Inefficiencies along the agricultural supply chain result in postharvest losses, higher transaction and distribution costs, and lower productivity. The Philippine logistics system has been characterized as being cost-inefficient, unresponsive to customers and market requirements, and unreliable. Compared to developed countries, distribution and processing costs in the country are 20-30 percent higher with logistics costs accounting for almost 30-40 percent of total marketing costs (NEDA-UNDP, 2005).
The ineffective logistics services coupled with inappropriate postharvest handling have, likewise, resulted in huge postharvest losses. For rice and corn, about 14.75 percent and 7.2 percent of the total production are lost during postharvest operations, respectively. Losses are even higher in horticultural crops: losses in fruits range from 5 to 48 percent, while losses in vegetables range from 16 to 40 percent. These postharvest losses, when translated into monetary values, sizeably reduce the income of farmers and their households (BPRE, 2010).