Sustainable Marketing Strategy in Micronesia

Final Report for SW99-015

Project Type: Research and Education
Funds awarded in 1999: $27,564.00
Projected End Date: 12/31/2001
Region: Western
State: Federated States of Micronesia
Principal Investigator:
Aurora Del Rosario
Palau Community College
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Project Information

Abstract:

The farm and market survey was done to determine the supply, demand and condition of fresh produce in Palau. The survey showed that there is a big demand for fresh produce which could not be met by local production. Hence the island still continues to be heavily dependent on imported produce. Chinese cabbage and cucumber were the leading vegetables produced and sold in the market. The local vegetable supply in the market can still be increased to meet the increasing demand and reduce dependence on imported produce.

Vegetable production training was conducted to train farmers on best management practices and marketing. Contract growing is effective in ensuring higher income and assured market for the farmer.

Project Objectives:

The project aims to :

1. Gather, collate, update and disseminate a database on producers’ organizations and members, local agricultural dealers and market outlets

2. Develop, analyze and disseminate a database on the local crop production and domestic market capacity

3. Pilot a contract in marketing local produce

4. Train producers and other stakeholders on best management practices, farm management and marketing

Introduction:

In Micronesia the two predominant agriculture systems are subsistence and commercial. Guam and the Commonwealth of Northern Marianas have predominant commercial agriculture operating , while the Republics of Palau and Marshall Islands and the Federated States of Micronesia are still dominated by traditional subsistence farming. The current economic development plans in Micronesia are to develop and improve market-oriented sustainable agriculture for self sufficiency, reduced importation and increase export of local produce. Agriculture and marine resources are important support industries to tourism on which the region is heavily dependent for economic growth and development.

Several reports ( SAGRIC, 1994; Nakamoto et al. , 1996; UNDP and RWG, 1996; Ragus et al., 1997) have shown that problems, needs and opportunities generally related to improving domestic markets are the following :

1. Lack of steady supply of local produce
2. Fluctuating monthly prices of agricultural commodities
3. Occasional surpluses in markets where growers deliver on same days
4. Farmer’s tendencies to grow any crop in any quantities at anytime
5. Farmer’s profits limited by consignment
6. Lack of information and/or non-availability of agricultural reports
7. Lack of information on market outlets, size, production and prices

Palau, a small island republic, is the westernmost archipelago in the Pacific with a population of 19,129 (Office of Planning & Statistics. 2000). Eighty percent of the population reside in the states of Koror and Airai where most of the economic activities take place. Palau is the third most visited destination in Micronesia after Guam and CNMI. Tourism is the major contributor to Palau’s economy, accounting for at least 11% of the gross Domestic Product (Deane et al. 1996. The National Master Development Plan). The majority of the tourists to Palau are from Japan, followed by the Taiwanese and Americans.

In Palau very little agricultural statistics are available. The first Palauan Statistical yearbook was published in 1998 containing quantities and values of locally produced crops. However the imported crops were all lumped under Food Items.

In 1995 projects funded by the Agricultural Development in the American Pacific (ADAP) evaluated agriculture statistics in the region and Market Information Systems (MIS) for production forecasts of vegetable crops.

Cooperators

Click linked name(s) to expand
  • Santy Asanuma
  • Nelson Esguerra
  • Christina Salii
  • Wilbur Williams

Research

Materials and methods:

Local government offices were contacted to obtain names and addresses of contact persons of existing women’s, men’s and youth groups, local agricultural dealers, hotels, restaurants, stores and government cafeterias. At the same time, location and owners of existing vegetable farms in Koror, Airai and Aimeliik were surveyed to come up with a list of growers of fresh produce in the market. This list served as a guide for possible cooperators on this project.

Market Survey. A survey form was prepared to obtain information on price, volumes of local and imported produce consigned and sold /consumed (Appendix 1) in 15 markets, stores, hotels, restaurants and government-owned cafeterias (Table 1). Volume and values of produce consigned, sold and spoiled were tabulated and computed. The market statistics was published in a local newspaper and disseminated to cooperating outlets and government offices.

Farm Survey. Monthly field surveys were conducted to gather data on the date and area of new plantings of various vegetable crops in 17 farms in Koror, Airai, Aimeliik and Ngaremlengui (Table 2). This data was entered into a computer using a program developed for Marketing Information Systems to make forecasts or estimations of vegetable production that could be supplied in the local market.

Training & Demonstration. A Vegetable Crop Production Training was conducted in April 2 – 5, 2001 with emphasis on production of the top selling crops — Chinese cabbage, cucumber and long beans. Also a demonstration plot on staggered planting of long beans and cucumber was established at the PCC Research and Development Station in Ngaremlengui showcasing sustainable best management practices on soil conservation, nutrient management and integrated pest management.

Contract Growing. A farmer who participated in the Vegetable Training was subsequently assisted in a contract growing scheme to supply and market the vegetables produced on his farm to a hotel / restaurant and a government cafeteria. A Memorandum of Agreement was signed among the parties and focused on frequency, volume and prices of specific crops to be supplied. The farmer was assisted by the project staff in terms of soil analysis of his farm, procurement of seeds, pest management of the crops grown in the farm and record keeping. Harvest and sales of the farm was also monitored.

Research results and discussion:

Market Information Survey

Thirteen out of the nineteen hotels, restaurants, stores and markets initially contacted about the survey participated. However as the survey went on, there was a marked decline in the number of stores, hotels, restaurants and markets who cooperated with the project and completed the survey form in spite of the continued and persistent follow up by the project staff. Some of the reasons for failure to continue participation in the market survey was that they had no time and staff to fill up the form; the lack of interest and appreciation of the importance of the survey, or competition with other stores.

We were fortunate to get the full cooperation of the leading wholesale market and the leading hotel on the island. However the figures showed that the even though with the cooperation of only one or two markets in the later part of the survey, the volume of imported and local fruits and vegetables accounted for 35 – 80% of the total volume sold / consumed by the 12 – 13 cooperators in the market survey. This showed that the leading market and the leading hotel dominate the sale and consumption of fresh produce in Palau.

Despite of the decline in number of participants and limited participation, the survey revealed a clear picture of the demand for fresh produce in Palau (Table 3). The total value of fresh produce in the market was $1,198,139.57. Of, these, 69% were imported with a total value of $823,485.61 while only 31% was locally produced. Vegetables accounted for 73% of the total fresh produce in the local market , while 27% were fruits. Eighty-two of the local produce were vegetables percent valued at $318,849.84, while only 18% were local fruits. Of the total fruits in the market, 79% were imported and only 21% were locally produced. For the vegetables, 34% were locally produced while 66% were imported. This data confirmed earlier reports that the country continues to be heavily dependent on imported fresh produce. This does not include meat, poultry as well as dried and canned goods.

The market survey conducted revealed that there were 26 different kinds of imported vegetables sold in the local market. Among the imported vegetables, the most popular were onions, head cabbage, potato, Chinese cabbage and carrots as indicated by the high volume of sales of these commodities (Table 4). The total value of imported vegetables was $ 505,549.84. Potato, onions, carrots, head cabbage and celery were among the cheapest imported vegetables in the market with an average price range of $0.53 – $0.73 per pound (Table 5). The most expensive vegetables were sweet peas, mushrooms spinach, shallot and zucchini. This data also show that some imported vegetables can be grown in the tropical climate of Palau.

Table 6 shows that 16 different kinds of imported fruits were sold in the local market. Imported fruits with the highest volume of sales were apples, oranges, grapes, cantaloupes and mangos . Total imported fruits was valued at $317,935.77. The most expensive fruits were grapes, plums, tangerines, pomegranates and honeydew melons ( $1.29 – $2.40/pound) while the cheapest fruits were pineapple, watermelon, mangos, lemons and limes which were being sold at $0.65 – $0.89/pound (Table 7) .

Twenty-five different kinds of locally grown vegetables and five kinds of root crops were sold in the local market (Table 8). The local vegetables with the highest volume of sales were Chinese cabbage (30%), cucumber (18.9%) eggplant ( 7.38%), swamp cabbage (5.79%) and long beans (4.31%). Their average price ranged from $ 0.72 – $1.07/pound (Table 9). The most expensive local vegetable was found to be green onions selling at an average price of
$ 2.97/pound.

Eleven local fruits were sold in the local market (Table 10). Fruits with the highest volume of sales were watermelon (33.2%), banana (24.5%), papaya (18.6%), soursop (7.33%) and citrus (kingkang) (5.94%). They were available all year round and their price ranged from $.070 – $1.25/pound (Table11).

Farm Survey

In the Republic of Palau, the women are tasked to produce the food for the family. Thus, they are the ones most actively involved in farming activities to grow and raised root crops such as taro, cassava and sweet potato, which are the staple foods on the island. Root crops are harvested and used for family consumption and custom as needed. Root crops produced in excess of their consumption are then sold in the market to generate cash for their other needs. Therefore the women in most of the states have organized themselves into Women’s Groups to facilitate selling their produce in stores and markets in the central business district of the island. However actual production was difficult to monitor as most of their produce was used for family consumption.

The project focused on production and marketing of vegetables in Palau. Vegetable production in Koror, Airai, Aimeliik and Ngaremlengui have become profitable ventures for enterprising farmers who have found that there is a big demand and market for locally produced vegetables. This is due to the increased awareness on the nutritional value of vegetables and the increased influx of tourists into the country. The vegetables are being supplied and sold to hotels, restaurants and major stores and markets in the central business district of the island.

Seventeen farms in Koror, Airai, Aimeliik and Ngaremlengui were visited on a monthly basis and surveyed for the type of crops, amount of area planted and the date of planting of each crop. Most of the farms were small holdings of 1-2 acres. Some were owned and operated by Palauans with Filipino or Chinese workers. Others were leased and operated by Chinese farmers. The survey showed that twelve vegetable crops were regularly planted. Data was entered into a computer program and a forecast was made on the production of each crop.

The farm survey revealed that the total area planted with vegetables was 42.31 acres (Table 12). The leading vegetable produced in Palau was found to be Chinese cabbage with a projected total annual production of 116,693 pounds (Table13) on 18.55 acres or 43.8% of the total area planted with vegetables. It was also found that 90% of the total Chinese cabbage in Palau was grown at the Palau Organic Farm. This is a venture of a Japanese firm in Palau where the vegetables are organically grown in 22 greenhouses with 95% of the total area planted with Chinese cabbage. Palau Organic Farm also grows other crops such as cucumbers, okra, bell peppers and green onions.

Other farmers have found cucumber, the second leading locally grown vegetable, to be a profitable crop with a total projected production of 89,670 pounds harvested in 4.75 acres. This was grown on 16 out of the 17 farms surveyed .

In terms of area the other most widely grown vegetables were string beans, watermelon, eggplant and swamp cabbage planted in a total area of 21.6 acres in Palau. Cucumber was grown in 18.5%, string beans in 13.7%, watermelon in 11.8%, eggplant in 9.2%nd swamp cabbage in 8.4% of the total area planted with vegetables.

Contract Growing

The project assisted Wilbur Williams, a farmer who participated in the Vegetable Training, in a Contract Growing Scheme to supply and market the vegetables and root crops from his farm to a hotel/restaurant (Penthouse Hotel) and a government cafeteria (PCC Cafeteria). A Memorandum of Agreement was signed among the parties on the volume, frequency and prices of the specific crops to be supplied (Appendix 4).

The farm is situated in Medorm, Aimeliik which is 12 miles north of Koror. It has an area of 2 acres with a sloping topography and ample water supply. Labor was supplied by two full time workers on the farm. Land preparation was done with a grass cutter and Merry Tiller. However only about 0.76 acre of the farm was planted with various vegetables, sweet potato, cassava and taro (Table 14). The farmer was concentrating on cucumber and swamp cabbage (Fig. 1), which were the most profitable vegetables in the market. In addition the farmer also grew okra, pumpkin, winged beans.

The contract between the farmer and the hotel / restaurant and the cafeteria, assures a market for his harvest without passing through a middleman. Table 15 shows a comparison of the consignment price paid by the leading wholesale market to farmers. It shows also that our farmer got a markedly higher price for cucumber (40%), eggplant (45%), swamp cabbage (42%), sweet potato (33%) and taro (5%). For okra he was paid lower than the price the wholesaler pays the other farmers. In some instances the farmer also sold his vegetables directly to employees of government and private offices. With direct selling to the end user / consumer, the farmer got higher price per pound than those who brought their produce to the wholesaler. This clearly showed that elimination of the middleman greatly benefited and increased the income of the farmer.

Research conclusions:
Impact of Results

Information generated from this study provided a database for the supply and demand condition for fruits and vegetables in the local market. It was shown that there was a big demand for fresh produce in Palau which could not be met by local production, leaving the country heavily dependent on imported fresh produce. The survey also showed the need to increase local vegetable production particularly of those imported products that can be grown in the tropical conditions of Palau.

Farmers learned best management practices on soil management, nutrient management, integrated pest management and marketing during the Vegetable Production Training conducted.

Farmers who brought their produce direct to the consumer / end user got a higher price for their produce than those who consign their harvest to the wholesaler. Contract growing was effective in ensuring higher income and an assured market for the farmer.

Participation Summary

Educational & Outreach Activities

Participation Summary

Education/outreach description:

Results of the market survey and farm survey were published in two local newspapers to disseminate information on local production and market capacity for fresh produce in the island.

Based on the information obtained from the market and farm survey, a Vegetable Production Training Course was conducted on April 2-5, 2001 focusing on Chinese cabbage, cucumber and long beans, the top vegetables produced and marketed in Palau (Appendix 2). Ten farmers participated in this training course. Among the topics discussed were production facts and the production region of cucumber, beans and Chinese cabbage in Palau (Fig. 3), cultural management practices, pests and diseases, types of pesticides, simple pesticide calculations, types of spraying equipment and tips on spraying pesticides. An open forum was held at the end of each topic discussed (Fig. 4). On the third day of the training, the participants visited the Palau Organic Farms in Ngaremlengui where they saw the production practices and problems in growing Chinese cabbage (Fig. 5) and cucumber (Fig. 6) under greenhouse conditions. The group then proceeded to the PCC Research and Development Station where they toured the facilities of the Experiment Station to observe the demonstration plot on staggered planting of long beans (Fig. 7). A demonstration on calibration of sprayer and spraying of pesticides was also done. On the final day of the training the group visited two conventional farms in the morning, where they observed the various cultural management practices in vegetable growing (Fig. 8) and identified pests attacking vegetable crops (Fig. 9). The awarding of certificates (Appendix 3) was held in the afternoon (Fig. 10).
Evaluation of the training showed that all the participants were satisfied with the training. They all recommended longer duration of the training, more field trips, pest and disease identification and control, and market statistics.

Project Outcomes

Project outcomes:

An income statement of the operations of our farmer-cooperator for 2001 showed that he had an annual deficit of $6,571.86 (Table 16). Based on the cash flow of his operations, he only had positive cash position in May, 2001 when he harvested sweet potato and taro. A large portion of the farm (74.37%) was planted with cassava and taro (Table 14 and Fig. 2) which were long term crops and take 8 – 10 months to mature and harvest. Only 18.14% of the total area planted on his farm was devoted to vegetables. However his income from vegetables steadily increased from June to November after he had invested in a nursery greenhouse for rearing his seedlings which ensured establishment of his plants in the field. It should also be noted that labor was the biggest expense (32%) in his farm operations. Vegetable production was only on a small scale basis and had not reached the profitable level of production. Thus the farmer should increase the area planted with vegetables which are early maturing and could be harvested and marketed in 3-4 months. These will give him faster and higher return on his investment than the root crops. He should also seek out other markets for his produce.

Farmer Adoption

After the training, the farmer adopted sound sustainable agricultural practices such as contour farming since his farm is in a sloping area and the use of compost and animal manure. One of the problems he encountered was the death of vegetables directly seeded in the plots / bed which readily succumb to Pythium due to frequent heavy rainfall in the area. Among the cultural management practices he adopted was growing of his seedlings in a nursery greenhouse prior to field planting (Fig. 11). This ensured the hundred percent survival and establishment of the plants in the field to maturity. The farmer also learned to identify and control pests and diseases with the use of appropriate pesticides for specific pests of the vegetable crops grown on his farm. At his farm, the project staff also released a mirid bug, Cyrtorrhinus fulvus, which is a biological control agent for the taro leafhopper (Tarophagus colocasiae Matsumura), a very destructive pest of taro in Palau (Fig. 12). Thus he does not have to apply pesticides to control taro leafhopper.

In addition during the monthly farm surveys, the farmers consulted the project staff on the pest problems they were encountering with their vegetables. They were given advise on appropriate control measures to alleviate the problem(s) on hand. So as a whole, as much as 20 farmers were reached by the project.

Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture or SARE.