Presentation of Orlando Abelgas on the results of his evaluation of the VCD Program Facilitation. Presented during the VCD in FED: Conversations on Frameworks ++

1. Sustainable Fair
Economic Development (SFED)
Evaluation

2. Sustainable Fair
Economic Development (SFED)
one of three ICCO major themes
SFED sub-programmes
• Local Market Development (LMD)
• Financial Services (FS)
• Private Sector Cooperation (SPC)
Objective:
to improve the socio-economic
position of rural poor households
and small producers.

3. Value Chain Development (VCD)
Programme objectives to improve
the environment of rural poor
• to strengthen the
collaborative engagement
among the chain actors and
support agents (Capacity
Building)
• to establish new linkages
that improve the chain
position of small farmers
(Market Development)

4. Value Chain Development (VCD)
Programme objectives to improve
the environment of rural poor
• to create new financial
services supportive of value
chain development (Financial
Services)
• to create an enabling
environment through lobby
and advocacy in which the 4
chains can flourish. (Lobby &
Advocacy)

5. Outcomes
• Capacity Building
• Market Development
• Financial Services
• Lobby and Advocacy
• Key Factors
• Lessons Learned

6. Two-level Approach
• The Programmatic Level
• The Enterprise Level

7. Indicators
• ICCO Program inputs: Relevance, Adequacy
and Timeliness
• Network members:
- Composition
- Contribution
- Commitment
- Concrete actions taken

8. Indicators
ICCO Program inputs: Relevance, Adequacy
and Timeliness.
Relevance : ICCO inputs provided that had a
direct bearing on the development of the value
chain platforms.
Adequacy: the inclusiveness of the inputs
provided and/or requested during the operating
period.
Timeliness: the submission by VCD partners of
requests for additional inputs and the time lag
required for the processing and
provision of those requested inputs.

9. Indicators
Composition. The composition indicator refers
to the actual membership and representation
reflected in each network or platform.
Contribution. Network members have their
individual histories, strategies, interests,
incentives and constraints. Characteristics
such as these configure the particular
contribution a network makes in engaging the
value chains of producers, channels and
buyers.

10. Indicators
Commitment. This refers to the dynamism
mobilized by the network for itself. This
dynamism is influenced by the network’s
appreciation of its resources (capabilities,
opportunities and strengths), and costs
(constraints, priorities and weaknesses).
Concrete actions taken. This indicator
evidences the current situation of the network
relative to its performance in a VCD program.

11. Indicators
Farmers’ level: Perceptions and Strategy
Orientation
Perceptions refer to small holders’ & women’s
self-assessment of changes in their socio-
economic situation resulting from their
involvement VCD program.
Strategy orientation refers to the collective
priorities of small holders and women
insofar as their value chain activities are
concerned.

12. VALUE CHAINS
• Southern Mindanao value chain or
Davao cluster
• Northern Mindanao value chain or CDO
cluster
• Metro Manila cluster
• Muscovado value chain
• Pili value chain, Bicol
• Seaweeds value chain,
Northern Samar

13. VALUE CHAINS
• Southern Mindanao value chain or
Davao cluster
• Northern Mindanao value chain or CDO
cluster
• Metro Manila cluster
• Muscovado value chain
• Pili value chain, Bicol
• Seaweeds value chain,
Northern Samar

14. VALUE CHAINS
Southern Mindanao value chain or Davao cluster

15. VALUE CHAINS
Southern Mindanao value chain or Davao cluster
Composition:
• Philnet RDI
• DPRDI
• Don Bosco
[all ICCO partners]

16. VALUE CHAINS
Southern Mindanao value chain or Davao cluster
Major strength:
Accessed OIKO Credit with ICCO guarantee

17. VALUE CHAINS
Southern Mindanao value chain or Davao cluster
Major weakness:
⁻ Split focus between Tagum market and Davao-
Manila markets
⁻ No group member prepared to take the lead

18. VALUE CHAINS
Southern Mindanao value chain or Davao cluster
Opportunities/Recommendation:
⁻ Prospect of systematic promotion of organic
products does not look bright
⁻ ICCO additional investment may not be advisable

19. VALUE CHAINS
• Southern Mindanao value chain or
Davao cluster
• Northern Mindanao value chain or CDO
cluster
• Metro Manila cluster
• Muscovado value chain
• Pili value chain, Bicol
• Seaweeds value chain,
Northern Samar

20. VALUE CHAINS
Northern Mindanao value chain or CDO cluster

21. VALUE CHAINS
Northern Mindanao value chain or CDO cluster
Composition:
- Parfund, APFTI, UMFI
(all ICCO partners)
- FPSDC

22. VALUE CHAINS
Northern Mindanao value chain or CDO cluster
Major strength:
With PARFUND as the only remaining organization,
strategy focus is on local rural markets as top priority
and urban markets as secondary.

23. VALUE CHAINS
Northern Mindanao value chain or CDO cluster
Major weakness:
PARFUND is overstretched

24. VALUE CHAINS
Northern Mindanao value chain or CDO cluster
Opportunities/Recommendations:
₋ Value chain cooperation with municipal and local
LGUs looks promising.
₋ The value chain rice-duck technology merits
further support.

25. VALUE CHAINS
• Southern Mindanao value chain or
Davao cluster
• Northern Mindanao value chain or CDO
cluster
• Metro Manila cluster
• Muscovado value chain
• Pili value chain, Bicol
• Seaweeds value chain,
Northern Samar

26. VALUE CHAINS
Metro Manila cluster

27. VALUE CHAINS
Metro Manila cluster
Composition:
Don Bosco UMFI, Pecuaria, Kool NE, TRIAS, Oiko
Credit.
OCCP and FPSDC as partners of interest

28. VALUE CHAINS
Metro Manila cluster
Major strength:
- Demand side very strong
- Premium price for organic rice

29. VALUE CHAINS
Metro Manila cluster
Major weakness:
The premium price margin is eroded by higher
working capital financing cost (90-120 days A/R)

30. VALUE CHAINS
Metro Manila cluster
Opportunities/Recommendations:
Metro Manila organic rice requires a marketing
communications plan to support earlier market study
identifying supermarkets (as channel markets) and
households (as end user markets).

31. VALUE CHAINS
• Southern Mindanao value chain or
Davao cluster
• Northern Mindanao value chain or CDO
cluster
• Metro Manila cluster
• Muscovado value chain
• Pili value chain, Bicol
• Seaweeds value chain,
Northern Samar

32. VALUE CHAINS
Muscovado value chain

33. VALUE CHAINS
Muscovado value chain
Composition:
Composed of the Negros Organic Muscovado
Industry Association (NOMIA), the largest of all
networks.

34. VALUE CHAINS
Muscovado value chain
Major strength:
NOMIA as an organization is the largest network.

35. VALUE CHAINS
Muscovado value chain
Major weakness:
Negros muscovado value chain players are not yet
united for concrete actions needed for certified
muscovado sugar.

36. VALUE CHAINS
Muscovado value chain
Opportunities/Recommendations:
Upscale TFM can take a more active role.

37. VALUE CHAINS
• Southern Mindanao value chain or
Davao cluster
• Northern Mindanao value chain or CDO
cluster
• Metro Manila cluster
• Muscovado value chain
• Pili value chain, Bicol
• Seaweeds value chain,
Northern Samar

38. VALUE CHAINS
Pili value chain, Bicol

39. VALUE CHAINS
Pili value chain, Bicol
Composition:
60 micro processors in Naga
- The Terminal Pili Store run by Great Choice Pink
Enterprise
- Capitol Multipurpose Cooperative
- Private consolidators and suppliers
- Sorsogon Integrated Development
Cooperative (SIDECO)

40. VALUE CHAINS
Pili value chain, Bicol
Major strength:
Market potential is there.

41. VALUE CHAINS
Pili value chain, Bicol
Major weakness:
Two platforms are not yet fully integrated.

42. VALUE CHAINS
Pili value chain, Bicol
Opportunities/Recommendations:
Successful entrance of IRDF in the existing chain
is required.

43. VALUE CHAINS
• Southern Mindanao value chain or
Davao cluster
• Northern Mindanao value chain or CDO
cluster
• Metro Manila cluster
• Muscovado value chain
• Pili value chain, Bicol
• Seaweeds value chain,
Northern Samar

44. VALUE CHAINS
Seaweed value chain, Northern Samar

45. VALUE CHAINS
Seaweed value chain, Northern Samar
Composition:
The University of the Eastern Philippines (UEP)
College of Fisheries, the Provincial Government
Environment and Natural Resources Office, the Office
of the Provincial Governor, some 10 out of 13 LGU
offices (MAO, PNP, Agricultural Technician, Baranggay
Captains, SB Chairs for Agriculture, BFAR Central
Office, BFAR Region 8, and BFAR N. Samar), CERD and
SPPI.

46. VALUE CHAINS
Seaweed value chain, Northern Samar
Major strengths:
- Composition was deliberately planned
- Very strong network governance

47. VALUE CHAINS
Seaweed value chain, Northern Samar
Major weakness:
- Still has to gear up to full production capacity
of 20-40 tons per month dried seaweeds
after the longer, because staggered, start-up
phase of farmers’ seaweeds production.

48. VALUE CHAINS
Seaweed value chain, Northern Samar
Opportunities/Recommendations:
- Institutionalization of the SPPI Local Economy
Development model in Capul Island and the
9 expansion municipalities.

49. ISSUES, ASSESSMENTS
Programmatic Level
The original ICCO conceptualisation of the
key factors in the value chain approach
underestimated the importance of a
number of factors and issues:

50. ISSUES AND ASSESSMENTS
Programmatic Level
The assumption that all network members
would have a common interest developing
the same value chain was not consistently
supported by the facts/findings.

51. ISSUES AND ASSESSMENTS
Programmatic Level
Facilitating the mobilisation of a value
chain working group assumed that there
was only one value chain within the same
sub-sector, which development would
benefit all members.

52. ISSUES AND ASSESSMENTS
Programmatic Level
The need for more specific market surveys
emerged soon after the sub-sector value chain
studies and the formation of value chain
platforms.
These surveys showed the differentiation in
market segments and subsequently between
value chains within the same sub-sector with
VC actors focussing on different market
segments and value chains.

53. ISSUES AND ASSESSMENTS
Programmatic Level
The factor of competition and lack of
confidence between value chain actors had a
more negative impact on the level of
cooperation within the VC working group than
anticipated.

54. ISSUES AND ASSESSMENTS
Programmatic Level
Progress regarding the creation of new financial
services to support the development of the
respective value chains has been limited.
Main financial service providers were Oiko
Credit (with ICCO guarantee) and FPSDC.
Cooperative Banks and members of the
Microfinance Councils were not (yet) keen to
get involved.

55. ISSUES AND ASSESSMENTS
Programmatic Level
There are also indications that the position and
incomes of small farmer producers are
improving as a result thereof.
However it might still be too early in the
programme to conclude to what extent the
position of small farmers in their respective
value chains and their income has tangibly
improved.

56. ISSUES AND ASSESSMENTS
Enterprise Level
All networks displayed ample bonding social
capital; but this has not yet translated to
bridging social capital that could be used
beyond the network.
Especially in the case of a common market, like
MCPI for the Samar seaweeds group and Metro
Manila for the organic rice MM group, a joint
interest and need for strategic cooperation
became evident, but for the S. Mindanao OR
group and the Negros Muscovado strategic
cooperation was not achieved.

57. ISSUES AND ASSESSMENTS
Enterprise Level
The facilitation and support activities of ICCO
have been relatively intensive and many of the
value chain platforms and their members still
heavily rely on ICCO’s input; therefore, a
mechanism should be put in place to make
these platforms and their members less
dependent on ICCO’s facilitation role.

58. GENERAL ASSESSMENT
Programmatic Level
The VC programme has been successful in
bringing together private sector, financial
sector, government, NGO’s and PO’s in
varying degrees per network.

59. GENERAL ASSESSMENT
Enterprise Level
As enterprises, the individual network
businesses are still at the start-up stage.
This is expected, given the duration of only
2 years to date, of the VC programme.
No mortality among the networks,
where 95% mortality for start-ups,
the norm for the first 2 years of operations.

60. GENERAL ASSESSMENT
Enterprise Level
- Financial sector (FS) generally
conservative; familiarity with the
enterprise(s)/entrepreneur(s)
drives product development and
basic lending decision even of
venture capital corporations;
- Thus, lag to be expected even from
development-oriented financial
intermediaries.

61. GENERAL ASSESSMENT
Enterprise Level
Data on gender equality needs
baseline; best practices, more so.

62. CONCEPTUAL ISSUES
- Confusion between sector, sub-
sector and value chain concepts
needs resolution.
- Markets define value chains.
(functional view on a value chain;
Value link, GTZ)

63. CONCEPTUAL ISSUES
Original Porter framework
• Relevant level for constructing a value
chain is a firm’s activities in a particular
industry (the business unit).
• An industry- , or sector-wide value chain is
too broad and may obscure important
sources of competitive advantage.
• Differences among competitor value chains
are a key source of competitive advantage.

64. CONCEPTUAL ISSUES
Functional view of a value chain
“A sequence of related business activities
(functions), from the provision of specific
inputs for a particular product to primary
production, transformation, marketing, and
up to the final sale of the particular product
to consumers .” (Value link, GTZ)

65. CONCEPTUAL ISSUES
Industry definition:
“A group of firms whose products or
services, from the customer’s point of
view, offer substitute products or
services.”

66. CONCEPTUAL ISSUES
Economic sectors
• The economy can be divided into sectors
following different criteria. Here, the term
“sector” is defined according to broad
product market categories. These include,
for example, the “agrifood sector”, “forestry”,
the “apparel sector” or the “tourism sector”.

67. CONCEPTUAL ISSUES
Economic sub-sectors
• Sectors can be further broken down into sub-
sectors by differentiating into specific product
or service markets, e.g. “horticulture”, “non-
timber forest products” or “ecotourism”.
• A network of firms that supplies raw
materials, transforms them, and distributes
finished goods to a range of end/final
markets. Example: Honey subsector: raw
honey sold to local markets; processed honey
sold to export market.

68. CONCEPTUAL ISSUES
Functional view of a value chain: “A sequence of
related business activities (functions), from the
provision of specific inputs for a particular product
to primary production, transformation, marketing,
and up to the final sale of the particular product to
consumers .” (Value link, GTZ)
Alternative functional view of a value chain: A
network of firms that supplies raw materials or
services, transforms them, and distributes finished
goods and services to particular consumer markets.

69. CONCEPTUAL ISSUES
Coalitions/Networks
• Coalitions are long-term alliances with other firms
that fall short of outright merger, such as joint
ventures, licenses, and supply agreements. (Porter)
• In the context of a VCD Program, these
coalitions are also referred to as networks.

70. CONCEPTUAL ISSUES
Multi-functional members
• Value chain networks are comprised by the various
operators or value chain actors, that usually
perform multiple value chain functions.
• These operators, in turn, may be social enterprise
organizations of small holders, farmers or
producers either apart from, or as a result of, their
involvement in the value chains.

71. CONCEPTUAL ISSUES
Network Governance/Firm infrastructure:
Network governance may be substituted for the
concept of firm infrastructure consisting of a number
of activities including general management, planning,
finance, accountinng, legal, government affairs and
quality management.

72. NETWORK CONFIGURATIONS
1. Deliberately planned network
composition: Seaweeds Net, N. Samar
2. Coalition of the willing: MM Cluster
Organic Rice
3. Residual organization: N. Mindanao
Organic Rice
4. Pre-existing network: Muscovado Sugar
5. Ad hoc network: Pili Nut, Bicol
6. Split network: S. Mindanao: Organic Rice

73. OVERALL ASSESSMENT
ICCO Value Chain Development Program:
very notably successful, given the
challenging network (coalition) structure of
the value chains.

74. THANK YOU