Credit utilization and its farm- level economic effects on backyard swine production in Laguna, 2012

Date

4-2013

Degree

Bachelor of Science in Agricultural Economics

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Quilloy, Antonio Jesus A.

Co-adviser

Quicoy, Cesar B.

Abstract

The study investigated the effects of credit utilization on farm productivity and profitability among backyard swine raisers in Laguna in view of the persistent liquidity problems faced by these backyard producers. Based on a sample of 60 backyard farrowto-finish swine farmers in Laguna, the study finds that despite some degree of misutilization, credit is still instrumental in stimulating economic growth among backyard swine producers because: (1) it promotes higher resource use efficiency; (2) it leads to higher profitability, and (3) it promotes higher total factor productivity. The study was able to arrive at the aforementioned findings using: (1) allocative efficiency analysis, based on the stochastic production frontier; (2) cost and return analysis; and (3) total factor productivity analysis based on the Törnqvist Index Approach, respectively The study showed that farms that availed of credit are almost as resource-use efficient as those that did not avail of credit. However, everything else being the same, credit use provided for higher levels of economic input and output optima, hence increasing the economic potential of swine farms that availed of credit. Credit also resulted to higher farm productivity and profitability. It was noted that farms that availed of credit have higher production elasticity as compared with farms that did not avail of any form of credit, especially with regard to feeds. In addition, the study revealed that the higher production elasticity implies that at given input and output price levels, farms that used credit in their operations can produce more output; hence higher total farm revenue at a given level of cost. It was further revealed, that much of the difference in revenue was due to improvement in total factor productivity, accounting for about 75 percent of the total percent difference in revenue. By and large, the study finds that credit remains to be a significant avenue for swine farmers to improve their economic performance. The study underscores the role of credit in improving the economic outlook of swine farmers in Laguna, in terms of the higher potential and technically feasible level of productivity and profitability. With the aid of credit, the swine farmers need to increase input utilization only up to the optimal level in order for them to maximize and realize their full economic potential.

Language

English

Location

UPLB College of Economics and Management

Call Number

Thesis

Document Type

Thesis

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