Value Chain Analysis of Dried and Smole Fish in Lucena City

Date

5-2015

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Dia Noelle F. Velasco

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Abstract

The study entitled “Value Chain Analysis of Dried and Smoked Fish in Lucena City” aims to present the profile and relationship dynamics of the actors involved in the value chain (input suppliers, processors, wholesalers, wholesaler-retailers, and retailers), to determine the costs and profit of the dried fish production and marketing as well as the value added at different stages in the value chain, to identify possible investment entry points and government interventions, and to recommend solutions to the identified problems.

The study used exploratory and descriptive research designs. Interviews were done to gather data on the key actors of the value chain which includes their demographic profiles, costs incurred, value adding activities, and problems encountered in the production. Value-adding activities in each level of the value chain were determined and analyzed using Michael Porter’s generic value chain model. Cost-return analysis, relationship dynamics, and profitability analysis were also done to analyze the value chain.

Forty-five processors were interviewed in the study. All of them operated in micro-scale level. The ages of the respondents ranged from 22 to 67 years old, with the majority being male. The lowest amount of initial capitalization was Php 3,000 while the highest amount was Php 20,000.

It was found out that there were four product flows or value chains in the marketing dried and smoked fish in Lucena City. The first value chain involves processors, wholesalers, wholesaler-retailers, and retailers. The second one removes the role of the wholesaler which makes the processors sell directly to the wholesaler-retailers. The third one involves the retailers buying directly from the processors and the last product flow is the direct transaction between the processors and consumers, removing the presence of all other traders.

In the identified value chains in the study, the first value chain is considered a strong value chain because of the strong relation between the participants. The third and fourth value chains are considered weak chains due to the lack of relationship marketing between processors and retailers (Value Chain 3) and processors and end consumers (Value Chain 4). The second chain was assessed to potentially become a sustainable chain. Relationship marketing between the processors and wholesaler-retailers can be improved through continuous transactions through the years. Transaction economics can also be improved by distributing the costs further among the chain participants.

In terms of the production costs incurred by the processors, the cost for the main input, fresh fish, took the largest percentage while transportation cost consume most of the marketing costs of the wholesalers. Wholesaler-retailers and retailers incurred their highest cost in rent.

In terms of the value added analysis, the processor generally received the highest value added among the other participants of the chain. This implies that the processors had the advantage in the prices of the dried and smoked fish. On the other hand, retailers received the lowest value added.

As for the profitability analysis, processors posted the highest average net return of Php 76.56 per kilogram. Wholesalers derived Php 15.40 per kilogram average net return. Wholesaler-retailers received Php 10.37 per kilogram average net return while retailers derived the lowest which was Php 7.52 per kilogram average net return. The profitability analysis also showed that the highest profit was obtained from Twakang (Commerson’s Anchovy). However, the Tamban (Indian Sardines) was the most in demand among the consumers and also has a stable supply compared to other species.

The identified issues, gaps, and weaknesses of the Lucena City dried and smoked fish value chain include: bad weather conditions, seasonality of fish, limited access to capital, research and development, limited resources to proper packaging, high cost of inputs, limited space in the public market, delays in payment of traders, changing customer preference, and lack of government support.

Recommendations were formulated for various players in the industry. For the processors, they should engage in product specialization, product development, research and technology development and forward integration. For the traders, they can adopt product specialization, product development, backward integration, and capacity utilization. For government agencies, they should provide financing programs, product information, infrastructure development, product support and development, technology development and training and technical assistance to fishermen and processors. Lastly, possible investment entry points for investors include engaging in aquaculture, and establishment of modern processing plants and cold storage facilities.

Language

English

LC Subject

Dried fishery products, Value Analysis (Cost Control)

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2015 M17 J35

Notes

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Document Type

Thesis

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