The Effects of Credit Constraint on Productivity and Farm Income of the Rice Farmers in Pila, Laguna

THE EFFECTS OF CREDIT CONSTRAINT ON PRODUCTIVITY AND FARM INCOME OF THE RICE FARMERS IN PILA, LAGUNA, 20161[pic 1]

1Thesis outline submitted in partial fulfillment of the requirements for graduation with the Degree of Bachelor of Science in Agricultural Economics, Major in Agricultural Finance and Cooperatives, from the Department of Agricultural and Applied Economics, College of Economics and Management, University of the Philippines Los Baños. Prepared under the supervision of Dr. Nora DM. Carambas

ALYSSA ANGELES RELOVA

INTRODUCTION

Background of the Study

Rice, being the staple food of the large Filipino population, is crucial in attaining food security. It is also considered as a significant contributor in the Philippine economy as it is one of the popular sources of income in the country. This makes rice a highly political crop.  Rice sector has always been the focus of agricultural policies in the Philippines which promotes rice self-sufficiency (Ricepedia, 2014). The Philippine government targets rice self-sufficiency which means meeting the country’s demand for rice through domestic production.  In fact, the Philippines’ target is to end imports of rice and attain 100% rice self-sufficiency by this year, 2016 (Department of Agriculture, 2012). 

The province of Laguna includes rice productivity in its most vital priorities as to increase the income of the farmers and provide them with sustainable sources of livelihood (Planning and Development Coordinating Office, 2016). Pila, one of the municipalities in Laguna, is in support with the goal of the province and the country primarily because rice farming is one of its main sources of income (Miravite, 2015). 

Despite the national and local governments’ effort in attaining rice self-sufficiency, the country’s rice productivity is still lagging behind due to a number of production constraints. Besides the biological, technical, and physical constraints in production like declining soil fertility, low technical efficiency of farmers, declining land area and climate change, there also exists a number of socio-economic production constraints in the country. These include limited access to credit, among others (Sebastian et al., 2002). Rice farmers in Pila, Laguna need credit to finance their rice production activities since a number of farms in the town do not have irrigation service that is much needed especially during dry cropping season. The rice farmers, who do not have irrigation service, tend to use diesel-fueled machineries in order to water their crop; this is a more expensive production process and requires a higher amount of capital (Miravite, 2015).