Although a large share of workers in the Philippines are engaged in the farming industry, accounting for 24% of the total employed population nationwide, its agricultural economy is experiencing great difficulties in creating added value, and accounts for only about 10% of the total gross domestic product (GDP). As natural disasters such as typhoons, floods, and landslides occur repeatedly, there was a need to heighten the emergency management capabilities of most local governments in the Philippines to prevent damages to infrastructure and loss of raw materials. In addition, a surge in grain prices caused by COVID-19 and the war in Ukraine has further deteriorated the situation of Philippine farmers. In response, KOICA is carrying out a project to strengthen the climate resilience capacities of rural areas in the Mimaropa region of the Philippines.
Farming households grappled with poverty caused by climate change and lack of value chain
The location selected for the project was Oriental Mindoro State, in the Mimaropa region of the Philippines that mainly produces calamansi, bananas, and coconuts. Agriculture contributes significantly to the local economy, with 62% of the local population engaged in agriculture and fishing, and 68% of the population living in rural areas. However, the region faced economic hardships, with low agricultural productivity and a high poverty rate hovering around 23.1%.
This area is vulnerable to natural disasters and climate change as a significant number of farmhouses and residential areas are located along the coast. From 2013 to 2018, about 400,000 people were affected by typhoons, floods, and landslides that occur every year, and agricultural damage due to climate change alone reached 76 million dollars. Although continuous climate change is causing constant damage to farmhouses, farmers carried on with traditional farming methods without adequate access to technology, information and disaster management knowledge in responding to emergency situations. Damage recovery was also a lengthy process.
In addition, since the vast majority of the farm households were farming on a small scale, farmers had resorted to entering into disadvantageous business contracts, with insufficient information, negotiation tools, or knowledge on sales channels and prices. The agricultural value chain1), which is the foundation for the cycle of production, processing, distribution, and sales of agricultural products in the region, was insufficient, making it difficult to achieve stable profits from agricultural product sales. Farmers were making one-off deals selling fresh produce at low prices to middlemen. In addition, due to a lack of facilities that are resilient to climate disasters or equipped with raw material processing equipment and low-temperature warehouses, the region was grappling with a vicious cycle where most of the harvested crops had to be processed outside the island.
In the meantime, when ships could not be operated due to severe weather conditions, fresh produce that spoils very quickly was either discarded or sold at an extremely low prices. Moreover, during the peak season, the selling price of agricultural products could be very low, often leaving the discouraged farmers no choice but to give up on harvesting their crops. Faced with such problems, young farmers in the region lost interest in agriculture and decided to leave the field, resulting in an overall slowdown across the agriculture market, with agricultural production and profits continuously declining.
Accordingly, KOICA, in cooperation with GGGI2), the Global Green Growth Institute, aimed to strengthen the Philippine’s local government policies to reduce vulnerability to climate change in the agricultural sector, nurture small and medium-sized agricultural processing businesses, and reinforce climate change adaptation and agricultural business capabilities. Thus began the project designed to enhance the agricultural value chain in underdeveloped rural areas in the Mimaropa region.
Strengthening the value chain by establishing agricultural processing facilities and climate vulnerability information system
The project ultimately aims to improve the climate change adaptability of underdeveloped rural areas by strengthening the agricultural value chain. To this end, KOICA started construction to establish and expand four farm processing facilities of calamansi, banana, coconut, and seaweed farming cooperatives in Oriental Mindoro. In order to improve facility accessibility and expand business opportunities for small farms, the construction of a joint agricultural product processing center, the ‘Provincial Agricultural Center (PAC)’, also began. In addition, solar panels were installed on the roofs of all five buildings, a first for local agriculture public organizations, laying the foundation for introducing renewable energy in rural areas in the Philippines.
The project not only facilitated the supply of facilities and equipment but also reflected the opinions of the private sector and market demand from the beginning by utilizing the expertise and network of GGGI, and by establishing a partnership with the 'Philippine Business for Social Progress (PBSP)', the largest corporate-based NGO in the Philippines. The project is expected to design long-term public business programs focused on the economy of the low-income class, contributing to creating a regional economic foundation and improving the quality of life of residents.
For example, the calamansi cooperative was able to seek opportunities to enter major markets through this project by expanding the production of calamansi juice. Seaweed cooperatives also plan to produce seaweed pasta noodles and seaweed, which are in high demand in the market, while terminating the production of cup noodles, nachos, and shampoo. With regard to the agricultural products processing center, discussions are currently underway to open digital startups and online distribution channels. Basic entrepreneurship education will be provided here so that small farmers and cooperatives can transition into becoming rural entrepreneurs.
The government of Oriental Mindoro has been operating the Climate Vulnerability Information System (CVRIS) pilot program since its launch in September 2022. This is a digital platform that can collect, manage, and analyze data related to the agricultural value chain, such as production, revenue, and sales activities of farms in 14 counties and one city that are spread out. By integrating this information with climate and natural disaster data such as floods and soil loss, the region can better prepare for natural disasters through a program that is user-friendly and easy to navigate.
Once the service is officially up and running stably, it will be possible for the local government to provide effective agricultural policy support. For example, through cooperation between the local government and with the consent of co-ops, a decision was made to relocate coconut farming co-ops, which had been located in an area vulnerable to climate disasters. The farmland was instead modified to cultivate taro, a product that is not highly affected by disaster.
Supporting sustainable development of farming households
KOICA is carrying out this project to support sustainable development in the Philippine’s agriculture, rather than offer short-term support. Building agricultural processing facilities through local construction companies and labor force is also part of KOICA’s plan that considers the long-term effect of directly contributing to the Philippine’s economic development.
Furthermore, to adapt to climate change and strengthen agricultural businesses, educational and training program modules were put together for local governments and farmers. Through such efforts, KOICA is providing training programs to foster agricultural entrepreneurs. In addition, KOICA shared the results of a climate change vulnerability assessment and provided workshops and policy consulting services so that the Oriental Mindoro state government could effectively establish and implement climate change adaptation policies in the agricultural sector. As a result, 6 policy advisory reports related to the operation of 4 farm processing co-ops and a general agricultural product processing center have been submitted to the Oriental Mindoro state government.
The project resulted in 9,600 households from calamansi, coconut, banana, and seaweed farm processing co-ops becoming direct beneficiaries from various outcomes such as increased income through the establishment of farm processing co-ops facilities and general agricultural product processing centers. As of September 2022, a total of 1,155 beneficiaries received training to adapt to climate change and strengthen agricultural business capabilities. It is also expected to create about 500 people’s local jobs. In addition, once the agricultural products processing center and four farm processing facilities are fully operated, sales of 56 million dollars are expected to be generated for 5 years after the initiation of the business.
This project’s purpose encompasses far more than simply supporting agricultural facilities; it aims to nurture entrepreneurial-minded co-ops centered on low-income farms and transform them into small and medium-sized enterprises (SMEs). As a result, it is expected that the value chain of agriculture in the Philippines will ultimately facilitate innovation in many different aspects, such as promoting the local economy and enhancing the capabilities of residents. Such multifaceted efforts are expected to contribute to climate response in the region.
1) A comprehensive process that connects production-processing and distribution-sales by linking production sites and market
2) Global Green Growth Institute, an international organization established in June 2012 to support green growth in developing countries