ACADEMY OF ST.

JOSEPH SENIOR HIGH SCHOOL DEPARTMENT

Assessing the Economic Viability and Profitability of Rice Farming in

Contemporary Context

CHAPTER 1

INTRODUCTION

Importance of the Study

Rice, (Oryza sativa), edible starchy cereal grain and the grass plant (family Poaceae)

by which it is produced. Roughly one-half of the world population, including virtually all of

East and Southeast Asia, is wholly dependent upon rice as a staple food; 95 percent of the

world’s rice crop is eaten by humans. Rice is cooked by boiling, or it can be ground into

a flour. It is eaten alone and in a great variety of soups, side dishes, and main dishes in

Asian, Middle Eastern, and many other cuisines. Other products in which rice is used are

breakfast cereals, noodles, and such alcoholic beverages as Japanese sake.

Many cultures have evidence of early rice cultivation, including China, India, and the

civilizations of Southeast Asia. However, the earliest archaeological evidence comes from

central and eastern China and dates to 7000–5000 BCE. More than 90 percent of the

world’s rice is grown in Asia, principally in China, India, Indonesia, and Bangladesh, with

smaller amounts grown in Japan, Pakistan, and various Southeast Asian nations. Rice is also

cultivated in parts of Europe, in North and South America, and in Australia. In Asia the

paddy is cultivated in three main types of soil, including clays with a firm bottom within a

few inches of the surface; silts and soft clays with soft bottoms becoming hard on drying;

and peats and “mucks” containing peat, provided the depth of the peat is not excessive.

Fields must be drained and dried before harvesting. When combine harvesters or binder

Assessing The Economicv Viability And Profitability Of Rice Farnming In

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Contemporary Context
 ACADEMY OF ST. JOSEPH SENIOR HIGH SCHOOL DEPARTMENT

threshers are employed, the grain must be dried to about 14 percent moisture so that no

deterioration takes place in storage. When reaper binders are used, the crop is “shocked” in

certain ways so that the grain is protected from rain. The milling methods used in most of

Asia remain fairly primitive, but large mills operate in Japan and some other areas. Hulling

of the paddy is usually accomplished by pestle and mortar worked by hand, foot, or water

power. Improvements are slowly taking place. The yield of milled rice is dependent on the

size and shape of the grain, the degree of ripeness, and the extent of exposure to the sun.

Some large mills, handling 500 to 1,000 tons of paddy daily, have specialized hulling plants

with consequent smaller losses from broken grain. They generally employ modern milling

techniques and rely on controlled drying plants instead of on sun drying.

Rice production is among the dominant agricultural activities by rural families for

almost half of the world’s population. Its production accounts for approximately 482 million

metric tons of milled rice per year. Globally, China and India account for approximately

50% of all rice outputs as well as consumption share. Rice is a staple food for the majority

population and a source of income and employment for more than 200 million households

from developing countries.

More than 200 million small farmers with an average of less than 1 hectare of land

produce 90% of the total rice in the world (Tonini & Cabrera, 2011). The supply of rice, a

staple food for half of the world’s population and the primary source of income and

employment of one-fifth of the global population is therefore strongly determined by small

farmers’ incentives for rice production. Small farm households are believed to face a lower

opportunity cost of labor than large farm households (Carter & Wiebe, 1990; Hunt, 1979;

Sen, 1966). As a result, they work on their farms in such a way that the expected marginal

value product of labor is less than a market wage-based measure of the opportunity cost of
Assessing The Economicv Viability And Profitability Of Rice Farnming In
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Contemporary Context
 ACADEMY OF ST. JOSEPH SENIOR HIGH SCHOOL DEPARTMENT

labor (Barrett, 1996). Small farmers more often employ their family labor and, as family

members are the residual claimant of the output, monitoring costs and other transaction

costs tend to be almost zero for small farmers but may be high for large farmers.

Consequently, small farmers tend be more productive and profitable than large farmers

(Barrett, 1996; Berry & Cline, 1979; Sen, 1975).

Alarmingly, because of the rapid economic development in a number of major rice-

producing countries (Philippines, India, China, Vietnam, and Thailand), the agricultural

wage rate has been increasing sharply, which essentially leads to an increase in the

opportunity cost of labor for small rice farmers. By contrast, except for the recent hikes in

commodity prices, the rice price has seldom increased in these countries. Other agricultural

input prices, such as for urea fertilizer and insecticides, have also been increasing

worldwide. Intuitively, small farm households might face more difficulty in adjusting to the

rising input costs, as they have less opportunity to use mechanization because of scale and

financial capacity constraints, and thus might incur more loss than large farms. By contrast,

large farm households might be able to purchase and deploy more machines and other

inputs in place of hired labor because of their financial capacity, access to credit, and scale

advantages. Thus, large farm households might be in a relatively more advantageous

position. Although this has important policy implications for sustainable growth in

agriculture in developing countries, existing studies seldom focus on the relationship

between farm size and profitability over time (e.g., Ahmad & Qureshi, 1999; Deb, 1995;

Rahman, 2003; Sharif & Dar, 1996; Thapa, 2007; Wadud & White, 2000). According to

production statistics, Tanzania, which is ranked the second after Madagascar in the Sub-

Saharan countries, is greatly held back by low yields. The major reasons for such low

Assessing The Economicv Viability And Profitability Of Rice Farnming In

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Contemporary Context
 ACADEMY OF ST. JOSEPH SENIOR HIGH SCHOOL DEPARTMENT

yield are poor resource utilization, high cost of inputs including labor and dependency on

rainfed ecosystem.

Economic profitability is the main target of a farmer. According to Brožová, profit

will vary depending on the costs and revenues which are considered as main economic

constituents. In the Philippines, rice production is one of the main sources of income (profit)

for Filipino people in rural areas. Rice is known as "Palay" in the country and it is

considered a staple food for millions of Filipinos. In fact, Casinillo stated that rice farming

is one of the issues in the agricultural sector that is a focal point of the Philippine

government's progress. Hence, the government has implemented different agricultural

programs that might improve the production of rice as well as the well-being of rice

farmers. Its production account to approximately 482 million metric Rice production is

conducted traditionally in the rural areas but provides food, income, and employment to

over 60% of the rural population. Most of farmers cultivate from 1-3 hectares of rice fields

on average in the rural areas. Due to the migration of labor in nonagricultural sectors,

shortages of labor and labor cost are becoming a serious problem in peak of cultivation. Due

to the industrialization in many of developing countries, labors are shifting towards mills

and factories; thus, it creates the shortages for agricultural operations. With the continuing

urbanization, the loss of agricultural lands, especially for rice production, is predicted to

increase rapidly in the next few years (Redfern et al., 2012). In addition, as population

increases by 2% annually (ADB, 2009), the task of producing the additional rice to meet the

expected demands of the year 2025 poses a major challenge. Coupled with the increase in

Assessing The Economicv Viability And Profitability Of Rice Farnming In

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Contemporary Context
 ACADEMY OF ST. JOSEPH SENIOR HIGH SCHOOL DEPARTMENT

the urbanization and industrialization, the need to increase food supply is becoming

progressively more important.

Rice remains an important agricultural commodity in the Philippines. It accounts for one-

fifth of agricultural gross value added, is a major source of employment and income for

rural people, and poor households spend about 25% of their income on rice (Balisacan and

Sebastian, 2006). The adoption of these mechanized farm machineries has provided

opportunities for rice farming households to increase production and to improve their

incomes and food security. Alongside, it is very important for us to support our Filipino rice

farmers, as one of the top rice producers in the world, and a top importer for rice in our

neighboring countries. With these demand , our country needs to produce more and become

a self-sufficient when it comes to rice supply. To strengthen the rice industry of the country,

Filipino farmers should eqiup techn Farmers still face many challenges in spite of the

enormous contributions they make to the world. Filipino farmers frequently deal with issues

such high input costs, low palay prices, labor shortages, capital shortages, postharvest

facilities, pests and illnesses, and irrigation systems [ARIDA I., 1970].The CALABARZON

Region has seen a significant change in its landscape, with certain agricultural areas being

largely transformed into an industrial sector, as a result of farmers' difficulties to survive on

their own resources with little assistance from the government. In order for rice farming to

continue, farmers need support from the public, private, and business sectors to preserve the

rural areas' resources and ecology. Since they don't think industrialization and

commercialization are the answers to the root cause of poverty, they are fighting to protect

the environment [Fernandez, D. 2014). Farmers in Davao City expecting government

support to strengthen the agricultural industry, emphasizing high-value goods. Farmers have

identified rice as one of the main crops that require development support [FRANCISCO
Assessing The Economicv Viability And Profitability Of Rice Farnming In
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Contemporary Context
 ACADEMY OF ST. JOSEPH SENIOR HIGH SCHOOL DEPARTMENT

C,,2019]. I.e.As a result, in response to the urgent needs of Filipino farmers, the Philippine

government significantly adopted the Rice Tariffication Law on February 14, 2019. The

goal of the law is to bring stability to rice prices, improve food security, and lessen

corruption and inefficiencies in the long-standing rice procurement system. Since rice is the

main meal in the nation, the government has come up with a plan to prevent a shortage by

permitting legitimate rice importers to do business. Senator Aquilino Pimentel said in a

press release from the Philippine Senate that, especially in nations with quickly growing

populations, food security is an important issue that has to be addressed with reforms to

guarantee that food supplies like rice are accessible and affordable [SENATE of the

phillines]. More importantly, by 2025, the Rice Tariffication Law hopes to have decreased

the number of undernourished children in the population by 2.1 million, or approximately

2.1 million fewer people who would otherwise be at risk of starvation and malnutrition.

Additionally, the government provides safety nets for Filipino farmers by introducing

innovations like improved rice-growing seeds and improved farming implements. Actually,

through the Rice Competitive Enhancement Fund (RCEF) program, tariffs on rice imports

will provide P10 billion toward the funding needed to establish a competitive local rice

industry [neda 2020]. Despite the fact that this law supports globalization, some local

farmers worry that it offers a threat to their livelihood because it stimulates the importation

of additional rice [Rivas r, 2019]. Palay farm gate prices fell sharply shortly after the law

took effect, reaching as low as P8 to P10 per kilogram, which is far less than the P12 per

kilogram projected production cost [ofreneo r. 2019]. There is no assurance that the goods

produced by palay farmers will be given preference in the marketplace, even if the

government may definitely charge taxes on rice imports in order to raise money. For some

farmers, it is a serious risk since they fear domestic rice products won't be able to match the

Assessing The Economicv Viability And Profitability Of Rice Farnming In

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Contemporary Context
 ACADEMY OF ST. JOSEPH SENIOR HIGH SCHOOL DEPARTMENT

high quality of heavily imported rice. ecological advancement and techniques to promote

their agricultural resilience.

In the local of Claveria, main source of income is farming especially rice farming.

Due to the moving of laborers from agriculture to construction, the price of daily wage has

grown rapidly by 80% for 3 years. Some farmers use modern machines (ei. Harvester, rice

planter, rototiller, water pump, rice miller, and paddy dryer). Due to rurality of Claveria all

the financial institution that are intend to financial assistance for farmers are not even reach

and also the transportation of inputs and outputs are expensive that can affect the yield and

profit of the farmers of Claveria.

Assessing The Economicv Viability And Profitability Of Rice Farnming In

P
Contemporary Context
 ACADEMY OF ST. JOSEPH SENIOR HIGH SCHOOL DEPARTMENT

Statement Of The Problem

This study aims the evaluation the economic viability and profitability of rice
farming in contemporary context

Specific problem:
- How may the profile of the respondent be described in terms of
1.1 -age
1.2- sex
1.3-type of seedling user
1.4 Type of mechanical users?
1.5 sizeland ownership

- how does modern agriculture affect the livelihood of farmers?

- Advantages and Disadvantages of modern agriculture?

- Does modern agriculture have a significant effect on the economic viability and
profitability of the rice farmers?

Assessing The Economicv Viability And Profitability Of Rice Farnming In

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Contemporary Context
 ACADEMY OF ST. JOSEPH SENIOR HIGH SCHOOL DEPARTMENT

Significance Of The Study

This study anticipated to contribute additional information to serve the following

individuals and organizations

Industry. This study will help the industry to improve their farming techniques to
earn and increase their profit on other regions and municipalities

Machine owners. This study will suggest how to improve the performance of the machine.
This study will also serve as a guide for more efficient and effective mechanized
machines.

Farmers. to enrich their knowledge and understanding regarding the usage of mechanical
machinery in rice cultivation. The vital information gathered in this study will help
them to identify the best strategies to minimize their expenses.

Consumers. This study will help consumers to maximize their purchasing power as the cost
of production can be lowered the milled product can be lowered to. This study can
also help ensure a stable and sufficient food supply for the growing population

Assessing The Economicv Viability And Profitability Of Rice Farnming In

P
Contemporary Context
 ACADEMY OF ST. JOSEPH SENIOR HIGH SCHOOL DEPARTMENT

Conceptual frameworks of the study

profile of the
data gathering the result of the

Output
Process
respondent be
Input

described in terms of -questionnaire study

-age
- sex -survey “The Impact Of
-type of seedling user
-type of mechanical
-the statistical Modern
users? treatement of data Agriculture On
the effect of modern
agricultue on livelihood -data gathering Productivity And
of the farmers procedures Profitability Of
effect of modern
agriculture on the yeild Rice Farmers Of
of the rice farmers Claveria"
advantage and
disadvantage of Modern
Agriculture

Figure 1. Input Process Output (IPO MODEL)

The researchers adopted the IPO model. It includes all of the material and all
the information that required in the process, the specific details and questionnaire in
the process itself, and the guide on evaluation of the the economic viability and
profitability of rice farming in contemporary context in the municipality of claveria.
the model shown the process on determining the impact of modern agriculture on
productivity and profitability of rice farmers

For input it consists the respondent profile as what type of farmer and the
aspects related to the educational research dependent and independent
variables.Usually all the details specified in the statement of the problem are
stipulated here.

For process it includes the questionnaire that were utilized. The observations
that was made for the data gathering method and the statistical analysis of the data.

For output, it includes the result of the study were the conclusion and
recommendation for more development of modern agriculture to sustain the
productivity and profitability of rice farmers

Assessing The Economicv Viability And Profitability Of Rice Farnming In

P
Contemporary Context
 ACADEMY OF ST. JOSEPH SENIOR HIGH SCHOOL DEPARTMENT

scope and delimitation

The study will acknowledge the effect of modern agriculture on the

productivity and profitability of the farmers. The limits its coverage to the rice
farmer only. the respondents will be 50 rice farmers in the municipality of Claveria.

Moreover, the participants will be purposely selected in the barangay of

dibalio alimoan cappanikian bacsay mapula pula malilitao san Antonio santo nino
sta.maria tabbugan with the total of 5 per barangay small farmer and large farmers.

The data and information will be gathered through surveys. Questionaries are
closed questions that provide respondents with a series of predetermined responses
which they can choose from. The duration of the investigation will start on ____ and
will end on ____.

Definition of term

Assessing The Economicv Viability And Profitability Of Rice Farnming In

P
Contemporary Context
 ACADEMY OF ST. JOSEPH SENIOR HIGH SCHOOL DEPARTMENT

Assessing The Economicv Viability And Profitability Of Rice Farnming In

P
Contemporary Context