Background
According to research (https://www.vancouverpcg.org/resources-listofrestaurants/yamang-pinoy/abaca/the-philippine-abaca-industry/) , farming is one of the major livelihood in the Philippines and Abaca farming is the source of livelihood of about 200,000 farming families in 56 provinces in the Philippines. All the provinces of Mindanao are one of the major abaca-producing areas nationwide together with the Bicol Region and Mindoro in Luzon; Leyte, Samar, Negros Oriental, Iloilo and Aklan in the Visayas. By 2022, Davao and some parts of Mindanao are gearing to become the major producer of abaca. With this end in view, many idle and unproductive lands of private sectors and the Indigenous People are to be developed for abaca production.
FASRMCO, Farmers Alternative for Self-Reliance Multi-Purpose Cooperative, a 1898-strong cooperative in Agusan del Sur, with 1138 farmers, 28 MSMEs, 6 Traders, 94 Professionals, and 4 youth, is presently engaged in the business of trading rice, coconut, rubber cup lumps and abaca fiber. They availed of the ARISE RCF in July 7, 2021 to help them in their business of buying and selling of abaca fibers. For the past five years, FASRMCO has had a maximum volume of 70 metric tons per month of abaca with a revolving capital of 3 million. The cooperative has established linkage with government agencies and other organizations with direct concern to abaca farmers, like PhilFIDA.
The Php3.3m they accessed from ARISE greatly improved their cash flow as it augmented their revolving capital of Php3m. They would have preferred a Php5m additional funding to strengthen their abaca trading. As of now, they only serve or get POs (Purchase Orders) based on available supply and sell them to big traders in Davao City and other parts of Mindanao, such as New Tech Pulp in Iligan (Mindanao), SPMI & PSPI.
Historically, this is the trading volume of FASRMCO for its 4 major commodities:
Rice (7230 bags) >> 361,500 kls
Coconut (copra) >> 455,634 kls
Rubber Cup Clump >> 469,549 kls
Abaca Fiber >> 189,429 kls
The purpose of their ARISE funding application was for additional working capital of the cooperative to increase the volume of abaca up to 80 metric tons per month. The additional capital was used solely for purchasing abaca stripped from different buying stations and their members. The volume was sourced from provinces of Agusan del Sur, Agusan del Norte, Surigao del Sur, and Surigao del Norte.
For 2022, the monthly abaca fiber volume reached are as follows:
January – 78,536 kgs., February – 69,875 kgs., March – 66,851 kgs. or an average of 71,754 kgs (71.7 metric tons), about 90% of their targeted 80 metric tons per month.
Innovations/Good Practices
The process of preparing abaca fiber involves four (4) major phases: Harvesting of Stalks, Extraction of Fiber, Drying, and Grading and Baling. The abaca propagates itself through suckering, or the growing of shoots from the roots. The first 3 steps and the propagation (farming) of the abaca plant are done on the farmer’s side and the last step is the one done by the coop.
Since it takes from 15 days to 1 month to prepare the abaca fibers from the time it is harvested to selling it as bundles of fiber to the coop, farmers need money for their daily sustenance. With the availability of a revolving fund, FASRMCO was able to give cash advances (CAs) to farmers. This monthly cycle is continuous, harvesting-processing-selling to the coop, since the abaca plant were not planted all at the same time, therefore farmers can also harvest stalks monthly. With the CA scheme, small farmers are continuously sustained by their livelihood.
Another good practice is air-drying of abaca fibers which is not presently done extensively because of the big capital requirement. Compared to sun-drying, which is dependent on the weather, it also produces better quality fiber as it will not be discolored due to exposure of sun and rain. This process could be scaled up with enough funding for capital on needed structures. An ideal Air-dry facility building sufficient for a 10hecatare abaca plantation would cost about Php250k (400s.m.).
Impact
- Helped farmers continue their livelihood (Harvesting of Stalks, Extraction of Fiber, Drying) as they are able to cash advance from their coop to pay for their daily consumption/sustenance
- Helped the coop consolidate stripped/dried abaca fibers and manually bundle them into half-sized (62.5kls) bales.
Facilitating Factors
- Availability of sufficient funds to sustain buying of abaca fibers from the farmers
- Continuous conversation with farmers to improve quality of abaca fibers in order to command a good price
Challenges
- Poor quality – farmers sometimes don’t mind selling their poor quality fiber (not well dried) because they are in a hurry to convert it to cash due to dire need. They also have the wrong notion that they’ll gain because it would be heavier, but then it is bought at a lower price. This is where farmer education is greatly needed, advocacy on quality fiber meeting global standards need to be widely promoted and the business sectors’ compliance to regulation on the fiber industry need to be closely monitored and strictly implemented.
- Market – volatile and very dependent on big traders such as New Tech Pulp in Mindanao, SPMI and PSPI (in Leyte, Visayas). They dictate the price. Ideal would be, if the coop could directly link to outside buyers (export). This could be accomplished if FASRMCO could be upgraded by PhilFIDA to GBE (Grading and Baling Establishments) from its present classification as 1st Class Trader.
- Production Volume Capacity – coop can presently bundle only 62.5kls/bale as it is done manually which is a half size standard that will be bought by the big time traders. Price difference would range from Php2 to Php5 per kilo. For instance,
Half size bale at 62.5kls/bale sells at Php91.00 per kilo
Standard bale at 125kls/bale sells at Php95.00 per kilo
A baling machine, costing about Php1.2m, is needed to be able to do standard bales. The benefit is tremendous because you can not only command a better price but you are also able to transport in bigger volumes improving your cost-benefit ratio. Presently, FASRMCO trades about 40 bales per day. Weather – Agusan having only 2 seasons, wet and very wet, that is, it is almost always raining there, therefore drying of abaca fiber is quite a challenge. And most of the time, farmers are tired and find it too laborious in transferring the fibers to covered areas and put them out again to dry. This sometimes result to poor quality fiber that is discolored and will sell at a lower price. Farmers, more often than not, are willing to sell their poor quality fibers even to exploitative traders because of dire need. A good intervention would be to a covered drying area or a green house for farmers to use.
Lending Experiences of NIAs to FOs
- Provision of working capital to coops is easier to manage and collect compared to the production loans that will be given directly to farmers because farmers mostly don’t have the capacity to pay their loans once their crops are destroyed by calamities (typhoons, flooding, etc.).
- Coops would gain and appreciate bigger and better benefits if the fund amount is bigger.
Lessons Learned
- Close monitoring or in person visits, that were impeded due to the pandemic travel restrictions, would have improved project implementation, engaged the partner-beneficiaries more, and identified and documented more good practices and challenges.
- The survey template/process is a good tool in engaging coops/farmers in designing a good program that will truly benefit them.
Recommendations
- Involve target beneficiaries in the design of an assistance program so that it will address and focus on their priority needs.
- Budget should be provided to do ample and quality documentation, press release or articles/videos/blogs and other publishing materials preparation.
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