Value Chain Analysis of Carabao and Carabao-based Products in the Visayas and Mindanao

BACKGROUND

Value Chain Analysis (VCA) is a comprehensive diagnostic tool that is now used worldwide to identify which policy/project/program strategies should be adopted to develop sustainable value chains. A sustainable food value chain is profitable throughout, has broad-based benefits for society and shows a positive 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).

In recent years, carabao production in the Philippines has gained importance as a vital component in achieving food security and increasing farm income, since it is now a main source of both draft power and meat for smallholder farmers. The supply chain of carabao products follow a traditional system. Carabaos are transported to Manila by ship in the case of Mindanao and smaller island provinces. Individual small-hold farmers sell carabao products at the spot market to traders, wholesalers, and retailers. The products are passed on to institutional buyers like dairy product manufacturers and meat processors.

In the overall supply and value chain, farmers remain the losers in the market place for getting the lowest gain from production of carabao products. An assessment of the value chain of carabao and carabao-based products is deemed important to identify and analyze the constraints facing the key players in the different segments of the chain, and also suggest policy directions and strategies to enhance the industry's competitiveness, and increase the participation of small-hold farmers and their share of value added.

It is against this background that the Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA) was commissioned by the Department of Agriculture – Philippine Carabao Center (DA-PCC) to conduct a Value Chain Analysis (VCA) of carabao and carabao-based products in Visayas and Mindanao.

The project officially started on 6 May 2016 and ended a year after, with Dr. Flordeliza A. Lantican, an agricultural economist specializing in agricultural policy and marketing and trade of agricultural products, as the Team Leader cum VCA Specialist.

PROJECT OBJECTIVES

The project generally aimed to analyze the value chains of carabao and carabao-based products in selected regions in the Visayas and Mindanao, and to recommend specific measures for improvement. The process through which these products pass through the different segments in the value chain, together with the resulting variety of products, was examined. Specifically, the project intended to:

• Provide an overview of the carabao and carabao-based products situation in the global setting, national level (Philippines) and different administrative regions in the Visayas and Mindanao;
• 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 (financial and non-financial) 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.

METHODOLOGY

The project covered only two major carabao-based products, which have big market potentials – carabao's milk and milk products; and meat and meat products. These products were selected based on the increasing demand for high-quality dairy and meat products, given fast-changing consumer preferences, changing lifestyles, increasing human population, and increased household income in the country.

The study areas were Regions VI (Negros Occidental and Iloilo), VII (Bohol and Cebu), VIII (Leyte), X (Bukidnon and Misamis Oriental), and XIII (Agusan del Norte and Surigao del Norte); with Negros Occidental and Misamis Oriental (Cagayan de Oro City) as demand centers and the remaining study sites as production areas in the Philippines.

PROJECT OUTCOMES

The project was able to provide the following:

1. An overview of the carabao and carabao-based products situation with emphasis on global, national, and regional production and product forms;
2. A description of the nature and structure of the industry, which focuses on the players and their functions in the value chain, role of women in the value chain, product and information flows, economic analysis, and nature of inter-firm relationships;
3. An analysis of markets and market opportunities of carabao products;
4. The identification of support services required and description of a business enabling environment;
5. The identification of constraints and opportunities in the carabao industry; and
6. Recommendations on upgrading strategies and policy directions.