Chapter II

REVIEW OF RELATED LITERATURE

This chapter is arranged into three parts: Part A includes crop production and its

indicators; Part B consists of independent variables and Part C includes the relationship

between dependent variable and independent variables. The relevant information and

background were included to serve as an aid to address problems and strengthen the research

interpretation on data.

A. Crop Production

Crop production is influenced by the availability of arable land, yields, macroeconomic

uncertainty, and consumption patterns, among other factors; it also has a significant impact

on agricultural commodity prices. Crop production is influenced by harvested areas, yields

per hectare (yields), and quantity produced. Crop yields are the amount of crop goods

collected per unit of harvested land. In most situations, yield data is calculated by dividing

production data by harvested area data. The actual yield obtained on the farm is determined

by a number of factors, including the crop's genetic potential, the amount of sunlight, water,

and nutrients absorbed by the crop, and the presence of weeds and pests. Wheat, maize, rice,

and soybean all have this indicator. Crop output is therefore quantified in tonnes per hectare,

thousand hectares, and thousand tonnes ( OCED, 2021).

Crop production encompasses all of the feed sources necessary to keep the dairy herd

afloat, as well as the resource inputs utilized to grow the crops. The type of feed is

determined by whether the animals are managed conventionally or organically. Corn silage,

corn grain, alfalfa hay and alfalfa silage, soybeans, soybean meal, wheat, oats, distiller's

grains solids, grasses, forage, and hay, as well as nutritional supplements such as minerals,
 are some of the most common feeds. All feed crops cultivated on the farm, acquired from a

vendor or another farm, or sold to another farm would be included in the inventory. Larger

farms in the United States buy feed, whereas smaller farms grow their own (USDA

Economic Research 2007).

According to Rotz (2010), a separate analysis for feed milling activities would be done

to account for resource inputs such as transportation fuel and power. However, fuel for

tractors and other equipment, water, machinery, fertilizer, insecticides, and packaging

materials such as plastic and cardboard are all resource inputs in agricultural production.

Furthermore, the manure nutrients are employed in crop production, they represent a resource

input unless some is withdrawn for other use outside of the production system.

According to Cagasan (2021), the Philippines' crop production innovation strategies must be
evaluated in order to determine the country's ability to achieve maximum productivity and
income. Furthermore, the importance of finding a more productive and

safer food has increased as a result of rising food demands resulting from a rapidly growing

population. As a result, it is necessary to identify and evaluate crop production innovation

strategies in the Philippines. As a result, identify innovative crop production strategies in the

Philippines, assess current technological advances in the Philippines, and discuss the significance

of crop production innovations and advancements.

B . Factors affecting Crop Production

B.1 Fertilizer Consumption

Fertilizer consumption refers to the amount of plant nutrients consumed per square meter

of arable land. Barker, Herdt, and Rose (1985) investigated and found that in the absence of

fertilizer, newer kinds did not always provide lower yields. In addition, modern cultivars
consistently provide better yields, larger yield increments, higher maximum yield fertilizer

levels, and higher average fertilizer productivity. Furthermore, research shows that Filipino rice

growers utilize inadequate fertilizer. Farmers' methods are compared to site-specific nutrient

management in one IRRI research (conducted in the late 1990s) (SSNM). SSNM is described as

dynamic field-specific management in a single cropping season to maximize supply and demand

based on time and spatial variation.

According to Malik and Sekhar 2007, the various aspects of fertilizer usage in Indian

agriculture, such as the pattern of fertilizer consumption, the factors governing the use of

fertilizers by farmers, the economics of fertilizer use, the reasons for imbalanced fertilizer use,

and so on. These investigations were conducted at various times in time in various parts of the

nation, utilizing various levels of geographical aggregation, a wide variety of data sets, and

alternate analytical methodologies. These research discovered the relative relevance of several

elements in influencing the pattern of fertilizer consumption under different underlying

conditions at different moments.

The situation of inorganic fertilizers and bio-fertilizers, two sub-sectors of the Philippine

fertilizer industry, was discussed. The inorganic fertilizer industry is run by the private sector and

in the free market, but the bio fertilizer industry is influenced by government programs and

initiatives. Breakthrough policies have been enacted in countries that have influenced the

fertilizer industry. These policies included the creation of political decision-making or

government agencies to support the operation of the domestic fertilizer industry. Policies for

environmental sustainability, thus support for organic fertilizer sub-industries, and policies that

promote quality standards. The Philippines has created a policy environment that supports the
two goals of improving productivity and protecting the environment from deterioration.

B.2 Irrigation

Irrigation and Crop Production have a site-specific relationship. Yaron and Bresler (1983)

and Vaux and Pruitt (1983) give good interpretations and critiques, as well as analyses of the

limits of production functions for evaluating irrigation water uses economically. Stewart and

Hagan's (1973) graphical representation of the link between crop yield and field water

availability demonstrates the issues explored in this chapter. They defined field water supply as

the total of the soil water in the profile at planting that will become accessible to the crop during

the season, as well as gross seasonal irrigations (which would include preplant irrigations if not

already included in ) and rainfall received during the season.

Future crop production research will not benefit from developing empirical production

functions, unless basic knowledge of irrigation uniformity, soil variability, or crop-soil rooting

interactions is lacking. Additional improvements in the quantification of the effects of water

deficits at critical crop growth stages are needed. As the development of comprehensive crop

growth models increases, the irrigation economic analyses and real-time irrigation decisions

(Swaney, 1983) studied can be accomplished with expert systems (Lemon, 1986) studied that

rely on crop simulation. Few current crop simulation models contain the sophistication to deal

with all of the simultaneous problems related to water, salinity, fertility, insects, diseases, soil

chemical and physical limitations, and irrigation dynamics, as well as environmental variability,

but the future of their application to irrigation management problems appears promising.
There is a sound economic rationale for supposing that market failures are pervasive in

the provision of irrigation services, as private actors are not willing to develop and operate the

requisite irrigation systems without subsidy. However, the capital requirements would be high

and the commercial risks too high, with farmer incomes generally being low, leading to high

defaults in times of calamity. Hence, the argument goes, if irrigation is to be developed, then

public-sector involvement in terms of capital and even operating subsidies becomes necessary.

Additionally, since the 1960s, the Philippines has taken the route of large public expenditure

outlays for irrigation development, both to construct and operate systems. The result has been

enormous benefits for Philippine agriculture, particularly rice. Irrigated areas have been rising

over time, which has led to an expansion in the area harvested of irrigated rice. This, in turn,

exhibits a distinct yield advantage over rain-fed rice (Briones, 2007).

B.3 Agricultural Production Loans

Agricultural sector is developing in Turkey, and the funding of farmers is mostly actualized by

external resources such as loans. Since the establishment of the Republic of the Philippines,

Ziraat Bank (a state-owned bank) has offered financing to farmers, but today private banks are

also financing the farmers and providing loans to them. The purpose of this study was (1) to

investigate the bank (private versus public) selection factors that influence farmers' decisions on

agricultural loan uses, (2) to explore whether farmers value domestic capital banks over foreign

capital banks.

Koctork( 2005) The analyses indicated that reliability and accessibility of the banks influenced

farmers' bank selections. Farmers who preferred private sector banks for agricultural loan uses
 perceived higher levels of reliability and accessibility than did farmers who preferred public

banks.

Shah (2008) investigated the impact of agricultural loans on farmer fertility and income

in the mountains of North Pakistan. They established a relationship between farm productivity

and agricultural credits during their investigation. A favorable relationship occurs between

agricultural credits and farm earnings as well. As a consequence of their timely and sufficient

input use, farmers who take out agricultural loans increase their output and revenue.

C. The relationship between Crop Production and Fertilizer Consumption, Irrigation and

Agricultural Loans

C.1 Fertilizer Consumption and Crop Production

Fertilizer consumption refers to the amount of plant nutrients consumed per square

meter of arable land. Barker, Herdt, and Rose (1985) investigated and found that in the

absence of fertilizer, newer kinds did not always provide lower yields. In addition, modern

cultivars consistently provide better yields, larger yield increments, higher maximum yield

fertilizer levels, and higher average fertilizer productivity. Furthermore, research shows that

Filipino rice growers utilize inadequate fertilizer. Farmers' methods are compared to site-

specific nutrient management in one IRRI research (conducted in the late 1990s) (Site-
specific nutrient management). SSNM is described as dynamic field-specific management in

a single cropping season to maximize supply and demand based on time and spatial variation.

While According to Malik and Sekhar 2007 the various aspects of fertilizer usage in

Indian agriculture, such as the pattern of fertilizer consumption, the factors governing the use

of fertilizers by farmers, the economics of fertilizer use, the reasons for imbalanced fertilizer

use, and so on. These investigations were conducted at various times in time in various parts

of the nation, utilizing various levels of geographical aggregation, a wide variety of data sets,

and alternate analytical methodologies. This research discovered the relative relevance of

several elements in influencing the pattern of fertilizer consumption under different

underlying conditions at different moments.

The relationship between Crop Production and fertilizer use efficiency (FUE) among

producers of rice, wheat, and maize by using farm-level agricultural production data across

China. The findings reveal that farm size and FUE have a beneficial association. The

predicted farm size elasticities for rice, maize, wheat–maize, and rice–maize are comparable,

with an average farm size elasticity of roughly 0.2. According to statistics, a 1% increase in

farm size corresponds to a 0.2 percent rise in FUE. These results are unaffected by a variety

of control factors, 2SLS estimation using the contractual size as the instrumental variable, or

quantile regression. The factors that limit the expansion of farm scale have also been

discussed. These results suggest that promoting the expansion of farm size can increase FUE,

and thus reduce environmental pollution caused by the loss of fertilizers. This finding

provides new support for the government to promote the development of medium- and large-

scale farm ( Zhu and Wang, 2022).

 C.2 Irrigation and Crop Production
Future crop production research will not benefit from developing empirical production

functions, unless basic knowledge of irrigation uniformity, soil variability, or crop-soil rooting

interactions is lacking. Additional improvements in the quantification of the effects of water

deficits at critical crop growth stages are needed. As the development of comprehensive crop

growth models increases, the irrigation economic analyses and real-time irrigation decisions

(Swaney, 1983) studied can be accomplished with expert systems (Lemon, 1986) studied that

rely on crop simulation. Few current crop simulation models contain the sophistication to deal

with all of the simultaneous problems related to water, salinity, fertility, insects, diseases, soil

chemical and physical limitations, and irrigation dynamics, as well as environmental variability,

but the future of their application to irrigation management problems appears promising.

There is a sound economic rationale for supposing that market failures are pervasive in

the provision of irrigation services, as private actors are not willing to develop and operate the

requisite irrigation systems without subsidy. However, the capital requirements would be high

and the commercial risks too high, with farmer incomes generally being low, leading to high

defaults in times of calamity. Hence, the argument goes, if irrigation is to be developed, then

public-sector involvement in terms of capital and even operating subsidies becomes necessary.

Additionally, since the 1960s, the Philippines has taken the route of large public expenditure

outlays for irrigation development, both to construct and operate systems. The result has been

enormous benefits for Philippine agriculture, particularly rice. Irrigated areas have been rising

over time, which has led to an expansion in the area harvested of irrigated rice. This, in turn,

exhibits a distinct yield advantage over rain-fed rice (Briones, 2007).

Moya (2014) studied identified several issues that contributed to the poor performance of 14

irrigation systems studied, including: (1) field water requirements used in the design of most

irrigation systems were grossly underestimated; (2) water losses throughout the system were

underestimated; and (3) many irrigation systems are littered with redundant turnouts and

unresponsive and long farm ditches, all of which contributed to higher project costs due to the

use of the conventional approach circumstances of flow.

Irrigation and Crop Production have a site-specific relationship. Yaron and Bresler (1983)
and Vaux and Pruitt (1983) give good interpretations and critiques, as well as analyses of the
limits of production functions for evaluating irrigation water uses economically. Stewart and
Hagan's (1973) graphical representation of the link between crop yield and field water
availability demonstrates the issues explored in this chapter. They defined field water supply as
the total of the soil water in the profile at planting that will become accessible to the crop during
the season, as well as gross seasonal irrigations (which would include preplant irrigations if not
already included in ) and rainfall received during the season.

C.3 Crop Production and Agricultural Loans

The Agricultural Lending Corporation was created to take the position of the three

previously mentioned government credit organizations. The following were the grounds for

its creation: (1) The three agricultural credit agencies that operated in the King area before

1960 were operating independently of one another. There was some overlap in their

operational rations in many circumstances. (2) A large portion of the loans made to farmers

were not used for the intended purposes. (3) Money lenders continued to be the primary

source of credit for farmers, extending loans at a very high interest rate (Steitieh, 1967).

Shah (2008) investigated the impact of agricultural loans on farmer fertility and

income in the mountains of North Pakistan. They established a relationship between farm

productivity and agricultural credits during their investigation. A favorable relationship

occurs between agricultural credits and farm earnings as well. As a consequence of their

timely and sufficient input use, farmers who take out agricultural loans increase their output

and revenue.

According to Iqbal (2003), they used the ordinary least squares (OLS) approach to

assess the influence of institutional loans on agricultural productivity in Pakistan. The

dependent variable in the study was Agricultural Gross Domestic Product (AGDP), and

agricultural output was supposed to be a function of water availability, agricultural labor

force, cropped area, and agricultural credit. The study's data on factors of relevance spans the

years 1971–72 through 2001–2002. According to their empirical findings, there is a positive

and substantial association between institutional credit and agricultural GDP.Awotide (2015)

found that total livestock unit and farm size are negative and statistically significant in

explaining variations in cassava productivity among farmers who have access to credit.

However, household size, farm size, and access to information assets are negative and

statistically significant in explaining variations in cassava productivity among farmers who

do not have access to credit. Furthermore, loan availability has a significant and favorable

impact on cassava and agricultural productivity.