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Tawilis Supply Chain in Taal Lake, Batangas, Philippines

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Tawilis Supply Chain in Taal Lake, Batangas, Philippines Tawilis Supply Chain in Taal Lake, Batangas, Philippines: An Investigation about the Current Value Adding Processes and Governance of the Bottled Tawilis Supply Chain RESEARCH REPORT MST 80433 Thesis Management Studies Cynthia V. Almazan Wagenigen, The Netherlands 2010 Tawilis Supply Chain in Taal Lake, Batangas, Philippines: An Investigation about the Current Value Adding Processes and Governance of the Bottled Tawilis Supply Chain Research Report for a M.Sc. Thesis (MST 80433 – 33 ECTS) Management Studies Group of Wageningen University Prepared by: Cynthia V. Almazan M.Sc. Student, 710213-012-080 Scientific Advisor: Dr. Jaques Trienekens 2nd Scientific Advisor: Dr. Jos Bijman Wageningen University Wageningen, The Netherlands August 18, 2010 ABSTRACT This study aims to investigate how the value adding processes and governance mechanisms in the bottled tawilis supply chain may stimulate a better balance between people, profit and planet. A case study was done which focused on the analysis of bottled tawilis supply chain in terms of its value adding processes, governance mechanisms and consequences for sustainability of the chain. Primary data was collected through survey. A semi-structured questionnaire was used and interviews were carried out with tawilis fishermen, middlemen and processors. The study assumed that contracts can be use as a governance mechanism that may stimulate a better balance between people, profit and planet in the bottled tawilis supply chain. Several hypotheses have been tested using the Pearson Correlation Analysis. Factors affecting the way contracts were undertaken between chain actors includes: domestic demand for fresh tawilis; sources of alternative credit facilities; access to market information; chain actors’ market and bargaining power and enforcement of law. Among the factors that might influence the bottled tawilis supply chain actors in practicing value adding processes and the transaction among them that may help stimulate the balance between people, profit and planet issues in tawilis fishery were: (a) fishermen’s trust, commitment and conflict to middlemen, (b) chain actor’s preference for a contract, (c) chain actors’ perception in tawilis degradation and (d) lack of size restriction on tawilis to be traded. The recommendations to address the sustainability issues in the bottled tawilis supply chain are as follows: (a) terms of contracts between processors and middlemen should include minimum and uniform (right) size requirement for fish, quality (freshness), delivery time and terms of payment; (b) terms of contract between gillnet operators and processors should include minimum and uniform (right) size requirement for fish, recommended mesh size for gillnet, quality (freshness), delivery time, terms of payment, provision of ice and/or fishing gears; (c) the government should strictly enforce the law on the total banning of illegal fishing gears, in addition, there should be a law on the size restriction of tawilis to be traded; (d) there should be a continuous and intensive information campaign regarding the sustainability of the tawilis fishery; and (e) there should be an additional livelihood for fishermen crew such as poultry, hog and livestock production. Keywords: Supply chain management, governance mechanisms, sustainability, tawilis, Philippines Tawilis Supply Chain in Taal Lake, Batangas, Philippines: An Investigation about the Current Value Adding Processes and Governance of the Bottled Tawilis Supply Chain Preface/Acknowledgements This research was conducted at the chair group Management Studies of Wageningen University, the Netherlands to fulfill the course requirement of Thesis Management Studies (MST 80433). I would like to take this opportunity to thank those who made this thesis possible. I owe my deepest gratitude to my scientific advisor, Dr. Jaques Trienekens, whose expertise, guidance and encouragements have inspired and challenged me throughout this research. I would also like to express my warm gratitude to my second advisor, Dr. Jos Bijman, for his valuable feedback to improve my research. I am grateful to Nuffic of The Netherlands for providing me scholarship to pursue my Masters in Wageningen University. I am heartily thankful to the Philippine Council for Aquatic and Marine Research and Development (PCAMRD) management and staff for allowing me to pursue a master programme in the Netherlands. Special thanks to ate Louree who patiently edited my report. I would like to express my gratitude to Dr. Emma Kambewa who unselfishly shared with me the questionnaires she developed which I used in the conduct of survey for my study. Special thanks to KMMLT, its leader (Mila Chavez) and members, and BFAR staff for all the vital information they provided during the survey. Thanks also to Mr. Renato Maranan and his wife for providing me all the information they have with regards to bottled tawilis. And to all the respondents of my research for their willingness to participate and complete the survey. Thanks to all my friends in Wageningen who have been there for me through thick and thin. I would like to show my gratitude to my mom, mom-in-law, and sisters and their families who have been supportive to me all these years. My deepest thanks to my husband Jojo, for his unselfish love and sacrifices, and making it possible for me to take the opportunity to study abroad. Likewise, I thank my two loving sons, Josiah and Jeremiah, who have been my inspiration and my strength throughout my study here in Wageningen University. Cynthia Vasquez-Almazan Wageningen, The Netherlands Wageningen University 2010 i Tawilis Supply Chain in Taal Lake, Batangas, Philippines: An Investigation about the Current Value Adding Processes and Governance of the Bottled Tawilis Supply Chain Wageningen University 2010 ii Tawilis Supply Chain in Taal Lake, Batangas, Philippines: An Investigation about the Current Value Adding Processes and Governance of the Bottled Tawilis Supply Chain SUMMARY Tawilis is the only freshwater sardines in the Philippines which can only be found in Taal Lake. It is one of the few freshwater sardines in the world. Tawilis is now reported to be overexploited at the rate of 62 percent from the optimum range of 30 to 50 percent. The main reasons for the dwindling supply of tawilis is the illegal operation of active fishing gears, overfishing, proliferation of cages and deterioration of water quality. For over a decade, tawilis is processed into Spanish sardines in oil, more popularly known as bottled tawilis. Processing of tawilis however, added pressure to the resource. This research was conceptualized to investigate the sustainability of the bottled tawilis supply chain, i.e. sustainability in terms of protecting the environment, well being of the people whose livelihood depends on tawilis production, processing and marketing; and enhanced economic gains from the chain. The objective of this study is to investigate how to achieve a balance between people, profit and planet in the bottled tawilis supply chain by analysing its value adding processes and governance mechanisms. It is assumed in this study that contracts can be use as a governance mechanism that may stimulate a better balance between people, profit and planet in the bottled tawilis supply chain. It is hypothesized that there is correlation between fishermen’s trust, commitment and level of conflict to their buyer and their decision to enter into a sustainable enhancing contract ( H1). Fishermen entering into a contract are more likely to practiced value adding processes ( H4). Contracts and fishermen’s access to market information are assumed to be correlated ( H2), while access to market information is also associated with fishermen’s market and bargaining power ( H3). Fishermen and buyers entering into a contract ( H5) are more likely to prevent overfishing; protect juveniles and spawners, not use destructive fishing practices; deliver quality fish and receive adequate compensation. Benefits from sustainable enhancing contracts may not be visible in the short run, but it will be beneficial in the long run. Three types of research methods were used in this study these are: desk research, case study and survey. Desk research was carried out to develop the theoretical framework of this study. A general overview of a supply chain management is presented, followed by discussions on concepts of fish supply chain management and how value is added. Literature on governance mechanisms provide concepts and theories on how supply chains are organized. In addition, concepts on power relationships among channel actors, information asymmetry and coordination mechanisms are analyzed. Lastly, concepts on sustainability are given, different sustainable practices, indicators and driving forces to achieve a sustainable chain are identified. The case study focuses on the bottled tawilis supply chain, where the main chain actors served as the embedded units of analysis. The case is limited to the examination of the value adding processes and governance mechanisms of the bottled tawilis supply chain. Three sets of semi-structured questionnaires were used in the survey and administered to 112 tawilis fishermen, 18 middlemen and 4 processing plant managers. Key informant interviews were done with the government officials and researchers involved in tawilis fishery. The questionnaires consisted of multi-item scales measuring trust, commitment, dependence, conflict, market and bargaining power, access to market information, delivery
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