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I. INTRODUCTION A. Overview Fish paste or bagoong is a well-known condiment in the Philippines which is part of the native dishes in the country. Its savoring taste enhanced several Filipino cuisines. Moreover, it is considered as one of the basic necessities for most Filipinos especially those in the places of the Ilocos Region. This product opened to establishment of bagoong industry in which made it a good export commodity. To be specific, bagoong making is a thriving industry of the town of Lingayen, Anda, Bani, Infanta, Bolinao and Binmaley. There are 65 registered operators of bagoong plants with a combined production of approximately 659 metric tons in 1974. Up to the present, the industry is experiencing an increase in customers' demand due to the Filipino's desire to the special taste of bagoong. Lingayen is a first-class municipality in the province of Pangasinan where the seat of Pangasinan government is situated. According to the 2015 census, it has a population of 103,278 people. It is the capital municipality and is known for its promising beaches, sceneries, and industries. Lingayen literally means "looking back" derived from the Pangasinan word "lingawen". It is the home of the most delectable bagoong. Honoring the pride brought by Bagoong, the town of Lingayen organized and celebrated "Bagoong Festival". It was first celebrated in April 2011 and was eventually moved to January, gathering the citizens of the town to praise its patron. It has been part of every people's culture and tradition to nurture the town’s one of a kind pride. Indeed, the town of Lingayen is proud to present its famous bagoong as it reflects the tradition and culture of its residents. The town of Lingayen bears gulf in its name, and with these fish harvests, together with the abundant salt production and salinity of air in the province of Pangasinan, the town naturally considers its recognition for being the bagoong center of the Philippines in which the town adopted bagoong as the official one town, one product since 2012.

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B. Statement of the Problem What would be the best development strategy for the bagoong product in Lingayen?

C. Objectives 1. To identify the possible actions for the development of bagoong 2. To identify the advantages and disadvantages of each action proposed 3. To determine the best development strategy for the bagoong product

II. ECONOMIC AND INDUSTRY ASSESSMENT A. Current Situation Bagoong has long been popularly associated with Lingayen, Pangasinan because it has been acknowledged as the “One Town, One Product (OTOP)” of the capital town. The OTOPPhilippines, a priority program of the government under the Department of Trade and Industry, aims to promote entrepreneurship and create jobs through the efforts of the local government units to identify, develop, and promote a specific product. It is a thriving industry in Lingayen that a number of 32 out of 65 bagoong plants registered operators in Pangasinan are situated in the town. In years of existence of bagoong business in the town, businesses exist for an average of 4 decades in the industry employing 20 to 30 workers. Bagoong, with its strong aroma and inarguably delicious flavor, is popularly used as a dip for grilled foods and fruits like mango as well as a seasoning for various vegetable dishes like pinakbet. It is made from fish-- usually dilis, padas, galunggong, caballas, or terong—mixed with salt and fermented for three to six months. The town has used its geographical location as its advantage since it is surrounded by beautiful beaches, not just as a tourist attraction, but as a source for these inputs. However, this advantage did not last long because many locals or even non-locals used to do illegal fishing to the shores of Lingayen which resulted to the scarcity of fish in their municipal waters. The volume of fish caught in the town is not enough to 2

sustain the demand for fish processing in the municipality. To address this issue, the fishes as raw materials are coming from Navotas, Malabon, Quezon Province and Mindoro which are kilometers away from the town. However, this does not hinder bagoong producers to maximize their product. Mang Emilio Mari, owner of Emil’s lechon, successfully experimented bagoong with something more to offer by combining it with his lechon, now known as Lechon-Bagoong. In addition, bagoong packaging also improved over the years, from a traditional glass bottle container turned to a more convenient plastic-repacked containers. However, this innovation has yet to be widely promoted since most supermarket does not sell it still. It has more proven to be widely loved by Filipinos when Lingayen Bagoong, owned by one of the biggest bagoong producers in Lingayen —JB bagoong by Germa and Jun Bernal, started exporting to California and the United States. It took years and decades before these development and innovations came into market. It showed how bagoong Lingayen is slow to coping with the modern needs of the society. According to Judy Vargas, one of the Lingayen councilors, Lingayen bagoong is one of the best products in the country but it needs to undergo more development to compete with Thailand’s fish paste in the Asian market.

B. SWOT Analysis SWOT Analysis of Bagoong Products in Lingayen STRENGTHS

WEAKNESSES



Long shelf life of about 12 months



Unpleasant and strong smell



A flavor enhancer and food additive for



Limited development of the bagoong

different dishes 

Affordable and reasonable price



A good source of protein



Distinct taste, consistency and aroma

products

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OPPORTUNITIES   

THREATS

Increasing consumption among the local 

Competition as to price wars and market

households

share

Rising demand among Filipinos based 

Issues about the scarcity of fish needed

abroad

for bagoong production

Potential for exports in the different countries



Potential for product innovation



Can induce job opportunities



Has a leading reputation in the bagoong industry of the Philippines

The strengths of the bagoong products in Lingayen include having a long shelf-life of about 12 months as these are prepared through fermentation process to preserve the products. Also, bagoong products undeniably serve as flavor enhancers and food additives to improve and have the desired taste for the different dishes. These products can also be bought in the market at an affordable and reasonable price that would suffice the needs and satisfaction of the consumers when it comes to foods. In addition, researches show that bagoong can also be a good source of protein as long as people would consume it appropriately to prevent the diseases brought by consuming too much salty foods. Furthermore, bagoong production in Lingayen is known for having that distinct taste, consistency and aroma as it was produced through the help of salt in Western Pangasinan which is believed to have a better salt quality compared to others, and other factors. As for the weaknesses of the bagoong include having that unpleasant and strong smell. Also, it is undeniable that the bagoong currently has limited development as to how it is packaged or distributed in the market, or as to how it was known in the public by simply being a condiment in a bottle. The opportunities of the bagoong products include the increasing consumption among the

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local households as these products become necessary in the daily living of most people especially in preparing foods. Also, the rising demand among the Filipinos based abroad opts to increase an opportunity to rise the bagoong production. Additionally, bagoong products can also be associated for the potential of the product for export in different countries since these spices are usually found in the Philippines only. Furthermore, bagoong can also be potential for product innovation in which it can be integrated to other products like Lechon Bagoong, or it can be made as bagoong cubes for convenient distribution and packaging of the products. These are also the reasons why bagoong in Lingayen has a leading reputation in the bagoong industry of the Philippines. Lastly, job opportunities can also be induced because of these demands in bagoong production where a strong and enough workforce is needed. The threats include having an intense competition as to price wars and market share among the suppliers or producers of the products in the town. Also, there could be threats to the issues about scarcity of fish needed for bagoong production when water resources are not properly managed, and that the possibility of importing fishes from other provinces would continue.

III. REVIEW OF RELATED LITERATURE A. Foreign Study Fermented Fish Products in Indonesia Fermented fish products in Indonesia have gained popularity in the market along with dried salted fish products. Shrimp paste (trasi), fish paste (pedah), fermented dry salted marine catfish (jambal roti), freshwater fish (bekasam) and fish sauce (kecap ikan) are among on the list. Pedah is a product of salting, drying and fermenting fishes like mackerel. Raw materials must be wet and are placed in layers in baskets or similar containers. The holes in the basket would allow slow draining, leading to maturation of the product and the development of its characteristic flavor and texture.

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Economic Analysis of Commercial Processing of Fermented Fish Product (Matka shidal) and its Marketing in North-East region of India “Shidal, a fermented value added fish product, is an indigenous product highly demanded in North-East region of India because of its typical flavour and aroma. This product is popular with different local names such as Shidal, Sepaa and Hidal in Assam, Tripura, Arunanchal Pradesh and Nagaland and Ngari in Manipur. The production and consumption of this product is mainly confined to NE region, however small proportion of Shidal is also imported from Bangladesh… This product is traded in whole North East region through the channels of Dry fish products. Hence, the Shidal and Dry fish products have similar marketing chains and trading centres in the region. The cost and benefit analysis of commercial processing of shidal indicated it as a profitable venture and it also provide gainful employment to the poor people. ” (Upadhyay, 2016) The Effect of Technological Innovation in Process of Fermented Foods “The use of novel technological interventions in fermentation and food processing, system biology and bioengineering shall open vast avenues for new generation microorganisms with enhanced functional features. This will not only provide several health benefits but also the technological advances and marketing shall profusely contribute to the development of small and medium sized enterprises on the one hand, and product diversification of large companies which directly or indirectly contributes to the economy as a whole.” (Montet and Ray, 2017) Effect of Innovation to an Industry Stated in Measuring and analyzing the continued innovation capability in Guizhou Huagong Tools Company (as cited in Darahagi, 2017), "In the research literature, there are different definitions of innovation. Innovation is the foundation or presentation of value." According to The dynamics of national innovation systems: a panel cointegration analysis of the coevolution between innovative capability and absorptive capacity (as cited in Daragahi, 2017), "Innovation includes the formation of an idea as well as the adoption and execution of 6

new ideas in processes, products and services. Nowadays innovation has become more important after shortening the lifecycle of products and technologies used in them.

B. Local Study Bagoong Industry in the Philippines "The exact origin of the bagoong in the Philippines, or the shrimp paste in the Southeast Asian region, is not known. However, one theory suggests it stemmed from the ancient practice of adding salt to fish or shrimp to preserve them. Another theory says that it was specifically made so that very tiny and unmarketable shrimp and fish could be sold. In the Philippines, the bagoong industry is found around the country. But the most popular bagoong products come from the thriving industry in Lingayen, Pangasinan. The province is actually synonymous to bagoong: it is said that the salinity and humidity in Pangasinan makes it the perfect place to create bagoong. The fish that is used to fuel the industry is mainly from the Lingayen Gulf, Bicol region and Quezon province." (FFE Magazine. 2014) According to National Academies Press (US), in developing country like the Philippines, the popularity of fermented food products circulates not only to its distinct flavors but also to its production processes from fermentation up to the canning process. In addition, as cited in National Academies Press (US), "Despite their popularity, research and development on fermented foods is meager. Most of the traditional food fermentation industries especially in the Philippines are rural, seasonal, labor intensive, informal, and capital deficient. Commonly, fermented foods are sold and consumed in the areas where they are produced." Lingayen: A Home of the Bagoong Industry It was believed that "Lingayen is the home of the most delectable bagoong. The theory of some makers is that the salinity of the air is a factor why fish fermenting is very ideal in Lingayen." (Province of Pangasinan, n.d., para. 3) Looking at this fact, several businesses started to exist when the industry boom few years ago, but the officials of Lingayen to which the 7

product is very known wanted to sustain their market share. "Lingayen bagoong is one of the best products in the country, but it needs to undergo more development to compete with Thailand’s fish paste in the Asian market," Councilor Judy Vargas said. The local bagoong used to be sold only in milk cans (locally called “litsi”) in the wet markets. It is now sold in bottles or pouches that line the shelves of upscale supermarkets and groceries. As explained to an article Life Among the Rotting: A Look into the Bagoong Backyard Industry, "Several streets in the area are lined with bagoong factories ranging from those that modernized production to adapt with the times to those that retained its old ways of brewing their signature blends. As its main product and source of livelihood, bagoong has become a central part of the municipality’s culture that the local government instituted an annual Bagoong Festival since 2012. Factories start out as backyard brews of different families, and recipes are often passed down from generation to generation. Some remained as they had always been 50 years ago, with operations and procedures barely unchanged." Innovation: An Opportunity of Economic Growth in the Philippines Across the globe, countries have committed to fostering innovation by 2030 in the UN Sustainable Development Goals. Developing countries such as the Philippines appear to be taking cognizance of the importance of innovation with an entire chapter in the Philippine Development Plan devoted to science, technology and innovation as mentioned by Albert and Quimba (2017) While innovation is recognized as important to improving productivity, firms and governments are paradoxically not investing enough therein. The Philippines needs a concrete plan of action to stir innovation. It needs to strengthen linkages among innovation actors and build up its pool of research scientists and engineers. An important lesson could be learnt from China: in the late 1970s to early 80s, China made massive investments in human capital and sent thousands of scholars in science and engineering to the top U.S. universities, and has subsequently reaped returns on these investments. 8

IV. ALTERNATIVE COURSES OF ACTION ACA 1: Expansion as to Product Line Adding new features and continue selling in existing market

The possible added features will be as follows: 

BagoMansi – traditional bagoong flavored with calamansi



Chili BagoMansi – traditional bagoong flavored with calamansi and chili



Sweet and Chili BagoMansi – traditional bagoong flavored with calamansi and sweet chili

Advantages: 

Diversifying risk Having multiple product lines may allow a growing business to diversify risk and

capitalize on its established reputation. 

Meets variety needs of consumers The number of product items can attract buyers with different preferences, increase

profitability thanks to market segmentation. It also provides convenience for consumers. They don’t need to rush to the market to buy the compliments for bagoong because we already have the variety of compliments to taste. 

Low cost of production As a business has existing expertise and processes in place for this category of

product, then it is likely that their production costs will be relatively low as compared to the production of a whole new product. This is because the new product will be produced utilizing the existing systems of the businesses.

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Disadvantages: 

Sales Cannibalization New products may cannibalize sales of older ones. It is no accident that each time a

business introduces the latest incarnations of their products, the older models with fewer features become less desirable and eventually obsolete. 

The need to for skillful marketing If the business advertises that their product has changed, it must be done skillfully.

People were buying products before because they liked it; if one changes it, it may not always be for the better. 

Possibility of traditional image of bagoong becoming distorted Bagoong is as one of the products known for it is preserved old way of processing. It

mirrors true Filipino culture – having complimented original Filipino cuisine. That established image of bagoong may become distorted when improved products were not done skillfully.

ACA 2: Expansion through Diversification New product introduced in existing and new market

The possible new products will be as follows: 

Bagoong cubes



Bagoong mix



Bagoong rice seasoning

Advantages: 

Convenience brought by new form 10

In supermarkets, bagoong is sold in bottles. It is fragility is sometimes inconvenient for both the seller and the buyer. The new form of Bagoong namely, cubes and packs will welcome convenience. 

Price reduction Bagoong is traditionally sold in bottles. Introducing it in cubes and in packs will

reduce the selling price. This may provide convenience for people who do not always use Bagoong in cooking. 

Less costly exportation Since bagoong is exported in bottles, the weight of the bottle adds a little extra to its

cost of exportation. Introducing a new form that compresses the taste of bagoong while maintaining convenience will no doubt cost less in terms of exportation.

Disadvantages: 

Larger amount of initial outflow/investment Bagoong cubes, Bagoong mix, Bagoong rice seasoning would require new machines

and technology. Not only that, but businesses can’t just buy their technology once and be done – they

need to update the technology constantly in order to stay abreast of

technological standards and improvements. 

The need for additional employee training Having new technology means that a business needs to pay technology

professionals to assist with and monitor that technology. ...