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ANALYSIS OF BANANA PROCESSING BUSINESSES AND THEIR SUPPORT ENVIRONMENT IN THE PHILIPPINES Argañosa S. Arturo, Perlita A. Nuevo, Jocelyn E. Eusebio and Bessie M. Burgos INTRODUCTION The Philippines is one of the major producers of banana in the world. In fact, it ranked fifth in global production in the year 2000 with India, Brazil, China and Ecuador on top of the list. Banana also accounted for 3.3% (P6.6 B at constant price) of the total value of production in agriculture in the year 2001. Moreover, it ranked second among the top Philippine exports in the year 1999 and 2000. This makes banana a consistent dollar earner with export revenues of more than US $200 M annually. The strength of the banana industry lies on the big hectarage, which is a little more than half (53.8%) of the total land area planted to fruits (621,861 has). The country is also blessed with favorable climate, well suited for growing bananas all year round. There are already existing banana cultivars accepted in domestic and export markets. The major cultivars are Cavendish and Señorita for the fresh export market, Saba and Cardaba for processed products (chips and crackers), Lakatan, Bungolan, Latundan, and Señorita for fresh local market. In the year 2004, the total area planted to banana was estimated at 414,510 has, 44% of which is planted to Saba. The total volume of banana production in 2004 was estimated to be 5,631,250 metric tons. Of this volume, 29% goes to export as fresh fruit, 18% goes to the processing sector, and 49% goes to the local market and used for various food items. As earlier stated, the Saba variety is often used for processing especially for banana chips. In Mindanao alone, there are 26 processing plants for banana chips with a capacity of 20-60 tons per day per plant. In a survey conducted in 2003, the total plant capacity is estimated to be 440 t/day but the actual average daily volume of banana chip produced was only 242 t/day or short of 198 t/day. The total banana chip production on daily basis of 242 tons is far short from the estimated 600 tons daily requirements for banana chips. destinations of banana chips is presented in Table 1. The total banana chips The top ten export export in 2004 is reported to be 36,538 tons valued at US$ 36.86 M.

Recently, however, banana chip

processors have reduced the buying price from P4.30 ­ 4.50/kg to P3.30 ­ 3.50/kg. Reports indicated that the main reason is the reduction in volume of banana chips being imported by China, the second biggest single country market of the product. Inspite of this, the growth potential for banana processed products remains high. The country has still a large area of land suited for banana production while its population growth rate remains above 2% annually. With more effort to disseminate relevant information, more people can be enticed to go into business of banana production and processing. Objectives: 1. Identify the strengths and weaknesses of small banana processing businesses; 2. Analyze the availability of information and services for small rural processing businesses which contribute to their efforts to compete; 3. Analyze the potential of small processing businesses to contribute to rural development; 4. Profile the mechanisms for information flow and collaboration and areas of noncommunication among the important agents linked to adding value to banana through processing; 5. Analyze the experience of a project which promoted small rural processing businesses; 6. Identify possible strategies for improving the conditions for the start up and expansion of small processing businesses which contribute to rural development. These strategies may depend on closer links among specialists from production, food processing and business support. Table 1. Top 10 export destinations for banana chips January to December 2004 (preliminary) Gross Kilos Canada China, People's Republic of Taiwan (Republic of China) France Germany Hongkong Japan (excludes Okinawa) Netherlands UK (Great Britain and N. Ireland) United States of America Total 783,239 7,496,311 4,365,256 2,513,636 3,968,409 2,018,834 1,664,738 1,239,034 3,245,700 6,764,450 40,561,835 Quantity 725,538 6,879,085 3,516,871 2,247,298 3,647,766 1,829,742 1,496,255 1,156,151 3,003,258 3,003,258 36,538,029 FOB Value 868,583 5,867,516 4,169,241 2,293,981 3,221,374 1,574,296 1,626,530 1,111,671 3,252,219 3,252,219 36,860,284 Rank 10 2 3 6 5 8 7 9 4 1 $/Kg 1.197 0.853 1.185 1.021 0.883 0.860 1.087 0.962 1.083 1.122 1.009

Country of Destination

Source: Bureau of Agricultural Statistics, 2004



Forming the National Team Figure 1 shows the organizational structure approved by the National Steering Committee organized in relation to the holding of the First International Banana Uses Workshop in the Philippines. As to the Country Study Team, the National Steering Committee agreed that this will be composed of the Head of the Technology Packaging Unit of the Technology Outreach and Promotion Division of PCARRD, the Director of the Crops Research Division of PCARRD, and a Technical Expert on post harvest handling and processing from the University of the Philippines at Los Baños (UPLB). The Terms of Reference of the Country Study Team include: 1) profile the different small-scale banana businesses and the service providers that support the banana processing businesses, 2) organize a small group workshop to validate the data gathered and 3-4 banana processing enterprises to conduct an in-depth study, 3) process and organize the results of the survey, and 4) prepare the output of the survey for presentation of the team to the international workshop. After organizing the Study Team, it was agreed that the study will be conducted in Southern Tagalog provinces, Region 4 which is composed of 10 provinces with Quezon, Oriental Mindoro and Occidental Mindoro as the leading banana producers (Figure 2). .


Preliminary View of Banana Processing A. Banana Products in the Market In the beginning of the study, the Study Team listed the different product preparations where banana is an ingredient. These products are the following: a) Snack foods (banana cue, banana splits, chips/crackers), b) banana sauce, c) flavorings and extracts, d) food ingredients, e) extenders, f) fabrics, g) novelty items, h) food wrapper and liners, i) animal feeds, and j) organic fertilizers. Thereafter, the list of enterprises registered with the Department of Trade and Industry (DTI) Central Office was listed (Table 2). There are 12 businesses engaged mainly in the production of banana chips all of them operating outside the Southern Tagalog provinces. These enterprises are big corporations involved in the processing of many other processed products.


Figure 1. Organizational Structure for the First Global Banana Uses Enterprise Workshop

International Coordinating Committee · Dr. Charles Staver · INIBAP Regional Coordinators

National Steering Committee · · · · INIBAP - Dr. Agustin B. Molina PCARRD - Dr. Patricio S. Faylon DA-BAR - Dir. Nicomedes Eleazar CvSU ­ Dr. Ruperto Sangalang

WORKSHOP/EVENTS COORDINATING COMMITTEE Chairman: Dr. Bessie Burgos, PCARRD Members: Dr. Vic Guiam, DA-BAR Ms. Versalyn Roa, INIBAP Ms. Yolanda Tanyag, PCARRD TOR · Lead in the local arrangement/coordination and implementation of the international workshop · Supervise the activities of the Techno Fair Team and Country Survey team

Techno Fair Team

Country Survey Team Team Leader: Members: Dr. Arturo Argañosa, PCARRD Dr. Jocelyn Eusebio, PCARRD Dr. Perlita Nuevo, UPLB

Leader: Members:

Dr. Simeon Crucido, CvSU Ms. Edna Vida, CvSU PCARRD Staff DA-BAR Staff


· · · · · Organize the Techno Fair Invite and arrange participation of exhibitors Put up physical facilities for the exhibits Organize techno forum/symposium Document the organization of techno-fair

TOR · Profile the different small-scale banana businesses and the service providers that support the banana businesses · Organize a small group workshop to validate the data gathered and select 3-4 banana enterprises to conduct an in depth study · Process and organize the results of the survey · Prepare the output of the survey for presentation of the team to the international workshop 4


E L G P A d d C V




Rizal Cavite Laguna

Map of the Philippines


Batangas Marinduque Occidental Mindoro Oriental Mindoro Romblon


Figure 2.

Southern Tagalog Region (Region 4) with Quezon, Oriental Mindoro and Mindoro Occidental as leading banana producers


Table 2. DTI list of companies which are into production and export of banana chips. Name of Company

B-G Fruits & Nuts Mfg. Corp.


621 Building, FTI Complex Taguig Metro, Manila 60 Lapu-lapu Avenue San Antonio Village, Lahug Cebu City 6000 Rm. 2309 Tower 1 Cityland 10 6815 Ayala Avenue Makati City Matin-ao, Polomolok South Cotatabo 88 San Guillermo Avenue Bo. Buting, Pasig, MM Dolmar Bldg., 56 EDSA Mandaluyong City, MM Villamor Street, Bo. Obrero Davao City 15 L. Rivera St. & J.P. Rizal St. Projj. 4, Quezon City 4 Dama de Noche St. United Parañaque Subd. IV Parañaque City 66 Imperial St., Cubao Quezon City Gensan Drive & Odi St. Koronadal, South Cotabato Had. Candelaria, San Enrique Negros Occidental

Contact Person/Position

Ms. Benny T. Badenas Vice President Mr. Rory Eddie Ong Yiu President Mr. Leopoldo Estrellado President Mr. Michael Rene Ong Yiu President Mr. Ruben See President Mr. Philip Young President & CEO Ms. Marilou Fernandez

Contact No.

Tel. : (632) 838-4434 837-0378 Fax: (632) 838-4563 Tel. : (6385) 342-7777 Fax: (6385) 342-8888 Tel. : (632) 815-1831 815-0580 Fax: (632) 810-0532 Tel. : (6383) 552-6754 501-0732 Fax: (6383) 501-0051 Tel. : (632) 641-0991 641-0995 Fax: (632) 641-0992 Tel. : (632)936-7246 to 48 930-6001 to 05 Fax: (632) 936-7245 939-5828 Tel. : (6382) 221-1528 300-5495 Fax: (6382) 300-5494 (632) 410-0522 Tel. : (02) 911-7240/2070 8549/713-4018 Fax: (02) 911-8549 Tel. :(632) 823-2566 to 70 Fax: (632) 823-3708 Tel. : (632) 912-2777 438-5837 Fax: (632) 438-4662 421-9149 Tel. : (083) 228-2262 Fax: (083) 228-2028 Tel. : (6334) 460-3186 Fax: (6334) 460-3186

Celebes Agricultural Corp. El Coco Mfg., & Trading Corporation. Greenville Agro Corporation International Food Snacks Corporation Festive Foods International, Inc. (formerly Jona's Int'l. Phils., Inc.) Koki Food International, Inc.

L. Dometita & Sons Food Industries Leslie Corporation See's International Food Mfg. Corp. SUNBLISS Internationale ExImports Reliance Ore Co., Inc.

Mr. Leopoldo A. Dometita Asst. to the Manager Ms. Cristy Enriquez Import-Export Officer Mr. Ruben Lim See President Mr. Carlos L. Bautista General Manager Mr. Ciriano D. Sia. Jr. Marketing Head

Failing to get a list of banana processing enterprise in Southern Tagalog provinces from the Central Office of the DTI, the Study Team visited the DTI Regional Office for Southern Tagalog. Again, the effort provided negative results. Hence, the Study Team turned to the different Provincial Offices of the DTI. The provincial DTI office of Laguna showed four enterprises involved in the processing of banana products, two in banana chips and two in banana sauce.


A visit to the DTI Provincial Office in Oriental Mindoro was also done. There are three known enterprises in the province engaged in the production of banana chips. All of them are registered with the DTI. After establishing that, the Regional Office in Southern Tagalog of the Department of Science and Technology (DOST) is actively involved in providing technical assistance to small food processing businesses, the Study Team sought their assistance. The Study Team was informed that there is a cooperative engaged in the production of banana chips and sauce in Calatrava, Romblon. To get more information on banana processed products, the Study Team went to the different DOST agencies. The Food and Nutrition Research Institute (FNRI) has developed a baby food with banana as one of the ingredients. Unfortunately, the product has not been commercialized. A number of banana processed products were also developed by the Industrial Technology Development Institute (ITDI), such as, banana flakes and banana powder. commercialization. However, these products are still awaiting The development of these banana products was funded and

coordinated by the Philippine Council for Industry and Energy Research and Development (PCIERD), DOST. The study team also visited Divisoria in Manila, the biggest trading center of agricultural products and supplies in the country. Indeed, one could find in the Divisoria market not only the raw materials for banana processing but also the processed banana products as well as supplies and equipment used in the processing of banana. The fresh Lakatan fruits are mostly coming from Mindanao while the supply of Saba is being sourced mainly from the Mindoro provinces. The bulk of the Saba is being bought by banana-cue processors from all over Metro Manila with some even coming from the nearby provinces. The study team was informed that overripe Saba is being purchased by individuals who process it into various banana products. Repeated follow-ups, however, proved futile in locating these processors. The banana processed products found in the Divisoria market are banana catsup, banana extracts used for flavorings, banana powder, and banana chips. Even banana leaves used as food wrappers and liners are sold in the market.


The different supplies being used for banana processing available in the Divisoria market are: bottle and plastic containers, bottle sealers, plastic sealers, strainers, large frying pan for cooking, and cooking. B. Technical Support Sector Table 3 shows the different organizations, mostly government, that provide various services for the establishment and operation of small banana processing businesses including product certification, promotion and marketing. Technical support is almost always provided by the Provincial Science and Technology Office (PSTO) to prospective and even existing small food processing businesses. The PSTO provides assistance in the preparation of feasibility studies and the technical training on food processing. If the manpower capability of the PSTO is inadequate, the PSTO coordinates with the different agencies of the DOST and other service providers who have the capability to provide technical training. The local state college or university that has a food-processing center is likewise tapped to provide technical training on food processing. C. Sectors Related to Small Business Start Up and Operations The Provincial Center of the DTI is responsible in providing business management and marketing aspects to prospective small business entrepreneurs necessary to start the business. The Provincial Center of the DTI also takes the lead in the promotion and marketing of the processed food products. In some cases, the TESDA provides the necessary trainings on entrepreneurship and value formation. In terms of product analysis, the Food Development Center and the Packaging Research and Development Center are recognized by the Bureau of Food and Drug Administration for product registration. For financial requirements, the Land Bank of the Philippines, the Technology and Livelihood Resource Center, the LGU's Livelihood Funds (if existing), and Small Business Guarantee and Finance Corporations are usually relied upon by the SMSEs proprietors. In trouble-shooting and evaluation of processing equipment, the Industrial Technology Development Institute and the Suppliers take the lead.


Table 3.

Different organizations providing various services for the establishment and operation of small banana processing businesses including product certification, promotion and marketing. Name of Organization

Food and Nutrition Research Institute (FNRI) - DOST Industrial Technology and Development Institute (ITDI) DOST

· · ·

Type of Organization

Research and Development

Services Offered

Research and development Product promotion Research and development, product promotion and commercialization Training Prototype development of processing equipment Technical assistance Development of labels and packaging materials Coordination and funding of R&D and commercialization of processed food products Research and development Technical assistance Research and development Product promotion Technical assistance Product promotion and marketing Organization and trade fair Training on entrepreneurship Issuance of business name and business certification Coordination and funding of trainings on food processing entrepreneurship and value formation Feasibility preparation Training on food processing Coordination of technical assistance to food processing business Product certification Microbial and chemical analysis of food products Analysis of nutrient contents of food products Coordination of international trade fair Export promotion of food products Export promotion of food products

Type of Business


· · · ·

PCARRD and Philippine Council for Industry and Energy Research and Development (PCIERD) ­ DOST University of the Philippines Los Baños (UPLB) Cavite State University (CvSU) Technical Assistance - training - product promotion and marketing - feasibility study preparation Department of Trade and Industry (DTI) Provincial Center



· · · · · · · · · ·


Technical Education and Skills Development Authority (TESDA) Provincial Science Technology Office, DOST and


· · ·


Product Analysis Certification


Bureau of Food and Administration (BFDA) Food Development Center


· · · · ·

All All All All


Packaging Research and Development Center, ITDI - DOST Bureau of Export and Promotion, DTI PhilFooDex





Land Bank of the Philippines (LBP) LGUs Livelihood Funds Technology and Livelihood Resource Center (TLRC) Small Business Guarantee and Finance Corporation, DTI

Barangay Micro Business Enterprise (BMBE)

· · · · · · ·

Financing and cooperative development Financing Financing Financing of SMS enterprise Financing Prototype development Technical assistance on operating the processing equipment

Cooperatives Microenterprise Micro and Small enterprise MSMEs Barangay enterprise All

Development of Processing Equipment

Industrial Technology and Development Institute (ITDI) ­ DOST

D. Size and Nature of Processing Businesses It is noted that in Table 2, there are 12 big companies engaged in the production of banana chips. In a study conducted in Regions 11, 12, and 13 on banana chips production, only five companies are included in the DTI list while five others are not. There are other three big banana chips producers in the three regions that did not provide any information during the conduct of the study. The results of the study showed that each company is producing at least 10 tons per day of banana chips. In the latest situationer of the banana chips industry, the total production of banana chips in the country is estimated to be 400 tons per day. It is 200 tons short of the 600 tons requirements for banana chips on a daily basis. The banana chips export in 2004 was estimated to be 36,538 tons valued at US$ 36.86 M. In the current survey covering the Southern Tagalog Region (Region 4) where six small banana chip processors are involved, it was found that their banana chips are marketed locally. It could be presumed that their production is not part of the annual estimate of total banana chips production in the country. Hence, it is actually difficult to decipher the total production of banana chips in the Philippines. III. Preliminary Workshop After gathering substantial data on banana processing businesses and support service providers, the Study Team convened a preliminary workshop. adjustment from the methodology was done. However, a little Instead of inviting a large number of

participants as suggested in the methodology, the Study Team just selected key


representatives from the banana processing sectors. The participants in the preliminary workshop are representatives from the following groups/agencies, as follows: 1) Processor ­ Zcorcuerra Food Products 2) Financial institution ­ LandBank of the Philippines 3) Department of Science and Technology (DOST) Regional Office No. 4 4) Department of Trade and Industry (DTI) Provincial Center in Laguna 5) State Universities ­ UP Los Baños (UPLB) and Cavite State University (CvSU) 6) Department of Agriculture ­ Bureau of Agricultural Research (BAR) 7) PCARRD The participants in the preliminary workshop conducted a focused-group discussion as to their role and activities in relation to banana processing businesses. Each participant shared their organization's programs and projects in food processing. Likewise, the participants shared information as to other groups and institutions who are involved in banana processing businesses. The outputs of the workshop are mostly reflected in Table 4. At the end of the preliminary workshop it was agreed to meet again in the final workshop to validate the results of the survey. IV. Analysis of Processing Businesses The Study Team conducted an analysis of three enterprises involved in banana processing businesses, namely: Mikko Banana Crackers, Zcorcuerra, and Arya Calatrava Food Products. Mikko Banana Crackers and Zcorcuerra Banana Chips are micro enterprises which are into the processing of banana chips. Arya Calatrava Food Products is likewise classified as small-owned and operated by the association of women in Calatrava, Romblon which is into the processing of catsup and banana chips A. Mikko Banana Crackers 1. General Information Name of Business : Contact Number: Name of Contact: Primary Products: Brand: Mikko Banana Crackers 0920-857-6585 Mr. Benjamin Esclanda, Jr. Owner-Operator Banana Chips/Crackers Mikko Banana Crackers


Certification: Clients of the products:

In progress Local tourists and residents Oriental Mindoro and Manila

2. The Original Idea and the start up/establishment of the business The owner-operator started the business in 1997 when he learned the technology of banana chip processing from a good friend. The tools needed in processing like in peeling, chipping, and cooking (Figures 4, 5, and 6) are simple and could easily be fabricated or sourced from the local market. The business project was started at the backyard of the owner. The owner made a trial and error testing the banana chips until he came out with a good product which eventually was sold at the Pinamalayan Public Market. Therefore, the project was started without any feasibility study or an investment plan. Two years later, however, the business project was not going anywhere so he approached the Provincial DTI Office to seek for assistance. He was referred to the DOST Provincial S&T Center (DOST-PSTC). The DOST-PSTC conducted an assessment of the project and found out that the main problem was operating capital. The DOST-PSTC assisted the owner by preparing a feasibility study which was used for sourcing the capital. Enterprises. Eventually, the owner availed a P60,000.00 loan from the Pinamalayan LGU Livelihood Fund. The amount was used to build the present site of business project in Socorro, Oriental Mindoro. 3. Technology and Organization of the processing of banana The present site of the Mikko's banana chip factory is approximately 50m2 house where the peeling, chipping, cooking, and drying are done. The factory has a concrete floor and galvanized iron sheet roofing but the walls are made of lumber slabs from locally sourced woods. Right after the entrance of the factory is a place where the raw bananas are piled up. This is where the peeling is done and the peeled bananas go to the right side where the chipper is positioned. After chipping, the banana chips are put in Fortunately, the Local Government of Pinamalayan, Oriental Mindoro has livelihood fund to Microfinance Small


pails with water then finally to the frying pan located at the farther right of the chipper. After cooking, the cooked banana chips are transferred to a strainer on the table just on the left side of the frying pan. After draining the oil, the chips are transferred to a container for final cooking before the chips are placed in a big plastic bag. A day after, the chips are transferred to small plastic sachet (polypropylene) with a capacity of 100 and 150 grams. The sachets are then sealed with the brand in it. The peeler being used is an improvised knife while the chipper is made of metal sheet mounted on a piece of wood. The furnace/burner is made of an indigenous technology which is being fed with rice hull as fuel. The frying pan is also locally made. The newly cooked chips are harvested using a strainer sourced from the Divisoria market and is mounted on a 2-meter wooden pole. strainer is made of a galvanized screen mounted on rectangular wood framing. Right now, Mikkos' banana chip factory processes 2,400 banana fingers per batch. It takes 5 hours to process the 2,400 banana fingers from peeling up to the cooking of banana chips. Three persons are involved in the process. The final product is an 80 kg banana chip. Two batches are processed each week. The quality of the product is done through self testing which was acquired through experience. The cooking oil is recycled and so the oil is not wasted. During summer, the banana peels are dried and used as a fuel for cooking. On rainy days, the banana peels are just thrown in an open field. 4. How is the business linked into the market chain? The bananas are usually sourced from local peddlers and sometimes from the stockyard of banana traders in the municipality. local market. The banana chips are sold by retailers in the public market and over the counter stores in Calapan City. The banana rejects for the Divisoria market are selected for its low price. Other inputs are sourced from the The


5. How is the business managed The business project is personally handled by the owner-operator from sourcing of the raw materials, processing, packaging, and marketing. No book of accounts is being maintained even if the business operator claims to have getting profit from the project. Right now, the owner-operator is in the thick of a negotiation with a banana chips trader from Manila. If the deal is closed, the plan is to expand the business. 6. Analyzing and summary of results Table 4. Principal strengths and weaknesses of Mikko's Banana Crackers Area Physical structure and equipment Availability and use of inputs Production process Planning, financial management strategies Markets and marketing Strengths Use of locally-made materials Adequate supply of bananas for chips Use of simple processing technologies The business operation is not yet big The DTI assists in the product promotion and marketing Available local market Availability of loan windows for MSMEs The project site is highly accessible to transportation services Weaknesses May not pass GMP requirements No quality standard is being observed in the purchase of raw materials May not pass GMP requirements Records are not being kept Lack of product certification would not allow expanding the market Limited capital Increasing cost of fuel

· ·

· ·

· · ·

· · ·


Financial capital Transportation and logistics

· ·

· ·

Analysis of the potential contribution to rural development The business project regularly buys the banana produced in the province. Hence, it contributes in stabilizing the price of raw bananas which may encourage the farmers to continue growing banana as their alternative source of income. The business project also needs extra labor which can provide livelihood to a number of people. It is clear that the project can provide steady income to some members of the community which would enable them to send their children school. The business


project would also encourage harmonious relationships among the workers, farmers, banana traders and the business owner. B. Z-Corcuera Banana Chips 1. General Information Name of Business: Name of Contact: Primary Products: Brand: Certification: Clients of the products: Z-Corcuera Food Products Mrs. Zeny Corcuera Owner-operator Banana Chips with Honey Z-Corcuera Food Products In-process Laguna residents, Balikbayan (outlet at Duty Free Philippines), Restaurants in Laguna area and other food processors


Establishment of the Business The business was started in 1992with peanuts and garlic as the main product. It was early this year (2005) that the banana chips with honey was added to the line of products. This happened when a friend encouraged the owner to prepare banana chips which later became a favorite "gift" to relatives who live abroad. The technology of chip preparation was basically patterned from the peanuts they are already cooking. Actually, it was the husband who did a trial and error cooking that resulted in the additional and acceptable product. It was marketed in the neighborhood and by word of mouth the sale increased. The operating capital for the banana chips was taken from the peanut sales. No formal record keeping of expenses and sales is done.


Technology and Organization of the processing of banana The present site of Z-Corcuera at their residence. It occupies the front part of the lot with an approximate area of 3 x 5 square meters. Operations While like washing, peeling and slicing are done outside the roofed area.

syruping, frying and temporary storage are done in the adjacent screened room. After receiving the fruits, which come from a nearby town (Bitin), fruits are defingered, washed in basin and peeled manually. Slicing is done using a very simple slicer available in supermarkets. It is made of hard plastic with adjustable 15

stainless blade.

In less than a minute, a single fruit could be sliced. Frying is Single fried bananas are stored in covered plastic

done in a large pan.

containers where it could be stored for a month or two. When there are orders, the stored chips are dipped in syrup and fried in gas-fueled big pans for the second time. Fried chips are removed from the pan by the use of a chicken wire with long bamboo handle. Excess oil is further eliminated by placing the chips on a strainer made of galvanized screen with wooden frames. After cooling, the fried chips are then packed and sealed either in polypropylene bags, microwavable containers (135gms or 200gms) or aluminum pouches. Labeling is also done in plastic containers. Distribution of banana chips to Manila is not a problem since the family owns a rent-a-car business where delivery could ride on a trip. Z-corcuera Food Products processes 2,000 Saba fingers per week. It takes six hours to process 1,000 fingers from peeling up to second frying. There are four people involved in the process. Cooking oil is recycled and so the oil is not wasted. Peel waste is disposed through the garbage collector in the community. A newly acquired slicer fabricated locally was purchased very recently at P31,000. However, the adjustment of the blade is quite problematic. The owner paid P1800 for the template used in labeling of the product. Product quality testing is done by the wife. 4. How is the business linked into the market chain? Raw materials are sourced from a nearby town in Los Baños. This is done by just calling the producer through the phone and the fruits are picked up after harvest. Chips are sold to the residents of Los Baños, Laguna, Duty Free Philippines at the airport, restaurants along Laguna roads and puts their own brand. some food processors who



How is the business managed The business is managed by the owner-operator from sourcing of the raw materials, processing, packaging, and marketing. No formal book of accounts is maintained. The owner has just recently negotiated with Shoemart Inc., a very big supermarket chain.

Table 5. Analysis and summary of results, Zcorcuerra Food Products. Area Physical structure · and equipment Availability use of inputs and · Strengths Use of simple tools and · utilities · Has an access to agencies for assistance (i.e. Packaging-ITDI, PCARRDDOST, etc) A family enterprise where family members could help in the operation Non- seasonality of `Saba' Easy processing method based from their earlier product. They have capital from the sales of peanut products Existing markets from their other products (peanuts and garlic) are also their markets for the chips Unexplored local markets Initial capital available from peanut product Owns a rent-a-car business where delivery and purchase of materials is facilitated Processing site is accessible · · · · · · · · Weaknesses Lack operational system flow Lack of space for expansion Lack of trained personnel to take charge of either marketing or processing. Erratic supply of quality raw materials Rapid processing of Saba to minimize problem of ripening Lack of GMPs and HACCP Lack of quality standards No formal accounts book of

· · Production process · Planning, financial · management strategies Markets and · marketing

Limited supply of chips Lack of quality standards

Financial capital Transportation and logistics

· · ·

· ·

Small financial capital High fuel cost



C. Calatrava Food Products 1. General Information Name of Business: Name of Contact: Primary Products: Brand: Certification: Clients of the products: Calatrava Food Products Mr. Dishan Servañez Municipal Planning and Development Officer, Calatrava, Romblon Banana Chips and Banana Catsup ACF (Arya Calatrava Foods) In progress Local residents of Romblon

2. The original idea and the start-up/establishment In 1998, the municipality of Calatrava, Romblon joined the One Village, One Product Movement by launching the Livelihood Program on Banana (Saba) Production. On the fourth year of implementation the livelihood program, a total of 455 hectares have been planted with approximately 94,000 banana plants. Realizing that the market for the raw banana which could reach up to more than 3M kgs a year will soon become a problem, the Officer-in-Charge of the Provincial TESDA in tandem with the Provincial Head of the DOST-PSTC convinced the Mayor of Calatrava, Honorable Alice C. Fetalvero to promote banana processing in the municipality. The provincial TESDA and the DOST-PSTC packaged the proposal for the conduct of the training in banana processing. TESDA eventually set aside the funds while the DOST-PSTC organized the training including the identification and invitation of the resource persons. In June 2002, a week-long training on banana processing was conducted in Calatrava with 19 women participants. After the training, they organized themselves into a viable organization called Arya Calatrava Foods (ACF). From then on, the group took charge in making banana chips and banana catsup. The banana products processed by ACF are slowly introduced into the market especially during important meetings of the Women's League of the province of Romblon and various market fairs held in Calatrava and nearby municipalities. In June 2003, the LGU of Calatrava submitted a proposal to the Japanese International Cooperative Agency (JICA) for them to avail of the banana catsup


making equipment (pulper-finisher, stem jacketed kettles, boiler, filling system, sealing machine, and bottle sterilizer) including pouches and labels. The proposal was approved by JICA and the banana making equipment was delivered. In June 2004, installation of the equipment was completed. Unfortunately, the banana catsup factory of ACF remains unoperational as the group is still waiting for the operational budget. Meanwhile, the ACF continues to produce banana chips. 3. Technology and organization of the processing of banana The Mayor of Calatrava designated the training center of the Municipal Agriculture Office as the temporary common service facility of the banana processing. It is where the ACF processed the banana chips and banana catsup. When the banana catsup making equipments were about to be delivered, the building was rehabilitated and extended. As mentioned earlier, the factory is still not yet in operation at present. Aside from the operational budget being waited by ACF, another problem encountered by ACF to go full blast in their operation is the limited supply of banana in the project site. A strong typhoon visited the province in November 2004 and has devastated their banana plantation. It will take 10-12 months before the banana plantation recovers from the effect of the typhoon. Meanwhile, the ACF continues to process banana chips and has temporarily transferred to one of the backyards of a member of the ACF. Figures 7-10 show the different tools and kitchen wares being used by ACF in processing banana chips. 4. How is the business linked into the market chain. Right now, the raw bananas are being sourced from the Odiongan market. However, the raw materials will be sourced from the banana plantation in Calatrava and nearby municipalities once it has recovered from the typhoon that visited the area in November 2004. it was not made clear what will be the buying arrangement as to the price and the terms of payment.


Once the catsup factory of the ACF becomes operational, the processed catsup is being eyed to supply the partial requirements of the province. The people of Romblon are known to patronize the products produced by their provincemates. The ACF has learned from experience that their products (catsup and chips) are easily sold whenever it is displayed or offered for sale during the various trade fairs participated by the group. The Congressman of the lone district of Romblon has also put up a "pasalubong" center (gift center) in Odiongan market where the products of ACF are on display and being offered for sale. The provincial DTI center is also active in helping the ACF in promoting and marketing their products by inviting the group in joining trade fairs outside the province. 5. How is the business managed The members of the ACF organized themselves to support the one town, one product program of the municipality of Calatrava. It is envisioned by the group that over the long term, the business project will supply the catsup and chips requirements of the province while ensuring the success of the banana production project of the municipality. The primary challenges of the ACF at the moment are the supply of the raw bananas and the inadequate operational capital. The supply of banana is expected to normalize once the banana plantation has recovered from the devastation brought by the typhoon last year. Regarding the operational capital, the DTI has set aside certain amount for the project to proceed pending compliance to some requirements. The LGU of Calatrava has also put a fund to assist the ACF but some accounting procedures are still being ironed out. At the beginning of the business project, the members are given training on entrepreneurship by the DTI through TESDA. The training provided the members the idea on how to handle the business especially on record keeping. A member has been assigned to record all the transactions which include the amount and costs of inputs used per batch of processed products, the volume of outputs produced and how much are sold. book. The transactions are recorded in a record


The ACF does not hire extra labor as the members themselves do the different tasks in the processing of the banana products. Processing is done on a rotation basis among the 19 members. 6. Analyzing and summarizing the results Table 6. Principal strengths and weaknesses of Calatrava Food Products Area Physical structure and equipment Strengths ACF has availed of the assistance from JICA and it gives the group the opportunity to mechanize their catsup factory The supply or raw materials is expected to be very stable The members of the ACF are well trained in the technical aspect of making banana catsup and chips Records of transactions are being kept however Concerned groups are actively providing assistance in developing the market and marketing the products The local leaders are active in sourcing the financial capital for the project The project site is accessible to land transport and the province by sea transport Weaknesses The equipment need to be used immediately or else it will deteriorate. Available experts to troubleshoot the equipment Frequent typhoons can be a potential problem No R&D plan is in place and this could limit the potential of the project Planning and strategic assessment is not yet being done Expansion will become a problem once the products produced exceeded what the market can take When there is a change in leadership, the continuity of the assistance may stop The roads are not well paved and this may affect the quality of the product

Availability and use of inputs Production process

Planning, financial management strategies Markets and marketing

Financial capital Transportation and logistics

Analysis of the potential contribution to rural development Poverty in the Philippines is becoming a big problem and definitely the business project could alleviate the situation. The project will not only provide livelihood to the members of the ACF and their families but as well as those engaged in production who will be assured of the market for their bananas. The project will therefore provide a steady income to the participants of the program which will enable them to send their children to school. The banana producers


and the banana processors are also expected to gain new knowledge on banana production and processing from the trainings they attended. When there is a stable income, the farmers and processors would be comfortable bringing about better social relations among the community members. The project could contribute to the maximization of land uses especially for banana production. V. Analysis of Support Services Table 3 presents the different support service providers to small food processing businesses. Most of the support service providers are government agencies mandated primarily to provide technical, financial, marketing, and certification to small food processing businesses. On the other hand, Table 7 shows the gaps between services needed and services offered. It will be noted that support services are available to assist small banana processing businesses in the different areas of their projects. However, these services are not usually availed of because of the following reasons: a) lack of awareness on the availability of such services, b) leniency in the compliance of existing policies on food sanitation and handling as well as waste management, c) difficulty in complying to the documentation and collateral requirements in availing financial capital, and d) high cost involved in the adoption of good manufacturing practices. Hence, it is highly recommended to prepare a primer on the different services available to support small banana processing businesses. This primer will be disseminated to LGUs, DTI provincial centers, DOST Provincial S&T centers, and other entities, public or private, which are providing assistance to small business operators. There should also be honest effort on the part of the different government instrumentalities to implement existing policies on ensuring the quality standards of food products and proper waste management. There is also a need to study the different windows of lending opportunities to encourage small business operators to avail adequate capital for their projects.


Table 7. Gaps between services needed and services offered

Areas Raw Materials Production process Weaknesses Occurrence of typhoons Erratic supply of quality fruit Technologies being used are sourced from indigenous knowledge Available Services Adoption of agricultural management practices like deleafing and propping State colleges and universities and research and development institutes (RDIs) have generated technologies on various banana processed products DTI, DOTS and LGUs have windows for providing sources of capital to finance the purchase of equipment and machineries Land Bank, Quedancor, DTI, DOST and commercial banks provide loans to finance MSMEs projects Food Development Center, DTI, and ITDI offer training sessions on HACCP and food manufacturing practices as well as food analysis ITDI provides technical assistance on product packaging and labeling Gaps in Services Lack of awareness on these agricultural management practices Limited access of business owners to those technologies and high cost of technology adoption

Equipment and machineries

High cost of equipment and machineries

Access to these windows is highly competitive

Financial capital

Small business owners have Limited capital Processed products of small banana processing businesses do not satisfy the primary requirements for BFAD accreditation Processed banana products are packed in plastic sachet, plastic containers, and aluminum pouches but its labels do not have the nutritional facts No bookkeeping of expenses and sales and most small enterprises are personally managed by the owners with limited activity on business planning and strategic building · Small business projects are not usually linked to existing marketing networks and just rely on local markets


Documentation and collateral requirements are oftentimes difficult to comply with High cost involved in complying to HACCP and GMP requirements · Leniency in the implementation a food sanitation and handling policies Lack of awareness of business owners about the services of ITDI and they usually do not want to shoulder the expense involved in availing the services for product packaging and labeling It is unclear why small business owners do not adopt sound business management practices


Product Certification

Product packaging and labeling

Business management · Administration · Planning, financial management, and strategies Market and marketing

DTI, DOST, TESDA, and LGUs are working together to package and conduct trainings on business management DTI and LGUs are active in supporting the small project owners in organizing trade fairs to promote the banana processed products

Participation in trade fairs entails a lot of cost and small business owners do not participate regularly in trade fairs Lack of policy on standard pricing of banana processed products

Small business owners do not follow standard pricing policy Technologies are available to convert the solid wastes from small banana projects into animal feeds and organic fertilizers

Waste management

Solid wastes from banana peelings and trimmings are given to takers who used it as animal feeds and substrates for organic fertilizers. If there are no takers, the wastes are just thrown away

Inadequate knowledge of small business owner on the potential of solid waste as animal feeds and organic fertilizers



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