MAP Insights

Last of Two Parts

When Benigno Peczon ventured into tilapia growing, the start-up cost was large, especially for the deepwell and land digging since the area was previously planted with sugarcane.

Labor was not cheap. An added concern was worker safety since harvesting was done at about 1 a.m. to get to market at 4:30 a.m. There are snakes in the vicinity of the ponds. Over the years of operation, feeds increased progressively. Weather, especially the rains, also posed a challenge since they often caused fishkills.

The never-ending problem was marketing. Size was always an issue with the viajeros — the fish sizes were never right, they were either too small or too big — and thus, prices offered were always on the low side.

What eventually killed the business was the non-stop rise in diesel prices and theft. But he learned valuable lessons. The key factor for financial success was to be there full-time. The operation has to be near a river as pumping water from a well is expensive. Tilapia food has to be grown or created on one’s own. The market should not depend on viajeros. There are opportunities for value-adding, such as in fillet. Overall, fish farming can be profitable, if one puts sufficient time, technology and savvy business sense into the venture.

When Ray Almario moved to Laguna, he put up a duck farming project in Pagsanjan with 6,000 ready-to-lay ducks. After seven weeks, he started to break even, which was about 50% of the population already laying.

As he is accustomed to record management, he kept vital information on every quantifiable management parameter. The major operating expense is feeds, accounting for about 75% of cost. He supplemented his feeds with snails from Laguna Lake. Snails are said to make the shell thicker for balut making, make the yolk more yellowish and make the egg a lot tastier.

Eventually, he expanded into balut production, using rice hulls or garung instead of electric incubators to reduce the cost.

Ten years ago, duck raising was profitable, both as a backyard and commercial business. The industry standard breakeven of 50% laying can even be lowered to 45% by substituting snails and other local agriculture by-products for feed. Proper feeding and management can improve the average laying up to 70%, equivalent to a gross profit margin of approximately 20% to 25%.

The biggest challenge facing the duck industry then was the quality of the breeding stock, which continued to deteriorate due to the absence of imported breeds to upgrade the locals. The situation resulted in a substantial deterioration in the egg production period from the usual 14 to 18 months profitable and economic life (productive laying period) to only seven to eight months. Equally depressing was the deterioration in egg quality. While the eggs were previously suitable for balut making, their use was downgraded to the lower-priced salted egg.

But overall, duck raising is a simple, easy-to-manage, less risky business, with no known pests and diseases, but with a ready market.

Tito Contado ventured into the production of a highly researched tropical medicinal plant, noni (Morinda citrifolia, Linn).

In the last four years, the venture has produced an average of 60,000 bottles (500 milliliters each) and 100,000 capsules a year worth around P27 million, adding value to a natural resource with zero economic value. The venture employs 35 people, providing income to 30 rural families who gather and collect the wild noni fruits, plus 60-70 more jobs for marketing people and a dozen more for supply providers.

The company does not have its own plantation. Mr. Contado cited that it would require a lot of capital to buy at least five hectares of land plus the waiting time of 2.5 years before harvest. What they are doing instead is to hire gatherers. It is a win-win situation. The gatherers are paid well and are able to earn incomes they did not have before. For its part, the company is able to have the fruits they need in just one month.

For three years now, PhilNONI has been sold by leading drug store Mercury Drug, which has an extensive network of branches all over the country. It has also been exported for about 10 years now, first to the USA, then to Hong Kong, China, South Korea, and Dubai. The company attributes its market success to its knowledge of product quality, its constant study of the different available marketing approaches, adoption of the best approach, as well as participation in local and international trade fairs.

According to Billy Gualberto, the COVID-19 pandemic will produce models that will make farming more profitable than it used to be. There will be a lot of jobless non-skilled workers that only farm enterprises can accommodate.

Reasonably priced, short-term, fast growing vegetables like the “pinakbet pack” (eggplant, squash, string beans, and other vegetables that are used in the vegetable stew) will remain in demand.

Farmers, fishermen, livestock and poultry raisers can be pooled to support a model that is provided with financing for seeds, fertilizers, pesticides, small farm equipment and machinery, cool-chain storage/transport units, with a centralized hub (agroservice centers or bagsakan), backed by a digital platform that is linked directly with organized consumer groups (churches of various denominations and sects, subdivisions, cooperatives, even wet markets, etc.) and processing companies.

A digital platform that will use this model, similar to what is being used in India, is in the final stages of development. There are, however, many considerations to make the system applicable, viable, and sustainable, especially for the investors, suppliers/farmers, the logistics providers, as well as the buyers/consumers.

In addition, his group is also working on a project for an Integrated Food Processing Terminal (IFPT), which is meant to resuscitate the dying coconut industry, increase the farmers’ income, escalate the economy of the towns where it will operate, add to the country’s export earnings and lift the country’s agricultural GDP. At least 10 potential sites with huge coconut areas have been identified, out of which three IFPT projects will be launched this year, particularly in Zamboanga City, Tupi-Polomolok in South Cotabato, and Mulanay, Quezon.

Farming is not a walk in the park. There are a lot of challenges across the whole supply chain from inputs and production, down to marketing. There is much to learn from people who get their hands dirty in the field. What makes the experience of the above experts special is that they can use them to influence and shape agricultural policies towards a more dynamic, modernized and competitive agricultural sector. n

This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or the MAP.


Rolando T. Dy is the Co-Vice Chair of the MAP AgriBusiness Committee, and the Executive Director of the Center for Food and AgriBusiness of the University of Asia & the Pacific.