The Scramble for Gold

By Tessa Choong

FB page: JRS – Jagna Relief Society Livelihood

The artistry and painstaking labour in the making of handicraft products is unfortunately rarely acknowledged by its extrinsic value and more often than not, craftsmen find themselves struggling to make ends meet. Partnered with Samuel, we have been assigned to a women mat making co-operative, named Jagna Relief Society Livelihood (JRS), which has been initially established by the members of the LDS church as a means to support the livelihood of the low-income citizens of Bohol. With the fortitude of the leader of the co-operative, Rebecca, we started looking into the accounts and the production process of JRS about two days after meeting the members of JRS.

Currently, the members are working at the place of residence of Luz who is the internal auditor of the JRS. Located in Canjulao, members of the co-operative can be seen cutting and weaving the assembled cloth using the used wooden frames to finally produce the brightly coloured mats. Having gathered a general idea of the making of the product, we were pleasantly surprised by the quality and feel of these artisanal mats. The co-operative is presently producing four main items being the traditional doormats, which can be obtained in two different sizes, squared shaped potholders and round rugs used for dusting. Their two best-selling products so far are the round rugs and the small doormats.

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Hand modelling for the products

In an attempt to reduce wastage of the scrap cloth, JRS has started making pillow stuffing with the remaining cloth and while these pillows sell for a higher price of 100 pesos, the orders have been scarce and the co-operative is likely to discard the production of these items. After enquiring about the financial records, we discovered that the co-operative manually maintained their bookkeeping entries with decent records of their sales, wage payments, and banked cash. From these source documents, I was able to devise the financial statement that was required for JRS to register their business with the Department of Labour and Employment and hopefully receive supporting funds amounting up to 500,000 pesos. Samuel was then in charge of producing the legal documents for their application. While they had proper records of their sales, records of their expenses were not properly documented as only some of the invoices were scattered in a file. However, completing the financial statements from scratch did feel rewarding as I was given the opportunity to apply my theoretical learning to a real life situation.

A serious issue faced by the co-operative was the low-profit margin, which prevented Rebecca from offering an adequate salary to the members and thus JRS suffered from low productivity. While housing a total of 29 members, only 4 of the members of JRS come to work on a “regular” basis, which is approximately 14 days in a month. As a result, JRS is unable to meet the demand and more often than not supplied a lesser amount to the customers. It all comes down to a vicious circle as the lack of funds prevents them from hiring more workers, which in turn hinders them from meeting the orders to increasing their earnings. Faced with such difficulties, the logical approach would be to increase the prices of their products. However, they dismissed such suggestions by claiming that the Cebu manufacturers were able to sell at lower prices such that increasing their selling prices would turn away potential customers instead of raising their profits.

 

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Rebecca – Leader of the Jagna Relief Society Livelihood

 

While the co-operative is among the few producers of woven mats in Bohol, JRS is unable to benefit from monopoly power due to its small-scale production. Despite having earned an annual profit of 15,000 Pesos, the co-operative could easily close down if the four remaining members refused to work for the given wages. We definitely felt that this small enterprise meant a lot to Rebecca and thus shutting it down was not an option. Therefore, we came up with the idea of setting up an online business that would enable the co-operative to access a larger international market where customers are willing to pay much higher prices for their crafted products. Since listing prices on popular online selling platforms such as Amazon are quite high, we are looking into the possibility of initially opening a facebook page that would enable customers such as members of the Mormon Church abroad to support JRS.

After constructing the business model, we were also able to spot the low-profit margin being made on the round rug, which is currently being sold at 1 peso and thus providing a mere profit of 0.19 peso. With the information in hand, we are planning to hold a general meeting with the members of JRS next Tuesday and talk to them about the current situation and recommendations. For the lack of branding, while discussing with Luz and Rebecca, we came up with the idea of adding a small informative tag to each product in order to allow potential clients to contact the co-operative and to differentiate our craftsmanship from the poorly manufactured mats of Cebu. In order to prevent any future economic stagnation, diversification is needed and thus we plan to set up a business plan to facilitate the co-operative’s scheme to branch out into the production of Nata de coco which is made fermented coconut water. Hopefully, this new venture will be successful.

Working with Rebecca and Luz during these two weeks has been very meaningful as I actually started appreciating the time that I have spent in learning the rigorous materials of accounting and finance. While we may have helped this small enterprise, I feel that it has been a win-win situation since I was the given the opportunity to learn further and help those lovely people.

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