Typhoon Yolanda: Panay Island Markets Assessment for
Boat Building Inputs
Introduction
Typhoon Yolanda hit the Philippines on the morning of 8 November causing mass destruction to
homes, public facilities, markets and livelihoods. Panay Island was one of the islands caught in the
direct path of the storm with coastal areas, in particular, suffering extensive damage.
Initial rapid assessments conducted by Save the Children, identified livelihood recovery as one of the
primary concerns of coastal communities in affected areas of Panay Island due to the destruction of
a high proportion of small and medium sized fishing boats. These areas were highly reliant on the
fishing industry with as much as 90% of some target communities engaged in the industry prior to
the typhoon. There are few alternative sources of income. This finding was backed up by the MIRA
Phase 1 which found that 64% of households in Domain 3 (Panay, Cebu and Coron) expressed that
the main reason for decreased access to food was loss of income.
In order to assess opportunities to rebuild livelihoods, a rapid market assessment was conducted on
24-28 Nov 2013. The study aimed to understand if the market for boat building materials would be
able to increase supply of materials without causing inflation if demand were stimulated through a
cash programming approach. Instead of focusing on one critical market for boat building inputs, this
study took a broader approach in providing a rapid overview of the markets for all related inputs for
building small/medium boats (plywood, hardwood, nails, paint, epoxy and labour).
This study focused on the supply of boat
Figure 1: Areas of Study
inputs
to
Typhoon
Affected
Municipalities in Iloilo Province as
highlighted in Figure 1. These
municipalities were chosen as they are
expected to be the most affected areas
in terms of loss of fishing-related
livelihoods. The focus questions were to:
a) identify changes in the market system
as a result of Typhoon Yolanda through a
comparison with the pre-typhoon
situation;
b)
identify
potential
bottlenecks or constraints currently
existing within the market system; c)
provide recommendations for response activities (inc. cash transfer or in-kind) aimed at supporting
poorer households who were previously engaged in fishing as their main source of livelihoods.
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Davina Jeffery, Food Security & Livelihoods Advisor. 29 Nov 2013
The study was conducted through a mixture of focus group discussions and key informant
interviews. Numbers and locations of those involved are given within the report.
Market Actors Description
The main market in Panay Island can be found in Iloilo City, which is a major hub through which
supplies are brought from other islands and further afield (China, Vietnam etc). Roxas market in
Capiz province performs a similar function, although on a smaller scale. Smaller markets are found in
the centre of all Municipalities. Estancia Municipality has the largest of these markets and often acts
as the point from which supplies from Iloilo and Roxas enter to the Municipalities covered in this
report. As such store in other Municipalities are often supplied by Estancia market although some
also stock direct from Iloilo/Roxas. A small number of shops are located at Barangay Level
(Administrative Unit below Municipality Level) which are usually supplied by shops in the
Municipality Centre or direct from Estancia.
All shops visited were fully functional and did not face structural damage or loss of stock during the
typhoon1. Communities have easy access to shops. Local trishaws/motorbikes from community
locations to Municipality shops cost 20-100peso return. Trips to the main Estancia market cost
approximately 100-500peso depending on the location. There are daily boats from the islands to
Estancia town which are used to reach markets and cost 40-150peso return.
Utilising analysis of interview and focus group information, a market map depicting the pre-typhoon
baseline market system for fishing boat materials is shown in Figure 2 (p3). The map is broken into 3
sections: a) Top: describes the market environment - the laws, rules, norms and trends within which
the market operates; b) Middle: describes the market chain – those involved in buying and selling
boat inputs linking from the producers to the consumers; c) Bottom: describes the infrastructure,
inputs and services which are required for the market chain to function e.g. vehicles for transport.
The following provides a description of the market chain actors and the ways in which they: a)
interact with each other, b) interact with their environment and; c) interact with the infrastructure
and inputs and services which support them.
FISHING COMMUNITIES:
Carles: Bankal (4 fishermen & Barangay Captain), Punta (3 fishermen & Barangay Captain); Estancia:
Bayas Island (10 fishermen); St Dionisio: Tiubas (5 fishermen & Barangay Captain)
According to focus group discussions and interviews with Barangay Captains 80-90% of households
within targeted coastal barangays are reliant on fishing for their main source of income.
1
This is in contrast to markets in Leyte where damage and loss of stocks were high. In Panay there was not a
significant sea surge and hardware stores tend to be located in permanent structures away from the coast.
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Davina Jeffery, Food Security & Livelihoods Advisor. 29 Nov 2013
Figure 2: Boat Inputs Market Pre-Typhoon
Environmental
Agency Logging
Restrictions
Municipality
Taxes &
License
The market environment:
institutions, rules,
norms & trends
Department of
Trade and
Industry
Policies
Import
Taxes/
License
The market chain:
market actors & their linkages
!
Alert
LOCAL BOAT
BUILDERS
INTERNATIONAL
PRODUCER
(plywood, nails,
paint, epoxy)
PHILIPPINES
PRODUCER
(epoxy, nails,
paint, expoxy,
wood, plywood)
MANILLA
WHOLESALERS
(plywood, nails,
paint, epoxy)
ILOILO
WHOLESALER
(plywood, nails,
paint, epoxy,
wood)
!
ESTANCIA
REATILERS/
WHOLEALERS
(plywood, nails,
paint, epoxy,
wood)
!
MUNICIAPLITY
RETAILER
(nails, paint, epoxy,
plywood)
BOAT OWNERS
WOOD DEALERS
Wood
!
PHILIPPINES
ILLEGAL
LOGGERS (wood)
!
AGENT
Wood
!
LOCAL LAND
OWNERS (wood)
Fuel
Key infrastructure, inputs
and market-support services
Creditors
Storage
Shippers/
Forwarders
Transportation
Labour
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Davina Jeffery, Food Security & Livelihoods Advisor. 29 Nov 2013
Although some fishing associations exist,
Table 1 – Boat Ownership
they are not usually very active and so
Boat Ownership Prior to Yolanda
fishing is largely conducted on an individual
Type of Boat
% of Population
basis with medium/large boat owners
no boat
40-50%
providing employment for the majority of
small boat (15ft minus)
15-25%
the HH who do not own boats (the
medium boat (16-24 ft)
10-20%
remaining HH gain income through petty
large boat (25ft plus)
10-20%
trade of fish, pedicab driving etc). As
shown in Table 1, prior to the typhoon,
these non-boat owners were the largest group in the fishing communities. Small boat owners,
whose boats accommodates 1 person and are not motorised constituted the second largest group.
The proportion of the population owning medium and large scale boats was approximately similar
and constituted the smallest proportions of the community. Medium sized boats usually require 2-3
crew members and the majority of these boats are motorised. Larger boats are 25ft or larger, usually
need 4-5 crew and are motorised.
Medium and larger boat owners provide the boat and other fishing equipment including fishing nets
and usually work with a set crew. Normally at the end of each day, crew members receive fish for
their own household consumption, while the rest is sold to fish wholesalers. When the catch is sold,
50-70% of the income is kept by the boat owner, while the remaining 30-50% is divided amongst the
crew. In the case of larger boats, the captain and engineer take a larger proportion of the crew’s
income than the other crew members.
The majority of boat owners purchase their boats on credit (those purchasing on credit usually take
a larger proportion of income). They tend to pay the creditor on a daily basis following the sale of
catch. Creditors are often the same people as the fish wholesalers, although some boat owners also
access loans from micro-finance organizations or from creditors known as the ‘Indians’ or ‘5-6’s’ who
operate across large areas of Panay island and have divided the area into different domains.
Boats over 24ft can be purchased ready-made, while medium and smaller boats are made locally. In
order to build a boat, the boat owner needs to buy the materials for the boat and then hire a local
skilled boat maker to build the boat. The main materials purchased to build boats are: a) marine
plywood for the body; b) bronze/copper nails; c) epoxy resin (for sealing joints); d) hardwood (Red
Lawa’an, Tipolo, Mahogany, Jimoline) for the hull and main structure; e) marine paint. Engines and
lights are also purchased for medium and larger boats.
Plywood, nails, paint and epoxy resin are usually purchased from municipality level retail hardware
shops or from larger hardware shops based in Estancia (which do retail and wholesale). The
preferred hardwood for use in boat building is Red Lawa’an which can be ordered from Sibuyan or
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Davina Jeffery, Food Security & Livelihoods Advisor. 29 Nov 2013
Masbate islands in Romblan Province through agents. The Department of Environment and Natural
Resources has placed a complete ban on the logging of Red Lawa’an, but illegal logging still occurs.
For small boats and some medium boats, wood can be sourced locally. Types of wood used are
Tipolo, Mahogany, Jimoline. If sourcing locally, boat builders buy the log directly from the land
owner. Legally logged woods can also be purchased in Estancia from some of the hardware stores.
To make a 16ft boat the following (approximately) is required – a) 4 boards 4x8ft plywood; b) 2kg
bronze nails; c) 1 litre epoxy; d) 2 gallons paint; e) engine (6.5-7.5 horsepower); f) hull and structure.
In addition bamboo is needed for the upper body and a metal mast is attached to the boat. The
bamboo is gathered locally and the metal mast is purchased in Estancia stores.
BOAT MAKERS
Carles: Bankal (3 boatmakers) & Punta (1 boatmaker); Estancia: Bayas Island (3 boatmakers); St
Dionisio: Tiubas (1 boatmaker)
Boat makers are hired directly by boat owners to construct boats once the materials have been
purchased. There are usually 4-6 boat-makers in each coastal barangay. For a medium sized boat
(15-24ft) it takes approximately 1-2 weeks to build or 2-3 days to repair. Small boats (15 ft or less)
take approximately 1 week to build. Customers are served on a first come first served basis.
Boat makers work with 2-3 assistants, although for smaller boast they usually work by themselves. It
takes approximately 3 mths to learn how to be a boat building assistant and approximately 1 year to
gain the skills to become a master boat builder. There is no license required to be a boat builder and
training happens through apprenticeships. Taxes are also not paid by boat makers.
Boat makers are paid per boat built. The normal fees for a medium sized, 16 ft boat is 4-5000p from
which the boat maker pays the assistants. Most boat construction is conducted manually. Some boat
makers have started using hand-held electric planers and/or circular saws which significantly reduce
boat construction time (as much as double can be produced in the same time period)
MUNICIPALITY BOAT MATERIAL RETAILERS
Carles Municipality (1 retailer); Batad Municipality (1 retailer); St Dionisio (1 retailer)
There are normally 3-5 hardware stores located within each municipality, with most located in the
central market. These shops sell direct to customers and often stock marine plywood,
bronze/copper nails, marine paint and epoxy. They do not stock hardwood or engines.
Municipality stores usually purchase their goods from Estancia or from larger Municipality stores if
located in other Barangays. Store owners usually travel to the shop to make orders and also will
make orders over the phone. The supplier usually includes transportation in the cost of supplies.
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Davina Jeffery, Food Security & Livelihoods Advisor. 29 Nov 2013
Larger retail stores also purchase plywood, nails, epoxy and paint from Iloilo, with the suppliers
organising transportation. The location of supply depends on the price being offered by the different
stores. Storage is normally within the shop and is approximately 50-100m3. Municipality taxes are
paid and a license is needed to trade. This is the same for Estancia and Iloilo traders.
ESTANCIA BOAT MATERIAL RETAILERS/WHOLESALERS
Estancia Municipality (3 retailers/wholesalers)
There are approximately 5 larger scale hardware stores in Estancia town which act as both
wholesalers and retailers. Plywood is sourced from Iloilo or Cebu. Epoxy is sourced from IlioIlo or
Manila and paint and nails are generally sourced from Manila. Some wholesalers also stock
hardwood including red lawa’an which is purchased from Iloilo either from wholesalers or from
informal wood traders. The latter of which tend to stock illegally logged wood.
Some of the wholesalers stock generators, circular saws and planers sourced from Iloilo.
Orders are placed by phone or fax and delivery of goods from outside Panay island is done through
forwarders based in Manila/Roxas who transport door to door. Transportation prices depend on size
of order. Goods purchased in Iloilo are either transported by the store owners (some own their own
trucks), or can be organised by the supplier. Storage capacity ranges from 500-750m3.
ILOILO WHOLESALERS
Iloilo City (2 wholesalers)
There are several large scale wholesalers of boat building materials located in Iloilo who sell to
retailers and wholesalers based in Estancia and the surrounding municipality markets. Marine
plywood is normally sourced from China or locally from Mindanao. Hardwood (Lawa’an or Santa
Clara) is also sourced from Mindanao. Paint, Nails and Epoxy are from Manila.
Before the typhoon availability of red lawa’an was limited and so prices tend to be quite high. This is
due to limited supply linked to the environment agency which has limited logging of this species in
production areas. Illegal supplies are available, but these do not normally go through wholesalers.
Orders are usually placed directly with the producers of the items and forwarding or shipping
companies (most based in Manila) are used to transport the goods. Import taxes and license are
required. Storage capacity ranges from 3000-8000m3.
Impact on the Fishing Boat Inputs Market
The impact on the boat inputs market of Typhoon Yolanda can be seen in Figure 3. The red
exclamation marks highlight areas of concern existing currently within the fishing boat input market.
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Davina Jeffery, Food Security & Livelihoods Advisor. 29 Nov 2013
Figure 3: Boat Inputs Market Post-Typhoon
Relief
Supplies
The market environment:
institutions, rules,
norms & trends
Import
Taxes/
License
Department of
Trade and
Industry
Policies
Municipality
Taxes &
License
The market chain:
market actors & their linkages
LOCAL BOAT
BUILDERS
Environmental
Agency Logging
Restrictions
!
Alert
!
INTERNATIONAL
PRODUCER
(plywood, nails,
paint, epoxy)
PHILIPPINES
PRODUCER
(epoxy, nails,
paint, expoxy,
wood, plywood)
MANILLA
WHOLESALERS
(plywood, nails,
paint, epoxy)
ILOILO
WHOLESALER
(plywood, nails,
paint, epoxy,
wood)
!
ESTANCIA
REATILERS/
WHOLEALERS
(plywood, nails,
paint, epoxy,
wood)
!
MUNICIAPLITY
RETAILER
(nails, paint, epoxy,
plywood)
!
BOAT OWNERS
!
WOOD DEALERS
Wood
!
PHILIPPINES
ILLEGAL
LOGGERS (wood)
AGENT
Wood
!
LOCAL LAND
OWNERS (wood)
Fuel
Key infrastructure, inputs
and market-support services
Creditors
Storage
Shippers/
Forwarders
Transportation
!
!
Labour
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Davina Jeffery, Food Security & Livelihoods Advisor. 29 Nov 2013
1) Loss/Damage to Boats: According to community focus groups and key informant interviews,
during the typhoon approximately 50-60% of boats were destroyed and a further 20-30% of
boats were damaged. Small-medium boat owners who lost boats, do not have the capital
available rebuild their boats. This has resulted in a loss of income meaning that their families
are now reliant on food aid.
2) Lack of Access to Credit: Those who lost their boats stated that they currently cannot get
loans due to a) Creditors/wholesalers are no longer getting their money repaid, and there is
very little income coming in due to the reduction in fishing so they do not have money to
offer new loans to boat makers; b) Creditors/Microfinance Organisations will not give new
loans to boat owners with loans outstanding and as boat owners can no longer pay, they are
not being offered new loans; c) Boat owners who lost their boats now have no collateral
against which to borrow money from banks or microfinance organizations.
3) Low Availability of Boat Makers: Since the typhoon most boat makers have seen an increase
in demand for their services although currently only a small proportion of people have been
able to rebuild their boats. They feel that if the majority of boat owners were able to rebuild their boats they would have a waiting list of customers which it would take some time
to clear. Customers would be served on a first come first served basis.
Boat makers who have electric tools are currently unable to use them due to the lack of
electricity in coastal barangays which is expected to last for several months. Boat makers
feel that if they were able to purchase a generator and an electric tool (for those who do not
already have this), they could double their output. Boat makers also have difficulties in
obtaining credit as they have very little collateral.
4) Wholesaler/Retailer Profiteering: As municipality retail shops normally supply the small and
medium size boat owners, they have seen a rise in demand of 20-30% while
retailers/wholesalers based in Estancia have seen demand increase by 50% since the
typhoon as larger boat owners are buying directly from there to conduct repairs/re-building.
According to traders in both Municipalities and in Estancia, there is currently no big problem
with supply. Many already had large stocks and they have been able to re-stock. However
due to the increase in demand, there was an initial steep rise in prices after the typhoon.
According to traders, prices of goods have now returned to pre-typhoon levels in most
shops. This is due to the fact that the Department of Trade and Industry issued a warning to
traders not to increase prices dramatically after the typhoon. Two hardware stores in
Estancia were closed for 3 days by the DTI due to customer complaints of profiteering.
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Davina Jeffery, Food Security & Livelihoods Advisor. 29 Nov 2013
However, as there are limited numbers of shops trading in boat materials at all levels along
the chain and hence limited competition, there is a possibility for traders to profiteer. Table
2 provides a summary of prices currently found along the main actors of the market chain.
According to these prices, there does not seem to be any significant market power issues, as
profit is not significantly aligned to one set of actors. Despite this, according to boat owners
prices have increased, which raises the possibility that the official prices given by traders
may not match the real prices paid by customers.
Table 2: Current Market Prices (average prices across types of trader) 2
Plywood
Nails
Epoxy
Paint
Location
Type of Trader
Action (p/4x8ft)
(p/1kg)
(p/1l)
(white p/g)
Iloilo
Wholesaler
selling
300
500
368
450
Estancia
Wholesaler/Retailer buying
325
547
372
496
Estancia
Wholesaler/Retailer selling
350
600
385
530
Municipality Retailer
buying
332
600
390
550
Municipality Retailer
selling
358
640
395
570
5) Delays in Shipping: Iloilo wholesalers have seen an increase in demand for boat building
materials compared to pre-typhoon levels. They have been able to cope with this expansion
and feel that they would be able to supply more if needed. The only constraint was seen to
be with the forwarders/shippers which are currently taking 1-2 weeks longer than normal
(current order to delivery times are between 3-4 weeks). This is due to the fact that the
government has requested for the prioritisation of delivery of relief goods.
This has also affected wholesalers/retailers at the Estancia level where traders have seen a
delay in receiving stocks from Iloilo as some Iloilo traders are waiting longer than normal for
their stocks to arrive, but expect this will be a short-term problem.
6) Illegal Trade in Red Lawa’an: As noted in the pre-typhoon description of the market for boat
inputs, Red Lawa’an which is the preferred material for building the hull and structure of
boats cannot be legally logged. Although small and medium boat owners tend to use local
woods which are not illegal (Jimoline, Tipolo) due to the lower cost, a large increase in
demand for boats is likely to also create an increase in the trade for illegally logged wood.
2
Traders often miss out a link in the above chain i.e. Municipality retailers buy direct from Ilioilo or Estancia
retailers from Manila and so price differences between different levels are quite low on average.
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Davina Jeffery, Food Security & Livelihoods Advisor. 29 Nov 2013
Response Recommendations
A. Cash Transfer (Vouchers or Cash) to affected Small/Medium Boat Owners
As the supplies for boat materials are available on the market with no major foreseen challenges or
major blockages, cash transfer programming appears to be a relevant response option. It is
suggested to focus on small and medium boat owners as a) they are less likely to have access to
affordable credit; b) medium boat owners still employ crew and the fishing industry also provides
jobs for petty traders etc and so repair of these boats will still have a multiplier effect.
Cash grants would have the following benefits as compared to in-kind boat provision: a) cash grants
will enable boat owners to re-build their own boat according to their individual specifications; b)
some boat owners have managed to salvage materials and loans are also more readily available with
collateral. This means that grants could be used to build better boats than would be possible for the
same amount of money used for ready-made boats; c) cash grants would increase the circulation of
cash in the local market and would provide employment opportunities for small-scale boat builders
and their assistants, who in general are also from poorer households.
The estimated costs of building a small un-motorised boat (9-12ft) is 10-15,000p and 15-25,000 for a
medium sized un-motorised boat (15-18ft). The latter, which are 2 person boats, are preferred as
motors can be added to them at a later stage. Larger boats (25 ft plus) cost 50,000p and upwards.
B. Tool Kits for Boat Makers
As capacity of boat builders is noted as a constraint, due in part to the lack of electricity in affected
areas, it is recommended to provide a tool kit for boat builders which will double the output of
boats. The recommended tool-kit would consist of one hand held tool (planer or circular saw) plus a
small generator (2KW). Some boat makers already own electric tools so this should be checked. The
likely cost of the toolkit would be approximately 10,000p.
These kit items are available for sale in Estancia. However, as suppliers stocking these items are
limited, it may make more sense to buy the items in Iloilo/Roxas and provide them in-kind.
Alternatively if the retailers are able to supply in sufficient quantity, a voucher program may also be
an option. This would need to be checked. The availability of these tools already in Estancia means
that spare parts and maintenance of tools would not be an issue. Boat makers could also be
encouraged to hire additional youth apprentices.
C. Advance Planning and Advocacy
Retailers and Wholesalers at the Municipality and Estancia level should be informed well in advance
of cash grant programming, so that they are able to plan effectively, bearing in mind the current
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Davina Jeffery, Food Security & Livelihoods Advisor. 29 Nov 2013
delays experienced with forwarding agencies. It would also be advised to visit the transporters based
in Manila to gain more information regarding the shipping delays.
In addition it would be good to highlight to the logistics cluster and large humanitarian actors that
the import and shipping of relief supplies is having an adverse effect on the recovery of the markets
in affected areas as a whole. While in some instances this is unavoidable, a lot of supplies are now
available locally and efforts should be made to procure locally where possible.
D. Market Monitoring
Due to the possibility of profiteering linked to low levels of competition along the market chain, it
would be good to establish market price monitoring for key boat building materials in order to
identify quickly any potential inflationary tendencies. Options to further avoid inflation could be a)
to use a voucher approach with set limits for prices of goods; b) to coordinate well with the DTI and
boat owners to identify and resolve profiteering quickly.
Further meetings should also be conducted with Manila suppliers to further understand issues of
market power and profit levels along the chain.
E. Further Learning
The following areas have been identified as areas requiring further analysis:
1) Credit Market – It was notable that a key constraint for fishers in re-building their boats is
the lack of affordable credit options. It would be good to conduct an assessment of the
credit market and conditions offered by different actors. This could be the basis of longerterm programming designed to improve availability of affordable credit and other financial
services to poorer households.
2) Hardwood Market – Although most actors stated that supply of hardwoods for the hull and
structure and as a component in plywood is not an issue, and small scale boat owners
usually source logs from local communities, a large increase in demand will likely increase
the use of illegal logging. As large scale boat building programmes kick-off, it may be good to
use a voucher system for hardwoods focused on imported sources to ensure the source will
not have long-term environmental consequences. A further, more in-depth market study of
these products would be useful.
3) Fishing Nets Market – This study did not focus on fishing nets, which is also a crucial
component of the fishing industry. A study of the fishing net market should be conducted,
including identification of types of net utilised by different wealth groups, estimated loss of
nets and supply of net making materials and labour.
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Davina Jeffery, Food Security & Livelihoods Advisor. 29 Nov 2013
4) Fish Market – This study did not investigate the market for fish. Assumptions were made
that demand for fish would be present. Given the current distribution of relief supplies and
lack of income amongst coastal populations, this may not materialise unless cash transfer
programming gets underway in these locations. It would be useful to gain an understanding
of this market to ensure demand would be present for fish.
For more information on the Save the Children Food Security and Livelihoods Programme contact:
Josh Leighton| Emergency Food Security and Livelihoods Adviser, Philippines
[email protected]
Tel: 09276584663
Annex 1 – Market Contact List
Creditor/fish wholesaler: Leony Carmen 09099454023
Estancia Wholesaler/retailer: Inyoini, Mr Joly Agrabrio 09479926901; NKS Marketing 03971
355/09081149991; N & F Wholesalers
Iloilo wholesalers: Garden City, Joseph Chan 3201595/0933 2345999 [email protected]; Iloilo
Central Lumber Emmanuel Leo Lim 0917 3238690/033 3379101, [email protected]
Cebu Plywood Wholesaler: Cebu Evergreen 0908 8134436
Manila paint wholesaler: Rosebuild 02645 3435/6456212
Manila Copper/bronze nail wholesaler: PureMetal 024437036438
Manila Shipping Companies: Moneta Shipping 2450125/7216400; Philippines Pan Asia 3372201;
Harmony Shipping 3378098
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Davina Jeffery, Food Security & Livelihoods Advisor. 29 Nov 2013