It defines the Investment Priority Areas of Iligan City and Lanao del Norte; Profiles of Priority Investment Areas; and existing Investment Incentive Programs for MSMEs.
CONTENTS:
DTI-Lanao del Norte Provincial Office
INTRODUCTION
A. Scope of the Industry/Industry Definition
Abaca is one fiber that has made the Philippines known all over the world.
Abaca has, for centuries, been practically synonymous to the Philippines because it is known the world over as Manila hemp. Before the advent of synthetics in the 60s, abaca was the principal raw material for the manufacture of the world-renowned Manila rope. In fact, since the turn of the century, abaca was the top export earner of the country.
The abaca plant is indigenous to the Philippines whose warm, wet climate and volcanic soils are particularly suited to its cultivation. It has been grown in the Philippines for centuries and was known to the Filipinos long before the Spanish occupation. When Magellan and his companions arrived in Cebu in 1521, they noticed that the natives were wearing clothes made from the fiber of the abaca plant, noting further that the weaving of the fiber was already widespread in the island.
Abaca has, for centuries, been practically synonymous to the Philippines because it is known the world over as Manila hemp. Before the advent of synthetics in the 60s, abaca was the principal raw material for the manufacture of the world-renowned Manila rope. In fact, since the turn of the century, abaca was the top export earner of the country.
The abaca plant is indigenous to the Philippines whose warm, wet climate and volcanic soils are particularly suited to its cultivation. It has been grown in the Philippines for centuries and was known to the Filipinos long before the Spanish occupation. When Magellan and his companions arrived in Cebu in 1521, they noticed that the natives were wearing clothes made from the fiber of the abaca plant, noting further that the weaving of the fiber was already widespread in the island.
According to Mallari, et al, Abaca, the country’s premier fiber, has come a long way from its humble beginning as raw material for the ancestors’ coarse and stiff clothing as well as foot wears and slippers. While the abaca is still being used for these purposes up to the present time, its application has expanded and improved tremendously, going beyond simple fiber craft to sophisticated industrial uses. Aside from the traditional cordage application, the fiber is now a superior and important material in the pulp and specialty paper industries and is used in the manufacture of tea bags, meat sausage casings, cigarette paper, filter papers, currency notes, stencil papers and a host of non-woven product applications. With the growing concern worldwide for preservation of the natural environment and conservation of forest resources, the importance of the abaca in the industrial sector is envisioned to heighten further.
Abaca Industry Development in Iligan City
The Abaca Industry Development in Iligan City started in the year 2000 with the City Government of Iligan spearheading and supported by all the government and private sectors and stakeholders of the industry.
The abaca industry of Iligan City is quiet a new industry in the City of Iligan. In 1999, the ASEAN Financial Crisis brought forth economic turmoil in the whole of Asia including the Philippines. The biggest and only steel manufacturing plant in Asia which is located in the City of Iligan was not spared. The steel manufacturing plant, National Steel Corp. (NSC) was shut down in November 1999. Such unfortunate event lead to the closure/slowdown of other big manufacturing plants in the city (which greatly affected the city’s economy) such as the Refractories Corporation of the Philippines, MCCI Corporation, and many other small businesses dependent on NSC. However, it also lead the local government of Iligan to look into alternative development strategy. Because the leaders of Iligan believe that “ In every difficulty, there is always an opportunity…” thus, the abaca industry of Iligan City was born, nurtured, developed… and still developing…and was chosen and endorsed as the One Town One Product (OTOP) of Iligan City.
B. Localized Cluster MapThe abaca industry of Iligan City is quiet a new industry in the City of Iligan. In 1999, the ASEAN Financial Crisis brought forth economic turmoil in the whole of Asia including the Philippines. The biggest and only steel manufacturing plant in Asia which is located in the City of Iligan was not spared. The steel manufacturing plant, National Steel Corp. (NSC) was shut down in November 1999. Such unfortunate event lead to the closure/slowdown of other big manufacturing plants in the city (which greatly affected the city’s economy) such as the Refractories Corporation of the Philippines, MCCI Corporation, and many other small businesses dependent on NSC. However, it also lead the local government of Iligan to look into alternative development strategy. Because the leaders of Iligan believe that “ In every difficulty, there is always an opportunity…” thus, the abaca industry of Iligan City was born, nurtured, developed… and still developing…and was chosen and endorsed as the One Town One Product (OTOP) of Iligan City.
The City Government of Iligan, entered into and signed a Memorandum of Agreement (MOA) with the Land Bank of the Philippines for a “Shared Financing Scheme”. Under the scheme the LGU committed to deposit a P6 million while LBP made available a minimum of P17 million to accelerate and enhance the growth and sustainability of the cooperatives of Iligan City. In February 15, 2002, the first release of funds was made available for 50 hectares for LUMADFAMCO of Rogongon. As of 2006, more than P13 million was already released to three other abaca producing cooperatives. DTI-LdN being a member of the Abaca Board facilitated a Strategic Planning Workshop with the stakeholders who formulated the vision of the abaca industry “ ILIGAN CITY TO BECOME A GLOBALLY-COMPETITIVE PRODUCER OF ABACA PRODUCTS BY OPTIMIZING THE USE OF RESOURCES THROUGH ENVIRONMENT-FRIENDLY TECHNOLOGIES FOR HOLISTIC SUSTAINABLE DEVELOPMENT.”
The original intent of developing the abaca industry was to support the raw material supply requirement of Newtech Pulp, Inc. (NPI). NPI is located in the nearby municipality of Balo-I, Lanao del Norte. It exports kraft paper out of abaca to Europe for further processing into tea bags, security paper, food packaging and other applications. Since not all of the abaca fibers could pass the quality requirement of NPI, DTI introduced the utilization of abaca fibers for handicrafts
The original intent of developing the abaca industry was to support the raw material supply requirement of Newtech Pulp, Inc. (NPI). NPI is located in the nearby municipality of Balo-I, Lanao del Norte. It exports kraft paper out of abaca to Europe for further processing into tea bags, security paper, food packaging and other applications. Since not all of the abaca fibers could pass the quality requirement of NPI, DTI introduced the utilization of abaca fibers for handicrafts
C. Products and Linkages
From the farm, abaca stalks are being stripped thru hand stripped or by stripping machines. These fibers are now classified as S1, S2 and S3. All S1 and S2 are delivered to Newtech Pulp, Inc. who is exporting abaca fibers to Germany while the S3 fibers are the one being processed into sinamay, hinabol, ropes and other handicrafts.
Convergence Efforts/LGU, NGAs Interventions
With the stakeholders decision to develop the downstream industry of abaca, the Department of Trade and Industry spearheaded the conduct of a ten (10) day training on Abaca Weaving, Dyeing and Rope Making for twenty (20) women representing different barangays of the City in May of 2005.. The project was funded by the Office of Congressman Cirilo Alipio Badelles and supported by the Local Government of Iligan City. This was followed by a Study Mission cum Technology Training on Fiber Softening and Dyeing Techniques in Leyte, Bicol and Bicutan on January 3-7, 2006 o create a pool of trainors for the handicraft industry .
To create a pool of weavers for the handicraft industry, DTI sought the assistance of the Department of Labor and Employment as well as the Office of the Congressman for a 10-day Echo Training on Weaving and Dyeing. The training was conducted last January 18, 2006 producing 30 new weavers from different barangays of the City.. The Echo Training entailed an additional investment of P105,000.00.
The growing number of weavers from the different barangays requires close monitoring and provision of various assistance and support that the government can provide. Hence, DTI collaborated its efforts with the Growth with Equity in Mindanao (GEM) which financed the construction of a P1.1M building that will not only cater the stripping equipment of the farmers but also the office and production area of the women. Such building in Rogongon has already been completed and was turned over to the community on February 13, 2006.
To create a pool of weavers for the handicraft industry, DTI sought the assistance of the Department of Labor and Employment as well as the Office of the Congressman for a 10-day Echo Training on Weaving and Dyeing. The training was conducted last January 18, 2006 producing 30 new weavers from different barangays of the City.. The Echo Training entailed an additional investment of P105,000.00.
The growing number of weavers from the different barangays requires close monitoring and provision of various assistance and support that the government can provide. Hence, DTI collaborated its efforts with the Growth with Equity in Mindanao (GEM) which financed the construction of a P1.1M building that will not only cater the stripping equipment of the farmers but also the office and production area of the women. Such building in Rogongon has already been completed and was turned over to the community on February 13, 2006.
d.) Key players in the sector
The following are the major key players in the abaca industry of Iligan City :
Farmers :
Major Organizations:
LAFAMCO (Lanipao Farmers Multi-Purpose Cooperative) with 100 members
LUMADFAMCO (Lumad Farmers Multi purpose Cooperative of Rogongon) with 100 member
KAFAMCO (Kalilangan Farmers Multi-Purpose Cooperative) with 65 members
DUFAMCO (Dulag Farmers Multi-{Purpose Cooperative)
Pinatagan Multi-Purpose Cooperative of Mainit, Iligan), a self-sustaining coop with 55 members.
Private Traders:
Arsenio P. Buac – Arbelle Marketing – Abaca Fiber
GGRN Enterprises - Giselle Anne C. Yñiguez
Iligan Agri-Fibers Enterprises – Julio F. Gerodias
Pazaka Enterprises – Dra. Melchora Ambalong
Exporter:
• Newtech Pulp, Inc.
Manufacturers/Processors/Weavers:
• PAHWA (Pala-o Abaca Handicraft Weavers Asso. – Adelaida Rico
Weavers – 10 Weavers
Rope makers – 15 Rope makers
Handicraft Makers (bags, placemats, etc.) 3
• Bgy. Tibanga Weavers’ Association with 5 Weavers
• Marcreen Raffled Kreations
• Nilda’s Crafts
• Mendoza’s Bags
F. Product Differentiations
Abaca in Cordage Use
According to historical accounts, an American lieutenant of the U.S. Navy
brought a sample of abaca fiber to the United States in 1820. This gave the initial
impetus to the Philippine abaca trade with the United States that five years later,
the first exportation of abaca was made. Since then abaca became well known
as one of the strongest materials for marine cordage because of its superior
tensile strength and proven durability under water. With the onset of the 20th
century, abaca fiber has become the premier export commodity of the
Philippines.
Because of its importance, the United States Department of Agriculture
sent its top agricultural and fiber experts to the Philippines to provide impetus to
the production of the fiber for their consumption. Many Americans were
encouraged to establish plantations in the Philippines and in 1909, Davao was
chosen as the most suitable area for abaca. At the close of the First World War,
the Japanese also took keen interest in abaca for its navy, also choosing Davao
as the plantation site. They improved the method of culture introduced by the
Americans that raised the industry to a high level of efficiency.
Abaca in Pulp and Paper
Significant breakthroughs in technology and processes took place in the
‘60s that brought about development of new uses for abaca, particularly in the
use of pulp for the production of specialty paper products. In 1968, the
Canlubang Pulp and Manufacturing Company, the first local company to embark
on the development of the technology for producing pulp using abaca, made its
first exportation. As demand for abaca pulp used increased, Filipino investors
became interested in domestically producing abaca pulp. Other investors
followed suit with most of them in partnership with foreign companies.
Demand for these kinds of paper increased from year to year, and in time,
stimulated a revival in the demand for the fiber. By the middle of the ‘70s abaca
pulp had become a tested material for making various kinds of specialty papers
and other non-woven disposables.
Abaca in Fiber craft
At the time when demand for abaca was declining, the Philippine
government encouraged the development of the fiber craft industry. Fiber craft
products like abaca rugs, doormats, hats, coasters, hot pads, linen and handbags
became very much in demand abroad. By mid-70s, the fiber craft industry
became the second biggest foreign exchange earner for the abaca industry, next
to raw fiber exports.
brought a sample of abaca fiber to the United States in 1820. This gave the initial
impetus to the Philippine abaca trade with the United States that five years later,
the first exportation of abaca was made. Since then abaca became well known
as one of the strongest materials for marine cordage because of its superior
tensile strength and proven durability under water. With the onset of the 20th
century, abaca fiber has become the premier export commodity of the
Philippines.
Because of its importance, the United States Department of Agriculture
sent its top agricultural and fiber experts to the Philippines to provide impetus to
the production of the fiber for their consumption. Many Americans were
encouraged to establish plantations in the Philippines and in 1909, Davao was
chosen as the most suitable area for abaca. At the close of the First World War,
the Japanese also took keen interest in abaca for its navy, also choosing Davao
as the plantation site. They improved the method of culture introduced by the
Americans that raised the industry to a high level of efficiency.
Abaca in Pulp and Paper
Significant breakthroughs in technology and processes took place in the
‘60s that brought about development of new uses for abaca, particularly in the
use of pulp for the production of specialty paper products. In 1968, the
Canlubang Pulp and Manufacturing Company, the first local company to embark
on the development of the technology for producing pulp using abaca, made its
first exportation. As demand for abaca pulp used increased, Filipino investors
became interested in domestically producing abaca pulp. Other investors
followed suit with most of them in partnership with foreign companies.
Demand for these kinds of paper increased from year to year, and in time,
stimulated a revival in the demand for the fiber. By the middle of the ‘70s abaca
pulp had become a tested material for making various kinds of specialty papers
and other non-woven disposables.
Abaca in Fiber craft
At the time when demand for abaca was declining, the Philippine
government encouraged the development of the fiber craft industry. Fiber craft
products like abaca rugs, doormats, hats, coasters, hot pads, linen and handbags
became very much in demand abroad. By mid-70s, the fiber craft industry
became the second biggest foreign exchange earner for the abaca industry, next
to raw fiber exports.
2. SECTORAL PERFORMANCE/RESOURCE ASSESSMENT
At present, the Philippines supplies about 84 percent of the total world abaca requirement and the rest, by Ecuador. The abaca industry continues to be one of the country’s major pillars in terms of employment generation and foreign exchange earnings. The industry sustains more than 1.5 million Filipinos who, directly or indirectly, depend on it for a living. Direct dependents include abaca farmers, classifiers/sorters, manufacturers, traders, exporters and hundreds of fiber craft processors who provide employment to thousands of Filipinos.
The abaca industry generates some US$81 million per year from the
exports of raw fiber and manufactures.
The abaca industry generates some US$81 million per year from the
exports of raw fiber and manufactures.
For Iligan City, there are four hinterland barangays of Iligan City suitable
for the production of abaca. These are the barangays of Rogongon, Kalilangan,
Lanipao, and Dulag with a total area of 1,365 hectares planted to abaca. The
abaca plantations are managed by the respective cooperatives in those
barangays supported by the City Government of Iligan. “Tangonon variety” was
selected and planted being a sturdy type of abaca.
Price Information:
1. Market Price of Abaca Fiber ranges from P55-P60 per kilo
2. Farm gate price is P30-P45 per
kilogram (depending upon the classification).
Abaca Handicraft Industry Prices
3. Pala-o Federated Women’s Association ( PFWA)
