SOCIO-ECONOMIC DETERMINANTS OF THE CHOICE OF MARKETING ARRANGEMENT OF RICE FARMERS IN BATAAN, 20101

Thesis manuscript submitted in partial fulfilment of the requirements for graduation with the degree of Bachelor of Science in Agricultural Economics from the Department of Agricultural Economics, College of Economics and Management, University of the Philippines Los Baos. Prepared under the supervision of Dr. Salvador P. Catelo.

PAULINE HAZEL TAMIO GACHE INTRODUCTION Background of the Study Rice is considered as the most significant economic crop in the Philippines like in most other Asian countries. It serves as a staple food and is widely produced in Central and Southern Mindanao, Western Visayas and Central Luzon. Moreover, of the 300,000 square kilometers of land in the country, about 43,542 square kilometers of the total harvested land were devoted to the production of rice as of 2010 (BAS, 2011). When it comes to production, the country has reached 15,772,319 metric tons of rice in 2010. This figure is almost 25% higher than the total production a decade ago (BAS, 2011). Of the total production from 2000 to 2010, Region III or Central Luzon contributed the largest ranging from 16 to 19%. Bataan is one of the provinces in Central Luzon. The province contributes almost 5% of the regions total production of rice (BAS 2011). Despite of this short production level, most of its residents nonetheless are dependent on rice farming. Rice farming serves as one of the chief sources of livelihood aside from fishing and fish processing.

Moreover, according to the key informant from the Department of Agriculture, the number of farmers involved in this industry is increasing over the years. Rice in this province is also traded in neighbouring provinces including Bulacan and Pampanga. However, production of rice is greatly affected by climatic conditions such as drought and typhoon and also by man-made factors such as commercialization and land conversion. Slow growth rate of the province production is also due to poor marketing arrangement (Bataan Provincial DA, 2010). When it comes to marketing of rice, there are two arrangements present in Bataan: private trading and cooperative marketing. Private trading pertains to a business operation where individual farmers market their own produce to rice traders. On the other hand, cooperative marketing involves farmers group or organization wherein the members help each other in marketing their produce (Bataan Provincial DA, 2010). As cited by Espiritu (2008), the current marketing system of rice is marked with practices that deprive the farmers of a just share of their produce. He also concluded that several factors affect the economic condition of Filipino farmers and one of these factors includes the favourable and constructive provisions found on farmers preferred marketing arrangement. Statement of the Problem Rice farmers are often on the losing end since they have to sell their produce at an unreasonable offered price to have immediate cash (Anonymous, 1992). They get hurt in the marketing process since the prices of rice are just enough for them to break even. In addition, even if they desire to market their rice to end-users, they are unable to find

suitable outlet alternatives due to lack of capital. Rice farmers lack the acumen for competitive trading, in effect; traders become an essential entity in the marketing of rice. An interview with one of the informants revealed that there are problems of unstable and non-uniform conditions in the marketing scheme of rice in Bataan, particularly the fluctuating price of rice. She also added that private trade marketing arrangement provides different terms and conditions which cover up the services from the point of production to the point of distribution or marketing of rice (Magcaling, 2010). Problems predominantly encountered by farmers include high input and fertilizer costs, poor financial assistance and credit availability, insufficient transportation facilities, land conversion and agreement involving inequitable terms and conditions between farmers and buyers (Espiritu, 2008). It was also found that aside from the economic factors and non-economic factors, social characteristics of rice farmers also affect rice production and marketing systems. The informants statement is a crucial thing to focus on since the provinces rice marketing scheme could have changed and improved. It is also worth it to determine if the alarming state of rice farmers in the marketing process remains unchanged. In addition, the study aims to know the reasons why a number of farmers prefer a certain marketing arrangement. What are the factors affecting the farmers choice of marketing arrangement? What are the deals, services and benefits that farmers received from respective marketing arrangement? Which marketing arrangement is more advantageous to the farmers, private trading or cooperative marketing?

Significance of the Study Even though several studies were made regarding the issues about rice marketing arrangement, those studies were done in some places other than Bataan and were conducted more than 10 years ago. Variations could have happened across different places and time thus this study is still important. Developments and changes due to industrialization in Bataan may alter the perception and view of several farmers not only in the aspect of production but also in trading and preference of marketing arrangement for rice. The problems on inequitable terms as well as low pricing for rice can somehow be lessened through entering in a marketing arrangement which provides equitable deal and services. According to Espiritu (2008), engagement of rice farmers into existing marketing arrangement can somehow alleviate the poor condition of farmers. He also stated that it can be achieved by means of securing reasonable price for rice. The outcome of the study will be of great help in analyzing the sociodemographic, non-economic and economic factors and their interrelationship that significantly affect the farmers choice of marketing arrangement in selling their produce. In addition, through this studys evaluation of the performance of the different marketing activities as well as the comparison of profits received by farmers under the two marketing arrangements, farmers can decide easier on what marketing arrangement they want to engage in.

Objectives of the Study The study was conducted to identify the socio-economic determinants of the choice of marketing arrangement of rice farmers in the province of Bataan. Specifically, it aimed to:
1.

identify and describe the terms and services offered by marketing

arrangements present in Bataan;

2.

analyze the prices received, marketing costs incurred and net selling price

under each marketing arrangements;

3.

determine the factors affecting the choice of marketing arrangement of

rice farmers; and

4.

determine the problems encountered by rice farmers in the marketing

process and suggest recommendations and areas for improving the marketing of rice in Bataan.

REVIEW OF LITERATURE Rice Marketing Arrangements Kalaw (1981) expressed in his study that Filipino farmers are in low economic condition. He discussed that poor marketing practices is one of the major causes of such condition since small farmers depend entirely on subsistence rice farming. He also added that the need for an efficient production system in line with the orderly marketing system should not be overlooked. Moreover, Gracia (1981), in another study, emphasized that decreased productivity and inefficient marketing of agricultural commodities are the major reasons why farmers are in poor condition. And one of the most pressing factors that contribute to the farmers dilemma is lack of capital. In a study conducted by Blanco (1979), it was said that farmers received low prices due to low quality produce, rice surplus, limited number of buyers and rigidity of price set by the government. In the same light, according to Food and Agribusiness Monitor (1997), during bumper harvests, farmers are forced to sell their produce at breakeven price due to lack of post-harvest and other infrastructure facilities. Also, an individual farmer could not market his produce all by himself because of his weak bargaining power as cited by Oagan (1977). That is why the need to have an efficient marketing arrangement is necessary to have a better price and to distribute rice in the market to achieve higher profitability. The present marketing set-up of rice offers a significant field for development. Various research studies have been conducted in order to equalize the distribution of rice from surplus to deficit areas. According to Tolentino (2008), there are two types of marketing arrangement; contract and non-contract, where produce can be sold to either private traders or

cooperatives. In cooperative marketing arrangement, farmers themselves form into organizations which collectively market their produce. Cooperatives find buyers with contract provisions favourable to the farmers. Cooperatives bundle the collective volume thus increasing the bargaining power. This also provides assistance in their procurement of inputs. On the other hand, farmers sell their produce to buyers in private marketing arrangement. These buyers would make the arrangement as early as two weeks after planting or as late as harvest time. The buyers and the farmers would agree on the price, volume of sale, mode of sale and method of payment. They may or may not provide other marketing services depending on the provisions of the contract. In summary, terms and conditions for private and cooperatives include the mode of sale, method of payment and mode of transport (Caranto, 1990). Related Studies on the Socio-Economic Determinants on the Farmers Choice of Marketing Arrangement Agricultural economics plays a crucial role especially in improving the economic condition of the farmers and helping them to achieve welfare. It is also important in analyzing the factors that significantly affect the farmers choice of marketing arrangement for the produce has not yet been fully elaborated. Gata (1997) conducted a comparative analysis of rice marketing through the cooperative and private traders in the province of Sorsogon. Production of rice in that area is composed of small number of producers and the produce is mainly sold to various kinds of marketing agents, given that rice is their major agricultural product.

Gatas study obtained data employing that rice farmers experience problems in marketing their rice, especially in transportation. Aside from that, the farmers encounter problems regarding price fluctuations, hauling and handling, inability to stock, and high cost of inputs. Rice farmers tried to receive not only the best prevailing price but also the best deal that could be made with their potential buyers. Because of these challenges, farmers tend to enter into contracts or marketing arrangements offering better marketing operations. According to Diamante (1990), Laguna rice farmers who were members of cooperatives have higher production and income than non-members. However, there were no significant differences in the production and net income of the two sets of farmers under marketing cooperatives and non-members. This is due to the fact that cooperatives did not really require the members to sell their produce to cooperatives. Farmers still have the prerogative on selling their produce to the middlemen who were available at the harvest time. Another study was conducted by Espiritu (2008). He found out that price received by farmers, availability of credit for operation, and post harvest facilities greatly affect the farmers choice of marketing arrangement in Isabela. Majority of the farmers in the area mentioned that they encounter problems including high cost of farm inputs and low and unstable prices. Aside from that, supply of rice increases during the harvest season, therefore making the prices of rice to drop. There are several problems in farmers rice marketing, but then, in order to become more productive, they will only choose between the two marketing arrangement present.

According to Wiboonpongse, et al (2001), there are various intermediaries involved in the rice marketing system, and these have been expanded through the uncoordinated initiatives of private individuals and the farmers. They also said that rice producing areas are concentrated and situated at some distance from the main urban consumption that is why rice marketing system takes a long route to reach the final consumers. At the local level, intermediaries include local buyers or assemblers, commission agents, farmer groups, local assembling market centers, millers wholesalers and lastly the cooperatives. All of these agents have their own roles and functions that could enhance the smooth flow of the rice. Since there are no recent studies that focus on rice trading business in Bataan, which is considered as one of the productive activity of several Bataeos, this study will focus in that subject and will take a deeper analysis on the marketing arrangement and the farmers.

CONCEPTUAL FRAMEWORK In the rice marketing system, there are two types of marketing arrangement. These are: private trading and cooperative marketing. Private trading is essentially a business operation where individual farmers market their produce to rice traders. On the other hand, cooperative marketing includes the group or organizations of farmers that would help each other in purchasing and marketing their produce. Farmers could enter in any of the marketing arrangements in selling their produce. These marketing arrangements have their individual practices and agreement with the farmer such as volume requirement or scale of produce, prices received by farmers, methods of payments, marketing costs, mode of procurement, time of delivery and other trading services. Moreover, it also involves market information, market linkage and input sourcing. Under the two marketing arrangements, farmers offer certain volume of rice and also acquire costs within the process. Socio-demographic characteristics pertain to the factors subjective to the rice farmers such as household size, age, farmers organization, tenure status and selling experience. First factor is the household size which pertains to the number of family members who are dependent on farmers support. Household size may have an effect on farmers decision in such a way that larger household size requires a greater need to immediately dispose the produce. Second factor is the tenure status for it greatly determines the farmers share of the rice being produced and marketed. Selling experience is also an attribute based on the long-run term of understanding and experience derived from the previous marketing

arrangement of rice farmers. Lastly, presence of farmers active membership in any organizations related to rice farming business may also alter his decision. Non-economic determinants pertain to several factors which are beyond the control of the rice farmers. One is the media and the other source of information that provide farmers basic and significant information about the market. Second is the distance from the farm to the nearest market center travelled by rice a farmer that determines the cost of transportation or freight of the rice. Third is government support. This may have a wide-range of impact on farmers preference and rice marketing operation through pricing, subsidies, farm to market road construction, etc. Fourth is social capital or networks which consist of farmers intensity of market networks and human resources. Likewise, economic factors involve the price of rice which is essentially the most important factor that determines the farmers choice of marketing arrangement. It is also the monetary form of returns of rice farmers. Another is the credit availability for it determines how and with whom the produce will be marketed after harvest. Rice farmers choice of marketing arrangement of either private trading or cooperative marketing is affected by several socio-demographic, non-economic and economic attributes as shown in Figure 1. Consideration of availability of credit is also crucial in order to assist the farming operations. In cases where farmers cannot acquire credit from institutions, they sometimes borrow from relatives or sell some properties to finance their operation. Lastly, farmers assets or the availability of farmers properties such as storage facility and transport facility are also considered.

Favourable terms and conditions under each marketing arrangement may affect farmers net selling price of rice received by farmer-respondents. Net selling price or the net farm price can be obtained by deducting the total marketing costs incurred by rice farmers from the total selling price of the produce. Net selling price can be realized depending on how much the prices of rice received by rice farmers offset the total costs of marketing the produce. Total marketing cost is determined by adding up several costs such as the transport, handling, labor and information costs incurred. Total marketing cost can be determined also by the services rendered by the two marketing arrangements which cover several practices in marketing and trading.

Socio-demographic factors Age Household size

Non-economic factors Media or source of information Distance from farm to market center Government support capital Social (networks)

Economic factors Price of rice Credit availability Farmers assets

Farmers organization Selling experience Tenure status Household Income Educational

Available information technology

Choice of marketing arrangement Private trading Cooperative marketing

Prices Marketing Costs Method of payments Mode of procurement Volume requirement Market linkage Source of information market and price

Time of delivery Financial assistance Other marketing services

Net Selling Price

Figure1. Conceptual Framework of the socio-economic determinants of the choice of marketing arrangement of rice farmers in Bataan, 2010.

HYPOTHESES OF THE STUDY

1.

There is no significant difference in the mean prices of rice, marketing costs incurred and net selling price received by rice farmers between the different marketing arrangements.

2.

Rice farmers choice of marketing arrangement is determined by:

Table 1. Factors affecting the farmers choice of marketing arrangement with their expected sign and description. VARIABLES Socio-demographic Household Size + Larger household size requires an immediate disposal of the rice in order to meet the needs of the family. In cooperative marketing, farmer could easily market his produce, which is why he would rather choose it as his market.

EXPECTED SIGN

HYPOTHESIS/DESCRIPTION

Farmer's Organization

Organizations could provide necessary information and incentives among its members. Since a cooperative is an organization, rice farmers will more likely choose it in order to have a profitable and convenient transaction.

Tenure Status

Tenure status determines the farmers share of the produce. A farmer who is a land owner would prefer to engage in cooperative marketing since he can have incentives for every cavan of rice sold.

Selling Experience

Longer time spent in production and marketing of rice may give the farmer enough experience and information about the market. As a result, the farmer would be able to know that cooperative marketing is a lot more better and beneficial.

Age

As the farmer gets older, the likelihood that he will enter cooperative marketing increases since it offers a more convenient and less hassle transaction.

Non-economic Distance from Farm to Market + Farmer would desire to market in the cooperative especially when it comes to transporting the rice. Since road condition and longer distance in marketing process entails the use of transport facilities, cooperative could eventually perform the marketing services.

Economic Price of rice + Higher price of rice received is directly proportional to the probability that the farmer would choose cooperative as his marketing arrangement.

Farmer's Assets

Cooperatives could offer different services such as storage and transport facilities among its members. In case the farmer lacks these facilities, engaging to cooperative marketing gives them the access to those services at a reasonable price.

Credit Availability

Whom to sell the produce and the presence of credit provider alters the farmers selection of marketing arrangement. He would rather choose to market through cooperatives since they provide sure buyers and lend some financial support at a reasonable interest rate.

RESEARCH METHODOLOGY Type of Data and Method of Data Collection This study used primary and secondary data in analyzing the socio-demographic, non-economic and economic variables affecting the farmers choice of marketing arrangement. Primary data was obtained through personal interviews with rice farmers using prepared and pre-tested questionnaires. Data that were gathered consist of characteristics of farmers such as name, age, gender, household size, educational attainment and civil status. Tenure status, household income, farming and selling experience, information on assets such as infrastructure, vehicle, etc., marketing accounts and records of farm profile are also included. Information about the factors affecting the choice of farmers on certain marketing arrangement as well as the problems encountered was also noted. Secondary data gathered included the profile of the study areas and the concerned cooperatives. Lists of farmer-respondents and cooperatives were gathered from Municipal Agricultural Offices in Bataan. Selection of the Study Area Bataan province was the place of the study, covering the top two rice producing municipalities out of 12 existing municipalities. The top two rice producing municipalities that dominate the rice sub-sector in Bataan are Dinalupihan and Balanga. Selection of the Respondents Only farmers engaged in private trading and cooperative marketing were included in the study. There were seven existing active rice farmer cooperatives in Bataan. From

the top two rice producing municipalities in Bataan, sixty farmers were included; thirty were engaged in private trading and the other thirty were into cooperative marketing. Sampling Technique Lists of farmers were gathered from the Municipal Agricultural Offices in Bataan. Only farmers in the top two rice producing municipalities were included in the study. From the lists, farmers were classified into predetermined marketing arrangements: private and cooperative marketing. A stratified random sampling method was employed in order to come up with two groups of farmers under each marketing arrangement. Method of Data Analysis Descriptive Analysis Descriptive analysis was used to determine the socio-demographic and economic characteristics of farmer-respondents. Data were presented and interpreted in tabular form showing the distribution of farmer-respondents according to their social and economic characteristics and type of marketing arrangement. Descriptive method was also utilized to present the marketing arrangement and all the marketing services and practices by each type of marketing arrangement. Statistical Analysis This section focused on the comparison of the two marketing arrangement in terms of prices of rice received by farmers, the marketing costs they incurred and the net selling price received by the rice farmers. The t-statistics was used to determine whether significant differences exist on the prices of rice, marketing costs incurred and net selling price received by farmers under each marketing arrangement.

In conducting the test of hypothesis, the null hypothesis stated that there was no difference between the prices received by farmers under private trading and cooperative marketing, no difference between the marketing costs incurred by farmers under private trading and cooperative marketing, and lastly, no significant difference between the net selling price of rice under private trading and cooperative marketing. In symbol, Ho: xPR1 = xPR2 Ho: xMC1 = xMC2 Ho: xNSP1 = xNSP2 where: 1 = Cooperative marketing 2 = Private trading PR = Price of rice received by farmer-respondents MC = Marketing costs incurred by farmer-respondents NSP = Net selling price received by farmer-respondents The alternative hypothesis stated that there was a significant difference between the net selling price of rice under private trading and cooperative marketing; there was a difference in between the prices received by farmers under private trading and cooperative marketing; and there was a difference between the marketing costs incurred by farmers under private trading and cooperative marketing. The standardized form of the test statistic used was: tc = which followed a Students t distribution with + - 2 degree of freedom.

where:

Estimator of the common variance of the two samples xi = Means of two samples xPR = Mean price of rice received by farmer-respondents xMC = Mean marketing costs incurred by farmer-respondents xNSP = Mean net selling price received by farmer-respondents n = sample size 1 = Cooperative marketing 2 = Private trading Decision rule: reject the null hypothesis if tc or the t-computed was greater than the t tabular value at level of significance ranging from 1% to 10%. Pearson Correlation Analysis Correlation analysis was done in order to test whether the predetermined factors in the binary logit regression are multicollinear. This analysis measures the value of linear relationship between the factors affecting the selection of marketing arrangement of farmers. The Pearson correlation coefficient ranges from the value of -1 to 1

indicating perfect negative and positive relationship, respectively. As the value approaches zero, it indicates that variables are of less relationship or uncorrelated.

Binary Logit Regression The study also formulated a model to approximate the probability of farmers choosing the cooperative marketing over private trading. Logit regression was done to test all the factors affecting the dependent variable together in one equation. Sociodemographic, non-economic and economic variables that affect the choice of farmer of certain marketing arrangement were considered. Logit regression model was used in order to analyze dichotomous dependent variable. Values of 1 and 0 were employed where one (1) was assigned to farmers under cooperative marketing and zero (0) value was assigned to farmers under private trading. Therefore,

where FCMAi refers to the probability that a farmer would enter into cooperative marketing arrangement and (1- FCMAi) refers to the probability that a farmer would enter into private trading. The odds in favour of entering into cooperative marketing

arrangement or the odds ratio was the ratio

, making the natural log of this ratio

as the logit. The Logit model states that the log of the odds ratio is the linear function of the explanatory or independent variable. The probabilities obtained in this method always lie between zeros to one. Farmers choice of marketing arrangement was hypothesized to be the function of the following factors:

FCMAi = f (AGE, EDUC, HHSIZE, AIT, FORG, SEXP, PRICE, TENURE, CREDIT, FDIST, FA, HHY) where: FCMAi = Farmers choice of certain marketing arrangement for their produce at time t (i = 1- cooperative marketing, 0 private trading) AGE = Farmers age (in years) HHSIZE = Household size (number of family members and dependents) FORG = Farmers organization (1- active membership, 0- otherwise) SEXP = Selling experience (in years) PRICE = price of rice received (in pesos) CREDIT = availability of credit (1- available, 0- otherwise) TENURE = tenure status (1- owner, 0- leasee) FDIST = farm distance to market (in kilometer) FA = farmers assets (1- available, 0- otherwise) Only the significant variables identified in Pearson Correlation Analysis were considered in the Binary Logit Regression.

LIMITATIONS OF THE STUDY Due to the absence of good record keeping of the farmer-respondents, most of the information gathered about the marketing accounts was based only on farmers recall and it was probable that there were errors committed. There were also some respondents who were hesitant to reveal their real income and other sources of profit. Furthermore, there was also insufficient number of farmer-respondents selected in the study which is attributable to the resource constraints of the author. In spite of all the limitations mentioned above, the study could still be considered significant for rice farmers. The results of the study could help the rice farmers in deciding which marketing arrangement is better and more profitable. At the same time, it may also inform traders and government institutions of what kind of services and arrangements are beneficial for them as well as the rice farmers.

RESULTS AND DISCUSSION Area of the Study Bataan is a province located in the Central Luzon or the Region III of the Philippines. It is composed of eleven municipalities and one city. The province covers a total land area of 137,298 hectares (Anonymous, 2011). Limited part of the entire land area of Bataan offer soil areas suitable for planting food crops such as rice. The province also possesses an abundant source of water crucial not only for navigation and fishing but also for irrigation of its major crops. As compared to other provinces in the region, Bataan has the smallest land area and contributes for only 5% of the total rice production in Central Luzon. Moreover, the latest update of socio-economic profile of Bataan reported that the total effective area for rice production as of 2004 is 14,514 hectares, approximately 11% of the total land area of the province. In spite of the small figures mentioned above, agriculture, together with the aquaculture sector, remains one of the major sources of income for most of the Bataeos. Agricultural production ranges from rice, vegetables and fruits. In economic perspective, Bataan is one of the most progressive provinces in the Central Luzon and Manila Bay Region. The province plays a crucial role in the region since according to PPDO (2004), it is strategically located right in the middle of the countrys growth triad corridor of SBMA, Clark Special Economic Zone and Metro Manila. It is also a strategic transport route and transhipment point linking the SBMA area and other Central Luzon provinces. Bataan hosts several industries and companies that produce diverse products such as Petroleum, plastics, fiber glass and many more. Diverse marine, aquaculture and agriculture products are likewise produced.

Municipalities Comprising the Study Area From the twelve municipalities of Bataan, only two municipalities were chosen as study areas namely, Balanga City and Dinalupihan. Balanga City is considered as one of the richest towns in Bataan. It is actually the center of trade and commerce in the entire province. Establishments and industries situated in this area are complemented with ports that facilitate transport of raw materials, people and most especially, agricultural products. Though production of non-agricultural products also prevails in Balanga Citys economic activity, agriculture is considered as one of its promising industries since agriculture is one of the major sources of income in the city. As a matter of fact, the second largest rice producer in the province as of year 2009 is Balanga City itself. In line with rice production, the town is also producing significant amount of sugarcane, corn, coconut, fruits and vegetables. With Balanga Citys promising state, the local government is trying to invest and enhance more its chief industries including the agricultural sector. Dinalupihan, on the other hand, is conducive for marketing and trading since it is a lone landlocked municipality which serves as an entry point to Bataan coming from Pampanga, Zambales and Bulacan. Furthermore, Dinalupihan is one of the few municipalities which are targeted to become the main contributor of agro-industrial production. Although the municipality is getting more and more commercialized over the years, its plain area is still enough and suitable for planting food crops. In fact, Dinalupihan contributes the largest percentage in the provinces total rice production as of year 2009. Figure 2 shows the map of Bataan and the distribution of the study areas. The red figures on the map indicate the two top rice producing municipalities.

Legend:

- study areas (Balanga City and Dinalupihan)

Figure 2. Map of Bataan and the chosen municipalities.

THE FARMER-RESPONDENTS Socio-Economic Characteristics of Farmer-Respondents Table 2 shows the summary of the socio-economic characteristics of the farmerrespondents such as age, sex, educational attainment and household size. Table 2 also shows the distribution of farmer-respondents under each characteristics and type of marketing arrangement. Age The youngest respondent interviewed was 32 years old and the oldest was 80 years old. Most of the farmer-respondents interviewed belonged to the 60 year old and above age group. This age group consisted of senior citizens who have been engaged in the business for a long time and may have several experiences and preferences in marketing their rice. The other age groups classified were 38 years old and below which consisted of farmers who have been in the rice farming business for less than 10 years and the other is the 39 to 59 years old age group. Farmers engaged in private trading were relatively older and significantly different in terms of the average age rather than the farmers who were engaged in cooperative marketing. Age was considered as one of several factors affecting the selection of marketing arrangement as stated in the past study. Older farmers prefer a more convenient marketing arrangement in order to have the easiest method to market their produce while younger farmers are more likely to explore and try some other existing marketing arrangement.

Table 2. Characteristics of the farmer-respondents by type of marketing arrangement, Bataan, 2010. MARKETING ARRANGEMENT CHARACTERISTICS Cooperative Marketing No. % 2 14 14 30 58 21 9 30 11 7 12 30 9 70 30 100 37 23 40 100 21 9 30 12 9 9 30 9 7 47 47 100 Private Trading No. % 0 12 18 30 63 70 30 100 40 30 30 100 42 18 60 23 16 21 60 9 0 40 60 100 Both No. 2 26 32 60 60 70 30 100 38 27 35 100 % 3 43 53 100

AGE (years) 38 and below 39-59 60 and above TOTAL AVERAGE SEX Male Female TOTAL Elementary High School College TOTAL AVERAGE NUMBER OF YEARS IN SCHOOL HOUSEHOLD SIZE (persons) 3 and below 4 to 6 7 and above TOTAL AVERAGE HOUSEHOLD SIZE 12 14 4 30 6 40 47 13 100 7 21 2 30 6 23 70 7 100 19 35 6 60 6 32 58 10 100

EDUCATIONAL ATTAINMENT

In Table 2, eighteen out of the 32 farmers who were considered as senior citizens chose to market their rice to the private trading while the remaining farmers chose to market their rice to cooperative marketing. It implies that most of the older farmerrespondents wait for their buyers in their respective farms. It would be hard for most of the older farmers to deliver their rice to the nearest market center due to health constraints and other concerns outside farm. On the other hand, fourteen out 26 farmerrespondents in the age group of 39 to 59 years old market their rice through cooperative marketing and the other twelve farmers market their produce through private trading. Only two farmer-respondents belonged to the age group of 38 years old and below and both of them market their produce through cooperative marketing. These younger farmers preferred to explore and search for other marketing arrangement rather than just waiting for the buyers to come to their farms. Sex Eighteen out of 60 farmer-respondents were female and the remaining was male. The result presented in Table 2 may imply that most of the work present in the farm required a greater amount of power more suitable among male farmers. Males were assumed as quite stronger and more useful during the production and marketing process rather than females that is why male farmers are preferred in the farm. For the mean time, female farmer reported that they could only accomplish limited work in the farm, for this reason, they were mostly subjected to household chores instead.

Educational Attainment All of the farmer-respondents were able to attend school. Twenty two were able to attend elementary education and seventeen were able to attend their secondary education where 11 were able to finish high school. Twenty one farmer- respondents were able to attend their tertiary education however, only one farmer-respondent finished a vocational course while seven farmer-respondents finished their Bachelors degree, however, most of the degree holder finished a course that is not related to agriculture. Educational attainment was also categorized according to the number of years the respondents have spent in school. In general, the average number of years the farmerrespondents have spent in school was 9 years. Education of each farmer-respondent could also affect their selection of marketing arrangement. It was assumed that farmers who had reached a higher level of education could mean a greater knowledge and higher chance of acquiring the benefits from their respective marketing arrangement. Based on the literature, educated farmer would eventually enter the cooperative marketing. However, the observation did not conform to the empirical basis since a number of college graduate farmer-respondents were just the same under the two marketing arrangements. Household Size On the average, household size of the total respondents was six, same as the average household size of farmers under cooperative marketing and private trading. Table 2 shows that more than half of the farmer-respondents had a household size ranging from 5 to 8 members and few respondents had a household size ranging from 9 and above. The lowest observed number of persons within a household was 2 while the largest was

composed of 12. It is noticeable that most of the farmer-respondents had a large household size. It was assumed that as the household size increases, the farmer would want to enter the cooperative marketing for he always wants to have immediate cash in order to satisfy the urgent needs of a large family. However, it was observed that farmers with large household size clustered under private trading. Upon interview, it was quite obvious that farmer-respondents who simply work and rely on rice farming comprised of larger household size. Time allocation of farmer-respondents could be linked with the size of their household. Apparently, the time allocated for work was inversely related to the household size, as the working hour increases, size of the household would decrease. Tenure Status Tenure status of farmer-respondents may also affect farmers selection of marketing arrangement. In this study, land devoted to rice was usually owned by the farmer-respondents. As a matter of fact, thirty one out of sixty farmers owned the land and the remaining twenty nine farmers were considered to have leased the land. This figure tells us that 29 farmers are paying for the land they cultivated while the other half do not. Table 3 shows that rice area was usually owned by farmer-respondents under private trading. The observed data could mean that farmer-respondents who owned the rice area tend to exert less effort in searching for a marketing arrangement with a higher price and more incentives since they would not eventually pay for the buwis or land rental fee.

In the case of farmer-respondents who were tenants, they might as well search for a marketing arrangement which offers a relatively higher price. In reality, tenant farmers were just receiving a certain proportion of the total produce for they have to pay for the land in the form of buwis or rice. Likewise, respondents said that it was the land owner who makes the final decision on the distribution of the produce. Table 3. Tenure status of farmer-respondents by type of marketing arrangement, Bataan, 2010. MARKETING ARRANGEMENT Cooperative Private Marketing Trading No. % No. % No. 18 12 30 60 40 100 11 19 30 37 63 100 29 31 60

TENURE STATUS Leasee Owner ALL

Both % 48 52 100

Rice Farming and Marketing Experience Longer years in rice farming business could enhance the awareness of farmerrespondents as well as their knowledge of other existing and favourable marketing arrangement in the area. More than half of the farmer-respondents inherited the business and the land they cultivated for rice from their parents. In line with the years spent in rice farming business, marketing experience could also influence the decision of farmerrespondents in selecting marketing arrangement. Farmers with more experience in selling and marketing their rice may have explored several marketing arrangement, gathered enough market information and developed different strategies in marketing their rice. On the average, all of the farmer-respondents have experience marketing rice for about 28 years. Twenty farmer-respondents were selling and marketing rice for about 32

to 45 years and six farmers were selling their produce for more than 47 years. Almost half of the respondents could be considered as old and pioneer in selling rice. Farmerrespondents revealed that they have developed a habit whenever they sell their produce in either cooperative or private traders. Some farmers tend to stick to a certain marketing arrangement without exploring others because that outlet already satisfied their requirements and expectations. While some farmer-respondents said that they have the concept of suki that most of the time provides credit and financial assistance. The results from Table 4 conformed to the hypothesis made since more farmerrespondents who have engaged in cooperative marketing were selling their produce for a much longer time. It implies that farmer-respondents are more likely to take risks in exploring other marketing arrangement. It may take several years for the farmers to settle in cooperative marketing and they are more likely to market their produce in the early years to the private marketing arrangement. It is true that younger rice farmers are risk takers when marketing the rice. Table 4. Years in rice marketing of farmer-respondents by type of marketing arrangement,Bataan, 2010. MARKETING ARRANGEMENT Cooperative Private Both Marketing Trading No. % No. % No. % 7 23 10 33 17 28 7 23 10 33 17 28 13 43 7 23 20 33 3 10 3 10 6 10 30 29 100 30 27 100 60 28 100

YEARS IN RICE MARKETING 17 and below 18 31 32 45 46 and above ALL AVERAGE YEARS IN MARKETING RICE

Reasons for Engaging to Rice Farming and Marketing Farmer-respondents stated their own reasons why they ended up with a business of rice farming; some said it was inherited while some considered it as a source of income. Thirty eight out of 60 farmer-respondents have inherited the rice farm and the business from their parents and relatives. Most of them reported that they grew up working on the farm. They confessed that it would be very hard for them to give up rice farming since their parents accustomed them with this kind of labour. They also mentioned that even though they do not usually profit from the rice farming business, they could not live without it because it was indeed part of their lifestyle. The remaining farmer-respondents were only engaged in the business in order to have an additional or chief source of income. Under this category, most farmerrespondents acquired their land through governments agrarian reform programs. Table 5. Reasons for engaging to rice farming business of farmer-respondents by type of marketing arrangement, Bataan, 2010. REASONS FOR ENGAGING TO BUSINESS Inherited For Extra Income ALL Household Income Household income comprised of earnings obtained from other sources aside from rice farming business. Household income was categorized into six income classes: PhP3,000 and below, PhP3,001 PhP6,000, PhP6,001 PhP9,000, PhP9,001 PhP12,000, PhP12,001 PhP15,000 and PhP15,001 and above. In Table 6, almost half MARKETING ARRANGEMENT Cooperative Private Both Marketing Trading No. % No. % No. % 20 67 18 60 38 63 10 33 12 40 22 37 30 100 30 100 60 100

of the farmer-respondents belonged to the two lowest income classifications. This observed data happened due to several reasons such as lack of income sources and presence of large household size which depended solely on rice farming. Furthermore, this low income classification of farmers-respondents could also be linked to their poor educational attainment. The result shows that poor farmer-respondents clustered on both private and cooperative marketing arrangement. The statement means that the results obtained from the past study saying that farmers with larger household income tend to sell their produce to the cooperative was rejected. It is because farmer-respondent with higher income preferred to sell play in private marketing arrangement. Table 6. Monthly household income of farmer-respondents by type of marketing arrangement, Bataan, 2010. MARKETING ARRANGEMENT Cooperative Private Both Marketing Trading No. % No. % No. 6 20 6 20 12 10 33 4 13 14 3 10 5 17 8 5 17 4 13 9 2 7 6 20 8 4 13 5 17 9 30 100 30 100 60

HOUSHOLD INCOME (PhP) 3,000 and below 3,001 6,000 6,001 9,000 9,001 12,000 12,001-15,000 15,001 and above ALL Other Sources of Income

% 20 23 13 15 13 15 100

Out of sixty farmer-respondents, thirty nine farmers earned income from sources other than rice farming. The other sources of income as being mentioned by the farmerrespondents were government employee, cooperative officer, livestock and quail

production, vegetable farming, remittances, rental and sari-sari store or carinderia. Large number of the farmers was getting their income through their childrens or relatives remittances and pension. It was then followed by sari-sari store or carinderia with merely seventeen percent of the total farmer-respondents. The other most common sources of income within the province were rental of commercial space or building and government employment comprising of councillors and Barangay officials. Working with the government allows the farmer-respondents to have an access to the subsidies and incentives provided by the local government. Table 7. Other sources of income of farmer-respondents by type of marketing arrangement, Bataan, 2010. MARKETING ARRANGEMENT Cooperative Private Both Marketing Trading No. % No. % No. % 3 10 5 17 8 13 6 20 0 0 6 10 1 3 4 13 5 8 1 3 1 3 2 3 3 10 4 13 7 12 4 13 8 27 12 20 13 17 5

OTHER SOURCE OF INCOME*

Government Employee Cooperative Officer Livestock Productiona Quail Production Vegetable Productionb Remittance/Pension Commercial Space 5 17 3 10 8 Rental Sari Sari 5 17 5 17 10 Store/Carinderia Othersc 2 7 1 3 3 a Swine and cattle production b Mongo, peanut, corn and sweet potato farming c Part-time driver, owner of funeral home *Some farmer-respondents mentioned more than one source of income

Organization Awareness and Active Membership Level of awareness with regards to existing related organizations was classified into low, moderate and high. The classification was made according to the number of existing related organization known by the farmer-respondents. The low awareness means a 0-1 known active organization, the moderate awareness signifies that farmerrespondent has 2-3 known related organization and the high awareness level indicates that farmer-respondent has extensive information about organizations related to rice farming business for the farmer is aware of at least four. Half of the respondents stated that they were moderately aware or knowledgeable about some business related organizations present within the area. It was then followed by 35% and 9% of farmerrespondents with low and high level of awareness, respectively. There were actually several organizations in the municipalities of Dinalupihan and Balanga City related to rice farming business, however, some old farmers said that membership would only be bothersome due to its time and money requirements. Table 8. Awareness level to existing organizations of farmer-respondents by type of marketing arrangement, Bataan, 2010. AWARENESS LEVEL TO EXISTING ORGANIZATIONS Low Moderate High ALL MARKETING ARRANGEMENT Cooperative Private Marketing Trading No. % No. % 5 17 16 53 18 60 12 40 7 23 2 7 30 100 30 100

BOTH No. 21 30 9 60 % 35 50 15 100

In addition, forty six out of 60 farmers were considered as an active member of their respective organization. Most common organizations mentioned by farmers were National Irrigation Association and Samahan ng Magsasaka.

DESCRIPTION OF THE FARM Total Area Devoted to Rice Total rice area determines the yield as well as the profit of the rice farmers. As the area devoted to rice increases, farmer-respondents would want to find the marketing arrangement where they can be most profitable. The highest price being offered would be the most preferred by the farmer-respondents. The reported largest area devoted to rice was 6 hectares while the smallest area devoted to rice was 0.2 hectare. In general, the sample respondents could be a good representation of the whole population since more farmer-respondents were working on a total rice area of utmost 2 hectares. Farmers with smaller rice area chose not to look for other marketing arrangement which offers a higher price. Farmer-respondents would not bother themselves on marketing their rice and they would just settle for the nearest marketing arrangement present in the area. It is because the volume of rice for sale is positively related to the offered price, as the volume of rice to market increases; offered price also increases since it would be an advantage for the rice traders and buyers. Table 9. Total rice farm area of farmer-respondents by type of marketing arrangement, Bataan, 2010. TOTAL RICE FARM AREA (hectares) 2 and below 3-4 5 and above ALL AVERAGE RICE FARM AREA MARKETING ARRANGEMENT Cooperative Private Both Marketing Trading No. % No. % No. % 19 63 18 60 37 62 10 33 8 27 18 30 1 3 4 13 5 8 30 100 30 100 60 100 1.8 2.2 2

Distance of Farm to Market and Available Transportation One of the major concerns in marketing rice is transport facility. The distance travelled by the farmer-respondents from the farm up to the nearest market center can affect the preference of rice farmers whether to perform or not the marketing practices. The farmers responsible in transporting the rice, would entail several costs within the marketing process. Choice of marketing arrangement depends on the condition of farm-to-market road and availability of transport facility as they affect product losses. The longer the distance travelled between the farm and nearest market center, the higher is the likely loss. However, farmer-respondents who do not have to transport their rice were not covered by the assumption that the distance from farm to market center affects the choice of farmer-respondents. On the average, the distance travelled from farm to nearest market center was 2.3 kilometers. Thirty eight farmers had a farm which was utmost 2 kilometers away from the nearest market center. Distance was not actually considered as problem while marketing their produce. The remaining less than half of the farmer-respondents had a farm situated 3 to 4 kilometers away and at least 5 kilometers away from the nearest market center. Based on Table 10, almost same number of farmer-respondents under the two marketing arrangement clustered on the nearest distance of 2 kilometers and below. The priori expectation did not conform to the observed data; it means that framer-respondents do not actually consider distance in selecting cooperative as their marketing arrangement.

More time and effort as well as larger transportation cost were the primary concerns of farmer-respondents whenever the farm was situated relatively far from the market center. Table 10. Distance travelled from farm to the nearest market of farmer-respondents by type of marketing arrangement, Bataan, 2010. DISTANCE OF FARM TO THE NEAREST MARKET (kilometers) 2 and below 3 -4 5 and above ALL AVERAGE DISTANCE MARKETING ARRANGEMENT Cooperative Private Both Marketing Trading No. % No. % No. % 20 67 18 60 38 63 7 23 7 23 14 23 3 10 5 17 8 13 30 100 30 100 60 100 2.3 2.3 2.3

Transportation was easily available for most of the farmer-respondents. Most of the rice areas were situated along the high way and national road that is why the common mode of transport used in marketing such as jeepneys, tricycles and small trucks were easily available anytime of the day. Farmers Marketing Assets Once rice was harvested and dried, it would then be transported by either farmerrespondents or buyers. The most common vehicle owned by farmer-respondents was tricycle. They were actually using it whenever they go to their rice farm and visit some of their prospect buyers, but whenever they have to deliver the rice, they would rather rent a larger vehicle. They mentioned that it would be too costly and risky for them to use the tricycle since it has a relatively lower capacity. According to the farmer-respondents, as much as possible they would want to market their rice without involving any transport cost. However, since half of the respondents owned transport facility while the other half could not afford to have one, transporting the produce is still a major consideration.

Table 11. Available storage and transport facility of farmer-respondents by type of marketing arrangement, Bataan, 2010. MARKETING ARRANGEMENT Cooperative Private Marketing Trading No. % No. % 6 20 7 23 13 43 17 57

VARIABLE Storage Facility* Transport Facility* *Multiple responses

BOTH No. 13 30 % 22 50

Meanwhile, the purpose of the storage facility is to extend the availability of rice over a longer period of time rather than if it was sold immediately after harvest. The assumption behind the use of storage facility is that the price would eventually rise while the product is in store to cover the costs of storage. Based from the table above, number of farmer-respondents who owned a storage facility was significantly smaller. According to majority of the farmers, they seldom store their produce since they would want to have immediate cash. In case they have to store rice as stock for the next cropping season, farmers would either rent some storage facility or just stock them up in their house. Fewer farmer-respondents who chose to sell in cooperative were observed to have a transport and storage facility. It did not conform to the assumption but it implies that most farmers engaged in cooperative marketing are maximizing the use of facilities and services rendered by the cooperative at a reasonable price. Available Information Technology Obtaining information about market prices, market conditions and buyers requires the use of information technology such as cellular phone, radio, television, etc. Investigating the market with the use of information technology could help the farmerrespondents to monitor different aspects of the market as well as the marketing

arrangement. The data below revealed that large number of farmer-respondents had an access to different kinds of information technology such as mobile phone/telephone, radio, television and etc. Although cellular phone was considered as a necessity, more farmer-respondents failed to make use of it because of their relatively old age and health constraints. Table 12. Available information technology of farmer-respondents by type of marketing arrangement, Bataan, 2010. MARKETING ARRANGEMENT Cooperative Private Marketing Trading No. % No. % 20 67 18 60 26 87 22 73 23 77 28 93

AVAILABLE INFORMATION TECHNOLOGY Mobile phone* Radio* Television* *Multiple responses

BOTH No. 38 48 51 % 63 80 85

MARKETING ARRANGEMENT PREFERENCE Marketing Arrangement Awareness Farmers awareness of existing marketing arrangement was classified according to the number of existing marketing arrangement known by the farmer-respondents. It was classified as low, moderate and high. Low or poor, moderate and high awareness level described that farmer-respondents have zero to one, two to three and at least four known marketing arrangement in Bataan, respectively. In Table 13, further information about the farmers level of awareness of existing marketing arrangement was presented.

Table 13. Awareness level to existing marketing arrangement of farmer-respondents by type of marketing arrangement and by, Bataan, 2010. AWARENESS LEVEL OF EXISTING MARKETING ARRANGEMENT Low Moderate High ALL MARKETING ARRANGEMENT Cooperative Private Marketing Trading No. % No. % 6 20 7 23 14 47 10 33 10 33 13 43 30 100 30 100

BOTH No. 13 24 23 60 % 22 40 38 100

Marketing Arrangement Preference Farmers might belong to either cooperative marketing or private trading; but then, farmers might also consider some other marketing arrangement aside from their present one. Several factors could alter the marketing arrangement preference of farmerrespondents however the terms of the agreement between the farmer and the buyer could offset the farmers marketing decision. Among farmers under cooperative marketing, 13 farmers preferred to sell their produce through private trading. The reasons pointed out by farmers towards cooperative marketing were the following: 1) cooperative could not buy in large amount; 2) cooperative offers a low price; 3) inconvenience while selling and acquiring credit; and, 4) higher marketing costs. However, one farmer under private trading said that he would be willing to sell his produce through cooperative marketing arrangement due to higher benefits and incentives given. Most of the farmers were satisfied with their marketing arrangement yet some of them were not. Few farmers were not satisfied because of their closed agreement with the

buyers. This closed agreement particularly production loans and credit could prevent the farmer to have a favourable marketing condition. RICE MARKETING SYSTEM Selling and marketing the rice were the primary concerns of the rice farmers in the province. Traders would eventually take a big role in marketing the rice since most of the farmers lack the acumen of being a good one. Furthermore, rice farmers could enter into any of the two marketing arrangements present in the study area. Farmers could enter into cooperative marketing where group of farmers help each other in purchasing and marketing their produce and they could also enter into private trading where individual rice farmer market his produce to private traders such as dayo and rice mills. This study included three cooperatives namely, Greater Bani Multi-purpose Cooperative, Bataan Seed Growers MPC which are both situated in Balanga City and Pagalanggang Farmers MPC which is situated in Dinalupihan, Bataan. Marketing Services of Marketing Arrangement Hauling and Transport Facility Transporting the rice was generally categorized into two: it was either picked-up from the rice farm by the buyers or delivered to the market center or buying stations by the rice farmers. Under cooperative marketing, it was observed that majority of the farmer-respondents tend to transport their produce to the cooperative. The cooperative would either buy rice of the farmer-respondents or collectively market the rice of their members to National Food Authority and to other institutional buyers. But for the farmerrespondents engaged in private trading, it was usually the buyer who picks-up the rice

from the farm. Farmer-respondents would voluntarily deliver their produce to the buyer when the volume was generally small. Greater Bani Multi-Purpose Cooperative from Balanga City was the only cooperative that currently offers transport facility to their members and even for nonmembers. The cooperative charges the minimum amount of PhP10.00 per cavan and would definitely increase depending on the distance between the farm and the market. The Greater Bani Multi-Purpose Cooperative gives no charge for renting their transport facility given that their farmer member would then market his produce to the cooperative. Meanwhile, most private rice traders and buyers used their own transport facility in procuring the rice. This service from private trading could give several farmerrespondents a lower marketing cost, however, for some farmers who hired a vehicle, minimum charge would range from PhP5.00 up to PhP15.00 per cavan and would also increase depending on the distance between the farm and market center. Storage Facility Among the three cooperatives included in the study, Greater Bani Multi-Purpose Cooperative was the only cooperative which offers storage facility among its members and non-members. The rice could be stored at the storage facility at a rate of PhP20.00 per cavan per month. For the meantime, private rice traders or the 'dayo' did not offer any storage facility to the farmer-respondents since these traders usually come from distant provinces. Farmers said that those traders do have a storage facility but it would be too costly for them to avail that storage for it was located outside the province of Bataan. However, storage could be carried out by rice mills. Several rice mills in the province offered their storage facility and access could either be free of charge or not

depending on their agreement made beforehand with the farmers. The most common agreement mentioned was that, payment for the acquired production loan would be in the form of rice. Different reasons for storing rice were mentioned by the farmer-respondents who avail the use of storage facility. Farmer-respondents pointed out reasons such as (1) to have a rice stock for the next cropping season, (2) to extend the period of availability since rice is a staple crop consumed throughout the year but harvested only twice a year, and lastly, (3) to levitate the price of rice since storage facility has this price stabilization effect. Source of Price Information Market information was comprised of the data about the market prices, market condition and the potential buyers. Other farmers, private traders, mills, cooperatives were some possible sources of market information that each farmer-respondents could have. Of all the factors of market information, market price was considered as the major concern. In cooperative marketing, the price of rice was basically the price specified by the local government or National Food Authority since it acts as the market outlet of Bataan Seed Growers and Pagalanggang Farmers Multi-purpose Cooperatives. On the other hand, private traders and rice mills would incorporate the price of rice based on the prevailing price of rice in the market. Market Linkage

Bataan Seed Grower Multi-Purpose Cooperative and Pagalanggang Farmers Multi-Purpose Cooperative, considered NFA or the National Food Authority as their market outlet for rice. Farmers could have an incentive or refund of PhP0.30 for every kilogram sold to the NFA. In order to identify the impact of PhP0.30 incentive to rice farmers, average gain per kilogram of rice was determined. Given the average price and average marketing cost for cooperative marketing in Table 14, the probable average price received for every kilogram sold was PhP15.293. Each cooperative gave their members the prerogative to choose whom and where to sell their produce. Table 14. Average price received per kilogram of rice sold to National Food Authority, Bataan, 2010. NFA Price Received Average Price Incentive Average Marketing Cost Average Price Received PHP PER KILOGRAM 15.56 15.26 0.3 0.267 15.293

Meanwhile, market linkage formation under private marketing was not actually encouraged particularly by the private traders from other province. This was due to the fact that market linkage could only increase the degree of competition within the market. Financial Assistance and Input Sourcing Cooperatives offered financial assistance to all of its members including production loan and even farm inputs. In the case of Bataan Seed Growers Multi-Purpose Cooperative, because of their good performance and stable condition, the cooperative was able to get a reward of financial support from the government. According to the key informant who was an active member of the Bataan Seed Grower Multi-Purpose

Cooperative, the government was able to notice the drastic growth of the cooperative in terms of production and performance of each member. He then added that as a form of reward, the local government granted the cooperative with a PhP3 million worth of credit loan and an 85% subsidy on farm inputs, specifically on the farm equipment. The interest rate imposed by Greater Bani Multi-Purpose Cooperative, Bataan Seed Growers Multi-Purpose Cooperative and Pagalanggang Farmers Multi-Purpose Cooperative were 1%, 1.5% and 2% per month, respectively. Most of the private rice traders and buyers from other province would neither offer financial assistance nor input provision to the farmer-respondents. As a result, farmer-respondents would just then resort to other farmers and friends as their source of credit. Contrary to the case of private traders, rice mills did offer production loans and financial assistance to the farmers given that farmers would sell their produce to rice mills in return. Volume Requirement Volume of rice to sell was not essentially a requirement for mills, private traders and Greater Bani Multi-Purpose Cooperative. However, two cooperatives whose market outlet was the National Food Authority namely: Bataan Seed Growers Multi-Purpose Cooperative and Pagalanggang Multi-Purpose Cooperative required a minimum volume of rice. Each of the two cooperatives would have to sell their produce in a collective manner with a minimum volume requirement of 100 cavans. In addition to the

requirements, the NFA might as well prefer to buy a good quality seeds considering the moisture content and the size of the grain. An informant said that volume requirement is imposed in order for the rice farmers to maximize the incentives from the local government.

MARKETING PRACTICES Mode of Procurement Whenever the rice was being picked-up by the buyer especially by the private rice traders from other province, the marketing costs incurred by the farmers were somehow lessen and the transaction for the farmers becomes less hassle. This kind of set-up was more favourable for farmer-respondents because they would not have to bother search and hire for transport facility. Marketing consisted of different costs which could be incurred by the farmer-respondents, and transport cost or hiring of transport facility constitutes the largest percentage in the marketing expenses. Delivering the produce to its potential buyer could entail larger marketing cost. If the farmer-respondent was the one responsible in transporting the rice, he/she would eventually carry out the utilization of transport facility. This could mean that greater time, money and effort are needed whenever the produce is sold through cooperative marketing. From the table below, farmer-respondents were almost equally distributed among the two mode of procurement, meaning to say, farmers under each of the two marketing arrangement might as well preferred the other existing marketing arrangement.

Table 15. Mode of procurement of farmer-respondents by type of marketing arrangement, Bataan, 2010. MODE OF PROCUREMENT MARKETING ARRANGEMENT Cooperative Marketing Private Trading Both No. % No. % No. %

Delivered Picked-up ALL

15 15 30

50 50 100

13 17 30

43 57 100

28 32 60

47 53 100

Mode of Payment Payment received by farmer-respondents could either be in the form of cash or instalment basis. Unpredictable change in buyers capacity to pay could also determine the mode of payment, however, this could only be observed each time the farmerrespondents created some input/credit provision and marketing bundled transactions with the potential buyer. As much as possible, most of the farmer-respondents preferred to receive the payment on cash basis since most of them mentioned that there was a need for immediate cash and that instalment basis was definitely a burden. In Table 15, fifty three farmers received the payment in terms of cash on delivery while seven farmers received the payment by mode of instalment. This would imply that farmer-respondents transact business with the buyers through cash on delivery mode of payment. Nevertheless, a small number of farmer-respondents confessed that instalment mode of payment could actually happen upon their transactions between rice mills and National Food Authority. Farmers also supported the previous statement by telling that the local government supervising the NFA was delayed in receiving their funds. Table 16. Mode of payment of farmer-respondents by type of marketing arrangement, Bataan, 2010. MODE OF PAYMENT MARKETING ARRANGEMENT Cooperative Marketing Private Trading Both No. % No. % No. %

Cash On Delivery Instalment ALL

27 3 30

90 10 100

26 4 30

87 13 100

53 7 60

88 12 100

Mode of Transport Transporting the rice makes use of a vehicle which was either owned or hired by the buyer or farmer. If the farmer-respondent would need to transport the rice, he must also consider the distance between the farm and the nearest market center for selling the rice to distant places requires heavy duty vehicles. Another thing to consider was the farm-to-market road condition; farmer would have to hire a mode of transport that could lessen the likely loss of the rice while in the process of transporting. Farmer must decide on what kind of vehicle to use that would not sacrifice the quality and quantity of the produce. As reported by the respondents, the kinds of vehicle used in the transaction were jeepney, owner-type jeepney with trailer, tricycle and truck. An owner-type jeepney with trailer was the most common vehicle hired by farmer-respondents who transported their rice to their respective buyers. It was then followed by tricycle as well as the small truck since they were considered as an accessible medium of transport in the study area. While in cooperative, half of the farmer-respondents carried the burden of finding a transport facility in selling their produce. Table 17 would further illustrate the distribution of farmer-respondents according to type of marketing arrangement and by mode of transport. In private marketing, more than half of respondents buyer made use of their own vehicle or hired some transport facility when purchasing the rice hence leaving some farmer-respondents at no cost or at lower marketing cost.

Table 17. Mode of transport of farmer-respondents by type of marketing arrangement, Bataan, 2010. MARKETING ARRANGEMENT Cooperative Private Trading Both Marketing No. % No. % No. %

MODE OF TRANSPORT Owner Type Jeepney With Trailer Buyer-Owned Hired Tricycle Buyer-Owned Hired Jeepney Buyer-Owned Hired Small Truck Buyer-Owned Hired ALL

8 3 3 0 3 8 1 4 30

27 10 10 0 10 27 3 13 100

6 7 1 3 5 0 5 3 30

20 23 3 10 17 0 17 10 100

14 10 4 3 8 8 6 7 60

23 17 7 5 13 13 10 12 100

COMPARISON OF PROFIT BY MARKETING ARRANGEMENT Profit could determine the impact of the chosen marketing arrangement with respect to the rice farmers. Through comparison of profits of farmers under each marketing arrangement, the effect on the farmer of his preferred market could be determined. In order to reveal which marketing arrangement is more advantageous and helpful to the rice farmers, comparison of marketing arrangement in terms of price received, marketing costs, net selling price and net income was conducted. Net income was measured in order to see the effect of chosen marketing arrangement to the overall benefits of the farmer. Net income was also determined

depending on how much the price received offset the amount of marketing costs incurred by rice farmers. Price Received The price of rice was determined and set by the buyers most of the time. According to the farmer-respondents, the price would be set beforehand and it would be very rare to negotiate for a higher price. The price of rice also depended on the quality of rice which includes the moisture content, size of the grain and etc. In an interview with the farmers, one of them said he was the one setting the price of rice since he would always prefer to harvest at an early time. Meanwhile seventeen farmers together with their respective buyers were both setting the price, they would make sure that the price is acceptable and the condition is fair for both parties. The remaining forty two farmer-respondents declared that they were just price takers, according to them, although they did not want the price being offered by the buyers, they would grab that opportunity since they always needed immediate cash. Appendix Table 1 shows the comparison of the price received by farmerrespondents under the two marketing arrangement as well as the marketing cost incurred and the net selling price. The selling price of rice sold in cooperative marketing ranged from PhP 14 up to PhP 17.40 per kilogram while rice sold in private trading ranged from PhP 11.00 to PhP 17.00. Relatively higher price received per kilogram of rice was observed in cooperative marketing with an average of PhP 15.26 as compared to the farmers under private trading which received an average price of PhP 14.53 per kilogram of rice. The computed difference between the average prices of the two marketing arrangement was PhP 0.73 per kilogram.

To further support the statement, two-tailed t-test was done in order to determine whether significant difference existed between the prices gathered from the two marketing arrangement. T-test showed a t-value of 2.537 and a p-value of 0.014. This means that we were rejecting the null hypothesis at =5%. The result implies that the price received by the farmers in cooperative marketing was significantly different from the price received by the farmers selling in the private traders. It could be supported by the fact that farmers under cooperative marketing could have some degree of bargaining power to set a much higher price. Cooperatives did not essentially require their members to sell their produce to them that was the reason why farmers would rather not sell their produce when they know that they were not better off. Moreover, market outlet of cooperative particularly the NFA, implemented a strict quality control measures that could lead to a higher price. In the case of private trading, farmers could also have some degree of bargaining power in setting the price. However, the formation of price depended on the quality of rice and the time of harvest. As stated before, there were some factors affecting the price of rice. One of those factors that greatly affect the price of rice was the moisture content, the price of rice increases as the moisture content of rice decreases or gets closer to the ideal one. However, it was hard for the farmers to control the moisture content of the rice due to lack of post-harvest facility and climate change. Marketing Costs Marketing costs incurred as reported by the farmer-respondents composed of the transport cost or hauling, handling cost or the pahinante/labourer and some farmerrespondents also consider the storage cost and information cost. Storage cost was seldom

utilized by farmer-respondents for they would want to have immediate cash for their personal use. Furthermore, some farmer-respondents would acquire market information and communicate with their potential buyers using their mobile phone that is why they could also incur an information cost. In the instance of selling the rice to the cooperatives and to the National Food Authority, farmer-respondents could also incur all the marketing costs reported above. Appendix Table 2 shows the breakdown of all costs while marketing a kilogram of rice. Rental of transport facility contributed the largest amount in the cost of marketing; it was noticeable that transport cost was greater under cooperative marketing mainly because farmer-respondents would usually deliver their rice to the buyer. Farmerrespondents, who sell their produce to the private traders, could not expend much in transporting the rice since the buyers were the ones who picked-up the rice from the farm. However, if we considered all other factors such as handling, storage and information costs; marketing expenses under private trading was comparatively larger than the marketing expenses under cooperative marketing. The t-test method also showed a t-value of -0.289 and a p-value of 0.773, since tcomputed was lower than the t-tabular value, null hypothesis was accepted. T-test result implies that there is no significant difference between the marketing costs incurred by farmers under cooperative marketing and private trading. Net Selling Price Net selling price per kilogram of rice was computed by subtracting total marketing costs from price received by the farmers. The average net selling price of rice

under cooperative marketing was estimated as PhP 14.99 while in private trading was PhP 14.25. The net selling price per kilogram of rice was higher in cooperative marketing since it had a higher price received and a lower marketing cost. The difference between the two averages which amounted for just PhP 0.75 per kilogram was significant at 5% level. In order to sustain the previous statement, two-tailed t-test was conducted (See Appendix Table 3). The null hypothesis was rejected in this variable since the t-computed value was 2.526 with a p-value of 0.013. Therefore, the result means that there is a significant difference between the net selling prices of per kilogram of rice received by the farmer-respondents engaged in the two marketing arrangement. Prices of rice sold to cooperatives were relatively higher than the prices of rice sold to private traders. The higher net selling price observed in cooperative marketing was due to higher prices of rice received by farmer-respondents as well as the much lower marketing costs they incurred. Net selling price could determine which of the two marketing arrangement gives a more advantageous and beneficial marketing system to the farmers. Aside from the fact that it measures the extent to which the selling price offset the marketing costs within the process, it also determines the amount of returns the farmer get by selling their rice to a particular marketing arrangement. With the use of the net selling price computed, net marketing returns of each farmer-respondent can also be computed. So, considering the results obtained, it could be said that farmers could be better off under cooperative marketing since they could have a higher net marketing returns.

PEARSON CORRELATION ANALYSIS In order to determine if multicollinearity existed between the independent variables in the regression model, Pearson correlation analysis was employed. The variables correlated in this method were age, educational attainment, farmers organization, tenure status, selling experience, household income, available information technology, distance from farm to market center, price, farmers assets and credit availability (See Appendix Table 4). The results revealed that at one percent level of significance, education had a moderate negative relationship with the variable age as well as the distance and household size. It was also found out that at one percent level of significance, selling experience had a strong positive relationship with the age. Lastly, household income and farmers asset were found to have moderate positive relationship. At five percent level of significance, farmers asset had a weak positive relationship with available information technology. Moreover, selling experience and educational attainment together with age and farmers asset were found to have a weak negative relationship at five percent level of significance. The factors age, educational attainment, household income, household size and availability of information technology were dropped because they were significantly correlated and represented by other factors in the model.

BINARY LOGIT REGRESSION ANALYSIS

Binary logit model was done so as to determine significant relationship between the probability that a farmer will enter into cooperative marketing and the different explanatory variables that could possibly affect the farmer-respondents choice of marketing arrangement. The signs of all explanatory variables did not conform to the priori expectations, the only factors that conformed were selling/marketing experience, price, farmers active membership in an organization and credit availability. The positive sign indicated that as the coefficient of the variables such as price received by farmer increases, in line with the presence of membership in an organization and availability of credit, the probability that the rice farmer would select cooperative marketing also increases. On the other side, the factors having a negative coefficient were farmers asset, presence of farmers organization, tenure status and the distance travelled between the farm and the market center. The negative coefficient implies a relative decrease in the probability that the farmer will choose the cooperative marketing as his marketing arrangement. Table 18 shows the results of binary logistic regression estimation using Statistical Package for Social Sciences Version 16. The value of the coefficients signified the direction of the relationship between the independent variables and the dependent variable or the farmers selection of marketing arrangement. In order to assert that the binary logit model was statistically acceptable, it was crucial to satisfy first the rule. The rule stated that the estimated Chi-square (2) must be greater than the tabulated Chi-square (20.1) the rule was satisfied in this case. The estimated Chi-square (2) test statistic of the model was 15.615 and it was greater than the

Chi-square (20.05) = 14.067 at 7 degrees of freedom. The logit model was acceptable since the rule was satisfied. Therefore we could reject the hypothesis that all explanatory variables do not explain the variation of the dependent variable. It can be stated that the explanation that at 95 percent confidence limit, i was not equal to zero. The result means that certain explanatory variables had significantly affected the decision of farmers regarding where to sell the produce. Table 18. Results of the estimation of the binary logit model testing the probability of the choice of marketing arrangement of rice farmers, Bataan, 2010. VARIABLE FA FORG SEXP TENURE PRICE CREDIT FDIST Constant COEFFICIENT -0.603 1.346* -0.006 -0.143 0.834** 1.450** -0.312 -13.406* SIGNIFICANCE LEVEL 0.350 0.079 0.794 0.825 0.011 0.093 0.151 0.010

Omnibus Test of Model Coefficient Chi-Square Model (Df=7) Significance level ** and * Significant at 5% and 10% respectively.

15.615* 0.029

The event of farmer marketing his produce through cooperative is assigned a value of 1. The event of farmer marketing his produce through private trading is assigned a value of 0. According to the estimated Chi-Square, the model was statistically significant at 5% which shows that considering all the independent variables together; it would have a significant effect on the dependent variable or the choice of marketing arrangement. The main factors significantly affecting the farmers selection of marketing arrangement were PRICE, CREDIT and FORG. The positive values of FORG, PRICE

and CREDIT tell us that as the number of business-related organizations increases, the price of rice received by farmer increases and as the credit provision becomes more available, the farmer is more likely to sell his rice through cooperative marketing. In examining the results of the Logit model, it can be said that the value of the model would be the constant at -13.406 given that all explanatory variables were set to zero. The negative coefficient stated that when all the explanatory variables were zero, rice farmers would tend to choose private trading as their marketing arrangement. Logit model simulated a farmers choice of marketing arrangement by utilizing the data obtained from the survey. Using the mean of each continuous variable and the most frequent modal value, the logit value was computed. (See Appendix Binary Logit Value Computation) Given the values of explanatory variable, we can say that there was a 65 percent probability that the farmer will enter the cooperative marketing arrangement. The remaining 35 percent was the probability that the farmer will enter the private trading. Moreover, marginal effect of each explanatory variables were also computed using the formula of

where: = coefficient of variable Xi FCMAi = probability that the farmer will enter into cooperative marketing arrangement 1-FCMAi = probability that the farmer will enter into private marketing arrangement

Marginal effect is the percent change in the probability of dependent variable given a percent change in a specific explanatory variable. For instance the PRICE of rice, the computed marginal effect was:

0.834*(0.65)*(1-0.65) 0.190 The value of the marginal effect means that a percent increase in the PRICE of rice would lead to a 0.190 percent increase in the probability that the farmer will enter into cooperative marketing arrangement. As stated before, farmer-respondents would want to enter a marketing arrangement that offers a good and profitable deal specially a higher price. The marginal effects of other independent variables were also computed. Same method of computing the marginal effect was employed to the remaining variables and the result was presented in Table 19. Table 19. Marginal effect of the variables affecting the choice of marketing arrangement of farmer-respondents, Bataan, 2010. VARIABLE FA FORG SEXP TENURE PRICE CREDIT FDIST MARGINAL EFFECT -0.137 0.306 -0.001 -0.033 0.190 0.330 0.071

PROBLEMS ENCOUNTERED

Bataan rice farmers mentioned several problems with regards to the marketing of rice. Majority of the rice farmers had a dilemma regarding the price of rice they received. They said the prices were very low and generally unstable within one season due to unfavorable weather conditions, pests and diseases affecting the quality of rice, over supply of rice in the area during harvest season, the need for immediate cash, and presence of rice traders and buyers insisting a much lower price. Some farmers used to canvass on the prevailing price within the market. However, some farmers were not allowed to explore other existing markets for they were tied with a credit provision and marketing bundled transactions with their buyers Poor farm-to-market road condition was also included in the marketing problems encountered by rice farmers. Harvest times of farmer-respondents whose rice areas were situated in the middle of the field were affected due to the absence of path. They were not able to catch the higher price offered for early harvested rice for they have to wait for the other farmers to harvest first to clear the pathway. Moreover, majority of farm-to-market roads were still considered as rough roads which most of the time contribute to higher rice losses. Only a small number of farmer-respondents mentioned poor transportation since transport facility in most areas was easily available. However, rice farmers under cooperative marketing reported that cooperatives transport facility was frequently unavailable. Rice farmers were also subjected to problems of lack of facilities, communication technologies and financial assistance. Moreover, more than half of the farmerrespondents mentioned that lack of government support was one of their problems such

as inefficient implementation of regulatory price and lack of protection and assistance for rice farmers. Table 20. Problems encountered by farmer-respondents by type of marketing arrangement, Bataan, 2010. MARKETING ARRANGEMENT Cooperative Private Both Marketing Trading No. % No. % No. % 27 90 21 70 48 80 21 70 24 80 45 75 13 3 7 13 17 43 10 23 43 57 12 3 8 8 20 40 10 27 27 67 25 6 15 21 37 42 10 25 35 62

PROBLEMS* Unstable Price Low Output Price Poor Farm-to-Market Road Poor Transportation Lack of Facility/ Technology Lack of Financial Assistance Lack of Government Support *Multiple responses

SUMMARY AND CONCLUSION

The study focused on the determination of factors affecting the preference of a farmer in entering a particular marketing arrangement where he can sell his rice. Municipalities of Balanga and Dinalupihan were selected and randomly chosen respon dents from these municipalities were personally interviewed. Specifically, the study aimed to: (1) determine and describe the terms and services offered by existing marketing arrangement employed by the rice farmers in Bataan, (2) compare and analyze the prices received, marketing costs incurred and net selling price under each marketing arrangement, (3) determine the factors affecting marketing arrangement decision of rice farmers, and lastly, (4) determine the problems encountered by rice farmers in the choice of marketing arrangement and suggest recommendations and areas for improving the marketing of rice Bataan. Bataan was selected as the study area since a significant number of farmers rely entirely on rice farming. Rice farming serves as one of the main livelihood in the province and according to the key informant, farmers engaged in rice farming businesses increase over the years. There are two marketing arrangements present in Bataan cooperative marketing and private trading. Cooperative marketing is defined as an organization or group of farmers who help each other in purchasing and marketing their produce particularly in providing marketing services and practices. Active agricultural cooperatives were considered such as Greater Bani Multi-Purpose Cooperative and Bataan Seed Growers Multi- Purpose Cooperative both situated in Balanga City and Pagalanggang Farmers Multi-Purpose Cooperative located in Dinalupihan.

On the other hand, private trading pertains to individual farmers who market their own produce to rice traders and buyers. Sixty farmers were selected in the study; 30 farmers engaged in private trading and another 30 in cooperative marketing. During the marketing process, each marketing arrangement offers marketing services and practices in order to satisfy the farmers expectations. The marketing services rendered by the buyers were hauling and transport facility, storage facility, price information, market linkage, financial assistance and input sourcing. In addition, each transaction performs several practices such as mode of procurement, mode of payment and mode of transport. Survey says 53 percent of the respondents said that their produce were being picked-up by their respective buyer leaving them at low costs or even no costs, while the remaining respondents said they are the ones who delivered the rice to the buyers. In terms of mode of payment, cash basis was considered as the most desired by farmerrespondents; however, due to some marketing restrictions in the terms and condition between the farmer and the buyer, some farmers have accepted the instalment type of payment. For the mode of transport, majority of the farmer-respondents hired a vehicle which is offered by the cooperatives. Half of the farmer-respondents does not own any transport facility that is why in every transactions, farmer-respondents would hire a vehicle. Marketing arrangement was also compared in terms of price received, marketing costs incurred, net selling price and net income of the farmer-respondents. With regards to the price, farmers under cooperative marketing has a relatively higher price amounted to PhP 15.26 compared to the price received by farmers under private trading which

amounted to PhP 14.53 per kilogram. Higher price could be due to the good quality of the and by early harvesting of rice. T-test result showed that prices received by farmers were significantly different unlike the marketing costs incurred by the farmers in both marketing arrangement. Marketing costs entails transport, handling, labor and information costs. The average marketing costs incurred in cooperative marketing and private trading were Php 0.267 and PhP 0.279 per kilogram of rice, respectively. By excluding the marketing costs from the price of rice, net selling price was obtained. Higher net selling price was also observed among the farmers in cooperative marketing, due to higher selling price but lower marketing cost. From the t-test done in net selling price, it was found out that the net selling price of farmers from two marketing arrangement is different at 5 percent level of significance. Considering the results above, it could be said that farmer-respondents were better off under cooperative marketing arrangement since they could receive a higher net marketing returns. Factors affecting the preference of marketing arrangement of the rice farmers were determined using the binary logit regression. Results showed that FORG or business-related organizations availability, PRICE of rice and CREDIT availability were the major factors that significantly affect the farmers choice of where to sell his produce. Using the average value of all the explanatory variable, the probability that the farmer will enter the cooperative marketing arrangement was 65 percent while the probability that the farmer will enter private trading was 35 percent. Marginal effect was also computed in order to know the change in the probability of entering in cooperative marketing given a unit change in a particular explanatory variable.

The latter part of the study identified the problems of the farmers in marketing their produce. Majority of the farmer-respondents mentioned the problem with regards to 1) unstable and low price of rice due to unfavourable weather conditions; 2) pests and diseases affecting the quality of rice; 3) over supply of rice in the area during harvesting season; 4) the need for immediate cash; and 5) presence of rice traders and buyers who insist of unreasonable price.

RECOMMENDATIONS Given the results of the study, some recommendations are put forth to address the threats and weaknesses of the study itself and the rice industry. Provide Access to Information Relevant information about the market such as prices, buyers, business-related organizations and market conditions are communicated through personal contacts. The flow of information among farmer-respondents is weak and there are no official channels or outlets of communication in the market. In order to improve the condition of farmers in Bataan, it would be good to extend and provide access to information through publications, bulletins, text messages and training activities. Furthermore, it was shown in the previous part of the study that farmers membership of organization or association is significantly affecting the decision of farmer regarding which marketing arrangement to choose from. Therefore, farmers must and should be well informed about the existing organizations in the province. Enhancing the awareness level of farmers will be a good step in the right direction since it would encourage the farmers to form organizations or join existing ones. Provide Access to Credit Rice farmers face problems which include the untimely release of financial support and limit in their access to credit to conduct marketing operations and to fund productive investment. Most of the credit for rice farmers comes from informal sources and personal contacts. In the case of formal credit sources, farmers are restrained with several credit requirements and high interest rates.

A finding says that credit is significantly affecting the farmers choice of marketing arrangement. Farmers could facilitate marketing operations, storage activities and investment in processing and transportation if more loans and better credit packages will be more accessible to them. Credit should need not be subsidized but rather be given on the basis of sound and stable banking principles, however, the government must also establish a monitoring system to ensure that credit guidelines are observed. Another option is to encourage private lending institutions to adopt policies that are suited to the needs of agricultural investment or encourage them to grant bulk loans to farmers or farmers organizations. Promote Rice Marketing Rice marketing system in the province should be promoted with a set of strict measures to improve the quality of rice and reduce the costs involved in the process. Stronger regulatory board for the quality, supply and price of rice should be imposed. The local government should regulate the pricing of agricultural products specifically the prices of rice since it is considered as a significant factor influencing the marketing decision of farmers. Same as consumers, producers or rice farmers must also be protected from necessary evils present in the market. Moreover, by controlling the supply of rice in the province, the burden of farmers could be lessened since price could not drop if there is enough supply of rice. Seminars and programs may also help the farmers to improve practices and services in marketing their rice and may help them become more familiar with the benefits and incentives when entering a marketing arrangement. If rice farmers have the necessary information and capacity regarding the marketing of rice, they can participate

effectively and competitively in making marketing decisions and also in bargaining for the price of rice. Invest in Agricultural Research Agricultural researches about the socio, non-economic and economic factors affecting the marketing decision of rice farmers are encouraged since some important variables are not captured in the analysis. Aside from that, complementary research which would contribute to the improvement of the quality of rice is persuaded. The need to improve those vital aspects mentioned above does not imply that the government should make all the investment itself. The government has a crucial role in facilitating access to market information, access to credit and also in providing good and conducive environment for the rice farmers in Bataan.

REFERENCES Blanco, M.P. 1979. Rice Marketing Under Samahang Nayon in Laguna City, 1978-1979. Unpublished Undergraduate Thesis. Department of Agricultural Economics, CEM, University of the Philippines, College, Laguna. Caranto, R.M. 1990. Malicon Marketing Cooperative Incorporated. Corcuera, U.U.T. 2008. Trend Analysis of Production and Price in the Philippines 19702005. Unpublished Undergraduate Thesis. Department of Agricultural Economics, CEM, University of the Philippines, College, Laguna. Espino, C. R. 2009. Analysis of the Marketing Options of Beef Cattle Raiser in Cavite. Unpublished undergraduate Thesis. Department of Agricultural Economics, CEM, University of the Philippines, College, Laguna. Espiritu, J.P.M.R. 2008. Socio-economic Determinants on the Choice of Marketing arrangement by Rice Farmers in Isabela, Philippines. Unpublished Undergraduate Thesis. Department of Agricultural Economics, CEM, University of the Philippines, College, Laguna. Gata, E.P. 1997. Comparative Analysis of Rice Marketing Through the Cooperatives and Private Traders in Sorsogon. Unpublished Undergraduate Thesis. Department of Agricultural Economics, CEM, University of the Philippines, College, Laguna. Gracia, W.T. 1981. Production and Marketing of Rice at the Farm Level in Davao del Norte: Focus on National Irrigation Systems. Unpublished Undergraduate Thesis. Department of Agricultural Economics, CEM, University of the Philippines, College, Laguna. International Rice Research Institute, 2010. World Rice http://www.irri.org/science/ricestat/pdfs/. Accessed August 30, 2010. Kalaw, M.M. 1981. Philippine Agriculturist Manila. Magcaling, 2010. National Food Authority. Bataan Provincial Economist. Interviewed August, 2010. Oagan, L.D. 1977. Cooperatives: Principles and Practices. ed. Cacho Hermanos, Inc. Tolentino, B.G.B. 2008. Comparative Economic Analysis of Independent and Contractual Marketing arrangement of Mangoes in Selected Municipalities of Batangas. Unpublished Undergraduate Thesis. Department of Agricultural Economics, CEM, University of the Philippines, College, Laguna. Statistics.

Ubalde, M.G.G. 2008. Status, Problems and Prospects of Rice Milling Industry Irosin, Sorsogon. Unpublished Undergraduate Thesis. Department of Agricultural Economics, CEM, University of the Philippines, College, Laguna. Wiboonpongse, A. et al. 2001. Agribusiness Research on Marketing and Trade. Rice Marketing System in Thailand.

APPENDICES

APPENDIX Table 1. Results of the t-test for the price received by 60 farmer respondents, Bataan, 2010. = 5% t-tab = 1.96 Decision Rule: Reject Ho if | t | > t0.05/2=1.96 FARMER RESPONDENTS Cooperative Private Trading Marketing Marketing 15.26 14.53 1.22 1.28 30 30 Difference d.f t Stat P (T < 1) 0.73 58 2.537 0.014

PRICE Mean Standard Error Observations

Decision: Since t-stat > t-tab, we reject the null hypothesis, therefore we can say that there is a significant difference between the price received by farmers under cooperative marketing and private trading.

APPENDIX Table 2. Results of the t-test for the marketing costs incurred by 60 farmer respondents, Bataan, 2010. = 5% t-tab = 1.96 Decision Rule: Reject Ho if | t | > t0.05/2=1.96

MARKETING COST Mean Transport Cost Handling Cost Storage Cost Information Cost Standard Error Observations

FARMER RESPONDENTS Cooperative Private Trading Marketing Marketing 0.267 0.279 0.171 0.111 0.058 0.067 0.016 0.057 0.023 0.043 0.03 0.02 30 30 Difference d.f t stat P (T < 1) -0.012 58 -0.289 0.773

Decision: Since t-stat < t-tab, we accept the null hypothesis, therefore we can say that there is no significant difference between the marketing costs incurred by farmers under cooperative marketing and private trading.

APPENDIX Table 3. Results of the t-test for the net selling price by 60 farmer respondents, Bataan, 2010. = 5% t-tab = 1.96 Decision Rule: Reject Ho if | t | > t0.05/2=1.96

NET SELLING PRICE Mean Standard Error Observations

FARMER RESPONDENTS Cooperative Private Trading Marketing Marketing 14.993 14.248 1.23 1.31 30 30 Difference d.f t stat P (T < 1) 0.745 58 2.562 0.013

Decision: Since t-stat > t-tab, we reject the null hypothesis stating, therefore we can say that there is a significant difference between the net selling price by farmers under cooperative marketing and private trading.

Appendix Table 4. Result of the estimation of the Pearson Correlation Analysis. Market Age Educ Outlet Market Pearson Outlet Correlation 1 -0.22159 0.009616 Sig. (2-tailed) 0.088841 0.941868 Pearson Age Correlation -0.22159 1 -0.40075** Sig. (2-tailed) 0.088841 0.001508 Pearson Educ Correlation 0.009616 -0.40075** 1 Sig. (2-tailed) 0.941868 0.001508 Pearson HHSize Correlation 0.007476 0.181046 -0.20288 Sig. (2-tailed) 0.95479 0.166253 0.120021 Pearson AIT Correlation 0.089443 -0.10613 -0.23653 Sig. (2-tailed) 0.496751 0.419643 0.068832 Pearson FA Correlation -0.13363 -0.2623* -0.08417 Sig. (2-tailed) 0.308726 0.042905 0.522566 Pearson Forg Correlation 0.157622 -0.10268 -0.03259 Sig. (2-tailed) 0.229058 0.434998 0.804766 Pearson SellExp Correlation 0.03763 0.667834** -0.28388* Sig. (2-tailed) 0.775298 5.58E-09 0.027941 Pearson Tenure Correlation -0.03335 0.05383 0.039769 Sig. (2-tailed) 0.800285 0.682916 0.762887 Pearson Price Correlation 0.31605* -0.03623 0.038736 Sig. (2-tailed) 0.013893 0.783444 0.768874 Pearson Credit Correlation 0.178885 -0.04287 0.034404 Sig. (2-tailed) 0.171452 0.744992 0.794119 Pearson Fdist Correlation -0.15055 -0.0301 0.249434 Sig. (2-tailed) 0.250909 0.819433 0.054611 Pearson HHY Correlation -0.18136 -0.16689 -0.10207 Sig. (2-tailed) 0.165518 0.202491 0.437728 * Correlation is significant at the 0.05 level (2-tailed). ** Correlation is significant at the 0.01 level (2-tailed).

HHSize 0.007476 0.95479 0.181046 0.166253 -0.20288 0.120021 1

0.16383 0.211008 -0.05595 0.671143 -0.09486 0.470925 0.182093 0.163776 0.043137 0.743471 -0.00163 0.990123 0.063526 0.629659 -0.39153** 0.001978 0.035307 0.788837

Continuation of Appendix Table 4 AIT Market Outlet Pearson Correlation Sig. (2-tailed) Pearson Correlation Sig. (2-tailed) Pearson Correlation Sig. (2-tailed) Pearson Correlation Sig. (2-tailed) Pearson Correlation Sig. (2-tailed) Pearson Correlation Sig. (2-tailed) Pearson Correlation Sig. (2-tailed) Pearson Correlation Sig. (2-tailed) Pearson Correlation Sig. (2-tailed) Pearson Correlation Sig. (2-tailed) Pearson Correlation Sig. (2-tailed) Fdist Pearson Correlation Sig. (2-tailed) Pearson Correlation Sig. (2-tailed) 0.089443 0.496751 -0.10613 0.419643 -0.23653 0.068832 0.16383 0.211008 1 0.298807 * 0.020389 -0.14098 0.282624 0.097817 0.457157 0.014915 0.909943 -0.00257 0.984452 0.16 0.222022 -0.09345 0.477576 0.212919 0.102394 0.03686 0.779778 -0.24231 0.062129 -0.16936 0.195795 0.034939 0.790991 0.029881 0.820706 0.249066 0.05498 0.342649* * 0.007363 FA -0.13363 0.308726 -0.2623* 0.042905 -0.08417 0.522566 -0.05595 0.671143 0.298807* 0.020389 1 FORG 0.15762 2 0.22905 8 -0.10268 0.43499 8 -0.03259 0.80476 6 -0.09486 0.47092 5 -0.14098 0.28262 4 0.03686 0.77977 8 1 SellExp 0.03763 0.775298 0.667834* * 5.58E-09 -0.28388* 0.027941 0.182093 0.163776 0.097817 0.457157 -0.24231 0.062129 -0.02614 0.842876 1 Tenure -0.03335 0.800285 0.05383 0.682916 0.039769 0.762887 0.043137 0.743471 0.014915 0.909943 -0.16936 0.195795 0.018399 0.889027 -0.01741 0.894938 -0.01741 0.894938 0.09605 0.465366 0.056797 0.666438 -0.03003 0.819844 -0.19893 0.127574 -0.24991 0.054131 0.104408 0.427253 -0.20616 0.11403 -0.11542 0.379869 1

Age

Educ

HHSize

AIT

FA

Forg

SellExp

Tenure

-0.02614 0.84287 6 0.01839 9 0.88902 7 -0.09827 0.45504 7 -0.14098 0.28262 4 0.00212 5 0.98714 3 0.03077 8 0.81541 5

Price

Credit

HHY

Continuation of Appendix Table 4 Price Market Outlet Pearson Correlation Sig. (2-tailed) Pearson Correlation Sig. (2-tailed) Pearson Correlation Sig. (2-tailed) Pearson Correlation Sig. (2-tailed) Pearson Correlation Sig. (2-tailed) Pearson Correlation Sig. (2-tailed) Pearson Correlation Sig. (2-tailed) Pearson Correlation Sig. (2-tailed) Pearson Correlation Sig. (2-tailed) Pearson Correlation Sig. (2-tailed) Pearson Correlation Sig. (2-tailed) Pearson Correlation Sig. (2-tailed) Pearson Correlation Sig. (2-tailed) 0.31605* 0.013893 -0.03623 0.783444 0.038736 0.768874 -0.00163 0.990123 -0.00257 0.984452 0.034939 0.790991 -0.09827 0.455047 0.09605 0.465366 -0.24991 0.054131 1 Credit 0.178885 0.171452 -0.04287 0.744992 0.034404 0.794119 0.063526 0.629659 0.16 0.222022 0.029881 0.820706 -0.14098 0.282624 0.056797 0.666438 0.104408 0.427253 0.043688 0.740311 1 Fdist -0.15055 0.250909 -0.0301 0.819433 0.249434 0.054611 -0.39153** 0.001978 -0.09345 0.477576 0.249066 0.05498 0.002125 0.987143 -0.03003 0.819844 -0.20616 0.11403 0.145335 0.267874 0.006029 0.963534 1 HHY -0.18136 0.165518 -0.16689 0.202491 -0.10207 0.437728 0.035307 0.788837 0.212919 0.102394 0.342649** 0.007363 0.030778 0.815415 -0.19893 0.127574 -0.11542 0.379869 -0.0797 0.544939 -0.16457 0.208922 0.020796 0.87468 1

Age

Educ

HHSize

AIT

FA

Forg

SEXP

Tenure

Price

Credit

0.043688 0.740311 0.145335 0.267874 -0.0797 0.544939

Fdist

0.006029 0.963534 -0.16457 0.208922

HHY

0.020796 0.87468

Binary Logit Value Computation Using the mean values of each continuous variable and the most frequent modal value, the logit value was computed: = -13.406 0.603 FA + 1.346 FORG -0.006 SEXP 0.143 TENURE + 0.834 PRICE + 1.450 CREDIT 0.312 FDIST Substituting the mean value of the variables to the equation, = -13.406 0.603 (1) + 1.346 (1) -0.006 (28) 0.143 (1) + 0.834 (15) + 1.450 (1) 0.312 (2.27) The numerical value of the Logit becomes 0.278 Taking the antilog of the equation; 1.896 Manipulating the equation, we have; FCMAi = 0.65 Therefore, there is a 65% probability that the farmer will enter the cooperative marketing arrangement. The remaining 35% is the probability that the farmer will enter the private marketing arrangement.