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close this bookEconomics of the Philippine Milkfish Resource System (UNU, 1982, 66 pages)
close this folderV. The delivery sub-system: marketing of milkfish
View the document1. Marketing practices and structure
View the document2. Marketing costs
View the document3. Prices and pricing efficiency

2. Marketing costs

Because producers undertake some of the initial marketing functions, costs are incurred before the milkfish are first sold. These costs are in addition to the brokerage fees paid by producers, which in 1978 equalled P0.35 per kilogram, based on an average wholesale price of P7.00. If engaged in transporting their catch to trading centres, producers can expect from P0.31 to P0.65, or an average P 0.50 for equipment depreciation, to be added to the per-kilogram value of their milkfish. Equipment used for transport includes bancas (motorized and unmotorized), jeeps, and trucks. When milkfish producers do not own the necessary transportation equipment to bring their produce to the market, they have to resort to the hiring of vehicles. Annual rental expenditures by those operators who incurred such expenses in 1978 ranged from P22 for tricycles to P171-P480 for unmotorized and motorized boats and P2,264 for trucks. Average rental cost to producers is approximately P0.05 per kilogram of milkfish produced.

Additionally, producers purchase various types of containers ranging in cost from P1.45 to P94 per container. The cheaper containers are sacks and baskets, such as tiklis and bayong, all with costs of less than P10 per unit. The more expensive containers include styrofoam boxes at P94, wooden boxes at P45, cases at P52, tubs at P20, and plastic bags at P 18. By far the most commonly used container is the basket, with an average cost of P10 per piece. Annual depreciation values of these various containers add approximately P0.08 to the per-kilogram value of producers' harvest.

Only a small number of the larger producers have invested in storage houses ( P9,242 per unit), chilling tanks ( P1,150 per unit), or ice crushers (P1,933 per unit). The corresponding yearly depreciation costs are P570 for the chilling tank and about P300 for the other two equipment items, or a value added of P0.05 per kilogram. Icing adds a further P0.16 perkilogram, making this the second largest cost item next to transportation. Finally, various labour expenses for loading, delivery, and unloading add a further P0.15 to the per kilogram value. These marketing costs borne by producers are summarized in table 22. It should be pointed out that not all of these expenses are incurred by all producers. The average marketing cost for all producers in 1978 was P0.54. In 1974, it was found by Guerrero and Darrah2 that producer marketing costs were only P0.16-0.20 (table 23).

TABLE 22. Summary of Marketing Costs (Excluding Brokerage Fee) Borne by Producers, 1978

Item Average cost per kg
For those incurring the itemized cost For all producers
Depreciation    
Transport equipment 0.50
Containers 0.08
Storage facilities 0.05 P0.54a
Icing 0.16  
Labour (loading, delivery, unloading) 0.12
Rentals 0.05

a. The average cost for all producers is less than the sum of itemized costs because not ail producers incurred these costs.

TABLE 23. Marketing Margins for Last Purchase/Receipt and Sale for 114 Milkfish Dealers, the Philippines, 1974

Item Pesos per Kilo Percentage of retail price
Luzon Visayas Mindanao Luzon Visayas Mindanao
Farm gate price 3.63 3.19 3.46 64 70 66
Producer's marketing cost 0.19 0.20 0.16 3 4 3
Producer's selling price 3.82 3.39 3.62 67 74 69
Intermediaries between producers and retailers:  
Marketing cost 0.24 0.13 0.08 4 3 1
Gaina 1.05 0.26 1.05 19 5 20
Retailers:            
Marketing cost 0.23 0.35 0.20 4 8 4
Gaina 0.33 0.45 0.30 6 10 6
Retail price 5.67 4.58 5.25 100 100 100
Marketing margin 2.04 1.39 1.79      

Source: See note 2.
a. For intermediaries, labour, management, profit, and risk.

Middlemen (brokers, wholesalers, wholesaler-retailers, and retailers) incur marketing costs for transport, labour, ice, and market fees. In 1974, these costs per kilogram were calculated to range from P0.28 in Mindanao to P0.47 in

Luzon and P0.48 in Visayas (table 24), excluding producer marketing costs. A 1979 survey of traders in Bulacan Province estimated the average per kilogram marketing costs to be P0.53. These costs do not include interest on the shortterm credit that is used at various stages in the marketing chain, nor do they include return to the intermediaries' labour, management, or risk.

TABLE 24. Percentage Shares of Milkfish Retail Prices for Producers and Marketing Intermediaries, the Philippines, 1978

Province Average price received by producersa (P) Average retail priceb (P) Producer share (%) Marketing group share (%)
Pangasinan 7.84 11.34 69.1 30.9
Cagayan 6.78 10.82 62.7 37.3
Bulacan 6.10 8.74 69.8 30.2
Iloilo 4.94 7.11 69.5 30.5
Bohol 4.32 6.34 72.6 27.4
Zamboanga del Sur 4.84 6.67 72.6 27.4
Philippines 5.80 8.50 68.2 31.8

a.Source of price data: BAECON/FIDC/ICLARM 1979 survey of producers. Net of producer marketing costs and brokerage fees.
b. Source of price data: Market Intelligence Section, AMSD, BAECON, Manila.

In 1974, the marketing margin per kilogram of milkfish (retail price less farm-gate price) ranged from P1.39 in Visayas to P1.79 in Mindanao and P12.04 in Luzon (table 23). These margins represent 30 per cent, 34 per cent, and 36 per cent respectively of the retail price, or an average mark-up of 51 per cent over the farm-gate price. By 1978, in six selected provinces, the marketing margin, though increasing to an average of P2.70, still represented approximately the same percentage of the retail price, 32 per cent (table 24).