EFFECTS OF THE EFFECTIVE MICROORGANISM (EM) TECHNOLOGY ON THE

INCOME OF FARMERS IN BARANGAY OLONGTAO ILAYA, MACALELON IN

QUEZON PHILIPPINES, 20171.

1
Thesis outline submitted in partial fulfilment of the requirements for graduation with the
degree of Bachelor of Science in Agricultural Economics, major in Farm Management and
Production Economics, Department of Agricultural Economics, College of Economics and
Management, University of the Philippines Los Baos. Prepared under the supervision of Prof.
Caesar B. Quicoy.

JUSTIN FELICITAS BUENDIA

INTRODUCTION
Background of the Study

According to the International Rice Research Institute (IRRI), the Philippines faced several

constraints in rice production such as: climate change, growing population, declining land area,

high cost of inputs, poor drainage, and inadequate irrigation facilities which are currently adding

pressure to the agricultural sector especially in rice industry. Additionally, IRRI also reported that

the conversion of agricultural lands into residential, commercial, and industrial lands really

contributes to the reduction of supply of rice in the country. In 2012, statistics from FAOSTAT

and AQUASTAT database online reported that the production of rice decrease from 16.27 Mt in

2009 to 15.77 Mt in 2010. This sudden decrease in the production of rice may eventually affect

the supply of rice in the country.

The Philippine Rice Research Institute (PhilRice) under the Department of Agriculture

(DA) initiated a program entitled Upland Rice Development Program (URDP) in 2012. The
program aims to harness the potential of the upland rice ecosystem as one of the major sources of

the countrys rice supply and other food staples. In this regard, the program has seven components

and one of its components is the Community-based Effective Microorganism Technology which

aims to increase the productivity and food sufficiency of upland farmers in the community.

Currently the upland rice ecosystem is underutilized by the government.

Under the Community-based Palayamanan system Effective Microorganism

technology is attached. It is a technology that utilizes beneficial microbial inoculants to maintain

soil health, improve plant growth, recycle biomass residues, control pest and bioremediates

toxicants (Higa 1995, Corales 2000). The EM microbial base inoculant is extensively used in the

different components of the farm system. The inoculant developed by PhilRice together with the

activated EM solution is used in nutrient cycling (in-place composting) for soil improvement,

production of organic fertilizer, and reducing the foul odor arising from the waste materials

generated by the animal component. Plant extracts used in pest control, feed supplement from

kitchen garbage and vegetable rejects, and antibiotics from medicinal plants, are all processed

through fermentation using the EM technology.

Technology adoption is the key to this increase on profitability and productivity of

upland farmers in selected sites in the Philippines. Technology adoption can be an indicator of

success or failure since it all depends on the willingness and capability of the farmer to perform

appropriately what the technology needs. In the study of (Conley and Udry, 2010), it was stated

that transformation of technology is fundamental to the development process. For a new

technology to be adopted by an agent, particularly in agriculture, it must be adapted to the

circumstances faced by that agent. Its characteristics usually will not be transparent to the new user

(Robert E. Evenson and Larry E. Wesphal 1995) as cited by (Conley &Udry, 2010).Therefore,
adoption of the technology can be triggered if one of the target particpipant shared his/her

experience in the process of adopting technology. (Romer 1986; Lucas 1993) reiterated in their

study that individuals learn from their peers, neighbors, or friends is an important public policy

assumption that underpins, for example, public subsidies of schooling and has been hypothesized

to be a significant source of economic growth as cited by (Foster &Rosenweig, 1995).

Still few previous studies have addressed the comparative analysis on the adoption of a

specific technology in terms of farmers who adopt the technology versus farmers who use

traditional farm practices. Therefore, this study should be conducted in order to increase the

literatures concerning technology adoption here in the Philippines and to help institutions who are

specializing in rice to focus more on the assessment of the technologies they introduced to the

farmers in the country.

In line with this endeavor, the study chosen Barangay Olongato as part of the town of

Macalelon settled in Quezon Province to be the selected site. It is one of the rural areas where

upland farming is a major source of income. Barangay Olongtao Ilaya, the only upland area where

Effective Microorganism Technology is adapted needs to be assessed whether the technology has

become effective in increasing the level of income of upland rice farmers.Therefore, it is necessary

to quantify the advantages that the farmers earned from the Effective Microorganism Technology

so as to work out whether or not it has become effective and to know the two different sides of

adoption, farmers who adopt and did not adopt the technology.
Statement of the Problem

The Effective Microorganism technology was introduced in Brgy. Olongtao, Macalelon,

Quezon on 2011 under the implementation of the Community-based Effective Microorganism

Technology that is part of the Upland Rice Development Program by the Philippine Rice

Research Institute (PhilRice). The primary goal of the technology is to increase productivity of

the farmers by utilizing microbial inoculant.

However, the lack of monitoring led to some implications such as poor technology

monitoring and assessment of its effects. Many of the promises of the technology are still to be

assessed if it is really effective in increasing farmers productivity. Still, farmers continued to

face challenges like lack of capital, knowledge, and government support that every now and then

avert the increase in the productivity and income of farmers.

In the present, there had been an increase on the production of upland rice since farmers

already know how efficiently optimize their available resources through attending seminars and

demonstrations pertaining to the production of upland rice. In that sense, supply of upland rice

abruptly increased resulting to low farm gate prices and many instances that farmers just stored

and consumed their harvest due to exploitative demands in the market. Now, it boils down

whether the gains from the technology really can compensate for the downfall in prices.

All of these concerns lead to the actual profitability of the farms. Some of the farmers

rely solely on the farms for their livelihood. Hence, the technology plays a crucial part in

improving the household income of these families. It is important to analyse the effects of the

technology not just on the business venture but also on the farmer earnings.
Objectives of the Study

The main objective of the study is to determine the effects of Effective Microorganism

(EM) technology on the income of the upland rice farmers in Barangay Olongtao Ilaya.

The specific objectives are as follows:

to describe the characteristics or features of Effective Microorganism (EM)

technology;

to assess the effects of the technology on the production cost and yield of upland rice

farms;

to analyze the effects of the technology on the supply and price of upland rice in the

area;

to determine the effects of the technology on the net income of the farms; and

to identify the problems encountered and make appropriate recommendations.

Significance of the Study

Upland rice farming is the major source of income in Barangay Olongtao Ilaya, Mcalelon,

Quezon Province yet it is not adequate to address their dilemma on poverty. The EM technology

is extensively used in the different components of the farm system. The inoculant developed by

PhilRice together with the activated EM solution is used in nutrient cycling for soil improvement,

production of organic fertilizer, and reducing the foul odor arising from the waste material from

animal manure.

This study is also timely since there was a change in the administration support and funding

to this technology may be affected, furthermore this will help the policy makers in decision making

if they should or should not continue the allocation of funds for the technology. This may also

affect the decisions of PhilRice if they should or should not implement the technology to other

places in the Philippines. Therefore, this study is important to the upland rice industry and farmers

who was affected by the change of administration.

This study is therefore of importance in order to know whether the EM technology is

effective in increasing the adopters income in comparison to the non-adopters. It implicates the

need to assess if the technology is easy to adopt within the site, so that necessary adjustments can

be made by the agricultural team, municipal government and the PhilRice accordingly.
 REVIEW OF RELATED LITERATURE

Generally, upland farming is one of the ventures that require intensive use of labor, inputs,

and time. Therefore, few farmers invest to this kind of business since the cost in producing a

specific crop like rice is very expensive and time- consuming. In the study of Cano (2011),he stated

that upland farming has its potential in supplying the demand of Filipino rice consumers if the

government give focus into it. In this regard, this section will cover important concepts related to

upland farming specifically on the productivity of upland rice farmers through the intervention of

Effective Microorganism Technology in Barangay Olongatao, Macalelon.

Upland
Upland locations can be categorized as less inventive and inaccessible for farmers who

wants to invest capital for farming. According to Bureau of Agricultural Statistics (BAS, 2015),

the percent share of upland for farming is just 0.3 percent of the total land areas devoted for

agricultural activities. This is a challenge for the government to innovate their understanding about

upland studies , if and only if upland sites was also prioritize.

Furthermore, Philippine institutions especially those institutions highly related to

agricultural production have their own definition of what is an upland , since it depends upon

the program or project involved.

The Department of Environment and Natural Resources (DENR) define upland as, hilly

to mountainous landscape of slope greater than 18% including the table- land and plateaus lying

at higher elevation which are not normally suited to rice unless some form of terracing and ground

water exist and which are largely lands of public domain (p.78-79) in layman definition any

mountainous land form which is conducive for agricultural production and can be converted into
sustainable site for crop production and husbandry. DENR also agree that upland are areas which

are dependent on rain or not benefited by irrigation.

Upland areas here in our country is subjected to kaingin or slash and burn and most of

the time abused by community residents (Rolando, 2012). He also added that upland areas were

treated as camp site by New Peoples Armies (NPA), so it is impossible for farmers to cultivate

crops since there are threats to their security. In contrary, Castro (2012) said that upland has

plenty of resources for farming especially for crops which are conducive for cold weather such as:

cabbage, carrots, broccoli, and fruits like strawberry.

Literature about upland are limited in nature but this proposal exerted an effort to search

for concepts about upland and determine its contribution to the welfare of Filipino upland

communiites.

Moreover, farming is one of the major activities that creates income for average Filipino

wage earners and mainly support the supply of goods in the market. It is also a source of fund for

the education of their children and some entities expressed farming as leisure.

In 1986, Celestino and Elliot described upland farms as "economically small; they are

generally and basically subsistence-oriented complexes, where there is heavy dependence on non-

cash technical inputs, e.g. use of native seeds, farm wastes for feeds and from which little or no

produce is sold (p. 101-102) or it is simply a subsistent type of farm which predominantly focuses

on how to feed their own household through upland farming.

Upland farming is very rare in the country, obviously those communities residing beside a

hill or mountain have the primary access to upland resources. Cultivation may be on the farm size

and ability of a farmer to sustain a specific site like upland, so it is necessary for farmers to know
the advantages and disadvantages of the site since they will invest time, money, and effort. Proper

knowledge on what crops to be planted in terms of input availability and productivity is a must in

order to gain a positive result in your investments.

In this regard, the next section will focus on concepts relevant to upland rice farming,

productivity of upland rice farmers in the Philippines, and the introduction of Upland

Palayamanan technology.

Upland Rice Farming

Rice farming is a major source of income for a big percent of farmers in the country.

Literally, rice plays a big role not just in our diet but in our political status as a nation. Umizawa

(2013) reported that Philippines can be a threat to other Asian nations if the country becomes

competitive in the production of rice every year but he reiterated that the country is suffering from

a loss in the production and supply of rice that leads to importation of the commodity. His study

focused more on the advantages and disadvantages of rice in the country and pointed out that there

must be a close check on the production of rice in every major fields in the country because the

production gets lower through time.

In addition, Del Mundo (2015) also reported that lowland rice production is decreasing

exponentially due to the conversion of lands from agriculture to services such as: real estate,

business establishments, private entrepreneurial entities, and big malls. He also noted that upland

rice farming is a best alternative solution for the low supply of rice in the country. PhilRice(2012)

also noted that upland rice farming can be a primary frontier in alleviating the problem of having

low production of rice in lowland areas since the country is composed of more than 100, 000

hectares of upland site which is conducive to the production of rice. The institution is dedicated to
focus their funds to the upland communities since it is one of the major concerns of the Philippine

government in the present.

Rice Farmers in Uplands

According to Kohler (2014), there are two factors to be considered in assessing the

productivity of a farmer such as: (a) input availability, and (b) farming skill.

Input availability is the ability of a farmer to acquire specific inputs in the production of

his/her farming venture such as: fertilizer, pesticides, machinery, and man power. while farming

skill is the ability of the farmer to conduct specific activities related to farming such as: planning,

planting, harvesting, and post harvest measures (Quincy, 2013). Therefore, factors of productivity

essentially contributes to the overall productivity of a farmer whether on-farm or non-farm

activities parse.

Moreover, Lee (2011) noted to his study that production is committed to input and

knowledge of the farmer. He also stated in his study that, income can be a good indicator of

productivity and profitability of a farm as well as the farmer itself. As a supporting claim to Lee,

Mckinley ( 2012) also said that income may vary through the fluctuations of the productivity of a

farmer and may take a chance to increase its ability to incur minimal loss in the production.

Effective Microorganism Technology

The concept of effective microorganisms (EM) was developed by Professor Teruo Higa,

University of the Ryukyus, Okinawa, Japan (Higa, 1991; Higa and Wididana, 1991a). EM

consists of mixed cultures of beneficial an naturally-occurring microorganisms that can be

applied as inoculants to increase the microbial diversity of soils and plant. Research has shown

that the inoculation of EM cultures to the soil/plant ecosystem can improve soil quality, soil

health, and the growth, yield, and quality of crops. EM contains selected species of
microorganisms including predominant populations of lactic acid bacteria and yeasts and smaller

numbers of photosynthetic bacteria, actinomycetes and other types of organisms. All of these are

mutually compatible with one another and can coexist in liquid culture.

EM is not a substitute for other management practices. It is, however, an added dimension for

optimizing our best soil and crop management practices such as crop rotations, use of organic

amendments, conservation tillage, crop residue recycling, and biocontrol of pests. If used

properly, EM can significantly enhance the beneficial effects of these practices (Higa and

Wididana, 1991b).

The Philippines as an agricultural country has been promoting the use, production, and

marketing of bio-organic fertilizers to partly replace chemical fertilizers in its production

system. The reasons for this are partly environmental, and partly economic. Agricultural

systems which adopt reduced use of agricultural chemicals and increased use of organic inputs

are seen as more sustainable, more environmentally friendly and more cost effective than

systems based on chemical alone. They are particularly important for low-income farmers,

who often cannot afford enough chemical fertilizer to supply all the nutrients their crops need.

The introduction of EM technology in Philippine agriculture can be viewed as an excellent

opportunity to avail of a product that has successfully been proven in many countries of the

world, especially in member countries of APNAN. However, one has to understand that under

the Philippine setting, prior clearance from the Fertilizer and Pesticide Authority is needed

before any new fertilizer/pesticide material can be marketed locally. Thus, to obtain such
clearance, some efficacy tests on EM and Bokashi were conducted during the past cropping

seasons.
 CONCEPTUAL FRAMEWORK

The Upland rice producers will be characterized and sorted according to farm size. The

classification criteria are Small Scale (4,999 m2), Medium Scale (5,000-9,999 m2) and Large

Scale (10,000 m2). The farm size is affected by the growers source/s of financing which is either

his own equity or from credit sources. Upon adoption of the EM Technology, three aspects of the

farmers operations were influenced. These include the yield, the total supply of Upland rice and

the production costs which all affect the farmers net farm income. The supply of Upland rice,

through the population, was influenced since the program encouraged the production among old

and new farmers. Furthermore, the technology was also expected to increase the productivity of

the farms by increasing the average yield. By the law of supply and demand, an increase in the

supply of a commodity would cause a decrease in price. Lower prices affect the profitability of the

farm since the total returns is affected by the price per unit. The main target of the technology is

to lower the production costs incurred by the farmers, therefore increasing their net profit per unit.

These three aspects lead to the profitability of the farms as illustrated in Figure 1. The satisfaction

of the farmers on the over-all effects of the technology on their productivity and profitability were

also determined.
Figure 1. Conceptual framework used in assessing the effects of the EM Technology on the

Upland Farms in Brgy. Olongtao, Macalelon, Quezon.

HYPOTHESES OF THE STUDY

1. The Effective Microorganism Technology has significantly decreased the investment

and production costs incurred by the Upland rice growers.

2. Effective Microorganism Technology has significantly increased the yield of the

Upland rice farms.

3. There is no significant difference in the increment change in the yield among the

three farm scales.

4. Effective Microorganism Technology has increased the net farm income of the

Upland rice growers.

5. There is no significant difference in the increment change in the net farm income

among the three farm scales.

METHODOLOGY

Types of Data and Methods of Data Collection

Primary data will be gathered through personal interviews with the aid of pretested

questionnaires. Secondary data will be acquired from Philippine Rice Research Institute

(Philrice) and the Macalelon Municipal Agriculture Office (MMAO).

Sampling Procedure
The MMAO provided the updated list of registered farmers. A total of 90 farmers are in

the list but only 60 will be available for the interviews. The farmers will be classified according

to farm sizes with: 30 small scale farmers, 18 small scale farmers, and 12 large scale farmers.

Analytical Procedures
Cost and Return Analysis will be performed for the years 2011 and 2016. The total costs

will be computed using monetary and non-monetary expenses incurred by the farmers in

their farm operations. The total returns will be the earnings derived from the farmers

operations, both cash and non-cash. Cost and Returns data will be analyzed to ensure that

non-farm incomes and expenses of the household are not counted.

All data gathered are for the years 2011 and 2016 since the costs, revenues

and credit information collected will be used to analyse the situation before and

during the technology adoption. In terms of prices, this will be adjusted with the

use of the Consumer Price Index with 2011 (CPI = 100) as the base year.

The formula will be used is:

=


 The analysis will be performed through the computation of the Net Farm Income.

The NFI is a tool used to estimate the net revenue of a farmer or farmer owner after cropping

season.

It will be computed using the formula:

Net Farm Income = Total Revenue Total Costs

The NFI will be computed for data that will be obtained before and after the

adoption of the technology.

Statistical Analysis will be performed through the Students t-test and One-way Analysis

of Variance (ANOVA). These are vital in analyzing the before-and-after effects of the

technology on both the productivity and profitability of the Upland rice farms.

Test of means will be employed to compare the mean farm yield, mean farm yield

loss, mean farm gate price and mean net farm income. More specifically, a two-way,

unpaired Students t-test will be conducted. A two-way test will be conducted because the

direction of the change can go either way (decrease or increase). The test will be also

unpaired because the number of farmers increased during adoption.

The hypotheses were set up as:

Ho: 1=2
Ha: 12

where 1 = sample mean before adoption

2 = sample mean during adoption
Test of means was performed through the computation of the tc given as:
(1 2 ) (1 2 )
=
1 1
2 ( )
1 2
 where = t computed
1 = sample mean before adoption
2 = sample mean during adoption
1 = population mean before adoption
2 = population mean during adoption
s2p = pooled estimate of variance
1 = sample size before adoption
2 = sample size during adoption

The pooled estimate of variance, s2p, is given as

(11)1 2 +(1 1)2 2
2 = 1 +2 2

where 2 = pooled estimate of variance

1 = sample size before adoption
2 = sample size during adoption
1 2 = standard deviation before adoption
2 2 = standard deviation during adoption

A 5% level of significance will be used to test the effects of the technology on these
indicators. The null hypothesis (Ho) implies that there is no significant difference in the means
before and during the adoption of the technology. The alternative hypothesis states otherwise.
The decision rule is to reject the null hypothesis if the value of is greater than the tabulated
value of t for that specific degree of freedom and confidence level. The P value, or the
probability of committing a Type 1 error, was also computed to support the results. A higher P
value implies that there is a higher probability of rejecting a true null hypothesis.

A one-way ANOVA will be used to check for significant differences in the increment
changes among farm sizes. The mean increment changes (increase or decrease) in the yield, net
farm income and gross ratio of the farms will be also put into consideration to see if the farm
sizes have significant (5% probability level) implications on the effects of the technology on the
farms.

The hypothesis was set up as:

: 1 = 2 = 3
Ha: At least one of the farm sizes yields significantly different results

where 1 = sample mean for small scale farms

2 = sample mean for medium scale farms

3 = sample mean for large scale farms

The ANOVA Table is set-up to calculate the F statistic (Fc). If the Fc is found to be
higher than the critical value, this implies that there is significant difference in the increment
among the farm sizes.

The different values will be computed and filled into the ANOVA Table to compute for
the F statistic.
Contents
INTRODUCTION................................................................................................................................... 1
Background of the Study ..................................................................................................................... 1
Statement of the Problem ..................................................................................................................... 4
Significance of the Study ..................................................................................................................... 6
REVIEW OF RELATED LITERATURE ................................................................................................ 7
Upland ................................................................................................................................................ 7
Upland Rice Farming ........................................................................................................................... 9
Rice Farmers in Uplands .................................................................................................................... 10
Effective Microorganism Technology ................................................................................................ 10
CONCEPTUAL FRAMEWORK ....................................................................................................... 13
HYPOTHESES OF THE STUDY ..................................................................................................... 15
METHODOLOGY ................................................................................................................................ 16
Types of Data and Methods of Data Collection .................................................................................. 16
Sampling Procedure........................................................................................................................... 16
Analytical Procedures ........................................................................................................................ 16