THE PRODUCTION

SECTOR
Topic Outline

❖FARM SYSTEM
elements in an Effective Production Subsystem
facts and Figures on Philippine Agricultural Economy (Crop production
sector, Livestock and poultry production sector & Fisheries and forestry
sectors)
❖ISSUES AND OPPORTUNITIES IN THE FARM SECTOR
the Philippine Farms
farm Production Sector Arrangements
problems and Constraints in the Farm Sector
problem Solutions/Options (Issues and Opportunities of farm sector)
The Agribusiness
Production Sector
• Core of the agribusiness system
• Production is a transformation process
where resources are combined to produce
a specific product at specific quality at
specific schedule
• Resources include land, farm inputs,
labor, and other resources
Elements in an Effective
Farm Production System
An efficient production system is affected by the
following important elements:

1. Market orientation
2. Location
3. Access to the right technology
4. Timely availability of resources
5. Management system
1. Market Orientation
• A market-led production system produces what the
market needs
• market forces determine what products to be produced
• products/markets of today may not necessarily be tomorrows
• Competition is present
2. Location
• A farm may be producing the right product but is not
sustainable because of its wrong location
• Choice of crop
• Availability and cost of land
• Agro-climatic factors
• Access to markets
• Support industries
• Existing infrastructure
• Availability of labor
3. Access to the right technology
• Technology influences productivity,
product quality, and production costs
• combination of farm inputs
• density of planting
• the type of irrigation
• methods of land preparation, harvesting and
handling of the produce
4. Timely availability of resources

• Plants and animals

undergo growth cycles
• Amount of resources
• Timing of application
of needed resources
 5. Management System
• Production management techniques
influences farm profitability and
sustainability
• Business functions
• Marketing
• Production
• Finance
• Human resources
AGRIBUSINESS SUBSECTOR ( Farm System)

• Crop production subsector,

• Livestock and poultry production subsector
• Fisheries and forestry subsectors &
• Forestry subsector
 Crop Production

• Dominates the agriculture landscape in the

Philippines
• Account for more than half of the
agricultural output
• Major crops in terms of production volume
• Palay, coconut, sugarcane, corn, banana and pineapple
• Major cops in terms of hectares planted
• Palay, coconut, corn, banana and sugarcane
Livestock and Poultry Production Sectors

LIVESTOCK
• Comprises: carabao, cattle, hog,
goat and dairy
• Dominated by hog production
POULTRY
• Includes: chicken, duck, chicken
eggs, duck eggs
• Chicken production is the
predominant activity
THE FISHERIES
SUBSECTOR
Fisheries Sector

Fish Farming
• Very important source of food, employment and
revenue in many countries.
• Types of Fishing Activity
• Municipal Fishing
• Commercial Fishing
• Acquaculture
Fisheries Sector

• Includes the marine, inland and aquaculture products

• Aquaculture accounted to almost half of the production
in terms of volume produced.
• Seaweeds, milkfish, and tilapia were the top
aquaculture species.
• Tuna and roundscad were the marine species with
highest volume catch.
• Top Producing Regions
Philippine Aquaculture Species
(BAS 2010)
FORESTRY SUBSECTOR
Services provided by forestry
sector (Carandang, 2008)
• Protective – soil stabilization and
erosion control, ecosystems protection,
protection of headwaters, habitat for
biodiversity, and amelioration of
microclimate, etc.
• Productive – production of water,
goods and services, etc.
• Aesthetic – beautiful sceneries, etc.
• Cultural and Historical
• Scientific – site for experiments, etc.
FUTURE AND Prospects of Forest
Industries in the Country

• Wood based industries in the near and medium

term – made up of sawmill, veneer and plywood mills
and pulp and paper mills
• Furniture and handicraft industries – export
winner; high quality products with the use of different
or mix media
• Herbal, beauty care products, and food
supplements – export potential
• Growing concern to conserve the natural forest
and increasing proclamation of protected areas
• Entry points: rattan and bamboo plantation
establishment; fuelwood plantations
THE PHILIPPINE
FARMS
Temporary Crops

• Plants grown seasonally and whose growing cycle is less

than one year and which must be sown or planted again
for production after each harvest.
 Permanent Crops

• Plants that occupy the land for a period of time and do

not need to be replaced after each harvest.
About 32 percent of the country's total land area
constitute the agricultural land. Of this, 51% and
44% were arable and permanent croplands,
respectively.
 Number and Size of Farms

• Decrease in total farm area could be attributed

to the conversion of farmlands to residential and
commercial purposes
Number and Size of Farms

• Reduction in the average farm size

• attributed also to the CARP of the government
• focused on the welfare of the
landless farmers and farm workers,
who are willing to take over the
ownership of the land and make it
productive
Crops and Animal Produce

• Palay is the major temporary

crop
• Coconut is the dominant
permanent crop
• Chicken is the prevalent poultry
raising activity (3.5 M farms)
• Major livestock reared is hog
(2.1 M farms)
• Ornamentals and flowers are
produced in 42,200 farms
What is a Farm?

• Any piece or pieces of land having a total area

of at least 1,000 square meters used wholly or
partly for the growing of crops (palay, corn, etc.
• And/or tending of livestock and/or poultry,
regardless of number;
• or any land, regardless of area used for raising
of at least 20 heads of livestock and/or 100
heads of poultry
Classification of Philippine Farms by Legal
Status
• Individual – refers to farms
operated by a person who maybe the
farm owner, lessee or tenant.
• Cooperative – refers to the
ownership of the farm by an
organization
• composed primarily of small producers
and consumers who voluntarily pool their
resources to form a business enterprise.
• Corporation – means that the farm
is owned and operated as a corporate
enterprise
Classification, cont…

• Partnership – means that the farm is owned by a legally

formed business organization
• results from a contract between two or more persons who
associate themselves in a common management.
• Government institution – refers to the ownership of the
farm by an organization owned and operated by the
government (Penal colonies, agricultural schools, etc.)
• Private institution
• Farm is owned an operated by a group of persons working together
• (charitable institutions, private schools etc.).
• includes other organizations not covered by the above mentioned
categories.
Farm Production Sector Arrangements

1. Cooperative Farming
2. Contract Growing
3. Contract Marketing
1. Cooperative Farming

• Combination of individually owned farms or is collectively

owned or operated, organized
• key decisions are made by the general assembly or an elected
board
• Advantages
• Sharing of resources
• Optimization of land
use
• Not required to pay 35% tax
2. Contract Growing

• A product and marketing arrangement

between two entries
• specifies several conditions of sale
• Requires the contracting firm to
provide technical and other services to
the production entry
 2. Contract Growing, cont…

Advantages to the farmers:

• Increased market for their output allowing them
to specialize and increase productivity.
• Production contracts would help in forecasting
their incomes
• Experimentation with and exposure to new crops
and techniques
• Access to farm inputs and support services
 2. Contract Growing, cont…

Advantages to the firm or the integrator:

• minimized of problems in managing an agricultural labor
force
• detachment from the challenges of unionization and rising
wages
• freedom from issues such as large holdings
3. Contract Marketing

• Processor/commercial farm tie-up

with small farmers
• The arrangement is that
commercial farmers or processors
buy the farmers’ produce in
advance or even before these are
harvested
3. Contract Marketing, cont…
• Advantage:
• Shared production risk and sure market for farmers
• Disadvantage:
• Farmers cannot dictate the price

• Advantage:
– Sure supply of products for the buyers
• Disadvantage:
– Risky (paying for the product even before its
harvest)
Farm Sector Arrangements, cont…

What it needs?
• Needs integration between
farmers with differing
scales of operation and
farmers and processors.
• On individual basis, the
problems of the farm
sector could also be solved
by designing marketing
strategies.
Farm Sector Arrangements, cont…

Marketing Strategies
For mass markets:
• maintenance of quality and product freshness
• faster disposal or movement of products,
• strengthening of relationship with existing buyers or
“suki”
Farm Sector Arrangements, cont…

Marketing Strategies
For institutional buyers (e.g.
hotels, restaurants)
• Quality and fresh products
• On time delivery
• Packaged and branded produce
(Styrofoam boxes for fruits,
perforated plastics for fruits
and vegetables and vacuum
packs for meat)
ISSUES and OPPORTUNITIES of Farm Sector
 Input Sourcing Problems

• Expensive farm inputs (for small farmers)

• Increase in production cost (dependence on use of
important inputs to boost production)
• Low volume and quality
of produce (farmers who
opted not to use important
inputs)
Production Constraints

• Farmers’ lack of control over

production conditions (weather
condition, temperature, soil type and
pH)
• Two options of farmers (during regular or
off season)
• Maintenance of quality
during production
operations
Marketing Problems

• Lack of markets and competition

• Perfectly competitive market for
agricultural produce
• No product differentiation
• Difficult access to market information
• Quality requirements not met
Farm Sector Problem Solutions/Options

• Market Linkaging and Strengthening of Existing

Marketing Linkages
• Identify opportunities and open up new markets
• Individual farm initiative, farmers’ organization, industry and
trade associations and through other concerned agencies
Farm Sector Problem Solutions/Options

• Small to Medium and Commercial Farmer Production

Alliances
• Mutually beneficial arrangements (commercial farms with
processing components tie-up with small farms)
• Example: contract growing
OPPORTUNITIES

• Creation of Roll-on-Roll-off (RORO) transport infrastructure that

has connected major Islands in the Philippines from Mindanao to
Luzon.
• A number of irrigation infrastructures are established and
improved in many regions (Bicol and Negros)
• High technologies
• Population growth
• ASEAN Integration