Monday, July 10, 2006

Franchise fresh and processed food industry in the Philippines

The Philippines has competitive advantage in terms of availability of raw materials for processing, suitability of climate and soil fertility to grow a wide variety of agricultural products.

Many enterprises operate manual and semi-mechanized systems. Some are gearing towards a fully automatic system to minimize labor input, contamination and waste. Others however, continue to be semi-automated to take advantage of the country’s large and skilled labor pool, as well as to limit investments in capital equipment.

Processed food is among the 14 export winners identified by the Philippine government. Export winners are high-growth potential export aggressively pushed by the government for development and promotion.
Food commodities for exports include fruits, vegetables, meat and marine products. The countryside supplies most of the fresh food crops while the urban areas take care of processing them.

Among the fresh fruit varieties, banana, mango and pineapple are enjoying wide patronage abroad. Their abundant year-round supply makes it easy for growers of these fruits to have a steady business with foreign buyers.

The country’s vegetable harvests likewise abundantly produce a stretch of preserved or pre-cooked varieties. Processed and even fresh mushrooms, asparagus, bamboo shoots, young corn, pickles, pimiento, and peas go off well internationally. The fruit and vegetable items are normally packed in tetra brik, canned or bottled.
Processed livestock, on the other hand, has sausages and prepared/preserved liver as its main export goods.

The sector’s moderate capacity for export is largely attributed to the meat processors’ local market concentration.

The size of operations of local meat processors ranges from small backyard to large with modern facilities. The well known and bigger companies are Purefoods, RFM and Campo Carne (San Miguel Corp.). Domestic meat processors sell most of their produce to the local market, with only a very small portion of total production is exported.

The government, through the Bureau of Animal Industry, has achieved significant success in the eradication of the foot-and-mouth disease (FMD). Palawan, Basilan and most areas in Mindanao are now FMD free. Main markets of processed meat are Singapore, Bahrain, United Arab Emirates and Italy.

Aside from the country’s vast land, an expansive water area likewise does more than good to the export ventures of the country. Technologies in prawn and shrimp farming have similarly equipped farmers with new approaches that resulted to a more competitive array of Philippine seafood products. Major producing areas are the Visayas, Central Luzon, Southern Tagalog and the Mindanao regions.

Areas of Collaboration

  • subcontracting arrangements with growers to maximize production volume and increase farmers incomes;
  • distributorships and/or technical assistance on marketing and packaging;
  • provision of high yielding and tested technologies by the processing firm to the farmers;
  • marketing agreements on exclusive distributorships of processed products by the firm to selected private marketers.

Areas of Investment

In terms of products, the potential areas for investment include:

  • soursop (Guyabano juice), which has been found out to be acceptable in North America, especially in Canada, as a health drink and ice cream flavor;
  • calamansi (lime) juice, proven to be a popular alternative to orange juice in Japan;
  • dried/dehydrated or processed fruits and vegetables such as mangoes, papaya, banana, asparagus, okra, banana shoots, rootcrops saluyot, malunggay, onions, cucumber and corn;
  • textured vegetable protein (TVP), a cheap source of protein and has strong demand among health-conscious consumers;
  • beta-carotene containing foods such as camote and squash;
  • coconut water and fruit juice mixed with other fruit juices;
  • high fiber products such as nata de coco. Nata de coco variants incorporation in fruit purees and juices to increase dietary fiber content; incorporation in jams and noodles; flavor variants, e.g. natural fruitjuice flavor (tropical) coffee, tea, etc.
  • pickled fruits and vegetables such as ampalaya, radish, singkamas, eggplant, onions, chili pepper, green mangoes and ginger
  • fruit pieces, pulp and paper
  • mango (piko, indian, others), guyabano (soursop), papaya, buko shreds in coconut water
  • nature coloring (mayana, red camote, turmeric, gumamela, rosells)
  • flour and dried fruits and vegetables (squash, sweet potato, taro, cassava, purple yam)
    diffusion drinks (banana, banaba, salabat)
  • poultry/processing
  • piggeries/processing

Other promising areas for investment

  • marketing assistance and market tie-ups in the form of exclusive distributorships
  • technology transfer and technical assistance in labeling packaging materials such as cartons, tin cans, tetra packs, glassware,
  • wrappers and plastic bags
  • storage and handling facilities
  • distributorship systems
  • farm input technology and post-harvest facilities
  • equipment and spare parts supply (cookers/coolers, boilers, de-palletizer,
  • equipment for dehydration, filtration equipment, juice extractors,
  • refrigeration equipment, seamers/closing machines, tuna filing machines)

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