Value Chain Analysis of Carabao and Carabao-based Products in Luzon, Philippines

BACKGROUND

The Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA) was commissioned by the Philippine Carabao Center (PCC) to conduct a Value Chain Analysis (VCA) of carabao and carabao-based products considering the importance of these products in providing livelihood to farmers and other stakeholders and in improving the nutritional status of the vulnerable populace. The VCA is a comprehensive diagnostic tool that is now used worldwide to identify which policy/project/program strategies should be adopted to develop a sustainable food value chain. A sustainable food value chain is profitable throughout, has broad-based benefits for society and shows a positive or neutral impact on the natural environment (Neven 2014).

Carabao value chain covers the full range of activities required to bring carabao and carabao-based products to final consumers, passing through the different phases of production, processing, and delivery via market-focused collaboration among different stakeholders who produce and market value-added products. An analysis of the carabao value chain is essential for understanding markets, relationships, different players, as well as the constraints that limit production and the competitiveness of small hold farmers (IFAD 2010).

The Philippine experience on the VCA has been concentrated on crops and fisheries and seldom on livestock including carabao and cattle. However, in other Asian and African countries, the United States Agency for International Development (USAID) and the Food and Agriculture Organization of the United Nations (FAO) have analyzed the value chains of livestock and findings have guided them in supporting appropriate development programs and initiatives. For example, with the understanding of the value chain concept and methodology, risks in the value chain of livestock have been identified by FAO thereby resulting into improved health management of the livestock. The PCC could also benefit in the same manner by knowing the constraints and opportunities that are identified in the VCA of carabao and carabao-based products wherein the agency could select upgrading strategies that are in line with its mandate. The ultimate benefit is manifested through increased income of carabao farmers and other key players, and enhanced growth of the dairy and meat industries.

OBJECTIVES

The study generally aimed to analyze the value chains of carabao and carabao-based products in select regions in Luzon, Philippines and recommend specific measures for improvement. The processes through which these products pass through the different segments in the value chain together with the resulting variety of products were also examined. Specifically, the study intended to:

• Provide an overview of the carabao and carabao-based products situation in the global setting, national level and different regions in Luzon, Philippines;

• Provide an overview of the carabao and carabao-based products situation in the global setting, national level and different regions in Luzon, Philippines;

• Analyze the nature and structure of the industry focusing on the description of the players by segment in the value chain, the value chain maps of carabao and select carabao-based products, economic analysis, and inter-firm relationships;

• Identify and analyze the market trends and opportunities in the value chains of carabao and carabao-based products;

• Determine the existing support services in the value chain and their adequacy;

• Analyze the business enabling environment affecting the value chains of carabao and carabao-based products; and

• Analyze the constraints and opportunities in each segment of the value chain and provide specific policy directions and strategies to improve the carabao industry in general and the specific value chains of selected carabao-based products in particular.

HIGHLIGHTS

The highlights of the Value Chain Analysis (VCA) in Luzon are mainly:

1. Identification of the key players and their functions in the value chain of carabao and carabao-based products;

2. Estimation of the raw milk and fresh carabeef production and demand requirements of processors and end-consumers to determine whether there is a surplus or deficit;

3. Assessment of the profitability of engaging in carabao dairy and meat enterprises; and

4. Identification of the constraints and opportunities, policy directions, and upgrading strategies.

OUTCOMES

This study yielded the following results:

1. An overview of the carabao and carabao-based products industry in Luzon, Philippines and description of local production levels, production systems and trends, from national, regional and provincial levels;

2. Identification of specific and applicable product forms available for trading in major production and demand centers in the country;

3. Product- and commodity-specific value chain maps which identify the specific activities and services, key players and their functions, product and information flows as well as selling and payment schemes; a. Performance of the value chain in terms of efficiency, flexibility and overall responsiveness; and b. Nature of interfirm relations (vertical and horizontal integration, backward and forward linkages).

4. An in-depth analysis of markets and market opportunities of carabao products, including market trends and product standards and requirements, (including current and potential markets, as well as domestic and export markets);

5. Identification of constraints and opportunities faced by the value chain players by function/segment;

6. Recommendations for policy directions, strategies and enabling environment needed to improve the carabao industry in general, and the specific value chain in particular; and

7. Publications on buffalo meat and meat products value chain and on dairy buffalo value chain.