By Lantican, Josefina M.

The low and unstable income generated from the prevailing farming and fishing activities in the Philippines keeps a lot of farming families below the poverty line. In order to stabilize and augment the incomes of families involved in farming, the Philippine Government continuously promotes value-adding activities, in its various projects and programmes. Concomitant with the promotion of value-adding activities is the improvement of farm-to-market linkages, which is deemed significant in improving the welfare of farming families in the country.

The study
To analyse and identify specific opportunities that secondary crop farmers can tap through product certification, a collaborative study was undertaken by the Republic of the Philippines-Bureau of Agricultural Research (BAR) and the United Nations Centre for Alleviation of Poverty through Secondary Crops' Development in Asia and the Pacific (CAPSA) in July 2008. The study is specifically aimed at: (1) identifying the linkages between smallholder producers and specific market segments, local and urban markets, and cold store chains; (2) determining the post-harvest practices of smallholder producers like cleaning, handling, and packing; (3) determining the pricing, implicit and explicit quality requirements and indicators, and current certification activities at all stages of the marketing channel; and (4) providing a basis for the preparation of training resources and materials specifically designed for small farmers to enable their linkage to dynamic markets.

The study focused on temperate and semi-temperate vegetables grown in the highlands of the Philippines. It covered Benguet Province in the Cordillera Administrative Region (CAR) and Bukidnon Province in Northern Mindanao Region, which are the major producers of highland vegetables in the country. Primary data and pertinent information related to post-harvest practices were collected from the producers, association/co-operative leaders, wholesalers, and retailers. Information on pricing, implicit and explicit quality requirements and indicators and current certification activities at all stages of the marketing channels were also elicited. The roles of local governments and policies were also studied and analysed.

The results of the study will serve as an input for the production of training materials for farmers, farmer associations or co-operatives and other stakeholders. The results were presented at a workshop in Bandung, Indonesia, attended by representatives of relevant agencies, highland farmers' associations and co-operatives leaders and other stakeholders. A similar workshop will be conducted in the Philippines from 17-18 December 2008. Results will also be posted on the web for wider dissemination.

The highland vegetable industry in the Philippines
The most adaptable areas in the country for temperate vegetable growing are the highlands of the Cordillera Administrative Region (CAR), the most notable of which is Benguet Province. Another area known for temperate and semi-temperate vegetable growing are the plateaus of Bukidnon and Misamis Oriental, in Northern Mindanao. Highland vegetables are also grown in the other regions of the country, but only in small quantities.

Area planted
For the last five years the area planted to major temperate vegetables averaged 41,978 hectare. CAR had the biggest cultivated area, averaging 15,505 ha or 35.7 per cent of the country's overall average area grown to temperate and semi-temperate vegetables. Northern Mindanao, on the other hand, has an arable area of 3,479 ha or 8 per cent of the national average. On the national scale, the biggest land area is devoted to tomato, covering 17,394 ha, followed by cabbage with 7,739 ha and carrots with 3,806 ha.

Average production
For the same period, the country produced an average of 455,069 tons of highland vegetables. Tomatoes had the biggest output volume with 169,095 tons, followed by cabbage and Irish potato with 98,178 and 79,125 tons, respectively. CAR produced an overall volume of 224,538 tons annually, about half of the country's total production. Northern Mindanao contributed 10.5 per cent of the total output. The value of produce traded in the La Trinidad vegetable trading post where most of the produce in CAR is bought stands at PhP 20 billion (US$ 408 million) annually.

Highland vegetables produced in the country are mostly consumed domestically, with low quantities being exported. The per capita consumption of both temperate and tropical vegetables in the Philippines stands at 39 kg annually. To increase consumption to 69 kg per capita as recommended by the Philippine Food and Nutrition Research Institute, the country has to increase vegetable production by 50 per cent. Among the low-income households, vegetables are mostly eaten as the main dish.

Vegetables of the Cordillera Administrative Region
Many vegetable growers in CAR are small landholders tilling half a hectare of land. They are generally grouped into associations and co-operatives. According to Benguet Vegetable Farmers Federation, the growing of vegetables per ha per planting season requires PhP 22,000 (US$ 460) capitalization, incurred mostly for the application of fertilizers (combined organic and inorganic) and pesticides. These input costs usually range from PhP 700-2,000 (US$ 15-42) per application per ha, depending on the rates of application.

The vegetables brought to La Trinidad are sold to wholesalers who later sell to other wholesalers, wholesaler-retailers, or retailers in Metro Manila, Northern Luzon, Central Luzon, Southern Luzon, the Bicol Region, and Eastern Visayas. Vegetables pass through 4 to 8 sets of traders before reaching their final destinations.

The Philippine Department of Agriculture (DA) has provided support to the vegetable industry in Benguet by providing services and various infrastructure of benefit to the farmers. Examples include cold storage facilities in La Trinidad vegetable trading post, and the agricultural tramline for hauling inputs from roadsides up to the farms in the mountains of the cordilleras and hauling fresh produce down.

Vegetables of Northern Mindanao
Cagayan De Oro is the marketing hub for highland vegetables in Mindanao and the site of the major vegetable trading post, the Agora Market. The average volume of vegetables that enter the Agora Market is PhP 1.88 billion annually (US$ 39 million), which is a huge contribution to the local economy of Cagayan De Oro.

Most of the vegetables being brought to Agora Market are produced in the provinces of Misamis Oriental and Bukidnon. In Northern Mindanao. It has been a common practice for many small landholder farmers to secure loans from vegetable traders for the purchase of inputs. In return, they are obliged to sell their produce to the traders who provided the loans, which often deprives them from making a decent profit from their farming activities. Aside from this, many farmers incur huge costs in transporting their produce due to the poor condition of many farm-to-market roads.

At the market, farmers are mostly paid in cash when their produce has been totally sold out. To cover the cost of trimming and cleaning, 10-25 per cent of the total value of the produce is commonly deducted. This is in addition to the PhP 1-2 (US$ 0.02-0.04) per kg of produce usually collected as a storage fee. Vegetables from Agora are commonly transported to the major cities in Mindanao, Visayas and Luzon. Northern Mindanao meets the demand in Metro Manila when production in Luzon falls short due to the destruction of vegetables by typhoons that pass over the island and by cold temperatures in Benguet from December to May, when vegetables, particularly tomatoes, cannot thrive.

Buying and pricing scheme
Traders are often well informed about the prevailing prices in the wholesale and retail markets. This gives them commanding power during price negotiations. Some farmers, who know the existing prices in retail markets, are more willing to bargain for better prices than those who depend entirely on traders' information.

Traders usually impose additional requirements when buying produce at the farm gate level. Most want certain types of vegetables cleaned, sorted and packed. Leafy vegetables like broccoli, cabbage and Chinese cabbage are sold untrimmed because the outer leaves serve as protection against physical damage sustained during transportation. Tomatoes are crated for better protection, while most produce is packed using sacks, as it is less vulnerable to physical damage. But vegetables such as carrots and potatoes, which are prone to decay when getting wet, are allowed to be packed unclean but must be sorted by size.

Most of the vegetables are bought and priced per kg. Tomatoes are priced per crate, while chayote is sold per sack. Untrimmed leafy vegetables such as broccoli, cabbage and Chinese cabbage are weighted first, and then a determined percentage is deducted from the gross weight in computing for the total value of the commodity. In Agora, 25 per cent is deducted from the gross weight of cabbage and Chinese cabbage, while 10 per cent is deducted from the broccoli.

Traders who purchase vegetables from the trading posts in CAR and Northern Mindanao transport the produce to other provinces and cities, where they sell to wholesalers and retailers. The markups from farm gate to wholesale prices range from 27 per cent (string beans) up to 619 per cent (asparagus) in 2007. On the other hand, the markups from farm gate to retail prices range from 114 per cent (string beans) up to 314 per cent (chayote).

Commonly encountered problems
The major problem in the highland vegetable industry is the high cost of transport of farm inputs and produce. This problem is compounded by high post-harvest losses, which are placed at 30-50 per cent (for all types of vegetables) due to poor handling, packaging, transport and storage. Likewise, improper use of fertilizers and pesticides remain a problem of the vegetable industry.

Prices of vegetables in the Philippines are unstable, constantly changing with the fluctuations in supply and demand. At the La Trinidad vegetable trading post, the inflow of vegetables from adjacent regions ensues an oversupply of vegetables, which lowers the price considerably. The continuous fluctuations in prices keep farmers vulnerable to the negative effects of sudden declines of vegetable prices.

Farmers cannot dictate the price of the produce for they commonly have no information on the prevailing prices in the significant retail markets. It has also been a constant problem that many farmers produce vegetables without knowing what type of vegetable is in demand in the market. Many farmers just follow what other farmers are planting or what they think would sell, resulting in 'casino' farming, in which profit is unpredictable.

Product certification in the Philippines
Product certification for vegetables is not a common practice in the Philippines due to the disincentives brought about by the high costs of the certification process, and the small portion of the market that demands certified products. Small farmers cannot afford the expensive certification process. Farming conglomerates, on the other hand, can afford to undergo product certification, but they seem less interested in it due to negligible incentives.

Good Agricultural Practices (GAP) Certification
Good Agricultural Practices (GAP) Certification in the country started in 2005. The Philippine Government developed and enforced the Code of Good Agricultural Practices in order to ensure the safety and quality of produce consumed fresh, to encourage farmers to adopt sustainable agricultural practices, and to increase accessibility of horticultural products to both local and foreign markets. Today, certification is still being popularized.

The Department of Agriculture Certification Schemes are differentiated into three categories according to the applicant type, which could be an individual grower, a produce marketing organization (PMO) with full control of the registered growers of the group, or a company or corporation. Certification involves an on-farm inspection in which the inspector takes samples of water, soil, plant tissue and other important matters for testing. All the materials are tested and the results of the analyses are given back to the producer. The cost of testing is borne by the producer and amounts to PhP 5,250 (US$ 109) per item. An ordinary inspection usually requires a minimum of three items to be tested. All applicants must implement a transparent and traceable system to keep track of the production from sowing to harvesting and packaging. All farm management activities should be well documented to help trace the history of the farm produce. Once certified, farms are enabled to use the Good Agricultural Practice for Fruits and Vegetable Farming mark on their produce and in advertising.

Organic agriculture certification
Organic agriculture in the Philippines is currently promoted and developed by the government in order to attain an agricultural system that is environmentally, socially and economically sound. The Executive Order 481 titled "Promotion and Development of Organic Agriculture in the Philippines" was approved on December 2005 and further strengthened the government's drive towards extensively promoting agricultural farming in the country.

Organic Certification Center of the Philippines (OCCP) is the country's only accredited certifying body for organic agricultural products. It is an independent and private organization, which started certifying in 2004. They set standards for organic production of various agricultural commodities, which are based on internationally approved standards. The organic certification cost a minimum of PhP 15,000 (US$ 313). In certifying organic produce, it is the method of production that is being certified as organic and not the product itself. As such, the standards created by OCCP focus on the cultivation of land, growing of plants and processing of produce.

High priority is given to the use of certified organic seeds and plant materials, plant breeding through conventional methods, and the use of biodegradable materials of microbial, plant or animal origin produced as fertilizers. There is a strict prohibition on the use of synthetic pesticides, and synthetic products like growth regulators and dyes. Products should be handled in a manner in which the good quality is maintained and contamination is avoided. When these qualifications have been met and many other requirements have been fulfilled by the farms, OCCP entitles them to use organic farming certification labels.

Pros and cons of certification
The financial cost of adhering to the standards of the certifying body is the most apparent cost of undergoing certification. Aside from the direct fee, application for certification requires a significant financial outlay for establishing the required facilities, maintaining cleanliness and orderliness in the farm, and keeping an updated record of farm activities.

With organic certification, the transition period for conversion incurs great cost. During the transition, a significant decrease in the quantity of harvest and changes in the quality of the produce has to be expected, causing a sudden, substantial decrease in income.

Even though certification requires a large financial outlay, it is still a risk worth taking for some farmers for it creates benefits in the form of easy market capturing, which results in higher and more stable prices for the produce. Complying with the set standards of the certifying body greatly improves the condition of the farm, quality of produce and welfare of the farmers. The right choice and proper application of fertilizer, pesticides and other farming inputs, which certification promotes, helps improve the condition and productivity of the farm, and helps lessen the wastage incurred by the improper application of farm inputs.

Stabilizing the supply of vegetables through the adoption of an efficient production plan will help minimize wide fluctuations in prices. Moreover, mitigation of the negative effects of unstable vegetable prices can be achieved through improving the flow of price information from the actual market to the farmers. If farmers are informed of the prices existing in the market, negotiating better prices would be much easier. Farmers, who have technological know-how (with the use of cell phones and internet) can be trained in using these technologies to get price information effectively. In the trading posts, posting of prices in major vegetable destinations like Manila, Cebu and Davao is a great way to relay information to the farmers who trade.

The government should encourage farmers to group themselves in associations or co-operatives in order to attain economies of scale and bargaining power leverage. Farmers should also be given training on how to take advantage of the support given by the government through relevant projects and programmes.

Lowering the cost of certification will significantly help to encourage more farmers to undergo certification. Subsidizing the entire cost of certification for some farmers is an option the government may use in promoting production using good agricultural practices. The selected farmers will serve as case study demonstrations on deriving more benefits from certification.

The importance of consuming certified good quality vegetable products should be made known to the public in order to create sufficient demand that would bring forth incentives for farmers to undergo certification. The benefits of consuming certified products should be popularized. Making the certification accredited in the foreign market will also help in widening the market that can be accessed by certified products, thus creating much larger incentive for certification.

(References available upon request)