A FARMERS’ GROUP in Northern Mindanao has been cited as an example of how small growers can target and meet the needs of hotels, supermarkets, restaurants and fastfood chains in major urban centers.

Speaking at the recently concluded “Food for All: Investment Forum for Food Security in Asia and the Pacific” held by the Asian Development Bank (ADB) in Metro Manila, Northern Mindanao Vegetable Producers Association, Inc. (NorminVeggies) Vice-President for Marketing Joan Cua Uy recounted to agribusiness leaders and senior officials from 30 countries how her group of small farmers developed economies of scale, ensured efficient delivery, and made effective use of partnerships to attract quality-conscious institutional buyers, a recent statement of the US Agency for International Development’s (USAID) Growth with Equity in Mindanao (GEM) program read.

ADB organized the conference with the UN Food and Agriculture Organization and International Fund for Agricultural Development, as well as with USAID and Asia Foundation.

NorminVeggies, which started in 2006 with a dozen grower members with farms of two to 10 hectares each, now has 177 core members working with about 7,000 affiliate growers in the provinces of Bukidnon and Misamis Oriental.

Through its “private-private” partnerships with these affiliate growers, the group supplies bulk-buying institutional clients in the Visayas and Luzon with about 70 metric tons of vegetables weekly, in addition to supplying more traditional markets in Mindanao. Its institutional buyers include a major supermarket chain and a high-end hotel, consolidators for fastfood chains, as well as hotel and restaurant distributors.

This was made possible, Ms. Uy said, through NorminVeggies’ use of “commodity clustering,” by which groups of farmers focus on a specific vegetable and program their harvests to coincide with shipment schedules agreed upon by buyers and growers. This creates economies of scale and helps farmers negotiate better prices, Ms. Uy said.

“The cluster provides the mechanism for quality control, for quick response to buyer feedback, as well as for implementation of market-related innovations as needed,” she added.

Commodity clustering is not new to Mindanao, where it has long been practiced through contract-growing agreements between farmers and large multinational agribusiness firms.

What makes NorminVeggies’ approach different, Ms. Uy said, is that it builds partnerships between small-scale independent growers, including those with tiny family-operated farms, of which Mindanao has thousands.

To ensure the efficient product flow from farms to buyers, NorminVeggies assumes the role of supply chain manager that coordinates, for a fee, the interaction among the small farmers, buyers and service providers like seed and logistics companies and other market actors.
“We see ourselves as growers who are also able to provide business development services for which other growers are prepared to pay,” Ms. Uy said.

NorminVeggies developed its value chain with the help of GEM, which provided training in good agricultural practices, improved post-harvest handling techniques, as well as marketing and logistics assistance.

Ms. Uy said NorminVeggies’ clusters now always produce 50% more than what their contracts require. In this way, any deficiency in the production of one grower can be covered by the others.

NorminVeggies continues to expand its ties with other private groups in its bid to reach more markets. For instance, it recently tied up with the Vegetable Industry Council of Southern Mindanao to supply vegetables to a big hotel in Davao City and with nongovernment organizations like Catholic Relief Services and Philam Foundation to enhance farmers’ knowledge of production technologies and their target markets.

article from Business Week Mindanao

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