Value chain analysis of chicken in the province of La Union / Arnelie Garcia Laquidan

Field Study Report (Master in Agribusiness Management and Entrepreneurship) -- University of the Philippines Los Baños, May 2018.

This Field Study Report is not available to general public.

The study entitled "Value Chain Analysis of Chicken in the Province of La Union" aimed to
present the profile and relationship dynamics of the actors involved in the value chain which
included the input suppliers, producers and intermediaries; to identify the flow of costs,
services, information and payment along the chain; to define activities, costs, returns and
interconnections that adds value to the chain; and to recommend improvements and solutions
based on the identified capabilities and constraints.
The study used descriptive survey method, in which questionnaires were prepared and
interviews were done to gather data on the key actors of the value chain. Information
gathered includes demographic profiles, costs incurred, value adding activities, and problems
encountered in the production and marketing of chicken products. Value-adding activities in
each level of the value chain were determined and analyzed using the Agricultural Value
Chain Ecosystem from the World Bank Group. Cost-return analysis, relationship dynamics,
and profitability analysis were also done to analyze the value chains of the three chicken sub
sectors in the province.
The respondents included eight (8) broiler farms under contract growership and
intermediaries which included 7 wholesalers, 7 local chicken roasters, 35 eatery owners, 12
local restaurants owners, 18 fried chicken sellers and 10 night market vendors. For the layer
sub-sector, seven (7) farms have been tapped, and intermediaries consisted of 9 wholesalers,
2 wholesalers cum retailer, 86 public market vendors, 21 individual sellers, and owners of23
eateries, 30 sari-sari stores and 14 bakeries. The native chicken sub-sector involved 25
backyard raisers, 4 retailers and 4 backyard raiser/ assembler/ retailer.
The study revealed two chains for the broiler sub-sector, eight chains for the layer sub-sector
and three chains for the native chicken sub-sector. The average years in operation for the
broiler and layer sub-sectors were 13 years and 16 years respectively. The native chicken
raisers, on the other hand, had an age mean of 51 years old. Initial investment was highest
for the broiler farms at P7,000,000 because of the requirement of the integrators of having a
tunnel vent for housing. Layer farming had P2,000,000 as the highest in initial investment,
while native chicken raising only required P2,000.
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The study disclosed that 26.36% of chicken meat from broiler farms was sold in the same
municipality where the farms were located, while 72.73% were sold in nearby municipalities.
Approximately 21.65% and 47.10% of total egg production were sold in the municipality
where the farms were located and nearby municipalities within La Union, respectively. The
remaining 31.25% was transported to neighboring provinces of Benguet and Ilocos Sur. For
the native chicken, 68.18% were raised and bought in the same municipality where they were
selling it, while 31.82% have been outsourced from other municipalities.
As to value added analysis, the intermediaries engaged in preparing ready-to eat meals from
chicken products registered as having the highest values. These included eateries, local
restaurants, night market vendors and fried chicken vendors.
As to the profitability analysis, various players have different levels of positive net returns.
But the intermediaries who prepared ready-to-consume meals gained the most per kilogram
of broiler meat or per piece of egg. Broiler and layer farms and wholesalers have smaller net
return per chicken and per egg, but gained the most because of the volume of products they
were transacting.
The identified issues, gaps, and weaknesses of the La Union chicken sector value chain
included extreme hot weather, strict quality requirements, improper waste disposal, scarcity
of day-old-chick, ready-to-lay pullets and native chicken, and dilapidated housing,
Recommendations were formulated for various players in the three sub-sectors. For the
contract growers under formal agreement, they should continue to abide with the terms and
conditions set by the integrators. Broiler and layer farms with conventional housing for
chicken must find ways on how they can have a tunnel vent-type for the flocks.
Intermediaries for both chicken meat and eggs must invest in facilities and equipment to
ensure the quality of the chicken products. Native chicken raisers must adapt an
entrepreneurial mindset as the potential of chicken in the market is high.
Interventions by the government would include capacity building, financial support and
research and development which is applicable to all the three sectors, as the product is a
commodity and would help ensure food supply stability and provide employment.