Case Study on the Alabat Island Kaanib Coconut Hub: Focus on Social and Economic Profits

Date

6-2023

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Melodee Marciana E. De Castro

Committee Member

Dinah Pura T. Depositario, Cherry Lou T. Reyes-Nuñez

Abstract

The Philippines is the world's top supplier and the second-largest producer of traditional coconut products, yet the coconut industry faces significant challenges as coconut farming sectors and coconut-producing provinces are plagued by poverty and low productivity. The untapped potential lies in addressing productivity issues, such as an abundance of old and unproductive trees and a lack of value-added enterprises, to foster growth and expansion in the coconut industry.

Coconut sugar, a major product made from the sweet sap obtained from coconut inflorescence, is on the rise in the country, providing a new source of income for rural coconut farmers. This is exemplified by the establishment of the Alabat Island KAANIB Coconut Hub as part of the KAANIB Coconut Hub Project (KCHP), a community-driven initiative by the Alabat Island Farmers Producers Cooperative (AIFPC), centered on the production and processing of coconut sugar.

This study assessed the social and economic profits of the Alabat Island KAANIB Coconut Hub. Specifically, it aimed to present the business profile, describe the external environment, discuss the practices according to the business functions, examine the social profit, analyze the economic profit, and recommend future strategic directions of the Alabat Coconut Hub.

The frameworks SIMPLE Holistic Quadruple Bottom Line (4BL) Impact Model and Social and Inclusive Business Models were applied in this study, which consist of three (3) main segments: the business environment, the social profit equation, and the economic profit equation.

The business environment conceptualizes and puts the Alabat Coconut Hub into context context, encompassing its overall business performance. This segment c . omprises five (5) key dimensions, namely, external drivers, internal drivers, stakeholders, mission and values, as well as activities.

The social profit equation describes how the Alabat Coconut Hub provides social benefits and raises social concerns in terms of community, education, finance, and health situations and/or conditions.

The economic profit equation analyzes the challenges and opportunities in the Alabat Coconut Hub, as defined by sales revenue, cost structure, and net profit earned, incurred, and generated, respectively.

This study employed the descriptive qualitative case research design, with participants including coconut sugar farmer-producers, coconut tappers or sap harvesters, and Coconut Hub staff and/or personnel. Out of the 64 beneficiaries of the Alabat Coconut Hub, a total of 55 served as the participants of the study, consisting of 11 farmer-producers from the Alabat Island Coco Sugar Producers Association, 20 coconut tappers or sap harvesters across the different coconut sap sugar production farms, and 24 staff and/or personnel of the Alabat Coconut Hub. Data collection methods involved Key Informant Interviews (KIIs), assisted surveys, physical store checks, product testing, and operational trials. Data analytical tools incorporated a stakeholder map, project conceptgram, External Factor Evaluation (EFE) matrix, value addition analysis, marketing mix, horizontal and vertical analysis, profitability ratio analysis, descriptive analysis, relative frequency, frequency scale, Mann-Whitney U test, and thematic analysis.

The Alabat Island KAANIB Coconut Hub Project, simply known as the Alabat Coconut Hub, was established as part of the national government's Accelerated and Sustainable Anti-Poverty Program or ASAPP. It aims to drive economic growth, create job opportunities, and increase farmers' income by harnessing the untapped potential of coconut in the island municipality. The Alabat Coconut Hub, owned by the Alabat Island Farmers Producers Cooperative (AIFPC) in partnership with the Philippine Coconut Authority (PCA), is primarily involved in the wholesale and retail production of organically certified coconut sugar. This project has garnered support from various government agencies and generates profits that are allocated to socio-economic development projects, enterprise reserves, and the cost recovery scheme of the Philippine Coconut Authority or PCA. Coconut sugar, derived from coconut sap, offers a natural sweetener with health benefits, making it a desirable product in the market.

The Alabat Coconut Hub is influenced by various factors across different dimensions that impact its operations and success. Politically, the Coconut Productivity Enhancement Program implemented by the Philippine Coconut Authority or PCA plays a significant role in shaping the coconut sugar industry, and the Alabat Coconut Hub strives to capitalize on this opportunity. Economically, the growing market projection for organic coconut sugar is highly significant, but the Alabat Coconut Hub’s efforts to capitalize on this opportunity are limited. Socioculturally, the emergence of coconut sugar as a high-value product influences the coconut sugar industry, but the Alabat Coconut Hub’s strategies to capitalize on this are average. Technologically, the Alabat Coconut Hub faces challenges in terms of supply improvements and skilled workers for coconut tapping, and its strategies to address these are inadequate. Environmentally, the susceptibility of coconut fruit to heat and water stress affects the coconut sugar industry, and the Alabat Coconut Hub’s strategies to mitigate this are insufficient. Legally, the free trade agreement on sugar importation poses a threat, but the Alabat Coconut Hub’s strategies to minimize adverse effects are lacking. Furthermore, the Alabat Coconut Hub relies on coconut sugar farmer-producers as input suppliers and uses external service providers for delivery and packaging. Its customer base includes local buyers, retailers, wholesalers, toll packaging firms, and institutional buyers. Market channels, such as social media, trade fairs, and word-of-mouth, help expand the reach of the Alabat Coconut Hub. Competition comes from private businesses and companies located outside Alabat Island, supplying similar products to institutional buyers.

The Alabat Coconut Hub is responsible for the production and processing of coconut sugar, from the collection of coconut sap to the packaging of the final product. The process involves tapping coconut palms to collect sap, which is then filtered and boiled to create coconut syrup. The syrup is further processed by boiling and stirring to create coconut caramel, which is granulated, sieved, and oven-dried to produce coconut

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sugar. The coconut sugar is packaged, weighed, and distributed to both local and international markets. All these stages in the entire production and processing of coconut sugar are made feasible with a range of personnel, including the Operations Manager, Bookkeeper, Administrative Staff, Production Manager, Hub Cooks, Machine or Dryer Operators, Production Workers, Utility Aide, and Coconut Tappers or Sap Harvesters. The Alabat Coconut Hub sells coconut sugar in various packaging sizes and mainly targets institutional buyers and/or exporters. The local government provides support and assistance in various aspects of the Alabat Coconut Hub’s operations, as well as partnerships with institutional buyers and participation in trade fairs to help expand its market reach. In financial terms, the cost of goods sold and operating expenses have a significant impact on the Alabat Coconut Hub’s net sales and income. Overall, the Alabat Coconut Hub has several strengths in production, processing, marketing and sales, human resources, and finance, which positively contribute to its business operations.

The Alabat Coconut Hub, a community-based social enterprise, has had a positive impact on the social conditions of its beneficiaries, including farmer-producers, tappers or sap harvesters, as well as staff and/or personnel. Through data analysis using the Mann-Whitney U test, it was found that there were significant improvements in community, educational, financial, and health situations for all beneficiaries after the project implementation. This indicates that the Alabat Coconut Hub has effectively improved the lives of farmer-producers by providing employment opportunities, stable

income, and access to basic necessities. However, there are still concerns raised by farmer- producers, such as unstable climate conditions and unorganized sap collection. Similarly,

tappers or sap harvesters face challenges such as unfavorable weather conditions and risks associated with their work but have gained benefits like higher income, increased productivity, and support for family needs. While staff and/or personnel at the processing facility have encountered concerns related to the inconsistencies in the supply and quality of coconut sap syrup of coconut sap syrup but they have acquired employment, higher income, and personal . development. Overall, the Alabat Coconut Hub has brought positive changes to the community, education, finance, and health of its beneficiaries.

The Alabat Coconut Hub, a community-based social enterprise, aims to be economically viable to repay the Philippine Coconut Authority’s or PCA’s invested capital and become self-sustainable in the long run. However, the analysis of its income statements from 2019 to 2022 reveals fluctuating cost structures, with operating expenses decreasing and increasing at different periods, while sales revenue also showed both increases and decreases. Although there have been net profits, they are decreasing over time, indicating inefficiencies in managing operations, thus, failure to meet its financial projections, and struggles to effectively manage operations with high costs and declining profits. The Alabat Coconut Hub faces various challenges in production, processing, marketing and sales, human resources, and finance, which hinder its optimal performance. This includes a lack of high-yielding coconut palms, a limited supply of coconut sap syrup, and inadequate marketing efforts. Despite these challenges, there are opportunities for growth, such as the increasing demand for coconut sugar and the shift towards organic and natural products. The Alabat Coconut Hub can capitalize on these opportunities due to the abundance of resources and market potential to offer additional prospects for its development.

After thoroughly examining and analyzing various aspects of the study, it has been determined that there are certain gaps and lacking capabilities within the enterprise that require improvement. Four business functional gaps have been identified within the Alabat Coconut Hub: (1) lack of coconut sugar farmer-producers for major raw material supply; (2) inconsistencies in the quality of coconut sap syrup for further processing; (3) lack of promotion, linkage, branding, and positioning for coconut sugar products; and (4) absence of entrepreneurial and business management skills training for the beneficiaries. Addressing these shortcomings may create an avenue for the Alabat Coconut Hub to learn, develop, and implement competitive strategies, enabling it to achieve sustainable economic profit while also generating relevant social profit. The researcher has then proposed strategic recommendations for each of these gaps to strengthen and revitalize the formerly good deal of business of the Alabat Island KAANIB Coconut Hub.

Language

English

LC Subject

Coconut industry--Philippines--Finance

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2023 M17 M35

Notes

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Document Type

Thesis

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