How A Farmer Cooperative Is Overcoming Challenges And Improving Their Livelihoods

Posted on 05/07/2024

Grameen Foundation partners sort coconut meat that is stored on a re-drying facility made of wood
Re-Drying Facility COFAMPCO

In support of Barry Callebaut’s (BC) Sustainable Coconut initiative, Grameen implements the five-year Sustainable Coconut Project in Philippines Davao Region. It aims to enhance the overall sustainable supply of coconut oil (CNO) to BC’s partner mills by strengthening the capacity of agricultural cooperatives in the Davao region to effectively improve smallholder farmers’ copra production and income, and connect them to markets while ensuring positive social and environmental impacts.

Comval Farmers Multipurpose Cooperative (COFAMPCO) is a farmer cooperative of 247 members located in Camanlangan, New Bataan, Davao de Oro.

COFAMPCO formally partnered with Grameen Foundation’s Sustainable Coconut Project (SCP) in March 2023. Its copra (white flesh of the coconut from which coconut oil is extracted) trading business started during the pandemic around 2020 when it frequently traveled to various barangays to purchase the produce of members and non-members. Being located in predominantly coconut farming communities in Camanlangan, they were able to consolidate 3 tons to fill up their truck and sell these to local traders in Nabunturan the capital of Davao de Oro. In a month, they can consolidate 40 tons of deliveries to the trader. COFAMPCO earns Php1.00/kg in this system.

During the meeting and presentation of the Grameen’s SCP team to COFAMPCO last January 18, 2023, opportunities for their copra business were presented and their response was positive. Their BoD and Manager personally visited New Asia Oil Mill (NAOI) to observe the process of deliveries soon after. Due to limited resources for logistics and in preparation for their first delivery, COFAMPCO took out a loan from a local cooperative federation to purchase a second-hand 12-ton capacity truck. They bought it from their trader to honor the end of their partnership, suggesting to the trader that they were hoping to progress with their copra business without the trader now that they had a more direct market linkage with NAOI.

Copra Is Loaded Onto A Truck For Delivery To The New Mill
Copra Is Loaded Onto A Truck For Delivery To The New Mill

With this truck, COFAMPCO delivered their first 12 tons of copra last February 21, 2023, to NAOI, which took place only a month after Grameen presented the project to them. The coop was glad and appreciative of Grameen for facilitating the business transaction to NAOI. They earned a net of Php 8.00/kilo more than what they usually earn from selling to local traders.

COFAMPCO gradually regularized a weekly volume delivery and established a good relationship with NAOI. They experienced negative comments from some other brokers and traders to discourage them, but they were determined to favor their commitment to farmers and their newly found institutional buyers. Up to now, COFAMPCO has offered the same price traders of Nabunturan. This is a strategy that attracted many farmers to sell to them instead of going to Nabunturan which is 23 km away.

In almost a year of deliveries to NAOI, COFAMPCO recognizes that there is still room to increase its net returns. For one, they experienced significant deductions due to high moisture content that averaged 11.66% valued at more than a million pesos (around USD17,700). They heed to the frequent reminders from the Grameen team that the copra business is a moisture business and constructed a re-drying facility where the copra delivered by farmers were re-dried to ensure good moisture content of copra to deliver to the mill. COFAMPCO delivers copra with a lower moisture content compared to other cooperatives in the northern part of Davao.

This gives COFAMPCO leverage in negotiating higher prices compared to the prevailing buying price of copra in the market. This also demonstrates their institutional relationship with NAOI, where they exclusively deliver their copra.

They also purchased land that they plan to develop into their copra buying and storing station. The cooperative has also applied for a loan from a government institution to acquire additional capital for their copra business as well as their highly appreciated “prenda arendo” program, especially for their coconut farmer members who mostly produce copra.

Carson Valencia, COFAMPCO's Extension Officer during a training session on good quality copra
Carson Valencia, COFAMPCO's Extension Officer Shares Best Practices On Good Quality Copra

The “prenda arendo” program is one of the innovative programs of the cooperative, wherein they help farmer members, who have mortgaged his/her farms to other individuals. Through the program, COFAMPCO assumes the mortgage or lends the money to their farmer member who has a mortgage so they can reclaim their land. The farmer member will then be allowed by the cooperative to continue to cultivate his land and gradually pay the cooperative using the earnings from the land. This ensures farmer members the opportunity and capacity to gradually pay their debt and in due time fully reclaim their land. The cooperative will regularly deduct a certain percentage from the earnings of the agricultural products sold by the farmer member to the cooperative.

This is a win-win situation for the farmer and the cooperative because while the farmer is ensured of continued income, the cooperative is ensured that the farmer will sell its products (especially copra) to the cooperative as well as they are assured that the farmer can pay the loan. Without this program, many farmers may end up losing their land because they are unable to pay the mortgage as they are not allowed to till the land while on mortgage and they have little to no other way to earn money to pay.

The "prenda arendo" program is appreciated as it promotes good moral equity and rights to farmers instead of exploitation and land grabbing. The mortgage amount varies ranging from Php10,000 to 200,000 (USD177 to 3,500). So far, 80 (33%) members have availed themselves of this service while 20 are waiting for their turn to get their request approved by COFAMPCO.

Image of a man with a baseball style hat on sitting at a desk
Carson Valencia, COFAMPCO's Extension Officer Seated At A Desk

Given the year’s successes, COFAMPCO never forgot to give back to their farmer supplier members. They give a Php0.25/kg incentive to their copra as additional capital build-up of the members to their share dividends. COFAMPCO also started clustering coconut farmers in nearby communities by holding meetings with Small Coconut Farmers Organizations (SCFO).

COFAMPCO will serve as their institutional buyer and open an account in the cooperative as an organization and every time a member of the SCFO sells to the cooperative, a Php 0.25/kg incentive will go to the account of the SCFO.

In December 2023, COFAMCO had to rent a 20T capacity truck to deliver their consolidated copra to NAOI. The cooperative has increased its annual copra production from an estimated 540MT at the start of the project in March 2023. By the end of the year, COFAMPCO delivered 583.66MT copra to NAOI. It was a period wherein their copra volume increased by 150%. It was also the period wherein COFAMPCO sought the assistance of Grameen to facilitate their Php5M loan application to SBCorp to add to their capital for copra trading which they expect to be approved and released in the next three months.

COFAMPCO’s BOD recognizes that they have yet to learn many things in the copra trading business but its good practices and principles of perseverance, cooperativism, and hard work, challenges will be overcome and improve the small-holder farmers’ livelihoods along the way.

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