Ecodev - Chapter 6

Republic of the Philippines
STATE UNIVERSITY
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College of Accountancy, Business, Ecocomics and International Hospitality Management
AGRICULTURAL SECTOR
IN PARTIAL FULFILLMENT OF THE COURSE SUBJECT

ECO 310
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BACHELOR OF SCIENCE IN MANAGEMENT ACCOUNTING

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GROUP 4
Agao, Richelle
Ancheta, Kate Ashly
Barza, James Lean
Chavez, Angelo M.
De Chavez, Baby Arriane A.
Dimatulac, Niel Andrea D.
Estabaya, Dianna Rose A.
Mendoza, Angel S.
Leading Innovations, Transforming Lives, Building the Nation

STATE UNIVERSITY
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College of Accountancy, Business, Economics and International Hospitality Management
CHAPTER 6
Agriculture Sector
Introduction:
Agriculture Sectors comprise establishments primarily engaged in growing crops, raising

animals, and harvesting fish and other animals from a farm, ranch, or their natural habitats.
The basic sectors of Agriculture:

 Agriculture
 Agriculture encompasses crops and livestock production, aquaculture, fisheries,
and forestry for food and non- food products.
 Horiculture
 Horiculture is the branch of agriculture that deals with the art, science and
technology, and business of plant cultivation.
 Animal Husbandry
 Animal Husbandry refers to livestock raising and selective breeding.
 Fishery
 A fishery is an area where fish are caught for commercial or recreational
purposes.
 Soil and Water Conservation
 Soil and Water Conservation are those activities at the local level which maintain
or enhance the productive capacity of the land including soil, water and
vegetation in areas prone to degradation through.
 Poultry
 Poultry, in animal husbandry, birds raised commercially or domestically for
meats, eggs, and feathers.
 Dairy Farming
 Dairy Farming is a class of agriculture for long-term production of milk, which is
processed for eventual sale of a diary product.
 Agricultural Marketing
 Agricultural Marketing covers the services involved in moving an agricultural
product from the farm to the consumers.
 Milk-fed Financial Institute
 One, to carry activities for promoting production, procurement and processing of
milk for the economic development of milk producers by providing remunerative

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milk market to them at their door step. Two, to provide quality milk and milk
products to consumers at reasonable rates.
 Social Forestry
 Social forestry is the management and protection of forests and afforestation of
barren and deforested lands with purpose of helping environmental, social and
rural development.
The Imperative of Agricultural Progress and Rural Development
Over 3 billion people lived in rural areas Developing countries often have resource-based
economies, meaning most people make their living from agriculture, timber, mining, or other
harvesting natural resources. These natural resources are most often located in rural areas.
Agriculture is the mainstay of many rural economies, ensuring food security, employment,
livelihoods, export earnings, and economic development. In rural areas, there are fewer people,
and their homes and businesses are located far away from one another. Agriculture is the
primary industry in most rural areas. Most people live or work on farm or ranches. Hamlets,
villages, towns, and other small settlements are in surrounded by rural areas.
Healthy, sustainable and inclusive food system are critical to achieve the world’s development
goals. Agriculture development is one of the most powerful tools to end extreme poverty, boost
shared property, and feed projected 9.7 billion people by 2050.
If the development is to take place and become self-sustaining, it will have to start in the rural
areas in general and the agricultural sector in particular. Sustainable rural development is vital
to the economic, social and environmental viability of nations. It is essential for poverty
eradication since global poverty is overwhelming in rural.
Figure 1.1 states the Economic Structure of Ghana by 2009-2014.

STATE UNIVERSITY
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Figure 1.2 states the regional distribution of poverty in Ghana by 1991- 2006.
Three complementary elements of an agriculture and employment-based strategy.

1. Accelerated output growth through technological, institutional and price incentive
changes designed to raise the productivity of small farmers. Through technology, it is
easy produce a good quality of product. It can help the rural areas especially the farmers
to get higher income that can help them to support their basic needs.
2. Rising domestic demand for agricultural output derived from an employment-oriented
urban development strategy. All increased in demand for the product without an increase
in supply will lead to higher market price for your product. An increase in supply of your
product without an increase in demand will lead to a lower market price for the product.
The factors affecting the demand of the agriculture produce are the price of the product
in question, the number of the producers, the input costs, the technological changes, the
price of other possible products, and unpredictable factors such as weather.
3. Diversified, non-agricultural labors intensive rural development activities that are
supported by the farming community. Supporting the farmers strengthens your
community and local economy. It can help to boosts farmer productivity and bargaining
power, farm management skills, household welfare and livelihoods, and rural
development.
To a large extent, therefore, agricultural and rural development has come to regarded by many
economists as the sine aqua non of national development. Without such integrated rural
development in most cases, industrial growth either would be stultified or, if it succeeded,
would create severe internal imbalances in the economy.

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Five (5) main Questions that need to be asked about 3rd World Agriculture and Rural
Development
 How can total agriculture output and productivity per capita be substantially increased in
a manner that will directly benefit the average small farmers and the landless rural
dweller while providing a sufficient food surplus to support a growing urban, industrial
sector?
 What is the process by which traditional low productivity peasant farms are transformed
into high productivity commercial enterprise.?
 When traditional family farmers and peasant cultivators resist change, is their behavior
stubborn and irrational or are they acting rationally within the context of their economic
development?
 Are economic and price incentives sufficient to elicit output increases among peasant
agriculturalists or are institutional and structural changes in rural farming systems also
required?
 Is raising agricultural productivity sufficient to improve rural life or must there be
concomitant off-farm employment creation along with improvements in educational,
medical, and other social services? In other words, what do we mean by rural
development and how can it be achieved?
Agricultural Growth: Past Progress and Current Challenges

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Figure 1: According to World Bank estimates, the developing world experienced faster growth
in the value of agricultural output (2.6% per year) than the developed world (0.9% per year) over
the period 1980 to 2004. Correspondingly, developing countries share a global agricultural GDP
byrose from 56% to 65% in this period, far higher than their 21% share of world non-agricultural
GDP.

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Figure 2: The Structure of Agrarian Systems in the Developing World. Three types of countries:
 Agriculture based countries.
 Countries like United States, Germany, Canada, Brazil and Thailand are more
significant when it comes to the basics that feed the world (rice, corn, wheat,
beans, lentils and animal proteins).
 Transforming Countries
 Considered to be countries which are undertaking macroeconomic reforms in the
attempt to alter the ways in which their economies are managed like China,
Indonesia, Guatemala, Angola, and Tunisia.
 Urbanized Countries
 Is used to describe the population shift from rural to urban areas, resulting drop
in the number of people living in rural areas, and the methods in which societies
adjust to this transition. Like Brazil, Philippines, Turkey, Cambodia, and
Argentina.
Average Annual Growth Rates of Agriculture, By Region (%)

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 Sub-Saharan Africa
 Improved maize and pest-resistant cassavas.
 Bangladesh
 Shallow tube wells for rice and homestead for food production.
 East Asia
 Hybrid rice and mug bean improvement.
 India
 Pearl millet and sorghum and smallholder dairy marketing.
 Philippines
 Improved tilapia.
 China and Vietnam
 Successful land tenure reform.
 Burkina Faso
 Cotton reforms
 Kenya
 Improvement of markets.
 China and India
 Two countries stand out of the many successes in recent time.
 The two countries are by their sheer size economic giants and while they grow at
the rates observed in recent years.
 Have Experienced very rapid growth which has resulted in notable
achievements, particularly reduction in poverty.
Current Challenges
1) Agrarian Patterns in Latin America: Progress and Remaining Poverty Challenges
 Apart from latifundios (large holdings) and minifundios (small farms) production
occurs on family farms typically and medium sized farms.
 Latifundios are relatively inefficient as landlords are not interested in farming and
large farms typically entail higher transactions costs.
 Overall, the sector seems to be doing well. Chile (diversification), and Brazil’s
(Biofuels).
 Extreme inequalities still present.
2) Transforming Economies: Problems of Fragmentation and Subdivision of Peasant
Land in Asia.
 Impact of colonial rule in strengthening land tenure systems of private property
rights and the consequent rise of moneylenders.
 Contemporary landlordism in India and Pakistan involves absentee landlordism
and persistence of sharecroppers and tenant farmers.
 Rapid Population growth resulted in more fragmentation and peasant
impoverishment.

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3) Subsistence Agriculture and Extensive Cultivation in Africa

 Low productivity due to lack of technology Shifting Cultivation plus seasonal
demand of labor depending upon the rainy season plus high dependence on
unimproved seed sown on unfertilized, rain-fed fields.
Agrarian Structure
The Philippine agrarian reform program encompasses much more than land redistribution
and support services and covers the following additional components, land transfer activities,
land settlement, leasehold operations, stock distribution options, production and profit sharing,
development of beneficiaries, and land.
Land Tenure- Is the relationships that individual and groups hold with respect to land and land-
based resources such as trees, minerals, pastures, and waters. Land Tenure rules define the
ways in which property rights to land are allocated, transferred, used, or managed in a particular
society.
Communal Tenure- Refers to a situation in which a group holds secure and exclusive fights to
owns, manage, and use land and natural resources, referred to as common pool resources,
including agricultural lands, grazing lands, forest, trees, fisheries wetlands, and irrigation waters.
Communal tenure can be customary and age-old, its rules relying on community decisions, or it
can be newly designed for specific purpose.
Estates- Estates in the Philippines is less expensive compared to other countries. The
Philippines has a relatively large number of well-funded developers, which improves the
investment. What is also good is that investors with or without licenses can take part in the real-
estates market.
Freehold- It is a type of ownership for a condo offered by most developers throughout the
Philippines. This type of ownership gives you to full control of the condo unit, given that you can
own it in totality.
Tenancy- A tenant shall mean a person who, himself and with the aid available from within his
immediate farm household, cultivates land belonging to, or possessed by, another, with the
latter’s consent for purpose of production, sharing the produce with the landholder under the
share tenancy system, or paying to the landholder a price certain or ascertainable in produce or
in money or both, under the leasehold tenancy system.
The Structure of Agrarian System in the Developing Country
Agrarian system is the pattern of land distribution, ownership, and management and the social
and institutional structure of the agrarian economy. It is also the dynamic set of economic and

STATE UNIVERSITY
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technological factors that affect agricultural practices. It is premised on the idea that different
systems have developed depending on the natural and social conditions specific to a particular
region.
There are three (3) systems of agricultural development economist Alain de Janvry et al.
alongside advanced agricultural systems developed countries, the agriculture-based countries,
transforming countries, and urbanized countries.
First, agriculture-based countries, often subsistence, but agriculture makes up part of

growth.
 World bank estimates that agricultural accounts for some 32% of GDP growth on
average in these countries, transforming countries, in which 417 million people
live, more than 2/3 of these live in rural areas.
 Includes Sub-Saharan, Africa, Laos, Senegal, etc.
Second, Transforming Countries, most world’s rural people, large proportion of poverty
incidence was found there, low contribution of agricultural growth.
 Most of South & East Asia, North America, Middle east, along with some outliers
such as Guatemala.
Third, Urbanized Countries, half or more even of the poor found in urban areas.
 Largely found in Latin America, and Caribbean, along with developing Eastern
Europe and Central Asia. The trend is from agriculture-based, to transforming, to
urbanized economies.
Informal Economy- are jobs that are not regulated or protected by the government.
Women around the world are gaining more economic, political, and social opportunities as
countries continue to develop and advance in demographic transition model. Women start to
gain more opportunities in society. However, that lay behind in their economic development
often tend to have more traditional gender roles in place which often place women in roles that
part of informal economy. Informal economy are jobs that are not regulate or protected by the
government (ex. Vendors, domestic worker, unregistered small business etc.)

STATE UNIVERSITY
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Gender Inequality Index
To better understand the development of society and to gain insight into women and the
opportunities that exist in the society for them, we can look at the gender inequality index. This
index measures reproductive health empowerment, and labor market participation to illustrates
the amount of inequality and equality in the country.

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Countries that have lower GII have less inequality between the different genders. This countries
are Australia, North America, and some parts of Europe. And Societies and countries that have
a higher GII have more inequality between different genders.
Women Gender, Norms and Opportunities

STATE UNIVERSITY
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If we look at the regions such as Southwest Asia or Sub-Saharan Africa, we can still see
inequality between genders and women still make up a large percentage of the agricultural
workforce. Countries that are less economically developed to have more traditional cultural
norms and gender roles for women. These roles are often had in place for many years and are
well established in society oftentimes called cultural norm that limits the opportunity that
different individuals in country have.
We can see this noted example in the India where around ¾ of all women workers in rural
India are in Agricultural and many more contribute to it through their unpaid activity even though
their work is not officially or statistically recognized.
Economic Development and Opportunities for Women

Now countries develop and move further down the demographic transition model they start
to allow more opportunities for women in society. And so are the changes in agricultural
production shifts as well as farms starts to utilize more machineries which reduces the amount
of human labor needed for production resulting in a lower agricultural density for economic
growth also leads to increased rates of urbanization.
Agricultural Density- means that the number of farmers divided by the total amount of land.

STATE UNIVERSITY
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As a major job open in the secondary sector, women are not just simple farmers and does not
only involve in the activity that extract the supply of raw materials that they take away from their
raw resources. Through this way, women can still participate in the new ways economy but
even with all these changes we can still see women working with agricultural products.
Micro-economics of Farmer Behavior and Agricultural Development

 Transforming traditional agriculture often requires, in addition to adopting the farm
structure to meet the demand for increased production, profound changes affecting the
entire social, political, and institutional structure of rural societies.
 Subsistence Farming; Risk Aversion, Uncertainty and Survival.
 Subsistence Farming- is a type of farming in which nearly all the crops or livestock
raised are used to support the farmers and his or her family, with little or no surplus for
sale or trade.
 Price, weather, and another uncertainty, along with limited access to credit and
insurance, largely explains the extent of risk-averse behaviors observed.
 Efforts minimize risk and remove commercial and institutional obstacles to small farmers
innovation are necessary.
 Issues on sharecropping: a long debate.
 Argues that landlords stipulate and effectively monitor sharecroppers’ activities.
 Empirical evidence for inefficiency of sharecropping.
The Transition of Mixed and Diversified Farming

 Farmer needs to feel secure that his family will benefit from the change in order to
guarantee successful transition.
From Divergence to Specialization: Modern Commercial Farming

 It usually involves capital intensive and labor-saving techniques of production.
Core Requirements of a Strategy of Agriculture and Rural Development

The goal of agricultural and rural development is to improve rural living standards by
increasing and developing small-farm incomes, outputs, and productivity. It is necessary to
identify the main sources of agricultural progress as well as the conditions that are needed to
achieve this goal.
Improving Small-Scale Agriculture
1. Technology and Innovation. In most developing countries, new agricultural

technologies and innovations in farm practices are preconditions of output and
productivity.

STATE UNIVERSITY
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2. Institutional and Pricing Policies. Providing necessary economic incentives. These

are agricultural extension services such as irrigation and access to credit must be
present in order for many of these new methods to succeed. Governments must provide
adequate incentives to farmers to ensure sustainability of foods.
3. Adapting to New Opportunities and New Constraints. Population growth creates an
increased demand for food and there might be new opportunities in exporting excess
food supply particularly in horiculture and aquaculture. Small farmers require special
assistance to capitalize on these opportunities. The priority here is to facilitate collective
action through producers organizations in order to achieve scale and bargain for better
prices.
Conditions for Rural Development

1. Land Reform- it is to redistribute agricultural land to landless farmers and workers, and
ensure equitable distribution and tenure security.
2. Supportive Policies- these policies encourage changes in rural institutions that control
production in supporting government pricing policies on inputs and outputs for farmers. It
is possible to sustain agricultural growth by combining those policies or improvements
with land reform.
3. Integrated Development Objectives- the primary purpose of rural development is to
improve the agricultural productivity of small farmers. It is also to raise farm and non-
farm rural incomes through job creations, rural industrializations and other opportunities.

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Republic of the Philippines

College of Accountancy, Business, Ecocomics and International Hospitality Management

IN PARTIAL FULFILLMENT OF THE COURSE SUBJECT

BACHELOR OF SCIENCE IN MANAGEMENT ACCOUNTING

Leading Innovations, Transforming Lives, Building the Nation

College of Accountancy, Business, Economics and International Hospitality Management

Agriculture Sectors comprise establishments primarily engaged in growing crops, raising

The basic sectors of Agriculture:

Leading Innovations, Transforming Lives, Building the Nation

Figure 1.1 states the Economic Structure of Ghana by 2009-2014.

Leading Innovations, Transforming Lives, Building the Nation

Three complementary elements of an agriculture and employment-based strategy.

Leading Innovations, Transforming Lives, Building the Nation

Agricultural Growth: Past Progress and Current Challenges

Leading Innovations, Transforming Lives, Building the Nation

Leading Innovations, Transforming Lives, Building the Nation

Average Annual Growth Rates of Agriculture, By Region (%)

Leading Innovations, Transforming Lives, Building the Nation

Leading Innovations, Transforming Lives, Building the Nation

3) Subsistence Agriculture and Extensive Cultivation in Africa

The Structure of Agrarian System in the Developing Country

Leading Innovations, Transforming Lives, Building the Nation

First, agriculture-based countries, often subsistence, but agriculture makes up part of

Leading Innovations, Transforming Lives, Building the Nation

Gender Inequality Index

Leading Innovations, Transforming Lives, Building the Nation

Women Gender, Norms and Opportunities

Leading Innovations, Transforming Lives, Building the Nation

Economic Development and Opportunities for Women

Leading Innovations, Transforming Lives, Building the Nation

Micro-economics of Farmer Behavior and Agricultural Development

The Transition of Mixed and Diversified Farming

From Divergence to Specialization: Modern Commercial Farming

Core Requirements of a Strategy of Agriculture and Rural Development

Improving Small-Scale Agriculture

1. Technology and Innovation. In most developing countries, new agricultural

Leading Innovations, Transforming Lives, Building the Nation

2. Institutional and Pricing Policies. Providing necessary economic incentives. These

Conditions for Rural Development

Leading Innovations, Transforming Lives, Building the Nation

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