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STRENGTHENING FARMER-LED AND STRENGTHENING FARMER-LED AND FARMER-OWNED MARKETING FARMER-OWNED MARKETING
ENTERPRISES THROUGH TECHNICAL ENTERPRISES THROUGH TECHNICAL ASSISTANCE AND LEARNING EXCHANGEASSISTANCE AND LEARNING EXCHANGE
THE VIRGIN COCONUT OIL (VCO) ENTERPRISE OF THE VIRGIN COCONUT OIL (VCO) ENTERPRISE OF CALIMA SOCIO-ECONOMIC MULTI-PURPOSE CALIMA SOCIO-ECONOMIC MULTI-PURPOSE
COOPERATIVE (CASEMPCO) IN POLA, MINDORO COOPERATIVE (CASEMPCO) IN POLA, MINDORO ORIENTAL, PHILIPPINES. ORIENTAL, PHILIPPINES.
CONTENT:1. Background of the enterprise2. Results of the assessment
– Findings– Analysis, conclusion and recommendation
3. Interventions plan– Within the project period– Beyond project period
4. Initial results of Intervention5. Feedback on the use of assessment tools (suggestion if any
for improvement)
BACKGROUND OF THE ENTERPRISEDate started: Late 2011 as a replacement of unprofitable enterprises -
lending and retail store. Some cooperative members were trained by Philippines Coconut Authority (PCA) on the VCO processing and individually, they produced coconut oil.
By March 2012, the cooperative members as a group participated in a trade fair and exhibit in SM Megamall for the first time.
Right after the trade fair, a proposal to an embassy for a grant of P 1.5M to finance a VCO processing plant was submitted but was subsequently turned down because the land for the facility was only covered by a Certificate of Land Ownership Award (CLOA) and not by a Transfer Certificate of Title (TCT).
By December 2012, the cooperative members entrusted the VCO processing to the cooperative. The assistance of Mindoro Ecological Sustainable Agri-Federation (MESAFED) was sought to promote and market the VCO.
By December 2013, the request of the international firm increased to 10,000 liters per month. There is difficulty in complying to the demand.
By March 2013, the cooperative received a start-up capital from Department of Labor and Employment (DOLE) amounting to P150,000. The 193 cooperative members shared an additional capital of P100,000.
The cooperative again participated in the annual trade fair and exhibit in SM Megamall and received an inquiry from an international firm regarding a considerable volume of VCO (5,000 liters per month amounting to P1,400,000). This was after they provided the firm with sample VCO that passed the required standard quality.
By June 2013, the PCA and the local government unit (LGU) provided the cooperative with some processing machine/equipment (vacuum, filter, oil separator, moisture analyzer and filter tank). A private trading company loaned some processing machine/equipment payable in kind (VCO).
By November 2013, the cooperative was awarded “Best Cooperative of the Year” by the provincial government. One of the reasons for the award, is the job generated for the VCO workers and income for the coconut suppliers.
By December 2013, the request of the international form increased to 100,000 liters per month. There is difficulty in complying to the demand.
BACKGROUND OF THE ENTERPRISE
Why VCO?The VCO in relation to the other CASEMPO enterprises.
Gross revenues – 9%
For the year 2013
Enterprise Gross revenue
Net income
Net margin
Years of existence
Copra trading 731,462.20 (13,268.00) -2% 13VCO 75,366.50 33,502.00 44% 3Other food processing 44,812.00 (5,895.00) -13% 2
Net income – P 33,502
BACKGROUND OF THE ENTERPRISE
RESULTS OF THE ASSESSMENT
Equivalent Score Stage
1.0 to 1.7 Start-Up/ Building Up
1.8 to 2.7 Strengthening/ Developing
2.8 to 3.0 Consolidating
ELEMENT FINAL RATING
STAGE OF ENTERPRISE
DEVELOPMENTOrganizational Management 2.93 Consolidating
Profitability and Solvency 1.75 Strengthening
Stability 1.20 Start-up
Market Access 1.50 Start-up
Inclusivity 2.00 Strengthening
Sustainability 1.67 Start-up
Organizational Management – 2.3RESULTS OF THE ASSESSMENT
INDICATORS SCORE FINDINGS ANALYSIS AND RECOMMENDATIONLegal identity to operate and comply with reportorial requirements
2
The cooperative was registered with CDA in 2000 and was re-registered in 2009. It complies with all the licensing requirements annually. However, it has not yet secured its accredition of its VCO from the Food and Drug Administration (FDA).
The cooperative was not able to secure accreditation of its VCO from the FDA because it cannot comply with the requirements of FDA in terms of the processing facility. The owner of the rented facility does not permit to change anything in the the building. There is aneed for the cooperative to undergo all the processes and to submit all the requirements for the accreditation of the VCO by the FDA. If need be, the cooperative has to look for another facility or to build their own.
Planning 2
The cooperative has vision, mission and goals. They assumed that the VCO project profile is already their business plan.
The cooperative has no written detailed plan. Yearly business planning has to be undertaken by the cooperative for clear direction and targets.
Membership
3
The members increased from 18 in 2000 to 193 as of December 2013. The members of the cooperative are coconut farmers mostly from the Municipality of Pola. There are some members from other neighboring towns. The target is additional 50 members per year.
There is a significant growth of membership not only from one locality but also from nearby communities. The cooperative needs to meet at least their target of 50 additional members per year. Specific profiling of the members' coconut production has to be done to determine the volume of raw mateial supply for the VCO production.
Leadership, Staffing and their Competencies (KSA)
2
Paid up share capital of the members amounted to P573,912 as of December 31, 2013.
Although there was an increasing amount of membership's share capital, some of the members also withdrew part of their shares from time to time. Continuous capital build-up scheme has to be institutionalized to ensure liquidity
As of the current operation of the enterprise, the leaders are supported by five paid staff which is adequate. They have clear job descriptions and are all functioning.
The competencies of the leaders and paid staff can be attributed to the planned training programs of the CDA which they implement or else the cooperative cannot be certified as good standing cooperative. This certification is renewed annually.
Many leaders are functioning along with the cooperative paid staff . Their main concentration is the business operation.
The leaders lack on planning, oversight and clear specific policy on the VCO enterprise. They need to craft a manual of operation on VCO production so that everyone will b e guided accordingly.
RESULTS OF THE ASSESSMENT
INDICATORS SCORE FINDINGS ANALYSIS AND RECOMMENDATION
Organizational Structure and Governance
2
Not all leaders can explain the lines of authority and division of work in the organization. There is an illustration of the organizational structure but this is not displayed publicly in their cooperative office.
There is lack of familiarization and comprehensive discussion on the organizational structure. Awareness and valuing of the organizational structure have to be internalized by the leaders and staff to avoid conflicts among the management team and the BOD
The Board of Directors regularly meets once a month to track the achievement of the plans, assess resources generation and utilization and gauge the implementation of policies and procedures. Upon deliberation, resolutions are formulated to document the agreements and new policies, if any.
There is formal communication in the cooperative which is properly documented in the organization. This practice has to be sustained.
The Board of Directors is dominated by women (6 out of 8 or 75%).
Women are well represented and are actively involved in decision-making process of the cooperative. Women's active participation has to be sustained in the cooperative.
Systems installed with security
3
Financial management system has been installed. The cooperative has received support from various government agencies. The enterprise is receiving increasing asset-based and financial support from internal and external sources.
Financial system is installed and is being used. Resources are coming in but planned scheme for resource mobilization is lacking and has to be established.
Organizational Management – 2.3
Profitability and Solvency – 1.75 RESULTS OF THE ASSESSMENT
INDICATORS SCORE FINDINGS ANALYSIS AND RECOMMENDATION
Critical analysis on the Feasibility of enterprise
1
There is no feasibility study of the VCO production as an enterprise as well as business plan. A Manager was hired and is being paid based on the earnings of the cooperative. 5% of the net earnings of the cooperative will be the base salary of the Manager payable quarterly.
If there is no feasibility study and there is no business plan, the manager will have difficulty in knowing the business direction that should be taken. Conflict with BOD may arise if expected deliverables are not clear and not agreed upon. Business plan formulation is an urgent activity that must be taken seriously.
Net Profit Margin (Cost & benefit analysis)
2
In 2013, the cooperative generated net profit margin is 44.5% which is twice as much as that of 2012 (22%). However, the volume of the sale is too small. The enterprise has employed five regular staff and additional 5 to 8 on-call workers when there are big orders. And they have at least 30 to 50 coconut suppliers.
The net profit is higher compared to previous year, however, the volume of VCO sold did not increase significantly. If the volume of sales can be increased, the number of job and income generation will also increase.
Increase sales and inventory performance 2
At present, the cooperative produces VCO per order basis only. There is minimal inventory of finished products. Annual sales of VCO increased by 15% from the previous year's operation.
Most of the inventory of the company are turned into cash immediately due to the sure market of the cooperative since they produce when there is only an order.
Current ratio that measures liquidity of enterprise operation
2
The current liquidity ratio of the cooperative in 2013 is 1.28 from all its enterprises. We cannot determine the current ratio of the VCO because the assets and liabilities pertaining to the VCO enterprise was not presented separately.
The current ratio of the cooperative is lower than the acceptable ratio of 2.00. This means that the current assets of the cooperative is just sufficient to cover its current liabilities with little amount remaining for operations.
Stability 1.2RESULTS OF THE ASSESSMENT
INDICATORSSCOR
EFINDINGS ANALYSIS AND RECOMMENDATION
Visibility of enterprise and promotion 2
The processing facility is strategic to the coconut suppliers of VCO because it is in the heart of the community. However, it is opposite in terms of marketing.
Promotion and marketing of the VCO should be transferred to a more accessible location such as in Calapan, Mindoro or in Metro Manila. There is lack of product visibility even in the community where it is produced (production of VCO is not being broadcast publicly).
Updated and reliable industry information (input suppliers-markets)
1
The cooperative has no complete and updated profile of the coconut suppliers for VCO. The only clear information is that each supplier is committed to deliver 500 coconuts per year. It does not also have directory and profile of their market outlets.
There is lack of updated and reliable industry information both on coconut suppliers and VCO market. Inventory of productive and healthy coconut trees in the community has to be undertaken.
Provision of Field/Farm Technical assistance (extension services) 1
There are no trained community based farm technician to provide technical assistance to the coconut farmer clusters in enhancing and expanding coconut production. The Department of Agrarian Reform (DAR) and Philippine Coconut Authority (PCA) were training the community farmers as a group but are not providing community-based trainor's training.
No trained farm technician to guide the coconut farmers in enhancing and expanding their coconut production to sustain the supply of coconuts for the VCO.
Quality control system that ensures product integrity 1
The quality control system the cooperative is undertaking is based on the training provided by the PCA. The fermentation method is being used to produce VCO with strict sanitary control. However, the cooperative has no documented manual of quality control procedures.
The quality control system is still weak. Consultation with the proper authorities and licensing entities must be done. So that they would be able to develop an effective quality control systems.
Return-on-Assets andReturn-on-Equity
1As of 2013, return on assets and return on equity of the VCO enterprise cannot be computed because the assets and equity pertaining to the VCO enterprise is not available.
There is need to segregate per enterprise the assets, liabilities and equity not only the income and expenses.
Market Access 1.5RESULTS OF THE ASSESSMENT
INDICATORS SCORE FINDINGS ANALYSIS AND RECOMMENDATIONTraining of farmers on sustainable agricultural techniques to increased yield and improved quality of produce
2
The coconut farmer members of the cooperative always have surplus which they regularly and continuously market either to the cooperative or other outlets (the 193 member-farmers committed 96,500 coconuts per year). The quality of coconuts in Mindoro was laboratory tested to be of high quality compared to other sources of coconuts (moisture content of .001). Besides the members, the cooperative can source coconuts to four other cooperatives, namely, Pula, Campamento, Buhay na Tubig and Biga with a total of 585 coconut farmers combined membership.
The cooperative can source coconuts from four (4) other cooperatives in Pola, namely: Pula, Campamento, Buhay na Tubig and BIga which will benefit a total of 585 farmers. If the marketing transactions of 5,000 VCO liters per month with the export companies will push through, the 96,500 coconuts per year is not even enough to produce a 2-month VCO demand (12 nuts=1 liter of VCO). There is a need to continuously improve and increase coconut production in Pola and that the cooperative should be able to already link with other sources for the supply of coconuts.
Competitive Price of products vis marketing contracts 1
There is no signed contract with farmers for the supply of coconut. Although members of the cooperative to supply a maximum of 500 coconuts per year. At present, price of coconut is still dictated by traders. The price of coconut purchased from members ranged from P 5.00 to P10.00.
The price of coconut is not competitive but the VCO can be competitive. There is a need to formalize contract with the members for nuts supply as well as marketing agreements with the buyers of VCO
Market intelligent
1
The manager has been gathering market information on VCO from existing and potential buyers and from government agencies such as DTI. There is no systematic and planned marketing sourcing scheme.
The market information on VCO is low. Knowledge management system on the demands for VCO and coconut supply has to be installed.
Market arrangement and level of engagement with market
2The current market is still local. However, potential international buyers/exporters continuously seek probabilities that the cooperative can supply.
There is a big potential for market but the cooperative has to meet all the requirements, legal and technical standards for export.
Inclusivity – 2.0RESULTS OF THE ASSESSMENT
INDICATORS SCORE FINDINGS ANALYSIS AND RECOMMENDATION
Quality of women participation in leadership and management 3
Six (6) out of eight (8) officers or 75% are women and are actively participating in the policy and decision making pertaining to the enterprise. The membership composition as to the ratio of men and women in 2000 until 2013 increased from 39% ( 11:7) to 58% (82:111).
Truly, women members and leaders in the cooperative have increased in proportion. It seems that there are more women coconut-farmers than men. However, there is a need to study how this happened and what is the real activities of women-members in the coconut farms.
Influencing policy for an inclusive and sustainable enterprise
2
In 2013, CASEMCO proposed to CDA to conduct joint meetings with the cooperatives with coconut farmer-members in Pola to ensure that all of them have the same information at the same time and when there are common issues and concerns all them will be together in resolving them. The proposal was approved and joint meetings of coconut-farmer cooperatives are regularly held with CDA every second Tuesday of the month.
CASEMCO is recognized by government agencies like CDA, PCA, DTI and others as one of the major players in coconut enterprise in Pola. Some of their recommendations are welcomed for implementation. This resulted to gained respect from other cooperatives. This good image should be maintained and should be maximized for the growth of the VCO production enterprise and to gain support from other stakeholders.
Equitable risks and benefit sharing
1
At present, traders set the price of coconut/copra. There is no written contract between farmers and their market because the price is fluctuating. The current price of coconut is P10 (last year it was P5). Should a marketing agreement be forged between international buyers, the price of coconut in Pola may get higher than the usual.
There are no provisions for the sharing of risks and benefits due to the absence of written contracts. There is a need for the cooperative to realize the value of written contracts in their business transactions. The BOD and the management staff should learn to study very well contracts and legal implications of agreements entered into in the name of the cooperative.
Inclusivity – 2.0RESULTS OF THE ASSESSMENT
INDICATORS SCORE FINDINGS ANALYSIS AND RECOMMENDATION
Services are responsive to priority needs of members
2
There are varied services rendered to farmer-members: provision of seedlings, sustainable agriculture training, assistance to the members in securing crop insurance, purchase of the coconuts (fair price as much as possible) of members for VCO processing, part or full-time employment for the members' kids and relatives. The cooperative services try to meet the needs of the membership.
The cooperative can expand its services to its members when its VCO enterprise becomes sustainably profitable. The cooperative has to be trained to come up with equitable distribution of services among its members which is based on individualized needs and concerns.
Farmers involvement in the supply/value chain
2
The farmer-members are the suppliers of coconut requirements of the cooperative as it starts its VCO enterprise. The cooperative employs some workers (part time/on call) from the community as it processes the coconuts supplied by the farmers.
There is a possibility that formal linkages between the farmers and other industry stakeholders can be developed in the future as it is "the getting to know you" phase had already taken place. Increase in farmers' involvement as supplier of products as well as services along the value chain e.g. employment, etc. can be projected. There is a need to capacitate CASEMCO's leaders and members with regards to the enterprise stakeholders.
Sustainability - 1.67RESULTS OF THE ASSESSMENT
INDICATORS SCORE FINDINGSANALYSIS AND
RECOMMENDATION
Linkages and Network Building
2
The cooperative has established some linkages in relation to its VCO enterprise. Some resouirces were mobilized and utilized. Government agencies institutional support were provided
The cooperative has initial linkages and networking skills that resulted to some positive results for the VCO enterprise. This c apacity has to be further developed to ensure viable enterprise operation.
Human resource development
1
The officers have completed five (5) out of the 17 training modules required by CDA for cooperative to take. These are: Finance Management, Leadersip and Governance, Business Management, Pre-Membership Orientaation, and Conducting Orientation / Training for New members. There are other trainings availed by the cooperative conducted by other government agencies such as: Entrepreneurship Seminar - PCA; Marketing Strategies and Good Manufacturing Practices - DTI; Product Development - DOST.
The required training modules by the CDA have to be completed by the cooperative. Continuous and upgraded capability building program has to be developed and implemented not only for the BOD and management staff but also for all the member-farmers.
Expanded benefits 2
For services of the cooperative, refer to Inclusivity (Indicator #4).
For services of the cooperative, refer to Inclusivity (Indicator #4).
Sustainability – 1.67 INDICATORS SCORE FINDINGS
ANALYSIS AND RECOMMENDATION
Sustainability of product supply and markets 2
Each member committed to supply to the cooperative about 500 coconuts yearly. This supply volume is not enough if all the orders / demands for VCO by the prospective buyers will be realized.
Coconuts enhancement, development, and area expansion to meet the demand have to be continued. Coconut infestations have to be prevented in Pola and the whole Mindoro Oriental. Finding new coconut seedlings to replace the existing old coconuts have to be done.
Product enhancement through technology innovation and expansion of markets
1
The Manager handles marketing of VCO. She secures marketing feedbacks re: VCO from their buyers. However real consumer and market researches are not yet done systematically and with guidance from the expert.
The cooperative has to be assisted in the conduct of comprehensive consumer and market researches with the help of technical consultants.VCO quality development program has to be launched and implemented.
Environmental protection, disaster risk mitigation and promotes health and safety products
2
Most members adapt organic farming. On November, 2013, the cooperative was a recipient of an award – “Gantimpalang Galing Sikad” - Best Cooperative”. The theme for the Galing Sikad’s 63 founding Anniversary was: Empowering Communities in the Face of Climate Change”. The said awardwas based on the following criteria: 1) Status of the cooperative, 2) Existing operations, 3) Impact on the environment (no pollution); and 4) job generation (The members are the suppliers of coconut for the coop’s VCO and five (5) workers were hired).
17 members are holders of PCIC Crop insurance. Five of them were able to claim crop insurance benefits after Yolanda.
Some members adapt organic farming (transition to agro-ecological/LEISA) reducing the use of chemical inputs as well as to produce safe, environment - friendly and cost-efficient production technology. The cooperative has to assisted in pursuing IDOFs so that going back to chemical farming is impossible
INTERVENTIONS PLANELEMENTS INTERVENTIONS
Organizational Management
Within project period •Assistance in preparing a detailed business plan for the VCO project.•Profiling of the members coconut production to determine the volume of raw material supply for the VCO production
Beyond project period•Assist in securing registration with the Food and Drug Administration (FDA): License to Operate (LTO) and Certificate of Product Registration (CPR) for its VCO. •Planned scheme for resource mobilization has to be established. •Assistance in the preparation of a manual of operation on VCO production.
Profitability and Solvency
• Assistance in the preparation of the feasibility study to determine the viability of the project.
• Assistance in securing financing for working capital and additional equipment.
Stability• Assistance in the promotion and the
marketing of the VCO
• Develop an effective control systems (in consultation with the proper authorities and licensing entities)
• Secure financing for building construction. Assistance In securing financing from the Fund for Social Society
• Conduct inventory of productive and healthy coconut trees in the community
ELEMENTS INTERVENTIONS
Market Access Within project period •Assistance in the marketing of VCO. (Local Market)
•Assistance in packaging design and low cost packaging materials.
Beyond project period•Formalized contract with members for coconut supply as well as marketing agreements with VCO buyers. •Assistance in negotiations with foreign buyers/traders.
InclusivityAssistance in conducting inventory of coconut in barangay Calima and adjacent barangays in Pola, Mindoro Oriental.
• Training of the cooperative to come up with an equitable distribution of services among its members.
Sustainability • Completion of the required training modules by the CDA. (12 modules not yet completed)
• Implementation of continuous and upgraded capability building programs not only for the BOD and management staff but also for the farmer members.
• Additional technical training from PCA. • Coconut enhancement, development and
area expansion have to be continued. • Finding new coconut seedling to replace
the existing old coconuts have to be done.• Assistance in the conduct of
comprehensive consumer and market researches with the help of technical consultants.
INTERVENTIONS PLAN
Initial results of Intervention• The inventory of the coconuts in Calima (2,000 hectares of
land) is on going being conducted by the members of the cooperative with the assistance from some volunteers. They numbered each coconut tree, determined the old coconuts that should be replaced. This is the first time that this is being done and the process facilitated team effort and enhanced solidarity.
• The General Assembly was conducted successfully and the agenda to focus on the VCO was approved with planned action: feasibility study, finding a new place for processing which is an important criteria for BFD licensing
• The assistance to secure market – a young businessperson interested in the VCO had visited the processing area; had gotten sample for analysis and discussed with the manager possible arrangement
Feedback on the use of assessment tools
The assessment tool for agriculture-based enterprise… …is a novel way of gauging the status of enterprises, (where are they now?) …includes all the element in an enterprise and reflect their actual stage of development…the visual/smiley face provides a quick simple way of knowing the status of the enterprise for each element…easy to compute/with 1,2,3 scoring with no room for guessing because there are corresponding descriptions per score
