Value Chain Analysis of Pili Nuts (Canarium ovatum) in Sorsogon, Philippines

Date

6-2023

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Maria Noriza Q. Herrera

Committee Member

Normito R. Zapata, Jr., Renen Szilardo C. De Guzman, Mar B. Cruz

Abstract

Value chain performance evaluation of the pili nut stakeholders in Sorsogon province was the objective of this study. Specifically, it intends to (1) characterize the key players in the pili nut value chain; (2) identify the relationships amongst the participants of the chain; (3) evaluate the performance of pili nut production in terms of its costs and profit, marketing, and value-adding activities at the different stages in the value chain; (4) determine the possible problems and challenges at each level of the value chain that affects the performance of the pili nut industry; and (5) formulate strategies to address the problems and challenges identified and recommend solutions to those problems.

A total of 100 respondents were covered in the study, which consisted of both 30 pili farmers and consumers and both 20 pili processors and traders. Snowball sampling was conducted in selecting the respondents, who came from the municipalities of Bulusan, Gubat, and Irosin and the capital of the province, Sorsogon City. These areas were where pili production and processing were dominant.

Farmers and processors have the weakest connection with each other. Meanwhile, it was the opposite in the case of traders, since they served as middlemen. Processors and traders generally have more bargaining power compared to farmers, as they are the primary buyers of pili products. Moreover, informal transactions were dominant among the stakeholders. Likewise, trust, communication, respect, and cooperation were the driving factors that enabled the stakeholders to have a successful transaction. Similarly, in every transaction, a cash basis was implemented across the different stakeholders. Also, some of the stakeholders sourced capital from financial institutions to expand their business operations.

Pili fruit is available and can be transformed into four different forms: fresh pili (pili with pulp), shelled pili, pili kernels, and processed pili products (pili confectioneries and delicacies). These forms of pili flowed into distinct chains involving several stakeholders, which contributed to the value addition of the commodity. Both fresh pili and shelled pili flowed on four distinct value chains in which processors were not involved. Meanwhile, pili kernels flowed on multiple chains (12 chains) due to their use among the different stakeholders. Specifically, traders and processors were the ones that required pili products, including shelled pili and pili kernels, since fresh pili (black in color) were often marketed directly to consumers. Furthermore, along with the flow of pili products, information regarding their utilization also circulated. Information such as processing procedures, supply and demand, and pricing, among others, were some that stakeholders shared. Lastly, the distribution of pili across the different stakeholders was done through delivery by trucks, jeepneys, tricycles, and picked-up. Distribution was not limited to the province since it was even marketed in Manila and other provinces. However, issues regarding fuel pricing and fees were some that stakeholders dealt with.

Farmers had the lowest amount of value-added on fresh and shelled pili in both seasons. Both of them had Php 2.60/kg in the peak season and Php 3.10/kg in the lean season. Value-added activities include depulping and drying. Moreover, in the case of pili kernels, traders, specifically wholesaler-retailers, had the highest amount of value-added in both seasons: Php 52.33/kg in the peak season and Php 97.51/kg in the lean season. Value-added activities include depulping, drying, and deshelling. Processors had the highest amount of value-added since they turn pili kernels into different pili confectioneries and delicacies. The amount of value-added ranged from Php 800 - Php 1,300 in the peak season and from Php 800 - Php 1,400 in the peak season. Relatively, the longer the chain of stakeholders as well as the kinds of activities involved, the higher the total value-added incurred; however, the net margin by each stakeholder decreased. Therefore, value-added and margin showed an inverse relationship.

Farmers had the highest net margin earnings due to low value-added costs: fresh pili had Php 22.40/kg in the peak season and Php 31.90/kg in the lean season; shelled pili had Php 44.40/kg in the peak season and Php 75.90/kg in the lean season; and Pili kernels had Php 597.40 in the peak season and Php 796.90 in the lean season. Moreover, Wholesaler-retailers had a net margin of Php 4.67 and Php 4.49 for both fresh and shelled pili in the peak and lean seasons, respectively. Meanwhile, pili kernels had a net margin of Php 747.67 in the peak season and Php 802.49 in the lean season. On the other hand, crispy pili were the basis for the computation of margin for processors. Processor- wholesaler-retailers and Processor-retailers have various net margins depending on where pili supply was sourced. Both types of processors earned a positive net margin, which amounted to Php 138.72/kg and Php 141.72/kg in the peak seasons if pili were sourced from the farmers. Unfortunately, negative net margins were incurred, which ranged from Php 50/kg to Php 400/kg for both seasons if pili were sourced from the traders.

Farmers’ main role was to grow pili trees and supply pili products (fresh and shelled pili and pili kernels) to the market. Meanwhile, traders’ main role was to source pili products from the farmers and market them; they targeted specifically the processors since they mostly sold pili kernels. Furthermore, traders were categorized into two categories: wholesaler-retailers and retailers. The former mostly marketed large volumes of pili supply, while the latter focused on retailing. Lastly, the processors' main role was transforming pil kernels into different pili confectioneries and delicacies - these were now the end products consumed by consumers. Likewise, processors were categorized into two categories: processor-wholesaler-retailers and processor-retailers. The former had various product lines and was marketed in large quantities, while the latter had only limited pili confectioneries.

Furthermore, the utilization and distribution of pili products were not only limited to the province but also to nearby provinces such as Albay, Camarines Sur, Camarines Norte, and outside Region 5, among others. To be specific, Albay province was the top processor of pili; hence, there were feweer processors in Sorsogon province. Also, with the current supply and demand of pili, most were utilized domestically due to the difficulty of meeting the international standards. Still, some processors were able to export their products; however, it was not in great quantity given the limited market available across countries, the products' compliance with international standards, costs, and certifications and registrations, among others. Conversely, if given enough support and foundation, pili can be exported, but it would take a lot of collaboration and effort among the stakeholders.

Farmers faced several problems and challenges, which included typhoons, a lack of modern equipment, manual methods of harvesting, and seasonality of production, among others. Moreover, traders and processors share the same problem with the insufficiency of pili supply, especially during the lean season. Also, the defectiveness of pili nuts and the lack of modern equipment were some of their problems. Lastly, traders mostly have problems with the sourcing of pili supply and buyers, while processors have problems with price fluctuations and the marketing of their products.

Consumers’ responses were also gathered, in which they prioritized the product’s flavor and taste. Meanwhile, they seek improvement in product packaging and labeling. They also mentioned that they were not selective about the stores, regardless of where they went in the Bicol region, because they saw similarities and differences between the products offered.

Finally, it is recommended that farmers join organizations or attend training and seminars to improve their knowledge when it comes to pili production and utilization of the commodity. Apart from that, they should practice pili grading so that they can have an advantage in negotiating the value of the produce. They could also seek assistance from support institutions for financial assistance and improvements in operations such as harvesting and sourcing from buyers, investment in technology and modern equipment, and the development of post-harvest facilities. Pili traders, on the other hand, must formalize their arrangements with the Pili farmers and processors to have immediate contact and better coordination. Meanwhile, pili processors must improve their product packaging and labeling so that they will meet market standards. In this way, it could be marketed locally and internationally. Also, they should widen their connections with the pili farmers so that supply would come directly from the farms, which is more efficient and a win-win situation for both stakeholders. Lastly, both traders and processors should invest in technology and modern equipment to improve their operations and join organizations, receive training, and attend seminars to gain better knowledge on the utilization of the products.

Language

English

LC Subject

Nut industry

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2023 M17 L38

Notes

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Document Type

Thesis

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