Nature, Causes, & Sources of

Productivity Growth in the

Livestock and Poultry Sub-
sectors
 Sectoral
Growth in agriculture GVA, Philippines
Background
20

15

10

5 87-88
(Percent)

0 92-93

Cereals Trad Exp Oth Crops Live and Total 97-98

-5
00-01
Poul
-10
-15 -25

-20

Source of data: NSO

 Chicken Inventory
250000

200000
head)
(000

150000 Philippines
Thailand
100000 Malaysia

50000

0
00
90
80
61

70

20
19
19

19

19

Source:
FAOSTAT
 Chicken Exports
350000
300000
Metric tons

250000
Philippines
200000
Thailand
150000
Malaysia
100000
50000
0
1980 1985 1990 1995 2000 2002

Source: FAOSTAT
 Corn Producer Price
0.30

0.25
(US$/kg)

0.20
Indo
0.15 Phil
Thai
0.10

0.05

0.00
1995 1996 1997 1998 1999 2000 2001

Source: FAOSTAT
 Study
1. AssessObjectives
production and supply
chain operations of the livestock
sector;
2. Collect evaluate commodity-
specific data relevant to
productivity growth analysis;
3. Describe the evolution of
technical, institutional, and
 Study
• Objectives
Describe the role of the private and
government sectors in the
development and introduction of
livestock technology; and
• Estimate sources of productivity
growth in the livestock sector
through appropriate methodologies
using the available data set.
Operational
Framework
 Accomplishments-
•Commodity Profile
to-Date
• Literatures (Approaches) Reviewed
• Data Gaps
• Analytical Model
 Commodity Profile
• Description of major time trends in production,
consumption, imports, and prices
• Discussion on the important segments of each
of the sub-sector’s supply chain
• Discussion on the relevant sub-sector trends
• Sectoral performance viz other countries
• Key issues in the sub-sectors
Literatures Reviewed
 Available Data
• Bureau of Animal Industry
– Supply Chain Analysis for Hog (file: BAI Hog
Supply Chain Analysis) COMPILED
– Supply Chain Analysis for Poultry
• Bureau of Agricultural Statistics
– Agricultural Employment Data by Sub-Industry
Group COMPILED
– Total Production, Philippines COMPILED
– Swine Inventory, Philippines COMPILED
– Chicken Inventory, Philippines COMPILED
– Metadata for National Agricultural Statistics in
the Philippines
• National Statistical Coordination Board
– Employment Statistics – household-based
data (file: NSCB PSIC Employment by Sector
(1991 – 2000)) COMPILED
• International Food Policy Research
Institute
– Philippines, Smallholder Livestock Production
Dataset, 2000-2001 COMPILED
• Dr. Robert Lo of Red Dragons Farms
– From presentation on Philippine broiler industry at
March 2006 poultry convention (will try to contact for
source of estimate) COMPILED
– Cost of production for broiler: unit cost, per head, per
kilogram COMPILED
• Dataserve Management, Inc.
– Potential data relevant to study (based on citations of
other sources)
 Analytical Model
• Stochastic frontier approach
– Two stages:
• Stage 1: Estimation of production function and
technical efficiency (TE)
• Stage 2: Estimating the determinants of TE
– Exploit results to estimate changes in total
factor productivity
• Stage 1: Single period, i = 1,…N firms or farms

yi  f  xi  TEi ev or yi  f  xi  evi ui

where :
yi  output of farm i
xi  vector of inputs of farm i
vi  ui  composed error
vi  error term,
TEi  e  ui
• Transformed further…
ln yi    xi   vi  ui
where: xi  1xk vector of inputs (transformed),
  kx1 vector of parameters

• Estimation approaches
– Deterministic
– Stochastic frontier model
• Deterministic
– “deviation from an observed max is attributed solely
to inefficiency of the firm…”(Greene, 1997, p 92)
– corrected OLS
• Stochastic frontier model
– “...maximum output that a producer can obtain is
assumed to be determined both by the production
function and random external factors such us luck
or unexpected disturbances…” (Greene, 1997 p 92)
– Assumes a distribution for ui…e.g. half-normal
– Maximum likelihood
• Stage 1: Multi-period
Revised equation:
yit  f  xit , t  e vit uit

i  1,...N farms; t  1,...T periods

Measure of technical efficiency:

yit uit
TEit  e
f  xit , t 
• Stage 2: Determinants of uit

uit  z it  wit

where:
z = vector of explanatory variables
 = vector of parameters
w = error term
• Measuring Change in total factor
productivity (TFP) – see Teruel (2007)

– Change in TFP = scale effect + pure

technological change + change in technical
efficiency + input allocative effect
 
Scale effect =  RTS  1   j xj
j

where:
RTS = returns to scale
 ln yit
RTS  
j  ln xit

f  xit , t 
x j
x j
j 
RTS
 f  xit , t 
Pure technical change: TCit 
t
uit
Change in technical efficiency: TECit 
t

Input Allocative Effect:  
j
j  S j  xj
 Issues
• Deterministic or stochastic?
– Inclined to do both
• What functional form?
– Prefer a translog but will depend on the number of
observations…..
– Will probably start with a Cobb-Douglas
• What are the xs (stage 1) and zs (stage 2)
– Depends on available data…later
 Data
• The dark side: Have time series data on
outputs but no data on inputs!
• A ray of sunshine: surveys used in the
studies of Costales et al. (2003) and Costales
et al. (2007)
– Have access to the data
– Can replicate survey (questionnaires and
respondents)
– Will be seeking permission from IFPRI
• Data collected
– Output (y)
– Inputs (x): labor, capital, feed consumption
– Others (potential zs?):
• Management characteristics: Years engaged in business,
credit avail, land ownership, visits to vet, attendance in
seminars
• Household characteristics: marital status, age, years of
schooling, household size, other potential sources of
income
• Other info:
– Costales et al. (2003)
• Period: Nov 2002-Jan 2003
• Smallholder and commercial farms
• Hogs: Central Luzon (59 obs), Southern Tagalog (76
obs), Northern Mindanao (72 obs)
• Poultry: Central Luzon (61 obs), Southern Tagalog (55
obs)
– Costales et al. (2007)
• Period: 2001-2
• 144 small-scale hog producers in Southern Tagalog
 Issues
• Which sites to visit?
– Budget constraint
– Status of farms…are they still in the business?
Work Schedule