A Value Chain Study of Rice in Abuyog, Leyte

A VALUE CHAIN STUDY OF RICE IN ABUYOG, LEYTE
An Undergraduate Thesis Presented
By
Jerome M. Alvero
Submitted to the Development Studies Program of

Ateneo de Manila University in Partial Fulfillment
of the Requirements for the Degree of
Bachelor of Arts, major in Development Studies
29 February 2008
TABLE OF CONTENTS
Abstract i
Chapter I. Introduction 1
1.1. Rationale of the Study 1
1.2. Objectives of the Study 2
1.3. Limitations of the Study 2
Chapter II. Review of Related Literature 3

2.1. Role of Rice in the Philippines 3
2.2. Philippine Rice Industry Profile 4
2.3. Rice Value Chain 6
Chapter III. Theoretical Framework 10
Chapter IV. Empirical Framework 13

4.1. Research Hypothesis 13
4.2. Description of Methodology 13
Chapter V. Results and Analysis 16

5.1. Value Chain and Cost Structure at Production 16
5.2. Marketing at Post-production 25
5.3. Social Cost 27
Chapter VI. Implications of Results 32

6.1. Implications to Development Theory 32
6.2. Implications to Development Policy 37
Chapter VII. Summary and Conclusion 40
Appendices
List of Figures
List of Tables
Questionnaires
Map of Abuyog
Documentation
A VALUE CHAIN STUDY OF RICE IN ABUYOG, LEYTE
Jerome M. Alvero
This value chain study presents a cost structure that estimates the cost incurred during the
production of palay in Abuyog, Leyte, which includes costs for purchasing inputs, such as
seeds, water supply, pesticides, fertilizers and transportation costs, and costs for attaining
labor for cultivation of land, planting, harvesting, and threshing of palay. It also presents
the estimated costs in the post-production and marketing of rice from the hands of the
assemblers in Abuyog down to wholesaler-millers, retailers, and consumers in Eastern
Visayas. The study reveals that at palay production, more than half of its total costs are
allotted for laborers yet they only receive quarter of the total production’s revenue where
the rest are shared by the tenant and landlord. Furthermore, farmers play a crucial role in
the production of rice in Abuyog but they are the ones who experience the highest level
of social costs among the actors in the rice sub-sector value chain. To empower these
farmers, the government should initialize or reinforce programs that would benefit them,
such as comprehensive agrarian reform, agricultural and cooperatives education. A
farmers’ cooperative is a form of community development which could promote self-
reliance among farmers amid the government’s lack of support.
i
CHAPTER I
INTRODUCTION
1.1. Rationale of the Study
Leyte is the largest rice-producing province in Eastern Visayas.1 It is, however,
considered as one of the provinces in the Philippines with a significant deceleration of
productivity growth in rice since 1986.2 In 2006, the municipality of Abuyog was the
highest rice producer in Leyte from its 2,830 hectares of irrigated land and 1,813 hectares
of rainfed land.3 Despite these decent figures, the rice industry in this municipality is
teeming with unscrupulous trading malpractices which results in unrealistic marketing
costs.4
A value chain (VC) is a method that shows the sequence of a sub-sector’s chain of
events—production to processing to marketing—and could be used to study an industry
such as a rice sub-sector. The German Technical Cooperation (GTZ) claimed that with a
VC study and promotion, “economic development is conceived as increasing division of
labor and cooperation between actors better known as ‘systematic competitiveness’” is
achieved.5 Moreover, the “coordination of public and private roles would result in a
combining entrepreneurial development at the micro level, with institutional change at
the meso and macro level.” The VC could loosely be visualized as a “map” that
identifies and spells out the basic functions and categories of actors in a certain sub-
1
Agribusiness and Marketing Assistance Division, Rice: A Commodity Profile (Tacloban City: Department
of Agriculture-8, 2007), 3.
2
Charmaine G. Ramos, State Intervention and Private Sector Participation in Philippine Rice Marketing
(Quezon City: Management and Organizational Development for Empowerment, Inc., 2000).
3
Agribusiness and Marketing Assistance Division, Rice, 3.
4
Rogelio Portula. Interview by Jerome Alvero, 18 October 2007.
5
German Technical Cooperation, The Value Chain Approach and its Application in Development
Assistance in Asia (Kathmandu, Nepal: GTZ, 2005)
1
sector. In effect, through the VC organization, costs can be reduced through better
logistics thus quality management is further attained, among others.6
1.2. Objectives of the Study
The main objectives of the study are the following:
1. Map the value chain of the rice sub-sector of Abuyog, Leyte by identifying the value
chain processes, the value chain actors and their roles;
2. Identify the costs entailed in value chain processes;
3. Determine the social costs for the actors (the farmers, in particular) in the value chain;
4. Present implications with regard to the results and findings of the study.
1.3. Limitations of the Study
This research adhered to the framework of Value Chain Promotion of GTZ. 7 This
study, however, was limited to one rice sub-sector situated in a municipal level, unlike the
study of GTZ which delves on industries at a nationwide scale.
This study used the methodology set by the GTZ in its value chain promotion.
Thus, the researcher selected a value chain, did chain mapping, analyzed the chains, and
identified constraints and opportunities in the value chains. The researcher, however, was
not able to provide and implement a market strategy due to various constraints in
resources and time.
The researcher did a cost structure of value chain processes, particularly those in
the production level, based on the data gathered in this research.
6
Ibid.
7
Ibid.
2
CHAPTER II
REVIEW OF LITERATURE
The second chapter provides a brief background on the role of rice in the
Philippines and describes the Philippine rice industry along with the issues that take place
in it. This chapter is relevant for understanding a rice sub-sector’s value chain structure.
The data and information presented in the sections of this chapter are drawn
heavily from the studies done by Charmaine Ramos8 and the United Nations
Development Programme (UNDP)9.
2.1. Role of Rice in the Philippines
Rice in the Philippines is a means of sustenance in two senses: as a basic staple
and as a source of income.10 The Philippine rice market has been regarded as highly
politicized, though.11 The Philippine government, via the National Food Authority
(NFA), enjoys monopoly rights over importation and engages in domestic operations to
defend farm support prices.12 In 1994, upon agreement with the World Trade
Organization (WTO), the government abolished quantitative restrictions on most of the
imported agricultural commodities and imposed tariffs instead. But the government
successfully negotiated with the WTO not to include rice in the tariffication, thus
allowing the quantitative restrictions on rice imports done by the NFA to continue.
8
Ramos, State Intervention.
9
United Nations Development Programme, A Logistical Evaluation of the Rice Sub-Sector (2005).
10
Cristina C. David and Arsenio Balisacan. Philippine Rice Supply Demand: Prospects and Policy
Implications (Makati City: Philippine Institute of Development Studies, 1995).
11
Ramos, State Intervention.
12
Leocardio S. Sebastian et al., Bridging the Rice Yield Gap in the Philippines (Muñoz: Philippine Rice
Research Institute, 1999)
3
According to UNDP, this continued use of the quantitative restrictions only “promote[s]
rent-seeking, reduces government revenues, incurs significant bureaucratic costs, and
introduced price uncertainties.”
2.2. Philippine Rice Industry Profile
Between 1970 and 2006, the palay production in the country coming from all
ecosystems exhibited a generally increasing trend although with few fluctuations.13 The
most notable of which was in 1998 when rice production plunged to 8,554,824 metric
tons (MT) from 11,268,963 MT in 1997 due to the occurrence of the El Niño
phenomenon in the country which caused water shortage, as water is needed in growing
palay for both rainfed and irrigated farms.14 Such reduction in volume resulted from a
considerable decline also in area planted for palay in that same year.
Over the past decade, production has steadily increased: In 1994, the volume of
production hit the 10 million-MT mark. Production significantly increased in 1996 to
11.28 million MT but dropped to 8.55 million MT in 1998 in view of the occurrence of El
Niño. On the other hand, from 1999 to 2006, area harvested for palay showed a
relatively flatter and steady trend with values averaging at 4,064,138 hectares per annum.
Furthermore, the trend in yield for the period 1999-2006 was more or less similar
to that of the trend in production, averaging at 3.33 MT per hectare. An increase in trend
was perhaps partly due to the increasing use of high-yielding varieties of rice among the
rice farmers in the country.
13
For statistics on the Estimated Palay Production, Area Harvested, and Yield in the Philippines from 1970
to 2006, see Appendices
14
Based on the origin of the palay’s water supply, paddy farm areas in the Philippines are either classified
as “rainfed,” where rainfall is the only source for water, or “irrigated,” where water comes from dams or
watersheds and is passed through the farm’s irrigation. See Appendices for statistics.
4
In spite of the steady increase in production, the Philippines has remained a net
importer of rice, as magnified with the figures in the past decade.15 Dawe pointed out
geography as the primary reason why the Philippines imports rice. 16 Thailand and
Vietnam, the countries where we import rice are “typhoon-exempt and are blessed with
great river networks,” unlike the Philippines. He also argues that the Philippines has a
comparative disadvantage in rice production relative to the major world exporters
because the quantity of arable land per person is much lower in the Philippines than in
most Asian countries and the share of rice in agricultural crop area is lower as well.
The country’s population growth also plays an important role in the rice
importation. The Philippine population growth rate is calculated to be at 2.36 percent,
compared to 1 percent of Thailand, and Vietnam’s 1.4 percent. A growth in the
population translates to an increase in rice consumption.17
Focusing on rice prices,18 trends in the prices of rice indicate that production-
related problems, e.g., water shortage, typhoon, and policies, are not the only sources of
the industry’s torpid performance, for problems are also encountered in the post-
production level, particularly in marketing. The widening gap between farmgate paddy
prices and wholesale and retail prices gives a picture of the rising margin attributed to
marketing costs. High marketing costs reflect inadequate and weak physical and
institutional infrastructure in the marketing system.19
15
See Appendices for statistics on imports.
16
David Dawe, Equity Effects of Rice Trade Liberalization in the Philippines (Los Baños: International
Rice Research Institute, 2003).
17
See Appendices for the comparison of statistics on production and total net food disposable. Losses on
post-production are not reflected in the production data. BPRE estimated that around 15 to 33 percent of
the total produced palay are lost during post-production processes.
18
See Appendices for statistics on prices from 1990 to 2006.
19
Dawe, Equity Effects of Rice Trade Liberalization.
5
2.3. Rice Value Chain 20
The value chain of rice is the sequence of events from its production to
processing, then down to its marketing and consumption. The rice input suppliers, rice
producers, and the marketing channels usually compose the basic value chain processes
for a rice sub-sector. The variety of seeds is the most important input of the rice industry.
Other important tasks include selecting a proper site for the proper growth of rice and
effective nutrition and pest management practices. Rice grains, the important output, are
supplied mainly to retail markets, groceries, and to public markets to cater to consumers.
The industry’s value chain uses wide-ranging labor. Upon palay production, a
prerequisite to a good and efficient marketing system is the ability of the producers to
decide on the best way to store and move their products down to their market
destinations. This means that the effectiveness of physical distribution plays an important
role because it has a major impact on customer satisfaction and of course, the costs
involved. A poor distribution system may destroy an otherwise good product. If
distribution is further delayed, stored grains tend to deteriorate. Even if grains are stored
dry at the standard 14-percent moisture content, spoilage can still occur particularly in
bulk storage systems where moisture migration may take place from one point of the
storage area to another. Moreover, the temperature difference between the hot storage
area and the cold environment outside may cause grain moisture re-absorption, which can
make the grain susceptible to mold and bacterial growth thereby causing spoilage. 21
Thus, a producer has to be able to decide on which system can cost be incurred at the
lowest level and customer satisfaction at its highest.
20
UNDP, A Logistical Evaluation of the Rice Sub-Sector.
21
Philippine Rice Research Institute, Rice Production Technology, no. 6 (Los Banos: IRRI, 2005).
6
In the supply chain of rice the logistics components are identified as: drying,
transporting, milling, packaging, and storage. An essential function that needs to be
performed before the palay is milled is drying. The market is paying a relatively huge
amount for dried palay, thus some farmers drying their produce right after harvest. The
most popular method used especially during the dry season is sun-drying in concrete
pavements which may take place in basketball courts, village halls, and even in roads and
highways. The use of these facilities has the disadvantage of foreign materials mixing
with the sun-dried palay and of non-uniformity of moisture content. Financial constraints
lead the farmers to make use of such facilities because a farmer incurs cost at only PHP
5.00 per cavan with the sun-drying method while about PHP 30 to PHP 40 per cavan is be
spent on using mechanical dryers.
Since the millers are handling large volumes of palay, they use mechanical dryers
to reduce the moisture content to only 14 percent. There are millers who buy only dried
palay so that drying will not be necessary. The cooperatives which sell to the NFA make
use of mechanical dryers since the NFA has set standards in buying rice. NFA buys rice
with 14 percent moisture content and such value is very difficult to achieve when sun-
drying is employed.
Very few farmers have their own vehicle to transport their palay to targeted
buyers. Usually transportation function is being performed by traders and millers using
trucks and vans: Big traders and millers use trailers and ten-wheeler trucks to transport
palay/rice in greater distances. These vehicles are usually owned or hired from trucking
firms. A number of retailers also do transportation but they normally use small trucks and
7
tricycles to deliver rice. Hauling cost is normally included in this function because of the
need in carrying sacks from the source and unloading the produce at its destination.
At the milling station, palay can either be milled right away or stored for milling
after a certain period of time. Mills have working storage where they hold the palay
which are already scheduled for milling within a short period of time. Rice mills are of
different types with capacities ranging from one ton per hour output (single pass type) to
10 tons per hour (multi-pass with rubber rollers). Multi-pass mills have the capacity to
produce excellent quality rice. Milling is considered important in the logistical chain as
this is one of the determinants of grain quality and eventually, the value of rice.
Storage, which is usually done by traders and millers, is also an important
function in the rice industry. Very few farmers have the capacity to store their palay for
more than a week because they need cash to pay their credit obligations incurred while
the crop is still being grown. Smalltime palay traders and retailers do store also some of
the produce but only within a relatively shorter time. Millers, on the other hand, do most
of the storage function since they have large storage facilities where they can hold as
much palay as they need to ensure the availability of palay for their milling activities.
The average storage period for palay is about one to six months but with uniform
moisture content of 14 percent, palay can be stored up to 12 months.
The most common type of packaging for both palay and rice is the plastic 50-
kilogram sacks. Jute sacks are rarely used these days because they have become
relatively expensive. Packaging is significant in promoting the ease of handling and for
protecting the grains as well. Right after threshing, palay is placed in sacks for easy
transport. Likewise, milled rice is placed in 50-kilogram sacks for transport to
8
wholesalers and retailers. Printed in plastic sacks are the miller’s corresponding labels
and designs, such as logos and seals. In the market where retailers are the most common
actors, rice packed and sold in smaller quantities.22
22
UNDP, A Logistical Evaluation of the Rice Sub-Sector.
9
CHAPTER III
THEORETICAL FRAMEWORK
The study is based on the framework of “value chain promotion” which was
introduced by the German Technical Cooperation Agency (GTZ). The value chain is the
full range of activities that are required to bring a product or service from its conception,
through its design, raw material sourcing and intermediate inputs, its marketing and its
distribution to the final consumer. The value chain concept therefore incorporates
production, sourcing, distribution, consumption, and beyond until recycling or disposal of
a given product or service.
Crucial in doing a value chain study is mapping out and identifying the various
stages and processes that occur in a studied sector or industry. With such comes an
analysis of functions done in every stage or value link. Upon studying the processes in
the every stage, strengths, weakness, opportunities, and threats are eventually identified,
which may convince value chain actors to adhere to better practices that may reduce costs
through better logistics, for example. Economic development is therefore conceived in
the implementation of a value chain approach, primarily done through the conduct of a
value chain study, as increasing division of labor and cooperation between actors is
achieved. This eventually would lead to the coordination of public and private roles thus
combining entrepreneurial development at the micro level, with institutional change at
the meso and macro level.
A “pro-poor growth” is the primary objective of the value chain promotion. It is
economic growth that alleviates poverty. Pro-poor growth leads to greater employment
10
and income for poor people. This is attained by better consumer end prices, greater
volume of products, and reduced cost. Additional jobs, new business opportunities, and
the localization of downstream processing stages are also results of the value chain
promotion leading to a pro-poor growth. To better understand the pro-poor growth
concept vis-à-vis the value chain promotion, refer to the Figures 3.1 and 3.2 at the
Appendices.
To be specific, the objectives of the value chain approach are: having a bird’s eye
view of the sector; giving attention to detail at all phases of the value chain; linking sector
stakeholders and their initiatives; focusing on survival and profitability; providing ways
for government involvement when clear issues are identified; building an organized and
effective sector environment; increasing buyer confidence; and answering the question of
where to prioritize so that support activities will be most effective. In the Appendices,
Figure 3.3 shows the prototype impact of the value chain promotion.
The value chain promotion could be done on a product or a service sector or sub-
sector. In doing so, the process (see Figure 3.4 in Appendices) is as follows: 1) Bring the
stakeholders together in a friendly environment; 2) Improve the understanding of
stakeholders on sector or sub-sector dynamics; 3) Facilitate identification of issues
through value chain mapping; 4) Identify the success factors and evaluate the status quo;
5) Prioritize the actions; 6) Develop among stakeholders the ownership for initiatives
(value chain core group); 7) Link with donors and other agencies for assistance needed to
implement initiatives and actions; and 8) Maintain a close contact among the stakeholders
through regular interaction for reviewing progress and revising plans.
11
According to Arun Rana, the “value chain promotion is the development of each
stage in the value chain to enhance the competitiveness of the industry.”23 For example,
the introduction of new processing technologies can ensure quality production. However,
working at the production end is not enough. This must be coupled with efforts to market
and distribute products. Value chain promotion works with all stages of the value chain,
thereby having a greater impact on the development of the industry as a whole.
23
Arun Rana, Orthodox Tea in Nepal: Upgrading with Value Chain Approach (Kathmandu: GTZ/PSP-
RUFIN, 2007)
12
CHAPTER IV
EMPIRICAL FRAMEWORK
4.1. Research Hypothesis
This type of research does not call for a formulation of a hypothesis; since this is a
value chain study, the researcher mapped out and identified the different phases of the
rice value chain in Abuyog, Leyte, including the roles of the value chain actors and the
costs incurred in the various value chain processes—all guided by the theoretical
framework initialized by the German Technical Cooperation Agency (GTZ), as discussed
in Chapter III.
4.2. Description of Methodology
The researcher conducted the study from 23 October up to 31 October 2007.
Through the assistance of Ms. Calypso Nogar, the agricultural technologist from the
Office of the Provincial Agriculturist of the Province of Leyte, data gathering for this
study was continued on 12 November up to 28 November 2007, without the actual
presence of the researcher.
The data gathering in Abuyog, Leyte was done primarily through an interview-
administered survey with 9 farmer-tenants as samples for 9 clusters of barangays which is
composed of 29 barangays. The clustering was based on the barangay’s location; nearby
barangays which shared common characteristics on rice farming were clustered or
grouped together. This method was suggested by Dr. Alfredo Guevarra, Chief of the
Research Division from the Office of the Provincial Agriculturist for the Province of
Leyte because according to him, interviewing farmers from all 29 barangays was
13
impossible considering the timeframe of this research. Also, the allotted time for data
gathering was beyond the palay harvest season hence farmers would not be easily located
as they neither stay nor reside at the rice farm.
These clusters are the following: Cluster 1 – Barangays Paguite and Balinsasayao;
Cluster 2 – Barangays Katipunan, Balocawehay, and Tadoc; Cluster 3 – Barangays
Balocawe, Barayong, and Mag-atubang; Cluster 4 – Barangays Capilian and Maitum;
Cluster 5 – Barangays Picas Sur, Laray, Bayabas, Dingle, and Alangilan; Cluster 6 –
Barangays Lawaan, Tinalian, and Bahay; Cluster 7 – Barangays Bulak, Kikilo, and San
Roque; Cluster 8 – Barangays Santa Lucia, Tib-o, Malaguicay, and Buaya; and Cluster 9
– Barangays New Taligue, Anibongon, Nebgo, and Combis. The numbering in the
clusters does not signify any relevant value and is only used for the purpose of addressing
and referring to clusters during the discussion of results.
Four assemblers or “middlemen” were also subjected to interview-administered
surveys. All located in Abuyog, Leyte, these assemblers were Edita Diloy from Barangay
Buntay (Poblacion), Emily Culaba from Barangay Nalibunan (Poblacion), Paulina Silleza
from Barangay Balocawehay, and Marivic Bulacan, also from Barangay Balocawehay.
Only these bigtime assemblers were procuring palay at the time of the interview and
these samples were selected based on the suggestion of the Leyte Provincial Agriculture
Office and the Abuyog Municipal Agriculture Office.
Moreover, a focus group discussion (FGD) was conducted among farmers in
Barayong, a farming barangay in Abuyog, Leyte, where the researcher mingled with and
interviewed the farmers during the actual harvesting and threshing of palay. These
farmers were headed by their “puno” (leader), Mr. Bonifacio Sedomia. The questions in
14
the FGD were basically the same with the ones in the interview-questionnaire tailored for
the farmers, but through the FGD, answers were more expounded, justified, and made
clearer.
An interview was also conducted among government officers who look over the
sub-sector and who implement regulations and guidelines for the processes that occur in
the sub-sector. Participants in the interview were Ms. Calypso Nogar, the Leyte
Agricultural Technologist, Dr. Alfredo Guevarra, Chief of the Research Division from
the Provincial Agriculture Office for Leyte, and the Leyte Provincial Agriculturist, Mr.
Rogelio Portula. This interview was conducted at the Provincial Agriculture Office in
Corner Jones and del Pilar Streets, Tacloban City, Leyte.
15
CHAPTER V
RESULTS AND ANALYSIS
This chapter presents the value chain functions and cost structure of palay
production, marketing at the post-production level, and the social costs involved in palay
and rice production, particularly for the farmers.
The data used for the cost structure at the production level are based on the
answers of surveyed farmer-respondents and on the focused group discussion with
farmer-tenants. However, the data and figures that were used to determine the costs at
the post-production level and the marketing of rice are based on the data presented during
the interview with the government employees of the Leyte Provincial Agriculture Office
in Tacloban City, Leyte.
Note that there are two farming seasons in Abuyog: dry and wet seasons. The
interviews with the farmer-tenants, who, by the way, do not own the farm lands, were
done during the post-harvest period at the second farming season (wet season) of the
year. The average farm size based on the surveys is between 4 and 5 hectares.
5.1. Value Chain and Cost Structure at Production
This section presents the value chain function and the cost structure of producing
palay, excluding post-production functions. The figures presented in this section are
rough estimates and are based mainly from the answers in the interviews and surveys
among farmer-respondents and focus group discussion. The main purpose of this section
is to present the cost structure of producing rice, considering the costs in inputs and labor,
16
which usually vary among rice farms. To facilitate the discussion of the results, refer to
Tables 5.1 and 5.2 in the Appendices.
5.1.1. Inputs Costs
Inputs costs in producing palay are those costs incurred in attaining seeds, water
supply, pesticides, fertilizers, and the cost in transporting these inputs.
5.1.1.1 Seeds
Seeds are the primary input for palay production. Out of the nine (9) farmer
respondents from nine (9) barangay cluster samples or twenty-nine (29) barangays, nine
(9) out of nine (9) or 100 percent said that they purchase their seeds from the municipal
office of the Department of Agriculture, also known as the Abuyog Municipal Agriculture
Office (MAO) at Poblacion in Abuyog.
The respondents bought the seeds at Php 440.00 per bag, which weighs 40
kilograms. In the interview with the head of the Provincial Agriculture Office of Leyte
(PAO Leyte), Mr. Rogelio Portula claimed that such price is the result of a government
subsidy. In actuality, the seeds cost Php 880.00 per bag and half of this price is
shouldered by the government. Survey respondents claimed that they tried to reuse seeds
from old stocks or those from the previous farming season, but such method resulted only
in poor palay harvest due to diseases that easily cling to palay with whenever such
method is applied. All nine (9) respondents also only use the certified seeds and hybrid
varieties, as these are the ones sold at the Abuyog MAO, such as the Mestizo, Bigante,
and CL8 varieties.
17
Respondents claimed that to be able to plant palay at one hectare of land, two (2)
bags of seeds or 80 kilograms for that matter is required. Therefore, Php 880.00 is spent
on the purchase on seeds to be able to plant palay and make use of one hectare of land.
5.1.1.2. Water Supply
Water is important in rice farming, as palay in general tend to be hydrophilic.
Water is used at the start of production in cultivating, plowing or tilling the land even
before the palay seedlings are planted, and during the planting of seedlings itself.
In the cases of our respondents, for water supply, four clusters are dependent on
the government-handled National Irrigation Agency (NIA). These are clusters 1, 6, 7, 8,
and 9. The respondents from these clusters said that in exchange for the water supply
good for one farming season, they have to either give back 150 sacks of threshed palay
upon harvest or Php 1,500.00 for every hectare supplied by the NIA during that season.
The respondents from all these clusters, however, opted to pay cash instead.
Cluster 3, however, depends on a cooperative that supplies water to rice farms in
the nearby barangays. This cooperative is called the Bunga-ISA, as it is located in
Barangay Bunga, a neighboring barangay of Barangay Barayong. The Barayong farmer
respondent said that a contribution of Php 250.00 per hectare is paid for the water supply,
which is nevertheless cheaper compared to the rationed water from NIA. This farmer
respondent said that he needed the supply and distribution of water into his farm twice in
a farming season. Thus, to be able to supply water for one hectare of his farm, he needed
Php 500.00 for the farming season.
Clusters 2, 4, and 5 are dependent on the rain for water supply, for majority of the
rice farms there are rainfed, not irrigated. Rainfed farm areas are obviously
18
disadvantageous during dry season, which is why there are more rice farms in Abuyog
where water is supplied by a constant source. These rainfed palay farms, however, are
smaller farms as compared to irrigated ones.
The average cost, therefore, for water supply in the cases of farmer respondents
with irrigated lands is Php 1,333.33.
5.1.1.3. Pesticides
All of the nine (9) respondents agreed that their palay are not totally resistant to
pests, such as insects and weeds. A common palay disease in all clusters is the tungro
virus. Through green leafhoppers locally called ngusong kabayo the virus is transmitted
to the rice plant while the insects feed primarily on the growing rice grains. As a result,
grains of palays become empty, while the stems and grains, as well, are covered by a
mold-like component. Farmers think that this kind of disease is normal, especially if the
time of planting palay is delayed, like for example, planting in July than the usual June.
Other pests that concern these farmers were weeds, which compete for the soil
nutrients, bugs, rats, and snails locally named kohol. All nine (9) farmer-tenants employ
chemical and natural methods in combating such pests – through insecticides and by
employing natural techniques like placing ducks or itik in the farm so as to prey on the
kuhol.
The expense for insecticides for farms, however, varies because the land area of
each farm respondent differs. But according to the focus group discussion, on the
average, Php 3,703.75 is spent on pesticides for every one hectare of the field. The
farmers in the focus group discussion revealed the cost of pesticides: a sachet pack of
Baylocide, a combatant against kohol, is worth Php 100.00, good for one tank of spray,
19
where 12 tanks are needed to cover a hectare. Thus, Php 1,200.00 is needed for a hectare
to be completely sprayed with Baylocide. Double Action, a formula against rats, costs
Php 95.00 per pack but is good for 4 hectares. Thus, Php 23.75 is spent for Double
Action to cover one hectare. Another pesticide is the Bascan pellets worth Php 800.00
per kilo where one kilo is good for a hectare of land. A formula called Machete is also
sprayed to the field, where each Machete pack is worth Php 140.00, and twelve packs are
needed to cover a hectare. Thus, Php 1,680.00 is needed for a hectare.
When totaled based on the figures mentioned, for one hectare of field, a farmer-
tenant needs Php 3,703.75 for pesticides.
5.1.1.4. Fertilizers
As for fertilizers, all farmer-respondents use ammonium, urea, and 40-14. This
commonality may be attributed to the availability of these products in the Abuyog
market. Each type of fertilizer costs Php 1,000.00 per sack. A sack for each ammonium,
urea, and 40-14 is needed for fertilizing a hectare of land. Thus, for fertilizers, a farmer-
tenant needs Php 3,000.00 to fertilize a hectare of land.
5.1.1.5. Transportation Costs
Transportation costs refer to the total amount of all costs incurred in transporting
the input supplies from the seller (supply store) to the location of the farm. In Abuyog,
the supply store is found in Poblacion. Farmer-respondents who live closer to the
poblacion incur less transportation costs. For example, since cluster 3 is situated near the
poblacion, the respondent incurred Php 100.00 for the cost in transportation as compared
to cluster 5 which is situated far from the Poblacion where its respondent spent Php
250.00 for transport.
20
The average transportation costs incurred by all the respondents amount to Php
166.67. Transportation costs, therefore, for a hectare of farm land is at Php 166.67,
assuming that such cost included all the necessary supplies for the production of palay for
that one hectare of land.
5.1.2. Labor Costs
Labor costs mainly refer to the monetary costs in paying for labor exerted by
farmers in producing palay. The production processes where labor costs are widely
essential include cultivation (plowing and tilling) of the farm soil, planting of seedlings,
harvesting and threshing.
5.1.2.1. Cultivation
Before planting palay into the field, the farmers need to cultivate the land so that
the palay grow with sufficient biological requirements, such as water, air, and nutrients.
In the farms, water is distributed either via irrigation or through rain. Once wet,
the soil is tilled with the help of a carabao. In the focus group discussion, farmers said
that in a usual 4-hectare field, four carabaos are used for tilling. Hence, one carabao is
used to till one hectare of the farm in a day. Renting carabao costs Php 200.00 per day
including a farmer who would “operate” the carabao. The farmer-tenant would also need
to serve lunch for the employed farmer. Thus in this process, approximately Php 230.00
is the incurred cost.
The use of carabao is only for softening the land so that when a mechanical
tractor, which the respondents referred to as “land master,” is used then it would be easier
to till and cultivate the land, so as to proceed with planting. This tractor is not owned by
the farmers, as they said. They are rented on an hourly basis, alongside a person who
21
would operate the equipment. A payment of Php 150.00 per hour is given to the renter.
An average of 25 hours in needed to cultivate five (5) hectares of farm fields. It,
therefore, requires five (5) hours to till a one-hectare land. A cost of Php 750.00 is
incurred in using a land master for cultivation.
Adding all these costs, cultivation is estimated to cost a total of Php 980.00 for
one hectare of land.
5.1.2.2. Planting
Once cultivation is done, planting of the seedlings follows. The farmers who
plant palay are not necessarily residents within the barangay where the farm is present.
These farmers form themselves into groups, each group headed by their puno who
handles negotiations with various land tenants so that they could either plant or harvest
palay. Transportation cost incurred by farmers from far-flung places is to be shouldered
by farmers themselves. They usually walk, use public transportation, or do pakyawan
where payments to the vehicle driver or vehicle owner are sacks of harvested and
threshed palay.
On the average, fifteen (15) farmers are employed in planting palay in a five-
hectare plot. This means that in a hectare of land, three (3) farmers are needed. These
farmers are hired and are paid an average of Php 120.00 each for a day’s worth of service.
Not only that, they are also to be served lunch by the farmer-tenant who is in charge of
the farm. Thus, it is estimated that a farmer’s planting service is worth Php 150.00 when
a meal is included. Total costs for planting palay is, therefore, estimated at Php 450.00
per hectare since three (3) farmers are employed in planting a hectare of rice field.
5.1.2.3. Harvesting and Threshing
22
Similar to planting, harvesting palay requires hiring of around fifteen (15) farmers
for a five-hectare field, thereby allotting three (3) farmers in a hectare. These farmers are
not necessarily the same farmers who planted the palay. In harvesting, a somewhat
feudal system of payment is employed. Cash is not used as payment for farmers but
rather, they are paid with sacks of threshed palay. Normally, the division is 7-1, which
means that one-eighth of the total number of sacks of palay is given to the farmers, while
the rest are divided between the landlord and the tenant wherein usually the tenants get
three sacks while the landlord receives four.
At the focus group discussion, it was revealed that a normal five-hectare rice field
produces 750 sacks of harvested and threshed palay. An eighth of all these sacks totals to
about 93 sacks, which is the number of sacks of palay given to farmers as payment for
their labor. Since there are fifteen (15) farmers, 93 sacks are divided among themselves,
thus each receives around six (6) sacks of threshed palay. Three farmers (3) are required
to harvest a hectare of the field, thus, 18 sacks of palay is the cost of harvesting palay in a
hectare of land. A kilo of threshed palay is sold at an average farmgate price of Php
11.00 in Abuyog. Since a sack contains fifty (50) kilograms of palay, 18 sacks of
threshed palay would be priced at Php 9,900.00.
Also included in the costs of hiring farmers are the meals served during lunch and
during the end of the harvest. Around Php 1,500.00 is spent on the food for all hired
farmers, or in other words, Php 100.00 is spent on every farmer or Php 300.00 for three
(3) farmers who worked in one hectare of land.
Upon adding these figures, the result will show that the cost incurred for hiring
farmers in harvesting and threshing palay is Php 10,200.00 for every hectare.
23
Threshing, the separation of the palay grains from the stem, is done using a
threshing machine which the tenant rents for Php 500.00 in one (1) day, including the
gasoline. The machine is operated by the farmers, too, for it is part of their job alongside
harvesting. Harvesting and threshing are accomplished in one to two days.
The total cost, therefore, of harvesting and threshing palay is Php 10,700.00.
Upon harvest, these palay are sold at the farmgate to assemblers.
The sacks of palay the farmers get in exchange for their labor are divided among
themselves. Some farmers would dry them, usually along roads or in cemented courts,
and mill for purposes of consumption, selling, or payments of debts.
5.1.3. Share of Costs 24
For one hectare of field, the costs incurred for the inputs and labor are the
following: Seeds – Php 880.00; Water supply – Php 1,333.33; Pesticides – Php 3,703.75;
Fertilizers – Php 3,000.00; Transportation Cost – Php 166.67; Cultivation – Php 980.00;
Planting – Php 450.00; Harvesting and Threshing – Php 10,700.00. All of these costs
total to Php 21,213.75. This implies that Php 21,213.75 is the total cost for producing
palay from a one-hectare farm land. Such amount is not far from that estimated by
Bonifacio Sedomia from the focus group discussion wherein he claimed that producing
palay in a five-hectare land would approximately cost Php 110,000.00, or Php 22,000.00
per hectare.
The share for the cost in harvesting and threshing palay comprises the largest
chunk of cost at 50.44 percent of the total cost. It is distantly followed by the cost in
purchasing pesticides which is 17.46 percent of the total cost. Then follow the costs for
24
Refer to Table 5.1 at the Appendices.
24
fertilizers (14.14 percent), water (6.29 percent), cultivation (4.62 percent), and planting
(2.12 percent). The cost for the transportation of inputs has the least share among the
costs at mere 0.79 percent. The overall cost for labor (cultivation, planting, harvesting
and threshing), at 57.18 percent share, outweighs the overall costs for inputs (seeds,
water, pesticides, fertilizers, and transportation cost, 42.82 percent share.
The farmgate price of palay is averaged at Php 11.00 per kilo. This means the
farmer-tenant sells the palay which were freshly threshed at such price to assemblers.
Given the share of the costs for each input or labor cost in producing palay, the value of
each input or labor which was required in the production of palay could be derived in
relation to the farmgate price. Multiplying the percent share of a specified cost to the 11-
peso-farm gate price would determine the value of such cost in peso. Harvesting and
threshing would therefore equal to a value of Php 5.55 per kilo of palay. Planting would
be valued at Php 0.23 per kilo of palay and cultivation at Php 0.51. Transportation cost
would be valued the lowest at Php 0.09 per kilo of palay. Inputs such as seeds would
have a value of Php 0.46 per kilo, water at Php 0.69, pesticides at Php 1.92, and fertilizers
at Php 1.56. All these values would total to Php 11.00, which is the farm gate price for a
kilo of palay.
5.2. Marketing at Post-production
The role of the farmers usually ends at threshing the palay. Post-production now
involves a different set of actors. First in line are the assemblers or the “middlemen” who
buy the sacks of threshed palay from the farmer-tenant, store them, and sell them to
wholesalers.
25
In Abuyog, all the interviewed middlemen bought the palay from the farm gate at
an average price of Php 11.00. All of the four middlemen who were interviewed stored
the palay in their own storage facility until they have contacted the buyers for them to
deliver the palay at the contact’s location. Edita Diloy, a known middleman or assembler
in the Poblacion, transacts with wholesalers not just in Abuyog but also in Tacloban,
Hilongos, Baybay, Samar, and even in Cebu.
These middlemen sell the palay, still in its threshed state, at an increased price of
Php 12.00. The middlemen get their profit by providing the linkage between farmers and
wholesalers, but at the expense of an added cost. The farmer-tenant could not avoid
selling his land’s produce to the middlemen because they are on-the-spot buyers, a source
of “sure money.” Also, most of the farmer-tenants draw capital for palay production by
borrowing money from these middlemen. A farmer-tenant who borrows cash from a
certain middleman sells his produce to the same middleman so as to deduct the tenant’s
debt from the valued amount of his produce.
The National Food Authority (NFA) normally comes into the post-production
scene in place of the middlemen. Upon buying the palay from farmers, the NFA mills the
rice, and retails it at a cheaper price, because the rice entailed lesser costs as it was
directly bought and is also subsidized by the government. However, none of the
researcher’s sample barangays were intervened by the NFA. The NFA’s presence is felt
in other parts of Leyte like in Ormoc, Carigara, and Alangalang. As NFA goes into
picture, less transactions and costs are incurred.
From the middlemen, the wholesalers are the ones who dry and mill the palay.
These wholesalers have specialized facilities used for drying the palay, such as a secured
26
open space to dry the palay or a drying machine. Php 1.20 per kilogram is the cost of
milling palay into rice. However, only sixty percent (60%) of the palay is successfully
recovered after milling to become rice. This loss would eventually lead to an increase in
the cost and price of rice.
After rice is milled, it is transported to the market, particularly from the
wholesalers down to the retailers. An additional cost of Php 1.40 per kilogram is
incurred. The cost augmentation is the results of the milling loss and the cost in
transportation, especially if the rice is transported from one province to another or from
one region to another.
At the retailer’s level, costs are further added as some retailers also sell their rice
down to another retailer. Prices down at the consumer level are identified to average at
Php 18.50 per kilo. This price is therefore shaped mostly by the cost incurred from the
previous processes. Driving for profit, actors in the post-production marketing side
increase the price of rice to be sold to the next actor in the chain. The supply and demand
of rice also determines the price of rice sold in retail markets.
5.3. Social Cost
The major actor in the value chain of rice, especially in the production stage, is
the farmer. Indeed, the rice, as an output, would not be produced without the labor
rendered by the farmer at the onset of rice pre-production and production. The seeds,
water, soil, fertilizers, and equipment would not render palay or rice without the farmers.
And even the other actors at the end of the value chain would serve useless without the
farmers are basic actors. With such importance emphasized on farmers, their work and
27
position in the value chain, the researcher gives special attention to them and their
condition in the value chain. After all, they are more than just a source of labor.
In the surveys conducted by the researcher, results showed that child labor is
rampant in the rice farming industry of Abuyog. Nine (9) out of the nine (9) surveyed
farming barangays or 100 percent have farmers who are minors, seventeen-year-olds and
below. The average age of farmers in the “minors category” is 15 years old. During the
actual harvesting and threshing that the researcher has actually witnessed, an eleven-year-
old boy partakes in farming by helping in catching the threshed palay that goes out of the
threshing machine. This is rather a hazardous undertaking by a young boy, for threshed
palay and the palay’s useless parts have the tendency to cause wounds in persons nearby
as these things suddenly shoot out of the thresher. Moreover, working under the heat of
the sun could cause harm especially to a growing child. Besides, minors like him should
not work but rather go to school or play. But poverty has nonetheless taken its toll even
to such young children.
Minors who chose or have been pushed to work in the rice farms receive the same
amount of cash that the adults do, if their job performance is comparable to that of their
fellow adult farmers. Aside from the money that these minors take home upon finishing
farming, they also get the chance to partake in meals usually sponsored by the land
tenants to farmers. However, in such setup, there is a tendency for minors to be exposed
to adult vices, such as drinking and smoking, or even gambling (cockfighting, in
particular), for they are mostly in the company of adult men.
However, not all farmers are males; female farmers also engage in farming
activities, specifically in planting palay seedlings. Some of these women farmers are
28
mothers, too; hence, their children, boys and girls alike, are tagged along, with them and
in the long run, would work as farmers, as well. The factors of having nothing to do and
financial inadequacy would somehow influence these children, minors, to work in the
farm lands. A mother, also, would feel shame whenever she tags her children with her
and the latter partake in meals, even without doing productive for the farm. Thus, a
farmer’s child eventually becomes a farmer, just like his or her parent.
Furthermore, aside from the extraneous amount of work that farming entails – in
planting and harvesting, especially when equipment are obsolete or are not available –
farmers are also exposed to disease-causing and deadly chemicals. These carcinogenic
substances, harmful for both internal and external body organs, are rampantly sourced
from input supplies that the farmers use in growing palay. These substances are in
fertilizers, insecticides, and herbicides. Bonifacio Sedomia, a famer-tenant, who was a
participant in the focus group discussion, is currently suffering from severe coughing
which he has been ignoring, for lack of monetary capacity to go consult a pretty decent
doctor who experts in such field and is only accessible in city hospitals and clinics, not in
Abuyog.
Although regular, rice farming is not done on a daily basis. In Abuyog and in the
rest of Leyte, rice planting and rice harvesting is only done twice or even for some, once
per year – once in the dry season and another during the wet season. Thus, the farmers
do not have a stable job as farmers, with which no stable wage, as well. As a
consequence, farmers tend to lend money from land tenants, land lords, or middlemen,
and payment for such is deducted from the meager wage (or the equivalent palay) that
they would receive if employed as farmers for the planting or harvest time. That is why
29
some farmers during “off-season” work as pedicab drivers in the poblacion, other do
sidelines as carpenters in Tacloban, or some even work in as far as Manila as construction
workers. Children of farmers, who do not work in the farms, are often sent as maids in
the cities by parents whose finances are not enough.
The occurrence of typhoons causes tragedy not only to the rice farms but also to
the farmers. What more can these farmers work for when the main object that they work
for and work with is gone? Typhoons do not only affect the supply of rice, as most of us
see and concern ourselves with, but such events are more remorseful for rice farmers,
whose wages and livelihood depend on the farm.
To concretize the exploitation done to farmers by the farmland owners, it is
needed to take into account the costs entailed in the obtaining the necessary labor from
the farmers vis-à-vis the revenue of the produced palay. Based on the data from the
surveys and FGD, the average farm size in Abuyog is about five hectares where 750
sacks of threshed palay is produced which also means 150 sacks of palay is harvested
from one hectare of farmland. Since each sack is equivalent to 50 kilograms, selling 150
sacks of threshed palay to assemblers gives revenue totaling to Php 82,500.00 per hectare
since a kilogram of palay is sold at Php 11.00 per kilo at farm gate price. The labor costs
incurred in producing palay in one hectare is estimated at Php 21,213.75, only a little
more than a quarter of the revenue, and is shared by three to six farmers whose labor
were used in planting, harvesting and threshing palay. Three quarters of the revenue is
the profit gained and divided between the tenant and the land owner. At the start of
another farming season, however, it is the tenant who is responsible for the capital in
30
conducting yet another farming activity. Clearly, the land owner who had the most
sedentary role among the actors gets the larger share of profits after all.
Nevertheless, no matter how exploitative their work can get, most farmers claim
that they rather stay as farmers who work in farm lands rather than live miserable and
impoverished lives in the city.
CHAPTER VI
31
IMPLICATIONS OF RESULTS
This chapter presents the implications of the results of the research to the
development theory, which is the promotion of a value chain approach in an industrial
sub-sector, such as the rice sub-sector of Abuyog, Leyte.
This chapter also presents the implications of the results to the development
policy or to that of the government’s policy in agriculture, particularly in the rice
industry.
6.1. Implications to Development Theory
In doing a value chain study, one is required to select a value chain sub-sector and
map out the different functions present within the sub-sector industry. With the mapping
comes a chain analysis to identify the processes present within each stage, the actors,
enablers, their roles and relationships with one another. After which comes the
identification of problem or those that are “needed to be done” so as to attain the goals of
the framework – productivity of the industry and a pro-poor growth.
From the results of this study of the rice sub-sector of Abuyog, the researcher
found out that the major player in the Abuyog rice sub-sector is the farmer, the one who
exerts manual labor to be able to produce the palay at the production level by cultivating
the farm land, planting the seedlings, harvesting and threshing the palay. In fact, a
farmer-tenant has to spend more than half (approximately 57 percent) of his budget in the
production level to be able to have the necessary manual labor needed in producing palay.
32
Although the farmers are the crucial actors when it comes to producing palay,
which later on becomes rice, among the actors, they are the ones who experience the
greatest social costs, too. The farmer seems to be at a stage of having the least of power
even if he has the greatest responsibility.
In line with the framework of the value chain promotion approach and in line with
its goal of productivity and pro-poor growth, the results of the research highly implies
that for the Abuyog rice sub-sector to be more productive, it needs to empower its
farmers. Empowering the farmers does not require a totally huge support or a huge
budget from the government. In fact, the empowerment of these farmers is attainable
among themselves through “community development” by forming a “farmers’
cooperative” unique in a given area, say, in a cluster of nearby barangays.
Community development is defined by F. Fajardo as “a process whereby the
conditions in the communities are improved largely through the resources and efforts of
the people themselves.” The concept of community development is “self-reliance.” 25
Through a cooperative among the farmers, costs of input supplies would lessen.
This, in fact, is proven by the results shown in assessing the cost of water supply among
irrigated farm land in this research. Cluster 3 only spent Php 500.00 for the supply of
water which was good for one hectare of land whereas Clusters 1, 6, 7, 8, and 9 had to
pay Php 1,500.00. Cluster 3 had its water from a cooperative called Bunga-ISA which
supplies water for the irrigation needs of its members or nearby barangays. A much
lower amount is spent in purchasing water from Bunga-ISA as compared to that of the
National Irrigation Administration (NIA). Bunga-ISA’s water supply, moreover, is not
rationed, unlike the water being supplied by NIA.

25
Feliciano R. Fajardo, Agricultural Economics (Manila: Rex Publishing, 1985).
33
The money spent for the water supply acquired from the farmers’ cooperative
would also benefit the farmer back if he is part of the cooperative. Other input supplies
could also be sold in the cooperative so as to lessen the costs (such as transportation
costs) of acquiring them. Supplies sold in the cooperative are most likely sold at the
correct market price. Farmers could also purchase other necessary farming inputs from
the cooperative which were hardly unavailable in supply stores.
Moreover, a farmers’ cooperative could pave way for a decrease in the costs of
renting equipment used in cultivating and tilling the field before planting and in threshing
the palay as compared before. A cooperative with enough funds could buy such
equipment and share among members the use of the equipment, or they could have them
rented to non-members, giving the cooperative a chance to generate income.
A well-funded cooperative could now reach out more to its members by lending
money to its members who fall short of budget as capital for planting palay or in
financing unexpected and emergency cases. Unlike before where farmers tend to borrow
money from the middlemen, with the cooperative, the farmers would not be forced to
make an agreement with the middleman for an exclusive selling of the farmer’s produce
because of the presence of a cooperative which would not impose high level of interest
rate.
Thus, a cooperative could market its own palay, as well. Since farmers are paid
with sacks of palay after harvest, they could collect them together, and directly sell to
wholesaler-millers. Another option is to mill the collected palay for consumption or for
the purpose of selling in the cooperative’s store. Also, the farmers could agree among
34
them to put up storage facility and drying machines so that they could sell rice to the
National Food Authority (NFA), thus availing of an incentive from NFA.
Farmers would have the option not to sell its whole quantity of the farm’s produce
to the middleman and market it themselves to interested wholesalers or millers at a
cheaper price. With this, they could earn more, for they could sell the palay at a higher
price as compared to that of the farmgate price but lower as compared to the price
imposed by the middleman.
The benefit could also trickle down to the end consumers because as bigger
quantity of rice comes to supply NFA then the price of the NFA rice could decrease in the
market. Also, directly selling the palay to interested wholesalers or millers would lessen
the incurred costs and minimize the costs which the consumers hurdle in the end.
With the existence of a cooperative, it would be easier for the Department of
Agriculture or any organization like NGOs and advocacy groups for that matter to
organize farmers and share with them the latest techniques or information with regard to
planting palay or just anything else helpful. It would be a quicker way for information
dissemination, too.
A cooperative among farmers could also pave way for an easy mass mobilization
in times where farmers’ rights are undermined and when they get to be ignored by the
government with regard to their plight.
Truly, a cooperative among farmers would benefit the rice value chain of Abuyog
by lessening the costs for inputs at the production level, also diminishing marketing costs
at the post-production side, and most importantly reducing and abolishing the social costs
35
for the farmers as a cooperative empowers them. Indeed, a farmer’s cooperative could
boost the rice sub-sector to be one that is more productive and pro-poor.
Another way to empower farmers is through agrarian reform. Actually, the
government has implemented various agrarian reform programs and the most recent is the
Comprehensive Agrarian Reform Program (CARP). Through agrarian reform, farm lands
are to be redistributed to a number of farmer, thus a once big area of land owned by only
one person may be partitioned to some other farmers, each having a parcel of his own.
This strategy is based on the idea of farm size productivity, a concept that became
popular after the Second World War, which relates farm size to productivity: small farms
exhibits high productivity and physical output and labor investment decrease with
increasing farm size.
The inverse relationship (IR) of farm size and productivity is said to be of
advantage to smallholders like the farmers. However, after much industrialization, some
have argued against the applicability of the IR concept of farm size productivity. The IR
is said to be only true for traditional technology; today’s farming techniques, however,
have also caught up with the high levels of technology. Commercialized huge farms in
the form of plantations produce more than small farms. It is the huge farms which have
access to capital in investing on hi-tech equipment, quality seeds and fertilizers, and other
biotechnological advancements.
Bridging the gap between small farmers and the access to latest farming
technology is supposedly the role of agrarian reform, but this time, by providing the
farmers with the needed capital so as to also invest on hi-tech mass producing farming
technologies. In other countries, through agrarian reform, farmers gain access to credit.
36
6.2. Implications to Development Policy
The government-led initiative that farmers most likely benefit from the
Department of Agriculture (DA) is the subsidy that they impose in the prices of palay
seeds. Other than that, the presence of this government office as an enabling body that
promotes progress in Philippine agriculture sector is rather not felt by the farmers who
were interviewed by the researcher in certain barangays in Abuyog, Leyte. Surveyed
farmers claimed that for a while, no DA personnel ever visited them or their farms for
technical assistance.
The researcher found out that there were certain government-led services which
are not available to the farmers of Abuyog. Also some government services entail greater
financial cost as compared to the same services from other sources. The National
Irrigation Administration (NIA), for example, fails to supply water to all the farmlands,
and if they could, they charge farmers an amount which is much higher as compared to
other sources. It is discovered in this research that NIA charges thrice the amount as a
cooperative does for a supply of water to farmlands. Also, water from NIA is rationed
and, at some time, could not be available if needed in palay production.
The National Food Authority (NFA), on the other hand, fails to have their
presence felt in Abuyog, for the operations of this office do not cover the farming
barangays which were surveyed by the researcher. According to the Leyte Provincial
Agriculture Office, NFA focuses on and prioritizes other municipalities that also produce
rice, such as Ormoc, Alang-alang, and Carigara. The last two municipalities are located
near Tacloban City where the NFA office is located.
37
Given the situation that the farmers are experiencing, what the government
should do is to strengthen the agriculture office in local government units (LGU), like the
LGU of Abuyog, for example, where only five people work for the municipal agriculture
office. The best thing that the government could do is to increase the number of trained
personnel in the agriculture department armed with enough skills in dealing with
agricultural matters and who could look into the situation of the farmers and the farm
lands even in far-flung municipalities.
The municipal government should also assign action centers on nearby farming
barangays where farmers could post questions and could also seek help.
Another important implication deduced in the research is for the government to
ensure the availability of improved yet affordable inputs required in the production of
palay and rice, such as pest- and disease-resistant palay seed varieties, adequate and
competitively-priced water supply, and the availability of farming equipment and
machines. The government, at least in Abuyog, should provide for farming equipment,
such as land tractors, which could be used by farmers for free and should be properly
maintained as well.
The government should also increase its credit supply for farmers. As discussed
in the previous chapter, farmers who lack capital for planting rice resort to borrowing
money from a middleman who puts up a high interest rate in the farmer’s credit and bind
the farmer to sell his produce to that middleman alone. This hinders better marketing
opportunities for farmers.
Finally, the government through the Department of Agriculture needs to regularly
inform and teach these farmers agricultural education, with updated information
38
regarding the latest farming techniques. The government should also include
cooperatives education so as to hone the leadership skills of the farmers and at the same
time empower them through self-reliance, as mentioned in the first part of this chapter.
All these impositions are supposedly included in the government’s CARP manned
by the Department of Agrarian Reform, for CARP was really made in 1988 in light of the
farmers’ plight. Now that the CARP is about to end this 2008, it evidently seems that the
government failed to enforce what the CARP should have been. Therefore, the CARP
may be extended and revised but the government should see to it that its provisions are
clearly stated in a manner that would not go against other laws. As mentioned, what the
CARP is as a whole in paper is good, especially as it tries to provide empowerment to
farmers, but the problem lies in its flawed implementation.
39
CHAPTER VII
SUMMARY AND CONCLUSION
Gone were the days when the Philippines was known to be a country which
exports rice; our country now imports rice from our neighboring countries that are
extensive rice-producers, such as Thailand and Vietnam. Although the volume of rice
production, the area harvested for rice, and yield are increasing in small increments, still
these amounts do not sustain for the demand of rice by the growing population of our
country.
Leyte produces the largest volume of rice in Eastern Visayas and Abuyog is the
top rice-producing municipality in Leyte. In line with the framework of value chain
promotion approach of GTZ, the researcher conducted a value chain study in the rice sub-
sector industry of Abuyog, Leyte. This study entailed the identification of the various
processes from the production of palay down to marketing of rice to consumers and the
estimation of costs incurred in the production and post-production stages of rice.
At the production level, an estimated total costs amounting to Php 21,213.75 was
incurred for the purchase of inputs, such as seeds, water supply, pesticides and fertilizers,
and for attaining labor from farmers who cultivate the farm land, plant and harvest the
palay. The overall cost for labor (cultivation, planting, harvesting and threshing), at
57.18 percent share, outweighs the overall costs for inputs (seeds, water, pesticides,
fertilizers, and transportation cost, 42.82 percent share.
Since farmers are the ones who exert labor for rice production to be possible, they
have the most crucial role in the value chain of the Abuyog rice sub-sector. Despite the
40
major role that they have, they are also the ones who incur the greatest level of social
costs. These costs are in the form of job instability and poverty. Although farmers have
the most number of responsibilities in the value chain, they are the ones who are least
powerful.
Post-production involves a different set of actors. First in line are the assemblers
or the “middlemen” who buy the sacks of threshed palay from the farmer-tenant, store
them, and sell them to wholesalers. These middlemen transact with wholesalers not just
in Abuyog but also in Tacloban, Hilongos, Baybay, Samar, and even in Cebu.
These middlemen sell the palay at an increased price of Php 12.00 from the
previous Php 11.00 farmgate price. The middlemen get their profit by providing the
linkage between farmers and wholesalers, but at the expense of an added cost.
From the middlemen, the wholesalers are the ones who dry and mill the palay.
Php 1.20 per kilogram is the cost of milling palay into rice. After rice is milled, it is
transported to the retailers. An additional cost of Php 1.40 per kilogram is incurred.
Prices at the consumer level are pegged at an average of Php 18.50 per kilo.
The government through its Comprehensive Agrarian Reform Act has an ideal
action on empowering farmers which includes ways in attaining productivity in relation
to their small farm sizes. Problems emerge, however, due to the government’s flawed
implementation of this agrarian reform program. Thus, the formation of a farmers’
cooperative would serve to empower the farmers, for through this they become self-
reliant amidst the government’s lack of support. This form of community development
would assist farmers in attaining unavailable input supplies at a cheaper price, provide for
41
farming equipment, promote mass mobility, and provide for financial assistance that
would allow an expansion of marketing of rice, no longer attached to a middleman.
42
APPENDICES
LIST OF TABLES
Table 2.1. Palay Production, Area Harvested, and Yield, Philippines, 1970-2006
Table 2.2. Rice Prices (in Peso per Kilo), Philippines, 1990-2006
Table 2.3. Regional Palay Production in the Philippines
Table 2.4. Arable Land and Share of Rice in Crop Area, Selected Asian Countries
Table 2.5. Actors in the Rice Industry Value Chain
Table 5.1. Costs of Palay Production Per Cluster
Table 5.2. Average Costs of Palay Production in Abuyog

LIST OF FIGURES
Figure 2.1. Basic Functions in a Rice Sub-sector Value Chain
Figure 3.1. Value Chain as Pro-poor I
Figure 3.2. Value Chain as Pro-poor II
Figure 3.3. Value Chain Promotion Approach
Figure 3.4. Value Chain Promotion Methodology

Table 2.1. Palay Production, Area Harvested, and Yield, Philippines, 1970-2006 26
Production Area Harvested Yield

Year
(MT) (Ha) (MT/Ha)
1970 5,322,090 3,105,380 1.71
1971 5,255,270 3,246,560 1.62
1972 5,113,970 3,390,560 1.51
1973 5,386,710 3,376,050 1.60
1974 5,548,715 3,525,020 1.57
1975 6,381,430 3,630,900 1.76
1976 6,542,610 3,651,450 1.79
1977 7,254,390 3,702,910 1.96
1978 7,211,620 3,548,660 2.03
1979 7,684,795 3,542,660 2.17
1980 7,646,490 3,470,500 2.20
1981 7,910,735 3,418,950 2.31
1982 8,333,730 3,351,140 2.49
1983 7,294,910 3,054,300 2.39
1984 7,828,880 3,162,340 2.48
1985 8,805,600 3,306,470 2.66
1986 9,246,790 3,464,210 2.67
1987 8,539,852 3,255,900 2.62
1988 8,971,030 3,392,670 2.64
1989 9,458,772 3,497,280 2.70
1990 9,319,276 3,318,720 2.81
1991 9,673,262 3,424,960 2.82
1992 9,128,940 3,198,070 2.85
1993 9,434,208 3,282,350 2.87
1994 10,538,054 3,651,530 2.89
1995 10,540,649 3,758,691 2.80
1996 11,283,568 3,951,136 2.86
1997 11,268,963 3,842,270 2.93
1998 8,554,824 3,170,042 2.70
1999 11,786,625 3,999,839 2.95
2000 12,389,412 4,038,085 3.07
2001 12,954,870 4,065,441 3.19
2002 13,270,653 4,046,318 3.28
2003 13,499,884 4,006,421 3.37
2004 14,496,784 4,126,645 3.51
2005 14,603,005 4,070,421 3.59
2006 15,326,706 4,159,930 3.68
Source: Bureau of Agricultural Statistics (2007)
26
2007 data are not available yet.
Table 2.2. Rice Prices (in Peso per Kilo), Philippines, 1990-2006
Farmgate Wholesale
Year Retail Price
Price Price
1990 4.74 8.77 9.44
1991 4.77 9.08 9.97
1992 4.82 9.48 10.40
1993 5.40 10.78 11.85
1994 5.90 12.13 13.29
1995 7.24 15.04 16.32
1996 8.13 17.39 19.00
1997 7.92 16.88 18.55
1998 8.30 17.40 19.03
1999 7.87 17.46 19.16
2000 8.42 17.77 19.45
2001 8.17 17.61 19.43
2002 8.82 18.21 19.98
2003 8.84 18.30 20.20
2004 9.45 19.12 21.04
2005 10.43 20.93 22.88
2006 10.46 21.39 23.56
Source: BAS (2007)

Table 2.3. Regional Palay Production in the Philippines by Decade
1970s:
Region Volume (MT) Share (%) Rank
Philippines 6,170,160 100.00%
CAR 139,985 2.27% 13
Ilocos 542,431 8.79% 6
Cagayan Valley 664,731 10.77% 4
Central Luzon 1,022,025 16.56% 1
Southern Tagalog 754,947 12.24% 3
Bicol 581,312 9.42% 5
Western Visayas 767,630 12.44% 2
Central Visayas 123,933 2.01% 14
Eastern Visayas 239,579 3.88% 10
Zamboanga 256,539 4.16% 9
Northern
Mindanao 170,239 2.76% 11
Davao 163,888 2.66% 12
SOCCSKSARGEN 382,085 6.19% 7
Caraga 99,237 1.61% 15
ARMM 261,602 4.24% 8
Source: BAS (2007)
1980s:
Philippines 8,403,679 100.00%
CAR 169,845 2.02% 13
Ilocos 730,977 8.70% 5
Cagayan Valley 886,056 10.54% 3
Central Luzon 1,518,723 18.07% 1
Bicol 648,253 7.71% 6
Western Visayas 1,108,695 13.19% 2
Zamboanga 303,326 3.61% 10
Northern
Mindanao 271,448 3.23% 11
Davao 384,180 4.57% 8
Caraga 168,675 2.01% 14
ARMM 203,243 2.42% 12
Source: BAS (2007)
1990s:
Philippines 10,152,837 100.00%
CAR 184,535 1.82% 15
Ilocos 922,000 9.08% 5
Cagayan Valley 1,256,950 12.38% 3
Central Luzon 1,828,014 18.00% 1
Bicol 666,259 6.56% 7
Zamboanga 337,930 3.33% 11
Northern
Mindanao 434,306 4.28% 8
Davao 384,124 3.78% 10
Caraga 272,510 2.68% 12
ARMM 251,373 2.48% 13
Source: BAS (2007)
2000-2005:
Philippines 13,535,768 100.00%
314,25
CAR 2.32% 14
9
1,277,0
Ilocos 9.43% 4
39
1,785,0
Cagayan Valley 13.19% 2
92
2,297,0
Central Luzon 16.97% 1
34
1,171,4
Southern Tagalog 8.65% 5
08
802,09
Bicol 5.93% 7
5
1,739,1
Western Visayas 12.85% 3
15
215,02
Central Visayas 1.59% 15
2
648,46
Eastern Visayas 4.79% 8
2
502,22
Zamboanga 3.71% 9
6
Northern 496,44
3.67% 10
Mindanao 1
440,11
Davao 3.25% 12
3
1,063,5
SOCCSKSARGEN 7.86% 6
34
342,30
Caraga 2.53% 13
0
441,63
ARMM 3.26% 11
0
Source: BAS (2007)
2006:
Volume
Region Share (%) Rank
(MT)
Philippines 15,326,706 100.00%
CAR 397,340 2.59% 14
Ilocos 1,597,168 10.42% 4
Cagayan Valley 1,953,755 12.75% 3
Central Luzon 2,677,633 17.47% 1
Southern Tagalog 1,188,231 7.75% 5
Bicol 888,772 5.80% 7
Zamboanga 514,201 3.35% 10
Northern
461,289 3.01% 12
Mindanao
Davao 476,411 3.11% 11
SOCCSKSARGEN 1,146,220 7.48% 6
Caraga 408,774 2.67% 13
ARMM 554,270 3.62% 9
Source: BAS (2007)
Table 2.4. Arable Land and Share of Rice in Crop Area, Selected Asian Countries
Arable land per person Share of rice in

Country (hectares per 100 agricultural crop area
people) (%)
Cambodia 28.2 85
Thailand 23.4 57
Myanmar 20.7 52
Lao PDR 16.6 75
Indonesia 9.7 38
Malaysia 8.2 13
Vietnam 7.4 63
Philippines 7.3 32
Bangladesh 5.9 74
Sri Lanka 4.7 40
Source: Dawe (2003)
Table 2.5. Actors in the Rice Industry Value Chain

Logistic
Specific Input Primary Final
Centers, Traders
Providers Producers Consumers
Industries
Researchers; Leaseholders; Multi-Purpose Business Household,
Extension Owner Cooperatives; Representatives; Business &
Workers Cultivators; International & Buyers; Institutional
Farm Workers Non- Incorporators Buyers;
Government Importers; Allied
Organizations; Small Processors Industries
Government;
Rice Millers;
Rice Retailers;
Viajeros;
Paddy Traders;
Rice
Wholesalers;
Rice
Wholesalers-
Retailers
Source: GTZ (2005)

Table 5.1. Costs of Palay Production Per Cluster
Cost (Peso per Hectare)

Production Cost Cluster Cluster Cluster Cluster Cluster Cluster Cluster Cluster Cluster
1 2 3 4 5 6 7 8 9
Seeds 880.00 880.00 880.00 880.00 880.00 880.00 880.00 880.00 880.00
Water 1,500.00 n/a 500.00 n/a n/a 1,500.00 1,500.00 1,500.00 1,500.00
Fertilizers 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00
Pesticides* 3,703.75 3,703.75 3,703.75 3,703.75 3,703.75 3,703.75 3,703.75 3,703.75 3,703.75
Transportation 100.00 150.00 100.00 200.00 200.00 100.00 250.00 150.00 250.00
Cultivation* 980.00 980.00 980.00 980.00 980.00 980.00 980.00 980.00 980.00
Planting* 450.00 450.00 450.00 450.00 450.00 450.00 450.00 450.00 450.00
Harvesting/Thresh 10,700.0 10,700.0 10,700.0 10,700.0 10,700.0 10,700.0 10,700.0 10,700.0 10,700.0
.* 0 0 0 0 0 0 0 0 0
21,313.7 19,863.7 20,313.7 19,913.7 19,913.7 21,313.7 21,463.7 21,363.7 21,463.7
TOTAL (PHP/ha) 5 5 5 5 5 5 5 5 5
* Values computed from the data given during the focus group discussion
Table 5.2. Average Costs of Palay Production in Abuyog
Cost (peso per

Production Cost hectare) % Share in Total Cost
Seeds 880.00 4.15%
Water* 1,333.33 6.29%
Fertilizers 3,000.00 14.14%
Pesticides 3,703.75 17.46%
Transportation 166.67 0.79%
Cultivation 980.00 4.62%
Planting 450.00 2.12%
Harvesting and
Threshing 10,700.00 50.44%
TOTAL PHP 21,213.75 per ha 100.00%
* Average value of irrigated farmlands only

Figure 2.1. Basic Functions in a Rice Sub-sector Value Chain
Specific Trans- Con-

Inputs Production formation Trade sumption
Capital; Grow; Classify Domestic and Livestock feed,

Land; Pest & Disease Desiccate Foreign Staple Food,
Labor; Control; Mills Import Land, Kaning
Planting Harvest; (Organic, Sea & Air Malagkit
Materials; Fiber Malagkit, Transport (Glutinous
Research Extraction Dinurado, etc.) rice),
Handicrafts
Source: GTZ (2005)

Figure 3.1. Value Chain as Pro-poor I
Price 
(quality, other varieties,
Volume 
Pro-poor, if chain actors counter-seasonal offers
(new
= product upgrading
belong to poverty groups buyers)
Specific Logistics
Primary Final
input centers,
producers Traders Consumers
providers industry
Specific Trans-
inputs Production formation Trade
Diversification
(non-traditional,
Better Product, organic, or niche
markets)
Cost 
(process upgrading)
Source: GTZ (2005)
Figure 3.2. Value Chain as Pro-poor II
Pro-poor, if jobs and business opportunities are

available to poverty groups
Additional Jobs
(due to upgrading and
market growth)
Specific Logistics
Primary Final
input centers,
producers Traders Consumers
providers industry
External
service
providers
Additional Jobs
(due to local outsourcing of
functions)
Source: GTZ (2005)

Figure 3.3. Value Chain Promotion Approach
Higher income of poverty groups. A

larger share of value-added remains
with poverty groups and in marginal
regions.
Increasing integration of Process

Business
marginalized groups into the design and
partners get
national, regional, and international networking
in touch.
markets.
(Small) producers utilize their

competitive advantages.
Business and traders invest and
create new jobs.
Quality standards and market

Enterprises identify business Better access and greater use
institutions are in line with
potential. of services.
business needs.
Process
Actors utilize the information. Service providers offer Government and Sector
design
affordable know-how and organizations agree on rules
and net-
technology and standards.
working
Analysis of potential and
(capacity and organ, issues of economic policy and
structure of VC sub-sectors.
arrangements). regulation.
Source: GTZ (2005)
Figure 3.4. Value Chain Promotion Methodology
Selection of a Strategy and Monitoring and

Chain Analysis
value chain implementation evaluation
Chain selection Chain Market study Impact

Mapping Monitoring
Detailed chain Assessment of

analysis constraints &
opportunities
Possibilities
for upgrading
Intervention
level & key
actions
Source: GTZ (2005)

Survey Questionnaire
(FARMERS)
Respondent’s Name: ___________________________________________________________

Location (Barangay) of Farm:_____________________________________________________
Location, Date, and Time of Interview: _____________________________________________
PRE-PRODUCTION
1. Where do you get the seeds that you use for planting rice?
___ from the local/municipal government? Specify (which agency, if ever.)__________________
Do you pay for the seeds? If so, how much? ___________________________________
How do the seeds get to you? (agency gets to you or you get there?) ________________
What and how much are the other costs to obtain the seeds? ______________________
___ from accredited seed dealers? Name and location of dealer: __________________________
How does the seed get to you? (dealer gets to you or you get there?) _______________
How much do the seeds cost? ______________________________________________
___ from yourself (old stock from previous harvest)?
What and how much are the costs involved? ___________________________________
___ from other sources?
What and where is this source? _____________________________________________
How do the seeds get to you? _________________________ _____________________
How much do the seeds cost? ______________________________________________
2. What is the type of seed that you use?

___ breeder? Details: ___________________________________________________________
___ foundation? Details: _________________________________________________________
___ registered? Details: __________________________________________________________
___ certified? Details: ___________________________________________________________
3. Those seeds sprout into which variety of rice?

___ inbred. Specify and describe the kind. ___________________________________________
___ hybrid. Specify and describe the kind. ___________________________________________
4. Where do you get your water supply? __________________________________________________

How much does it cost? _________________________________________________________
5. What problems, if any, do you encounter in procuring the input supply, such as seeds and water?
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
6. Are your palay variety resistant to pests, such as insects and weeds? __________________________
(If yes to all pests, go to no. 7)
If no, how do you control pests?
___ through insecticides? Specify nature of insecticide(s). ______________________________
From whom or where did you get the insecticide? _______________________________
How much does it cost until harvest? _________________________________________
What and how much are the other costs to obtain it? _____________________________
___ through herbicides? Specify nature of herbicide(s). ________________________________
From whom or where did you get the herbicide? ________________________________
___ other methods? Specify nature of the method. _____________________________________
From whom or where did you get the materials for the method? ____________________
7. What other pest management practices do you practice?

_____________________________________________________________________________
_____________________________________________________________________________
How much do they cost you? ______________________________________________________
8. What other problems do you encounter in pest management?

_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
9. What fertilizers do you use? Describe further the fertilizer and its effects. ______________________
_____________________________________________________________________________
_____________________________________________________________________________
10. Where do you get the fertilizers? ______________________________________________________
11. How much do they cost? ____________________________________________________________
12. What other nutrient management practices do you do?

_____________________________________________________________________________
_____________________________________________________________________________
How much do they cost you? ______________________________________________________
13. What other problems do you encounter in nutrient management?

_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
PRODUCTION
14. How many farmers are there in your farm who plant palay? What else do they do aside from
planting? ____________________________________________________________________________
_____________________________________________________________________________
15. What do these farmers get in return of such services? If possible, please specify the amount of
payment for farmer per rendered service. __________________________________________________
_____________________________________________________________________________
16. Who pays these farmers and how much do they get for planting? ____________________________
_____________________________________________________________________________
17. What other benefits do these farmers receive? ___________________________________________

_____________________________________________________________________________
18. Where do these farmers live? How young and old are they? Please describe them more.
_____________________________________________________________________________
_____________________________________________________________________________
19. What are the problems and/or sentiments, if any, do these farmers have?
_____________________________________________________________________________
_____________________________________________________________________________
POST-PRODUCTION
20. How do you harvest the palay?

___ manual harvesting. Do you hire other workers for such manual harvest? _______________
If so, how much does this cost you? _________________________________________
___ mechanical harvesting. How much does this cost you, if any? ________________________
21. How do you thresh the palay?

___ manual harvesting. Do you hire other workers for such manual harvest? _______________
If so, how much does this cost you? _________________________________________
___ mechanical harvesting. How much does this cost you, if any? ________________________
22. Who cleans and dries the harvested palay?

___ farmers themselves. How?
___ mechanical. How much does it cost? ________________________
___ manual. How much does it cost? ___________________________
___ others.* Specify who: ________________________________________________________
Who sets the price of the harvested palay? ____________________________________
How much is it? _________________________________________________________
How is the price set? What is the basis? ______________________________________
23. Who stores the cleaned and dried palay?

___ farmers themselves. Where? __________________________________________________
How much does it cost? ___________________________________________________
___ others.∗ Specify who: ________________________________________________________
Who sets the price of the palay? ____________________________________________
How much is it? _________________________________________________________
24. Who mills the palay?

___ farmers themselves. How? Which method? ______________________________________
_______________________________________________________________________
How much does it cost (including the sacks as containers)? _______________________
___ others.∗ Specify who: ________________________________________________________
Who sets the price of the palay? ____________________________________________
How much is it? _________________________________________________________
25. Upon milling, who buys the milled palay/rice for wholesaling? ________________________________
Where is the wholesaler located and how did it get to the farmers? ________________________
_____________________________________________________________________________
What is the price of the milled rice?_________________________________________________
Who sets the price of the milled rice?________________________________________________
What is the basis of the price? _____________________________________________________
26. What are the problems encountered during transactions? ___________________________________

_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________

Another questionnaire is designed for this post-production stage if done by another actor.
Survey Questionnaire
(AGENTS / ASSEMBLERS)
Respondent’s Name and/or Company: _____________________________________________

Location: ____________________________________________________________________
Name/Location of Farm in Transaction with: _________________________________________
Location, Date, and Time of Interview: _____________________________________________
POST-PRODUCTION
1. From where did you buy the palay (farmer, viajero, etc.)? ___________________________________
_____________________________________________________________________________
2. How much did you pay for the palay which you bought from the farmer, viajero, assembler, or
cooperative? _________________________________________________________________________
_____________________________________________________________________________
3. What and how much are the other costs for acquiring the palay? _____________________________
_____________________________________________________________________________
4. Where do you store the rice? _________________________________________________________
How much is the cost of storing? ___________________________________________________
5. Where do you mill the rice? __________________________________________________________
How much is the cost of milling? ___________________________________________________
What happens to rice after milling? Is it sold to wholesalers? At what price? What are other
costs? _____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
6. Where do you wholesale the rice? Is it sold to retailers? ____________________________________

_____________________________________________________________________________
Who are the retailers and where are they located? _____________________________________
_____________________________________________________________________________
What and how much are the costs? ________________________________________________
7. Where will you retail the rice? How much is its cost? Who are the consumers and where are they
located?
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
8. What are the problems encountered during the milling / storing / wholesaling / retailing?
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
Interview Questionnaire
Name of Interviewee, Office/Organization, Position:

1) _____________________________________________________________________
2) _____________________________________________________________________
3) _____________________________________________________________________
Date, Time, and Location of Interview: ________________________________________________
Questions:
A. Input Supplies
1. What are the available seed types and varieties in Abuyog? How much should they cost?
2. Does the government provide subsidy for seeds? What are the government programs that would cater
to the farmer’s seed supplies?
3. Who are the accredited suppliers of seeds for farmers in Abuyog?
4. Where do these seeds come from, place of origin?
5. Where is the source of water for irrigation? How much do farmers pay for water supply?
6. How does the LGU monitor the transactions for input supplies? Where can the farmers go for
assistance or complaints?
7. What are the complaints or problems that farmers encounter with input supplies?
B. Pest Management
1. What are the pests that are common in the farmlands of Abuyog?
2. What pesticides/herbicides should be used? At what price should they be sold? Where could the
farmers get them?
3. What does the government do in terms of pest management?
4. How does the LGU monitor the transactions for pesticides/herbicides? Where can the farmers go for
assistance or complaints?
5. What are the complaints or problems that farmers encounter with pest management?
C. Nutrient Management
1. What fertilizers are suitable to the farmlands of Abuyog? At what price should they be sold? Where
could the farmers get them?
2. What does the government do in terms of nutrient management? Any programs?
3. How does the LGU monitor the transactions for fertilizers? Where can the farmers go for assistance or
complaints?
4. What are the complaints or problems that farmers encounter with nutrient management?
D. Harvesting
1. What kinds of harvesting and threshing equipment are present and necessary in Abuyog farms?
2. Are these owned by farmers or by somebody else?
3. If these equipment are for rent, who or what company/cooperative owns them? How much should
they charge the farmer who rents?
4. Where are these owners (individual, company, or cooperative) located for transactions?
5. What are other expenses that the farmers entail in harvesting and threshing?
6. What are the problems that farmers encounter in harvesting and threshing?
7. Who buys harvested and threshed palay from farmers? How much should the buyer pay?
8. Bought from the farmers, what will happen to the palay?
9. Who are the other actors in this stage?
E. Drying and Cleaning

1. What are the drying and cleaning methods practiced in Abuyog? What are the available equipment?
Where are these located?
2. Who usually does the drying and cleaning? the farmers themselves? the traders, viajeros?
3. How much do both mechanical and manual drying and cleaning cost?
4. What are the problems encountered in drying and cleaning?
5. Who buys dried and cleaned palay from the farmers? How much should the buyer pay?
6. Bought from the farmers, what will now happen to the dried and cleaned palay?
7. Who are the other actors in this stage?
F. Milling and Storage

1. What kinds of milling equipment are present and necessary in Abuyog farms?
2. Are these owned by farmers or by somebody else?
3. If these equipment are for rent, who or what company/cooperative owns them? How much should
they charge the farmer who rents?
4. Where are these owners (individual, company, or cooperative) located for transactions?
5. What are other expenses that the farmers entail in milling and storing the rice?
6. Where are the storage warehouses located in Abuyog? Are they enough?
7. What are the problems that farmers encounter in milling and storing?
8. Who buys milled/stored palay from farmers? How much should the buyer pay?
9. Bought from the farmers, what will happen to the palay?
G. Wholesaling and Retailing

1. Who does the wholesaling and retailing of palay in Abuyog? Where are these located?
2. What is the right wholesale price of rice in Abuyog? How is this determined?
3. What is the right retail price of rice in Abuyog? How is this determined?
4. Upon wholesale and retail, where are the rice distributed?
5. Who supplies rice if it is deficient in the province?
6. What are the problems encountered in wholesaling and retailing?
At the Abuyog Municipal Hall
Rice Field at Brgy. Barayong
At the Municipal Agriculture Office
Rice Field at Brgy. Capilian
My transport vehicle in Abuyog
With the farmers threshing the palay
Interview at the Provincial Agriculture

Office

A Value Chain Study of Rice in Abuyog, Leyte

Hochgeladen von

Dokumentinformationen

Originalbeschreibung:

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

A Value Chain Study of Rice in Abuyog, Leyte

Hochgeladen von

Copyright:

Verfügbare Formate

A VALUE CHAIN STUDY OF RICE IN ABUYOG, LEYTE

An Undergraduate Thesis Presented

Submitted to the Development Studies Program of

Bachelor of Arts, major in Development Studies

Chapter II. Review of Related Literature 3

Chapter III. Theoretical Framework 10

Chapter IV. Empirical Framework 13

Chapter V. Results and Analysis 16

Chapter VI. Implications of Results 32

Chapter VII. Summary and Conclusion 40

1.1. Rationale of the Study

Leyte is the largest rice-producing province in Eastern Visayas.1 It is, however,

considered as one of the provinces in the Philippines with a significant deceleration of

teeming with unscrupulous trading malpractices which results in unrealistic marketing

events—production to processing to marketing—and could be used to study an industry

VC study and promotion, “economic development is conceived as increasing division of

labor and cooperation between actors better known as ‘systematic competitiveness’” is

combining entrepreneurial development at the micro level, with institutional change at

logistics thus quality management is further attained, among others.6

1.2. Objectives of the Study

The main objectives of the study are the following:

chain processes, the value chain actors and their roles;

2. Identify the costs entailed in value chain processes;

1.3. Limitations of the Study

study of GTZ which delves on industries at a nationwide scale.

resources and time.

the production level, based on the data gathered in this research.

Development Programme (UNDP)9.

2.1. Role of Rice in the Philippines

Rice in the Philippines is a means of sustenance in two senses: as a basic staple

Organization (WTO), the government abolished quantitative restrictions on most of the

rent-seeking, reduces government revenues, incurs significant bureaucratic costs, and

introduced price uncertainties.”

2.2. Philippine Rice Industry Profile

production hit the 10 million-MT mark. Production significantly increased in 1996 to

rice farmers in the country.

comparative disadvantage in rice production relative to the major world exporters

importation. The Philippine population growth rate is calculated to be at 2.36 percent,

compared to 1 percent of Thailand, and Vietnam’s 1.4 percent. A growth in the

population translates to an increase in rice consumption.17

institutional infrastructure in the marketing system.19

involved. A poor distribution system may destroy an otherwise good product. If

lowest level and customer satisfaction at its highest.

transporting, milling, packaging, and storage. An essential function that needs to be

spent on using mechanical dryers.

Storage, which is usually done by traders and millers, is also an important

moisture content of 14 percent, palay can be stored up to 12 months.

transport. Likewise, milled rice is placed in 50-kilogram sacks for transport to

actors, rice packed and sold in smaller quantities.22

production, sourcing, distribution, consumption, and beyond until recycling or disposal of

a given product or service.

through better logistics, for example. Economic development is therefore conceived in

combining entrepreneurial development at the micro level, with institutional change at

the meso and macro level.

A “pro-poor growth” is the primary objective of the value chain promotion. It is

promotion leading to a pro-poor growth. To better understand the pro-poor growth

stakeholders together in a friendly environment; 2) Improve the understanding of

stakeholders on sector or sub-sector dynamics; 3) Facilitate identification of issues

through regular interaction for reviewing progress and revising plans.

thereby having a greater impact on the development of the industry as a whole.

4.1. Research Hypothesis

framework initialized by the German Technical Cooperation Agency (GTZ), as discussed

4.2. Description of Methodology