Ampalaya - PHP Version 5.6.21 - Philippine Rural Development

Transcription

PHILIPPINE RURAL
DEVELOPMENT
PROJECT (PRDP)
I-PLAN Component
Luzon A Cluster
VALUE CHAIN ANALYSIS AND
COMPETITIVENESS STRATEGY:
AMPALAYA
Central Luzon
DEPARTMENT OF AGRICULTURE
Region III
RPCO 3
0
October 2014
CONTENTS
Contents
Page
TABLE OF CONTENTS
1
LIST OF TABLES
2
LIST OF FIGURES
3
ACRONYMS
4
EXECUTIVE SUMMARY
5
Section 1: INTRODUCTION
8
A.
Background Information and Objectives
8
B.
VCA Objectives
8
C.
Methodology and Approach
9
Section 2: OVERVIEW OF THE INDUSTRY
10
A.
Production Description
10
B.
Production Trends
12
Section 3: NATURE AND STRUCTURE OF INDUSTRY
17
A.
Value Chain Mapping
17
B
Key Players and Function
19
C.
Nature of Interfirm Relationship
26
D.
Price and Cost Structure
29
Section 4: MARKETS AND MARKET OPPORTUNITIES
36
A.
Markets and Market Trends
36
B.
Price Trends
42
Section 5: SUPPORT MARKETS
44
A.
Financial Services
44
B.
Non-Financial Services
45
Section 6: ENABLING ENVIRONMENT
46
A.
Formal Rules, Regulations, and Policies
46
B.
Informal Rules and Socio-Cultural Norms
47
Section 7: CONSTRAINTS AND OPPORTUNITIES
48
Section 8: COMPETITIVENESS DIRECTION
52
A.
Competitiveness Vision
52
B.
Priority Constraints/Opportunities and Interventions
53
Section 9: CONCLUSIONS AND RECOMMENDATIONS
AMPALAYA VCA STUDY, DA-PRDP-REGION 3-CENTRAL LUZON
65
1
LIST OF TABLES
Tables
Page
1
Top Producing Regions of Ampalaya in the Philippines of Ampalaya,
2013
13
2
Top 5 Ampalaya Producing Provinces in the Philippines, 2013
13
3
Production Trends in the Philippines and Central Luzon, 2009-2013
13
4
Top 5 Ampalaya Producing Municipalities in Nueva Ecija, Bulacan, and
Pampanga, 2012
16
5
Ampalaya Processors/ Manufacturers
24
6
Farmers’ Cooperatives
26
7
Costs and Returns: 1 hectare Ampalaya Farm
High Inputs-Hybrid Seeds, 2013
29
8
Costs and Returns: 1 hectare Ampalaya Farm
Makiling/Native Variety – Low Input Production System, 2013
31
9
Relative Financial Position of Value Chain Players
Fresh Ampalaya Chain, 2013
33
10
Relative Financial Position of Value Chain Players
Herbal Tea Chain, 2013
35
11
Buying Patterns of Key Intermediaries in the Fresh Ampalaya Market,
2013
38
12
Annual Per Capita Consumption of Ampalaya (in kilogram)
Philippines and Key Markets of Central Luzon
39
13
Volume Requirements of Processors
40
14
Key Sources of Financial Services of Ampalaya: Farmers in Central
Luzon, 2013
44
15
Constrains and Opportunities
48
16
Priority Constrains/Opportunities and Interventions
57
17
Prioritization of Interventions Per Province
64
18
List of Members/Components of the VCA Preparation
66
2
LIST OF FIGURES
Figures
Page
1
Uses of Ampalaya and Its By-Products, 2013
10
2
Central Luzon Product Formats
11
3
Annual Bittergourd Cultivation in Asia
12
4
Top Ampalaya Producing Provinces and Municipalities, Central Luzon
15
5
Value Chain Map of Fresh Ampalaya, Central Luzon
17
6
Geographic Flow of Ampalaya, Central Luzon
18
7
Value Chain Map of Processed Ampalaya, Central Luzon
19
8
Traders/viajeros Sorting Practices
22
9
Consolidators’ Practices and Infrastructure
24
10
Flow of Transactions, Fresh Ampalaya Chain
28
11
Relative Financial Position of Value Chain Players, Fresh Ampalaya
Chain
34
12
Relative Financial Position of Value Chain Players, Herbal Tea Chain
35
13
Fresh Ampalaya Grading Classification
37
14
Fresh Ampalaya End-users Grading Classification
37
15
Fresh Ampalaya Price References, Central Luzon 2012
42
16
Competitiveness Vision of Ampalaya Industry, Central Luzon
52
3
ACRONYM
ACEF
AMCFP
ASKI
BAFPS
BAS
BINHI
BPI
CHIPI
DA
DA-BAR
DOH
DOST
DTI
FDA
FGD
GAP
GMP
KII
MFIs
MRDP
PCIP
PDP
PRDP
SUCs
VCA
WHO
Agricultural Competitiveness Enhancement Fund
Agro-Industry Modernization Credit Finance Program
Alalay Sa Kaunlaran Incorporated
Bureau of Agricultural and Fisheries Product Standards
Bureau of Agricultural Statistics
Bio-Farm and Natural Health Ingredients
Bureau of Plant and Industry
Chamber of Herbal Industries of the Philippines, Incorporated
Department of Agriculture
Department of Agriculture Bureau of Agriculture Research
Department of Health
Department of Science and Technology
Department of Trade and Industry
Food and Drugs Administration
Focus Group Discussion
Good Agricultural Practices
Good Manufacturing Practices
Key Informant Interview
Micro Financing Institutions
Mindanao Rural Development Program
Provincial Commodity Investment Plan
Philippine Development Plan
Philippine Rural Development Project
State Universities and Colleges
Value Chain Analysis
World Health Organization
4
EXECUTIVE SUMMARY
This report provides an overview and analysis of ampalaya value chain in Central Luzon, linking the
international context to the national, regional, and provincial contexts, with the aim of identifying
main leverage points and key strategies to improve Central Luzon’s competitiveness and promote
development in a pro-poor and sustainable manner. It will provide the basis for the formulation of
the Provincial Commodity Investment Plan and will lay the foundation for PRDP’s cooperation with
the private sector and other government agencies active in the ampalaya industry.
Total Philippine production of ampalaya in 2013 was about 89,862.95MT.
Even with lower
hectarage, Central Luzon had the highest production volume in 2013 at 25,140.79, accounting for
28% of the national production.
At the provincial level, the top five (5) ampalaya producing provinces in 2013 were Quezon, Nueva
Ecija, Pampanga, Batangas and Bulacan. Three of the top producers are in Central Luzon and with
productivity levels above the national average. With good agronomic practices and use of hybrid
ampalaya varieties, Central Luzon can potentially increase its average yield to 20 to 30 metric tons
per hectare.
Ampalaya is high in vitamins and an excellent source of iron and calcium. Bitter melon is generally
consumed cooked in the green or early yellowing stage. The young shoots and leaves of the bitter
melon may also be eaten as greens. The fruit is commonly used in Filipino dishes such as the
“pinakbet”. In Central Luzon, 98% of the ampalaya produce is sold as fresh.
Ampalaya has also been used in traditional medicine to treat diabetes and high blood. Given its
superior nutritional value and its medicinal properties, it is now commercially available as tea, juice,
extracts and pills. The more common processed products are tea and capsules, with powder and
dried strips as intermediate ingredient forms. About 2% of the ampalaya production in the region is
processed into tea, capsules, coffee, and powder.
Farmers in Central Luzon are mainly smallholders with average farm size of two hectares. Usually,
only a portion or about 22% of their farm area is planted to ampalaya. Ampalaya is usually rotated
with rice and other vegetables to reduce risks of pests and diseases. Farmers generally plant
ampalaya after they have harvested their rice. Ampalaya monocropping is not adopted by the
farmers because of the emergence of bacteria in the soil resulting to low yield.
Farmers prefer to grow the Galaxy variety because of its capacity to bear more fruits. Others prefer
the Galactica variety because of its resistance to “pamamarako” or inability to develop fruits.
Planting of the Makiling variety is done primarily by farmers that are specifically targeting the
processed ampalaya/herbal product processors.
About 98% of the ampalaya produced in Central Luzon passes through a wholesale vegetable market
or trading area. Oftentimes, farmers sell their ampalaya to the viajeros who then deliver to key
trading areas. The chain continues to the supermarkets, hypermarkets, hotels and restaurants and
wet markets until it reaches the end consumer. The wet markets continue to play a major role as the
primary retailer for both the consumer and the institutional markets.
Traders or viajeros usually pick-up the produced from the farm. However, in areas where roads are
bad, farmers have to shoulder the cost of bringing their products to the nearest accessible road.
5
Farmers spend an additional of PhP 0.30 to 0.40 per kilogram to haul the products. In a one hectare
ampalaya farm, this translates to an additional cost of PhP 4,800.00 - PhP 6,400.00 per crop cycle to
bring their products to the nearest road. Similarly, they spend an additional of PhP 1,600 to PhP
2,400 to haul inputs to production areas. These costs do not add value to products and can be
avoided with good quality farm to market roads.
Traders, on the other hand, suffer losses due to damages and bruises caused by rough and gravel
roads. At 6% damage per load of 15 MT, this translates to about 900 kilos of ampalaya that have to
be sold at discounted price. With road conditions getting worse after each rainy season, traders and
“trucks for hire” are hesitant to service the areas or if they do, it is usually at a very steep price to
cover depreciation costs. This entails an additional cost of PhP 0.45 to PhP 0.60 per kilogram
The adoption of safe handling and merchandising practices for perishable fruits and vegetables such
as ampalaya in the bagsakan markets in the region continues to be inhibited by the absence of welldefined quality standards, and inadequate physical infrastructure, and, lack of awareness and/or
know-how on food safety and hygiene. Bagsakan centers generally lack the following facilities which
are critical to the promotion of food safety, quality, and occupational health : a) sorting and storage
areas adequately protected from environmental hazards and pests; b) adequate drainage facilities;
c) convenient and efficient loading and parking areas; d) potable and safe water for drinking and
cleaning; e) safe and clean stalls; and f) well-ventilated trading areas.
Another ampalaya supply chain involves farmers linked directly to micro scale processors who are
usually associations and cooperatives. However, these associations only undertake processing when
there is an oversupply of ampalaya and, consequently, the price is low. Micro and small
scaleampalaya processors indicated that the FDA standards on food safety and the FDA
requirements for a License-To-Operate a processing facility constitute the main challenge in their
operations.
On the other hand, medium scale processors like Herbcare Corporation imports dried ampalaya
fruits from Vietnam because the local farmers cannot supply its volume, and meet its quality and
price requirements. Processors prefer either the native (Makiling) variety of ampalaya, or the Bonito
variety produced by the East-West Seeds Company, because of its more bitter taste, light color when
powdered, and pleasant aroma. A key requirement in the export market is for ampalaya intended
for the herbal industry to be GAP certified. Likewise, there is a general preference for organically
grown ampalaya especially among the medium scale processors.
Currently, only processed ampalaya herbal products are being exported. The international market of
herbal products is estimated to be US $ 62 billion and poised to grow at a rate of 7% per annum to
US $ 5-7 trillion by 2050. The worldwide increasing trend in the population of the elderly (aged 65
and above) is the potential market for herbal products.
The supply and demand of ampalaya in the country so far reflect a pattern of sufficiency, with total
net disposable production slightly exceeding consumption. The production in Central Luzon exceeds
its regional consumption by about 66.53%. This surplus makes the region a major and critical
supplier to the rest of the country. A consolidator supplying supermarkets, hotels, and restaurants
require 1,500 to 2,000 kilograms of ampalaya per day. On the other hand, assembler, cater primarily
to the supply requirements of wet markets, carries a daily inventory of 200 to 600 kilograms per day.
In view of the developments in the global and domestic markets, the Central Luzon Industry has
identified the following priority areas for action:
6
a) Compliance to food safety, sanitary, and quality standards though adoption of GAP and GMP
b) Construction/Improvement of
existing small scale irrigation system (SSIS) and/communal
irrigation system(CIS)
c) Improvement of existing farm to market roads
d) Improvement of access to postharvest facilities and upgrading of trading posts
e) Development of processing sector parallel to promotion of coordinated and cluster production
f) Establishment of Central Luzon as supplier of organically and naturally grown ampalaya
g) Strengthening of the ampalaya herbal subsector as platform to promoting value addition at the
farmer’s level and mitigating risks of oversupply of ampalaya
7
Section 1:
INTRODUCTION
A. BACKGROUND INFORMATION AND OBJECTIVES1
The Philippine Rural Development Project (PRDP), a flagship program of the Department of
Agriculture (DA), is designed to establish the government’s platform for a modern, climate-smart
and market-oriented agri-fishery sector. The design of PRDP and its implementation aspects draw
heavily on the experiences of the Mindanao Rural Development Projects (MRDP 1 and2), a project
that has been successfully implemented over the past decade. The project adopts a value chain
development approach as a platform for promoting inclusive, climate resilient, and sustainable
growth in key agricultural subsectors and value chains. The entry point in the implementation of
value chain interventions is at the provincial level with an aim to gradually scale these up to other
viable areas within the region.
Region III or Central Luzon has a total agricultural land area of 552,104 hectares. Out of this,
33,362.27 hectares or about 6 percent were utilized in lowland vegetable production such as
ampalaya, eggplant, tomato, okra and others. The lowland vegetable is one of the selected priority
products of the region on which the PRDP will concentrate during its first year of implementation.
Ampalaya was selected and prioritized among lowland vegetables identified due to its market
potential and value adding opportunities. Aside from this, Central Luzon is the top ampalaya
producing region in the country. Its top three key producing provinces are Nueva Ecija, Pampanga
and Bulacan which is accounted for 86% of production area and 94% of production volume in 2013.
Central Luzon had the highest average yield per hectare in 2013 of 13.02 MT/hectare which is 57%
higher than the national average. At the provincial level, the top 2 provinces in terms of yield were
Nueva Ecija and Bulacan.
As of 2013, value of ampalaya production totalled PhP 628.52 million. The industry also provides
livelihood to value chain players within and outside the region. For the Novo Ecijano’s, Bulakenyo’s,
and Kapampangans, the bitter taste of ampalaya paved their entry to the growing market for herbal
products.
B. OBJECTIVES OF THE VCA
The Value Chain Analysis of Ampalaya provided the basis for the formulation of the Provincial
Commodity Investment Plan (PCIP) for the commodity. It laid out the foundation for PRDP’s
cooperation with the private sector and other government agencies active in the ampalaya industry.
Specifically, the value chain analysis aims to:
a) Provide an overview of the ampalaya industry in Central Luzon;
b) Map out the specific value chain for ampalaya in Central Luzon;
c) Analyze the performance of the chain in identifying constraints and opportunities of the
ampalaya industry from inputs provision segment to its end markets;
1
Overview of PRDP was taken from the Program Information Document – World Bank website
8
d) Identify areas for improvement and provide specific recommendations for the public and
private sectors to improve the ampalaya industry in general and the specific value chain in
particular.
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
key informant interviews (KII) and focus group discussions (FGDs). Key informants and participants
to the FGDs consisted of input suppliers, farmers, traders, manufacturers, 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:




Context of key informants and survey of participants
Third party observations (e.g., government agencies, providers, VC facilitators with
experience in ampalaya development projects, etc.) were important for suggesting
important issues to explore and for substantiating the results of the interviews
Experiences of other ampalaya producing areas
Past assessment studies of the Philippine ampalaya industry and Philippine herbal industry
9
Section 2:
OVERVIEW OF THE INDUSTRY
A. PRODUCT DESCRIPTION
Bittergourd or ampalaya (Momordicacharantia L.) belongs to the family Cucurbitaceae along with
cucumber, squash, watermelon and muskmelon.It is widely grown in the Philippines for its edible
fruit. The vine grows up to 5 meters, with tendrils up to 20 centimeters long. Flowering starts at 4555 days from sowing and lasts up to 6 months. Ampalaya originated from India.
Ampalaya thrives well in all climates and can be planted anytime of the year. Higher yields are
observed during the colder months due to larger flowers and fruits. It grows best in low elevation
and in full sunlight. It thrives in a wide range of soils but grows best in well-drained, sandy loam soil
with pH of 5.5-6.5.
Bitter melon comes in a variety of shapes and sizes.Fruits may be 3-11 cm long and 2-4 cm wide;
spiny and warty or almost smooth, pale yellow green to very dark green color.As its English names
suggest (bitter melon or bitter gourd), ampalaya has a bitter taste due to the presence of
momordicin. The extent of bitterness varies from one variety to another.
Figure 1. Uses of Ampalaya and By – Products, 2013
10
Ampalaya is high in vitamins and an excellent source of iron and calcium. Bitter melon is generally
consumed cooked in the green or early yellowing stage. The young shoots and leaves of the bitter
melon may also be eaten as greens.The fruit is commonly used in Filipino dishes such as the
“pinakbet”. In Central Luzon, 98% of the ampalaya produce is sold as fresh.
Ampalaya has also been used in traditional medicine to treat diabetes and high blood. Given its
superior nutritional value and its medicinal properties, it is now commercially available as tea, juice,
extracts and pills. The more common processed products are tea and capsules, with powder and
dried strips as intermediate ingredient forms. About 2% of the ampalaya production in the region is
processed into tea, capsules, coffee, and powder. The larger Philippine processors of bitter gourd
tea and capsules prefer to import dried ampalaya. According to them, importers such as those in
Vietnam are better because they are able to meet their requirements in terms of price, quality, and
reliability. For herbal products, the variety commonly used and recommended for medicinal plant
production is the ‘Makiling’.
Figure 2. Central Luzon Product Formats
Although the processed bitter gourd products in the Philippines and elsewhere promise health
benefits, most of the manufacturers do not offer scientifically proven data on the effectiveness of
bitter gourd or their products. However, in recent years and through the initiatives of the Bitter
Gourd Project funded by GIZ/BMZ and implemented by AVRD-The World Vegetable Center, there is
a growing number of researches that validate the antidiabetic effects of bitter gourd. The goal of
the Bitter Gourd Project is to provide safe and clear preparation and dosage recommendations so
that consumers will realize the greatest benefit from consuming fresh bitter gourd or bitter gourd
products. (Bitter Gourd Project website)
11
B. PRODUCTION TRENDS
1. Global Production
Figure 3. Annual Bittergourd Cultivation in Asia
As shown in Figure 3, ampalaya production is concentrated in Asia with nearly 340, 000 hectares per
year devoted to its cultivation. India is the top ampalaya producing country accounting for 31% of
world production followed by China at 22%. Other top producing countries are Pakistan, Vietnam
and the Philippines. The Philippines account for about 4% of the total world production.
Unfortunately, ampalaya or bittergourd is not among those included in FAOSTAT and other
databases on world production of crops.
2. Domestic Production
In the Philippines, ampalaya is cultivated in 10,831.08 hectares in 2013. Calabarzon had the largest
area planted to ampalaya followed by Central Luzon. Total national production was reported at
89,862.95 metric tons with the highest production in Central Luzon at 25,140.79 metric tons
followed by CALABARZON with 24,194.13 metric tons.
Production from these two regions
comprised 55% of the national production. The other two regions in Luzon A Cluster, namely, Ilocos
and Cagayan Valley, ranked 3rd and 4th respectively.
12
National average yield in 2013 was 8.30 metric tons per hectare. Central Luzon had the highest
average yield at 13.02 metric tons per hectare. This was about 57% higher than the national average.
Calabarzon’s average yield of 10.35 metric ton/hectare was 20.51% lower than Central Luzon. The
high productivity of ampalaya farms can be attributed primarily to the dominant use of hybrid seeds.
Table 1. Top Producing Regions in the Philippines, 2013
Region
Area Planted
No. of Hectares
Production Volume
% Share
Quantity (MT)
Average Yield
% Share
Philippines
10,831.08
100%
89,862.95
100%
8.30
Central Luzon
1,931.00
18%
25,140.79
28%
13.02
Calabarzon
2,337.90
22%
24,194.13
27%
10.35
Other Regions
6,562.18
61%
40,528.03
45%
6.18
Source: BAS /Philippine Statistics Authority (PSA)
Ampalaya is grown in 79 provinces in the Philippines. The province of Quezon had the highest
production in 2013 followed by Nueva Ecija, Pampanga, Batangas, andBulacan. The top 5 ampalaya
producing provinces in 2013 accounted for 48% of the production. It should be noted that 3 of the
top 5 producers in 2013 are provinces in Central Luzon.
Table 2. Top 5 Ampalaya Producing Provinces in the Philippines, 2013
Province
Area Planted
Production Volume
Average Yield
No. of Hectares
% Share
Quantity (MT)
% Share
1,558
14.4%
13,748
15.3%
8.82
Nueva Ecija
827
7.6%
13,125
14.6%
15.87
Pampanga
550
5.1%
6,555
7.3%
11.92
Batangas
306
2.8%
5,644
6.3%
18.44
Bulacan
279
2.6%
3,922
4.4%
14.06
7,311.08
67.5%
46,869.40
52.2%
6.41
Quezon
Other Provinces (74)
Batangas’ average yield of 18.44 metric tons per hectare was the highest in 2013. Two provinces in
Central Luzon, namely Nueva Ecija and Bulacan, had the 2nd and 3rd highest average yield,
respectively.
13
Table 3. Production Trends in the Philippines and Central Luzon, 2009 - 2013
Production
Indicators
2009
2010
2011
2012
2013
Annual %
Growth
Area Planted
11,038.47
11,129.32
10,877.10
10,892.55
10,831.08
-0.4%
Production Volume
86,497.53
88,437.28
86,599.32
87,059.19
89,862.95
0.8%
7.84
7.95
7.96
7.99
8.30
1.2%
Area Planted
1,958.00
2,002.00
1,947.60
1,957.05
1,931.00
-0.3%
Production Volume
24,991.03
25,749.95
25,034.12
25,281.07
25,140.79
0.1%
12.76
12.86
12.85
12.92
13.02
0.4%
Area Planted
55.00
59.00
59.60
59.00
58.00
1.1%
Production Volume
174.90
181.50
181.75
181.93
170.95
-0.5%
3.18
3.08
3.05
3.08
2.95
-1.5%
Area Planted
28.00
28.00
28.00
26.05
26.00
-1.4%
Production Volume
108.15
109.32
112.00
111.40
116.70
1.6%
3.86
3.90
4.00
4.28
4.49
3.2%
273.00
278.00
283.00
289.00
279.00
0.4%
3,674.00
3,979.00
3,999.00
4,025.00
3,922.00
1.4%
13.46
14.31
14.13
13.93
14.06
0.9%
783.00
827.00
827.00
827.00
827.00
1.1%
12,307.14
12,997.50
12,821.49
12,977.25
13,124.99
1.3%
15.72
15.72
15.50
15.69
15.87
0.2%
630.00
622.00
560.00
560.00
550.00
-2.5%
7,081.00
6,996.00
6,648.00
6,685.00
6,555.00
-1.5%
11.24
11.25
11.87
11.94
11.92
1.2%
103.00
103.00
105.00
105.00
100.00
-0.6%
1,410.54
1,258.23
1,040.38
1,043.94
989.15
-6.0%
13.69
12.22
9.91
9.94
9.89
-5.6%
PHILIPPINES
Average Yield
CENTRAL LUZON
Average Yield
AURORA
Average Yield
BATAAN
Average Yield
BULACAN
Area Planted
Production Volume
Average Yield
NUEVA ECIJA
Area Planted
Production Volume
Average Yield
PAMPANGA
Area Planted
Production Volume
Average Yield
TARLAC
Area Planted
Production Volume
Average Yield
14
Table 3. Production Trends in the Philippines and Central Luzon, 2009 - 2013
Production
Indicators
2009
2010
2011
2012
2013
Annual %
Growth
Area Planted
86.00
85.00
85.00
91.00
91.00
1.2%
Production Volume
235.30
228.40
231.50
256.55
262.00
2.3%
2.74
2.69
2.72
2.82
2.88
1.0%
ZAMBALES
Average Yield
Although hectarage planted to ampalaya in the Philippines was on a declining trend during the last
five years, production volume still posted an increase of 0.8% per year due to increase in farm
productivity. The same trend was observed in Central Luzon. With the percentage increase in farm
productivity higher than the percentage decrease in hectarage, the region still managed to grow its
production volume of ampalaya by 0.1% per year from 2009 to 2013.
Figure 4. Top Ampalaya Producing Provinces and Municipalities in Central Luzon
The provinces of Nueva Ecija, Pampanga and Bulacan accounted for 86% of production area and 94%
of production volume in 2013. Many farmers in Pampanga stopped planting ampalaya in 2011 after
they suffered losses due to the occurrence of ampalaya disease commonly called as pamamarako.
This is the early maturity of ampalaya that prevents the shedding of its fruits. This was further
15
aggravated by the decline in price in 2010 due to significant increase in supply of ampalaya in the
market.
It can be seen from the above map that ampalaya production in Nueva Ecija is quite dispersed in
several municipalities. In Bulacan and Pampanga, production of ampalaya is more or less
concentrated in 5 municipalities. With good agronomic practices and the continued use of hybrid
ampalaya varieties, Central Luzon can potentially increase its average yield to 20 to 30 metric tons
per hectare. Data from the municipal level indicates that there are municipalities with average yield
of more than 30 tons per hectare.
Table 4. Top 5 Ampalaya Producing Municipalities in Nueva Ecija, Bulacan, and Pampanga
CY 2012
Municipality
Area (in hectares)
Volume (in MT)
Yield (MT/Ha)
Nueva Ecija
Palayan City
89.74
1,196.76
13.34
General Tinio
34.09
1,071.85
31.44
Quezon
35.20
853.38
24.25
San Jose City
41.60
821.84
19.76
Talavera
49.75
691.31
13.89
1,689.63
56,665.34
33.54
Angat
570.17
11,025.55
19.34
Norzagaray
424.53
4,639.25
10.93
San Miguel
418.79
5,430.94
12.97
San Rafael
123.05
3,155.77
25.65
196.00
2,548.00
13.00
Floridablanca
43.60
654.00
15.00
Candaba
35.75
536.25
15.00
Lubao
80.00
480.00
6.00
Magalang
29.06
219.73
7.56
Bulacan
San Ildefonso
Pampanga
Mabalacat
Source: MLGUs
16
Section 3:
NATURE AND STRUCTURE OF THE INDUSTRY
A. VALUE CHAIN MAPPING
Figure 5. Value Chain Map of Fresh Ampalaya, 2013
About 98% of the ampalaya produced in Central Luzon passes through a wholesale vegetable market
or trading area. Oftentimes, farmers sell their ampalaya to the viajeros who then deliver these to
key trading areas. The chain continues to the supermarkets, hypermarkets, hotels and restaurants
and wet markets until it reaches the end consumer. The wet markets continue to play a major role
as the primary retailer for both the consumer and the institutional markets.
Twenty percent (20%) of ampalaya produced in Bulacan is consumed within the province while 80%
is brought to the Balintawak market for consolidation and eventually resold to wholesalers and
retailers for distribution in Metro Manila.
For Nueva Ecija, 20% of their ampalaya produce is also consumed within the province. 80% of the
production goes transhipment points like Sangitan market in Nueva Ecija and Urdaneta market in
Pangasinan. Main buyers of assemblers in Sangitan Market are wholesalers from Metro Manila and
other nearby provinces. In Urdaneta market, about 50% of the ampalaya is shipped to Baguio and
the remaining half is sold locally.
17
Twenty percent (20%) of the ampalaya produced in Pampanga is traded in Balanga City, Bataan
while 50% is brought to Divisoria. About 30% of the production is consumed locally.
Although some of the supermarkets also buy from wholesalers in wet markets, there is an increasing
tendency for them to work with consolidators to provide them with the complete line of vegetables.
Consolidators source from different farm areas (usually via viajeros) to provide a complete line of
vegetables to the institutional markets.
Figure 6. Geographic Flow of Ampalaya, Central Luzon
Another ampalaya supply chain involves farmers linked directly to micro scale processors.
Processors who source their ampalaya from the region are usually associations and cooperatives.
The KababaihangMasigla ng Nueva Ecija, for example, sources directly the ampalaya from their
members. The association, however, onlyundertakes processing when there is an oversupply of
ampalaya and, consequently, the price is low.
There are also privately owned farms that supply directly to processors. An example of this is LAC
Farm, a certified organic farm in Sta. Rosa, Nueva Ecija, which supplies dried organic ampalaya
leaves and lagundi to Pharma Corporation.
On the other hand, medium scale processors like Herbcare Corporationimports dried ampalaya fruits
from Vietnam at P500.00 per kilogram(15 kg fresh: 1 kg dried). According to Herbcare Corporation,
18
local farmers lack the capacity to supply 5-7 metric tons of dried ampalaya fruits per month, and
meet their quality and price requirements.
Figure 7. Value Chain Map of Processed Ampalaya, 2013
B. KEY PLAYERS AND FUNCTIONS
1. Input Provision
Key inputs in ampalaya production are the planting materials, trellising materials, plastic mulch,
fertilizers and pesticides. Numerous hybrid and open-pollinated varieties are available. Hybrid seeds
usually produce higher yields but their seeds are relatively expensive and must be purchased for
every planting. Open- pollinated varieties have the advantage that their seeds may be saved and
used for future plantings.
There are three key suppliers of seeds, namely East West Seed Company, Inc., Allied Botanical
Corporation, and Nueva Ecija Fruits and Vegetable Seeds Center at Science City of Muñoz, Nueva
Ecija. Of the three seed suppliers, East West is the most dominant.
East-West Seed Company, which is based in Bulacan, started in 1982 with the goal of blending
European style seed production with Asian tropical vegetables. From its early work in the country, it
has expanded to include breeding programs in Thailand, Indonesia, Vietnam, India and China. After
introducing the first hybrid vegetable seeds in Asia, East-West has become a market leader by selling
19
premium quality hybrid and open pollinated seeds for all major tropical vegetable crops. The
company is one of the active participants in the Bitter Gourd Project.
Range of ampalaya planting materials offered by East West includes the following:
- Seeds: PhP 1,700 per 100 gram pack
- Seedlings: PhP 8.10/seedling
- Organic seeds: PhP 180 per 15 pieces of seeds
- Grafted ampalaya/ampatola: PhP 15/seedling
The most popular format bought by farmers is the seeds. Company sold about 2,000 to 2,500
kilograms of ampalaya seeds in 2012 with Galaxy F1 as the best - selling variety. At 1.2 kilograms of
seeds per hectare (10 – 12 cans approximately 100 grams of seeds), this translates to about 1667 to
2083 hectares of land planted using hybrid seeds from East West. It would appear that almost all of
the ampalaya farmers in Central Luzon used hybrid seeds. This only proved that vegetable farmers
mostly relied on private seed companies as sources of seeds.
During the recent years, farmers are increasingly concerned on the increasing incidence of disease
and pest infestation. As such, during the 4th quarter of 2011, East West launched the campaign on
the use of grafted ampalaya. The grafted seedlings are more robust and more tolerant to stresses
such as bacterial wilt disease, too much water or too dry conditions compared to the ungrafted ones
(direct seeded). Grafted seedlings also have a much longer productive life. Usually, the ungrafted
seedlings produce 18 to 20 harvests per cycle. In the case of the grafted ampalaya, the grower can
expect 10 extra harvests. However, this technology is still on the process of acceptance to farmers
due to its high cost and difficulty to access especially on far areas since only the East west seed
companies are capable to produce it. With this only few ampalaya farmers can afford to buy the
grafted ampalaya seedlings.
Nueva Ecija Fruits and Vegetable Seeds Center at Science City of Munoz is a producer and retailer of
Open Pollinated Variety (OPV) of seeds and seedlings. The Center is producing the planting
materials for the Sta. Rita and native varieties of ampalaya. In 2012, a total of 35.7 kilograms of
ampalaya was sold or an outreach of about 12 to 15 hectares. OPV seeds from the Center are sold
at P3,800/Kg or P380 per 100 g pack for Sta. Rita variety and at P3,500/Kg or P350 per 100 g pack for
native variety.
The Department of Agriculture (DA) through its High Value Crops Development Program (HVCDP)
has distributed a total of 1,095.45 kilograms of hybrid seeds ampalaya from 2011 to 2013. In 2011,
the HVCDP distributed 202.08 kilograms of seeds. To further accelerate the adoption of hybrid
seeds, HVCDP stepped up its distribution in 2012 to 700.36 kilograms. With a greater majority of the
farmers already using hybrid seeds, the program concentrated the 2013 distribution of 193 kilos of
seeds in the more remote ampalaya producing areas.
Both inorganic and organic fertilizers are available in the region. There are about 21 players or
companies in the organic fertilizer supply chain in the region consisting of the following: one (1)
importer/repacker, ten (10) distributors/area distributors, nine (9) manufacturers/processors, and
one (1) exporter (Galang, et.al FPA, 2009).
The 5 key manufacturers of organic fertilizer are ELR Trading Corporation, Novatech Enterprises,
Romarc Enterprises, Ceña Enterprises and Titan Bio-Organics Fertilizer Corporation. Among them,
RomarcEnterprises is the largest producer with an average production of 96,000 bags per year. The
price of organic fertilizer ranges from P180.00 to P300.00 per bag. Chicken manureis the common
raw material used by the organic fertilizer producers.
20
Another option available to farmers is the use of dried chicken manure which cost from PhP 20 to 80
per bag.
Farmers in remote municipalities though still have difficulties in accessing fertilizer and prefer onfarm production of organic fertilizer to reduce costs.
2. Farming
The region has a total of 5,393 ampalaya farmers. Eighty-two percent (82%) or 4,416 farmers are in
the three major ampalaya producing provinces: Bulacan, Nueva and Pampanga. Of the 4,416
farmers, 42.85% or 2,311 farmers are located in Bulacan, 24.86% or 1,341 in Nueva Ecija, and
14.17% or 764 in Pampanga.
Ampalaya farmers are mainly smallholders with average farm size of two hectares. Usually, only a
portion or about 22% of their farm area is planted to ampalaya. Ampalaya is usually rotated with
rice and other vegetables to reduce risks of pests and diseases. Farmers generally plant ampalaya
after they have harvested their rice.
Ampalaya monocropping is not adopted by the farmers
because of the emergence of bacteria in the soil resulting to low yield.
The main activities performed by the farmers are: planting/replanting, trellising, weeding, fertilizer,
irrigation and chemical application, and harvesting. Sorting, packing, and marketing are done by
farmers who are not financed by traders.
Farmers prefer to grow the Galaxy variety because of its capacity to bear more fruits. Others prefer
the Galactica variety because of its resistance to “pamamarako” or inability to develop fruits.
Planting of the Makiling variety is done primarily by farmers that are specifically targeting the
processed ampalaya/herbal product processors. To date, only 275 farmers in Nueva Ecija with an
aggregate of 14 hectares are planting the Makiling variety. Farmers in Bulacan have expressed
interest to allocate a portion of their farm for the planting of the Makiling variety. Herbal farming
can be a profitable business although current aggregate demand is not as high compared to the
fresh market. Likewise, herbal farming requires more care and consideration than the growing of
ampalaya for the fresh market. The general considerations for herbal farming are (Jose, 2003):
-
Site profiling of the farm or plantation far from pollution
Soil that is free from heavy metals,
High quality planting stocks to produce high quality leaves,
Use of organic fertilizer
Non-use of insecticides, fungicides or pesticides
Moisture content of dry leaves or powdered materials below 5% among others.
Adoption of grafted ampalaya or the ampatola is gradually increasing as a result of the campaigns
and demonstrations conducted by East West. Bulacan has the highest number of farmers using
grafted ampalaya due to its proximity to the East West Seed Company followed by Pampanga. In
Nueva Ecija, the use of grafted ampalaya has just recently been introduced and, as such, only the
more progressive farmers are adopting the new technology.
Farmers can opt to plant ampalaya all year round but most financially rewarding growing seasons
are from October to December and from May to July. Bulacan farmers usually plant ampalaya from
April to June. Peak period for ampalaya cultivation in Nueva Ecija is from May to August while in
21
Pampanga, farmers plant during the months of January, May, and August. Farmers without access
to irrigation are generally not able to plant during the dry season.
The use of plastic mulch to preserve the soil moisture and to prevent weeds emergence is more
prevalent in Bulacan than in Nueva Ecija and Pampanga. Farmers use both organic fertilizer and
inorganic fertilizer. Majority of the farmers use a combination of chicken manure and inorganic
fertilizer. Volume of chicken manureused per hectare ranges from 4 to 100 bags per cropping. For
inorganic fertilizer, a farmer uses from 3 to 40 bags per farmer per cropping. The chicken manure is
usually incorporate with the soil during land preparation.However, it is rare for farmers to have their
soil analysed as basis for fertilizer application and management. Dosage of fertilizer is based on
farmer’s experience and his/her cash flow.
3. Shippers/Traders/Viajeros
Shippers, also called the viajeros, buy and transports assorted vegetables in bulk from farmers to
assemblers and supermarket consolidators. Many of these shippers are farmers themselves who
have vehicles for transporting products to the market. Viajeros may either buy the productsoutright
or provide just transportation and brokering services on a “per-kilogram” fee.
There are three types of traders:
a) Farmer-Financier-Trader: A trader who has his/her own ampalaya farm and, at the same time,
provide financing to trusted ampalaya farmers to have continuous supply of ampalaya for
trading.
b) Financier – Trader: A trader who provides production support to ampalaya farmers to secure
their supply of ampalaya. Farmer must sell all his/her produce to trader.
c) Trader: Solely engaged in buying and selling of ampalaya.
Elf and jeep are the common means of transportation used by the traders. On the other hand,
farmers who do their own marketing use tricycle to transport the ampalaya to BagsakanMarket and
sell their produce at higher price. A trader usually has 2 regular workers, 1 driver and 1 loader and
unloader. Volume of traded ampalaya daily per trader ranges from 300 kg to 1,000 kg.
Figure 8. Traders/Viajeros Sorting Practices
22
Traders do the sorting and packing before transporting the produce to different bagsakan markets
and transhipment points. Sorting in farms and trading posts is usually done in vacant lots directly
exposed to sunlight posing risks of contamination and spoilage. Ampalaya is usually packed in
polyethylene bags with a capacity of ten kilograms.
The region has two trading post or bagsakan markets, namely: Sangitan Market (Cabanatuan City –
Nueva Ecija) and the Pampang Market (Angeles City – Pampanga). Bulacan farmers generally
deliver their produce directly to the Balintawak Market.
The adoption of safe handling and
merchandising practices for perishable fruits and vegetables such as ampalaya in the bagsakan
markets in the region continues to be inhibited by the absence of well-defined quality standards,
and inadequate physical infrastructure, and, lack of awareness and/or know-how on food safety and
hygiene. Bagsakan centers generally lack the following facilities which are critical to the promotion
of food safety, quality, and occupational health : a) sorting and storage areas adequately protected
from environmental hazards and pests; b) adequate drainage facilities; c) convenient and efficient
loading and parking areas; d) potable and safe water for drinking and cleaning; e) safe and clean
stalls; and f) well-ventilated trading areas.
4. Assemblers
Assemblers have their permanent stalls in transhipment points like the Sangitan Market in
Cabanatuan City and the Pampanga Market in Angeles City. Each assembler sells from 500 to 1000
kg of ampalaya per day.Assemblers sell to inter-regional traders, wholesalers, and directly to market
vendors operating within the proximity of the trading posts.
Just like the traders, assemblers also face problems in maintaining quality of ampalaya in their stalls
due to poor infrastructure and limited know-how on safe handling of perishable products.
5. Consolidators
Instead of working with a large number of suppliers delivering various vegetables, supermarkets are
increasingly using consolidators who act as full line suppliers for vegetables. Two of the big
consolidators of ampalaya are UBM Corporation and Dizon Farms Incorporated.
Consolidators procure vegetables from traders and large farms. While assemblers in transhipment
points tend to purchase varying quality levels of vegetables, consolidators are stringent with their
quality requirements. For ampalaya, they do not buy undersized ampalaya and those that are more
than 600 grams per piece. On the average, a consolidator has an average daily requirement of 1,500
to 2,000 kilos of ampalaya. Consolidators have warehouse where the vegetables are washed,
graded, and repacked in accordance with the requirements of their buyers.
According to one consolidator interviewed, spoiled fruits and vegetables generated daily reach
about 1,000 Kg or 1 MT.
23
Figure 9. Consolidators’ Practices and Infrastructure
6. Inter-regional Traders
Interregional traders are wholesale buyers of ampalaya from outside the region. They usually
purchase ampalaya at the transhipment points and distribute them to retailers in other regions.
7. Retailers
Retailers buy ampalaya either from farmers, shippers (viajeros), assemblers, and interregional
trader. A retailer usually procures 5-10 kg of ampalaya daily. Aside from cash flow considerations,
small volume requirement is a way of reducing risks of spoilage.
Some retailers buy rejects and slice these for inclusion in the pinakbet packs.
8. Processors
With the growing interest on traditional herbal medicine in the country, several private companies
ventured into the production and manufacture of medicinal plants and products, mostly in the form
of herbal supplements and teas. The following are the nine (9) herbal product processors that use
ampalaya as one of the key ingredients in their various products.
Table 5. Ampalaya Processors/Manufacturers
Company
Product Lines
Market
Located in Central Luzon
Muñoz Science
Products
City
Food
-
Tea (guyabano, lemon
grass, malunggay, bignay,
cafe
rice,
ampalaya,
turmeric, ginger, saluyot,
ginger apple, carrot, ginger
garlic,
guyabano
with
SM Kultura Filipino Section of
SM in Metro Manila, Cebu and
Davao; Hypermarket (Mall of
Asis); N.E. Pacific Mall (Nueva
Ecija); Walk-in buyers
24
Company
Product Lines
-
Akita Herbal Products
pandan)
Chips (ginger)
Salabat (ginger, turmeric)
Powder
(guyabano,
malunggay,
chilli,
ampalaya, turmeric, ginger)
Polvoron (rice)
Coffee (rice)
-
DBS Ampalaya amplify
Health and wellness stores;
Lagundi Plus
Drugstores; Trade fairs and
Sambong Plus
exhibits
Card-Vasc
Bayabas Plus
La Buena lagundimenthos
Agri Uric Acid
Makabuhay natural booster
Sambong Kidney washer
Malunggay
Akita Magic Touch 99
Ointment
Healing Oil
Herba-Trim Slimming
Kababaihang Masigla ng Nueva
Ecija
-
Rice wine
Tamarind concentrate
Tamarind Sweets
Spicy tamarind
Virgin coconut oil
Rice coffee in tea bags
Instant rice coffee in bottles
Salabat in tea bags
Instant salabat in bottles
Ampalaya powder
Ampalaya capsule
Turmeric powder
Tomato Sweets
Sun-Dried Tomato in Olive
Oil
Tomato Jelly
Guava Jelly
Karamuy
Tilanggit
San Manuel Tarlac Women’s
Multi-Purpose Cooperative
-
Era Care Ampalaya roast Trade fairs and exhibis; Walk-in
coffee
buyers
Era Care Ampalaya tea
-
Organic vegetables
Dried ampalaya leaves
Dried Lagundi leaves
LAC Farm
-
Market
Agribusiness
Development
Center of DA; Trade fairs and
exhibits; Walk-in buyers
SM;
Pascual
Laboratory/
Pharma Corporation
25
Company
Product Lines
Pascual Laboratory, Inc.
-
Northfield Laboratories
-
-
Lagundi ascof
Ampalaya capsule
Market
Drugstores
RiedocNutriplus
food Riedoc Trading Corporation and
supplement (malunggay, other manufacturers
ampalaya, saluyot, barley
grass, ascorbic acid)
Riedoc coffee
Outside Central Luzon
Herbcare Corporation
-
Ampalaya loose tea
Ampalaya tea in bag
Ampalaya Capsule
Policosanol Prime
Drugstores;
Supermarkets;
Diabetic Club; Export
Bio-Farm and Natural Health
Ingredients (BINHI)
-
Powder (Leaves- Sambong, Export
(Korea);
RockGlen
Malunggay,
Lagundi, Corporation;
PlemexLagundi
Ampalaya)
Commercial; Walk-in buyers
Interviews with micro and small scale ampalaya processors revealed that the FDA standards on food
safety and the FDA requirements for a License-To-Operate a processing facility constitute the main
challenge in their operations. The KababaihangMasigla ng Nueva Ecija, for instance, has not yet
fully complied with the FDA requirements. Likewise, operations are intermittent and products sold
mainly within the region.
With respect to raw materials, manufacturers or processors prefer either the native (Makiling)
variety of ampalaya, or the Bonito variety produced by the East-West Seeds company, because of
their more bitter taste, light color when powdered, and pleasant aroma.
Herbcare Corp. is the first company to launch an FDA-registered ampalaya food supplement under
the brand name “Charantia”, which is now a by-word in the country. Charantia is the only ampalaya
food supplement that the FDA has officially allowed to claim that it is “for the diet of diabetics.”
On the other hand, Pascual Laboratories which also released its own ampalaya brand, Amargozin, a
clinically proven herbal medicine for type 2 diabetes, claimed that their ampalaya vines are
“cultivated and nurtured in organic and environment-friendly farms, and are processed into capsules
at BFAD-registered and CGMP-compliant production facilities”.
C. NATURE OF INTERFIRM RELATIONSHIPS
1. Horizontal Relationship
Table 6. Farmers Cooperatives
Province
No. of Cooperatives
% No. of Farmers who are
members of cooperatives
Bulacan
13
60%
Pampanga
11
30%
Nueva Ecija
8
21%
Source: Survey
26
Based on the survey of three (3) provinces in Central Luzon, only the province of Bulacan has existing
vegetable-farmers’ cooperatives providing marketing support and, on a very limited scale,
production loan to its members. Some associations are trying to venture into processing of
vegetables including ampalaya. The KababaihangMasigla ng Nueva Ecija, for example, is engaged in
producing different processed fruits and vegetable products but in limited quantities. The
association aims to become training ground for product development of different agricultural crops.
The association is also an advocate of organic farming practices.
Except in the processed sector, clustering or aggrupation among players occur at informal levels.
Farmers may cooperate in the transporting of produce to market, and traders may link with each
other temporarily to transport excess cargo. Farmers also informally exchange information on
technology, prices, and markets. But there are no formal and sustaining mechanisms for
cooperation and exchange of information.
In the processed sector, medium processors or manufacturers of ampalaya are registered members
of Chamber of Herbal Industry in the Philippines, Inc. (CHIPI). This is an organization that caters to
the needs and development of the herbal industry (ampalaya included), and engages in promotion
of herbal supplements, as well as lobbying for support in the conduct of clinical and scientific studies
for the sector.
2. Vertical Relationship and Supply Chain Governance
Chain players in the production and distribution of fresh ampalaya are predominantly linked via
informal arrangements. Ampalaya is conveyed from farmers to end markets mainly through on the
spot transactions and without any signed agreements between players.
Trade of ampalaya can be characterized as a buyer’s market as there is more supply than
demand.Relationship between farmers and traders is generally arm’s length based on supply and
demand although there is a semblance of ‘long-term’ relationship through the ‘suki system’.
Many farmers rely on advances from traders for their capital particularly for the purchase of inputs
and planting materials. These advances from traders, whether in cash or in-kind, are one of the
main tools used to increase leverage and ensure a reliable supply of ampalaya. Farmers who depend
on this source of working capital often become captive suppliers and have few marketing options.
Most players of the chain communicate only with those at the previous and following level. While
spot market price information is widely available and efficiently transferred, the flow of other
product information (i.e., quality and quantity specifications) particularly to upstream players is not
as transparent. The lack of market transparency is a major factor that can cause value chain
disconnects to occur.
27
Figure 10. Flow of Transactions, Fresh Ampalaya Chain
The link between the fresh and the processing sectors is very informal and tenuous. Partly owing to
the low volume currently involved in processing, information on the requirements of processors are
virtually unknown among farmers. The processors or manufacturers as such experience difficulty in
sourcing raw materials or ingredients that will conform to the quantity and quality needed.
Resorting to integrated operations through own-farm sourcing is untenable, however, as is contractgrowing with individual farmers, given that ampalaya mono-cropping is technically inadvisable due
to its high susceptibility to pests and diseases.
Contract growing with farmers’
collectives/cooperatives appears as a viable option but processors still have to explore and develop
such an arrangement.
The Central Luzon ampalaya industry is to a significant extent fragmented and atomistic with an
asymmetric distribution of information and market power between downstream and upstream
players. To a significant extent, consolidators and assemblers drive the chain and have the market
power in the ampalaya supply chain. An atomistic market structure is characterized by many small
enterprises/farms that generally have low economies of scale. Likewise, these small businesses do
not have the ability to set prices and, as such, are price takers.
28
D. PRICE AND COST STRUCTURE
1. Income and Profit
High Inputs – Hybrid Seeds
Table 7. Costs and Returns: 1 hectare Ampalaya Farm
High Inputs – Hybrid Seeds, 2013
Line Items
Quantity
Unit Cost (PhP)
Total (PhP)
% Share
EXPENSES
MATERIAL COST
Seeds
12
1,700/can
20,400.00
6.79%
Seedling tray
44
25/piece
1,100.00
0.37%
Plastic mulch
10
1,650/roll
16,500.00
5.49%
Inorganic fertilizer
15.00%
Urea
20
1,100/bag
22,000.00
14-14-14
14
1,200/bag
16,800.00
16-20-0
6
1,050/bag
6,300.00
Insecticide
13.57%
Lannate
20
170/sachet
3,400.00
Prevathon
20
650/250 ml
13,000.00
Brodan
20
450/liter
9,000.00
Butterfly
8
1,050/300 ml
8,400.00
Express
20
350/liter
7,000.00
Trellis (bamboo post)
320
50/pc
16,000.00
5.32%
Bamboo beam
4,000
8/pcs
32,000.00
10.64%
Blue string
20
130/kg
2,600.00
0.86%
Alambre
16
1,975/roll
31,600.00
10.51%
Weedicide
-
-
-
0.53%
Power
2
400/Gallon
800.00
Round-up
2
400/Gallon
800.00
120
45/liter
Diesel (STW, Handtractor)
Sub-total of material cost
5,400.00
1.80%
213,100.00
70.88%
LABOR COST
Land Preparation
Plowing
Harrowing
Plot preparation
1
1
10
4,000/passing
4,000/passing
200/day
4,000.00
4,000.00
2,000.00
0.67%
Plastic mulch application
36
200/day
7,200.00
2.39%
2.66%
29
Table 7. Costs and Returns: 1 hectare Ampalaya Farm
High Inputs – Hybrid Seeds, 2013
Line Items
Seed sowing
Transplanting
Trellis installation
Inorganic fertilizer application
Insecticide application
Fungicide application
Irrigation
Weeding
Harvesting/Hauling/Packing
Sub-total of labor cost
Quantity
Unit Cost (PhP)
Total (PhP)
% Share
8
12
20
50
36
32
10
200/day
200/day
200/day
200/day
200/day
200/day
200/day
1,600.00
2,400.00
4,000.00
10,000.00
7,200.00
6,400.00
2,000.00
0.53%
0.80%
1.33%
3.33%
2.39%
110
200/day
22,000.00
72,800.00
7.32%
24.21%
8,000/cropping
8,000.00
2.66%
1,946/ ha
4,814/ha
1,946.00
4,814.00
14,760.00
300,660.00
0.65%
1.60%
4.91%
OTHER COSTS
Rental fee (land)
1
Input hauling cost
Output hauling cost
Sub-total of other cost
TOTAL EXPENSES
2.13%
0.67%
INCOME
Fruits (kg)
NET INCOME
Return on Expenses
Gross Profit Margin
16,000
25.00/kilo
400,000
99,340.00
33.04%
24.84%
Source: KII
Total production cost per hectare ranges from PhP 280,000 to PhP310,000 per hectare. Material
costs account for 70.88% while labor costs comprise about 24.21%. A total of 1,213 farmers or
about 20% to 25% of the farmers rent the land they till and pay about PhP 8,000 per year per
hectare. Land rental is about 2.66% of total expenses.
Under material cost component, the largest cost component is the cost of trellis material and its
installation, which accounts for 27.34% of total expenses. Many farmers try to use the trellis for two
seasons or partially repair existing trellis to save on cost.
The second largest cost component at 15.00% is fertilizer followed by insecticide at 13.57%. Farmers
usually make adjustments on their fertilizer and insecticide usage based on available or accessible
cash/funds. Some farmers use a combination of organic and inorganic fertilizer to reduce costs.
Majority of the farmers though are still wary on using solely organic inputs as many have not been
exposed to pure organic ampalaya farms.
Costs of hybrid seeds comprise 6.79% of total production cost. Despite the relatively high cost of
hybrid seeds vis-à-vis open pollinated seeds, farmers in the region prefer the form due to its high
yielding potentials. Decision on the size of area to be planted is determined primarily by the cash
they have at the start of planting.
30
Labor is usually supplied by the farmer and immediate household members. Harvesting is the
largest cost component under labor at 7.32%. At times, traders would advance or shoulder this cost
but with a corresponding deduction in farm gate price.
Ampalaya is harvested 45 days after transplanting. Harvesting can be done 2 to 3 times a week and
done continuously for 2 to 3 months. Yield of farmers using hybrid seeds and relatively high inputs
ranges from 14 MT to 18 MT per hectare per cropping. With good agronomic practices, optimum
average yield is 30 MT/hectare according to East West.
Transportation cost of inputs from the market to farms accounted for 0.65% while the cost of output
from farm going to the nearest/accessible existing roads is 1.6%. These additional costs are due to
poor farm to market roads valued around PhP 6,760.00 per hectare.
Net income of farms ranges from PhP 90,000 to 120,000 per cropping. This translates to about PhP
18,000 to 26,000 income per month based on a cropping period of 5 months (including harvest). Net
Return on Expenses or the cost-profit (net income ratio) is about 33.04%.
Makiling/Native Variety- Low Input
Table 8. Costs and Returns: 1 hectare farm
Line Items
Quantity
Unit Cost
Total Cost
(PhP)
% to Total
Cost
4
1,000/2.5 kg can)
4,000.00
3.08%
EXPENSES
MATERIAL COST
Seeds
Inorganic fertilizer
10.23%
Urea
2
900/bag
1,800.00
14-14-14
10
1,150/bag
11,500.00
Insecticide
2.15%
Karate
4
450/liters
1,800.00
Chix
2
500/liters
1,000.00
Trellis (bamboo post)
35,000.00
26.92%
Sub-total of material cost
55,100.00
40.23%
LABOR COST
Land Preparation
Plowing
1
4,000/passing
4,000.00
3.08%
Seed sowing
8
200/day
1,600.00
1.23%
4,000.00
3.08%
Transplanting
Trellis installation
Inorganic fertilizer application
80
200/day
16,000.00
12.31%
Insecticide application
40
200/day
8,000.00
6.15%
31
Table 8. Costs and Returns: 1 hectare farm
Line Items
Quantity
Unit Cost
Total Cost
(PhP)
% to Total
Cost
Fungicide application
Irrigation
Pruning
6
200/day
1,200.00
0.92%
Weeding
40
100/day
4,000.00
3.08%
Harvesting/Hauling/Packing
120
200/day
24,000.00
18.46%
Sub-total of labor cost
62,800.00
48.30%
OTHER COSTS
Irrigation fee
1
4,000/cropping
4,000.00
3.08%
Rental fee (land)
1
8,000/cropping
8,000.00
6.15%
2,910/ha
2,910.00
2.24%
Sub-total of other cost
15,150.00
11.47%
TOTAL EXPENSES
133,050.00
100%
Input and Output Hauling Cost
INCOME
Fruits (kg)
9,000.00
20.00
180,000.00
Fruits
Leaves (kg)
300
30.00
9,000.00
Leaves
Total Income
189,000.00
Net Income
58,990.00
Net Return on Expenses
45.37%
Gross Profit Margin
31.21%
Source: KII
In farms planted with native varieties and under a low input production system, labor costs tend to
be higher than material costs. Labor costs comprise 48.3% while material costs account for 40.23%
of total expenses.
Similar to farms planted to hybrid varieties, the biggest chunk of material costs is on the
construction of trellis. This is followed by fertilizer cost at 10.23%. An expense on seeds (OPV) is the
third biggest component, with 3.08 percentage share contribution to the total expenses.
Insecticides are only about 2.15% of total expenses.
Labor is usually supplied by farmer and members of his/her households. Labor costs for fertilizer
application is the biggest expense followed by harvest.
Transportation cost or hauling cost of inputs and output/produce from the market to farms
accounted for 2.24% from the poblacion to the farm and from farm going to the nearest existing
road and pick-up points of traders. This additional transportation cost is due to poor farm to market
valued around PhP 2,910.00 per hectare for native variety.
32
Farmers usually harvest both fruits and leaves with the former comprising more than 90% of the
harvest. Yield is 50% to 60% lower than hybrid variety – high input farms. With good agronomic
practices though, yield can potentially reach 20 MT/hectare.
In terms of financial ratio, cultivation of makiling variety has higher net return on expenses and gross
profit margin compared to farms planted to hybrid seeds. In absolute peso terms though, net
income from low input farms is only 50% to 62% of that of hybrid farms.
Farmers with ampalaya farms located in areas not accessible by trucks and other 4-wheel motorized
vehicles spend an additional of PhP 0.30 to 0.40 per kilogram to haul harvest to the nearest
accessible road to facilitate pick-up by trader. In farms accessible only by narrow dirt roads, farmers
use either the draft animals (e.g.,carabaos, etc.) and motorcycle with steel cart or karmatyog to carry
farm produce from the farm to the nearest road. The fertilizer and other inputs are brought to the
production areas in the same way. With the said transportation modes, the travel time and loading
capacity are often among the primary concerns of farmers and traders.
During the focus group discussions, farmers and traders said that the rough roads and gravelly
characteristics of the road bruise and damage the ampalaya. The farmers and traders estimated
that about 6% of produce are damaged during the transit from farm or pick-up point to trading
center. Traders spend around PhP 0.45 to 0.60 per kilo to transport produce from farm to bagsakan
center.
2. Relative Financial Position of Players
Fresh Ampalaya Chain
Table 9. Relative Financial Position of VC Players in Fresh Ampalaya Chain, 2013
Player
Product
Costs
Profit
Margins
Total
Unit Cost
Added
Unit
Cost
% Added
Unit
Cost
Unit
Price
Unit
Profit
% Profit
Unit
Margin
% to
Price
Farmer
Fresh
18.37
18.37
59%
25.00
6.63
35%
25.00
50%
Viajero
Fresh
26.70
1.70
5%
30.00
3.30
18%
5.00
10%
Assembler
Fresh
30.55
0.55
2%
33.00
2.45
13%
3.00
6%
Wholesaler Fresh
35.65
2.65
8%
38.00
2.35
13%
5.00
10%
Retailer
46.00
8.00
26%
50.00
4.00
21%
12.00
24%
Fresh
Source: KII
Farmers spend PhP 18.37 to produce one kilo of ampalaya. Farmer’s share to total cost of
production and marketing is about 59%. At a selling price of PhP 25/kilo, farmers earn a profit of
PhP 6.63/kilo, representing a 35% share to total profit generated from the sale of one kilo of fresh
ampalaya.
In addition to purchase price of ampalaya, viajeros spend an additional of PhP 1.70 for logistics and
transportation costs. Transport costs from farm to bagsakan area range from PhP 0.40 to 0.60 per
kilo. Traders are very much hesitant to pick-up produce from farms located in areas accessible only
by rough roads as this would significantly increase their costs in terms of fuel, vehicle depreciation,
and time. The remaining PhP 1.10 covers labor costs for hauling, packing, (un)loading, and sorting.
33
Assemblers incur the least cost as they usually just wait at the bagsakan and accept deliveries.
His/her main costs would be the cost of the stalls and some labor to help traders and buyers during
the sorting of ampalaya prior to packing.
Although farmers have the highest profit in absolute value, the percentage distribution of profits in
the fresh supply chain appears to be more beneficial to intermediaries. Farmers account for 590% of
the production and marketing cost of 1 kilo of ampalaya but their percentage share to profit is only
35%. Percentage share of viajeros to profit is 18% while their share to added cost is only 5%. Similar
trends can be observed among the different intermediaries except for retailers where percentage
share to profit and price is significantly higher than their percentage share to added cost.
The analysis on relative financial position of players also seems to imply that production at the farm
level is not as efficient as those of the operations of intermediaries except for retailers. Productivity
improvement can potentially improve farmers’ and retailers’ percentage share to profit.
Figure 11. Relative Financial Position of Value Chain Players, Fresh Ampalaya Chain
34
Herbal Food Supplement/Herbal Tea
Table 10. Relative Financial Position of VC Players in the Ampalaya Herbal Tea Chain, 2013
Assumption: 1 kilo of fresh leaves = 1 box of herbal tea
Player
Product
Costs
Profit
Margins
Total
Unit Cost
Added
Unit
Cost
% Added
Unit
Cost
Unit
Price
Unit
Profit
% Profit
Unit
Margin
% to
Price
Farmer
Leaves
13.97
13.97
21%
30.00
16.03
22%
30.00
27%
Processor
Tea
83.95
53.95
79%
110.00
56.05
78%
80.00
73%
Source: KII
The distribution of profits in the herbal tea supply chain appears to be equitable. Percentage share
to profit is more or less proportional to percentage share to added cost. Farmers can capture a
bigger percentage of the value in herbal tea production if they supply dried leaves instead of just the
fresh leaves.
Figure 12. Relative Financial Position of Value Chain Players, Herbal Tea
35
Section 4:
MARKETS AND MARKET OPPORTUNITIES
A. MARKETS AND MARKET TRENDS
1. Export Market
Currently, only processed ampalaya products are being exported. According to Mr.Ric Reyes,
Product-Market Manager of East West Seeds, ampalaya tea and tablet sales (domestic and export)
reached PhP 400 million (US$9Mio) in 2013. Members of the Chamber of Herbal Industries of the
Philippines, Inc. (CHIPI) estimate that about 10% to 15% of their annual sales are from exports.
About 70% of the 70-member CHIPI already exports to Europe, United States and Singapore.
Herbcare Corporation, for instance, is exporting 15% of their company’s production of ampalaya tea
and capsule to Turkey, USA, Australia, Europe, Korea and Japan.
The international market of herbal products is estimated to be US $ 62 billion and poised to grow at
a rate of 7% per annum to US $ 5-7 trillion by 2050. The herbal products industry comprises a
number of inter related sub-section including, i) phytochemicals; ii) functional food; iii)
nutraceuticals; iv) herbal teas; v) ethical OTC medicines; vi) flowers and fragrances; vii) aroma
therapy; viii) culinary and spices use. Functional food alone enjoys a market of about US$ 2.0 billion
in Europe and US$ 5.0 billion in USA, mainly for improvement of gut health, heart health, bone
health and immune function. China and India are the world’s leading producing countries, whereas
Hong Kong, USA and Germany are the important trade centres (Dagmar Lange, 2004). China is a
major growing and manufacturing center for herbal extracts and finished products.
The worldwide increasing trend in the population of the elderly (aged 65 and above) is a potential
market for herbal products. For Southeast Asia alone, the elderly sector is projected to increase from
24 million in 2000 to 58 million in 2025, and to 129 million in 2050 (EWCRPPHS, 2002).
In the future years, the market for nutraceuticals is expected to be significantly influenced by the
potential for increased industry regulation around the globe, encouraged by the growing concerns
over product safety. Although this would pose challenges for the business environment in the
coming years, it would strengthen the confidence of consumers in these products. No system of
medicine can achieve a high degree of credibility and mass acceptance unless some degree of quality
assurance is maintained. In many countries, herbal products are marketed through health stores as
dietary supplements. For quality assurance, a minimum documentation of the product needs to be
done indicating: i) that the products are manufactured by following Good Manufacturing Practices
(GMP), ii) certificate of analysis of the batch detailing the tests performed, limits, actual value
recorded, and iii) minimum labeling of contents. The drugs are required to be labelled to comply
with the label provision of the concerned country into which it is imported. Processors especially
small scale producers have difficulty in complying with the rigid regulatory requirements for herbal
medicines in export markets.
2. Domestic Market
Fresh Ampalaya Market
Fresh ampalaya is usually graded into three classifications namely: primera, segunda, andtersera or
reject. Grading classifications are based on the girth, length and appearance. Usually the price per
36
kilogram of primera is P5 to P13 higher than segunda which, in turn, is P10 higher than tersera.
Figure 13. Fresh Ampalaya Grading Classification
End-users consisting of households and institutional buyers such as restaurants and hotels prefer
two types of ampalaya aligned to the dishes the ampalaya is intended for. First, the native type of
ampalaya which is small in size and bitterer in taste compared to others. This type is usually used in
cooking pinakbet. Second, the hybrid types which are bigger in size and used in cooking other
ampalaya dishes.
Figure 14. Fresh Ampalaya End-Users Grading Classification
Supermarkets such as SM prefer the bigger-types of ampalaya (Galaxy, Galactica, etc.) with size
requirements of about 600 grams per piece or 10 -12 inches length. When products start to lose its
freshness, these are sliced, chopped, and packed into ready-to-cook dishes such as pinakbet and
ginisang ampalaya.
37
Table 11. Buying Patterns of Key Intermediaries in the Fresh Ampalaya Market, 2013
Intermediaries
Buying Pattern
Consolidators
catering
to 98% of ampalaya being bought are of the hybrid varieties/big
supermarkets, hotels, and other sizes, 12-13 inches in length
institutional buyers
The native variety comprised 2% of typical order
Maximum size: 0.6 kg per piece
Volume: 1,500 to 2,000 kilograms per day
Smooth skin, no scratches and bruises, diretso
Also requires organically grown ampalaya but supply is limited
Local Traders/Viajeros
Volume: 500 to 1,000 kilograms per day
All types of ampalaya including rejects
Stationery Assemblers
Volume: 200-600 kilograms per day
Wholesalers
All grades of ampalaya
Retailers
Source: KII
According to Concepcion (2009), five criteria are considered most influential in the consumers’
decision to purchase fresh vegetables. These are price, quality, phytosanitary standards, product
appearance and packaging. Consumers prefer vegetables that are firm and can be stored without
loss. Phytosanitary standards mean that the vegetables are free from pest or disease damage, free
of mechanical and physical injury, free of soil and free of chemical residues. The same criterion
applies to ampalaya. The extremely low income groups though are less sensitive to this set of criteria
and are the main buyers of the tersera class of ampalaya. The tersera class is also used in “ready to
cook” packs sold by vendors.
In 2012, the average annual per capita consumption of ampalaya in the Philippines was at 2.55
kilograms. Cagayan Valley had the highest per capita consumption at 3.75 kilograms followed by
Central Luzon at 3 kilograms. Regions in rank 3rd to 5th in terms of per capita consumption were
Ilocos Region (2.97 kilograms), National Capital Region (2.81) and Bicol Region (2.76 kilograms).
Except for Bicol, all of the Top 5 ampalaya consuming regions in 2012 are key markets of Central
Luzon.
Annual per capita consumption decreased by 5% in 2012 over 2009 figures while ampalaya
production increased by 1% during the same period. In key markets of Central Luzon though, per
capita consumption in 2012 increased in the National Capital Region (NCR), Cordillera Administrative
Region (CAR), and Cagayan Valley by 20%, 13%, and 6% respectively. Per capita consumption in
Ilocos Region and Central Luzon decreased by 3% and 15% respectively.
38
In 2012, the upper and middle classes consumed 46% more per capita per year than the lower
classes. The upper income market segment (AB) had the highest annual per capita consumption. The
AB segment especially those in urban areas usually purchases vegetables from supermarkets. High
socio-economic households tend to be more aware of the health benefits of ampalaya. In the upper
income segment, only Ilocos Region posted a significant increase in per capita consumption.
Cagayan Valley had the highest per capita consumption in this segment at 4.23 kilograms.
Table 12. Annual Per Capita Consumption of Ampalaya (in kilogram)
Philippines and Key Markets of Central Luzon
Socio-economic
Class
Philippines
NCR
CAR
Ilocos
Cagayan
Valley
Central Luzon
20082009
2012
20082009
2012
20082009
2012
20082009
2012
20082009
2012
20082009
2012
All Classes
2.55
2.41
2.34
2.81
2.08
2.36
3.07
2.97
3.54
3.75
3.54
3.00
AB: Upper Class
4.16
3.54
4.00
3.38
3.43
2.49
2.65
4.15
6.08
4.23
3.90
3.90
C: Middle Class
3.43
3.11
3.48
3.13
2.13
2.44
5.20
3.03
3.69
4.83
3.85
3.60
D: Lower Class
2.44
2.30
1.98
2.73
1.92
2.38
2.76
2.78
3.38
3.83
3.48
2.75
E: Extremely
Lower Class
1.66
1.54
1.51
1.33
1.92
1.95
1.25
2.78
3.69
2.86
2.91
2.00
Source: BAS
Except for Central Luzon, per capita consumption of ampalaya among the D segment increased in all
regions. The awareness campaign on the health benefits of ampalaya conducted by East West Seeds,
the Department of Health, and their partner organizations which were primarily directed to lowincome groups may have contributed to increased consumption. The increase in per capita
consumption may also be linked to increased self-medication and concerns over health threats.
Traditionally, Filipinos have relied heavily on their doctors and their prescription medicines, rather
than self-medicate. While this is the case, consumer researches indicate that the past 5 years has
seen increasingly more Filipinos self-medicate, and consume “healthy” and disease prevention food
products. This trend is driven by the desire to maintain wellness in an environment where healthcare
is increasingly out of the reach of the majority, i.e. too expensive;
The lower income market segment though is very sensitive to price. Past researches in vegetable
consumption trend indicated that when money is scarce, Filipinos generally choose to cut back on
fruits and vegetables in exchange for small portions of meat, fish, and poultry in their diet.
The supply and demand of ampalaya in the country so far reflect a pattern of sufficiency, with total
net disposable production2 slightly exceeding consumption. The production in Central Luzon
exceeds its regional consumption by about 66.53%. This surplus makes the region a major and
critical supplier to the rest of the country.
Ampalaya Herbal Products
The local natural health and wellness industry sells about P700 million worth of products annually.
Common local herbal products include virgin coconut oil, ampalaya (bitter gourd) supplements,
malunggay (moringa) capsules, ilang-ilang and sampaguita oils and extracts.
2 Gross production less exports, seeds feeds, waste and processing utilization
39
A study conducted by Cruz et al. (2011) revealed that 86% of 1,809 adult respondents in 2008 in
Metro Manila were aware of food supplements, considerably much higher than the 38% level of
awareness in 1998. Women (48%) were more aware of food supplements than men (37%). Among
food supplements, herbal supplements and herbal teas were taken by 51% and 28% of the regular
users, respectively, compared with 65% regular users of single-nutrient food supplements. The top
five herbal supplements for regular users include ampalaya, garlic, sambong, ginseng and Gingko
biloba, while for herbal teas include green tea, lemon tea, ginger tea, banaba tea and taheebo tea.
About 70% of the respondents using food supplements suffered from diabetes and hypertension.
The survey also validated the common perception that food supplements have positive effects on
one’s health.
As of 2013, a total of 17,467 drugs and 1,837 food supplements (including herbal supplements) have
been registered under the Food and Drug Administration (FDA) (FDA, 2014). In contrast, only 106
traditional medicines and 35 herbal medicines were approved by the FDA in 2013 (MB, 2013). In
effect, there is still a still limited availability of safe and high quality herbal medicines in the country.
Charantia, which is produced by Herbcare Corporation, is the only ampalaya food supplement that
the FDA has officially allowed to claim that it is “for the diet of diabetics.”
The market for nutraceuticals, both locally manufactured and imported, is worth about PhP 75
billion. The nutraceutical market has been growing at between 8% per annum and 10% per annum
over the past 10 years, except for in 2009, when the market contracted as a result of consumers'
negative reaction to the global financial crisis. With the growing number of health conscious
consumers and growing segment of Filipinos aged 65 and above, industry stakeholders are optimistic
that market for herbal products in the Philippines will continue to expand in the coming years. In
the Philippines, during 1970 - 2010, the older age group (65 years and over) has increased at a faster
rate of 3.4% per year compared with 1.5% for the younger (0-14 years) and 2.8 per cent for the
working (15-64 years) age groups (Albert, 2012). Price competitiveness and credibility are very
important in the development of markets for herbal products.
The market potential for ampalaya herbal products is anchored on the Philippines being one of the
world’s emerging diabetes hotspots. Ranked in the top 15 in the world for diabetes prevalence,
Philippines is home to more than 4 million people diagnosed with the disease – and a worryingly
large unknown number who are unaware they have diabetes. 3
At the rate diabetes cases are increasing in the country, there will be some 6.16 million diabetic
Filipinos by 2030, health experts warned. According to Dr. Joey Miranda, Secretary of the American
Association of Clinical Endocrinology-Philippines, there were 3.4 million diabetes cases in the
country in 2010, representing a prevalence rate of 7.7 percent. Citing data from the World Health
Organization and International Diabetes Foundation, he said that by 2030, the prevalence rate is
projected to rise to 8.9% or 6.16 million cases. These figures represent an increase of 15.6% and
84.2% in prevalence rate and the number of cases, respectively. 4
Table 13. Volume Requirements of Processors
Classification of Processors
Micro and small scale processors
Ampalaya Requirements
Fresh fruits
Fresh leaves with vines
Native varieties (Makiling, Bonito)
3
http://www.idf.org/BRIDGES/map/philippines
Philippine Star. March 14, 2013
4The
40
Table 13. Volume Requirements of Processors
Classification of Processors
Ampalaya Requirements
Organically grown
Volume requirement ranges from 400-1,200 kg of fruits and
leaves annually.
Medium and
processors
large
scale
Dried fruits and leaves --- primarily leaves
Native varieties (Makiling, Bonito)
Hybrid Variety: Super 242 F1
Organically grown
GMP certified facilities
5 to 7 MT per month of dried fruits and leaves
Source: KII
With respect to ampalaya requirements, general preference is the native variety (Makiling) although
there are processors who are also using imported varieties similar to Bonito, which is produced by
the East-West Seeds. These two varieties are bitterer than those commonly sold in wet market. In
powder form, it has a light color and a pleasant aroma.
Herbcare Corporation utilizes about 5 to 7 MT of dried ampalaya fruits and leaves (similar to Bonito
variety) per month. The company imports most of its raw materials from Vietnam. Lately, they are
starting to source their requirements from a local supplier with FDA-licensed facility. The supplier
washes the leaves in potable UV-treated water, dries them to about 40% moisture content in
cabinet-type ovens, and shreds or powders them in an FDA-licensed facility prior to delivery to
Herbcare.
Pascual Laboratories uses only the leaves of the Makiling variety in the manufacture of Amargozin (a
clinically proven herbal medicine for type 2 diabetes). Likewise, they only source organically grown
ampalaya.
Smaller processors, on the other hand, are not as stringent in their requirements and standards.
Some of them accept any variety of ampalaya fruits and vines from nearby markets or farms. This
practice can undermine the development of a more vibrant market for ampalaya herbal products
given that ampalaya has once been delisted in 2003. The Department of Health restored ampalaya
as a scientifically validated, medicinal plant (DOH Circular 2007-0058, 2007) in 2007 but the
therapeutic and preventive values of ampalaya were restrictively defined. Ampalaya tablets could
only be taken upon a doctor’s prescription. To date, there is a paucity of conclusive clinical study on
the therapeutic efficacy of ampalaya’s fruit, vine, roots and seeds. Majority of medium and large
scale processors use only the Makiling variety as this is the only one that has been clinically proven
for diabetes treatment.
To ensure the quality of locally-made herbal products, companies need to pass through government
certifications on good manufacturing processes. Aside from production related constraints, market
penetration is also seriously hindered by the following factors:
-
Lack of scientific basis to support various product claims; only ampalaya leaves of the
Makiling variety have been clinically-proven for diabetes treatment due to an active
ingredient known as polypeptide-P
41
-
No standardization of natural ingredients
No clearing house or centralization of Government funded R&D studies
Lack of laboratory dedicated to the natural product industry
B. PRICE TRENDS
1. Export Market
The industry for manufacturing ingredients that are already processed and ready for use in the
nutraceutical/herbal product industry is not yet well-established in the Philippines. Moreover, the
level of manufacturing technology in the country in low compared to its neighbours. As a result,
most of the large manufacturers of nutraceuticals, functional foods, and cosmetic products in the
Philippines resort to importation. A kilo of dried ampalaya fruits from Vietnam costs about PhP 500
including freight cost. To produce one kilo of dried fruits, 14 kilos of fresh fruits are needed. With its
current production cost, Central Luzon can potentially compete with Vietnam and be the base for
medicinal/herbal farming and primary production.
In terms of dried leaves, price of exporting countries ranges from US$ 5 to 6 per kilo. The price in
the Philippines ranges from PhP 250 to 350/kilo.
2. Domestic Market
Figure 15. Fresh Ampalaya Price References, Central Luzon 2012
42
The pricing of Ampalaya shows a general upward trend over the years (2002-2012), with two
downturns in the years 2007 and 2010 due to apparent sudden increases in production.
The price movements of ampalaya occur at the farm-gate, wholesale and retail fronts. Data
however suggest that retail markups over the years are increasing in greater proportion compared
to farm-gate and wholesale markups. Retail prices also appear to be slower in reflecting price
reductions due to over-production.
This has implications on the distributional aspects of the fresh ampalaya value-chain; possibly
necessitating a system of price monitoring and dissemination for the benefit of farmers and
consumers, and requiring more efficient market channeling of produce.
The price of Ampalaya varies on a monthly basis reflecting availability of supply. The period October
to December is considered the lean months where supply is lowest and prices are highest. At this
time most farms in Central Luzon are just coming off rice production.
43
Section 5:
SUPPORT SERVICES
A. FINANCIAL SERVICES
The availability of credit is a major constraint in the chain, particularly in the farm production
segment. The constraint is not due to absence of credit facilities but rather the accessibility of such.
The formal banking sector is rarely accessed by farmers due to documentary requirements. The main
sources of credit for ampalaya farmers are farm-input stores and trader-financiers located/present
in farmer communities. However these operate on very limited capital and are thus not able to fully
serve the demand for credit.
Vegetable or ampalaya traders, on the other hand, borrow trading capital from different financial
institutions. Borrowed capital ranges from PhP50,000 to PhP400,000 per trader with an interest rate
of 1 % to 4 % per month. These funds are mainly channeled to farmers as credit with no interest
and under a condition to sell the produce to the trader-financier. Pricing and marketing of ampalaya
are thus controlled by traders.
Table 14. Key Sources of Financial Services: Farmers in Central Luzon, 2013
Provider
Trader-financier
Features/Description
No interest but farmers generally receive a lower price.
Sipbu MPC
Payment is deducted from proceeds of harvest.
When sales of farmers from ampalaya during one harvest season is
not enough to pay the loan, balance is carried over to the next
cropping.
Only for members of the cooperative
Production loan: PhP 37,000/hectare
Interest rate: 17% per annum
Loan is intended for rice production but farmer-members of the
cooperatives also utilize this facility for ampalaya production.
BubulongMunti vegetables Only for members of the cooperative
farmers
Cooperative/
Bulusukan MPC
Cooperative provides input supplies to farmers to be paid after
harvest.
Alalay
sa
Kaunlaran, Provide crop production loan for qualified individual, group of
Incorporated (ASKI)
farmers and cooperatives
3% interest rate for 4 months
Informal lenders
Processing fee and capital build-up deducted from loan proceeds
Borrower should be known to lender
44
Table 14. Key Sources of Financial Services: Farmers in Central Luzon, 2013
Provider
Features/Description
Character reference
Agricultural Credit and Policy Low interest rate and payable in 3 years
Council (ACPC)
Stringent requirements and documentation
Source: KII
B. NON-FINANCIAL SERVICES
1. Technology transfers in the chain occur from embedded services of input suppliers, from
government-subsidized training programs, and from farmer-to-farmer peer exchange. The
diffusion of technology through these services appears sufficient given the posted productivity
levels. However, there is a lack of providers of services needed to enable farmers to adopt Good
Agricultural Practices and organic farming.
2. Water for irrigation poses another constraint. Irrigation systems and equipment are widely
needed but severely limited.
3. Storage and trading posts especially those with facilities for cleaning, grading, and sorting are
still limited. Clustering and establishment of GMP compliant postharvest facilities in major
ampalaya/vegetable producing areas will facilitate reduction of postharvest losses and value
added processing. There is also a lack of providers that can assist processors in complying with
GMP and food safety standards. Although there are laboratory facilities in the region for
product testing, microprocessors cannot afford to pay the fees upfront.
4. Although there are about 10 Clinical Research Organizations (CROs) operating in the Philippines,
conduct of clinical trials and scientific studies to authenticate claim of effectiveness of ampalaya
herbal products remain a challenge especially for small scale processors because of the cost
involved. Without the scientific evidence, mall processors would have difficulties in getting the
necessary FDA permits/certification and in penetrating markets outside of their immediate
locality. Public consumption of herbal products continues to be hampered by the lack of
scientific studies to back up their effectiveness.
45
Section 6:
ENABLING ENVIRONMENT
A. FORMAL RULES, REGULATIONS, AND POLICIES
1. Poor farm to market roads inampalaya producing areasgreatly increases the transaction costs of
farmers and traders. Likewise, the lack of transportation facilities creates farmers’ dependence
on traders which result to low bargaining power.
2. Through the years, the public retail markets use plastics forpackaging of ampalaya and other
vegetables. The government passed a bill regulating the use of plastic in the public market to
lessen the accumulation of non-biodegradable things that badly affects the environment. To
support this, some of the public markets encourage the use of bayong and paper bag. . Some
LGUs also impose charges or fines ranging from P500.00 to 1,000 to the sellers and buyers who
will be caught using plastic bags. Vendors claim that using paper bags is costly and thus, affect
their margins. Agricultural products like ampalaya are bulky and messy to handle. Eliminating
the use of plastic bags is difficult to implement. Proper dissemination of information and selfdiscipline among players in the market will help a lot in the implementation of the regulation.
3. For more than a decade, most government efforts to expand access to agricultural credit have
been channeled through the Agricultural Competitiveness Enhancement Fund (ACEF) and AgroIndustry Modernization Credit Finance Program (AMCFP). Outreach, to date, of the two
programs have been limited. The Agri-Agra Reform Credit Act of 2009 (Republic Act 10000)
signed in February 2010 has not also been effective in facilitating smallholders’ access to
financial services.
There is a need for government to put in place a sound risk management framework to address
the issues that are at the core of private sector reluctance to lend and farmers’ hesitation to
avail of formal financial services.
4. In the early 90s, the government was openly supportive and welcoming of the herbal industry
when the Department of Health (DOH) was promoting the 'SampungHalamangGamot' program.
In 1997, the Traditional and Alternative Medicine or the TAMA Law was passed with the
objective of growing the industry to cater to a wide range of alternative health care benefits to
Filipinos. This provided the platform for the development of the herbal industry. It was at this
time that ampalaya products became popular.
In 2003, the DOH issues a circular taking out ampalaya from DOH list, and downgrading it as a
"folklorically validated" herbal medicinal plant. This resulted in the almost-death of the
ampalaya sector of the herbal industry. in March 2007, ampalaya was reinstated as a
scientifically validated herbal medicinal plant that can lower elevated blood sugar levels. This
enabled the sector to slowly recover. However, the therapeutic and preventive values of
ampalaya were restrictively defined to cover primarily the leaves of the Makiling varietyas these
were the only ones that were clinically-proven for diabetes treatment. To date, there is still a
lack of additional supporting clinical studies for ampalaya.
In 2010, Administrative Order (AO) 2010-008 was issued directing the herbal industry to place
the advisory in all its products and promotional campaigns “"Mahalagangpaalala: ang (name of
46
product) ay hindigamot at hindidapatgamitingpanggamot sa anumanguri ng sakit” in addition to
the standard phrase “No approved therapeutic claim”.
Clinical studies are urgently needed to bolster the position and competitiveness of ampalaya
herbals in the domestic and global markets.
B. INFORMAL RULES AND SOCIO-CULTURAL NORMS
1. The major sources of social capital among Filipino farmers are kin networks, home
neighborhood, farm neighborhood, and membership in a farmer’s association. Filipinos
particularly in rural areas give premium to interpersonal relations. Kinship reigns 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 technology
2. Another value related to loyalty is utangnaloob or debt of gratitude. It is expected that those
who are helped in their time of need will return the favor when the opportunity comes. So, a
trader or a lead farmer or buyer sharing technology with kins and peers can also be regarded a
form of repayment from utangnaloob or depositing a help to be withdrawn later when need
arises (e.g., trader expects that farmer will give him some priority when ampalayasupply is tight).
3. Buying in tingi or piecemeal is the norm rather than an exception in the Philippines. Long before
multinationals and large local companies began producing product sachets, sari-sari stores
(neighbourhood stores) would buy household items such as sugar, vinegar, shampoo, cooking
oil, cigarettes, etc. in bulk and sell these to the customers in piecemeal: by the stick, by the
piece, by the tablespoon or cup. The “tingi” system has spread into various industries such as
telecommunications where it became possible for users to buy phone credit or load for as low
as PhP 5.00.
The tingi or piecemeal mentality influences much of what the Filipinos do. The tingi mentality is
also reinforced with Filipino’s relatively low propensity to save, and preference for immediate
gratification. This is manifested even in little things, such as their preference for “instant prize”
promotions rather than loyalty programs which might require them to accumulate points toward
a larger prize (De Veyra 2004). Spending more to purchase sachets today instead of saving up to
buy in bulk would be consistent with this tendency. Likewise, the dominance of the “tingi”
mentality can also be correlated to general aversion of Filipinos to risks.
As such, in the conduct of training and capacity building activities as well as introduction of new
technology and innovations, the program can build the design around this “tingi” mentality to
have higher chances of success and adoption.
47
Section 7:
CONSTRAINTS AND OPPORTUNITIES
Table 15. Constraints and Opportunities
Opportunities
Constraints
Province
INPUT PROVISION
Lowering the cost of ampalaya
production will directly benefit the
farmers through increase in income
received.
High cost of hybrid seeds
Bulacan
Nueva Ecija
Lack of capacity of farmers to pay up Pampanga
front for seeds
Production or yield of ampalaya depends on the quality of seeds used. Generally, a farmer is
experiencing difficulty in coping up with the continuous increase in the cost of producing agricultural
products especially when there are no existing cooperatives who can give production loan at lower
interest rate. On the other hand, even there is existing financier, the interest fee is high and the
requirements to avail loan are too many and hard to comply.
FARMING
Proper irrigation can help accelerate
shoot/leaf development and sustain
productivity
Lack of access to cost efficient Bulacan
irrigation facilities [Small Scale Nueva Ecija
Irrigation System (SSIS)/ Communal Pampanga
Irrigation System (CIS)]
Farmers can plant ampalaya during
dry season if they have access to
water
Lack of know-how on water saving
technology
Careful water management of
ampalaya farms is needed to ensure
both environmental sustainability
and productivity
Farmers not aware on the water
requirement of ampalaya and
importance of water in reproductive
stages/fruiting stages
Ampalaya requires irrigation to produce the quality the market demands and the yield the producer
needs to be profitable and to be price competitive. When the plant is under extreme water stress,
the stomata shut down to conserve moisture. When that happens, no carbon dioxide enters the
leaves and photosynthesis grinds to a halt. As a result, root and shoot growth slows. As crops move
into their critical productive stages, the impact of water shortfalls is profound and economically
costly.
Given that water is becoming a scarce commodity, there is a need to promote technologies that
would encourage water savings and more efficient water usage. Likewise, water source is an
important aspect in organic and Global GAP certification.
Farmers without access to irrigation facilities are unable to plant ampalaya during the dry season.
Farms are oftentimes idle or underutilized. This also causes instability of supply which discourage
large processors to source their raw materials locally.
Compliance to GAP will enable Lack of capacity (skills, knowledge, Bulacan
farmers to meet sanitary and food and financial) among farmers to Nueva Ecija
safety
standards
parallel
to implement GAP
Pampanga
improving farm productivity and
48
Opportunities
product quality and integrity.
Constraints
Province
Lack of providers to assist farmers to
comply with GAP
GAP certification + traceability will
enable farmers to penetrate more Low appreciation among farmers on
discriminating markets such as the the benefits of GAP
herbal industry and high end market
segments.
Dispersed production areas and
weak horizontal collaboration make
it more difficult for providers to
reach farmers
Adoption of GAP would address issues of productivity, efficiency, food safety, and quality. The herbal
industry is also very much particular that raw materials conform to the Global GAP standards. The
World Health Organization (WHO) considers that the safety and quality of raw medicinal plant
materials and finished products depend on both intrinsic (genetic) and extrinsic factors (environment,
collection methods, cultivation, harvest, post-harvest processing, transport and storage
practices).GAP is an essential step towards the modernization of the ampalaya industry especially
the herbal subsector.
Outreach, depth, and breadth of services aimed at promoting GAP compliance are limited for both
government and value chain based providers owing to resource constraints and dispersed production
areas. Resource poor farmers are most unlikely to pay for training and extension services given the
long tradition of heavily subsidized and free services. Likewise, many of the smallholders who
urgently need technical assistance are located in remote areas.
Farmers generally have low appreciation of the benefits of GAP compliance. Likewise, many do not
have the capacity to individually set-up the infrastructure needed to comply with GAP and to pay for
the cost of certification.
Production of organically grown
ampalaya can provide Central Luzon
with a competitive advantage over
other ampalaya producing areas
especially with the increasing
attention given to food safety and
the effects of chemical inputs to
both people and the environment.
Lack of know-how and capacity Bulacan
among farmers to venture into Nueva Ecija
organic farming
Pampanga
Lack of providers to train and guide
farmers in organic farming
Organic farming can help improve
climate change resiliency and
address declining soil fertility.
The herbal industry requires organically grown ampalaya. In the fresh ampalaya market chain, there
is a growing interest on organically grown produce especially among the AB market segment. The
supply of organically grown ampalaya is still very limited. On one hand, farmers are experiencing
declining soil fertility and increased incidence of pests and diseases. The production of organic
ampalaya can help Central Luzon diversity its market
while regenerating the land, regaining
biodiversity, and supplying quality food to local communities.
However, the establishment of an organic farm needs investment (knowledge, skills, and financial)
49
Opportunities
Constraints
Province
that are not within the easy reach of farmers. Technologically, organic farming is knowledgeintensive. Although Central Luzon is actively promoting organic farming, outreach is limited due to
resource constraints.
PROCESSING
Farmers can potentially supply
ingredients such as the dried
ampalaya fruits and leaves needed
by the herbal industry
Processing can mitigate risks of
declining prices due to oversupply
GMP certification will enable
existing cooperatives engaged in
ampalaya processing to penetrate
markets outside of their immediate
locality
No access to GMP
processing facilities
compliant Bulacan
Nueva Ecija
Pampanga
Lack of skills and technical knowhow on ampalaya processing and
GMP
Weak vertical relationships (farmers
and processors)/ Requirements of
processors are virtually unknown
among farmers
Given the current trend of total net disposable production slightly exceeding consumption, there is
a need to systematically and incrementally channel some of the produce to the processing sector to
expand the utilization of ampalaya. There is very little value addition initiatives among ampalaya
farmers primarily because they have no access to processing facilities and lack of awareness of
market opportunities.
Non-compliance to GMP results to production inefficiencies and inconsistent quality of herbal
products. Without the GMP certification, an enterprise cannot get the License to Operate and would
find it difficult to sell to institutional buyers. None of the cooperatives currently engaged in
ampalaya production has a GMP certification.
MARKETING
Good farm to market roads can
reduce cost of transactions
Poor farm to markets roads resulting Bulacan
to inefficiencies and high cost of Nueva Ecija
transactions
Pampanga
Poor infrastructure results to inefficiencies, deterioration of quality, and limited access to product
and input markets.
Traders of viajeros usually pick-up the produce from the farm if it is accessible. However, in areas
where roads are bad, farmers have to shoulder the cost of bringing their products to the nearest
accessible road. Farmers spend an additional of PhP 0.30 to 0.40 per kilo to haul the products. In a
one hectare ampalaya farm, this translates to an additional cost of PhP 4,800 to PhP 6,400 per
crop cycle to bring their products to the nearest road. Similarly, they spend an additional of PhP
1,600 to PhP 2,400 to haul inputs to production areas. Poor farm to market can also contribute to
the delay in delivery and cause post-harvest losses due to spoilage, and bruises of products. These
costs do not add value to products and can be avoided with good quality farm to market roads.
Traders, on the other hand, suffer losses due to damages and bruises caused by rough and gravel
roads. At a 6% damage per load of 15 MT, this translates to about 900 kilos of ampalaya that have
to be sold at discounted price. With road conditions getting worse after each rainy season, traders
50
Opportunities
Constraints
Province
and “trucks for hire” are hesitant to service the areas or if they do, it is usually at a very steep price
to cover depreciation costs.
Clean and sanitary trading post with
price and quality monitoring system
can significantly help reduce
postharvest
losses,
build
buyers’/consumers’ confidence in
both the quality traits and technical
attributes of ampalaya and its byproducts and other vegetables and
herbal products, and promote
transparent and fair pricing.
Existing bagsakan centers are
congested and not compliant with
food safety standards
Bulacan
Nueva Ecija
Pampanga
Bulacan has no bagsakan center
LGUs willing to provide equity and
maintenance cost.
Incomes of players in the ampalaya chain especially smallholders and vendors are closely linked with
the state of the trading centers. Likewise, while bagsakan centers and wet markets provide benefits
to small farmers and vendors in terms of accessibility, lower barriers to entry, when compared with
more formal market structures, these are eroded by quite high levels of postharvest losses, lower
prices, and limited bargaining power. Food safety and quality are, therefore, important parts of
public health, income generation capacity of smallholders, vendors, and intermediaries, market
competitiveness, and in making the benefits of a more open and modern economy reach the rural
population.
Bulacan farmers are dependent on the Balintawak Market, which is prone to flooding and congested.
The existing trading centers in Bulacan are primarily geared for retail selling and are not located in
strategic locations.
Clinical tests, scientific studies, and
R and D will significantly help the
ampalaya herbal industry to grow its
market and capture a bigger share
of the growing pharmaceutical
market
Industry players especially the micro Bulacan
and small scale processors lack the Nueva Ecija
capacity to undertake and/or Pampanga
commission clinical tests and
scientific studies.
Clinical studies are urgently needed to bolster the position and competitiveness of ampalaya herbals
in the domestic and global markets. Although there are about 10 Clinical Research Organizations
(CROs) operating in the Philippines, conduct of clinical trials and scientific studies to authenticate
claim of effectiveness of ampalaya herbal products remain a challenge especially for small scale
processors because of the cost involved.
51
Section 8:
COMPETITIVENESS DIRECTIONS
A. COMPETITIVENESS VISION
Figure 16. Competitiveness Vision of Ampalaya Industry, Central Luzon
The ampalaya industry players in Central Luzon recognize that the markets for their product are
becoming highly competitive where product quality is essential and price competitiveness is crucial
parallel to innovations in product formats and production of high quality products in a safe and clean
environment. The industry has inherent strengths that if further and judiciously exploited will
redound to benefit many smallholders who hold bulk of the region’s ampalaya supply. Specifically,
industry players and stakeholders identified the following priority areas for action:
a) Improved compliance to food safety, sanitary, and quality standards though adoption of GAP
and GMP
b) Improved irrigation facilities (SSIS and CIS)
c) Improved existing road network (FMR)
d) Improved access to postharvest facilities and upgrading of trading posts
52
e) Development of processing sector parallel to promotion of coordinated and cluster production
f)
Establishment of Central Luzon as supplier of organically and naturally grown ampalaya
g) Strengthening of the ampalaya herbal subsector as platform to promoting value addition at the
farmer’s level and mitigating risks of oversupply of ampalaya
B. PRIORITY CONSTRAINTS/OPPORTUNITIES AND INTERVENTIONS
INPUT PROVISION
1. Development of local capacity to produce and/or distribute high yielding seeds at affordable
prices
Production and distribution of seeds are usually handled and distributed by the private sectors in the
region. Usually, the farmers are experiencing difficulty in sourcing out of capital to have continuous
farming activities. To address this constraint, the following interventions were identified:
a) Improvement and production of seeds, utilizing and strengthening of existing government owned
vegetable seeds center
b) Strengthening of existing cooperatives to accredit as input providers and/or distributors.
FARMING
2. Promote optimal utilization of existing irrigation facilities and prioritize access to irrigation
facilities in major and strategic production areas
As irrigation water is a limited resource in the region, the challenge is how to maintain or increase
yield while reducing total agricultural water use. More so, the dependence of many of the irrigation
facilities to rainwater affects the suitability of the area for year-round farming. Not all of the
targeted areas for irrigation are effectively irrigated. Water supply of rice farms located downstream
of the water source depends on the efficient utilization of water by the rice farmers located near the
water source.
The efficient utilization of irrigation water in relation to increasing productivity can be promoted via
the following:
a) Promotion of water saving technologies and implementation of volumetric pricing for irrigation
water so as to motivate farmers to treat water as a valuable resource of his/her farming
enterprise. This may also include development of varieties that require less water.
b) Prioritization of establishment of irrigation facilities in highly suitable and productive areas. The
program may also want to explore low cost drip irrigation system that is divisible and movable
especially in areas where water source is limited.
53
3. Development of local capacity to deliver GAP training and support in the establishment of
facilities necessary for GAP compliance
The mission of producing safe and high quality ampalaya is not only an imperative for
competitiveness and improved market access but also for the health and welfare of the consumers
parallel to sustaining the long-term capacity of the environment to support basic human needs. GAP
offers a means to meet specific objectives of food safety, productivity, production efficiency,
livelihoods, and environmental benefits in both the medium and long-term.
It is proposed that farmers especially in major production areas be organized into learning cum
farming clusters to reduce cost of service delivery, facilitate peer-to-peer learning, and promote
economies of scale both in farming and marketing. Under this scheme, contiguous farms will be
clustered, and dispersed farms coordinated into compact ampalaya farms behaving as one
synergistic production and marketing unit. Standardizing the quality of amplaya produced by
farming clusters facilitate pooling of harvests to improve bargaining power and reduce cost of
transactions. Each cluster will have lead farmer-GAP trainors selected based on interest, experience,
and leadership qualities. To avoid volunteerism fatigue, farmer-trainors may be compensated with
produce from demonstration plots or be trained as consolidator and quality control officers with
compensation derived from mark-ups.
To enable farmers to set-up the necessary infrastructure and transportation services
achievement of GAP certification and reduction of postharvest losses particularly
deterioration, it is suggested that program provide matching grants to key production
especially those that have demonstrated to be committed in adopting recommended
practices.
vital to
quality
clusters
farming
To promote experimental learning, innovation, and adoption of improved practices, it is
recommended that demonstration plots be established in pilot areas. Likewise, the program can also
organize competitions, cross-training, and benchmarking visits. The good practices/ innovative
solutions that will emerge from competitions can be incorporated in training modules. It is also
recommended for program to work closely with the media in the dissemination of key messages on
sustainable farming practices and success stories.
4. Development of local capacity to deliver training services on organic farming and production
of key inputs through piloting in small areas in one or two production clusters in collaboration
with herbal processors
It is recommended that a pilot be conducted on areas /farms assessed to be highly suitable for
organic ampalaya farming. The pilots can serve as model farms cum farmer field schools to
demonstrate the differences in production costs, productivity and income between conventional
and organic ampalaya farming. Likewise, to provide incentives for farmers to adopt organic farming
and, to a significant extent, assure markets for the organic produce including adherence to market
standards, it is proposed that the piloting be conducted in close collaboration with medium and
large scale processors. This can also jumpstart the development of directed relationships between
farmers and processors.
Parallel to set-up of demonstration farms cum field schools, it may also be necessary to support the
establishment of on-farm organic fertilizer production facilities and nurseries to facilitate affordable
access to inputs parallel to promoting additional income streams. Rather than direct distribution of
free seeds and fertilizer which oftentimes undermine the development of effective demand and
supply, PRDP can implement a voucher based program or similar demand creation mechanisms. In a
54
voucher program, farmers pay for a portion of the cost of inputs and redeem the voucher to a
program accredited supplier of their choice. A voucher program helps increase effective demand by
making farmers aware of the improved inputs available within the locality and allowing them the
opportunity to acquire small quantities of these inputs at low risk and investment to test on their
farms, which they might then purchase for themselves in subsequent seasons. The use of vouchers
can also help in strengthening cash flow of nurseries and fertilizer production units as well as
encourage operators to provide good quality inputs to generate repeat clients.
PROCESSING
5. Build up capacity of cooperatives to provide GMP compliant toll processing services
This will involve the establishment of common service or toll processing facilities that will serve as
the base for the delivery of postharvest and value addition services compliant to Good
Manufacturing Practices. It is proposed that the development of training program on ampalaya
processing and GMP including the establishment of production protocols be done in close
collaboration with herbal processors to gain their “ownership” of the facilities and encourage them
to avail of the services.
Product development assistance to collective enterprises wishing to develop and/or market
innovative ampalaya herbal products will lay the groundwork for the development of a robust
ampalaya processing industry in the region. The objective of the assistance is to increase
consumption of ampalaya from Central Luzon by accelerating the rate of development of new
products, responding to consumer market requirements, increasing the commercial success rate of
new products, and assisting the industry to diversify products and markets. The program should also
focus on helping the herbal industry in finding new products that utilize ampalaya fruits of the
Makiling variety.
MARKETING
6. Upgrading of farm to market roads
Rural roads open opportunities for sourcing relatively cheaper inputs, and marketing and trading
rural produce. To have an efficient supply chain that will yield benefits to supply chain participants, it
is important to have the proper road network and link these to production areas. The objective is to
have a seamless transport service, which produces or generates value addition at each node of the
supply chain for the benefit of players in the chain. Investments in good quality road infrastructure
will reduce the time and cost of doing business.
7. Upgrading and/or establishment of GMP compliant trading centers in strategic locations
A crucial distribution link that needed to be strengthened is the traditional market structures such as
bagsakan centers which, to date, are the main market channels accessible to farmers. The proposed
intervention will contribute to addressing consumer concerns related to food safety and quality
parallel to sustaining the long-term operations and capacity of bagsakan centers to be sources of
opportunities to facilitate economic empowerment.
The pursuit of common upgrading objectives among the diverse stakeholders may be facilitated
through the establishment of a Quality System in key bagsakan areas. To promote ownership of the
Quality System, customization, updating, and adaptation of the system and the standards including
low-cost implementation measures have to be done together with the key players. The
55
development of a pool of providers (i.e., progressive intermediaries, vendors, and apprentices from
schools within the area) is to ensure that players have access within their proximity to services that
will help them comply with the Quality System and overcome food safety, quality, and other market
access related constraints. Access to upgraded physical infrastructure will also be crucial. GMP
compliant bagsakan centers and training program r on proper ampalaya/vegetable handling,
storage, and display have great potential impact on marketing efficiency and, hence, on wholesale
and retail prices. Development of financial viability (e.g., bundled with stall rental) and delivery
schemes are aimed at ensuring that services would continue even after PRDP support ends. Training
should be aligned to the low-cost implementation measures identified in collaboration with the
players themselves.
It is proposed that a consumer campaign be conducted to promote the benefits of ampalaya
consumption and to make buyers aware of the upgrading initiatives being undertaken by the chain
to ensure safe and healthy affordable ampalaya and other vegetables, which will increase
consumers’ interest in ampalaya. Local dietary guidelines and food guides may be used as tools for
relevant nutrition education. The campaign can also provide incentives to farmers and other players
to upgrade their products and processes.
Parallel to this, it is suggested that price monitoring currently being implemented by DTI be
strengthened to ensure that players and consumers get value for their money/investment.
8. Support conduct of clinical tests and scientific studies of two or three most commercially
viable herbal products
The cost of conducting clinical tests is out of the reach of many enterprises. However, without the
tests, it would be nearly impossible for enterprises to sell to bigger and more lucrative markets. It is
proposed that program supports the conduct of clinical tests of two or three commercially viable
products on the condition that these will be manufactured in program supported toll processing
facilities.
56
Table 16. Priority Constraints/Opportunities and Interventions
Opportunities/Constraints
Province
Intervention Strategy and Approach
Who Can Do It?
Public
Private
INPUT PROVISION
Priority # 3
High Cost of hybrid seeds
Bulacan
Nueva Ecija
Pampanga
Lack of capacity of farmers to pay up
front for seeds
Development of local capacity to produce
and/or distribute high yielding seeds at
affordable prices
DA/PRDP
Cooperatives
- Financial and
technical
IAs
assistance
1) Improvement and production of seeds
utilizing and strengthening of existing
government owned vegetable seeds center
LGU/OPA
Fruits
Vegetables
Center
2) Strengthening of existing cooperatives to
accredit as input providers/distributors.
and
Seed
LGU
FARMING
Priority # 6
Lack of access to cost efficient irrigation
facilities
Lack of know-how on water saving
technology
Opportunities
Proper irrigation can help accelerate
shoot/leaf development and reduce
bitter taste of ampalaya
Bulacan
Nueva Ecija
Pampanga
Promote optimal utilization of existing irrigation DA/PRDP
Cooperatives
facilities and prioritize access to irrigation - Financial and
facilities in major and strategic production areas
technical
IAs
assistance
(1) Promotion of water saving technologies
and implementation of volumetric pricing BSWM
for irrigation water
(2) Establishment and/or rehabilitation of LGU
irrigation facilities in strategic production
areas
57
Province
Who Can Do It?
Public
Private
Farmers can plant ampalaya during dry
season if they have access to water
Careful water management of ampalaya
farms is needed to ensure both
environmental
sustainability
and
productivity
Priority # 4
Lack of capacity (skills, knowledge, and
financial) among farmers to implement
GAP
Bulacan
Nueva
Pampanga
Development of local capacity to deliver GAP DA/PRDP
Ecija training and support in the establishment of
facilities necessary for GAP compliance
PLGU/MLGU
Lack of providers to assist farmers to
comply with GAP
Low appreciation among farmers on the
benefits of GAP
Dispersed production areas and weak
horizontal collaboration make it more
difficult for providers to reach farmers
(1) Establishment of learning cum farming and CSLU
marketing clusters
BAFPS
(2) Development of GAP trainors in each
cluster who may also act as consolidators
(3) Capacity building of existing providers to
take on the role of mentors/”big brothers”
Opportunities
(4) Extension of matching grants to facilitate
establishment of common service facilities
(storage, sorting area, transportation, etc.)
needed to achieve GAP certification
Compliance to GAP will enable farmers
to meet sanitary and food safety
standards parallel to improving farm
(5) Conduct of competitions to motivate
adoption,
stimulate innovation,
and
facilitate identification of emerging good
58
East West and
other
seed
companies
Cooperatives
Consolidators/
Herbal Processors
Province
Who Can Do It?
Public
productivity and product quality and
integrity.
practices as basis for regular updating of
modules/Dissemination of emerging good
practices
GAP certification + traceability will
enable farmers to penetrate more
discriminating markets such as the
herbal industry and high end market
segments.
Priority # 7
Lack of know-how and capacity among
farmers to venture into organic farming
Private
(6) Establishment of model farms
(7) Work with MFIs and financial institutions in
the development of financial products
appropriate for resource poor farmers
Bulacan
Nueva Ecija
Pampanga
Lack of providers to train and guide
farmers in organic farming
Opportunities
Production of organically grown
ampalaya can provide Central Luzon
with a competitive advantage over other
ampalaya producing areas especially
with the increasing attention given to
food safety and the effects of chemical
inputs to both people and the
environment.
Development of local capacity to deliver training DA/PRDP
services on organic farming and production of
key inputs through piloting in one or two PLGU/MLGU
production clusters in collaboration with herbal
processor
CSLU
(1) Participatory development (with farmers,
herbal processor) of modules on
organicfarming practices to ensure buy-in
and ownership of stakeholders and
conformance to market requirements
including technical assistance in the
development of training approaches that
allow quick wins to motivate and sustain
adoption
(2) Development of capacity of participating
farmers to provide training services to
59
BSWM
LAC Farms
Cooperatives
Herbal Processors
Province
Who Can Do It?
Public
Private
Build up capacity of cooperatives to provide DA/PRDP
Ecija GMP compliant toll processing services
PLGU/MLGU
(1) Establishment of GMP compliant toll
processing or common service facilities DOST
including basic laboratory services
DTI
(2) Work with large herbal processors in the
Cooperatives
peers
Organic farming can help improve
climate change resiliency and address
declining soil fertility.
(3) Establishment of village level processing
facility for organic inputs
(4) Establishment of nursery aligned to organic
farming protocols and focusing on varieties
with proven strong medicinal properties
(5) Implementation of voucher program or
similar market-based schemes to stimulate
use of organic inputs and full adoption of
organic farming
(6) Establishment of demonstration farms
(7) Work with MFIs and financial institutions in
the development of financial services
appropriate for farmers
PROCESSING
Priority # 2
No access to GMP compliant processing
facilities
Lack of skills and technical know-how on
ampalaya processing and GMP
Bulacan
Nueva
Pampanga
60
Herbal
Processors/CHIPI
Consolidator
Province
Who Can Do It?
Public
Weak vertical relationships (farmers and
processors)/ Requirements of processors
are virtually unknown among farmers
development and implementation of BFAD
training program on ampalaya processing
and GMP
Opportunities
(3) Support in the development of ampalaya
herbal products
Farmers
can
potentially
supply
ingredients such as the dried ampalaya
fruits and leaves needed by the herbal
industry
(4) Development of a pool of trainors on GMP
and ampalaya among those operating the
common service facilities
Processing can mitigate risks of declining
prices due to oversupply
(5) Broker linkages between herbal processors
and toll processing facilities/Faciliate the
development of win-win relationships
GMP certification will enable existing
cooperatives engaged in ampalaya
processing to penetrate markets outside
of their immediate locality
(6) Product and market development support
(7) Work with MFIs and other financial
institutions in the development of financial
services appropriate for micro and small
scale processors
MARKETING
Priority # 1
PLGUs/MLGUs do not have sufficient
financial capacity to upgrade farm to
market roads
Bulacan
Nueva Ecija
Pampanga
Upgrading of farm to market roads
DA/PRDP
(1) Cost contribution in the construction PLGU/MLGU
and/or rehabilitation of farm-to-market
roads
61
Private
Province
Who Can Do It?
Public
Opportunity
Good farm to market roads can reduce
cost of transactions
Priority # 5
Existing bagsakan centers are congested
and not compliant with food safety
standards
Bulacan
Nueva Ecija
Pampanga
Upgrading and/or establishment of GMP
compliant trading centers in strategic locations
DA/PRDP
(1) Design, set-up and implementation of a PLGU/MLGU
Quality System encompassing basic food
safety and hygiene standards
Bulacan has no bagsakan center
LGUs do not have sufficient financial and
technical capacity to upgrade existing
bagsakan centers
(2) Strengthening of price monitoring system in
collaboration with DTI
(3) Technical,
financial,
and regulatory
support in the upgrading and/or set-up of
GMP compliant trading centers
Opportunities
Clean and sanitary trading post with
price and quality monitoring system can
significantly help reduce postharvest
losses,
build buyers’/consumers’
confidence in both the quality traits and
technical attributes of ampalaya and its
by-products and other vegetables and
herbal
products,
and
promote
transparent and fair pricing.
(4) Development and/or upgrading of
providers and services/products that would
facilitate the upgrading of trading centers
and the players (operators and users)
participants particularly the acquisition of
capacities and capabilities to meet basic
food safety and quality standards parallel to
development of systems to ensure
sustained and equitable access to these
services
62
Private
Province
Who Can Do It?
Public
LGUs willing to provide equity and
maintenance cost.
Private
(5) Conduct of promotional campaign on use of
trading centers by both farmers and buyers
(6) Support in implementation of consumer
campaign on ampalaya consumption, food
safety and quality standards
Priority # 8
Bulacan
Nueva Ecija
Industry players especially the micro and
small scale processors lack the capacity
to undertake and/or commission clinical
tests and scientific studies.
Opportunity
Clinical tests, scientific studies, and R
and D will significantly help the
ampalaya herbal industry to grow its
market and capture a bigger share of the
growing pharmaceutical market
Support conduct of clinical tests and scientific DA/PRDP
studies of two or three most commercially viable
herbal products
PLGU/MLGU
(1) Cost contribution in the conduct of clinical DOH
studies for two or three products from
processors willing to enter into contract DOST
agreement with common service/toll
processing facilities
(2) Support development of branding and
market development campaign
63
Herbal
Processors/CHIPI
Clinical Research
Organizations
Table 17 summarizes the priority ranking per province as gathered during the Stakeholders
Workshop. Interventions will only be implemented in the top 3 ampalaya producing provinces in the
region.
Table 17. Prioritization of Interventions per Province
Intervention Strategy
Ranking (1 – highest)
Bulacan
Pampanga
Nueva Ecija
3
2
3
Promote optimal utilization of existing
irrigation facilities and prioritize access to
irrigation facilities in major and strategic
production areas
6
6
6
Development of local capacity to deliver
GAP training and support in the
establishment of facilities necessary for
GAP compliance
4
4
5
Development of local capacity to deliver
training services on organic farming and
production of key inputs through piloting in
one or two production clusters in
collaboration with herbal processor
7
5
2
Build up capacity of cooperatives to provide
GMP compliant toll processing services
2
7
7
Upgrading of farm to market roads
1
1
1
Upgrading and/or establishment of GMP
compliant trading centers in strategic
locations
5
3
4
Support conduct of clinical tests and
scientific studies of two or three most
commercially viable herbal products
8
8
8
Development of local capacity to produce
and/or distribute high yielding seeds at
affordable prices
64
Section 9:
CONCLUSIONS AND RECOMMENDATIONS
Given that production currently exceeds consumption, Central Luzon has to:
a) Diversify its markets for fresh ampalaya while sustaining or increasing its market share in existing
markets
b) Develop strong differentiation factors that the region can sustain as a marketing proposal and
anchors for market diversification initiatives
c) Strengthen its processing capacity and the herbal industry
The successful achievement of above objectives is underpinned by the following factors:
-
Efficient farming and production technologies to ensure that the cost of production will
meet market expectations, allow the industry to be competitive in the fresh and processed
markets, and improve chain wide profitability
-
The continuing confidence of buyers in the safety, quality and value of the ampalaya and
herbal products from Central Luzon
-
The need to address infrastructure and resource deficiencies that are impeding the
efficiency of supply chains and its capacity to pursue value adding initiatives
-
A win-win relationship among players as a means of promoting chain-wide learning and
Innovations, market access, and the equitable distribution of benefits from trade
-
The development of vibrant support markets
-
An industry-driven and market-based environmental management to help implement and
promote ecologically sustainable development parallel to access to niche/specialty markets
65
Table 18. List of Members/Components of the VCA Preparation
NAME
1. Andrew B. Villacorta, DVM, CESO III
2. Crispulo G. Bautista
3. Marian Boquiren
4. Ivan Idrovo
5. Ariel Briones
6. Gil David
7. Edna David
8. Lordelyn Dela Cruz
9. Mario Somera
10. Janelyn Golingo
11. William Valdez
12. Maricel Dullas
13. Jinkee Ciriaco
14. Jenelyn Ibale
15. June H. Lacasandile
16. Memito Luyun III
POSITION/DESIGNATION
Regional Director, DA-Region III /RPCO Head
PRDP RPCO 3 Focal Person
VCA Consultant
VCA Consultant
PSO, I-PLAN Component Head
PRDP RPCO 3 Alternate Focal Person
RPCO 3, I-PLAN Component Head
Planning Specialist
Planning Officer
Project Development Associate
RPCO 3, I-REAP Component Head
Marketing Specialist
Business Development Officer
Project Development Associate
Monitoring and Evaluation Officer
HVCDP Staff
66

Ampalaya - PHP Version 5.6.21 - Philippine Rural Development

Transcription

Similar documents

The Best 100 Philippine Medicinal Plants

District Deputy District Deputy

Russell

Market Plan

Download/View here - Southville International School

accomplishments - City of Rock Island

We`d like to express a sincere thank you to all of our sponsors – you

spc disaster risk reduction management core team meeting

MADURAI KAMARAJ UNIVERSITY DEPARTMENT OF ADULT