NEXUS Agribusiness Solutions

RAPID APPRAISAL OF POST HARVEST FACILITIES IN THE PHILIPPINES

Final Report

Nerlita M. Manalili

Kevin F. Yaptenco

Alessandro A. Manilay

30 March 2016

Study Leader(Value Chain Specialist)

DR. NERLITA M. MANALILI

Asst. Study Leader(Agricultural Engineer)

DR. KEVIN F. YAPTENCO

Economist PROF. ALESSANDRO A. MANILAY

Statistician PROF. NELITA M. LALICAN

Research Support Engr CARISSA JOY E. OZOA

MS. IMELDA V. VALENTON

MS. MARA MICHELLE Q. PANGILINAN

MS. MONINA ANN P. SAGUIN

STUDY TEAM

NEXUS Agribusiness SolutionsSOURCE: Rolle and Mazaud 2003; Bautista and Esguerra 2012; PHILMECH 2012; http://www.gov.ph/2013/06/05/republic-act-no-10601/

1977Launching of FAO Action

Program for the Prevention of Food Losses

and

Establishment of the ASEAN PHTRC in UP Los Baños

1975UN General Assembly resolution to reduce

losses by 50% by 1985

1973UP-Cornell Univ

program introduces postharvest research

and education in UPLB

1968FAO “war on

waste” campaign

1967FAO holds

symposium on crop losses

1978NAPHIRE created

through Presidential Decree 1380

2003FAO Global

Initiative for Post-Harvest

Development

1981NAPHIRE expands

beyond postharvest of rice and corn

2011DA (Regional Offices + PHILMECH) implement

Rice Mech Program1997Agriculture & Fishery

Modernization Act signed into law,

recognizes importance of postharvest

2013RA 10601 (AFMECH

Law) is passed

NEXUS Agribusiness Solutions Source: http://www.fao.org/save-food/en/

… something is wrong with our food supply system …

Establishment of Postharvest Facilities in the Philippines

PROGRAMS OF THE DEPARTMENT OF AGRICULTURE

What are the

impacts of

these projects?

General

• Evaluate effectiveness of postharvest facilities (PHF) and assets

Specific

• Characterize PHF projects (selection, expenditures, assets, impacts)

• Assess a representative set of PHF projects

• Identify strengths, weaknesses in the project cycle of PHF projects

Project Objectives

RAPID APPRAISAL OF POST HARVEST FACILITIES

IN THE PHILIPPINES

• Literature review, initial data gathering

• Prioritization of PHF projects for evaluation

• Initial field assessments

• In-depth field assessments

Methodology

RPC MILLED RICE

INTERVIEW AT A BRGY. FOOD TERMINAL

BFT IN TORIL, DAVAO CITY

FLATBED DRYER

KOICA RICE MILL

Project Highlights

• Four KOICA Rice Processing Centers(RPC)

• Flatbed dryers, food terminals, rice threshers

KOICA Rice Processing Centers

RPC BUILDING

RECIRCULATING DRYERS

RICE HUSKERS / ASPIRATOR

RICE HULLER

COLOR SORTER

LENGTH GRADER

KOICA Rice Processing Centers

Proposal Description Findings

Objectives:1. Increase farmers’

income2. Increase processing

capacity for rice self-sufficiency

Funding• SK gov’t grant = Php648-M• Phil. gov’t counterpart =

Php136-M, with Php20-M operating capital per site (4 sites)

• Farmers’ assoc. counterpart = Php2-M

Reported impact (Tolentino2013)• Reduced system loss by 4-6%• Jobs for 33 professionals, 48

workers• Stable local prices (esp.

during wet season)• High head rice recovery,

milling recovery = 65-68%

Expected impact:1. Reduced post-

harvest losses2. Generated

employment3. Stabilized local

prices4. Improved milled

rice quality

Facilities / services• Mech. dryers , rice mill,

cargo trucks• Storage warehouse • Pickup, delivery service• Custom milling, drying

External assessment• Financial losses / under-

utilization• Suppliers prefer selling wet

paddy to RPC• Improved prices even during

peak harvest• Milled rice is not premium

grade*

*Brokens = 10-26% by weight; based on NFA standards, maximum brokens for Premium grade = 5%

Agri-Pinoy Food Terminals Funding• MFT: Php0.5 – 1.5M for building• BFT: Php150,000 for trading capital,

building improvement, training

Services• MFT – consolidation area, market

prep. / trading area• BFT – retail market, provide clean,

orderly environment

Proposal Findings

Objectives:1.Provide access to markets2.Provide agri-fishery commodities, basic necessities at affordable prices3.Create employment4.Develop entrepreneurship5.Strengthen LGU-private sector partnership

Reported impact (DA-AFMIS 2013)•Lako-lako system eliminated, less transport cost, farmers paid in cash, by barter•Serves daily needs of housewives; organic farming encouraged•Hiring of personnel for BFT, provide support to local businesses•Expansion of production areas, development of additional products

Expected impact:•Increase income of agri-fishery producers•Provide safe, nutritious, affordable food•Create employment•Income generation for LGU

External assessment•Eliminate transport costs, mech. damage•Encourages home gardens, wide variety of produce available•Locals hired to tend BFTs, as workers to expand production•Provides support for small business ventures•BFT collects user fees for maintenance, supplies ingredients to processors•Repair / replacement of equipment difficult

Barangay Food Terminals

Proposal Findings

Objectives:1.Provide access to markets2.Provide agri-fishery commodities, basic necessities at affordable prices3.Create employment4.Develop entrepreneurship5.Strengthen LGU-private sector partnership

External assessment•Lako-lako system eliminated, transport cost reduced, growers obtain better selling prices•Facilitated exchange of goods between growers and traders•Product handling employment opportunities created, trucking/ transport services expanded•Collects market fees from traders, stall rentals•Issues and concerns jointly addressed; Municipal Ordinance issued for sustained patronage of MFTs, and organizing loading unloading areas •Some MFTs unused / underutilized

Expected impact:•Increase income of agri-fishery producers•Provide safe, nutritious, affordable food•Create employment•Income generation for LGU

Municipal Food Terminals

Flatbed Dryers

PHILRICE

DA RFU

Check, validate completeness of

documents; endorse to GMA Rice

Program

GMA Rice Program

Compile a short list of recipients

NABCOR

Provide detailed engineering designs and plans for drying

facilities and equipment

Received project funds for transfer to

cooperating agencies

Validate list of recipients

PHILMECH

Fund administration, management and disbursement

Compile list of qualified IAs

NIA

Organize IAs, provide training,

coaching and mentoring

Ensure utilization of drying facilities

IA

Undergo training, provide feedback on utilization, operation

and maintenance

Provide land, storage shed, initial

operating cost, labor

Coordinate, implement and

monitor all GMA Rice Program

activities in each region

Procurement, bidding, delivery, installation of drying facilities and equipment

DISSEMINATION

OF DRYERS

UNDER THE

FIELDS PROGRAM

Aspect Findings of Impact Assessment

Utilization Over-utilized during wet season, especially during simultaneous harvests; underused during dry season

Durability Perforated flooring of grain bin prone to corrosion; replaced with bamboo slat floor overlaid with netting; cracking of concrete lining of biomass furnace

Condition of dryer

Thermometer not operating, flooring deformed

Operator safety

Absence of shields for rotating / moving components

Flatbed Dryers

BENEFIT-COST ANALYSIS OF THE IMPACT OF RICE POSTHARVEST TECHNOLOGY

PROJECTS

PHYSICAL LOSSES

Sundrying losses

Milling losses

VALUE (QUALITY) LOSSES

Delay in threshing

Delay in drying

TYPES OF POSTHARVEST LOSSES

without appropriate PH technology

SUNDRYING:

5.8% OF HARVEST

(PhilMech)

WHERE IT OCCURS:

FARMER

TRADER/PRIVATE MILLER

PH PHYSICAL LOSSES IN RICE WITHOUT APPROPRIATE POSTHARVEST FACILITIES

MILLING

1) Broken grains due to

fissuring during

sundrying

2) Use of technically

inefficient mills

LOWER MILLING

RECOVERY

WHERE IT OCCURS:

RICE MILLER

MR = 60% (IRRI, 2014)

MR (%)= Total milled rice X 100

Total rough rice

PH PHYSICAL LOSSES IN RICE WITHOUT APPROPRIATE POSTHARVEST FACILITIES

DRYING

• VALUE LOSS DUE TO

DELAY IN DRYING:

o 75% OF FULL VALUE

(3 DAYS DELAY)

o 6% OF FULL VALUE (1

DAY DELAY)

PH VALUE LOSSES IN RICE WITHOUT APPROPRIATE POSTHARVEST FACILITIES

VALUE LOSS ESTIMATION:

PADDY VALUE(%)= 100 – 3.51D0.35 X (MC-15)0.65

WHERE:

D = no. of days wet paddy was left undried

MC = moisture content

(TETER, 1987)

POSTHARVEST LOSSES IN RICE WITHOUT APPROPRIATE POSTHARVEST FACILITIES

• DELAYS IN THRESHING AND DRYING WERE MINIMIZED (BATCH RECIRCULATING DRYERS-RPCs; FBDs AND THRESHERS – FARMER COOPERATIVES)

• MILLING RECOVERY INCREASED FROM 60% TO 68% (MULTI-PASS RICE MILLS – RPCs)

(PhilMech and IRRI)

WITH THE PH FACILITIES

PH Losses in Rice With and Without Appropriate PH Technologies

0%

10%

20%

30%

40%

50%

60%

70%

80%

3 days delay 1 day delay Zero Delay

% o

f fu

ll va

lue

Value Loss Due To Delay in Drying

0%

1%

2%

3%

4%

5%

6%

7%

Sundrying Mechanical Dryers

Ph

ysic

al L

oss

ess

Physical Lossess Due to Drying

PH Losses in Rice With and Without AppropriatePH Technologies

56%

58%

60%

62%

64%

66%

68%

70%

Single/Double Pass Mills Multi-Pass Mills

Mill

ing

Re

cove

ry

Milling Recovery of Traditional and Modern Rice Mills

• BASED ON ACTUAL PADDY PROCUREMENT OF RPCs:

A) VALUE LOSS - JULY TO OCTOBER 2013 AND 2014: 7,238,178 KG (7.23 MT)

B) QUANTITY LOSSES: TOTAL PROCUREMENT

2013 AND 2014:

58, 444,801 KG (58.44 MT)

• FULL VALUE OF PADDY: PhP 20.50/KG

ESTIMATE OF PREVENTED VALUE LOSSES AND REDUCED PHYSICAL LOSSES USING RPC DRYING &

MILLING FACILITIES

REDUCTION IN VALUE LOSS BY USING RPC DRYER

VALUE OF PADDY WITH ZERO DELAY IN DRYINGFull value:PhP148.38M

VALUE OF PADDY WITH 3 DAYS DELAY IN DRYING (SUNDRYING)75% of full valuePhP 110.85M

VALUE OF AVOIDED LOSS

PhP 37.53M

REDUCTION IN QUANTITY LOSSES BY USING RPC DRYER

RECIRCULATING BATCH-TYPE DRYERS:No significant lossess

SUNDRYING (5.8% LOSSES)PhP 82.88M

VALUE OF AVOIDED LOSSESPhP 82.88M

REDUCTION IN QUANTITY LOSSES USING RPC RICE MILL

RPC MULTI-PASS MILL67.5% MRPhP 1.5B

SINGLE- and DOUBLE-PASS MILL60% MRPhP 1.33B

VALUE OF AVOIDEDLOSSESPhP 166.57M

TOTAL VALUE OF AVOIDED LOSSES PhP 286.97M

ITEM VALUE (PhP) ASSUMPTION

Reduced value loss (delay in drying)

14.8 M PhP 10/Kg (Vietnam, 2003)

Prevented physical losses (recirculating

batch dryer)

40.25 M 2.9% of paddy wt. being dried

Reduced physical losses (multi-pass

mill)

111.05 M 65% MR

TOTAL 166.12 M

ESTIMATED REDUCTIONS IN PADDY VALUE AND QUANTITATIVE LOSSES USING

CONSERVATIVE ASSUMPTIONS

• INCREASE IN FARMERS‘ INCOME: PhP 13.96 M

• COMBINED NET INCOME OF RPCs: PhP 2.07M (2011 to 2014)

ADDITIONAL BENEFITS

• Reduced ph losses P 286.97M

• Farmers’ increase in income P 13.96M

• RPCs net income P 2.07M

P 303.00M

TOTAL ESTIMATED BENEFITS FROM RPCs

• PhP 865 M: PROJECT COST

• PhP 303.00 M: BENEFITS

• CAPITAL RECOVERY APPROACH TREATS THE BENEFITS FROM THE RPC PROJECT AS REPAYMENT TO THE CAPITAL INVESTMENT (PROJECT COST) AND DETERMINES THE PROPORTION OF THE PROJ COST THAT HAS BEEN RECOVERED.

BENEFIT-COST ANALYSIS: CAPITAL RECOVERY APPROACH

CONVERT BENEFIT AND COST TO ANNUITY VALUES

• P 865M (PROJ COST) P 101.21

(15 YEARS USEFUL LIFE OF RPC; 8% OPPORTUNITY COST OF MONEY)

• P 303M (BENEFITS) P 138.5M

(2.5 YRS LENGTH OF RPC OPERATION; 8%)

• CRR = 138.5M/101.21M = 1.37

• AFTER 2.5 YRS OF OPERATION, RPCs GENERATED A NET BENEFIT THAT WAS ABLE TO FULLY PAY ONE YEAR OF THE ANNUITY PLUS AN EXCESS OF 37% OF THE ANNUITY.

CAPITAL RECOVERY RATIO

BENEFITS:

REDUCED PH LOSSES P116.12M

FARMERS’ INCREASE IN INCOME P 13.96M

RPC NET INCOME P 2.07M

P182.16M

ANNUALIZED BENEFITS: P83.26M

CRR = 83.26M/101.21M = 0.82 (BENEFITS DERIVED ONLY RECOVERED 82.3% OF PROJECT COST ANNUITY)

CAPITAL RECOVERY ANALYSIS USING CONSERVATIVE VALUES

THE CR ANALYSIS SHOWS THAT THE RPC PROJECT IS SENSITIVE TO A REDUCTION IN THE ESTIMATED

BENEFITS (CRR = 0.82)

• FARMERS’ BENEFITS FROM FBDs

o FBDs more appreciated during the wet season harvest

o low buying price for wet paddy

o P 1.00/kg premium for dry paddy

o Farmers who use FBDs sell paddy to private traders/millers (Credit-mktg linkage)

FLATBED DRYERS (FBD)

o ONE FBD UNIT CAN ONLY SERVE ONE FARMER AT A TIME

o 8 HRS TO DRY ONE BATCH OF PADDY TO 14% MC

o FBDs are useful only if wet paddy can be dried

immediately (according to farmer respondents)

LIMITATION OF FBD PROGRAM

AN ADDITIONAL THRESHER FOR A FARMING COMMUNITY IS

CONSIDERED BENEFICIAL BECAUSE MOST FARMERS HARVEST

AT THE SAME TIME RESULTING IN SHORTAGE OF THRESHERS

PADDY MUST BE THRESHED SO FARMERS CAN SELL THEIR

HARVEST

THRESHERS

• WT. OF PADDY HARVESTED BY FARMERS WHO USED THE

THRESHERS: 144,920 KG

• COMPARE 1 DAY DELAY IN THRESHING WITH ZERO DELAY

ESTIMATED BENEFIT FROM THRESHERS

VALUE OF PREMIUM PADDY: P 20.50/KG

• VALUE OF PADDY WITH 1 DAY THRESHING DELAY: P 19.23/KG

(20.50 – (20.50 x 6.2%))

• Footnote: Determination of buying price by traders/millers

based on paddy condition is subjective

• PADDY VALUE WITH NO THRESHING DELAY:

• 144,920 KG X 20.50/KG = P 2.97M

• PADDY VALUE WITH 1 DAY DELAY IN THRESHING:

• 144,920 KG X P 19.23/KG = 2.78M

• VALUE LOSS = P190,000

• DELAYS IN THRESHING AND DRYING WERE MINIMIZED

(BATCH RECIRCULATING DRYERS-RPCs; FBDs AND

THRESHERS – FARMER COOPERATIVES)

• MILLING RECOVERY INCREASED FROM 60% TO 67.5%

(MULTI-PASS RICE MILLS – RPCs)

(PhilMech and IRRI)

OVERALL IMPACT OF RPCs, FBDs, THRESHERS

Post Harvest Facilities within The Value Chain

Gaps and OpportunitiesProgram Planning and Implementation

The Rice Value Chain With RPC As A Major Player

GAPS/DELIMITING FACTORS

Operational CapitalPhP 20 million is a small capital vs private millers hundreds of millions

TruckingRPCs 2 vehicles used for delivery, servicing end users more than farmers

Farmers unable to supply RPC and benefit from better pricesCycle of farmer indebtedness:

Tied up with Traders for inputs and marketing; unable to supply RPC/ find better markets

In addition to interest, traders’ purchase price is Php 1 less than prevailing market price.

OPPORTUNITIES

Underutilized RPC capacity Underutilized Service area of

1,000 ha of rice farm

Scheduling of planting andharvest for enhanced benefits

There is potential in Farmerseducation for bettercollaboration

Credit tie ups – Sikap Saka of Land bank (but with limitations)

Basic Commodity Value Chain

With MFT’s and BFTs As Major Players

GAPS/DELIMITING FACTORS

Non Viability of MFTs cold storage

High energy cost of operations

Limited Volume of utilization

Poor site selection

proximity to well functioning markets)

Unmet volume of transactions

Facilities used for other uses

(fast food )

OPPORTUNiTIESTrading group (buyer & seller)

Incentives to produce more; higher market absorbtive capacity

Better prices – direct transaction

Convenience for sellers reduced long walks as peddlers

One stop trading venue with varied commodities

ConsumersMore commodities to choose

Convenience, comparable prices to major markets

Reduce transportation cost

NEXUS Agribusiness Solutions

BFTs Distribution per Region

*Values obtained from DA-AMAS

18

45

132

25

75

126

11

52

75

70

71

60

105

66

72 88

167

*Source::Mapsof.net

NEXUS Agribusiness Solutions

10

14

48

20

9

2

14

5

6

1

1

5

4

4

16

2 7

9

MFTs Distribution per Region

Program Planning & Implementation

Planning

Wanting preparatory activities prior to implementation

Beneficiaries unaware of extent of contribution (power, capital)

Confusion as to roles and responsibilities

(spiced with political flavor)

Cushion programs on

political interference

Need to trace back issues to Project cycle

Implementation

*Organization & Management

“champions” who push program cause/objectives are success factor

› Iloilo RPC, Leon MFT & MAO

*Focus: Solutions more than problems

*Coping mechanisms reflects project leadership/teamwork

(PH Mgt team, regional line agencies)

*Balancing facilitating & regulating

roles difficult, but crucial and

works best for farmer’s interest

Conclusions and

Recommendations

Conclusions

Recommendation

Areas for Further Study

Conclusions RPCs increase farmer’s income through

production of good quality milled rice and

reduction of postharvest losses.

Potential maximized if paddy procurement capital is increased

FBDs and threshers of the Rice Mechanization Program,

›preserve grain quality and reduce postharvest losses through:

› augmenting existing thresher and dryer capacities.

Food terminals ›well managed; provided market access to agri-suppliers

›Improve availability & variety of commodities/basic goods,

›create employment

›enable operators to become entrepreneurs and

›strengthen partnerships between LGUs and private sector.

ConclusionsFunctioning PHF enhanced rice & basic

commodity value chains

Expanded Production (RPC MFTs BFTs) Enterprise establishment Enterprise management know how rubbed on to

members (BFT); put up own small businesses

(opportunity dependent – Panglao, tourist areas)

Value addingHousehold Processing of produce otherwise marketed fresh given added market options

NEXUS Agribusiness Solutions

Recommendations

Rice Processing Center Increase operating capital from 20 M to

PHP40-80M to scale up procurement

additional cargo trucks for each RPC

for timely pick up and delivery.

Could be the second phase of KOICA project - to ensure RPC sustainability

However, release of additional funds and inputs by DA should be subject to performance of each facility.

NEXUS Agribusiness Solutions

RPCs….

Appropriate Financing and crop insuranceservices reduce farmers’ dependence onprivate traders with high interest rates.

Local Spare part distribution (if not fabrication)

› Train reputable and capable local distributors ofKorean RPC spare parts and equipment for RPC

› Should comply with PAES

Recommendations….

NEXUS Agribusiness Solutions

Flatbed Dryers &Threshers

Closely monitor accredited

fabricators to ensure

quality of disseminated units

specification compliance

proper and timely servicing

if defects are present.

Recommendations

Thorough evaluation of project beneficiaries

proper site selection (maximize use of dryers)

Incorporate design improvements

( safety and durability)

Continuous monitoring and testing by appropriate government agencies :

proper operation

proper maintenance

Recommendations

Flatbed Dryers &Threshers

Recommendations

Food Terminals

Technical improvements

*better lighting

*mechanized handling to:

reduce physical damage

reduce labor requirement

lessen worker’s injury.

Promote hygienic handling

*for food safety.

Project Planning and Implementation Well thought of Proposal: implementation strategy well developed .

Short sighted planning is evident

facilities established and maintained with scarce government funds and without properly trained personnel

Involve beneficiaries/project stakeholder as early as possible

Strict adherence to project guidelines

improve project implementation

minimize political interference

Compliance of RPC products with NFA standards (milled rice)

should be verified by mandated government agencies with

corresponding action to correct violations

Recommendations

Measures of Performance For Better Decision Process

RPC

*Service target areas of 1,000 ha but with limited earnings or service other areas to sustain plant operation

*Cost and Revenue treatment Asset used: free or depreciated

Grant Mgt & Enterprise Mgt different perspective

Added income spread costs or profit add ons

*Sustainability measures Need be clear as early as planning stage

MFT/BFT

Location selection

far from existing trading centers

Farm to market roads a problem

Existence of production areas

within kilometer radius

Management Modality

LGU Managed

Cooperative Managed

Learn from Success and failures of MFT andBFT projects

Document best practices

disseminate results

To ensure maximum utilization,

› Include survey of existing food terminalsand wet markets during site selection stage

Recommendations

Project Planning and Implementation

The study found the evaluated PHFs as worthy government (maybe in future private) investments, however, regular and thorough review should still be carried out to determine their further impact

Selection of sites and beneficiaries be based on a set of suitable criteria rather than a “divide by N”approach (prone to duplication and overlaps)

Strengthen information and education campaign on existing government programs or review if needed -

inspite of years of program existence

not many are availing of the said services.

Recommendations

Recommended Areas for Further Study

Possibility of locally produced RPC equipment, parts and tools

Assessment of other PHF programs

› agricultural tramlines and

› cold chain programs

Documentation of PH best practices andbusiness models for outscaling/upscaling

In-depth evaluation of success failure factors of PHF across regions and organizational types

First Global Conference on PH Losses; Rome Oct 5-7, 2015

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Thank You!