Assessing the Economic Viability and Profitability of Rice Farming in

Contemporary Context

CHAPTER 1

INTRODUCTION

Importance of the Study

Rice, (Oryza sativa), edible starchy cereal grain and the grass plant (family Poaceae)

by which it is produced. Roughly one-half of the world population, including virtually all of

East and Southeast Asia, is wholly dependent upon rice as a staple food; 95 percent of the

world’s rice crop is eaten by humans. Rice is cooked by boiling, or it can be ground into

a flour. It is eaten alone and in a great variety of soups, side dishes, and main dishes in Asian,

Middle Eastern, and many other cuisines. Other products in which rice is used are breakfast

cereals, noodles, and such alcoholic beverages as Japanese sake. Many cultures have

evidence of early rice cultivation, including China, India, and the civilizations of Southeast

Asia. However, the earliest archaeological evidence comes from central and

eastern China and dates to 7000–5000 BCE. More than 90 percent of the world’s rice is

grown in Asia, principally in China, India, Indonesia, and Bangladesh, with smaller amounts

grown in Japan, Pakistan, and various Southeast Asian nations. Rice is also cultivated in parts

of Europe, in North and South America, and in Australia. In Asia the paddy is cultivated in

three main types of soil, including clays with a firm bottom within a few inches of the

surface; silts and soft clays with soft bottoms becoming hard on drying; and peats and

“mucks” containing peat, provided the depth of the peat is not excessive. Fields must be

drained and dried before harvesting. When combine harvesters or binder threshers are

employed, the grain must be dried to about 14 percent moisture so that no deterioration takes
place in storage. When reaper binders are used, the crop is “shocked” in certain ways so that

the grain is protected from rain. The milling methods used in most of Asia remain fairly

primitive, but large mills operate in Japan and some other areas. Hulling of the paddy is

usually accomplished by pestle and mortar worked by hand, foot, or water power.

Improvements are slowly taking place. The yield of milled rice is dependent on the size and

shape of the grain, the degree of ripeness, and the extent of exposure to the sun. Some large

mills, handling 500 to 1,000 tons of paddy daily, have specialized hulling plants with

consequent smaller losses from broken grain. They generally employ modern milling

techniques and rely on controlled drying plants instead of on sun drying.

Rice production is among the dominant agricultural activities by rural families for

almost half of the world’s population. Its production accounts for approximately 482 million

metric tons of milled rice per year. Globally, China and India account for approximately 50%

of all rice outputs as well as consumption share. Rice is a staple food for the majority

population and a source of income and employment for more than 200 million households

from developing countries.

More than 200 million small farmers with an average of less than 1 hectare of land

produce 90% of the total rice in the world (Tonini & Cabrera, 2011). The supply of rice, a

staple food for half of the world’s population and the primary source of income and

employment of one-fifth of the global population is therefore strongly determined by small

farmers’ incentives for rice production. Small farm households are believed to face a lower

opportunity cost of labor than large farm households (Carter & Wiebe, 1990; Hunt, 1979;

Sen, 1966). As a result, they work on their farms in such a way that the expected marginal

value product of labor is less than a market wage-based measure of the opportunity cost of

labor (Barrett, 1996). Small farmers more often employ their family labor and, as family

members are the residual claimant of the output, monitoring costs and other transaction costs
tend to be almost zero for small farmers but may be high for large farmers. Consequently,

small farmers tend be more productive and profitable than large farmers (Barrett, 1996; Berry

& Cline, 1979; Sen, 1975).

Alarmingly, because of the rapid economic development in a number of major rice-

producing countries (Philippines, India, China, Vietnam, and Thailand), the agricultural wage

rate has been increasing sharply, which essentially leads to an increase in the opportunity cost

of labor for small rice farmers. By contrast, except for the recent hikes in commodity prices,

the rice price has seldom increased in these countries. Other agricultural input prices, such as

for urea fertilizer and insecticides, have also been increasing worldwide. Intuitively, small

farm households might face more difficulty in adjusting to the rising input costs, as they have

less opportunity to use mechanization because of scale and financial capacity constraints, and

thus might incur more loss than large farms. By contrast, large farm households might be able

to purchase and deploy more machines and other inputs in place of hired labor because of

their financial capacity, access to credit, and scale advantages. Thus, large farm households

might be in a relatively more advantageous position. Although this has important policy

implications for sustainable growth in agriculture in developing countries, existing studies

seldom focus on the relationship between farm size and profitability over time (e.g., Ahmad

& Qureshi, 1999; Deb, 1995; Rahman, 2003; Sharif & Dar, 1996; Thapa, 2007; Wadud &

White, 2000). . According to production statistics, Tanzania, which is ranked the second

after Madagascar in the Sub-Saharan countries, is greatly held back by low yields. The major

reasons for such low yield are poor resource utilization, high cost of inputs including labor

and dependency on rainfed ecosystem.

 Economic profitability is the main target of a farmer. According to Brožová, profit

will vary depending on the costs and revenues which are considered as main economic

constituents. In the Philippines, rice production is one of the main sources of income (profit)

for Filipino people in rural areas. Rice is known as "Palay" in the country and it is considered

a staple food for millions of Filipinos. In fact, Casinillo stated that rice farming is one of the

issues in the agricultural sector that is a focal point of the Philippine government's progress.

Hence, the government has implemented different agricultural programs that might improve

the production of rice as well as the well-being of rice farmers. Half of the world’s

population. Its production account to approximately 482 million metric Rice production is

conducted traditionally in the rural areas but provides food, income, and employment to

over 60% of the rural population. Most of farmers cultivate from 1-3 hectares of rice fields

on average in the rural areas. Due to the migration of labor in nonagricultural sectors,

shortages of labor and labor cost are becoming a serious problem in peak of cultivation. Due

to the industrialization in many of developing countries, labors are shifting towards mills and

factories; thus, it creates the shortages for agricultural operations. With the continuing

urbanization, the loss of agricultural lands, especially for rice production, is predicted to

increase rapidly in the next few years (Redfern et al., 2012). In addition, as population

increases by 2% annually (ADB, 2009), the task of producing the additional rice to meet the

expected demands of the year 2025 poses a major challenge. Coupled with the increase in the

urbanization and industrialization, the need to increase food supply is becoming progressively

more important.

Rice remains an important agricultural commodity in the Philippines. It accounts for one-fifth

of agricultural gross value added, is a major source of employment and income for rural

people, and poor households spend about 25% of their income on rice (Balisacan and

Sebastian, 2006). The adoption of these mechanized farm machineries has provided
opportunities for rice farming households to increase production and to improve their

incomes and food security. Alongside, it is very important for us to support our Filipino rice

farmers, as one of the top rice producers in the world, and a top importer for rice in our

neighboring countries. With these demand , our country needs to produce more and become a

self-sufficient when it comes to rice supply. To strengthen the rice industry of the country,

Filipino farmers should eqiup technological advancement and techniques to promote their

agricultural resilience.

In the local of Claveria, main source of income is farming especially rice farming.

Due to the moving of laborers from agriculture to construction, the price of daily wage has

grown rapidly by 80% for 3 years. Some farmers use modern machines (ei. Harvester, rice

planter, rototiller, water pump,rice miller, and paddy dryer). Due to rurality of claveria all the

financial institution that are intend to financial assistance for farmers are not even reach and

also the transportation of inputs and outputs are expensive that can affect gthe yield and

profit of the farmers of claveria.

 Statement Of The Problem

This study aims the evaluation the economic viability and profitability of rice farming in
contemporary context

Specific problem:

- How may the profile of the respondent be described in terms of

1.1 -age
1.2- sex
1.3-type of seedling user
1.4 Type of mechanical users?
1.5 sizeland ownership
- how does modern agriculture affect the livelihood of farmers?

- Advantages and Disadvantages of modern agriculture?

- Does modern agriculture have a significant effect on the economic viability and profitability
of the rice farmers?

Significance Of The Study

This study anticipated to contribute additional information to serve the following individuals
and organizations

Industry. This study will help the industry to improve their farming techniques to earn and
increase their profit on other regions and municipalities

Machine owners. This study will suggest how to improve the performance of the machine. This study
will also serve as a guide for more efficient and effective mechanized machines.

Farmers. to enrich their knowledge and understanding regarding the usage of mechanical machinery
in rice cultivation. The vital information gathered in this study will help them to identify the
best strategies to minimize their expenses.

Consumers. This study will help consumers to maximize their purchasing power as the cost of
production can be lowered the milled product can be lowered to. This study can also help
ensure a stable and sufficient food supply for the growing population

Conceptual frameworks of the study

profile of the respondent
data gathering the result of the
Process

Output
Input

be described in terms of
-age -questionnaire study
- sex
-type of seedling user -survey “The Impact Of
-type of mechanical
users?
-the statistical Modern
the effect of modern treatement of data Agriculture On
agricultue on livelihood
of the farmers -data gathering Productivity And
effect of modern procedures Profitability Of
agriculture on the yeild
of the rice farmers Rice Farmers Of
advantage and Claveria"
disadvantage of Modern
Agriculture
 Figure 1. Input Process Output (IPO MODEL)

The researchers adopted the IPO model. It includes all of the material and all the
information that required in the process, the specific details and questionnaire in the process
itself, and the guide on evaluation of the impact of modern agriculture on productivity and
profitability of the rice farmers of Claveria. the model shown the process on determining the
impact of modern agriculture on productivity and profitability of rice farmers

For input it consists the respondent profile as what type of farmer and the aspects
related to the educational research dependent and independent variables. Usually all the
details specified in the statement of the problem are stipulated here.

For process it includes the questionnaire that were utilized. The observations that was
made for the data gathering method and the statistical analysis of the data.

For output, it includes the result of the study were the conclusion and
recommendation for more development of modern agriculture to sustain the productivity and
profitability of rice farmers

scope and delimitation

The study will acknowledge the effect of modern agriculture on the productivity and
profitability of the farmers. The limits its coverage to the rice farmer only. the respondents
will be 50 rice farmers in the municipality of Claveria.

Moreover, the participants will be purposely selected in the barangay of dibalio

alimoan cappanikian bacsay mapula pula malilitao san Antonio santo nino sta.maria tabbugan
with the total of 5 per barangay.

The data and information will be gathered through surveys. Questionaries are closed
questions that provide respondents with a series of predetermined responses which they can
choose from. The duration of the investigation will start on ____ and will end on ______.