200 March 2001 Journalof FoodDistribution Research
Infrastructure Needs Assessment Kong or Japan to Manila is about $1500 per 40- for Distribution of Frozen foot container while from Manila to Cebu the cost is $1800 to $2000 per 40-foot container. Third, Processed Potato Products although Manila and Cebu have moder seaports, in Southeast Asian Countries the port in Bacolod is incapable of handling 40-foot containers. Because the seafood industry in Ba- Victoria Salin, Rodolfo Nayga, Catherine colod is declining, cold storage and port facilities Viator, Wuyi Fang, and Wipon Aiew have not been developed It was also noticed that Texas A&M University traffic congestion is a serious problem in Manila Department of Agricultural Economics and makes inter-city deliveries more difficult. Compared with the Philippines, Thailand has The purpose of this project is to assess the less severe problems in distributing frozen proc- commercial feasibility of investments in cold chain essed potato products from ports to secondary infrastructure improvement needed to distribute cities. Private cold storage facilities (owned by frozen foods in and beyond major cities in Thailand frozen food exporters and importers, including an and the Philippines. Quick-serve restaurants and importer of french fries) are modernized and can US shippers have successfully penetrated the major meet strict quality standards. In addition, the ca- urban centers of Manila and Bangkok. Growth op- pacity is enough to satisfy current demand. There portunities are expected in the secondary cities. The is only one public cold storage available in the objectives of this project are to: Bangkok area and none in the other cities visited because of lack of demand. Ports in Thailand and (1) develop pilot projects illustrating business Laem Chabang have good facilities to handle im- opportunities with commercial potential in the ports and exports of frozen food products. Thai- infrastructure needed for transportation and land has a well-built highway system connecting handling of frozen foods to secondary cities in the Bangkok ports to secondary cities. the Philippines and Thailand; and Cold storage companies in both countries cited high electricity costs as a major problem. In (2) draw conclusions about feasibility of projects, some of the secondary cities in the Philippines using risk analysis based on economic condi- (Cebu City, Bacolod City) and Thailand (Phuket), tions and institutional constraints. electricity blackouts and erratic voltage are also a constraint. A research team visited the capital cities and major secondary cities in the Philippines and Thai- Proposed Pilot Projects land during May and June 2000. While there, ap- proximately 80 companies were interviewed in- Proposed projects in the Philippines include: cluding cold storage businesses, transportation service companies (shipping lines and trucking and (1) Construction of new public cold storage ware- railway cargo service companies), port authorities, houses in Cebu City and Cagayan de Oro. frozen food companies, quick service restaurants, (2) Add more outlets to an inter-island vessel to banks, and government officials. accommodate a larger volume of refrigerated containers. Current Situation in Cold Chain Infrastructure Proposed projects in Thailand include:
The main issue in distributing frozen proc- (1) Construction of a new public cold storage essed potato products in the Philippines is insuffi- warehouse in Phuket. cient quality cold storage, especially in secondary cities such as Bacolod and Cebu. The expensive (2) Expansion of reefer van fleet in Phuket. inter island shipping cost from Manila to secondary cities is another bottleneck. Freight rates of inter The preliminary financial analysis and risk as- island shipping are higher than international ship- sessment for the proposed projects is available if ping charges. For example, the cost from Hong potential investors are interested. Research Updates 201
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o 50 100C icPIONc S An Lemh~o~r~tnonrmC~n gwcProj..tro SPNufR
Figure 1. Shaded Relief Map of the Philippines.
Source: PCL Map Collection. The University of Texas at Austin. "World Atlas and Maps: Shaded Relief Map of the Philippines."
Figure 2. Shaded Relief Map of Thailand.
Source: PCL Map Collection. The University of Texas at Austin. "World Atlas and Maps: Shaded Relief Map of Thailand."
Summary the Cooperative. The management team addressed problems and handled day-to-day business activities The project team feels that the market is well in a unified, methodical way. The Cooperative ac- developed and will continue to expand in the Phil- quired capital and purchased necessary startup ippines. Investment in cold storage warehouses in equipment, such as a refrigerated trailer, cutting ma- Cebu City and Cagayan de Oro and adding more chines and wash sinks. The Cooperative developed a outlets on inter-island vessels in the Philippines good working relationship with the Food Service will be feasible given its declining tariffs, market Director for the Gadsden County School District by situation, and competition. The level of capacity providing high-quality produce, prompt deliveries, utilization is critical to the financial returns ex- fair prices, and courteous professionalism. The pected on the cold storage investments. vending experiences of the 1997/98 and 1998/99 Cold chain infrastructure in Thailand is basi- school years were positive steps for the Cooperative cally sufficient to meet the current distribution in building a long term, reputable business. The Co- needs of frozen processed potatoes. Thai consumer operative's main product was fresh-cut leafy greens, acceptance of western-style quick-serve restaurant but watermelons, strawberries, blackberries, and foods is lower than the level observed in the Phil- muscadine grapes were also sold. Word of mouth ippines. However, it is possible that extra cold stor- advertising has portrayed the Cooperative as a repu- age in Phuket and trucking fleets near ports could table vendor and opened doors of opportunity in help improve the efficiency of distribution if the other school districts, including Jackson, Leon, and demand increases in the near future. Walton Counties. The project's objectives for the 2000/2001 Innovative Marketing school year are to expand current marketing and distribution of agricultural and value-added prod- Opportunities for Small Farmers: ucts through additional, non-traditional marketing Local Schools as Customers channels including additional school districts, military bases, and prisons. Dan Schofer Agricultural Marketing Service Innovative Production and Marketing U.S. Department of Agriculture Systems to Provide Small Farmers with The U.S. Department of Agriculture's (USDA) Sustainable Job and Income Opportunities Agricultural Marketing Services (AMS) and the Natural Resources Conservation Services (NRCS), S. Sink, C. Coale, G. Haugh, and D. Reaves the West Florida Resource Conservation and Devel- Virgnia Polytechnic Institute and State University opment Council (WFRCDC), and the Small Farmer Outreach, Training, and Technical Assistance Proj- Objectives ect, Florida A&M University (FAMU) have worked * Identify markets for various horticultural and together over the past 3 years on a pilot project ti- value-added products and services tled: Innovative Marketing Opportunitiesfor Small Farmers: Local Schools as Customers. A group of * Develop production scenarios to support small farmers in the Florida Panhandle organized identified market demand into the New North Florida Cooperative and estab- * Develop integrated production, handling, and lished a central location in Marianna, FL, 70 miles storage systems to support vertical market op- west of Tallahassee. The Cooperative recognized a portunities considerable opportunity in serving local school districts with fresh agricultural products. * Estimate cost and revenue streams for se- The Cooperative overcame initial difficulties, lected value-added products and services including lack of organization, economic difficulties, * Evaluate project's effectiveness and contribu- social attitudes, existing customer preferences, and tion to small farmer sustainability lack of equipment. Realizing that effective organi- zation was critical, these limited-resource growers This project is a two-year cooperative agree- formed a management team as a governing body for ment with the U.S. Department of Agriculture, and