Loida E. Mojica, Jeanette Angeline B. Madamba, and Paul Joseph B. Ramirez
Department of Agribusiness Management and Entrepreneurship,
College of Economics and Management, University of the Philippines Los Banos
Department of Economics, College of Economics and Management,
University of the Philippines Los Banos
https://doi.org/10.57043/transnastphl.2013.3212
ABSTRACT
This paper presents the raw material sourcing issues of the Philippine food-manufacturing sector, the sourcing practices adopted by selected food manufacturing companies, and the strategic options available to food manufacturing firms. Raw material sourcing is one of the most important issues besetting the food-manufacturing sector. There are volume, cost, quality and sustainability concerns in this sector. These issues were brought about by the generally weak agricultural base of the country coupled with climate changes contributing to shortages of local raw materials and dependence on the foreign suppliers. Several strategic options are available to the local food-manufacturing firm with contract growership as one model proven to be a viable option to ensure raw material supply. Sourcing from foreign markets is inevitable because of the demand for processed products for which raw materials are not available locally. In addition, this is a good strategy in addressing raw material shortages. Food companies are moving towards more sustainable raw material sourcing strategies, putting more emphasis on their long-term relationship with raw material suppliers and how these suppliers will be benefitted in the long-run.