Cluster farming : a vegetable marketing strategy for smallholder vegetable farmers in Southern and Northern Mindanao

Abstract

With increasing population, rising household income and greater urbanisation in the Philippines, markets are emerging for the vegetable industry to supply hotels, hospitals, supermarkets, restaurants and fast food chains. These institutional buyers, who need more vegetables for their menus, are looking for reliable suppliers who can provide a constant supply at a good price and maintain good quality. Smallholder vegetable producers acting independently are generally unable to meet the quality specifications or to supply the institutional market at a competitive price. More recently, their inability to supply has been exacerbated by increasing competition from imported products. As the majority of the vegetable farmers in the Philippines cultivate less than 3 hectares, producers must collaborate to consolidate their products. One of the many alternatives for collective vegetable marketing is to form clusters.Cluster farming involves grouping farmers who work together to consolidate products to sell to the market. Two cluster farming approaches have been identified: an area based and a commodity based approach. In the area-based approach, farmers come together based on proximity of farms and trading posts, while in the commodity based approach, farmers plant the same vegetable and combine their product to achieve a larger volume of more consistent quality produce. The main objectives of cluster farming are to consolidate smallholder farmers’ produce, deliver in bulk to save on transportation and transaction costs, and to increase income.For the three cluster groups studied, the monthly income for smallholder farmers was found to increase for only one cluster. Nevertheless, most cluster members believed that they were financially better off after joining the cluster. After joining the cluster, smallholder farmers received other substantial, mostly non-monetary benefits such as access to markets, market information, market and production linkages, technical and financial support, and production inputs.Institutional support in the form of training, building and enhancing network capacity, market information, material support and access to markets are required to facilitate the success of the clusters.