THE FARM SECTOR_Lec.pdf

ANDREW DEL-ONG Lecture Notes in AB 11 1st Semester 2024-2025 THE FARM SECTOR The agricultural production sector of agribusiness Consists of agriculture, fishery, and forestry sub-sectors Core of agribusiness Closely interlinked with the input, processing and marketing sectors  Farm  Any...

ANDREW DEL-ONG Lecture Notes in AB 11 1st Semester 2024-2025 THE FARM SECTOR The agricultural production sector of agribusiness Consists of agriculture, fishery, and forestry sub-sectors Core of agribusiness Closely interlinked with the input, processing and marketing sectors  Farm  Any tract of land used for raising plants and animals.  Include the summation of environmental resources (land, water, air), organic inputs, plants and animals, and technological improvements (fertilizers, feeding enhancement techniques, temperatures, etc.) in a given location; including the farmer and his/her family. Farming  The practice of agricultural production.  The oldest known vocation of civilized people. Characteristics of farming Home and farm business is integrated Functions of management and ownership are combined Most farms are small business units Characteristics of Farming Farm products are not easily standardized Farmers’ control over production is limited Demand and supply of farm products are inelastic Characteristics of Farming Farming is subject to great risks Financing farming is a difficult task Farming can be done by less educated persons Disadvantages of Farming Farm products are highly competitive Farming has many uninsurable risks Farm production costs is high due to a relatively small size production units Disadvantages of Farming Farm wages are lower compared with other industries Farm production is difficult to control Farm works are rated with low social status by Asian societies  Similarities of Farming to other Businesses Farm managers must also plan their production programs to fit the local market channels Daily operations must be planned to achieve efficiency Products must be prepared towards the market to maximized profits THE PHILIPPINE FARMS  NUMBER – 2.16M in 1960; 5.7M in 2000  AREA (ha) – 7.77M in 1960; - 10.3 M in 2000  AVERAGE AREA (ha) - 3.59 in 1960; - 1.80 in 2000  More than 50% of the total number of farms are 2.99 hectares and below  More than 50% of the farms are either owned or partly owned THE PHILIPPINE FARMS Crops – 76% of the total area Livestock – 24% of the total area Rice – 52.73 % of the area devoted to crops Corn - 36% of the area devoted to crops THE PHILIPPINE FARMS Production value – ₱1.78 trillion Crops share/ production value – 55% Livestock share – 16.8% Poultry’s share – 11.78% Fishery share – 16.25% THE PHILIPPINE FARMS Major Crops:  Palay Coconut  Corn  Banana  Sugarcane FARM CLASSIFICATIONS According to Legal Status Individual Corporate Cooperative Partnership Government Institution Private Institution FARM CLASSIFICATIONS According to Tenure Owned Partly Owned Tenanted Leased FARM CLASSIFICATIONS According to Management Systems Subsistence Farms – production-oriented farms managed by the household; small portion goes to the market; 2/3 world’s farms are subsistence farms. FARM CLASSIFICATIONS According to Management Systems Commercial farms – producing mainly for sales Collective farms – manage by centrally planned economies FARM CLASSIFICATIONS According to Crops/Livestock Raised Mono crop farms – usually observed in large estate farms with processing components Mixed crop farms – done to maximized land productivity FARM CLASSIFICATIONS According to Crops/Livestock Raised Relay crop farms – succession planting done to maintain soil fertility Integrated farms – different farm units support each other FARM AND FARMING SYSTEM Farming System – a more or less coherent combination in time and space of some quantities of labor and various means of production in order to get different agricultural products. One or different farming systems could be adopted in one farm FACTORS AFFECTING CHOICE OF FARMING SYSTEM  Tenure – owner operators have more freedom to choose crop / livestock combination (s)  Farm characteristics - size, topography, location, soil type  Market risks – affect choice between mono-cropping and mixed cropping and integrated farming  Income opportunities  CHARACTERISTICS OF THE FARM SECTOR  Dominated by small scale producers  Highly dependent on uncontrollable production conditions ( production risks)  Subject to high market risks due to the variability, seasonality and perishability of produce  Due to smallness of operations, the sector is weak in relation to its backward (input) and forward (markets) links. PROBLEMS/CONSTRAINTS IN THE FARM SECTOR Input-sourcing Problems High cost of inputs  Poor access to input sources Lack of information on input choices and use  PROBLEMS/CONSTRAINTS IN THE FARM SECTOR Production Constraints Lack of control over production conditions Farm maintenance during production process Lack of awareness on new production technologies  PROBLEMS/CONSTRAINTS IN THE FARM SECTOR Marketing Problems Lack of markets Lack of product differentiation Poor marketing infrastructure Lack of market information  PROBLEMS/CONSTRAINTS IN THE FARM SECTOR Support-services related problems Inadequacy of and poor access to credit Lack of production and marketing infrastructure Inefficiency of support programs FARM SECTOR OPTIONS Small to Medium and Commercial Farmer Production  Farmers’ organizations  Contract growing  Contract marketing  FARM SECTOR OPTIONS Market Linkaging and Strengthening of Existing Market Linkages through:  Individual farmer initiatives  Farmers organizations  Industry associations  NGOs and government organizations  SMALL CONSUMER FARMS MARKET COOPERATIVE MARKETING ORGANIZATION Figure 1. Small Farms Forming Cooperative Marketing Organization and Selling to Consumers  Contract Growing SMALL BUSINESS DOMESTIC FARMS MARKETS CONSUMERS EXPORT MARKETS Figure 2. Alternative Distribution Strategy: Export and Domestic Marketing by Small Farms Through Contract Growing Arrangements  COMMERCIAL BUSINESS FARMS MARKET CONSUMER TRADERS MARKET Figure 3. Alternative Distribution Strategy: Direct and Indirect Marketing by Commercial Farms  COMMERCIAL FARMS EXPORTERS LOCAL INTERNATIONAL TRADERS MARKETS BUSINESS CONSUMER MARKETS MARKET Figure 4. Alternative Distribution Strategy: Export and Domestic Marketing by Commercial Farms