COMMUNITY WEALTH CREATION INITIATIVES IN COMMUNITY WEALTH CREATION INITIATIVES IN MINDANAWMINDANAW

KATILINGBANONG PAMAHANDI SA KATILINGBANONG PAMAHANDI SA MINDANAW FOUNDATION INC.MINDANAW FOUNDATION INC.

The Social Enterprise Institution of The Social Enterprise Institution of Balay Mindanaw Group Balay Mindanaw Group

KPMFI… KPMFI… • relatively newcomer in the field of social relatively newcomer in the field of social

enterpriseenterprise

• registered with Securities and Exchange registered with Securities and Exchange Commission (SEC) last Oct. 17, 2006Commission (SEC) last Oct. 17, 2006

• It is an institution that has been It is an institution that has been conceptualized by the leadership of Balay conceptualized by the leadership of Balay Mindanaw Foundation, Inc. Mindanaw Foundation, Inc. (www.balaymindanaw.org) (www.balaymindanaw.org)

after seeing the need for an institution that after seeing the need for an institution that will focus on social enterpriseswill focus on social enterprises

• It is also a logical evolution of its area based It is also a logical evolution of its area based development work for the last 11 years. development work for the last 11 years.

RationaleRationale• Integral part of our SIAD work as realized when we Integral part of our SIAD work as realized when we

implemented the SIAD Programimplemented the SIAD Program

• PuttingPutting value value from the existing initiatives (SIAD – from the existing initiatives (SIAD – COCOBREAD)COCOBREAD)

• Taking –off from the strength of the livelihood projects Taking –off from the strength of the livelihood projects of the partner communities in the last five years of the partner communities in the last five years (production, processing and marketing) (production, processing and marketing)

• How to ensure that “small How to ensure that “small victories and gainsvictories and gains” ” achieved by the partner PO’s and partner barangay and achieved by the partner PO’s and partner barangay and local government units will be protected and enhanced local government units will be protected and enhanced to grow stronger as the vehicle towards development to grow stronger as the vehicle towards development and become a foundation for building sustainable peace and become a foundation for building sustainable peace in the partner communitiesin the partner communities

Vision (Internal)Vision (Internal)

• A Social Enterprise NGO with big A Social Enterprise NGO with big dreams for its partner communities dreams for its partner communities under the BM Group of NGOs, with under the BM Group of NGOs, with professionalism at par with national and professionalism at par with national and global standards, and a local NGO with global standards, and a local NGO with a passion to revolutionize production a passion to revolutionize production technologies and contributing to market technologies and contributing to market reforms thus making it accessible to the reforms thus making it accessible to the poor…poor…

Mission : Mission :

• Helping Build Community Sustainable Helping Build Community Sustainable Enterprises Enterprises

• Helping Build Opportunities for Wealth Helping Build Opportunities for Wealth Creation for Local Entrepreneurs Creation for Local Entrepreneurs

• Helping Build Vibrant Local Economies Helping Build Vibrant Local Economies

• Helping Build Foundation of Sustainable Helping Build Foundation of Sustainable PeacePeace

• Helping Build Sustainable Business Models Helping Build Sustainable Business Models for Social Enterprises for Social Enterprises

Goals and Objectives(in Goals and Objectives(in 10yrs):10yrs):• Establish at least 10 farm based and off-farm Establish at least 10 farm based and off-farm

sustainable and viable community enterprisessustainable and viable community enterprises• Develop at least 1500 community based Develop at least 1500 community based

entrepreneursentrepreneurs• Establish direct joint venture investments Establish direct joint venture investments

with at least 10 business corporations, with with at least 10 business corporations, with LGU’s (province, municipalities/cities and LGU’s (province, municipalities/cities and barangays) and with enterprising NGO’s and barangays) and with enterprising NGO’s and PO’s and other civil society groups. PO’s and other civil society groups.

Strategies and ProgramsStrategies and Programs(SE Promotion or Scaling-up)(SE Promotion or Scaling-up)• Community-Based Work (Participatory Local Community-Based Work (Participatory Local

Governance, Access to Justice and Peace Building)Governance, Access to Justice and Peace Building)• Capacity Building program for partner PO’s and Capacity Building program for partner PO’s and

LGU’s on sustainable enterprisesLGU’s on sustainable enterprises• Joint venture partnerships with business Joint venture partnerships with business

corporations, enterprising NGO’s/PO’s, Local corporations, enterprising NGO’s/PO’s, Local Government Units (province, municipality/city and Government Units (province, municipality/city and barangays)barangays)

• Business Development ServicingBusiness Development Servicing• Market Development and Linkages (both for Market Development and Linkages (both for

mainstream and niche markets)mainstream and niche markets)• Capital Sourcing from Government, Donors and Capital Sourcing from Government, Donors and

Business CorporationsBusiness Corporations

KPMFI’s CORE BUSINESS

Helping Transform Agri-Based Poor Households to

become Entrepreneurs

WHAT WILL BE OUR WHAT WILL BE OUR BUSINESS MODEL?BUSINESS MODEL?

Rural Household Usual Situation in terms of Income and Rural Household Usual Situation in terms of Income and ExpensesExpenses

DailyDaily WeeklyWeekly MonthlyMonthly QuarterlQuarterlyy

SeasonSeasonalal

YearlyYearly

IncomeIncome BananaBanana CopraCopra

CoffeeCoffeeCornCorn

RiceRiceCassavaCassava

AbaccaAbacca

ExpensesExpenses FoodFood

School School BaonBaon

Farm Farm InputsInputs

WaterWater

ElectricityElectricity

SchoolSchool

TuitionTuition

RequiremenRequirementsts

Post Post harvest harvest ServiceServicess

Post Post harvest harvest ServiceServicess

Post Post harvest harvest ServicesServices

Context…Context…

Rural Household Usual Situation in Rural Household Usual Situation in terms of Income and Expensesterms of Income and Expenses

Result:Result:

Diminishing CapitalDiminishing Capital

Limited Capacity to ProduceLimited Capacity to Produce

Low ProductionLow Production

Low IncomeLow Income

PovertyPoverty

Immediate Challenge…Immediate Challenge…1. Increase Farmer’s Income1. Increase Farmer’s Income

Daily – Weekly – Monthly – Quarterly – Daily – Weekly – Monthly – Quarterly – SemestralSemestral

2.2. Good Social Enterprise Good Social Enterprise Triple Bottom Lines:Triple Bottom Lines:a. Raise the Quality of Life of the Poor (Doing Good)a. Raise the Quality of Life of the Poor (Doing Good)b. Generate Social Enterprise Income (Doing Well)b. Generate Social Enterprise Income (Doing Well)c. Address Social Issues (Doing Right)c. Address Social Issues (Doing Right)

Daily Weekly Monthly Quarterly Seasonal Yearly

ON-FARM DairyEgg

BananaCut FlowerVegetables

PoultryGoatVegetables

CopraCoco HuskLawi (broom)Coffee

CornRice

CassavaAbacca

OFF-FARM • SilhiG, Banig, Basket, Hand Craft, Post Harvest Facilities, Trading and Marketing

Schedule of Harvest

Daily Weekly Monthly Quarterly Semestral Yearly

Banana CopraCoconut Husk

CornRice

Cassava

Current Current SituationSituation

TRANSFORMATION TRANSFORMATION PROCESSPROCESS

RECLAIIMRECLAIIM

Rural Enterprises thru Crop-Rural Enterprises thru Crop-Livestock-Aqua Integration-Livestock-Aqua Integration-Intensification Model Intensification Model (RECLAIIM)(RECLAIIM)

INCOME SOURCE

Daily Weekly Monthly Quarterly

Seasonal

Yearly

ON-FARM DairyManureEgg

BananaCut FlowerVegetables

PoultryGoat MeatVegetablesOrganic Fertilizer

CopraHuskLawiCoffee

CornRice

CassavaAbaccaCattle Meat

OFF-FARM

• Silhig

• Banig

• Basket

• Hand Craft

• Post Harvest Service

• Trading and Marketing

Investment per HouseholdLivestock Input Investment

NeededProjected

Income per Month

Backyard Poultry Production

1,000 heads

120,000 P 6,000

Goat Dairy and Meat Production

20 Heads 120,000 P 6,000

Cattle Dairy and Meat Production

3 heads 150,000 P 10,000

TOTAL P 390,000 P 22,000

TRANSFORMATION PROCESS TRANSFORMATION PROCESS OVERVIEWOVERVIEW

ProductioProduction n Processing Processing Marketing Marketing

Farmer Supplier/Transporters

Processors

Whole-salers

Exporters

Retailers

Retailers

Local Market External Market

Input Supplier

Intra-chain/Inter-actor support, coordination, facilitation and consolidation and Supply Chain Management

Business Devt. Services

Community Development

Work

Multiplier Farm(Research and Development)

Market Development

Donors

Value Chain

Supporters

MFI/BANKS GOVT.

NGOS

BUSINESS CORPORATIO

N

Value Chain Actors

KPMFI core

interven-tion and

Programs

Basic Value Chain

Franchising Development

WHAT WILL BE OUR WHAT WILL BE OUR BUSINESS DESIGN?BUSINESS DESIGN?

Manok MindanawManok Mindanaw Backyard Poultry Production ProjectBackyard Poultry Production Project

20062006

Context:Context:• Provide additional Household incomeProvide additional Household income• Maximizing productive local resource Maximizing productive local resource

(land, labor, water and indigenous (land, labor, water and indigenous materials)materials)

• Revolutionize the poultry industry Revolutionize the poultry industry through backyard poultry project through backyard poultry project (breaking tradition)(breaking tradition)

Current Trend and System of Broiler Industry in the Philippines : Current Trend and System of Broiler Industry in the Philippines : Commercial Contract Grower (Conventional)Commercial Contract Grower (Conventional)

Large Contract Growers Large Contract Growers 120,000 birds/Grower120,000 birds/Grower

2424Flockman : 1 SupervisorFlockman : 1 Supervisor(25% Labor and 75% Owner)(25% Labor and 75% Owner)

Supplier 2Supplier 2

IntegratorIntegrator-Magnolia, -Magnolia,

Bounty, GAMA, Bounty, GAMA, ACIACI

InputsInputs-DOCDOC

- FeedsFeeds-Vaccines, Vaccines, MedicinesMedicines

- Technical Technical

Supplier 3Supplier 3

Supplier 1Supplier 1

Feed Feed MillMill

Contract Contract Agreement :Agreement :ALW = 1.4ALW = 1.4HR = 95%HR = 95%FCR = 1.85FCR = 1.85GF = Pph 8.00/birdGF = Pph 8.00/bird

Dressing Dressing Plant Plant

MarketingMarketing

DistributionDistributionFresh, Frozen and Fresh, Frozen and Processed ProductProcessed Product

OutputOutput30-35 day old 30-35 day old

chickenchicken

Food Food ProcessingProcessing

Revolutionizing the Broiler Industry in the Philippines : Revolutionizing the Broiler Industry in the Philippines : Commercial Contract Grower to Backyard Contract GrowerCommercial Contract Grower to Backyard Contract Grower

Backyard Contract Growers Backyard Contract Growers 120,000 birds @ 600 birds/Grower120,000 birds @ 600 birds/Grower

200 Households200 Households100% GF goes to the Household100% GF goes to the Household

IntegratorIntegratorACI/Sr. Pedro ACI/Sr. Pedro

LMLMInputsInputs-DOCDOC

- FeedsFeeds-Vaccines, MedicinesVaccines, Medicines

- Technical Technical

SuppliersSuppliers

Dressing Dressing Plant Plant

MarketingMarketing

DistributionDistributionFresh, Frozen and Fresh, Frozen and Processed ProductProcessed ProductFeed Feed

MillMill

OutputOutput30-35 day old 30-35 day old

chickenchicken

Contract Contract Agreement :Agreement :ALW = 1.4ALW = 1.4HR = 95%HR = 95%FCR = 1.85FCR = 1.85GF = Pph 8.00/birdGF = Pph 8.00/bird

Food Food ProcessingProcessing

KPMFIKPMFIFACILITATOR, FACILITATOR,

ORGANIZER AND ORGANIZER AND CONSOLIDATORCONSOLIDATOR

KPMFIKPMFIFACILITATOR, FACILITATOR,

ORGANIZER AND ORGANIZER AND CONSOLIDATORCONSOLIDATOR

KPMFI’s KPMFI’s Fee = 2/klFee = 2/kl

Management Fee = Management Fee = 3% of total INPUT 3% of total INPUT Cost (Pph 1.40/kl)Cost (Pph 1.40/kl)

Household BACKYARD Household BACKYARD MODEL MODEL Household BACKYARD Household BACKYARD MODEL MODEL

KPMFIKPMFIINTERMIDIARY, FACILITATOR, ORGANIZER AND CONSOLIDATORINTERMIDIARY, FACILITATOR, ORGANIZER AND CONSOLIDATOR

Warehouse and Warehouse and LogisticsLogistics

Trucks (1 chickvan Trucks (1 chickvan and 2 harvester and 2 harvester

with crates)with crates)

Setup of Admin and Setup of Admin and FinanceFinance

Technical PersonsTechnical Persons

Revolutionizing the Broiler Industry in the Philippines : Revolutionizing the Broiler Industry in the Philippines : Commercial Contract Grower to Backyard Contract GrowerCommercial Contract Grower to Backyard Contract Grower

Initial Investment Initial Investment of 3 Mof 3 M

WarehousingWarehousing

Sampling and Sampling and Harvesting Harvesting

Technical Training on Technical Training on Broiler Mngmt.Broiler Mngmt.

Technical Monitoring Technical Monitoring

Recruitment, Recruitment, Orientation and COingOrientation and COing

Delivery and Delivery and Distribution Distribution

Billing and PaymentBilling and Payment

Growers Assessment Growers Assessment and Programming and Programming

Contract Contract Agreement :Agreement :ALW = 1.4ALW = 1.4HR = 95%HR = 95%FCR = 1.85FCR = 1.85GF = Pph 8.00/birdGF = Pph 8.00/bird

KPMFI’s Fee = KPMFI’s Fee = 2.00/kl2.00/kl

Management Fee = Management Fee = 3% of total INPUT 3% of total INPUT Cost (Pph 1.40/kl)Cost (Pph 1.40/kl)

700 Households 700 Households engage into Contract engage into Contract

GrowingGrowing

What we have done so far….What we have done so far….

  # HH # DOC Grower’s Net Income Grower’s Net Loss2006 248 140,429 1,303,884.48 19495.452007 655 694200 4,355,184.48 675,328.56

Totals    834,629 5,659,068.96 694,824.01

Observation: 1.Grower’s Buy out per bird is only 6.78/bird2.11% net loss from the supposedly total net income of the growers3.Almost 400% increase of total Day old Chick from 2006 to 20074.164% increase of Household engage in contract growing (2006 – 2007)5.Involving 2 Municipality and 1 City with a total of 59 Barangays 6.Average Grower’s Net Income 2006 – Pph 5,257.59/grower 2007 – Pph 6,649.13/grower

 

# DOC Harvested Harvest

Recovery Average Live

Weight

Feed Conversion

Rate 550,077.00 507,298.00 92% 1.48 1.80

 1.92% harvest recovery is lower of 3% of the target HR of 95%2.Average Live weight is significantly higher to the target ALW (more percentage of oversize)3.FCR is significantly good (feed conversion rate) 

AS of May 2008 AS of May 2008

Finance ?Finance ?

HH Grower’s Projected Income

Item Unit Unit price Quantity Cost

FARM Inputs Cost  Day Old Chick bird 17.00 200 3,400.00 CBM (Chick booster mash) sack 860.00 2.00 1,720.00 BSC (Broiler Starter Crumble/Mash) sack 790.00 8.00 6,320.00 Total volume of Feeds sack   10.00 8,040.00 Cost of Medicines (2.00/bird) pesos 2.00 200 400.00 Total Input Cost       11,840.00 Hauling Charges        DOC @ 0.5/DOC bird 0.50 200.0 100.00 FEEDS @ 35/SACK sack 35.00 10.0 350.00 Total Hauling Cost       450.00 Total Cost (Inputs and Hauling Charges)       12,290.00 Interest Income (3% of the total farm inputs)       368.70 Total Cost of Inputs and interest       12,658.70          Sales 52.00 per kl of the total harvest @ 1.45 ALW with 5% mortality)       14,326.00 Chicken Dung sack 60.00 4.00

Gross Sales      14,566.00

Gross Income       1,668.00     Profit per Bird 8.80 Assumptions: FCR 1.95 ALW 1.45 HR 95%Buy-out per Kilo 52

Site Inspection of the Proposed BBPP

Basic Orientation on BBPP (1 day)

Inspection of poultry house and equipment and approval

Technical Training on Broiler Management and Scheduling

Final Preparation of Housing and Brooding Area. Delivery of Initial INPUTs (feeds and medicine)

Monitoring on Growing Stage

Delivery of Feeds

Placement of Day Old Chick (DOC) Delivery and

Administration of Vaccines

Brooding Period (14 days)

Harvesting and delivery to Dressing Plant (35th day)

Sampling for Harvesting

Billing to ACI and Grower Billing to ACI and Grower

Payment to Growers

(15 days after harvest)

Payment to Growers

(15 days after harvest)

Growers’ Evaluation and Scheduling for Next Cycle

Growers’ Evaluation and Scheduling for Next Cycle

Approval and Signing of MOA – Memorandum of Agreement

Project Process OverviewProject Process Overview Construction of

Poultry House and Purchase of basic facilities and equipment

Next Production Cycle (21 days after harvest)

Payment and Collection of Payment from ACI

Payment and Collection of Payment from ACI

Site Inspection of the Proposed BBPP

Basic Orientation on BBPP (1 day)

Approval and Signing of MOA – Memorandum of Agreement

Construction of Poultry House and Purchase of basic facilities and equipment

Inspection of poultry house and equipment and approval

Technical Training on Broiler Management and Scheduling

Final Preparation of Housing and Brooding Area Delivery of Initial INPUTs (feeds and medicine)

Pre-production Stage

Monitoring on Growing Stage

Delivery of Feeds

Harvesting and delivery to Dressing Plant (35th day)

Sampling for Harvesting

Placement of Day Old Chick (DOC)

Delivery and Administration of Vaccines

Brooding Period (14 days)

Billing to ACI and Grower Billing to ACI and Grower

Payment to Growers

(15 days after harvest)

Payment to Growers

(15 days after harvest)

Growers’ Evaluation and Scheduling for Next Cycle

Growers’ Evaluation and Scheduling for Next Cycle

Next Production Cycle (21 days after harvest) Next Production Cycle (21 days after harvest)

Payment and Collection of Payment from ACIPayment and Collection of Payment from ACI

Production Stage Post-production Stage

Backyard Broiler Production Project FlowBackyard Broiler Production Project Flow

Offsetting of Inputs

Purchases and Sales of Stocks with

Hauling Cost

Offsetting of Purchases of Stocks and

Sales of INPUTS and

Hauling Cost

ANACIANO, INC. (INTEGRATOR)

ANACIANO, INC. (INTEGRATOR)

KPMFI (INTERMEDIARY)

KPMFI (INTERMEDIARY)

BACKYARD GROWERSBACKYARD GROWERS

Supply of INPUTS and Technical Services

Supply of INPUTS and Technical Services

Logistics (Delivery and Distribution) Logistics (Delivery and Distribution)

Production (30-35 days of broiler raising)

Production (30-35 days of broiler raising)

Processing Processing Logistics (Harvest, Consolidation and Hauling to Dressing Plant)

Logistics (Harvest, Consolidation and Hauling to Dressing Plant)

Produced ChickenProduced Chicken

Billing and payment Billing and payment

Billing and payment Billing and payment

Billing and payment Billing and payment

StakeholdersStakeholders

ANACIANO, INC. (INTEGRATOR)

ANACIANO, INC. (INTEGRATOR)

KPMFI (INTERMEDIARY)

KPMFI (INTERMEDIARY)

BACKYARD GROWERSBACKYARD GROWERS

Supply of INPUTS and Technical Services

Supply of INPUTS and Technical Services

Logistics (Delivery and Distribution) Logistics (Delivery and Distribution)

Production (30-35 days of broiler raising)

Production (30-35 days of broiler raising)

Processing (Dressing Plant)

Processing (Dressing Plant)

Logistics (Harvest, Consolidation and Hauling to Dressing Plant)

Logistics (Harvest, Consolidation and Hauling to Dressing Plant)

Produced Live ChickenProduced Live Chicken

Production

Sr. Pedro Litson Manok

Sr. Pedro Litson Manok

Premium Size (20%)Premium Size (20%)

Premium Size (50% ) Premium Size (50% )

Manok Mindanaw

The Healthy Chicken

Manok Mindanaw

The Healthy Chicken

MarketingMarketing

Out Size (US/OS (30%)Out Size (US/OS (30%)

Distribution

Promotion

Merchandising

Sales/Collection

BulkBulk

Individual Pack Individual Pack

Domestic

Dealer

Retailer

Hotel/Res

Supermarkets

Export Importer

CDO, Iligan, Ozamis,Zamboanga, Gignoog, Butuan, Surigao, Davao, Bukidnon...

Cebu, Bohol, Dumaguete, Iloilo, Bacolod

Malaysia, Brunie, Singapore…

Dressing Plant Dressing Plant

NCR ?

Target Costumer

Target Area

Premium Size (2,000 kls)

Premium Size (2,000 kls)

Out Size (US/OS )

3,000 kls.

Out Size (US/OS )

3,000 kls.