August 1
agribusiness
Changes in the Definition of Agribusiness
- Technology and innovation
- Malnourishment (from anorexic to obesity)
- Provides: money, health, and beauty
- 4G in regards to food and phone?
- LTE and EMV meaning (Add info)
Horizontal integration
Vertical integration
Driver of agribusiness transformation
- Getting married with other companies
- Strengthen and attain exposure
August 9
Input - production - processing/distribution - marketing -
consumption
AGRIBUSINESS AS A SYSTEM
Agribusiness starts from research and development
instead of input then ends with waste management
instead of plant or fork.
Input <------> consumption
Farm ←-----> plate/fork
Research and development ←----> waste
management
Agricultural losses happen after production in developed
countries.
While organizational losses are observed before
harvesting in developing countries.
II. Climate change which has driven concerned citizens
and institutions to improve agricultural technologies and
processes, continuously innovate in production, do
research on new varieties and climate resilient crops and
livestock
Add info: Examples of new technology; Salt-tolerant
rice
Agriculture as a factor in climate change; methane from
livestock industry
III. Globalization of markets
- Presenting threats and opportunities to local
- Tariff implemented on Chinese products
- Bigger market (opportunity)
IV. Income Growth
V. Changing consumer buying behavior due to
increasing urbanization, more information on products
and increasing exposure on product choices
Opportunities and Challenges in Agribusiness
1. More educated and demanding consumers
- Consumers drive proliferation of certain goods
and services
- Consumers drive companies to produce products
that are ecologically sensitive
- Consumers demand improved packaging and
labeling of products for their safety
- For trade-certified (attention to the
producers)
- PhilGap-certified (ex: Del Monte w/
Global GAP)
2. Niche and non-traditional players
- Emergence of smaller players producing highly-
specialized products (natural products, low sugar
food, low carb)
- Market-focused enterprises that addresses
important and emerging concerns in consumer
marketing
3. Lower cost, opposite season, and new
competitors
- Globalization has made it possible for
consumers to access low-priced produce, off-
season products
- Carrying a wide variety of products which can
be on or off-season
- Presents local competition to local producers
and marketers
4. Identify innovations and new technologies and
methods
- Integrated with the science of nutrition, genetics,
production, and health
- Hydroponics, GM, tissue culture
- Plant-based meals, artificial meat from bio-
manufacturing, insects, synthetic wines are
being introduced as alternative food
5. Food safety, security and sustainability as major
concerns
- The agricultural sector is challenged to increase
production in support of food security objectives
 - Deteriorating production environment and
increasing population (1.57% increase)
- Food security (accessible, available, affordable)
- Addressing yield gap through importation
- Empty nets phenomenon (Add info)
- Sustainable Development Goals
August 16
6. Health, wellness and food safety
7. Retailers as key players in agribusiness supply
chain
- Stock keeping unit (Add info)
8. Government regulations and support
- Terrification law on rice (Add info)
- MALAMPAYA - top source of energy (Add
info)
9. Increased costs of pollution control and
compliance to food safety and other ecological
requirements
10. Opportunity of linking agribusiness with tourism
and recreation
August 28
APPROACHES TO THE STUDY OF
AGRIBUSINESS: INDUSTRY ANALYSIS
Michael Porter’s Framework
Which would affect the profitability of the company?
Industry
- Group of firms or companies that are producing
products that are close substitutes of each other
- Industries in agribusiness are known as
‘agroindustries’
What are strategic groups?
Why is industry analysis important?
- For the potential entrants to identify an
opportunity for investment
- For existing firms to establish a firm’s
competitive position within the industry
- For the coordinating bodies (government,
industry associates) to identify problems and
imbalances which call for coordinative works
- Michael Porter’s Framework
- Agri-eco tourism (Add info)
- Knowledge of the structural elements (Add info)
1. Firms within the industry
- Number and size of competitors
- Degree of product differentiation
- Industry exit barriers
- Low switching costs
2. Entrants
- Increase industry capacity (positive)
- Intensify industry competition (positive to the
customers; negative to the existing companies)
- Depends on the attractiveness of the industry
such as market size
- Barriers of entry
a. Economies of scale
b. Product differentiation
c. Capital requirements
d. Switching costs
e. Access to distribution channels
f. Cost disadvantages independent of scale
- Ideal industry conditions
a. Less intense competition
b. Low threat of entry and substitutes
c. Weak bargaining power of buyers and
suppliers
d. Profitable industry
3. Substitutes: put a ceiling to the prices that the
industry can charge
4. Suppliers: threaten industry players by
increasing prices or decreasing quality
5. Buyers: threaten industry players by forcing
them to decrease prices or improve quality of
industry products

Drivers of Change in the Industry
????????????????
September 4
AGRIBUSINESS INPUT SECTOR
Production as core of agribusiness
Revolution
1. Adoption of modern agriculture (Pre-1900s)
- structured dualism; colonizers (Add info)
- Rapid experimentation and innovation in food
production and livestock breeding
- Dramatic increase in yield
- Increase in size and scale of farms as these
transitioned into commercial entities
2. Mechanization Post-WWI (1920s)
- Internal combustion engine
- Increased farm productivity
- Intensive cropping practices
- Greater variety of food in modern diets
3. The green revolution
- exporting rice (Add info)
- Increase in the application of the science of
chemistry and breeding of dwarf varieties of
grains
- Widespread use of nitrogen and phosphate
fertilizers
- Global grain output tripled
- Rapid growing field of biotechnologies and
genetic modification of agricultural goods
- Corporatization of agriculture and launching
agribusiness to multinational heights
4. The digital revolution
- Widespread cultivation, land degradation and
pollution of natural ecosystem caused by Green
Revolution
- Producers are more aware of the need for
sustainable resource management (doubly green
revolution: Add info)
- Using technology and data science to optimize
on-farm production and supply chains that are
responsive to real time consumer demand;
feeding the world sustainably
Add: Conservation Agriculture
- Doubly green revolution
- No tillage
- Bio-pesticide control; use plants as shield from
pests
- Usage of mulch
Challenges
1. Climate variability
2. Dwindling resources
3. Population growth
4. Need for increased productivity
5. Changing consumer preferences
Inputs for Farm Production
Inputs for Initial and Final Processing
- Industrial machines and equipment
- Packaging materials
- Supplies
- Industrial labor
Characteristics of Input Sector
1. Dominated by a few large-scale firms (mostly
MNCs/Multinational Corporations)
2. Dependence on imported raw materials and
suppliers
3. Threatened by high supplier bargaining power
4. Coordinated by strong industry associations
The Feed Industry
- Critical input to the poultry livestock and
fishery/aquaculture sector
- Linked with the corn and other feed ingredients
industry
- Around 60% of the total production cost
- The backward and forward links of the industry
are both agricultural production.
September 6 (contd.)
- Yellow corn, soybean oil meal, rice bran, copra
meal, fish meal and wheat by-products
- Corn - 50%-60% of mixed feeds, feed users
account for 70% of the total corn output
- Other feed ingredients include cassava and
sweet potato meals, brewer’s yeast and ipil-ipil
leaf meal
 - Feeds come in the forms of pellets, crumbles,
meal type
- Republic Flour Milling (RFM); consider
moisture content (Add info)
Classification of Feed Milling Firms
1. Small - at most 50mt per 8 hr shift
2. Medium - 50 mt to less than 100mt per 8 hr shift
3. Large - at least 100mt per 8 hr shift
- 2016, recorded that 27,000 mt of feeds were
produced by the 486 registered commercial feed
mills valued at $500M
World Feed Production
47% - poultry
28% - pig
20% - Ruminant
5% - Aqua
Top 10 Feed Mills
1. San Miguel Corp - B-meg
2. Charoen Pokphand Foods
3. Cargill Philippines - Purina
4. Sunjin - Sunjin meals
5. Universal Robinsons Corporation - Uno
6. UNAHCO - Pigrolac, Univet, Sarimanok
7. CJ - Piggy Max, Supper Max
8. PILMICO - Elite
9. General Milling Corporation
10. Philippine Foremost Milling Corporation - Excel
Production Concentration of Commodities (Add Info)
Markets for Animal Feeds
1. Small and Medium Farms
- Backyard farmers and aquaculture operators
- The use of trash feed is a major practice
amongst backyard swine producers
- Have a very high focus on feed price rather than
on the technical or functional characteristic of
the feed
- Price sensitivity is driven backwards along the
supply chain to the feed manufacturer and to the
feed ingredients importer. Feed mills have
forward integration with the contract-growers
- Feed conversion ratio - objective (Add Info)
2. Large integrated livestock producers and
aquaculture operators
- Purchasing criteria are oriented around obtaining
value-for-money from trusted suppliers in terms
of:
a. Technical characteristics and on-farm
performance of the feed
b. Price; how market entry price works
Key Issues and Opportunities in the Feed Milling
Industry
1. Corn availability and cost due to the ff:
- Low productivity (1.5mt per ha)
- Declining hectarage-land conversion
- High transportation or marketing cost (distance
of corn supply from feed production areas)
2. Substitution of lower priced products such as
wheat resulting to lower quality feeds
3. Heavy dependence on importation
4. Inadequate storage facilities
5. Increasing demand for livestock and poultry
6. Successful integration and improvement in the
input to marketing links in the feed and livestock
industry
Fish meal - imported from Papua New Guinea and Peru
(Add info)
Types of integration
1. Vertical
2. Forward integrate - control on market
3. Backward integrate - control on resources
4. Horizontal - buy competitors
Seed Industry
Definition:
Four Major Groups
1. Rice seed
2. Corn seed
3. Vegetable and legume seed
4. Forage seed
Seed Industry Development Act (RA 7308)
- Aims to promote and develop the seed industry
Composed of:
1. Private seed companies
2. Government agencies - BPI, UPLB-IPB,
PhilRice
3. Industry associations with membership from
both private and government
- East-West Seed; RamGo Seeds (Add Info)
Breeder seed - plant breeder
Foundation seed - approved by the National Seed
Industry Council
Certified Seed - sold to farmers
Good Seed - no tags from NSIC
 September 11
Seed Companies
1. Rice - Bayer, Pioneer, DevGen (Syngenta), SL, Players of the Fertilizer Industry
Agritech
2. Corn - Ayala Agricultural Development Issues and Opportunities in the Fertilizer Industry
Corporation, Monsanto 1. Accessible to farmers at lower cost and prices in
3. Vegetables - East-West Seeds Corp., Pilipinas the face of dwindling industry profitability
Kaneko, etc. 2. Efficient resource use given that the Philippines
has reached its horizontal expansion limits in
Key Issues production
1. Post-harvest handling and processing 3. Shortage in raw materials (ex.sulfur and
2. Lack of support despite its importance diammonium phosphate)
diversifying the agricultural base and in making 4. Low fertilization application due to high prices
crops competitive of fertilizer
5. Taxes in importation and foreign exchange
patterns
Fertilizer Industry 6. Increasing demand for organic fertilizers -
domain shifting opportunity
- Contribute 30%-50% of the increase in yield of 7. Increase areas devoted to *HbVs*, crops for
crops biofuels, high-yielding varieties
8. Projected to continue to grow
Importance
1. Increase crop Production
Agricultural Machinery Industry
2. Replenish nutrients
3. Increase bio-mess Agricultural Mechanization
4. Made crop production possible in many - Prerequisite to and partner of industrial progress
unproductive soils - Power sources include human, animal and
5. Allow diversified farm activities mechanized
Use of Agricultural Machines
Types of Fertilizers For the ff:
1. Inorganic fertilizer - synthesized 1. Tillage and crop establishment
2. Organic fertilizer - biodegradable mixtures from 2. Crop care and maintenance
plant and animal wastes, agricultural by- 3. Crop protection
products and processing wastes 4. Harvesting and post-harvest handling
3. Others - soil conditioner, plant growth promoter. 5. Transporting supplies and products
Raw materials Importance of Agricultural Mechanization
4. Specialty fertilizers 1. For increased productivity
- Contribute human *dra____*
- Contributes to intensive cultivation
Forms of Fertilizers - Permits more exact and timely conduct of farm
1. Solid or liquid *activities*
2. Packed in woven polypropylene with
polyethylene liners; net content of 50 kg 2. For effectiveness and efficiency
3. Branding - Response to the need for more exact application
of inputs
Philippine Fertilizer Industry
- General decline in fertilizer utilization due to: 3. Address labor shortages brought by the shift of
a. Weak agricultural practices agriculture labor to agroindustrial labor?
b. High fertilizer cost 4. Characterized by heavy importation and local
c. Yield responses to increasing fertilizer *production-
inputs is decreasing a. Country inputs - locally manufactured
- Imported inputs for fertilizer production 5. Low demand due to low utilization of
- Stiff competition among manufacturers and agricultural machines
importers - 1.5 to 5 Hp per ha
- High cost of distribution - *3 to 7 Hp per ha
- *0.70
**
Filipino farmers *devised* small *machines*
______ by availability of credit, machinery with_______
Production growth in small machines given ____
Grew by 50% in the past 15 years
Makes sources of impo____
**
Key Players
- Most important industry association;
Agricultural Machinery Manufacturers and
Distribution Association (AMMDA)
- Spokesperson of the industry
- 70% of members are manufacturers or
distributors
- Smaller machineries = domestic
- Larger machineries = imported
1. Alpha Machinery
2. *Kato* International Inc.
3. Kubota Agro-industrial Machinery Philippines
Inc.
4. Sea Commercial Company Inc.
5. Tramat Mercantile Inc.
Key Issues
1. Low level of mechanization due to:
a. High import cost
b. High cost of money
c. Availability of credit
2. Local manufacturers have difficulty in
competing with imported products due to:
- Higher tariffs on materials and supplies
as compared to finished machinery
3. Medium and large scale farms are hesitant to
increase investment due to the threat of CARP
Agricultural Labor
- Involved in all of the activities of farming
- 33.36% of the Total Labor Force in developing
countries
- Agricultural Labor Types:
a. Family farm labor
b. Hired labor (usually contractual)
c. regular/salaried
d. Exchange
- Employment - 10.9M
- DOLE support to agricultural labor
- RA 3844: Agricultural Land Reform Code
- Enjoy the same rights and opportunities in life as
industrial workers
Agricultural Labor Rights
1. Self organization
2. Engage in concerted activities
3. Minimum wage
4. Work for not more than 8 hours
5. Claim for damages for death or injuries
sustained while at work
6. Compensation for personal injuries, death or
illness
7. Against suspension or lay-off
Key Issues
1. Low wages
2. Lack of interest
3. Aging workers
4. Does not enjoy constitutional rights of workers
a. Self organization
b. Collective bargaining
c. Security of tenure
d. Just and humane work condition
PRODUCTION SUBSYSTEM
- Also known as farm subsystem
- Consists of agriculture, fishery, and forestry
subsectors
- Core of agribusiness
- Closely interlinked with the input, processing,
and marketing sectors
Elements of Efficient Production System
1. Market orientation
2. Location
3. Access to the right technology
4. Timely availability of resources
5. Systems approach to management
Characteristics of the Philippine Farm Sector
1. Dominated by small scale producers
2. Highly dependent on uncontrollable production
conditions (production rate)
3. Subject to high market risks due to the
variability, seasonality, and perishability of
produce (three factors/characteristics of
agricultural produce)
4. Due to smallness of operations. The sector is
weak in relation to its backward (input) and
forward (markets) links
Performance of Philippine Agriculture
- Contribution of agriculture decreased by 1.27%
(currently ay 7.5%)
 Farms and Farming System
Agricultural Production Farming system
1. Crops - 47.42% - More or less coherent combination in time and
2. Livestock - 17.41% space of some quantities of labor and various
3. Poultry - 17.75% means of production in order to get different
4. Fisheries - 17.41% agricultural products
- Represent an appropriate combination of farm
Farm Concentration According to Legal Status enterprises, cropping systems, livestock,
1. Individual - most common fisheries, forestry, poultry, and the resources
2. Corporate available to the farmers to raise them for food
3. Cooperative and/or profitability
4. Partnership - One or different farming systems could be
5. Government institution adopted in one farm
6. Private institution - Conservation Agriculture (Add info)

Biofuels - ethanol, corn, sorghum (Add Info)

Biodiesel - coconut (Add Info)

Factors Affecting the Use of Agricultural Land

Economic factors Unused areas of

Farm Classification According to Tenure Social Factors agricultural land increase
1. Owned Governance/Political
2. Partly owned factors The land degradation
3. Tenanted - subjected to CARP Technical and Non- processed continue
4. Leased technical Factors
Environmental Factors Property structure is
September 25 (contd) Individual Factors fragmented
Farm Classification According to Management Systems
1. Subsistence farms Factors Affecting Choice of Farming System
- Production-oriented farms managed by the 1. Tenure - owner operators have more freedom of
household choose; livestock combination
- Small portion goes to the market 2. Farm characteristics - size, topography, location,
soil type, climate, relief
2. Commercial farms 3. Market risks - after choice between
- Producing mainly for sales monocropping, mixed cropping and integrated
- institution/private owned farming
4. Capital or income opportunities
3. Collective farms 5. Farmer’s choice
- Managed by centrally planned economies 6. Labor availability
- Communists?/estate
- Malaysia’s :Federal Land Development Smallholders Vs. Agribusinessmen
Authority” (Add Info) Risk-averse Risk-takers
Limited internal resources Access to internal
Farm Classification According to Livestock Raise/Crop *External resources
1. Monocrop farms - usually observed in large *Stock *External
estate farms with processing components Lack business skills *Stock
2. Mixed crop/farms - done to maximize land *Decision Sufficient business skills
productivity Short time for planning *Decision
3. Relay crop farms - succession planting done to Long time for planning
maintain soil fertility
4. Integrated farm - different farm units support Factors Affecting Production Volume
each other, integration of crops, livestock, and 1. Land area and intensiveness of farming
___ is common 2. Weather conditions
3. Input sourcing and application
4. Pests and diseases
 5. Crop, livestock and poultry management
- Use of new technologies, diversification,
production maintenance
6. Marketing considerations
a. Local and export demand
b. Local and export prices
c. Competition
d. Availability of market infrastructure
7. Local government support
a. Production programs
b. Technologies
c. Infrastructure support
d. Incentives
Key Issues in the Farm Sector
1. Input-sourcing
a. Limited quality seeds/seedlings
b. High cost inputs
c. Inappropriate fertilizer use
d. Lack of information on input choice and
use
e. Limited credit access
f. Insufficient irrigation
Input > issues in production > marketing/processing
2. Production
a. Farm maintenance during production
process
b. Lack of control over production
conditions
c. Lack of new production technology
awareness
d. Inefficient water management
e. Low productivity
f. Limited replanting of senile trees
g. Poor extension activities
h. Low farm mechanization
Add Info:
- Forecasting technology
- Papaya rot
- BusinessWorld, ManilaTimes, PhilStar
3. Post-harvest
- Cost-effective, farme-based facilities
4. Processing
a. Low recovery - sugar and ethyl-alcohol
example
b. Underutilized capacity
c. Inconsistent product quality - lack of
raw materials example
5. Marketing
a. Lack of markets
b. Lack of product differentiation
c. Poor marketing infrastructure
d. Lack of market information
e. Low export share
- Must know how to add value (problem
with farmers as producer; Add info)
- Inability to meet quality requirements
(quality mismatch; moisture content &
aflatoxin)
- Farmers lack market
- Feedmill company lack raw
materials
- Close distance
- Negative Balance Payment
(import > export)
6. Support-services related
a. Inadequacy of and poor access to credit
b. Lack of production and marketing
infrastructure
c. Inefficiency of support programs
Strategic Option
1. Collective Actions among players
2. Integrative arrangements
3. Compliance to quality standards
4. Innovations
Add info:
- CA: CARP to the sugarcane plantation
- Reframing agribusiness (has to be
larger)
- Consolidation; “Block Farm”
- Integrative: Contract-growership
- Small brother-big brother relationship
- Big to big for chickens
- Compliance - niche even when small; Costales -
Bistro Groups
- Innovations
Disruptive Technologies in Agriculture
- One that displaces established technology and
shakes up the industry
- “Ground-beaking product that creates a
completely new industry” - Paul Teng
1. Agronomy and agricultural biotechnology
- Seeds with new genetics, pest control,
microbiome, animal health
2. Mechanization, robotics, on-farm machinery,
automation, drones guided by GPS or GIS,
environmental sensors, growing equipment
- Biotherapy, RFID (health condition; Add info)
- BlockChain Technology
3. Farm management software, Internet of Things
systems with sensing and intervening
 - Environmental farming data capture devices,
decision support software, big data analytics,
miniature portable applications
First disruptive technology - use of digital services;
Drones
Second disruptive technology - biotechnology
- Asia grew 10% of the world’s biotech crops
- 19M ha in 9 countries
- GM crops - cotton, papaya, maize, eggplant,
sugarcane
- Japan and Korea are hesitant in planting Biotech
crops but import large quantities of GM for
food, feed, processing
- Thailand and Malaysia import GM products but
of not grow GM crops.
Third disruptive technology - rise of indoor farming
- Drivers:
a. Urbanization
b. Climate change
c. Increased demand of consumers to have
produce nearby
- Greenhouses with tiered trays
- Produce is costlier than outdoor farming
- Vertical farming (Video)
Fourth disruptive technology - alternative proteins
- Plant based proteins
- Cellular meat (link)
- Insect protein)
Fifth disruptive technology - Blockchain Tech
- For easier monitoring, transparency, and
reporting. This is best applied in agribusiness
finance and logistics. Internet data are accessible
to all in the supply chain
“There should be no technology divide among farmers”
- to be inclusive
Oct 4, 2019
AGROINDUSTRIES
- Processes raw materials from the agriculture
- Processed products are for intermediate and final
consumption
- Pertains to transformation activities in the
agribusiness sector
1. Agriculture, fishery, and forestry (farm/holding)
2. Manufacturing (establishment)
3. Production and process of products other than
food
4. Wholesale and retail, and other activities
(construction, tourism, R & D, education, etc.)
5. Agrofood industries
The agroindustrial sector
- Food industries
- Non-food industries
Importance of agroindustries
1. Maximize the use of raw materials
2. Provides competitive advantage to a raw and
undifferentiated agricultural produce
3. Strengthen the agricultural base of the country
4. Minimize waste and quality losses
5. Provide alternative to satisfy ocnsumer’s needs
and wants better - goal of agro processing
6. Transform agricultural products into new forms
and consumer foods that add:
a. Stability
b. Palatability
c. Transportability
d. Nutritive value
7. Additional employment generation
8. Address food security issues
9. Contribute significantly to the total
manufacturing value added of a country
- 21 out of the top 25 exports are
processed products
10. Pave the way for sideway linkages
- Markets of by-products derived from
processing operations
- Ex. ethyl-alcohol as a by-product in
sugar milling operations
11. Results to increased demand of products in
allied industries. Ex. machines, packaging
materials, and ingredients
LINK BETWEEN AGRI AND PROCESSING
Food Processing Industry
1. Increases demand for raw materials
2. Farmers produce more to meet demand and
increase agriculture production
3. In the process, farm labor becomes more
productive
4. Finally, wages and profits of the farmer
increases
5. Farmer’s income increases and with increased
income…?
Classification of Agroindustries
I. Types of products produced
1. Food industry
 - Processed meat, milk and dairy products,
processed fruits and vegetables
- Processed fish
- Bakery products
- Beverages (ex. chocolates)
- Condiments and flavoring extracts
- Cereals
2. Non-food industries
- Leather and leather products (Bulacan)
- Wood and woodworks (Benguet) and cork
products
- Tobacco manufacturers (Cotabato)
- Rubber and rubber products
- Textile manufacturers
- Paper and paper products (Kimberly Clark)
- Fiber products
II. Type of Activities
1. Upstream activities - engaged in initial
processing
- Activities include: cleaning, grading and
ginning, cutting, mixing and milling, tanning
Input Upstream
Output Downstream
2. Downstream activities - undertake further
processing
- Activities include: cooking, canning,
dehydration, chemical alteration
III. Level of Transformation
Level 1 - cleaning and grading
Level 2 - ginning, cutting and mixing
Level 3 - cooking, pasteurization, canning, dehydration,
freezing, weaving, extraction, assembly
Level 4 - chemical alteration and texturization
Considerations in Engaging in Agroindustrial Enterprise
1. Selection of processing technology
2. Plant location
3. Inventory management
4. Supplies for processing
5. Programming and control
6. Use of by-products
I. Selection of Processing Tests
1. Qualitative Requirements
- Determine what the market requires
- The more strict the requirements are, the higher
the cost of processing and the higher the value
attached to the processed products
2. Process requirements
- Depends on the level of transformation that
could be done to the raw materials
- Serve as barriers of entry to processing
-
- Depends on the level of transformation that
could *lead* to the raw materials
- Could serve as barriers to entry to processing
companies
- Potential investor must consider optimal labor-
capital combination
Rated and Annual Capacity Utilization
Investor must look into the possibility of the multiple
uses of equipment and machinery
Management capability
- Supervisors must have techno-managerial
competence in managing agroindustrial plant
NOTE: SLERs HAM vs. Purefoods/Pampanga’s Best;
tocino and longganisa
NOTE: Essence of chicken = intermediate
Chicken cuber = final product
Cost of Technology and Labor
- The level of mechanization one adopts does not
only depend on the nature of production drivers
but also on the cost of labor in the site
- Nutritional value of processed food
- An investor must also evaluate the effect of the
processing technology on the nutritional value of
the processed food
- Prolonging shelf-life and increased digestibility
are only one side of the issue
II. Plant Location
- Decision to make locating the plant near the
source of raw materials or near the market
- In both cases, an investor has to determine
availability of:
- Labor, basic utility like electricity and
water, basic provisions such as roads
and communication networks, land
costs, development costs
- Factors favoring plant location near the raw
material sources
- Perishability of raw materials
- Sensitivity or fragility
- Difficulty of transporting of raw
materials as compared to finished
products
- Products that are affected by the supply
of labor and the availability of power
and other structure
III. Inventory Management
 - Agroindustrial raw materials are characterized
by seasonality, perishability, and variability
- Requires careful inventory management
- Inventory management - dependent on the
availability and timing of raw material supply,
examine:
- Storage capacity of raw materials and
storage cost
- Capacity of warehouse of finished
products
- Shelf-life of raw materials and finished
products
Oct 11, 2019
IV. Supplies for Processing
- Next to raw materials in terms of importance to
the processing activities
- Include ingredients or parts other than the raw
materials, packaging materials, and other
finishing products such as varnish in the case of
wood furniture manufacturer
- Contribute a considerable proportion in the cost
of processing
- Reliability and availability of supplies must be
ensured
- Note: Coffee liqueur, Kahlua, Bailey’s Irish
Cream
V. Programming and Control
1. Production Design - implementation of plans
and production engineering (specifies physical
facilities and layout)
2. Production scheduling - specifies production
runs and timing of production operations
(important in scheduling raw material deliveries
and marketing activities)
3. Control systems - used to deliver higher levels
of efficiency and reliability specific to an
application for optimum performance
Modern process control systems use a much higher
degree of automation that relies on process data being
interpreted and applied by Programmable Logic
Controllers (PLC)
Top 20 Food and Beverage Processor in the Philippines
Major Manufacturing Players (2013)
Trends in the Food Processing Industry
1. Consumer preference
a. Shifting demographics
b. Convenience
c. Environmental stewardship
d. Desire for more information about food
2. Marketplace pressures
a. Sustainability
b. Assume standards
c. Traceability and Data management
I. Shifting demographics
- Aging baby boomers
- Increasing purchasing power of the millenials
- Increased ethnic diversity
II. Convenience
- Immediate consumption
- Fresh ready-to-eat fruits and vegetables
- Healthy quick-assembly meals
- Single portions
III. Environmental stewardship
- Production and processing methods
- Local e.g. 100-mile diet
- Food waste reduction - ‘ugly’ food market for
food that are near expiration date
- Nutrition labels - nutrition
- What consumers do not want
- Allergens, sodium, gluten, trans fat,
added sugar, chemical additives,
preservatives
- Front of pack symbols - eg. whole grain,
vegetarian
IV. Desire for more information about food
- Health and well-being
- Personal choice or values
- Vegetarian, fair trade, animal welfare
- Free range, cage free, dolphin safe
- Clean and clear labels

VI. Use of By-product

- Process must be able to identify potential by-
products and more commercial value
- Market-linkaging activities must also include Sustainability
by-product marketing Food supply/Global Demand
Increased demand for food to feed
The Philippine Food and Beverage Processing Industry 9.8B in 2050
- US$ 3.21B in 2018 Environment Impact
- Growth 7% iver 2017 Waste Reduction
- Growth 31% in the past 5 years Water conservation