Lettuce Supply Chains and Marketing Margins in Benguet, Philippines

Abstract

Understanding value chains requires knowledge of the needs of customers and how these needs are met by different suppliers of marketing or value-adding services. The need for these marketing services and costs of supplying these are reflected in marketing margins or the difference in the prices of the various marketing levels in the chain. This study analyzed lettuce supply chains in Benguet and mapped 3 chains, including the value-adding activities and the governance mechanisms such as contracts and payment terms that exist in the chain. Some new roles have emerged due to recent developments in the market. Some wholesalers became “commissioners” and “disposers,” and some individuals played dual roles along the chain. A few farmers became “disposers,” and a few “disposers” eventually became farmers. Marketing margins were also computed for a sample chain including the cost of value-adding activities to show a more accurate distribution of benefits across key actors in the chain. Higher gross margins were due to higher costs of providing marketing services, which indicates a competitive market. There are opportunities in the lettuce chains to respond to increasing demand for salad vegetables. While lettuce producers and other actors in the chain respond to these market requirements such as producing new lettuce varieties, there are issues that need to be addressed to improve efficiency and performance of the chain.