Contractual Arrangements in Agriculture (Northern and Central Luzon Component)

Author: 
Alma M. dela Cruz
Description: 
DISCUSSION PAPER SERIES NO. 2007-21
JEL codes: 
Organisation: 
Abstract: 
This study aimed to characterize and analyze the various contractual arrangements in selected agricultural commodities in parts of Central and Northern Luzon. Specifically, the objectives are to: i) characterize the nature, process and degree of various agricultural contracts involved in the production and marketing of mangoes, hogs, rice and selected vegetables and, ii) analyze the implications of the various contracting arrangements in these commodities in terms of efficiency and equity. The research sites for this study consist of major producing provinces of the four specified commodities in selected parts of Northern and Central Luzon regions. For mango, Calasiao and San Carlos in Pangasinan, Iba and Masinloc in Zambales and Munoz in Nueva Ecija served as the study areas. For lowland vegetables, the municipalities of Talavera, Aliaga and San Jose City in Nueva Ecija, were primarily selected as study sites being major producers of eggplant, tomato, okra, onions and other vegetables. For hogs, Talavera, Munoz and San Jose City in Nueva Ecija where integrators and key informants are located constitute the sites of the study. The nature, process and degree of the different contracting systems in the four selected agricultural commodities have been diverse. In most cases, however, the different contracts were outcomes of the farmers need to adjust to the different production and market conditions surrounding the agricultural sector. The pervasiveness of sharecropping in many agricultural crops such as mango, rice and vegetables underscore the farmers difficulty in raising capital, due to missing credit and insurance markets. The associated risks, seasonality and specialized nature of agricultural production have likewise complicated the production processes and patterns of contracts in these commodities. Access to credit and marketing institutions and functioning of insurance markets are essential for the transformation of subsistence-oriented asset-poor farmers.