Strategic plan to expand the abaca fiber business

Written by Guido Guerra, Team Lead Planning Monitoring Evaluation and Learning department

San Isidro Upland Farmers Multipurpose Cooperative (SIUFMULCO) is a primary cooperative established in 1989 located in the island of Mindanao (Philippines). San Isidro cooperative is engaged in the trading of abaca fiber produced by its members as well as sourced from other local cooperatives. The cooperative purchases abaca fiber from farmers in three buying stations and then transfers it to a centralized warehouse where the fiber is sorted, cleaned and packed (baled). Then, the cooperative sells the fiber to local exporting traders.

During the cooperative assessment carried out in the first quarter of 2021 by Agriterra’s local cooperative advisors, with the collaboration of the Dutch experts Hans Geuns, Jan Kamphof and Laurens Coort, San Isidro cooperative revealed that its goal is to become the biggest abaca supplier in Mindanao island over the next five years, for which the cooperative needs a significant increase in working capital and investment capital to set up new facilities and purchase equipment to expand the abaca fiber business.

Although the cooperative formulated annual work and financial plans, it had never developed a long-term strategic plan to orient the formulation of annual plans towards the achievement of its goal.

Thus, in December 2021 Agriterra mobilised Maria Teresa Tumbali, a local cooperative advisor accompanied by the Agripool expert Jan Kamphof, former director of the Dutch cooperative Agrifirm, to support San Isidro cooperative developing a 5-year strategic plan 2022-2026. The strategic plan focused on three key lines of action:

1. double the volume of abaca fiber purchased from new farmers by setting up two new buying stations in areas with abundant supply of abaca fiber and staff each station with a manager and a cashier, as well as hire 20 pieceworkers in the centralised warehouse to handle the increased volume of raw material,
2. increase the volume of abaca fiber purchased from existing farmers by increasing their productivity through trainings, supply of better agricultural inputs (seeds) and provision of working capital loans to farmer members,
3. invest in three trucks to improve logistics, in baling machines to improve the fiber quality and fetch better prices, and make infrastructure improvements in the warehouse.

To carry out these key activities additional funds were required as the volume of abaca fiber purchased increases over time, ranging from EUR 200,000 in 2022 to EUR 300,000 in 2026, for which raising internal capital from members and obtaining loans from local financial institutions was proposed.

Thanks to the clear and structured strategic plan, in July 2022, San Isidro cooperative reached an agreement with a local financing institution (BCBMPC) for a PHP 15 million investment loan (+EUR 250K) to finance the purchase of two trucks, repair the baling machines and increase its working capital. The purchasing of two Isuzu 10 Tn capacity trucks allowed San Isidro to speed up the delivery of abaca fiber to buyers while at the same time free up space at the warehouse.

Watch the movie about SIUFMULCO