47 International Peer Reviewed Journal Organizational Capacity Assessment of Herbs, a Rural-Based Farmer Organization in San Pablo City, Laguna, Philippines HERBERT T. TICZON https://orcid.org/0000-0002-0811-4171 rdcstudentresearchers@gmail.com Dalubhasaan ng Lunsod ng San Pablo San Jose, San Pablo City Originality: 95% • Grammar Check: 100% • Plagiarism: 5% ABSTRACT HERBS Inc. is a rural-based organization recently established in San Pablo City, Laguna, the Philippines comprising of farmers who are senior citizens, mostly retired in government service, to formalize training in organic farming, harvesting and selling products such as chili powder, chili paste, soya milk, and other soy by- products. Records from the City Agricultural Office showed that newly formed farmer’s organization in the past ten years experienced difficulties in management and operations and eventually faced the risk of closure. The study was conducted to assess this organization in its capacity on entrepreneurship for its members to improve their income and uplift their quality of life, thus promoting inclusiveness in our society. Focused Group Discussion using PRA tools such as Livelihood analysis, Venn Diagram, SWOT and TOWS analysis, Problem Tree analysis, and Logical Framework Matrix was used in conducting this study. Results showed that the organization still need further training on organizational competencies and skills to achieve and maintain their goals and objectives. Furthermore, the findings showed the internal and external factors that hinder or stimulate the development Vol. 37 · July 2019 https://doi.org/10.7719/jpair.v37i1.700 Print ISSN 2012-3981 Online ISSN 2244-0445 This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. mailto:rdcstudentresearchers@gmail.com https://creativecommons.org/licenses/by-nc/4.0/ https://creativecommons.org/licenses/by-nc/4.0/ 48 JPAIR Multidisciplinary Research of their organization. The Participatory Rural Appraisal has been proven to be effective in assessing the organizational capacity; therefore, we recommend its usage in carrying out studies of this nature. Keywords — Rural Extension, Farmer-entrepreneur, Organic farming, Participatory- Rural Appraisal Method, Philippines INTRODUCTION Entrepreneurship is the answer to the problem of unemployment and as a way of increasing household income, which leads to a better quality of life. Entrepreneurship can provide the solution by creating wealth, jobs, and social empowerment (Evangelista, 2013). It directly leads to more business and creates more employment opportunities. The Philippine government recognizes the impact of entrepreneurship on unemployment, nation-building, and in attaining inclusive economic growth introduced various measures so that entrepreneurial culture will be developed in the country (Concepcion, 2009). In order to become a successful entrepreneur and have a thriving business requires managerial skills and must develop an entrepreneurial spirit. To develop an entrepreneurial spirit, an individual must show the attributes of being creative, innovative, risk-taker, good decision-making skills, future time-oriented, always looking for new opportunities and being able to provide new products and fulfill gaps in services or demand (Kahan, 2012; Singh, 1990). With all these attributes, the bottom line is the ability to make profits from the business venture. HERBS INCORPORATED is a farmer’s organization formed and registered with DOLE, the primary purpose of which is to improve the quality of life of its members by engaging in a profitable farming enterprise. For the organization to realize its goal and expectation, it must have members who have knowledge and expertise in running a business and equippeaad with an entrepreneurial spirit. The organization is almost on its first year of existence, and being a new organization is still on a learning curve when it comes to business operation. Given the situation, the study deemed it necessary to understand the condition and needs of the organization and to recommend solutions to the deficiencies and weaknesses identified. 49 International Peer Reviewed Journal OBJECTIVES OF THE STUDY Generally, the study assessed the organizational capacity in the area of farm business management and its entrepreneurial ability. Specifically, the study sought to, (1) determine the capacity of the members to start and run a profitable farm business; (2) identify the interventions needed to enhance member’s entrepreneurial spirit, and (3) analyze the financial position of the organization as it affects the sustainability of its operations. REVIEW OF LITERATURE The need to develop organizational and entrepreneurial competence According to Cortes. 1993 as cited in Díaz-Pichardo, Cantú-González, López-Hernández, and McElwee (2012) a lack of organizational competency may restrict farmers from presenting a common agenda for the defense of their business interests: for example in dealing with intermediaries, or in achieving more efficient production model. By developing organizational and entrepreneurial competency, farmers are expected to be able to work in an organized manner and develop sustainable competitive advantages in order to compete successfully in regional, national and international markets (Díaz-Pichardo, Cantú-González, López-Hernández, and McElwee, 2012). Entrepreneurial competencies are seen as important to business growth and success (Mitchelmore & Rowley, 2010). This can be acquired through tailored educational programs combined with experiential learning under the guidance of appropriate leadership and in the congruent culture that reinforces success-striving practices (Robinsons, 2009). Maresch, Harms, Kailer, and Wimmer-Wurm (2016) explained that an entrepreneurial organization with a culture that respect freedom of thought and expression, where cooperation and sharing of knowledge is a norm, where leaders articulate a guiding vision, empower people and value creativity; where individuals have complementary traits and skills, who believe in each other and who are willing and able to challenge the status quo will experience growth and success (Maresch, Harms, Kailer, and Wimmer-Wurm, 2016). As a result of these changes, farmers have the chance to benefit from market opportunities and to take greater responsibility for the success of their businesses; in other words, farmers theoretically have more freedom to farm as they wish (Rudmann, 2008). 50 JPAIR Multidisciplinary Research Value of Entrepreneurship Entrepreneurs are frequently thought of as national assets to be cultivated, motivated, and remunerated to the greatest possible extent. Entrepreneurs can change the way we live and work. If successful, their innovations may improve our standard of living, and in addition to creating wealth with their entrepreneurial ventures, they also create jobs and the conditions for a prosperous society (Seth, 2017). Smit (cited in Richards & Bulkley, 2007) believes that entrepreneurship should be at the core of farming. The farmer must be equipped with entrepreneurial skills to manage the farm profitably and to surmount the challenges faced by the agricultural sector. A farmer is concerned with cultivating the land, a farm manager oversees farm operations, but an agripreneur (farmer entrepreneur) finds opportunities to make the most of agricultural output. Roxas & Santiago, 2015 stressed that while agricultural productivity is important, training and programs must emphasize the development of entrepreneurial qualities. This will allow a shift from producing more of the same crops to selling value-added produce. Together with increased productivity, improving farm incomes through entrepreneurial means contributes to the economic sustainability of agricultural communities. Timmer, 2005 (cited in Roxas & Santiago, 2015) emphasized that value creation at the farm level stimulates greater farm production, bringing more income to the agripreneurs. Improving the purchasing power of agripreneurs and farmers makes them a viable consumer market base, thus further stimulating economic activity (Roxas & Santiago, 2015). Economic growth happens when a society embraces and encourages entrepreneurial behavior; when it values achievement and when there are a lot of people who are ‘competent, resourceful and enterprising’ (de Wolf & Schoorlemmer, 2007). Management practices of an organization Management practices of an organization are largely influenced by its leaders. Hisrich, Peters & Shepherd (cited in Robinson, 2009) added that while an organization’s purpose may be determined by its leader, his behavior may also establish the so-called “moral –tone” of the organization. Also, any organization is a composite of the individuals comprising it, the development process followed by individuals also applies to the organization; therefore, it follows that organizational development is dependent on the composite progress of those working in it (Robinson, 2009). So, it also follows that the kind of organization will reflect on the kind of leaders and members of the organization. Kahan 2012 pointed out that there is a difference between farm business management and entrepreneurship. The 51 International Peer Reviewed Journal farm business is about better planning, implementation, control, and managing risk while entrepreneurship is about looking forward – identifying opportunities, creating a vision of how the business will grow, innovating and taking risks. These two should be combined to have a profitable, successful, and sustainable business. Vision is your dream. It’s what your organization believes are the ideal conditions for your community; that is, how things would look if the issue important to you were completely, perfectly addressed. It might be a world without war, or a community in which all people are treated as equals, regardless of gender or racial background (Nagy & Fawcett, 2015). A farm business mission statement reflects the core values and beliefs of the individuals who lead the business. To the extent, there are large differences between a farm mission and a personal mission, or between farm business values and personal core values, there will be discord and friction for that individual within the business (Grusenmeyer, 2016). Karl Lewin (cited in Reese, 2009), a progressive Prussian social psychologist, has found a core principle: that we are likely to modify our own behavior when we participate in problem analysis and solution and likely to carry out decisions we have helped make. By involving all concerned, the participants were happier, and the decisions were widely received. Participatory management could result in better relationships among the members of the organization because it could be expected to achieve unity of purpose. The people who know about the issue irrespective of their organizational positions are the ones involved in making the decisions which usually results in better decisions and which usually results in a more efficient, productive and successful organization (Reese, 2009). METHODOLOGY Research Design The study conducted Focused Group Discussion (FGD) and utilized both qualitative and quantitative approaches to data collection. Secondary data analysis provided insights and ideas in the results of FGD. Research Site The study was conducted in the City of San Pablo, an agricultural city witnessing the gaining popularity of farming enterprises locally. And one of those is HERBS Inc. The study was focused on HERBS Inc., a newly formed organization with a registered office located at Brgy. Concepcion, San Pablo City. The workshop which lasted for two days was conducted at the City Agriculture Office in Brgy. San 52 JPAIR Multidisciplinary Research Jose, San Pablo City, made possible by Ms. Elizabeth Eseo the City Agriculturist. Participants The researcher further identified participants of the Focused Group Discussion (FGD) through purposive selection. The participants were seven members of the organization, four women and three men, and they were mostly retirees with technical know-how in organic and natural farming. The City Agriculturist Officer who served as the mentor of the organization was also interviewed to analyze the capability of the group in meeting their goals. The treasurer of HERBS was also interviewed concerning the financial health of the organization. Instrumentation The research instrument was composed of Focused Group Discussion (FGD) and PAR tools. For the FGD, the secondary data analysis provided insights and which include written mission and goals, financial documents, and the profile of each member of the organization. Financial data were obtained in order to determine the financial capability of the organization to sustain its operation and gauge its ability to achieve its mission, vision, goals, and objectives. Meanwhile, PAR tools were deemed necessary to understand and assess HERBS, INC. as an organization. The following process of PAR empowered and led the members to have increased control over their organization: (a) Venn Diagram/Linkage Map; (b) Livelihood Analysis has five units of analysis include the human, social, physical, natural and financial capital, so the researcher adopted a Likert-type five-point rating scale; (c) Seasonal; (d) Problem tree analysis and (e) SWOT and TOWS analysis. The participants were seven members of the organization, four women and three men, and they were mostly retirees with technical know-how in organic and natural farming. Data Analysis The researcher utilized Percentage analysis to represent and display raw streams of data as a percentage (a part in 100 - percent) for the better understanding of collected data. It is a particularly useful method of expressing the relative frequency of survey responses and other data. Data Gathering Tools The researcher submitted a letter of request and informed consent to the Herbs Inc. seeking permission to conduct the study. PAR tools were deemed necessary 53 International Peer Reviewed Journal to understand and assess HERBS, INC. as an organization. The process of PAR empowered and led the members to have increased control over their organization. a. Venn Diagram/Linkage Map showed the degree or intensity of the relationship or linkages built by the organization both within local and outside partners/collaborators. b. Livelihood Analysis provided information on the different stakeholders that enumerated significant roles in enhancing livelihood opportunities of the organization. c. Seasonal Calendar is drawn up by participants to show the seasons experienced annually and movements or changes associated with this (Loewenson, Laurell & Hogstedt, 2014) d. Problem tree analysis was used to create a diagram and diagnosed the root causes of certain problems in the organization. e. SWOT and TOWS analysis was conducted to describe and evaluate the internal strengths and weaknesses of the organization and its proposed solutions. It also analyzes opportunities and threats external to the organization, which affects the conduct of the proposed solution. On the other hand, TOWS was also used to reflect and plan courses of action based on the outcome of the SWOT analysis. RESULTS AND DISCUSSION The group was divided into two groups and participated in the VGMO workshop after the facilitator presented the concepts. The group discussed and consulted among themselves the words they wanted to include in their Vision and Mission. They came up with the final GOALS and OBJECTIVES as follows: I. ON THE PRODUCTION 1. To harvest and sell its own products such as soya milk, tofu, taho, and other soya by-products. 2. To harvest and sell its own products such as chili powder and chili paste • To rent a place for processing the harvested products harvested by August 2016. • To attend trainings on soya processing by September 2016 3. To be able to coordinate with the Department of Labor Employment • For the processing equipment in June 2016 • For the replanting in October 2016 54 JPAIR Multidisciplinary Research 4. To have its first full production by September 2017 • To coordinate with the Department of Education as a marketing arm of soya milk by August 2017 • To look for another market of soya milk products II. ON THE MEMBERSHIP 1. To recruit new members of the organization • To form a membership committee during the meeting of the organization on May 7, 2016 • To approve at least five (5) to ten (10) members until December 2016 • To collect the payment of the capital share of the members until December 2016. 2. To help the members become disciplined and responsible • To form a disciplinary committee who will take charge of those members who will violate the organization’s rules and regulations. • To form a grievance committee who will look after the rights and welfare of the members. THE VISION AND MISSION OF HERBS, INC. VISION: A progressive organization having disciplined members with exemplary, broad knowledge and experts in training others about organic farming “Isang samahan gmaunlad, disiplinado na may mataas at malawak na kaalaman sa organikong pagsasaka at maging kilalang tagapagbahagi ng mga kaalaman ukol dito” MISSION: An active farmer’s organization that educates and shares new technologies in organic farming towards a healthy, strong and developed the sector of the society “Aktibong samahan ng mga magsasaka na nagsasagawa at namamahagi ng mga makabagong organikong pamamaraang tungo sa malusog, matatag at maunlad na sector ng lipunan” 55 International Peer Reviewed Journal Livelihood Analysis and Financial Analysis Livelihood analysis was used to understand the livelihood of the individuals and the organization as a whole. Based on the ratings done by the member participants, it showed that human capital has the highest rating, which rated a perfect 5. Second, are the natural resources with a rating of 4.6. Ranked third with a rating of 4 is the physical capital. Ranked fourth with a rating of 3.82 is the social capital. The financial capital is ranked fifth, getting the lowest score of 3.06. Seasonal Calendar The HERBS Inc. will start with land preparation on the late days of April 2016. Chili seeds will be sowed for one month before transplanting to prepared bed while soya seeds will be planted directly to the field right after the land preparation. As a whole, months of May, August, and late April will be the busy months for HERBS for land preparation, planting of crops and harvesting of chili and other organizational activities. October may also become busy for them for the harvest, drying, and processing of soya. Chili production is a year-round production that requires labor, but also it provides income. Venn Diagram Venn Diagram is used to identify the social linkages established by HERBS Inc. from the time they have started. Venn diagramming is a method to find out who, what person or organizations are important in and for a community. A total of 19 organizations, institutions, and individuals were identified by the members of HERBS Inc. Eleven were from government agencies (58%), four from private institutions (21%) and also four from individuals (21%). The Venn Diagram emphasized the significant role of major government agencies. The participants described the close relationship they have with the agencies which influenced their decision-making. 56 JPAIR Multidisciplinary Research SWOT/TOWS PRMO-F, which stands for People, Resources, Marketing, Operation, and Finance, was used as a guide in extracting the strength and weaknesses of the organization. From the five major areas, only two areas were strength came from, these were People and sort of Resources. 57 International Peer Reviewed Journal Based from the result above, including the result of the TOWS analysis, the HERBS Inc. must work hard to developed more strengths for the organization to propel their goals and objectives or at least all areas in PRMO-F must have respective strength to overcome weakness and to have enough strength to make use of the opportunities and avoid the possible threats. Logical Framework Matrix (LFM) Logical frame matrix (LFM) sometimes refer to as project planning matrix (PPM), or project design matrix (PDM) is a concise document that outlines the key features that lead to a project achieving its goal. Process Focus group discussion (FGD) tool was used by the class in conducting the logical framework matrix for HERBS INC. at San Pablo where all the group (25) members actively partook in the formulation process, and all the information generated were given by them. The project proposed to improve organic soya-based enterprise skills of members. As an improvement in members’ skill on organic soya- based enterprise will result in an increased income of members, which will lead to growth in the interest of members in the soya-based organic enterprise. PROBLEM TREE ANALYSIS The participants showed so much enthusiasm in identifying the problems that may cause hindrance to the progress of their organizations. Problem Tree was created by each group, and it resulted to (1) The Problem Tree from the Production group stated that the core problem was the absence facility to make soy milk, tofu, and taho. This was caused by a lack of funds; (2) The Problem Tree from the Processing group stated that the core problem was low income and caused by members having other important concerns which led to labor and manpower shortage; (3) The Problem Tree from the Marketing group stated that the core problem was low buying price and was caused by high supply and low demand for products. 58 JPAIR Multidisciplinary Research CONCLUSIONS The study was conducted to assess the organization’s capacity on farm business management and its entrepreneurial ability through the use of PRA tools. The study also analyzed the socio-demographic profile of the members to help in assessing their capabilities in achieving the vision, mission, goals, and objectives established. The organization aims to become a progressive, disciplined, and knowledgeable in organic farming and be a trainer/educator in the future. Its purpose is to conduct livelihood project specifically in organic soya and chili production, to process the products into soya milk, taho, tofu and chili paste and to market the products as well. The organization was characterized in terms of organizational, managerial, and operational attributes. The result shows that the group, despite their numerous trainings and seminars, is still lacking in direction, and there is a need for better coordination in planning. The members are also in need of additional knowledge on business acumen, financial literacy, and must be able to do a business plan and feasibility study before embarking on a project. These weaknesses are manifested by the result of the organization’s initial ventures in farming, which resulted in losses. The lack of direction was shown during the workshop wherein the members appeared to be at a loss in defining the direction they wanted to take. In the first two ventures of the organization during the period ending December 31, 2015, and the period ending April 30, 2016, on both occasions, the organization incurred losses. The findings show that HERBS Inc. lacks management and entrepreneurial skills and needed capacity building on these areas. The chance of success and sustainability of the business cannot be assessed unless the total budgetary requirements can be determined. By knowing the needed budget, the organization will be able to plan and set up a financial strategy on how to source the monies required to make the project operational and sustainable. TRANSLATIONAL RESEARCH The members should continue with their trainings and seminars to acquire the latest technologies and innovations in farming; therefore, the findings of this study could be translated into a conceptual manual which will aim for them to become a progressive, disciplined and knowledgeable. It may also be brought into various media of communication for information dissemination such as social media and mass media (TV, newspaper, and radio). 59 International Peer Reviewed Journal RECOMMENDATIONS Having determined the organization’s mission, vision, goals, and objectives, it should now focus on how these will be achieved. Foremost is, the members should determine the form of organization they want to be in. They can form a cooperative, partnership, or corporation. The organization must be properly registered and must ensure that it complies with all the requirements of the different relevant government agencies. The Bank account should be opened so that the cash will be safeguarded appropriately, and asset register should be kept. Accounting records should be adequately maintained, and the regular financial report should be provided to the members. The person-in-charge of the accounting records must be well versed in record keeping and accounts preparation. The organization should consider employing the services of an accountant. Before commencing operation, business plan and feasibility study must be prepared to determine the viability of the business. By doing the business plan and feasibility study, the budgetary requirements will be determined from which financial strategies can be formulated like how much will be the capital contribution of members and the financial requirements. Without proper funding, it will be tough to continue with the business. It is also essential to assess the market situation and to plan a marketing strategy. By knowing the market situation, i.e., the demand and supply of the products, the feasibility of the business can be determined and also help in deciding the scale of the business operations. Finally, it is also recommended that the members continue with their trainings and seminars to acquire the latest technologies and innovations in the organic soya and chili business. 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