The Vegetable Industry in the Philippines

by Peter J. Batt, Sylvia Concepcion, Klondy Dagupen, Ma Connie Lizada, Roy Murray-Prior

Final report, ACIAR, Australia, November 2007

Executive Summary

In 2005, some 604,000 hectares of vegetable crops were cultivated in the Philippines, which produced over 4.5 million tonnes of fresh vegetables.

Although the average yield (10.65 t/ha) compares favourably to many other countries in South East Asia, there is considerable potential to increase yields through improved farm practices and investment in new technologies.

Being in the tropics, most areas of the Philippines are suitable for growing lowland tropical vegetables, however, as altitude is able to substitute for latitude, large quantities of high value temperate vegetables are cultivated at high elevation. Nevertheless, vegetable production in the Philippines is highly seasonal in response to temperature, rainfall, and the frequency and intensity of typhoons. Vegetable prices are generally lowest in March to May and highest in September to December. Vegetable consumption in the Philippines is currently estimated at only 39 kg per capita, well below the 146-182 kg per capita recommended by the WHO/FAO. Most Filipinos use vegetables as only a small part of a meat or fish dish and very seldom as a meal in itself. Increasing vegetable consumption is therefore a major public health challenge.

The majority of fresh vegetables in the Philippines (75-85%) are sold through the traditional marketing system, where farmers sell their produce on the spot market to traders, consolidators, vegetable processors and wholesalers in the wet market. As personal disposable income rises, greater quantities of fresh vegetables are being sold through modern retail markets and the institutional food market. Throughout most of the Philippines, the supermarket share of the market is thought to approach 10% but in Metro Manila, the major market for fresh vegetables in the Philippines, supermarkets are believed to currently hold a 15% market share.

As the average farm size in the Philippines is just 2.02 hectares, it is very difficult for smallholder vegetable farmers to access the institutional market.

Inconsistent supply, poor quality, low prices, unfavourable terms of payment and penalties associated with non compliance provide little incentive. Poor quality is a multifaceted problem that has root causes at the farm level and postfarm gate: poor quality seed; poor cultural practices; excessive insect and disease damage; inappropriate post-harvest handling; the high cost of inputs and limited access to finance. Furthermore, most smallholder vegetable farmers are unaware of the quantities of vegetables planted, the customers' quality requirements, preferred varieties, the seasonality of production and the supply and demand situation in both domestic and export markets.

Without consolidation, smallholder vegetable farmers will not have sufficient production to maintain the quality or continuity of supply and most farmers do not have the financial resources to purchase the required inputs, nor access to the appropriate technology to produce quality product on a consistent basis. To this end, this scoping study has identified six alternative mechanisms for smallholder farmers to access the emerging institutional market.

Available for download at http://www.aciar.gov.au/system/files/sites/aciar/files/node/4189/Final+report+ASEM-2005-062.pdf