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Country
Philippines
Project Code
PLIA/2005/151
Project Title
PLIA/2005/151: Philippines policy linkages scoping study
Resource Type
Project Leader
Date
2008-01-14
Report
The agriculture sector remains an important pillar in the development of the Philippine economy. In the past decades, however, the sector’s growth performance has been weak that led to the erosion of its revealed comparative advantage especially vis-à-vis the other Asian countries. Low and declining productivity levels in almost all commodities have primarily accounted for the poor performance of the agriculture sector. Other factors that have exacerbated the gradual erosion of yield growth include the degradation of natural resources, the country’s geographical diversity that accounts for the differential capacity of the regions to respond to opportunities including the implementation of projects or the adoption of new technologies, high incidence of unemployment and under employment, rapid population growth and high incidence of poverty and hunger. Overcoming these problems that hinder productivity growth has not been easy despite the institution of wellformulated policy reforms supposedly to get the agriculture sector back on track towards steady growth and development. The policy environment remained constricted rather than broad-based such that:
  • public investment in commodity development (especially through R&D), extension, infrastructure, and human capacity development remained low and misallocated
  • property rights and regulatory systems remained poorly defined and weakly implemented
  • more innovative rural financing schemes continued to be lacking especially those that cater to small farmers
  • archaic price and market policies were maintained that perpetuated monopolistic and oligopolistic systems
  • continued lack of transparency and accountability that eroded confidence in government’s ability to do business and provide services.
It has affected the implementation even of well-meaning programs and projects, some of which have fallen short of their expected goals and, hence, of pushing the agriculture sector to develop appropriately. The relatively low uptake of projects, including those of ACIAR’s, is partly attributed to policy and institutional bottlenecks that slowdown the dissemination of benefits. The ACIAR Philippines program began in 1983 with a number of projects dedicated to research on soil management issues – nutrient management, erosion control, rice cropping systems, biological nitrogen fixation, and tree establishment on degraded land. In time, the areas of focus have expanded, so that over the past 23 years, the scope of ACIAR’s work in the Philippines has covered the broad ambit of agricultural and primary industry livelihoods, including: animal sciences, crop sciences, fisheries, forestry, land and water resources, on-farm systems, postharvest technology, and public policy and agricultural and natural resource economics. To date, ACIAR projects in the Philippines number about 130 separate activities with total funding support exceeding $ 50 million. In real terms, annual expenditure has ranged from a high of $3.6 million (in real terms) in 1993-94 to a low of $1.3 million in 1998-99 to $2.9million in 2006-07. Uptake of ACIAR research has not been satisfactory. Of the number of projects reviewed that were conducted or with some activities conducted in the Philippines, only very few indicated some uptake but which are based on assumptions. Most of the projects had little or no uptake at all. A recent ACIAR Adoption Study (ACIAR 2004) identified six factors inhibiting the uptake of new technology and practical research:
  • bureaucratic barriers to further development and implementation of project results
  • shortage of essential facilities and/or equipment and/or expertise to use it
  • limited number of field trials and demonstrations to provide visible proof of the effectiveness of the new approach
  • competition from cheaper alternatives
  • time lag – where the results from implementing research are not immediately apparent
  • no existing domestic market and/or poor infrastructure to support industry development.
Combined, these six factors suggest that ACIAR research undertaken in the Philippines has been stifled by two issues. Firstly, the research itself has not been taken up – in essence, the hurdles to adoption, including bureaucratic constraints, risk factors associated with adopting, and others, exceed the real or perceived benefit of the research. At the same time, the benefits of the research have been reduced through the lack of markets or market access as well as high transportation costs and increased competition. The emerging perceptions suggest policy is a barrier to achieving the benefits of research. As such, there may be value for ACIAR to look into identifying areas where policy change may occur and to position the research portfolio to take advantage of such changes. The relevance of future policy research lies not only on its ability to make farm incomes rise but also to ensure that this environment becomes stable by empowering the LGUs and other development partners to take on the greater role of defining a more people centered development objectives and achieving them. The study points to policy research activities in two possible areas, one to do with activities to bring about policy reform on a broad front, another to do with policy analysis relating to particular technical project areas. Tackling policy reform on a wide front seems to be a high priority in the Philippines, and possibly in other developing countries. Whether ACIAR could usefully support activities in this sphere would depend on several considerations, two of which pertain to:
  • the size of the policy reform agenda (settling priorities may become difficult if the agenda is very large)
  • the little comparative advantage that Australians may derive from sound policy analysis, except perhaps when these are drawn on relevant Australian experience.
Australian support, for instance, could be useful particularly in areas that relate to project development and for which specific policy scoping studies might be relevant. Australia’s experience (both good and bad) in agricultural policy reforms over the past 30 years, which have had quite significant adjustments, may be helpful to the Philippines. Such policy reforms have been helped by two special features in its policy environment: (1) the creation of the Productivity Commission (formerly the Industry Commission), which is an independent, economy-wide, transparent advisory agency that conducts public inquiries on industry assistance and regulation for over 30 years; and (2) the National Competition Policy, which derives from an agreement by all Australian governments to review and test all regulations in terms of the public interest. Of the list of areas where policy scoping maybe useful to ensure success, further development of the high-value crops should be stressed. This is not only because of their strong export potential but also because of their strong forward linkages to the agribusiness sector. The potentials of the aquaculture industry should be sustainably exploited to boost households’ incomes, especially among the small fisherfolk. A particular aspect of private sector participation that needs to be strengthened pertains to the promotion of a more efficient distribution of agricultural products. In this regard, policies have to be rectified to enable a more vigorous development of the transport system, especially the maritime/shipping industry that could facilitate the integration of development efforts not only across the country’s numerous island regions but also with other countries.  
Date of Information
January 14, 2008
Document Owner
Project Leader Country
Content Language
English
Keywords/Tags
Project Topics
Markets
Country
Pakistan
Project Code
PLIA/2005/159
Project Title
PLIA/2005/159: A constraints analysis of mango supply chain improvement in Pakistan
Resource Type
Project Leader
Date
2007-11-02
Report
Objectives and Approach This Short Research Activity (SRA PLIA/2005/159) was undertaken as part of an Agriculture Sector Linkage Program (ASLP) between Pakistan and Australia, bringing together stakeholders involved in mango research, development and extension (RD&E). The aim of this SRA was to broadly identify and analyse the constraints currently limiting the competitiveness of supply chains for Pakistan mangoes. The specific objectives of this constraints analysis were to:
  1. broadly identify the types of markets and their needs;
  2. broadly identify the various components and associated impediments in representative supply chains;
  3. identify options to build better commercial linkages between all components of the supply chain;
  4. provide recommendations for an R&D project PLIA/2005/159 ‘A constraints analysis of mango supply chain improvement in Pakistan (scoping study)’ to improve the competitiveness of mango supply chains in Pakistan;
  5. review the policy environment influencing mango production, distribution and marketing and assess whether this is likely to hinder development of more competitive mango supply chains.
A project team comprising Associate Professors Ray Collins (team leader) and Tony Dunne from the University of Queensland, Ms Jodie Campbell from the Queensland Department of Primary Industries and Fisheries, Mr Peter Johnson from the Western Australia Department of Agriculture, and Dr Aman Ullah Malik from the University of Agriculture Faisalabad, Pakistan, undertook the research in Pakistan and Singapore from 25 March to 9 April 2006. Valuable assistance was provided by the Pakistan Horticulture Development and Export Board (PHDEB). A parallel small research activity (HORT2005/154) was carried out by a six-member Australian team whose task was to investigate mango production systems with an emphasis on disease and pest management. The results from this team’s findings provided input to the activities of the supply chain team. Linking the two teams’ activities and findings reflects the systems-based approach that is being proposed to improve the Pakistan mango industry. Scoping study activities began with a four day workshop in Multan, attended by a wide range of industry and government stakeholders. The objective of the workshop was to consider the present Pakistani mango industry, the Australian mango industry, the prospects for future development of the Pakistan industry, and any implications for development of the Australian industry. Following the workshop, the team undertook field visits, interviews and observations involving the full range of participants in mango supply chains, including growers, contractors, commission agents, transport operators, exporters, importers (Singapore), retailers (Singapore), quality management companies, freight forwarders, shippers, and support agencies such as PHDEB, universities, government departments and wholesale market committees. This phase of the project took a further nine days. Industry Background Pakistan is the world’s fifth largest mango producer with an annual crop of around one million tonnes. It exports about 80 000 tonnes, mainly to the Middle East and the UK. Less than 3 per cent of the crop is used for processing, mostly into mango pulp. Production is centred in the regions of the Punjab and the Sindh. Harvest begins in the Sindh in late May and finishes in the Punjab in late August. The principal varieties are Sindhri, which dominates Sindh production, and Chaunsa, which dominates Punjab production. Pakistan mangoes are sweet, aromatic, yellow skinned and soft. Mango farms range in size from less than 2ha to more than 400ha. Production, postharvest and marketing systems are poorly developed and returns are distributed quite unevenly, favouring middlemen. Fruit quality is generally poor and 30 to 40 per cent of fruit is wasted in the harvest-to-market system. Modern infrastructure for cool storage, grading, postharvest treatment and transport is almost non-existent. Periodic gluts occur on domestic markets and with no capacity to store fruit, heavy discounting of retail prices is common. The export market faces similar challenges. Pakistan mangoes have a reputation as being cheap and of poor quality, and exporters have a tendency to dump fruit in markets such as the UAE. In general, there is little evidence of a value-oriented approach to supply chain management and there are concerns that current returns for growers are unviable. Compounding this situation, mango tree dieback and decline is beginning to further reduce productivity. Existing Supply Chains and Impediments Domestic retailers include street hawkers, fruit and vegetable shops, supermarkets, roadside stalls and food service outlets. Most mangoes in Pakistan are sold by street hawkers, who purchase their daily requirements from local wholesale markets. Specialist fruit and vegetable shops are uncommon, but are found in larger cities. Very few supermarkets operate in Pakistan but multinationals are expected to open in 2-3 years. Roadside stalls in mango production areas sell fourth or reject grade fruit at low prices. Food service outlets include better quality hotels, which may include mangoes in fruit baskets in guests’ rooms, and restaurants that serve mangoes in season. The major export destinations for Pakistan mangoes are the Middle East, the U.K. and Europe. The majority of exports are consumed by expatriate Pakistanis and other Asian communities living abroad. On export markets, Pakistan mangoes have a reputation as low priced, of low postharvest quality, yet with inherently good eating properties. Domestic chains are fragmented and involve numerous stakeholders. Most chain activities are controlled by commission agents, who provide finance to the contractors and determine the scheduling and flow of fruit from the contractor to the wholesale market. The major impediments identified in domestic supply chains were:
  • The product subsystem: the poor quality of mangoes that reach the final consumer is a result of poor production systems coupled with inadequate handling, storage and transport systems;
  • The communication subsystem: the absence of effective information flows within the chain inhibits feedback from markets;
  • The value subsystem: the wide variations among prices at farm, wholesale market and retail levels point to a system where there are few rewards for quality;
  • The governance subsystem: the dominant role of commission agents indicates a system where it may be difficult to change the status quo.
The major export supply chain impediments were found to be:
  • The product subsystem: there was no effective quality management or trace-back system available for product sourced from the wholesale markets; there is a lack of knowledge concerning appropriate handling, storage and transport systems;
  • The communication subsystem: there was little evidence of effective information flows within the chain; there was an absence of market research on existing or potential export markets;
  • The value subsystem: while the inherently superior eating quality of Pakistani mangoes was widely recognized, market development and profitability were reported as being undermined by low product quality, inconsistency and unreliable supply;
  • The governance subsystem: there was a perception that many exporters were not interested in developing long term marketing partnerships with importers.
Improving Supply Chain performance Growers, whether large or small, need better access to information, specific skills training and more incentive to take responsibility for the quality of mangoes they produce. Growers are relatively disempowered in the supply chain and would benefit from belonging to alliances for skills development, as well as through-chain commercial alliances. Contractors’ performance was rated low in terms of its impact on product quality. Their operations are guided and financed by commission agents, and they have little power to voluntarily change their present practices. Improving commercial linkages between contractors and other chain members would require the support and encouragement of commission agents. Commission agents hold most of the power in the supply chain, and any chain improvement strategy would depend on their support and involvement. Processors expressed concern that they were seen as a dumping ground for lowest quality fruit when in fact their requirement was for sound, fully mature mangoes. Improving commercial linkages with processors will involve education of suppliers about processors’ needs and their ability to pay for fruit that meets those needs. Exporters expressed a wide range of concerns over fruit quality and the performance of the supply chain. Some of their practices had no scientific basis, each exporter doing what they thought to be ‘the right things’. They were eager to learn how to extend mango shelf life and how to access new markets. There is a clear need for technical information to improve exporters’ practices. Recommendations for RD&E Improving product quality and reducing losses is the highest priority, requiring a multi-faceted strategy spanning pre-harvest and postharvest practices, training, R&D, and demonstrations. Value creation and appropriation is characterised by low overall levels of value, distributed asymmetrically. Improvements in quality will drive improvements in value. Information systems must be improved so that they become the vehicle for messages about improving product quality, the needs of other chain members and feedback from markets. Overarching these improvements is the need for integrated supply chain governance. Governance will focus on issues such as rules of operation, efficiency and equity in chain performance, and the chain’s ability to respond to changing circumstances. Four possible R&D approaches are identified. They are training, research, demonstrations and capacity building. Each can be applied at the industrywide level, at the level of specific operators in the supply chain such as growers, transport operators, contractors, etc., or at the level of a specific supply chain. Not all approaches can be used at all levels. Training will be targeted at specific chains and levels in chains; research will focus on industry-wide problems; demonstration activities will be oriented towards specific chains; and capacity building will be at the industry-wide and specific chain levels. Three research objectives emerge from this scoping study. They are:
  1. mango quality improvement and maintenance;
  2. market research (domestic and export)
  3. developing demonstration supply chains (domestic and export).
Objective 1 will be informed by a parallel SRA project, HORT2005/154, which is focused on mango pest and disease management. Objectives 1 and 2 will feed into objective 3, which will provide examples of how the four supply chain sub-systems (see above) can be integrated so as to produce mangoes of improved quality, generate improved market returns for this quality, distribute that value equitably, gather and feed back information that encourages continuation of improved practices, and govern the supply chain as a single competitive unit. Participants for these demonstration supply chains have been identified during this scoping study. Institutional frameworks A study of institutional frameworks has become the subject of a separate project. In brief, the mango industry in Pakistan operates in a largely unregulated environment. The country’s Rapid Export Growth Strategy could provide considerable impetus to developing the mango industry. The main supporting agency for the mango industry is the Pakistan Horticulture Development and Export Board, which is doing an excellent job. Opportunities exist to strengthen institutions such as the University of Agriculture Faisalabad.
Date of Information
November 2, 2007
Document Owner
Project Leader Country
Content Language
English
Keywords/Tags
Project Topics
Markets