The Price Effects of the Tax Reform for Acceleration and Inclusion (Train) Law on Financial Management of Rice Farm-Households in Pila, Laguna, 2019

Date

6-2020

Degree

Bachelor of Science in Agricultural Economics

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Salvador P. Catelo

Committee Member

Salvador P. Catelo, Antonio Jesus A. Quilloy, Agham C. Cuevas

Abstract

Rice farmers in the Philippines already suffer from insufficient capitaL inaccessible credit, and high cost of inputs. The implementation of the Tax Reform fOI' Acceleration and Inclusion (TRAIN) law in 2018 was presupposed to have worsen this situation_ In 2018, the prices of fuel and fertilizer increased by 48.2 percent and 19.1 percent, respectively, from the previous year's levels. This spike in input prices bas been hypothesized to have affected the financial management of most farmers. To test whether the TRAIN law has indeed affected the farmers, 44 rice farmers in Pila, Laguna were interviewed in 2019. The objective was to analyze the price effects of TRAIN law on the financial management, farm production cost, as well as household expenditures of farm­ households during the dry season of 2018.

Descriptive statistics such as frequencies, means, percentages, and tabulation method were used to describe the respondents on their financial management. Results reveal that ninety-one percent of the respondents had other sources of income besides rice farming. Only 41 percent of the farmers borrowed money for farm production and 61 percent of them availed credit from formal institutions namely, NIA Region N Employees Multi-Purpose Cooperative Incorporated (NEMCO), Cavite United Rural Bank (CURB), and CARD Bank, Inc., due to their accessibility. Almost seven for every ten respondents had savings before and after the TRAIN law. In the allocation of capital, household needs were prioritized more than the farm expenses.

Using the paired t-test analysis, the study found out that there was a significant difference in net farm income per hectare and farm-household expenditures before and after the TRAIN law. Even with the increase in price of specific inputs and basic goods, the net farm income significantly increased by 26.8 percent from PhP 17,168.66 per hectare in 2017 to PhP 21,771.53 per hectare in 2018. This was because the selling price of palay also increased significantly by 43.1 percent. Furthermore, there was a 24.5-percent increase in total expenditures for both farm and household spendings. Farm expenses increased by 20.5 percent while household expenses increased by 28.2 percent primarily due to price increases. The study also revealed no significant difference in the amount of credit availed of, amount of savings, and quantity of input utilization.

The results of the study showed that the financial management of rice farmers was affected by the price effects of TRAIN law and the farm-household expenditures increased. Therefore, it is recommended that the farmers adopt cost-saving agricultural innovations such as the integrated rice-duck farming system (IRDFS) to offset the increase in production costs. It is also recommended that more research be conducted to validate the results of this study since it was limited to 44 rice farmer-respondents only. Furthermore, future studies must be done to ascertain the implications of TRAIN law on farmers' profitability, liquidity, and solvency.

Language

English

LC Subject

Taxation, Agriculture

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993.5 2020 A14 A43

Document Type

Thesis

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