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Chapter 11 Region 4A: Fruits Industry Cluster 11.1 Overview of the Industry 11.1.1 Situationer 11.1.1.

1 The fruits industry in the Philippines Agriculture posted a 0.37 percent growth in 2009. The year on year gains in the first three quarters of the year did not offset the huge production losses incurred during the fourth quarter of the year. Except for crops, all the subsectors managed to post some output increments. At current prices, agriculture grossed P1.2 trillion, representing a 2.18 percent increase from the 2008 level. The crops subsector which contributed 46.80 percent to total agricultural output registered a 1.42 percent decrease in production. This was largely attributed to the weather disturbances that hit the country, particularly during the fourth quarter of 2009. Crop production was valued at P632.0 billion at current prices in 2009. The fruit industry plays an important role in the upliftment of the Philippine economy. The fruit sector has been earning revenues for the country for several years and up to the present. The three most important fruits that contribute greatly to the economy are banana, pineapple and mango. They contribute about 90 percent of the total volume of production and only 10 percent is contributed by other fruits. The fruit export in 2009 was 1,278,606 metric tons valued at US$ 363,187,000. As well, the Philippines imported 427,799 metric tons of fresh fruits (pineapple) worth US$ 77,972. Volume of production In 2009, agricultural production inched up by 0.37 percent. The series of weather disturbances particularly during the fourth quarter of 2009 slowed down the sectors performance during this year. Though some agricultural corps suffered, like rice, banana was a gainer with output increment of 3.74 percent. There were reports of increased area harvested and bearing hills in the Visayas and Mindanao regions and bigger bunches and fruit sizes harvested in ARMM and Western Visayas. In addition, increase in production was due to better crop management and absence of major weather disturbances in Camarines Sur while banana farms in CALABARZON reported better quality of fruits.

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Table 11.1 Banana, Mango and Pineapple: Volume of Production by Region, 2009 (In 000 metric tons) Region/Crop Banana % Share Pineapple % Share Mango % Share Philippines 4,557.853 100.00 1,056.702 100.00 667.286 100.00 CAR 13.225 0.29 0.500 0.05 3.738 0.56 Ilocos Region 21.855 0.48 0.114 0.01 290.492 43.53 Cagayan Valley 255.816 5.61 20.877 1.98 37.551 5.63 Central Luzon 26.640 0.58 1.166 0.11 58.393 8.75 CALABARZON 57.637 1.26 69.884 6.61 42.381 6.35 MIMAROPA 92.614 2.03 0.168 0.02 8.103 1.21 Bicol Region 30.733 0.67 58.043 5.49 0.355 0.05 Western Visayas 179.945 3.95 8.919 0.84 40.610 6.09 Central Visayas 109.827 2.41 3.150 0.30 44.263 6.63 Eastern Visayas 134.842 2.96 6.079 0.58 0.468 0.07 Zamboanga Peninsula 92.877 2.04 1.392 0.13 34.173 5.12 Northern Mindanao 793.854 17.42 429.129 40.61 18.379 2.75 Davao Region 1,947.782 42.73 15.316 1.45 27.636 4.14 SOCCSKSARGEN 501.829 11.01 439.015 41.55 48.554 7.28 CARAGA 103.171 2.26 2.480 0.23 7.511 1.13 ARMM 195.204 4.28 0.472 0.04 3.410 0.51 Source: Bureau of Agricultural Statistics, Partial data: January-June 2009.

For banana, the top five producing regions are: Davao (42.73 percent), Northern Mindanao (17.42 percent), SOCSKSARGEN (11.01 percent), Cagayan Valley (5.61 percent), and ARMM (4.28 percent). For pineapple the top five producing regions are: SOCSKSARGEN (41.55 percent), Northern Mindanao (40.61 percent), CALABARZON (6.61 percent), Bicol (5.49 percent), and Davao (1.45 percent). For mango, the top five producing regions are: Ilocos (43.53 percent), Central Luzon (8.75 percent), SOCSKSARGEN (7.28 percent), Central Visayas (6.63 percent), and CALABARZON (6.35 percent). Of the 16 regions, only SOCSKSARGEN has been in the top five fruits producing regions for banana, mango and pineapple production.
Table 11.2 Crops: Value of Production, Philippines, 2008-2009 (In million pesos) Crops 2007 2008 Palay 182,052.53 234,072.46 Corn 65,887.27 75,864.12 Coconut 59,708.79 80,121.14 Sugarcane 28,905.89 33,783.75 Banana 58,300.91 75,321.67 Pineapple 9,860.49 11,112.98 Mango 17,385.99 19,881.38 Coffee 5,495.96 6,217.98 Others 84,677.12 95,182.86 Source: Bureau of Agricultural Statistics 2009 238,353.57 76,952.29 64,663.12 29,906.86 88,867.88 8,521.81 18,114.31 5,528.91 101,124.92

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Value of production In 2009, the gross value of output in the agriculture sector amounted to P1.2 trillion at current prices. The gross value of crop production was estimated at P632.0 billion, Pineapple production, however, went down by 1.35 percent during the year. Crop shifting to banana and poor maintenance of the crop were reported in SOCCSKSARGEN. In Ilocos region, reduced planting materials were noted. Other contributing factors to the decline were high cost of inputs in Bicol and smaller fruit sizes in CARAGA and Zamboanga Peninsula. Mango production also slid further by 12.77 percent in 2009. Gross value of mango production was down by 8.89 percent due to decreased production. In Ilocos region, trees were toppled down by typhoon Emong and flowering of young fruits was aborted because of typhoon Pepeng. Too much rains also adversely affected the mango trees in their flowering stage in Central Luzon, Bicol, Western and Central Visayas and CARAGA regions. Prices of mango and banana went up by 4.45 and 13.73 percent, respectively.

The fruit industry is just a small portion of the Philippine agricultures crops subsector, and is concentrated mainly in Mindanao except for mango which is also found in abundance in Calabarzon, Region 1 and Central Luzon. The Department of Agriculture records as of 2009 show volume of production for banana, mango and pineapple per region, thus: Area planted In the first semester of 2009, the total area planted to banana was 438,451 hectares; for mango it was 185,411 hectares and for pineapple it was 58,425 hectares. The total area planted to banana, and pineapple has been increasing, though not significantly. Area planted to mango, however, decreased slightly from 2008 to 2009.
Table 11.3 Area Planted to Fruit Crops, Philippines, January-June 2009 (In hectares) Crop 2007 2008 Banana 426,604 434,601 Mango 179,666 185,411 Pineapple 51,066 57,524 Calamansi 20,179 20,825 Durian 14,902 18,480 Source: Bureau of Agricultural Statistics 2009 438,451 184,412 58,425 20,844 18,480

Prices Likewise, in the first semester of 2009, the average wholesale price of banana lacatan variety was 20.37 pesos per kilo. This was 6.67 pesos below the retail price and 8.80 pesos above the farm price. For the saba variety the farm and retail prices did not change 11-3

significantly in the first semester of 2009 compared to the same period in 2008. The average wholesale price of saba or cardaba variety was 10 pesos per kilo. Exports Banana products generated US$ 216.2 million in export earnings for the first semester of 2009. This was lower by 8.13 percent compared to 2008. Mango products generated US$ 23.5 million in export earnings. This was 1.84 percent lower than the US$24 million of 2008. Exports of pineapple amounted to US$123.5 million. This represented additional export earnings of US$4.1 million compared to 2008.
Table 11.4 Quantity and value of exports by product form and country of destination, Philippines, January-June 2008 2009 (Quantity in metric tons, FOB values in 000 US$) Product Form/ 2008 2009 Destination Quantity FOB Value Quantity FOB Value Banana 1,149,869 235,334 1,003,465 216,204 Fresh 1,131,599 211.426 987,368 198,173 Japan* 546,204 110,082 559,568 120,202 Others 585,396 101,343 427,799 77,972 Processed 18,269 23,908 16,097 18,031 USA 3,037 3,924 2,585 2,896 Others 15,233 19,984 13,511 15,134 Pineapple 286,583 119,402 254,579 123,459 Fresh 150,687 31,939 125,668 29,167 Japan * 112,910 24,307 85,334 20,035 Others 37,777 7,632 40,335 9,132 Processed 135,896 87,463 128,911 94,292 USA 82,875 50,569 82,617 56,801 Others 53,021 36,894 46,293 37,491 Mango 19,923 23,966 20,562 23,524 Fresh 12,925 12,368 12,839 10,723 Japan* 2,922 6,817 2,979 6,224 Others 10,032 5,551 9,860 4,498 Processed 6,969 11,958 7,722 12,802 USA 1,685 2,940 3,386 4,413 Others 5,283 8,658 4,337 8,389 Source: Bureau of Agricultural Statistics *Excludes Okinawa

Imports In the first half of 2009, the Philippines imported more than US$3,000 worth of processed banana products. This was 80.37 percent lower than the importation in 2008. Imports of processed mango products jumped from US17,000 in 2008 to US$66,000 in 2009. Pineapple imports also went up from US$654,000 in 2008 to US$1.05 million in 2009. The Philippines is still a net exporter of processed banana, mango and pineapple as shown in the table below. 11-4

Table 11.5 Quantity and value of imports, Philippines, January-June 2008-2009 (Quantity in metric tons, FOB values in 000 US$) 2008 2009 Product Form Quantity FOB Value Quantity Banana, Processed 1,149,869 235,334 1,003,465 Mango, Processed 1,131,599 211.426 987,368 Pineapple 546,204 110,082 559,568 Fresh 585,396 101,343 427,799 Processed 18,269 23,908 16,097 Source: Bureau of Agricultural Statistics

FOB Value 216,204 198,173 120,202 77,972 18,031

The Department of Agriculture (DA) has identified several measures it believes would further propel the industry forward, and support the industrys aim of enhancing its capacity to produce quality products at improved levels of efficiency. [2] Unfortunately, processing capabilities poses a problem compared to domestic fruit farming, which may ultimately prove to be the biggest constraint to the progress of the processed fruit sector. The high price of feeds is hitting farmers hard. Fruit growers are especially worried that local production may be unable to compete with imports from Japan and other countries. Low tariffs on imports from these countries only serve to worsen the threat. The majority of fruits in the Philippines are still raised in small-scale backyard farms. For the Philippine fruit value chain to reach its full potential, the number and size of commercial farms will need to increase. 11.1.1.2 The fruit industry in Region 4A The fruit industry in Region 4A is an industry subsector participated in by micro to largescale farmers and composed of several sub sectors. The major fruits and corresponding production volume for 2008 are shown in Table 11.6. The fruit industry potentials are vast as the region is abundant in the production of crops mainly due to the typhoon-free climate and favorable conditions of the region. Region 4A has a mixture of industry and agriculture. Cavite, the top producer of fruits is highly industrialized where a reputable processor, KLT exists. The existence of agricultural lands, albeit getting smaller, further assures the continuous supply of a good percentage of raw materials for processed fruit industries. Fruit growing in Region 4A is exclusive to local investors. A number of fruit growers operate in the region, mostly concentrated in Cavite. The fruit industry is not a major sector within the crops industry, although the agriculture industry, which supports it, is considered much more significant. There are few key players, although there are many small-farm growers, who may not have the benefit of mechanized operations because of cost requirements. The fruit growers in Calabarzon are all SMEs: approximately 92 percent micro, 6 percent small, and 2 percent medium. 11-5

The fruit industry in Region 4A is positioned as an ordinary product. There are three major fruit producing areas in Region 4A, these are: Cavite, Batangas and Quezon, as shown in the table below.
Table 11.6 Production Volume of Fruits, Region 4A, 2008 (In 000 metric tons) Province Banana Pineapple Cavite 25,912.61 72,807.63 Laguna 16,696 12,018.18 Batangas 33,100.67 57.03 Rizal 3,301.21 557.51 Quezon 27,354.42 727.8 Total (Region 4A) 105,365.79 86,168.15 Source: Bureau of Agricultural Statistics Mango 5,354.36 502.22 26,731.55 1,145.52 7,153.21 40,886.86

KLT Fruits A significant player in the fruit sector in Cavite is KLT Fruits. KLT Fruits, which stands for the surnames of the owners Kiao, Lao, and Tia, started in 1985 with its fruit processing plant in Alabang. It was then transferred to its current location in First Cavite Industrial Estate (FCIE), Cavite in 1992, with the intention of focusing on pineapples as the companys main processed product. KLT Fruits, however, encountered difficulties in getting quality pineapples despite the seemingly strategic location. Tagaytay was producing inadequate quantities of pineapples and the imported pineapples from Davao always arrive with bruises due to distance or overripe due to travel time. They processed pineapples for 2 years, from 1992-1994, before shifting their focus to mangoes as their main processed product. Aside from mangoes and pineapples, KLT Fruits also processes passion fruits (yellow variety), guyabanos (soursop), calamansi (Philippine lime), dalandan (Philippine orange), papaya (hawaiian variety), ube (purple yam), and guavas. From these fruits they produce pure tropical fruit purees and concentrates in quantity denominations of 25 kilo containers up to 225 kilo drums. Ms. Nora Neypes, a B.S. Chemical Engineering graduate working as the manager of the Quality Assurance Department of KLT Fruits, proudly asserts that KLT Fruits is ISO 22000- 2005 and HACCP certified and holds yearly evaluation to ascertain the quality of their products and processes. Don Robertos Winery Corporation Don Robertos sweet mango (yellow) wine was formally launched on Dec. 2, 2001. A year before it was launched, however, Mr. Castaeda, the owner/president of the corporation started his research on the viability of yellow mango for wine production. In 2002, Don Robertos again went into research, this time in the viability of green mangoes for wine production. Equipped with a recipe for mango wine and backed by the researches done on the fruit wines, Mr. Castaeda still thought that his knowledge in wine business is still not enough 11-6

so he went to the U.S to study wine making. He also went to Europe to observe their wine industries as well as study about the western way of wine making. By the time he went home to the Philippines he realized that indeed, the Philippines has the best mangoes in the world which could be used for the best mango wine in the world. The target market of mango wine produced by Don Robertos is the A-B market. Mangoes are sourced not only from the province but also from Zambales, Bataan, Mindoro, Batangas, Bicol, the Visayas and Cagayan de Oro. When the fruit is in season in Calabarzon or in Luzon, Mr. Castaeda uses the mangoes from Luzon; when it is not in season in Luzon, then mangoes coming from Visayas and Mindanao are used. This way, the company never runs out of mangoes to be used in production. At first plastic bottles were used but then customers kept on asking for glass containers. For this reason, Mr. Castaeda started using his own designed hand blown bottle containers produced by Kimbell Packaging Inc., with a secondary plastic packaging to give the products a classy style. His wines are packaged in 750ml bottle containers and are put in a box with 12 bottles each. Significance of the fruit industry The government sector (DTI and the Provincial Agriculturist Office) sees the Cavite fruits industry as significant since it contributes to employment generation. DTI Provincial Director Noly Guevara, however, observes that Cavite is a net importer of fruit products except coffee. This, he opined is due to the fact that Cavites fruit production is less than its fruit consumption, thus the need to import. 11.1.2 Value chain and sub-sectors 11.1.2.1 General value chain of the fruit industry in the Philippines Figure 11.1 shows the general value chain of the fruit industry. It includes several players: (1) seedlings/plant material suppliers, (2) growers, (3) chemicals suppliers, (4) processors, (5) metal works, (6) warehouse and cold storage, (7) truckers and (8) wholesalers/distributors. 11.1.2.2 Value chain of the fruit industry in Cavite Figure 11.2 shows the values chain of the fruit industry in Cavite. Destination of produce According to the Office of the Provincial Agriculturist (OPA) Lorna Cron, 60-70 percent of the locally produced fruits in Cavite are Manila-bound once they are harvested; 20 percent goes to the local market; 5 percent goes to local supermarkets and another 5 percent are consumed by the growers themselves. This point of view is also shared by the interviewed officers of the existing industry associations who also own farms. 11-7

Figure 11.1 Fruit Industry Value Chain, General

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Figure 11.2 Fruit Industry Value Chain, Cavite

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When the local fruit farmers harvest their farm products, the usual route of these fruits are Divisoria, Manila markets like in Pasig, Binondo and Cavite markets like Tanza, Silang Dasmarinas, and Tagaytay. Mr.Donato Alegre, a farm owner has a rule of thumb for his farm and this is also followed by the association he chairs, the Mendez Farmers Association. When he sells his produce, if it is abundant, it is brought to Manila supermarkets because they command a higher price. If the produce, however, is in short supply, then it is just sold to the local markets. This way, they do not have to incur additional transportation costs. Problems arise when the produce is low since it can not adequately supply the local consumption. When this happens, fruits are imported from Manilas Divisoria market. In the case of Mrs. Leonora Purificacion, the owner of Puri Farms as well as the Vice-Chair of the Batas Multi-Purpose Cooperative, the market for her pineapple fruit juice which is just a backyard production, is usually the University of Santo Tomas in Manila where she has already made contacts with a canteen owner to sell her fruit juice. There are times when the Department of Trade and Industry or the Department of Agriculture would hold trade fairs, and during these times, Cavite fruits are put on display for sale. None of the fruit growers are into export. Don Robertos winery, however, tried exporting once but had to stop since the feedback it got was that the market did not like wine in plastic bottles, which it was then using when it exported its wine. 11.1.2.3 Support industries Support industries like plant nurseries, seedlings, chemicals/fertilizers, farm implements, packing and packaging materials such as carton boxes, wooden crates and pallets, trucking services, bagsakan centers and cold storage facilities are available in the region. 11.1.2.4 Support agencies Department of Agriculture The Department of Agriculture is the principal government agency that is responsible for the promotion of agricultural development and growth through increased productivity. Some of the major services being done by the department are: devising plans for proper utilization of resources, managing these resources and conducting research work on crops and fertilizers. Responsible for boosting the income of farmers as well as reducing the incidence of poverty in the rural sector as stipulated in the governments Medium Term Development Plan. Department of Science and Technology-Region 4A 11-10

DOST CALABARZON, through its S&T centers, the Tanauan Packaging Service Center (TPSC), and the Packaging Research and Development Center of the Philippines (DOSTPRDCP), developed for 22 firms packaging and labeling system appropriate for each product. These include: 6 firms in Laguna for cookies/pastries, meat products, pickled vegetables, and tropical fruit wine; 4 firms in Cavite, Batangas, and Quezon or a total of 12 firms for juices, cookies/pastries, meat products, pickled vegetables, and tropical fruit wine; and 3 firms in Rizal for noodles, dairy products and tea. PSTC-Batangas facilitated the establishment of TPSC in 2006 under the auspices of the Local Government of Tanauan City and Senator Ramon Magsaysay Jr. Together with DOST-PRDCP, it assisted the center in acquiring processing and packaging equipment to enable it to provide, among others, labeling services, toll packaging for native delicacies, supply in low volumes of packaging materials, and consultancy services. TPSC has since developed technical competency on food safety, specifically on good manufacturing practices, label designing, shelf-life studies and nutritive analysis (DOST Calabarzon). 11.1.3 Demand/users and markets 11.1.3.1 Major users The fruit sector of Region 4A operates mainly in the domestic market. Approximately 90 percent of the total Calabarzon production of the fruits industry is sold outside the region -- to Divisoria market. 11.1.3.2 Domestic market Local residents, including walk-in customers and retail outlets/supermarkets account for about 10 percent of total sales; and markets outside of the region (but still within the Philippines) account for 90 percent. The demand for fruits is not seasonal, though it peaks in summer where 90 percent of the total yearly sales are concentrated.
Table 11.7 Mango: Volume of Production, Region 4A, 2003-2008 (In metric tons) Province 2003 2004 2005 2006 2007 Batangas 81,574 60,428 38,642 20,046 25,817 Cavite 13,968 12,968 11,333 10,839 9,889 Laguna 636 699 714 643 573 Quezon 9,212 9,230 9,154 8,922 7,996 Rizal 1,236 1,232 1,170 1,127 1,149 Total 106,625 83,821 61,014 41,576 45,424 Source: Bureau of Agricultural Statistics 2008 26,732 5,354 502 7,153 1,146 40,887

Table 11.8 Mango: Area Planted/Harvested, Region 4A, 2003-2008 (In hectares)

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Province 2003 2004 Batangas 9,450 9,454 Cavite 1,680 1,693 Laguna 177 177 Quezon 817 817 Rizal 815 815 Total 12,939 12,956 Source: Bureau of Agricultural Statistics

2005 12,144 1,690 206 817 815 15,672

2006 12,109 1,690 179 755 815 15,548

2007 12,109 1,130 179 735 810 14,963

2008 11,970 1,130 187 735 810 14,832

11.1.3.3 Export market None of the fruit growers are into export. 11.1.4 Raw materials supply Raw materials are both sourced individually or collectively, depending on the raw materials needed. The table below shows the sources of raw materials the fruit growers need for their industry.
Table 11.9 Sources of Raw Materials Raw material Within province Tissue culture (Lacatan Department of Agriculture; variety) Cavite State University Fertilizer Organic Seeds LGU, DA Pesticide DA Plant seedlings DA Coco coir Lime Local market Equipment (tractor) etc. DA Sterilized water Cavite Within region Luzon UP Los Banos UP Los Banos Seed companies Tagaytay Tagaytay

11.1.5 Productivity The opinions expressed regarding productivity of the fruit industry vary. Some say that productivity appears to be lower to comparable to identical industries in the country. Still, there are those who say that it is low since there is less interest in farming and this is coupled with natural calamities visiting the province which affect the yield of the land. 11.1.6 Price Competitiveness Prices of the members of the associations are generally at par with those outside the region.

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11.2 Potentials and Issued in View of Cluster Development 11.2.1 General issues 11.2.1.1 Competitive advantage The main competitive advantage of the fruits industry growers (mango, banana and pineapple) in Calabarzon is the cool climate of the place which is suitable for abundant fruit production. Add to this advantage, the Cavite soil which has a high potassium content that can produce high quality fruits. According to the growers, as far as bananas as concerned, Cavite bananas have a more intense yellow color, thicker skin and higher resistance to plant diseases. For the fruit processor, KLT Fruits, the view is that their competitive advantage lie in the superior quality mangoes they source. 11.2.1.2 Other related events and issues Problems Many Cavitenos do not want to farm now. If they own the land they till, they prefer to just leave it the way it is since land appreciates in value anyway and once there is a good offer, then it is just sold. Should they farm, there are additional inputs which also mean additional costs. Productivity is low compared with Mindanao which is a main competitor for fruits production since in CALABARZON, the area planted to fruits is smaller as compared with Mindanao. This is primarily due to the urbanization of CALABARZON such that many areas planted to fruits are now being converted to subdivisions. A critical financing problem confronting the farmers is that there are stringent requirements which they have to submit when they apply for loans. For example, for them to qualify for loans from Land Bank, there is a need to get a certificate from the Department of Agriculture/the Municipal Agriculturists Office/the Municipal Technician who officially states that they are indeed farmers or land owners. Add to this the fact it is the cooperative that is recognized in loan application, however, when the loan is given, it is in the name of the individual and not the cooperative. In addition, Land Bank requires collaterals. It is also observed that there is that weakness of farmers for gambling and vices which result to using less money for the farm. Another problem is the preference of many farmers in planting cash crops to get easy money. Prices of cash crops fluctuate significantly and investing in high value fruits will provide more stability.

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11.2.2 Technology The degree of mechanization for the industry players Calabarzon vary. For the growers, it is purely manual except for land preparation which is mechanized since a tractor is used. For the processor, the KLT Fruits, it is just 5% manual and this is during the raw material inspection and 95% automated for fruit juice extraction. Robertos winery relies mainly on manual processes. 11.2.3 Marketing and distribution The local markets for most of the mango, pineapple and banana growers act as middlemen to buyers outside of the region like those coming from Olongapo, Pangasinan and Zambales since the growers bring their produce to the local markets. The problem with this system, avers the growers, is that the middlemen are getting the produce at a very low price which they can sell to different provinces at a higher price, thus, making more profit than the farmers. The farmers very rarely conduct business directly with the buyers themselves. In the case of the Mendez Farmers Association, the usual route of their produce is like this: if the produce is low, they sell direct to individual buyers such as neighbors or to the local markets since it commands a better price this way. If the produce is high, which will then command a low price due to abundance, they accumulate all produce from farms of the members of the association and then contact supermarkets such Waltermart. Mr. Silan of CMG who is into dragon fruit growing started peddling his dragon fruits in Binondo and Ongpin together with his wife. They initially had a hard time marketing dragonfruit locally, owing to its unusual covering. Their initial dragon fruit buyers were foreigner tourists in Tagaytay. Eventually, the local market becomes interested in purchasing dragonfruit. Currently, Silans Agri Farms marketing schemes include the TV interview by Jessica Soho in Kapuso Mo, Jessica Soho and in Mauland Agrikultura by Sec. Yap of the DA, the internet (youtue.com) as well as print advertisements like brochures. Majority of KLT Fruits end products are distributed to juice manufacturers here and abroad. They also supply small quantities of fruit juice to restaurants in the region. Its Sales Department in Mandaluyong, Manila is in charge of marketing the companys products through various means such as through the company website, among others. Don Robertos Winery markets its products by giving out leaflets, joining exhibits and trade fairs and through its own website (www.mangowine.com). At present, Don Robertos has distributors all over the country.

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11.2.4 Financing facilities Walang masyadong nahihiraman ng pera ang farmers, says Mr. Silan of CMG. Farmers are afraid to approach banks for loans even though Land Bank has programs for farmers. Instead, farmers prefer to borrow from co-farmers or cooperatives. 11.2.5 Skilled labor development Appropriate labor supply is generally available and adequate. The laborers, though, available in the province, are migrants from the Bicol region and the Visayas. Lack of quality consciousness and being unmotivated in their work are the two difficulties faced by the growers when it comes to labor. The fruit processor KLT does not have problems with its workers. Training programs on technology and planting for the benefit of the industry are regularly conducted by the Department of Agriculture, and the UP Los Baos. Likewise, the LGU and the Municipal Agriculturist also conduct trainings on technical capability building. The DTI, in turn, conducts HACCP training with the assistance of HACCP consultants it hires. DOST was also mentioned as a training program provider through its technology transfer programs. 11.2.6 Infrastructure The fruits growing industry does not face any serious infrastructure problems. The farmto-market roads are 80 percent cemented; water supply is fairly adequate since irrigation system is present in many of the big farms. Still, there are some concerns that need to be addressed: Water supply: Some farms are located very far from the residential area that there are no available water facilities. Some farmers have to bring water containers from their house to the farm to water their plants. KLT, for its part, though not experiencing any water supply problem, has its own deep well. Equipment: More mechanical farm equipment is needed so that manually-done processes can be done mechanically to save on time. Waste management facilities: Waste hauling has been a long-time problem for KLT owing to its high cost. KLT normally needs 4 trucks to haul all the wastes, spending a total of Php 4000 daily for that alone. KLT adheres to its strict policy on product recovery and tries to arrive at only 15% waste. An upcoming project is venturing into composting of wastes, since majority of those coming from their plant are biodegradable.

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11.3 Cluster Structure 11.3.1 Existing industry cluster initiatives There is no fruit industry cluster in the region. What exists are different associations like the Banaba Cerca Farmers Association, Batas Cooperative, Cavite Farmers Association, Cavite Vegetable Industry Council (for fruits and vegetable farmers), Mendez Farmers Association and the Cavite Modern Growers, the mother association. 11.3.2 Relevant industry/trade associations 11.3.2.1 Batas Multi Purpose Cooperative The Batas Multi Purpose Cooperative started in October 25, 1993 as a Samahang Nayon which was initially formed under the Agrarian Reform Community. Their foremost objective was to care for the land. Ms. Purificacion, the Vice Chairperson of the Cooperative, shares that they currently have a total of 114 fruit farmer members. Aside from caring for the land, the Cooperative now aims to revive the reputation of Batas as a fruit growing community as well as to look for alternative business ideas for their farmer members, such as fruit processing. Their main crop is pineapples, which are harvested 3 times a year. They also produce occasional corn, nuts, and rice crops. The collective hectarage of all the members is approximately 200-300 hectares at 2-7 hectares per farmer. Approximately 30,000 pineapples can be harvested per hectare. The prices of the pineapples fluctuate at a great deal, depending on the bargaining situation at the local markets. Ms. Purificacion shares, Depende sa presyuhan sa palengke. Pag medyo marunong yung nauna sa palengke, mataas ang presyuhan dun. Pag hindi marunong yung nauna, mababa ang presyuhan. Big-sized pineapples could be sold up to Php 25 per piece but if the local markets are demanding for low prices, it could go down to Php 14 per piece. Small-sized pineapples, on the other hand, are sold at Php 5 per piece but could go down to Php 3 per piece. This is one of the problems that the fruit industry in Batas faces: the local markets acting as the middlemen. Ms. Purificacion adds, Nalulugi ang magsasaka. In the unfortunate event that pineapple prices go lower as expected, Ms. Purificacion recommends processing the produce instead of selling it per piece so that they can sell it at a higher price. The Batas Multi Purpose Cooperative Office, which is located at the center of the Batas Plaza, serves as their processing plant. They manually crush the pineapples to be sold as pineapple juice. At times, they also produce pineapple chunks, which are manually done as well.

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The Cooperative Office also serves as a warehouse for their stocks of fertilizers and pesticides for sale. The farmer members can purchase these stocks at a low price. The Cooperative used to buy fertilizers and pesticides from a middleman until they learned of the warehouse in Batangas where they can purchase stocks at a much lower price. Aside from the problem with middlemen, the Cooperative is also encountering problems within. As said earlier, they currently have 114 members but only 82 are active. The reason for such is that members get easily discouraged by low selling prices and bad harvests. Ms. Purificacion acknowledges how hard it is to bounce back after a bad harvest and thus makes her more committed to pursing and advancing their fruit processing business to fully maximize profits from limited stocks of produce. Despite the problems, Ms. Purificacion asserts that Batas can still revive its reputation and realize alternative ways of profiting from their fruit produce, as long as the farmers continue to plant and care for the land. 11.3.2.2 Mendez Farmers Association The Mendez Farmers Association started 10 years ago with only a handful of fruit and vegetables farmers from Mendez, Cavite. Mr. Donato Alegre, a member for 3 years now and currently the chairman of the Association, updates that they already have 120 farmer members as of December 2009. One of the beneficial activities of the Association is the collective selling of produce of member farmers to local supermarkets, such as Walmart in Manggahan. This bulk selling of fruits and vegetables results in a higher selling price than if sold to the local markets. When the harvest is abundant for a particular season, the farmer members could fill at least two jeeps worth of fruits and vegetables. The major crops of the Association are coffee, bananas, and jackfruit, with the occasional mangoes, calamansi (Philippine lime), rambutan, jackfruit, taro, and papaya, as well as vegetables like eggplants, baguio beans, Chinese cabbage, and bitter melon. Mr. Mendez shares that for the banana produce, one piece could be sold for as high as Php 5 at the supermarkets and for as low as Php 2.50 at the local markets. Another advantageous activity of the Association is the collective buying of raw materials. If the farmer members buy in bulk, they are still charged with the regular price of the raw materials but are given additional quantities for free. May dagdag naman pag marami kang bibilhin adds Mr. Mendez. The bonus quantities are then distributed equally among the members. Still another positive result from acting as an Association is their effective bargaining power. Their requests for equipment, seeds, and other planting materials forwarded to the Department of Agriculture as well as requests for trainings and speakers during seminars forwarded to UP Los Baos are granted when they name the whole Association as the beneficiary.

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The Mendez Farmers Association is looking forward to more helpful programs and projects for its members. One of their future plans is setting up funds to be made available to members as loans. They have tried fund raising activities before, such as selling tickets for a bingo game at the local casino and marketing tickets for a community raffle, which proved to be effective. They are currently strategizing how to improve still on their fund raising activities so they could initiate the setting up of a collective fund for the farmer members. 11.3.2.3 Cavite Modern Growers Cavite Modern Growers, Inc. (CMGI) is a non-stock farmers organization which aims to modernize agriculture in Cavite in terms of application of technology in farming, that is, upgraded farming equipment and implements, innovative processes, new crops, among others. It started in 2006 with only 28 fruit and vegetable farmer members and, with former Cavite Governor Juanito Remullas encouragement and support, the membership has grown to 922 by July 2007. CMGI currently boasts of 1,300 farmer members, mostly from the towns in upland Cavite, being led by their President, Mr. Edilberto Silan, and their Board of Trustees composed of the mayors of different towns in Cavite. Upland Cavite consists of 11 towns: Silang, Amadeo, Tagaytay, Indang, Bailen, Magallanes, Naic, Trece Martirez, Malabon, and Dasmarias. Upland Cavite is known for its potassium-rich soil and cool climate, providing optimum conditions for producing high quality high value (HV) fruits and vegetables. The major crops of CMGI are banana, pineapple, papaya, and dragonfruit, dubbed as the 21st centurys king of fruits. These crops keep the farmers busy, with dragonfruit harvest months from May to October, papaya on November, and banana and pineapple for the rest of the year. To diversify the products and provide supplementary income, the farmers intercrop with sili (chili) and tomatoes. Mr. Silan asserts that they prefer producing HV fruits than cash crops because its a worthwhile investment. He claims that HV fruits are Mas matagal bago anihin pero mas malaki naman ang kita. (It takes a longer time to harvest but yields higher profits.) CMGI has gone a long way from its humble beginnings. They have discovered innovative ways of farming, such as in the use of coco coir as punlaan (planting medium) and vermicast fertilizers. They have ventured into partnerships with other farmer organizations, such as the Banaba Cerca Farmers Association, for trainings, seminars, and equipment rentals. They have secured grants and donations from various institutions and personalities, such as the local and provincial LGUs, the Department of Science and Technology (D.O.S.T.), the Philippine Council for Agriculture, Forestry, and Natural Resources Research and Development (PCARRD)- D.O.S.T., the Farmers Information and Technology Services (FITS) Center, the Cavite State University and UP Los Baos, among others. One of the future projects of CMGI is exporting their produce outside of the country and Mr. Silan is looking forward to pursuing the foreign market.

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11.3.2.4 Banaba Cerca Farmers Association The Banaba Cerca Farmers Association was started by the Municipal Agriculturist more than 10 years ago, just around the 80s. Its initial membership of 150 fruit and vegetable farmer members expanded to 200 when the Association managed to secure grants for seeds for the members. According to Mr. Io, Mojica, the president of the Association, Banaba Cerca has the biggest volume of fruit farmers in Cavite. He estimates that farmer members each have 1-7 hectares planted with mangoes, papaya, kamoteng kahoy or balinghoy (cassava), kamoteng baging, radish, tomatoes, corn, and rice. 11.3.3 Support from research institute/university The Cavite State University in Indang, Cavite started as a pioneer intermediate school established by the American Thomasites in 1906. From being a secondary school with emphasis on vocational agriculture for boys and domestic science for girls, the school had expanded its baccalaureate degree program offering in agriculture including the teachertraining program in agriculture education. Due to the demands of parents and in answer to the challenges in Calabarzon, major program units such as Arts and Sciences, Education, and Engineering were created in 1992 in addition to the School of Agriculture. CvSU is an active partner of the Department of Science and Technology and the Department of Trade and Industry and has been designated as the National Training and Demonstration Center for Fruit and Vegetable Products. CvSU also serves as the leader in the National Integrated Research, Development and Extension Network on Urban Agriculture and in the National Sub-Network on Coffee. Likewise, it serves as member in the other networks, namely: fruit crops, plantation, crops, ornamental, agricultural engineering, vegetables, root crops and plant genetic resources. Limited collaborative activities between the CvSU and the associations, like the Mendez Farmers Association are noted. CvSU renders consultancy services to farmers and the use of its testing facilities. CvSu has a Research Center which exerts efforts towards streamlining the research, development and extension programs of the school aimed at generating innovative and viable technologies useful to farmers and other clientele. This is done with the goal of improving their standard of living. Since it has been noted in Calabarzon, Cavite in particular, that many Caviteos now shy away from the farm to the detriment of agriculture, fruits industry sector included, CVSU has a program for its graduates who are still unemployed. Graduates are offered entrepreneurship training then given some financial assistance to start a small business. Incoming freshmen, in turn, are offered scholarship to go into agricultural courses to mitigate the loss of the diminishing breed of farmers or at least those who upon graduation will be equipped with agricultural skills can serve as guides to farmers.

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The University has also maintained ties in establishing collaborative projects with international and local agencies with emphasis on plantation crops, high value fruits and vegetables, poultry and livestock, and ornamentals, among others. Other institutions that have rendered consultancy for the farmers is the Department of Science and Technology through its Philippine Council for Agriculture, Forestry, and Natural Resources Research and Development and the Farmers Information and Technology Services Information System. FITS IS aims to serve as a viable tool to facilitate faster access to information to fast track the delivery of services to clients in agriculture, forestry and natural resources by fast access to information and technologies informs appropriate to clients needs. 11.4 Development Policies and Activities 11.4.1 Development policy direction and targets of the DTI regional office The DTI Regional Office is more focused on the processing aspect of the fruit industry. It has programs and policy initiatives that support fruit processing such as: trade policy negotiation, facilitation, and promotion services, business matching, business development services, assistance to individual firms and clustering of industry associations and sectoral groups and one stop shop such as the NERBAC. National Economic Research and Business Assistance Center (NERBAC) NERBAC-CALABARZON is convenience through convergence. It is the convergence of Region 4-A's local government units (LGUs), regional line agencies, and the private sector to make doing business in CALABARZON convenient. It will provide prospective entrepreneurs and investors with basic information on various business options that are open to them in accordance with the investment priorities of the government. It is also a one-stop action center that facilitates the processing and documentation of all paper requirements necessary for the establishment of a business enterprise in the region, including credit services. One of the targets of NERBAC-CALABARZON is to reduce the processing time of starting a business from the existing 11 processes to five or less, more than 50 percent reduction. NERBAC Functional Areas Investments Promotion and Facilitation: NERBAC-CALABARZON assists in harmonizing plans, programs, and projects of the CALABARZON provinces, along with the local government units (LGUs), industrial estates and ecozones, private sector entities, and relevant government agencies towards marketing the Region as a 11-20

single investment destination. Knowledge Management. It establishes an updated databank of industries and business enterprises and coordinates the conduct of relevant research projects. It also monitors and collates economic, technical, and research outputs on business development and provides information on business opportunities in accordance with the investment priorities of Region 4A. Business Registration. It institutes standard procedures to streamline the processing of applications for permits and licenses with partner LGUs and regional line agencies to improve transaction costs and flows, thus, contribute to the enhancement of Philippine competitiveness.

11.4.2 Expectation for cluster development, existing support programs, and aggressiveness towards the cluster approach 11.4.2.1 Lead government agencies The Department of Agriculture has its Plant now, pay later scheme for farmers where it grants equipment to farmers association like tractor, water pump, among others. There is also the Agricultural Training Institute 4A which provides training, farm and business advisory, extension and knowledge products, online-extension services to farmers. Policy Information Services The MIN Policy Information Services makes available important government policies and regulations relevant to the mango industry such as nursery accreditation and quarantine regulations. Quarantine Declaring Mango Pulp weevil a Dangerous Pest and Injurious to Mangoes and Placing the Palawan Island Group Under Quarantine(DA, Bureau of Plant Industry) Establishing a Plant Quarantine Security System in the Island of Guimaras(DA, through the Office of the Secretary) Declaring the Island of Guimaras as a "Special Quarantine Zone"(Malacaang, through the Executive Secretary

Nursery Accreditation (DA, Bureau of Plant Industry) Philippine National Standard (DTI, Bureau of Product Standards) Fresh Fruits - Mangoes (Mangifera indica Linn.: Grading & Classification) Specification for Dried Mangoes 11-21

Setting of Variable Grace Period for Long-Gestating Agriculture and Fisheries Projects(Bangko Sentral ng Pilipinas, Maynila, Philippines, Office of the Governor) Providing for the creation of the Zambales mango industry development council Special Lending Programs Available for the Mango Industry 11.4.2.2 Local government units

The Office of the Provincial Agriculturist under the Provincial Government is supervised by the Provincial Agriculturist. Growers and traders of mangoes get assistance from OPA in production technology, inputs from suppliers by way of connecting growers and linking them with companies that supply needed inputs for the industry like fertilizers. At the same time, OPA organizes the CMG and links them with DTI for the marketing of their products. Both the OPA and the DTI are members of the Cavite Small and Medium Enterprise Council with DTI as the lead agency. OPA also makes their office available to the industry when there are meetings or briefing with input suppliers. 11.4.2.3 Regional Development Council (RDC) The mission of RDC-Region 4A is to institutionalize strategic urban and rural planning through the RDC's framework of decentralized and collaborative processes among LGUs, AROS and private organizations to initiate interregional and inter-local cluster development, and to promote the role of the region as a global economic hub, with minimum poverty, amidst a clean and balanced urban-rural environment and ecosystem. 11.4.2.4 Industry associations The Cavite Chamber of Commerce and Industry created an office within the Provincial Government called Provincial Cooperative Livelihood and Entrepreneurial Development Office. This is a partner of SMEDC which gives product development assistance on processing need like labeling. Marketing links are also established and holding of summit and involvement in trade fairs are regular activities of the PCLEDO. The Cavite Mango Growers is an association of mango growers in the region that was established in 2008. The association is supervised by OPA and in fact, OPA was included in organizing it. There are about 30 growers in the association. Interviews 1. Noly D. Guevara, provincial director, Department of Trade and Industry, 18 February 2010 2. Donato Alegre, grower, 19 February 2010 3. Donato Alegre, chair, Mendez Farmers Association, 19 February 2010 4. Edilberto Silan, owner, Silans Agri Farm, 18 February 2010 5. Edilberto Silan, president, Cavite Modern Growers, Inc., 18 February 2010 6. Leonora Purificacion, owner, Puri Farms, 19 February 2010 11-22

7. Leonora Purificacion, vice-chair, Batas Multi Purpose Cooperative, 19 February 2010 8. Pio Mojica, grower, 18 February 2010 9. Pio Mojica, president, Banaba Cerca Farmers Association, 18 February 2010 10. Nora Neypes, manager, Quality Assurance Department, KLT Fruits, 18 February 2010 11. Lorna Cron, provincial agriculturist, DA, 26 January 2010 12. Roberto Castaneda, owner, Don Robertos Winery, 26 January 2010 References 1. Aquino, A. P. and Daite, R. B. (PCARRD-DOST), Transaction Cost and Supply Chain Management: The Case of Export Mango and Small-hold Banana Marketing in the Philippines, November 2007. 2. Cavite State University, About the Research Center, retrieved March 5, 2010, from http://www.cvsu.edu.ph. 3. DA Bureau of Agricultural Statistics, Production Trend of Some Major Crops Planted in Cavite: 2001-2009. 4. DA Bureau of Agricultural Statistics, Situation Report on Selected Fruit Crops: January- June 2009, September 2009. 5. DTI- CALABARZON, CALABARZON OTOP Directory. 6. DTI-Cavite, Cavite OTOP.

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