Banana Processing Businesses and Thier Support Environment in the Phil
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Transcript of Banana Processing Businesses and Thier Support Environment in the Phil
ANALYSIS OF BANANA PROCESSING BUSINESSES AND THEIR SUPPORT ENVIRONMENT IN THE PHILIPPINES
Argañosa S. Arturo, Perlita A. Nuevo, Jocelyn E. Eusebio and Bessie M. Burgos INTRODUCTION
The Philippines is one of the major producers of banana in the world. In fact, it ranked
fifth in global production in the year 2000 with India, Brazil, China and Ecuador on top of the
list. Banana also accounted for 3.3% (P6.6 B at constant price) of the total value of production
in agriculture in the year 2001. Moreover, it ranked second among the top Philippine exports in
the year 1999 and 2000. This makes banana a consistent dollar earner with export revenues of
more than US $200 M annually.
The strength of the banana industry lies on the big hectarage, which is a little more than
half (53.8%) of the total land area planted to fruits (621,861 has). The country is also blessed
with favorable climate, well suited for growing bananas all year round. There are already
existing banana cultivars accepted in domestic and export markets. The major cultivars are
Cavendish and Señorita for the fresh export market, Saba and Cardaba for processed products
(chips and crackers), Lakatan, Bungolan, Latundan, and Señorita for fresh local market.
In the year 2004, the total area planted to banana was estimated at 414,510 has, 44% of
which is planted to Saba. The total volume of banana production in 2004 was estimated to be
5,631,250 metric tons. Of this volume, 29% goes to export as fresh fruit, 18% goes to the
processing sector, and 49% goes to the local market and used for various food items.
As earlier stated, the Saba variety is often used for processing especially for banana chips.
In Mindanao alone, there are 26 processing plants for banana chips with a capacity of 20-60
tons per day per plant. In a survey conducted in 2003, the total plant capacity is estimated to
be 440 t/day but the actual average daily volume of banana chip produced was only 242 t/day
or short of 198 t/day. The total banana chip production on daily basis of 242 tons is far short
from the estimated 600 tons daily requirements for banana chips. The total banana chips
export in 2004 is reported to be 36,538 tons valued at US$ 36.86 M. The top ten export
destinations of banana chips is presented in Table 1. Recently, however, banana chip
2
processors have reduced the buying price from P4.30 – 4.50/kg to P3.30 – 3.50/kg. Reports
indicated that the main reason is the reduction in volume of banana chips being imported by
China, the second biggest single country market of the product.
Inspite of this, the growth potential for banana processed products remains high. The
country has still a large area of land suited for banana production while its population growth
rate remains above 2% annually. With more effort to disseminate relevant information, more
people can be enticed to go into business of banana production and processing.
Objectives:
1. Identify the strengths and weaknesses of small banana processing businesses; 2. Analyze the availability of information and services for small rural processing
businesses which contribute to their efforts to compete; 3. Analyze the potential of small processing businesses to contribute to rural
development; 4. Profile the mechanisms for information flow and collaboration and areas of non-
communication among the important agents linked to adding value to banana through processing;
5. Analyze the experience of a project which promoted small rural processing businesses; 6. Identify possible strategies for improving the conditions for the start up and expansion
of small processing businesses which contribute to rural development. These strategies may depend on closer links among specialists from production, food processing and business support.
Table 1. Top 10 export destinations for banana chips
January to December 2004 (preliminary) Country of Destination
Gross Kilos Quantity FOB Value Rank $/Kg Canada 783,239 725,538 868,583 10 1.197 China, People’s Republic of 7,496,311 6,879,085 5,867,516 2 0.853 Taiwan (Republic of China) 4,365,256 3,516,871 4,169,241 3 1.185 France 2,513,636 2,247,298 2,293,981 6 1.021 Germany 3,968,409 3,647,766 3,221,374 5 0.883 Hongkong 2,018,834 1,829,742 1,574,296 8 0.860 Japan (excludes Okinawa) 1,664,738 1,496,255 1,626,530 7 1.087 Netherlands 1,239,034 1,156,151 1,111,671 9 0.962 UK (Great Britain and N. Ireland) 3,245,700 3,003,258 3,252,219 4 1.083 United States of America 6,764,450 3,003,258 3,252,219 1 1.122
Total 40,561,835 36,538,029 36,860,284 1.009 Source: Bureau of Agricultural Statistics, 2004
3
I. Forming the National Team
Figure 1 shows the organizational structure approved by the National Steering
Committee organized in relation to the holding of the First International Banana Uses
Workshop in the Philippines.
As to the Country Study Team, the National Steering Committee agreed that this will
be composed of the Head of the Technology Packaging Unit of the Technology Outreach
and Promotion Division of PCARRD, the Director of the Crops Research Division of
PCARRD, and a Technical Expert on post harvest handling and processing from the
University of the Philippines at Los Baños (UPLB).
The Terms of Reference of the Country Study Team include: 1) profile the different
small-scale banana businesses and the service providers that support the banana
processing businesses, 2) organize a small group workshop to validate the data gathered
and 3-4 banana processing enterprises to conduct an in-depth study, 3) process and
organize the results of the survey, and 4) prepare the output of the survey for
presentation of the team to the international workshop.
After organizing the Study Team, it was agreed that the study will be conducted in
Southern Tagalog provinces, Region 4 which is composed of 10 provinces with Quezon,
Oriental Mindoro and Occidental Mindoro as the leading banana producers (Figure 2). .
II. Preliminary View of Banana Processing
A. Banana Products in the Market
In the beginning of the study, the Study Team listed the different product
preparations where banana is an ingredient. These products are the following: a)
Snack foods (banana cue, banana splits, chips/crackers), b) banana sauce, c)
flavorings and extracts, d) food ingredients, e) extenders, f) fabrics, g) novelty items,
h) food wrapper and liners, i) animal feeds, and j) organic fertilizers.
Thereafter, the list of enterprises registered with the Department of Trade and
Industry (DTI) Central Office was listed (Table 2). There are 12 businesses engaged
mainly in the production of banana chips all of them operating outside the Southern
Tagalog provinces. These enterprises are big corporations involved in the processing
of many other processed products.
4
Figure 1. Organizational Structure for the First Global Banana Uses Enterprise Workshop
National Steering Committee
• INIBAP - Dr. Agustin B. Molina • PCARRD - Dr. Patricio S. Faylon • DA-BAR - Dir. Nicomedes Eleazar • CvSU – Dr. Ruperto Sangalang
International Coordinating Committee • Dr. Charles Staver • INIBAP Regional Coordinators
WORKSHOP/EVENTS COORDINATING COMMITTEE
Chairman: Dr. Bessie Burgos, PCARRD Members: Dr. Vic Guiam, DA-BAR Ms. Versalyn Roa, INIBAP Ms. Yolanda Tanyag, PCARRD
TOR • Lead in the local arrangement/coordination and
implementation of the international workshop • Supervise the activities of the Techno Fair Team
and Country Survey team
Techno Fair Team
Leader: Dr. Simeon Crucido, CvSU Members: Ms. Edna Vida, CvSU PCARRD Staff DA-BAR Staff
TOR
• Organize the Techno Fair • Invite and arrange participation of exhibitors • Put up physical facilities for the exhibits • Organize techno forum/symposium • Document the organization of techno-fair
Country Survey Team
Team Leader: Dr. Arturo Argañosa, PCARRD Members: Dr. Jocelyn Eusebio, PCARRD Dr. Perlita Nuevo, UPLB
TOR • Profile the different small-scale banana
businesses and the service providers that support the banana businesses
• Organize a small group workshop to validate the data gathered and select 3-4 banana enterprises to conduct an in depth study
• Process and organize the results of the survey • Prepare the output of the survey for
presentation of the team to the international workshop
5
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Map of the Philippines
Palawan
Rizal
LagunaCavite
Batangas
Occidental Mindoro
Oriental Mindoro
Marinduque
Romblon
Quezon
Figure 2. Southern Tagalog Region (Region 4) with Quezon, Oriental Mindoro and Mindoro Occidental as leading banana producers
6
Table 2. DTI list of companies which are into production and export of banana chips.
Name of Company Address Contact Person/Position Contact No. Tel. : (632) 838-4434
837-0378 B-G Fruits & Nuts Mfg. Corp. 621 Building, FTI Complex
Taguig Metro, Manila Ms. Benny T. Badenas Vice President
Fax: (632) 838-4563 Tel. : (6385) 342-7777 Celebes Agricultural Corp. 60 Lapu-lapu Avenue
San Antonio Village, Lahug Cebu City 6000
Mr. Rory Eddie Ong Yiu President Fax: (6385) 342-8888
Tel. : (632) 815-1831 815-0580
El Coco Mfg., & Trading Corporation.
Rm. 2309 Tower 1 Cityland 10 6815 Ayala Avenue Makati City
Mr. Leopoldo Estrellado President
Fax: (632) 810-0532 Tel. : (6383) 552-6754
501-0732 Greenville Agro Corporation Matin-ao, Polomolok
South Cotatabo Mr. Michael Rene Ong Yiu President
Fax: (6383) 501-0051 Tel. : (632) 641-0991
641-0995 International Food Snacks
Corporation 88 San Guillermo Avenue Bo. Buting, Pasig, MM
Mr. Ruben See President
Fax: (632) 641-0992 Tel. : (632)936-7246 to 48
930-6001 to 05 Festive Foods International,
Inc. (formerly Jona’s Int’l. Phils., Inc.)
Dolmar Bldg., 56 EDSA Mandaluyong City, MM
Mr. Philip Young President & CEO
Fax: (632) 936-7245 939-5828
Tel. : (6382) 221-1528 300-5495
Koki Food International, Inc. Villamor Street, Bo. Obrero Davao City
Ms. Marilou Fernandez
Fax: (6382) 300-5494 (632) 410-0522
Tel. : (02) 911-7240/2070 8549/713-4018
L. Dometita & Sons Food Industries
15 L. Rivera St. & J.P. Rizal St. Projj. 4, Quezon City
Mr. Leopoldo A. Dometita Asst. to the Manager
Fax: (02) 911-8549 Tel. :(632) 823-2566 to 70 Leslie Corporation 4 Dama de Noche St.
United Parañaque Subd. IV Parañaque City
Ms. Cristy Enriquez Import-Export Officer Fax: (632) 823-3708
Tel. : (632) 912-2777 438-5837
See’s International Food Mfg. Corp.
66 Imperial St., Cubao Quezon City
Mr. Ruben Lim See President
Fax: (632) 438-4662 421-9149
Tel. : (083) 228-2262 SUNBLISS Internationale ExImports
Gensan Drive & Odi St. Koronadal, South Cotabato
Mr. Carlos L. Bautista General Manager Fax: (083) 228-2028
Tel. : (6334) 460-3186 Reliance Ore Co., Inc. Had. Candelaria, San Enrique Negros Occidental
Mr. Ciriano D. Sia. Jr. Marketing Head Fax: (6334) 460-3186
Failing to get a list of banana processing enterprise in Southern Tagalog provinces
from the Central Office of the DTI, the Study Team visited the DTI Regional Office for
Southern Tagalog. Again, the effort provided negative results. Hence, the Study
Team turned to the different Provincial Offices of the DTI. The provincial DTI office
of Laguna showed four enterprises involved in the processing of banana products,
two in banana chips and two in banana sauce.
7
A visit to the DTI Provincial Office in Oriental Mindoro was also done. There are
three known enterprises in the province engaged in the production of banana chips.
All of them are registered with the DTI.
After establishing that, the Regional Office in Southern Tagalog of the Department
of Science and Technology (DOST) is actively involved in providing technical
assistance to small food processing businesses, the Study Team sought their
assistance. The Study Team was informed that there is a cooperative engaged in the
production of banana chips and sauce in Calatrava, Romblon.
To get more information on banana processed products, the Study Team went to
the different DOST agencies. The Food and Nutrition Research Institute (FNRI) has
developed a baby food with banana as one of the ingredients. Unfortunately, the
product has not been commercialized. A number of banana processed products were
also developed by the Industrial Technology Development Institute (ITDI), such as,
banana flakes and banana powder. However, these products are still awaiting
commercialization. The development of these banana products was funded and
coordinated by the Philippine Council for Industry and Energy Research and
Development (PCIERD), DOST.
The study team also visited Divisoria in Manila, the biggest trading center of
agricultural products and supplies in the country. Indeed, one could find in the
Divisoria market not only the raw materials for banana processing but also the
processed banana products as well as supplies and equipment used in the processing
of banana. The fresh Lakatan fruits are mostly coming from Mindanao while the
supply of Saba is being sourced mainly from the Mindoro provinces. The bulk of the
Saba is being bought by banana-cue processors from all over Metro Manila with some
even coming from the nearby provinces. The study team was informed that overripe
Saba is being purchased by individuals who process it into various banana products.
Repeated follow-ups, however, proved futile in locating these processors.
The banana processed products found in the Divisoria market are banana catsup,
banana extracts used for flavorings, banana powder, and banana chips. Even banana
leaves used as food wrappers and liners are sold in the market.
8
The different supplies being used for banana processing available in the Divisoria
market are: bottle and plastic containers, bottle sealers, plastic sealers, strainers,
large frying pan for cooking, and cooking.
B. Technical Support Sector
Table 3 shows the different organizations, mostly government, that provide
various services for the establishment and operation of small banana processing
businesses including product certification, promotion and marketing.
Technical support is almost always provided by the Provincial Science and
Technology Office (PSTO) to prospective and even existing small food processing
businesses. The PSTO provides assistance in the preparation of feasibility studies and
the technical training on food processing. If the manpower capability of the PSTO is
inadequate, the PSTO coordinates with the different agencies of the DOST and other
service providers who have the capability to provide technical training.
The local state college or university that has a food-processing center is likewise
tapped to provide technical training on food processing.
C. Sectors Related to Small Business Start Up and Operations
The Provincial Center of the DTI is responsible in providing business management
and marketing aspects to prospective small business entrepreneurs necessary to start
the business. The Provincial Center of the DTI also takes the lead in the promotion
and marketing of the processed food products. In some cases, the TESDA provides
the necessary trainings on entrepreneurship and value formation.
In terms of product analysis, the Food Development Center and the Packaging
Research and Development Center are recognized by the Bureau of Food and Drug
Administration for product registration.
For financial requirements, the Land Bank of the Philippines, the Technology and
Livelihood Resource Center, the LGU’s Livelihood Funds (if existing), and Small
Business Guarantee and Finance Corporations are usually relied upon by the SMSEs
proprietors.
In trouble-shooting and evaluation of processing equipment, the Industrial
Technology Development Institute and the Suppliers take the lead.
9
Table 3. Different organizations providing various services for the establishment and operation of small banana processing businesses including product certification, promotion and marketing.
Type of Organization Name of Organization Services Offered Type of Business Research and Development Food and Nutrition Research
Institute (FNRI) - DOST • Research and development • Product promotion
MSMEs
Industrial Technology and Development Institute (ITDI) - DOST
• Research and development, product promotion and commercialization
• Training • Prototype development of
processing equipment • Technical assistance • Development of labels and
packaging materials
MSMEs
PCARRD and Philippine Council for Industry and Energy Research and Development (PCIERD) – DOST
• Coordination and funding of R&D and commercialization of processed food products
MSMEs
University of the Philippines Los Baños (UPLB)
• Research and development • Technical assistance
MSMEs
Cavite State University (CvSU) • Research and development • Product promotion • Technical assistance
MSMEs
Technical Assistance - training - product promotion and
marketing - feasibility study
preparation
Department of Trade and Industry (DTI) Provincial Center
• Product promotion and marketing
• Organization and trade fair • Training on entrepreneurship • Issuance of business name
and business certification
MSMEs
Technical Education and Skills Development Authority (TESDA)
• Coordination and funding of trainings on food processing entrepreneurship and value formation
MSMEs
Provincial Science and Technology Office, DOST
• Feasibility preparation • Training on food processing • Coordination of technical
assistance to food processing business
MSMEs
Product Analysis and Certification
Bureau of Food and Drug Administration (BFDA)
• Product certification
All
Food Development Center • Microbial and chemical analysis of food products
All
Packaging Research and Development Center, ITDI - DOST
• Analysis of nutrient contents of food products
All
Export Bureau of Export and Promotion, DTI
• Coordination of international trade fair
• Export promotion of food products
All
PhilFooDex • Export promotion of food products
All
10
Financing Land Bank of the Philippines (LBP)
• Financing and cooperative development
Cooperatives
LGUs Livelihood Funds • Financing Microenterprise Technology and Livelihood
Resource Center (TLRC) • Financing Micro and Small
enterprise Small Business Guarantee and
Finance Corporation, DTI • Financing of SMS enterprise MSMEs
Barangay Micro Business Enterprise (BMBE)
• Financing Barangay enterprise
Development of Processing Equipment
Industrial Technology and Development Institute (ITDI) – DOST
• Prototype development • Technical assistance on
operating the processing equipment
All
D. Size and Nature of Processing Businesses
It is noted that in Table 2, there are 12 big companies engaged in the production
of banana chips. In a study conducted in Regions 11, 12, and 13 on banana chips
production, only five companies are included in the DTI list while five others are not.
There are other three big banana chips producers in the three regions that did not
provide any information during the conduct of the study. The results of the study
showed that each company is producing at least 10 tons per day of banana chips.
In the latest situationer of the banana chips industry, the total production of
banana chips in the country is estimated to be 400 tons per day. It is 200 tons short
of the 600 tons requirements for banana chips on a daily basis. The banana chips
export in 2004 was estimated to be 36,538 tons valued at US$ 36.86 M.
In the current survey covering the Southern Tagalog Region (Region 4) where six
small banana chip processors are involved, it was found that their banana chips are
marketed locally. It could be presumed that their production is not part of the annual
estimate of total banana chips production in the country. Hence, it is actually difficult
to decipher the total production of banana chips in the Philippines.
III. Preliminary Workshop
After gathering substantial data on banana processing businesses and support service
providers, the Study Team convened a preliminary workshop. However, a little
adjustment from the methodology was done. Instead of inviting a large number of
participants as suggested in the methodology, the Study Team just selected key
11
representatives from the banana processing sectors. The participants in the preliminary
workshop are representatives from the following groups/agencies, as follows:
1) Processor – Zcorcuerra Food Products
2) Financial institution – LandBank of the Philippines
3) Department of Science and Technology (DOST) Regional Office No. 4
4) Department of Trade and Industry (DTI) Provincial Center in Laguna
5) State Universities – UP Los Baños (UPLB) and Cavite State University (CvSU)
6) Department of Agriculture – Bureau of Agricultural Research (BAR)
7) PCARRD
The participants in the preliminary workshop conducted a focused-group discussion as
to their role and activities in relation to banana processing businesses. Each participant
shared their organization’s programs and projects in food processing. Likewise, the
participants shared information as to other groups and institutions who are involved in
banana processing businesses. The outputs of the workshop are mostly reflected in Table
4.
At the end of the preliminary workshop it was agreed to meet again in the final
workshop to validate the results of the survey.
IV. Analysis of Processing Businesses
The Study Team conducted an analysis of three enterprises involved in banana
processing businesses, namely: Mikko Banana Crackers, Zcorcuerra, and Arya Calatrava
Food Products.
Mikko Banana Crackers and Zcorcuerra Banana Chips are micro enterprises which are
into the processing of banana chips. Arya Calatrava Food Products is likewise classified
as small-owned and operated by the association of women in Calatrava, Romblon which
is into the processing of catsup and banana chips
A. Mikko Banana Crackers
1. General Information
Name of Business : Mikko Banana Crackers Contact Number: 0920-857-6585 Name of Contact: Mr. Benjamin Esclanda, Jr.
Owner-Operator Primary Products: Banana Chips/Crackers Brand: Mikko Banana Crackers
12
Certification: In progress Clients of the products: Local tourists and residents
Oriental Mindoro and Manila
2. The Original Idea and the start up/establishment of the business
The owner-operator started the business in 1997 when he learned the
technology of banana chip processing from a good friend. The tools needed in
processing like in peeling, chipping, and cooking (Figures 4, 5, and 6) are simple
and could easily be fabricated or sourced from the local market. The business
project was started at the backyard of the owner. The owner made a trial and
error testing the banana chips until he came out with a good product which
eventually was sold at the Pinamalayan Public Market. Therefore, the project was
started without any feasibility study or an investment plan.
Two years later, however, the business project was not going anywhere so he
approached the Provincial DTI Office to seek for assistance. He was referred to
the DOST Provincial S&T Center (DOST-PSTC). The DOST-PSTC conducted an
assessment of the project and found out that the main problem was operating
capital. The DOST-PSTC assisted the owner by preparing a feasibility study which
was used for sourcing the capital. Fortunately, the Local Government of
Pinamalayan, Oriental Mindoro has livelihood fund to Microfinance Small
Enterprises.
Eventually, the owner availed a P60,000.00 loan from the Pinamalayan LGU
Livelihood Fund. The amount was used to build the present site of business
project in Socorro, Oriental Mindoro.
3. Technology and Organization of the processing of banana
The present site of the Mikko’s banana chip factory is approximately 50m2
house where the peeling, chipping, cooking, and drying are done. The factory has
a concrete floor and galvanized iron sheet roofing but the walls are made of
lumber slabs from locally sourced woods.
Right after the entrance of the factory is a place where the raw bananas are
piled up. This is where the peeling is done and the peeled bananas go to the right
side where the chipper is positioned. After chipping, the banana chips are put in
13
pails with water then finally to the frying pan located at the farther right of the
chipper. After cooking, the cooked banana chips are transferred to a strainer on
the table just on the left side of the frying pan. After draining the oil, the chips
are transferred to a container for final cooking before the chips are placed in a big
plastic bag. A day after, the chips are transferred to small plastic sachet
(polypropylene) with a capacity of 100 and 150 grams. The sachets are then
sealed with the brand in it.
The peeler being used is an improvised knife while the chipper is made of
metal sheet mounted on a piece of wood. The furnace/burner is made of an
indigenous technology which is being fed with rice hull as fuel. The frying pan is
also locally made. The newly cooked chips are harvested using a strainer sourced
from the Divisoria market and is mounted on a 2-meter wooden pole. The
strainer is made of a galvanized screen mounted on rectangular wood framing.
Right now, Mikkos’ banana chip factory processes 2,400 banana fingers per
batch. It takes 5 hours to process the 2,400 banana fingers from peeling up to
the cooking of banana chips. Three persons are involved in the process. The final
product is an 80 kg banana chip. Two batches are processed each week.
The quality of the product is done through self testing which was acquired
through experience.
The cooking oil is recycled and so the oil is not wasted. During summer, the
banana peels are dried and used as a fuel for cooking. On rainy days, the banana
peels are just thrown in an open field.
4. How is the business linked into the market chain?
The bananas are usually sourced from local peddlers and sometimes from the
stockyard of banana traders in the municipality. The banana rejects for the
Divisoria market are selected for its low price. Other inputs are sourced from the
local market.
The banana chips are sold by retailers in the public market and over the
counter stores in Calapan City.
14
5. How is the business managed
The business project is personally handled by the owner-operator from
sourcing of the raw materials, processing, packaging, and marketing. No book of
accounts is being maintained even if the business operator claims to have getting
profit from the project.
Right now, the owner-operator is in the thick of a negotiation with a banana
chips trader from Manila. If the deal is closed, the plan is to expand the business.
6. Analyzing and summary of results
Table 4. Principal strengths and weaknesses of Mikko’s Banana Crackers
Area Strengths Weaknesses Physical structure and
equipment • Use of locally-made
materials • May not pass GMP
requirements Availability and use of inputs • Adequate supply of
bananas for chips • No quality standard is
being observed in the purchase of raw materials
Production process • Use of simple processing technologies
• May not pass GMP requirements
Planning, financial management strategies
• The business operation is not yet big
• Records are not being kept
Markets and marketing • The DTI assists in the product promotion and marketing
• Available local market
• Lack of product certification would not allow expanding the market
Financial capital • Availability of loan windows for MSMEs
• Limited capital
Transportation and logistics • The project site is highly accessible to transportation services
• Increasing cost of fuel
Analysis of the potential contribution to rural development
The business project regularly buys the banana produced in the province.
Hence, it contributes in stabilizing the price of raw bananas which may encourage
the farmers to continue growing banana as their alternative source of income.
The business project also needs extra labor which can provide livelihood to a
number of people.
It is clear that the project can provide steady income to some members of the
community which would enable them to send their children school. The business
15
project would also encourage harmonious relationships among the workers,
farmers, banana traders and the business owner.
B. Z-Corcuera Banana Chips
1. General Information
Name of Business: Z-Corcuera Food Products Name of Contact: Mrs. Zeny Corcuera
Owner-operator Primary Products: Banana Chips with Honey Brand: Z-Corcuera Food Products Certification: In-process Clients of the products: Laguna residents, Balikbayan (outlet at
Duty Free Philippines), Restaurants in Laguna area and other food processors
2. Establishment of the Business
The business was started in 1992with peanuts and garlic as the main
product. It was early this year (2005) that the banana chips with honey was
added to the line of products. This happened when a friend encouraged the
owner to prepare banana chips which later became a favorite “gift” to relatives
who live abroad. The technology of chip preparation was basically patterned
from the peanuts they are already cooking. Actually, it was the husband who did
a trial and error cooking that resulted in the additional and acceptable product. It
was marketed in the neighborhood and by word of mouth the sale increased.
The operating capital for the banana chips was taken from the peanut sales.
No formal record keeping of expenses and sales is done.
3. Technology and Organization of the processing of banana
The present site of Z-Corcuera at their residence. It occupies the front
part of the lot with an approximate area of 3 x 5 square meters. Operations
like washing, peeling and slicing are done outside the roofed area. While
syruping, frying and temporary storage are done in the adjacent screened room.
After receiving the fruits, which come from a nearby town (Bitin), fruits are
defingered, washed in basin and peeled manually. Slicing is done using a very
simple slicer available in supermarkets. It is made of hard plastic with adjustable
16
stainless blade. In less than a minute, a single fruit could be sliced. Frying is
done in a large pan. Single fried bananas are stored in covered plastic
containers where it could be stored for a month or two. When there are orders,
the stored chips are dipped in syrup and fried in gas-fueled big pans for the
second time. Fried chips are removed from the pan by the use of a chicken wire
with long bamboo handle. Excess oil is further eliminated by placing the chips
on a strainer made of galvanized screen with wooden frames. After cooling, the
fried chips are then packed and sealed either in polypropylene bags,
microwavable containers (135gms or 200gms) or aluminum pouches. Labeling is
also done in plastic containers.
Distribution of banana chips to Manila is not a problem since the family owns
a rent-a-car business where delivery could ride on a trip.
Z-corcuera Food Products processes 2,000 Saba fingers per week. It takes
six hours to process 1,000 fingers from peeling up to second frying. There are
four people involved in the process.
Cooking oil is recycled and so the oil is not wasted. Peel waste is disposed
through the garbage collector in the community.
A newly acquired slicer fabricated locally was purchased very recently at
P31,000. However, the adjustment of the blade is quite problematic. The owner
paid P1800 for the template used in labeling of the product.
Product quality testing is done by the wife.
4. How is the business linked into the market chain?
Raw materials are sourced from a nearby town in Los Baños. This is done by
just calling the producer through the phone and the fruits are picked up after
harvest.
Chips are sold to the residents of Los Baños, Laguna, Duty Free Philippines at
the airport, restaurants along Laguna roads and some food processors who
puts their own brand.
17
5. How is the business managed
The business is managed by the owner-operator from sourcing of the raw
materials, processing, packaging, and marketing. No formal book of accounts is
maintained.
The owner has just recently negotiated with Shoemart Inc., a very big
supermarket chain.
Table 5. Analysis and summary of results, Zcorcuerra Food Products.
Area Strengths Weaknesses
Physical structure and equipment
• Use of simple tools and utilities
• Lack operational system flow
• Lack of space for expansion
Availability and use of inputs
• Has an access to agencies for assistance (i.e. Packaging-ITDI, PCARRD-DOST, etc)
• A family enterprise where family members could help in the operation
• Non- seasonality of ‘Saba’
• Lack of trained personnel to take charge of either marketing or processing.
• Erratic supply of quality raw materials
• Rapid processing of Saba to minimize problem of ripening
Production process • Easy processing method based from their earlier product.
• Lack of GMPs and HACCP • Lack of quality standards
Planning, financial management strategies
• They have capital from the sales of peanut products
• No formal book of accounts
Markets and marketing
• Existing markets from their other products (peanuts and garlic) are also their markets for the chips
• Unexplored local markets
• Limited supply of chips • Lack of quality standards
Financial capital • Initial capital available from peanut product
• Small financial capital
Transportation and logistics
• Owns a rent-a-car business where delivery and purchase of materials is facilitated
• Processing site is accessible
• High fuel cost
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C. Calatrava Food Products
1. General Information
Name of Business: Calatrava Food Products Name of Contact: Mr. Dishan Servañez
Municipal Planning and Development Officer, Calatrava, Romblon
Primary Products: Banana Chips and Banana Catsup Brand: ACF (Arya Calatrava Foods) Certification: In progress Clients of the products: Local residents of Romblon
2. The original idea and the start-up/establishment
In 1998, the municipality of Calatrava, Romblon joined the One Village, One
Product Movement by launching the Livelihood Program on Banana (Saba)
Production. On the fourth year of implementation the livelihood program, a total
of 455 hectares have been planted with approximately 94,000 banana plants.
Realizing that the market for the raw banana which could reach up to more than
3M kgs a year will soon become a problem, the Officer-in-Charge of the Provincial
TESDA in tandem with the Provincial Head of the DOST-PSTC convinced the
Mayor of Calatrava, Honorable Alice C. Fetalvero to promote banana processing in
the municipality.
The provincial TESDA and the DOST-PSTC packaged the proposal for the
conduct of the training in banana processing. TESDA eventually set aside the
funds while the DOST-PSTC organized the training including the identification and
invitation of the resource persons. In June 2002, a week-long training on banana
processing was conducted in Calatrava with 19 women participants. After the
training, they organized themselves into a viable organization called Arya
Calatrava Foods (ACF). From then on, the group took charge in making banana
chips and banana catsup.
The banana products processed by ACF are slowly introduced into the market
especially during important meetings of the Women’s League of the province of
Romblon and various market fairs held in Calatrava and nearby municipalities.
In June 2003, the LGU of Calatrava submitted a proposal to the Japanese
International Cooperative Agency (JICA) for them to avail of the banana catsup
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making equipment (pulper-finisher, stem jacketed kettles, boiler, filling system,
sealing machine, and bottle sterilizer) including pouches and labels. The proposal
was approved by JICA and the banana making equipment was delivered.
In June 2004, installation of the equipment was completed. Unfortunately, the
banana catsup factory of ACF remains unoperational as the group is still waiting
for the operational budget.
Meanwhile, the ACF continues to produce banana chips.
3. Technology and organization of the processing of banana
The Mayor of Calatrava designated the training center of the Municipal
Agriculture Office as the temporary common service facility of the banana
processing. It is where the ACF processed the banana chips and banana catsup.
When the banana catsup making equipments were about to be delivered, the
building was rehabilitated and extended. As mentioned earlier, the factory is still
not yet in operation at present.
Aside from the operational budget being waited by ACF, another problem
encountered by ACF to go full blast in their operation is the limited supply of
banana in the project site. A strong typhoon visited the province in November
2004 and has devastated their banana plantation. It will take 10-12 months
before the banana plantation recovers from the effect of the typhoon.
Meanwhile, the ACF continues to process banana chips and has temporarily
transferred to one of the backyards of a member of the ACF. Figures 7-10 show
the different tools and kitchen wares being used by ACF in processing banana
chips.
4. How is the business linked into the market chain.
Right now, the raw bananas are being sourced from the Odiongan market.
However, the raw materials will be sourced from the banana plantation in
Calatrava and nearby municipalities once it has recovered from the typhoon that
visited the area in November 2004. it was not made clear what will be the buying
arrangement as to the price and the terms of payment.
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Once the catsup factory of the ACF becomes operational, the processed catsup
is being eyed to supply the partial requirements of the province. The people of
Romblon are known to patronize the products produced by their provincemates.
The ACF has learned from experience that their products (catsup and chips) are
easily sold whenever it is displayed or offered for sale during the various trade
fairs participated by the group.
The Congressman of the lone district of Romblon has also put up a
“pasalubong” center (gift center) in Odiongan market where the products of ACF
are on display and being offered for sale. The provincial DTI center is also active
in helping the ACF in promoting and marketing their products by inviting the
group in joining trade fairs outside the province.
5. How is the business managed
The members of the ACF organized themselves to support the one town, one
product program of the municipality of Calatrava. It is envisioned by the group
that over the long term, the business project will supply the catsup and chips
requirements of the province while ensuring the success of the banana production
project of the municipality.
The primary challenges of the ACF at the moment are the supply of the raw
bananas and the inadequate operational capital. The supply of banana is
expected to normalize once the banana plantation has recovered from the
devastation brought by the typhoon last year. Regarding the operational capital,
the DTI has set aside certain amount for the project to proceed pending
compliance to some requirements. The LGU of Calatrava has also put a fund to
assist the ACF but some accounting procedures are still being ironed out.
At the beginning of the business project, the members are given training on
entrepreneurship by the DTI through TESDA. The training provided the members
the idea on how to handle the business especially on record keeping. A member
has been assigned to record all the transactions which include the amount and
costs of inputs used per batch of processed products, the volume of outputs
produced and how much are sold. The transactions are recorded in a record
book.
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The ACF does not hire extra labor as the members themselves do the different
tasks in the processing of the banana products. Processing is done on a rotation
basis among the 19 members.
6. Analyzing and summarizing the results
Table 6. Principal strengths and weaknesses of Calatrava Food Products
Area Strengths Weaknesses
Physical structure and equipment
ACF has availed of the assistance from JICA and it gives the group the opportunity to mechanize their catsup factory
The equipment need to be used immediately or else it will deteriorate. Available experts to troubleshoot the equipment
Availability and use of inputs The supply or raw materials is expected to be very stable
Frequent typhoons can be a potential problem
Production process The members of the ACF are well trained in the technical aspect of making banana catsup and chips
No R&D plan is in place and this could limit the potential of the project
Planning, financial management strategies
Records of transactions are being kept however
Planning and strategic assessment is not yet being done
Markets and marketing Concerned groups are actively providing assistance in developing the market and marketing the products
Expansion will become a problem once the products produced exceeded what the market can take
Financial capital The local leaders are active in sourcing the financial capital for the project
When there is a change in leadership, the continuity of the assistance may stop
Transportation and logistics The project site is accessible to land transport and the province by sea transport
The roads are not well paved and this may affect the quality of the product
Analysis of the potential contribution to rural development
Poverty in the Philippines is becoming a big problem and definitely the
business project could alleviate the situation. The project will not only provide
livelihood to the members of the ACF and their families but as well as those
engaged in production who will be assured of the market for their bananas. The
project will therefore provide a steady income to the participants of the program
which will enable them to send their children to school. The banana producers
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and the banana processors are also expected to gain new knowledge on banana
production and processing from the trainings they attended.
When there is a stable income, the farmers and processors would be
comfortable bringing about better social relations among the community
members. The project could contribute to the maximization of land uses
especially for banana production.
V. Analysis of Support Services
Table 3 presents the different support service providers to small food processing
businesses. Most of the support service providers are government agencies mandated
primarily to provide technical, financial, marketing, and certification to small food
processing businesses.
On the other hand, Table 7 shows the gaps between services needed and services
offered. It will be noted that support services are available to assist small banana
processing businesses in the different areas of their projects. However, these services
are not usually availed of because of the following reasons: a) lack of awareness on the
availability of such services, b) leniency in the compliance of existing policies on food
sanitation and handling as well as waste management, c) difficulty in complying to the
documentation and collateral requirements in availing financial capital, and d) high cost
involved in the adoption of good manufacturing practices.
Hence, it is highly recommended to prepare a primer on the different services
available to support small banana processing businesses. This primer will be
disseminated to LGUs, DTI provincial centers, DOST Provincial S&T centers, and other
entities, public or private, which are providing assistance to small business operators.
There should also be honest effort on the part of the different government
instrumentalities to implement existing policies on ensuring the quality standards of food
products and proper waste management.
There is also a need to study the different windows of lending opportunities to
encourage small business operators to avail adequate capital for their projects.
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Table 7. Gaps between services needed and services offered
Areas Weaknesses Available Services Gaps in Services Raw Materials Occurrence of typhoons
Erratic supply of quality fruit Adoption of agricultural management practices like deleafing and propping
Lack of awareness on these agricultural management practices
Production process Technologies being used are sourced from indigenous knowledge
State colleges and universities and research and development institutes (RDIs) have generated technologies on various banana processed products
Limited access of business owners to those technologies and high cost of technology adoption
Equipment and machineries
High cost of equipment and machineries
DTI, DOTS and LGUs have windows for providing sources of capital to finance the purchase of equipment and machineries
Access to these windows is highly competitive
Financial capital Small business owners have Limited capital
Land Bank, Quedancor, DTI, DOST and commercial banks provide loans to finance MSMEs projects
Documentation and collateral requirements are oftentimes difficult to comply with
Product Certification Processed products of small banana processing businesses do not satisfy the primary requirements for BFAD accreditation
Food Development Center, DTI, and ITDI offer training sessions on HACCP and food manufacturing practices as well as food analysis
• High cost involved in complying to HACCP and GMP requirements
• Leniency in the implementation a food sanitation and handling policies
Product packaging and labeling
Processed banana products are packed in plastic sachet, plastic containers, and aluminum pouches but its labels do not have the nutritional facts
ITDI provides technical assistance on product packaging and labeling
Lack of awareness of business owners about the services of ITDI and they usually do not want to shoulder the expense involved in availing the services for product packaging and labeling
Business management • Administration • Planning, financial
management, and strategies
No bookkeeping of expenses and sales and most small enterprises are personally managed by the owners with limited activity on business planning and strategic building
DTI, DOST, TESDA, and LGUs are working together to package and conduct trainings on business management
It is unclear why small business owners do not adopt sound business management practices
• Small business projects are not usually linked to existing marketing networks and just rely on local markets
DTI and LGUs are active in supporting the small project owners in organizing trade fairs to promote the banana processed products
Participation in trade fairs entails a lot of cost and small business owners do not participate regularly in trade fairs
Market and marketing
• Small business owners do not follow standard pricing policy
Lack of policy on standard pricing of banana processed products
Waste management Solid wastes from banana peelings and trimmings are given to takers who used it as animal feeds and substrates for organic fertilizers. If there are no takers, the wastes are just thrown away
Technologies are available to convert the solid wastes from small banana projects into animal feeds and organic fertilizers
Inadequate knowledge of small business owner on the potential of solid waste as animal feeds and organic fertilizers