Part IV.

Lessons Learned

Part IV

Lessons Learned

The clustering strategy for agroenterprise development is a

simple approach to assist small farmers to be organized and
produce based on market demands and opportunities. It can
be adopted by development service providers such as NGOs
and government agencies interested to undertake projects
that build the entrepreneurial capacities of farmers. It can also
be used to enhance projects focused on farmers.

Here are some valuable lessons of CRS-Philippines in its

SFMP pilot project experiences. It is hoped that they can help
development service providers reflect on roles and

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 Part IV. Lessons Learned

competencies in the complex and dynamic work of enabling

farmers to undertake marketing as a group enterprise.

1. Initial benefits are attained without too much risk if

projects start with what the farmers have and build on
available opportunities.

For farmers engaging in marketing for the first time, it is

less risky to improve existing products and enter new
markets, rather than to work with new products with new
markets. New products can bring higher earnings but
they also carry high risks. In the design of projects, new
products can be part of the expansion phase.

2. Securing the product supply base of a core of farmers is

the prerequisite for engaging the market.

Farmers’ capability to produce and to supply the

products the buyers want, even in small quantities at the
start but in a reliable and sustainable manner, is what
determines if the marketing venture is ready to scale up
commercially, remain at pilot/testing stage, or fold up.
Effective and timely extension services facilitate the
development of a core of farmers who serve as models
to other farmers on improved farm management
practices and sustainable production technologies.

3. Understanding marketing and market opportunities is

the key to a market-oriented, profitable farming.

The challenge for development organizations is to assist

farmers not only to increase farm yields but also to farm
profitably. This calls for a shift in development
interventions from just production-focused to a market-
oriented approach that emphasizes production
according to market opportunities and for income.

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 Part IV. Lessons Learned

4. Helping farmers analyze market opportunities and their

product supply capacity relative to opportunities opens
their minds to new knowledge that empower them.

Tools in participatory research that lead farmers to

arrive at this type of analysis enable them to realize that
they are a crucial part of the market chain. They also let
them think of what they can do to gainfully participate in
it. This analysis relates directly to a practical challenge
and objective for them: “How to supply their product to
the buyer that interests them?”

5. Clustering is the new mode of organizing where farmers

can be competitive in the market, become attractive to
the buyers, and exercise ownership of their
agroenterprise.

The clusters are product supply units, proactively

planning production for the intended market. Being small
groups, they can keep pace with continuously changing
market conditions that require innovations from them.
The cluster is also the mechanism where each farmer’s
voice is heard and he/she can actively participate in
decision making as owner of the agroenterprise.

6. Guiding the clusters to go through an interactive

enterprise planning is a powerful process that starts
farmers to think in an entrepreneurial way.

This process “demystifies” business and guides farmers

to break up plans into pragmatic “doables” in marketing,
supply, management and finance. When farmers make
their financial plan, they will go through profitability
analysis and will recognize that they must pay costs and
service fees. Involving farmers will make them feel
ownership of the plan and widen their opportunity to
readjust them based on need.

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 Part IV. Lessons Learned

7. Cost payments, savings and organizational fund build-

up should already be integrated even at an early stage.

This will enable the farmers to have a realistic view of

business operations to make it succeed. This will also
emphasize to the farmers the importance to maintain
financial records and methods of financial management
which are basic skills needed in operating a business.

8. Development facilitators should only initiate the market

linkage. A market commitment which is a promise to
supply to a buyer must be made by the clusters
themselves.

Commitments are made by farmers because they are

the ones to weigh the opportunities with the risks on the
basis of their experiences, circumstances and
resources. In so deciding, they will own whatever is the
result and not blame the development providers for any
problem.

9. The clusters’ relationship is direct to the buyer. There

should be no layer in between them and the buyer.

This implies that the farmers in the cluster will get the
buyer’s price for the product that is promised to the
buyer. Marketing is through facilitation services and for
which they pay marketing service fees. This practice of
market facilitation ensures that farmers own the product
and will take responsibility for product quality and
delivery reliability up to the buyer’s end.

10. Test marketing will put a severe test on the clusters. It

is a period of steepest learning curve. At the heart of
viability is an assessment after every market transaction
and fast corrective measures.

Problems are expected. It does not matter what

problem will arise; what is important is that the clusters

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 Part IV. Lessons Learned

understand the problem and they can make the decision

to correct it fast. Documentation of activities and
assessment of every product delivery is essential;
otherwise the farmers can get discouraged and lose
confidence.

11. It is alright for small failures and setbacks to happen,

and development organizations must not readily
subsidize the losses or costs.

In business, every product delivery is not necessarily

profitable. Computations are done across a period of
time and what matters is that the resulting income is
positive. Interventions become necessary though when
the survival of the enterprise is at stake. But clusters
can more likely cope with the rigors of business if they
have gone through adequate preparation before
marketing.

12. “Enabling” subsidies or grants may be required for the

clusters to undertake innovative practices or address
certain bottlenecks especially during the test marketing
stage.

But farmers have to be informed that these are only

short term support during the incubation stage of their
enterprise. It is important for the clusters to generate
organizational capital for investments in continuous
innovations.

13. When credit is needed, it is better to provide them

through organizations that have the expertise for credit
management.

The development organization’s role is just to reduce

risks through ensuring that technologies for productivity
are in place, the loan is used for its intended purpose,
field monitoring with technical advice is provided, and

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 Part IV. Lessons Learned

built-in schemes of loan payment from product sales can

be installed.

14. Good monitoring, assessment and documentation guide

the clusters towards the needed innovations and provide
progress of clusters from test marketing towards scaling
up.

Business is unforgiving of inefficiencies. At scaled up

operations, enterprise operating policies and systems
have to be written. Records and reports have to be
regularly done. The advantage of scaled up operations
is that the clusters can move with lower costs which
allow farmers to feel the real benefit of their marketing
enterprise.

15. Linkages and partnerships will matter. The wider the

network, the more the support.

Involving the private sector, especially the business

sector, and the government translates into faster results
and practical solutions to challenges. Government
partnerships ensure that development support is
mainstreamed. In market linkage, considerable benefits
are attained if clusters can work alongside with bigger
producers or in partnerships with buyers.

16. Development service providers play an important role in

the initial stage of establishing the sound foundation for
agroenterprise.

Development investments are required in trainings,

capacity building (in the areas of production
improvement, business planning and management,
cluster organizing and strengthening), value addition
technologies, market research, partnership and linkage
building, and management support from business
practitioners or specialists.

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 Part IV. Lessons Learned

Agroenterprise development should not be rushed. At least a

2-year timeframe is needed for farmers to go through a
maturation process. It takes time for farmers to learn new
knowledge, new skills, new values, and to build their
organization and enterprise. It is largely a learning-by-doing
process for both the farmers and the development facilitators.

CRS-Philippine experiences demonstrate that the clustering

approach is a promising participatory, integrated capacity
building assistance to prepare small farmers for market
engagement. The development facilitator starts with a certain
number of farmers formed into a cluster. Then the market
“drives” its expansion as the farmers try to come up with more
supply of a given product for the market demand. At this
stage, the clusters take up their own dynamics for growth as
they pass on their experiences and skills to a bigger group
and then network for more advantages in the market.

What lies ahead for the clusters? Cluster development should

lead to formal business organizing. The cooperative may still
be the best business type. It is owned by members who
control and benefit from it. Unfortunately, their advantages
have been outweighed by financial losses due to
mismanagement that have made farmers wary of them.

Clusters linked with one another in a network, able to work

with markets and finances, generate savings and organization
funds, keep records and practice transparency, accountability,
and participatory decision making, can serve as good building
blocks for a strong farmers’ cooperatives or other types of
business entities, or even movements that can advocate for
development changes that bring lasting improvements: good
governance with policies and programs that favor sustainable
development of the farming sector.

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 References

References
Research Report

Digal, L.; Concepcion, S.; Cua Uy, J. Keys to the Inclusion of Small
Farmers in the Dynamic Vegetable Market: The Case of
NorminVeggies in the Philippines. Regoverning Markets Program.
Philippines. 2006.

Books

Catholic Relief Services. Preparing Farmer Groups to Engage

Successfully With Markets. A field guide for five key skill sets. A
product of the CRS and RII-CIAT Agroenterprise Study Tour Group:
Catholic Relief Services, Baltimore, USA and The Rural Innovation
Institute, CIAT, Cali, Colombia. July 2007.

Department of Trade and Industry. Industry Clustering: Inspiring Ways

to Competitiveness. A documentation project done by C.L. Follosco,
J.P. Tabbada, M.C. Garcia, A.M. Maghirang, G.T, Mirasol and G.S.
Recio. Export Development Council. Philippines. June 2007.

Food and Agriculture Organization of the United Nations. Horticultural

Marketing. Rome. 2005.

Ferris, S.; Best, R.; Ostertag, C.; Lundy, M.; Gottret, M. A Participatory
and Area-Based Approach to Rural Agroenterprise Development.
Centro Internacional de Agricultura Tropical. Colombia. 2006.

Ferris, S.; Kaganzi, E.; Best, R.; Ostertag, C.; Lundy, M.;
Wandschneider, T. A Market Facilitator’s Guide to Participatory
Agroenterprise Development. Centro Internacional de Agricultura
Tropical. Colombia. 2006.

Robins, P.; Bikande, F.; Ferris, S.; Kleih, U.; Okoboi, G.;
Wandschneider, T. Guide to Collective Marketing for Small-Scale
Farmers. Undated.

Wandschneider, T.; Ferris, S.; Lundy, M.; Ostertag, C. A Guide to Rapid

Participatory Methods for Analysing Markets. CIAT Rural Agro-
enterprise Project. 2006.

CRS Presentations and Workshop Proceedings

Catre, J. Community Processes. Paper presented during the

Agroenterprise Development Training and Workshop. Malaybalay,
Bukidnon, Philippines. May 21-26, 2007.

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184
 References

CRS Philppines. Proceedings of the Agroenterprise and Marketing

Manualization Workshop. Talomo, Davao City, Philippines. June 19-
23, 2006.

CRS Philppines. Proceedings of the 1st Agroenterprise Mindanao

Agroenterprise Learning Alliance (MAeLA) . Malaybalay, Bukidnon,
Philippines. 2005.

CRS Philppines. Proceedings of the 2nd Agroenterprise Mindanao

Agroenterprise Learning Alliance (MAeLA) . Maragusan,
Compostela Valley, Philippines. 2006.

Israel, F. Cluster Formation and Enterprise Planning. Paper presented

during the Agroenterprise Development Training and Workshop.
Malaybalay, Bukidnon, Philippines. May 21-26, 2007.

Mendoza, L. Coffee Quality Control Procedures. Paper presented

during the Coffee Buying Training and Workshop. Malaybalay,
Bukidnon, Philippines. January 15-19, 2007.

__________. The Territorial Approach & CRS Innovations. Paper

presented during the Agroenterprise Development Training and
Workshop. Malaybalay, Bukidnon, Philippines. May 21-26, 2007.

__________. Rapid Market Appraisal. Paper presented during the

Agroenterprise Development Training and Workshop. Malaybalay,
Bukidnon, Philippines. May 21-26, 2007.

__________. The Experience of CRS in Clustering Small Farmers.

Paper presented during the 3rd Mindanao Vegetable Congress.
Cagayan de Oro City, Philippines. October 25-27, 2006.

Uy, J. Marketing Concepts. Paper presented during the Agroenterprise

Development Training and Workshop. Malaybalay, Bukidnon,
Philippines. May 21-26, 2007.

__________. Cluster Formation and Enterprise Planning. Paper

presented during the Agroenterprise Development Training and
Workshop. Malaybalay, Bukidnon, Philippines. May 21-26, 2007.

__________. Cluster Enterprise Performance Monitoring &

Development. Paper presented during the Agroenterprise
Development Training and Workshop. Malaybalay, Bukidnon,
Philippines. May 21-26, 2007.

__________. Cluster Formation and Enterprise Planning. Paper

presented during the Agroenterprise Development Training and
Workshop. Malaybalay, Bukidnon, Philippines. May 21-26, 2007.

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Credits
Design and layout:
Dinah Q. Tabbada, Alexander U. Tabbada and Lionel D. Mendoza

Front cover and computer graphics:

Xavier Aurelio Q. Tabbada and Linus T. Miranda

Artworks:
Joselito T. Jimenez

Photos:
CRS-Philippines Agriculture/NRM Program

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186
 SFMP

The Small Farms Marketing Project (SFMP) is a three-year program

(2004-2007) funded through the USDA Food for Progress Program
monetization. The SFMP aims to improve the livelihoods of 3,500 resource-
poor upland farmers in Mindanao by increasing the productivity of
marketable horticultural crops in small farms and by improving the efficiency
of domestic market chains for these products. CRS will support farmers
through (a) agriculture extension, (b) marketing assistance, (c)
infrastructure projects, and (d) by funding natural resource conservation
projects to promote the sustainability of agricultural development efforts.

The overall objectives of the program are:

[1] Increased on farm incomes for rural households; and
[2] Community-based environmental and conservation initiatives that lead
to improved natural resource management.

Program Components and Strategy

1. Agricultural Extension: Enhancement of farm productivity through

extension services assisting farmers to reduce their production costs
and risks and to maximize the production of quality marketable
produce.
2. Marketing Assistance: Identification of crops meeting consumer
demand and preferences through a farmer generated Productivity
Agenda; Marketing assistance in research and farmer-to-market
training designed to link farmers more efficiently to the domestic fruit
and vegetable supply chain.
3. Rural Infrastructure: Access to rural infrastructure inputs including post-
harvest handling and other equipment for activities promoting the
economic potential of farmer communities.
4. NRM/Landcare for Watershed Management: Improvement of on-farm
conservation in critical watershed areas allowing for sustainable
production and support to livelihoods.

CRS, its partners, and rural people are engaged in advocacy initiatives for
favorable agriculture and NRM policies at the local, national and
international level; and collaboration among diverse groups to clarify and
uphold shared rights and responsibilities over public and private resources
thru good local governance.

Approaches
The Agri/NRM program and its partners continue using well-tested
participatory rural and agro-enterprise development methodologies such as
COPAR (Community Organizing through Participatory Action Research),
the Territorial Approach to agroenterprise development and Integrated
Watershed Management.

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Catholic Relief Services was founded in 1943 by the Catholic
Bishops of the United States to assist the poor and
disadvantaged outside the country.

It is administered by a Board of Bishops selected by the

National Council of Catholic Bishops and is staffed by men and
women committed to the Catholic Church's apostolate of
helping those in need. It maintains strict standards of efficiency
and accountability.

The fundamental motivating force in all activities of CRS is the

Gospel of Jesus Christ as it pertains to the alleviation of
human suffering, the development of people and the fostering
of charity and justice in the world. The policies and programs
of the agency reflect and express the teaching of the Catholic
Church. At the same time, Catholic Relief Services assists
persons on the basis of need, not creed, race or nationality.

Catholic Relief Services gives active witness to the mandate of

Jesus Christ to respond to human needs by:

• Responding to victims of natural and man-made disasters;

• Providing assistance to the poor to alleviate their immediate
needs;
• Supporting self-help programs which involve people and
communities in their own development;
• Helping those it serves to restore and preserve their dignity
and to realize their potential;
• Collaborating with religious and nonsectarian persons and
groups of goodwill in programs and projects which contribute
to a more equitable society; and
• Helping to educate the people of the United States to fulfill
their moral responsibilities in alleviating human suffering,
removing its causes and promoting social justice.