Philippine Institute for Development Studies Working Paper 83-07 ./
_l%_IC INCENTIVES AND CO_m_TIVE ADVANTAGE IN THE _ INDUSTRY* by L.S.
Caban,bb_a
PlOS Library
ECONOMIC INCENTIVESAND COMPARATY_E ADVANTAGE
IN THE LIVESTOCK
L. So C_anil_a
C-overnme_t intervention become
an impertant
Philippines.
part
The desire
in the face of demand population
INDUSTRY*
_
in the livestock
of aBricultural
resulting
has led to more government
As in other industries, forms which
ÂŁnterventions
puts
in the domestic
and border
alter
of protection
are afforded
and, some consumer
relative
market
(world) prices.
groups
broadly
intervention
in the products
in=ome
and
in the industry.
Nas taken several
_s tariff and non-tariff.
prices
of inputs and out-
and put a wedge Consequently,
be_ÂŁween domestic
different
to firms within are protected
has
in livestock
from increasing
intervention
can be classified
These
policy making
for self-suffiefency
growth
industry
degrees
and across
while
others
industries, are
penalized.
Revised version of the paper presented at the Workshop on The Impact of E_onomic Policies on Agricultural Development sponsored jointly by the Philippine Institute of Development Studies (PIDS) and The Philippine Council for Agriculture and Resources Research and Development (PCARRD) on Mareh 25-26, i983, Tagaytay City. Also a condensed form of the author's Ph.D. dissertation with the same title, done at the UPLB, May 1983. **
5
_
Ass_tant _ro_essor, Department of Economics, Oollege of Bevelopment Economics and Management (CDEM), University of the Philippines at Los Ba_os, College, Laguna_
The ment
existence
intervention
policies in in
of
the
When
The
private
sector
to determine livestock of
This
paper
impact
government
The of 15 Most
livestock
Philippine
of
this
to come
cattle
and
raised
as work
lln
present that
intervention
the
other
sectors.
production,
Thus,
it
addi-
is necessary
_ntervention
system
promotes
relatively
efficient
in
are
the
three
industry,
parts.
the
and
The
analyzes
third
part
discusses
livestock
production
The
Livestock
lndust_
gross
from
value
four
although
animals
rather
statistical
poultry is distinguished stock includes poultry.
from
(GVA)
species
carabaos than
in
the
I contributes
added
animal
briefly
part
the
industry
first
second
in
livestock
carabaos_
official
of
policies,
advantage
percent
on
sector.
is composed
the
comparative
effects
these
development
from
to
this
not
goyern_
resources.
describes of
resulting
in livestock
the
or
to agricultural
is high
activities
domestic
conflicting
of whether
pervasive
or not
production
use
has
flow
whether
question
structure
profitability will
sometimes
favorabie
incentive
resources
and
the
effects
livestock
tional
the
raises
produce
general.
numerous
are
source
publications livestock.
Philippines.
an
average
in agriculture,
namely at
the
poultry,
present
hogs,
primarily
of meat.
._articular!y For
this
study,
NEDA's) live-
3
The amimals,.particularly carabaos]
the ruminants
are raised predom_nantly
of the commercial and pouitry) phenomenon
sector
has Been
which
seem
that technology
easilN
across
not.
Cattle
raising
tions favoring land-man which
the temperate
ratio presents
areas where for cattle generally
raised
is relatively
are provided
with
Asian
LDC's
in hogs and poultry while
cattle
is
on environmental
to higher
condi-
the declining
inventories
of cattle
only in sparsely
cost of land
for growing
low.
In contrast,
housing
scale
hogs
anywhere
facilities
is due is
technolo_yin
Furthermore_
This
raising
economically
in commercial
proper
(e.g. hogs
tbe early seventies.
countries_
the opportunity
be raised
since
dependent
a barrier
But _rowth
in the non-ruminants
countries
is highly
are at present
farms.
to be true also in most
to the observation transferred
in 5ackyard
specially
significant
(e.g., cattle and
populated
pasture
grass
and poult_
can
as long as they
and a steady
supply
of
feed concentrates, Meat
production
2_5 percen_ previous
years
the number !mpor=ant
per year
of animals
has been
growing
in the seventies
(.see Figure
slaughtered
Hogs
supply and poultry
at an average
compared
i) has been
in this development
in hogs and poultry. meat
which
in the
due to the growth both
is the commercial
supplies
to I percent
and the weight
contribute
rate of
around
around
in
of animals. sector particularly
60 percent
15 percent.
of the total
Thogsm_ MT 850 8O0 75O 700 6,50 600 55O 50O 450 40O
Pork
350 500 250 200 _50 I00 50
__L_L__L---L--J-_ 55 56 57 58 59 60 6!
62 63 64 65 66 67 68 69 70 71 7'2 73 74 75 YeO_
Fig. |. Trendsin rneotproduction_1956-e0.
76 77 78
The ruminants
_re
a minor
be true also in the future. ion in poultry, system will animals
source
Commercial
which has become
continue
are known
sion efficiency
of meat
to serve
hogs
is also hi@her
and broiler
predominantly
as the major
to reproduce
and this will
much
faster
product-
a contract
sources
growing
of meat,
and their
than ruminants.
likely
These
feed conver-
It is worth
noting
however,
that since raising hogs and chickens necessitates the use 2 of lar@e amounts of feeds, increased domestic production or increased
importation
of foodstuffs
will
be needed.
if the coun=ry foreign
exchange
production_ produce
we have
meat.
the production which
appears
forei_
resources
particularly
other land.
to import
corn, soybean
imports,which
are needed
starting
we may end up This
in the seven-
of foodstuffs
have grown
have been kept
to
for the use of
foodstuffs.
imports
notably
relatively
at low levels
(see
2).
2 Feeds cost can 8o as high as 70 percent of production (See Labadan, 1976).
to
feed grains,
Otherwise_
and fish meal,
domestic
to be allocated
food crops
in the Philippines
meal,
which
no_ably
these
to save
and promoting
have
ingredients
with
exchange
imports
the feedscuffs
the value of the country's
than meat
Figure
feed
competes
to 5e the case
ties when yellow
to produce
of more
resources
usins more
meat
In other words
inevitably
domestic
more
by preventing
wants
of the total
cost
8O 75 7O 65
_
FeedIngredients
60
........
Meot Products
55 50 45 40 35 50 25
_5 I05
_,f,_,,_s
*'''=
60 6_ 62 65 64 65 66 67 68 69 70 71 72 73 74 75 76 77 7'8 79 80 Yeor Fig. 2. Trendsin valueof feed in(3redier_ts _d meo! productsimported1960-80.
Except durin@
for the'substantial
the early post-war
the mid-sixties, of supply and eUs. been
Marketing
the total
imports
of fresh, beef dropped beef
imports
tr_audously
averaged
for pork,
chicken
increase
meat
during
beef however_
during
to more
or three
for livestock
and the sixaveraged
than 90 percent
times
the same period.
to conserve
the average
imports
It is then evident
products
put pressure
of
volume
But even this has
when
foreign
have
the National
of corned beef
in the mid-seventies
income growth will
livestock
imports
is equivalent
efforts
in demand
corned
days of =he fifties
only 130MT per year.
the government's
capita
than one percent
quantities
of canned
in
I0 percent
(NAMARCO>
This
some token amounts less than
i@55 and 1969,
per year.
meat and eggs
been
in si_ificant
Between
7pOOOMT
have generally
and less
Corporation
of poultry
and again
Canned meat s particularly
imported
ties,
years
imports
for beef
imports
exchangep
of corned that due to the expected
due to population
to the expansion
and per
of domestic
production.
An_sis
Since livestock one of the major low and stable
of OovernmentPolieies
products
concerns
consumer
this_ the government
are Considered
of the government
prices
intervened
of these
essential has been
products.
in both output
goods,
to maintain
To achieve
and inputs markets.
Tariff
policy
has.can
foreign
competitors
to make
the price
used
to protect
and various of inputs,
In this section,
other programs
especially
the effects
analyzed.
Composed
policies
that affect
output
policies
that affect
the price
Policies
that Affect
Output Price
a)
producers were
feeds_
instituted
low.
of gover_iment policies
of two parts,
from
are
the first part deals with
price
and the second deals with
of inputs.
Trade Policy
Both tariff
duties
and quantitative
used in the past to regulate stock products ban
domestic
into andout
on the importation
res_rictious
the flow of live animals of the country
of egSs
but except
in 1951 and live hogs
1976, _rade on livestock
products
have bee n regulated
=hrough
not only
provide
tariff.
Tariffs
but also price protection raisin@ however,
domestic
above border
has been historically
the other animal Starting in Customs
price
to domestic
more
government
livestock
price.
and livefor the export
in
mostly revenues
producers
Tariff
favorable
have been
,by
protection
to poul_ry
than
(the Tariff
and
species. 1957 when
Republic
Laws of the Philippines)
was 70 percent, for poultry
meat
was
Act
1937
approved_
and i00 per_e_t
the _ariff
rate
for eggs while
other
forms of meat were
poultry
was subject
animals
of the other
and goats) were The high
During
to 15 percent
to a 60 percent species
tariff
(i.e., horses,
duty.
rate,
Live
while young
bovine,
pigs,
sheep
t_free.
tariff
of preventing
subject
for poultry_
_he inflow
the mid sixties
threat of Danish
served
of cheap
poultry
for example_
chicken
that in Ehe succeeding
meat
there
flooding
revisions
as an effective
means
products
from abroad.
has been
a constant
the domestic
of the tariff
_arket
codes
so
tariff
for
tariff rates
for
3 poultry
remained
high- _
In the 1972 revision poultry
meat
and eggs remained
respectively percent,
but tariffs
Duties
on live poultry live animals
(75 percent %100 percent.
declined
on other
forms
to 50 percent
to I0 percent.
particularly
for other Tax-free
canned
corned
meat)
imports
and 100 percent,
of meat declined
likewise
there was a siEnificant meat,
code,
at 70 percent
on live animals
increased
this revision on processed
of the tariff
changed.
while
change
on other
be noted
that
in the tariff
beef.
the _ariff
of corned
The tariff
tariffs
It will
to I0
beef,
From
in
duty
15 percent p
duty increased which
to
started
3people in the poultry sector in batting for the retention of high tariff rates claim that the entry of cheap Danish chicken in 1964 has caused them a lot of trouble (See Baladad, A., 1979).
i0
upon
the creati6n
of the NationalMarketing
in 1955 also stopped. form a protection
Although
for beef
Another Although
will
share part
to the tariff
remained
favorable
and eggs
of this
the absence
of poultry
policies
market,
products
decline
to poultry.
to only
tariff structure
of other
in the domestic
industry,
a
commer-
a greater
code was instituted
(by 1982) will
Pork and beef are now subject cation
was directly
of this through
this time there was a general
(by 1981),
(N_MARCO)
as raw materials.
amendment
the structure meat
this development
to the local meat processing
cial cattle producers demand
Corporation
relative
in tariff Imports
5 percent
that negate observe
rates,
of poultry
face a 50 percent
in livestock
we will
in 1980.
duty.
products
tariff.
The impliis that in
its impact on prices
that domestic
prices
to 5order
price
will be higher
through
fiat,
has been
than
pork and beef.
Price Control
Direct primarily products.
price
to maintain
Thus,
a stable
If effective,
impact of tariffs .
intervention
consumer
it should
on domestic
prices
of pork, but not beef,
counteract
of livestock part of the
prices.
in View of _he c0ncer_
local consumer,
price
used
of poultry are subject
_or the meat
benefit
of the
and eggs and some cuts
to price
control.
ii
Government
authorized
this is enforced Most
recently,
of livestock centers
products
periodic
prices.
ineffective
by tariff
stores
However,
relative
of retail
undertook
stores.
and other
distribution of the
to the total market
on domestic
and
distribution
the smallness
in depressing
policy
to the public
_nspection
likewise
in rolling
of these centers
particularly
are announced
the government
price control
renders
the upward pressure
price
of livestock
products,
poultry.
Periodic mostly
through
at controlled
operation
exerted
prices
reports
located
the meat sold tend to show
indfcate
that
in Metro-Manila in the area
that farmers
these distribution
handle
less than one percent
(ithe BAI Report, prefer
centers
to sell
1979).
Studies
their produce
of also
to middle4
men
than to government
procurement-distribution
centers.
Other Policies
There
exist other
the industry. for example
have
These
prosrams
price
as better
mean lower
ments
Research
policies
and extension
important
could
that have
have
technology
effects
on
significant (higher
!ong-r_
programs
efficiency)
on
of the government
technology long-run
effects
in livestock. repercussions
would
on
ultimately
cos_ of production.
4L_ited capacity to absorb supply and strict grading are some of the reasons cited (Zam_ra, G., ]982).
requir,
12
Unfortunately, is very little in domestic logy
research
technology
transfer
value of output and 0.035
takings
in poultry
ante of the local
middlemen. devoted
marketing
of policy
ing system
makers.
Because
to the regulation
(GMTFM)
Garcia, contrary
to other of the
to 0.07 for pork
1981).
Genetic
of research
under-
in the perform-
to that in the U.S.
aspect
much effort
The
known
and Livestock However,
that has caught
It is a popular
establishment
as the Greater
of the Food Terminal Manila
to what
most
men are essential.
people
Terminal
Markets
studies
show that middlemen
1973).
think,
of
of the middlemen
Auction
N._
'
in the past has been
Food
(LAM's) are moves
role in the marketin s of livestock
M., 1981; Deomampo,
the
idea that the market-
to the involvement
of the activities
system.
along this line. play a major
technoto note
0_40 percent
the improvement
due primarily
of this_
(FTI), previously
Market
relative
component
relative
is another
is inefficient
in the marketing Inc.
stock
direct
1980),
Livestock attention
_venson,
possible
poultry
attention
there
Improvements
it is important
in 1980 compared
an important
and this has made
through
represented
and carabeef
has been
(see Arboleda_
Nonetheless,
got more
co,mmdities,
on livestock.
been primarily
expenditures
for beef
improvemen_
have
in poultry
Research
agricultural
expenditure
from abroad.
that research species.
like in most
(Dagaas_
still C. and
This may be because,
the services
of the middle-
13
Impact of Policies" on Output
To quantify output prices, meat,
the net impact
the nominal
eggs, pork
by which
price
One commonly
used measure
unit value
(CIF).
import
unit values cannot
domes_ically_ output
the average reasons,
are the import unit
Its geographical
NPR =
imports
is the country's the Philippines _
compriee
prices
a very
•Moreover_
that is traded
used in valuin s
for poultry
and pork,
for beef.
tion that it imports
pb = border
price
however,
ofHongkong
the rate
price.
quality .of meat
border
values
The choice of Hongkong
5
NPRs measure
of the border
be used since
affecting
(NPRs) 5 for chicken
of the to_al domestic: supply°
For these
and of the U.S.
policies
the border
For livestock,
proportion
do not represent
rates
calculated.
deviates from
import
ports
of government
protection
and beef were
domestic
insignificant
Price
import price
substantial
is based
quantities
location
relative
i) x
(i00) where:
on' the observa-
of livestock
to international
products.
supply
points
pd (p_price.
pd = domestic
price
and
im-
14
is comparable
to_ the Philippines,
are found to be very
similar
Korea and Singapore_ were used
to other
For beef,
since its imports
and its import unit values
U,S,
consist
countries
like South
import unit values mainly
of low qumllty
beef. 6 Estimates using direct Immediately During
of NPR for the livestock
price comparison apparent
the period
to broiler
production
16 percent
afforded
9 percent
Except
are the high
covering
received
was 62 percent
protection and zero 7
afforded
derived
in Table I.
coefficients
1960-80,
for the case of beef,
tariff protection
are shown
industry
for poultry.
the rate of protection on average,
layers
but pork and beef were protection
rates,
these are consistent
to these enterprises
respectively. with
t_e
across
time. Protection in the early
rates
sixties.
for chicken Government
and pork were notably policy,
particularly
high tariff
6 Despite the precautions undertaken in choosing what is thought to be the most appropriate border price, there may still be problems O_ eomparatlbility particularly in beef since traded 5eel comprise a wide range of different _ualities. 7 The low NPR for beef is hard to explain especially because we may have price comparability problem_ Note however that recent data (1981) show high NPR for beef -- 60 percent, making its average NPR to the 6 percent,very close to the tariff rate.
15
Table
I.
NPR for pork,
beef,
1960-64
1965-69
1970-74
1975-80
Pork
16
50
20
-2
9
Beef
I0
-4
-32
17
0
Chicken
50
122
50
57
62
Eggs
23
47
13
ll
16
Source:
policy, This
Average
Derived
from Appendix
has allowed
domestic
Table
price
sector.
techniques
Lastly,
of production
and eggs,
i,
integrated
it is also
1960-1980.
1960-1980
to be well above
seams to have been a necessary
poultry
chicken
type of the
in the sixties
such as the contract
border prices.
that new
growing
s=heme
evolved. Towards
the seventies
rates declined
(Figures
in egBs and pork. government
policies
stock products poultry
3 and 4), there
with
affect
been no change
domestic
improvements
domestic
part of the protection
protection
trend was more consistent
has generally
this period,
together
the eighties, This
that snrongly
during
technology
to have made
Since
and into
price
of live-
in hogs and
competition
afforded
in
by tariff
appear redundant.
16
Price
22
BEEF
20 18 - _ 16
_ _
l--
DomestiC Price
.....
Border Price
14
12
,o
I
,iV
-J
w
8 6
e
4
Z
/""
0
60
I 70
65
1 75
8O
Price 16
!0 --
( 1
,
_
"
l l
_
l
_
_
_
12 -
po
_
l
1
l
'
14 --
./
/_
4 _
l
55
6O
I
1
I
-65
70
l
.....
75
80
(Year) Fig. 3. Trendsin domestic and border prices {P'/kq.}, pork, t959 - 1980,
beef
17
16
14 12 -
,
@//O<E/VMEAT " DomesticPrice
I0 -
--------=
Border Price
"
/ / __r".
8-
/
/"%,.,-"" n
q._#"
0
,
i , 60
,i 65
L 70
i 75
80
I ........ 75
80
Price
14
EGGS
'째t
12
8-
4 --
-|
_
, ----_m._Imkm
1. 60
55
_._
nn
_
S mm inill_
_
J 65
gj
I. 70
.
(Year) Fig.
4. Trends
in domestic
and
and eggs, 1959-80,
border I)rice$
(t>/kg,)
chicken mea_
18
Better organizational with better example,
made higher
performance
in broiler notes
breeds
tachnology_
tests
kilo liveweight only six weeks. to produce
As a result,
the same weight
The samephenomenon now takes only to 8 kgs.
increased.
meat
compared years
of feeds
that generally,
years
back.
efficiency
that
in the US while
below.
Technical
_
experts
it in
only 2 kilos to 8 kilos
of feeds
of feeds
a dozen
It
eggs compared
It is interesting
than
production
attribute
to grow one
to attain
in domestic
in egg production broiler
(1980)
in egg production.
to produce
tive to that in the US is much higher Efficiency
Arboleda
ago.
was experienced
2 kilos
together
In 1975 for
than 14 weeks
it now takes
several
of feeds several
production.
possible.
it is now common
a kilo of chicken
to attain
however,
has
growing,
show that feed efficiency
it used to take more of broiler,
contract
efficiency
in poultry
and egg production
that while
e,g._
to note
egg production
in domestic
broiler
is only 2 percent performance
this phenomenon
rela-
below
is 20 percent
to environmental
8 factors. comparison,
This
is consistent
for eggs
rates for eggs.
with
the luwerNPR,
than in chicken Stronger
8Some claim that broiler lower than the yearly average
meat
competition
based
despite among
on price
_he higher
tariff
the more
grows much faster at around 75째F temperature in Khe Philippines.
19
efficient of eggs
egg producers relative
The same 5e very
to border
certain
about
position
to neighboring However, which,
but latest
withthe
it possible
countries
developments
domestic
price.
This
competitive
the exportation
of live hogs
during
thisperiod.
a ban on hog exports,
domestic
price
it is not clear when show that commercial
in the export market
It will
seventies,
5order
imposed
has driven
3).
price
in the countryts
like Hongkong
years
(Figure
again ventured potential
the early
of the improvement
for several
Policies
closely
in 1976, the government
world price
in the NPR foK beef.
that during
on hogs making
down domestic
to be true for pork but we cannot
the trend
of pork moved very
is an indication
also driven
price.
thing appears
he noted for example, price
may have
below
the
the 5an was lifted hog producers
-- evidence
have
of the inherent
of this sector.
Affecting
Protection
on the price
of the government's production
Input Prices
influence
in the country.
the input markets
of livestock
on the structure
The government
in an effort
to make
able and at the same time maintain Since feeds,
as pointed
products
of livestock
also intervenes
domestic
production
a stable consumer
out earlier,
cent of the total cost of livestock
is just part
comprise production
as much
price
in profitlevel.
as 70 per-
particularly
in
20
the commercial of altering also
tries
low
sector,
intervention
the price to make
interest
of feeds
other
forms of incentives
under
(IPP)
of the Board of Investment
credit
from
the problems
inherent
recognized industry ments
(see David,
on fixed capital)
the major cussion
expenditure
sector
to cheap
for long
will
Plan
in the
Barangay).
credit
the bulk
programs
But apart now well
of the loans
term investments
cost which
production°
focus mainly
to the
(e.g., invest-
than for Operating
item in livestock
in this section
various
are essentially
(e.g., Bakahang
rather
through
through
(BOl_.
C., Ig82)
has been mainly
The government
the investment _Priorities
for the backyard
of supervised
in the form
low primarily
and secondarily
form
been
in the market.
the cost of capital
credit policy
Programs
has mainly
is
The dis -_
on policies
affecting
feeds. Trade
Policies
Under tariff like of
the old Tariff
on prepared
animal
flour meal, meat
cereals
and Customs
(RA No. 1937),
feeds was 40 percent.
and bone meal,
and leguminous
Code
planÂŁs
were
the
Ingredients
fish meal and by-products subject
to I0 percent
tariff. In the 1972 revision feeds
was increased
essentially
remained
of the tariff
to 50 percent unchanged.
code_
the duty on mixed
but the tariffs Also
in the
on ingredients
seventies
impor-
21
rations
and distribution
soybean
meal
became
and wheat
The
the National
tariff rates
price of feeds. its marketing or further
And,
increas2
earlier,
the domestic
price.
This will
fishmeal,
meat
price wedge
from which under
Food
since
corn
price
that may arise
Authority.
on the domestic
ingredients
tax-free,
and soybean meal may dampen on its pricing
as has already
tax.
lower
tax would
than the border
of the implicit
It will
tariffs
also counteract
from NFA's marketing
policy.
been noted
The export
4 percent
the impact
and 5one meal.
Grains
pressure
depending
exports
at least
cushion
hran is derived,
the National
to a 4 percent
price
corn,
Authorityl.
on yelllow
domestic
like yellow
wheat
the N_A imports
and molasses
are subject
ingredients
will put an upward
monopoly
Copra meal
yellow
grain,
a governmentmonopoly
(now called
make
of-vital
on
whatever
monopoly
on
corn and soybean meal.
Price Control
In addition
to the trade policies
price of domestically on mixed
feed ingredients,
feeds and feed ingredients_
their by-products prices
produced
were
for different
instituted.
types
that tend to lower
of_mixed
price
the
controls
particularly
feed grains
Note however,
that ceiling
feeds
are based
and
on the cost
9Note that in our succeeding analysis, the 5order price of yellow corn and soyDean meal (CIF] were adjusted upwards By 5 percent to account for NFA's additional costs of handling from thm boat to the pier.
23
analysis,
we took
alternative
the 33 percent
(a lower
limit),
do not enjoy any effective tariffs
paid
prpducers
ingredients
2 shows
protection,
price
areâ&#x20AC;˘passed
the individual
to note
meal
have
respectively,
on these ingredients
feeds,
IT rates
that soybean
for the different IT for mixed
and yellow
implicit
Apparently,
has imposed
that feed-millers
on to the livestock
the average
under _IFA's control
59 and 17 percent
assume
and as an
i.e., EPR = O, and implicSt
for mixed
used in estimating
is interesting ingredients
we simply
on feed ingredients
as a higher
Table
as the â&#x20AC;˘upper limit
a penalty
feeds.
corn,
tariff
It
the
rates
NFA's pricing to the users
feed
of policy
of these
ingredients. Table
2 also shows
a summary
for layer mash, broiler_ash mixtures
were
and piggery proportion They
used
produced
since
of total mixed
also represent
that
aBd layer mash ingredients
[which are subject
On the other hand, there is more
it appears
reliance
comprise
volume
for these
explained
These
tariff
the biggest
of mixed
feeds
groups of animals. rates
for broiler
by the greater
to high
use of importable
IT s) in poultry
that in the hog feeds
on indigenous
feed
in each type of enterprise.
of the total
implicit
of the IT
for layer_ broiler,
they normally
intended
the higher is largely
the feeds
feeds used
the bulk
by feed millers
Note
and hog grower mash.
to represent
enterprises
of our estimates
_aterials.
feeds.
formulation,
As an example,
24
Table
2.
Implici_ feeds.
tariff
rates
for feed ingredients., and mixed
FEEDSTUFF
IMPLICIT TARIFF
%
Feed Ingredients (A)
Tradables Yellow
(B)
Mixed
corn
17a
Soybean meal Meat meal Fish meal Vitamins
59 a 24 b 245 275.
Copra meal Molasses
-4 c -4 c
Non-Tradables Corn bran
0
Corn germ meal Corn grits Ipil-ipil leaf meal Pollard Rice bran Salts
0 O. 0 0 0 0
Feeds 1 Broiler mash Layer mash Cattle feeds
23 . 20 17
HO_ grower mash .....
_c _
7
•
•
? ,H!
abased
on price
bBased
on legal rates.
CExport
•
•
comparison,
tax rate.
IFor computational
Very
'
Average
close
details
;
_
-
J!
of 1979-1981
to IT using
see Cabanilla,
price
i
"
prices.
comparison.
L,S. 1983¢
25
corn _ran and ric_ bran were
combined,. 5otR,_b¥_products
milling
industry,
percent
of the total weight
to only _ percent pointed
must_e
_or hogs
in layer
on the prices
products.
_
Effective
Protection
To synthesize output rates
companies
in hog grower
feeds in ig75 in 5roller
that the lower
se.r_e of pork
to around
to offset
implicit
40
compared
mash.
It
tariff
rates
the lower '
and 5eef relative
to pbultry
Rate
the impact
of government
policies
affecting
and input prices, we estimated the effective protection 10 (EPEs) for poultry, hogs and cattle. Note first that for
broiler, Th_s
feeds
_y PAFMI
and 5 percent
out however_
and cattle
protection
ut£1£zed
of the local
only the EPR for an integrated
is 5ecause,
is thsught
the total protection
to be shared by
and the broiler
grower,
operation for broiler
the hatchery
particularly
operator,
under
is presented. production feed miller
the contract
growinE
scheme.
i0 Also known
as protection
on value
added EPR is shm_n
as:
Vd EPR =
(-__) M
- i) x
(i00)
where: EPR = effective protection on the jth activity; _d=. value added in domestic price_ V 5' = value added in 5order price.
26
Our estimate_ tariffs
are shown
for feeds derived
and the 33 percent upper limits_
to those limits. /hat truely reflected between
indicate
the high
broiler
production
of the very
is feeds.
Moreover,
It appears
efficient
corresponding
sure that the EPRs on feeds
are
fall half-way
meat,
existence,
because
Cost
most
of
of which_
the NPK for
compared
to the
serving
to primary
as
factors
high.
hand,
are not as well
by the protection
and in fact the sustained is one indication
units.
Domestic
is primarily
to continue
returns
for
as an average
gap between
production
that they are penalized
producing
protection
production.
in broiler
on the other
however,
This
is a wider
had to be artificially
hogs production
the
as high
in broiler
IT for inputs
For broiler
continued
provides
from 70 to 80 percent,
there
HoEs and cattle
Their
added
source of chicken
of production
limit
and cattle.
enjoys
protection.
inputs range
and average
for hogs
in particular,
effective
other species.
a lower
these would
is high effective
protection
small value
intermediate
to make
of price policy
At best
that there
and negative
the main
the effect
and Power
the implicit
and low estimates.
poultry
of 200 percent
Because
EPR estimates
is an attempt
in our estimates.
It appears
output
by Medalla
two Separate
This
3.
in this study provide
derived
we made
in Table
favored.
system. srowth
that they are
in
27
Table
3.
Effective protection rates _percent) for poultry, hogs and cattle.
ENTERPEISEI
EFFECTZVE.PR_ECTION Project
_ish,,, B_oiler
Survey
(1980)
._ow ....
(Integrated)
Larse Small
241 278
155 228
Layer
D_
19 12
7 (-)9
Hogs 17 15
(1979)
L_
251
209
-
(-)7
15
Large Small
Survey
._Rh
18 Large Small
_-%TE2,,_
_-)29
(-)20 (-)29
-
-
Cattle3 (-)16
-
-
(s)
3
(-) .3
-
-
x,anch ._) (s)
(-)6 ?
(-) 7 6
=
-
Feedlot
(A)
IBackyard farms were feedstuffs in these farms
(-)11
not included because the use is vet7 small. EPs are very
of traded close to NPRs.
2The high estimates correspond to the conservative ITs for feeds i.e. broiler _ash =23 percent; layer mash = 20 percent and hog mash - 7 percent. The low estimates correspond to the 33 percent IT for all types of feeds. 5There are two estimates for cattle. (A) refers to EPR when NPR for beef 18 assumed zero and (B), when NPR is I0 percent.
28
Comparati__xv _ AdVap_age PrOduction
The high protection favorable
business
ing investments It must
whether
rate to poultry
environment
from various
he noted, however,
and social
profitability
another way, efficient
of private
For
farms, which
survey
projects
Bulacan,
data,
of
protecting
production.
Put
is socially
to swine
from here
involving
concreted
profitability
and cattle
swine and poultry,
personally
of Laguna,
The other
to as
and poultry
and Batangss
by _,the author
Rizal,
data set on
on, shall be referred
62 sample hogs
the
one set of data
in the provinces
Laguna,
is followed
used for this purpose
(DBP_ provided
and P_anga.
taken from Metro Manila,= Bulacan, small survey
Data
commercial
Bank of the Philippines
Cavite,
relative
cost estimates.
of 118 of their financed
commercial
exchange
private
the issue
to continue
such as poultry
analysis
come from three sources.
Batangas,
between
activities.
resource
Development
tackling
beneficial
attract-
the big feedmillers.
is wPuether or not poultry
foreign
In this section, by domestic
notably
necessitates
a more
entrepreneurs
that the divergence
the question
or other production
project
groups,
endeavors
in saving
has created
for private
or not it is socially
import substituting
in _iVestock
farms,
came from a
in 198Q.
29
Farms
in
this
farms
in
an
This
attempt
farms
are
commercial
of
Agricultural
baekyard
aro_md our
Metro
past.
nature
may
present
other
our
in
samples derived
do from
where case
were by
the studies
also
the
a nationwide
the
limited of
problems
management
this
technology.
two
ranch
concentration
at
on
gathered
Bureau
survey
of
UPLB respect
not
also the
of
samples
samples
in provinces
coefficients surveys
preclude
the
number
on representativeness
input-output
farm
experts
in
that
Manila
numbers,
implications
out
the
Data
large
used.
_he
with
of
Private
pointed
However,
data
in
and
production
a cattle
(BAEcon)
and
Technical
these
and
farms
samples.
consistent
in
be
growers.
were
small
distinctions
farms,
farms
into
in 5roller
cattle
backyard
livestock
commercial
some
contract
Economics
It should of
all
For
categorized
important
feedlot
undertaken.
were
to make
is potentially
large of
data/set
find
serious
limitations the
following
appear
conducted no
usefulness
of to be
in
the
problems
posed of
by
the
the
analysis,
Profitability
The differences
analysis in
category,
This
commercial
and
of
private
techniques was
done
backyard.
of by
profitability production classifying
And,
within
is highlighted within the
the
each
sample
commercial
by
=he
animal farms
into
sector,
farms
3O
were
divided
into s_all
layer farms usually buy commercially
and large.
mix their
mixed
where
the chicks and mixed
not snco_mon separate
Commercial
In 5ro_ler growers.
feeds
for independent
cost of production
operation
in the farm is also
Thus,
for broiler
and integrated
inputs
in commercial
farms
and hogs.
proportion
of the cost of feeds which
is highly pricing
This
comprise
in poultry
government
farms
we have
operation.
Farms
Cost of intermediate
ability
commercial
Integrated
farms.
hogs and
prQduction , most of
are produced
among large broiler
estimates
commercial
feeds w_uile small
feeds.
the large farms are contract
Large
is aafnly
dependent
(_ables 4 and 51 particularly
due to the relatively implies
on the price on
policy
feeds
the bulk of the total
high
that private
of feeds.
iS important
profit-
Consequently,
to the_producers
of these animals. For broiler, the independent inputs
note
the differences
and inte@rated
is on the average
independent
type whereas
60 to around production
of prz_maz,yinputs
This
and mixing
under
of the value
is because of feeds
the integrated
of the added cost of feed_
i_ Sigher
type,
of output
in the
it ranges
from
the value
added
in the
is now a part of the cost
operation.
The proportion
in the integrated
the parent
between
Cost of intermediate
in the integrated
of cost of feeds however,
chicks,
operation.
80 percent
68 percent.
of chicks
in the cost structure
system because
stock that produces
the
Table
4.
Private
coats and returns
in co_ercial
Large
poultry
production. I
' BR Independent Small DBP pesos per kg.
ILER Large
Integrated Small pesos per kg.
DBP
Costs 2 I.
Intermediate
Inputs
Feeds MVS
2.
(.80)
9..41 (.82)
7.5_7 (.81)
7,47
(.67)
8.3__55 (.73)
6.70
5.97 (.53) ,44
6.95 (.61) .30
4.90 (.53) .22
6.73 (.60) .46
7.80 (.68) .32
6.17 (째66) .24
Water & electricity Others (fuel & oil, office supplies) Chicks
2.48
(.22)
2.12
(.19)
.05 2.32 (.25)
Primary
2.22
(.20)
2.00
(.18)
1.67
Inputs _
Labor Depreciation Interest: Fixed Capital Operating Capital 3.
9.00
Taxes
& Other Fees
.11
.04
.05
(.[9)
.19
.12
.12
.09 -
.10 -
.05 -
3.71
(.33)
3.06
(.27)
2.56
.22 .20
.18 .23
.13 .18
.33 .32
.31 .48
.23 .29
.30 .28
.29 .35
.55 .06
,49 .34
.53 .40
.72 .I0
.05
-
-
.05
-
-
(.72)
(.28)
Total Output: Quantity (kgs) Total Value (I_)Value/Unit output /unit output
No_es:
28,921 2,370 324,767 27,047 Ii.2_ 11.41 1.17 (.i0) 0.95
(.08)
ITaken f_m cabaniila, L_ S., 1983, 2Numbers within parenthesis are proportions
19,.576 28,921 i_,401 324,767 9.27 11.22 .74 (.08) 2.23 (.20)
; "_ "" of costs to value
2,370 27,047 11.41 1.35
of output.
19,576 181,401 9.27 (.12) 1.21 (.13)
Table
4.
continued I
|
'
LAYER ITEm,S Large
Small pesos
DBP
per egg
Costs I.
2.
Intermediate
Inputs
.330
(.55)
.496
(.72)
.489
¢.78)
Feeds Mrs
.319 .002
(.53)
.482 .0).0
(.70)
.451 .009
(.71)
Water b electricity Others (fuel & oil office supplies) Ch icks
.004
.001
.003
.005 _
.003 -
.003 .023
Primary
.271_
Inputs
Total
.197
(.28)
.141
Labor
.034
.014
.010
Depreciation Interest:
.029
.039
.029
.070 ,005
.079 .006
Fixed Capital Operating Capital 3.
(.45)
Taxes
& Other
Fees
-
(.ii)
-
(.22) (.05)
.066 (,i0) .006 ,-
Output : Quantity (pc_ Total Value (P) Value/unit output /unit output
5,180. 999 3,054,163 .60 .133
463,479 324,191 (.22)
.69 .059 (.08)
432,616 272,287 .63 .03 (,05)
t_
Table
5.
Private
costs
and returns
in commercial
Large
H O G S Small
ITEMS
hogs and cattle
DBP pesos per head
production. I
O A T T L E Feedlot Ranch
Costs 2 i.
Intermediate
Inputs
Feeds MVS Repairs Water & Electricity Fuel & Oil Fertilizers Others
2.
(e.g. Office Supplies)
Primary
Inputs
Labor Depreciation Interest: Fixed Capital Operating Capital 3.
Taxes
678.57
662.24 (.75) 6.80 3.11 4.20 2.08 .... .14 203.41
731.43
(.33)
220.00 24.45 18.12
80.69 12.29
(.09)119.70 12.44
3.55
(.77)
708.07 (.74) 13.15 9.25 .96
40.26 12.46
Total Output Quantity (heads) 3,143 Total Value (_) 2,773,774 Value/Unit Output 882 Returns/Unit Output 54.06 Notes:
(.77)
468.07
(.76)
2t464.18
(.67)
b34.14
(.35)
438.32 12.00 7.33 9.41
(.71)
1,399o54 17.53 45.36 7.01 147.71
(.38)
124.14 323.40 47.20 99.57 38.55
(.07) (.18_
1.01 (.23)
145.66 4.45 15.08
(.13)
84.57 5.64
-
195 185,527 950 (.06) 45.28
ITaken from Cabamilla, L,-S_, 1983. 2Nos. within parenthesis are proportions
(.24)
(.14)
847.03
(.23)
1.28
1,236.33
(.33)
1,184.59
(.65)
91.95 149.74
(.04)
306.55 107.54
(.17) (.06)
322.61 103.03
(.09) (.03)
403.30 57.02
(.22)
.59
98 60,203 614 (.05) 35.92
of costs
(.04)
-
3,423 12,669,100 3,701 (.06) 56g
to value
-
2,350 4,274,020 1,819 (.15) 310
of output.
(.17)
34
Profit
per u_it output
than the independent ways
re_lect
hatchery
farms by around
the profits
operator.
in our independent
in the integrated
6Q percent,
that accrue
paid By the integrator expect
an increased
future
as the farmers
also
enterprise
which in "_ some and the
that profit per kg.
is close to the fixed
to the contract
shift
is higher
to the feedmiller
It will be noted broiler
farms
to contract
grower. _rowing
are less exposed
However,
fee
we may
scheme in _he
to risk
in this system
ii of production. Qur figures profit among
for the co_ercial
per unit of egg among the small
difference
farms.
in the feed
In the projecc
survey,
feeds while majority feeds.
Apparently,
feeds.
I_ addition,
layer
large
farms
Tbe reason
all the large
the farms
the price per eg_ is lower
among
is twice
the small sample
farms
that
as much as those
and large farms.
farms
costs by mixing
_s also assured. large
mix their own
huy the cemmercially.ÂŁ_ixed
can reduce
feed quality
indicate
for this is the significan t
cost between
of the small
farms
farms which
their
Thus,
own
although
is due to volume
12 deliveries_
net returns
are still much
higher.
liln 1976, some contracts specify tkat in case of abnormal mortality, the grower's sharz in the loss is only _i.0,0 per bird (UP to 4 weeks of age) and _2o00 per bird (5-8 weeks of age). l_s_ of the sm_ll therefore price received
farms cater directly is a little higher_
to retail
atores
35
Ne_
returns
among
DiP
sample
farms
egg.
It
s_ould
5e
low-_
3 centavos
survey
covered
only
5 months
on
hot
humid
months
the
less
and
5 shows _the
cattle.
farms
It will
represent
produce as
both
of
noted
production the
number
farms their
5e
noted
different
year
which
when
to he very
however
that
happened
the
costs
and
returns
first
that
small
production (marketable
(for
to
sale
of weanlings
Small
private
finishers
weanlings
sell
of
appear
laying
the
to fall flock
are
productive. TaBle
and
per
the
on
small
fs more
_he
other
animals
as
hand
the
rarely
ffnishers.
for
large
slaughter)
sell
Gf
the
as well
finishers
case
usually
instances
weanlings째
is
hogs
hog
farms
In most
number
This
commercial
Large
operators).
than
and
systems. animals
for
sold.
Usually in
the
our
they
sample
farm_ The
large
to produce he
raised
produce do not
as
have farms
weight
of
large
farms,
The sale
to
animals
and
these
feed
85 kgs.
unit
despite profft
output the is
survey
sale
Breeding
per
tBat
for
for
around
ever,
our
finishers.
weanlings
cost
iu
weanl_n_s
large
feed
farms
to
maintain hackyard
small
animals Because fs hfgher
lower
price
20 percent
on
the
farms.
that
of
buy
they
this, among
per higher
and
other
In some
they
till
animals
operators
farms
other so
breeding
price small
head
of
than
hand, cases,
weanlings reach
to rarely
they
from
marketable
per
unit
farms. output
small
also
and
Note among
farms.
howthe This
36
profit
difference
can be looked
at as
the risk of maintainin K a larse
stock
addition
to scale economies
Another on capital
difference
cost.
between
Although
amon E large farm& buildings
their fixed
is lower
among the large
explanation
Commercial lot operation
in pasture while
while
lands.
ranches
are the sources differences structure
between
Intermediate percent
in a ranch_
of the total
normally
farms
Cattle
efficient
cost
per unit of output
per head.
takes
is
notin E that
raise
of which
primarily
as well.
In fact,
operators.
cost in feedlot
compared
to graze for meat they These
cost and return
in our figures is feeds,
are raised
are allowed
cattle
for the feedlot
and ranch
two forms -- feed-
in feedlot
why we ohser%'e a contrasting
most
There
out, fell on a period
the animals
as 5reedin 8 farms
feedlot
inputs,
investments
demand.
ranching.
of yearlings
explain
Capital
been pointed
producton
Feedlot
serve
is
sophisticated
to this hut ft is worth
and cattle
in confinement
capital
tha_ they are more
show a low profit
rate and siack cattle
farms.
and large hog farms
total
investment.
in
farms.
as had already
of low production
the small
- - they have more
capital
The DBP data on boss
the DBP survey
5y the large
it appears
fn usin_
for assu_in E
of breedin s animals
in general,
is higher
and equipment,
no apparent
enjoyed
premium
in Table
comprise
around
5. 67
to only 35 percent
37
in cattle ranch.
Oh the other
total cost in cattle
ranch
Our case feedlot
ranches
reach marketable
weight
consist
agrÂŁbusiness
mainly
amounts
with
of soybean
slaughter. of output per output
â&#x20AC;˘a yearling when
higher
till they
fed to the of the
in addition
feedto some
until ft becomes
of i_s yearlings
the area who in turn feed
they reach marketable
of its output
the difference
in feedlot
risk assumed
the
weight.
are sold for meat
in the value per unit Note
also that the profit
operation,
by the feedlot marketable.
dies than when
l_is
farmer
accounts
in raising
The farmer
loses more
it dies at an earlier
age.
Farms
The costs and returns a per peso worth absence
200 kgs.
are supplied bY
sells most
the two case farms.
is much
the yearlings
Backyard
until
This explains
for the higher
hand
farmers _n
than 50 percent
_etween
and energy
on the other
_n their backyards less
around
from the plantation
corn and its hy_products,
to rural 5ank_assisted
Slightly
weighing
The roughage
of waste matter
of the
inputs_
them in confinement
of 400 kgs,
protein
proportion
meal.
The case ranch
cattle
is on primary
and feed
firm, while
ing the animals
the major
farm buys yearlings
from neiEhBorÂŁng
animals
hand_
of output
of information
for _ackyard (Table 6_.
on output
farms are expressed This is because
quantity
from
on
of the
the survey
conducted
38
Table 6.
Cost and'returns; output).
ITEMS
hackyard
livestock
farms
_eso
of
Poultry
Hogs
Cattle
.079
.251
.169
_eeds
.079
.243
.168
M_IS
.002
.002
,001
.921
â&#x20AC;˘.749 ,,.,
. 83
LaBor
.192
.541
.270
Residual
.72g
.208
.560
Costs i.
intermediate Inputs
2.
Primary
Source:
Inputs
Cabanilla,
5y the Bureau
L. S., 1983.
of Agricultural
that the set of prices the project make
cial farms,
in the BAEcon
and DBP surveys
our numbers
Economics
since
in the 5ackyard
cost and returns
(BAEcon).
survey
is different
it was gathered farms
comparable
are expressed
Note however from
in 1976.
To
to the commer-
per peso worth
of out-
put. Two things
are clear
to the commercial amonE 5ackyard cost which
farms,
farms.
is as much
from Table
6.
First,
the cost of primary
This
is Because
as 70 percent
in contrast
input
is large
the proportion
among
commercial
of feeds farms,
is
39
very small. higher
Second,
ÂŁt appears
among backyard
farms.
of the value of output commercial
The system
native
farms
chicken)
However,
production
units.
type where
the
ranges
feeding
from
the higher
use of purchased
production
Marketing
=ate
farms
would
ul_imately
among
continue
offers
farm waste.
now heine
used among
is not
aspect
included
folk.
an opportunity
in the
unorganized livestock
farms. farms
of the farming
Backyard
to he important
necessitate is a limit
the small,
to be an /mportant
_urthermore,
there
out that hackyard
and eggs for the rural
livestock
inputs
of production
fs low.
since
materials
in the rural areas in the future,
meat,
(in the case purchased
systems
these
cost, which
But it is worth pointing
will
refuse
cannot 5e taken as an
foodstuff
feeding
is also higher
continue
(_he case of the
Because
5ackyard
among
_ncreased
to the home,produced
kitchen
material_
profit
backyard
these farms.
t_e scavenger
tend to be high,.
feed efficiency
cabarao)
the
are subs_stedce
expanding
will
percent
in general,
in favor of promoting
analysis
20_70 among
to a system where
are low, net returns
because
to be
to 5_22 percent
to fend for themselves
_s the main
argument
5etweeu
appears
compared
of feeding
are allowed
of hoes)
It ranges
rate
farms.
_ackyard
animals
that profit
livestock
sources
Furthermore,
for a 5otter
system _e.g.,
Of farm power, backyard
utilization
of
4_
Domestic
Resource
_ost
The DRC 13estimates of estimates
are presented.
tion, allocates actually
inputs
occurred.
all potentially estimates stock
The historical
broiler
compared
an indication layer,
mates are compared
in broiler
resources
used in broiler
exchange
rate.
production
treats the twe
of t_e live-. presupposes
come from their present all potentially
production.
rate,
than
it becomes
value
is higher
is
the DEC esti-
does not possess
The social
for
This
is less efficient
exchange
production way,
activities.
In fact, when
at present
Put another
expansions
in the high DRCs
production
to the shadow
advantage
as they
Conceptually,
assumption,
production.
that the country
alloca-
assumption,
allocation
will
from the numbers
that broiler
source
imported.'
to the other
hogs and cattle
apparent
production
are assumed
What is revealing
source
Two sets
sources
traded
the future
in the fully traded
inputs
and foreign
the fully
on
7 and 8.
the historical
input_ as foreign.
for expanding
while
tradable
The other,
implication_
industry.
sources
One,
in Tables
to domestic
tradable
have
that inputs
are shown
comparative
of domestic
than the shadow
the "own-exchange"
rate of
13DRC measures the opportunity cost in terms of total domestic resources of producing _aving) a net marginal unit of foreign exchange.
Table
7.
Domestic
resource
cost estimates
in poultry.
D R C PRODUCTION
Commercial A.
'B.
CATEGORY
DBP/BAEcon Survey I
12a
12
Project Survey
Traded DBP/BAEco_ Survey
Ful!_
Historical Project Survey
DI_/'BAEco_ Survey _
1.35
1.35
Project Survey
Traded DBP/BAEcpn Survey_
Broiler 18a
17 _
2
1.9
Large
12
17
I.35
1.9
Small
13
20
1.46
2.2
Integrated
Backyard
Fully
Project Survey
Independent
Commercial
DRC'/SER
Historical
ii a
ii
16 a
16
i, 24
1,24
i, 8
Large
II
15
i. 24
I. 7
Small
ii
17
1.24
i. 9
Layer
7a
7
7a
.7
"79
.79
.79
Large
8
8
.90
,90
Small
7
7
.79
.79
Poultry
I0
iData on backyard
I. 13
.79
I. 13
farms are from BAEcon.
aMean DRC coefficient Source:
I0
i, 24
Cabmnilla,
of large and small L. S., 1983.
farms. _.
Table
_.
8.
,. -=
Domestic
]
resource
estimates
....
, ,
in
'
r
,
D PRODUCTION
CATEGORY Project Survey
Commercial
Hogs
Historical DBP/BAEcon Survey
cattle.
.....
_ ......
_ w
_
C
_.
DRC
Fully Project Survey
Traded. DBP/BAEcon Survey
Historical Project DBP/BAEcon Survy Survey
•
'
,,,
.
Fully Traded Project DBP/BAEcon Surv__ey ___ S__urvey _
6a
6
.79
.67
.73
Large
7
-
6
-
.79
-
.67
-
Small
7
-
7
-
.79
-
.79
-
.9
.9
Hogs
8
8
.67"-
Cattle
Feedlot High
7
-
b
-
.79
-
b
-
Low
6
-
b
-
.67
-
b
-
High
7
-
b
-
.79
-
b
Low
6
-
b"
-
.67
-
b
-
High
-
8
-
b
-
.9
-
b
Low
-
7
-
b
-
.79
-
b
Ranch.
BackyardCattle
_ata
on
backyard
farms
are
from
BAEcono
aMean DRC coefficient
of large
bTb,e DRC coefficients
are the same as un er the historical
_ource:
Caban£!la,
and small
L, S., 1983,
farms. source
allocation.
1 •
/SER
6
Comercial
B.
R
,
and
7a
Backyard
A.
_, .
hogs
43
broiler
is higher,than
Thus, broiler same
the shadow
is not efficient
price
of foreign
in saving which
exchange_
foreigz
exchange.
produces
both meat
is true with hackyard
poultry
Apparently,
of the arts in brQiler
The and
eggs. the state
had not yet reached
the level
that
is comparable
at the time our data was collected farms,
Our evidence
experts
as noted
broiler
in the country
production,
earlier,
its present
for layer
competitive
On the other hand, are fed with
DRC coefficients efficient
cost_
when
in saving
foreign
The a comparative
by tariff
this sector
enough
in the to attain
time however,
that hogs
the
and cattle,
amount of indigeneous
are more
compared
case째
Egg
production,
it will be noted
a significant
low opportunity
afforded
Given
of
that in the U.S.
has enabled
position.
of technical
efficiency
that i= possesses
rates
to broiler
for commercial
an interesting
indicate
to egg production
same thing may happen
with
far below
presents
to those abroad
the observation
that the technical
The high protection
early fifties
which
to confirm
is still
in contrast,
DRC coefficients advantage.
tends
--1979-1981
production
efficient
than broilers.
to the SER indicate
exchange.
feedstuff Their
that they are
44
Summary
As
income
products the
will
country
each
and
important importation
which
mean
Expansion
of
of
resources.
expansion which
of
aÂŁ present Because
country both
has
of had
foodstuffs
in the
future.
geared
along
an extremely
production
already the to
chronic tackle_
and In
these
lines.
limited
efficient
utilization
Our
analysis
and
cathie
during
products
were
of
shows
these
that the
much
of
government
use
of
the
use
feedstuffs
content. problem
the
more
likely have
country be
are
that
the
produGtion
policies
it would
policies
for
more
the
since
base,
choice
been possesses
necessary
moves
of
;owards
to a more
resources. NPRs
post-ward higher
commodities.
domestic is
exchange
so because
exchange
products
the
foreign
competition
import
--r
economy.
increased
require
a high
domestic
more
particularly
However,
resource
or not
the
expansion
past
whole
entail
demands
importation
importable
foreign
livestock fact,
the of
livestock
growing
to
would
have
this
inoxease
would
is more
for
or
use
heightening
production
whether
poultry
entail in other
This
determine
hogs
would
demand
meet
production
thus
animal
To
repercussions
domestic
resources
Comments
increase,
rise.
a sacrifice
domestic these
to
expand
Increased may
Concluding
population
continue
could
having
and
for years
than
poultry --
prices
were
domestic at
the
higher
than-
prices
of
border
compared
45
to hogs
and cattle.
for these products in promoting
ion rate. negative
which
domestic
Likewise, in poultry,
This
indicates
particularly On the other This
policy
hand,
is true in cattle
broilers,
for the private and other related
decade.
production
whether
or not to allow
stock to continue
infant poultry
effective
protect-
suffering
from
NPR for output was
rate for inputs,
while
the
production
and parti-
a favorable
investment
opportunity
This has attracted
investments
in hatchery
In fact this has resulted broiler
production however,
in saving
show that broiler resources.
for hogs and cattle,
by the protection foreign
exchange.
system,
protection
show
One important
arises' from this observation
the present
in the
in the last
in the use of domestic
the DRC estimates
issue that inevitably
It appears
broiler,
that are penalized
that they are efficient
high
has resulted
in poultry
is still inefficient
the enterprises
of tariff policy
and hogs were
of the DRC analysis
On the other hand,
policy
given
of commercial
The results
structure
and hogs.
enterprises_
rapid development
in
tariff
has Created
sector.
enjoying
cattle
is because
The high protection cularly
the importance
in the input market,
broiler,
much highe r than the implicit opposite
with the tariff
production.
government
EPRs.
is consistent
structure
is in live-
in the future.
that the high industry
tariff walls
has produced
better
meant
to protect
results
the
in eggs than
46
in broiler enabled
product_ono
The protection
the egg producing
position.
This
sector
reach
seem not yet true
is need
for more vigorous
efforts
broiler
production.
could
genetic
improvement
conditions develop
indigenous
be achieved
Therefore, efficiency
there in
further
adaptable
not to mention Through
has
competitive
through
strains more
materials,
in egg production
to local
the need
these
to
efforts
in organizational
technology_
can very well be duplicated
in
production.
Furthermore
it is worth
could very wellbe
feed ingredients
Philippines
that must
which,
(e.g., yellow succeeds
especially effective
change
for hogs
hog production
protection, rate likewise
in the world
afforded
indicate market.
in
the fact that it uses Here,
the disadvantage
the source
and the
does not have
however,
to pay
if the government
program.
and cattle
in =he use of domestic
truewith
developments
for example
corn production
The low DRC estimates are efficient
by
cost between
This may
in its present
_hat the disadvantage
be imported.
Thailand,
corn).
noting
explained
lies in the added =ransport
compete
to improve
improvements
by policy
its present
in broiler.
feed quality_
feeding
further
the efficiency
broiler
to develop
and better
together with
broiler
This
afforded
show that they
resources. which,
This
despite
it_ continues
that domestic
is
the negative
to grow.
hog producers
Latest can
47
In general comparative through
therefore,
advantage.
the feed milling
the livestock
Its linkage
industry
to the manufacturing
and drug/chemical
industries
that it should not be left out in the process development.
The industry
income generating
endeavor
can effectively in the rural
time provide
protein-rich
foods
particularly
in the urban areas.
possesses
a
sector
implies
of economic
serve as an important
areas,
for the growing
and at the same population
BIBLIOGRAPHY
Arboleda, C. (1980). Genetic Improvement of the Chicken and the Development of the Philippine Poultry Industry. Paper presented at the PSAS-UPLB-NRCP Lecture Series: A Tribute to Dr. Francisco Fronda. Aviquetero, E. st. al. (1976). Income and Food Consumption (Summary of 17 Economic Surveys), Special Studies Division, Ministry of Agriculture. Baladad, A. (1979). News Vol. 20, No. 12.
and views,
Better
Poultry
and Livestock,
Balassa, B. (1955). Tariff Protection in Industrialized An Evaluation, JPE, Vol. 23, p. 573-94. Bautista, R., J. H. Power and Associates tion: Policies in the Philippines. of DevelopmenÂŁ Studies OPIDS). Bruno, M. (1972). Clarification
Countries:
(1979). Industrial PromoPhilippine Institute
Domestic Resource Cost and Effective and Synthesis, JPE, 80 (i).
Cabanilla, L. S. (1983). Economic incentives vantage in the Livestock Industry, Ph.D. College, Laguna.
Protection:
and ComparativeAddissertation, UPLB
David, C. (1982). Economic Policies and Agricultural Incentives. Paper presented at the first session of the Leonides S. Virata round table on development policies, Manila, October 6, 1982. Deomampo, N. and T. B. Punzalan (1973). and Margins of Hog Farms° Journal and Development, Vol. Ill, No. 2.
Marketing Practices Costs of Agricultural Economics
Evenson, R. E., P. Waggeoner, and P. Bloom, (1981). "Agricultural Research Progress in the Philippines,'! Unpublished paper, Economic Growth Center, Yale University. Gapuz, R. (1977). Poultry Management in the Philippines. edition, Philippine Education Co., Manila.
Revised
49
Integrated Agricultural Production and _arketing Project (IAPMP), 1980. 'Fne corn-feed livestock industry: A framework for policy
analysis,
Ministry
of Agriculture,
Quezon
City.
Labadan, M. (1976). "The Feed Processing Industry , in Livestock Production in Asian Context of Agricultural Dive_si fication, Asian Productivity Organization (APO). Lopez, P. (1980). Production, Utilization and Trade of Feed Stuffs in the Philippine, Unpublished paper, Department of Animal Science, University of the Philippines, Los BaEos. Medalla, E. and J. Power (1979). Estimating Implicit Tariffs and Nominal Rates of Protection, Special Paper No. 2, in Bautista R. and J, Power, Industrial Promotion. Policies in the Philippines. NEDA,
The Philippine
Food
Balance
Sheet
(various
issues_.
Appendix
Table
i.
Domestic (NPR) of
wholesale pork beef,
" Domestic Price
/kg. 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 Notes:
Border Price
'
Domestic NPR Price
P/kg.
_
1.97 2.02 2.11 2.31 2.46 2.54 2.81 3.04 3,20 3.24 3.72 4.69 4.27 5.34 8.04 7.61 8.48 9.62 9.73 14.20 15.50
1.79 1.82 1.86 1.72 2.11 1,83 1.87 1.95 1.95 2.26 2.07 3,39 3.62 4.69 7.89 7.99 10.21 11.40 11.62 12.21 12,80
10 Ii 13 34 17 39 50 56 64 43 21 38 18 14 2 -5 -17 -16 -16 16 21
Sources
of data:
price, border poultry and
'EF â&#x20AC;˘ Border Price
P/_/kg. 2.81 2.83 2.83 2.93 3.01 3.01 3.00 3.51 3.51 3.51 3.66 4.69 6.34 6,35 9.46 11.02 11.31 11.47 "11,79 19.85 22.66
Border
and nominal 1960-1981.
protection
"-" O TRY" .Domestic NPR Price
Z 2.66 6 2.56 11 2.55 ii 2.66 10 2.73 10 2.89 4 3.28 -8 3.51 0 3.63 -3 4.02 -13 6.55 -44 7.49 -37 8.44 -25 11.63 -45 10.34 -8 7.63"44 9.62 18 9.32 23 12.65 -7 18.28 9 18.04 25
Price:
price eggs,
FAO Trade
Border Price
rates
E S' NPR
Domestic Price
P/k_.
_/kg.
_/kg.
Z
2.85* 2.93* 2.83* 3.25 _ 3.75* 6.07 4.27 4.32 4.46 4.85 5.38 5.64 5.52 6.74 8.49 9,70 9.55 ii.41 12.06 13.51 14.94
2.17 2.03 2.09 2.19 1.91 1,99 2.07 1.99 1.83 2.03 3.07 3.14 3.62 5.17 6.19 6.48 7.77 7.25 7.55 7.77 8.44
31 44 35 48 96 104 106 117 144 139 75 80 52 30 37 50 23 57 60 74 77
2.14 2.25 2.20 2.51 2.66 2,83 2.90 2.87 2.90 2.86 3.75 5.12 5.28 5.15 ,7.02 7.06 8.02 8.84 8.55 9.54 11.33
Border Price
_/kg. 1,61 1.93 2.09 2.16 t.76 1,87 1.87 1.91 1.83 2.30 3.36 3.58 4.02 4.96 7.28 7.85 8,10 8.95 8.58 7.62 7.33
hTR
Z 33 16 5 16 51 51 55 50 58 24 12 43 3! 4 -4 -i0 -i -2 0 25 55
Yearbook
Border price of pork, poultry and eggs are imports unit values of Hongkong, and U.S, import unit values for beef. gn converting border values to pesos, the official exchange rates were used. Domestic Price: Central Bank of the PhilipPines. Converted from price of chicken liveweight.
_a