Chicken Market Integration in the Context of Developments in Information and Communication Technology (ICT) and Transporation Infrastructure, Philippines, 1995-2005

Date

4-2007

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Isabelita M. Pabuayon

Committee Member

Dr. M. Elauria, Dr. P. Gordoncillo

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Abstract

The study was conducted to analyze the changes that occurred in the market integration of the Philippine chicken industry considering the developments in the information and communication technology (ICT) and transportation infrastructure. The specific objectives were: 1) to describe the domestic chicken industry as well as the selected farm, wholesale and retail markets with respect to their price behavior through time; 2) to compare the ICT and transportation infrastructure developments between Period A (1995 to 2000) and Period B (2001 to 2005) in selected regions; 3) to compare the degree of integration of farm-to-wholesale, wholesale-to-retail and farm-to-retail markets between Period A and Period B; and 4) to identify the policy implications and recommendations of the study.

Secondary data were gathered for the analyses. The analytical tools employed were trend analysis (simple regression); ratio-to-moving average method to determine the seasonal price variations; comparative means test; and market integration analyses specifically the cointegration method and Index of Market Connection (IMC) to determine the co-movement of prices and degree of market integration, respectively. Results were presented in tabular and graphical forms.

The volume of chicken production in the Philippines increased by 3.48 percent every year from 1997 to 2005. While the volume of chicken production in Central Luzon increased yearly by 5.71 percent, chicken production in Southern Tagalog decreased by 0.89 percent. Chicken prices at different market levels showed increasing trends. The retail prices of chicken showed the highest monthly increase while the wholesale prices were relatively stable. Farm prices of chicken in Central Luzon were higher than in CALABARZON. Seasonal monthly price variations were largely driven by demand. Prices were generally highest in January, May, June and December when several occasions like the holiday season and local feasts are usually held. Lowest prices of chicken usually occurred in March, April and November.

The Medium-Term Philippine Development Plan (2001-2004) had infrastructure development as one of its thrusts. NCR, Central Luzon and Southern Tagalog had significant improvements in the telephone subscriber teledensity. The number of CMTS subscribers and CMTS density as well as the number of NTC-registered ISPS and internet subscribers significantly increased between Period A and Period B. Moreover, the country's transport sector showed significant improvements during Period B. Both the road and bridge lengths as well as the road densities for NCR and Central Luzon had increased except those of CALABARZON.

Co-movement of prices was more evident in Period B than in Period A. All markets pairs were found to be cointegrated in the later period except CALABARZON. The IMC results indicated that all market pairs, except three, have high degree of market integration during Period A. These three pairs referred to the wholesale-to-retail markets especially the Metro Manila wholesale to Pampanga, Cavite and Laguna. In Period B, however, these were the only market pairs that showed improvements in the degree of market integration. Integration of other market pairs did not improve.

Several factors may help explain the mixed results. The first factor could be the varying level or degree of transportation infrastructure development across regions that created a gap between the fully-developed and less-developed regions. The second factor could be the emergence of more important reference markets or demand centers due to the development of new market channels or chains as facilities improved. The third could be the influx of domestic and foreign investors that promoted industrial development causing some changes in the nature of markets. The fourth factor is related to changes in production and consumption levels that likewise altered the extent of market integration across regions and within a particular region.

The recommendations of the study are as follows: continuous improvement and equitable development of the transport facilities with focus on the upgrading of current road quality; promotion of the use of ICT in the agricultural sector in accordance with AFMA; and further research on the effect of infrastructure development on the emergence of new agricultural markets in relation to the integration and efficiency of these markets.

Language

English

LC Subject

Chicken industry, Chickens--Marketing, Information technology--Management

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993.5 2007 A14 T83

Notes

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Document Type

Thesis

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