Technical Efficiency and Profitability of Sweet Potato Production in Bagac, Bataan, 2020

Date

1-2022

Degree

Bachelor of Science in Agricultural Economics

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Julieta A. Delos Reyes

Committee Member

Agham C. Cuevas

Abstract

The study determined the technical efficiency of sweet potato production in Bagac, Bataan. The specific objectives of the study were to: describe the production practices of sweet potato farmers of Bagac, Bataan; assess the profitability of their sweet potato production; determine the factors affecting the technical efficiency of sweet potato production; and identify measures that can improve the sweet potato profitability and technical efficiency in the study area.

Data were collected through personal and phone interviews from a total of 52 sweet potato farmers from Bagac, Bataan using a pre-tested interview schedule. The list of farmers was obtained from the Municipal Agriculture Office of Bagac, Bataan from which a two-stage random cluster sampling was employed.

Descriptive and cost and returns analyses were performed. Technical efficiency analysis using the Ordinary Least Square (OLS) and the Maximum Likelihood Estimates (MLE) was also done to estimate the average production function and frontier production function, respectively. The software Frontier 4.1 was used in the estimation of a Cobb- Douglas production function.

The profitability analysis showed that the average net farm incomes for Kinerots variety were PhP62,810 (small-scale), PhP72,589 (medium-scale), and PhP60,625 (large- scale). The small-scale Inube farm had an average net farm income of negative PhP100. The computed ROI for the Kinerots variety was 76.54 percent (small-scale), 74.76 percent (medium-scale) and 55.56 percent (large scale) while a negative 0.12 percent for the Inube variety.

Results of the OLS estimation revealed that only the amount of labor significantly affected the technical efficiency of sweet potato production at 10 percent level of significance with coefficient of 0.445. Gamma which determines the presence of technical efficiency was calculated at 0.677 implying that there was 67.7 percent variability in the model that could be attributed to technical efficiency in the production and 32.3 percent was due to random noises. The Likelihood-ratio (LR) test result was 0.268 in favor of MLE proving the likelihood of the existence of inefficiency. The log likelihood was computed at 34.18 which was higher than OLS estimate further proving the existence of technical inefficiency. Among the variables predicted to contribute to technical inefficiency, only age was proven to be significant at 5 percent level of significance.

Based on the results of the study, it was concluded that large-scale farms are more efficient (90%) than small (81%) and medium-scale farms (86%) The computed increase in production needed by the average and least efficient large-scale farmer was 4.65 percent and 8.51 percent, respectively. Recommendations include implementation of a graduated increase in labor force; training younger generation of farmers and hiring younger labor force; fast-tracking of loan applications/processing; and putting up of accurate province- based weather and climate forecasting system through a mobile application.

Language

English

LC Subject

Sweet potato industry

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993.5 2022 A14 M46

Notes

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Document Type

Thesis

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