Clustering is the best way for agriculture
Though small is beautiful, in our global competitive environment, this is often disastrous. The best way to succeed is for small independent enterprises to be organized into clusters. This way, we can get the economies of scale required for success.
For the domestic scene, production without clustering results in products that lose out to countries which have these economies of scale. The result is more imports, more losses and more poverty. This can be reversed through clustering.
Cacao exports show much promise. From 2023 to 2025, volume multiplied by 2.4 times from 1,900 to 4,700 tons; the value multiplied by 6.7 times from $5.8 million to $39.1 million.
Last June 23, a joint proposal was submitted to the Department of Agriculture (DA) from the private organization called the Philippine Cacao Industry Association Inc. (PCIA) as well as the public-private Philippine Cacao Industry Council (PCIC).
The private sector, which knows business, takes the lead. The government provides the support, which is absolutely necessary for significant success. Spearheading this effort is Armi Lopez-Garcia. She is the president of PCIA and the chair of PCIC.
With the guidance from Agriculture Secretary Francisco Tiu-Laurel Jr., PCIC has two co-chairs; one undersecretary each from the DA and the Department of Trade and Industry.
The situation
There is good news and bad news. The good news is that the Philippines is recognized as having among the “best beans in the world.” This distinction was given during the globally-recognized biennial Cacao of Excellence (COEX) award ceremonies. There are more than 200 entries from at least 30 cacao-producing countries. The Philippines consistently won top honors in every global competition since 2017.
However, there is bad news. While we have the best beans, the great majority of our cacao products have low quality and low productivity. Our average cacao yield is one kilo per tree, instead of the required two kilos for reasonable profitability. The reason is that the government had previously promoted cacao planting everywhere. The right soil and climate were not considered. Furthermore, there was no plan to cluster the cacao growers. The result has been low quality, low productivity and an enormous waste of much money.
The PCIC-PCIA proposed clustering plan changes all of this. Planting will now be done only in areas with the right soil and climate. In addition, clustering will be done in two steps.
Action plan
The first step is to initially establish six clusters called the Cacao Cluster Common Service Facility (CCSF): one in Luzon, two in the Visayas and three in Mindanao. Examples are an identified cluster of 4,000 hectares with 500 farmers and another of 2,000 hectares with 4,000 farmers. This results in economies of scale.
Each cluster will serve as a post-harvest and consolidation center for organized cacao farmers, cooperatives and associations. The fresh cacao beans will be consolidated, fermented, dried, sorted, packaged and prepared for sale to a Cacao Mass Processing Facility (CMPF).
Each CCSF will have facilities for fermentation, solar drying, warehouse and storage, sorting and packaging, training and demonstration. The quality of the beans will be ensured through strict quality control.
The second step is to establish a CMPF that receives the high-quality beans from the other CMPFs. It will serve as the central value-adding and processing hub.
This will result in consistently high-value cacao products. It will have the best equipment for bean receiving and inspection, cleaning and sorting, roasting, cracking and winnowing, grinding and refining, packaging and storage, and laboratory testing for quality assurance.
Increase in value
The value of wet beans will increase from P35 to P65 and dried beans from P150 to P250 a kilo. These beans can achieve export-grade standards and then be sold at P400 a kilo. Once these beans go to the CMPF for further processing, the value will be multiplied many times over.
Last year, under the leadership of Secretary Tiu-Laurel and Undersecretary Philip Young, our 22 percent agriculture export growth surpassed Vietnam’s 14 percent and Thailand’s zero percent. This momentum can be further increased only if we change our current detached individual enterprises and go into clustering, not only for cacao but for our other agriculture products.
The DA must now immediately exercise its leadership with Congressional budget support and private sector participation. Otherwise, we will never achieve our great agriculture potential.
The author is Agriwatch chair, former secretary of presidential flagship programs and projects, and former undersecretary of the Department of Agriculture and the Department of Trade and Industry. Contact through agriwatch_phil@yahoo.com
