Coco Sap Sweetener Production and Processing
Location
Province of Misamis Oriental
Misamis Oriental Eastern Towns Agrarian Reform Community Cluster (MISORET ARC CLUSTER)

Municipalities of Balingasag, Lagonglong, Salay, Kinoguitan, Sugbongcogon, and Binuangan

Baseline Profile

The MISORET cluster extends over 42,856.5847 hectares about 31,976.1456 hectares or approximately 75% is considered under private and government ownership. The remaining 10,880.4391 or 25% are generally forest reserves, pastureland and others.

The cluster is bounded on the North and Northwest by the Mindanao Sea, on the South by the Municipality of Jasaan and Claveria, and on the West by the municipality of Claveria.

MISORET covers six (6) municipalities; Kinoguitan, the farthest, which is located 77 kilometers away from the growth center of Cagayan de Oro City and more or less 35-40 kilometers away from one of the growing municipality of Medina and the City of Gingoog. The nearest municipality in this cluster to Cagayan de Oro City is Balingasag which is more or less 40 kilometers. It is more or less 30 kilometers away from the International Container Port of Tagoloan town, Lagonglong, Salay, Binuangan and Sugbongcogon.

The total population of the MISORET cluster is 102,936. Balingasag has the highest number of population with 46,018 and followed by Salay and Lagonglong with 18,932 and 15,258 respectively. Binuangan has the lowest population with 5,374 only while Sugbongcogon and Kinoguitan has a population of 6,957 and 10,406, respectively. We can say, that the average area per person in the MISORET is 4,313 square meters.

The Cluster has a total CARP Scope of 2,157.4478 hectares for Land Acquisition and Distribution and 4,196.4240 hectares for Leasehold Arrangements with an accomplishment of 1,786.6568 hectares for LAD and 3,254.2284 hectares leaving a balance of 370.7910 hectares for LAD and 942.1956 hectares for Leasehold.

There are One thousand four hundred forty one (1,441) Agrarian Reform Beneficiaries who are holders of Emancipation Patents and Certificate of Landownership Awards and One thousand five hundred eighty nine (1,589) leaseholders in the MISORET cluster.

The cluster has thirty two (32) Agrarian Reform Community Barangays with twenty seven (27) partner peoples’ organizations and fifty eight (58) Non Agrarian Reform Community barangays
Foreign assisted and funded projects , such as the World Bank ARCDP Phase I(WB-ARCDP); The Solar Power Technology In Support to ARCs Phases I and II ( SPOTS) ; The Northern Mindanao Communities Initiatives Resource Management Project (DAR-IFAD-NMCIREMP); The German Technical Cooperation (GTZ) has been implemented in the cluster, together with Agrarian Reform Funds (ARF) and the AREDP-Pineapple and SICAD Projects, and presently, the Convergence on Value Chain Enhancement for Rural Growth and Empowerment (Project conVERGE).

Practically, the cluster is a coconut area, some portions or sizeable areas for Riceland are located in the municipalities of Balingasag and Lagonglong. Corn is grown in all municipalities with 2.8 metric productions per hectare. Known producer of vegetables is Balingasag with 10 metric tons per hectare. Through the encouragement of the government to produce high value crops and vegetables, all municipalities within the cluster are now engage in vegetable production and become one of the primary source of high value products such as carrots, cabbage, lettuce, pepper, broccoli, cauliflower, strawberry, pineapple to mention a few.

Barangays in the MISORET cluster can be reached through a road system classified as provincial, municipal and barangay road crisscrossing the interior barangays of all towns that links to the National Highway.

The cluster’s topography is a combination of flat to undulating on lowland barangays and sloping, rolling to hilly on the upper and hinterland barangays who have an elevation peak of 3,500 feet and above sea level. Its soil characteristics are a combination of porous in the some areas where water holding capacity is low and in most areas clayish where the water holding capacity is high. The identified soil type are Umingan clay loam, Jasaan clay, Bolinao clay, Camiguin clay, Mambajao clay, San Miguel clay, Beach sand, Mountain soil and hydro soil.

The climate in MISORET is a combination of type II and type III. It is almost typhoon free. The dominant wind direction in the cluster is the southeast direction known in vernacular as HABAGAT and could mistakably perceive as typhoon. The climate is cool from November to February. The rest of the year is neither cool nor warm except in the hinterland, most barangays of every municipality in the cluster wherein its climate is like Baguio City or comparable to Malaybalay City.

Rainfall is heaviest in the northeast monsoon in July. September, April and May are considered dry season. Soil erosion is one problem in the hinterland barangays, however with the technical assistance from ICRAF and LANDCARE a technology on how to prevent erosion was taught to the people’s organizations and individual farmers.

The agricultural land in the cluster is suitable to various crops, both staple crops and high value crops to include fruits and forest products.

Vegetables and fruit trees must be develop in the cluster due to good performance of many varieties that are tested in the cool hinterland barangays.
An agricultural school located in Kinoguitan can be a center for research in any of the crops that are grown here. It has large area reserved for the school at sitio Dumagongdong, Kagumahan Kinoguitan .

Any technology acquired or discovered to improve the production and quality of the products, will surely improve the income and raise the standard of living of the community households in the cluster.

Many products produce in the cluster whose production sometimes exceeds in the local market, needs to be processed. Banana for example of different varieties can be processed into banana chips, banana catsup, and banana puree and banana juice.

This will be introduced to the cluster household level for additional income or an alternative source of livelihood to other farmers. Packaging can be done in a municipal federation or a cooperative that serves as the municipal center before it will be brought to the market.

This is true to all municipalities. Corn products are brought to either Salay or Balingasag for milling and the byproducts of corn are made into binaki or a corn cake that the ARBs in these two municipalities can engage. There will be a centralized trading/buying and marketing of farm produce per municipality. The system will only minimize the presence of middle men in the trading/marketing aspect of the MISORET operation. The system will regulate and minimize possible losses due to poor marketing schemes. The major economic activities of the people in the barangays derived income from farming, household derived income from various sources such as from employment at the poultry, carpentry, local construction, masonry, and fishing.

The average family income based on the Focused Group Discussion (FGD) conducted by DAR is Php 70,417.00 on the On – Farm income. The Off-Farm income is Php 9,537.00 and the Non-Farm income is Php 9,050.00 or a total of Php 89,211.00 per annum. But the total income is not enough.

Development Issues

The people remain below the poverty level. The poverty incidence is attributed to lack of capital for production, no linkage to market, high cost of production inputs, high cost of transportation, poor conditions of farm to market roads and other factors such as poor technology adopted, disunity among farmers and leaders, the presence of usurers.

Health conditions of the farmers are greatly affected due to non-existence of health centers in some barangays and access to medicines, doctors, nurses, especially in the hinterlands. The far distance of health centers from the barangay proper also contributes to the deterioration of health conditions of farmers who cannot afford to travel due to scarcity of money to go to health centers and hospitals.

In spite of these conditions, the Provincial Government has provided health insurance services thru PhilHealth sponsored program of Governor Oscar S. Moreno to some 31,486 farmer beneficiaries’ cluster wide.

Malnutrition problem is also alarming. The DSWD is trying its best to address the problem. With the program of the government to build more schools, children of school age are now slowly going to school but in many cases, children do not go to school simply because they lack food to eat.

Lacks of teachers are observed in the hinterland barangays. There are cases that a school has no teacher and a teacher in some schools is serving two or three class levels and the quality of education suffers.

Goals and Objective

Majority of the ARBs inside the MISORET ARC cluster are coconut farmers. Coconut farmers are considered as one of the poorest among the rural poor . This  is attributed to its being chained to copra production – the main coconut derivative produced by small coconut farmers . 

The Project Convergence in Value Chain Enhancement for Rural Growth and Empowerment (ConVERGE) is an IFAD assisted project in the Philippines implemented by the Department of Agrarian Reform. The project is optimizing the potential of coco sugar production through mechanization process in Misamis Oriental. Pursuing the mandate to help reduce the incidence of poverty, Project ConVERGE provided support to Linabu Multi-Purpose Cooperative (LAMPCO) in form of technical assistance and processing equipment to optimize the potentials of coconut sugar processing. The support aims to transform the enterprise into a significant contributor to the inclusive economic growth in Misamis Oriental Eastern Towns (MISORET) Agrarian Reform Community cluster. The specific objectives of the project are the following, to wit:

1.) To strengthen LAMPCO as coconut sugar processing enterprise and expand its coconut sugar processing venture.  Specifically: 

a.) Increase the number of ARBs participating as suppliers of raw materials for the processing venture.

b.) Increase the number of trees utilized (and therefore their income) in the respective farms of each participating ARBs.

c.) Increase the number of landless participating as sap tappers and semi processors.

d.) Increase the number and income of factory workers. All these requires the attainment of the next specific objective:

f.) To expand the processing capacity of LAMPCO by upgrading its existing plant from 6 tons to 30 tons capacity and replicate these processing plants inside the ARC where it is located.

 2.) To replicate a 30 ton a month capacity processing plant in 4 other ARCs inside the cluster through build operate transfer (BOT) scheme. This will be implemented in selected communities of  Kinoguitan, Binuangan, Sugbungcogon, Salay.  The BOT scheme follows this process:

a.) Phase 1: Organizing and training of ARBs into production modules. This will be accompanied by a replanting program for dwarf varieties. This will be financed by LAMPCO as retail lending institution. ARBOs of other ARCs act as consolidators of their members’ produce for delivery to the central processing plant owned by LAMPCO.

 b.) Phase 2: Replicate, Build and Operate a Processing Plant in each of the ARC. This shall be under the management of LAMPCO as mother cooperative with the local ARBO as junior partner and on under study method.

 c.) Phase 3: Spin off and Transfer when an ARBO is ready and capable to manage the plant.  LAMPCO will remain as marketing consolidator of the whole network.

Strategies

1) Improve production and `pre-processing facilities and processes to become fully compliant to Good Manufacturing Practices, International Standards and Food Safety Standards.

2) Upgrade the processing facilities through mechanization in order to enhance product quality differentiation, and to reduce processing costs.

3) Attain economy of scale and thus, achieve comparative advantage within the market
(Supplying large processing companies) by expanding production to other ARCs inside the cluster.

Investment Needs

The project will require an a total investment of P39,900,000 , or 97% shall be external via IFAD while the remaining P 1,200,000 or 3% shall be sourced out from the coops own existing and revolved resources.

Implementing the above strategies will require a new investment from Project ConVege in the amount of P39,900,000 that would augment the existing assets of the cooperative which is equivalent to P1,200,000 bringing the total project cost to P25,661,250. The new investments will cover expenditures on the first year for system retrofitting and upgrading in production and processing levels, replanting of high yielding dwarf varieties, working capital augmentation, product certification and procurement of larger delivery vehicle.
The problems associated with the low volume of production and low income of farmers in the area is addressed through mechanization of the process in production of coco sugar. The traditional method of manual processing of coco sugar is replaced with a more efficient mechanized method. This is achieved through the provision of;

1. 30 units of Evaporation Kettle and 2 units of Crystallization Kettle machines;
2. Provision of technical assistance in formulation of business plan and marketing plan;
3. Provision of technology training with focus on HACCP, food safety and sanitation;
4. Construction of 4.3-kilometer farm to market road enhancing access from production area to processing plant.

Market and Opportunities

Attain economy of scale and thus, achieve comparative advantage within the market (Supplying large processing companies) by expanding production to other ARCs inside the cluster.

LAMPCO’s channel of distribution are the following:

Exporters. Exporters are independently owned firms that take title to the merchandise they handle then sell it in foreign markets. Exporters like Coconut Republic purchase product in bulk and store it until they can resell it abroad for a profit. LAMPCO’s customer in this category is the Coconut Republic. The latter is also categorized as wholesaler’s carries a variety of competing products. Aside from LAMPCO, Coconut Republic also exports products of other coconut sugar producers.

Distributors. Distributors are similar to wholesalers, but with one key difference. Distributors usually maintain close relationships with their suppliers and customers. Distributors will take title to products and store them until they are sold. Examples of LAMPCO’s customers under this category are the Upland Marketing Foundations, Inc and the Global Organic Wellness Corporation, and Sharmila, Inc.

Agents or Brokers. The agent as a marketing intermediary is an independent individual or company whose main function is to act as a selling arm of the producer and represent the producer to users. Agents take possession of products but do not actually own them. Agents usually make profits from commissions or fees paid for the services they provide to the producer and users. Under this category is CCCI which bridges LAMPCO to Coconut Republic and other buyers.

Retailers. A retailer takes title to, or purchases, products from other market intermediaries. Retailers can be independently owned and operated, like small “mom and pop” stores, or they can be part of a large chain, like SM. The retailer will sell the products it has purchased directly to the end user for a profit.

Industrial Users. Another market of LAMPCO is Lorenzana Foods that makes use of coconut sugar as an ingredient of its processed products like Mangosteen Coffee.

Gender, Youth and Indigenous Peoples

Gender equality and women’s empowerment are objectives of, and instruments for, poverty reduction. The Project shall be gender focused with a special commitment to improve the well-being of indigenous women by:

a) expanding their access to and control over fundamental resources such as land, capital, traditional knowledge and technologies;

b) strengthening their decision making role in community affairs, and representation in local institutions; and

c) building on their untapped potential for sustainable development, by recognizing their role as stewards of natural resources and biodiversity, and as bearers of rich varied traditional knowledge systems.

The Project shall ensure that at least 30% of the beneficiaries will be women; hence rural women shall be mainstreamed and involved in all phases of project implementation. The Project will provide resources to equip the women and build their skills for a more dynamic participation in project implementation.

The targeted beneficiaries of the project are 3,117 beneficiaries, (40%) of them are women.

Expected Outcomes

The initial outcomes are facilitated by the following factors:
• Willingness of the cooperative and the member farmers to adopt mechanized processing to upgrade the level of the enterprise;
• Provision of technical assistance and management support systems like the formulation of business plan and marketing plan
• Rehabilitation 4 kilometer of farm to market road that enhanced access from production area to the processing site.

The contributions of the mechanized processing to the success of the enterprise will be manifested in increase in production and efficient processing of better quality coco sugar. These will result in the increased income of farmers and provides opportunity for women to actively participate in the agribusiness enterprise. A tapper will realize an increase in income from P210 per day to P472.5 per day. On the other hand the ARB farm-owners will gain increase income through expanding the utilization of standing trees from 1 module (30 trees) to 4 modules (120 trees) that will result to an increase in income from PhP202.00 to PhP810.00 per day. The supported enterprise will be able to increase the buying price of coco sap from P100 to P120 per kilogram. Despite the cost of processing of the coco sap to syrup during the crystallization stage the cooperative will be able to realize profit of PhP8.71 per kg of coco sugar. By the end of the project, the cooperative will have a production output of 1 ton of coco sugar per day.

Sustainability Measures

Replication and up scaling of the value chain model in other ARC clusters should be adopted and supported by the Philippine Government and IFAD to provide better opportunity to coco sugar producing farmers in the rural areas.

The project will ensure a close coordination with the LGU in the sustainability of subprojects implemented such as the Farm-to-Market Roads, and Potable Water System.

shares