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. The total banana chips

export in 2004 is reported to be 36,538 tons valued at US$ 36.86 M. The top ten export

destinations of banana chips is presented in Table 1. Recently, however, banana chip

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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 non-

communication 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) Country of Destination

Gross Kilos Quantity FOB Value Rank $/Kg Canada 783,239 725,538 868,583 10 1.197 China, People’s Republic of 7,496,311 6,879,085 5,867,516 2 0.853 Taiwan (Republic of China) 4,365,256 3,516,871 4,169,241 3 1.185 France 2,513,636 2,247,298 2,293,981 6 1.021 Germany 3,968,409 3,647,766 3,221,374 5 0.883 Hongkong 2,018,834 1,829,742 1,574,296 8 0.860 Japan (excludes Okinawa) 1,664,738 1,496,255 1,626,530 7 1.087 Netherlands 1,239,034 1,156,151 1,111,671 9 0.962 UK (Great Britain and N. Ireland) 3,245,700 3,003,258 3,252,219 4 1.083 United States of America 6,764,450 3,003,258 3,252,219 1 1.122

Total 40,561,835 36,538,029 36,860,284 1.009 Source: Bureau of Agricultural Statistics, 2004

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I. 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). .

II. 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.

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

National Steering Committee

• INIBAP - Dr. Agustin B. Molina • PCARRD - Dr. Patricio S. Faylon • DA-BAR - Dir. Nicomedes Eleazar • CvSU – Dr. Ruperto Sangalang

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

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

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

TOR

• 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

Country Survey Team

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

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

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Palawan

Rizal

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Occidental Mindoro

Oriental Mindoro

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Figure 2. Southern Tagalog Region (Region 4) with Quezon, Oriental Mindoro and Mindoro Occidental as leading banana producers

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

Name of Company Address Contact Person/Position Contact No. Tel. : (632) 838-4434

837-0378 B-G Fruits & Nuts Mfg. Corp. 621 Building, FTI Complex

Taguig Metro, Manila Ms. Benny T. Badenas Vice President

Fax: (632) 838-4563 Tel. : (6385) 342-7777 Celebes Agricultural Corp. 60 Lapu-lapu Avenue

San Antonio Village, Lahug Cebu City 6000

Mr. Rory Eddie Ong Yiu President Fax: (6385) 342-8888

Tel. : (632) 815-1831 815-0580

El Coco Mfg., & Trading Corporation.

Rm. 2309 Tower 1 Cityland 10 6815 Ayala Avenue Makati City

Mr. Leopoldo Estrellado President

Fax: (632) 810-0532 Tel. : (6383) 552-6754

501-0732 Greenville Agro Corporation Matin-ao, Polomolok

South Cotatabo Mr. Michael Rene Ong Yiu President

Fax: (6383) 501-0051 Tel. : (632) 641-0991

641-0995 International Food Snacks

Corporation 88 San Guillermo Avenue Bo. Buting, Pasig, MM

Mr. Ruben See President

Fax: (632) 641-0992 Tel. : (632)936-7246 to 48

930-6001 to 05 Festive Foods International,

Inc. (formerly Jona’s Int’l. Phils., Inc.)

Dolmar Bldg., 56 EDSA Mandaluyong City, MM

Mr. Philip Young President & CEO

Fax: (632) 936-7245 939-5828

Tel. : (6382) 221-1528 300-5495

Koki Food International, Inc. Villamor Street, Bo. Obrero Davao City

Ms. Marilou Fernandez

Fax: (6382) 300-5494 (632) 410-0522

Tel. : (02) 911-7240/2070 8549/713-4018

L. Dometita & Sons Food Industries

15 L. Rivera St. & J.P. Rizal St. Projj. 4, Quezon City

Mr. Leopoldo A. Dometita Asst. to the Manager

Fax: (02) 911-8549 Tel. :(632) 823-2566 to 70 Leslie Corporation 4 Dama de Noche St.

United Parañaque Subd. IV Parañaque City

Ms. Cristy Enriquez Import-Export Officer Fax: (632) 823-3708

Tel. : (632) 912-2777 438-5837

See’s International Food Mfg. Corp.

66 Imperial St., Cubao Quezon City

Mr. Ruben Lim See President

Fax: (632) 438-4662 421-9149

Tel. : (083) 228-2262 SUNBLISS Internationale ExImports

Gensan Drive & Odi St. Koronadal, South Cotabato

Mr. Carlos L. Bautista General Manager Fax: (083) 228-2028

Tel. : (6334) 460-3186 Reliance Ore Co., Inc. Had. Candelaria, San Enrique Negros Occidental

Mr. Ciriano D. Sia. Jr. Marketing Head Fax: (6334) 460-3186

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.

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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. However, these products are still awaiting

commercialization. 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.

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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.

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Table 3. Different organizations providing various services for the establishment and operation of small banana processing businesses including product certification, promotion and marketing.

Type of Organization Name of Organization Services Offered Type of Business Research and Development Food and Nutrition Research

Institute (FNRI) - DOST • Research and development • Product promotion

MSMEs

Industrial Technology and Development Institute (ITDI) - DOST

• Research and development, product promotion and commercialization

• Training • Prototype development of

processing equipment • Technical assistance • Development of labels and

packaging materials

MSMEs

PCARRD and Philippine Council for Industry and Energy Research and Development (PCIERD) – DOST

• Coordination and funding of R&D and commercialization of processed food products

MSMEs

University of the Philippines Los Baños (UPLB)

• Research and development • Technical assistance

MSMEs

Cavite State University (CvSU) • Research and development • Product promotion • Technical assistance

MSMEs

Technical Assistance - training - product promotion and

marketing - feasibility study

preparation

Department of Trade and Industry (DTI) Provincial Center

• Product promotion and marketing

• Organization and trade fair • Training on entrepreneurship • Issuance of business name

and business certification

MSMEs

Technical Education and Skills Development Authority (TESDA)

• Coordination and funding of trainings on food processing entrepreneurship and value formation

MSMEs

Provincial Science and Technology Office, DOST

• Feasibility preparation • Training on food processing • Coordination of technical

assistance to food processing business

MSMEs

Product Analysis and Certification

Bureau of Food and Drug Administration (BFDA)

• Product certification

All

Food Development Center • Microbial and chemical analysis of food products

All

Packaging Research and Development Center, ITDI - DOST

• Analysis of nutrient contents of food products

All

Export Bureau of Export and Promotion, DTI

• Coordination of international trade fair

• Export promotion of food products

All

PhilFooDex • Export promotion of food products

All

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Financing Land Bank of the Philippines (LBP)

• Financing and cooperative development

Cooperatives

LGUs Livelihood Funds • Financing Microenterprise Technology and Livelihood

Resource Center (TLRC) • Financing Micro and Small

enterprise Small Business Guarantee and

Finance Corporation, DTI • Financing of SMS enterprise MSMEs

Barangay Micro Business Enterprise (BMBE)

• Financing Barangay enterprise

Development of Processing Equipment

Industrial Technology and Development Institute (ITDI) – DOST

• Prototype development • Technical assistance on

operating the processing equipment

All

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. However, a little

adjustment from the methodology was done. Instead of inviting a large number of

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

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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 : Mikko Banana Crackers Contact Number: 0920-857-6585 Name of Contact: Mr. Benjamin Esclanda, Jr.

Owner-Operator Primary Products: Banana Chips/Crackers Brand: Mikko Banana Crackers

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Certification: In progress Clients of the products: 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. Fortunately, the Local Government of

Pinamalayan, Oriental Mindoro has livelihood fund to Microfinance Small

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

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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. The

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. The banana rejects for the

Divisoria market are selected for its low price. Other inputs are sourced from the

local market.

The banana chips are sold by retailers in the public market and over the

counter stores in Calapan City.

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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 Strengths Weaknesses Physical structure and

equipment • Use of locally-made

materials • May not pass GMP

requirements Availability and use of inputs • Adequate supply of

bananas for chips • No quality standard is

being observed in the purchase of raw materials

Production process • Use of simple processing technologies

• May not pass GMP requirements

Planning, financial management strategies

• The business operation is not yet big

• Records are not being kept

Markets and marketing • The DTI assists in the product promotion and marketing

• Available local market

• Lack of product certification would not allow expanding the market

Financial capital • Availability of loan windows for MSMEs

• Limited capital

Transportation and logistics • The project site is highly accessible to transportation services

• Increasing cost of fuel

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

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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: Z-Corcuera Food Products Name of Contact: Mrs. Zeny Corcuera

Owner-operator Primary Products: Banana Chips with Honey Brand: Z-Corcuera Food Products Certification: In-process Clients of the products: Laguna residents, Balikbayan (outlet at

Duty Free Philippines), Restaurants in Laguna area and other food processors

2. 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.

3. 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

like washing, peeling and slicing are done outside the roofed area. While

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

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stainless blade. In less than a minute, a single fruit could be sliced. Frying is

done in a large pan. Single fried bananas are stored in covered plastic

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 some food processors who

puts their own brand.

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5. 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 Strengths Weaknesses

Physical structure and equipment

• Use of simple tools and utilities

• Lack operational system flow

• Lack of space for expansion

Availability and use of inputs

• Has an access to agencies for assistance (i.e. Packaging-ITDI, PCARRD-DOST, etc)

• A family enterprise where family members could help in the operation

• Non- seasonality of ‘Saba’

• 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

Production process • Easy processing method based from their earlier product.

• Lack of GMPs and HACCP • Lack of quality standards

Planning, financial management strategies

• They have capital from the sales of peanut products

• No formal book of accounts

Markets and marketing

• Existing markets from their other products (peanuts and garlic) are also their markets for the chips

• Unexplored local markets

• Limited supply of chips • Lack of quality standards

Financial capital • Initial capital available from peanut product

• Small financial capital

Transportation and logistics

• Owns a rent-a-car business where delivery and purchase of materials is facilitated

• Processing site is accessible

• High fuel cost

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C. Calatrava Food Products

1. General Information

Name of Business: Calatrava Food Products Name of Contact: Mr. Dishan Servañez

Municipal Planning and Development Officer, Calatrava, Romblon

Primary Products: Banana Chips and Banana Catsup Brand: ACF (Arya Calatrava Foods) Certification: In progress Clients of the products: 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

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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.

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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. The transactions are recorded in a record

book.

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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 Strengths Weaknesses

Physical structure and equipment

ACF has availed of the assistance from JICA and it gives the group the opportunity to mechanize their catsup factory

The equipment need to be used immediately or else it will deteriorate. Available experts to troubleshoot the equipment

Availability and use of inputs The supply or raw materials is expected to be very stable

Frequent typhoons can be a potential problem

Production process The members of the ACF are well trained in the technical aspect of making banana catsup and chips

No R&D plan is in place and this could limit the potential of the project

Planning, financial management strategies

Records of transactions are being kept however

Planning and strategic assessment is not yet being done

Markets and marketing Concerned groups are actively providing assistance in developing the market and marketing the products

Expansion will become a problem once the products produced exceeded what the market can take

Financial capital The local leaders are active in sourcing the financial capital for the project

When there is a change in leadership, the continuity of the assistance may stop

Transportation and logistics The project site is accessible to land transport and the province by sea transport

The roads are not well paved and this may affect the quality of the product

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

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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.

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Table 7. Gaps between services needed and services offered

Areas Weaknesses Available Services Gaps in Services Raw Materials Occurrence of typhoons

Erratic supply of quality fruit Adoption of agricultural management practices like deleafing and propping

Lack of awareness on these agricultural management practices

Production process Technologies being used are sourced from indigenous knowledge

State colleges and universities and research and development institutes (RDIs) have generated technologies on various banana processed products

Limited access of business owners to those technologies and high cost of technology adoption

Equipment and machineries

High cost of equipment and machineries

DTI, DOTS and LGUs have windows for providing sources of capital to finance the purchase of equipment and machineries

Access to these windows is highly competitive

Financial capital Small business owners have Limited capital

Land Bank, Quedancor, DTI, DOST and commercial banks provide loans to finance MSMEs projects

Documentation and collateral requirements are oftentimes difficult to comply with

Product Certification Processed products of small banana processing businesses do not satisfy the primary requirements for BFAD accreditation

Food Development Center, DTI, and ITDI offer training sessions on HACCP and food manufacturing practices as well as food analysis

• High cost involved in complying to HACCP and GMP requirements

• Leniency in the implementation a food sanitation and handling policies

Product packaging and labeling

Processed banana products are packed in plastic sachet, plastic containers, and aluminum pouches but its labels do not have the nutritional facts

ITDI provides technical assistance on product packaging and labeling

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

Business management • Administration • Planning, financial

management, and strategies

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

DTI, DOST, TESDA, and LGUs are working together to package and conduct trainings on business management

It is unclear why small business owners do not adopt sound business management practices

• Small business projects are not usually linked to existing marketing networks and just rely on local markets

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

Market and marketing

• Small business owners do not follow standard pricing policy

Lack of policy on standard pricing of banana processed products

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

Technologies are available to convert the solid wastes from small banana projects into animal feeds and organic fertilizers

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