Rice Production, Processing and Marketing

Location

The VETREBUNS ARC Cluster contiguously situated in the southern part of the province, with an aggregated land area of 168,839 hectares, 18.83% of the total land area of the Province of Agusan Del Sur. The municipalities composed of four (4) which includes Veruela, Trento, Bunawan, and Sta. Josefa.
In the cluster, the municipality of Trento has the largest land area at 80,982 hectares and the municipality of Sta. Josefa has the smallest land area at 15,899 hectares.

The Province of Agusan Del Sur is located in the Northeastern portion of the island of Mindanao in Southern Philippines. It is bounded to the north by the Province of Agusan Del Norte; to the east by the Province of Surigao Del Sur; to the South by the Province of Compostela Valley; and to the Southwest and West by the Provinces of Compostela Valley and Bukidnon, respectively.

Baseline Profile

The Province of Agusan del Sur has an elongated basin formation with mountain ranges in both the eastern and western sides forming a valley, which can be found at the central section of the land. Based on the climate map of the Philippines, the modified coronas classification shows that the province falls under Type II. This climate type has no dry season with a very prominent wet season.

The four (4) municipalities of Veruela, Trento, Bunawan, and Sta. Josefa compose the VETREBUNS ARC Cluster. Contiguously situated in the southern part of the province, the cluster has an aggregate land area of 168,839 hectares, 18.83% of the total land area of the Province of Agusan Del Sur. In the cluster, the municipality of Trento has the largest land area at 80,982 hectares and the municipality of Sta. Josefa has the smallest land area at 15,899 hectares.

The municipalities of the VETREBUNS Cluster are all accessible by land. The Tumaba and Cebolin-Cuevas ARCs can be reached through the Cuevas-Bislig route leading to Surigao Del Sur, while the Sta. Josefa and Patrocinio ARCs can be reached through the concrete provincial circumferential road. The Kaunlaran ARC Bunawan is accessible via the Nueva Era-Bunawan barangay road while the Kaunlaran ARC Veruela side can be reached through two access points – the Limot-Tagumpay road and through the Veruela Poblacion. The Labis-Pomasa ARC can be reached through the secondary provincial road from Sta. Josefa and the all-weather road leading to Veruela proper.

The VETREBUNS Cluster has a total of 37 ARBOs with in seven (7) Agrarian Reform communities. Out of these 37 ARBOs, 32 ARBOs are directly involve in rice commodity activities with a total membership of 5,705. Membership by gender is 3,546 men and 2,159 women, with 68.68% or 3,918 of them being ARBs. Of the total count of ARB members disaggregated by gender; 2,647 are men and 1,271 are women. Indigenous People members counted is 856, 706 are men and 150 women.

Development Issues

Studying the rice value chain of VETREBUNS and the proposed post-harvest facilities for the area, there is a need to carefully consider the inherent development issues as well as the capacity of the rice farmers to utilize the proposed facilities.

Some development issues that were considered are:

  • There is low productivity of the rice lands in the area. This can be attributed to the low utilization of HYV seeds, low usage of fertilizers as well as the lack of capital to purchase such need inputs.
  • Traders are often the source of production capital of the farmers thus the latter are also obligated to sell their produce to them to be able to repay their debts.
  • The value chain shows that the post-harvest facilities’ ownership is concentrated on the millers and traders.
  • Farmers prefer to sell wet palay rather than dry them to avoid additional costs.
  • There is a small difference in the buying price of wet and dry palay.
  • Traders from other parts of the region have started to buy wet palay in the VETREBUNS area but prefer to dry them outside the region.
  • Present farmer’s cooperatives still lack the resources and capacity to act as rice traders in the industry.

Goals and Objective

The goal of the project is to increase income of about 30% to 5,705 ARBs/farmers in 2021.

Main Objectives:
1. To provide farmers an affordable access to farm machineries for production and processing facility services for their palay for household consumption;

2. To engage and expand milled rice trading with the other non-rice producing cooperatives, fast food chains, hotel and restaurants, super markets, wholesalers and retailers of milled rice in VETREBUNS ARC Cluster and other regions;

3. To introduce new technologies and techniques designed to improve farm productivity and income;

4. Adopt of appropriate technology in rice production by VETREBUNS ARC rice farmers; and

5. Upgrade of the capacity of ARC people’s organizations to manage their institutions and enterprises, and integrate economic linkages between cooperatives.

Strategies

Development needs such as agricultural productivity, post-harvest facilities, and access to market remains to be the pressing problem in the VETREBUNS ARC Cluster.

The framework below shows the strategic framework of the project where interventions focuses on these three (3) core needs of the ARC cluster.

The proposed value chain allows the main participating ARBOs, LAMUPCO, KAMMPE and BARBMPC, to be involved on rice production, to which farm inputs will be provided such as production financing, fertilizer, chemical, etc., through lending scheme to its farmer members. In return, the palay produce by the farmer members will be sold back to the lead ARBOs, in which buying stations will be established in their respective areas of main participating ARBOs. With these process flow, the concept of integration of palay to lead and main participating ARBOs will be achieved. Provision of trading capital to buy wet palay from the farmer members will be financed by SASEPCO.

On the other hand, SASEPCO as lead ARBO, will consolidate all the palay from the three (3) main participating ARBOs/buying stations, run and manage the main enterprise of the cluster – milled rice. With business-to-business relationship with Baug CARP Beneficiaries Multi-Purpose Cooperative (BCBMPC), Sto. Niño Multi-Purpose Cooperative and other formal and informal institutions, additional funds for the capitalization of palay trading will be accessed.

The purchased wet palay by the main participating ARBOs will be sold to lead ARBO (SASEPCO) for drying, storing, milling and trading of milled premium rice to whole sellers, retailer, other non-producing rice ARBOs and to fast food chains, hotel and restaurants as well as to super markets within and neighboring regions of Mindanao and Visayas.

Investment Needs

The project for the VETREBUNS ARC cluster, main participating ARBOs, Kahugpungan sa Malahutayong Mag-uuma para sa Ekonomikanhong Kalambuan (KAMMPE), La Fortuna Multi-Purpose Cooperative (LAMUPCO), and Bong Agrarian Reform Beneficiaries Multi-Purpose Cooperative (BARBMPC), will engage into rice production improvement and will sell their palay to SASEPCO for processing. Rice trans-planter, 4WD 35Hp farm tractor and hand tractor with complete implement and trailer, and combine harvester are proposed to be provided in each of the three main participating ARBOs within the municipalities of Sta. Josefa, Veruela and Bunawan as their business assets.

The SASEPCO as lead ARBO who will run and manage the large-scale drying and milling operation of the cluster and will also be provided with multi-pass rice mill, recirculating mechanical batch dryer, 10-wheeler wing van type hauling truck, 6-wheeler truck, and warehouse/bodega.

These lead ARBO and main participating ARBOs in the cluster will be trained to manage and operate the pre and post-harvest facilities as an enterprise. Each facility will target at least 1,426 rice farmers to mill their rice for consumption in the cooperative’s facilities to sustain its operations. The first objective of the enterprise is to offer farmers an affordable way to farm equipment services, drying, milling and storage of their grains for their household consumption as well as on commercial scale. This will result in savings by the households as well as dividends from the successful operations of their cooperative. The second objective of the enterprise will be to engage in large-scale milled rice trading with the other non-rice producing cooperatives, retailers, wholesalers and even to the fast food chain, hotel, restaurant and super markets in the region by supplying them with premium milled rice.

Market and Opportunities

TThe VETREBUNS ARC has been identified as a key production area for rice, among others. At present, it produces 39% of the total rice output of the Caraga Region. The average rice production yield per hectare per annum of the VETREBUNS ARC is pegged at 3.36 MT.

Demand for rice in both the local and international markets are seen to rise as the population of the country and the world continue to increase. Livestock (e.g., sheep and cattle) is also fed with cereal grains in increasing volumes, further boosting annual demand for rice around the world.

Rice self-sufficiency of the Caraga Region, Agusan del Sur Province and the VETREBUNS ARC primes them as rice suppliers of other parts of the country. The increasing production, coupled with the declining trend in per capita consumption of rice in the Caraga Region provides an opportunity for them to be converted into a domestic exporter. With the boosted support provided by the Philippines government for the rice farmers, rice production may well be the key to inclusive growth and improved local economies in these areas.

The VETREBUNS ARC rice cluster has begun to organize itself as a strongly inter-linked group that is poised to optimize public and private support for its rice production and marketing and to exploit an increased bargaining power.

The recent emergence of market niches – both domestic and foreign – for rice produced with the use of purely organic fertilizers provides another lucrative alternative for smallholder farmers of the
VETREBUNS ARC.

Moreover, the growing global trade of rice fueled the increased participation of the emerging economies therein. The share of the developed countries therein will continue to decline. Specifically, the shares of the Organization for Economic Co-operation and Development (OECD) member-countries in the world imports and exports of rice are projected to be lower than their current levels. The rice exports of these countries are seen to decrease from the average of 12.98% for 2003-2012 to 10.33% for 2013-2022. Similarly, their rice imports are seen to decrease from the average of 14.46% for 2003-2012 to 13.82% for 2013-2022.

Gender, Youth and Indigenous Peoples

Rice farming as it is practiced by both men and women, the project will expect thirty percent (30%) of women will be involved in rice farming as well as in the adoption of the technologies designed to increase farm productivity, and 30% women will become Para-Technicians. At least 30% of IPs.

Indigenous People’s (IPs) participation will also be involved as integrator on palay buying.

Expected Outcomes

In 2021 the target beneficiaries have 30% increase in income through the following benefits:

  • Accessed to Farm Equipment, Transport Services and Facilities (Less 10% of the service fees if ARBO member);
  • Accessed to Para-technician Services on Updated Farming System and Technology;
  • Acquired technical skills on the operation and management of facilities/equipment;
  • Accessed to Farm to Market Roads (Reducing Transportation Cost 10% to 20%, travel time of 30 to 45 minutes);
  • Established Rice Marketing Enterprise;
  • Capacity building activities on Enterprise and Institutional Development to ensure that the enterprise will be properly managed;
  • Acquire Farm Equipment and Facilities as Business Assets
  • Trained technical staff to ensure proper operation and management on the facilities/equipment;
  • Enhanced Financial System;
  • Installed Policies, Systems and Procedures on Operation and Maintenance of the Facilities/Equipment; and
  • In-kind Incentives for 500 sacks quota of palay.

Sustainability Measures

ENHANCING CAPACITY OF COOPERATIVES IN OPERATING THE MACHINERIES THEIR PROJECTS

Often times the machineries and facilities that are provide for by the government are left unrepaired when these break down. Technical expertise in operating such machineries is needed to maximize its capacity at the same time avoid excessive use of its capacity. Operators of these machine must be trained properly on the proper usage, maintenance and repairs of these. Also imperative is ensuring that funds will be available in the future by regularly setting aside portion of the profits for its maintenance and repairs. This fund will be dedicated exclusively for that purpose alone.

NETWORKING BETWEEN COOPERATIVES

Linkages between cooperatives allows individual cooperatives will support and a wealth of experiences in managing cooperatives and projects. By interacting with other cooperatives in the area thru training and organizational meetings, cooperatives will learn the value of building alliances and partnerships to strengthen their role in the rice value chain of VETREBUNS. It is hoped that these partnerships will not only be political or social in nature but will include building economic ties with other cooperatives. Exchanges on products as well as services allows cooperatives to maximize the local resources as well as the help generate a bigger spread effect of their income within the locality.

UPGRADING THE CAPACITY OF COOPERATIVES AND PEOPLES ORGANIZATIONS TO MANAGE THEIR ENTERPRISES

Leadership and management seminars will be needed to develop leaders from amongst the members of the cooperatives. In the history of cooperatives in the Philippines, many enterprises have failed because of mismanagement and lack of human resources. These organizational issues can be addressed through capacity building of the officers and members of the cooperative. Exposure to similar enterprises and institutions will allow the officers and members a wider perspective of the industry and at the same time discern practical lessons on developing their own enterprises.

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