ADB backs RoRo services for streamlining agri supply chains, raising farmer prosperity

ROLL-ON, ROLL-OFF (RoRo) ship terminals are expected to help farmers streamline their supply chains, eliminate middlemen, and raise incomes while keeping consumer prices in check, the Asian Development Bank (ADB) said in a blog post.

In the Asian Development Blog, author Eugenia Co Go said the ADB found that middlemen who ship produce to distant markets often bargain hard with farmers without passing on the reduced costs to consumers. Small-scale farmers have little bargaining power and are vulnerable to price gouging during unusual market conditions.

Established in 2003, the Philippine RoRo terminal system allows trucks to be transported by ship with their cargoes and disembark at their destinations ready to roll to their destinations, skipping the intermediate step of unloading from the ship’s hold. RoRo was intended from the start as a mode of transport to make the supply chain more efficient, and theoretically should lower trading costs and increase income for small farmers.

Most farmers in the Philippines are forced to depend on multi-level intermediaries to arrange the transport of their produce, with 90% of agricultural land estimated at less than three hectares, according to the Census of Agriculture.

Getting rid of middlemen effectively closes the distance between farmers and their consumers.

“Studies have shown that lower trade costs take pricing power away from intermediaries. For example, intermediary profits tend to be larger for remote locations in Sub-Saharan African countries and are also associated with higher consumer prices. Reducing trade costs can alter the distribution of profits along the marketing chain and benefit farmers,” ADB reported.

A RoRo-based transport program is also deemed suitable for inter-island trade by saving on cargo handling costs.

Direct deliveries also mean cost savings on inventory and warehousing, the ADB said. — Luisa Maria Jacinta C. Jocson