MASTERAL THESIS PROPOSAL PROGRAM

Thesis Writers Department :Agricultural Economics

Advisers Name :Assoc.Prof. Dr. Tuna ALEMDAR
Thesis Writers Name :An nur EMPAL
Thesis Date Started :May 2017
Thesis Title :Factors that motivates Cacao Farmers
towards Agricultural Entrepreneurship
Activities in Davao Region, Philippiens

I. INTRODUCTION

BACKGROUND OF THE STUDY

The Philippines is an archipelago of 7,100 islands on the western rim of thePacific Ocean
between Taiwan and Borneo, extending about 1,851 km north to south and with a maximum
breadth east to west of 1,070 km. It isbounded by the Pacific Ocean to the east, the Celebes
Sea to the south, theSulu Sea to the south-west, the South China Sea to the west, and the
BashiChannel to the north. The country has a total area of 300,000 km² and a totalcoastline
of 17,461 km.

DAVAO REGION, designated as Region XI, consist of five (5) provinces and six (6) cities,
namely: Davao del Norte, Davao Oriental, Davao del Sur, and newly created Davao
Occidental, and the Cities of Davao, Panabo, Tagum, Digos, Mati and Island Garden City of
Samal. It is located in the southeastern portion of the island of Mindanao surrounding the
Davao Gulf. It is bounded on the north by the provinces of Surigao del Sur, Agusan del Sur
and Bukidnon, on the east by the Philippine Sea, and on the west by the Central Mindanao
provinces.

While the region’s economy is predominantly agri-based, it is now developing into a center
for agro-industrial business, trade and tourism. Its competitive advantage is in agri-industry
as its products, bananas, pineapples, fresh asparagus, and fish products are exported abroad.
The region can be a vital link to markets in other parts of Mindanao, Brunei Darussalam and
parts of Malaysia and Indonesia.

Agriculture production in Davao Region dropped by 8.32% in 2013. The decline was
attributed to the output decreases in crops and livestock subsector. The crops subsector,
which comprised 66.56% of the regions agricultural output, recorded a 12.58% decreased.
Production in livestock subsector slightly went down by 0.73%. On the other hand, the
poultry and fisheries subsectors had output increases of 3.71% and 3.32% respectively
(Philippine Statistics Authority)(Table 1).
 TABLE 1. Gross Output in Agriculture: Growth Rate by Subsector,
Davao Region, 2013
Sector Growth Rate 2013 (percent)
Agriculture (8.32)
Crops (12.58)
Livestock (0.73)
Poultry 3.71
Fisheries 3.32
Source: Philippine Statistics Authority (PSA)

TABLE 2. Top Agricultural Commodities,

Davao Region, 2013
Commodity Name Production Share to Total Rank of the
Growth Rate Agricultural Region in the
Output of the National
Region Production
---------- (in percent) ----------
Banana (16.40) 33.76 1st
Hog (0.56) 13.10 6th
Chicken 4.90 8.52 7th
Palay (Rice) (6.02) 7.93 14th
Coconut (16.33) 7.92 1st
Source: Philippine Statistics Authority (PSA)

Table 2 shows the top five (5) major commodities produced in Davao Region, namely:
Banana, Hog, Chicken, Palay and Coconut contributed 71.23% to the regions total
agricultural output in the year 2013. The region continued to be the country´s number one
producer of banana and coconut while fourteenth in production of Palay. It ranked sixth in
hog production and seventh in chicken production.

CACAO (or cocoa for some) is a bean derived from the Theobroma cacao or cocoa tree,
which grows in elevations of 1,000 meters above sea level. Originating from South American
rainforests, cocoa thrives best in wet climates with rainfall evenly distributed across the year.
The Aztecs of South America were the first in recorded history to harvest cocoa beans and
concocted a beverage called “xocolātl”. Thus began man’s global romance with chocolate.

The global demand for cocoa is estimated to reach between 4.7 million to 5 million metric
tons by 2020, but a cocoa global shortage is also predicted at 1 million MT the same year, as
reported by the Department of Agriculture.
In the Philippines, the local consumption is at 50,000 MT every year, and the local supply is
only around 10,000 MT. To avoid this impending deficit, the Philippines committed to
produce 100,000 MT of fermented beans for the export and domestic markets through 40%
annual increase in production by 2020.

Cocoa is used as a source material for chocolate and cocoa powder. Cocoa butter is also
derived from roasted cocoa beans and is prominently used by the cosmetic and
pharmaceutical industries. Other uses of cocoa beans include treatments for a wide variety
of diseases including diabetes. In the Philippines, most small-scale producers process their
cocoa beans into “tableya,” a native chocolate confection.

TABLE 3. Cacao Volume of Production (Metric Tons),

Davao Region, CY 2011-2015
CACAO 2011 2012 2013 2014 2015
DAVAO REGION 3,617.11 3,762.89 3,844.30 4,365.90 4,920.27
Davao del Norte 342.03 346.57 371.82 829.65 914.57
Davao del Sur 1,680.79 1,709.97 1,718.04 1,428.41 1,703.46
Davao Oriental 506.16 485.25 483.13 494 510.13
Compostela Valley 204.61 206.31 141.58 287.19 316.71
Davao City 883.52 1,014.79 1,129.73 1,326.65 1,475.4
Source: Philippine Statistics Authority (PSA)

Table 3 shows a rapid growth of cacao production in Davao Region from year 2014 to 2015
this indicates that the market opportunities for cocoa products is growing, as there is an
increasing number of cafes and restaurants offering chocolate drinks. Moreover, the trend
towards wellness and a healthy lifestyle is seen as another opportunity for cocoa, as it is
being positioned and marketed as a health food given its natural contents and health benefits.

It is projected that by 2020, there is an additional one million tons of cacao needed to meet
global demand, while an additional 30,000 tons are needed to meet local demand. As such,
cacao growers and cocoa manufacturers in the country are well-positioned to translate these
market opportunities into a profitable reality.

ENTREPRENEURSHIP defined as the capacity and willingness to develop, organize and

manage a business venture along with any of its risk in order to make a profit. In economics,
entrepreneurship combined with land, labor, natural resourses and capital can produce profit.
Entrepreneurial spirit is characterized by innovation and risk-taking, and is an essential part
of a nations ability to succeed in an ever changing and increasingly competitive global
marketplace (www.businessdictionary.com).
 Entrepreneurship, value chains and market linkages are terms that are being used more and
more when talking about agriculture and farming. Many small-scale farmers and extension
organizations understand that there is little future for farmers unless they become more
entrepreneurial in the way they run their farms. They must increasingly produce for markets
and for profits. Becoming more entrepreneurial can be a challenge for small-scale farmers.

FARMERS AS ENTREPRENEURS Agri-entrepreneurs see their farms as a business.

They see their farms as a means of earning profits. They are passionate about their farm
business and are willing to take calculated risks to make their farms profitable and their
businesses grow. Furthermore, agri-entrepreneurs operate in a complex and dynamic
environment. They are part of a larger collection of people including other farmers, suppliers,
traders, transporters, processors and many others. Each of these has a role to play in
producing products and moving them through to the market through the value chain. Each
one needs to be an entrepreneur. They also need to respect each other and work together to
make the whole system work better and be more profitable (Kahan, D. 2012
Entrepreneurship in Farming, FAO)

II. IMPORTANCE OF THE STUDY:

III. OBJECTIVES OF THE STUDY:

1. This research primarily aims to study the needs of Cacao farmers in Davao Region to
become an Agri-Entrepreneur and increase their involvement in Agri-entrepreneurship
activities.

2. To identify the motivating factors for developing agri-entrepreneur mindset among cacao
production farmers in Davao Region, Philippines.

3. To analyze all the motivating factors for cacao production farmers which encourage them
to engage in Agri-entrepreneurship activities in Davao Region, Philippines.

4. To give findings on which factors the cacao production farmers are highly motivated and
propose some recommendations in order to elevate Agri-entrepreneurial success rate and
as a result encourage more individuals to participate in agricultural entrepreneurship.

5. To give an overall view on the current state of entrepreneurial activities involving cacao
production farmers in Davao Region, Philippines.

6. To determine the level of importance of the motivating factors to entrepreneurial success

as perceive by the Cacao production farmers.
 7. To provide useful information which will be beneficial in efforts to produce a more
business minded farmers, to be an agri-entrepreneurs both locally and globally.

8. To motivate and encourage future entrepreneurs to engage in the business of cacao

production.

IV. MATERIALS and METHOD:

(WHAT DATA and METHOD IS GOING TO BE USE)

To execute this study, Primary data will be obtain through distribution of structured
questionnaires following by face-to-face interview with Cacao production farmers who are
involved in agricultural entrepreneurship activities in Davao Region, Philippines. While
secondary data will be obtain from books, reports, scientific research, magazines, and
information from government agencies involved in the agricultural sector.

Sampling: Stratified random sampling technique will be use to ensure that the respondents
will be selected in a fair and equitable manner.

Statistical Method: Factor analysis will be carried out to identify motivating factors which
encourage Cacao production farmers to engage in agricultural entrepreneurship activities.
Factor analysis will start by calculating the correlation matrix for all relevant variables.
The Varimax Rotation method will be adopted to minimize the problem of cross loading.
Next, a reliability analysis will be used to determine the relevance of variables in each
instrument for entrepreneurial factors.

V. REVIEW OF LITERATURE