PHILIPPINE RURAL

DEVELOPMENT PROJECT
(PRDP)

I-PLAN Component
Luzon A Cluster

VALUE CHAIN ANALYSIS AND

COMPETITIVENESS STRATEGY:
RAW PEANUTS/GROUNDNUTS
Ilocos Region and Cagayan Valley

DEPARTMENT OF
AGRICULTURE
Luzon A Cluster

October 2014
CONTENTS

CONTENTS Page
EXECUTIVE SUMMARY 5
Section 1: INTRODUCTION 9
A. Background Information and Objectives 9
B. VCA Objectives 10

C. Methodology and Approach 10

Section 2: OVERVIEW OF THE INDUSTRY 12
A. Production Description 12
B. Production Trends 14
Section 3: NATURE AND STRUCTURE OF INDUSTRY 20
A. Value Chain Mapping 20
B Key Players and Function 22
C. Nature of Interfirm Relationship 28
D. Price and Cost Structure 29
Section 4: MARKETS AND MARKET OPPORTUNITIES 32
A. Markets and Market Trends 32
B. Price Trends 40
Section 5: SUPPORT SERVICES 43
A. Financial Services 41
B. Non-Financial Services 41
Section 6: ENABLING ENVIRONMENT 46
A. Formal Rules, Regulations, and Policies 46
B. Informal Rules and Socio-Cultural Norms 46
Section 7: CONSTRAINTS AND OPPORTUNITIES 48
Section 8: COMPETITIVENESS DIRECTIONS 51
A. Competitiveness Vision 51
B. Priority Constraints/Opportunities and Interventions 53
Section 9: CONCLUSIONS AND RECOMMENDATIONS 64
Annex 1: Ranking and Prioritization of Interventions by Stakeholders and 66
VC Players, Sept 2014
Annex 2: Ranking and Prioritization of Interventions by Stakeholders and VC 67
Players, Sept 2014

1
LIST OF TABLES

No. Title Page

1 World Peanut Production, 2009 to 2013 14
2 Peanuts Production in the Philippines by Region ranked according to Volume, 16
2013
3 Top Ten Peanut Producing Provinces in the Philippines, 2013 17
4 Peanut Production Trends in Ilocos Region, 2009 to 2013 19
5 Peanut Production Trends in Cagayan Valley, 2009 to 2013 20
6 Some of the Processors in Ilocos Region and Cagayan Valley 26
7 Indicative Costs and Return for 1 hectare of Peanut 29
8 Relative Financial Position of VC Players: Dry Peanuts with Shell 30
9 Philippine Exports of Peanuts and Peanut Butter, 2009 to 2013 32
10 World Export Trade of Peanuts, 2009 to 2013 33
11 World Imports of Peanuts, 2009 to 2013 34
12 Philippine Imports of Peanuts, 2009 to 2013 36
13 Gross Annual Demand and Peanut Self-Sufficiency Ratio in the Philippines, 38
2009 to 2013
14 Supply Utilization Accounts by Commodity, 2009 to 2013 38
15 Size classification of peanuts 40
16 Average Export Price of Unshelled Peanuts, 2009 to 2013 40
17 Farm Gate Price of Locally Produced Peanuts versus Price of Imported Peanuts 41
(Dry Unshelled Peanuts), 2009 to 2013
18 Farm Gate Price of Peanuts with shell and dry in Ilocos Region and Cagayan 42
valley, 2009 to 2013
19 Wholesale Price of Peanuts without shell and dry in Ilocos Region and Cagayan 42
valley, 2009 to 2013
20 Constraints and Opportunities 48
21 Summary of Constraints/Opportunities and Interventions 58

2
LIST OF FIGURES

No. Title Page

1 USES OF PEANUTS 12
2 PRODUCT FORMATS IN ILOCOS AND CAGAYAN VALLEY 13
3 VALUE ADDED PRODUCTS IN OTHER COUNTRIES 14
4 PERCENTAGE BREAKDOWN OF PEANUT PRODUCTION VOLUME IN THE
16
PHILIPPINES BY REGIONAL CLUSTERS, 2013
5 VALUE CHAIN MAP 20
6 FLOW OF RAW PEANUTS: ILOCOS NORTE AND ILOCOS SUR 21
7 FLOW OF RAW PEANUTS: LA UNION AND PANGASINAN 21
8 FLOW OF RAW PEANUTS: CAGAYAN VALLEY 22
9 FARMER MANUALLY STRIPPING THE PODS IN THE FIELD 24
10 POSTHARVEST AND MARKETING SYSTEM 25
11 RELATIVE FINANCIAL POSITION OF VC PLAYERS: DRY PEANUTS WITH SHELL 31
12 AVERAGE EXPORT PRICE OF UNSHELLED PEANUTS: TOP 5 EXPORTING
41
COUNTRIES, 2009 TO 2013
13 SYNTHESIS OF COMPETITIVENESS VISION, 2014 TO 2020 52

3
ACRONYMS

ASEAN Association of Southeast Asian Nations

ARC Agrarian Reform Communities
ARMM Autonomous Region in Muslim Mindanao
BAFPS Bureau of Agricultural and Fisheries Product Standards
BAS Bureau of Agricultural Statistics
BFAD Bureau of Food and Drugs
BSWM Bureau of Soils and Water Management
BPI Bureau of Plant and Industry
CVIARC Cagayan Valley Integrated Agricultural Research Center
DA Department of Agriculture
DA-BAR Department of Agriculture - Bureau of Agriculture Research
DENR Department of Environment and Natural Resources
DOH Department of Health
DOST Department of Science and Technology
DTI Department of Trade and Industry
FAO Food and Agriculture Organization
FGD Focus Group Discussion
GAP Good Agricultural Practices (Global GAP)
GATT General Agreement on Tariffs and Trade
GMP Good Manufacturing Practices
ha Hectare(s)
ICRISAT International Center for Research in Arid and Semi-Arid Tropics
KII Key Informant Interview
LBP Land Bank of the Philippines
LGU Local Government Unit
MFIs Micro Financing Institutions
MLGU Municipal Local Government Units
MRDP Mindanao Rural Development Program
MT Metric Tons
PCAARRD Philippine Council for Agriculture, Aquatic and Natural Resources
Research and Development
PCIP Provincial Commodity Investment Plan
PDP Philippine Development Plan
PLGUs Provincial Local Government Units
PRDP Philippine Rural Development Project
PSA Philippine Statistics Authority
RCEP Regional Comprehensive Economic Partnership
SUCs State Universities and Colleges
VCA Value Chain Analysis

4
 EXECUTIVE SUMMARY
Peanuts or groundnuts are the edible seeds of a legume, Arachis hypogaea, and they are high in
protein, oil, and fiber. The variety widely planted in the two regions is the Ilocos Pink or NSIC Pn 12.
The Spanish variety NSIC Pn 12 has large pods and seeds. The seeds have attractive pink seed coat
color and shape. It matures in 95- 100 days during the rainy season and 96-98 days during the dry
season. The majority of the pods are two-seeded with shelling outturn of 71 to 72%. The seed
contains 26.26% crude protein, 40.18% crude fat, 11.37% carbohydrates and 2.19% ash (minerals).
During the recent years, a growing number of farmers especially in Cagayan Valley have also shifted
to the planting of the Asha and Namnama varieties which are categorized as confectionery peanuts.
The Asha and Namnama varieties were bred and introduced by the International Center for
Research in Arid and Semi-Arid Tropics (ICRISAT) to Cagayan Valley through a project initiated by the
Bureau of Agricultural Research (BAR) and the Philippine Council for Agriculture, Aquatic and Natural
Resources Research and Development (PCAARRD). These varieties produce better pods and large-
seeded. The high quality seeds are most desirable for processing and can also be sold as table and
cocktail peanuts.

While the peanuts physical structure and nutritional benefits more closely resemble that of other
legumes, its use in diets and cuisines more closely resembles that of nuts. In Ilocos Region and
Cagayan Valley, peanuts are widely consumed as boiled-in-shell peanuts and salted fried peanuts,
processed as peanut butter, and as an ingredient in the manufacture of confectioneries such as
peanut brittle and yema. It is also used as an ingredient in sauces, soup, meat, and other dishes.

Total world peanut production for 2013 was 41,308,175 MT. China is the worlds largest producer
and in 2013 accounted for 39% of the world production. Other top peanut producing countries are
India (17%), Nigeria (8%), United States (5%), and Myanmar (3%). Peanut production in the United
States in 2013 went down by 33% over 2012 performance due to drought. On the other hand,
production in India in 2013 increased by 5% over 2012 output. World production grew by an
average of 3% per year.

Over 100 countries worldwide grow groundnut. Developing countries constitute 97% of the global
area and 94% of the global production of this crop. Production is concentrated in Asia (66.2% of
global production) and Africa (25.5% of global production), where the crop is grown mostly by
smallholder farmers under rainfed conditions with limited inputs. In 2013, Philippines ranked 48th
with a minimal share of 0.07%.

During the past 10 years, Chinas yield was about 3.5 MT per hectare. China has a very intensive
production method. Each farmer cultivates small intensive plots. Most of them cover the fields with
very thin layer of plastic to reduce pests and weed infestation, which in turn leads to moisture
retentions and, ultimately, increased yields.

In 2013, average yield of peanut farms in the United States was at 4.5 MT/hectare. High yield in the
United States is attributed to the use of high yielding runner varieties, good agronomic practices,
and the mechanization revolution.

During the last five years, Philippines produced an average of 29,711.72 MT of peanuts with the
highest production of 30,978 MT achieved in 2009 and the lowest at 29,088.93 MT in 2013. Luzon A
regions accounted for 59% of the total peanut production in 2013. The top three peanut producing
regions in the Philippines in 2013 were Ilocos Region (30%), Cagayan Valley (14%), and Northern

5
Mindanao (9%). The top 3 regions in Philippines in terms of average yield per hectare in 2013 were
Ilocos Region (1.54 MT/ha), Northern Mindanao (1.26 MT/ha), and Central Luzon (1.36MT/ha).

In 2013, Pangasinan remained the top peanut producing province in country with 5,599 MT in 2013,
followed by La Union with 2,897 MT and Lanao del Norte with 2,050 MT. Pangasinan also had the
highest average yield at 1.79 MT/hectare.

Farmers sell shelled and unshelled peanuts to local traders. The traders in turn sell these to
consolidators. Main buyers of the consolidators are wholesalers in wet markets and key trading
centers in Luzon. Wholesalers sell to retailers and microprocessors of table nuts (fried, roasted,
boiled), peanut butter, peanut brittle, and other similar products. The microprocessors include the
peanut vendors who collectively are the biggest buyers of peanuts produced by the two regions.
Peanut vendors get their supply either from retailers or straight from wholesalers and local traders
depending on volume requirements. Microprocessors also use imported peanuts.

In Cagayan Valley, there are cooperatives that are into peanut processing. The cooperatives source
from members and non-members. There are also microprocessors in both Ilocos Region and
Cagayan Valley who source directly from their own farms. Some traders also process a portion of
their stocks into table nuts, peanut brittle, and other confectioneries.

There are about 6 companies in the Philippines who use significant quantities of peanuts in their
products. The companies source a small percentage of their products from consolidators who have
the equipment to sort and pre-grade peanuts. A greater percentage of the peanut requirements are
imported from China and India.

In Ilocos Region, traders provide the planting materials under a buy-back agreement. The traders
source the planting materials from farmers within and outside the region and from their own stocks.
Majority of the farmers have stopped saving seeds for next planting as quality tends to deteriorate
quickly due to the absence of proper storage facilities. Quality of seeds deteriorates in less than 6
months under ordinary storage.

The Cagayan Valley Integrated Agricultural Research Center (CVIARC), through its peanut project co-
funded by the Department of Agriculture (DA) Bureau of Agricultural Research (BAR,) is t the lead
in the promotion of seed production of the confectionery peanut varieties. CVIARC has established
the Agri Store which distributes 10 to 15 MT of certified seeds yearly. It assembles and distributes
these seeds throughout the country. In Cagayan Valley, CVIARC's partners in certified seed
production are the Cagayan Valley Legumes Seed Growers Association and the Lighthouse
Cooperative certified seeds and the Lighthouse Cooperative. As of 2012, the CVIARC program has
accredited 36 seed growers. Even though there are a number of seed producers, availability of
sufficient quantity of quality seed is still a challenge.

In Cagayan Valley, peanut is primarily grown as cash crop in corn-based areas with distinct wet and
dry seasons. It is usually planted mostly during dry season as rotation crop after corn. There are
about 4,845 peanut farmers in the region.

Peanut is grown in all provinces of Ilocos Region in one to two croppings. Majority of the farmers
interviewed indicated that during the recent years, they only had one cropping due to constraints in
accessing water and seeds. Peanuts are usually planted from late September to December. During
these months, there is still residual soil moisture sufficient to support the vegetative and
reproductive process of the crop. According to farmers, after the September to December period,
supplemental irrigation is already needed especially during the 1st month (germination to pod filling).

6
Likewise, crops planted during this period have higher yields than wet season crops. Based on
experiences of farmers interviewed, peanuts planted during the wet season tend to produce fewer
pods and with high risk of rotting.

Postharvest operations are undertaken by both farmers and traders. Drying is usually done twice
within the chain of postharvest operations. Initial drying is done before threshing and final drying is
done before shelling. The most widely used drying method is the direct sun drying. Some farmers
practice windrow drying in the field followed by aeration in shaded huts. Sun drying is done by
laying tarpaulin and other similar protective on the ground. Each drying operation usually takes
about 3 to 5 days depending on weather conditions.

Shelling is generally done by manual cracking of pods and separation of kernels from pods. There are
only a few consolidators who have sorting and grading equipment but these can only be used for the
local small-seeded peanuts and not the confectionery peanuts. Despite having a growing supply of
the confectionery peanut varieties, the peanut industry chain in Cagayan is still not yet able to
supply large processors as they usually require shelled and pre-graded peanut.

The following are the range of processors in Ilocos Region and Cagayan Valley:

Street Food Enterprises: Main products are boiled, roasted, and fried peanuts. These are commonly
family or one-person informal businesses.

Micro and small scale processors: Majority of enterprises in the two regions engaged in peanut
processing are micro scale and household based enterprises. Main products include peanut butter,
greaseless peanuts, adobo peanuts, honey coated peanuts, peanut brittle, and other confectioneries
and pastries. Products are positioned primarily as pasalubong items. Except for cooperative
owned businesses, many of the processors especially in Ilocos Region generally prefer to use
imported peanuts due to the following reasons: i) large seeded; ii) low risk of aflatoxin
contamination/ moisture content as per acceptable standards; iii) consistent sizes; and iv) cheaper
than local peanuts.

The Ilocos Region peanut industry may be described as atomistic. This denotes fragmentation among
the key industry player groups and within each group. In an atomistic supply chain, horizontal and
vertical linkages are weak and players tend to operate individually. There is little or almost no
collaboration and cooperation between and among players. Except for the Metro Luba Coconut
Farmers Multi-Purpose Cooperative, there seems to be no other peanut-based associations or
cooperatives in the region. The little cooperation that does occur is based on friendship or family
relations and information on prices, buyers, and markets is exchanged in this way.

In Cagayan Valley, there are five cooperatives. Activities of cooperatives range from seed production
to processing and distribution. Among farmers who are members of the cooperatives, involvement
in collective initiatives is still limited. Majority of the farmer groups have not fully made use of their
organizations as platforms to collectively address constraints, promote economies of scale, and
improve bargaining position.

Philippines is a net importer of peanuts. Although import volume has been declining in the past five
years, the quantity imported has always been higher than domestic production except in 2013. Data
though from Intracen/UN Comtrad indicates that Philippines imported 36,853 MT of peanuts in 2013
vis--vis production volume of 29,089 MT. During the past five years, the country spent an average
of US$ 13,265,000 per year for peanut importation. In 2013, India was the top supplier accounting
for 67% of the imported peanuts followed by China at 28%.

7
Attributes of imported peanuts that are most appreciated by all types of processors are the
following: i) uniform in size; ii) aflatoxin free (higher assurance vis--vis locally produced peanuts); iii)
reliability of supply; and iv) cheaper than local peanuts. On the other hand, locally produced peanut
varieties are considered superior in taste than imported peanuts.

The countrys demand for peanut butter is also supplied by importation. Volume of peanut butter
imported by the Philippines increased from 1,819 MT in 2009 to 4,451 MT in 2013. The general
perception among Filipino consumers is that imported peanut butter is less oily, of better quality,
and safe than locally produced products.

According to BAS/PSA data, annual gross demand for peanuts decreased from 102,677.59 MT in
2009 to 51,676.91 MT in 2013. It would seem that self-sufficiency ratio of peanuts in the Philippines
improved due to decrease in gross demand by an average of 10% per year during the past five years.

Trade in peanut is based on confidence and reliability in terms of supply as well as product quality
particularly in terms of Aspergillus, the source of aflatoxin. Based on the five year domestic demand
average of 76,958.74 MT peanuts, the two regions hope to be able to meet 57% of the requirement
by 2020. To achieve this, stakeholders identified the following priorities for action:

a) Increased access, availability, and use of good quality planting materials of the high yielding
varieties required or demanded by the market

b) Improved access to, availability, and use of low-cost and eco-friendly fertilizer

c) Enhanced flow and quality of extension services for peanut farming to facilitate adoption of
good agronomic practices to ensure food safety and improve farm productivity

d) Improved access to cost efficient low-cost irrigation technology

e) Improved access to GMP compliant postharvest facilities and extension services necessary for
the consistent production of high quality aflatoxin free confectionery peanuts

f) Improved access to facilities and resources to catalyze value addition and lay the groundwork for
commercial scale processing of processed peanut products

g) Improved physical/infrastructure linkages to input, support, and product markets

h) Enhanced organizational capacity of farmer groups to become effective economic players

8
 Section 1:
INTRODUCTION

A. BACKGROUND INFORMATION AND RATIONALE1

The agricultural sector strategy (Agri-Pinoy) embodied in the Philippine Development Plan (PDP) for
2011-2016 advances the principles of inclusive growth, food staple sufficiency, natural resource
management and area-based development. Agri-Pinoy also includes the following new strategies: (i)
institutionalizing regionally-based, spatial planning (ii) developing a systems approach for both
planning and resource allocation; (iii) providing the critical infrastructure needed by priority value
chains; and (iv) building a more resilient production base to accommodate fluctuations in global
markets and effects of climate change. Complementing the Agri-Pinoy strategy is the National
Climate Change Action Plan (NCCAP) which highlights the priority to be given to the rural sector in
pursuing climate adaptation measures.

The Philippine Rural Development Project (PRDP), a flagship project of the Department of
Agriculture (DA), is aligned with the Agri-Pinoy strategy. It is a six-year program (2013-2019)
designed to establish the governments platform for a modern, climate-smart and market-oriented
agri-fishery sector. Externally, it will focus on expanding market access and improving
competitiveness. Internally, it will introduce reforms in operating the DA bureaucracy. Specifically,
it aims to achieve the following development objectives:

At least, 5% increase in annual real household incomes of farmer beneficiaries; 30%

increase in income for targeted beneficiaries of enterprise development
7% increase in value of annual marketed output
20% increase in number of farmers & fishers with improved access to DA services

To facilitate the achievement of above objectives, the program has four main components, namely:

I-PLAN: Investment for AFMP Planning at the Local and National levels
I-BUILD: Intensified Building-Up of Infrastructure and Logistics for Development
I-REAP: Investments for Rural Enterprises and Agricultural and Fisheries Productivity
I-SUPPORT: Implementation Support to PRDP

The design of PRDP and its implementation aspects draw heavily on the experiences of the
Mindanao Rural Development Projects (MRDP 1 and 2), a program that has been successfully
implemented over the past decade. The program adopts a value chain development approach as a
platform for promoting inclusive, climate resilient, and sustainable growth in key agricultural
subsectors and value chains.

Peanut or groundnut is one of the priority products of Ilocos Region and Cagayan Valley. The two
regions account for 53% of the national production. Peanut cultivation has become an important
livelihood strategy in these two regions especially among smallholders. Peanut is a versatile crop
that provides growers with many options to spread risk. With a short growing season, peanut fits
well as a cash crop within a diverse range of cropping systems. Peanut production stimulates local
food processing industries and adds value to the crop.

1
Overview of PRDP was taken from the Program Information Document World Bank website.

9
The peanut crop canopy provides nearly full ground cover. Whether grown alone or in sequence
with other crops, peanut cultivation reduces exposure of soil to erosion from rainfall or wind. The
closed peanut canopy also suppresses weeds to reduce weed pressure, especially when peanut is
intercropped with a grain crop. In either case, reduced weed pressure reduces need for
environmentally-harmful chemical weed control.

While peanut offers many benefits to growers, processors, and consumers, there are still several
important constraints associated with peanut production and use. To date, national peanut
production is not sufficient to meet local demand. Self-sufficiency ratio in 2013 was at 56.29%.

B. OBJECTIVES OF THE VCA

This report provides an overview and analysis of the raw peanut value chain with the aim of
identifying main leverage points and key strategies to improve competitiveness of the Ilocos and
Cagayan Valley Regions and promote development in a pro-poor and sustainable manner. It will
provide the basis for the formulation of the Provincial Commodity Investment Plans and will lay the
foundation for PRDPs cooperation with the private sector and other government agencies active in
the peanut industry. Specifically, the value chain analysis aims to:

a) Provide an in-depth understanding of the range of factors and relationships that affect the
performance of the peanut industry in the two regions, including end markets, enabling
environment and coordination/cooperation among firms.

b) Identify in a participatory process the systemic chain level issues that hinder or promote the
gainful participation of rural households, sustainability of the chain, and its competitiveness in
general.

c) Under a participatory process, identify and prioritize interventions needed to overcome

bottlenecks throughout the chain that would foster value chain competitiveness and climate
change resiliency.

d) Identify and explore how to catalyze private and public sector stakeholders in the peanut
industry to collaborate for improved industry performance

C. METHODOLOGY AND APPROACH

An initial desk study was conducted to collect and summarize information from currently available
reports and studies. It provided guidance to issues that needed to be the focus of field research. The
field work component of the study was conducted using qualitative research techniques particularly
value chain analysis workshops, key informant interviews (KII), and focus group discussions (FGDs).
Key informants and participants to the workshops and FGDs consisted of farmers, traders,
processors, and representatives from relevant government agencies. Key informant interviews
were used for collecting data on individuals perspectives, experiences, and quantitative data. FGDs
were effective in generating broad overviews of issues of concerns to the groups or subgroups
represented and in the triangulation/vetting of information obtained from the KII.

Constraints and interventions were identified and further elaborated based on iterative and
inductive analysis of responses during the KII and FGD/Stakeholders Workshop primarily from the
following perspectives:

10
 Context of key informants and FGD participants

Third party observations (e.g., government agencies, providers, VC facilitators with

experience in peanut VC development projects, etc.) were important for suggesting
important issues to explore and for substantiating the results of the company interviews

Experiences of other peanut producing countries such as India, United States, Mali, and
other African countries

Past assessment studies of the Philippine peanut industry

Competitiveness is generally defined as the ability to efficiently produce goods (and services) for
which there is high demand that leads to increased income generation capacities that are
sustainable in the future. Strategy is about choice --- choosing what to do to build competitiveness
from a long list of viable and promising options. Given the competing and varied incentives and
motivations among and between stakeholders and players, the process required iterative ranking
and prioritization and arriving a consensus on what needs to be done within the next 5 years. The
competitiveness strategies proposed in this report reflect the choices made as a result of extensive
analysis of the industrys key constraints and a dialogue with stakeholders and players.

11
 Section 2:
OVERVIEW OF THE INDUSTRY

A. PRODUCT DESCRIPTION

Peanuts or groundnuts are the edible seeds of a legume, Arachis hypogaea, and they are high in
protein, oil, and fiber. The variety widely planted in the two regions is the Ilocos Pink or NSIC Pn 12.
The Spanish variety NSIC Pn 12 has large pods and seeds. The seeds have attractive pink seed coat
color and shape. It matures in 95- 100 days during the rainy season and 96-98 days during the dry
season. The majority of the pods are two-seeded with shelling outturn of 71 to 72%. The seed
contains 26.26% crude protein, 40.18% crude fat, 11.37% carbohydrates and 2.19% ash (minerals).
During the recent years, a growing number of farmers especially in Cagayan Valley have also shifted
to the planting of the Asha and Namnama varieties which are categorized as confectionery peanuts.
The Asha and Namnama varieties were bred and introduced by the International Center for
Research in Arid and Semi-Arid Tropics (ICRISAT) to Cagayan Valley through a project initiated by the
Bureau of Agricultural Research (BAR) and the Philippine Council for Agriculture, Aquatic and Natural
Resources Research and Development (PCAARRD). These varieties produce better pods and large-
seeded. The high quality seeds are most desirable for processing and can also be sold as table and
cocktail peanuts. Asha is also called a 3-in-1 variety because of its flexible size of Class A export
quality (one gram per seed), Class B for domestic market, and Class C for planting.

While the peanuts physical structure and nutritional benefits more closely resemble that of other
legumes, its use in diets and cuisines more closely resembles that of nuts. In Ilocos Region and

12
Cagayan Valley, peanuts are widely consumed as boiled-in-shell peanuts and salted fried peanuts,
processed as peanut butter, and as an ingredient in the manufacture of confectioneries such as
peanut brittle and yema. It is also used as an ingredient in sauces, soup, meat, and other dishes.

In the global scene, about one-third of the total world production of peanut is consumed as food and
two-thirds are crushed for oil. The following are some the value-added products from peanuts:

Peanut Butter: Peanuts are roasted, blanched and sorted before grinding into a creamy consistency.
Custom formulations (e.g., chunky peanut butter, peanut butter with malunggay, peanut butter with
coco sugar) have also been developed to modify the texture or sweetness or to add flavoring.

Peanut Flour: It is made from crushed, fully or partly defatted peanuts. It is used in confectionery
products, seasoning blends, bakery mixes, frostings, fillings, cereal bars and nutritional bars. Peanut
flour is gluten-free, has a high protein content, and is a good flavour enhancer

Peanut Oil: Peanut oil is extracted from shelled and crushed peanuts by one or a combination of the
following methods: hydraulic pressing; expeller pressing; and/or solvent extraction. Oils and solvents
derived from peanuts are used in medicines, textiles, cosmetics, nitro-glycerine, plastics, dyes,
paints, varnishes, lubricating oils, leather dressings, furniture polish, insecticides and soap.

Peanut Milk: It is a lactose free milk-substitute beverage. Main ingredients are peanuts and water.
The peanuts are typically ground, soaked, sometimes heated, and then filtered through a fine filter.

Peanut Paste: It is used in a variety of industrial food recipes --- cookies, crackers, baked goods, ice
cream, sauces, etc.

13
The residue from processing peanuts for oil is used as an animal feed and fertilizer. Peanut shells are
used as raw materials in the manufacture of plastic, wallboard, abrasives, fuel, cellulose and glue.
Peanuts can also be used as a feedstock for biodiesel. The stems and leaves are fed to livestock. Like
other legumes, roots of peanuts have nodules containing bacteria that fix nitrogen in the soil and
make it more fertile.

B. PRODUCTION TRENDS

1. Global Production

Table 1.- World Peanut Production, 2009 to 2013

Country Production Volume (in MT)
2009 2010 2011 2012 2013
WORLD 36,564,192 42,100,175 40,016,584 41,269,157 41,308,175
China 14,764,870 15,709,036 16,114,231 16,875,700 16,072,746
India 5,428,500 8,265,000 6,964,000 5,779,000 6,964,900
Nigeria 2,977,620 3,799,240 2,962,761 3,070,000 3,162,124
United States 1,674,500 1,885,510 1,659,510 3,057,850 2,034,074
Myanmar 1,304,829 1,362,452 1,399,625 1,371,500 1,362,681

14
Table 1.- World Peanut Production, 2009 to 2013
Country Production Volume (in MT)
2009 2010 2011 2012 2013
Indonesia 777,888 779,228 690,949 712,874 1,269,140
Sudan 942,000 762,500 1,185,000 1,032,000 1,137,700
Senegal 1,032,651 1,286,855 527,528 672,803 845,906
Argentina 605,491 611,040 701,535 820,000 725,929
Cameroon 5,013,175 536,187 564,230 570,000 574,668
Others 36,564,192 42,100,175 40,016,584 41,269,157 41,308,175
Source: FAOSTAT

Total world peanut production for 2013 was 41,308,175 MT. China is the worlds largest producer
and in 2013 accounted for 39% of the world production. Other top peanut producing countries are
India (17%), Nigeria (8%), United States (5%), and Myanmar (3%). Peanut production in the United
States in 2013 went down by 33% over 2012 performance due to drought. On the other hand,
production in India in 2013 increased by 5% over 2012 output. World production grew by an
average of 3% per year.

Over 100 countries worldwide grow groundnut. Developing countries constitute 97% of the global
area and 94% of the global production of this crop. Production is concentrated in Asia (66.2% of
global production) and Africa (25.5% of global production), where the crop is grown mostly by
smallholder farmers under rainfed conditions with limited inputs. In 2013, Philippines ranked 48th
with a minimal share of 0.07%.

During the past 10 years, Chinas yield was about 3.5 MT per hectare. China has a very intensive
production method. Each farmer cultivates small intensive plots. Most of them cover the fields with
very thin layer of plastic to reduce pests and weed infestation, which in turn leads to moisture
retentions and, ultimately, increased yields.

In 2013, average yield of peanut farms in the United States was at 4.5 MT/hectare. High yield in the
United States is attributed to the use of high yielding runner varieties, good agronomic practices,
and the mechanization revolution.

2. Domestic Production

During the last five years, Philippines produced an average of 29,711.72 MT of peanuts with the
highest production of 30,978 MT achieved in 2009 and the lowest at 29,088.93 MT in 2013.
Production volume decreased by an average of 1% per year while area planted to peanuts declined
by 2% per annum. On the other hand, average yield per hectare slightly increased from 1.10 MT in
2009 to 1.14 MT in 2013.

Luzon A regions accounted for 59% of the total peanut production in 2013. The top three peanut
producing regions in the Philippines in 2013 were Ilocos Region (30%), Cagayan Valley (14%), and
Northern Mindanao (9%).

15
As seen in Table 4, the top 3 regions in Philippines in terms of average yield per hectare in 2013
were Ilocos Region (1.54 MT/ha), Northern Mindanao (1.26 MT/ha), and Central Luzon
(1.36MT/ha). On the other hand, CAR (0.50MT/ha), Western Visayas (0.63 MT/ha), and ARMM
(0.68) posted the three lowest average yield among all regions in the country.

Table 2.- Peanuts Production in the Philippines by Region ranked according to Volume, 2013

% Share to RP
REGION Volume (MT) Area (Ha) Yield (MT/ha)
Volume
PHILIPPINES 29,088.93 25,599.82 1.14 100%
Ilocos Region 11,431.65 7,420.59 1.54 39%
Cagayan Valley 3,973.43 3,506.00 1.13 14%
Northern Mindanao 2,632.74 1,842.95 1.43 9%
Western Visayas 2,114.59 3,377.00 0.63 7%
Central Luzon 1,744.44 1,283.00 1.36 6%
MIMAROPA 1,272.90 1,154.87 1.10 4%
Central Visayas 1,014.43 1,349.43 0.75 3%
Zamboanga Peninsula 892.87 717.75 1.24 3%
Bicol Region 868.53 1,276.00 0.68 3%
SOCCSKSARGEN 674.20 536.15 1.26 2%
ARMM 580.51 903.00 0.64 2%
Eastern Visayas 572.43 806.78 0.71 2%

16
Table 2.- Peanuts Production in the Philippines by Region ranked according to Volume, 2013

% Share to RP
REGION Volume (MT) Area (Ha) Yield (MT/ha)
Volume
Davao Region 542.83 515.30 1.05 2%
Calabarzon 523.40 543.00 0.96 2%
CAR 125.51 249.50 0.50 0%
Caraga 124.47 118.50 1.05 0%
Source: BAS/PSA

Four of the top 5 peanut producing provinces in the Philippines in 2013 belong to the Luzon A
Cluster. In 2013, Pangasinan remained the top peanut producing province in country with 5,599 MT
in 2013, followed by La Union with 2,897 MT and Lanao del Norte with 2,050 MT. Pangasinan also
had the highest average yield at 1.79 MT/hectare. Lanao del Norte in Mindanao had the second
highest average yield at 1.51 MT/hectare followed by La Union at 1.44 MT/hectare. Cagayan and
Isabela ranked 4th and 5th in terms of yield.

Table 3.- Top Ten Peanut Producing Provinces in the Philippines, 2013
Province Volume (MT) Area (Ha) Yield (MT/ha) % to RP
Volume
PHILIPPINES 29,088.93 25,599.82 1.14 100%
Pangasinan 5,598.83 3,131.26 1.79 19%
La Union 2,896.92 2,005.00 1.44 10%
Lanao del Norte 2,050.00 1,360.00 1.51 7%
Cagayan 1,818.98 1,593.00 1.14 6%
Isabela 1,637.32 1,426.00 1.15 6%
TOTAL OTHER PROVINCES 14,724.16 16,084.56 0.92 51%
Source: BAS/PSA

Ilocos Region
A
Peanut production in Ilocos Region slightly decreased from 11,884MT in 2009 to 11,432MT in 2013.
The decrease in production volume was due to the decline in area planted to peanuts from 7,660
hectares in 2009 to 7,421 hectares in 2013. Based on interviews, a few farmers shifted to other
crops due to lack of planting materials and lack of access to water sources. Average yield per
hectare during the past five years fluctuated between 1.52 MT to 1.57 MT.

Pangasinan comprised 49% of the 2013 production of the region. La Union, which is the 2 nd highest
peanut producing province in the region, contributed 25% of the production. Ilocos Sur and Ilocos
Norte accounted for 14% and 12%, respectively, of the regions production.

La Union experienced the highest drop in production over the past 5 years with a negative average
growth rate of 1.61% per year. The decline in production volume was brought about by decrease in
average yield and area planted. Farmers attribute the decline to difficulties in sourcing good quality

17
seeds and lack of access to water sources. On the other hand, Ilocos Norte has posted the highest
production average growth of 1.91% annually with a small but steady average growth rate of 0.48%
in area planted to peanuts. Ilocos Norte also had the highest percentage increase in yield between
2009 and 2013. Pangasinans production in 2013 decreased due to poor pod development. Average
yield correspondingly decreased from 1.83 MT per hectare in 2012 to 1.79 MT in 2013.
Production Trends in Zamboanga Peninsula, 2009 to 2013
Table 4.- Peanut Production Trends in Ilocos Region, 2009 to 2013

Annual %
Indicators 2009 2010 2011 2012 2013 Growth Rate

ILOCOS REGION
Volume 11,833.97 12,120.19 11,566.34 11,765.67 11,431.65 -0.68%
Area Planted 7,659.88 7,808.36 7,592.52 7,514.80 7,420.59 -0.62%
Average Yield 1.54 1.55 1.52 1.57 1.54 -0.06%
Ilocos Norte
Volume 1,249.01 1,255.72 1,287.98 1,332.43 1,368.09 1.91%
Area Planted 1,088.10 1,093.27 1,093.27 1,104.20 1,114.00 0.48%
Average Yield 1.15 1.15 1.18 1.21 1.23 1.40%
Ilocos Sur
Volume 1,611.52 1,534.95 1,572.43 1,536.72 1,567.81 -0.54%
Area Planted 1,131.57 1,135.00 1,135.00 1,135.00 1,170.33 0.69%
Average Yield 1.42 1.35 1.39 1.35 1.34 -1.19%
La Union
Volume 3,151.28 3,014.55 3,050.99 2,915.29 2,896.92 -1.61%
Area Planted 2,128.21 2,079.09 2,099.25 2,007.60 2,005.00 -1.16%
Average Yield 1.48 1.45 1.45 1.45 1.44 -0.48%
Pangasinan
Volume 5,822.16 6,314.97 5,654.94 5,981.23 5,598.83 -0.77%
Area Planted 3,312.00 3,501.00 3,265.00 3,268.00 3,131.26 -1.09%
Average Yield 1.76 1.80 1.73 1.83 1.79 0.34%

Cagayan Valley

Cagayan Valley is the second highest peanut producing region in the country. In 2013, the region
produced 3,973 MT of peanuts cultivated in a total area of 3,506 hectares. Peanut production in
Cagayan Valley decreased from 4,432 MT in 2009 to 3,973 MT in 2013. In terms of average yield,
Cagayan Valley ranked 5th in the country with 1.13Mt/hectare.

Cagayan province was the highest peanut producing province in the region in 2013 accounting for
46% of the production or 1,818.98 MT, followed by Isabela with 1,637 MT (41%). Collectively, the
two provinces accounted for 87% of the production. All four provinces of Cagayan Valley had
negative growth rate in terms of production volume and area planted. According to farmers, area

18
planted to peanuts is primarily dependent on the quantity of seeds that they are able to access.
Some farmers also said that they experienced poor germination due to lack of water. Isabela had
the highest average yield at 1.15 Mt/ha while Quirino had the lowest yield at 0.69 MT/ha.

Table 5.- Peanut Production Trends in Cagayan Valley, 2009 to 2013

Annual %
Indicators 2009 2010 2011 2012 2013 Growth
Rate

CAGAYAN VALLEY
Volume 4,432.36 3,392.73 4,373.28 3,905.72 3,973.43 -2.07%
Area Planted 3,690.00 3,159.25 3,780.00 3,514.00 3,506.00 -1.00%
Average Yield 1.20 1.07 1.16 1.11 1.13 -1.13%
CAGAYAN
Volume 1,876.82 1,509.29 1,683.09 1,878.09 1,818.98 -0.62%
Area Planted 1,640.00 1,551.00 1,605.00 1,607.00 1,593.00 -0.57%
Average Yield 1.14 0.97 1.05 1.17 1.14 -0.04%
Isabela
Volume 1,926.58 1,320.89 2,153.31 1,497.09 1,637.32 -3.00%
Area Planted 1,455.00 1,071.25 1,647.00 1,412.00 1,426.00 -0.40%
Average Yield 1.32 1.23 1.31 1.06 1.15 -2.66%
Nueva Vizcaya
Volume 593.36 533.80 502.32 499.89 488.93 -3.52%
Area Planted 547.00 492.00 480.00 451.00 446.00 -3.69%
Average Yield 1.08 1.08 1.05 1.11 1.10 0.21%
Quirino
Volume 35.60 28.75 34.56 30.65 28.20 -4.16%
Area Planted 48.00 45.00 48.00 44.00 41.00 -2.92%
Average Yield 0.74 0.64 0.72 0.70 0.69 -1.45%

19
 Section 3:
NATURE AND STRUCTURE OF THE IINDUSTRY

A. VALUE CHAIN MAPPING

Farmers sell shelled and unshelled peanuts to local traders. The traders in turn sell these to
consolidators. Main buyers of the consolidators are wholesalers in wet markets and key trading
centers in Luzon. Wholesalers sell to retailers and microprocessors of table nuts (fried, roasted,
boiled), peanut butter, peanut brittle, and other similar products. The microprocessors include the
peanut vendors who collectively are the biggest buyers of peanuts produced by the two regions.
Peanut vendors get their supply either from retailers or straight from wholesalers and local traders
depending on volume requirements. Microprocessors also use imported peanuts.

In Cagayan Valley, there are cooperatives that are into peanut processing. The cooperatives source
from members and non-members. There are also microprocessors in both Ilocos Region and
Cagayan Valley who source directly from their own farms. Some traders also process a portion of
their stocks into table nuts, peanut brittle, and other confectioneries.

There are about 6 companies in the Philippines who use significant quantities of peanuts in their
products. The companies source a small percentage of their products from consolidators who have
the equipment to sort and pre-grade peanuts. A greater percentage of the peanut requirements are
imported from China and India.

20
Below are the indicative trade flows of raw peanuts from production areas to markets:

1. Ilocos Norte and Ilocos Sur

About 80% of the

peanuts produced
in Ilocos Norte and
Ilocos Sur in 2013
were sold to
traders. Main
market of traders
is the assemblers
in Urdaneta
Market. About
20% of the peanuts
collected by
traders were sold
directly to
wholesalers in wet
markets. There
are farmers who
sell their produce directly to street vendors. In some cases, household members are also street food
vendors. Based on interviews with vendors in wet markets in Ilocos Norte and Ilocos Sur, there are
times when they source peanuts either from Urdaneta or Divisoria.

2. La Union and Pangasinan

Peanuts from La
Union and
Pangasinan are
generally sold
outside of the
region. Based on
estimates of
traders, about
40% of the annual
produce are sold
to wholesalers in
Divisoria, 30% are
brought to the
Urdaneta Market,
and 10% to the
Sangitan Market
in Nueva Ecija.

The local market

accounts for
about 10% of the
annual production volume. Main buyers are the peanut vendors.

21
Only about 10% are sold directly to processors within their immediate locality. There are also a few
processors from Baguio and Central Luzon who source directly from farmers but this is not on a
regular basis. Processors generally prefer to use the imported peanuts.
3. Cagayan Valley

About 80% of the

peanuts produced in
the region were sold
to traders. Volume
supplied by one
consolidator
supplying to the 6
large processors
based in Metro
Manila represented
about 13% of the
annual production
volume. Traders
also sell their
peanuts to
consolidators in
Santiago City who, in
turn, distribute
these to buyers in
Metro Manila and
other regions in
Northern Luzon. During the Stakeholders Workshop, players estimated that 52% of the production
are used up locally primarily by peanut vendors within the region.

Microprocessors of peanut butter and other peanut-based products utilize about 15% of the peanut
production. The processed products are sold just within the locality.

B. KEY PLAYERS AND FUNCTIONS

1. Input Provision

In Ilocos Region, traders provide the planting materials under a buy-back agreement. The traders
source the planting materials from farmers within and outside the region and from their own stocks.
Traders generally save a portion of their stocks for seed loans to farmers for the next cropping
season. Some farmers produce their own seeds and sell surplus to traders and other farmers.
Majority of the farmers though have stopped saving seeds for next planting as quality tends to
deteriorate quickly due to the absence of proper storage facilities. Quality of seeds deteriorates in
less than 6 months under ordinary storage.

The Cagayan Valley Integrated Agricultural Research Center (CVIARC), through its peanut project co-
funded by the Department of Agriculture (DA) Bureau of Agricultural Research (BAR,) is t the lead
in the promotion of seed production of the confectionery peanut varieties. CVIARC has established
the Agri Store which distributes 10 to 15 MT of certified seeds yearly. It assembles and distributes
these seeds throughout the country. In Cagayan Valley, CVIARC's partners in certified seed
production are the Cagayan Valley Legumes Seed Growers Association and the Lighthouse

22
Cooperative certified seeds and the Lighthouse Cooperative. As of 2012, the CVIARC program has
accredited 36 seed growers.

Even though there are a number of seed producers, availability of sufficient quantity of quality seed
is still a challenge. During the workshops, farmers reported that they either cut down area planted
to peanuts or temporarily shifted to other crops due to difficulties in procuring seeds.

Only a very small percentage of farmers use fertilizers. A few farmers use organic fertilizer. Many of
the farmers rely on cultural methods to control pest and weed infestation.

2. Farming

In Cagayan Valley, peanut is primarily grown as cash crop in corn-based areas with distinct wet and
dry seasons. It is usually planted mostly during dry season as rotation crop after corn. There are
about 4,845 peanut farmers in the region.

Peanut is grown in all provinces of Ilocos Region in one to two croppings. Majority of the farmers
interviewed indicated that during the recent years, they only had one cropping due to constraints in
accessing water and seeds. Peanuts are usually planted from late September to December. During
these months, there is still residual soil moisture sufficient to support the vegetative and
reproductive process of the crop. According to farmers, after the September to December period,
supplemental irrigation is already needed especially during the 1st month (germination to pod filling).
Likewise, crops planted during this period have higher yields than wet season crops. Based on
experiences of farmers interviewed, peanuts planted during the wet season tend to produce fewer
pods and with high risk of rotting.

There are about 11,492 farmers in Ilocos Region and with majority already in the business for more
than 20 years. In both regions, peanut is a secondary crop and supplements their income from corn
or rice.

Planting shelled peanut seeds is the standard practice of farmers. There are still some farmers
though who still plant unshelled pods which take a longer time to germinate and with a lower rate of
germination. Majority of the farmers do not use external inputs. For those who use inputs, fertilizer
management is usually based on their experiences from peanut and rice/corn farming. Weed control
is done through a combination of cultivation and manual weeding. Farmers who have undergone
training under the CVIAR program have better agronomic practices and relatively higher yields
compared to those who rely purely on knowledge and skills acquired from elders and long years of
farming.

Harvesting is an important phase in peanut production since timing greatly affects its yield and
quality. Interviews with traders indicate that there are still farmers who harvest prematurely.
Premature harvesting results to shrivelled and poor quality beans.

Harvesting is a manual and labor intensive operation. It is done by pulling the plants using a spading
fork, pitch fork, and other digging tools. Pods are either handpicked or stripped from the vine by
beating; Farmers generally sell the peanuts to traders after stripping. They find this practical and
harvest is easily turned to cash because peanut traders prefer to buy fresh right at the field when
the farmers are stripping.

23
3. Post Harvest Operations

Postharvest operations are undertaken by both farmers and traders. Drying is usually done twice
within the chain of postharvest operations. Initial drying is done before threshing and final drying is
done before shelling. The most widely used drying method is the direct sun drying. Some farmers
practice windrow drying in the field followed by aeration in shaded huts. Sun drying is done by
laying tarpaulin and other similar protective on the ground. Each drying operation usually takes
about 3 to 5 days depending on weather conditions. According to traders, peanuts are dry when the
sound of nuts inside the pods is heard if shaken. Alternatively, dryness is determined by pressing the
thumb and the index finger to a peanut kernel. Peanuts are considered dry when the seed coat
separate easily from the cotyledon when pressure is applied.

Shelling is generally done by manual cracking of pods and separation of kernels from pods. Others
use stones or wooden hammer to crack pods. An experienced sheller can shell 5 to 7 kilos per day.
Some of the key quality problems are presence of scratches, ruptured seed coats, and broken
cotyledons. Any form of injury to the seed coat is harmful and results to decay, fungal
contamination, and rancidness. Many of the farmers prefer to sell unshelled peanut as shelling is
generally viewed as laborious and time consuming.

Sorting is usually done manually. There are only a few consolidators who have sorting and grading
equipment but these can only be used for the local small-seeded peanuts and not the confectionery
peanuts. Despite having a growing supply of the confectionery peanut varieties, the peanut industry
chain in Cagayan is still not yet able to supply large processors as they usually require shelled and
pre-graded peanut.

24
Farmers rarely store peanuts to avoid incidences of black spots. According to experts, risks of black
discoloration can be reduced if relative humidity of storage areas is less than 75%. A central issue
for post-harvest handling and processing of peanuts is the potential for fungal infection and
mycotoxin contamination, particularly aflatoxins

.
4. Trading

Peanuts are marketed at the farm gate in the following product formats:

- fresh or newly harvested pods (after stripping)

- dried peanuts in pods
- shelled peanuts usually in small quantities and sold directly to vendors

The following are the different intermediaries in the peanut marketing chain:

Local traders: They purchase the crop in one or more municipalities. In Ilocos Region, traders
usually buy the newly harvested peanuts (wet). Traders who provided seed loans almost always also
take care of the harvesting. Harvesting expenses and cost of seeds are then deducted from the sales
or proceeds of the harvest. Farmers may also opt to deliver dry unshelled peanuts to the house of
the traders.

In Cagayan Valley, an average of 3 traders is usually located within the same municipality as the
farmers. Farmers deliver the dry unshelled or shelled peanuts to the traders.

25
Large Traders/Consolidators: They usually collect from several local traders. In Cagayan Valley, one
consolidator has a buying station and is also engaged in the trading of other commodities. Another
consolidator, R.B. Chua Trading, supplies processors in Metro Manila and buys 400 to 500 MT per
year. R.B. Chua distributes shelled and pre-graded seeds to food processors in Metro Manila like
Tobi Marketing Inc., Newborn Food Products Inc., Marigold Commodities Corp., and California
Manufacturing Co. Inc. R.B. Chua trades only with the small/medium-seeded peanuts since existing
sorting equipment cannot handle the large seeded confectionery peanuts.

Lighthouse Cooperative supplies peanut food processors in Cagayan. It also serves as assembler and
distributor of processed products. The cooperative produces 5 MT to 10 MT of peanuts per month.

In Ilocos Region, one consolidator sells to a wholesaler in Divisoria, while another one supplies
wholesalers in Urdaneta and Sangitan Trading Centers. In many cases, they trade unshelled peanuts.

Wholesalers: The wholesalers distribute the peanuts to vendors and processors. They deal with
both imported and local peanuts. Wholesalers generally carry other products.

Retailers: Retailers consist mainly of market vendors.

5. Processing

The following are the range of processors in Ilocos Region and Cagayan Valley:

Street Food Enterprises: Main products are boiled, roasted, and fried peanuts. These are commonly
family or one-person informal businesses. The enterprises can be mobile vendors (on foot and
bicycles), semi-mobile (using push carts), or stationary vendors (with stalls). In many cases, the
peanuts are cooked in make-shift kitchen or right at the stall. There are some who sell packed
peanuts (in brown paper bag or plastic). There are also peanut farming households who are directly
involved in the preparation and sale of table peanuts. The street food enterprises are among the
major buyers of peanuts.

Micro and small scale processors: Majority of enterprises in the two regions engaged in peanut
processing are micro scale and household based enterprises. Main products include peanut butter,
greaseless peanuts, adobo peanuts, honey coated peanuts, peanut brittle, and other confectioneries
and pastries. Products are positioned primarily as pasalubong items. Except for cooperative
owned businesses, many of the processors especially in Ilocos Region generally prefer to use
imported peanuts due to the following reasons: i) large seeded; ii) low risk of aflatoxin
contamination/ moisture content as per acceptable standards; iii) consistent sizes; and iv) cheaper
than local peanuts.

Table 6.- Some of the Processors in Ilocos Region and Cagayan Valley
Company Description
Ilocos Region
Romana - A 50-year old company; a pioneer in peanut brittle manufacturing
and one of the leading brands in the country

- Prior to 2007, products were sold mainly in pasalubong stores in

Baguio City, Pangasinan, and other key tourist centers in Northern
Luzon. Currently, products are available in major supermarkets
and smalls.

26
Table 6.- Some of the Processors in Ilocos Region and Cagayan Valley
Company Description

- Prefers to use peanuts from China which are large seeded, of

consistent sizes, and cheaper than locally produced peanuts.

- Main Products: Peanut Brittle, Adobo Peanuts, Greaseless

Metro Luba Coconut
Farmers Multi-Purpose
Cooperative
Peanuts
- Main products: Peanut Chocolate, Peanut Butter, Peanut
Polvoron
- Recipient of grants from the Department of Science and
Technology (DOST) and the Department of Trade and Industry
(DTI)

- GMP compliant plant; has a mechanical stainless steel peanut

roaster
- Still in the process of developing their market
Cagayan Valley
Alcala Peanut Food Main products: greaseless peanuts, roasted peanuts
Processing
Sources from farmers (members and non-members)

Current markets: Tuguegarao, Metro Manila (fairs, orders)

Jones-Isabela Village Level Table nuts using asha and namnama variety
Processing Plant
Buys from farmers in the area

Market: Within the province; market development phase

With 51 peanut processors in Cagayan Valley, the DA-CVIARC in partnership with DTI has launched
the unified pasalubong brand Peanut MAGIC. MAGIC stands for Market Attractive to Growers
and Import Cooperative. With the unified branding, DA-CVIARC hopes to be able to help the
industry build new and diversified markets for their products.

The following are the five major processors in the country who have been active in the various
initiatives to upgrade the peanut industry:

- Marigold Commodities Incorporated

- Newborn Food Products Inc.,
- Tobi Marketing
- Growers Food Industries Inc.
- California Manufacturing Corporation

The five companies require about 4,200 to 5,000 MT of peanuts per year.

27
C. NATURE OF INTERFIRM RELATIONSHIPS

1. Horizontal Relationships

The Ilocos Region peanut industry may be described as atomistic. This denotes fragmentation among
the key industry player groups and within each group. Except for the Metro Luba Coconut Farmers
Multi-Purpose Cooperative, there seems to be no other peanut-based associations or cooperatives
in the region. The little cooperation that does occur is based on friendship or family relations and
information on prices, buyers, and markets is exchanged in this way.

In Cagayan Valley, there are five cooperatives. Activities of cooperatives range from seed production
to processing and distribution. Among the main difficulties faced by farmer groups are:

a. Lack of capital to grow in scale and for investment in physical assets for value addition and for
product quality improvement

b. Lack of management capacity and good organizational governance

c. Lack of entrepreneurial skills and capacity to interact effectively and to undertake collective
action, which is necessary to induce lead firms to accept a high level of interdependence.

d. Weak business/market orientation

Among farmers who are members of the cooperatives, involvement in collective initiatives is still
limited. Majority of the farmer groups have not fully made use of their organizations as platforms to
collectively address constraints, promote economies of scale, and improve bargaining position.

In general, majority of the farmers and enterprises in the peanut industry in both regions operate in
isolation. Household enterprises in the same village know each other quite well. These personal and
social relationships, the pursuit of bigger and more lucrative markets, improved bargaining position,
and reduced cost of transaction through economies of scale can be harnessed to get players to work
together.

2. Vertical Relationships and Supply Chain Governance

Interviews suggest that a great percentage of the crop in Ilocos Region is sold prior to harvest
through informal loans tying farmers into traders. This scheme provides farmers with a valuable
source of credit and a guaranteed market but it also makes them price takers with low bargaining
position.

Local traders in the Ilocos Region also appear to have specific geographic assignments. Seldom are
two local traders located in the same area to buy peanut produce. In other words, aside from
binding farmers through buy-back scheme, local traders see to it that they do not have competition
in buying. This further gives the traders wider latitude to set the price.

Among farmers in the two regions who procured their own seeds, trading of peanuts is generally via
spot sales transactions. Traders usually buy peanuts by cans (empty oil plastic cans) rather than
weight. The use of cans as measuring device is a source of conflict and (mis)trust issues. Traders
expand the capacity of these cans through card boards or used folders. Likewise, since farmers
usually sell newly harvested peanuts, quality is not given too much importance except for pods that

28
are obviously damaged. This practice provides disincentives for upgrading although most farmers
look at this as a risk mitigation tool.

Market relationships, in general, do not permit close cooperation between and among the value
chain players and hardly contributed to the systemic upgrading of the supply chain. Consequently,
the system is not well positioned to respond to market change and requirements. Necessary change
is either slow or perhaps missed altogether. There is an inefficient flow of information along each
link of the chain.

D. PRICE AND COST STRUCTURE

1. Income and Profit

Table 7.- Indicative Costs and Return for 1 hectare of Peanut

Item Amount (in PhP) % to Total Cost
MATERIALS 5,850.00 32%
Seeds 4,400.00 24%
Fertilizer 1,250.00 7%
Pesticides 200.00 1%
LABOR 12,500.00 67%
Land Preparation 6,000.00 32%
Farm Maintenance 3,000.00 16%
Harvesting/Stripping 3,500.00 19%
TRANSPORTATION 200.00 1%
TOTAL 18,550.00
Yield 1,350.00
Cost per Kilo 13.74
Unit Price/kilo 24.00
Gross Income 32,400.00
Net Income 13,850.00
Input-Output Ratio 1.75
Profit Margin 43%
Source: KII

The gross income for a typical peanut farm is about PhP 32,400 per hectare at unit price of PhP
24/kg of wet peanuts and yield of 1,350 kilograms. Net income per hectare is about PhP 12,500. The
average cost of production per kilo of wet peanut is about PhP 13.74. Estimates of production cost
per kilo of wet peanuts ranged from PhP 11.50 to PhP 14.50 based on interviews. According to
farmers, peanut farming is generally profitable as long as there is sufficient water and not too much
rain during the planting season.

As can be seen from Table 7, main cost centers are the seeds and labor. Seeds account for 24%
while labor comprised 67% of total production cost. Ilocos Region, traders advance or shoulder

29
about 40% to 45% of the total production costs. Upfront production costs shouldered by farmers
would be about PhP 5,000 for land preparation and planting. Labor for farm maintenance is usually
provided by farmer himself and family members.

Transportation cost depends on road conditions. For farms located in areas with poor roads,
transportation expenses to haul inputs and produce can go up as high as PhP 500. In cases where
farmers opt to pick up the produce, the price is lower by PhP 0.50 to 1.00 per kilo to compensate for
depreciation cost and travel time. However, in many cases, traders are hesitant to pick up produce
from farms located with long stretch of rough roads.

2. Relative Financial Position of Players

Table 8.- Relative Financial Position of VC Players: Dry Peanuts with Shell
Assumption:
1.2 kilo of fresh peanuts = 1 kilo dry peanuts with shell
Function Product Costs Profit Margins
Total Added % Unit Unit % Profit Unit % to
Unit Unit Added Price Profit Margin Price
Cost Cost Unit
Cost
Farming Fresh 16.49 16.49 57% 28.80 12.31 37% 28.80 46%
Peanuts
Trading 33.80 5.00 17% 40.00 6.20 19% 11.20 18%
Consolidation Dry 43.50 3.50 12% 50.00 6.50 20% 10.00 16%
Wholesale Peanuts 52.00 2.00 7% 56.00 4.00 12% 6.00 10%
Retail Sales 58.00 2.00 7% 62.00 4.00 12% 6.00 10%
Total 28.99 100% 33.01 100% 62.00 100%

Source: KII

Production cost for one kilo of dry peanuts is about PhP 28.99 with farming accounting for 57%.
Traders and consolidators jointly account for 29% of the production and distribution costs.
Postharvest operations comprise about 76% of the costs incurred by trader and consolidator.
Transportation and hauling expenses make up the remaining 24%.

Profit per kilo of dry peanuts is about PhP 33.01 with farming getting a percentage share of 37%.
Although farming has the highest percentage share to profit, it is not proportionate to farmers
share to production cost. The distribution of profit can be made more equitable by improving
efficiency and productivity throughout the chain especially at the farm level. Upgrading of
postharvest operations can lower the cost of production and reduce postharvest losses.

30
31
 Section 4:
MARKETS AND MARKET OPPORTUNITIES

A. MARKETS AND MARKET TRENDS

1. Export Market

Philippine Exports

Table 9.- Philippine Exports of Peanuts and Peanut Butter, 2009 to 2013
2009 2010 2011 2012 2013
PEANUTS: HS 1202 Groundnuts, not roasted
WORLD
Volume (in MT) 193 100
Value - 35,000 50,000 -
Unit Price (US$/MT) 181.35 500.00
China
Volume (in MT) - - 39 - -
Value - - 7,000 - -
Unit Price (US$/MT) 179.49
Saudi Arabia
Volume (in MT) - - - 20 -
Value 32,000
Unit Price (US$/MT) 1,600
India
Volume (in MT) - - 154 - -
Value - - 28,000 - -
Unit Price (US$/MT) 181.82
United Arab Emirates
Volume (in MT) - - - 80 -
Value 18,000
Unit Price (US$/MT) 225.00
Peanut Butter: HS 200811 Ground-nuts nes o/w prepared or preserved, sugared, sweetened,
spirited or not
WORLD
Volume (in MT) 1,067 1,102 1,334 1,001 465
Value 2,077,000 2,261,000 2,637,000 2,371,000 1,145,000
Unit Price (US$/MT) 1,946.58 2,051.72 1,976.76 2,368.63 2,462.37
Canada

32
Table 9.- Philippine Exports of Peanuts and Peanut Butter, 2009 to 2013
2009 2010 2011 2012 2013
Volume (in MT) 153 179 179 158 107
Value 359,000 424,000 425,000 480,000 358,000
Unit Price (US$/MT) 2,346.41 2,368.72 2,374.30 3,037.97 3,345.79
United States
Volume (in MT) 229 300 339 342 82
Value 443,000 590,000 631,000 827,000 217,000
Unit Price (US$/MT) 1,934.50 1,966.67 1,861.36 2,418.13 2,646.34
Italy
Volume (in MT) 66 30 48 51 65
Value 127,000 67,000 99,000 100,000 119,000
Unit Price (US$/MT) 1,924.24 2,233.33 2,062.50 1,960.78 1,830.77
United Arab Emirates
Volume (in MT) 100 58 103 75 57
Value 191,000 107,000 216,000 165,000 135,000
Unit Price (US$/MT) 1,910.00 1,844.83 2,097.09 2,200.00 2,368.42
Malaysia
Volume (in MT) 0 2 50 37 28
Value - 4,000 107,000 72,000 35,000
Unit Price (US$/MT) 2,000.00 2,140.00 1,945.95 1,250.00
Source: Intracen

During the past five years, data from Intracen indicates that Philippines has exported only a total of
293 MT of peanuts. Export sales were made in 2011 and 2012. Export sales of processed peanut
products were more substantial than raw peanuts. The major destinations of the peanut exports are
countries with many Filipino residents and/or overseas contract workers who are the most probable
target consumers of these exported peanut products. Prior to the 54% decline of export volume in
2013 over 2012 performance, Philippines was exporting an average of 1,126 MT of processed peanut
products per year. Volume of processed peanut products exported was on an increasing trend until
2011. Among the key problems faced by Philippine exporters are quality and aflatoxin related issues.

World Trade of Peanuts

Table 10.- World Export Trade of Peanuts, 2009 to 2013

2009 2010 2011 2012 2013
WORLD
Volume (in MT) 1,294,059 1,590,105 1,851,478 1,772,873 1,729,198
Value (in US $ '000) 1,313,848 1,626,003 2,539,473 2,727,660 2,329,087
Unit Price (US$/kg) 1.02 1.02 1.37 1.54 1.35
India

33
Table 10.- World Export Trade of Peanuts, 2009 to 2013
2009 2010 2011 2012 2013
Volume (in MT) 240,101 468,916 760,764 655,690 438,267
Value (in US $ '000) 206,442 399,835 941,047 896,812 483,304
Unit Price (US$/kg) 0.86 0.85 1.24 1.37 1.10
United States
Volume (in MT) 199,621 184,173 168,462 189,552 402,845
Value (in US $ '000) 207,930 219,832 222,491 261,501 545,734
Unit Price (US$/kg) 1.04 1.19 1.32 1.38 1.35
Argentina
Volume (in MT) 200,671 218,146 243,082 222,433 188,980
Value (in US $ '000) 163,352 203,771 347,282 372,529 241,015
Unit Price (US$/kg) 0.81 0.93 1.43 1.67 1.28
Netherlands
Volume (in MT) 84,835 112,415 144,598 135,569 139,672
Value (in US $ '000) 143,096 176,422 277,449 303,020 280,988
Unit Price (US$/kg) 1.69 1.57 1.92 2.24 2.01
China
Volume (in MT) 236,943 191,172 165,333 146,059 134,740
Value (in US $ '000) 218,225 241,765 259,768 272,361 219,077
Unit Price (US$/kg) 0.92 1.26 1.57 1.86 1.63
Source: Intracen

During the past five years, less than 4% of the world peanut production was traded internationally,
with export sales averaging to US$ 2.1 billion dollars per year. Global peanut export volume
increased by 7% per year.

The five largest exporters of peanuts supplied about 75% of the world export trade in 2013: India,
United States, Argentina, Netherlands, and China. Although China remains the worlds largest
producer of peanuts, most of its production is consumed domestically as peanut oil. Two significant
factors affecting peanuts in the world market are: (i) consumer concerns for nutritious foods; and
(ii) stricter import standards for food safety and quality.

Table 11.- World Imports of Peanuts, 2009 to 2013

2009 2010 2011 2012 2013
WORLD
Volume (in MT) 1,674,933 1,890,184 1,987,536 1,708,875 2,106,973
Value (in US $ '000) 1,757,720 2,002,270 2,592,753 2,942,875 3,038,362
Unit Price (US$/kg) 1.05 1.06 1.30 1.72 1.44
Netherlands
Volume (in MT) 260,023 301,064 301,557 308,764 359,199

34
Table 11.- World Imports of Peanuts, 2009 to 2013
2009 2010 2011 2012 2013
Value (in US $ '000) 331,450 338,318 451,024 642,657 601,632
Unit Price (US$/kg) 1.27 1.12 1.50 2.08 1.67
Indonesia
Volume (in MT) 194,002 229,393 251,004 185,828 282,423
Value (in US $ '000) 176,740 222,650 256,870 218,286 332,256
Unit Price (US$/kg) 0.91 0.97 1.02 1.17 1.18
Vietnam
Volume (in MT) 908 1,623 3,223 No Quantity 160,739
Value (in US $ '000) 1,309 1,822 4,059 3,567 174,184
Unit Price (US$/kg) 1.44 1.12 1.26 1.08
Germany
Volume (in MT) 103,991 108,965 109,483 102,041 123,972
Value (in US $ '000) 155,505 137,271 182,072 200,553 221,415
Unit Price (US$/kg) 1.50 1.26 1.66 1.97 1.79
Mexico
Volume (in MT) 107,839 112,723 128,397 49,580 107,603
Value (in US $ '000) 114,560 129,783 182,051 88,413 147,370
Unit Price (US$/kg) 1.06 1.15 1.42 1.78 1.37
Source: Intracen

Major importing countries of peanuts in 2013 were Netherlands, Indonesia, Vietnam, Germany, and
Mexico. These five countries collectively accounted for around 49% of total peanut imports. In 2013,
Philippines was the 13th largest importer of peanuts.

Due to climate conditions, raw peanuts cannot be produced in the Netherlands and, therefore, have
to be imported. The Netherlands relies fully on the imports of peanuts for its processing and
domestic consumption. The Runner type is by far the most traded type in the European Union,
including the Netherlands. Argentina, United States, and Brazil are the largest exporters to the
Netherlands in terms of volume. EU countries import two types of peanuts: i) in-shell peanuts; and
ii) shelled peanuts. In-shell peanuts are consumed directly by consumers but shelled peanuts are
imported by processors to produce peanut butter, candy, snacks, etc. All imports to Netherlands and
the European Union must comply with the food safety standards. Due to issues with aflatoxin
contamination, Netherlands is not importing from major producing countries such as India and
African countries (except South Africa).

The majority of the Dutch population consumes peanuts as a (healthy) snack or as a protein
component within a vegan meal. Peanut butter is very popular in the Netherlands as a sandwich
spread. The Netherlands has a substantial ethnic minority that is familiar with peanuts as an
ingredient for cooking. For example, Chinese, Indonesian and Thai. Dutch eating habits are
influenced by the colonial past and immigration. An example is peanut sauce, which was originally
used in the cuisines of Indonesia, Malaysia, Thailand, Vietnam, China and Africa. The Dutch public is
demanding a more sustainable approach to production and handling of consumer goods including
food. Environmental and social issues are becoming more and more important for consumers and

35
retailers. Sustainability is becoming very important for the processors of peanuts as well. Unilever,
for example, wants all products to be sustainable by 2020. (CBI)

Indonesian peanut production growth has been trending downward in the past eight years.
Consequently, peanut consumption that is increasing in parallel with population growth will most
likely lead to higher peanut import in the next two years to put supply and demand in balance.
Indonesia consumes large amounts of peanuts as sauces (satay) and gravy. Big peanut based food
manufacturers such as PT. Garuda, PT. Dua Kelinci, Orang Tua Group, and PT. Mitra Foods are
accounting for 65% of total food use of peanut in Indonesia. (USDA Report)

In Vietnam, the majority of peanuts, locally produced and imported, are used in the snack and
confectionery industries with a small amount used in-shell for household consumption, extruded for
cooking oil, or exported. Main suppliers are India, Senegal, Paraguay, and China.

2. Domestic Market

Table 12.- Philippine Imports of Peanuts, 2009 to 2013

2009 2010 2011 2012 2013
PEANUTS: HS 1202 Ground-nuts, not roasted
WORLD
Volume (in MT) 75,778 70,643 62,653 56,045 36,853
Value (in US $ '000) 11,907 13,343 14,580 16,135 10,358
Unit Price (US$/kg) 0.16 0.19 0.23 0.29 0.28
India
Volume (in MT) 40,461 40,327 47,960 45,114 24,541
Value (in US $ '000) 5,518 6,118 10,117 9,040 4,927
Unit Price (US$/kg) 0.14 0.15 0.21 0.20 0.20
China
Volume (in MT) 16,451 17,402 13,776 10,547 10,436
Value (in US $ '000) 2,740 3,530 4,143 6,972 4,901
Unit Price (US$/kg) 0.17 0.20 0.30 0.66 0.47
Nicaragua
Volume (in MT) - - - - 444
Value (in US $ '000) - - - - 99
Unit Price (US$/kg) 0.22
Mozambique
Volume (in MT) - 97 257 - 431
Value (in US $ '000) - 19 53 - 97
Unit Price (US$/kg) 0.20 0.21 0.23
United States
Volume (in MT) 55 53 38 1 333
Value (in US $ '000) 10 24 30 1 173

36
Table 12.- Philippine Imports of Peanuts, 2009 to 2013
2009 2010 2011 2012 2013
Unit Price (US$/kg) 0.18 0.45 0.79 1.00 0.52
PEANUT BUTTER/PROCESSED PEANUT PRODUCTS: HS 200811 Ground-nuts nes o/w prep or
preserved, sugared, sweetened, spirited or not
World
Volume (in MT) 1,819 3,248 3,091 3,593 4,451
Value (in US $ '000) 2,635 4,341 5,588 6,055 8,216
Unit Price (US$/kg) 1.45 1.34 1.81 1.69 1.85
China
Volume (in MT) 1,345 2,217 2,025 2,580 3,377
Value (in US $ '000) 1,732 2,584 3,624 4,175 6,287
Unit Price (US$/kg) 1.29 1.17 1.79 1.62 1.86
United States
Volume (in MT) 334 614 685 656 831
Value (in US $ '000) 636 1,142 1,488 1,476 1,573
Unit Price (US$/kg) 1.90 1.86 2.17 2.25 1.89
India
Volume (in MT) 16 190 146 198 99
Value (in US $ '000) 9 71 28 41 25
Unit Price (US$/kg) 0.56 0.37 0.19 0.21 0.25
Source: Intracen

Philippines is a net importer of peanuts. Although import volume has been declining during the past
five years, the quantity imported has always been higher than domestic production except in 2013.
Data though from Intracen/UN Comtrad indicates that Philippines imported 36,853 MT of peanuts in
2013 vis--vis production volume of 29,089 MT. During the past five years, the country spent an
average of US$ 13,265,000 per year for peanut importation. In 2013, India was the top supplier
accounting for 67% of the imported peanuts followed by China at 28%.

Attributes of imported peanuts that are most appreciated by all types of processors are the
following: i) uniform in size; ii) aflatoxin free (higher assurance vis--vis locally produced peanuts); iii)
reliability of supply; and iv) cheaper than local peanuts. On the other hand, locally produced peanut
varieties are considered superior in taste than imported peanuts. Current varieties commonly
planted in Luzon A are not competitive with imported peanuts both in terms of quality and price.
The Luzon A peanut industry can be competitive through use of seeds of high yielding confectionery
peanut varieties (Asha, Namnama), adoption of good agronomic practices, and access to GMP
compliant postharvest facilities and technology.

The countrys demand for peanut butter is also supplied by importation. Volume of peanut butter
imported by the Philippines increased from 1,819 MT in 2009 to 4,451 MT in 2013. The general
perception among Filipino consumers is that imported peanut butter is less oily, of better quality,
and safe than locally produced products.

37
According to BAS/PSA data, annual gross demand for peanuts decreased from 102,677.59 MT in
2009 to 51,676.91 MT in 2013. It would seem that self-sufficiency ratio of peanuts in the Philippines
improved due to decrease in gross demand by an average of 10% per year during the past five years.

Table 13.- Gross Annual Demand and Peanut Self-Sufficiency Ratio in the Philippines,
2009 to 2013
Indicators 2009 2010 2011 2012 2013
Gross Annual Demand 102,677.59 98,417.87 64,597.35 67,424.00 51,676.91
(in MT)
Philippine Production 30,977.83 29,623.78 29,734.16 29,133.91 29,088.93
(in MT)
Self Sufficiency Ratio 30.17% 30.10% 46.03% 43.21% 56.29%
(in percentage)
Source; BAS/PSA

From the Supply Utilization Accounts from BAS/PSA which includes both local and imported peanuts,
the following trends can be inferred:

a) Between the period 2009 and 2013, quantity of peanuts utilized for processing decreased by
50%. From this data, it would appear that either processors reduced production volume or a
significant number of enterprises have stopped their operations. Given that peanut processing
has generally low entry barriers especially production of table nuts, enterprises generally go in
and out of the business depending on perceived demand and profitability.

b) Average of 107 MT of peanuts per year was utilized for seeds. This was about 0.20% of total
supply.

c) Postharvest losses in peanuts appear to be low at an average of 0.50% of total supply.

d) Annual per capita consumption decreased from 1.03 kg in 2009 to 0.49 kg in 2013. Two of the
common prejudices held against street foods are that they are less nutritious and unsafe to eat
(dirty). Food products are often prepared and stored under non-sanitary conditions. During the
recent years, the Food and Drug Administration (FDA) has issued several warnings against
peanut products, including those sold by ambulant and street vendors, after receiving reports
about those found to be laden with cancer-causing fungal contaminant. The FDA also recalled
some peanut butter products after these were tested to contain aflatoxin beyond the allowable
limits. The negative publicity may have contributed to the decline in demand.

e) Domestic production is not sufficient to meet demand.

Table 14.- Supply Utilization Accounts by Commodity, 2009 to 2013

FACTOR 2009 2010 2011 2012 2013

SU Production 30,978 29,624 29,734 29,134 29,089
SU Imports 71,703 68,798 35,047 38,293 22,591
SU Gross Supply 102,681 98,422 64,781 67,427 51,680

38
 Table 14.- Supply Utilization Accounts by Commodity, 2009 to 2013

FACTOR 2009 2010 2011 2012 2013

UT Exports 1 b/ 183 2 0
UT Seeds 113 108 108 104 102
UT Feeds and Waste 513 492 323 337 258
UT Processing 7,188 6,890 4,522 4,720 3,618
UT Total Net Food Disposable 94,867 90,932 59,645 62,264 47,702
UT Per Capita kg/yr 1.03 0.98 0.63 0.65 0.49
SU Supply UT Utilization b/ - Less than 1 metric ton
Source: BAS/PSA

Market Standards (PNS/BAFPS 107:2012)

Peanuts must be:

Clean, practically free of any visible foreign matter;

- practically free from pests and damaged caused by pest;
- intact (with shell, or whole kernel) and sound (not affected by rotting or deterioration);
- free of any objectionable odor and/or taste; and
- free from chemical treatment.
The moisture content of shelled and unshelled peanuts must not exceed 10%.
The development and condition of the shelled or unshelled peanuts must enable them:
- to withstand transport and handling, and
- to arrive in satisfactory condition at the place of destination.

Shelled or unshelled peanuts are classified into:

Extra Class Shelled or unshelled peanuts in this class must be of superior quality. They must
possess characteristics of the variety. They must be free from defects with the exception of very
slight superficial defects, provided these defects do not affect the general appearance of the
produce, the quality, the keeping quality and presentation in the package.

Class I Shelled or unshelled peanuts must be of good quality. They must possess characteristics of
the variety. This class consists of whole, split or broken but not more than one-fourth (1/4) of the
kernel is missing, slight defects in shape and color. Superficial scratches are allowed, provided the
defects must not affect the general appearance of the produce, the quality, the keeping quality and
presentation in the package.

Class II - This class includes shelled or unshelled peanuts which do not qualify for inclusion in Class I
but satisfy the specified minimum requirements. The defects may be whole, split or broken, or a
mixture of whole, split or broken are allowed, provided these defects must not affect the general
appearance of the produce, the quality, the keeping quality and presentation in the package.

39
 Table 15.- Size classification of peanuts (PNS/BAFPS 107:2012)
Counts/100g Peanuts Counts/100g Peanuts
SIZE CLASIFICATION
Shelled Unshelled
Small 26 - 35 55 - 72
Medium 16 25 37 - 54
Big 10 - 15 20 - 36

Quality tolerances for both shell and unshelled are based on defects and sizes and unshelled
peanuts. Tolerance allowances are fixed for defects and sizes according to the grading classification
(Extra Class, Class I, and Class II) in terms of maximum percentage of not compliance to the
correspondent % of tolerance allowance.

B. PRICE TRENDS

1. Export Market

Table 16.- Average Export Price of Unshelled Peanuts, 2009 to 2013

Exporting Country Unit Price/MT
2009 2010 2011 2012 2013
World 1,050 1,060 1,300 1,720 1,440
India 1,020 1,020 1,370 1,540 1,350
United States 1,040 1,190 1,320 1,380 1,350
Argentina 810 930 1,430 1,670 1,280
Netherlands 1,690 1,578 1,920 2,240 2,010
China 920 1,260 1,570 1,860 1,630
Source: Intracen

Edible grade peanut prices largely depend upon the price of milling grade peanuts in the world
market. Milling grade prices depend upon the groundnut production in the world as well as the
production of other substitutable oils and oilseeds. Small changes in the production of major
exporting countries also produce large imbalances in edible peanut supplies leading to fluctuations
in prices.

In 2012, prices rose significantly owing to crop failure in the USA. As a result there was short supply
in the world market and prices increased by an average of 32%. As often happens, with high prices
came increased planted hectarage. With increased supply, prices in 2013 went down by 16% over
2012 prices.

Among the top 5 exporting countries, Argentina had the lowest price followed by United States and
India. Netherlands had the highest average export price.

40
2. Domestic Market

Imported peanuts are cheaper than the locally produced ones. The only time it seems that locally
produced peanuts came out cheaper than peanuts produced by Ilocos Region and Cagayan Valley
was on 2012 when there was a worldwide supply shortage. In 2013, imported peanuts were 35%
cheaper than locally produced peanuts even based on the assumption that total landed costs would
be twice the export price.

Table 17.- Farm Gate Price of Locally Produced Peanuts versus Price of Imported
Peanuts (Dry Unshelled Peanuts), 2009 to 2013
2009 2010 2011 2012 2013
Imported Peanuts: Unit Price in Peso Equivalent/Kilogram
India 6.67 6.77 9.10 8.45 8.49
China 8.10 9.02 12.99 27.87 19.95
Farm Gate Price of Locally Produced Peanuts: Peso/Kilogram
Ilocos Region 27.03 29.77 35.44 36.78 38.66
Cagayan Valley 25.44 24.75 26.51 32.49 38.02

Average Landed Cost 14.77 15.79 22.09 36.32 28.44

41
 Table 17.- Farm Gate Price of Locally Produced Peanuts versus Price of Imported
Peanuts (Dry Unshelled Peanuts), 2009 to 2013
2009 2010 2011 2012 2013
of Imported Products
Average Farm Gate 26.24 27.26 30.98 34.64 38.34
Price of Local Peanuts
Percentage Difference 78% 73% 40% -5% 35%
Source: BAS/Intracen/KII

Based on data gathered during the FGDs and KII interviews, farm gate price of peanuts with shell and
fresh fluctuates between PhP 23 to 25 per kilo. Based on BAS data, average price in Ilocos Region
was at PhP 26.92, which happened to be slightly higher than average price in the country at PhP
26.29. The highest price was enjoyed by farmers in Ilocos Norte at PhP 33.69 per kilo in 2013.

In general, farm gate prices have been consistently increasing during the past 5 years. Ilocos Norte
had the highest farm gate price of PhP 33.69 per kilo in 2013 due to lack of supply of peanuts in the
region. According to market vendors, they had to source peanuts from Divisoria or Urdaneta as
supply in the province was not sufficient and, oftentimes, more expensive than the imported
peanuts.

Table 18.- Farm Gate Price of Peanuts (with Shell and Dry) in Ilocos Region and Cagayan
Valley, 2009 to 2013
Price per Kilo (PhP/kg) Annual %
Region Growth
2009 2010 2011 2012 2013 Rate
PHILIPPINES 20.59 23.5 26.7 26.22 26.29 5.54%
ILOCOS REGION 22.76 24.61 26.44 26.56 26.92 3.66%
locos Norte 23.56 24.26 28.01 30.44 33.69 8.60%
Ilocos Sur 19.22 22.14 29.39 28.18 27.75 8.88%
La Union 23.19 25.46 25.3 26.54 24.57 1.19%
Pangasinan 21.2 23.38 25.97 23.96 24.3 2.92%
CAGAYAN VALLEY No data No data No data No data No data No data
Source: BAS/PSA

For dry peanuts without shell, Ilocos Sur had the highest farm gate price in 2013 at PhP 44, 79,
followed by Ilocos Sur with PhP 44.54. However, only a few of the farmers sell unshelled peanuts as
manual shelling is considered by the majority to be very laborious. Likewise, without proper storage
facilities, risk of quality deterioration is higher for peanuts without shells than peanuts with shells.

Table 19.- Wholesale Price of Peanuts without shell and dry in Ilocos Region and Cagayan
valley, 2009 to 2013
Price per Kilo (PhP/kg) Annual %
Region Growth
2009 2010 2011 2012 2013 Rate
PHILIPPINES 27.57 29.62 32.15 34.4 35.81 5.98%

42
Table 19.- Wholesale Price of Peanuts without shell and dry in Ilocos Region and Cagayan
valley, 2009 to 2013
Price per Kilo (PhP/kg) Annual %
Region Growth
ILOCOS REGION 27.03 29.77 35.44 36.78 38.66 8.61%
Rate
locos Norte 29.32 30.52 37.3 40.24 41.79 8.51%
Ilocos Sur 23.94 26.38 34.98 37.27 44.54 17.21%
La Union 35.15 37.23 34.19 31.44 28.26 -3.92%
CAGAYAN VALLEY 25.44 24.75 26.51 32.49 38.02 9.89%
Cagayan 25.59 25.31 26.91 31.57 37.93 9.64%
Isabela 22.82 25.72 25.79 31.3 35.58 11.18%
Quirino 26.33 23.33 27.92 32.26 0 5.63%
Source: BAS/PSA

43
 Section 5:
SUPPORT SERVICES

A. FINANCIAL SERVICES
ii. Land Bank of the Philippines (LBP) can accommodate three types of loans: Agricultural
Production Loan (APL), Working Capital Loan (WCL), and Rediscounting Line (RL). The APL
consists of short term and long term loans to finance agricultural and fisheries activities and
projects including cottage industries which utilize excess farm labor. The WCL is aimed at helping
cooperatives access operating capital for purchasing, processing and trading of inputs or finished
products. RL provides supplemental cooperative operating capital via rediscounting of
promissory notes of its members.

Financial services offered by LBP and the rural banks require farmers to be members of an
organized group (Cooperative). Since peanut farmers in Ilocos Region do not have an organized
group, they cannot avail these financial support services. Borrowers are also required to submit
an audited two-year financial statement. Peanut farmers, however, do not keep records or book
of accounts on the cost and returns of their produce. Similarly, in the absence of written
marketing agreements, farmers and cooperatives in both regions cannot avail of financial
services from formal institutions.

iii. Traders are the main sources of financial services among farmers. The traders provide the seeds
and advance the funds for harvesting expenses. Payment for the loan is deducted from
proceeds of harvest.

iv. Processors who are formally registered are able to avail of loans from banks. Informal
enterprises rely on friends, relatives, and usurers for consumption and business loans.

B. NON-FINANCIAL SERVICES
The Department of Agriculture (DA)-Cagayan Valley Integrated Agricultural Research Center
(CVIARC) is the lead provider of non-financial services to the peanut industry especially at the
farming level. CVIARC provides technology/research and development (R and D) services, relevant
information/data, seed distribution and agricultural product sales, plant and animal health clinics,
integrated laboratory analyses, training, and technical assistance for their technology/R&D services,
CVIARC conducts technology adaptation through on farm research trials. The Center also maintains a
repository of mature technologies that are ready for adoption and offers technology training to
visiting farmers. CVIARC sells agricultural products through their i) cold and storage processing
center where farmers can buy quality seeds of upland crops such as corn, rice, mungbean, soybean,
peanut, and other vegetables;; and ii) product talipapa also called "agri store" where farmers and
visitors can buy seeds in small packets/retail and organically grown fresh vegetables, fruits, peanuts,
glutinous corn, and other agri-based products.

CVIARC, in collaboration with the Bureau of Agricultural Research (BAR), is implementing a project
called Peanut MAGIC: CPAR Approach towards Enhanced Productivity in Cereal-based Areas of
Region 02. The project aims to facilitate a steady increase in peanut supply and income. This is
being done through the introduction and promotion of packaged technologies such as large-seeded,
high-yielding peanut varieties, development of farm management practices that will cater to the

44
regions problem on drought and floods, and establishment of an attractive market to both farmer-
producers and buyers.

Although services of CVIARC are primarily concentrated in Cagayan Valley, CVIARC has been
providing training services to other peanut producing areas. A snapshot survey conducted by DA
Region 1 though indicates that many of the farmers have very limited access to training and
technical know-how on peanut farming. Learning among smallholders is generally via peer coaching
or on-the-job training (older family members teaching the younger generation). The informal
mentors are proficient in the traditional peanut farming system but lack the exposure to new
technology and practices to ensure high yield and consistent product quality. They also lack access
to postharvest facilities.

Other organizations providing services to the peanut industry are the following:

1. Department of Trade and Industry

Product and package design development

Market development through trade fair participation and market linkages

2. Department of Science and Technology

Technology transfer
Technical and financial assistance for the upgrading of processing initiatives

45
 Section 6:
ENABLING ENVIRONMENT

A. FORMAL RULES, REGULATIONS, AND POLICIES

1. Policy and implementing guidelines for food safety are in place but implementation has been
constrained by:

- Lack of providers to provide assistance and assess GAP/GMP compliance

- Lack of access to GMP compliant postharvest facilities
- Farmers and enterprises lack awareness and knowledge on its benefits and scopes
- Stakeholders lack capability to comply with market requirements in terms of quality
standards, competitive prices and food safety

The recurrent problems on aflatoxin contamination have affected commercial sales of peanuts
and processed peanut products.

2. The Association of Southeast Asian Nations (ASEAN) and its six trading partners are targeting to
sign by 2015 the Regional Comprehensive Economic Partnership (RCEP), a free trade agreement
that is expected to further open up new and bigger markets for local businesses. The end-goal of
ASEAN economic integration is the full realization of an ASEAN Economic Community (AEC),
wherein the region will be transformed into a single market and production base, a highly
competitive region, a region of equitable economic development, and a region fully integrated
into the global economy. As such, when the AEC commences in 2015, it can be expected that
the economies will aggressively open up given that barriers to trade both tariff and non-tariff
will be eliminated. Economies will be liberalized to achieve the goal of ASEAN becoming a single
market and production base. This can potentially provide the platform for Philippines to
penetrate the Indonesian and Vietnamese peanut markets.

B. INFORMAL RULES AND SOCIO-CULTURAL NORMS

1. Informal rules can contribute to the effectiveness of formal rules. If the norm is to abide by
formal rules (e.g., adherence to food safety standards even if the buyer does not always check),
then it becomes less costly to enforce the regulations. If this is not the case, then the standards
set by government agencies become a paper tiger or a substantial amount of resources is
needed to enforce the regulations. Norms of civic cooperation reduce enforcement costs by
leading individuals to internalize the value of standards and regulations even when the
probability of detection for violation is negligible.

2. The major sources of social capital among Filipino farmers are kin networks, home
neighborhood, farm neighborhood, and membership in a farmers association. Filipinos
particularly in rural areas give premium to interpersonal relations. Kinship reins above all the
social relations of Filipino farmers followed by farm neigbor relationship. It is characterized by
strong ties, mutual trust, and norms, which promote coordination and cooperation for mutual
benefit. Harnessing the kinship/interpersonal relations factor can reduce transaction cost in the
sharing and diffusion of farming and postharvest technologies.

46
3. Snacking on peanuts is encouraged when studying/reviewing as it is believed to improve
memory and even IQ. This association of peanut to intelligence is one reason of peanut's
popularity as snacks. On the other hand, excessive eating of peanuts is believed to cause facial
acne and pimples.

47
 Section 7:
CONSTRAINTS AND OPPORTUNITIES

Table 20 . Constraints and Opportunities

Opportunities Constraints Province
INPUT
CVIARC has developed seed Lack of supply of good quality Ilocos Region
multiplication and distribution seedlings of high yielding varieties Ilocos Norte
Ilocos Sur
system that can be replicated La Union
Low adoption of confectionery Pangasinan
Availability of approved peanut varieties
confectionery peanut varieties Cagayan Valley
Cagayan
Varieties planted by majority of Isabela
Use of good quality seedlings of high farmers have limited uses/not Nueva Vizcaya
yielding varieties can significantly appropriate for processing Quirino
contribute in increasing production
volume and improving yield.
Improved varieties of peanut seeds especially the confectionery peanut varieties are available but in
the absence of large-scale multiplication, spread and adoption have been slow and low. Likewise,
many of the farmers are hesitant to shift to confectionery peanut varieties due to fears of crop
failure, doubts on site suitability, and apprehensions on markets and buyers especially so that
farmers are used to receiving seeds from traders. Processors prefer confectionery seeds than the
small seeded varieties that majority of the farmers are planting. The development and utilization of
improved varieties is the preferred and most efficient means of improving peanut quantity and
quality.

The small farmers generally rely on seeds from traders, often of low quality; which leads to the
difficulty of introducing new, improved varieties. Due to use of poor quality seeds, yields are low
leading to high production cost. Farmers decision on size of area to be planted with peanuts is
primarily determined by quantity of seeds that he/she is able to access. During the workshops,
farmers indicated that they were not able to plant peanuts due to lack of seeds.
Appropriate nutrient management Low use of fertilizer among Ilocos Region
together with use of good quality smallholders due to lack of Ilocos Norte
Ilocos Sur
seedlings of high yielding varieties understanding among farmers on La Union
and good agronomic practices can cost benefits of proper and efficient Pangasinan
potentially result to 100% increase in use of fertilizer, risk aversion, and
yield limited purchasing capacity Cagayan Valley
Cagayan
Isabela
Nueva Vizcaya
Quirino
The optimization of the mineral nutrition is one of the keys to optimize the production of peanuts, as
it has very high nutrient requirement and high yielding varieties almost always remove still more
nutrients from the soil. On contrary peanut farmers tend to limit inputs to the peanut crop. Fertilizer
is usually inadequate or not used at all resulting in severe mineral nutrient deficiencies and plant
stress. Improper application of fertilizer compromises farm productivity and profitability. Inadequate
and imbalance use of nutrients is one of the major factors responsible for low yield. Plant stress
especially during shell development makes peanuts more susceptible to fungal infestation.

48
Table 20 . Constraints and Opportunities
Opportunities Constraints Province
FARMING
Good agronomic practices can help Lack of access to providers/services Ilocos Region
farmers in reducing incidences of to improve agronomic practices, Ilocos Norte
Ilocos Sur
pests and diseases and in improving reduce incidence of insects and La Union
farm productivity diseases Pangasinan

Low uptake and adoption of good Cagayan Valley

Cagayan
agronomic practices/sustainable Isabela/Santiago City
farming practices Nueva Vizcaya
Quirino
Farmers lack adequate knowledge of basic agronomic practices necessary to attain maximum yield
and ensure compliance to food safety and quality standards. Adoption of Good Agricultural Practices
(GAP) at the pre-harvest level and during drying and storage can prevent aflatoxin contamination.

Although DA-CVIARC has been providing training on good agronomic practices, the depth and
breadth of their outreach is limited. Many of the farmers have not undergone any training on peanut
farming. In many cases, there is still a lack of understanding among farmers on cost benefits of
adopting good agronomic practices. Farmers generally have the "wait-and-see" attitude. Although
many farmers are very much open to new ideas and technology, there are more farmers who would
first want to see a working model or system before they invest in upgrading.
Proper irrigation can help improve Lack of access to irrigation facilities Ilocos Region
productivity and reduce risks of Ilocos Norte
Ilocos Sur
aflatoxin contamination as well as La Union
promote efficient water use. Pangasinan

Cagayan Valley
Cagayan
Isabela /Santiago City
Irrigation is recommended to combat heat and drought stress which almost always result to low
productivity. Irrigation to ensure adequate soil moisture during the last 4-6 weeks of crop growth can
help reduce mycotoxin contamination in peanut. This may be achieved by growing a completely
irrigated crop or by applying supplementary irrigation to a basically rain-fed crop. Aflatoxin
contamination most often occurs when crops suffer stress such as high rainfall, high temperatures,
drought, and insect infestation which allows the fungi to grow on the outer surface of the peanut
pod and spreads inward reaching the kernel.
POSTHARVEST OPERATIONS
Proper postharvest technologies and Lack of access to postharvest facilities Ilocos Region
facilities can reduce risk of aflatoxin Ilocos Norte
Ilocos Sur
contamination and improve product La Union
quality. Pangasinan

Postharvest facilities appropriate for Cagayan Valley

Cagayan
large seeded confectionery peanuts Isabela /Santiago City
will enable industry to sell to large
processors and potentially re-
invigorate export trade.
The growth of fungi and hence aflatoxin contamination can be controlled along the value chain,

49
Table 20 . Constraints and Opportunities
Opportunities Constraints Province
particularly in the immediate postharvest period. Poor harvest and post-harvest handling increases
risks of infestation. In the harvesting of peanuts, the method of hand pulling, and if it is dry soil, the
use of hoes results in high pod cracking, predisposing the pods to infestation. The practice of drying
peanuts on open grounds exposes the product to dirt, dust, vermin, and insects. Lack of proper
sorting and storage containers and facilities increases the risks of fungal growth. Likewise, poor
postharvest handling contributes to high quantities of shrivelled or wrinkled peanuts.

Commercialization of large seeded peanuts is hampered by the lack of appropriate sorting and
grading equipment. Processors especially the large companies require pre-sorted and pre-graded
peanuts.
PROCESSING
Implementation and adoption of Weak compliance to food safety and Ilocos Region
standards such as GMP can play a quality standards Ilocos Norte
Ilocos Sur
positive role in providing the catalyst La Union
and incentives for the modernization Lack of access to GMP compliant Pangasinan
of the peanut industry and the processing facilities
adoption of safer processing activities Cagayan Valley
Cagayan
that can institutionalize market Lack of product differentiation
Isabela/Santiago City
competitiveness
Weak product and market
The very large population in the development skills
Philippines and the popularity of
peanuts as snack food provides
opportunities to develop the local
market for other processed peanut
products
GMP compliance is a basic requirement to get permits to operate which are necessary to penetrate
institutional buyers and to work with big exporters. Without the basic BFAD certification, enterprises
are not able to penetrate bigger and more lucrative markets. During the recent years, there has
been several product recalls and warnings on aflatoxin contamination which to a significant extent
negatively affected the image of locally manufactured peanut products.

A common prejudice held against peanuts sold by street vendors are that they are unsafe to eat
(fried peanuts cooked and displayed in the open and exposed to dust, fume, etc.) and too oily. Peanut
products are often prepared and stored under non-sanitary conditions.

Enterprises are aware of preferences of consumers within the locality. However, majority has
minimal knowledge on the market requirements/trends beyond their locality. Product standards are
generally based on locally accepted norms.

The lack of initiatives to develop and diversify processed peanut products and markets can be
attributed to the following:

- Lack of knowledge of potential market segments and its requirements

- Dominance of spot transactions which stifles innovation and learning
- Lack of product development skills and food technology know-how since in many cases skills
were passed on from one generation to another

50
Table 20 . Constraints and Opportunities
Opportunities Constraints Province
- Lack of technical know-how in the development of differentiated premium products
- Smallness of operations and current markets including limited individual capacity to invest in
product development.

It has generally been found that products that offer a specific benefit tend to fare better than me,
too products that merely imitate a competitors products. Product research and development are
important aspects of the processed peanut business given increased competition with the entry of
more players and the influx of imported brands.
MARKETING
Good roads can reduce cost of Poor farm-to-market roads Ilocos Region
transactions and improve access to Ilocos Norte
Ilocos Sur
markets: product, inputs, and La Union
support services Pangasinan

Cagayan Valley
Cagayan
Isabela/Santiago City
There is a significant difference in the cost of moving goods in rural areas on dirt roads as opposed to
paved roads. This difference is usually reflected back on the price received by farmers. Likewise, poor
road conditions and, consequently, the high transport costs, provide disincentives for traders to
source from these areas. This limits the options of farmers to a few traders and forces them to be
price takers.
INTERFIRM RELATIONSHIPS
Farmers in the same village know Weak horizontal collaboration Ilocos Region
each other quite well and have had Ilocos Norte
Ilocos Sur
experiences of working together. Weak supply chain collaboration/ La Union
Such naturalsocial constituents can Dominance of spot transactions Pangasinan
be harnessed to get them to work
together Cagayan Valley
Cagayan
Isabela /Santiago City
Nueva Vizcaya
Quirino
A key factor that hinders upgrading and market access is the smallness of most livelihood operations
and, thus, unable to take advantage of economies of scale. Farmers especially in Ilocos Region act
and operate in isolation. Given that volume is important in trading and in attracting institutional
buyers; farmers have to learn to work collectively. Farmers can stand to benefit by collective action
in procurement of inputs, upgrading of postharvest facilities (e.g., contiguous farms share upgraded
postharvest facilities), selling of their produce, getting information, disseminating them, or sharing
expertise. An organized group can, likewise, serve as an organizational framework for the efficient
delivery of credit and extension services.

Formation of market linkages that does not permit close collaboration between players contributes
little to systemic upgrading of the chain. Strong inter-firm coordination is important to buffer key
investments aimed at upgrading infrastructure, technology, and knowledge-based assets. Loosely
integrated internal structures are less capable of creating production systems that work efficiently
and to uphold a process of upgrading. Dominance of spot transactions stifles innovation and results
to weak supply chain governance and weak compliance to food safety and quality standards.

51
 Section 8:
COMPETITIVENESS DIRECTIONS

A. COMPETITIVENESS VISION

Although total consumption of peanuts in the Philippines has been on a declining trend during the
past years, Philippines remains a net importer of peanuts which translates to market opportunities
for the Ilocos Region and Cagayan Valley. Trade in peanut is based on confidence and reliability in
terms of supply as well as product quality particularly in terms of Aspergillus, the source of aflatoxin.
Based on the five year domestic demand average of 76,958.74 MT peanuts, the two regions hope to
be able to meet 57% of the requirement by 2020. To achieve this, stakeholders identified the
following priorities for action:

i) Increased access, availability, and use of good quality planting materials of the high yielding
varieties required or demanded by the market

j) Improved access to, availability, and use of low-cost and eco-friendly fertilizer

k) Enhanced flow and quality of extension services for peanut farming to facilitate adoption of
good agronomic practices to ensure food safety and improve farm productivity

l) Improved access to cost efficient low-cost irrigation technology

52
m) Improved access to GMP compliant postharvest facilities and extension services necessary for
the consistent production of high quality aflatoxin free confectionery peanuts

n) Improved access to facilities and resources to catalyze value addition and lay the groundwork for
commercial scale processing of processed peanut products

o) Improved physical/infrastructure linkages to input, support, and product markets

p) Enhanced organizational capacity of farmer groups to become effective economic players

B. PRIORITY CONSTRAINTS/OPPORTUNITIES AND INTERVENTIONS

Drawing on findings from the end markets and value chain analysis and the focal points of action
identified by VC actors and stakeholders, below are the proposed intervention strategies and
approaches to improve market competitiveness of the peanut industry while promoting broadbased
growth and climate change resilience. Prioritization of interventions for each of the provinces in
Ilocos Region and Cagayan Valley is presented in Annexes 1 to 2 while specific approaches for each
province are indicated in Table 21.

INPUT PROVISION

1. Development and/or strengthening of local capacity to commercially produce and distribute

good quality planting materials of high yielding varieties required by the market

To ensure availability of sufficient quantity of seeds of high yield varieties appropriate to climate,
soil, and end use, it is proposed that project supports the establishment of community based seed
production and marketing and the scaling up of the seed distribution system initiated by CVIARC.
The seed growers can then be linked to agrivet suppliers to market the seeds. Seed growers can also
directly sell the seeds to farmers within their proximity. Research and development support will be
crucial in sustaining the development of locally adjusted and optimized varieties.

Development of a sustainable supply of planting materials will also require the creation of an
effective demand. To stimulate smallholders to buy and use good quality seeds without creating high
dependency on government and project support, a voucher program, plant now pay later scheme,
and similar market-based mechanisms may be implemented during the first year. A voucher
program or similar mechanism will also provide PRDP supported nurseries a captive client base
which is critical during the start-up phase while respecting market development principles. Given
the to see is to believe attitude of many farmers, establishment of a demo farm within the
proximity of the nursery can serve as showcase and learning venue where clients can visually
validate results to make informed decision. An information campaign on seed and variety selection
and dissemination of success stories would help in promoting chain wide learning and in catalyzing
effective demand for good quality seeds and adoption of varieties such as Asha and Namnama.
Development of capacity of nurseries or seed growers to deliver location and variety specific
agronomic advice to their clients will help promote the optimum utilization of seeds. Successful
peanut production by farmer-clients will create sustainable market for the seed distribution business
of cooperatives.

53
2. Development and/or strengthening of local capacity to commercially produce and distribute
good quality organic fertilizer and promotion of proper fertilizer application and management

Continuous cultivation using low external inputs decreases soil fertility and crop yields. Fertilizer use
can improve productivity of peanut farms but recommendations should be site-specific and should
address existing nutrient deficiencies in farmers fields. It is, therefore, proposed that program
supports the development of a vibrant market for organic fertilizer, which is 50% to 75% cheaper
than chemical inputs. Likewise, there is a need to provide farmers with access to services to guide
them in proper fertilizer management and application to boost productivity parallel to improving
profitability. Specific interventions under this strategy would consist of the following:

- Set-up of community-based organic fertilizer plant and/or upgrading and scaling up of existing
fertilizer enterprises including assistance to get the necessary certification/ accreditation.

Establishment of community-based plant for technological inputs will reduce dependence on

expensive external inputs and facilitate shift towards sustainable, regenerative production
systems. This will also contribute to employment generation and solid waste management. Aside
from assistance in setting up the necessary infrastructure, capacity building support should also
be geared towards helping enterprises produce fertilizer from agri-waste materials that match
agro-ecological zones and cropping systems of peanut growers parallel to increasing their
productivity, production capacity, and product quality. This will enable fertilizer enterprises to
offer consistent and reliable supply of alternative fertilizer products of better quality and
improved effectiveness at lesser cost, which will result to lower production costs of peanuts.
Training and coaching on business management and marketing will assist seed growers to
improve its internal infrastructure to better serve the clients while ensuring its financial viability.

- Development of capacity of organic inputs providers and retailers to deliver technical advice to
farmer clients and basic soil test analysis or via partnership with providers of soil analysis

Promotion of fertilizer use must be complemented with extension services to ensure that
fertilizers have the correct formulation to meet local soil needs, are applied in the correct
amount and at the optimal point in the planting cycle, and are used alongside complementary
inputs such as good quality seeds of high yielding varieties. Improper fertilizer application can
actually decrease profitability by creating a significant added cost without a corresponding
increase in crop yields. As such, in addition to assisting fertilizer producers to scale up their
production capacities, they must also be capacitated to deliver advisory services to their farmer
clients. It may also be possible to integrate soil testing services with fertilizer distribution.
Fertilizer demand must be promoted with an integrated approach to increasing the profitable
use of fertilizer by farmers through extension services, and linking farmers to output markets.

- Interventions to create effective demand

Demand for fertilizer may be stimulated through the following approaches: i) demo farms
highlighting organic fertilizer use and appropriate crop and soil management; ii) point-of-sale
knowledge transfer; iii) voucher programs or similar market-based based mechanisms; and iv)
tri-media dissemination of emerging good practices and success stories.

54
FARMING

3. Development of local capacity to provide services that will enable farmers to adopt GAP
including pilots to demonstrate benefits of GAP compliance

This intervention strategy is aimed at complementing the extension services provided by

government extension officers. Diversity of extension provision, from government extension officers
to community-based and value chain-based providers, will give farmers greater choice of sources of
information, knowledge, and skills to support the long-term sustainability of their farm enterprise.
This will facilitate access of farmers to technology and resources that will enable them to improve
their agronomic practices parallel to improving chances of the latter adopting the practices to their
benefit. Technology transfer will focus on enabling farmers to incrementally shift to production
systems aligned to principles of GAP and sustainable farming. This will address communities need
for increased farm productivity, reduced production risk, maximized use of land or better resource
allocation, and enhanced diversity and ecological balance. GAP adoption will also facilitate improved
compliance to food safety and, consequently, risk of aflatoxin contamination, which has become a
primordial factor of quality and competitiveness both for domestic and export markets.

The following are the proposed interventions under this strategy:

a) Formation of farmer training groups and development of lead farmer-trainer per group including
establishment of small demonstration plots

This will involve the organization of interested farmers into farmer training groups. Each group
will have lead farmers selected based on interest, experience, and leadership qualities. Lead
farmers will receive in-depth training on GAP and may be compensated with the produce from
the project supported demonstration plots. The lead farmers will provide training to peers. It is
recommended to employ participatory learning methods, such as demonstration plots and
hands-on training, to build knowledge of less well-understood areas, such as pest control.

b) Conduct of competitions to motivate adoption, stimulate innovation, and facilitate

identification of emerging good practices as basis for regular updating of module

Conduct of friendly competition is also a way to make learning and upgrading fun. The contests
can provide incentives to farmers to become aligned with GAP, while simultaneously
demonstrating the effects of good practices. Good practices and innovative solutions that will
emerge from the competitions can be incorporated into the GAP manual and training modules,
helping capture and further disseminate new learning. The competitions are also a way to
quickly monitor farmers understanding of different elements of GAP and take corrective action
whenever necessary.

c) Support research and development to identify opportunities for productivity improvement and
low cost GAP implementation measures.

It is essential that farmers continuously seeks to improve production systems to remain

profitable, meet market demand, and sustain a competitive position for Philippine peanuts.
This can be facilitated through research and development support as basis for improving
extension services.

55
 4. Improve access of farmers to technologies that will help promote water use efficiency and
reduce resource use

Optimal irrigation can increase peanut yields, quality and crop profitability and also reduce the
incidence of aflatoxin. The proposed intervention will involve support to establishment of low cost
Irrigation system particularly in areas depending on rain-fed agriculture and facing water shortages.
Irrigation would be most needed in areas that would want to plant peanuts during the late dry
season (February).

POSTHARVEST OPERATIONS

5. Establishment and/or upgrading of postharvest facilities to enhance viability of collective

marketing initiatives, ensure compliance to food safety and quality standards, and to facilitate
access to institutional buyers

The proposed intervention aims to enhance the capability of the peanut industry in Ilocos Region and
Cagayan Valley to convert the locally produced peanuts to the quality, form, volume, and price
required by the market which is aflatoxin free, uniform in size and the price can compete with the
price of imported peanuts. To build capacity of intermediary cooperatives to undertake postharvest
functions, it is proposed that the latter be assisted in the establishment of a GMP compliant common
service facilities supported with extension services on good postharvest practices and food safety
compliance. For the facilities to be economically viable, it is important that the cooperative has the
volume of peanuts to cover operations and overhead costs. The postharvest facilities may also be
operated under a toll processing scheme where farmers or neighboring coops retain ownership of
their peanuts and pay for the use of the facilities and the services.

PROCESSING

6. Upgrading of processed peanut products and development of a range of differentiated premium

quality products that the two regions can sustain as a marketing proposal in the domestic
market with a view of laying the groundwork for export sales

Adding value allows for better margins to be made at local level, which contributes to improving the
economic situation of local players, which in turn contributes to the development of the country.
Likewise, the development of better and improved products can potentially increase peanut
consumption in the domestic market and improve regions competitiveness in the export market.
Main intervention approaches include product development support, introduction of appropriate
technologies for commercial scale processing, and brand and market development. Establishment
of GMP compliant common service facilities or toll processing facilities can be an option for areas
where there is adequate supply of peanuts to support year-round production.

Marketing support ranging from trade fair participation, selling missions, brochures, etc. should be
built around specific image and product differentiation factors. This can also serve as an incentive
for producers to upgrade their products and processes in order to be a part of the marketing
campaign.

56
MARKETING

7. Upgrading of farm-to-market roads

Farm-to-market road rehabilitation or construction will help farmer to access markets and vital
services. Improvements of rural infrastructure can reduce transportation and labor costs and, more
generally, the cost of transaction. The overall reduction of transaction costs will contribute to
improving price competitiveness and/or better profit margins that can help farmers cope with price
fluctuations. Public investments in road infrastructure can potentially stimulate agribusiness
investment, vertical coordination with buyers, and inclusion of small farmers in remote areas.

INTERFIRM RELATIONSHIPS

8. Development of capacity of farmers to incrementally associate, collaborate, and coordinate to

achieve economies of scale in their transactions and to become attractive partners to large
buyers parallel to improving vertical collaboration

The promotion of collective action is an important strategy for increased and gainful smallholder
participation in the peanut value chain. In view of lower transaction costs and more effective
capacities, institutional buyers often prefer to work with organized farmers rather than individuals,
despite the increased bargaining power that groups enjoy. Thrust of PRDPs support may be directed
to assisting farmer groups to engage in communal business oriented activities that would allow them
to take on additional functions in the chain such as nursery operations, cluster or block farming,
collective marketing, and operations of common service facilities.

Competition can be used as a positive force to motivate consolidators and processors to invest in
collaborative and directed relationships and in the capacity building of farmers as a means of
securing loyalty and trust as well as a strategy to lower cost of production and transaction. Business
models such as forward contracting can insulate farmers from price fluctuations as well as promote
a more equitable relationship between and among players. For directed relationships to prosper, it is
necessary to build capacity of cooperatives on supply chain management and chain governance.

57
Table 21 . Summary of Constraints/Opportunities and Interventions
Constraints/Opportunities Province Intervention Strategy and Approach Who Can Do It?
Public Private
INPUT PROVISION
Lack of supply of good quality Ilocos Region Development and/or strengthening of local capacity to DA/PRDP Cooperatives
seedlings of high yielding varieties Ilocos Norte (1 to 5) commercially produce and distribute good quality Technical and Management and
Ilocos Sur (1 to 5) financial operation of
La Union (1 to 5) planting materials of high yielding varieties required by
Low adoption of confectionery the market assistance nurseries and
Pangasinan (1 to 5)
demo farms
peanut varieties
Cagayan Valley (1) Upgrading and scaling up of existing seed
Cagayan (1 to 5) CVIARC Traders
Varieties planted by majority of growers/nurseries and/or set-up of certified Technical Promotion to
Isabela/Santiago City
farmers have limited uses/not (1 to 5) nurseries assistance/training farmer suppliers
appropriate for processing Nueva Vizcaya (2) Patronage of
Quirino (2) (2) Implementation of voucher program, Plant Now, BPI project supported
Opportunity Pay Later scheme or similar market-based Technical nurseries
mechanisms to stimulate farmers to acquire and assistance
CVIARC has developed seed use planting materials
multiplication and distribution PLGU/MLGU
Follow through
system that can be replicated (3) Support R and D on appropriate planting materials
extension services
and inputs Organizational
Availability of approved development
confectionery peanut varieties (4) Set up of demo farm to showcase benefits and as Management and
venue for learning coordination of
Use of good quality seedlings of voucher program
high yielding varieties can (5) Develop capacity of nursery operators to provide or similar
significantly contribute in technical advice to farmer clients mechanisms
increasing production volume and Promotion
improving yield. campaign

Low use of fertilizer among Ilocos Region Development and/or strengthening of local capacity to DA/PRDP Cooperatives
smallholders due to lack of Ilocos Norte (1 to 4) commercially produce and distribute good quality Technical and Management and
Ilocos Sur (1 to 4) financial support operation of
understanding among farmers on La Union (1 to 4) organic fertilizer and promotion of proper fertilizer

58
Table 21 . Summary of Constraints/Opportunities and Interventions
Constraints/Opportunities Province Intervention Strategy and Approach Who Can Do It?
Public Private
cost benefits of proper and Pangasinan (1 to 4) application and management fertilizer plants
efficient use of fertilizer, risk (1) Upgrading and scaling up of existing fertilizer CVIARC/ATI
Cagayan Valley
aversion, and limited purchasing enterprises including assistance to get the necessary Technical
Cagayan (1 to 4)
capacity certification/accreditation assistance/training
Isabela/Santiago City
(1 to 4)
Opportunity Nueva Vizcaya (3) (2) Set-up of community-based organic fertilizer plant PLGU/MLGU
Quirino (3) Follow through
Appropriate nutrient management
extension services
together with use of good quality (3) Implementation of voucher program or similar tool Organizational
seedlings of high yielding varieties to stimulate purchase and use of organic development
and good agronomic practices can fertilizer/inputs and reduce risk averseness among Management and
potentially result to 100% increase farmers coordination of
in yield voucher program
(4) Develop capacity of organic inputs providers and or similar
retailers to deliver technical advice to farmer clients mechanisms
and basic soil test analysis or via partnership with Promotion
providers of soil analysis campaign

FARMING
Lack of access to Ilocos Region Development of local capacity to provide services that DA/PRDP Cooperatives
providers/services to improve Ilocos Norte (1 to 5) will enable farmers to adopt GAP including pilots to Technical and Base of training
Ilocos Sur (1 to 5) financial support services and
agronomic practices, reduce La Union (1 to 5) demonstrate benefits of GAP compliance
incidence of insects and diseases farmer training
Pangasinan (1 to 5)
CVIARC/ATI groups
(1) Formation of farmer training groups and
Cagayan Valley Technical
Low uptake and adoption of good development of lead farmer-trainer per group assistance/training
Cagayan (1 to 5)
agronomic practices/sustainable Isabela/Santiago City
including establishment of small demonstration
farming practices (1 to 5) plots PLGU/MLGU
Nueva Vizcaya (2) Follow through
Opportunity Quirino (2) (2) Conduct of competitions to motivate adoption, extension services
Good agronomic practices can stimulate innovation, and facilitate identification of Organization of

59
Table 21 . Summary of Constraints/Opportunities and Interventions
Constraints/Opportunities Province Intervention Strategy and Approach Who Can Do It?
Public Private
help farmers in reducing emerging good practices as basis for regular competitions/
incidences of pests and diseases updating of modules promotional
and in improving farm productivity (3) Support R and D to identify opportunities for campaign
productivity improvement and low cost GAP
implementation measures
Lack of access to irrigation Ilocos Region Improve access of farmers to technologies that will help DA/PRDP Cooperatives
facilities Ilocos Norte promote water use efficiency and reduce resource use Technical and Management and
Ilocos Sur financial support maintenance
La Union
Opportunity Pangasinan (1) Support establishment of appropriate irrigation
PLGU/MLGU
Proper irrigation can help improve system (e.g., drip irrigation systems
Cagayan Valley Technical
productivity and reduce risks of assistance
Cagayan
aflatoxin contamination as well as Isabela/Santiago City Monitoring
promote efficient water use.
BSWM
Technical
assistance
POSTHARVEST OPERATIONS
Lack of access to postharvest Ilocos Region Establishment and/or upgrading of postharvest facilities DA/PRDP Cooperatives/
facilities Ilocos Norte (1 to 2) to enhance viability of collective marketing initiatives, Technical and Consolidator
Ilocos Sur (1 to 2) financial support Management and
La Union (1 to 2) ensure compliance to food safety and quality standards,
Opportunities and to facilitate access to institutional buyers operations of
Pangasinan (1 to 2)
PhilMECH common service
Proper postharvest technologies
Cagayan Valley Technical facilities
and facilities can reduce risk of (1) Establishment of GMP compliant common service assistance
Cagayan (1 to 2)
aflatoxin contamination and Isabela (1 to 2)
facilities for drying, shelling, sorting, and grading Prototype
improve product quality. development
(2) Establishment of GMP compliant storage and
Postharvest facilities appropriate packing facilities
for large seeded confectionery

60
Table 21 . Summary of Constraints/Opportunities and Interventions
Constraints/Opportunities Province Intervention Strategy and Approach Who Can Do It?
Public Private
peanuts will enable industry to sell
to large processors and potentially
re-invigorate export trade.
PROCESSING
Weak compliance to food safety Ilocos Region Upgrading of processed peanut products and DA/PRDP Cooperatives
and quality standards Ilocos Norte (1 to 4) development of a range of differentiated premium Technical and Management and
Ilocos Sur (1 to 4) financial operations of toll
La Union (1 to 4) quality products that the two regions can sustain as a
Lack of access to GMP compliant marketing proposal in the domestic market with a view assistance processing
Pangasinan (1 to 4)
facilities
processing facilities of laying the groundwork for export sales
Cagayan Valley DOST
Cagayan (1 to 4) GMP training Micro and small
Lack of product differentiation Isabela/Santiago City
(1) Process and product upgrading support Technology enterprises
(1 to 4) transfer Patronage of toll
Weak product and market (2) Development of a range of differentiated premium Product facilities
development skills products development Product
development
Opportunity (3) Brand development and market development DTI
Implementation and adoption of campaign Product Pasalubong
standards such as GMP can play a development Centers
Market Promotional
positive role in providing the (4) Establishment of GMP compliant common service
development campaign
catalyst and incentives for the facilities/toll processing facilities for production of
modernization of the peanut processed peanut products PhilMECH
industry and the adoption of safer Technical
processing activities that can assistance in
institutionalize market design of
competitiveness appropriate
facilities
The very large population in the
Philippines and the popularity of PLGU/MLGU

61
Table 21 . Summary of Constraints/Opportunities and Interventions
Constraints/Opportunities Province Intervention Strategy and Approach Who Can Do It?
Public Private
peanuts as snack food provides Organizational
opportunities to develop the local development
market for other processed Follow through
peanut products support
Promotional
campaign
MARKETING
Poor farm-to-market roads Ilocos Region Upgrading of farm-to-market roads DA/PRDP
Ilocos Norte Technical and
Ilocos Sur financial support
Opportunity La Union (1) Cost contribution to road construction and/or
Good roads can reduce cost of Pangasinan rehabilitation
PLGU/MLGU
transactions and improve access
Cagayan Valley Equity
to markets: product, inputs, and Road maintenance
Cagayan
support services
Isabela/Santiago City
INTERFIRM RELATIONSHIPS
Weak horizontal collaboration Ilocos Region Development of capacity of farmers to incrementally DA/PRDP Cooperatives
Ilocos Norte (1 to 5) associate, collaborate, and coordinate to achieve Technical and Mentoring of
Ilocos Sur (1 to 5) financial support members
Weak supply chain collaboration/ La Union (1 to 5) economies of scale in their transactions and to become
Dominance of spot transactions Pangasinan (1 to 5) attractive partners to large buyers parallel to improving
PLGU/MLGU
vertical collaboration
Cagayan Valley Organizational
Opportunity development
Cagayan (1 to 5)
Farmers in the same village know Isabela/Santiago City
(1) Organizational development support to farmers support
each other quite well and have (1 to 5) complemented with behaviour change interventions
had experiences of working Nueva Vizcaya (1 to 3) and entrepreneurial skills development DTI
together. Such naturalsocial Quirino (1 to 3) Capacity building
constituents can be harnessed to (2) Support to groups to start low risk collective supply chain
get them to work together activities that provide quick wins and tangible governance
benefits (self and group) Promotion of

62
Table 21 . Summary of Constraints/Opportunities and Interventions
Constraints/Opportunities Province Intervention Strategy and Approach Who Can Do It?
Public Private
vertical
(3) Support to promotion and operationalization of collaboration
farm clusters including mapping of peanut zones
(4) Promotion of long term contractual commitment
under an ethical and responsible trading
relationship

(5) Capacity building on supply chain management and

chain governance

63
 Section 9:
RECOMMENDATIONS AND CONCLUSIONS

1. The increase in peanut self-sufficiency ratio was due to the decrease in demand rather than
increase in local production. This implies that parallel to increasing local production, there is a
need to increase consumption through introduction of better quality processed products and/or
lower priced peanut products.

2. The current consumption level indicates that a 100% increase in production volume can still be
absorbed by the domestic market provided quality and specifications are at par with the
imported peanuts. For locally produced peanuts to be competitive with imported peanuts, it
must have the following characteristics:

- Uniform in size
- Aflatoxin free
- Consistent and reliable supply/stable supply throughout the year
- Price should be lower or at the most at par with imported peanuts
- Range of varieties according to intended end use (e.g., Ilokano Red for adobo/fried
peanuts; confectionery peanuts for peanut brittle, peanut butter, etc.)

Above requirements can be met through use of seeds of high yielding confectionery peanut
varieties, adoption of good agronomic practices, and access to GMP compliant postharvest
facilities and technology. A 100% increase in production volume is possible by enabling farmers
to reach optimum yield of Asha, Namnama, and other recommended peanut varieties.

3. The steady increase in prices during the past five years represents a real opportunity for farmers.
Yet the capacity for producers to effectively benefit from these price trends depends on
improvements in markets and production. By increasing yields, aligning varieties to market
demand, and bulking, farmers can increase production and sales to take advantage of the
increasing prices.

4. The primary constraint affecting the export and domestic sales of peanuts is aflatoxin, a
naturally occurring toxin that can infect a number of cropsincluding groundnutsand can
result in acute and chronic poisoning in humans and animals on ingestion. The health impacts of
ingestion in humans include stunted growth and development as well as an increased risk in liver
cancer. It is possible to reduce risks of aflatoxin contamination through chainwide
implementation of food safety and quality standards.

5. Prices differ according to whether the groundnuts are shelled or unshelled. Shelling is a form of
value addition that can be performed by farmers and can lead to increase income. Access to
postharvest facilities may encourage farmers to maintain their peanut farms. The absence of a
shelling industry also hinders the formation of linkages with big processors.

64
ANNEXES

65
 Annex 1: ILOCOS REGION

Ranking and Prioritization of Interventions by Stakeholders and VC Players, Sept 2014

Intervention Strategy Ilocos Norte Ilocos Sur La Union Pangasinan
Development and/or strengthening of local 1 1 1 1
capacity to commercially produce and
distribute good quality planting materials of
high yielding varieties required by the
market
Development and/or strengthening of local 5 3 2 2
capacity to commercially produce and
distribute good quality organic fertilizer and
promotion of proper fertilizer application
and management
Development of local capacity to provide 4 7 7 6
services that will enable farmers to adopt
GAP including pilots to demonstrate benefits
of GAP compliance
Improve access of farmers to technologies 8 6 5 7
that will help promote water use efficiency
and reduce resource use
Establishment and/or upgrading of 6 4 8 3
postharvest facilities to enhance viability of
collective marketing initiatives, ensure
compliance to food safety and quality
standards, and to facilitate access to
institutional buyers
Upgrading of processed peanut products 3 8 3 4
and development of a range of
differentiated premium quality products
that the two regions can sustain as a
marketing proposal in the domestic market
with a view of laying the groundwork for
export sales
Upgrading of farm-to-market roads 7 5 6 8
Development of capacity of farmers to 2 2 4 5
incrementally associate, collaborate, and
coordinate to achieve economies of scale in
their transactions and to become attractive
partners to large buyers parallel to
improving vertical collaboration

66
 Annex 2: CAGAYAN VALLEY

Ranking and Prioritization of Interventions by Stakeholders and VC Players, Sept 2014

Intervention Strategy Cagayan Santiago City
Development and/or strengthening of local 1 1
capacity to commercially produce and
distribute good quality planting materials
of high yielding varieties required by the
market
Development and/or strengthening of local 3 5
capacity to commercially produce and
distribute good quality organic fertilizer
and promotion of proper fertilizer
application and management
Development of local capacity to provide 4 7
services that will enable farmers to adopt
GAP including pilots to demonstrate
benefits of GAP compliance
Improve access of farmers to technologies 2 6
that will help promote water use efficiency
and reduce resource use
Establishment and/or upgrading of 5 2
postharvest facilities to enhance viability of
collective marketing initiatives, ensure
compliance to food safety and quality
standards, and to facilitate access to
institutional buyers
Upgrading of processed peanut products 8 3
and development of a range of
differentiated premium quality products
that the two regions can sustain as a
marketing proposal in the domestic market
with a view of laying the groundwork for
export sales
Upgrading of farm-to-market roads 6 4
Development of capacity of farmers to 7 8
incrementally associate, collaborate, and
coordinate to achieve economies of scale in
their transactions and to become attractive
partners to large buyers parallel to
improving vertical collaboration

67