Analysis of Contract and Non-Contract Marketing Arrangements on Rice among Agrarian Reform Beneficiaries (ARBs) in Bay and Calauan, Laguna

Date

5-2019

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Loida E. Mojica

Committee Member

Agnes T. Banzon, Dia Noelle F. Velasco, Normito Zapata, Jr.

Abstract

This study sought to (1) describe the socio-economic profile of the Agrarian Reform Beneficiaries who are into rice farming in Bay and Calauan, Laguna; (2) discuss the current marketing practices and marketing arrangements on rice in Bay and Calauan, Laguna; (3) identify the main factors affecting the choice of marketing arrangement of the farmers; (4) analyze the effects of these marketing arrangements on the business performance of the farmers; (5) evaluate the problems encountered by the farmer beneficiaries concerning their participation on the marketing arrangements.

For this study, 66 rice farmers were interviewed which consists of 57 rice farmers under non-contract arrangements and 9 farmers under contract arrangements. They were selected through the use of snowball sampling and they were interviewed using pre-tested questionnaires. Descriptive analysis was used to describe the socio-demographic characteristics of the ARBs and the types of marketing arrangements present in the area.

An analysis of the relationships between variables such as socio-demographic, economic, and non-economic factors and other variables such as income and profitability was determined through the use of Chi-Square Test. Influencing variables that were determined to be related with the decision of the rice farmers was further tested using Cramer’s V to determine the strength of association.

Results have shown that the improved knowledge and skills through training, price of rice received by farmers, access to credit, and available information technology were the identified factors that influence the decision of farmers in joining a specific marketing arrangement. Additionally, based on the interview, most farmers were not aware or do not have an access to contract marketing arrangements.

In analyzing the effect of these arrangements on their farm income and productivity, it was observed that farmers under contract arrangements have higher yield, higher price received, and higher net returns. T-test results showed that there were significant differences between the net return of the farmers. The difference of their average net return was Php 25,698.80 per hectare. This can be attributed to their higher yield per hectare. Although they also have relatively higher costs, it shows that the returns they receive offset their farm costs.

The problems faced by farmers in marketing palay were also identified. Farmers under contract arrangements usually have problems when their payments come in late and it takes about two to three weeks before they receive it and convert into cash. Farmers who are not under contract arrangements, usually have problems when they get involved in credit- marketing-tie-up. In this case, they have no choice but to sell all their produce to the people whom they have borrowed capital. Although the support they get from them helps to cover up costs in their production, there is an uncertainty whether they would get higher return since these loans come with higher interest rates.

The study revealed that contract arrangements were able to help improve the productivity and yield of the farmers. In contract arrangements, there are two major companies who provide sponsorship. The first one is into rice processing and marketing and provides minimum amount of inputs while the other one is into the business of input supply and provides all the necessary inputs needed by the farmers in rice production and marketing through credit. Although both of them gave farmers higher yield and returns, farmers were able to benefit more on having a contract arrangement with the second one since they no longer need to worry on financing the costs during the cropping season. It is because the costs are shouldered by the company during that time and they would only have to pay them at the end after they sell their produce

Given the problems encountered by the farmers, it is recommended that the farmers should be more open to participate in seminars and meetings conducted by the sponsoring companies so they will be able to know the benefits of joining a contract arrangement. On the other hand, the companies may encourage farmers to join these arrangements through providing farmers an access to inputs and capital. And for them to be able to keep their current partners and to avoid late payments, they may offer more farmer-friendly payment procedures by reducing the waiting time or they may give them initial payment after the procurement of palay.

Language

English

LC Subject

Land reform beneficiaries

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2019 M17 M34

Notes

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Document Type

Thesis

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