mr. N.K.Suseelan, Field Extension Worker
Indonesia
Indonesia Coconut and Palmae Research Institute (ICOPRI) Dr. Doah Dekok Tarigans, Project Leader
Technical Support Group: Ir. Henkie T. Luntungan, Plant Breeder/Alternate Project Leader Dra. Iis Nana Maya, Communication Dr. Hengky Novarianto, Regional Coordinator/North Sulawesi and Gorontalo Ir. R.B. Maliangkai, Deputy Regional Coordinator Ir. Jeanette Kumaunang, Technical Assistant for North Sulawesi and Gorontalo 32 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Mr. Ronald T. Hutapea, Agricultural Economist BIPP, Poigar Regent Extension Service BIPP, Wori Regent Extension Service Ms. Dinas Perkebunan, Extension Service Etty Sumiati, Treasure Kusumo Wardono, Administration
Community Coordinators: Mr. Engelbert Manaroinsong SP, Nonapan Village Mr. David Sumura, Wori Village Mr. Yulianus R. Matana SP, Huntu/Batudaa Village
Sri Lanka
Coconut Research Institute of Sri Lanka (CRISL) Mr. Ajith Dias Samarajeewa, Project Leader
Technical Support Group: Mr. J.M.D.T. Everard, Plant Breeder Mrs. S.R. Samarajeewa, Economist Mr. A.D. Samarajeewa, Integrated Farming and Livestock Specialist Mr. K.D.P.P. Gunatilaka, Food Technologist
Community Coordinators: Ms. Padmini Ratnayaka and Mr. W.R.O. Fernando, Wilpotha Mr. Don Ruwan Harshajeewa Nishshanka, Thuththipiritigama Ms. Galmangoda Gamage Pamodha Prasanganie and Mr. J.I. Costa, Dodanduwa
Vietnam
Oil Plant Institute (OPI) Mr. Vo Van Long, Project Leader
Technical Support Group: Ms. Nguyen Thi Le Thuy, Director of Dong Go Experimental Center, OPI Mrs. Nguyen Thi Bich Hong, Head of Perennial Oil Crops Division Mrs. Pham Thi Lan, Vice Head of Perennial Oil Crops Division Mr. Nguyen Van Minh, Researcher Mr. Ha Van Han, Researcher Ms. Ngo Thi Kieu Duong, Researcher Mr. Nguyen Van Trai, Researcher Ms. Nguyen Thi Thuy, Researcher
Community Coordinators: Mrs. Dang Thi Be, Hung Phong Community Mrs. Pham Thi Dep, Xuan Dong Community Mr. Hynh Minh Ngoc, Tam Quan Nam Community Mr. Luu Vinh Phu, Phong Nam Community (satellite project site) CHAPTER 1: PREPARATORY ACTIVITIES 33
Annex 2. Baseline survey form
Poverty Reduction in Coconut Growing Communities Project
Baseline Survey Format (BEFORE THE PROJECT)
COUNTRY: ______; PROJECT SITE: ______
INSTRUCTIONS: Please fill-out this form as accurately as you can. Place a check () mark beside the appropriate items. Data to be gathered from this form will be treated with utmost confidentiality and will only be used solely for establishing benchmark information to evaluate the benefits and impact of the project to the participants by comparing the situation before and after the project. If you have any questions, please ask your respective project community coordinators.
(1) Name of Farmer: ______
(2) Status: Single Married (3) Age: ______(4) Gender: M / F Others (specify): ______
(5) Number of Family Members: ______
(6) Education: Informal/ non-formal Elementary Some High-School High-school Some College College Post-graduate (i.e., MSc, PhD)
(7) Other skills (aside from farming, e.g. masonry, carpentry, sewing, etc.): ______
(8) Have you ever attended any skills development training seminar/workshop? Yes No If YES, what were they about? (please enumerate): ______
(9) Farm Area (ha): Area/Parcel 1 ______Area/Parcel 2 ______Area/Parcel 3 ______Area/Parcel 4 ______
(10) Do you own the farm? P1 Yes/ No; P2 Yes/ No P3 Yes/ No; P4 Yes No
(11) Farm area planted to coconut (ha): _____ (12) No. of coconut trees planted in farm: _____
(13) Average age of palms: _____ (14) Average nut yield per tree: _____
(15) Coconut variety(ies) planted in the farm (please list down; use additional sheets if necessary): a. ______b. ______c. ______d. ______34 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
(16) From where did you / do you usually obtain/buy the coconut seedlings that you plant in your farm? [Please enumerate source(s)]: ______
(17) Coconut products produced (i.e. copra, Estimated Annual Income Derived juice, etc.): (local currency): ______(18) Other Occupation(s)/source(s) of income Estimated Annual Income Derived (including crops grown separate from (local currency): coconut, if any): ______(19) Other major intercrops planted in the Estimated Annual Income Derived coconut farm (if any): (local currency): ______(20) Livestock raised in the farm (if any): Estimated Annual Income Derived (local currency): ______TOTAL ANNUAL INCOME
(21) Before the project, have you been a member of any farmers’ cooperative(s) or community- based organization(s)? Yes No If YES, enumerate the name(s) of the cooperative(s)/ organization(s): ______Have you been an officer of this cooperative/ organization? Yes No If YES, what position(s) did you occupy? ______
(22) Before the project, were you able to easily obtain loans for financing of farm-related activities (i.e., loans for obtaining livestock, agricultural inputs, etc.)? Yes No
If YES, enumerate the name(s) of the organization(s), cooperative(s) or other financial institution(s), where you were able to obtain these loans: ______CHAPTER 1: PREPARATORY ACTIVITIES 35
(23) When a family member gets sick or ill, how often do you seek professional medical advice/ help/ service (i.e., see a doctor or go to a clinic or hospital)? Never Seldom Sometimes Frequently Always
(24) Please check the box that best describes your house at present: Thatched/ nipa roof, bamboo or wood walls and floors Wood or bamboo walls, concrete floor with thatched/ nipa roof Wood or bamboo walls, concrete floor with galvanized iron roofing Mostly concrete with galvanized iron/ tile roofing and some wooden structure
(25) Please check beside the appliance(s) that you presently own: Television VCR (VHS or Beta) VCD/ DVD player AM/FM Radio Stereo Cassette/ CD player Washing machine Personal Computer Wood/ coal stove Gas stove Telephone/ Cellular phone Others (please specify): ______
(26) What do you know about the objectives and activities of the project? ______
Thank you very much for taking the time to answer this survey form 36 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Annex 3. Sample Memorandum of Agreement
KNOW ALL MEN BY THIS PRESENTS:
This Memorandum of Agreement is entered into by and between:
The Vayalar Community Development Centre (VCDC), a community-based organization (CBO), registered under Reg. No. 304/02 dated 24 July 2002, under the laws of the Government of India, represented hereto by its President Shri. G. Bahuleyan hereinafter referred to as the VCDC;
and
The Peekay Tree Crops Development Foundation (PTCDF) of Kochi-682020, a Non- Government Organization, registered under Reg. No. ______, under the Laws of the Government of India, represented hereto by its President, Mr. P.K. Thampan, with residential address at MIG-141, Gandhi Nagar, Kochi-682020, Kerala State, India, referred hereinafter as the PTCDF;
WITNESSETH:
Whereas, the CPCRI, representing India in the International Coconut Genetic Network (COGENT), is a recipient of funds under the Poverty Reduction in Coconut Growing Communities Project; Whereas, the CPCRI has agreed to share 1/3 of the allocated funds for India to PTCDF; Whereas, part of the funds are intended for field trials on livestock production, intercropping, producing and marketing high-value products form all parts of coconut, establish community-based nursery and plant coconut seedlings to increase farm productivity and income of coconut farmers; Whereas, the said funds, amounting to US$______or equivalent sum of Indian Rupees______are to be put up to a Community-based Organization as a SEED FUND for its Microcredit System, to be re-loaned to its farmer-members for the following purposes: field trials on livestock production, intercropping, producing and marketing high-value products form all parts of coconut, establish community-based nursery and plant coconut seedlings to increase farm productivity and income of coconut farmers Whereas, this amount is channeled to PTCDF, as NGO which is supporting the development of the VCDC, and PTCDF agrees to relinquish custody over said funds to serve the purpose where the funds are intended; Whereas, the PTCDF also agrees to continue to supervise and implement activities for the development of VCDC and the Microcredit System’s operations; Whereas, the VCDC accepts the funds and agrees to operationalize the Microcredit System and re-loan the money to its farmer-members who will undergo field trials on livestock production, intercropping, producing and marketing high- value products form all parts of coconut and establish community-based nursery and plant coconut seedlings;
Now, for and in consideration of the aforementioned, the following parties: VCDC and PTCDF agree to the following:
That, the funds shall be released to the CBO which will operationalize a Microcredit System to re-loan said funds to farmer-members that will undergo trials on livestock, CHAPTER 1: PREPARATORY ACTIVITIES 37
production, intercropping, production and marketing of high-value crops from all parts of the coconut, establish community-based nurseries and plant coconut seedlings, and promise to take adequate steps to recover the money from borrowers, make it grow in order to serve more farmers and more income generating activities in the future; and That, in the event that the funds are not used for the intended purposes, reduced because of mismanagement or non-recovery of loans from individual member- borrower, the PTCDF will have the full authority and power to retrieve said funds and the VCDC have no option but to return said funds, or whatever is left to the PTCDF, immediately upon advise.
Responsibilities of Parties Involved:
The VCDC shall: • Accept the funds to be put up as revolving fund for the microcredit system and issue corresponding Official Receipt to PTCDF acknowledging receipt and recognizing responsibility over the funds, and correspondingly registered said funds as part and parcel of the VCDC’s assets as will be shown in the Statement of Assets and Liabilities of VCDC; • Manage and takes care of the funds entrusted to the CBO like a “good father of a family”; • Re-loan the said funds to farmers-borrowers for specific purposes as enumerated above; • Devise a loaning systems and procedures to have adequate safeguard and ensure recovery of loans, either in kind or in cash with appropriate interest to make the revolving fund grow; • Design an appropriate recording system to monitor and track the movement of funds, i.e. releases to whom, how much, collection and the like, similar to a small financial or credit institution; • Prepare periodic report to PTCDF on the status of the Microcredit System and make the records open to PTCDF at a reasonable time during office hours; • Allow the PTCDF to generate lessons from the CBO implementation of the project and to publish write-ups and articles for sharing to wider audience for the benefit of other coconut farmers, locally or internationally; and • Allows the PTCDF and its partner organizations as CPCRI, COGENT and others, to bring other stakeholders who may want to witness and learn from the experiences of the CBO in implementing the Poverty Reduction in Coconut Growing Communities Project.
The PTCDF shall: • Release the appropriate funds to the VCDC immediately upon perfection of the MOA and issue corresponding documentation of the transfer of responsibility over the funds; • Continuously supervise and assist in the development activities for the VCDC and its Microcredit System operations; • Serve as Adviser and Consultant to the VCDC regarding organizational management and development of the CBO and its microcredit system management; • Monitors and evaluates operation of the CBO including the microcredit system operations; • Coordinates with and monitor periodically to CPCRI the development and status of the Microcredit operations, rendering reports as necessary; and • Provides copy of Official Receipt issued by VCDC to COGENT; and 38 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
• Prepares regular reports as necessary and required by its partner organizations: CPCRI and COGENT, during the duration of the PRCGC project and submit report of status of the funds to COGENT every year for 10 years upon signing the MOA.
Benefits of the Parties Involved:
The VCDC shall: • Retain the revolving fund as long as they are managed profitably, re-loaning to farmer-members for the purpose the funds are intended and recovering the loans; • Have the opportunity to help farmer-members increase their income thru the activities mentioned above; and • Earn from the interest it will charge from the principal amount borrowed by the members;
The PTCDF shall: • Generate lessons from the project implementation that can be written as techno- guides, extension bulletin, research write-ups and articles that can be publish for wider sharing benefiting more coconut farmers, locally and internationally; and • Be allowed to bring other stakeholders who may be interested to learn from the experiences of the CBO in implementing Poverty Reduction in Coconut Growing Communities Project: organizations, institutions, donors, farmers groups and others.
This agreement will take effect immediately upon signing of all parties concerned. Any amendments to be made to this agreement shall have to be agreed in writing by all parties concerned.
For and in consideration of the foregoing, all parties herewith affixed their signatures manifesting their agreement this day of , 2003 at ______. ______, ______.
For VCDC For PTCDF Shri G. Bahuleyan Mr. P.K. Thampan President President Residence Certificate No. ______Date Issued: ______Place Issued: ______
Witnesses:
______Dr. V. Rajagopal Ms. Omana Banerji, Dr. Ponciano Batugal Director, CPCRI Secretary, VCDC COGENT Coordinator IPGRI
Optional: (A sworn statement to be executed with/by a lawyer may follow, making this agreement legal and binding under the rules of court) Chapter 2 SUPPORTING STRATEGIES and TECHNOLOGIES
• Establishing and Managing Community-Based Organizations in Coconut Growing Communities • Developing Microcredit System in Coconut Growing Communities • Establishing and Managing a Microcredit System: The Grameen Bank Experience • Profitability Analysis of Coconut-Based Farming Systems • Conducting Market Surveys and Developing Market Channels • Machineries and Equipment for Processing Coconut By-Products • Production High-Value Coconut Fibre-Based Products • Production High-Value Coconut Wood-Based Products • Production High-Value Coconut Shell-Based Products • Production Coconut Candy and Confectionery Products • Production Coconut Sugar • Performance Evaluation of Village-Level Coconut Oil Mills • Coconut-Based Intercropping • Livestock and Feed/Fodder Production in a Coconut-Based Farming Systems
CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 41
Supporting strategies and technologies
Introduction One of the major constraints of smallholder coconut farmers in not being able to increase their meagre incomes is their lack of access to affordable village-level strategies and technologies for producing a diversity of marketable coconut-based products. This is partly because successful income-generating technologies are often located in different countries and many coconut growing communities have access to only a limited few (through their national extension programmes). To address this problem and to enable poor coconut growing communities to tap their tremendous income-generating potential, the International Plant Genetic Resources Institute (IPGRI) and its International Coconut Genetic Resources Network (COGENT) hired consultants to document these opportunities and developed the reports into 14 generic manuals. These manuals were shared with the project participating countries which were then used as basis in developing suitable local training materials. These, in turn, were used in training community members in each of the 24 coconut growing communities. To provide a quick reference, the 14 generic manuals were condensed into about 15 pages each as enumerated below and described in detail in the articles that follow. The longer versions can be requested from COGENT as needed.
Manuals on supporting strategies and technologies 1. Establishing and managing community-based organizations in coconut growing communities 2. Developing a microcredit system in coconut growing communities 3. Establishing and managing a microcredit system: The Grameen Bank experience 4. Profitability analysis of coconut-based farming systems 5. Conducting market surveys and developing market channels 6. Machineries and equipment for processing coconut by-products 7. Production of high-value coconut fibre-based products 8. Production of high-value coconut wood-based products 9. Production of high-value coconut shell-based products 10.Production of coconut candy and confectionery products 11.Production of coconut sugar 12.Performance evaluation of village-level coconut oil mills 13.Coconut-based intercropping 14.Livestock and feed/fodder production in a coconut-based farming systems 42 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Establishing and managing community-based organizations in coconut growing communities Percival B Ramos1 and Pablito M. Villegas2 1Consultant, Meganomics Specialist International, Inc., Future Point, Plaza Condominium, 112 Panay Avenue, Quezon City, Philippines 2President, Meganomics Specialist International, Inc., Future Point, Plaza Condominium, 112
Introduction The tasks of organizing the community towards purposive action are never easy. The uniqueness of the individual and the inherent differences among individuals can complicate even more the already complex processes of bringing these individuals into one common shared objective. Doing these are primarily the enormous challenges of community organizing, especially in areas where poverty has been more of a “way of life” rather than the deprivation of basic needs and empowerment. Experiences, however, demonstrated that many communities have not yet learned their lessons well, including those people for whom the task of community-based organizing are entrusted. Reports and records of some projects with community organizing as one of its integral components revealed such experiences – that after the termination of the time-bounded projects, the supposedly organized communities have slowly begun disintegrating. It became apparent that majority of the members did not fully understand and internalize the intent of the project, which they had committed to implement from the very beginning. Because of these, there is now a sharper focus being directed at improving the approaches and strategies of community-based organizing aimed at establishing a strong or stronger people’s organization. Specifically, in the coconut producing communities, there is an imperative need to establish or strengthen and manage community-based organizations (CBOs) in order to effectively mobilize the population within the areas towards increasing their productivity and income, and to move forward for bigger accomplishments on a sustainable manner. It is through this background that this paper is produced to serve as reference for the whole range of community- based organizing and strengthening activities, and its management for sustainable operation.
Concepts, objectives and scope of community-based organizing
Definitions Community organizing (CO) or interchangeably called community-based organizing is defined in many different ways by different individuals and groups. As cited by Luz Canave-Anung (1997), CO is organizing people for power. It is equated with the continuing process of empowering the people so that benefits consistent with their priorities and aspirations will sustainably accrue to them. Along the same vein, CO is also defined (KALAHI-CIDDS 2002) as a process of systematically bringing disadvantaged families and communities together to analyze their problems, prioritize these, take action to solve them by mobilizing resources from various partners or sources and, in the process, build people’s organization and develop spirit of social responsibility. The International Coconut Genetic Resources Network (COGENT) in its Poverty Reduction and Coconut Growing Communities project defines organizing CBOs as the process of organizing farmers/producers into viable associations capable of managing and implementing agribusiness projects and coconut-based enterprises. Such CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 43
CBOs could serve as a delivery mechanism for credit. Thus, it is vital for agricultural communities to have organized successful CBOs that will mobilize community resources, access external finance, technology, market and management systems and perform other business and social facilitation functions. To sum it up, a common definition was agreed upon by 185 representatives from both provincial peoples’ organizations and NGOs in the Philippines in 1994 which states CO as “a transformative/liberative; collective, sustained, systematic and participatory process of building people’s organizations by mobilizing and enhancing the people’s capabilities and resources for the resolution of their issues and concerns to effect change in the existing oppressive and exploitative conditions”.
Objectives Community organizing is generally aimed at mobilizing communities and developing/ strengthening their capabilities to implement project and/or subproject activities and become long-term resource managers using the community-based approach. In specific terms, a CBO is usually established to attain the following objectives: 1. Enhance the knowledge and awareness of the community in conducting a continuing and effective information, education and communication (IEC) activities; 2. Develop appropriate leadership and membership capabilities of the community that will mobilize them toward the attainment of the project objectives; 3. Based on the project profile, conduct training activities that are designed to socially, sociologically and technically prepare the community in undertaking project/subproject activities; 4. Assist the community in the preparation of feasibility studies and implementation of viable livelihood projects within the project/subproject site; 5. Provide technical assistance to the community on various activities; and 6. Develop the community into viable entity that is capable of managing the project on a long-term basis, through the community-based approach or participatory processes.
Scope and thrust Under COGENT’s poverty reduction project, the setting where community-based organizing takes place is specifically within the coconut producing areas or communities. Majority of the population in the Philippines depends on the coconut industry for their means of living and particularly in surviving the poverty situation that they are experiencing. In the Philippines, coconut is a major source of rural income since more than one third of the population is dependent or involved in the coconut industry sector. Based on statistics, more than 4 million hectares of agricultural lands are planted to coconut producing about 12.5 million tonnes (Bureau of Agricultural Statistics 2000). But since most of the farmers operate only on a small-scale category, the coconut products, which the farmers sell, are being channelled to middlemen. Besides, the full potential of the coconut and its by-products are not yet productively or profitably developed. The concept of CBO would be a major component that would help the coconut farmers alleviate their poverty. The CBO should be well organized, solid, stable, efficient and productive in converting the physical and material resources as well as the technology for other alternative high-value products in terms of good quality and volume. 44 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
The community-based organizations have great potential for serving as viable and effective partners in development efforts. Their strong affinity and ties with the community, particularly deprived communities, and the potentials they offer as voices of the people, can lead to a much more people centred development agenda responsive to real community needs. In the case of a coconut-based community, there are several factors that could contribute to the eventual success of a CBO. This may include the following: • Availability of and accessibility to the technology – It will be very advantageous for the CBO if they could easily have access to and utilize the technology within the community thereby enabling farmers to improve their productivity and increase their income. • Availability of credit and financing – Financing through cooperatives would also be a great help since in a rural community, particularly the small entrepreneurs or smallholders, lack access to financial assistance from other forms of financing institutions, e.g. commercial banks. • Mutual knowledge and trust among the members of the CBO – This promotes respect and consequently teamwork. The unity and cooperation among members of the CBO is essential to address common issues and problems.
Distinct stages or steps in organizing CBOs with their corresponding performance indicators Guided by a desire to make the community enterprisingly productive, the experiences of the Southern Mindanao Agricultural Programme (SMAP 1999) in their participatory and community-based approach is worth mentioning as a model. The processes in the different stages or steps in organizing a CBO are broken into six stages with their corresponding performance indicators as shown below. While the stages are presented as being distinctly separate, it must be emphasized that in reality there may be no clear demarcation between them. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 45
,
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ONE: and Entry TWO: Building 46 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
,
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Consolidation and Networking ensur fully conscious of itself, of the pr its own development, and of its place in the surr community. Its objective is to check that the community is community. cohesive and is able to interact ef community, including both gover community, structures and entities. structures
Stages Scope of activities or major concer
THREE: Learning By Doing
FOUR: Consolidation and Networking CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 47
.
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s
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Capability
Exit
Stages Scope of activities or major concer
FIVE: SIX: Demonstration 48 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
The development or community-based workers/organizers, in order to be effective, must understand, internalize and put to practice principles on participative and community-based approaches and strategies in community-based organizing. They should be equipped with sufficient knowledge on these principles and approaches and can translate them into operational terms. Some of these are the following: 1. Poor people maybe penniless or landless, but they are neither brainless nor soulless. They only lack opportunities. 2. Outsiders (development worker/community organizer) can help, but insiders (people) must do the job. 3. Development generally occurs more rapidly, and with better long-term results, if people are given the opportunity to recognize and analyze their own situations, to determine their own future, and plan how they will achieve it (self- determination). 4. People cannot be developed, they develop themselves. 5. People are the solution, not the problem. 6. There are many possible futures – people are able (have the right) to select the future that they desire for themselves and their children. Each future involves finding solutions to problems which may inhibit the attainment of the desired future. 7. People are able (have the right) to select the method by which they achieve their future. 8. Self-determination is more likely to be effective if people are provided with the best available information, and so are able to examine the full range of available futures and solutions, and the repercussions of each future/solution. 9. Inputs (physical, financial and technical) are often required to enable development, but let alone are insufficient to sustain development. 10.The development process is inherent in all communities. All communities, to a greater or lesser extent, possess the skill of managing their own development. 11.Communities refine their development skills when assisted through successful development cycles.
Participatory approach The participative approach stresses two-way involvement of all parties in all activities. By participating in a well structured process, the community ‘learns-by-doing’ and improves its skills at managing development. The capacity building or enabling function of the participatory approach is matched by the physical output of the process – infrastructure and improvements to production.
Community-based approach A community-based approach gives the ultimate responsibility for making decisions to members of the community. This is done because: The decision influences their lives. • The decisions are most likely to be more appropriate. • Greater commitment to implementing the decision is generated. • Decision-making is a skill that generally needs strengthening in developing communities through learning-by-doing.
The community–based approach is premised on the belief that the community, given all available information and understanding of the basic principle underlying the problem and its solution, will make an appropriate decision. The community’s decision may not be perfect, but will be in the right direction and appropriate to the circumstance/s. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 49
Strengthening an existing CBO It is not enough that the community is organized. Efforts should be provided to make the CBO viable in order to pursue productive activities in ways that are environmentally sustainable, socially acceptable and economically profitable. A viable CBO aims for a continuous and increasing capability to properly manage resources (natural, human, financial, material, etc.), resolve short and long term problems on their own and recover from stress conditions. As such, the CBO must be subjected to regular assessment as a means of identifying and defining its strengthening mechanisms. This would indicate if the CBO is sustainable.
Current reality assessment through SWOT Analysis One simple way to assess the organization is through current reality analysis through SWOT (Strengths, Weaknesses, Opportunities and Threats) technique. The technique applies systematic development and evaluation of the past, present and future data to identify the critical factors, both internal and external, that influence a given situation, the implications of each factor and specific recommendations for future actions. The internal factors are called Strengths and Weaknesses or limitations, while the external factors are the Opportunities and Threats. Strengths are features or attributes in the environment which enhance the development of an area or community. Opportunities are trends and events, whether economic, social, political or technological, that can significantly benefit a community in the future such as high demand for the products of the community, programmes or projects of government or private sector, availability of grants and donations for development. Threats are events that can potentially harm the present and future development or economic program of the community. SWOT can be most efficiently done through interviews with key farmers and other major stakeholders or through a consultation workshop.
Strategies, activities and procedures on strengthening existing CBOs Community-Based Organizing as sufficiently discussed is aimed at building, developing or enhancing relatively stable people’s organization that serves the needs and aspirations of the community. Being an operating organization, it must continue to grow to a higher level of development as a result of the series of assessments of its strengths and weaknesses. Its major strategy is the strengthening of the established and/or registered Organization by harnessing and mobilizing human and institutional resources in the community in pursuit of common goals. It looks at the total development of the coconut-producing areas with the whole community being capacitated to be the principal actors in the management of the resources and development activities within the said areas and its immediate environment. To further promote sustainability of development interventions and of project-based structures (Institute of Cultural Affairs 1994), the following activities should be continued or pursued: 1. Education and training. This is an important strategy for sustaining CBO. Participatory education and training should remain a continuing activity with an increasing role for local trainers. 2. Federation/Interlinking. Initial linkaging in the earlier stages may have been at the project area level. The network can be further expanded. One way to ensure sustainability is to assist local groups or working committees to link up with similar groups at village, district and regional to more advanced levels. 3. Expansion into radiation areas. The extension of the project concept towards wider acceptance and adoption outside the project site is posed as a challenge to project participants. Using experiences of failures and successes, the project will help others establish similar programmes in radiation sites. 50 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
4. Influencing policy reforms. Influencing change in local policies, practices and laws to create an environment more favourable to the poor and to rural development is a sphere of activity that well-organized groups and communities are encouraged to get into. Advocacy takes groups from the level of doing to influencing leaders, legislators, policy makers through lobbying and policy dialogues. 5. Internal CBO action tracking. Another innovation that could sustain the gains of the CBO is to regularly track its action with the following activities: • Build and sustain momentum • Keep everyone informed • Update plan • Motivate team
Towards effectively sustaining and strengthening Peoples’ Organizations The following insights should be considered in the overall perspective of strengthening CBOs: 1. The membership of the organization, with better appreciation and working in unison, must have the final decision on the type/course of action to be taken to address community issues and problems. 2. Consolidation and expansion must be done on a continuing basis, albeit systematically. Every member must internalize bases of unity, i.e. why the organization was set up. Basic principles that they adhere to and goals and objectives that they want to pursue collectively must always be clear to all and sustained programme of action should be based on a thorough social analysis. 3. The programme of action must be carried out in a collective fashion. Actual implementation must strengthen the shared and collective patterns of leadership and management of the organization. More effective ways of doing things must be discovered. New organizational arrangements more suited to the challenges of the programme of action must be tested. Sustained organizational development entails learning from experience and continuing education. 4. The programme of action must be collectively monitored, evaluated and summed up. Corrective measures must be instituted on time. The status of implementation of every activity must be monitored. Continuing documentation of collective endeavours must be done. 5. Spotting and development of new leader must be done on a continuing basis. More and more leaders are needed as the organization expands. Shared and collective leadership pattern is promoted as more and more leaders emerge from the ranks of membership. 6. Alliance building and networking must be done on a continuing basis. Links with other organization with similar persuasion must be strengthened. Collective action with them must be pursued.
Managing CBOs Successful management is an element of community organizing/mobilizing. Management, as an activity, means making decisions and solving problems based on a menu or array of logical options weighed in terms of its benefits vis-a-vis costs. The essential management and planning decisions can be found through effective use and application of the management concepts that would be beneficial in directing a CBO. An effective CBO is a result of the interaction between and among different factors, foremost of which are the peoples’ response in recognition of the issues and problems besetting their community and the strong desire to unify to address these (issues and problems); the capabilities of the community organizers to effectively facilitate CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 51
association of the people into one integrated whole; and the enabling environment where the CBO largely interact with. No doubt, however, external support is very helpful, especially in the nurturing stage when CBO understandably needs guidance and assistance in facing its challenges and opportunities.
Characteristics of a successfully managed CBO Based on learning experiences, one of the important features of a successfully managed CBO is that they are political, social change organizations rather than social service providers since such organizations operate with modest budgets but they seek power through mass mobilization. A successfully managed CBO is characteristically promoting: • Participation. People’s involvement does not revolve merely around exerting effort, energy and time in attending meetings or adopting/performing management technologies. It springs from a person’s active involvement in defining a vision in life, planning activities that run consistently with his/her family’s needs and community-wide concerns, decision-making implementation, and assessment/evaluation of outputs. Participation is also a voluntary effort and is never a result of threat or coercion. People will participate because they know that their involvement will bring forth benefits to their families and their community at large. • Collectivism. CBO fosters a close relationship of collaboration and unity among the members. The group serves as a body that allows each individual to share knowledge and skills to attain a goal that is common to the majority, if not everybody. • Teamwork. The spirit of collectivism in the cyclic process of planning, doing and reflecting should be present in the CBO. Through this, each member feels responsible for the others and for whatever they have as a group. Likewise, an atmosphere of cooperation rather than competition is developed. • Consensus building. The group believes in coming up with well-thought out decisions that are amenable to all sectors, parties and levels in the community. Consensus building is not necessarily decision-making by the majority. In consensus building, people are contented by the results/agreements. • Continuous leadership development. A continuing programme for developing local skills and capabilities has to be installed. This can be done through training, technical assistance, coaching and distribution of educational materials. As such, viability and sustainability are ensured even in the absence of a facilitator or a development worker. • Clear roles and rules. The CBO members and leaders must have a clear understanding of their particular functions in the group and the community. The existence of clear and appropriate guidelines, codes and systems helps maintain social order in the organization.
Requirements for successfully managing a CBO In line with the encouragement for the participation of the people through CBOs, there are principles that embrace the concept of people’s participation in the successful management of CBOs. These may include the following: • Utilization of the full human potential thereby developing people’s core development initiatives. • Fostering the innate vigour of local and home-grown knowledge, practices and beliefs while respecting the cultural differences, moral standards and spiritual beliefs of Filipino society. • Self-determination and respecting the rights of the people and relying on their natural capacity to decide on the course of their own development. 52 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
• Recognition of the important role of men and women as well as their complementary roles in management and development. • Ensuring the participation and empowerment of all sectors represented in the community in development, decision-making and processes.
Within the same vein, it is equally important to state that every organization requires the performance of the following management functions: • Integration of the organization with the larger society of which it is a part. Every organization is part of a larger system. A change in the larger system will impact the organization, and a change in the organization will impact the system of which it is a part. • Ensuring access to resources. The physical environment is the principal source of an organization’s resources. Hence, the group must always preserve and safeguard it so that supply is always constant. • Access to partners (project participants, clients, etc.). Every grassroots organization is created to fill a need or to address a problem of a particular group of people. It is important for the organization to satisfy these needs and to have the capability to respond to new ones which may emerge over time. • Establishing/Reviewing the organization’s vision, mission, goals, objectives (VMGO). All organizations need a VMGO or continuing purpose for existence. • Planning, organizing, directing, controlling and evaluating. These are the traditional management functions needed to ensure that the organization fulfils its mission. The planning function involves the establishment of short and long-term goals supportive of the mission and the development of strategies to achieve the goals. The organizing function brings people and tasks together into a structure designed not only to carry out the work but also to satisfy the need of those who will do the work. As organizations grow and become complex, the need for direction grows as well. The control function is necessary to keep the organization on track and to take the corrective action should something go wrong. And finally, an evaluation function is needed to determine whether or not the goals are being achieved.
Other important considerations in determining successful management of CBOs include the following operating social and institutional concerns: 1. Appropriate institutional arrangements/safeguards are necessary during the project design stage such as: • Promotion of harmonious participation of all concerned. • Provision for efficient mechanisms to avoid delays in project design. Participation can be unwieldy if too many institutions and individuals are involved. • Care must be exercised in choosing an implementing unit such that long- term sustainability, not only short-run efficacy, is obtainable.
2. The framework for social and institutional concerns covers: • Participation of potential participants in the design process provides the foundation for long-term project ownership. • Project ownership is a pre-requisite to post project sustainability. This can be tested when the supporting agency shall have phased out their assistance. • With sustainability ensured, more people can benefit from the income- generating project through expansion and replication. • The criteria for selecting beneficiaries or project participants must be crafted very well to minimize resentment from those not selected, and to avoid bias against low income or weaker groups. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 53
• It is important to dwell on the appropriateness and professional capacity of the possible implementation unit. One overriding factor to be noted here is the distinctive competence of the staff, especially those who will be assigned as community organizers/mobilizers/coordinators or facilitator.
Another requirement to determine successful CBO management is the formulation of milestones which will indicate running targets over a defined period of time or indicators which will, more or less, show project sustainability. These indicators include the following: 1. Continued Delivery of Services and Production of Benefits • Comparison of actual and intended benefits and services and their stability over time • Efficiency of service delivery • Quality of services (benefits) • Satisfaction of beneficiaries • Distribution of benefits among different economic and social groups • Adequacy of maintenance procedures and resource • Beneficiary involvement in maintenance procedures 2. Long-term Institutional Capacity • Technical capacity and appropriate mandate of the principal operating agencies • Stability of staff and budget of operating agencies • Adequacy of inter-agency coordination • Adequacy of coordination with community organizations and beneficiaries • Flexibility and capacity to adapt the project design and operation to changing circumstances 3. Support from Key Stakeholders • Strength and stability of support from international agencies • Strength and stability of support from national government • Strength and stability of support from provincial and local government agencies • Strength and stability of support at the community level • Extent to which the project has been able to build a broad base of support to avoid becoming politically controversial
Monitoring and evaluating the effectiveness of the established CBOs Effective monitoring and evaluation process of the established CBOs could be a set of processes of observing results and evaluating progress towards reaching the objective of the Poverty Reduction Project of the coconut-based communities. This looks at the process of monitoring and evaluation as well as showing the skills needed by the participants and implementers.
Setting up a project monitoring and evaluation system Monitoring and evaluation provides critical bases for planning, decision-making, problem solving and strategic adjustments. One of the basic characteristics of a functional community structure is its ability to monitor and evaluate its performance in a way that will allow quick resolution of problems and draw major lessons as basis for enhancement. It involves appraisal of progress towards the achievement of planned outputs and results. It also considers the validity of targets themselves. Evaluation process calls for the systematic collection and analysis of objective data/information, which periodically brings a variety of viewpoints to bear on activities and problems, and which relates evaluation findings to action decisions. It is also the routine gathering 54 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
and reporting of project accomplishments against measures of expected performance. Its result is early detection of problems/deviations so that adjustments are instituted. It is concerned with day-to-day supervision of procurement, delivery, and installation of inputs, and the production of outputs to assure that progress is on schedule. A good monitoring system will make periodic evaluation much easier. Evaluation, on the other hand, is concerned with the achievement of programme objectives, its effects and impact. It is the analysis and comparison of actual progress vs. prior plans, oriented towards improving plans/programmes/projects for future implementation. Monitoring and evaluation is concerned with implementing and evaluating. Evaluation seeks to answer three basic questions: 1. Effectiveness – Are the targets for outputs and purposes being achieved? What are the reasons for success or failure? 2. Significance – Will the achievement of the target contribute to economic development or other higher goals beyond the project purpose? To what extent? What are the activity’s advantages over possible alternatives? What about side effects? 3. Efficiency – Do the benefits justify the cost? Are there more efficient means of achieving the same targets?
Evaluation’s primary purpose is to assist management to fulfill its decision-making responsibilities. Evaluation studies should be designed to meet the following criteria: 1. Objectivity – Evaluation activities must minimize subjectivity and must be as candid and factual as possible. 2. Timeliness – Evaluation studies must become available to management on a timely basis, whether designed to provide feedback to an ongoing project or information in connection with other activities. 3. Applicability – The study must produce operationally useful conclusions or recommendations. 4. Communicability – Findings should be amenable to translation from academic language techniques into a form readily understood by those who will use the study’s results. 5. Validity – The design of an evaluation study must adhere to principles that ensure the reliability of the data being gathered. Collection and processing of data should be appropriate to the design of the study and to conditions under which the study was conducted. 6. Scope or depth – Evaluation should measure not only the progress or quality of performance in the plan/programme/project, but should also seriously question the premises on which the entire project is based.
Effective monitoring allows the accomplishment of the following: 1. Measures physical progress of a project against plans and work schedules; 2. Measures financial progress against projected cash flow and budget allocation/ plan; and 3. Identifies problems at project level, permitting immediate corrective measures.
There are three types of evaluation that are useful to the community. These are: 1. Process Evaluation. Process evaluation provides community organizers and residents with technical information that can assist them in developing and implementing similar projects. Special attention is given in identifying the lessons learned at the various levels and guidance provided regarding organization and development of programme/project activities, and to the implementation of programme/project elements, which are useful in addressing particular kinds of problems. Doing process evaluations establishes the foundation for more intensive impact evaluation. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 55
2. Outcome Evaluation. Outcome evaluation studies the immediate or direct effects of the project on the community, usually done right after the project phases out. The scope of an outcome evaluation can extend beyond knowledge or attitudes to examine the immediate behavioural effects of projects. 3. Impact Evaluation. Impact evaluation looks at and examines the effect beyond achieving (or not) the project objectives. It tells us what conditions or situations came about as a result of the project, i.e. Does achieving the project objectives contributed to policy changes or programming decisions?
The recommended steps in starting a Community Monitoring System are as follows: 1. Select and train the Monitoring Team; 2. Plan the monitoring and evaluation activities; 3. Assemble resources required; 4. Conduct field monitoring visits/data gathering; 5. Consolidate/organize data; 6. Provide feedback, validate or confirm data with the community; 7. Analyze and derived conclusion and recommendations (and prepare the report); and 8. Provide feedback to the community.
References Canave-Anung, Luz. 1997. Community organizing-participatory research: Its concept, philosophy and principles. Mindanao Training Resource Center - Institute of Primary Health Care. Davao Medical School Foundation, Davao City, Philippines. 3rd Edition. Center for Rural Technology Development. 1991. Handbook on Community Training Programs. Philippine Business for Social Progress. Quezon City, Philippines. DENR. 1996. Basic Community Organizing Handbook for Community-based Forest Management Programs. Quezon City, Philippines. DENR. 2001. Guide on strengthening activities for reenergizing peoples’ organizations under the DENR forestry sector project. Quezon City, Philippines. Department of Agriculture. 1998. Guide for participatory municipal agricultural & fishery development planning. Quezon City, Philippines. Department of Agriculture. 1999. Manual for trainers on participatory planning. DA-PRISP. Quezon City, Philippines. Department of Agriculture. 1999. Project Design: Workbook for Project Development Officers. DA-PRISP. Quezon City, Philippines. Institute of Cultural Affairs. 1994. Technology of participation. Phoenix, Arizona, USA. KALAHI-CIDDS. 2002. Manual on community organizing: Sub-Manual 1. KKB. Philippines. KALAHI-CIDDS. July 2002. manual on community organizing, Sub-Manual IA: Area Coordinator’s Manual. KKB. Philippines. National Council on Integrated Area Development. 1987. Operational guidelines for community development: A people-centered approach. Quezon City, Philippines SMAP. 1993. Manual on Southern Mindanao Agricultural Program (SMAP) for participative, community-based rural development. Davao City, Philippines. 56 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Developing a microcredit system in coconut growing communities Melody De Guzman1, Pablito M Villegas2 and Jaime Aristotle B Alip3 1Consultant, Meganomics Specialist International, Inc., Future Point, Plaza Condominium, 112 Panay Avenue, Quezon City, Philippines 2President, Meganomics Specialist International, Inc., Future Point, Plaza Condominium, 112 Panay Avenue, Quezon city, Philippines 3Consultant, Meganomics Specialist International, Inc. and Founder of the Center for Agriculture andRural Development (CARD), San Pablo, Laguna, Philippines
Introduction The importance of coconut in the national economy of coconut producing countries and the need to improve its productivity and fully develop its value addition potentials deserved much attention. One way is through creation of related livelihood and enterprise development project. Such initiative will instill a strong foundation that will justify the need for establishing a microcredit operation. Understanding the interrelationships between the finance-production-market triad would provide valuable inputs in the implementation and management of a successful microcredit operation.
The role of microcredit In MSE developmentt The development of micro and small enterprises (MSEs) is being given preferential attention by both the government and the private sector owing to their global economic significance. The development process, however, is being hampered by inadequate or even lack of financing for these enterprises. Some of the major reasons identified for the inadequacy or lack of financing were: a) market and technical viability of the projects for financing; b) stringent banking requirements such as collateral securities; and c) readiness of the MSEs or cooperatives to manage projects. Microcredit will play a key role in accelerating the development and promotion of MSEs by addressing their financing needs. The potentials and capacity of MSEs for entrepreneurship would be encouraged and honed with the availability of small- scale loans. The other non-financial services being provided by the microcredit system (e.g. value formation, skills trainings) would allow the MSEs to be more self-reliant and would create employment opportunities.
The interrelationships of the Finance-Production-Market Triad The Technology-Finance-Market Triad Model as an integrated approach towards a progressive rural development should be characterized by a balance or fit between the three factors namely: finance, production technology and market. Technology is important because it will determine the extent of activities that a community of farmers can engage in, the absorptive capacity and the amount of investments required. Financing is extremely necessary so that these production activities can be carried out adequately and timely in a viable and sustainable manner. The market, on the other hand, will translate the production into cash flows and monetary values. Consequently, available market will determine how much gross margins and net profits can be realized, how fast the investments can be recovered and ultimately, how financing can be repaid. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 57
Methods of establishing a successful microcredit system Microcredit is the extension of small loans to entrepreneurs too poor to qualify for traditional bank loans. It has proven an effective and popular measure in the ongoing struggle against poverty and food insecurity, enabling those without access to lending institutions to borrow at bank rates, and start small business. A microcredit programme, on the other hand involves three of the most consistently difficult development activities that need to be implemented successfully: a) that of group organizing the “development partner” beneficiaries and their motivation; b) that of lending and collecting money; and c) that of managing (planning, staffing, implementing, directing and controlling operations, monitoring, and evaluating business performance) a sustainable income generating activity. Very often, the difficulty, complexity and rigorous demand on time, expertise and resources (including cost effectiveness) for running a credit scheme are grossly underestimated.1
Importance of microcredit vis-à-vis formal bank credit The importance of microcredit has recently assumed a certain degree of prominence as evidenced by the growing number of microfinance institutions being established in each Asia and Pacific country every year. It is based on the recognition that the latent potentials and capacity of the poor for entrepreneurship would be encouraged with the availability of small-scale loans and would introduce them to the small- enterprise sector. This could allow them to be more self-reliant, create employment opportunities and at the very least, engage members of the households, more particularly women/wives and children, to economically productive endeavours.
Rationale for the establishment of a successful microcredit system in the “Poverty Reduction in Coconut Growing Communities” project In the context of COGENT’s poverty reduction project, the mobilization and availability of microcredit is highly critical in carrying out the intercropping, livestock diversification and product diversification processes that will be involved in the development of a coconut-based farming system in the coconut growing communities. Technology, inputs procurement, human resources, credit delivery systems, institutions, infrastructure and natural resources endowments compose the input subsystems that feed into the production of commodity transformation. The credit delivery system, including its receiving mechanisms, even on a micro level basis, is the key subsystem that will spur the institutionalization of all the other subsystems towards the production or commodity transformation characterized by higher level of productivity and/or conversion into higher value products.
Characteristics and requirements of a successful microcredit system Foremost requirement: “There is a felt and urgent need recognized by the community and that a potential solution, i.e. Microcredit (and Savings) or Microfinance Programme, is also identified by the community.”
1 http://www.undp.org “Observations on Micro-Credit Schemes in the Pacific: Making Micro-Credit More People-Centered” 58 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
A successful microcredit system should have the following characteristics and requirements: 1. The effective planning and implementation of the microcredit component should be handled by a viable farmers’ association or cooperative which has a legal personality. 2. A well-defined vision and mission statement underlining the specific purpose for which the programme was established. 3. A clear set of measurable goals and objectives geared towards translating the mission statement into realistic and workable targets. 4. Provide the rural population with access to savings mobilization schemes within the local area and with a certain cushion against socioeconomic risks and business fluctuations. 5. Encourage group responsibility, cooperative consciousness and community feeling of solidarity and mutual assistance. 6. Exclusive focus on the very poor by using rigid selection criteria to ensure that the non-poor or better endowed and prosperous members of the community will not gain entry into the programme. 7. An organization and management system composed of trained, committed and honest workforce that is capable of delivering programme resources directly to the community. 8. Effective control over its funds through intensive savings mobilization, proper accounting system and loan recovery programme thereby ensuring long-term viability and sustainability. 9. Effective governance following the principle of financial transparency and moral accountability. 10.Provide non-financial services that fit and are responsive to the needs and preferences of the “partner-beneficiaries”, i.e. simple recording, bookkeeping and accounting, and value formation. 11.Appropriate flexibility in the amount of loan and terms of repayment depending on the type of business or income generating activity, preference and convenience of the borrower. 12.Borrowers maintain the dignity and ability to choose economic activity and must have the basic knowledge and skills on the enterprise/project that they are or will be engaged in to invest their borrowed money. 13.Simple and minimum documentation and procedures. 14.Appropriate screening and assessment of borrowers and economic activity where loans are to be invested and regular verification and monitoring to ensure loans are invested properly. 15.Equity counterparts from the ‘partner-beneficiaries’.
Recommended activities and procedures in organizing a successful microcredit system
Site selection
Identification of potential ‘partner-beneficiaries’ Identification can also be done by assessing the characteristics of the population group such as the gender, poverty level, geographic focus, ethnicity, caste and religion, as follows: • Gender – focusing on female clients has been the trend of majority of microcredit institutions worldwide in line with their objective of empowering women by increasing their economic position in society. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 59
• Poverty Level – assessment should take into consideration the two segments of the population: the poor or the poorest among the poor or ultra poor. • Geographic Focus – characteristics of both urban and rural areas must be examined thoroughly. • Ethnicity, Caste and Religion – in most countries, there are ethnically or traditionally defined groups that cannot or will not take part in a financial services project due to a religious, ethnic, or other social influence.
Selection of cooperative conduits/participants to the microcredit programme The following guidelines are suggested in assessing and in selecting the cooperative conduit/participant: 1. Make a shortlist of the viable cooperative organizations or farmers’ associations in the coconut growing communities in coordination with the local government units or coconut development agencies or local leaders in the area; 2. Conduct visitations and interviews with all the short-listed organizations to determine their capacities and interest to participate in the microcredit component; and 3. Assess conduits based on the following criteria: • Has legal personality, registered with any concerned registering agency in the country; • Has at least 80% active membership; • Has proven track record (at least 2–3 years) on providing loans to its members/ beneficiaries and on high (at least 85–90%) recovery of loans; • Has existing economic activities such as coconut growing and intercrops, trading, cooperative store, etc. and has a proven track record in managing such activities as evidenced by their profitability and growth; • Has a functioning Board of Directors and Officers fully prepared to absorb responsibility and accountability of the microcredit funds; • Has a core management team in-charge of the day-to-day cooperative transactions; and • Has an effective accounting and auditing system.
In the absence of community-based group or cooperative in the community, a group can be organized with the intention of becoming ‘Community-based Organization’ or CBO that will eventually implement and manage the Microcredit and Savings Programme. (see Establishing and Managing a Community-based Organization in Coconut Growing Communities in Part 2, Section 1). Basic organizational activities are as follows: 1. Initiation of group building process • Hold community orientation meeting re: Overview of “Poverty Reduction in Coconut Growing Communities Project” and the “Microcredit Programme” • Identify core or potential leaders • Do groundwork to discuss in more details the programme and assess interests of the core or potential leaders about implementing a microcredit program • Invite identified core leaders to set-up the group’s structure 2. Institutional strengthening of the group/s 3. Preparation for formal organization or establishment as a cooperative 4. Registration with the licensing or regulatory agency 5. Institutional strengthening of the cooperative as manager of the Microcredit Programme 60 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Establishment/organization of a successful microcredit system The following sequential activities and procedures are recommended in the establishment of the microcredit component: 1. Formulation of a mission statement. 2. Formulation of the objectives of the Microcredit Programme, setting up measurable goals and translating the mission statement into tangible targets. 3. Design and development of a lean but responsive organizational structure that will be directly responsible for the operation and management of the Microcredit Programme. 4. Attendance in capability-building and skills trainings by the abovementioned designated staff specifically on microcredit operations (e.g. principles, importance, operating systems and procedures, bookkeeping/accounting) and on project management. 5. Conduct of a planning workshop among the programme staff and other concerned officers to map out the following critical activities: • Define/identify the target market or group of clientele that the microcredit system would like to service or support. • Formulate programme guidelines as to beneficiary and membership selection, lending terms and policies more specifically on credit services and loan products, and savings mobilization. • Map out budgetary and funding requirements and resource generation and its mobilization. • Formulate the programme’s operating systems and procedures which will delineate the chronological activities that will have to be done to implement the microcredit system. 6. Identification and securing of the microfinance budget from the funding institution(s) which could either be a ‘government financing institution, donor agency, or other financing intermediaries and their conduit microfinancing institutions, including their (CBO’s) equity counterpart. 7. Execution of partnership agreement with the funding institution and other legal documents (e.g. permits, etc.) to formalize the setting up of the Microcredit Programme in the coconut growing communities.
Procedural requisites of a practical and sound microcredit programme The loaning cum savings procedures can be summarized as follows: 1. Selection of productive and remunerative enterprise activities or identification of the type of microenterprise that will be financed. 2. Selection of beneficiary and other criteria should follow the formulated selection criteria to ensure that priority is given to the most poverty-stricken households needing access to productive resources, particularly in the area of capacity building and access to enterprise development training. 3. Application for membership to the Microcredit Programme. 4. Pre-membership seminar to would-be borrowers (vision, mission, goal of the microcredit programme, policies and procedures of the programme and roles and responsibilities of the member-borrowers). 5. Testing whether the above subjects are well understood before one can apply for a loan. This will enhance commitment to the programme and adherence to the policies and procedures. 6. Loan application. Simple loan documents must be filled-up by any member- applicant. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 61
7. Assessment of the project and further “background/character” investigation of the member-borrower. • Amount of credit – the loan is usually given in small amounts to be used either for start-ups or maintain an ongoing business. • Terms of disbursement/payment – the credit could be disbursed either in tranches or lump sum depending on the type of project and farming activities or production plan. • Back-up/follow-up support – this is done to ensure that credit is utilized properly and identify other needs of the beneficiary. 8. Repayment terms (amount and duration) – design repayment terms that are most affordable to the beneficiary and in strict accordance with the cash flow generation of the project. 9. Savings – this is an essential requisite to enhance the microcredit programme’s sustainability and likewise imposes discipline on the beneficiary in developing savings habit. 10.Regular programme review – this is done to assess the effectiveness of the programme and map out solutions to constraints or problems, modifications or improvements in the designs and systems or procedures, if warranted. 11.An authorization to release funds in terms of sanctions or conditions. 12.Loan ledger (containing individual loan accounts) – this is essential and an effective accounting tool to monitor movements of the beneficiaries’ accounts. 13.Actual payment (cash or cheque) of the released loans. 14.Regular posting and balancing of repayments and its proper application into interest and principal.
Successful implementation and management of an effective microcredit system There are favourable experiences of leading microfinance institutions that lead to successful microcredit planning, implementation and overall management. One of these is the Grameen Bank model which is a specialized financial institution in Bangladesh for the improvement of the living conditions of the poor (see Establishing and Managing Microcredit System: The Grameen Bank Experience in Part II, Section 3). Another is a modified Grameen Bank Model that is being adopted by CARD Bank in the Philippines and Bank for Agriculture and Agricultural Cooperatives (BAAC) in Thailand. As such, an effective microcredit system could be established by implementing such similar successful models that have the following distinctive features and implementing measures: 1. Exclusive focus on the poorest among the poor; 2. The design and development of organization and management systems capable of delivering programme resources to the villages instead of the normal practice of asking people to come to the bank to avail of the credit facilities; 3. Organizing the prospective borrowers into small group of five like-minded persons with a number of groups (five to eight) being federated into a centre; 4. Adherence to special loan conditions which are particularly suitable to the poor; and 5. Establishing collective and guarantee cum risk funds. 62 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Characteristics of a successfully managed microcredit system and its requirements for sustainability A successfully managed microcredit system is characterized by the following indicators which can be categorized as follows: 1. High loan recovery or collection rate – this can be achieved through provision of financial incentives to encourage prompt repayment, disbursement of funds efficiently and rapidly, and implementation of a sound beneficiary selection and approval process. 2. Profitability – characterized by sustained viability or continuous increase in business profits which is attained through effective business operation and financial management, such as maintenance of low-cost operations and devising cost factors and profit margins that can cover all operating costs. 3. Expansion in client base or type of loans (loan product mix) and/or geographic area of operations – this means a continuous growth in the level of outreach achieved at the targeted clientele group which is attributed primarily to the affordable and responsive financial services offered (e.g. easy repayment terms that is matched with project cash flows, adequacy of loan amount) to optimize productivity and returns and deployment of dedicated and well-trained staff at the village level. 4. Liquidity – the microcredit programme should always have cash reserve to pay for any obligations, including scheduled loan releases, withdrawal of savings deposits and operational expenses at any time deemed necessary. 5. Sustainability – this means the programme is self-sustainable and self-reliant which can be achieved through intensive implementation of savings mobilization and other resource generation strategies to gradually wean away the rural poor from dependence on government subsidies or from donor agencies.
Sustainability means that the microcredit provider (e.g. coconut cooperatives, farmers’ associations, etc.) is either already able to operate without external subsidy or is generating enough revenues from its operations (from interest charges and fees) to cover all costs. The following are the requirements for sustainability of a microcredit system: 1. A broad base of targeted group of clients with sufficient means to repay their debts, including interest and charges. 2. Proper pricing of interest rates for loans and savings deposits which can cover the cost of providing credit services, administrative expenses and loan losses, and allow for a reasonable profit margin. 3. An institutionalized savings mobilization activity and formulated strategies for fund creation or sourcing of the cheapest cost of funds. 4. Cost efficiency which is attained by keeping the transaction costs low without necessarily hampering the efficient delivery of credit to the targeted clients. 5. Implementation of risk assessment and remedial management measures such as conduct of regular client-project-monitoring activity, product-market matching and linkages, capacity building in enterprise development and internal and external audit, among others.
Requirements for successful management of an effective microcredit system The following salient rudiments or requisites should be present in an effective microcredit system in order to successfully manage its operations: 1. Well-defined and clear-cut objectives translated into an annual and medium- term plans and realistic targets. 2. A well-defined target market - this should be clearly identified in order to stay focused on the management of the microcredit system. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 63
3. Availability of diversified and appropriate loan products and non-financial services (e.g. technology transfer, marketing assistance) that would meet the needs of the identified target group. 4. A trained and pro-poor workforce, which is specifically committed and skilled in extending financial services to the poor. 5. A well-defined and well-understood programme guidelines and operating systems and procedures both by the staff and the member-borrowers. 6. A well-defined strategy with corresponding or accompanying incentives structure or packages, to generate savings, maintain high collection rate, increase quality borrowers and motivate staff to deliver (pay increase or bonuses based on contribution to operational efficiency and incremental net incomes). 7. A sound management information system (MIS) and a well-structured monitoring and evaluation scheme which will serve as valuable tools in assessing the movements of the accounts of the ‘partner-beneficiaries’. 8. A supportive and responsive local government unit and community leaders who are quite influential in the coconut growing community.
Recommended activities and procedures in effective implementation and management of a microcredit system Some of the activities recommended below are patterned after the Grameen Bank Model of Bangladesh which is widely replicated all over Asia as well as that of the CARD Bank in the Philippines. The CARD Bank has adopted a modified ‘Grameen’ scheme that proved very successful in Luzon Islands. 1. Invoke community awareness by conducting a community orientation and dialogue with the target market or clientele group in the coconut growing community. 2. Conduct of house-to-house visits to validate the baseline information regarding the prospective members’ demographic and socioeconomic background using the data on the application form. 3. Conduct of a series of trainings for the prospective members that would run for at least 24 hours or three days of intensive training. 4. Testing of the members whether they have fully understood the mission and goals of the microcredit system, the guidelines, policies and procedures of the system. 5. Formation of groups of five like-minded individuals sharing similar socio- economic conditions who come together to achieve a new way of increasing their household income through the microfinance programme. 6. Federation of five to eight groups into a Centre in the selected community or town. 7. Loan processing – loan processing should be done at the shortest time possible, not longer than one week, if possible. 8. Loan proposal preparation – members who want to avail of the microcredit programme prepare the loan proposal. The loan proposal format should be simple for easy accomplishment – one-pager proposal, if possible which briefly states how much the member intends to borrow from the programme and how she/ he intends to use the proceeds from the loan (as well as how to repay the loan) and sources of revenue or income to repay the loan. 9. Loan evaluation – this is done by the Project Assistant of the microcredit provider. The evaluation process should take into consideration the technical and market viability of the proposed microenterprise that will be undertaken by the member- borrower. 10.Loan approval – the evaluation and the recommendation of the Project Assistant is contained in a report form submitted to the Project Officer who approves the loan by indicating the approved loan amount and affixing his/her signature. 64 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
11.Loan disbursement – the loan should be disbursed on or before the actual need or utilization of the borrower. 12.Loan utilization reporting during Centre Meeting – this activity is conducted to ensure that the loan proceeds are used for the purpose for which it was intended. 13.Loan repayment and attendance to weekly Centre meeting – the weekly Centre meeting plays a decisive role in the growth and development of the Centre and in instilling discipline among members.
Monitoring and evaluation of the effectiveness and sustainability of the established microcredit system Monitoring and evaluation (M&E) is an integral part of managing a project or programme. Monitoring is a surveillance system used by those responsible for a project to see that everything goes according to plan, as early as possible, and that resources are fully utilized. It is a continuous feedback system, ongoing throughout the duration of a programme and involves the overseeing or periodic review of each activity, at every level of implementation, to ensure that the set objectives are achieved. If not, adjustments can be made and corrective actions are taken when necessary. Evaluation, on the other hand, is a systematic analysis of the organization’s achievement compared to its plans. During the process of evaluation, conclusions are reached concerning the organization’s effectiveness and efficiency in obtaining its overall objective thereby enabling project management to adjust, redefine policies or objectives, or deploy resources as necessary. The overall objective of evaluation is to improve the effectiveness and efficiency of the organization in using available resources.
Monitoring A system should be installed by which to monitor whether policy and operational guidelines and procedures are being followed, financial and operational targets are being met and the necessary amount of resources are being mobilized and properly utilized. Monitoring forms should be devised and accomplished regularly to provide management information for decision-making, financial monitoring and future planning. Formulating the M&E System can be done with the participation of various stakeholders especially the intended beneficiaries. Basic format that can be used should indicate the following: 1. Microcredit systems’ goals and objectives 2. Indicators of success 3. Who should collect information 4. When/frequency information should be collected 5. Sources of information 6. Who will use the information
Monitoring can be done during/after the weekly Centre Meeting and during the Cluster Meeting by filling-up appropriate forms that can be devised based on the output of a Participatory Workshop on Designing M&E System. Financial Statements such as the Statement of Income and Expenditures and the Statement of Assets and Liabilities, could provide monthly information as to the financial condition of the microcredit programme. On the other hand, an Operations Update Report (OUR) could be devised which would provide information on the following indicators of a sound management information system (MIS):
1. Outreach 2. Portfolio Quality 3. Operational Efficiency CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 65
A narrative report should always accompany the above operations update report. Detailing the progress and experiences of the Centres, highlighting problems encountered and actions taken to resolve these problems. Aside from the formal reporting system, the monitoring system should provide for varied venues for information sharing. There should be an informal process of information exchange among the staff concerned. This information exchange should also be conducted regularly (either monthly or bi-monthly). Information on members’ needs and concerns, on the other hand, are monitored or generated during the weekly Centre meetings.
Evaluation Evaluating the impact of the programme on the beneficiaries should not only measure the change in income levels of its clients. The evaluation should also determine the asset build-up of the borrowers, specifically in terms of land acquired, appliances and jewelleries purchased and housing condition. This is done through conduct of in-depth field interviews with members. Evaluation (with other stakeholders especially with representative from the beneficiaries) on the other hand, can be done quarterly, semi-annually or annually as deemed necessary by programme/project management. The programme should be evaluated primarily on the basis of the goals and objectives, aside from other indicators that may come up during the Participatory Workshop on Designing M&E (i.e., profitability, liquidity, expansion and sustainability). The following additional parameters could be used in evaluating the impact of the microcredit system: 1. Client Exit – refers to those clients or members who withdrew their participation in the programme. Evaluating or tracking the reasons why the clients or members are leaving can be very useful to the programme’s improvement. 2. Client Empowerment – empowering the poor has always been the mission of most microfinance institutions since it is a key part of alleviating poverty. Microcredit is often given ‘credit’ for empowering the poor. An in-depth interview should be conducted with the client in order to identify ways in which clients feel and manifest empowerment as a result of their participation in the programme. The technique concentrates on outward manifestations or concrete demonstrations of empowerment as seen in behavioural changes in the individual, household, community or enterprise.
Microcredit performance measures
Quantitative and performance evaluation measures There are simple analyses that can be done as mentioned earlier like, profitability, liquidity, outreach, sustainability, loan recovery rate in evaluating the performance of a microcredit programme. 66 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
On the other hand, other performance indicators which may or may not be applicable are cited below:
Quantitative Measures Performance Evaluation Degree of Market Penetration • Active borrowers Number of contacts needed to find, screen, • Conversion ratio (loans lent as a and yield clients, or efficiency of staff percentage of applicants or outreach outreach and marketing contacts) • Percentage of staff time spent on outreach and group formation Development Impact • Number of clients served Whether the intended results are being • Percentage increase in customer incomes achieved and whether they remain • Number of businesses created, appropriate and responsive to savings and maintained, or grown wealth creation (poverty reduction) • Jobs created (including self-employment) • Qualitative gains/personal development Operating Results • Average cost per loan Whether annual volume of clients is • Revenues per average loan increasing and whether operating • Clients per loan officer/staff person costs are decreasing per loan • Staff expense as a percentage of average assets • Net interest margin • Unit cost ratio • Cost per currency unit lent Financial Condition • Average portfolio outstanding Portfolio credit risk and financial health • Liquidity ratio of the organization • Delinquency and loan ageing reports • Ratio of losses to average portfolio outstanding Required Subsidy • Self-sufficiency ratio The percentage of total operating costs that are met from internal revenue sources (interest on loans, interest on investments, and fee income).
References ACCION International. 1996. Microcredit in Transitional Economies.: The Programme on Local Economic and Employment Development. OECD, Paris Asian Productivity Organization. 2001. Agricultural Credit in Asia and the Pacific. Tokyo, Japan. Bank of Agriculture and Cooperatives. 2000. Annual Report. Thailand Center for Agriculture and Rural Development (CARD) Bank. San Pablo, Laguna, Philippines. Porter, Michael E. 1998. On Competition, Clusters and Competition – New Agenda for Companies, Governments and Institutions. U.S.A. Saltzman, S., Rock, R. and Salinger, D. 1998. Performance and Standards in Microfinance: ACCION’s experience with CAMEL instrument. (Discussion paper no 7) Accion International,Cambridge, Massachusetts, U.S.A. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 67
Establishing and managing microcredit system: The Grameen Bank experience Md Siddiqur Rahman1 and Rodolfo E Coronel2 1Deputy General Manager, Grameen Bank, Head Office, Mirpur-2, Dhaka-1216, Bangladesh 2Training Assistant, COGENT-IPGRI Regional Office for Asia, the Pacific and Oceania (APO), Serdang, Selangor Darul Ehsan, Malaysia
Introduction Credit is said to be a ‘lubricant’ that facilitates economic activities. While credit alone is not a panacea for poverty, it is important and necessary. It provides opportunities for people to use their talents for investment in enterprising activities that can promote growth and development of themselves and of the community. However, the traditional banking system has fallen short of providing credit to people who needed those most – the asset-less or the poor to the very poor people. The following are the four major reasons why the microcredit system has evolved over the years, to become alternative credit system for the poor: 1. Traditional banking system lacks manpower that has community development orientation. Most often than not, bank staff are working for profit and they are evaluated by how much profit they can contribute to the bank. 2. Traditional banking system requires collateral and a number of documents that must be filled-up and submitted by the borrowers. These requirements effectively exclude the poor farmers from accessing credit. They have complex rules and regulations that not only exclude the asset-less but also the illiterates, which represent most of the poor farmers; 3. The systems by which they carry out their lending and collection are not appropriate with small loans and with small borrowers. They want big loan releases to save on economies of scale and they want borrowers to come to the bank in the town or urban centres and pay the loan in lump sum; and 4. Banks keep considerable distance from women. When woman applies for a loan, bank always asked if the husband approves of her application. And this, of course, does not work the other way around.
In light of these circumstances, a credit delivery system for the poor has emerged and is becoming widespread across the globe, especially in the developing countries. It is called ‘microcredit’, others called it ‘microfinance’ as the system looks at poverty in a more holistic manner. Aside from providing capital for investment, a microcredit system also provides other non-financial services to clients. Experiences have shown that microcredit for the poor can provide impetus for the establishment of modest livelihood activities and generation of employment both for individuals and for the community. The challenge, however, is how to make a microcredit system sustainable to derive a lasting benefit for the resource poor farmers and for the community at large. This article offers a guide or reference for project leaders, community organizers, extension workers and others who are interested in establishing a microcredit system for the poor. Users are encouraged to innovate, to modify and adapt based on local situations. 68 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Microcredit: Definition and objectives
Definition Microcredit is a small type of loan primarily reserved for poor, marginal and disadvantage sector of the society, usually intended for enterprising or livelihood activities. It is a way of providing opportunities for poor people to utilize their skills and talents for self-employment to reduce poverty. It is operated based on mutual trust and largely different from that of the traditional banking credit system.
Objectives The overall objective of microcredit is to reduce poverty by providing opportunities for investment for poor people to use their skills and talents for generating income through self-employment. In Bangladesh context, microcredit also aims to emancipate the poor women from social burdens and economic crises by providing them capital to use their talents to engage in livelihood activities, earn income and live dignified lives. Its specific objectives are: 1. To extend the ‘banking’ facilities to the poor men and women; 2. To eliminate the exploitation by the money lenders; 3. To create opportunities for the vast unutilized manpower resources in rural communities; 4. To bring the disadvantaged people within the folds of some organizational format which they can understand and operate and can find socio-political and economic strength through mutual support; and 5. To reverse the age-old vicious cycle of “low income, low saving, low investment, low income” into an expanding system of “low income, credit, investment, more income, more credit, more investment, more income”.
Benefits and importance of a microcredit system The microcredit system has become popular over the decades. Its popularity and efficacy as an alternative means to access capital by the poor people is manifested by the increasing number of organizations engaging into microcredit operations. There are many benefits and the most important ones are the following: • It creates entitlement to assets and resources by the poor/marginal farmers. Good investment of borrowed capital earns income. As poor people accumulate income, they can increase their ‘net worth’ and build up their assets. • With appropriate credit, one has the opportunity to mobilize local resources and make a desired change in the society. It creates employment. Credit used wisely creates a new economic environment. Local resources, talents and skills are used for more productive purposes. • It provides a fair chance to improve the economic aspects of life of the poor, i.e. creating opportunity for self-employment that would ensure better quality of lives. Welfare benefits, handouts, dole outs, throw-away money to feed the poor will not help them get out of poverty. Poor people need an opportunity and fair chance to use their talents and skills. Credit for capital, used for productive purposes provides that opportunity for poor people to make a living on their own. • It equips the poor people to fight economic odds around them, i.e. exploitation by unscrupulous money lenders, unfair trade practices in the locality. Credit provides poor people the opportunity and options to utilize their talents and skills for self-employment and to change the practices that are exploitative for a more desirable economic order. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 69
• Credit empowers the poor and the women. Credit also provides poor people the opportunity to manage their lives without depending from others. They can make decisions. They are empowered. • It acts as lubricant and facilitates trade, commerce and industry. Credit money invested properly promotes and facilitates the flow of economic activities.
Justification for the establishment of microcredit system in the context of the “Poverty Reduction in Coconut Growing Communities” project Coconut is grown on about 12 million hectares across the globe. It directly supports 50 million poor farmers and their households. About 96% of coconut farmers are smallholders (tending 4 hectares or less), earning a net income of US$25 per hectare and thus live below the poverty line. The marginal income of resource-poor coconut smallholders is due to natural calamities, ageing palms, population pressures causing crop shifts, inadequate replanting programme, lack of suitable planting materials, poor palm nutrition, and lack of capital for farmers to invest in coconut production using recommended technology and inputs. The development and use of improved coconut cultivars and adaptation of coconut- based income-generating technologies such as intercropping, livestock production under coconut farming system and processing high-value products from coconut parts as shell, trunk, husk, leaves, kernel and water, could markedly improve both the productivity of the coconut and the farmers. However, providing needed capital inputs to the poor farmers, whether in the form of cash or in kind as handouts or dole outs in the past had proven to produce more negative than positive impact. While investment is necessary to pursue both strategies, integrating a microcredit system to the programme design, though a small one at the beginning, becomes necessary.
Characteristics of a successful microcredit system There are many characteristics of a successful microrcredit system. Some of the common ones are the following: 1. The system has 100% loan recovery rate. Successful microcredit system has to recover the loans and reinvested again and again to earn income to sustain its services. 2. It is profitable or registering surplus income. It is able to post net income, after deducting overhead and operational costs. 3. It is always ‘liquid’ or has the ability to pay any obligations at any point in time. It can pay all obligations to suppliers and creditors when due, including sudden increase in loan applications and withdrawals in case of savings deposited by members, if any. 4. It has better outreach both in terms of geographic and sectors of membership, (i.e., fisherfolks, farmers, artisans, etc.). 5. More and sustainable kinds of services and programmes are available for the members and community at large. It has a variety of services, financial and non- financial, that help borrowers and members in running their livelihood activities, i.e. bookkeeping and accounting services, training on enterprise management, auditing and financial management. There is also a variety of projects that are benefiting the members and the community in general like projects related to health and sanitation, environment, gender sensitivity, etc. 6. Borrowers and members are profitable, can save and are enjoying better quality lives, improved housing condition, better educational attainment of family members, better health and nutrition, clothing and adoption of family planning. 7. It generates employment. As borrowers engaged themselves in self-employment or pursue enterprising activities, additional people are employed to assist them. 70 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
8. It empowers women. In Bangladesh situation, women are relegated to household duties. Their mobility is restricted. With microcredit system, there is an opportunity to access credit without collateral and use their skills and talents for self-employment to get out of poverty. 9. Improved credit worthiness of the members. The credit value of the borrowers is improved such that they can now access credit from other financial institutions. 10.The system is being adapted or replicated in other areas. Because of its effectiveness, other organizations are replicating or adapting the system for implementation in other areas.
Requirements of a successful microcredit system There are no absolute guarantees that a microcredit system will be successful all the time, anywhere. However, there are certain requirements, based on observations and experiences, which must be present if one has to succeed most of the time, in most area. 1. The system has been identified based on the felt needs of the same people that require it. It has to be responsive in addressing the gaps in current realities in a community. 2. Clear vision, mission and goals. The vision, mission and goals (VMG) have to be clearly defined, well understood and agreed upon by the members. The VMG are the principles that guide the staff in performing their duties and responsibilities and in relating with clienteles. 3. Clearly defined indicators of success. Success indicators have to be defined at the onset. They have to be consistent with the VMG. These indicators will be the ‘measuring stick’ by which performance of the system will be compared with, in the short and in the long term. 4. Exclusive focus on the poor. The poor who are desperately in need of credit generally remain outside the orbit of the traditional banking system. The poor, particularly the women, always utilize loan and have the natural tendency to pay their loan. In poor communities or households, women suffer the most. Giving priority to women in fighting poverty through credit empowers them. 5. Committed and capable management staff to manage the system. Management staff should have at least the basic knowledge and skills to manage the microcredit system; they should be able to plan, lead, organize, coordinate, control, prepare reports; and have basic financial management background. But even more than these qualities, the management staff must have the commitment and dedication to work beyond the normal call of duty. 6. Appropriate systems, policies and procedures are in placed. Systems, policies and procedures must at all times be well understood and acceptable both with the staff and member-borrowers. 7. Effective governance. Good management system has to be functional in terms of administrative system and procedures, human resource management, financial management and control. Management and financial records must be open to the members at reasonable time to promote financial transparency and moral accountability. 8. Scheme for mobilizing savings. The system has to provide opportunities for rural poor to access savings mobilization scheme to increase capitalization for re- investment and increase benefits for the members. Saving money also provide opportunities for borrowers to graduate from borrowing in the future by using their savings. 9. System for protecting loan portfolio on the impact of inflation has to be operational. This will reduce the ‘losses’ due to declining value of money in the future. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 71
10.Discipline and high level of awareness among members. Members have to be fully aware of their responsibilities and have to abide by the policies and procedures approved by the general assembly for the common good. Credit without strict discipline is nothing but charity. 11.Strong support from members. Members have to patronize the products and services and continuously provide feedback on how to improve these. The members have to put a stake in the system to heighten their sense of ownership. The more they feel the ownership of the system, the more they are likely to work hard and protect the system. 12.Borrowers have the dignity to choose the type of income generating activity to invest their money. They tend to choose an activity which they have knowledge, experience and feel comfortable working with. With appropriate assistance, there will be greater chance of success to such activity. 13.Availability of non-financial services. The system not only provides loan assistance but likewise offers non-financial services, i.e. bookkeeping and auditing, training on financial management, entrepreneurship, marketing, planning and others. 14.Availability of proper screening mechanism. This is to assess the capacity of borrowers to manage their income generating projects (IGPs), evaluate proposed IGP and investigate the character and attitude of the prospective borrowers. 15.No collateral is required. No asset is required from the borrowers to avail of the loan. The poor have no appropriate resources for collateral. 16.Collective responsibility. The “property collateral” of the traditional credit system is replaced with social and moral collateral. It works based on peer pressure and peer support among the members. Mutual help and cooperation exists. 17.Good policy environment supporting the microcredit system. The government and its concerned agencies are promoting the cause of the poor and supporting the promotion of microcredit for the poor. They enact laws and decrees that encourage and protect the system.
Recommended activities and procedures in organizing a successful microcredit system 1. Site selection. Selecting a site where there is a large concentration of poor families is important to make the most impact possible. There are other criteria that can be useful: • Highest potential for success • Interest of the community in general • Absence of other credit programme for the poor • Accessibility • Peace and order situation
Selecting the site can be done through the following steps: • Target areas (municipalities) are selected through the secondary data from the governments’ appropriate office (planning body) where the most number of poor household can be found, are accessible and no other credit programmes for the poor are available; • Once potential areas have been identified, specific sites or communities are evaluated through interviews with residents to get an idea of their income status, value of personal assets and of their interest; • Simultaneously, ocular observations are done to determine the size, appearance and conditions of the houses; • From the communities evaluated, the focused community is identified where the microcredit system will be organized. 72 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
2. Participatory situation analysis. After specific sites are identified, the potential member-borrowers can now be engaged in participatory situation analysis. The main objective of this activity is to let the people realize for themselves the needs and problems they are experiencing and the problems and issues of their community in general. 3. Identifying the core planning body. The Community Coordinator or Facilitator identifies the core group that will work with him/her to pursue further activities such as planning, setting the vision, mission and goals of the system and defining strategies among others. 4. Participatory planning. When consensus is arrived at, planning can then begin. Setting the vision, mission and objectives follows and strategies are formulated. 5. Defining the systems and procedures. Basic policies, rules and regulations are then formulated, i.e. criteria for selecting borrowers, policies and procedures on evaluating loan applications, interest and loan recovery mechanism, group formation and weekly meetings, savings mobilization, and benefits system, among others.
The challenge for the facilitator is how to introduce his/her inputs in a way that is not imposing but rather people will take it as part of their own decision, hence they take full responsibility over the decision to accept or not the contributions from the facilitator.
6. Setting up the microcredit system’s structure and identifying the staff. When all the functionalities have been identified, the structure or the form is then established and consequently, roles and responsibilities are enumerated and defined for each position. 7. Training and orientation of the officers and staff. Once the core officers and staff are organized, they can now have orientation on the whole gamut of the microcredit system management. There are specific trainings that are very helpful in upgrading the capabilities of the management staff such as financial management, microcredit management, value formation, etc. 8. Registration with appropriate government agency (if necessary). All things set up, if required, the microcredit system has to be registered with appropriate government agency to legalize its operation.
Characteristics of a successfully managed microcredit system A successfully managed credit system produces a viable credit programme. The following are some of the most important characteristics of a successfully managed microcredit system: 1. The activities and budget are executed according to plan. If ever, there should only be a very minimal deviation and delays for releasing loans, accomplishing the target loan releases and collections, and attaining the number of target loan accounts and number of borrowers. 2. Investment requirements of the borrowers are released in adequate amount and at the right time. This allows the borrowers to take the best opportune time to make the business works due to complete capitalization of their business. 3. Good recording and accounting system. All transactions are checked for clarity, legitimacy and accuracy and are recorded accordingly at the right time. All documents are kept and filed properly and can be retrieved at ease if needed. Financial reports are reported accurately and on time. 4. Staff are satisfied and skills are continuously upgraded to catch up with latest trends and developments in the credit business. Competencies of the staff are always kept at high level to deliver results and promote the competitiveness of the microcredit system. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 73
5. Financially sustainable. It earns from the interests and fees charged from the loans released to defray operating cost and maintain the value of capital. 6. Operationally efficient. It is serving as many people as possible with its resources at the lowest possible costs, i.e. there is a low cost to loan portfolio ratio. There is also a fast turn over and high loan recovery. There is a high ratio of borrowers over the number of staff involved in operations and the methodologies are running smoothly. 7. Has high quality loan portfolio. This is manifested by the ability of people running the system to manage well and make profit out of the funds entrusted to the system by the members and by other institutions. 8. There is an effective control mechanism. There is an appropriate check and balance. Weaknesses can be easily identified so that corrective measures are instituted accordingly at the right time to ensure that there is no delay and/or default in paying amortization by the borrower.
Requirements for Sustainability Sustainability means that the microcredit system is able to do its “business” without relying on external subsidies and is generating enough revenues from its operation to cover all operational costs, i.e. from interest and fees charged to loans. The following are some of the major requirements for sustainability of a microcredit system: 1. Committed membership. Members are always ready to support the officers and staff in discharging their functions. They show great interest to continuously patronize the products and services of the system. They show enthusiasm to promote the objectives of the system and take pride in promoting the system to other people. 2. The members know their benefits and privileges as well as their roles and responsibilities. They are aware of their duties and responsibilities and are discharging them accordingly. They pay their obligations such as membership fees, annual dues and loans, if any and participate fully in the affairs of the system. They are vigilant to pinpoint weaknesses of the system and have the courage to offer alternatives to correct the situations. They contribute to the healthy discussions for the future of the system. 3. Broad based or large clienteles for economies of scale. Servicing an optimum number of clients and processing applications with adequate amount of loan can achieve efficiency on operations. 4. Diversified credit schemes that are adapted to various income generating activities of potential borrowers. The system should be able to offer diversified scheme of lending for a variety of purposes and preferences of prospective borrowers. 5. Full cost recovery. Appropriate interest rate must be charged to cover the administrative and operational expenses in delivering credit to the members, reasonable profit margin and allowance to cover inflation and potentially loan losses. 6. Appropriate system of funds generation and mobilization to increase capital base. An institutionalized savings mobilization scheme must be installed; i.e. offering interest earning on savings deposits, special time deposits for members and others in the community, forced savings mechanism for borrowers, etc. This will increase the system’s capitalization and loan fund. 7. Borrowers’ equity contributions to the project/activity to be financed. There is more than the actual equity contributed by borrowers. If they put part of their hard- earned money to the project, there is a high sense of ownership, hence they will exert their best effort to protect and make the project work. 74 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
8. Borrowing for productive purposes only. When credit money are used for activities that begets money or earns income, there must be no reason why the borrowers can not pay their loan obligations. Borrowed money put into something else other than productive purposes puts loan recovery at risk. 9. Effective good governance. Leaders, officers and staff should have the knowledge and skills to manage a microcredit system. They should be vigilant in observing current trends and developments and be able to adapt quickly to the changing environment. They should be able to take calculated risks and make quick decisions. 10.Networks and linkages with institutions that can help in technical, financial and management aspect of the business. ‘No man is an island’. This is true as well with a microcredit system. It has to link with others to share experiences, learn from their lessons, adapt strategies, get support, and keep abreast with new trends and developments in the field.
Requirements for successful management of an effective microcredit system Basically, an effective microcredit system is the one that is internally generating funds to cover the cost of operations with surplus income. Effective microcredit also means that the borrowers are improving their quality of lives as a result of credit obtained from the system. Enumerated are some of the major conditions that must exist to ensure successful management of an effective microcredit system: 1. Availability of resources. As a major requirement, resources must be available to be able to start-up a microcredit system. 2. Well-defined objectives. The system should have a well-defined vision and mission statement, translated into annual and medium-term plans and realistic targets. These would serve as guide and set proper directions for successfully managing the microcredit system. 3. Well-defined target market. This should set the focus and priority of where and who the system shall work with. 4. Good services. There should be an appropriate diversified loan products and non- financial services (i.e. accounting and auditing, marketing assistance, technology transfer, training on enterprise related subjects) that would meet the needs of identified target group. 5. Responsive strategy. Suitable methodologies are needed to generate savings and build-up capital, entice more good borrowers, enhance loan recovery and motivate staff to perform well. 6. Appropriate systems and procedures in placed. Systems, policies and procedures serve as guide for staff to discharge their functions efficiently and effectively. These have to be well understood by the staff and members. The systems, policies and procedures, however, have to be reviewed periodically, modified and improved to adapt to existing realities. 7. Functional organizational structure. Microcredit system should be characterized by lean and flat organization structure. Duties and responsibilities with corresponding authorities as well of each of the position in the organizational set up shall have to be clearly defined, well understood and accepted by the staff. 8. Committed and capable management staff. The officers and staff should have the commitment to help, serve and work with the poor people. They must exhibit good character to enhance public relations. They must be competent, possessing at least a minimum background of managing a microcredit system to be effective and efficient. They must also be creative. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 75
9. Supportive and responsive policy environment. Government at the national and local level should enact laws, decrees and ordinances that are supportive to the operations of the microcredit, i.e. tax incentives, fund appropriations for mechanism of building capacities in the microcredit sector, marketing assistance, etc.
Recommended activities and procedures in effective implementation and management of a microcredit system (see Figure 1) Some of the activities recommended below are patterned after the Grameen Bank Model of Bangladesh which is widely adapted in some Asian countries. 1. Invoke community awareness by conducting a community orientation and dialogue with the prospective member-beneficiaries or clientele group. At the meeting, the objectives of the programme, its operating principles, general procedures, duties and responsibilities of prospective members should be discussed, among others. 2. Conduct of house-to-house visits to validate the baseline information regarding the prospective members’ demographic and socioeconomic background. In validating/testing the poverty level of the prospective members, there are three indices which could be used: • Housing index – involves a more detailed visual appraisal of the potential member’s dwelling such as the size of the house, structural condition and roofing material for a fair approximation of its value. • Income index – indicates the present economic status of the potential member. The cut-off score for this is per capita income of not more than US$ 60 per month or US$ 2 per day. • Valuation of personal asset index – involves measuring the asset base of potential member households. Total marketable assets should not exceed US$2000 or the equivalent market value of 0.5 hectare of agricultural land in the community or village.
If the prospective member fails in housing and asset indices tests but passed the income index test, that prospective member shall pass accordingly.
3. Conduct of a series of trainings for the prospective members that would run for at least 24 hours or 3-days of intensive training. The training should touch on: a) group or team building and value formation; b) organizational mechanics; c) systems and procedures; d) project management/enterprise development; and e) commitment exercises. These trainings are designed to equip the members with the knowledge, skills and values necessary to run their centres effectively and manage their projects successfully. Prospective members should memorize and internalize the “16 Decisions” – the core values members should have to improve their lives. The “16 Decisions” follows: a. The four principles of ‘Grameen Bank’ – Discipline, Unity, Courage and Hard Work – we shall follow and advance in all walks of our lives. b. Prosperity we shall bring to our family. c. We shall not live in dilapidated houses. We shall repair and work toward constructing new houses at the earliest. d. We shall grow vegetables all year round. We shall eat plenty of it and sell the surplus. e. During the plantation seasons, we shall plant as many seedlings as possible. f. We shall plan to keep our families small. We shall minimize our expenditures. We shall look after our health. 76 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
g. We shall educate our children and ensure that they can earn to pay for their education. h. We shall always keep our children and the environment clean. i. We shall built and use pit latrines. j. We shall drink tube well water. If it is not available, we shall boil water or use alum. k. We shall not take dowry in our sons’ wedding; neither shall we keep the centre from the curse of dowry. We shall not practice child marriage. l. We shall not inflict any injustice on any one; neither shall allow anyone to do so. m. For higher income, we shall collectively undertake bigger investment. n. We shall always be ready to help each other. If anyone is in difficulty, we shall all help her/him. o. If we come to know any breach of discipline in any centre, we shall all go there and help restore discipline. p. We shall introduce physical exercise in all our centres. We shall take part in all social activities collectively.
The above “16 Decisions” could be modified/redesigned to suit coconut communities.
4. Testing of the members whether they have fully understood the mission and goals of the microcredit system, the guidelines, policies and procedures of the system, and the roles and responsibilities of the members. 5. Formation of groups of five like-minded individuals sharing similar socioeconomic conditions who come together to achieve a new way of increasing their household income through the microfinance programme. The group should be managed by an elected leader and secretary from among the members. The group can be called ‘Cluster’ or ‘Group’.
The following are the recommended criteria for members to form a ‘Cluster’ or ‘Group’: • The group must consist of five (5) self-chosen people of similar age and education background; • They must belong to similar socioeconomic status; • Members must be neighbours but not relatives; and • Members must enjoy mutual trust and confidence.
6. Federation of five to eight clusters or groups into a Centre in the selected community or town. The Centre should be headed by an elected Chief, who is tasked to conduct the weekly meetings and is responsible for the observance of all rules set by the Centre. 7. Loan processing should be done at the shortest time possible, not longer than one week. One key success factor of implementing a microcredit programme is extending credit quickly at the time that the credit is needed most. Processing entails the conduct of the following activities: • Loan proposal preparation – members who want to avail of the microcredit program prepare the loan proposal. The loan proposal format should be simple for easy accomplishment – one-page proposal, if possible. The proposal briefly states how much the member intends to borrow, how she/he intends to use the loan, sources of revenue or income and how to repay the loan. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 77
• Confirmation of loan application – the loan proposal should be confirmed by both the group members and the Centre Chief and endorsed to the staff (i.e. Loan Officer) of the microcredit provider assigned in the community. This should then be forwarded to the microcredit provider. • Loan evaluation – this is done by the Loan Officer of the microcredit provider. The evaluation process should take into consideration the technical and market viability of the proposed microenterprise that will be undertaken by the member-borrower. • Loan approval – the evaluation and the recommendation of the Loan Officer should be contained in a report form submitted to the Project Officer who approves the loan by indicating the approved loan amount and affixing his/ her signature. • Loan disbursement – the loan should be disbursed on or before the actual need or utilization of the borrower. Releases of loans could be done during the weekly Centre Meeting, with the presence of the group members.
The loan disbursement should be properly recorded in the individual member- borrowers passbook, in the accounting books maintained by the Centre and consequently, in the books of the microcredit organization. The loan amount approved may be disbursed in one lump sum or staggered basis depending on the actual amount required at each stage of the project as per investment plan prepared by the borrower upon application of loan.
8. Loan utilization reporting during Centre Meeting –this activity is conducted to ensure that the loan proceeds are used for the purpose for which it was intended. From time to time, the Loan Officer and the Centre Chief should be required to conduct independent validation of loan funds usage by inspecting the borrower’s project. During the Centre Meeting, the member-borrowers should also report the current status of their projects, i.e. expenses, sales and profit made among others. 9. Loan repayment and attendance to weekly Centre meeting – the weekly Centre meeting plays a decisive role in the growth and development of the Centre and in instilling discipline among members. All loan repayment shall be recorded to individual member’s Loan Ledger kept by the members and at the ledger kept by the Loan Officer of the microcredit provider. Any loan can be repaid anytime within the loan period. New loan can only be applied upon repayment of the previous loan. 78 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Figure 1. Illustrative diagram of the activities and procedures for an effective implementation and management of a microcredit system CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 79
Monitoring and evaluating the effectiveness and sustainability of the established microcredit system
Monitoring and evaluation (M&E) is an integral part of any programme or project. The two (Monitoring and Evaluation) are often used interchangeably. However, there are important differences between them. Monitoring generally refers to the process of regularly checking on the status of the programme or project by comparing the actual implementation of activities with a work plan. It includes checking whether the activities are being completed within the time frame specified and whether activities are being done and budget is spent according to plan. It is a continuous systematic review of a project/programme to check whether it is progressing as plan, if not, then adjustments can be made accordingly. It implies a more frequent form of reflection. Evaluation, on the other hand, is directed at measuring progress on a longer term toward the achievement of programme objectives and the impact of the programme. It involves comprehensive analysis of the project/programme to determine its effectiveness and efficiency. Its purpose is adapting new strategy and planning and influencing future policies and programmes. Evaluation is a more complete and thorough process and a less frequent form of reflection, usually taking place at certain points in time, i.e. mid term, or final/end of the project. Although monitoring and evaluation are two different activities, the two processes work together leading to the same end of producing information that can be used to improve the implementation of a programme and achieve the intended short-term and long-term objectives. Neither one can be substituted for the other and differs mainly in the frequency and range of information gathered. Formulating the M & E system can be done with the participation of various stakeholders especially the intended beneficiaries. Basic format that can be used should indicate the following: • Microcredit systems’ goals and objectives • Indicators of success • Who should collect information • When/frequency information should be collected • Sources of information • Who will use the information
The following are some basic information worth monitoring and evaluating: Level Potential indicators to monitor and evaluate Member-Borrowers 1. Income and household 2. Health and nutrition status 3. Education 4. Asset build-up 5. House improvement 6. Skills acquired 7. Lifestyle changes 8. Level of empowerment
Specific to COGENT Project: 1. Number and kind of intercrops planted 2. Number and kind of livestock raised 3. Kind of coconut-based processing involved 4. Number of new coconut seedlings planted 80 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Level Potential indicators to monitor and evaluate Microcredit System* 1. Financial sustainability 2. Operational Efficiency 3. Loan Portfolio Quality 4. Outreach ❖ Number of active groups/Centres ❖ Number of active members ❖ Total active borrowers ❖ Number of members with loans ❖ Number, total amount and average amount of loans disbursed per loan product ❖ Number, total amount and average amount of loans outstanding per loan product ❖ Total active savers (members and non-members) ❖ Total amount of savings (members and non-members) ❖ Financial statements such as the Statement of Income and Expenditures and the Statement of Assets and Liabilities (Balance Sheet) and Cash Flow Statement, could provide monthly information as to the financial condition of the microcredit programme Community level 1. Kind and number of enterprises/businesses established 2. Level of business generated 3. Level of income generated 4. Number and kind of employment created 5. New products sold or become available 6. Health and nutrition status (malnutrition, life expectancy, prevalence of communicable but preventable diseases) 7. Education level attained 8. Enhancement of environment (over all sanitation, trees planted, water pollution level, etc.)
As indicated above, the microcredit system’s performance can be measured by the three groups of indicators. They can be termed as ratios, which give indications of the ongoing and long term viability of the microcredit system. One may choose few basic or several of them or all of them depending on how detailed he/she wants to know the exclusive level of performance of the credit institution. The following are more detailed indicators worth looking into at the microcredit system’s level:
Financial efficiency Ratio Formula Purpose Return on performing Financial income/ Indicates financial productivity asset (increasing RPA is Average performing assets of credit services and positive) investment activities Financial cost ratio Financial cost/ Show costs of funds; affected (decreasing FCR is positive) Average performing assets by mix of net worth, soft loans, hard loans Loan loss provision ratio Loan loss provision/ Indicates provisioning (decreasing LLPR is positive) Average performing asset requirements on loan portfolio for current period Operating cost ratio Operating expenses/ Key indicator of efficiency of (decreasing OCR is positive) Average performing assets lending operations CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 81
Ratio Formula Purpose Imputed cost of capital ratio Inflation X (Net worth- Net Indicates cost of maintaining (decreasing ICC is positive) fixed assets) + (Inflation- purchasing power of net worth Int. rate Pd)X Concessional and soft loans loans Imputed C.C./ Average performing assets Donations and grants ratio Donations and grants/ Shows dependency of (decreasing DGR relative to Average performing assets institutions on outside funding the Net Margin is positive) for support Operating self-sufficiency Financial income/ Shows ability of institution to (increasing OSSR is positive) Finance/Operating costs + cover costs of operation with Loan loss provision internally generating income Financial self-sufficiency Financial income/ Shows ability of institution to be (increasing FSSR is positive) Finance & Operating costs+ fully sustainable in the long run Provision+ Imputed C.C. by covering all operating costs and maintaining value of capital
Operational efficiency Ratio Formula Purpose Cost per unit of money lent Operating costs/ Indicates efficiency in (decreasing CUML is positive) Total amount disbursed disbursing loans (in monetary terms) Cost per loan made Operating costs/ Indicates efficiency of (decreasing CLR is positive) No. of loans made disbursing loans (in terms of number of borrowers) Number of active borrowers No. of active borrowers/ Indicates performance of Loan per Loan Officer (increasing No. of Loan Officers Officer and efficiency of NB/LO is positive) methodology Portfolio per Loan Officer Value of loans outstanding/ Indicates potential financial (increasing LP/LO is positive) No. of Loan Officers productivity of Loan Officers
Portfolio quality Ratio Formula Purpose Portfolio in arrears Payment in arrears/ Indicates amount of payments (decreasing PA is positive) Value of loans outstanding past due Portfolio at risk Balance of loans in arrears/ Measures amount of default (decreasing PR is positive) Value of loans outstanding risk in portfolio Loan loss ratio Amount written off/ Indicates extent of un- (decreasing LLR is positive) Average loans outstanding collectible loans over the last period Reserve ratio Loan loss reserve/ Indicates adequacy of (decreasing RR is positive) Value of loans outstanding reserves in relation to portfolio 82 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
References De Guzman, M., Villegas, P.M. and Alip, A.B. 2002. Establishing and managing a microcredit system (Philippines). Meganomics Specialist International, Inc., Quezon City, Philippines. Family Planning Management Development, Management Sciences for Health. 1997. Using evaluation as a management tool. The Family Planning Manager. Newton, Massachusetts, USA. Financial Services Working Group, The Small Enterprise Education& Promotion (SEEP) Network. 1995. Financial ratio analysis of micro-finance institutions. The SEEP Network, Pact Publications, 777 United Nations Plaza, New York, U.S.A. Negros Women For Tomorrow Foundation, Inc (NWTF). Undated. Project Dungganon: A Program to Reduce Hard-Core Poverty. Project Dungganon, NWTF. Bacolod City, Negros Occidental, Philippines. Scroll Michael. 1999. Monitoring Made Easy: A Handbook for Development Practitioners. International Institute of Rural Reconstruction, Africa Regional Office. Nairobi, Kenya. Yunus, Muhammad. 1991. Grameen bank: Experiences and reflections. (A paper presented at the Consultation on the Economic Advancement of Rural Women in Asia and the Pacific in Kuala Lumpur, Malaysia). Grameen Bank, Bangladesh. Yunus, Muhammad. 1993. We can create a poverty-free environmentally balance world if we only want it. (A paper presented at the GLOBE (Global Legislators’ Organization for Balanced Earth) General Assembly held in Tokyo). Grameen Bank, Bangladesh. Yunus, Muhammad. 1997. Towards creating a poverty-free world. (D.T. Memorial Lecture delivered at the Institute of Social Sciences, New Delhi, India). Grameen Bank, Bangladesh. Yunus, Muhammad. 1999. How donor funds could better reach and support grassroots microcredit programs: Working towards the microcredit summit’s goal and core themes. (A paper presented at the Microcredit Summit Meeting of Councils in Abidjan, Cote d’Ivoire). Grameen Bank, Bangladesh. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 83
Profitability analysis of coconut-based farming systems
Corazon Aragon1 and Rodolfo E Coronel2 1Independent Consultant, FRIEnDS Philippines, Inc., Los Baños City, Laguna, Philippines 2Training Assistant, COGENT-IPGRI Regional Office for Asia, the Pacific and Oceania (APO), Serdang, Selangor Darul Ehsan, Malaysia
Introduction The acceptability and adoption of coconut intercropping, livestock integration under coconut, and the production of high-value coconut products by coconut farmers and their households would largely depend on their profitability. Profitability analysis is, therefore, needed before researchers and extension workers can give their final recommendations on new farm technologies or coconut-based enterprises to farmers and their households. The article discusses briefly simple practical tools used in analyzing the profitability of activities or enterprise(s) in a coconut farming system. Sample computations are provided for ease in understanding the analytical tools. It also presents the range of data that should be monitored and recorded to make a better analysis.
Basic data/information needed to conduct profitability analysis There are basically two sets of information that are needed: 1) the revenue or income or returns, and 2) the expenses incurred in the operations of an activity or enterprise.
Forms of Income Cash Income/Returns – is the income received from selling commodities produced on the farm in a given accounting period (e.g. a year), i.e. sales of crops, livestock, manure, eggs, nata de coco, copra, etc.
Non-cash Income – is the income for which no cash is received; it is the market value of output that is produced that accrues to the farmer/producer, but not sold for cash (i.e., value of farm-raised products consumed by the farm household, paid in kind to harvesters and creditors, used on the farm for seed or for livestock feed, given away, and in storage at the end of the accounting period). Gross farm income is defined as the value of the total output of the farm over some accounting period (usually a year), whether or not that output is sold. It, therefore, includes output produced, which is sold, used for household consumption, used on the farm for seed or livestock feed, used for payments in kind, given away, or in storage at the end of the accounting period.
Gross Farm Income = Cash Farm Income + Non-cash Farm Income
To avoid double counting, any output produced in earlier accounting periods but sold or used in the current period is excluded from the current gross farm income. Alternative terms for gross farm income include value of farm production and gross return. Increases in inventory, which is a non-cash income, should be included in computing gross income or total income. In determining gross income, the price of the product must be the effective price received by the farmer, which is referred to as the farm gate price (Brown and Librero 1991). Costs related to selling or marketing the crops must be deducted from the price received by the farmers to obtain the net or “effective” price. 84 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Gross income is a measure of the total productivity of all the resources used on the farm. Ratios such as gross income per hectare can be computed to indicate the intensity of operation of the farm.
Classification of costs of production and cost components Total farm expenses/cost – is defined as the value of all inputs used up or expended in farm production. Ideally the expenses included in any accounting period should be those incurred in producing the output generated in that period.
Cost structure – is the composition of the items that go into the production of a commodity; each commodity has a different cost structure. Costs can be classified in different ways, i.e. according to the level of output and the manner it is shouldered.
According to level of output 1. Fixed Costs – costs that remain the same regardless of the volume of output in the short run. The coconut farmer would have to pay them regardless of how much his farm produces. Examples of fixed costs are the following: • Land rent which would be the same regardless of whether a farmer raises a bumper crop or a poor crop. • Fixed interest on investment. When borrowed money is used to buy fixed inputs such as land, tools, and machinery, interest on investment is a fixed cost. • Depreciation of tools, equipment, machinery, and buildings. Depreciation is also a farm business expense and can be viewed as such from two different related viewpoints. First, it represents a loss in value because the item is used in the business to produce income. Second, it is an accounting procedure to spread the original cost over the item’s useful life. It is not appropriate or correct to deduct the full purchase price as an expense in the year of purchase, as the item will be used to generate income for many years. Instead, the purchase price less salvage value is allocated or spread over time through the farm business expense called depreciation. • Land tax and irrigation fee do not vary with output.
2. Variable or Operating Costs – those costs which change as production or output varies over a specified period.
Items such as feeds, breeding livestock purchases, fertilizer, seeds, chemicals, fuel, hired labour for land preparation and care of the crop, harvesting labour, transportation costs, nuts to be used for coconut processing, and livestock health expenses are examples of variable costs. Most repair costs are variable costs since they depend upon the usage of an asset, i.e. wear and tear. Variable interest on investment/borrowed capital is also a variable cost. That is, when borrowed money is used to buy variable inputs in production or to pay for the operating expenses of the business, interest on investment or operating capital is a variable cost. In general, the time scale of a decision-making has an important influence on whether or not costs should be viewed as fixed or variable. In the long run, all costs are variable while in the short-run, costs may be fixed or variable.
According to the manner it is shouldered 1. Cash Cost or Explicit Cost – cost incurred whereby actual money is involved. 2. Non-cash Cost or Implicit Cost – cost item used in the production process wherein no direct cash outlay is involved or money payment is made; the cost incurred is not monetary in nature, i.e. unpaid family labour, land rent paid in kind. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 85
Fixed costs can be either cash or non-cash expenses. Since the supply of cash is often very limited, it is useful to know the degree to which an enterprise requires heavy cash costs. It is the cash cost that coconut farmers and researchers will be most aware of. A large part of total fixed cost can be non-cash expenses as shown in the following chart:
Fixed Cost Item Cash Cost Non-cash Cost Depreciationa X Interest on capital investment X X Repairs X Land rent X X Land taxes X a Depreciation is always a non-cash expense as there is no annual cash outlay for this fixed cost. There are three methods of estimating annual depreciation: 1) straight-line method, 2) double declining balance method, and 3) sum of the year digit’s method (SOYD). The most commonly used for ease and practicality is the straight-line method. It is simply computed as ‘the acquisition cost’ minus the ‘salvage value’ divided by the ‘estimated useful life’, of machinery or equipment. More detailed discussion on depreciation is contained in COGENT’s manual on “Profitability Analysis of Coconut-based Farming System”.
For example, if the purchase cost of a machine is US$ 2000 and assigned a salvage value of US$ 400 and a 10-year useful life, the annual depreciation using the straight- line method would be:
US$ 2000 – US$ 400 = US$ 160 10 years
Useful life is the expected number of years the item will be used in the business. For experimental data, the useful life of the machinery or equipment is determined by interviewing dealers and agricultural engineers.
Salvage value or scrap value (terminal value) is the item’s value at the end of its assigned useful life. Salvage value may be zero if the item will be owned until completely worn out and will have no junk or scrap value at that time. A positive salvage value should be assigned to an item if it will have some value or scrap or will be sold before it is completely worn out. In the latter case, the salvage value should be its estimated market value at the end of its assigned useful life. In general, the shorter the useful life, the higher the salvage value.
Profitability measures and interpretation/significance The following are some measures of farm profitability:
1. Net Cash Farm Income – is simply the difference between total cash income and total cash expenses.
Net Cash Income = Total Cash Income – Total Cash Expenses
A positive net cash income means that the activity or enterprise is profitable. 86 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
2. Gross Margin or Return Above Variable Costs – is the difference between total income or gross income and total variable cost. It is the enterprise’s or farm contribution to fixed costs after the variable costs have been paid.
Return Above Variable Cost = Gross Farm Income – Total Variable Cost or Gross Margin
3. Net Farm Income – is a measure of profit from the year’s operation and represents the return to the owner for his/her personal labour, management and equity used in the farm.
It is calculated using the formula below:
Net Farm Income = Gross Farm Income – Total Farm Expenses
4. Return to Capital – is a measure of profitability relative to the capital invested in the business. It measures the return to all sources of capital. It represents the amount of cash the farmer gets after paying operating expenses and the estimated value of the farmer’s labour and management.
The calculations would be:
Net Farm Income + Interest Paid = Adjusted Net Farm Income
Return to Capital = Adjusted Net Farm Income – Opportunity Cost of Farmer’s Labour and Management
Simple analytical tools in conducting profitability/financial viability analysis The following are the simple commonly used tools to analyze the profitability of enterprises: 1. Cost and Return Analysis 2. Sensitivity Analysis 3. Enterprise budgeting (ex-ante or forecasting/projecting) 4. Break-even Analysis 5. Undiscounted Measures of Financial Viability a. Payback Period b. Return On Investment (ROI)
Costs and returns analysis Costs and returns analysis (sometimes called farm income analysis) is the most common ex-post analytical method of determining and comparing the profitability of different farm enterprises, cropping patterns, or farm practices/technologies in a given accounting period. It provides researchers, extension workers, and farmers with information on the actual benefits of technologies. As an ex-post analytical tool, costs and returns analysis determines the actual profit or net income derived from a production activity or farm operation after the technology has been adopted. In costs and returns analysis, actual data on input costs (expenses), output price (income/ returns), and production levels are used. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 87
Steps in costs and returns analysis, and interpretation of results
Costs and returns analysis of an enterprise A profitability analysis on a whole farm basis may indicate a problem, but the source of the problem is often difficult to find if there are many enterprises. Several enterprises may be highly profitable and several others, unprofitable or marginally profitable. Costs and returns analysis of each enterprise can identify the less profitable enterprises so that some type of corrective action can be taken.
The steps used in conducting a costs and returns analysis of a crop enterprise are as follows: 1. Calculate the total or gross income which includes cash and non-cash income. Compute gross income on a per hectare basis. 2. Classify costs of production into fixed and variable (cash and non-cash) and compute for the different items of costs on a per hectare basis. The fixed costs in a crop enterprise are those associated with a charge for land use plus machinery use. The land charge is the opportunity cost of land and represents a return for its use in crop production. When the land being used is owned, the rental income represents the actual short-run opportunity cost. As long as the land is owned, the only feasible alternative to an owner/operator is to rent it to someone else. Machinery fixed costs must also be prorated to the specific crop enterprise on a per hectare basis. A fair and equitable allocation of machinery depreciation, interest on the machinery investment, building depreciation, and other farm overhead expenses must be done if the enterprises are to be accurately compared for profitability. Several procedures are possible, but each requires either extensive records or some estimation: • Per hectare basis. The total machinery fixed costs and other farm overhead costs can be divided equally among enterprises based on the total area planted to each crop in the farm. • Gross income basis. The fixed costs can be allocated among the various enterprises based on their proportion of enterprise gross income to total gross income. • Actual use basis. When the detailed records are available, they can be used to allocate some types of fixed costs.
3. Compute total variable cash cost, total variable non-cash cost, total variable cost, total fixed cash cost, total fixed non-cash cost, total fixed cost, and total cost per hectare. 4. Compute the measures of profit (net income, net cash income, and gross margin per hectare) and interpret the results. In analyzing the results of the costs and returns analysis, one should first examine the net income figure to determine whether or not the crop enterprise is profitable. The estimated profit can be compared against the estimated per hectare profit of other crops and can be used to select the more profitable crops and crop combinations to be grown each year. If the crop shows a loss, action must be taken either to improve its profitability or to shift resources to the production of some other more profitable crop. If the enterprise is not profitable, the analyst should identify the cause of profitability problem. This can be done by examining the gross value of farm production or gross income. If the evaluation of the gross income indicates it is high enough to provide satisfactory net income, the profitability problem will generally be caused by excessive costs. In examining the cost items, the fixed 88 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
costs should be evaluated first. If they are high relative to the farm size and gross income, steps should be taken to reduce those which will have little or no effect on the level of production. If the fixed and overhead costs appear satisfactory, the next step is an analysis of variable costs.
Example 1: Crop enterprise (coconut or intercrop) Table 1 shows an example of costs and returns analysis for a bittergourd enterprise as an intercrop under coconut.
Interpretation: Intercropping a coconut farm with bittergourd is profitable as evident from a positive net income (i.e., considering all production costs) amounting to US$1236.68 on a 0.5- ha area planted to this crop or US$2473.41 per hectare. If only cash costs and income are considered, the net cash income that would be generated from the bittergourd enterprise would be US$781.56 per 0.5 ha or US$1563.12 per hectare.
Table 1. Costs and returns analysis of bittergourd (0.5 ha) as an intercrop under coconut, 1-hectare coconut farm per production cyclea (Batangas, Philippines, 2001) Value in US$ ITEM 0.5 ha of Per ha of bittergourd bittergourd Income Cash income Bittergourd sales 1750.00 3500.00 Total Cash Income 1750.00 3500.00 Non-cash income Bittergourd consumed at home 500.00 1000.00 Total Non-cash Income Total/Gross Income 2250.00 4500.00 Costs Variable Costs Cash Costs Seeds 51.77 103.54 Hired labour 170.60 341.20 Fertilizer 69.57 139.14 Chemicals 237.08 474.16 Trellising materials 380.07 760.14 Fuel and Oil 17.65 35.30 Interest on operating capitalb 41.70 83.40 Total Variable Cash Cost 968.44 1936.88 Fixed Costs Non-cash Costs Depreciationc 0.98 1.96 Land charged 43.88 87.75 Total Non-cash Cost 44.86 89.71 Total Cost 1013.32 2026.59 Net Cash Income 781.56 1563.12 Net Income 1236.68 2473.41 Gross Margin 1281.56 2563.12 a One production cycle/period is 3 months (equivalent to one quarter per year). b Interest rate (bank lending rate) at 18% per annum/4 qtr x total variable cost; borrowed capital used. c Computed as follows: ( original cost of garden tools -salvage value) /useful life and then divided by 4 quarters = (US$7.85 -0) /2 = US$3.93 per year; US$3.93/4 = US$0.98 per quarter. d Based on land price/sq m (US$0.39) x area x interest on time deposit per yr (9%) divided by 4 qtrs; Exchange rate in 2001: US$1.00 = Php50.99 CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 89
Example 2: Livestock enterprise integrated under coconut Costs and returns analysis can also be conducted for a livestock enterprise integrated with coconut production. The procedure followed in conducting costs and returns analysis for a livestock enterprise is the same as that in conducting costs and returns analysis for a crop enterprise. The main difference is in the cost items. In the livestock enterprise, the variable cash costs are feeds, vaccines/veterinary medicines, hired labour, and interest on operating capital (if capital is borrowed). Fixed cash costs include the cost of purchased animals (e.g., piglets for hog fattening), land rent (if paid in cash), and interest on fixed capital investment (if capital is borrowed). On the other hand, fixed non-cash costs include land rent (if paid in kind) and value/opportunity cost of family labour. An example of a costs and returns analysis for a hog fattening project integrated with the coconut enterprise is shown in Table 2. The assumptions used in conducting a costs and returns analysis of a hog fattening enterprise were based on farm survey data gathered from the coconut farmers with a hog fattening project in Nagcarlan, Laguna, Philippines.
Interpretation: Integrating a hog fattening enterprise (i.e. 8 heads) in a 1-ha coconut farm will generate a meager net income of US$ 2.18/head or US$17.42 for eight heads in a 4-month period. If only cash costs are considered, the net cash income generated from this enterprise would be US$ 14.69 per head or US$117.52 for eight heads.
Table 2. Costs and returns of hog fattening enterprise (8 heads) integrated with coconut production (Laguna, Philippines, 2001) Value in US$ ITEM 8 heads Per head Income Cash Income Hog sales 778.19 97.27 Total Cash Income 778.19 97.27 Gross Income 778.19 97.27 Costs Cash Costs Piglets 188.27 23.53 Anti-cholera vaccine 5.88 0.74 Feeds 405.64 50.71 Interest on operating capitala 49.98 6.25 Interest on fixed capital investmentb 10.07 1.26 Land rentc 0.83 0.10 Total Cash Cost 660.67 82.58 Non-cash Cost Unpaid family labour 88.25 11.03 Depreciation 11.85 1.48 Total Fixed Non-Cash Cost 100.10 12.51 Total Cost 760.77 95.09 Net Cash Income 117.52 14.69 Net Income 17.42 2.18 a Interest on or operating capital was computed by multiplying the prevailing bank interest (18%/year/yr or 6% for 4 months) by the total cost of piglets, vaccine, and feeds; borrowed capital used b Computed as follows: (total fixed capital investment + salvage value) /2 x interest rate at 18%/yr and then divide by 12 months x 4 months; (US$335.75 + 0) /2 x 0.18/12 months x 4 months c Land rent in cash was calculated as follows: (US$0.25/sq m per year x 10 sq m)/12 months x 4 months 90 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Example 3: High-value coconut processing enterprise An example of costs and returns analysis of coconut toddy production in Batangas, Philippines is shown in Table 3.
Table 3. Costs and returns analysis of coconut toddy production per 100 coconut palms per year (Guino’s farm, Batangas, Philippines, 1995) Value in US$ ITEM 1165 Gallons Per gallon Gross Income Cash Income Coconut toddy sales 2617.44 2.25 Total Cash Income 2617.44 2.25 Coconut toddy consumed at home 38.76 0.03 and given away Total Non-cash Income 38.76 0.03 Total Gross Income 2656.20 2.28 Costs Variable Costs Variable Cash Costs Supplies and materials 680.80 0.58 Hired labor 1048.50 0.90 Transportation 6.80 0.01 Repairs and maintenance 80.00 0.07 Interest on operating capitala 265.15 0.23 Total Variable Cost 2081.25 1.79 Fixed Costs Fixed Cash Costs Interest on fixed capital investmentb 15.37 0.01 Total Fixed Cash Cost 15.37 0.01 Fixed -Noncash Costs Unpaid family labour 94.48 0.08 Depreciation 20.40 0.02 Total Fixed Non-cash Cost 114.88 0.10 Total Fixed Cost 130.25 0.11 Total Cost 2211.50 1.90 Net Cash Income 520.82 0.47 Gross Margin 574.95 0.49 Net Income 444.70 0.38 a Computed by multiplying the sum of supplies, materials, hired labour, transportation, and repairs, and maintenance expenses by the bank interest rate (14.6%/yr) b Computed as follows: (total fixed capital investment + salvage value)/2 x iinterest rate; (210.60 + 0)/2 x 0.146 Exchange rate: US$1: = Php25 Source of basic data: Medina, S. et al. 1997
Interpretation: Based on 1995 price levels, coconut toddy production at Guino Farm was profitable generating an annual net income amounting to US$0.38 per gallon of coconut toddy and a net cash income of US$0.47 per gallon per year. If only the variable costs are considered, the gross margin would be US$0 .49 per gallon. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 91
Costs and returns analysis of the whole farm In conducting costs and returns analysis of the whole farm, all sources of farm income and expenses are taken into account. Total farm income is the sum of the income derived from all the enterprises existing on the farm. The total for each cost item can be found by calculating the total for each enterprise and then summing across the enterprises. For the whole farm analysis, it is necessary to include both fixed and variable expenses in order to estimate the farm profit or net farm income. Table 4 presents the results of comparative costs and returns analysis for a coconut monocrop farm and a coconut-bitter gourd intercropped farm.
Interpretation: Comparing the two types of coconut farming (monocropping vs. intercropping), a 1- ha coconut farm that is intercropped with bittergourd would give a higher farm profit (or profit per hectare). The net farm income from a coconut-bittergourd intercropped farm would be US$1230.76 per hectare compared to a net loss amounting to US$49.82 per hectare from a coconut monocrop farm. The coconut-bittergourd intercropped farm would also generate a substantial gross margin amounting to US$1320.04 per hectare compared to only US$38.48 per hectare from the coconut monocrop farm.
Table 4. Comparative costs and returns analysis of coconut monocrop farm and coconut-bittergourd intercropped farm, 1-ha coconut farm (Batangas, Philippines, 2001) Value in US$/ha ITEM Coconut Coconut and monocrop bittergourda Income Cash Income Bittergourd sales 1 750.00 Copra sales 141.96 141.96 Total Cash Income 141.96 1 891.96 Non-cash Income Bittergourd consumed at home 500.00 Total Non-cash Income 500.00 Total Income 141.96 2391.96 Costs Variable Costs Cash Costs Seeds 51.77 Hired labour 80.16 250.76 Fertilizer 21.06 90.63 Other chemicals 237.08 Trellising materials 380.07 Fuel and oil 17.65 Interest payment 2.26 43.96 Total Variable Cash Cost 103.48 1 071.92 Fixed Costs Non-cash Costs Depreciation 0.98 Land charge 88.30 88.30 Total Fixed Non-cash Cost 88.30 89.28 Total Cost 191.78 1 161.20 Net Cash Income 38.48 820.04 Net Farm Income -49.82 1230.76 Gross Margin 38.48 1320.04 a An aggregate of about 0.5 ha of the 1-ha coconut farm is effectively covered with bittergourd. 92 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Cost and returns analysis of different farm practices or technologies Costs and returns analysis may also be used to compare the profitability of different farm practices or technologies. An example illustrated is the comparison of the profitability of a zero NaCl application vs. 1.76 kg/palm of NaCl application (Table 5). In the analysis, it is not necessary to use full cost accounting or to include all farm expenses. Only those cost items in which two different technologies or farm practices differ should only be included in the analysis.
Interpretation: It is highly profitable to apply 1.76 kg/palm of NaCl fertilizer as evident from the high gross margin amounting to US$352.73 per hectare as compared with only US$202.00 per hectare with no NaCl fertilizer application. The substantially high gross margin could be attributed to the marked increase in nut/copra yield resulting from the NaCl fertilizer applied.
Table 5. Comparative costs and returns analysis of coconut farms with NaCl (1.76 kg/palm) and without NaCl application (Philippines) Value in US$/ha ITEM No NaCl 1.76 kg NaCl/ application tree application Income Cash Income Copra sales 252.13 496.85 Total Cash Income 252.13 496.85 Total Income 252.13 496.85 Costs Variable Costs Cash Costs NaCl fertilizer 0 35.20 Hired labour 44.76 93.48 Interest on operating capital 5.37 15.44 Total Variable Cash Costs 50.13 144.12 Gross Margin 202.00 352.73
Sensitivity analysis It is also necessary to conduct sensitivity analysis in order to know how seriously an error may affect the outcome of an analysis since certain prices are derived with some difficulty and this may reflect erroneously the situation faced by the farmers. Researchers/analysts may examine the sensitivity of conclusions by computing different results for prices above and below the levels originally assumed for the output and some input items. Using the same set of data in Table 5, only the price of NaCl was varied in the example presented in Table 6 to assess the effect of increasing the price of NaCl fertilizer on the profitability of adopting this coconut technology. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 93
Table 6. Sensitivity analysis showing the effects of increasing the price of NaCl fertilizer on the profitability of adopting the NaCl fertilizer technology (Philippines) Assumption ITEM Base 10% increase 20% increase US$0.20/kg US$0.22/kg (US$0.24/kg Gross Income (US$/ha) 496.85 496.85 496.85 Total Variable Cost (US$/ha) 144.12 148.06 152.01 Gross Margin (US$/ha) 352.73 348.79 344.84
Interpretation: Increasing the price of NaCl fertilizer has a minimal effect on the profitability of this coconut technology. A 10% increase in the price of NaCl fertilizer will decrease gross margin by only 1.12% from US$352.73/ha to US$348.79/ha. Likewise, a 20% increase in the price of NaCl fertilizer will decrease gross margin minimally by 2.24% from US$352.73/ha to US$344.84/ha.
Enterprise budgeting (Ex-ante or projection) Enterprise budgeting is used to conduct an ex-ante assessment of the profitability of a proposed enterprise. In contrast, costs and returns analysis is an ex-post approach and can be used to analyze improved farm practices/technologies and also the whole farm operation involving a number of enterprises. An enterprise budget is, therefore, an organization of projected or estimated revenue, expenses, and profit for a single enterprise (Kay 1989). Each type of crop or livestock that can be grown is an enterprise. Enterprise budgets can also be created for different levels of production or types of technology so there can be more than one budget for a given enterprise. The base unit for enterprise budgets is typically one hectare for crops and one head for livestock. Using these common units permits an easy and fair comparison across different enterprises. Enterprise budgets can be used to compare the profitability of alternative enterprises to be proposed on a coconut farm and are useful in developing a whole farm plan. It is used to select the more profitable enterprises to engage in. Once completed, an enterprise budget contains the data needed to compute average cost of production, the break-even price, and the break-even yield (Kay 1989).
Format of an enterprise budget and steps in enterprise budgeting 1. Compute all sources of gross income from each enterprise (i.e. main product and by-products). Projected yield should be based on historical yields, yield trends, and the type and amount of inputs to be used (Kay 1989), historical price levels, price trends, and outlook for the future should be conducted before estimating a price. 2. Compute operating or variable costs. For a crop enterprise, operating or variable costs will include expenses on seeds, fertilizer, farm chemicals, fuel, oil, and lubrication, machinery repairs, labour, and interest on operating capital. • Fuel, oil, and lubrication expenses are related to the type and size of machinery used and the number and type of machinery operations performed for a crop enterprise. • Machinery repair expense must also be allocated relative to the type of machinery used and the amount of use. In estimating machinery repair expense per hectare, any of the methods used for estimating fuel expense per hectare can also be used. • Labour cost per hectare may be estimated. Estimation of labour cost has been discussed earlier under costs and returns analysis. 94 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
• Interest on operating capital. This interest is on the capital tied up in operating expenses. Even if no capital is borrowed, there is an opportunity cost on the farm operator’s capital. • Machinery depreciation. The amount of machinery depreciation to charge to a crop enterprise will depend on the size and type of machinery used and the intensity/number and type of machine operations. • Machinery interest or interest of fixed capital investment. Interest on machinery is based on the average investment in the machine over its life and is computed the same way regardless of how much, if any, money was borrowed to purchase it. The annual interest should be prorated if there are two or more enterprises in the farm. • Land charge. Rental for the use of the land or equivalent if land is owned by the farmer. The value can be approximated with the current rentals prevailing in the community. • Miscellaneous overhead expenses. Many enterprise budgets will contain an entry of miscellaneous overhead expenses. • Unit. The budgeting unit for livestock is usually one head, but units such as one liter for swine, one cow unit, or 100 birds for poultry can also be used. • Time period. Although many livestock enterprises are budgeted for one year, some feeding and finishing enterprises require less than a year. Some types of breeding livestock, such as swine, produce offspring more than once a year. Regardless of the time period chosen, it is important that all costs and revenue in the budget be calculated for the same time period. • Multiple products. Many livestock enterprises will have more than one product producing revenue. For example, dairy would have revenue from cull cows, calves, and milk while poultry would have revenue from meat and eggs. All sources of revenue must be identified and prorated correctly to an average individual animal in the enterprise. • Breeding herd replacement. An important consideration in enterprise budgets for breeding herds is properly accounting of the replacements for the producing animals. • Feeds. Many livestock enterprises consume both purchased feed and farm-raised feed. Purchased feed is easily valued at cost. Farm-raised feed should be valued at its opportunity cost or what it would sell for if marketed off the farm. • Livestock facilities. Livestock facilities include building, fences, pens, working chutes, feeders, wells, and other specialized items used for livestock production. Operating expenses for these items include repairs and any fuel or electricity required for operating them. • Machinery and equipment. Tractors, pickups, and other machinery and equipment may be used for both crop and livestock production. Both operating and ownership expenses should be proportionately divided between the crop and livestock enterprises.
Example of an enterprise budget Table 7 shows an enterprise budget for eggplant as an intercrop in a 1-ha coconut farm. Eggplant will occupy an effective 0.80 ha and its production period is three months. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 95
Table 7. Enterprise budget of eggplant as an intercrop under coconut per production cyclea, 1-ha coconut farm (Philippines, 2002) Value in US$ ITEM 0.8 ha of Per ha of eggplant eggplant Gross Income Cash Income Eggplant sales 2160.00 2700.00 Total Cash Income 2160.00 2700.00 Total Gross Income 2160.00 2700.00 Expenses Variable Costs Variable Cash Costs Seeds 51.20 64.00 Hired labour 320.80 401.00 Fertilizer 85.22 106.53 Chemicals 156.86 196.08 Fuel and oil 25.60 32.00 Interest on operating capitalb 19.19 23.99 Total Variable Cost 658.87 823.60 Fixed Costs Fixed -Noncash Cost Land chargec 35.00 43.75 Depreciationd 0.75 0.94 Total Fixed Non-cash Cost 35.75 44.69 Total Fixed Cost 35.75 44.69 Total Cost 694.62 868.29 Net Cash Income 1501.13 1876.40 Gross Margin 1501.13 1876.40 Net Income 1465.38 1831.71 a One production cycle/period is 3 months equivalent to one quarter per year. b Interest rate at 12% per annum x total variable cost divided by 4 quarters; borrowed capital c Land charge computed as follows: (land price/sq m x land area ) x interest rate on time deposit (7%/yr) divided by 4 quarters =(0.25 x 8000) x 0.07 = US$140; US$ 140/4 = US$35/quarter d Computed as follows: ( original cost of garden tools –salvage value) /useful life and then divided by 4 quarters = (US$6 - 0) /2 + US$3.00 per year; US$3.00/4 = US$0.75 per quarter. Exchange rate: US$1.00 = Php51.00
Interpretation: In a 1-ha coconut farm, growing eggplant as a coconut intercrop with an effective crop area of 0.8 ha will be profitable as evidenced by a positive net income amounting to US$1465.38. This profit figure is the return to the coconut farmer’s own capital, labour, and management. It is farmer’s net profit after considering all production costs (both cash and non-cash costs). However, if only cash income and cash costs are considered, the net cash income amounts to US$1501.13. On the other hand, if only variable costs are considered, the estimated gross margin or return above variable cost is also US$1501.13.
Break-even analysis
Uses of break-even analysis Results obtained in actual farm condition may not always be the same with that obtained from experimental farms because yield and output prices vary considerably by location and time. It is, therefore, necessary to determine the minimum yield and 96 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
output price needed that would make the coconut farmers recover at least the variable expenses or the total cost incurred in using a given technology or improved farm practice. It is likewise useful to determine the minimum yield and output price that would make the profit from the technology at least 30% higher than that obtained using the traditional technology (Brown and Librero 1991). Since the yield and output price in an enterprise budget are estimated rather than actual values, the calculation of break-even yields and prices can aid managerial decision-making. Estimates of break-even yields and prices can help farmers make decisions concerning continuing or stopping production losses to minimize losses in the short run. The data contained in an enterprise budget can be used to perform a break-even analysis for prices and yields. Break-even prices and yields can be calculated from either total cost or total variable cost.
Examples of break-even analysis
Example 1: Determination of the break-even yield Break-even yield (BY) refers to the yield required to recover all expenses or variable costs incurred in production at given prices of the product and inputs. The formula for computing break-even yield of a given enterprise is:
Break-even Yield (BY) = Total Cost or Total Variable Cost Output Price Output Price
For the example in Table 7, the break-even yield of the eggplant intercrop would be 4829.31 kg/ha.
Break-even Yield (BY) = Total Cost = 695.42 of Eggplant as a Output Price 0.18 Coconut Intercrop = 3863.44 kg for 0.80 ha or = 3863.44/0.80 = 4829.31 kg/ha
Interpretation of break-even yield: If eggplant yield is higher than 4829.31 kg/ha, the break-even yield, it will be profitable for the coconut farmers to grow eggplant as a coconut intercrop. Conversely, if eggplant yield is lower than the break-even yield of eggplant, the coconut farmers will incur a loss if they grow this crop.
Example 2: Determination of the break-even price Break-even price (BP) of the output refers to the output price needed to recover all expenses or variable costs incurred in production at a given output level and prices of the inputs. The formula for computing break-even output price is:
Break-even Price Total Cost or Total Variable Cost = Expected Yield Expected Yield
For the example in Table 7, the break-even price of eggplant as a coconut intercrop would be US$ 0.07/ha.
Break-even Price = Total Cost ($US) = 695.42 of Eggplant as a Expected Yield (kg) 12 000 Coconut Intercrop approximately US$0.06/kg CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 97
Interpretation of break-even price: This means that if the price of eggplant is above US$0.06/kg, the break-even price, it will be profitable to grow eggplant as a coconut intercrop. Conversely, if the price of eggplant is below US$0.06/kg, the coconut farmers will incur a loss if they grow eggplant as a coconut intercrop.
Financial/investment analysis
Importance/uses of financial analysis A number of mature technologies have long gestation, that is, they produce benefits that extend over several years. Some of these technologies include intercropping of perennials (e.g. durian, mango, citrus, rambutan, etc.) and coconut processing (e.g. village-level coconut oil milling, coconut coir processing, etc). Financial/investment analysis rather than simple costs and returns analysis is the most appropriate tool in determining the profitability or financial viability of technologies or investment projects/enterprises with long gestation period (i.e. those that generate a stream of costs and benefits).
Undiscounted measures of financial viability Financial viability of a project may be evaluated using undiscounted measures of project worth. A major limitation of these measures is that they do not consider the time value of money. The two undiscounted measures of financial viability are as follows:
1. Payback Period - the number of years it takes to recover all the capital invested.
The formula for computing the payback period if the stream of gross annual profit is constant from year to year is as follows:
Payback Period = Original Capital Investment Ave. Gross Annual Profit where:
Gross Profit = Gross Revenues or Income – Operating Expenses for Any Year
Average Gross Profit = Sum of Gross Profits for Each Year Number of Years of Project Life
To illustrate, consider a nata de coco processing project which requires an initial capital investment of US$ 1000 and the project is expected to produce a stream of annual gross profit of US $200 per year, the payback period would be five years.
Payback period = US$1000/US$200 per year = 5 years
However, if the annual gross profit is not equal from year to year, they should be summed year by year to find the year where the total is equal to the amount of the investment. In Table 8, the payback period would be three years because the accumulated gross profits reach US$ 1000 in the third year. The payback method is easy to use and quickly identifies the investments with the most immediate gross profit. However, the payback period has two weaknesses, which leads to misleading choice of investments: 1) it fails to give any consideration 98 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
to gross profit earned after the payback date; and 2) it fails to take into account the differences in the timing of gross profit earned prior to the payback date. No consideration is given to the time value of money. A dollar received during the first year is given the same weight as a dollar received in the second year.
Table 8. Payback computation for a nata de coco project with different annual gross profit from year to year Year Gross Operating Gross Revenuea Expenses Profitb (US$) (US$) (US$) 1 400 100 300 2 500 200 300 3 600 200 400 4 700 200 500 5 800 300 500 Total 3000 1000 2000 Average Annual Gross Profit 400 Initial Capital Investment US$ 1000 Payback Period 3 years a Production multiplied by unit price b Gross revenue minus operating expenses or production cost; sometimes called as net cash revenue
The payback method does not really measure profitability, but is a measure of how quickly the investment will contribute to the liquidity of the business. For this reason, it can easily lead to poor investment decisions and is not the best method for investment analysis.
2. Return on Investment (ROI) – The rate of return on investment expresses the average annual net revenue as a percentage of the investment. Net revenue is found by subtracting the average annual depreciation from the average annual gross profit revenue. The rate of return on investment is calculated from the following equation:
Return on Investment (%) = Average Annual Net Revenue x 100 Investment Cost
Assuming that the annual depreciation of containers and equipment amount to US$ 100 in the example in Table 8, then the average annual net revenue is:
= Average Annual Gross Profit Revenue - Average Annual Depreciation = US$ 400 – US$ 100 = US$300
Then, the return on investment (%) is computed as follows:
Return on Investment (%) = Average Annual Net Revenue x 100 Investment Cost
Return on Investment (%) = (US$ 300/ US$1000) x 100 = 30% The rate of return on investment is better than the payback period because it considers an investment’s earnings over its entire life. However, it uses average annual earnings, which fails to consider the size and timing of annual earnings and can, therefore, cause errors in selecting investments. This is particularly true when there are increasing or decreasing net revenues. Because of this shortcoming, the rate of return on investment is not generally recommended for analyzing investments. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 99
Discounted measures of financial viability such as the Net Present Value (NPV), the benefit-cost ratio (BCR), and the internal rate of return (IRR) which considers the time value of money are preferred to the payback period and the Return on Investment. Computations of these financial measures are presented in a separate paper on “Performance Evaluation of Village-level Coconut Oil Mills”, (see Part 2, Section 12).
Sources of data and procedures in collecting data for profitability/financial analysis
Secondary data Secondary data could be a good source of information for profitability/financial viability analysis of coconut-based farming systems, specific enterprises, and technologies/farm practices. Unpublished and published secondary data could be obtained from various government and private institutions. Get secondary data only from reliable agencies.
Primary data
Methods of collecting primary data The following are the different techniques for collecting primary data required for evaluating the profitability/financial viability analysis: 1. Farm record keeping. Records kept by farmer-respondents/cooperators can be a very good source of farm management data. This method is appropriate for information easily forgotten, but can be used only when the farmer-respondents have the required level of literacy. Farmers may be expected to keep all the basic farm records with close supervision from the researcher/extension worker, or the researcher/extension worker may visit the farms regularly and record the required farm information. • Farm Inventory Form. The farm inventory is a complete listing of all physical assets or farm properties (e.g. land, buildings, tools, equipment, machinery, livestock inventory, etc) at a specific date usually at the beginning of the year. The farm inventory form includes a description of each fixed asset, the number of units, the purchase price (or construction cost for buildings), the useful life of the asset, and the total value of each fixed asset. The appropriate time to take the farm inventory is about one to two weeks before the start of the new crop year. • Record of Cash Farm Receipts/Income. This record is used to document the cash inflow into the farm business. Income received from selling products is recorded on the day it is received. • Record of Cash Expenses. Farm expenses constitute the amount of money spent for inputs and services used in the farm. • Farm Labour Record. The labour record is to be used for recording the amount of labour input used on the farm for various operations. The amount of labour is generally measured in man-days, which is equivalent to 8 hours of work of a person. Labour used should be recorded on the day the farm activity was done. • Record of Production and Disposal. This record is intended for recording data and information on the area and kinds of crops grown in different fields or parcels of the farm as well as the total production and disposal (uses) of the harvested produce (i.e. crops and/or livestock). The methods of product disposal are broken into the following: quantities given as payment for hired labourers, reserved as seeds for the next planting (e.g. for crop enterprises), paid in kind to the farmers’ creditors, set aside for home use, those sold, and landlord’s share (for tenanted farms only). 100 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
• Livestock Breeding, Farrowing, and Weaning Records. This record should form part of records of farmers engaged in swine breeding as a component of the farm business. This record will provide information on sow production performance, which is vital for deciding whether or when to cull and dispose a sow. • Feed Consumption and Medication Record. The record of feed consumption provides reliable information vital in helping farmers in seeing to it that feeds are efficiently converted into saleable products such as meat and eggs. Animal medication is also recorded.
2. Farm survey. A one-time farm survey is conducted to collect all the pertinent input-output data on a farm over a 12-month period. A major problem in using this method is the difficulty of the farmers to remember the labour, power, and material inputs used. The one-time survey is recommended if the farm survey is conducted shortly after harvest to minimize the problem of memory recall. The following data need to be collected for profitability/financial cash flow analysis: • Effective price of material inputs/farm supplies The unit effective price for purchased inputs should include transport cost per unit from the source to the farmers’ field. Data on the prices of inputs supplied by the farmers must be verified by interviewing input dealers in the project area. • For inputs that are home-grown or not purchased in the market, their values (or opportunity cost) must be estimated or imputed to derive their input costs. • Labour cost. Labour cost is calculated as man-hours or man-days of labour spent of farm activities times the wage rate. Hired labour for different tasks usually requires different wages. Family labour is a major component among small-scale coconut farmers. The simplest way to value family labour for a given operation is based on the wage rate of hired labour. • Land values. If the farmer interviewed is an owner-operator, he/she should be asked if the land is inherited or purchased. If it was purchased, he/she should be asked to indicate the purchase value of the land during the year of purchase. The current market value of the land of the same quality in the project site should also be obtained. If the land is rented, the rental value of the land should be obtained from the farmers. • Accurate measurement of the farmers’ plots is critical to obtaining reliable area (per hectare) size (Church 1984). Because of limited time and resources, many interviewers depend on the farmers’ estimates of their field sizes. Although generally reliable, farmers tend to overestimate their field sizes, causing input level per product yield to be underestimated when the conversion per hectare or standard units is made. When possible, interviewers should measure the fields to verify the farmers’ estimates. Farmers’ fields, however, often are irregular in shape making the area difficult to calculate. The method used in measuring irregularly shaped fields is called measurement of triangulation and is done by pacing (walking along edges and counting the number of steps or paces on each side) or by using a steel tape measure and right angle bar. • Gross income or value of production. It is estimated by multiplying the total production by the effective price of the product.
3. Experimental data. Costs and returns analysis of coconut technologies and coconut-based farming systems may also be conducted using experimental data conducted in farmers’ fields or in experimental fields/research stations. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 101
One of the major problems in using experimental data from research stations is that farm labour cost is usually overestimated. To resolve this problem, prevailing farm wages should be used in the costs and returns analysis instead of the actual wage paid to labourers hired under the research project. A farm is often composed of land of different types and perhaps only a certain portion is of equivalent productivity to that on which experiments have been conducted. If farmers are interviewed to determine the price of land, researchers/ analysts must take care to obtain the price of land of appropriate quality (Price 1984). If farmers or other sources cannot suggest a market value of the land, researchers might construct a rental value by interviewing tenant farmers. Results will be most accurate if the researcher asks about specific plots or fields that were treated in a uniform manner during the year. In addition, seasonal variability in output prices should be incorporated. This is done by visiting product markets frequently (e.g. once a month) to obtain prices from product buyers/traders. The cost of transportation to the market if the product is to be delivered to prospective buyers should be added to the price of the product. The unit effective price for purchased inputs should also be used, gathered through interviews with input dealers in the project area.
References Aragon, C. 1991. Cost and returns analysis. Economic and social science research methodologies in agriculture. PCARRD-RRDP/USAID. Philippines. Aragon, C. 1991. Economic analysis of experimental data for crops and livestock. Economic and social science research methodologies in agriculture. PCARRD-RRDP/USAID. Philippines. Banta, G. and Jayasuriya, S.. 1984. Economic analysis of new technologies. Basic procedures for agroeconomic research. IRRI, Los Baños, Laguna, Philippines. Brown, E. and A. Librero. 1991. Measuring the economic viability of agricultural technologies. Book Series No. 118/1991. PCARRD-RRDP/USAID. Church, P. 1984. Collecting and analyzing farm-level survey data. Basic procedures for agroeconomic research, IRRI, Los Baños, Laguna, Philippines. Corcolon, R. 1995. Farm record keeping. FAO, Bangkok, Thailand. Flinn, J. 1978. Enterprise budgeting. Paper presented during the Third Workshop on Farm Management Teaching Materials sponsored by ADC in Bangkok, Thailand. Gittinger, J. 1982. Economic analysis of agricultural projects. EDI/World Bank. John Hopkins University Press, Baltimore and London. Kay, R. 1989. Farm management planning, control and implementation. New York: McGraw- Hill. Medina, S. 1997. Documentation and assessment of successful coconut, production, processing, and marketing enterprises in Luzon. PCARRD and FSSRI, Los Baños, Laguna, Philippines. Perrin, R., Winkelmann D., Moscardi E. and J. Anderson. 1976. From agronomic data to farmer recommendations: An economics training manual. International Maize and Wheat Improvement Center: Information Bulletin 27, Mexico. Price, E. 1984. Estimating prices of agricultural inputs and products for analysis of agricultural experiments. Basic procedures for agroeconomic research, IRRI, Los Baños, Laguna, Philippines. 102 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Conducting market surveys and developing market channels
Elvira Roseph V. Castelo, Levy A. Trinidad, Harold J. Dacumos1 and Pablito M. Villegas2 1Consultants, Meganomics Specialists International, Inc., Future Point, Plaza Condominium, 112 Panay Avenue, Quezon City, Philippines 2President, Meganomics Specialists International, Inc.
Introduction The coconut growing rural communities from almost all over the world are facing austere circumstances. Based on review of literature and experiences gathered through actual grounding in the field, the critical circumstances that confront the coconut growing communities include: (1) traditional practice of processing whole nuts into copra and crude coconut oil (CNO); (2) small landhodings; (3) low productivity; (4) increasing competition and; (5) poor marketing system, among others. These conditions are the major causes of declining profitability and viability resulting into high incidence of poverty in coconut growing communities. In the Philippines for instance, despite the advent of technologies, farmers remain predominantly traditional in processing nuts into copra. Most of them have failed to adopt downstream copra making (and its economical drying) as well as decentralized production of crude oil and edible coconut oil. It is estimated that 90% of the total Philippine production goes to copra and coconut oil without emphasis on developing alternative coconut products or engaging in secondary and tertiary processing of oleofoods and oleochemicals. Similar circumstances also prevail in other coconut producing countries. Aside from being traditionally dependent on the production of copra, coconut oil and copra cake, low productivity is also a constraint faced by most coconut communities along the tropical belt primarily because the same inefficient technologies are being used. In addition, coconuts are continually being produced in unsuitable areas. Low productivity is manifested by a low yield of only 39 nuts per tree, per year vis-à-vis a highly attainable yield of 60–70 nuts per tree, per year. In terms of copra production, yields are normally below 0.5 t per hectare vis-à-vis 3–5 t of copra production in best farms planted to high yielding cultivars that are adopting recommended and better agronomic practices. Most of the areas planted to coconut are considered marginal where fertilization is less than adequate. This results in lower yield or productivity. The increasing competition from other oils remains a serious constraint faced by the coconut producing countries. Based on a recent Study on Restructuring of Agro- based Industries (MADECOR-World Bank 2001) in Indonesia, oil yield per hectare of coconut amounted to 0.34 t per hectare as compared to palm oil which yielded about 3.32 t, rapeseed 0.52 t, sunflower 0.45 t, and soybean 0.36 t. In terms of oil extraction or production cost, crude palm oil costs US$240/t as compared to US$285/t production cost of coconut, rapeseed US$780, sunflower US$400 and soybean US$450. Other constraints faced by coconut producing countries include occurrence of pest and diseases, natural calamities, indiscriminate cutting of coconut trees, conversion of coconut farms into other profitable crops, scarcity of skilled labour and, erratic and volatile prices of coconut products in the world market (low of less than US$200/t to US$700/t). Despite these unfavourable and inequitable circumstances, there is still much hope that coconut farmers need not be poor. Coconut rural communities can open their doors to alternative processing and value-added inputs that will supplement the traditional whole nut or copra product. Among the alternatives open to the coconut CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 103
based rural communities are intercropping, product diversification, by-product utilization, and product cost-reducing technologies. Imperative however, to the execution of these alternative undertakings will be the setting up of farmers’ organization and establishment of efficient market and information exchange system. While the process of developing viable business endeavours for the poor rural coconut-based communities entails medium to long-term transition, it is essential that precursory activities towards this end be immediately initiated by the community- based organizations with the support of the coconut development institutions. Thus, teaching the coconut farmers the value of a well-planned and organized coconut-based agribusiness and marketing operations at the village level maybe considered as a logical take-off point towards better appreciation and probable mainstreaming into regional, national or even international level. Learning the mechanics of designing and implementing a market survey as well as the mechanics of developing alternative market channels will pave the way for the identification of workable and sound strategies towards the establishment of viable markets and sustainable business endeavours by coconut growing communities.
Principles to consider in designing a market survey and development of market channels Towards the formulation and implementation of appropriate market survey and developing market channels, the appreciation and understanding of some fundamental agribusiness management and economic principles are crucial. These basic principles are briefly discussed below.
The market or demand-driven approach There is a general perception that market demand and business opportunities for coconut and its by-products are seemingly expanding. Coupled with the availability of demonstrated workable technologies to enhance and improve production efficiencies, these opportunities will materialize only if farmers are producing the right quality and quantity at the right time and if these products are available to the buyers at a price that buyers are willing and able to pay. In other words, making available the right products at the right time and place and at the right price is the very essence of a market-oriented or demand-driven approach. Simply put, produce only what can be sold profitably or remuneratively. This principle is essentially the exact opposite of the traditional approach of selling what has been produced.
Farmer-focused approach A farmer-focused approach will be necessary so that the farmer-producers will achieve the optimal, if not the maximum benefits possible from the selected coconut-based business undertakings. A farmer-focused approach would mean that benefits derived from the community enterprises are focused on the farmers, their families and their socioeconomic and cultural needs. These benefits could be in terms of improving their livelihood, increasing farm household incomes and improving the general welfare of the farmers and their families. From a developmental point of view, a farmer-focused approach would be essential in identifying the interventions that will be necessary in order to capacitate them to become effective drivers of progress and rural prosperity.
Technology-based approach Technology-based approach refers to directing production activities towards sound, practical and accessible technologies that are: (a) yield or productivity increasing; (b) 104 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
cost-reducing and, (c) value adding (e.g. processing, prolonging products’ shelf-life, packaging and added convenience). Technology–based approach should also promote product diversification, by-product utilization, product enhancement and new uses of the products.
The Technology-Market-Finance Triad The Technology-Finance-Market Triad Model (Figure 1) suggests that an integrated approach towards a progressive rural development entails a balance between and among the three variables namely, technology, market and finance. This involves tailor fitting and properly managing these variables, as well as interweaving them with the basic factors of production such as land, labour, capital and management.
Figure 1. The Technology-Finance-Market Triad Model
Source: Villegas, P.M., Meganomics Specialists International, Inc. 2002. The Integrated Industry Cluster Approach and Global Competitiveness
In view of the emerging economic paradigm of globalization and trade liberalization, the viability and sustainability of coconut-based enterprises involve a steadfast and logical inter-connection of the village level activities to the town level, to regional level, to the national and eventually, to the international level. As adapted from various authors (Gonzales 1997; Kotler 1998; and Porter 1990), the process of transformation from the production sub-system to the global market has the following implications: • The local and global markets determine the economic opportunity costs of inputs and outputs from the coconut production system. • The involvement of the farmers in the business or entrepreneurial activities is an important factor to consider. • The economic foundation includes technology, research and development (R & D) capability, natural endowments, physical infrastructure, human resources, capital resources and financing. These constitute the input subsystems that feed into the production of commodity transformation. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 105
• The marketing system determines the movements and flow of the domestic agribusiness outputs to the global market for exports and back to the domestic market for imported products. • Focus on market windows of opportunities for an alternative preferred or specific product is crucial. The analysis of these windows of opportunities determines the seasonality, local or global demand and behaviour of the international competitors in specific markets.
A coconut-based integrated-agro-industrial cluster approach will be necessary in order to relate the macro environment and microeconomics at the community, grassroots or farm levels. The Modified Coconut-based Agro-Industry Cluster Framework suggests that: • An industrial cluster is an agglomeration of inter-linked or related activities comprised of core industries, critical supporting upstream and downstream industries, suppliers, and related services, physical infrastructure as well as the institutions that are interdependent and generally connected with each other. • By looking at the broader picture, product, services and even management, specialization is triggered and the transformation of the comparative advantages into competitive advantages of specific or preferred products is encouraged. • The necessary interventions such as the appropriate empowerment of the key producers, e.g., the coconut farmers in the rural areas, may be determined. For instance, the need to teach the concept of self-help financing cum savings mobilization schemes such as micro-credit and savings systems to the farmers to warrant viability and sustainability of potential economic undertakings of a particular coconut community may be deemed necessary and highly attainable through community-based organizing processes.
Conducting a market survey
What is a market survey? A market survey is a study instrument geared towards the assessment and quantification of product demand as well as elaboration of market-related constraints and opportunities. Following the principle of demand-driven approach and market- related principles discussed earlier, product demand, technology and finance should be given ample and balanced consideration in the selection of best alternative mix of production and marketing activities that a particular coconut-based community will engage in. The market survey is an important activity since the results of the process of gathering and analyzing product and market information will aid the coconut-based communities in making sound and practical marketing and production decisions. Specifically, the following demand-related information, among others, may be derived from the survey: (1) target market (who and where); (2) buyer’s preferences in terms of quality and product forms; (2) indicative or duly validated quantity that the market can absorb (both for domestic and international market); (3) the timing of production and timing of storage and disposal; (4) where to sell the potentially marketable products; and (5) the price that the buyers are willing and able to pay for the potentially marketable products. The market survey, through rapid marketing appraisal (RAMA) technique, will help determine the “best marketing practices” of the key players and identify opportunities, and therefore will aid in the design of appropriate and practical marketing strategies and tactics to warrant operational business viability and sustainability. The market survey will aid in the determination of the variables and potential 106 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
constraints and threats that can hamper successful business undertakings as well as provide insights on how to deal with them (constraints and threats) even before they could happen. In other words, the marketing survey will serve as a tool that will aid in reducing, if not eliminating business risks and uncertainties.
Factors to be considered in designing a market survey Relating to the project objectives of the ADB-funded Poverty Reduction in Coconut Growing Communities, the factors to be considered in designing a market survey may be grouped into four classifications. Based on these factors, both the marketing opportunities and marketing constraints can be firmly determined, including the major market development gaps. These factors are enumerated below:
1. The market demand and the target market It is important to understand and analyze the market demand in order to identify the needs and wants of the consumers. It will also determine whether they are willing and able to pay for the products that the coconut rural community intends to produce. In order to establish whether there is a demand for a product, it is important to study the historical product demand as well as the future demand. An estimation of the future demand is essential to make sure that only the right quantity and quality are produced or manufactured given a specific period of time. The estimation of future demand is also known as forecasting and normally takes into consideration the local production and importation figures of the past. These include other factors such as credit availability, income distribution, population growth, price variations, age composition, the degree of urbanization, consumers’ tastes and preferences, and money supply. It is critical to understand that product demand is a function of the different variables. Specific factor or variables affect the behaviour or the trend of a product demand. For instance, it is important to understand the income distribution to determine the types of products that consumers can afford to buy given their relative purchasing power. Both the price of the product and product substitutes should be considered as important factors in order to determine whether they pose marketing opportunities or marketing constraints. In a demand-driven approach, the target market remains the focal point. The target market represents the group of people or individuals who are considered to be the takers of the products produced or manufactured by the community. These groups of people or individuals may be classified as wholesalers, retailers, or end users or consumers. Some wholesalers and retailers may be institutions, industrial users or manufacturers who may have a need for the products for re-sale or as raw materials for further processing. These groups of people or individuals also make up the marketing channels. Regardless of the need for the products, it is essential that the preferences of these buyers be carefully assessed. Considering the demand-driven approach, only the products that are marketable should be produced. Products that are marketable are those that satisfy the requirements and preference of the target market. These products should be produced in suitable and strategic areas so the price would be affordable. To sum up, the variables to be considered in the assessment of the target buyers’ demand and preference would include the four “Ps” in market development, namely: (1) Product, (2) Price (3) Place and (4) Promotions. It is also worthwhile to take into consideration other macro or broad economic data such as the GNP or Gross National Product. Practical sense will tell us that if the GNP is expected to rise rapidly, businessmen could generally expect good times for their business. In this case, the rising GNP may be considered as a marketing opportunity, otherwise, if the opposite occurs, the declining GNP maybe considered as a marketing constraint due to its negative effects on demand. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 107
2. The farmer-producers Towards the design of appropriate and effective market survey design, it is important to understand the profile of the farmer-producers. Their capabilities, economic status, socio-cultural behaviours, preferences, working habits, traits and values must be taken into account to create a balance between production and marketing strategies. The farmers in the agribusiness system, as illustrated in Figure 1 (The Technology-Finance- Market Triad Model), are the main drivers and beneficiaries of the project. Thus, their concerns should be appropriately and fully addressed.
3. The suppliers, competitors and market channels To be able to come up with a logical market survey design, it is consequential to take a look at the supply situation. The supply-sourcing situation may be determined as follows: • Who and where are the direct supplier-competitors? Classify them according to size, product quality, location, market share and performance. • Determine historical domestic supply as comprised by local production and importation. • If there is a foreign market, determine the historical supply patterns in the targeted countries as comprised by their local production and importation. • Evaluate supply growth patterns and project future supply by applying appropriate projection methods. • Determine the share of the market by establishing the proposed production volume as against the total market size.
4. Understanding the basic economic foundation The basic economic foundation refers to the following: Technology, Research and Development (R & D), Natural Endowments, Physical Infrastructure, Human Resources, Business and Policy Environment, and Capital Resources and Financing. These elements are vital because they indicate the marketing constraints that will determine the depth and extent of activities that a particular coconut-based community can engage in. These economic foundations also indicate opportunities and strengths from within the community and from the external environments that will determine the extent of benefits that the community may achieve. Needless to say, understanding these economic foundations will immensely contribute to the development of viable markets and marketing strategies at the macro (national or global), meso (cluster of industries) and micro (firm) levels.
Data required for the survey
Secondary data Secondary data are published statistics and other information that are already available from sources such as government agencies, libraries, banks, NGOs, the private sector organizations, academe such as State Colleges and Universities, and other research institutions. To save time and money, it is wise to maximize the use of relevant information from the secondary sources in conducting and analyzing market surveys.
Primary data Primary data are those obtained through first hand research data collection procedure. Data may be collected through observation, informal interviews and discussion in order to clarify and deepen the knowledge obtained from the analysis of the secondary data. Primary data are collected through field visits and rapid market appraisal where informal interviews are held with identified key informants such as farmers, housewives, sellers, etc. Direct observation is an important activity, and actual farm and market visits are essential. 108 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Following the Rural Rapid Appraisal (RRA) or Participatory Rapid Appraisal (PRA) or Rapid Marketing Appraisal Techniques, activities usually begin with discussion with key informants such as the retailers or buyers in the market who will be knowledgeable about the marketing practices in a particular location. Although data collection is informal, it is useful to have a structured guide into which information can be noted. A questionnaire may not be appropriate, but a checklist should be used in conjunction with prepared guide questions or information/data recording sheets.
Guidelines and step-by-step procedure on how to implement the market survey The following are the suggested step-by-step procedures in the design and implementation of a market survey.
Step 1. Designing the conceptual framework of the survey • Start with the statement of the problem that needs to be solved • Consider the relevant principles, project concepts and new economic paradigm in the design of the conceptual framework
Step 2. Variable selection • Before conducting a survey, it is important to make a checklist of data and information required for the cost-effective design of an appropriate semi- structured or structured questionnaire. Note that logical market survey design and implementation should always relate to the conceptual framework. • The next step is to group the variables according to related and coherent topics. With an appropriate understanding of the concepts and principles discussed earlier, it will be easier to create a systematic logical or sequential listing. Understanding those concepts will allow easier organization of thought and grouping together of related or mutually reinforcing variables.
Step 3. Determining the extent and levels of detail • Step 3 entails deciding up to what level of data coverage and detailing of information will be used in processing data for the survey. • After the data and information requirements have been listed and grouped according to topics, the next step is to determine what information will be gathered at different levels such as village, town, and region, national or even international. In deciding the level of detail one should consider the following: (1) Cost implication; (2) Time element; (3) Relevance of gathering (or implications of not gathering) the information; and (4) Relatedness of the information to the problem statement, objectives and expected outputs/results of the project or study.
Step 4. Determining the coverage of the market survey • The extent and levels of detail will determine the coverage of the survey. Following the principle of promoting sustainability and viability through global competitiveness, it is important to consider the logical flow of markets from village level, regional level, national level and international level. While this seems to be too ambitious and implies costly market research, a practical solution is to collect as much secondary data possible and to focus on the most preferred products where “established markets” have to be critically examined and ascertained. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 109
Step 5. Determining the sample size • To make sure that data gathered would be a good representation of the actual, an appropriate sample size will have to be determined. • When you eat a small piece of cake, you are sampling the whole cake. The piece of cake is called a sample. From the sample, you can get the idea of what the whole cake tastes like. But you have to choose the sample in the right way. One cannot get a good idea of what the whole cake is like if you choose a sample that has only the icing or the filling. • The sample size will determine the number of respondents required. For purposes of achieving results which is closest to the actual, market segmentation or purposive market sampling maybe done to determine which particular slice of the consuming public or households will be the subject of the survey. For instance, households may be segmented by location, income or ethnic location. Market can be segmented according to market size, location and demand. These data will also provide insights in estimating the actual potential demand for a particular product.
Step 6. Designing structured guide questionnaire and the secondary data guide sheet • Based on the listings generated in steps 2–4 that contain the specifics of the required information, the required items will have to be articulated in question form and shall comprise the Structured Guide Questionnaire. The guide questionnaire will be used in gathering primary data. On the other hand, the Secondary Data Guide Sheet shall serve as the guide in gathering data from published source. • It is important to identify the source of information, whether through secondary data or primary data because the guide questionnaire and the secondary data guide sheet should be organized per data source.
Step 7. Designing the data record sheets • All the information gathered should be compiled accordingly in the data record sheets. The data record sheet should be designed to coincide and should be consistent with the structured guide questionnaire for ease of recording. The questionnaire can also serve as the Data Record Sheet if provided with enough space for recording the results.
Step 8. Testing and validating questionnaire • To assure the effectiveness of the structured guide questionnaire, it is necessary that testing be conducted. At least 2% of the total required sample size should be tested through the conduct of actual interview and survey. If the population is heterogeneous, stratification of the sample is needed such that each stratum is represented proportionately according to its homogeneity.
Step 9. Fine-tuning • After the conduct of testing and validation, an evaluation will have to be undertaken. Based on the results of the evaluation, the questionnaire will have to be further improved and/or corrected to ensure that it will be responsive to the attainment of objectives of the market survey.
Step 10. Data collecting • Data collecting refers to actual gathering of data from either primary or secondary source. The implementation of the survey should take into consideration the cost implication and timeliness. As much as possible, secondary data or simplified participatory rapid appraisal techniques must be used to minimize cost. For the 110 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
gathering of the primary data, the most reasonable minimum sample size must be considered. Given the imperfections in the market itself, the selection of key informants and market indicator samples would suffice particularly if funding is a constraint and speedy action is required to complete the survey and immediately formulate an alternative marketing plan. • In many cases, the PRA technique using key informants interview of major actors or intermediaries in the market channels, accompanied with sensible analysis and synthesis of secondary data and existing literature prove more effective than launching costly formal surveys using detailed and elaborate questionnaires. This rapid marketing appraisal technique is simply the application of internationally acceptable PRA techniques focused on marketing issues (e.g. costly marketing channels and linkages). • Note that it is practical to gather as much information possible from available sources if there are no substantial additional costs. While the focus of our problem is related to marketing, there might be an interrelationship between and among the other agribusiness functions, including finance and production. Because of the nature of the interrelationships and critical linkages, it is highly probable that in the final analysis there could be some significant correlation between the variables that may be worth considering in the formulation of the marketing plan and strategies.
Step 11. Analysing and interpreting the results • Anchored on the problem statement, the results of the survey is aimed at providing insights that will serve as guide in designing the appropriate marketing interventions and strategies towards the establishment of responsive and viable market channels. • If the market survey confirmed a demand for specific products, there is a need to further find out what applicable marketing strategies should be adopted in terms of pricing, product positioning, product forms and packaging, manner of distribution, etc. In essence, these will ensure that these products could be sold at the right time and place and at the right price. Note that the survey should be designed in a manner wherein one will be able to get an indication of what other alternative or preferred products could be marketed in case the identified products will be found unmarketable. • An appropriate analysis will entail both quantitative and qualitative. Quantitative analysis will be useful in projecting the product demand by using mathematical and statistical methods. Qualitative analysis on the other hand, is applicable in determining the “best marketing and product quality management practices” of successful industry players, including market competitors and allies. Information in terms of inherent constraints, opportunities or development gaps that may be gathered from the existing market channels may serve as inputs for the qualitative analysis and evolution of major findings, conclusions and recommendations. • For the quantitative and qualitative analyses, traditional method and use of pre- constructed computer templates may be employed. For the quantitative analysis, a computer programme can easily make the required mathematical computations such as computing the mean, median and mode averages. For the qualitative analysis, the use of computer templates can also easily determine the existing correlation or relationships among the variables. These relationships maybe useful in undertaking quick marketing analysis and deciding an appropriate marketing plan and strategy. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 111
• For purposes of interpreting the results, various mathematical and statistical methods may be applied. A qualified trainer technician may assist the coconut community in using computerized templates for doing the computer-based statistical analysis, assuming that the computer and internet technology is available. If not, the technical expert may opt to consider manual computation methods. • An appropriate analysis will have to be anchored and focused on the specific problems earlier identified. Based on the results, one can establish the following: (1) Whether there is a significant demand that can be “quantified” for a particular product at different levels (town, region, national, international); (2) A configuration of consumers’ or buyers’ preferences; (3) The product substitutes and its relative competitiveness; (4) An indicative pricing range and pricing scheme; (5) The seasonality of the product and means to grow or source it during off-season; (6) Where the products are sold and the distribution routes (market channels) including the various intermediaries (e.g. wholesaler, retailer, agent, transporters, retailers, etc); (7) A configuration of the prospective competitors and their estimated market share; (8) The best practices (production, product quality, marketing) of the industry players in terms of pricing, product positioning, promotions, etc.; (9) The capabilities of the farmer producers vis- a-vis available innovative or modern technologies; (10) Accessible and available infrastructures (transport, handling, processing) and; (11) Other relevant information useful in the development of market channels and formulation of marketing strategies.
The very essence of the market survey does not merely end with a good analysis and interpretation of the results, but with the translation of the results into sound marketing strategies, including the development of market channels. The prescribed implementation procedures for these undertakings are contained in the succeeding discussions.
Developing market channels
What is a market channel? A marketing channel shows the flow of a particular commodity or product from the growers to the different intermediaries, until it finally reaches the household consumer or the product-end user. It shows the key players involved in the commodity marketing system in selected areas or specific locations.
What is an intermediary? An intermediary in the market channel of a particular commodity provides value adding to the product such as re-packaging, sorting, grading, storing, transporting, etc. Each intermediary contributes to the end-price of the commodity or the product as each intermediary collects a corresponding profit margin. Examples of intermediaries are Grower, Agent, Assembler-Wholesaler, Contract Buyer, Wholesaler, Wholesaler- Retailer, Retailer, and Institutional Buyer.
The route of distribution of products The route of distribution of products may be unique for each specific commodity or product at each specific location. Some takes few intermediaries while others may take as much as 10 intermediaries before the product reaches the end-user. As each layer would add on to the price (without necessarily adding value to the product), it is but logical to think that the ability of the growers to directly link with the end- 112 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
user would give them higher returns and the ability to sell at lower competitive prices. In other words, there is a meritorious advantage to both the grower-producer and the end-user if there is a shorter and direct distribution route between the two of them.
Factors in determining and developing market channels By adopting the rational strategic approach, it is wise to take stock of what the coconut growing community organization have and does not have. It would then be necessary to evaluate its missions and objectives and then relate the existing thrusts to the events happening in the environment. For purposes of developing market channel, it is best to take stock of all the relevant information gathered from the survey to be able to identify the most promising opportunities and threats that tend to reverse the growth. These external environmental factors should be matched with the internal strengths and weaknesses to find out what marketing activities should be focused on, where to catch up or what to avoid. Thus, the factors to be considered in the development of a marketing channel are the internal environment and external environment. The internal environment would refer to the strength of the community (e.g. human resources, skills, etc) and weakness of the community (e.g. lack of skilled manpower, etc). On the other hand, the external environment would refer to the threats (e.g. health and environmental hazards, competition, etc) and opportunities (e.g. increasing demand for product, etc.). The existing marketing systems and practices should be very well considered, including the market preferences of the target market, the characteristics and habits of the target market, the capabilities of the farmers, the economic foundation, the core industry system and the related and allied industries and services. It is also important to take into consideration the interrelationships between the technology-market-finance triad. As mentioned earlier, there should be a fit between these three variables to ensure viability. It goes without saying therefore that it is important to establish a management and marketing system that will be responsive and sustainable to ensure the viability of the product-market system. It is also critical to consider the following factors that also affect the channel of distribution: (1) nature of the goods (industrial, perishability and bulk); (2) nature and location of the markets; (3) price of the product; (4) availability of middlemen, transportation and storage facilities; (5) sales effort required by the middlemen; and (6) resources of the manufacturer.
Management of marketing channels Marketing channel management involves two basic problems: the selection of the proper channel for the product and maintaining the channel. Three alternatives may be considered in the selection of the channel and these are: • General or Intensive Distribution, whereby the cooperative or the firm seeks to obtain the widest possible distribution for its product by allowing it to be sold everywhere by anyone willing to stock it. This alternative is particularly applicable for consumer products such as coconut soaps, coconut wine, coconut vinegar, coconut cooking oil, etc. • Selective Distribution, where the manufacturer chooses only those outlets that are best able to serve the manufacturer’s needs. • Exclusive Dealerships, which allows only one distributor to stock and sell the product in a given market. A good example applicable to this alternative is the coconut hybrids for sale to specific farmer groups. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 113
The need to establish market linkages and networks Efforts towards the development of market channels become relevant only if the corresponding market linkages are developed. It will be very difficult to penetrate into the distribution system without establishing the necessary business linkage and network. It is therefore important to identify and establish relationships with all relevant institutions, business entities, government agencies, NGOs, Local Government Units (LGUs) and cooperatives. To ensure viability, it is not only important that relationships with target market are developed. Equally important is the establishment of relationships with other relevant individuals or groups to be able to develop a strong foothold in the industry. For instance, it will be wise to develop relationship with other key producers of similar or related products in order to explore possible consolidation of export orders. Relevant market information on the other hand maybe obtained from exporter associations and other government agencies and NGOs. Invitation and participation to trade fairs or science fairs to become updated on the latest technology trends are also made possible through proper linkaging and networking. It will be easier to remember market linkaging through the following acronyms:
G – Government P – Producer A – Academe L – Linkage with I – Institutions U – User N – NGOs S – Scheme
The first set of acronyms, GAIN refers to group of people or institutions where it is necessary to establish marketing relationships or linkages. On the other hand, the second set of acronym PLUS infers that, it is beneficial to the farmers to shorten the marketing channel route by directly linking with the product end-user.
Recommended specific steps in determining and developing market channels The following are the recommended steps in determining and developing market channels towards the establishment of viable markets:
Step 1. Gather all relevant results arising from the market survey conducted.
Step 2. Based on the results of the survey, determine the prevailing or existing market channels for the identified coconut product. Evaluate its advantages and disadvantages given the present circumstances of the rural coconut community. The advantages may be assessed in terms of the benefits that the farmers may achieve with the market channel.
Step 3. Construct and analyze the existing market channels and intermediaries involved.
Step 4. Determine possible alternative strategies through SWOT (Strength, Weaknesses, Opportunities, and Threat) analysis.
Step 5. Decide a point of entry or decide to establish a new route. Select the proper channel for the product (general distribution, selective distribution, and exclusive dealership). In deciding a point of entry, one may opt to: (1) Determine his/her entry point from among the existing intermediaries that would be best suited given his/ her present circumstances and limitations; (2) Decide to be an additional intermediary, say assembler or wholesaler or retailer, etc.; and (3) Decide to shortcut the distribution route by integrating production and marketing activities. 114 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Step 6. Develop the necessary market linkages using the GAIN and PLUS technique.
Step 7. Conduct strategic trial on consumers’ or buyers’ acceptance of products intended for commercial market to validate the product’s acceptability.
Step 8. Determine an appropriate long-term and viable relationship with the market linkages. Marketing relationships with potential buyers can be done through local marketing or international marketing.
The local marketing modalities could be: (1) Direct Selling, (2) Contract Marketing, (3) Contract Growing, or (4) Joint Venture. • Direct Selling entails that the rural coconut community through an organized community based organization such as cooperative sells directly to the market. In many areas where vehicle traffic is relatively heavy, the potential viability of establishing ‘roadside markets’ where farmers or their cooperatives may do direct selling method can be explored. Before the community organization or the cooperative can undertake this activity, it is important that the necessary permits have been secured and necessary taxes are paid to the municipality. • Contract Marketing refers to an agreement between the community-based organization and institutional buyers. The Purchase Order normally serves as the ‘agreement’. • Under the Contract-Growing Scheme, the producer is guaranteed with an assured market, technical assistance, production inputs and in some cases, financial assistance from the contracting party. To protect the interest of both parties, a contract is prepared and perfected. The contract contains the responsibilities of both parties. • A Joint Venture is an agreement between the producer (CBO or cooperative) and a corporation that intends to venture in a specific project. The agreements on management, capital investment, technical assistance and profit- sharing are discussed before the implementation of the project. • International Marketing could involve: (1) Franchising and Licensing, (2) Manufacturing, and (3) Exporting. Under Franchising, patents, trademarks, manufacturing know-how services (technical, managerial, marketing) are all made available to foreign companies in return for royalties to mother company. Licensing on the other hand entails only a part of the whole franchising aspect. In Manufacturing, local firms may be organized as Assembly Plants, Contract Manufacturing, Joint Venture or Wholly Owned Plants. Exporting allows an entity to enter foreign markets with a minimum change in product lines, company organization, investments or company missions. Under export marketing, there are several modes of entry namely: producer-exporter, exporter-trader, selling agent, buying agent and subcontractor.
Step 9. Strengthen linkage through constant communication (interpersonal, telephone, e-mails, brochures and other multimedia modes) and representation.
Formulation of marketing strategies The formulation of an effective Marketing Strategies and Plan requires a market survey and the development of market channels. The results of the market survey will serve as the baseline inputs or data, which will be necessary in the formulation of the Marketing Plan. The Marketing Plan articulates who will buy the products, how and where the products of the CBO or producers will be sold. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 115
The Marketing Plan provides the business direction for the cooperative or CBO. It also serves as basis in determining whether the business goals are achieved and, if deemed necessary, interventions and innovations maybe applied accordingly. The following will serve as the guidelines in the preparation of a Marketing Plan:
Step 1. Analyzing the business environment or Environmental Scanning
Environment refers to the location where the coconut community-based organization moves or plans to sell its produce. Environmental scanning would be necessary in order to identify the marketing constraints and opportunities. It would also aid in the assessment of comparative advantages of location and competitive advantages of the product. There are three methods that can be used in environment scanning:
1. Demand and supply analysis The simplest method to identify an opportunity is to analyze the supply and demand trends and direction. The objective is to determine the gaps between the estimated demands and the available supply so that the coconut communities can supply the unsatisfied demands. The historical supply and demand should be carefully studied to make sure that the present supply-demand gaps are not artificial or temporarily caused by a certain calamity. Information may be sourced from government agencies such as the Bureau of Agricultural Statistics. The trend of the supply and demand should also be examined in order to determine the seasonality of a certain product or produce. Likewise, the concentration of demand must also be considered to determine what segment gets the biggest share and determine their preferences.
2. SWOT Analysis SWOT represents S-strengths, W-weaknesses, O-opportunities, and T-threats. The SWOT studies both the internal and external environment of the community based organization to determine the potential markets and eventually plan an appropriate marketing strategy for the particular product. Strength refers to the positive elements of an organization that can be harnessed towards the realization of the organization’s goals and objectives. Weaknesses on the other hand, refer to the negative elements of a community-based organization that can hinder the realization of the goals of the organization. Opportunities and Threats refer to circumstances outside of the community-based organization or cooperative. Opportunity refers to a favourable situation or circumstance, which can be tapped by the organization while Threat refers to unfavourable circumstance or situation that can hamper the realization of the goals of the organization.
3. Analysis of Competition Porter’s (1990) model may be used to analyze the forces in the industry that will have an effect on the business of the community-based organization. The purpose of this exercise is to determine positions in the industry and identify prospective markets to warrant viable and sustainable market and business. There are five forces to consider: 1) new entrants, 2) substitute products, 3) buyers, 4) sellers, and 5) competition among organizations.
Step 2. Determine Target Markets
Step 3. Determine the Objectives of Marketing 116 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Step 4. Plan the Marketing Strategies
Step 5. Develop the necessary organizational set-up and critical institutional arrangements and linkages
Step 6. Prepare the Financial Plan and Budget.
In summary, the process of conducting market surveys and developing market channels involves the following: a. Understanding the principles and best practices to be considered in designing a market survey and developing market channels; b. Conducting a market survey; c. Determining and developing innovative market channels; d. Establishing marketing linkages and management of marketing channels; and e. Formulating and executing duly selected marketing strategies and tactics.
References Esguerra, R.S. and Suplico, L.T. 1997. Export marketing: Going global. De La Salle University Press Inc., Philippines. Gloria, Manuel. 1993. Workshop proceedings: Village, small and medium scale processing of fresh coconuts. “Factors affecting the viability of cottage, village and small scale coconut processing plants”. KIT-PCA-ATI-ITDI, Philippines. LBP-CDA-ATI Training Consortium. 1995. “Gabay aklat sa pagbebenta sa pamamagitan ng kooperatiba”. Cooperative Development Authority, Philippines. Madecor. 2001. A study on restructuring of agro-based industries in Indonesia. World Bank. U.S.A. Morato, E.A., Jr. 1989. Strategic Intervention for Development Managers. Strategic Management. (Vol. 1). Asian Institute of Management, Makati City, Philippines. Porter, M. E. 1990. The competitive advantage of nations. The MacMillan Press, Ltd., London. Suharto, J.C. 1996. Promoting multi purpose uses and competitiveness of coconut. Potentials for increasing farmers’ income and enhancing competitiveness of the coconut industry through alternative uses. International Plant Genetic Resources Institute Regional Office for Asia, the Pacific and Oceania (IPGRI-APO), Serdang, Selangor Darul Ehsan, Malaysia. University of the Southeast Asia and the Pacific Foundation. 2000. Global competitiveness strategies for Philippine agribusiness, ‘Angat Pinoy 2004: Competitive analysis and benchmarking study’. Philippines. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 117
Machinery and equipment for processing coconut by-products
Carlos dela Cruz1, Cesar M Pobre2 and Narcisa R Gabrido3 1Mechanical Engineer, 2Agricultural Engineer and 3Senior Agronomist, National Irrigation Administration (NIA), Region IV, Pila, Laguna, Philippines
Introduction Recognizing the potential contribution of coconut industry in poverty alleviation through production of high value products from coconut fiber, shell and wood, the use of machineries and equipment is indispensable. It is important for coconut farmers to acquire knowledge of the different machines used in processing coconut by-products. A detailed illustration of the identified machines would enable familiarity by beginners and would complement on-site training activities on fiber, wood and shell works. Hence, this reference manual was compiled for use of project leaders, staff and other interested parties. This manual is specifically prepared to serve as reference and guide in helping coconut growing communities become familiar with the operation and maintenance of machineries and equipment used in the processing of coconut by-products from fiber; wood and shell; and in preparing confectionery products from coconut meat and milk. The contents of this manual on machineries, equipment and tools used in production of coconut by-products are presented under four major headings: fiber production; utilization of fiber; wood and shell works; and candy processing. This manual also includes the general safety considerations on the use of machineries and equipment.
Fiber production Fibres and dusts keep coconut husks sturdy. Separating the fibers and dusts requires the successive processes of beating and decortication using different types of machines. Beating breaks and loosens epidermis while decortication separates fiber and dusts. The process flow of the machines is shown below including its installation to an engine drive motor.
Beating machine The operation of the beating machine Coconut husks involves the application of force from the Beaten rotating impeller blade that beats and coconut drags coconut husks to the series of tool husks steel metal blocks strategically welded to the lower portion of the machine’s cylinder. As a result, beaten coconut husks have broken epidermis and loosened strands. Wetting with water and setting overnight before decortication renders the husks soft and pliant. The beating machine can beat 25 000– 30 000 coconut husks per day in continuous 8-hour operation. This volume is enough to supply a day’s operation of 3–4 decorticating machines. 118 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Decorticating Machine Beaten coconut In the decortication process, wet coconut husks are fed husks to the decorticating machine and dragged inside the cylinder consisting of multiple blades strategically welded to the rotating shaft assembly to a series of counter blades causing rapid separation of coir fibers and dusts. Fibers and dusts are discharged in separate outlets. The coir fiber is a slender thread-like material or filament which can be entwined to make single or double-ply ropes. The machine produces mixtures of long (12.7 cm or more) and short (6.35 cm to less than 12.7 cm) fibers. Potential market for coir fibers are manufacturers of upholstered cushions and mattresses, single rope, double rope, doormat, geotextiles, etc. Coir Coconut coir fibers are 100% natural; biodegradable; dust naturally golden brown in colour that fits any décor; hard Coir fibre and resilient fiber which provides excellent scrubbing action; high water retention; hard-wearing, rustic and elegant; moth and rot resistant; and good insulator of heat and sound. Other by-products are the coir dusts. These are natural, biodegradable residues consisting of fine particles sometimes resembling spongy grains or granules. Exposure to natural conditions such as rain and various weather conditions reduces salinity and conductivity. Coconut dusts which are sold in local and international markets in the form of bricks, blocks, and disks are used as growing/potting media or substrate for horticulture purposes and as soil conditioner. On the average, 10 coconut husks will produce 1 kg of fiber while continuous machine operation will yield 500–700 kg per day. Beating and decorticating machines available for sale (Vietnam and the Philippines) are already mounted on bedplate or base which is usually leveled. However, alignment of the machines, whether direct-coupled or belt-driven, should be checked prior to installation. For safety and convenience of work, installation of the machines should be in an exclusive location with an area of about 1000 square meters.
Utilization of fibre
Single-ply twining machine Coconut fibres are twisted into thread to produce “single-ply rope” using the single- ply twining machine. This portable machine is a simple, efficient and labor saving machine made of wooden frame with sets of pulley and round steel shafting that produce rotating force transmitted by means of belt-driven motor as shown in the figure. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 119
Production of single-ply rope begins with twisting about 20–25 fibers (approximately 3 mm) by hand and connecting it to the twister hook provided in the machine’s twister frame to mechanically continue twisting the fiber. Strong and smooth finished single- ply rope depends on the looseness or tightness of twist. Single-ply rope is used as raw material for making double- ply rope and other woven by- products or handicrafts such as mats, geotextile, floor rugs or carpets, decorative materials, and personal accessories.
Double-ply twining machine Consisting of a series of inter-connected pulleys through which rotating force is transmitted by means of belt-driven motor, the double-ply twining machine produces ‘double-ply rope’ by twisting two single-ply ropes. Double-ply rope is formed by connecting and entwining two single-ply ropes from the double-ply twining machine to a stationary wooden frame, each with separate sets of hooks. Strong and smooth finished double- ply rope depends on the looseness or tightness of twisted single-ply ropes. It is used in industrial purposes and other woven by-products or handicrafts like mats, geotextile, floor rugs or carpets and other decorative material, etc. On the average, 1 kg of fibers can be twisted into 105 m of double- ply rope. A worker can produce 70 kg or 7350 m of double-ply rope per day in a continuous 8-hour operation. The machine is installed opposite a stationary wooden frame having the same number of hooks, length and height in a 5 x 30 meters land area. Electrical lines and outlet must be ready for connection to the motor.
Doormat-making equipment Doormat made from coconut fiber requires simple and labour saving equipment made of rectangular wood with inlay of nails around and inside according to selected character design as shown in the figure. A double-ply rope or other knotted rope derived from coconut single-ply rope can be used as inlay materials. Doormats are made from single-ply rope used as inlay material to produce x-knotted style rope. Various character 120 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
designs can be selected for elegant, colorful, thick, and heavy-duty doormats. Doormats made of coconut fiber provide excellent scrubbing action and moisture absorption.
Processing coconut wood and shell by-products Products derived from coconut wood ranged from lumber/decorative walling materials to finely curved kitchen utensils and decorative items. Varieties of exquisitely designed and delicately finished handicrafts are also produced using coconut shells. This includes kitchen utensils, bowl, cups, ladles, pepper holders, spoon and fork, etc); decorative gift items (coin bank, lampshade, astray, paper weights, key holder, letter opener, etc); and ladies accessories (bags, belt, necklace, earrings, buttons, combs and hairclips). Wood and shell works such as cutting, curving, drilling, and finishing are done using various types and sizes of machines by or under supervision of a skilled or knowledgeable person.
Wood lathe machine A lathe machine is a powered rotary driving tool on which a faceplate or a spur centre is attached to a motor-driven spindle that revolves at adjustable speed. It is used to rotate stock for shaping, or polishing. It is also used as a holding jig for fluting, reeding, and drilling holes. Some lathes are made with a gap bed that provides a greater distance from centre to bed, or swing, permitting larger faceplate turnings. The lathe cuts on the principle of the cutting wedge. The work is mounted on the faceplate, screw chuck or between centres and is shaped by turning against chisels or special cutters. The wood lathe machine including supplemental equipment and tools such as drilling machine, bench grinder/polisher, and others require a shop area of at least 3 x 4 meters for proper positioning and comfortable movement of the operators. Electrical wirings and outlets must be installed prior to the connection of 0.5 to 3 hp motors in the shop.
Drill press machine The drill press machine is a powered rotary driving tool used for drilling or boring holes, and when used with various attachments, it substitutes as a sander, planer, shaper, router, and mortiser. Its capacity is determined by the distance (expressed in diameter) from centre of chuck to the column. The vertical power is applied through the hand wheel to a pinion gear, which engages a rack on the quill. Speed varies from 300 to 7000 rpm. Speed is controlled by shifting the drive belt on a set of cone pulleys, which operate on the principle of the wheel and axle. An example of a coconut wood by-product bore using a drill press machine is a pen holder measuring 12 cm long and 4 cm in diameter, (see Drill press machine CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 121
figure). The item requires multiple drilling (3 different sizes of drill bit) to make a 2.5 cm inside diameter and takes 15–18 minutes of normal operation to finish one piece by a skilled operator. Thirty-two (32) pieces of pen holders can be completely bore/produced per day in a continuous 8-hour operation. Penholder
Band Saw/Cutter Machine The band saw or cutter machine is an endless, flexible steel belt with rip teeth filed on one edge. It is used for cutting curves, re-sawing, crosscutting and ripping. The operation of the band saw works on the principle of a continuous set of cutting wedges. The flexible steel belt with rip teeth filed on one edge of the band saw moves at a speed ranging from 3000 to 5000 feet per minute (600 to 1200 wheel rpm). Pre-cutting of coconut wood to desired shapes using the band saw lessens the workload of a wood lathe and other machines. By-products ranged from lumber/decorative walling materials to finely curved kitchen utensils and decorative items.
Circular saw Another power- driven rotary cutting tool is the circular saw. It has toothed blade revolving at an arbor speed of approximately 3450 rpm. It is used in cutting stock, rabbets, grooves, dadoes, and tenons. The circular saw has several attachments: dado heads for cutting tenons, dadoes, grooves, and rabbets; tenoning for cutting tenons without the use of dado heads; molding heads for cutting moldings; length gauge, cutting several pieces of the same length; stop block, attached to the rip fence; and sanding disk for sanding convex curves on edges of stock. Products derived from coconut wood ranged from lumber as big as 20 feet in length are first cut in a circular saw to produce smaller sizes. An example of wood product cut using the circular saw is a stick measuring 25 x 2 x 0.75 cm thick. The item takes about 15 seconds to cut through, and will then be resized and used as a base stand of penholder. Cutting wood with a 21 cm width will produce four pieces of 5 cm width of stick (21:20). About 1920 pieces of this item stick could be produced per day in a continuous 8-hour operation. 122 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Jigsaw The jigsaw is a power-driven, toothed cutting tool reciprocating at speed of 600, 950, 1325, or 1750 strokes per minute. It is used for enclosed or open curves. Portable jigsaws as shown are best used for straight or irregular cutting jobs. A larger jigsaw can cut through a 2” x 4” piece in less than 15 seconds. Most hand jigsaws use orbital action (cutting the material on the up stroke and moving away from it on the down stroke). As the blade is drawn downward the teeth cut in the manner of a series of cutting wedges. Because of this, cutting speed is greatly increased and the saw cuts with clean edge. An example of product shaped by a jigsaw machine is a rectangular wood measuring 30 cm x 15 cm x 3 cm, which is cut on both sides before it is curved into a piece of ladle. It takes about one minute and 30 seconds to finish cutting a single item. Three-hundred twenty (320) pieces of cut wood could be produced per day in a continuous 8-hour operation.
Handsaw Handsaws include all hand-operated, special-purpose saws: crosscut saws and ripsaws. They are generally designed to cut across the grain of the wood or at an angle Coping Saw to the grain. Different types of handsaws have different types of cutting jobs: Hacksaw or crosscut saw, especially designed to cut boards to length; Panel saw, short, fine- toothed crosscut saw used for doing fine work; Ripsaw, for cutting along the grain of the wood; Compass saw, has rip teeth with a narrow blade so it can cut to a curve; Keyhole saw, is a fine compass saw; Veneer Keyhole Saw saw, has crosscut teeth on both edges used for cutting veneer; Backsaw, has fine crosscut teeth with a thin blade and a steel reinforcing bar on the back used for fine cutting or where a straight, even cut is required; Dovetail saw is similar to a backsaw, except that it has a thinner blade and straight handle, and is used for cutting dovetails and doing other fine work; and Coping saw, has a narrow blade with rip teeth used for cutting along a curve. The hacksaw or crosscut saw cuts both as a knife and a chisel. The extreme points on either side of the saw score parallel lines. As the sawing action continues, the cutting edge on the inside of the teeth comes in contact with the wood, shearing it out of the kerf. When the full bite is taken, the points of each tooth continue to score the outside of the kerf, and the sharpened, beveled sides of the teeth crumble and shear the wood left between the cutters. At each stroke, the sawdust is carried out of the kerf in the throat or gullet formed between the teeth of the saw. An example of coconut shell product curved using coping saw, as shown in the Figure, is a decorative flower measuring about 5 cm in CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 123
diameter and 3 mm thick. It takes 30 minutes to drill small holes and finish an item by skilled worker. Sixteen (16) pieces of the item product could be produced per day in a continuous 8-hour operation.
Grinder/Buffing machine A grinder machine is typically designed for sharpening, cutting, dressing, adjusting and shaping bevels. With proper attachments, it can also be used in smoothing or polishing metal and wood. A silicone carbide wheel attached to the grinder machine works with proper speed to sharpen metal tools and round off edges of metal. Nearly all cutting-edge tools can be sharpened on a power grinder. The grinding wheel turns from the top toward the tool rest and the cutting edge of the tool. This motion reduces the formation of a wire edge on the cutting edge of the tool and helps to hold the tool on the rest. An example of a product polished using a buffing machine is a bowl cat, (see figure). Made from coconut shell, the bowl cat measuring 25 x 6 x 9 cm is polished using a Bowl cat sanding disk. Grinder/buffing machine
Adjustable holding tools Adjustable holding tools carry important aspects in the operation of hand saws, portable jigsaw and similar tools for cutting, grinding, drilling, attaching and gluing wood works. These tools Bench vise include: hand screw, Hand screw designed for holding stock under pressure; bench vise, ensuring a firm grip on the work; C-clamps, securing small piece of work; and bar clamps, used in clamping wide, glued-up sections and in holding parts in assembly. The hand screw works on the principle of the screw and lever, which is designed for holding stock under pressure. The two jaws are adjusted for size opening by simultaneously revolving the two spindles. Compression is applied by tightening the middle spindle. Tightening the end spindle causes the jaws to pivot on the middle spindle, resulting in leverage and additional compression at the open end of the jaws. 124 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Processing coconut–based candies Confectioneries and candies are major alternative sources of income derived from processing fresh coconut meat and milk. Preparation of candy products is enhanced using motor-powered equipment and tools, which can be installed separately or alongside each other on a community-basis. Some of commonly used machines and equipment are discussed below:
Mechanical coconut grater The mechanical coconut grater has a cast iron metal toothed-blade for cutting or grating meat of moderately mature to mature coconuts into coarse or fine texture. Depending on the recipe, grating coconut is a preliminary process for most cooking preparations or in extracting milk as a major ingredient in caramel or toffee. The depth and sharpness of blades affect texture of grated coconut. Depending on the skill of the operator or worker, the mechanical grater can yield an average of 15 kg of grated coconut per hour of operation. The grater measures 70 x 50 x 100 cm and is powered by a 1/2 hp motor engine (220 volts) with 1800 rpm.
Mechanical coconut stripper Some pastry and candy preparations require stripped coconuts, which have soft to moderately soft texture. The stripper cuts moderately mature coconut into strips using the stainless steel dome- blade assembly with slightly protruded perforation attached to a rotating shaft. Depending on the skill of the operator, the mechanical coconut stripper can yield 30–40 coconuts per hour operation.
Coconut scooper Taking the meat of soft to moderately soft coconuts from shell requires a slightly bent cast-iron blade mounted in a wooden bench. Before cutting or shredding into desired size or grinded into uniform texture, pulp of scooped coconut is removed using sharp knife or peeler. Depending on the skill of the operator, about 400 moderately young coconuts can be scooped in a continuous 8 hour operation. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 125
Multipurpose grinder Household food preparations oftentimes involve breaking down cereals, meat and other ingredients such as coconut into uniform consistency and texture using a mechanical grinder. Dry or wet ingredient is fed to the hopper and gently pushed towards the plate blades attached to the rotating shaft. Processed ingredient is discharged through an outlet at the bottom. The hopper can contain an average of 5 kg of ingredient at one loading.
Coconut milk extractor/expeller Milk is extracted by pressing grated coconuts in between two metal plates as the threaded metal bar is screwed downwards. A metal screen filters the milk as it drains in the pan. A pair of 10” – metal plate can press or expel milk from 10–20 grated coconuts at one time.
Mechanical mixer/stirrer Continuous mixing of coconut milk candy preparation by mechanical means, gives balanced consistency and texture of cooked mixture. The mechanical mixer used for processing coconut milk-based candies is a wheel and axle machine that operates like a drilling machine. The vertical power from the engine motor is applied through the pulley which propels the mixing blade fastened at the tip of the spindle. Cooking time using the mechanical mixer/stirrer depends on volume and desired consistency of coconut milk and sugar mixture. The mechanical mixer can be set up for both small and large capacity boilers. At most, 20 liters of coconut milk and sugar mixture can be stirred using the machine.
Furnace/heavy duty gas stove The number of furnace or stoves used in the cooking process of coconut-based candies depends on the scale of production. For small-scale business, at least, one big furnace is needed. There are two common types of furnace: The close-type furnace, in which the opening has removable iron rings for accommodating different sizes of boilers, is made of concrete cement mixture and iron bar support. It has also a chimney for 126 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
exhausting smoke. Meanwhile, the open furnace consists of used steel drums mounted in concrete mixture with iron bar supports. Enough fuel wood for one cooking is provided before the boiler is set. Convenient and smoke-free cooking especially for coconut milk-based preparation can be achieved using heavy duty stove using Light Petroleum Gas (LPG). Commercial models available in the market have different sizes and number of burners. These stoves, however, can be locally fabricated to fit the needs of the household or village. The recommended capacity of an LPG tank is 11 kg. Available models of heavy duty gas stove vary in size and number of burners.
Form holders and moulders Sweet delicacies or confectioners from coconut come as crunchy caramel, toffee balls, bars or as jam and spread. Efficiency in cutting candy mixture is increased using form holders or wooden moulds which could be flat containers such as trays or rimmed tables for cooling coconut candy preparation prior to cutting and packaging.
Utensils and other materials Kitchen utensils and other materials used in candy making include boiler, paddle or wooden spoon, parer, weighing scale, working table, candy wrapper, candy packer, sealer, hand gloves and packing bags or cartons.
Candy packer and packing bags (plastic)
Candy wrapper and hand gloves Electric sealer CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 127
General safety considerations Your personal safety is your own responsibility. Machines may cause accidents but man has control over them to prevent these accidents. For your own personal safety when working in the shop, observe and practice the following:
1. Loose sleeve cuffs are dangerous especially when you work in shops where machines are in constant motion. Roll them up above your elbow while in the shop.
2. Keep your hair short. If you wear long hair, confine it in a hat, cap or hair net. Do not let it hang loose, as it might get caught by moving machinery, power transmission apparatus or moving parts.
3. Do not walk around barefooted. Wear your work shoes, preferably those with thick soles to protect you against sharp objects such as screws or metal shaving bits.
4. Protect your eyes by wearing goggles or spectacles with side shields when sawing, scraping or performing any activity where chips or flying objects might hit your eye. 128 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
5. Wear a mask or respirator when working in a dusty area and/or with chemicals such as varnishes, adhesives and paints.
6. Do not wear loose clothing, neckties, rings, bracelets or other apparel that may become entangled in moving machinery, power transmission apparatus or moving parts. Be sure your helpers or those in close proximity with your machine do not wear such items too.
7. Wear a workshop man’s overalls or any clothing that fits well and lets you move about comfortably.
8. Be sure you are an authorized person to operate and maintain shop equipment and that you have received adequate training and instruction on them. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 129
Production of high-value coconut fibre-based products
Vo Van Long1 and Rodolfo E. Coronel2 1Coconut Scientist, Oil Plant Institute (OPI), Vietnam 2Training Assistant, COGENT, IPGRI Regional Office for Asia, the Pacific and Oceania, Serdang, Selangor DE, Malaysia
Introduction This section presents the steps and procedures to produce several high-value products from coconut fibre. The procedures are simple and can be easily followed by the farmers, women and even the youth. Machinery and equipment used are simple and can be easily fabricated in the coconut growing communities or purchased from local machine shops and hardware stores. The technology presented provides opportunity for idle community labour force, including women and the youth, to be productive and generate income by producing ropes, mats, geotextile, pots and others, using the husk that are otherwise burnt or left in the field to rot. This section also features several coconut fibre-based products that can be produced, including several designs when applicable. Pictures of various stages of production of each product are presented as well as the various machinery, equipment and tools being used. The efficiency of production and economic costs and returns are likewise shown using data from Vietnam as reference. Coir fibre is the fibrous material extracted from the coconut husk. Coir extracted from green immature husk is used in the preparation of yarn, cordage (rope), and a wide range of furnishing materials such as foot mats, matting, rugs, carpets and specialty items. The mature nut yield brown fibre and is a by-product of copra or desiccated coconut production. It is used in the manufacture of brushes, curdle coir for filling upholstery, and rubberized coir products which serve as bed mattress, cushioning blocks, air filters, and packaging materials. The later requires sophisticated equipment and bigger capitalization. What are featured here, however, are those that can be made at the household level requiring small capital and simple tools and equipment. A by-product of extracting fibres from the coconut husks is called coco peat. It is popularly used in horticultural substrate cultivation and medium for propagation of ornamental plants. If the farmers are not inclined to sell the coco peat, they could be used as soil conditioner and organic fertilizer when fully decomposed.
Illustrative production process of sample coconut fibre-based products
Single-ply rope Single-ply rope is the basic material used in a variety of products out of coconut fibres, like door mats, geotextile nets, carpets and rugs. A farmer or a member of his/her household including children can produce single- ply rope at home. A kilogram of coconut fibres can produce 130 meters of 5 mm rope. A worker can earn from 1200–1400 VND (US$ 0.08–0.10) per kg of single-ply rope. At an average efficiency of 182 kg of single-ply rope per day, a worker can earn from 21 600 to 25 200 VND a day (US$1.40–1.64). Single-ply rope can be sold to cooperatives, private enterprises that are producing mats, geotextile nets, coco-log, double-ply ropes and other fibre-based products. 130 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Production procedure
1. Put primer first from 2. The primer then is 3. Start twisting the string horizontal axis through threaded through a hole on from coconut fibres with relevant position the frame motor/or manual twining machine
4. Continue to feed coconut 5. Rewind the coconut single 6. Take the rotating tool with fibre to make single-ply rope ropes from horizontal axis full single rope out with enough twist with a rotating tool
7. Disassemble the rotating 8. Secure the final product in Final product. Rolls of tool to collect coconut single- roll by tying with plastic twine single-ply coconut fibre ropes ply rope in full form (around 10 kg/roll CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 131
Machinery and equipment for producing single-ply rope
Single-ply rope making equipment Ð manual & Single-ply rope making equipment with motor motor combined (wooden frame) (metal frame)
Twin-single-ply rope equipment with motor
Estimated cost of equipment to produce single rope A wooden framed and manually operated single-ply rope-making machine costs about 300 000–350 000 VND (US$19.50–22.70) each. This equipment can be produced locally in coconut processing communities. 132 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Double-ply rope It is used mostly in Hop Industry and in making textiles. It can also be used similar with single-ply rope, i.e. in making geotextile net and coco-log, as a sturdy or strong material to stabilize the soil and control soil erosion. The estimated output in producing double-ply rope at the household level is 80 kg per worker per 8–hour work. The average selling price is 4000 VND per kg. With the average cost of production of 3000 VND, a farmer/worker can earn 80 000 VND in a day or roughly US$5.20.
Production procedure
1. Stretch two separate 2. Fix one end of the twin- 3. Start the twister with strings of coconut single-ply string in a rotational hook of rotational hooks run by motor rope to 20-30 m far then put twister 1/4 HP or manually them together
4. Continue running the 5. Then put double ropes out 6. Collect coconut double-ply twister until the two-ply ropes ropes. are sufficiently twisted
Finished product. Coconut double-ply ropes CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 133
Machinery and equipment
Side view of the simple rope-twisting equipment with motor
Close-up of the rotating hook of the twister
Estimated cost of equipment to produce double-ply rope Twister with motor: 300 000 VND (US$19.50). This equipment is produced locally in coconut processing communities. Manually operated twister can be fabricated by the farmers themselves. 134 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Doormat Doormat making out of coconut fibres is basically a home-based industry and done manually. Mechanical production is, however, possible but requires bigger capitalization. The mats can be made in many designs, shapes, sizes and colours depending on the requirement of the customer. Doormats are usually used at entrances to wipe dirt from the shoes or feet. They can also be used as decorations, especially those with unique designs and colours.
Production procedure
1. Assemble the wooden 2. Put coconut single-ply rope 3. Weave coconut single-ply frame and put iron bars (¯8) with desired colours along rope in zigzags through the into appropriate holes in the with iron bars alternately on iron bars wooden frame the frame
5. Weave coconut single-ply 6. Take the doormat with iron 7. Then withdraw the iron bars rope (5 mm diameter) with bars out of the wooden frame one by one from their position different colours (natural and replace them with colour or bleached colour) coconut single-ply rope by depending on design using a steel needle or steel preference string with hole at the end. The single-ply rope replacement is attached to the needle or to the steel string.
8. Prepare the surface of the doormat by cutting protruding fibres with scissors Final product. Doormat with design CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 135
On the average, a worker can produce 8 pieces of doormat per day and can earn 17 600 VND or US$1.14 a day. On the other hand, if he/she produces and sells the product by him/herself, he/she can earn 5000 VND per piece or 40 000 VND (US$2.60) for a daily production based on doormat sale of 8000 VND/pc and cost of production at 3000 VND.
Tools and equipment In addition to ordinary medium-sized scissor and big steel needle or steel string about a foot long, below are two types of wooden frame.
Simple equipment to produce doormat: Another kind of doormat wooden frame wooden frame with the iron bars
Estimated cost of equipment to produce doormat The wooden frame including the iron bars costs around 100 000–200 000 VND (US$6.50– 13.00) per frame depending on type of the frame. This equipment is produced locally in coconut processing communities.
Animal-shaped doormat Animal-shaped doormat is another coconut-based product that can be used either for wall decor or as a mat for wiping mud, etc. from the shoes. Coconut fibre-based animal- shaped doormats in Vietnam are popular among local and foreign tourists and for export market for decoration purposes. One doormat maker can produce an average of 10 animal-shaped doormats in 8 hours. The estimated cost of materials and labour per piece of doormat is US$0.45 and US$0.12, respectively. The average total production cost is US$0.57. With the selling price of US$0.78, one can have a gross profit of US$0.21 per piece or US$2.10 per day. Animal-shaped doormats are being sold in handicraft and souvenir shops, flea-markets, department stores and general merchandize shops. 136 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Production procedure
1. Prepare twin-ropes from Twin-ropes in rolls ready for 2. Put the twin ropes into the jute rope and coconut rope animal-shaped doormat frame following the shape of with a length of 4Ð5 meters production the animal. Use coloured twin-ropes at the border first and secure them into the shape using nail and hammer
3. Continue weaving the twin- 4. When the doormat is Finished products. ropes into the ‘inside’ of the completed, use big needle Various designs of animal- desired shape. Insert with jute rope to saw the shaped doormat coloured twin-ropes at doormat horizontally and relevant portion. Use nail and vertically so that the shape hammer as necessary to will not fall apart when taken make the weave secured and out of the frame. After compact. Remove nails as sawing, pull the doormat out the next twin-ropes is weaved of the wooden frame. Trim into the portion of the shape the mat by cutting protruding fibres.
Tools and equipment
Equipment to produce animal- shaped doormat include wooden frame (shown at right) with nails/ spikes driven on shaped lines. Other tools are hammer, scissors and big needle. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 137
Estimated cost of tools and equipment to produce animal-shaped doormat • Wooden frame – around 30 000 VND (US$19.50) This equipment is produced locally in coconut processing communities • Hammer – 10 000 VND (US$0.65) • Scissors – 10 000 VND (US$0.65) • Needle – 6000 VND (US$0.40)
Snowmat This is another kind of mat produced using mechanical wooden loom. Snow mats are particularly exported to countries experiencing snow fall. They are used at the entrance to wipe snow from the shoes.
Production procedure
1. Thread coconut single 2. Use shuttle with single 3. Cut the surface after each ropes and double ropes on a ropes to weave by hand action of the shuttle along loom with iron bar
A long snowmat 4. Cut the snowmat upside 5. Secure two ends of a down into pieces with desired snowmat by using a needle length with jute rope
6. Use scissors to cut long 7. Sun-dry the mats. Finished product. fibres on the surface to Snowmats with different sizes smoothen looks 138 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Other snowmat designs (painted/dyed)
A skilled worker can produce 10 snowmats per day. At 2000 VND per piece, a worker earns 20 000 VND (US$1.30). One snowmat sells at ex-factory price of 8000 VND (Binh Dinh Province). With total production cost of 5850 VND, including labour, manufacturer earns 2150 VND per piece or 21 500 VND (US$1.40) per worker output per day.
Estimated cost of tools and equipment to produce snowmat • Wooden loom – Around 800 000–100 0000 VND (US$52–65). This equipment is produced locally in coconut processing communities in Vietnam (Hoai Nhon district, Binh Dinh province). • Scissors – 10 000 VND (US$0.65) • Needle – 6000 VND (US$0.40) • Steel brush – 16 000 VND (US$1.04) • Steel knife – 15 000 VND (US$0.97)
Geotextile Geotextiles are made of coconut fibres or yarns interweaved manually or mechanically to produce net of varying sizes depending on the customer preferences. Geotextiles are used to stabilize soil and control soil erosion. They are commonly used by companies constructing or maintaining roads, railway tracks, irrigation canals and dikes, and structures near sloping lands.
Production procedure
1. Feed coconut single-ply 2. Stretch coconut double-ply 3. Place geotextile making rope on the shuttle ropes of 20 meters length frame with the double ropes with two ends fixed by nails in right position approximately 1 inch apart (or depending on the size required) CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 139
4. Move the wooden frame forward-backward 5. Change position of the two layers of double- while changing position of the two layers of ply rope by putting shuttle between them to strings release single-ply rope
6. Adjust size of the net using A piece of the geotextile Finished product. the fingers as the ‘guide’. Geotextiles in rolls ready for selling
Tools and equipment
Simple geotextile making equipment: wooden frame with two shuttles cost about 200 000–250 000 VND (US$13.00– 16.20). This equipment can be produced locally in the coconut processing communities.
A pair of skilled workers can produce 6 rolls of geotextiles in a day and earn 21 000 VND each (US$1.36). The cost of fibres per 20 sq m roll with single-ply rope in shuttle is 30 000 VND (US$1.95) and sells at 50 000 VND (US$3.25). The cost of materials with double-ply rope in shuttle is 60 000 VND (US$3.90) and sells at 100 000 VND (US$6.50). 140 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Manufacturer can earn 13 000 VND (US$0.84) per roll for single-ply rope in shuttle or 78 000 VND (US$5.04) for a day’s production of a pair of skilled workers. With double-ply rope in shuttle, a manufacturer can earn 33 000 VND (US$2.15) per roll or 198 000 VND (US$12.85) for a daily production from a pair of workers.
Other samples of high-value coconut fibre-based products3
Sowing pot Coconut fibre-based sowing pots are commonly used in nurseries for growing seedlings. It is advisable to use because it is organic. Seedlings can be transplanted to the ground with the pot in it and the seedlings’ roots will not be disturbed unnecessarily. And because it is organic, it will eventually decompose and serves as soil conditioner. 1. Wind a single-ply rope in itself to form a plate and then continue winding along a shape made of any materials 2. Wind until the desired height is reached 3. Remove the winded rope from the shape 1 2 4. Then using a needle with nylon thread, sew across the rings of rope to fix and hold the pot shape in place.
A worker can produce an average of 25 pieces of pots at 750 VND/piece earning a daily wage 4 3 of 18 750 VND (US$1.22). The total cost is 870 VND including 120 VND for materials. With an average selling price of 2500 VND per piece, a manufacturer earns 1630 VND per piece or a total of 40 750 VND ($2.65) from the output of a worker per day.
Seedling pot It is similar with the purpose 1 2 3 the sowing pot is used for, except that it can accommodate bigger seedlings. It is made up of fibres with latex. Specially made wooden mould with ‘in- part’ and ‘out-part’ are used. 1. Using the ‘in-part’, cut the 5 4 fibre to be used as the base of the pot 2. Then using the ‘out-part’, cut the fibre to be used as the wall 3. Put the cut fibres as base and wall to the ‘out-part’. Then put the ‘in-part’ mould 4. Use hammer to press the ‘in-part’ 5. After pressing, remove the ‘in-part’ and take out the seedling pot.
A farmer/worker can produce an average of 150 pieces of seedling pots giving him/ her a potential income of 24 000 VND (US$1.60) per day.
3 More coconut fibre-based high-value products are available in the COGENT’s “Manual on the Production of Coconut Fibre-based High-value Products”. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 141
Production of high-value coconut wood-based products
Vo Van Long1 and Rodolfo E. Coronel2 1Coconut Scientist, Oil Plant Institute (OPI), Vietnam 2Training Assistant, COGENT, IPGRI Regional Office for Asia, the Pacific and Oceania, Serdang, Selangor DE, Malaysia
Introduction The coconut tree is commonly referred to as the ‘Tree of Life’ because of the many uses and products that can be derived from all its parts. Although cutting coconut trees for timber is not encouraged, for practical reasons, old and unproductive trees for replacement have to be felled and utilized productively. Processing the felled tree trunk into unique and elegantly designed wood-based products in place of hardwood adds value to using coconut wood. This section presents illustrative step-by-step procedures in making several high- value products from coconut wood. The procedures are simple and easy to follow. Some products, though, require appropriate machinery and equipment. These are also featured here. These machinery and equipment can be commonly found in hardware stores and/or machine shops. Although the techniques presented cover a variety of products such as vases, chopsticks, bowls and trays, the basic principles can be applied in producing similar items or products. The simple economics of production or costs and returns are likewise shown using data from Vietnam as reference.
Production process The basic steps are simple. While production process may require machineries and equipment, one can easily learn the techniques with appropriate guidance from a skilled worker. The following are the basic steps in production, keeping in mind that there are products that require additional or lesser step(s) in the process.
Drawing the pattern (i.e., spoon, fork, cigarette box), but not applicable to products where lathing is required (i.e., vase, bowl, toothpick box, ashtray)
Cutting the coconut wood according to the product to be produced, as well as its size and design
Shaping, either manually, by lathe machine or electric saw
Polishing manually or using a machine
Setting and finishing (application of varnish)
Packaging 142 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Machinery, tools and equipment used in producing high-value coconut wood products
Lathe machine (worth 5 million VND or Another type of a lathe machine US$325) used for shaping wood
Combined electric saw and polisher Ð Smaller version of an electric polisher Ð 600 000 VND ($39Ð40) 500 000 VND ($32.50)
Another type of combined electric saw and Other tools: chisel, pliers, hammer, small crowbar, polisher clamp, saw, nails CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 143
Illustrative process of production of sample products
Rice bowl Primarily, it is used as a decorative item at table top or at the shelf. It is functional also as container for small household or office items, i.e. paper clips, coins, candies, buttons, keys, etc. On other occasions, it is also used as rice bowl as the name implies.
Production procedure
Cut coconut logs into Lathe the wooden blocks … … until outside is round… 10x10x10 cm blocks using electric saw
… as well as the inside Lathe out base and then Final products: Rice bowls of polish. Use varnish for glossy different sizes finish depending on the preference of the buyer
A skilled worker/farmer can produce about 10 pieces of rice bowl per day. With a labour fee of 4000 VND (US$0.26) per piece, a worker earns 40 000 VND (US$2.60) per day. The cost of materials and power per piece is 7000 VND (US$0.45). With an average total production costs of 11 000 VND ($0.71) and a selling price of 15 000 VND (US$0.97), a manufacturer can still earn 4000 VND per piece or 40 000 VND (US$2.60) from the output of a single worker per day. 144 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Chopsticks Commonly used in for eating, chopsticks are most popular among Chinese, Japanese and Koreans.
Production procedure
Cut 25x25x1 cm wooden Saw dressed timber into Saw each piece into two plates from coconut timber pieces with 2.0 cm width separate chopsticks using an electric saw
Polish each chopstick: one Package the chopsticks using Finished products end rounded and the other appropriate materials such as end squared and slightly plastic, box, etc. thicker.
A skilled worker can finish 60 pairs a day. At 300 VND per pair, a worker can earn 18 000 VND (US$1.20) daily. The total production cost per pair is 700 VND. With a selling price of 8000 VND per 10 pairs (800/pair), the manufacturer can still earn 100 VND/pair or 6000 VND (US$0.39) from the output of a single worker per day. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 145
Spoon Like chopsticks, a spoon is used for eating. Large-sized spoon made of coconut wood can also be used as cooking utensil or as decorative item.
Production procedure
Clamp coconut timber onto a Cut the drawn part out of the Cut/curve the deep-set part stable wooden frame and coconut timber by using a of drawn timber draw figures of spoon on it hand saw following up the drawn shape of spoon
Polish the raw spoons with Apply varnish Finished products an electric polisher
A worker can produce 20 pieces of spoon in a day. At a labour rate basis of 1000 VND/ pc, a worker can earn 20 000 VND (US$1.30) a day. The total cost of production including materials and power is 2500 VND/pc. With the estimated selling price of 3000 VND/ pc, a manufacturer can earn 500 VND/pc or 10 000 VND (US$0.65) out of the output of one labourer per day. 146 POVERTY REDUCTION IN COCONUT GROWING COMMUNITIES, VOLUME II
Toothpick box/holder Used for holding toothpick and also as decorative item for table tops and shelves.
Production procedure
Cut coconut wood into blocks Put coconut wood blocks Drill a hole for the ‘box’ (5x5x20 cm) in lathe machine
Make the cover of the box Cut body of the box from its Cut the cover from the rest of using the same wood block cover the wood block. Polish and apply varnish
Sample toothpick boxes
Skilled worker can produce an average of 15 toothpick boxes a day. At a piece-rate basis of 2500 VND, a labourer earns 37 500 VND (US$2.44). The total cost of production per piece including materials and power is 6000 VND (US$0.39). At a selling price of 8000 VND (US$ 0.52) a pc, a manufacturer can earn 30 000 VND (US$1.95) per labourer output per day. CHAPTER 2: SUPPORTING STRATEGIES AND TECHNOLOGIES 147
Serving tray Coconut wood-based tray can be used as serving tray for coffee and other food items. It can also be used as container for fruits at the dining table or double as container for household items at the shelf and as decorative item, especially those that are elegantly designed.
Production procedure Making coconut wood based tray is quite simple and easy. The coconut trunk is cut into lumber slabs or boards using electric saw. Then the board is further cut into desired sizes and shapes based on the preferred design of the tray using hand saw. The cut parts, base, and sidings, are then polished using electric polisher to smoothen the surfaces.
Assembling the parts followed using small nails, hammer and wood glue or similar adhesive. Once assembling is done, varnish is applied for shiny and glossy finish.
Various designs of coconut wood-based tray
A skilled worker can finish about 7 trays in a day. At 3000 VND per tray, a labourer earns 21 000 VND (US$1.36)/day. The total production cost, including materials and power is 6200 VND/tray. At a selling price of 18 000 VND (US$1.17) per tray, a manufacturer earns 11 800 VND/tray (US$0.77) or 82 600 VND (US$5.36) from the output of a worker per day.