Value chain finance analysis of selected carabao dairy products in Laguna, 2016

Date

6-2016

Degree

Bachelor of Science in Agricultural Economics

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Jose M. Yorobe, Jr

Abstract

The study was conducted primarily to analyze the financial aspects if the value chain of selected carabao dairy products in Laguna by determining their credit needs, factors offering credit demanded and the supply of credit. Using simple random sampling, a total of 15 farmers and three processors from selected municipalities in Laguna, particularly Magdalena, Pagsanjan, Lumban, Sta. Cruz, and Calauan were interviewed. Descriptive analysis and regression analysis were the analytical tools used in the study. The operating capital of the farmers and processors amounted to PhP1, 674.95 and PhP7, 379.02 per 100 liters of raw milk, respectively. The farmers had lower capital investment amounting to PhP69, 664 as compared to the processor-respondents with PhP65, 110. The income of the farmers amounted to PhP7, 639.31 per 100 liters of raw milk. This includes the net income from farming business and other income of the whole household. The processors had an average income of PhP5, 632.18 per 100 liters of raw milk. Despite having other sources of income and incentives given by government institutions, credit is still needed by the actors in the chain to finance their expenses. The average credit need of the farmers was PhP 2893.14 and PhP 1688.49 for the processors. The factors affecting the amount of credit needed by the farmers were also identified in the study through linear regression. The explanatory variables that were considered are capital investment, farm expenditure, household size, farm size, years in farming, and number of milking carabaos. Only the number of milking carabaos was negatively related to the amount of credit needed by the farmers. Farmers tend to borrow from other actors of the chain specifically their processors whereas the processors borrowed from an informal source. The farmers and processors borrowed in cash. The loan availed by the farmer ranged from PhP2000-PhP35, 000 which was used for their household expenses and capital investment. For the processors, it amounted to PhP 80, 000 which was used for their operating expenses. The cost of credit of the processors (PhP 206) was higher than the farmers (PhP52, 03) per PhP1000 of loan since it was borrowed from an informal source. The major problems encountered by farmers were the low milk yield especially during dry season and diseases. This can be indirectly related to financial problems since the low supply of milk can mean lesser amount of income that can be used to finance the expenses of the framers. This also affects the processors since the low supply of raw milk from the framers limit their expansion. Moreover, the other problem raised by the processors was the high interest rate. Based on the findings of this study, it is recommended that continuous support by the government should be made available to the actors in the chain. Furthermore, financing intervention should not only be applied to the production side, but it should benefit every segment of the chain to help actors of the chain and the whole industry to expand.

Language

English

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993.5 2016 A14 J37

Document Type

Thesis

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