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									  The Coop Way of Life: An Uplift Program for the Small-scale Producers

Theme: SUPPLY/VALUE CHAINS, MARKET ACCESS AND LINKAGES

A. Problems or Gaps and Market Opportunities
       The livestock sector had the strongest and most consistent growth
performance of all economic activities in Philippine Agriculture over the past
decade. Its average annual growth between 1990 and 2006 was 3.7% and its
share of gross value added in agriculture steadily increased from 18% in 1990 to
25% by 2005 (FAO 2006). The main livestock industry is pig production, which
compromises about 58% of total meat output and is growing at 5.5 % per year
(Costales et. al. 2007).


       The main drivers of growth in the livestock sector are the steadily
increasing domestic demand fuelled by rising population (2.4% per year between
1995 and 2000), increased urbanization, and modest improvements in per capita
incomes (Asian Development Bank (ADB) 2006; NSCB 2006; NSO 2005a).


       The strong demand on pork creates a potential for increasing the income
and therefore serves as a poverty alleviation opportunity for rural communities
and agricultural households. However, the avenue remains tough to small scale
producers and the market makes it harder for them to compete with large scale
producers. Challenges like the cost of quality feeds and other inputs, lack of
access to credit, and entering the market are not easily handled by the small and
independent producers. Moreover, meat consumers now demand for quality,
food safety, convenience and product differentiation.
 B. Development of Solutions




 The supply value chain involve in the Livestock Industry is illustrated below:


                                                                  Consumer
  Production             Production                               Retailing
    Inputs:             Management
                                              Live Hog
  Feeds, Vet            Labor, water,
                                              Marketing
Supplies, Piglets        electricity
                                                                  Meat
                                                                  Processing




 SIDC AS A SOCIAL ENTERPRISE: BUSINESS ACTIVITIES AND PRACTICES


         Sorosoro Ibaba Development Cooperative is a social enterprise. As such,
 SIDC builds and promotes enterprises to create wealth with the intention of
 benefiting the members and their communities. The enterprise is distributive in
 nature rather than accumulative. Adopting the empowerment strategy, the
 cooperative allows the members to own control and manage the enterprise. As a
 social enterprise, SIDC also operates to achieve the triple bottomline, ie.
 economic stability, social sustainability and environmental responsibility.


         In 1972, Kakang Victor noticed a small poultry that can be a potential
 market for the association. He learned from the growers that they usually buy
 chicks from suppliers at a very high price. If the association would be able to
 supply the demands of the growers, it would mean additional income for the
 organization. The idea was materialized. The cooperative started to sell broiler
 chicks. Soon after, they also began supplying piglets for the hog raisers. This
endeavor marks as the beginning of an enterprise that becomes SIDC’s core
business- the contract growing.


       The contract growing or paiwi program serves as the uplift program for the
members. Under the paiwi program, the cooperative provides the member-raiser
with the supply of chicks and piglets, feeds and veterinary supplies. The number
of stocks being provided depends on the capacity that the pens can hold. He/She
is even provided with technical support. All the member should do is, of course,
to provide the labor and the space for the poultry and pens for the livestock.


       With the cooperative’s help, many residents were able to shift their
livelihood from rice farming into hog and poultry raising. The number of raisers
steadily grew. And the time came for SIDC to integrate forward and backward.


       SIDC distributes dividends annually. Since the flame of cooperativism
keeps on burning, most members opted not to withdraw the dividends instead
they preferred to add it on their shares so they could help the coop more.
Through this effort, members expanded their business, doubling the number of
heads that they raised. The cooperative then thought of marketing the members
produce by setting up meat stalls at various markets in the city and the bigger
markets.


       As a consequence of growing number of growers, the demand for feeds
also increased. The cooperative can no longer meet the demand of members for
more feeds. Moreover, some members complain about the high price of rations
when they need to buy from other suppliers. Worse, some feeds from other
sources are of poor quality. In 1987, SIDC started its feed milling business to
guarantee members with high quality feeds. Output of the feedmilling section is
sold to members who are engaged in pig and poultry production and to those
who are in the business of feed distribution. The feedmill nowadays produces
daily an average of 9300 bags of variety of high quality animal feeds. On top on
the member’s need of a high quality feeds, SIDC pursued to have its own piglet
multiplier farm to provide the members with high quality piglets. The farm
maintains 1500 sows which can produce an average of 75,000 piglets in a year.
A breeding program together with the establishment of the artificial insemination
center has been placed sometime in1997, side by side with the pig multiplier
farm to ensure the quality of piglets produced. The program maintains high
quality boars and produces F1 gilts as reserve for sow restocking in the multiplier
farm. The cooperative also offers Expanded Credit Line for members who are in
need of financial assistance to expand their current business operations, for
animal housing, farm equipment, and biodigester installation. With the creation of
these important schemes, the cooperative has become self sustainable as far as
farm inputs and livestock production is concerned.


       Marketing the hogs and broilers under the contract growing is a sole
prerogative of the cooperative. Hogs/Broilers from member-raisers were
consolidated to get a best deal and to create a space in the market and be able
to compete with big commercial farms. The coop also provides services for the
weighing and collection of hogs and transport. The SIDC Hog Selling Pen has
been established to serve as the central holding area of hogs. It is placed
strategically for convenience in marketing and selling of hogs, accessibility and
bio-security. It is equipped with state of the art electronic weighing scale. With the
coop’s intensive livestock production and determination to succeed, the
Batangas City Government in recognition to SIDC’s contribution for the city’s
agricultural development and food security, it awarded the coop to manage the
operation of the Batangas City Slaughterhouse. The slaughterhouse services the
slaughtering of hogs and beef cattle for the city’s meat requirements. Carcass
are delivered to SIDC meat shops of the SIDC CoopMarts and meat stall and
vendors at the wet markets and small markets “talipapa” in the city, some of
which are operated by a member of the cooperative. Allocations to SIDC Farmer
Vic Meatshops located in neighboring provinces and in the greater Metro Manila
areas are delivered from the Hog Selling Pen to the slaughterhouse in the
destination. Backloads are frozen excess parts and entrails from the previous
day delivered in the Farmer Vic Meat Processing Plant for processing.


         Starting from a small store, the cooperative now runs four branches of
Coop Marts in Batangas strategically placed in areas where members are highly
concentrated. The store offers a wide variety of reasonably priced commodities,
from the basic household needs to farm supplies and equipment. SIDC products
such as feeds, biofertilizers, farm fresh organic vegetables, fresh and processed
meat products are sold in the store. Since, the cooperative has a bargaining
power, it is able to purchase products from other sources at a lower price, hence,
it is able to offer them also at a competitive price through the coopmarts.


         The cooperative also owns and operates a Satellite Master Antenna TV or
SMATV that provides window to the world, nation and a medium of transparency
in the coop operation. Aside from providing entertainment to the members, the
SMATV is a medium to reach the members by information campaigns,
technology     updates   on   livestock   management,      vegetable    production,
technologies on waste management systems among others at the SIDC
community channel. The SMATV provides entertainment to the member
subscribers. With the increased popularity, the coop way of living gained more
interest from the general public reaching the city proper of Batangas and
neighboring barangay and provinces. SIDC started expanding its business
portfolio to address the needs of its expanding membership and serves as an
integral part of existing business units. It managed to own and operate gasoline
stations (as an integration to its transport and production activities), auto supply
store, purified water refilling stations, rice production scheme, rice milling and
trading, organic vegetable production scheme, biofertilizer manufacturing meat
processing plant, meat shops and grocery stores, food business, savings and
loans.
       In spite of the cooperative’s economic success, social and environmental
concerns were not neglected. SIDC offers services like (1) free medical check-
up, (2) scholarship grants/study now pay later (3) barangay development fund –
of which 2% of SIDC’s annual net income is allocated for the development
projects of barangay, (4) pollution control program – translates SIDC’s concern
for the environment. A Biogas facility and Waste Water Treatment Plant are on
the pipeline, (5) SIDCIKAT- a quarterly newsletter aimed to foster the spirit of
cooperativism, (6) patronage refund allocation, (7) outreach program – yearly
Christmas gift-giving, fund raising campaign and humanitarian missions, (8)
Mortuary Aid, (9) job opportunities, (10) Seminars and Trainings for Members
and Employees, and (11) marketing and technical assistance to members in the
production and marketing of their businesses.




SMALL PRODUCERS AS BIG PLAYER

       The livestock sector has had the strongest and most consistent growth
performance of all economic activities in Philippine agriculture over the past
decade. Its average real annual growth between 1990 and 2006 was 3.7%, and
its share of gross value added in agriculture steadily increased from 18 percent in
1990 to 25 percent by 2005 (FAO 2006). The main livestock industry is pig
production, which comprises about 58 percent of total meat output and is growing
at 5.5 percent per year (Costales et al. 2007).


       The main drivers of growth in the livestock sector are the steadily
increasing domestic demand fuelled by rising population (2.4% per year between
1995 and 2000), increased urbanization, and modest improvements in per capita
incomes (Asian Development Bank (ADB) 2006; NSCB 2006; NSO 2005a).


       The strong demand on pork creates a potential for increasing the income
and therefore serves as a poverty alleviation opportunity for rural communities
and agricultural households. However, the avenue remains tough to small scale
producers and the market makes it harder for them to compete with large scale
producers. Challenges like the cost of quality feeds and other inputs, lack of
access to credit, and entering the market are not easily handled by the small and
independent producers. Moreover, meat consumers now demand for quality,
food safety, convenience and product differentiation.


       It is in this sense that SIDC created a solution to assist members to be
able to compete with the big players. The cooperative provides the member-
raisers with (1) quality stocks through the exercise of control on the breeding
farm and the availability artificial insemination service, (2) access to credit to
expand their operations, (3) quality feeds through its own feedmill, (4) animal
health services, (5) a processing plant, and (6) distribution channels like the meat
stalls, meatshop, and coop marts that bring convenience to the customers.
Through this integrated system, customers are guaranteed of quality product,
from farm to plate. SIDC as a consolidator of small producers produce is now a
big player in Southern Tagalog region, and in the Philippines.




SIDC’S EXPERIENCE AS A MODEL FOR REPLICATION


Sorosoro Ibaba Development cooperative’s experience presents possibility for
replication.   From a simple trading business, it has developed into a
conglomerate of social enterprises that created opportunities for the small
players to compete with large commercial farms.


SIDC is professionally managed, it is run like a normal business yet profit or
surplus are being used for sustainability and developmental projects. Members
benefited from the income as the primary stakeholder, as shareholders and as
consumers and patrons of the cooperative’s goods and services.
SIDC success factors rely heavily on members’ cooperation, competent and
principled-centered leadership and on the attitude of grabbing the opportunities
that come their way, innovation and continuous development, and concern for
the members, the community and environment. These elements when made
present to a new or another cooperative, the road to success wouldn’t be difficult.
Another solution that results to a greater impact can be created.

								
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