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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