Effects of Climate Variability on a Livestock Value Chain: The Case of the Sorosoro Ibaba Development Cooperative (SIDC) Hog Business

Date

5-2015

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Dinah Pura T. Depositario

Committee Member

Nanette A. Aquino, Normito R. Zapata, Reynaldo L. Tan

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Abstract

Sorosoro Ibaba Development Cooperative (SIDC) is one of the country’s most successful multi-purpose cooperatives. It operates diverse businesses including a hog business consisting of four major components – inputs, production, transport and distribution, and marketing. Like any other agricultural-based business, SIDC’s hog value chain is vulnerable to climate variability.

The general objective of this study is to analyze the vulnerability to climate variability of each link and identify the business risks across the whole hog value chain of SIDC.

The study specifically aimed to: 1) describe the manifestations of climate variability in Batangas City from 1994 to 2014; 2) present a background and profile of the Sorosoro Ibaba Development Cooperative (SIDC), especially its hog business; 3) map out the value chain process and actors of SIDC’s hog business; 4) discuss the effects of climate variability at each point along SIDC’s hog value chain; 5) describe the current adaptation strategies utilized by SIDC to address the effects of climate variability and; 6) suggest climate variability adaptation strategies for SIDC’s hog business.

The study used the value chain approach to identify the effects as well as the climate change adaptation strategies at all points along the SIDC hog value chain. Primary data were gathered through semi-structured key informant interviews among veterinarians, technicians and production operators. Interviews were also conducted with the cooperative’s general manager, feed mill SBU head, purchasing department head, marketing and sales manager and livestock department manager of SIDC, as well as with the Batangas OCVAS Chief Veterinarian and a PAGASA Climate Data Section personnel. A survey was conducted among the contract growers of SIDC who came from Barangays Sorosoro Ilaya, Sorosoro Ibaba and Bucal in Batangas City and Brgy. Balanga, Ibaan, areas where there were recorded above-average number of mortality cases for the past year.

Secondary data was taken from the cooperative’s records and files like SIDC’s annual reports for the last five years and financial statements. Other secondary data were gathered from the records of Bureau of Agricultural Statistics (BAS), Philippine Council for Agriculture, Aquatic and Natural Resources Research and Development (PCAARRD) and Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA). Secondary data were also gathered from the Internet about climate variability and its effects on agribusiness enterprises and industries. Other related literature were from the unpublished special problems.

Results showed that Batangas City is affected by climate variability as manifested in sharp fluctuations in maximum, minimum and mean temperature and varying rainfall amount in the last 20 years.

The SIDC hog value chain consists of four major links – input, production, transport and distribution and marketing. The Input Link is composed of the SIDC Feedmill business, internal (i.e., SIDC pig farm) and external (i.e., breeder-farms) weanling suppliers, SIDC’s veterinary services (provided by the Livestock Division) and the contract- growers who provide the housing. The Production Link, on the other hand, is composed of the SIDC Pig Farm, its communal farm and the contract growers. For the Transport and Distribution Link, the major players were the haulers who SIDC transacted as well as the coopmart branches and outside slaughterhouses. Lastly, the Marketing Link in the value chain consists of the wholesalers who sold to end consumers in CALABARZON and NCR.

Each point on the value chain was assessed to be affected by climate variability. Feed ingredients such as yellow corn would get wet during prolonged rain. This led to the need to add preservatives during feed milling to maintain the quality of the output which led to an increase in cost of production. The effects of climate variability, on the other hand, on weanlings grown both by external and internal sources was an increase in disease incidence (e.g., scouring). The pig pens of some contract growers were also affected especially during Typhoon Glenda in July 2014 when damages ranging from P 10,000 to P100, 000 per grower were posted. Hogs at the growing stage became vulnerable to respiratory diseases (i.e., Pseudorabies virus (PRV) and Actinobacillus pleuropneumonia (APP), and in the case of some contract growers, increased mortality among their hogs. Transport and distribution of marketable hogs was also disrupted by unpredictable extreme heat and increased rain intensity and duration. Some hog haulers claimed cases of mortality among the hogs being transported due to extreme heat during travel which led to losses in their income. Lastly, at the Marketing Link, exposure to extreme heat of pork for retail resulted to water loss, and consequently meat weight loss and also effects on the firmness, color, texture and odor of the meat.

The players in the SIDC hog value chain employed adaptation strategies at each point. At the Inputs Link, specifically the feed mill, a temperature monitoring gauge for their

storage of raw materials was installed. At the Production Link, specifically the contract- growing operations, raisers are required to disinfect their pens to prevent the spread of

climate variability-related diseases and to use additional covering like “trapal” (water- proof sheeting) along the sides of their pig pens. Modifications in feed formulations (i.e.,

addition of vitamins) during summers as well as addition of electrolytes to water to relieve stress among the hogs are also allowed by management. At the Transport and Distribution Link, water is sprayed to the hogs by the haulers prior to and during travels. Lastly, at the Marketing Link, some market outlets where pork is bought have acquired their own cold storage facilities in the interest of preserving the quality of meat.

Potential climate variability adaptation strategies were recommended at each point of the SIDC hog value chain. For the Input Link, it was suggested that the cooperative provide a bigger storage area for raw materials at the feed mill like good quality yellow corn to minimize production cost increases due to expenses on preservatives. Improvement in housing design especially the roofing and air circulation were recommended to the contract-growers. Further, the Livestock department of SIDC should conduct more trainings and seminars in relation to climate variability. It was also suggested that an Automatic Weather Station (AWS) be purchased by SIDC to have real-time and accurate weather data in the area and to improve their timing of operations based on the forecasts. To address the climate variability issues of those involved in the transport and distribution of hogs, the haulers should improve their truck design to allow for better air circulation.

As long-term climate variability adaptation strategies, the researcher recommends that SIDC revive their slaughtering operations by investing in a slaughter house as well as cold storage facilities. Further SIDC should also intensify its direct marketing efforts and install a feedback mechanism at the Marketing Link of the SIDC hog value chain.

Language

English

LC Subject

Livestock--Cooperative marketing, Producer cooperatives

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2015 M17 S27

Notes

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Document Type

Thesis

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