Supply Chain

Supply/Value Chain Analyses of Four (4) Commodities (Abaca, Coco-Coir, Cassava and Queen Pineapple) Under the RP-SPAIN, SAIS-BC Project 1

Supply/Value Chain Analyses of Four (4) Commodities (Abaca, Coco-Coir, Cassava and Queen Pineapple) Under the RP-SPAIN, SAIS-BC Project

I. Introduction

Project Overview

This study on Supply/Value Chain Analyses of Four (4) Commodities (Abaca,

Coco-Coir, Cassava and Queen Pineapple) was commissioned by the

Department of Agriculture RFU-5 and the RP-Spain, "Strengthening of the Agro

Industrial Sector in Bicol and Caraga" (SAIS-BC) Project to come up with updated

and comprehensive S/VCA for Cassava, Pineapple, Abaca and Coco Fiber to

provide basis and reference in assessing the profitability of Coop-beneficiaries

value-adding initiatives in relation to the processing and marketing interventions

provided by the project. The concept of Supply/Value Chain Analysis (S/VCA) for

every commodity is deemed important in the identification of effective

strategies in the production, marketing, processing and supply sourcing aspects.

S/VCA is also expected to be beneficial in crafting future developmental plans

and policy directions specifically in the identified commodity or industry.

The RP-Spain, SAIS-BC Project is a grant assistance from the Spanish Government

through the Agencia Espaola de Cooperacion Internacional para el Desarollo

(AECID). It aims to facilitate technology adoption, resource utilization and to add

value to existing economic activities of the agri stakeholders in the rural areas.

The project components include the establishment and provision of processing

facilities; institutional development and capability building; marketing assistance;

and project management and monitoring.

This S/VCA Study was conducted under the marketing assistance component, to

assist the coop-beneficiaries in assessing the market readiness or competitiveness

of their primary and secondary-processed commodities and linking the

cooperatives to possible markets for their products.

Supply/Value Chain: Definitions and Concepts


Supply Chain generally means the physical flow of goods that are required for

raw materials to be transformed into finished products and value chain is being

taken to mean a group of companies/entities working together to satisfy market

demands. It involves a chain of activities that are associated with adding value

to a product through the production and distribution processes of each activity.

An organisations competitive advantage is based on their products value

chain. The goal of the company is to deliver maximum value to the end user for

the least possible total cost to the company, thereby maximising profit (Porter

1985).

It is useful to review some of the main activities that occur at each stage of the

value chain to identify key stages where costs can most effectively be reduced,

resources can be most efficiently utilized and profitability be maximized. These

include the following.

Input supply. This stage is concerned with the sourcing of raw materials required

for agriculture production, processing, and trade. Inputs may either be procured

locally or imported. The final value of an input at its place of use includes all

manufacturing costs, transportation costs, customs duty and tax, and unofficial

payments incurred up to that point. The efficiency of a countrys input supply

system therefore has a major bearing on the performance of the entire value

chain.

Farm production. This stage is concerned with primary agriculture production

and ends with the sale of a raw commodity at the farm gate. These transactions

may occur literally at the farm gate or at some other point where the farmer

hands over ownership of the product to the next value chain participant.

Depending on the crop, some type of primary processing (such as the shelling or

bagging of dry grain) may take place at the farm level.

Assembly. This stage involves the collection of agricultural produce from many

farmers by a cooperative-buyer, industrial buyer or licensed assembler and

Input Supply

Farm Production

Assembly

Processing

Logistics


delivery of the raw material to a factory for industrial processing or packaging.

Bagging and simple grading, sorting and classification of crops can also occur at

this stage depending on arrangements made at the first point of sale.

Processing. The processing stage involves the transformation of agriculture raw

materials into one or more finished locally or internationally traded goods. Raw

commodities, of course, are also traded and this stage may not apply to every

crop. Primary processing may start from the site of production after harvest, or

during assembly stage if the assembler also acts as processor.

Domestic and international logistics. The logistics stage is concerned with the

delivery of traded commodities to their final market destination. This may either

be a foreign market in the case of exports, or a local market for import

substitutes. For import substitutes, the logistics stage ends at the domestic level,

but the analysis is still concerned with the cost of importing a like product from

the nearest or most competitive country.

Price build-up from stage to stage. In value chain analysis, all inputs and outputs

carry forward their inherited/accumulated value from the previous stage.

Although this may seem understandable enough, it is still imperative to mention

this especially in the VCA of agricultural commodities where the focus is usually

on the qualitative aspect of product value and not on cost levels at different

stages as a key determinant of competitiveness and profitability. Price build up in

highly perishable and seasonal agricultural products depends on the efficiency

of the input supply system, farm production, assembly, processing, and logistics

costs up to the final domestic market.

Product transformation. Throughout the value chain agriculture products take on

many different forms. In the most basic sense, this may simply be the difference

between a recently harvested farm product with high moisture content and one

that has been assembled in a warehouse and dried for several months. As

described, most agriculture raw materials also undergo some type of industrial

processing to produce one or more final traded commodities. This may involve

any number of processes such as granulating (cassava), drying, decorticating &

baling (coco-coir) and fiber extraction (abaca and pineapple fiber). Again, this

point on product transformation may seem understandable enough, but the

fact that a single agriculture commodity can take on different forms at each


stage of the value chain means that great care is needed to track the

accumulated value across products in a consistent manner.

2. Scope of the Study

The scope of the study is limited to the RP-Spain, SAIS-BC Project cooperative-

beneficiaries as the sub-sector in the six (6) provinces of the region covering the

stages of production, processing and marketing. The study identified key

constraints and opportunities as well as the dynamics of the supply/value chain

actors of the four focus commodities and identified the competitive advantage

of the actors to increase their productivity and profitability in terms of production,

value-adding and processing. The data gathering results for this study is annexed

to this report.

3. Objectives

General

This study has the primary purpose of establishing a quantified description and

assessment of the value-adding activities for Cassava, Pineapple, Abaca and

Coco Fiber being undertaken by the project beneficiaries using the

Supply/Value Chain Analysis tool.

Specific

This study has the following specific objectives:

Value Chain

1. Develop a commodity value chain map; identify the major players in the value chain

2. Identify the constrains and opportunities faced by the coop-beneficiaries commodity key players along the value chain

3. Identify the competitive advantages/disadvantages of the coop-beneficiaries in terms of market access, technology/product development management/organization, input supply (raw materials), finance, policy, operating environment/infrastructure, trade regime, etc.


4. Identify sector/commodity prospects and barriers to growth and relate them to an analysis of the competitive strength of the value-adding business.

Marketing Conditions and Project Support/Interventions

1. Identify the present market conditions of the sub-sector market, key players, demand supply gap, pricing trends, imports and exports (if applicable), distribution networks

2. identify the gaps and opportunity areas for possible interventions of the project and assess how the projects previously-provided interventions affect the value-adding systems of the four focus-commodities

4. Methodology of the Study

To achieve the above mentioned objectives, the study was divided into three (3)

primary Phases 1) Preliminary Consultations and Data Gathering, 2) Data

Integration, Critiquing and conduct of Training and Workshop 3) Presentation of

key findings, and Finalization of S/VCA Outputs. A combination of survey, guided

interview, Focused-Group Discussion and Key Informant Interview (as sources of

primary information) and literature review (as source of secondary information)

were conducted. The primary information served as the critical framework for

analysis while the secondary information provided important inputs for

understanding the context and rationale behind the status of subsector.

This combination has provided the needed context-bound information that lead

to explaining the commodity scenarios more concretely as it was expected that

a simple data-collecting instrument would neither reveal the true picture of the

value addition and the dynamics nor would it demonstrate the true benefits of

such activities. Further, it was also expected that the observation would also be

difficult particularly with the limited time frame thus, both qualitative and

quantitative data gathering were used.

This strategy has provided meaningful insights as to how the producers,

processors, assembler, and other sectors along the value chain perceive various

issues and address specific constraints of their commodity of concern. Also, the

strategy enabled the respondent to express subjective insights and feelings to

the interviewer regarding third party information, or into a task situation.


Lastly, in order to facilitate more efficient conduct and coordination of the

activities within the study, a team composed of DA, FIDA & PCA Personnel was

ordered to spearhead the activities under the 3 major phases of the study.

Results and data gathered during the first phase were processed and analyzed

by the coop-beneficiaries themselves during the conduct of the 3-day

Supply/Value Chain Training Workshop under the guidance and supervision of

the resource persons from the University of Asia and the Pacific. The training

workshop was organized to achieve four major objectives, 1) to understand the

dynamics of the four focus commodities and the coop-recipientsvalue-adding

activities 2) present both the coop-beneficiaries and survey team outputs and

seek clarification on critical issues of the subsector, 3) to validate the findings,

and 4) to explore ideas for interventions that addresses constraints and aide in

the development of the value chain. The workshop provided certain clarity to

the findings and also offered certain new information. Details, Schedule and

participants of the activities conducted under the Phases 1 and 2 of the study

were provided in Annexes 2-4 of this report.

Sampling Framework and Information Gathering

For this study, key representatives of all coop-beneficiaries of the SAIS-BC Project

were interviewed and requested to answer survey questionnaires to gather data

and information. Along with the survey, six (6) FGDs were conducted in all

provinces of the Bicol Region with 10-25 participants in each session and Key

Informant Interview of progressive processors and assemblers (who at the same

time serve as market/buyers of the processed products of the coop-

beneficiaries) for in-depth understanding on selected key issues on: production,

marketing, trading, processing, as well as constraints/opportunities and potential

project interventions to minimize the constraints and take advantage of the

opportunities.


QUEEN

PINEAPPLE

COMMODITY PROFILE


Pineapple, scientifically known as Ananas comosus Merr. is one of the country's

most popular fruits. It is also one of the top earners of foreign exchange among

the country's agricultural commodities.

Its fruit has tapering shape, deep eyes, yellow rind to deep yellow flesh color, has

small core, crispy texture, rich flavor and distinct sweetness. It is smaller in size and

has spines on the leaf and tip.

The fruit contains water, carbohydrates, substantial amounts of Vitamin C and

Potassium and other nutrients

Pineapple Varieties

Several varieties of pineapple are available in the Philippines. One is the Smooth

Cayenne or Hawaiian, which is the heaviest, most popular, and best for canning.

The Queen or African Queen or Formosa is the sweetest. The Native Philippine

Red or Red Spanish is cone-shaped and considered of medium quality. It is also

grown for its fiber. The Cabezona is the largest, measuring approximately 8-12

inches long when fully matured. Other varieties include the Buitenzorg or Java,

Sugar, Loaf and Abakka.

Table 1. Commonly Grown Pineapple Varieties

VARIETY SIZE SHAPECOLOR OF

FLESH FLAVOR TEXTURE

Smooth Cayenne

2.3 to 3.6 kg (big) cylindrical Light yellow Sweet Slightly fibrous

Queen 0.45 to 0.95 kg (small)

Tapering Deep yellow Sweet & crisp rich

Red Spanish .91 to 1.4 kg (medium)

Barrel shaped

Pale yellow Sweet and coarse spicy

fibrous

Cabezona 8 to 12 in. cylindrical Dark green to bright yellow

Queen Pineapple is traditinaly grown in Bicol, mostly in the province of

Camarines Norte particularly in the municipalities of Basud, San Lorenzo Ruiz, San

Vicente, Labo, Talisay, Daet, Paracale, Sta. Elena, J. Panganiban and

Capalonga. Due to flower induction technology, supply of fruit is available year

round.

Nutritional Facts


Table 2. Nutrition Facts of Pineapple Fruit

Serving size (oz) 4Calories (Kcal) 90Carbohydrates (g) 21Fat (g) 1Crude Fiber (g) .66Sodium (mg) 10Potassium 165Vitamin C 160Thiamin (Vit. B1) 35Riboflavin (Vit. B2) 6Niacin 2Folic Acid 8Vitamin B12 2Copper 4Pantothetic Acid 2

Source: Agribusiness Systems Assistance Program (ASAP-USAID), DA-R5

Production Volume

Pineapple production posted a 3.87 percent decline in the last quarter of 2009

from its level in 2008.This drop in production as well as that in the previous quarter

resulted in 3.75 percent decrease in 2009 pineapple harvests (Table 1). In

SOCCSKSARGEN, pineapple output dropped by more than 5 percent in 2009 as

farmers shifted to cavendish and corn cultivation. The production gain in

Northern Mindanao, the top producing region did not offset losses in

SOCCSKSARGEN (Figure 4). In Camarines Norte, yield decreased as farmers were

compelled to use less farm inputs due to high costs. Area planted however,

increased by 0.95 percent in 2009 despite the reduced area in Saranggani due

to area expansion of corporate farms in Bukidnon and Misamis Oriental (Table 3)

Source: BAS Major Fruit Crops Quarterly Bulletin 2009

Table 3. PINEAPPLE: VOLUME OF PRODUCTION IN METRIC TONS, BY REGION, BY PROVINCE

PHILIPPINES, 2003-2008


Source: BAS Major Crops Statistics 2003-2008

Similar to the change in the land area where pineapples where harvested, the

production volume showed erratic changes but similar trend as area harvested.

From 2005 to 2007, there was a steady increase in the volume of production. But

in consecutive years the production decreases in the when the prices of fertilizers

tremendously increased.

Table 4. Volume of Production (mt), 2005-2009, Region/Province/Year


Particulars 2005 2006 2007 2008 2009

Region V (Bicol Region)

104,995.39 112,210.00 116,815.86 111,529.72 109,967.07

Albay 1,099.53 1,006.00 991.88 1,018.16 1,044.88Camarines Norte * 99,892.32 107,338.00 112,241.09 106,555.00 104,789.00

Camarines Sur 2,812.26 2,765.00 2,669.22 2,820.67 2,860.24Catanduanes 13.37 14.00 11.55 12.59 12.51Masbate . . . 50.00 91.20Sorsogon 1,177.91 1,089.00 902.12 1,073.30 1,169.24* Formosa variety

Table 5. PINEAPPLE: AREA PLANTED IN HECTARES, BY REGION, BY PROVINCE, PHILIPPINES, 2003-2008

Source: BAS Major Crops Statistics 2003-2008

Camarines Norte continues to be the top producer of pineapples with 106,555

metric tons of pineapple production in 2008 accounting for 94.94% of the total


regional production. The provinces of Camarines Sur, Albay, Sorsogon and

Catanduanes shared the remaining 5.06 percent.

In terms of pineapple fibers, the production comprises handscraped pina fiber

(includes knotted pina fiber), Decorticated Pineapple fiber and Brushed

Pineapple fibers.

Knotted handscraped pina fiber is being produced by LPMPC, priced at

P5,000/kg is used in weaving pina cloth which is priced at 1,800/cut. In 2009 a

total of20.4071 kgms. Were produced. Decorticated pineapple fibers during the

year reached 4,058.35 kgs. Of which 1,706.95 kgs were sold to the following

buyers at Php 200-250/kg

1. Philippine Textile Research Institute (PTRI)

DOST Gen. Santos Ave. Bicutan, Taguig, MM

2. MASA Ecological Development Incorporated

Tagaytay City

3. C & J Specialty Paper (Phils.)

Brgy. Langkiwa, Binan, Laguna

Table 6. Pineapple Fiber Production

MONTHP R O D U C T I O N

SALES (kgs.)KNOTTED PINA FIBER (kg)

Deco Pina Fiber (kg)

JANUARY 1.616 540 200FEBRUARY 2.181 552 605MARCH None 587.3 200APRIL 1.51 265.35MAY 1.438 475.5JUNE 3.46 210.5 200JULY 3.754 568.7 100AUGUST 3.281 356.2 1.95SEPTEMBER .665 106.0OCTOBER 2.110 74.0 150NOVEMBER 3 84.5 100DECEMBER 537 247.3 150TOTAL 20.4071 4058.35 1706.95

From April to September 2009, the Pineapple Growers of Matnog, Basud,

amarines Norte produced 720 kgs. Of brushed pina fiber. It was supplied to

Asia-Link Craft, a specialty paper processor in Marikina City who shoulders the


cost of production for the brushed pina fiber produced by the cooperative. Price

of the brushed pineapple fiber is at Php235.00/kg.

Area Harvested

There has been an erratic change in the volume of production among areas

planted with pineapple.For 2005 and 2006, there was an increase in the area

planted. But in the last three years, there was a decreasing area planted with

pineapple. Camarines Norte has the biggest area, followed by Camarines Sur

smallest area planted with pineapple is Catanduanes.

Table 7. Area Planted/Harvested (in hectares), 2005 - 2009, Region/Province

Particulars 2005 2006 2007 2008 2009

Region V (Bicol Region) 3,837.00 3,847.00 3,323.00 3,115.0

0 3,109.0

0 Albay 100.00 80.00 80.00 75.00 75.00

Camarines Norte 3,250.00 3,255.00 2,731.00 2,528.0

0 2,520.0

0 Camarines Sur 316.00 335.00 335.00 335.00 335.00 Catanduanes 3.00 4.00 4.00 4.00 4.00 Masbate . 5.00 5.00 5.00 5.00 Sorsogon 168.00 168.00 168.00 168.00 170.00

MARKET

Local Market

Fresh Pineapple Market

Local traders buy the bulk of the pineapple harvest. The product is in turn

marketed and sold in nearby provinces such as Albay, Camarines Sur, Laguna

and Quezon. Balintawak, Divisoria and Munoz markets of Metro Manila absorb a

big part of the harvest. The growers/retailers cater to the local demand for

pineapple.

They also sell their fresh pineapple at the roadside to travelers and motorists. The

mode of payment for pineapple fruits brought by the traders is either in cash or

installment basis.

Farmgate prices of pineapple are based on the size and supply of the

commodity in the market, size classification ranges from extra/jumbo (Extra

large) to butterball (very small) with bigger sizes commanding higher prices.


Another form of pricing is called escalera where sizes form the extra/jumbo to

tercera have only one price and those from 4th to butterball also have one price.

Factor that affect the price margin are transportation, handling and hauling

expenses.

Retailers in Metro Manila in turn sell their fruits at prices based in weight.

Pineapple prices do not vary much owing to the fact that the fruit is available all

throughout the year.

CLASSIFICATION

Extra large ----------- above 1,100 g

Large ----------- 800 1,099 g

Medium ----------- 500 799 g

Small ----------- 350 499 g

Butterball ----------- below 350 g

MATURITY INDEX

Widening of the eyes

For distant market, harvest before fruits show trace of yellow

For immediate consumption, harvest fruits with trace of yellow

MARKET PREPARATION

Sort fruits according to size and ripeness Cull out those with injury, disease and/or insect damage Trim stalk, leaving about 1cm. For disease control, dip in 0.2% thiabendazole (fungicide) for 1 minute To extend shelf-life, apply wax by brushing the fruit surface with an

emulsion of mineral oil, fungicide solution and liquid detergent (1:18:0.05 v/v/v).

Air-dry completely before packing in containers or before bulk loading inside transport vehicle

PRODUCT TYPES and APPLICATION

As fresh ingredient in fruit salad sweetened with condensed milk and cream.

As ingredient in ice-cream, shakes, halo-halo and gelatin. As filling for cakes, pies, tarts and bread. As sweetening ingredient for meat dishes, curries and stews. As jam, jelly, puree and marmalade. As thirst quencher when made into fruit drinks, shakes and other mixed

beverages.


As preserved fruit cooked in syrup (slices, chunks, tidbits or crushed) As candied fruit (dehydrated)

As fermented product such as wine vinegar and soy sauce. As fermented fruit pulp (nata de pina) used as salad ingredient or as

dessert

Commodity Flow & Marketing Chain and Outlets

Several intermediaries are involved in the marketing of pineapple in the region.

From the growers, the fruits are either sold to wholesaler/traders, retailers, or

directly sold to processors before they reach the consumers. Small amounts of

the produce are also being sold directly to the consumers in the locality.

Figure 2. Commodity Flow of Fresh Pineapple

Wholesaler/traders represents majority of the pineapple traders in the regional

market who generally supply the retailers. They primarily sell to retailers and

sometimes directly to consumers. Retailers are those who sell directly to

consumers. They sell pineapples in various forms such as unpeeled, peeled, and

peeled and sliced. Processors, on the other hand are those sell pineapple in

various processed forms such as pineapple juice, pineapple jam, dehydrated

pineapple, pineapple tart, empanaditas, and pineapple jelly.


Sales Arrangements

Sales arrangements vary at different marketing levels. Manner of selling is based

on either picked-up or delivered while mode of payment on either cash or

installment. Normally, the wholesaler/retailer picks up the commodity at the

farm. Very seldom does the farmer bring the produce to the buyer's place since

this will involve arranging for transport and incurring additional cost. This usually

occurs during peak harvest time when farmers have to bring their produce to the

buyers to facilitate product disposal.

Among traders, manner of selling is usually based on delivered basis except for

those procurement "viajeros" who pick up their commodity from the suppliers.

The volume of supply also influences manner of selling. In times of over supply,

seller deliver to buyers while in times of scarcity, buyers pick up the products.

Processed Pineapple Market

Processed pineapple products are sold in the local market. The Caayunan Multi-

Purpose Cooperative in Basud, Camarines Norte is engaged in pineapple

processing. Their operation is still at the micro level scale. Members also engage

in direct selling to different government offices, private enterprises and

educational institutions. Processed pineapple may take the form of dehydrated

pineapple, pineapple tart, empanaditas, pineapple jelly, pineapple juice, and

pineapple jam.

Pineapple Fiber Market

Fiber production from the leaves of pineapple is still at the testing stage. In 1998,

the Department of Trade and Industry, in cooperation with the Provincial

Government of Camarines Norte, conducted a spinning trial. The Manila Bay

Spinning Mills (MBSM) for its initial commercial yarn production bought the one

ton dried fiber produced of these trials. The first produce was bought at P90.00

per kilo with succeeding deliveries bought at P120.00 per kilo.


Machine Decorticated Pineapple Fiber

The following are the list of spinning mills, which are the possible buyers of

pineapple fiber:

1. Dragon Textile MillsBinondo, Manila

Contact Person: Mr. Carlos Bun Sit Chung

2. Finetex Spinning Mills, IncorporatedDasmarias, Cavita

Contact Person: Mr. Churchil Vendiola

3. Filspin, IncorporatedCanumay, Valenzuela City

Contact Person: Mr. Lyndon Tan

4. Surya Manufacturing CorporationContact Person: Mr. R. K. Vig

5. Filway Development CorporationDr. Santos Avenue, Paraaque City

Contact Person: Mr. Benjamin Tan

6. Indophil Textile MillsMarilao, Bulacan

Contact Person: Mr. V. K. Jain

7. Kewalram Philippines, IncorporatedCalamba, Laguna

Contact Person: Mr. Krishnen Kumar

8. Litton Mills, IncorporatedEdsa cor Ortigas Avenue, Quezon City

Contact Person: Mr. James Go

9. Malayan Textile Mills, IncorporatedSun Valley Subdivision, Paraaque City

Contact Person: Mr. Tan Ching

10. Manila Bay Spinning Mills, IncorporatedLopez Jaena Street, Marikina City

Contact Person: Mr. Arsenio Tanco


11. Solid Development, IncorporatedSan Ildefonso, Bulacan

Contact Person: Mr. Alfonso Castillo

12. Solid Mills, IncorporatedKm. 20 East Service Road, Muntinlupa City

Contact Person: Mr. Dicksen Young

13. Yarn Ventures Resources, IncorporatedCabuyao, Laguna

Contact Person: Mr. Toshiak Okuma

The machine decorticated pineapple fiber is also being used in the production

of handmade paper. The target regular buyers for this product are:

1. Mr. Asao ShimuraKannabis Press

Poking, Capangan, Benguet

2. Mr. Takaaki OkadaNippi Company, Incorporated

Pio Del Pilar, Makati City

3. Ms. Anna Marie S. de ChavesYamamoto-Tomo Menko, Ltd.

Legazpi Village, Makati City

Handwoven Pia Cloth

Listed below are the possible buyers of handwoven pia cloth:

1. Philprime Garments Manufacturing Co., Inc.2671 Honduras St., corner Batangas St.,

Makati City

2. Perpetual CraftNHA Industrial Building II

Lapu-lapu Avenue, Kaunlaran Village, Navotas

3. Agnes PhilipsVeness Haus of Fashion

Daet, Camarines Norte


4. Laguna-based embroiderers: Aileens Hand Embroidery

Ailyns Embroidery

Amelines Embroidery

Arevalo Sinamay Dealer

Carla Chris Hand Emboidery

Carmelitas Exclusive Embroidery

Coras Embroidery

De Leons Embroidery

Deng Lacbay Embroidery

Dial-Iris Hand Embroidery

Eduviges Alunan Embroideries

Eleazars Hand and Machine Embroidery

Fels Embroidery

Florencio Mamonong

Gloria Anonuevo

Imeldas Hand Embroidery

Lolys Embroidery

Mamonongs Embroidery

Marcia Ballesteros

Melys Hand Embroidery

Nemecia Embroideries

Neritas Embroideries

Rondels Embroideries

Valeriana Abederia

PROCESSING

The Formosa pineapple is a versatile fruit that is suited for the production of

quality dehydrated pineapple and pineapple juice. Its leaves are good sources

of fiber, which when decorticated and mixed with polyester, produces a

polypia cloth. The machine decorticated fiber is also an ideal raw material for

handmade paper, while the fiber extracted from the leaves through manual

scraping could be woven into pia cloth.


Dehydrated Pineapple and Pineapple Juice

The Caayunan Multi-Purpose cooperative (CMPC) in Barangay Caayunan,

Basud, Camarines Norte manufactures dehydrated pineapple and pure

pineapple juice, while the Samahan ng Nagkakaisang Mamamayan ng San

Antonio in Barangay San Antonio (SNMSA) and Labo Multi-Purpose Cooperative

at Labo, Camarines Norte produce machine decorticated fiber.

Handmade Paper

There are only three (3) producers of handmade paper in Camarines Norte, the

Guinacutan Handmade paper in Labo, the Macca Arts and Crafts in Paracale

and the Labo Multi-purpose Cooperative. The former is not operating regularly,

while the latter has already their own regular market in Metro Manila. Actually

Macca manufactures fans and boxes using handmade paper as raw material

and seldom sells paper sheets.

Machine Decorticated Pineapple Fiber

The fiber extracted from Formosa pineapple using the decorticating machine is

strong and silky in appearance that can be manufactured into a fine translucent

fabric locally known as polypia . It passes the spinning trial to by the Fiber

Processing and Utilization Laboratory (FPUL) of the Fiber Industry

The signing of Republic Act No. 9242 last October 2004, prescribing the use of

Philippine Tropical Fabric for uniforms of public officials and employees, gave

future to machine decorticated pia cloth.

Based on the test result of PTRI on the fineness and tensile strength of manually-

scraped Formosa fiber using their spinlab stelometer strength tester, the following

are the results:

Table 8. Characteristics of Pineapple FiberFiber Test ResultFineness * Coarse 29.45 denier * Fine 21.59 denierTensile strength * Coarse 30.29 kg.-meter/gram * Fine 23.70 kg.-meter/gram


The acceptable fineness of fiber is 20 denier and above while the acceptable

tensile strength is 15 kilogram-meter/gram and above. The test results therefore

showed that both the coarse and fine manually scraped Formosa pineapple

fiber surpassed the required standard for fineness and tensile strength for textile

production.

H a n d S c r a p in g

N e w ly H a r v e s t e d F o r m o s a P in e a p p l e L e a v e s

W a s h in g

D r y in g

D is e n ta n g l in g

K n o t t i n g

B o b b in W in d in g

W e a v in g

H a n d l o o m P i a C lo th

M a c h in e D e c o rt ic a t io n

B r u s h in g

W a s h i n g

S u n d r y i n g

C le a n i n g

U n b r u s h e d & W a s te F ib e r

C le a n in g /R e m o v a l o f D i s c o l o r a t io n

B o i l i n g a n d W a s h in g

B e a t in g a n d W a s h i n g

B le n d i n g / C o lo r in g

M o ld i n g / D e s ig n in g

P re s s i n g / C u t t in g / a n d D r y in g

H a n d m a d e P a p e r

B r u s h e d P i a f i b e r

Figure 3. Steps in Processing Pineapple Fiber and Pulp

Value Chain Analysis for Queen Pineapple Fiber (LPMPC Model)

Sector Introduction

The fiber extracted from Formosa pineapple using the decorticating machine is

referred to as Machine Decorticated Pineapple Fiber, strong and silky in

appearance that can be manufactured into a fine translucent fabric locally

known as polypia. It passed the spinning trial conducted by the Fiber

Processing and Utilization Laboratory (FPUL) of the Fiber Industry Development

Authority (FIDA).


The signing of Republic Act No. 9242 last October 2004, prescribing the use of

Philippine Tropical Fabric for uniforms of public officials and employees and for

other purposes, gives future to the proposed project on machine decortication

of Formosa pineapple leaves. With the population of government employees

nationwide said to be already 1.4 million and average per capita textile

consumption for four (4) blouses or polo barong of 1,600 grams, approximately

2,240 MT of textile needs to be produced for a year. Since the polypia fabric

has a fiber blend of 80% polyester and 20% pineapple fiber, there is a total

demand of 448 MT of tropical fiber nationwide in one year.

On the other hand, the demand for handwoven pia cloth from Year 2000 to

Year 2004 registered an average export sale of US$ 0.0077 million or Php 0.418

million peso-equivalent. The top 5 importing countries are France, United State

of America, Great Britain and Northern Ireland, Hong Kong and Japan.

The LPMPC is currently producing the seda type of handwoven pia cloth, which

is made of coarse fiber and silk yarn. However, they also intend to produce the

liniwan, which is made of pure and fine Formosa pineapple fiber.

The pia cloth made of liniwan or pure fiber, as well as pia seda are excellent

materials in making shawls, scarves, bags, cushion covers, placemats, table

runners and window blinds. It has slowly penetrated the foreign markets like

Japan, Hong Kong, United States, Canada, Italy, France, Denmark, Germany,

Switzerland, Netherlands, United Kingdom, China, Malaysia and Thailand.

Fiber produced from pineapple leaves go through five (5) basic processing

operations 1) Harvesting/collection of leaves 2) decortications 3) washing 4)

drying 5) cleaning. Only the decortications process is mechanized while the rest

of the four remaining processes are being done manually. The pineapple sub-

sector study tried to perform cost analysis in each activity related to operation or

production of the fiber, considering the inbound and outbound logistics involved

in fiber production, processing, trading and marketing.

Definition of Actors in the Chain


Industry Players

Producers: Farmers engaged in production of queen pineapple and source of

pineapple leaves. They are usually the ones harvesting and gathering fresh

pineapple leaves and sell it to other coop-assemblers/local traders or processors.

Local Trader: Local traders are directly involved in buying and selling pineapple

leaves from different farmer/producers. They usually act as the

consolidator/assembler of fresh pineapple leaves

Assembler: Wholesalers deal with large volume of products either through local

traders or farmers. They invest and transact large amount of money in their

business and often control the market price.

Trader/Exporter: These are large traders mostly working for large forward markets.

They may obtain their products from the wholesalers, farmers or local traders and

even through their own commissioning agents to collect desired quantities of

products. These traders often work as exporters and sell directly to foreign market

traders and also play the role as commission agent for other forward markets.

Processor: Processors are engaged in creating value addition by

processing/converting pineapple leaves into fiber and pulp for commercial uses.

Assemblers can sometimes be the processors at the same time depending on

the manpower and financial resources that can be tapped.

Commodity/Industry Constraints along the chain

Production/Input Supply Formosa pineapple farms in Camarines Norte ranges

from 1 to 3 hectares per farmer on the average. This variety can give-off 10-12

pieces of leaves per plant at maturity as fiber source.

The 142 members of the LPMPC who are pineapple growers have a total area

planted to pineapple of 40.15 hectares. If the annual production will cover 25.92

hectares, then these coop members are assured of a sure market of their

produce.

The 40.15 hectares plantation of the coop members who are pineapple growers

yields a total of 541,632 kilos leaves. They are assured therefore of an additional


annual income of Php 270,816.00 from pineapple leaves, which was long

considered as waste in agricultural production.

Despite the apparent financial benefits that can be derived from pineapple

leaves, majority of large pineapple producers in Camarines Norte is not totally

keen on harvesting pineapple leaves from mature, fruit-bearing stage pineapple

plants for fear that it will adversely affect or decrease the size, quality and

volume of pineapple fruits that may be harvested from the plants. Thus, the

periodic scarcity of supply fresh pineapple leaves for fiber and pulp processing.

Another constraint is the physical assembling of harvested leaves and hauling/

transport of the same from production to pick-up or assembling areas. Since

pineapple plantations are mostly situated along the slopes of the hilly terrain of

barangays covered by the province of Camarines Norte, carrying on-foot or

manual or animal drawn carts is the most reliable mode of transport of the

gathered leaves from point of production to processing centers. Such scenario

posts negative affects both on the timeliness and hauling/transport cost of

pineapple leaves.

Processing with regards to processing of pineapple leaves, preliminary

processing steps prior to machine decortication (handscraping, washing,

disentangling, knotting etc.) are being done manually. Thus, variability in terms of

time vs. efficiency, meeting/maintaining purity, quality and technical standards

are all arbitrary depending on the skill, mastery and competence of the workers.

For a specialty product penetrating and competing at the world market arena,

this scenario may post serious problems in the overall competitiveness of the

product.

Market The Office of the President, through the approval of Republic Act 9242

prescribing the use of Philippine Tropical Fabric for uniforms of public officials and

employees, the demand for pineapple fiber eventually increased. However,

since the SNMSA and the LPMPC could not cope up with the increasing demand

due to lack of working capital and machine deficiency, the LPMPC decided to

increase its production capacity by sourcing additional decorticating machines.

If more machine decorticated pineapple fiber will be produced in the province,

more pineapple leaves will be needed. The more pineapple leaves that would


be utilized, the more employment would be provided and the more increase in

income will be realized by pineapple growers. With these volumes of local

demand, steady market presence of international buyers, the increasing

variability and nature of use as well as the limited source of quality pineapple

fiber worldwide establishes the need for more pineapple fiber and pulp supply.

The main constraint however in the marketing of pineapple pulp and fiber is the

inadequacy of volume of supply of fiber which is being demanded by export

markets. The coop-processors/assemblers will have to rely on intermediary

assemblers in Metro Manila in order to market their produce because they

cannot enter into an export marketing contract due to limited volume of fiber

available and the inability to satisfy the required frequency of delivery. Thus,

local coop beneficiaries cannot directly demand or haggle for a higher buying

price of their produce.

In terms of trading logistics, the provision of hauling/delivery trucks can

significantly decrease trading cost and therefore increase traders buying price of

fiber from processors.

VALUE CHAIN (The case of LPMPC)

Production Cost

The total cost of pineapple fiber production sums up to P1,102.26 with an

estimated P110.23 cost per kilogram of production. This would yield net income

of P 197.74 or P19.77 per kilogram. This is based on the assumption that

production is 10 kg/day, with 22 days/month operation, thus 2,640 kg per year.

The details of the cost are summarized on the next table.

Table 9. Table Costs and Returns of Pineapple Fiber Production, Camarines Norte, 2010 (10 kg dry fiber


(DF)/day)

ITEM QUANTITY UNIT UNIT COST TOTAL P/kg

COSTS Raw material

Leaves (800kgs leaves make 10kls DF/day) 800 kg fresh leaves 0.10 80.00 8.00

Labor - Gathering of Leaves 800 kg fresh leaves 0.40 320.00 32.00

Decortication of Leaves 40 kg wet fiber 8.00 320.00 32.00

Washing, Drying & Cleaning 40 kg wet fiber 4.00 160.00 16.00

Fuel - Decortication of Leaves 3.50 liters 34.50 120.75 12.08

Transport of Workers & mach 0.35 liters 34.50 12.18 1.22 Lubricant 0.06 liter 127.00 7.47 0.75 Driver (transport of workers) 0.09 MD 250.00 22.06 2.21

Depreciation Decorticating machine (50,000/5yrs) 37.90 3.79

Hauler (86,800/15yrs) 21.90 2.19

TOTAL COST 1,102.26 110.23 RETURNS Dried Fiber (unbrushed) 10 kg.

Selling price of dried fiber 130.00 1,300.00 130.00

NET INCOME 197.74 19.7

7

ASSUMPTIONS:

production of 10 kg/day, with 22 days/month operation; 2,640 kg per year

Marketing Cost

There is also an additional cost in the marketing of the goods. An amount of

P24,414.00 is added for the marketing of pineapple fibers. For goods marketed in

Manila, an additional P750 is needed for the freight. The marketing costs

subtracted by the selling price of the products yields a net income for

consolidator of about P1,826 or P12.24 per kilo.

Table 10. Marketing Costs for Pineapple Fiber, Camarines Norte, 2010 ITEM QUANTITY UNIT UNIT TOTAL P/kg


COST

MARKETING (150kgs per load)

Buying price 150 kg 130.00 19,500.00 130.

00 Fuel cost (Labo-Daet back&forth) 4 liters 34.50 138.00 0.92

Driver (250/day) 2 hours/load 31.25 62.50 0.42

Helper (200/ day) 2 hours/load 25.00 50.00 0.33 Packaging Material (Plastic)6bags (good for 150kgs)

6

bag 15.00

90.00

0.60

Packing Tape(1roll good for 500kls)

1

roll 45.00

13.50

0.09

Packing (200-peso MD/500kgs DF) 1 load 60.00 60.00 0.40

Depreciation of warehousedepreciation=(87,500/10yrs)/4,500 DFper yr 291.00 1.94

Depreciation of weighing scaledepreciation=(7,500/5yrs)/4,500 DFper yr 49.50 0.33

Administrative cost 4,159.50 27.73

Total 24,414.00 162.76

Volume marketed to Manila 150 kg

Freight to Manila 150 kg/load 5.00 750.00 5.00

TOTAL MARKETING EXPENSES 25,164.00 167.76

Selling price for Manila 150 kg 180.00 27,000.00 180.00

NET INCOME OF CONSOLIDATOR 1,836.00 12.24

ASSUMPTIONS:

production of 10 kg/day, with 22 days/month operation; 2,640 kg per yeardepreciation = (87,500/10yrs)/4,500 DF/yr

depreciation = (7,500/5yrs)/4,500 DF/yr

* Weighing Scale = 5,787/2,640 kg DF/ yr

Supply Chain

The production of pineapple fiber in Camarines Norte follows a specific supply

chain. From the output supplies or the purchasing of raw materials, the

pineapple fibers are produced, processed and transported to markets. They are

then classified and stocked for trading. The pineapple fibers also will undergo

quality control to ensure top quality before they reach the market.


Costing for the Supply Chain

Raw materials are procured at P8 per kilogram. It is then processed at a cost of

P98.81. Various logistics expenses and trading cost sum up to P10.10 and P31.11

respectively. The buying price as the pineapple reac hes the market is P180 per

kilogram.

The above diagram shows the value addition, cost build up and profit margin at different stages

Key Issues on Pineapple Fiber Production


The table below summarizes the issues in terms of raw material supply,

fiber production, marketing and logistics of pineapple fiber production. As

indicated in the result of the SVC analysis It is also coupled with

recommendations on probable solutions on these issues.

KEY ISSUESSEGMENT Issues Recommended Actions

Raw material supply

unwillingness of some farmers to sell their pineapple leaves

Information dissemination and technology transfer on the proper way of harvesting pineapple leaves and training harvesters or explore the possibility of cultivating pineapple for the purpose of fiber production alone.

high perishability of leaves

conduct of processing activities on field and improvement in handling & transport efficiency

Fiber production

low production Improve fiber extraction method through continuous process research & equipment design improvement

high production cost Consider mechanized washing and drying of fiber, consider the cost vs. benefit of installing water source and waste water treatment facility

high maintenance cost of machinery and equipment

educate operators on proper utilization and maintenance of machinery and equipment

high risk in machine operation

enhance safety and efficiency of machine through training of operators and improvement of the design of machine/equipment

inconsistent quality of fiber

standardize the gathering and processing of fiber through improved processing technology & mechanization of the entire fiber extraction process

Marketing unsustainable supply of quality fiber

Information dissemination, increase in capital to provide for more MOOE and trading fund

lack of regular buyers Execute marketing contract with institutional buyers

longer term of payment by buyers

Strict stipulation of payment terms in the contract of marketing

Logistics high freight cost (to Manila)

Maximize volume per delivery

Mechanization of fiber extraction

Value-adding (fibercraft manufacturing)

Proper Fertilization

Appropriate culture and management strategies

Tumbling

Collective marketing

Direct marketing

Fiber classifying

Provision of hauling vehicles

Provision of delivery vehicles

Storage/ classifying buildings

Collective marketing

Direct marketing

Fiber classifying


Suggested interventions along the supply chain system of pineapple fiber, Bicol Region 2010.

Impact of SAIS-BC-Provided Interventions

On Production

Indirect effect on the increase in production of pineapple was realized because of

the additional financial benefits that can be derived from selling pineapple leaves

for fiber and pulp purposes.

INPUTSUPPLY

PRODUCTION PROCESSING MARKETTRADING

LOGISTICS

LOGISTICS


On Processing/Value-adding

The provision of processing equipment/machineries by the SAIS-BC Project provided

significant reduction in the processing and marketing/trading cost of the

cooperative-recipient. Foremost in the benefits provided by the project is the

utilization of the pineapple leaves which is otherwise considered waste by pineapple

fruit producers, creating alternative livelihood source and employment for the locals.

Second, on the part of LPMPC being the primary assembler/processor of pineapple

pulp and fiber, the project provided them additional assured supply of raw materials

for their fiber and pulp-based products enabling them to be more aggressive in

looking for more markets locally and internationally. Aside from the realization of the

cooperative to look closer in the stages of the chain in their own area covered in

order to identify areas for further improvement of efficiency and productivity. Lastly,

for the pineapple industry in Camarines Norte, the project presented an alternative

business and livelihood opportunity thereby contributing to the sustainability and

overall profitability of the industry.

POTENTIAL INTERVENTIONS


COCONUT COIR

COCONUT


COMMODITY PROFILE

Coconut is widely grown in the Philippines but is mostly found in 68 out of 79

provinces in the country covering about 1,195 municipalities. Next to Indonesia, the

Philippines is the worlds second largest producer of coconut. Of the countrys total

arable agricultural area of 12 million hectares, the coconut area shares 27 % or

about 3.258 million hectares although based on its 2006 report, the Bureau of

Agricultural Statistics (BAS) has put the total coconut area at about 3.33 million

hectares.

There are more than 300 million bearing coconuts in the country today. The coconut

palms produce about 14 billion nuts/year at an average of 43 nuts/palm/year. From

1998-2007, coconut production increased at a yearly rate of 2.81 percent. In the last

five years, the average production has reached 2.3 million MT in copra terms. An

average coconut plantation produces about 1.0 metric ton of copra/hectare/year.

The coconut farming sector consists of about 3.5 million coconut farmers who are

either owners, owner/tillers, tenant/tillers or farm workers. Each farm family (an

average size of six) cultivates an average farm holding of 3.6 hectares. Based on a

copra price of P 10.00 per kilo, a coconut farmer earns an average gross annual

income of only P 10,000.00 per hectare which is a way below the poverty line.


In Bicol, it is one of the major crops grown in all of its

provinces. Regionwide, a total of 648,210 hectares

are planted to coconut with 25% occupied and

actually utilized because of its morphological

features leaving 75% of the coconut land for

diversification. Although the region ranked 4th

nationwide in terms of area planted , the optimum

copra production level per year of 850 kilograms of

copra is low compared to the optimum level of 2-4

tons of copra per year. It turned out that at the

present production level, the farmer earns only

P12,750 per year at P15.00 per kilo

(www.bicol.da.gov.ph)

With copra as the major source of income of most coconut farmers, the copra

making process uses the coconut meat that makes up only 30% of the fruit. More

often, the remaining 70% of the fruit like husk, shell and water are treated of less value

of as farm wastes. Further, copra drying utilizes only about 50% of the total husk

produced with the excess husks being left in the farm thus creating a problem on

disposal. Furthermore, husk piles endanger human lives due to the presence of

snakes.

The economic value of coconut husk has now been realized and people are able to

find its long line of uses and applications. The husk is fully of long coarse fibers, running

in one direction. About 30% of the husk is available for fiber extraction, while 70% is

composed of coir dust. Extractible fibers produce both bristle and mattress types.

These are extensively used as raw material for making ropes, rugs and mattress. As a

by-product, coir dusts are used primarily in agricultural applications because of its

inherent water-holding properties. With global concerns for environment-friendly

products, coco coir and other coir-based products have the potential to be export

winners for the Philippines.

Like in all other coconut-growing areas in the Philippines, coconut husks are

considered as farm waste in Bicol Region. However, the region is host to seven (7)

coconut husk processing plants of which three (3) are in Albay, one (1) in Camarines

Sur and three (3) in Sorsogon. An additional of eight (8) coco husk processing plants

are currently being established in the region funded by a


grant-assistance from Spain through the Agencia Espaola de Cooperacion

Internacional para el Desarrollo (aecid) in support to the Bicol Coco Coir

Grid/Geotextile Production Highway (MTRDP, Bicol Region, CY 2005-2010). The Bicol

Coir Grid Project aims to establish an integrated production and marketing for coco

coir and other coco husk-based products in the Bicol Region.

Investment Area

Farm productivity

Credit and marketing

Post-harvest and processing

Research, development and extension

Infrastructure building and development

Information and technologySource: www.bicol.da.gov.ph

Production Performance (1999-2008)

Production (1999-2008)

Coconut husk production in Bicol region can be seen as a pattern of booms and

busts for the last ten years (Figure 1). Lowest production was posted in 1999 at

1,265,559.9 metric tons due to the El Nio weather phenomenon. However, it

recovered in 2000 with a 23% growth. Declines were again registered in 2001 and

2002. A good performance was attained in 2003 at 1,661,993.133 metric tons, the

highest volume during the decade. Its production in 2004 and 2005 were practically

at the same level but lower than 2003. The year 2007 was marked with super

typhoons like Milenyo that causes drastic change in coconut production reflecting

only 1,279,143.8 metric tons of coconut husks. It recovered again in 2008 with almost

21% growth. Average growth for the whole decade was at only 3% per annum.


Source: BAS data on coconut production volume converted into coconut husk using conversion: 1 kg copra = 4 whole nuts; 1 kg husk = 3 whole nuts

Figure 1. Coconut Husk Production Volume, Bicol Region, 1999-2008

Table 1. Volume of Coconut Production, 1999-2008 by Province and Year

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Coconut

Region V (Bicol Region) 949,170 1,165,456 1,122,499 1,042,786 1,246,495 1,197,506 1,185,327 1,219,374 959,358

1,159,810

Albay 156,278 152,043 163,359 179,307 207,158 172,516 183,246 178,852 144,138 149,595

Camarines Norte 102,982 122,337 145,965 160,998 183,543 205,066 208,889 210,855 214,207 228,772

Camarines Sur 213,039 326,590 294,854 364,530 423,723 400,468 362,263 383,795 184,116 306,314

Catanduanes 1,119 1,380 1,308 1,476 2,031 1,854 2,244 2,455 2,449 2,751

Masbate 309,030 360,632 301,413 108,839 194,670 183,430 185,248 221,366 280,716 295,882

Sorsogon 166,722 202,474 215,600 227,636 235,369 234,171 243,436 222,051 133,732 176,496Source: Bureau of Agricultural Statistics (BAS) Copyright: Yes Contact: [email protected] Unit: metric tons Matrix: PNVOP101

Table 2. Volume of Coconut Husk Production, 1999-2008 by Province and Year

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Coconut

Region V (Bicol Region) 949,170 1,165,456 1,122,499 1,042,786 1,246,495 1,197,506 1,185,327 1,219,374 959,358 1,159,810

whole nut 3,796,680 4,661,822 4,489,995 4,171,145 4,985,979 4,790,024 4,741,307 4,877,496 3,837,431 4,639,242

Husk 1,265,560 1,553,941 1,496,665 1,390,382 1,661,993 1,596,675 1,580,436 1,625,832 1,279,144 1,546,414

Source: BAS data on coconut production volume converted into coconut husk using conversion: 1 kg copra = 4 whole nuts; 1 kg husk = 3 whole nuts

Production per Province (2008)


For CY 2008, coconut husk production is estimated to have reached 1,546,414

tons with Camarines Sur province leading the production with 408,419 tons and

Catanduanes with the lowest, almost negligible amount of 3,668 tons. Masbate

ranked 2nd with 394, 509 tons, lower by 3.4% with that of Camarines Sur (Figure 2 and

Table 3).

Figure 2. Coconut Husk Production Volume, Bicol Region, per Province, 2008

Table 3. Coconut husk production per Province, 2008 Tons

Region V (Bicol Region)1,546,414

Albay 199,460

Camarines Norte 305,030

Camarines Sur 408,419Catanduanes 3,668Masbate 394,509Sorsogon 235,328

Area Harvested (1999-2008)

Areas planted to coconut reached the lowest level in 1999 of 364,970 hectares.

Hectarage increased in 2002 through 2008 when it reached its peak at 447,743

hectares. Overall, the average area expansion was 2.3% annually (Figure 3 and

Table 4).


Source: BASFigure 3. Coconut Areas, Bicol Region, 1999-2008

Table 4. Area Planted/Harvested of Crops (Other than Palay and Corn), 1990- 2008 by Crop, Region/Province and Year

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Coconut

Region V (Bicol Region) 364,970 367,245 369,169 389,293 412,504 412,443 415,449 432,620 442,406 447,743

Albay 32,949 34,393 35,321 35,325 41,180 41,180 41,180 41,180 40,180 40,180

Camarines Norte 89,759 87,500 87,250 84,591 85,146 85,350 85,363 85,365 85,370 85,375

Camarines Sur 86,038 88,261 89,808 90,200 104,150 104,150 103,726 119,045 119,045 119,045

Catanduanes 6,262 6,155 6,126 6,120 8,400 8,135 9,252 11,102 12,500 14,375

Masbate 74,907 75,855 75,930 73,500 75,890 75,890 78,190 78,190 87,573 91,076

Sorsogon 75,055 75,081 74,734 99,557 97,738 97,738 97,738 97,738 97,738 97,692

Source: BAS

THE PRODUCTION PROCESS

Product/Process Description

Coconut husk is the mesocarp of fibrous covering layer of the coconut fruit which is

about 4-8 cm. thick weighing about 400 grams. The husk of a young coconut is

green; it gradually turns pale brown as the nut matures. In the Philippines, brown husk

is generally used for fiber extraction.


A. Available Technologies-

1. Decortication- is the process of extracting and separating the fiber from the

coconut husk. After sprinkling with water or retting the husk, it is fed into a drum

type machine with beater to break the husk. This process of beating is done

twice after which the fibers go to the sifter or rotating wire screen to separate

good fibers. Fibers are then transferred to a turbo cleaner, dried and baled. To a

large extent, sun-drying is used. Decortication yields 30% fiber called coir and 70%

coir dust or coco peat. Coir extracted is of varying lengths. This fiber is classified

as CH3 mattress fiber.

2. Defibering is another fiber extraction process. The process is essentially the

same as decortication. The difference lies in the machine used. A defibering

machine is equipped with spikes that work like combs during the process. Long

fibers are produced and classified as CH1 and CH2.

3. Twining is the process of converting the fibers (CH1/CH2) into yarns or ropes.

The twining process can be done in two (2) ways, to wit:

a) Mechanical or Motorized Twining

The fibers to be used for twining should contain 15-20% moisture to produce a

semi-permanent curl. The fibers pass through a cleaning machine or rotating

screen to remove the peat; fibers are then passed through a series of grooved

rollers and are attenuated to form a sliver. The fibers then undergo further twisting

with the use of mechanical yarn making or spinning machines to convert slivers

into tightly coiled ropes. Curled ropes are made into coils of 23 kilos each.

b) Semi-Manual

This method uses light and mobile bicycle -type equipment. The process is

advantageous since the twine/yarn can be easily produced although the

resulting product quality may not have even thickness unlike those produced

mechanically. This is because feeding of fibers to the twine is not controlled and

weighed.

Two persons are needed to work in this method. One sits at the bicycle or beside

it to pedal. To begin the process, he inserts the fibers onto a hook connected to

the equipment, while the other person, stationed at the front of the one who

pedals, holds and adds fibers to finish the twines.


The resulting rope/yarn is augmented with more fibers while twining progresses or

until the desired length is attained. The twines serve as materials for the

production of hand-woven textiles or coir nets or matting.

4. Looming/Weaving- process of making geo-textile nets by weaving twines/yarns or

ropes to a desired specification.

a) Coir Nets/Mats

The coir twines are woven into coir nets/mats with the use of a handloom similar

to the ones used in weaving native cloths.

The coir twines are tied from end to end in vertical lines at the pikes nailed on the

sides of the loom frame. With the use of a wooden spindle, coir twines are

inserted horizontally and woven in a crisscrossing manner into vertical twines. The

weaving goes on in this manner until the desired size, length and width of the

geo-textile are arrived at.

b) Fascines/Bio-logs

Coir twines are hand-woven into high strength nets, formed into tubes with

diameters ranging from 10-12 inches and length from 10-20 meters and filled with

coir and coco peat.

5. Fiber Stitching - The fibers are carried by a conveyor belt unto a sheet-forming

machine where they are spread and formed into sheets. The sheet is then

transported by a conveyor unto a stitching machine. The stitched sheet will then

be sprayed with latex and dried, and then cut/trimmed into desired sizes.

6. Rubberizing - The fiber undergoes curling after which it is uncurled by an uncurling

machine. The loosened material is fed by a conveyor belt into a machine where

it is formed into sheet. The sheet then passes onto another conveyor with a spray

head where its top surface will be sprayed with a latex solution. After the latex

has been sprayed, the sheet passes through a drying oven. It will then be

reversed so that the other side will be sprayed with latex, dried and then cut into

desired lengths.


THE PHILIPPINE STANDARDS FOR COCONUT COIR

Coco Coir

Grade/Classification

Specification/s

1. Bristle Fiber Good (CH1) The highest grade of fiber; with average length of 5 inches and more; with no pulp or dust content; color ranges from light brown to dark brown and perfectly dried and combed.

2. Bristle Fiber Fair (CH2) The second highest grade of fiber; same length with that of CH1 but the texture is harsh with some pulp or dust still present; color is much darker than CH1 from dull brown to almost dark brown.

3. Coir Mixed Fiber (CH3) Mixture of bristle and mattress fiber; the length is 5 inches and below but not shorter than 2.5 inches; color ranges from light brown to dull brown; texture is medium harsh and generally crumpled; and with maximum moisture content of 14%.

4. Coir Mattress Fiber (CH4) Consists mostly of short crumpled fiber; average length of not less than 2 inches; same color as CH3; and it must be free from coir dust.

5. Coir Wastes (CH5) Consists of coir dust and reject fibers that cannot be classified in any of the regular grades of coir.

MARKET GROWTH

Supply, Demand, Gap

Table 1. World production of coir and coir products (000 MT), 2004-2007Country 2004 2005 2006 2007

India 362 477 481 486Indonesia 3 3 8 38Malaysia 26 23 22 21Philippines 5 4 8 10Sri Lanka 177 191 197 231Thailand 46 50 57 38Vietnam 0 1 2 3

Total: 620 749 776 827Source: Road Map of the Philippine Coconut Coir Industry, PCA, March 2009

Table 3. World export of coir and coir products (000 MT), 2004-2007Country 2004 2005 2006 2007

India 78 81 85 93Indonesia 1 1 2 8Malaysia 0 1 4 7Philippines 5 3 5 5Sri Lanka 62 55 73 90Thailand 45 34 34 21


Table 3. World Import of coir and coir products (MT), 2004-2007Country 2004 2005 2006 2007


China 84 13 115 144Netherlands 19 29 34 37Korea 0 29 0 0USA 19 22 12 22Japan 4 20 4 5Other Countries 71 86 71 88


Table 4. Domestic production of coir (MT), 2004-2008Region 2004 2005 2006 2007 2008

S. Tagalog 2,755 2,467 2,998 1,540 2,510Bicol 174 62 17 3 0W. Visayas 0 0 15 30 0C. Visayas 0 0 0 15 0E. Visayas 0 41 0 84 58W. Mindanao 186 106 132 106 0N. Mindanao 0 0 0 221 0S. Mindanao 2,002 1,673 4,764 7,963 7,415CARAGA 0 0 0 57 0

Total: 5,117 4,350 7,926 10,019 9,983Source: Road Map of the Philippine Coconut Coir Industry, PCA, March 2009

Table 5. Philippine export of coir fiber (MT), 2004-2008Destination 2004 2005 2006 2007 2008

Taiwan 2,252 1,196 1,514 1,192 1,420PROC 1,895 1,105 2,004 3,781 3,290Korea 202 150 699 33 89USA 260 158 86 0 44Japan 228 149 236 69 81Others 423 530 428 190 901

Total: 5,260 3,288 4,967 5,265 5,825Source: Road Map of the Philippine Coconut Coir Industry, PCA, March 2009

Other market accounts

National Situation - Status of the Industry

A) Consumption/Demand

Over the past five (5) years, the Philippines produced an average of 7,479 MT of coir.

Of this number, the country exported 4,995 MT of coir as against local consumption

of 2,484 MT. Most of the decorticating plants are located within the Laguna-Quezon-

Bicol and Mindanao areas.

Current indicative prices are as follows:


Domestic

Fiber: P 9.50 (Luzon, ex-plant)

P 9.00-10.00/kg. (Vis.-Min, ex-plant)

Plus P 1.00-1.50/kg. delivered

Geotextile: P 50.00/sq.m.

Exports

Fiber: FOB Mindanao: $230.00 /MT

FOB Manila: $240.00 /MT

C & F China: $280.00 /MT

Geotextile: FOB Manila: $1,300 / MT

B) Inputs/Raw Material Availability

The Philippines is unquestionably the second biggest world husk producer. The

country produces some 12 billion husks annually. Of this volume, an estimated 40% or

4.8 billion husks are available for coir processing distributed as follows: Luzon 24%,

Visayas 17.38%, and Mindanao 58.61%.

C) Processing Equipment/Machines (with approximate cost of investment)

Except for the production of slivers and twines, most coir producers utilize locally

fabricated machines/equipment with indicative prices as follows:

1. For decorticating operation (5 deco machines shall be clustered and equally

operated by the same number of cooperatives):

a. Decorticating machine 0.750 M x 5 = Ps. 3.750 M

-Output: 1,000 kgs. fiber/8 hr. operation

(wet);(1,000 kgs. X 5 units = 5,000 kgs.)

b. Sifter/revolving screener 0.060 M x 5 = Ps. 0.300 M

-Output: 3,000 kgs. Dust/8 hr. operation

(wet);(3,000 kgs. X 5 units = 15,000 kgs.

c. Baling Press (Low Density) 0.350 M x 5 = Ps. 1.750 M

-Output: 35-40 kgs./bale; 5-6 bales per hour

(40 kgs. X 5 bales x 5 units = 1,000 kgs)

d. Hauling truck 0.700 M x 5 = Ps. 3.750 M

Sub-total Ps. 9.550 M

2. For common service facility to service five (5) deco machines


1. For Geo-textile Production

2.a.1 Slivering machine, 18 units 0.140 M x 18 = 2.520 M

-Output:220 kgs./unit or 4,000 kgs. for 18 units

2.a.2 Motorized Spinning Machine, 80 units 0.120 M x 80 = 9.600 M

- Output: 50 kgs./unit or 4,000 kgs. for 80 units

2.a.3 Looming Paraphernalia, 67 units 0.050 M x 67 = 3.350 M

- Output: 150 sq.m. of 60k gms. Per

day/unit or 10k sq.m. of 4M gms./

day for 67 units (1 sq.m. = 400 gms.)


2. For Coco Peat Production (sterilized and compacted)

2.b.1 Carbonizer, 1 unit 1.300 M = 1.300 M

- Input: 30 tons CS; Output 7.5 tons

CSC (excess heat to be tapped upon carbonizing CSC)

2.b.2 Coco Peat rotating Dryer, 1 unit 0.700 = 0.700 M

- Output: 12 tons/8hr.-operation

2.b.2.1 Accessories

- Cyclone feeder with rotary 0.200 = 0.200 M

- Washing & Compaction Screw (peat) = 0.980 M

- Peat Transfer Screw = 0.280 M

2.b.3 Coco Peat Compactor, 5 units 1.000 x 5 = 5.000 M

- Output: 340 blocks of 5kgs./block/

8-hr. operation/unit or 1,700 blocks

8-hr. operation for 5 units


Total Ps. 33.480 M

Add: Baling Press if the common service Ps. 1.250 M

facility chooses to export baled coir ____________

Grand Total (With HD baling press) Ps. 34.730 M

D) Trading Facilities

a. International Ports


The Port of Manila is the countrys premier port of origin. It services coir exporters

located in Luzon and to some extent, the eastern Visayas. It has the lowest freight

cost when compared to other ports outside Manila which are levied arbitrary

charges. Thus, freight costs are normally higher there than in Manila. Said out ports

are as follows:

- Port of Cebu, Cebu City (Region VI, VII & VIII)

- Port of Cagayan, Cagayan de Oro City (Region X, Caraga & ARMM)

- Port of Davao, Davao City (Region XI)

- Port of General Santos, General Santos City (Region XII)

- Port of Zamboanga, Zamboanga City (Region IX & ARMM)

Table 5. Comparative Freight Costs to Xiamen, China (As of March, 2009)

Port of Origin Container Van/SizeFreight Cost FOB, RP

Port (US$)a. Port of Manila/

Xiamen

20

40

150.00

280.00b. Port of Cebu/

Xiamen

20

40

380.00

680.00c. Port of Davao/

Xiamen

20

40

580.00

930.00d. Port of Gen. Santos/

Xiamen

20

40

580.00

980.00e. Port of Zamboanga/

Xiamen

20

40

924.00

1,822.00f. Port of Cagayan De Oro City/

Xiamen

20

40

902.00

1,775.00

b. Transport System

Raw coir as an export item is bulky, thus the necessity to bale it when transported.

The authorized weight and size of bale for export are 125 kgs./bale and 100 cm. x 55

cm. x 60 cm. or .33 cu.m./bale, respectively.

A 40 container van can load an average of 20 mt. fiber. The existence of RO-RO

carries now in service makes it possible to establish processing plants in island

provinces with good supply of coconut husks. By industry standard, one peso and

fifty centavos (P1.50) per kilo as transport cost is still competitive. The presence of an

efficient road system in the country further affords mobility of products for exports.


c. Infrastructure

Detailed infrastructure information can be obtained from concerned

regional/provincial offices of the Philippine Coconut Authority, LGUs and the DPWH.

By way of advice, a coir processing plant should be installed in areas with good

network, especially feeder roads around plantations with high concentration of

coconut trees. Even the processing plant should not be located far away from

international ports of loading. In like manner, the presence of enough source/supply

of power is an important consideration. Equally important is the existence of an

adequate information technology and communication system, basically the

telephone.

d. Organizational Support

Every province has an active coconut farmer organization. Similarly, there exist

active cooperatives that can be tapped to provide the husk in volumes required by

coir processing plants.

The coir sector is being supported by allied industries such as furniture and bed

industries, organic fertilizer manufacturers, fruits and vegetable plantation farms,

cutflower industry and poultry and livestock raising industries.

e. Job Generation/Farmers Income

A decorticating plant employs six (6) laborers/workers per deco machine. Twining

operation needs an additional 3 workers per twining machine and 2 for geo-textile

weaving. A total of about 440 jobs created as direct processing plant

supervisors/workers/laborers and 10 indirect employees for this module are

envisaged. Moreover, there will be more or less 2,100 farm owners/farm

workers/tenants to be identified as coconut husks suppliers as well.

This module is seen to cover a catchment area of 6,250 hectares of cocal land with

available coconut husks for milling at 12,500,000 pieces per year valued at P 3.75

Million (P. 0.30 per piece).

f. Investment Cost

A simple decorticating plant needs P 1.910 Million capital, excluding land, shed and

working capital. Other activities, including down streaming operations for geo-textile

net and compacted coco peat production require P 34.730 Million.

g. Return On Investment (for decorticating activity

only)


ROI is 32%, payback period is 2.15 years.

Regional Situation

In a paper entitled Interdependency and More Intensive R&D as Development

Strategy for the Coir Industry in Bicol, E.P. Carba et al estimated that Bicol Region in

2008 used a total only of 9,289,355 kgs. out of the 26,304,978.50 total available husks.

It reflects that there was still a total of 17,015,623.50 kgs. of unused husks. These husks

could have been processed into fiber, thus contributing additional income for the

farmers rather than left to rot in the farm as wastes. (Table 6).

Table 6. Estimated Husk Consumption in Region VACTIVITY ESTIMATED AMT.

OF HUSK NEEDED (KG)

TOTAL AVAILABLE (KG)

UNUSED (AVAILABLE NEEDED, KG)

REMARKS

Decorticating* 9,000,00026,304,978.50

Unused husks translates to about 170,156,235 pcs.

Copra making** 263,050Other use*** 26,305TOTAL 9,289,355 26,304,978.50 17,015,623.50* Irregular operation, about 75% only of full capacity** 1% of husk in the farm*** 0.1% of husk in the farm

Commodity Flow

Coconut husk gathering is still under strong promotion as of now convincing the

farmers to continuously gather it and bring to the identified decorticators who can

be private institution or the capacitated organizations and cooperatives or can go

directly to processors/traders nearby.

The decorticators will bring the fibers to market players such as Juboken Enterprises,

Inc. The trader/processors have arrangements with markets which can be local or

international markets for geo nets, fiber mats and other coco coir by-products.

(Figure 4).

Based on FGD conducted last January 19 to 31, 2010 of S/VCA Coconut Team of SAIS-BC DA RFU 5

Farmer/ GatherersDecorticators (Cooperatives,

Organizations, Private)

Processor/Trader

Local Markets

International Markets


Figure 4. Commodity flow of coconut husk in Bicol

VALUE CHAIN ANALYSIS

Coconut husk is considered a potential source of income and livelihood among the

local folks. The coconut coir industry has remained relatively underdeveloped

especially in Bicol. There are seven major players in the local coir and peat industry

in the region of which three (3) are in Albay province, one (1) in Camarines Sur and

three (3) in Sorsogon. Any of the six (6) provinces in the region can singlehandedly

supply all raw material requirements of all these manufacturers but transport cost and

accessibility issues are among the limiting factors that may make such option less

profitable (Carba, et.al., 2008).

Definition of Actors in the Chain

Under the SAIS-BC Project, the following cooperatives are being assisted in coco fiber

production through provision of workshed, set of coco husk processing equipments

and coco husk hauler-truck:

Albay

1. Tastas Farmers Producers Cooperative Tastas, Ligao City

Camarines Sur

2. Iriga Farmers Development Association, Inc. Brgy. Sta. Elena,

Iriga City

3. RNAFS Development Cooperative Brgy. Liboro, Ragay,

Camarines Sur

Camarines Norte

4. Basud Coconut & Pineapple Farmers Cooperative

Bgy. Laniton, Basud, Camarines Norte

Sorsogon

5. Maharlika Development Cooperative

Bgy. San Isidro, Bacon Dist., Sorsogon City

6. Castilla Development Cooperative

Brgy. San Rafael, Castilla, Sorsogon


Masbate

7. Aroroy Coconut Processors Association

Brgy. Bangon, Aroroy, Masbate

8. P4MP Federation - Uson Chapter, Inc.,

Brgy. Quezon, Uson, Masbate

These organizations/cooperatives have their farmer-members as primary suppliers of

coconut husks. As of now, marketing of coir fiber by the SAIS-BC-assisted plants is

anchored with Juboken Enterprises, Inc. with main plant located in Bgy. Gapo,

Camalig, Albay. The capacity of this plant is 3.0 MT fiber/day with 1 unit each of

decorticating and baling machine, 600 units of twining machine and 50 units

looming machines. This processor/trader is linked with markets such as DPWH local

(for coir mats) as erosion control material and bailed fiber

Supply Chain

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