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Journal of Economics, Management & Agricultural Development Vol. 4, No. 1 77
Introduction
A country‘s productivity in the agriculture sector often translates to a certain
level of competitiveness which may also be revealed through various measures or indices. One of the commonly used tools of European Union countries in measuring
competitiveness is the Domestic Resource Cost (OECD 2011). Looking into the
Philippines‘ agriculture sector, there have been studies which have determined the competitiveness of various commodities that are being imported and even produced
domestically. The study of Briones (2012) indicates that key agricultural commodities
of the country which include rice, yellow and white corn, sugarcane, mango, coconut, banana, pineapple, hogs, broilers, and milkfish have the competitive advantage based
on DRC values below unity.
Cost and Price Competitiveness of Soybean Production in Isabela,
Philippines
Jessa Danica Villa L. Agcopra1 and Ma. Eden S. Piadozo2
Abstract
The study was conducted to determine whether local soybean production can replace
importation through cost and price competitiveness analysis. A complete enumeration of
the 58 farmers with harvested soybean for crop year 2015 was done in the Municipality of
Burgos and Ilagan City in Isabela province. The soybean farmers are engaged in either
organic or conventional production practices. This is in line with the current program of
the government to increase the production of organic soybeans through the Soybean
Development Program of the Department of Agriculture-Bureau of Agricultural Research.
The result of the study reveals that the province of Isabela cannot be a major producer of
soybean in the immediate short run since domestically producing soybeans would incur
higher costs to society. The Resource Cost Ratio (RCR) in producing soybean for both the
conventional and organic practices are 6.00 and 3.26, respectively, under comparative
advantage; and 4.60 and 2.22, respectively, under competitive advantage. Under both
scenarios, organic farming involves higher production costs than conventional farming due
to higher labor cost. Further, comparing the import parity price vis-à-vis the domestic
wholesale price, the computed ratio is 0.75 indicating the lack of competitiveness of
Isabela province to domestically produce soybean. As a result, the Philippines has to
continue importing soybean to meet the demand of the feed and food industries which
utilize soybean in producing various commodities.
Keywords: price competitiveness, local production, importation, domestic resource cost
1Economic Development Specialist, National Economic and Development Authority, jessa.agcopra@gmail.com
(corresponding author) 2Department of Agricultural and Applied Economics, College of Economics and Management, University of the
Philippines Los Banos, College, Laguna, mspiadozo1@ up.edu.ph
78 Agcopra and Piadozo
Soybean (Glycine Max L.) is known as one of the ―world‘s wonder crops‖ due to its nourishment ability and minimal growth requirement. The utilization of soybean is
mainly for feeds but these can also be processed as food products. According to FAO-STAT (2016), the United States of America (USA) was the world‘s top producer of
soybeans in 2015 producing approximately 107 million metric tons (mt). Brazil was
the top exporter of soybeans in 2013 with a total volume of 42.8 million mt accounting for 52.4% of its production. USA ranked second among the top exporters
of soybeans with a total volume of 39.2 million mt or 42.9% of its total production in
2013. On the other hand, China was the top importing country of soybeans in 2013
with total imports amounting to 63.4 million mt.
In the Philippines, soybean is one of the major imports along with other agricultural commodities such as wheat and milk. From 1995 to 2014, the average
volume of imported soybean comprised 99% of the total supply of soybean in the
Philippines while domestic production comprised only one percent. In 2013, soybean and its products ranked 7th with a total volume of 173.4 million kilograms and c.i.f.
value of PhP 4.5 billion. Since the domestic production of soybean is nil, the Philippines imports large volume of soybean from other countries in order to meet the
demand of both the food and feed industries.
For a country to lessen its imports, it can adopt import substitution strategy. This is practiced mostly by less developing countries wherein the production of a certain
commodity is made domestically rather than importing it elsewhere (Liang 1997).
Import substitution can be a solution for the commodities heavily imported by the Philippines, such as soybean, in order to reduce the costs incurred by the country on
importation and therefore save foreign exchange. Instead of importing these commodities, the government along with its concerned agencies, can introduce the
domestic production of these crops and help farmers increase their income and also to
generate more jobs.
The Department of Agriculture–Bureau of Agricultural Research (DA-BAR)
launched the ―Soybean Development Program‖ in 2011 which aimed to increase the domestic production of soybean. This five-year program intends to develop the
organic production of soybean all over the Philippines. The vision-mission of the
program is to create farming communities which would produce organic agricultural goods to be provided to fellow Filipinos and other Asian countries by building
community-based production, and to develop a processing industry through
public-private partnerships (De Lima 2010). The DA is currently implementing the National Organic Agriculture Program (NOAP) which aims to engage the farmers to
organic farming in order to improve the income, livelihood, and health of farmers; protect the environment; and improve resiliency of the sector towards climate change.
Thus, the NOAP provides the guiding principle for the DA and its attached agencies
and bureaus in crafting programs related to organic agriculture.
The province of Isabela is the top producer of soybean in Luzon under the
Soybean Development Program of DA-BAR. This study is an attempt to 1) determine
whether Isabela can replace the imported soybeans by producing soybeans domestically in the short run, and 2) differentiate the farmers engaged in organic or
conventional production practices. In the event that the province of Isabela can fully replace the imported soybeans, the country can save foreign exchange, promote
further the domestic production of soybean, and improve the income of soybean farmers.
Journal of Economics, Management & Agricultural Development Vol. 4, No. 1 79
Conceptual Framework
Figure 1 shows the conceptual framework used in the study in order to
determine the cost and price competitiveness of soybean production in the province of Isabela. The production of soybean in Isabela and all over the country is being
supported by the Soybean Development Program of the DA–BAR. In this study, the
production of soybean in Isabela follows either organic or conventional production practices. Cost of production differs between the two production systems, and thus
the competitiveness of soybean produced in Isabela for the two systems.
Figure 1. Conceptual framework to determine the cost and price
competitiveness of soybean production in Isabela
Comparative and Competitive
Advantage of Soybean
Production in Isabela
Cost of Production of
Soybean
Import Competitiveness of
Soybean Produced in Isabela
vis-à-vis Imported Soybean
Soybean Production in Isabela
Soybean Development Program of
DA-BAR
Organic Production
Use of organic fertilizer
and biopesticide
Higher labor input
Lower production
Conventional Production
Use of inorganic fertilizer
chemicals and pesticide
Higher output
World Prices of Soybean and
Inputs
Exchange Rate
Storage, Port and Transfer Costs
80 Agcopra and Piadozo
3Out of the 80 soybean farmers listed under the master list from the Department of Agriculture – Cagayan Valley
Research Center, only 58 soybean farmers had harvests for the time period covered.
The following hypotheses were tested. 1) The province of Isabela has a comparative and competitive advantage in producing soybeans. The domestic
production of soybeans in Isabela is competitive vis-à-vis importation since the price of domestically produced soybeans is lower compared to the import parity price of
soybeans. 2) The opportunity cost of domestic resources spent in soybean production
is relatively smaller as compared to the foreign exchange that it saves by substituting domestic production for imports. 3) Producing organic soybeans is, however, less
competitive than conventional production due to higher cost incurred.
Methodology
Data and Data Collection Methods
The study used both secondary and primary data from various sources. The
primary data were obtained from 58 completely enumerated soybean farmers in the
Municipality of Burgos and Ilagan City in Isabela who had harvests for crop year
20153. The 58 soybean farmers were classified based on their production practice; whether the soybean farmers engaged in organic or conventional production of
soybean. On the other hand, the secondary data on the volume of imports, value of imports (in CIF prices), sources of imports, world prices, official exchange rate, and
tariff amount and rates were obtained from the Bangko Sentral ng Pilipinas (BSP),
Philippine Statistics Authority (PSA), World Bank, Bureau of Customs, and the
Manila International Container Terminal.
Analytical Tools
The competitiveness of soybean production was determined using the cost and price competitiveness analyses. Cost competitiveness analysis involves determining
the Domestic Resource Cost (DRC) and Resource Cost Ratio (RCR) coefficients. The price competitiveness analysis involves a comparison of the domestic wholesale
price and import parity price.
Cost Competitiveness Analysis
Domestic Resource Cost (DRC) is the ratio of the domestic costs used in the
production of a unit of commodity as an output in domestic currency to the difference between the world price or border price and foreign costs per unit of output which are
expressed in foreign currency. Domestic costs can either be evaluated using market or
financial price (for competitive advantage) or in shadow or economic prices (for comparative advantage). DRC under comparative advantage was computed using the
formula:
domestic costs evaluated in shadow prices per unit of output
(border price of output) - (foreign cost per unit of output in border price) DRC =
Journal of Economics, Management & Agricultural Development Vol. 4, No. 1 81
For competitive advantage, the formula is as follows:
The Resource Cost Ratio (RCR) was used for identifying comparative
advantage which is a measurement of comparative efficiency (Arcilla 2003). This was
be obtained using the formula:
where:
RCR = Resource Cost Ratio DRC = Domestic Resource Cost
SER = Shadow Exchange Rate
If RCR < 1, comparative advantage exists; if RCR = 1, neutral or neither
comparative advantage or disadvantage exists; and if RCR > 1, comparative disadvantage exists. A value of RCR less than 1 (RCR < 1) implies that producing a
commodity in a country would have a lesser social cost compared to importing the
product. Also, domestic production is cheaper than importing it elsewhere. An RCR value greater than 1 (RCR > 1) implies that social cost is less in imports compared to
domestic production. This means that domestic production is more expensive relative
to imports. If the value of the RCR is 1 (RCR = 1), the situation is said to be neutral which means that the production of a commodity in a country neither has a
comparative advantage or disadvantage.
Following the studies of Balangue (2011), Cataquiz (1997), and Elca (1997), the
shadow exchange rate was computed to be 20% higher than the official exchange
rate. This is computed using the formula:
SER = OER + (OER x 0.20)
where:
SER = Shadow Exchange Rate
OER = Official Exchange Rate
Resource cost under competitive advantage which is a measurement of
competitive efficiency (Arcilla 2003) was computed using the formula:
where:
RCR* = Resource Cost Ratio
DRC* = Domestic Resource Cost
OER . = Shadow Exchange Rate
domestic costs evaluated in market prices per unit of output
(border price of output) - (foreign cost per unit of output in border price) DRC* =
DRC
SER RCR =
DRC*
OER RCR* =
82 Agcopra and Piadozo
If RCR < 1, competitive advantage exists; if RCR = 1, neutral or neither competitive advantage or disadvantage exists; and if RCR > 1, competitive
disadvantage exists.
Since competitive advantage takes into consideration market distortions and
government interventions, the first relationship wherein RCR < 1 implies that actual
cost of production is less when a commodity is produced domestically than when it is imported. This also suggests that the country could compete in the international
market. On the other hand, RCR > 1 implies that a country cannot compete in the
international market; importing the commodity would be better than producing it
domestically.
Price Competitiveness Analysis
Import competitiveness requires taking the ratio of the import parity price to the
domestic wholesale price of soybean. The ratio determines whether import
competitiveness exists in the area. Import competitiveness indicates whether the domestic production of soybean can replace the imported soybean as revealed by its
price ratio. This was computed using the formula:
where:
IC = import competitiveness
Pi = import parity price (PhP/mt)
Pd = domestic wholesale price (PhP/mt)
Following Balangue‘s (2011) methodology, import parity price (Pi) was
computed using the following formula:
Pi = (CIF x ForEx) + Tariff + PC + STC
where:
Pi = import parity price
CIF = cost, insurance and freight equal to FOB (US$/metric ton) + freight and
insurance
ForEx = foreign exchange rate (PhP/US$)
PC = Port cost (PhP/mt)
STC = Storage and transfer cost from pier to warehouse (PhP/mt)
Journal of Economics, Management & Agricultural Development Vol. 4, No. 1 83
Results and Discussion
Overview of the Domestic Production and Trade of Soybean
The domestic production of soybean comprises less than 1% of the total world production of soybeans. On the average, the domestic production of soybean is
approximately 1,000 mt while the global production of soybean is around 91 million
mt (PSA 2015). From 1995 to 2014, the average volume of imported soybeans comprised 99% of the total supply of soybeans in the Philippines with only 1% from
domestic production (PSA 2015). During this period, the average annual total supply
of soybeans was 147,629 mt with average annual growth rate of 12%. The average volume of imported soybean reached 146,541 mt. On the other hand, the domestic
production of soybean was observed to be declining by 6% per year. The total volume
of soybeans produced from 2011 to 2014 in Region II was 1,299.50 mt. which is the
second highest total volume produced next to the Caraga Region which produced
6,510.30 mt for the same period. On the average, the volume of soybeans produced in the Caraga Region was 1,627.57 mt per year while Region II‘s average volume of
soybeans produced was 324.88 mt per year.
Aside from the declining domestic production, the land area devoted to soybean
production had also decreased at a rate of 6.37% annually (Figure 2). On the average,
the land area devoted to soybean in the country was only 850 hectares (ha). This decline may suggest that farmers in the country have shifted to planting other crops
such as corn and rice which exhibited an increasing trend in production from 1995 to
2014 (Figure 3). Specifically, the province of Isabela posted an average growth rate of
4% for rice production and 10% for corn production.
Figure 2. Land area (hectares) devoted to soybean production, 1995-2014 Source: FAOSTAT 2015
84 Agcopra and Piadozo
Characteristics of Soybean Farmers in Isabela
Table 1 shows the summary characteristics of soybean farmers in Isabela.
Majority of the soybean farmers (57%) are engaged in conventional soybean production. Fifty-three percent of the respondents are male and the average age of the
respondents is 46 years old. About one-fourth of the farmers finished only elementary
education, 43% completed high school, and 31% earned a college degree.
On the average, the respondents have been farming for 20 years, and engaged in
soybean production for only two years. Among the 58 respondents, 71% are land
owners while only a few respondents rent, borrow, and use public land for soybean production. More than half (57%) of the respondents are members of a farmer‘s
organization. Half has undergone training related to soybean production or processing which was sponsored by either a government agency or private sector. The farm lands
of the respondents are in plain and sloping areas, with 53% and 47% of the
respondents, respectively.
Farm Characteristics of the Soybean Farmers in Isabela
Table 2 summarizes the farm characteristics of the soybean farmers in Isabela.
Organic and conventional soybean farmers have almost similar characteristics. On the
average, the total farm size of the respondents is 3.42 ha wherein 0.96 ha is devoted
for soybean while 2.47 ha are devoted for other crops. Generally, the land area of the soybean farmers in Isabela is approximately twice as much as the national average
farm size reported by the Philippine Statistics Authority (PSA) in 2015 which is 1.29
ha. However, the land area devoted to soybean production is below the national average and has also decreased from the average land area in the 1990s of 2 to 3 ha.
The average distance of the farm from the farmer‘s residence is 4.01 kilometers (km)
while the average distance of the respondent‘s farm to market is 20.94 km.
Figure 3. Volume of production (mt) of rice and corn, Isabela, 1995-2014 Source: PSA 2015
Journal of Economics, Management & Agricultural Development Vol. 4, No. 1 85
Table 1. Distribution by socio-demographic characteristics, 58 soybean farmers,
Isabela, 2015
Characteristic
Organic
(n=25)
Conventional
(n=33)
Total
(n=58)
No. Percent No. Percent No. Percent
Gender
Male 14 56 17 52 31 53
Female 11 44 16 48 27 47
Age
< 20 0 0 1 3 1 2
21-30 4 16 1 3 5 9
31-40 5 20 7 21 12 20
41-50 10 40 9 27 19 33
51-60 5 20 8 24 13 22
61-70 0 0 4 12 4 7
> 70 1 4 3 10 4 7
Average 44 49 46
Highest Educational
Attainment
Elementary 6 24 9 28 15 26
High school 11 44 14 42 25 43
College 8 32 10 30 18 31
Years in Farming
1-10 12 48 10 31 22 38
11-20 7 28 8 24 15 26
21-30 2 8 7 21 9 16
31-40 1 4 4 12 5 9
41-50 1 4 0 0 1 2
> 50 2 8 4 12 6 10
Average 18 22 20
Years in Soybean Farming
< 1 1 4 2 6 3 5
1-2 20 80 28 85 48 83
> 2 4 16 3 9 7 12
Average 2 2 2
Land Ownership
Owned 18 72 23 70 41 71
Rented 6 24 6 18 12 21
Borrowed 1 4 2 6 3 5
Occupant in public land 0 0 2 6 2 3
Membership in Farmer
Organization
Yes 15 60 18 55 33 57
No 10 40 15 45 25 43
Has Undergone Training
Yes 12 48 17 52 29 50
No 13 52 16 48 29 50
Topography
Broad plain 13 52 18 55 31 53
Sloping 12 48 15 45 27 47
Source: Survey data 2015
86 Agcopra and Piadozo
4The computed shadow exchange rate was PhP 56.68, which is 20 percent higher than the official exchange rate.
Table 2. Farm characteristics, 58 soybean farmers, Isabela, 2015
Comparative and Competitive Advantage of Soybean Production
The summary of the domestic and foreign costs components of the input materials used in soybean production in Isabela is shown in Table 3. In Isabela, the
soybean farmers are classified as organic producers and conventional producers.
Among the cost items, hired labor has the highest cost, accounting for more than 50%.
For competitive advantage, the computed DRC values, 221.55 for organic
production and 108.39 for conventional production, are greater than the prevailing official exchange rate which was PhP 47.23 at the time of the study. These computed
values suggest that import substitution of soybean in the province is not cost
competitive. The computed RCR values (4.69 for organic production and 2.29 for conventional production) are greater than one which implies that the soybean
production in Isabela has a competitive disadvantage for both production practices. Expanding the production of soybeans in Isabela would not be competitive since the
actual cost of producing soybean domestically is greater than the import cost of the
commodity.
Comparing the computed RCR values for both comparative and competitive
advantage, the RCR values are higher under shadow prices than under market prices.
This suggests that there is a higher private profitability in engaging in soybean production than social profitability which suggests that soybean production is
beneficial from the farmers‘ perspective as opposed to the society.
Soybean farmers engaged in organic production have incurred higher costs than
those engaged in conventional production. This is mainly attributed to the cost of
hired labor which is relatively higher under organic production. Engaging in organic
production is observed to be more labor-intensive as compared to conventional
production which has greatly affected the competitiveness of organic soybean
production.
Farm Characteristic Organic Conventional Average
Average farm size (ha) 3.44 3.40 3.42
Average farm size for soybean production (ha) 0.91 1.00 0.96
Average farm size for other crops planted (ha) 2.53 2.40 2.47
Average distance of farm from house (km) 4.04 3.97 4.01
Average distance of farm from market (km) 21.64 20.24 20.94
Source: Survey data 2015
Journal of Economics, Management & Agricultural Development Vol. 3, No. 2 87
Item
Co
mp
ara
tiv
e A
dva
nta
ge
Co
mp
etit
ive
Ad
va
nta
ge
Org
an
ic (
n=
25
) C
on
ven
tio
nal
(n=
33
) O
rgan
ic (
n=
25
) C
on
ven
tio
nal
(n=
33
)
DC
a
(Ph
P/k
g)
FC
b
(US
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g)
DC
a
(Ph
P/k
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FC
b
(US
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g)
DC
a
(Ph
P/k
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b
(US
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g)
DC
a
(Ph
P/k
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FC
b
(US
$/k
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Hir
ed l
abo
r 3
0.8
9
0.0
0
23
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0.0
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26
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14
.63
0.0
0
See
ds
7.9
1
0.0
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7
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7.9
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d i
no
cula
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0.0
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0.0
0
0.2
2
0.0
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5
0.0
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0.2
2
0.0
0
Fer
tili
zers
1
.21
0.0
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1.2
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6
1.2
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rest
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tal
49
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33
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8
22
1.5
5
10
8.3
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RC
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5.7
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4.6
9
2.2
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Tab
le 3
. D
om
esti
c an
d f
ore
ign
cost
com
pon
ents
of
the
inp
ut
mate
rials
/cost
ite
ms
use
d i
n s
oyb
ean
pro
du
ctio
n e
valu
ate
d a
t sh
ad
ow
a
nd
mark
et p
rice
s a
s o
f la
st h
arv
est,
Isa
bel
a, 2015
a D
om
esti
c C
ost
, b
Fore
ign
Cost
, c U
sed
for
shel
lin
g,
clea
nin
g,
and
sort
ing
CIF
pri
ce o
f so
yb
eans:
US
$ 0
.35
per
kg
Sou
rce:
Auth
ors
‘ es
tim
ates
bas
ed o
n s
urv
ey d
ata
201
5
88 Agcopra and Piadozo
Import Competitiveness of Soybean Production
Table 4 summarizes the price comparison and import competitiveness of
soybean production in Isabela based on the secondary data obtained from various sources and key informants. For the purpose of this study, the US No. 2 Yellow
Soybean was compared with the PSB 2 (Tiwala 6) local variety of soybean since
these two varieties have similar characteristics in terms of quality.
Following the methodology for computing for the import competitiveness, the
cost, insurance and freight (CIF) price is composed of the world price of soybean,
freight cost, and insurance in US dollars. The computed CIF price of soybeans per metric ton is US$ 440.50. Import price was then converted into peso by multiplying
the CIF price with the official exchange rate. The computed import parity price of
soybean per metric ton is PhP 20,804.82. Upon arrival in the Philippines, a tariff rate
of 1% is charged along with port, storage, and transportation costs. Problems
regarding port congestion greatly affect the transportation of the imported goods in the country. One main cause of the delay of transportation is the truck ban
implemented in Manila which prohibits trucks from transporting goods during the day. Port congestion surcharges along with additional storage fees are included to
take into consideration the current situation in the Port of Manila. The computed
import parity price of soybeans amounts to PhP 33,311.44 per metric ton which is
also the total cost of transporting the soybeans from the US port to the Manila port.
Table 4. Price comparison and import competitiveness of soybean production,
Isabela, 2015
Price Comparison Component Currency Amount (Per Mt)
From the US port
World price US$ 352.00
Freight costs US$ 81.46
Insurance US$ 7.04
CIF price US$ 440.50
Conversion from US$ to PhP
CIF price US$ 440.50
Foreign exchange rate PhP/US$ 47.23
Import price PhP 20,804.82
Arrival in Manila port
Import price PhP 20,804.82
Tariff rate (%) 1.00
Tariff amount PhP 208.05
Port costs PhP 8,551.00
Storage and transportation cost PhP 2,278.36
Additional storage charges PhP 54.08
Port congestion surcharges PhP 1,415.13
Import parity price PhP 33,311.44
Isabela to Manila
Farm gate price PhP 40,000.00
Transportation and distribution cost PhP 4,500.00
Domestic wholesale price PhP 44,500.00
Import Competitiveness Ratio 0.75
Source: Authors‘ estimates based on secondary data 2015
Journal of Economics, Management & Agricultural Development Vol. 4, No. 1 89
The domestic wholesale price was computed by tracing the transported soybean from the producers in Isabela to the market in Metro Manila. Since soybean is sold
usually at PhP 40.00 per kilogram, a metric ton of soybean costs PhP 40,000.00. With this, the computed domestic wholesale price of soybean is PhP 44,500.00/mt
considering the transportation and distribution cost which amounts to PhP 4,500.00/
mt. The domestically produced soybean in Isabela is usually sold within the area but
there is also soybean which is transported and sold in Manila.
The ratio of the import parity price to domestic wholesale price resulted in an
import competitiveness ratio of 0.75 which suggests that the province of Isabela is not yet fully capable of replacing imported soybean. This is because the imported price of
soybean is lower as compared to the domestic price. This also suggests that the cost of producing soybean in other countries is lower as compared to the province of Isabela.
In this case, import substitution cannot take place yet since continuously producing
soybean domestically would incur higher costs than importing soybean. In addition, soybean production in Isabela can only be considered as a supplemental livelihood for
farmers and not for import substitution.
Conclusion and Recommendation
The results of the study suggest that the Philippines cannot be a major producer
of soybean in the immediate short run since domestically producing soybean would incur higher costs to the society. The Philippines has to continue importing soybean to
meet the demand of the feed and food industries which utilize soybean in producing
different commodities.
The cost of labor is the highest among all the cost items incurred in soybean
production. Soybean farmers employ hired laborers to perform the different cultural management practices with minimal labor-saving equipment. If they will continue
producing soybean, labor-saving equipment such as seeders, weeders, and harvesters
should be introduced to lessen the number of laborers employed as well as the man-days spent on these activities. The use of cost-saving equipment or machineries
is upheld under Republic Act No. 1061 which is known the Agricultural and Fisheries Mechanization Law or AFMech Law (gov.ph 2013). Aside from the use of
machineries and equipment to decrease cost and save labor, the AFMech Law aims to
enhance the productivity, efficiency, and the income of farmers.
Another important factor to consider is the production practice performed by the
soybean farmer. Organic soybean farmers incur higher costs than conventional
soybean farmers. Labor costs are higher under organic than conventional production
which can be attributed to the frequency of application of various organic and/or
biological controls to induce growth and avoid pest infestation. Another observation is that organic soybean farmers have lower yields than conventional farmers. Organic
soybean farmers are not maximizing the usage of inputs such as fertilizers and pest
control. For instance, while it is recommended that organic soybean farmers apply 10 bags of fertilizers per hectare, they only apply three (3) bags of fertilizers per hectare.
For pest control, organic soybean farmers were observed to be applying only one (1)
colony of earwigs per hectare against the recommended four (4) colonies per hectare. Likewise, only 10 packs of Metarrhizium (fungi) are applied versus the recommended
28 packs. Thus, the organic soybean farmers do not achieve the maximum volume of
soybean production per hectare.
90 Agcopra and Piadozo
Another factor which may have contributed to the low production of soybean in the province is the presence of El Nino in 2015-2016. The Philippine Atmospheric,
Geophysical and Astronomical Services Administration (PAGASA 2017) describes El Nino as a ―large-scale oceanographic/meteorological phenomenon that develops in
the Pacific Ocean and is associated with extreme climatic variability‖. In the
Philippines, the presence of El Nino has brought drought and dry spell in different provinces including Isabela which has declared a state of calamity in 2015. The
farmers in the province have experienced massive losses most especially the corn
farmers due to the dry spell in the region (Pillien 2015).
With the uncertainties in the weather conditions brought about by climate
change, the government, most especially the implementing agencies, must incorporate strategies on how to address climate change effects in their plans and programs. These
strategies may include the provision of capacity building activities for farmers and
even the local government units in order to enhance their knowledge and skills in climate change adaptation such as introduction and provision of climate- resilient crop
varieties to farmers, among others.
The study also shows that the import parity price of soybean is lower than the
domestic wholesale price of soybean which is due to the low world price of soybean.
Despite the presence of the additional costs in importing soybean such as port congestion surcharges and additional storage charges, the import parity price remains
lower than the domestic wholesale price. Decreasing the volume of imported goods,
particularly soybean, can greatly affect the feed and food industries. Decreasing the volume of imports will only be favorable if the cost of producing soybean in the
Philippines is less than the cost of importation but the study reveals otherwise.
References
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Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA). 2017. What is El Niño/Southern Oscillation El Niño Phenomenon.
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