FARMER PROJECT

RICE CONSUMPTION STUDY AMONG

MEMPCO MEMBERS
 OUTLINE
• Results of the FARMER Pilot Project
• Demand and Supply Study
• Key Recommendations
STUDY ON THE SUPPLY AND DEMAND FOR RICE AMONG MEMPCO
MEMBERS

RESULTS OF THE FARMER PILOT

PROJECT
 BACKGROUND OF THE PROJECT
• Objective of the project is to increase farmer
household income.
• Specific objectives are to
– Improve farm production and sale of rice;
– Reduce the dependence of farmers on informal
sources of credit that charge high interests; and
– Increase savings and investment of farmers in the
cooperative.
 What MEMPCO Accomplished
• The action research project started on April
2014 and ended on September 30, 2015
• At the end of the pilot project evaluation on
November. 30, 2015 MEMPCO was able to
achieve the following:
– 421 member farmers were financed
– Php 27.85 million loans were released
– Outstanding loans of Php 18.92 million
– Farmer savings of Php 263,979 and investment of
Php 269,780 in MEMPCO
 Impact on Farmers
• There was a noticeable increase in farm outputs
because
– Farmers were able to readily access credit to purchase
farm inputs
– Farm inputs were provided on time

• Farmers were organized under MEMPCO clusters

where training and discussions on farm concerns
were facilitated
• Farmers were able to get sufficient supply of rice
until the next harvest season.
• Farmer incomes increased
Were the Objectives of the Pilot
Project Achieved?

YES
But before we continue, we need
to address the challenges
 Post Project Concerns
• Possible crop failure due to infestations and the lack
of insurance
• Need for more training of farmers on the use of farm
inputs
• Problems with selling the rice outputs
• Issues with irrigation
• Need for machineries in production and post-harvest
• Quality of seeds used
 Effects of these concerns
• Poor quality of rice produced
• Over supply because the outputs have no
immediate market
– Traditional traders/millers would not buy the rice
because of lost incomes on their part (cut-throat
strategy to kill the agri-program)
• Unable to produce in times of drought
• Difficulty to dry harvest in times of heavy rain
• No security in case of crop damage
• Portfolio-at-risk of 18% of total portfolio as of
Nov. 2015
 What MEMPCO can do?
• Provide farmers with crop insurance through
partnerships and tie-ups.
• Address needs for training through MEMPCO
ADO and partners
• Organize a rice distribution channel within
MEMPCO’s membership
• Work with the LGU to help farmers to address
concerns with irrigation (and other farm risks)
• Provide financing for modernization of
production and post-harvest facilities of member
farmers
Can MEMPCO perform all of these?

YES
RICE CONSUMPTION STUDY AMONG MEMPCO MEMBERS

DEMAND
 The Big Picture
• “Domestic production of palay in Zamboanga
City is not enough to meet the needs of the
current population. Furthermore, considering
current trends in area planted to palay and
yield per hectare, projected domestic
production would not be enough to meet the
needs of the projected population.”
– (source: http://zamboanga.net/sepvol2chap2b.htm)
Zamboanga City population grew by 2.98% and
is estimated to reach 1.614 million by 2037

Source: psa.gov.ph
 Number of households grew by 47%
from 2000 to 2010 and is estimated to
reach 257,000 families by 2020

Source: psa.gov.ph
What do these numbers mean?

INCREASE
IN RICE
DEMAND
 Based on the Rice Consumption Study
performed by MEMPCO among its members
• 100% of its members and their families eat rice
• 100% of those eating rice will most likely not look for
substitutes nor reduce present rice consumption
• Average daily consumption is 1.56 kg
• Average annual consumption is 570 kg
• Average cost spent per kilo Php 40.5
• Average cost spent daily is Php 64.0
• Average annual amount spent is Php 23,323
• Potential market size for rice from MEMPCO members
in Zamboanga City alone is at
– Php 400,572,525.00
 Conclusion
• Demand for rice in Zamboanga City will
continue to increase with the projected
increase in population size
• MEMPCO has an opportunity to penetrate the
market through the current membership’s
own demand for rice
RICE CONSUMPTION STUDY AMONG MEMPCO MEMBERS

SUPPLY
 There is high demand but limited
supply of rice at source

WE ARE UNABLE TO
OPTIMIZE OUR
CAPACITY

OUR OWN FARMERS

REMAIN POOR!
 The Big Picture
Local DA Data 2012 2013 2014 2015 2016
Area Planted (Has) 7,094 7,272 7,480 7,480 7,480
Net Production (MT) 29,286 29,258 33,543 33,543 33,543
Effective Supply (MT) 19,036 19,018 21,803 21,803 21,803
Demand (MT) 92,103 95,363 98,739 102,234 105,853
Deficit (MT) (73,067) (76,345) (76,936) (80,431) (84,050)
Bureau of Agri Statistics
Actual Harvested (Has) 7,609 7,331 7,211 7,545
Actual Production (MT) 28,616 27,552 27,455 28,503
Estimated Supply (MT) 18,600 17,909 17,846 18,527
Deficit (MT) (73,503) (77,454) (80,893) (83,707)
Estimated Capacity
 How Much Do We Need?
• Zamboanga’s total capacity in terms of land
area is 68,087.37* hectares for agriculture,
out of which 18,473** hectares can be utilized
to produce rice
• Only 7,545*** hectares are used for rice
production as of 2015
• Additional rice production capacity can be
made by utilizing 10,938 hectares not used
Sources:
*DENR CENRO ZC,
**Zamboanga.Net
***Bureau of Agricultural Statistics
Constraints

Source: NEDA Region IX

What does capacity mean?

ZAMBOANGA
CAN PRODUCE
MORE RICE
 Other Constraints to Capacity
• Product quality and market acceptability
• Farmer’s technical competence
• Market and production information
• Post harvest facilities
• Investment protection (insurance)
• Affordable and readily accessible financing
 MEMPCO FARMER CAPACITY
• 95 Farmers under 4 pilot clusters in Mercedes,
Cabaluay, Gapuh, and Bolong
• Total of 159.45 hectares of rice fields utilized
• Possible to at least double the production to
300 hectares if additional farmers are
recruited
 Assumptions and Estimated Capacity
• 160 Has. capacity of current member-farmers
• 136 sacks per hectare net production capacity
• 21,760 sacks total production capacity
• 44 kilos per sack (average)
• 957.44 metric tons total production capacity
– This is only 4% of actual 2015 total production of ZC
– 846.46 MT net milling output or 33,859 sacks production
• Php 1.436 million gross milling income
• Php 33.520 million potential farmer gross income
• Php 20.931 million potential net production income
• Php 220,328 potential income per farmer per season
 What does this mean?

BIG ECONOMIC
OPPORTUNITY
FOR
ZAMBOANGA
CITY RICE BIG ECONOMIC
OPPORTUNITY
FARMERS FOR MEMBERS
WHO ARE PART OF
THE RICE VALUE
CHAIN
Can MEMPCO help the farmers and
actors in the value chain?

YES
But before we continue, we need
to address the challenges of
organizing the MEMPCO rice
ecosystem
The Rice Value Chain and Process
SEEDS

Farmer Seed Company

Local DA Retailer

Land Planting Maturity /

Preparation Growing Harvesting
RICE FARMER (15 days) (80 - days) (30 days) PALAY

Retailer Trader / Coop / Financier

Manufacturer Miller / Consolidator

Distributor
FARM INPUTS
Retailer / Rice Trader

CONSUMER
The Rice Value Chain and Process
SEEDS

Seed Company

Local DA

Land Planting Maturity /

Preparation Growing Harvesting
RICE FARMER (15 days) (80 - days) (30 days) PALAY

Manufacturer Miller / Consolidator

MEMPCO Distributor
FARM INPUTS Value Retailer / Rice Trader
Chain
Facilitator
MEMBERS
 What MEMPCO will do
• Organize the Farmer Members into Clusters
• Coordination with Local DA for farmer education
• Accreditation of Suppliers of Farm Inputs and Seeds for
member-farmers
• Partnership with PCIC for crop insurance
• Organize the Value Chain Actors
• Provide financing to value chain actors
• Provide technical support for the marketing of farm outputs
• Advocacy and representation to LGU for infrastructure
support using available government support mechanisms
such as the Bottoms Up Budgeting (BUB), People’s
Development Trust Fund (PDTF), Overseas Development
Assistance (ODA), etc.
 However, this will take a longer
time to complete and the risks are
very high
How much is needed to finance a
common milling project that will
produce the required grain quality
expected by consumers?
 Complete Milling Facility Costs
• Equipment = P 13.7 million
• Facility = P 1.0 million
• Total Estimated Capital Investment = P 14.7 M
• Payback Period (using Present Value) = 6.3 yrs
• Net Present Value Index = 0.97
• Assumptions:
– Constant cash Inflow for one harvest season only was used
– Cash outflow for two harvest seasons were used with
increasing value of 10% annually
– Cost of capital of 15%
– Equipment capacity of 3.0 MT per hour
 What does this mean?
• Milling operations are critical to the value chain
for Zamboanga City
• In order to produce the commercial quality
expected by members, local milling facilities will
need to be upgraded and/or modernized
• Investment on a common service facility is high
with return on investment running over five years
• Income from the operations of the milling facility
is high, however it is subject to the risk factors
affecting agriculture (such as climate conditions)
STUDY ON THE SUPPLY AND DEMAND FOR RICE AMONG MEMPCO
MEMBERS

KEY RECOMMENDATIONS TO
MEMPCO