ASSESSING THE IMPACT OF GOVERNMENT INCENTIVES

ON RICE FARMERS IN PALAYAN LEAGUE,

LIBON, ALBAY

A RESEARCH PROPOSAL PRESENTED TO THE

FACULTY OF SENIOR HIGH SCHOOL DEPARTMENT
LIBON COMMUNITY COLLEGE

IN PARTIAL FULFILLMENT OF
THE REQUIREMENTS FOR
PRACTICAL RESEARCH 2

JONA MAE SERGIO ABANO

ALTHEA BEA REGALARIO ELCANO
ELERY JOY RACINES FERNANDEZ
ANGELICA NEBRIA NARISMA
JOHN ROY SEGUI PACAMARA
ELLANE JOY QUINDO PASUMALA
MERLIZA SHANE LORZANO SARIO
CARLA MAE BONTO SENADAN
REGIE MAE BALINSAYO TAGULAO

JANUARY 2024

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 CHAPTER I

INTRODUCTION

The agricultural sectors play a crucial role in the economy of many countries,
particularly in regions where rice farming is a significant component of agricultural
activities. Governments often implemented various incentives and support programs to
promote and sustain rice farming, aiming to enhance the productivity, profitability, and
overall well-being of rice farmers.

Rice is a staple food for over half of the world's population, and it is particularly
important in the Philippines, where it is consumed on a daily basis. It is the single most
important agricultural crop in the Philippines, and is therefore a major source for income.
The rice industry is a vital sector of the Philippine economy, contributing significantly to
food security, employment, and rural development. In 2020, the Philippines produced 19.44
million metric tons of rice, making it the 8th largest rice producer in the world, accounting
for 2.8% of global rice production. The province of Albay is one of the major rice-producing
provinces in the Philippines, with a total of 1.88 percent of harvested are. The municipality of
Libon’s major economics activities are agriculture and fishing. Its 4, 000 hectares (9, 900
acres) of rice field produce 30.4million kilos or 608, 000 bags of palay per year, earning the
sobriquet “Rice Granary of Albay”, (Philippine Statistics Authority, 2016).

According to Cororaton (2014), rice also have its political significance, the
government is heavily involved both in its supply and distribution to assure consumers a
sufficient and stable supply at low prices to maintain a reasonable return to rice farmers with
government incentives. The government has implemented various incentives to support rice
farmers in the Philippines. These incentives include; Subsidized fertilizer and seeds, Loans
with low interest rates, Price support for palay. These incentives are aimed at helping rice
farmers increase their productivity and income.

A study by Rosegrant and Hazell (2013) found that government incentives can have a
significant impact on agricultural productivity. The study found that a 10% increase in go
vernment incentives led to a 4% increase in agricultural productivity. In addition, government

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incentives can also have a good impact on agricultural income. It can increase agricultural
income up to 6%, if the increase in government incentives is 10%, (World Bank, 2014).

However, other studies have found that government incentives can have negative
impacts on agricultural production. For example, a study by Anderson and Thampapillai
(2015) found that government incentives can lead to overproduction and market gluts. The
study found that government incentives led to an increase in rice production, but this increase
in production led to a decline in rice prices, unfairly undermining small farmers. According
to Jason Clay (2013) government subsidies may also lead producers to overuse fertilizers or
pesticides, which can result in soil degradation, groundwater depletion and other negative
environmental impacts. In addition, government incentives can put an excessive burden on
the scarce government’s finances.

In the context of the Philippines, a study by the Philippine Institute for Development
Studies (PIDS) (2013) found that government support for rice farmers has been effective in
increasing rice production. The study found that government support programs, such as the
Rice Self-Sufficiency Program (RSSP), have helped to increase rice yields. Nonetheless, the
study also found that government support programs have not been as effective in increasing
rice farmers income.

Studies have been conducted on the determinants of government incentives impact in

rice farmers production. Some have sought to assess its impact on agricultural income, but
other research found that government incentives did not have much effect on the income of
rice farmers. Other research also suggests that the government incentives can have a negative
impact on the production of the rice farmers. According to the researcher’s observation
within their community, researchers observed that government subsidies are helpful.
However, some government subsidies are concentrated among a small number of farmers and
not distributed properly. Understanding the impact of these government incentives on rice
farmers is essential for policymakers, agricultural stakeholders, and researchers. Thus, the
purpose of this proposed study is to examine the impact of government incentives on rice
farmers in Libon. The researchers will investigate into various aspects related to government
incentives, such as financial subsidies, low interest loans, and etc. Interestingly, this proposed
research aims to evaluate the efficacy of various government incentives such as subsidies,

3
low interest loans, and grants on the productivity, profitability, and sustainability of rice
farmers. By examining the effectiveness and implications of these incentives, government
can make informed decisions to improve existing programs to develop new strategies that
better support rice farmers.

Statement of the problem

Generally, this study aims to evaluate the efficacy of various government incentives such as
subsidies, low interest loans, and grants on the productivity, profitability, and sustainability of
rice farmers.
This proposed research has questions that needs to be answered by the respondents:
1. What is the socio-demographic profile of the respondent in terms of:
a. Age
b. Sex
c. Address
d. Educational Attainment

2. What is the perception of rice farmers on the impact of government incentives in

terms of:
a. Productivity
b. Profitability
c. Sustainability
d. Work Efficiency
e. Safety Precaution Measures
3. What output can be proposed based from the findings of the study?

Assumptions

Assumptions that could be made about a study on the impact of government

incentives on rice farmers include:

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 1. The profile of the respondents may vary;
2. Rice farmers perception about the impact of government incentives on work
efficiency, profitability, productivity, and safety precaution measures may vary.
However, there will be similarities, such as some may believe that the incentives
have helped them to become more efficient in their farming practices, leading to
higher outputs and greater profits. Moreover, incentives have enabled farmers to
invest in safer farming practices, such as using protective gear and implementing
sustainable agriculture methods.
3. Researchers will suggest some interventions or program to the LGU that could
possibly help the rice farmers. These outputs or programs could include training
and capacity building programs, technology transfer initiatives, and others that
promote productivity, profitability, and sustainability among rice farmers.
Assessment report and proposal can also be made after knowing the impact of the
government incentives to the rice farmers.

Scope and delimitation

The researchers will be conducting this study entitled “Assessing the Impact of
Government Incentives on Rice Farmers in Palayan League Libon, Albay.” The study will
focus in evaluating the efficacy of various government incentives such as subsidies, low
interest loans, and grants on the productivity, profitability, and sustainability of rice farmers.
The location of the study will be in Palayan League in Libon, Albay, and the most target
respondents would be the rice farmers in Palayan League, but possibly, the researchers will
also find other respondents outside the Palayan League to gather some information, and will
use other resources to be able for this research to become possible and effective. This study
will be conducted during School Year 2024-2025.

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 Significance of the study

The researchers believes that the study will be significant to various individual,
community and institution listed below. The above mentioned were primary beneficiary and
would have a direct effect from the findings of the study.

Farmers. The primary beneficiary of the result of this research is the farmers. This
may help them to understand the effect of government incentives to them in terms of
productivity, profitability, and sustainability. This research may also find other ways to
support the rice farmers aside from the incentives that the government provides.

Local Government Units. This study may foster ideas and knowledge that can help
them proposed actions or plans to enhance the help they are giving to the rice farmers.

Non-Government Units. This study may help them to create awareness about the
impact of government incentives to the rice farmers, and to improve the economic conditions
for farmers through supporting smallholder farmers so that they can increase their incomes
and production.

Students. The findings of this study may be helpful to students who are interested in
agriculture and can help them to gain more knowledge.

Researchers Themselves. This study may help the researchers to evaluate the
efficacy of various government incentives such as subsidies, low interest loans, and grants on
the productivity, profitability, and sustainability of rice farmers. It may also help the
researchers to gain more knowledge about the topic.

Future Researchers. This study may serve as their guide and future reference. The
findings of this study may help the researchers to expand their understanding of the topic.

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 Definition of terms

For better understanding of the words used in the study, the following terms are
defined operationally and conceptually.

Incentives. It is anything that persuade a person to alter their behavior in the desired
manner (Merriam Webster Dictionary). In this study, incentives can either be money or any
tools and equipment that are given by the government.

Productivity. It refers to how much output can be produced with a given set of inputs
(Cambridge English Dictionary). In this study, it refers to the output of the rice farmers with
their skills and the government incentives they receive.

Profitability. It is a measure of an organization’s profit or financial gain relative to its

expenses (Cambridge English Dictionary). In this study, it is the money earned by the
farmers through their rice production activities.

Sustainability. It is the quality of being able to continue over a period of time

(Cambridge English Dictionary). In this study, it is the ability of the rice farmers to meet the
society’s present needs, without compromising the ability for current or future generations to
meet their needs.

Rice Farmers. It is the cultivator of rice as a food crop (Merriam Webster

Dictionary). In this study, rice farmers refer to the respondents and benefactor of this
proposed research.

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 LITERATURE CITED

Cororaton, C. (2014). The Philippine Rice Industry: A Review of the Literature. Philippine
Institute for Development Studies.
Rosegrant, M. W., & Hazell, P. B. R. (2013). Transforming the Rural Asian Economies:
Proceedings of the 1997 Conference of the International Association of Agricultural
Economists. Johns Hopkins University Press.
World Bank. (2014). World Development Report 2008: Agriculture for Development. World
Bank.
Anderson, K., & Thampapillai, J. (2015). The Impact of Agricultural Protectionism on the
Developing Countries. Trade Policy Research Centre, London.
Philippine Statistics Authority. Retrieved 12 November 2016. PSGC Interactive. Quezon
City,
Philippines
Clay, J. (2013). World Agriculture and the Environment: A Comprehensive Account. John
Wiley & Sons.
Philippine Institute for Development Studies (PIDS). (2013). A Review of Government
Support to Rice Farmers in the Philippines. PIDS Policy Notes Series.
NA, (2022). Merriam- Webster.com Dictionary. G. & C. Merriam Co.

NA, (2023). Cambridge English Dictionary. England. Cambridge University Press

NA, (2023). Cambridge English Dictionary. England. Cambridge University Press

NA, (2023). Collins Dictionary. United Kingdom. Glasgow

NA, (2022). Merriam- Webster.com Dictionary. G. & C. Merriam Co.

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 CHAPTER II
REVIEW OF RELATED LITERATURE AND STUDIES

This chapter presents an overview of related literature and studies both foreign and
local taken from journals, books, and article and through the internet that bears similarities to
the topic. This chapter also includes the synthesis-of-the-art, gap bridged by the study, and
theoretical and conceptual frameworks used in the study.

Related literature
In many nations, rice growing is essential to both economic expansion and food
security. Governments frequently provide financial aid, grants, and subsidies to rice farmers
in an effort to boost their output and profitability. This section examines the body of research
that evaluates the effects of government incentives on the profitability and productivity of
rice producers.

Rice Farming
Rice feed the majority of the world’s population and employs millions, especially in
developing countries in the Global South. Farmers face numerous challenges that impact
their productivity, profitability, and overall well-being. These challenges include limited
access to credit, market volatility, climate change, land degradation, pests and diseases, and
labor shortages. The literature emphasizes the need for policies and support systems to
address these challenges and promote sustainable farming practices (Muthayya et al.,2014).

In the Philippines rice is the single most important agricultural crop, and is a major
source of income for millions of Filipino farmers. It also has political significance; the
government is heavily involved both in its supply and distribution to assure consumers
sufficient and stable supply at low prices and to maintain a reasonable return to rice farmers
with adequate price incentives.

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Government Incentives
According to Pinero (2013), incentives is a tangible fiscal and non-fiscal package of
rebates and exemption on goods and services offered to the farming community. It serves as
an indication of government’s commitment to the fostering of growth and development of
various agricultural sub-sectors in a liberalized trading environment. These incentives, seeks
to encourage farmers to increase production, promote good agricultural practices, encourage
the preservation of the environment and the conservation of natural resources.

Productivity
Several studies have examined the effects of government incentives on rice farmers’
productivity. For instance, a study conducted by Nguyen et al. (2018) in Vietnam found that
government financial incentives led to increased investment in modern farming technologies,
ultimately enhancing rice yield and productivity. Similarly, a study by Sarker and Rahman
(2017) in Bangladesh demonstrated that government subsidies for fertilizers and improved
seeds resulted in higher rice productivity. These studies suggest that targeted government
incentives can positively influence farmers’ adoption of modern farming practices, leading to
increased productivity.

Various government incentives, such as input subsidies, technology adaptation

programs, and credit facilities, have been implemented to augment rice farmers’ productivity.
A study conducted by Acharya et al. (2016) in Nepal examined the impact of subsidized
seeds and fertilizers on rice farmers’ productivity. The findings indicated that the provision
of subsidized inputs positively influenced farmers’ adoption of improved technologies,
resulting in increased rice yield and productivity.

Profitability
In terms of profitability, government incentives can also have a significant impact on
rice farmers’ income. A study by Mishra et al. (2019) in India examined the effects of
government subsidies on farmers’ income and found a positive correlation between
government incentives and rice farmers’ profitability. The authors argued that government

10
support in the form of subsidized irrigation, credit facilities, and input subsidies reduced
production costs and increased farmers’ revenue, ultimately improving their profitability.

Additionally, some studies have shown that financial support in the form of direct
subsidies, low-interest loans, and price support mechanisms have contributed to higher
income for farmers. For instance, a study by Rani et al. (2019) in India revealed that
government subsidies for irrigation facilities and the provision of credit significantly
enhanced farmers’ profitability and overall agricultural growth.

However, some studies have indicated the existence of potential challenges in the
distribution and implementation of government incentives. A study by Abdulai and Nkegbe
(2019) in Ghana found that the lack of access to timely and accurate information on
government programs and policy frameworks hindered rice farmers’ ability to fully benefit
from the provided incentives. Additionally, inadequate infrastructure and bureaucratic
hurdles were identified as barriers to the effective delivery of government support. In the
study of Chauhan and Singh (2018) in Nepal highlighted the significance of farmers’ access
to information and training programs in maximizing the benefits of government incentives.
They argued that without adequate knowledge on modern farming practices and proper
training, farmers may not be able to fully utilize the provided incentives, thereby limiting
their impact on productivity and profitability.

Therefore, effective coordination, transparency, and monitoring mechanisms must be

integrated into the implementation of government incentives. A study by Asfaw et al. (2020)
in Ethiopia emphasized that government intervention should not only focus on providing
financial and technical support but also strive to address market-related issues such as price
volatility and market access, to ensure sustained profitability for rice farmers.

In conclusion, government incentives have proven to have a positive impact on rice

farmers’ productivity and profitability. Subsidies, technology adaptation programs, and credit
facilities have facilitated increased productivity and income for rice farmers. However,
challenges such as inadequate infrastructure and limited access to information need to be

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addressed to ensure effective implementation and maximize the benefits of government
support. It is crucial for governments to adopt a holistic approach that encompasses
infrastructure development, market access, and knowledge dissemination to achieve
sustainable growth in the rice farming sector.

Sustainability

According to Ranjan Roy et al. (2013), This study assesses rice farming sustainability
in Bangladesh by developing a composite indicator (CI) under the four pillars of
sustainability and examines the main determining factors. The assemblage of top-down and
bottom-up approaches were applied to generate an essential set of indicators and data were
collected through a household survey from 15 villages of three major rice growing
ecosystems. The results revealed that less than half of the rice growers were sustainable in
terms of economical viability, ecological benefits, and quality of life. By category, Boro rice
farming was found to be the most sustainable, followed by Aman and Aus rice farming.

Additionally, Sustainability is defined as the maintenance or improvement of

production levels and protection of natural resources, within the context of economic
viability and social acceptability. And also, There is a need to increase the resource use
efficiency and sustainability of rice production in the intensive lowland irrigated rice growing
areas of Thailand where farmers face challenges such as the overuse of inputs that cause
negative environmental effects, rising input and labor costs, declining rice farm gate prices,
and water scarcity.

Work Efficiency

According to Bajracharya et al. (2017) conducted a study on technical efficiency of

certified maize seed in Palpa district of Nepal. Moreover, Adhikari et al. (2018) also
conducted a research to estimate the technical efficiency of hybrid maize production in
eastern Terai of Nepal. However, an assessment on technical efficiency of rice production is

12
lacking. This paper aims to estimate the technical efficiency of rice growing farmers and
identify the factors affecting it. This shows the way to increase the yield by possible
improvement in efficiency without increasing the resource. Moreover, this study also
explores the areas where the major interventions are needed to be done to improve the
efficiency and increase the yield.

In conclusion, The average technical efficiency of rice production predicted from

stochastic frontier model was more than ninety percent; majority of the rice growing farmers
were operating at this efficiency level. This showed the efficient allocation of input resources
in rice production in the study area; however, there is still scope to improve the technical
efficiency. Also, the farmers should be encouraged to be the member of agricultural
organization such as cooperatives, farmers' group; membership of experienced farmers in
such organization will have positive multiplier effect to technical efficiency. The government
should encourage the farm households to adopt agriculture as their major occupation through
different supportive policies of grants, subsidies and technical assistance.

Improving work efficiency for rice farmers involves implementing modern

agricultural practices, utilizing technology, and providing training. This can include precision
farming, water management systems, and access to updated information on crop health.

Safety Precaution Measures

As per the findings of Thant Zaw Lwin, Aung Zaw Min, Mark Gregory Robson, and
Wattasit Siriwong (2017), pesticides are an inevitable part of agricultural food production in
Myanmar, a developing country. Thus, it is essential to have knowledge about how to use
and respond to pesticide toxicity. Pesticides have a negative impact on the environment,
animal and human health, and both. However, in order to avoid mishaps when working in the
fields, rice farmers should take safety precautions. Among these precautions is donning
protective gear, such as long sleeves and long pants, to prevent cuts from sharp objects and
insect bites. To prevent injury to their hands and feet, farmers should also wear boots and

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gloves. In order to reduce, they need also utilize the right tools, including harvesters and
tractors, and adhere to the right operating protocols.

Farmers should implement measures to prevent injuries during manual labor, such as
using appropriate tools and maintaining ergonomic postures. Regular equipment
maintenance, proper disposal of waste, and creating awareness about the importance of
personal hygiene contribute to a safer working environment for rice farmers.

Related studies

Foreign

According to the study of Laiprakobsup (2019), the government intervention in the

rice sector has a positive effect on rice production in Southeast Asia. The results show that a
decline in the state’s tax intervention in the rice sector helps to increase rice production in
both exporting and importing countries.

The relatedness of this in our present study is that it shows evidences that government
incentives can have a significant impact on rice production. This suggests that tax barriers
should reduce on the rice sector and avoid controlling prices.

In accordance to the study of Fahmid et. al (2022), They investigated the impact of
increasing the highest retail price (HRP) of subsidized fertilizer on rice production in
Indonesia. The study found that increasing the HRP would decrease national rice
productivity. Which suggest that increasing HRP of the subsidized fertilizer would have a
negative impact on rice production.

This study is relevant to the present study because it shows that government
incentives such as subsidized fertilizer, can have a significant impact on rice production. The

14
study’s findings suggests that policymakers should carefully consider the potential impact of
government incentives on rice production before implementing them.

In the study of Obaniyi and Adesiji (2014), examined the motivating incentives of
farmers in rice production trainings in Kwara State, Nigeria. The study found that farmers
were motivated by variety of factors, including the desire to improve their standard living,
add to their knowledge, and increase of profitability of their farming activities. The study
also found that farmers were more likely to participate in training programs if they were
aware of the benefits of the training and had access to resources such as loans and equipment.

This study is related to our present study because it discussed that government
incentives can be effective in encouraging rice farmers to participate training programs. It
also discussed that availability of resources, such as loans and equipment, can also play a role
in effectiveness of government incentives.

In addition, the study of Jill Hobbs (2016), provides valuable insights into the
incentives and disincentives for farmers to adopt Good Agricultural Practices (GAPs). It
highlights the diverse range of objectives and programs promoting GAPs, and raises
concerns about potential impacts on smallholders in developing countries.

This finding is relevant to our study because it discussed the framework of

understanding the potential impacts of government incentives on farmers behavior.

According to Daniel A. Summer (2023), farm subsidies are complex and

controversial, with significant impacts on both domestic and international food markets.
While supporters argue they offer benefits in terms of market stability, income support, and
food security, critics point to their inefficiency, unfairness, and negative trade effects.
Considering the costs and downsides, reform of farm subsidy programs is a crucial step
towards a more efficient and equitable global food system.

This study has a relationship to the present study because it discusses agricultural
subsidies in general, covering various crops and countries. Also, it focuses specifically on the
impact of the government incentives.

15
Local
Pamintuan et. al (2023), stated that government involvement in rice production
was more effective in stabilizing producer prices compared to relying solely on market
forces. Also, it states that reducing tax barriers and eliminating tax barriers might benefit rice
production in the long run.

This finding is relevant to our study because it discussed some effects of government
interventions in the rice industry. Understanding the impact of these interventions on price
stability and farmer income is crucial for assessing the effectiveness of government
incentives for rice farmers.

According to Oñate (2023), pouring out more financial resources to boost the Caraga
regions rice industry is necessary to ensure a stable supply of safe and nutritious rice. He also
suggests that optimizing government incentives are important, thus this will help to increase
the productivity of the rice farmers, and creates an increase to farmers income.

This study has a relationship to the present study because it shows the potential
positive impact of government interventions on the rice industry, particularly in terms of
productivity and income. Additionally, the study highlights the importance of optimizing
existing incentives to ensure their effectiveness

In the research of Balié et al. (2021), investigates the impact of the Rice
Tariffication Law (RTL) in the Philippines on different types of households. Their model
predicts that the RTL will reduce both consumer and producer rice prices. As most
households are net rice buyers, they will benefit from lower prices. This leads to overall
positive effects on poverty, with the poorest quintiles experiencing the biggest gains.
However, rice growers who are net sellers will be negatively affected. The authors suggest
that investments in public goods and services could help ease the transition for these farmers
by creating more profitable alternative businesses.

16
 To explain the relatedness of this study to our present study it investigates the welfare
effects of the Rice Tariffication Law (RTL) on both rice consumers and producers. It
provides valuable empirical evidences and insights that can inform policy makers in
implementing effective interventions that support rice farmers while balancing consumers
welfare.

According to the findings of the study by Briones (2013), the Department of

Agriculture's (DA) production support services on the income of poor farmers and fisherfolk
finds that past programs have not been effective in reducing poverty or promoting
agricultural growth. The DA should shift its focus from providing private goods, such as
input subsidies, to providing public goods, such as infrastructure, regulatory services, and
research and development

This study is related to our present research because it discussed that past efforts
offering private goods like input subsidies haven't effectively reduced poverty or boosted
agricultural growth, it suggests a need for reevaluating current incentive strategies for rice
farmers. This reinforces the importance of researching the effectiveness of government
interventions and exploring alternative approaches, potentially focusing on public goods like
infrastructure and research to address the specific needs of rice farmers and enhance their
income and livelihood.

In the study of Travero (2013), Rice Assistance Program for Institutional

Development (RAPID) in Bohol, Philippines, involved 240 farmer beneficiaries who
revealed timely delivery and repayment of inputs. However, a lack of field visits by
Community Organizers was noted. After the program, farmers reported increased meeting
attendance, association membership, soil fertility, fewer pests, crop yields, and income. Thus,
the study recommends institutionalizing RAPID by allocating local government funds for
project sustainability and expanding it beyond irrigated areas to include farmers with small
landholdings and those in rainfed areas.

17
 To relate this study, it helps the researchers to understand a specific example of a
government program that has a positive impact on rice farmers. It also highlights the
importance of monitoring and evaluation to ensure that government programs are effective.

Synthesis of the state- of- the- art

All the above-mentioned literature and studies reviewed are of great help in
strengthening the present study. These provide the researchers the needed background on the
nature of the problem and will serve as a guide in the proposed research.

In the study of (Muthayya et al.,2014), it shows that farmers face numerous issues
such as, limited access to credit, market volatility, climate change, land degradation, pests
and diseases, and labor shortages that affects their productivity, profitability, and overall
well-being. Moreover, the study conducted by Muthayya, suggested that to address these
issues governments support is very crucial.

The study of Pinero (2013) and Obaniyi and Adesiji (2014), explain the concept of
government incentives and how it can motivate and create impact to farmers productivity and
profitability. Hence, government incentives can also have an impact to farmers behavior
which was explained by the study of Jill Hobbs (2016), where he provides valuable insights
into the incentives and disincentives for farmers to adopt Good Agricultural Practices
(GAPs).

18
 According to the study of Nguyen et al. (2018), Sarker and Rahman (2017), and
Acharya et al. (2016), Laiprakobsup (2019), Fahmid et. al (2022), Pamintuan et. al (2023),
Oñate (2023), they describe that government incentives are necessary for the rice farmers as
it creates a positive impact on farmers productivity. Futhermore, in the study of Mishra et al.
(2019) and Rani et al. (2019), explains how the incentives given by the government can also
help to increase the rice farmers profitability.

Additionally, in the study of Daniel A. Summer (2023), Balié et al. (2021), Briones
(2013), and Travero (2013), explicate that the help of government to the rice farmers can
create a change and develop for an economic and agricultural growth. These studies have
shown that government interventions or programs are effective and can help for the rice
farmers sustainability.

However, the study by Abdulai and Nkegbe (2019) and Chauhan and Singh (2018)
found that lack of access to timely and accurate information on government programs and
policy frameworks hindered rice farmers’ ability to fully benefit from the provided
incentives. Therefore, effective coordination, transparency, and monitoring mechanisms must
be integrated into the implementation of government incentives. In the study of Asfaw et al.
(2020), he explained that government intervention should not only focus on providing
financial and technical support but also strive to address market-related issues for rice
farmers.

Gap to be bridged by the study

In the researcher’s review of related literature and studies that have been
made, it was observed that the currents studies were focused more on assessing the impact of
government incentives on rice farmers in terms of productivity, profitability, and
sustainability. There are also studies conducted that aimed to determine the impact of
government incentives on rice farmers in various countries. However, the researchers noticed
that there are no studies that have been conducted to assess or evaluate the impact of
government incentives in Libon, Albay. This proposed research will focus only on evaluating

19
the efficacy of various government incentives such as subsidies, low interest loans, and
grants on the productivity, profitability, and sustainability of rice farmers specifically in
Palayan League of Libon, Albay. Furthermore, to come up with an intervention or program
that could possibly suggested to the LGU to help the rice farmers. The researchers will come
up with an output that will be based on the findings of the study, and the output will be
conceptualized in such a way that it will be beneficial to the farmers in the Palayan League of
Libon, Albay.

Theoretical framework

Incentives are important in helping farmers, it is one of the keys for them to produce
and cover crops. This study makes use of the Economic Incentives Theory by William
Vickrey.

Theory of Economic Incentives was proposed by William Vickrey (1966). According

to Vickrey, incentives affect people’s behavior and it is the main drive for the entrepreneurial
activities. He also explained that in some cases it is not so evident, but the persons inner
drives have always been associated with economic gains. William Vickrey describes
economic incentives as a financial reward provided to people in altering their consumption
and production patterns in an economy. He also said that the main purpose of the economic
incentives approach is to influence human behavior to produced desired results naturally, and
it is a type of monetary motivation that the government or businesses offer. These can be in
the form of money, bonuses, tax, rebates, or subsidies. Vickrey also discussed that economic
incentives can either be intrinsic or extrinsic based on the source of motivation. Furthermore,
he stated that it has a huge macroeconomic effect, like stimulating commercial activity and
increasing people’s participation. It allows the government to keep control of the economy
and helps businesses increase sales. For instance, a government offering subsidies for
farmers, providing them palay fertilizers, rice seeds, farming equipment’s, or money. In this
case, the farmers are motivated to increase their productivity.

20
 This theory is related to our study as it discusses about economic incentives wherein,
in this study this will aid and tackle the impact of government incentives given to the
farmers. It will serve as a guide for the researchers to determine whether the government
incentives given to the farmers are helpful for them or not. Theory of Economic Incentives
suggests that the incentives such as subsidies, loans, grants, access to credit, and so on, can
significantly impact the decision-making and behavior of the rice farmers. Researcher
believes that this theory will help to explores how incentives influence agricultural
production, sustainability, and the profitability of the rice farmers. Theory of Economic
Incentives delves into the interplay between economic incentives and welfare of the rice
farming communities, offering insights into the effectiveness of different incentives in
achieving desired agricultural and economic outcomes.

ASSESSING THE IMPACT OF

GOVERNMENT INCENTIVES
ON RICE FARMERS IN LIBON,
ALBAY

ECONOMIC
INCENTIVES
THEORY
(WILLIAM VICKREY
21
Figure 2.1. Theoretical Paradigm

CONCEPTUAL FRAMEWORK

This study has its conceptual framework where the conceptual enhancement
indicated. In this study, the framework of the study is based on the impact of government
incentives on rice farmers in Libon, Albay. The researchers were guided by IPO Model with
its input, process, and output.

Input. To be able to assess the impact of government incentives on rice farmers in

Libon, Albay in terms of productivity, profitability, and sustainability of the farmers.

Process. The data gathered with the use of survey-questionnaires and interview will
be recorded, analyzed and interpreted. The impact of government incentives on rice farmers
of Libon, Albay in terms of productivity, profitability, and sustainability of the farmers will
be determined.

Output. After careful analysis of data gathered, the results of the analysis will be
used by the researchers to conduct a proposal, suggesting to raise the incentives that the

22
farmers receive. Programs such as capacity building programs, technology transfer
initiatives, and others that promote productivity, profitability, and sustainability among rice
farmers can abe proposed. Assessment report can also be made after knowing the impact of
government incentives on rice farmers. Interventions or programs can also be suggested to
help the r ice farmers in Libon, Albay.

Feedback. This will be reflected through the recommendations of the researchers to

the impact of government incentives on rice farmers in Libon, Albay. If the output was found
not so effective and helpful, it will give a way to review the input.

INPUT PROCESS OUTPUT

1. What is the
socio-
demographic
profile of the  Collection of
respondent in
data through
terms of:
a. Age
interviews and
b. Sex observation
c. Address
d. Livelihood
e. Educational A Proposal, an
 Quantitative
Attainment Assessment
analysis and
Report and
2. What is the interpretation
Interventions or
impact of of data
Programs that
government gathered 23
incentives on the can help to the
productivity and rice farmers of
profitability of Libon, Albay.
  Formulation

FEEDBACK

Figure 2.2. Conceptual Paradigm

LITERATURE CITED

Muthayya, N., Harsanyi J., Marschack J. (2014). Productivity and Technical Efficiency of
Rice Farmers. Journal of Agricultural Economics Research.
Pinero… - Journal of College, 2014 - Wiley Online Library
Nguyen, H. T., Dau T. S., Le T. T., & Nguyen, H. K. (2018). The impact of government financial
incentives on rice farmers’ productivity in Vietnam. Journal of Agricultural Economics
Research, 2(3), 15-24.
Sarker, M. A., & Rahman, M. A. (2017). Impact of government subsidies on rice farmers’
productivity: Evidence from Bangladesh. Journal of Economic Cooperation and
Development, 38(1), 1-14.
Acharya, S., Bhattarai, M., & Sitaula, B. (2016). Impact of government incentives on rice
farmers’ productivity in Nepal. Journal of Agriculture and Natural Resources, 2(1),
45-57.
Mishra, S., Pandey, V., & Tripathi, M. (2019). Government incentives and rice farmers’
profitability in India. Economic Affairs, 64(4), 763-780.

24
Rani, R., Mehar, M., Damodaran, A., & Mishra, D. (2019). Role of government incentives in
enhancing rice farmers’ profitability in India. Journal of Rice Research, 12(1), 56-68.
Abdulai, I., & Nkegbe, P. (2019). Government incentives and rice farmers’ productivity in
Ghana: The mediating role of information and communication technology. Agrekon,
58(3), 340-358.
Chauhan, A., & Singh, R. (2018). Impact of government incentives on the productivity and
income of rice farmers in Nepal. Journal of Agriculture and Rural Development,
19(2), 51-67.
Asfaw, S., Biniyam, D., & Gebresilassie, S. (2020). Government interventions and rice
farmers’ profitability in Ethiopia. Quarterly Journal of Agricultural Economics and
Policy Analysis, 25(1), 31-47.
Laiprakobsup, P. (2019). The impact of government intervention on rice production in
Southeast Asia. Agronomy for Sustainable Development, 39(3), 1-11.
Fahmid, A., Heriansyah, R., & Suryana, E. (2022). The impact of increasing the highest retail
price of subsidized fertilizer on rice production in Indonesia. International Journal of
Food and Agricultural Economics, 10(1), 22-36.
Obaniyi, O. A., & Adesiji, O. B. (2014). Motivational incentives of farmers in rice
production training programs in Kwara State, Nigeria. Journal of International
Development and Cooperation, 20(1), 1-14.
Hobbs, J. (2016). Incentives and disincentives for farmers to adopt good agricultural
practices (GAPs): A framework for analysis. Food Policy, 62, 150-165.
Summer, D. A. (2020). Farm subsidies: A complex and controversial policy area. Choices:
The Magazine of Food, Farm & Resource Issues, 35(3), 1-6.
Pamintuan, C. R., Balde, M. G., & Baltazar, J. A. (2023). Government intervention in rice
production: A comparative analysis of the Philippines and Vietnam. Journal of
Southeast Asian Economies, 40(2), 189-214.
Oñate, R. P. (2021). Optimizing government incentives for rice farmers in the Caraga region.
Policy Analysis and Research Journal, 18(1), 1-18.
Balié, J., Balisacan, A., Briones, R., & Labios, R. (2021). Welfare effects of the Rice
Tariffication Law in the Philippines. Journal of Development Economics, 151,
102693.
Briones, R. (2013). The Department of Agriculture's production support services and the
income of poor farmers and fisherfolk. Philippine Review of Economics, 49(1), 1-28.
Travero, M. V. (2013). Assessing the impact of the Rice Assistance Program for Institutional
Development (RAPID) on farmer beneficiaries in Bohol, Philippines. Philippine
Journal of Agriculture, 96(2), 193-206.
Vickrey, W. (1966), Incentives Theory and Public Inputs, Journal of Public Economics–
ERIC

25
 CHAPTER III

METHODOLOGY

This chapter goes into the study’s methodology, providing a thorough discussion of
the research design, data collection procedures, and analytical tools used in the evaluation of
the influence of government incentives on rice farmers in Libon, Albay. It includes the
research design, methods, and tools to be used in gathering relevant data and information,
sources of data, sampling of population, respondents, formulation and validation of the
instruments, and statistical tools to be used.

Research design

26
 This study adopts a descriptive research design to conduct a detailed investigation
into the prevailing conditions and characteristics associated with various government
incentives—specifically subsidies, low-interest loans, and grants—and their potential impact
on the productivity, profitability, and sustainability of rice farmers in Libon, Albay. This
design is intentionally selected for its focus on depicting the current state of affairs rather
than establishing causation, aligning with the study’s objective of providing a comprehensive
overview of the subject matter.

Descriptive research is chosen to capture the current landscape of government

incentives and their impact on rice farming outcomes. This approach facilitates a systematic
and objective presentation of data, enabling a clearer understanding of the conditions without
intervening variables. The design’s inherent emphasis on the present circumstances aligns
with the study’s goal of providing a snapshot of the existing dynamics within the realm of
rice farming practices.

The descriptive research design offers valuable insights into the immediate study
area, Palayan League in Libon, Albay, providing a detailed depiction of the current scenario.
While the findings may not be as readily generalized beyond the local context, the depth of
understanding achieved contributes to informed decision-making within the specific
agricultural setting.

Research Methodology

The descriptive research method will be used in this study. The methodology
continues to utilize quantitative methods. The structured questionnaire remains a valuable
tool for collecting quantitative data, allowing for statistical analysis. The purpose of
quantitative research is to attain greater understanding of the facts and generalizations of the
information’s that can be obtained by the researcher. The researchers choose this method as it
is the most appropriate for conducting investigations. The researchers believes that this
method will help to systematically present the current conditions and characteristics related
to government incentives and their impact. This holistic approach aims to enhance the overall

27
validity and reliability of the study by capturing a comprehensive view of the subject matter
within the specific context of Libon, Albay.

Sampling
A purposive sampling technique will be employed to carefully select respondents who
meet the specific criteria of being rice farmer in Palayan League, Libon Albay who have
experienced varying combinations of subsidies, low-interest loans, and grants. This sampling
strategy ensures that the participants have direct experience and firsthand knowledge of the
topic under investigation, thus contributing to the credibility and relevance of the study.

Purposive sampling is a technique in which units are selected because they have
characteristics that are needed or relevant to the research. The selection process will involve
identifying potential participants through collaboration with barangay’s head who can
provide insights into rice farmers who have experienced varying combinations of subsidies,
low-interest loans, and grants. This approach will enable the researchers to purposefully
choose individuals who can provide rich and meaningful perspective on the impact of
government incentives in terms of profitability, productivity, and sustainability. By
employing a purposive sampling technique, this study aims to provide a comprehensive and
nuanced understanding of the impact of government incentives on rice farmers in Palayan
League, Libon, Albay.

Respondents
The participants in this study, referred to as respondents, constitute rice farmers
residing in Palayan League, Libon, Albay. The selection of respondents will be guided by a
purposive sampling technique.

Respondents eligible for participation will meet the following criteria:

1. Actively engaged in rice farming activities within Palayan League, Libon, Albay.

2. Have received one or more types of government incentives, including subsidies, low-
interest loans, or grants.

28
 The selection and involvement of respondents are fundamental to the success of this
study, between government incentives and rice farming outcomes in Palayan League, Libon,
Albay.

Table 3.1. Number of Respondents per Barangay

RESIDENCE NUMBER OF PERCENTAGE (%)
RESPONDENTS
San Agustin 10 20
Sta. Cruz 10 20
West Carisac 10 20
East Carisac 10 20
Marayag 10 20
Total: 50 100.00

Research Instrument

A structured questionnaire will be designed to quantitatively capture data on key

variables, including productivity, profitability, and sustainability. The questionnaire will
undergo a thorough development process, incorporating validated constructs and ensuring
clarity and relevance. Pilot testing will be conducted with a subset of the target population to
assess the instrument’s effectiveness and make necessary refinements.

The structured questionnaire will be designed with specific sections tailored to each
stratum, ensuring that questions are relevant to the experiences of the respective groups. This
targeted approach enhances the instrument’s effectiveness in capturing nuanced information
related to subsidies, low-interest loans, and grants. A questionnaire refers to a device that
secures answer to questions by using a form that the respondent fills by himself. It consists of
a number of questions and a reply to them in the form of a number of questions printed or
typed in a definite order. Forms are given to the respondents, who was expected to read and
understand the questions. The findings from these questionnaires will contribute to a
comprehensive understanding of the impact of the government incentives on the rice farmers
in Libon, Albay in terms of profitability, productivity, and sustainability.

29
 Questionnaire Validation and Preparation
In the preparation of questionnaire, the researchers referred to some books,
thesis, researches and other related material to the study. The questions in the questionnaire
will be answered by reading the questions and putting a check on the options that were
prepared. The questionnaire will be carefully developed based on the research objectives,
ensuring that it covers the key areas of interest. It will be designed to assess the impact of
government incentives on rice farmers in Libon, Albay. Additionally, the research
questionnaire that will be made will undergo first with the evaluation and validation process,
attested by the validator.

Statistical Tool
The tools of frequency count and percentage technique are valuable in quantitative
research for summarizing and presenting categorical data. The data obtained will be tallied
and tabulated. To explain the data in the table, the following statistical tools will be used:

Frequency Count. Frequency count provides a simple count of how often each
category or response occurs in a particular variable. This offers a quick overview of the
distribution of responses. This tool tallies the answer of the respondents and determines the
percentage of each response.

Percentage Technique. The percentage technique complements frequency count by

expressing the relative proportions of each category in relation to the total number of
responses. This helps in understanding the significance of each category within the entire
dataset. Percentages allow for easy comparison between different categories or groups,
highlighting any variations or disparities.

The formula is:

30
 Where:

P = Percentage

Σ f = Summation of Frequency

n = total number of respondents

The collected data will be systematically processed and summarized using the
weighted mean as a central measure of tendency.

Weighted Mean. This method will be used to determine the impact of government
incentives on rice farmers in Libon, Albay by using the answer of the respondents from the
questionnaire. Weighted mean was utilized to describe the data gathered in the study.

The formula is:

TWF
WM=
N

Where:

WM= weighted mean

TWM= total weighted mean

N= total number of respondents

In its final form, the Likert scale is a five-or-seven-point scale that is used to allow an
individual to express how much they agree or disagree with a particular statement by Mcleod
(2019). Mcleod stated that the Likert scale typically provides five possible answers to a
statement or question that allow respondents to indicate their positive-to-negative strength of
agreement or strength of feeling regarding the question or statement.

SCALE RANGE VERBAL

INTERPRETATION

31
 5 4.20 – 5.00 Strongly Agree

4 3.40 – 4.19 Agree

3 2.60 – 3.39 Neutral

2 1.80 – 2.59 Disagree

1 1.0 – 1. 79 Strongly Disagree

Literature Cited

Mcleod S. (2019). Likert Scale Definition, Example and Analysis. Simply Pschology.

32