Economic Analysis of Organic Rice Production in Tayabas, Quezon, 2018-2019

Date

7-2020

Degree

Bachelor of Science in Agricultural Economics

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Antonio Jesus A. Quilloy

Committee Member

Antonio Jesus A. Quilloy, Agham C. Cuevas

Abstract

The study aimed to analyze the economics of organic rice production in the Municipality ofTayabas, Quezon. Using a partial budget and benefit-cost analysis on a sample af 43 rice farmers, the study found out that organic rice farming has a higher net benefit than conventional rice farming in terms of environmental, health, and economic effects. The finding􀂟 concerning environmental benefits or organic rice farming are based solely on the fmners' experience garnered through interviews. Organic farmers have compared the level of soil fertility after practicing both farming systems. According to the organic farmers, the quantity of organic fertilizer remains to be relatively constant while conventional farmers claimed that they experience fluctuation in the fertilizer requirement. The addition of chemical fertilizers is required because the level of soil fertility is continuously decreasing.

Conventional rice farmers from Tayabas, Quezon could be better off if they produce organic rice instead. Traditional farming generates greater gross income, however, having higher production cost results in a lower net income. The average selling price of conventional rice is PhP 13.00 while organic rice is PhP 18.92. The average net returns computed for conventional farming is PhP 10,436.22 per hectare which is significantly lower than net returns generated by organic farmers amounting to PhP 34,054.46 per hectare. The higher net returns gained in organic rice fanning are due to the low production cost of the farming system.

Based on the partial budget analysis, the possible overall impact of adopting organic rice fanning in the dry and wet season can amount to PhP 42,141.78 and PhP 42,4225.46 per hectare, respectively. Also, comparing the net present value, benefit-cost ratio, and internal rate of return of organic and conventional rice fanning using a 20-years cash flow shows that organic has a greater possibility of gaining net benefit. The computed net present value for conventional rice farming is PhP -829, 713. 79, which indicates that this type of farming system is not profitable given the 20-year projection. In contrast, organic rice farming generates a positive value amounting to PhP 211,952.37, which indicates a possible net gain in investment. The benefit-cost ratio of conventional rice farming was less than while organic rice farming was higher than one, which indicates that the returns generated by organic farmers outweigh the cost. The computed IRR for conventional rice fanning was zero while the organic obtained 12 percent, which was higher than the base rate of return. The organic farming system is profitable based on the positive results of the indicators.

The study concludes that farmers are highly encouraged to convert from conventional to organic. Despite the decrease in the level of farm production, organic farming still generates greater net income. Conventional rice farming has greater gross income, however, having higher production costs results in a lower net income. Also, comparing the net present value, benefit-cost ratio and internal rate of return of organic and conventional rice farming using a 20-years cash flow show that organic has a greater possibility of gaining net benefit.

Language

English

LC Subject

Agriculture, Economic Aspects, Rice Production

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993.5 2020 A14 A48

Document Type

Thesis

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