Good Practices in Agro-enterprise Clustering

Approach (AECA)

The clustering approach is envisioned to be a farmers’ journey of learning. It is a sequence of

eight (8) steps that a lead or support institution can be used as a guide as the farmers go
through for group learning and action in farming as a business and in collective marketing.

Each step in the AECA specifies the activities facilitated by a dedicated extension agent or field
staff from a lead institution that works directly with the farmers. The process is sequential so
that results of each step constitute the starting point for the succeeding steps.

To make simple complex ideas in business, AECA is presented as a journey of learning with a
vehicle (bus) on the road carrying the extension agent (or field facilitator) with the organized
farmers through three phases that includes altogether eight steps. (Figure 1)

The first six steps are organizing and preparation. The actual group marketing takes place in
Step 7, starting with test marketing in Step 7 and developed into an ongoing and growing
marketing enterprise in Step 8 through regular evaluation and improvement.

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 Good Practices in Agro-enterprise Clustering
Approach (AECA)

Step 1: Formation of Working Group and Basic Cluster

Key Elements:
-Formation of Working Group
-Formation of Clusters with profile
-Identification of Cluster Officers
-Quick Site Appraisal
-Formation of Two (2) Study Teams

Major Activities:
-Identification, orientation and securing commitment of stakeholders
-Formation and profiling of at least 2 initial clusters (10-15 members per cluster)
-Identification of cluster officers: cluster leader, production coordinator, postharvest coordinator,
secretary, food safety officer
-Site appraisal of the farmers and the farming community
-Formation of study teams: Supply Study Team and Market Study Team

Good Practices:
• The head of the lead institution’s presence during initial activities in gathering support from
other stakeholders will reflect the institutions commitment to the implementation of AECA.
• Maintain regular communication to the members of the working group by setting regular
meetings.
• Head of working group members provide support to AECA implementation by assigning a staff
to help the facilitator from the lead institution.
• The lead institution can organize clusters within a formal farmer organization (informal clusters
within a cooperative or an association).
• Be clear during the orientation with the farmers that this process will require their active
participation, that this will be their journey and the working group will be their support in
implementing the process.
• Focus on few clusters at the start. Inviting farmers who have demonstrated leadership or
entrepreneurial behavior will help in convincing other farmers to join the cluster.
• Encourage farmers, who are known in the area to have good production practice and high yield
of initially identified crop, to be part of the supply study team. For the market study team,
encourage farmers with experience in selling their products to 2 or more markets.

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 Good Practices in Agro-enterprise Clustering
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Step 2: Creation of Production Module and Cluster Supply Plan

Key Elements:
-Selection of Product
-Creation of Production Module (recommended farming practice and production cost)
-Creation of Initial Cluster Supply Plan

Major Activities:
-Discussion and agreement of priority product for collective marketing
-Gathering of information on production practices with cost and profit by the Supply Study Team
-Discussion on initial cluster supply plan of product agreed by the farmers
-Approval and adoption of the production module and supply plan

Good Practices:
• Assigned field facilitators to get the consensus of the farmers on both the production module
and supply plan. The facilitator’s role is to facilitate the discussion and not to decide for the
farmers.
• Guide the farmers in assessing both the opportunity and the risks if a new product is selected
and let the farmers decide if they want to pursue the new product. It is very important that the
farmers have an ownership of the decision.
• Recommended farming practice can be based on the successful farmers’ practices.
• Conduct trial production/field demonstration if there are new farming practice identified in the
recommended practice. Involve the farmers in the trial production by doing the trial near the
farmers.
• Provide hands-on guidance and repeated explanations in teaching cost and income
computation in the production module. Regular visits and learning sessions with the farmers
will help deepen the relationship between the field facilitator and the farmers.
• For the cluster supply plan, allow a certain percentage of the farmer’s harvest to be committed
for collective marketing. This is to ensure that the factor of uncertainty in supply, when farmers
must pay loans to traders, or when adverse weather damaged the crop, and among other
reasons, are accounted for.
• Local study team and cluster secretary should record all agreements during the meeting.

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 Good Practices in Agro-enterprise Clustering
Approach (AECA)

Step 3: Development of an Agro-enterprise (AE) Objective

Key Elements:
-Market Information Gathering
-Analysis of Market Information Gathered
-Developing Market Projections and AE Objective

Major Activities:
-Market chain mapping
-Market chain study (market visits and interviews) and price monitoring by the Market Study Team
-Consolidation of information gathered, comparison and analysis of the market that were interviewed
-Selection of target market and value chain mapping
-Presentation of the AE Objective to the officers and the members

Good Practices:
• Ensure the involvement of the farmers during the market chain study and analysis of the
information gathered.
• Present the result of the market chain study in a simple and easy to understand manner.
• Help the farmers in analyzing and starting with the low risk market first to be able to focus and
build the skills and confidence in collective marketing.
• Prioritize friendly institutional buyers aside from the traders as a market.
• During the value chain mapping, include all possible marketing costs and analyze possible
combination of markets in order for the delivery to be viable.
• Information on price should always be available and accessible to farmers. The group can find
someone from the local market to help them provide price information or they can tap their
LGU for help.

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 Good Practices in Agro-enterprise Clustering
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Step 4: Formalization of Committed Clusters

Key Elements:
-Approval of AE Objective
-Signing of initial cluster supply plan
-Writing policies and agreements

Major Activities:
-Analysis and approval of the AE Objective
-Discussion and signing of committed members on the cluster supply plan
-Drafting of initial policies and agreements related to production and collective marketing
-Presentation of initial policies to the members

Good Practices:
• Gather consensus with the farmers on their group’s AE objective and emphasize that the
objective is based on their analysis and not being imposed by the lead institution.
• It is possible that the number of farmers will be reduced at this stage of the process. Focus on
those who are really active and encourage them more by acknowledging their help/work.
• During the writing of policies and agreements, provide possible scenarios to the farmers that
will help them craft the policies and agreements.
• Provide all members a copy of the written policies and agreements and have them sign it to
signify their commitment to follow the group’s policies and agreements.

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 Good Practices in Agro-enterprise Clustering
Approach (AECA)

Step 5: Finalization of Agro-enterprise (AE) Plan

Key Element:
-Approved AE Plan

Major Activities:
-Drafting of the AE Plan by the study teams and cluster officers
-Presentation of the AE Plan to the members
-Approval of the AE Plan

Good Practices:
• During the drafting of the AE Plan, it’s important for the farmers to understand where the
information on the AE Plan will be coming from. The field facilitator should bear in mind that
the farmer members of the study team as well as the cluster officers should be able to present
this to the other members of the group.
• Coaching the farmers before the presentation to the other farmer members will give them
more confidence and ownership of the AE Plan.
• The AE plan should also be presented to the working group to be able for the farmers to secure
the commitment to support their plan.
• Upon approval of the AE Plan, the cluster secretary should keep the agreements and the plan
itself since this will also be the basis during the assessment to be made in Step 8.

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 Good Practices in Agro-enterprise Clustering
Approach (AECA)

Step 6: Creation of Supply Forecast

Key Elements:
-Field monitoring
-Updating of cluster supply plan
-Reporting of supply forecast

Major Activities:
-Regular field monitoring of the field facilitator and the production coordinator
-Interview with cluster members to update the supply plan
-Cluster supply plan updating by the production coordinator and field facilitator
-Presentation of the supply forecast to officers and working group

Good Practices:
• During the field monitoring, it is important to note the factors that might affect the target
supply of the cluster. These factors should be considered during the next planting cycle and be
ready with solutions.
• During the analysis and updating of the cluster supply plan, if there are cluster members that
cannot meet their committed volume, the members may decide to secure volume from other
members who have surplus volume. But this should be agreed by all members and should be
included in the written policies and agreements.
• Communicate regularly with the market on the supply forecast. If based on the forecast the
farmers cannot fulfill the order, it is best to inform the buyer/market to be able for them to find
alternative supplier for the unfulfilled volume.
• The group can also assign the cluster leader to help the production coordinator in the field
monitoring and interview with the members.

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 Good Practices in Agro-enterprise Clustering
Approach (AECA)

Step 7: Validation of Agro-enterprise (AE) Plan through Test Delivery

Key Elements:
-Preparation for Test Delivery
-Actual Test Delivery

Major Activities:
-Secure all delivery requirements of the buyer
-Secure all packaging and logistics requirements
-Consolidation and quality assurance of the product by the postharvest coordinator and cluster officers
-Actual delivery to the market

Good Practices:
• Confirm the delivery date, volume and requirements to the buyer/market at least 3 days before
the delivery date. This is to ensure that all information on the delivery details is correct.
• Be ready with buffer supply if in case the target volume was not met during
consolidation/quality check.
• Secure quality specifications from the buyer/market to ensure non-rejection of products upon
arrival to the delivery point.
• Encourage the farmers to participate in the delivery to better appreciate the process and
deepen their understanding on the importance of their delivery to the market.
• If there are unexpected incidents during actual delivery that may affect the time of arrival in the
drop off point, communicate immediately with the buyer and explain the reason of the delay.

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 Good Practices in Agro-enterprise Clustering
Approach (AECA)

Step 8: Evaluation and Improvement of Agro-enterprise (AE) Plan

Key Elements:
-Test delivery reporting and assessment
-Adjustment/revision of the AE Plan

Major Activities:
-Reporting of the actual delivery to the members and working group
-Assessment of the test delivery based on the AE Plan
-Revision of the AE Plan based on the actual experience

Good Practices:
• Allow the farmers who joined the delivery to share the experience.
• During assessment, point out the major deviation between the plan and the actual experience.
This will help the farmers analyze what needs to be improve in the next delivery.
• Gather consensus from the members on the decision to continue their chosen market and help
them by comparing the pros and cons based on the experience and revised AE Plan.

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