| Peer-Reviewed

Profitability and Profit Efficiency of Sugarcane Block Farming in Balayan, Batangas, the Philippines: An Empirical Study

Received: 23 August 2022     Accepted: 13 September 2022     Published: 27 October 2022
Views:       Downloads:
Abstract

This study aimed at determining the profitability and profit efficiency of sugarcane block farming in Balayan, Batangas, Philippines. Farm-level data obtained from 157 block farm members in Crop Years (CY) 2018-19 and 2019-20 were used and analyzed using a Cobb-Douglas stochastic frontier profit function model. Empirical results show that the block farm mean profitability is higher in CY 2019-20 than in CY 2018-19 by 27% in both gross margin and profit while only 5% for Revenue/Cost ratio. While the mean profit efficiency scores increased from 0.57 in CY 2018-19 to 0.77 in CY 2019-20. Although around 96% of the sample farms were inefficient in CY 2018-19, this became 100% in the succeeding year. With efficiency score of 0.77 for the current year, there is still opportunities to increase profit efficiency by 23% through the adoption of the best farm practices in the study area. The factors that influenced profit efficiency were the costs of power, man-animal, fertilizer, planting materials, labor, and fixed cost. Also, the number of trainings, number of planting materials, and frequency of weeding positively influenced efficiency. The sole constraint to efficiency was the use of N fertilizer (kg). Block farming had played its part in increasing farmers’ profit efficiency through technology diffusion and adoption as various training, technical advisory and production support embedded in the program were provided to the members. Therefore, the Sugar Regulatory Administration (SRA) should continue organizing small farmers unto block. It should also organize service providers in the district to serve as a hub in providing production support services making productivity inputs (high yielding varieties and farm machinery) accessible in the area. Furthermore, SRA should expand the coverage of its Socialized Credit Program to enable farmers to modernize their farm operations and enhance their farm income and profit.

Published in International Journal of Agricultural Economics (Volume 7, Issue 5)
DOI 10.11648/j.ijae.20220705.16
Page(s) 243-253
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2022. Published by Science Publishing Group

Keywords

Block Farming, Block Farms, Profitability, Profit Efficiency, Stochastic Frontier Approach, Sugarcane Farmers

References
[1] Ali, M. and Flinn, J. C. (1989). Profit efficiency among basmati rice producers in Pakistan punjab. American Journal of Agricultural Economics. 71: 303-310.
[2] Battese, G. E. and Coelli, T. J. (1995). A model for technical inefficiency effect in stochastic frontier production function for panel data. Empirical Economics, 20: 325-332.
[3] Carambas, N. (2018) Profit function approach to productivity and efficiency analysis of sugarcane farms in the Philippines. PhD Thesis. University of the Philippines at Los Baňos.
[4] Coelli, T. J. (1996). “A Guide to FRONTIER Version 4.1: A computer program for stochastic frontier production and cost function estimation.” CEPA Working Paper 7/96, School of Economics, University of New England, Armidale, Australia.
[5] De los Santos, D. and Mendoza, T. (2002). “Crop production: determinants of sugarcane yield in agrarian reform communities in Negros Occidental, Philippines”, The Philippine Agricultural Scientist. 85 (2): 114–121.
[6] Delgado, C. L., Narrod, C. A., Tiongco, M. M. and de Camargo Barros, G. S. A. (2008). Determinants and implications of the growing scale of livestock farms in four fast-growing developing countries. International Food Policy Research Institute. Washington DC.
[7] Geron, Ma. Piedad S. (1994) The impact of Comprehensive Agrarian Reform Program (CARP) on the crop sector. Philippine Institute for Development Studies. DISCUSSION PAPER SERIES NO. 94-15. https://dirp4.pids.gov.ph/ris/dps/pidsdps9415.pdf
[8] Hailemichael, Mulie (2014). The determinants of profit efficiency of coffee producing and marketing cooperatives (The case study of Sidama Coffee Farmers’ Union). Journal of Economics and Sustainable Development. 5 (7) 125-138.
[9] https://batangas.balinkbayan.gov.ph/batangas-province/.
[10] https://weatherspark.com/y/134505/Average-Weather-in-Balayan-Philippines-Year-Round
[11] Khounthikoumane, S.; Chang, J. B.; and Lee, Y. (2021) Profit efficiency of rice farms in wet-season lowlands in Champhone District, Savannakhet Province, Lao PDR. Agriculture. 11 (657). https://doi.org/10.3390/ agriculture11070657.
[12] Mohapatra, Rangalal (2011). Farmers’ education and profit efficiency in sugarcane production: A stochastic frontier profit function approach. IUP Journal of Agricultural Economics, 8 (2): 18-35.
[13] Munir, M. A., Hussain, M., Imran, M. A., Zia, S., Anwar, H., Ayub, M., Rashid, M., Jamil, I., & Ghaffar, I. (2015). Analysis of profit efficiency in sugarcane production in District Sargodha, Punjab, Pakistan, International J. of Eco. Commerce and Management, 3 (9), 649-658.
[14] NEDA Discussion Note (2020) An assessment of reform directions for the Philippine sugarcane industry. https://neda.gov.ph/an-assessment-of-reform-directions-for-the-ph-sugar-industry/
[15] Ogunleye, A. S., Adeyemo, R., Bamire, A. S. and Kehinde, A. D. (2017). Assessment of profitability and efficiency of cassava production among government and non-government assisted farmers association in Osun State, Nigeria. African Journal of Rural Development, 2 (2): 225-233.
[16] Ogunniyi L. T. (2011). Profit efficiency among maize producers in Oyo State, Nigeria ARPN Journal of Agricultural and Biological Science, 6 (11): 11-17.
[17] Padilla-Fernandez, M. D. and Nuthall, P. L. (2012) Farm size and its effect on the productive efficiency of sugar cane farms In Central Negros, International Society for Southeast Asian Agricultural Sciences. 18 (1) 49-61.
[18] Philippine Statistics Authority (2018). Selected Statistics on Agriculture. Quezon City. Retrieved from http://www.psa.gov.ph/ content/selected-statistics-agriculture.
[19] Philippines: Sugar Annual (2020) Attache Gain Report. https://www.fas.usda.gov/data/ philippines-sugar-annual-4.
[20] Rahman, S. (2003) Profit efficiency among Bangladeshi rice farmers. Journal of Food Policy, 28 (5–6): 487-503.
[21] Sugar Regulatory Administration- Extension Services Division Annual Report, 2020.
Cite This Article
  • APA Style

    Marietta Dina Padilla Fernandez, Joel Guansing Ronario, Evelyn Bagtas Estanislao, Lea May De Los Reyes Aguila. (2022). Profitability and Profit Efficiency of Sugarcane Block Farming in Balayan, Batangas, the Philippines: An Empirical Study. International Journal of Agricultural Economics, 7(5), 243-253. https://doi.org/10.11648/j.ijae.20220705.16

    Copy | Download

    ACS Style

    Marietta Dina Padilla Fernandez; Joel Guansing Ronario; Evelyn Bagtas Estanislao; Lea May De Los Reyes Aguila. Profitability and Profit Efficiency of Sugarcane Block Farming in Balayan, Batangas, the Philippines: An Empirical Study. Int. J. Agric. Econ. 2022, 7(5), 243-253. doi: 10.11648/j.ijae.20220705.16

    Copy | Download

    AMA Style

    Marietta Dina Padilla Fernandez, Joel Guansing Ronario, Evelyn Bagtas Estanislao, Lea May De Los Reyes Aguila. Profitability and Profit Efficiency of Sugarcane Block Farming in Balayan, Batangas, the Philippines: An Empirical Study. Int J Agric Econ. 2022;7(5):243-253. doi: 10.11648/j.ijae.20220705.16

    Copy | Download

  • @article{10.11648/j.ijae.20220705.16,
      author = {Marietta Dina Padilla Fernandez and Joel Guansing Ronario and Evelyn Bagtas Estanislao and Lea May De Los Reyes Aguila},
      title = {Profitability and Profit Efficiency of Sugarcane Block Farming in Balayan, Batangas, the Philippines: An Empirical Study},
      journal = {International Journal of Agricultural Economics},
      volume = {7},
      number = {5},
      pages = {243-253},
      doi = {10.11648/j.ijae.20220705.16},
      url = {https://doi.org/10.11648/j.ijae.20220705.16},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijae.20220705.16},
      abstract = {This study aimed at determining the profitability and profit efficiency of sugarcane block farming in Balayan, Batangas, Philippines. Farm-level data obtained from 157 block farm members in Crop Years (CY) 2018-19 and 2019-20 were used and analyzed using a Cobb-Douglas stochastic frontier profit function model. Empirical results show that the block farm mean profitability is higher in CY 2019-20 than in CY 2018-19 by 27% in both gross margin and profit while only 5% for Revenue/Cost ratio. While the mean profit efficiency scores increased from 0.57 in CY 2018-19 to 0.77 in CY 2019-20. Although around 96% of the sample farms were inefficient in CY 2018-19, this became 100% in the succeeding year. With efficiency score of 0.77 for the current year, there is still opportunities to increase profit efficiency by 23% through the adoption of the best farm practices in the study area. The factors that influenced profit efficiency were the costs of power, man-animal, fertilizer, planting materials, labor, and fixed cost. Also, the number of trainings, number of planting materials, and frequency of weeding positively influenced efficiency. The sole constraint to efficiency was the use of N fertilizer (kg). Block farming had played its part in increasing farmers’ profit efficiency through technology diffusion and adoption as various training, technical advisory and production support embedded in the program were provided to the members. Therefore, the Sugar Regulatory Administration (SRA) should continue organizing small farmers unto block. It should also organize service providers in the district to serve as a hub in providing production support services making productivity inputs (high yielding varieties and farm machinery) accessible in the area. Furthermore, SRA should expand the coverage of its Socialized Credit Program to enable farmers to modernize their farm operations and enhance their farm income and profit.},
     year = {2022}
    }
    

    Copy | Download

  • TY  - JOUR
    T1  - Profitability and Profit Efficiency of Sugarcane Block Farming in Balayan, Batangas, the Philippines: An Empirical Study
    AU  - Marietta Dina Padilla Fernandez
    AU  - Joel Guansing Ronario
    AU  - Evelyn Bagtas Estanislao
    AU  - Lea May De Los Reyes Aguila
    Y1  - 2022/10/27
    PY  - 2022
    N1  - https://doi.org/10.11648/j.ijae.20220705.16
    DO  - 10.11648/j.ijae.20220705.16
    T2  - International Journal of Agricultural Economics
    JF  - International Journal of Agricultural Economics
    JO  - International Journal of Agricultural Economics
    SP  - 243
    EP  - 253
    PB  - Science Publishing Group
    SN  - 2575-3843
    UR  - https://doi.org/10.11648/j.ijae.20220705.16
    AB  - This study aimed at determining the profitability and profit efficiency of sugarcane block farming in Balayan, Batangas, Philippines. Farm-level data obtained from 157 block farm members in Crop Years (CY) 2018-19 and 2019-20 were used and analyzed using a Cobb-Douglas stochastic frontier profit function model. Empirical results show that the block farm mean profitability is higher in CY 2019-20 than in CY 2018-19 by 27% in both gross margin and profit while only 5% for Revenue/Cost ratio. While the mean profit efficiency scores increased from 0.57 in CY 2018-19 to 0.77 in CY 2019-20. Although around 96% of the sample farms were inefficient in CY 2018-19, this became 100% in the succeeding year. With efficiency score of 0.77 for the current year, there is still opportunities to increase profit efficiency by 23% through the adoption of the best farm practices in the study area. The factors that influenced profit efficiency were the costs of power, man-animal, fertilizer, planting materials, labor, and fixed cost. Also, the number of trainings, number of planting materials, and frequency of weeding positively influenced efficiency. The sole constraint to efficiency was the use of N fertilizer (kg). Block farming had played its part in increasing farmers’ profit efficiency through technology diffusion and adoption as various training, technical advisory and production support embedded in the program were provided to the members. Therefore, the Sugar Regulatory Administration (SRA) should continue organizing small farmers unto block. It should also organize service providers in the district to serve as a hub in providing production support services making productivity inputs (high yielding varieties and farm machinery) accessible in the area. Furthermore, SRA should expand the coverage of its Socialized Credit Program to enable farmers to modernize their farm operations and enhance their farm income and profit.
    VL  - 7
    IS  - 5
    ER  - 

    Copy | Download

Author Information
  • Research, Development and Extension Department, Sugar Regulatory Administration, Quezon City, Philippines

  • Research, Development and Extension Department, Sugar Regulatory Administration, Batangas, Philippines

  • Research, Development and Extension Department, Sugar Regulatory Administration, Quezon City, Philippines

  • Department of Agricultural and Applied Economics, University of the Philippines, Laguna, Philippines

  • Sections