Industry Strategic Science and Technology Plans (ISPs) Platform

Coop for a Cup: Role of Cooperatives in Coffee and Dairy Buffalo Technology Adoption

As a labor-intensive country, one of the major driving forces of Philippine agricultural development is technology. Aside from cost reduction, technology enables farmers to enhance the quality of their produce, discover effective and efficient farming techniques, and ultimately address the risks and challenges inherent in agriculture. The success of a technology, however, boils down to its dissemination and adoption at the field level. It is important to recognize that technology is deemed useless if farmers will not adopt it, which is why understanding a farmer’s behavior, particularly the factors affecting their decision to adopt a certain technology, is crucial.

In 2017, PCAARRD funded a program titled, “Role of Cooperatives in Technology Adoption for Improved Production and Market Efficiency in Dairy Buffalo and Coffee”. Dr. Agham Cuevas from the University of the Philippines Los Baños led this initiative to determine how cooperatives and other rural/community-based organizations (RBOs) affect technology adoption, and production and marketing efficiency, assess their effectiveness as platforms for innovation and technology transfer in the rural areas, and provide specific recommendations on how cooperatives/RBOs can enhance technology adoption.

Coffee and Dairy Buffalo Industry Overview

Coffee and Milk are two distinct beverages commonly consumed here in the Philippines. Both of these industries are composed mainly of smallholder farmers with an average of 1-2 hectares and 2-4 heads, respectively.

Philippine coffee is comprised of four varieties, namely: Robusta, Arabica, Excelsa, and Liberica — with Robusta as its most common type. The proliferation of local and foreign coffee stores (e.g. Starbucks, Figaro, etc.) and brands (e.g. Nestle, Cafe Amadeo, etc.) is a strong indication of its rising demand in the marketplace. However, failure to meet this growing demand is a problem within the industry, especially with a 0.2% annual decline in coffee volume over the past 10 years (PSA, 2018).

On the other hand, unlike coffee, milk is consumed in various forms of dairy products (e.g. fresh, powdered, etc.). Despite its many uses and health benefits, the Philippines only produces 1% of its 2.5-billion-liter milk requirement (NDA, 2019), with 99% of the dairy products imported from different countries.

Impact of Coop Membership in Technology Adoption and Production and Marketing Efficiency

The study showed that cooperatives/RBOs play an important role in stimulating the adoption of technology for the enhancement of production and marketing efficiencies. In fact, studies have shown that collectively, small-holder producers share information, pool resources, and distribute costs and risks among themselves to improve yield and productivity, which would not be possible if the smallholder farmer is working alone.

Coffee

Among 380 respondents, 58 percent is a member of a cooperative/RBO. Findings show that members have a greater tendency to adopt technologies (52%) relative to non-members (40%). Farmers attribute this to the prioritization of cooperative members in the provision of agricultural inputs and technical services, attendance in various training, and linkages with other stakeholders. These provisions give members greater information, resources, and support.  Likewise, membership was also found to significantly affect a farmer’s ability to maximize their output given a level of inputs (technical efficiency). This suggests that cooperative members are more productive than those who are not. It was also highlighted that members have greater marketing efficiency thanks to better selling prices, greater access to buyers, and better processing activities.

Dairy buffalo

In the case of dairy buffalo, 71 percent of the respondents are members of cooperatives/RBOs. Similar to the case of coffee, cooperative members are more likely to adopt bundles of technology than non-members.  Dairy farmers validated that these associations facilitate technology transfer by providing venues for capacity-building.

Most importantly, RBOs serve as regular buyers of milk — this requires farmers to follow the recommended practices, particularly on milk handling, which encourages other farmers to adopt the technologies. Ultimately, better farming practices of cooperative members lead to greater productivity and marketing efficiency.

Coffee and Dairy Buffalo Technologies

The study analyzed the role of cooperatives/RBOs in the adoption of PCAARRD coffee and dairy buffalo technologies as well as Good Agricultural Practices (GAP) for coffee. Among the technologies, coffee farmers mostly practice selected picking, no grazing of farm animals, and planting with distance whereas dairy farmers mainly adopt Ad Libitum grass-feeding, artificial insemination for breeding, use of milking chutes as housing, and deworming of carabaos.

Institutional constraints

Cooperatives/RBOs identified the following institutional constraints which affect the performance of their industries:

  • Lack of information/Poor access to technologies
  • Inadequate equipment/facilities
  • High input and transportation costs
  • Poor access to credit
  • Limited market access

Challenges and Recommendations

Although cooperatives serve as instruments in both industries, they are still confronted with issues such as membership delinquency, lack of participation among members, poor planning, and lack and/or mismanagement of resources. Hence, policy incentives to form and join cooperatives must be provided and associations must be strengthened through management and developmental seminars for its members. Further, greater public investment is warranted for technology diffusion, enterprise development, and establishment of facilities and processing centers near the farmers.