BIBLIOGRAPHY YUBOS, NILO. P. MARCH 2006. A...
BIBLIOGRAPHY
YUBOS, NILO. P. MARCH 2006. A Documentation of Traders, Input Suppliers
and Farmers’ Input – Supply Relationships in Madaymen, Kibungan. Benguet State
University, La Trinidad, Benguet.
Adviser: Jovita M. Sim, MSc
ABSTRACT
This study was conducted in Madaymen, Kibungan, Benguet. The respondents
consisted of 20 input suppliers and 60 farmers. The input suppliers included the farm
supplies establishments in Baguio City and La Trinidad providing farm inputs to the
farmers on credit basis, traders providing inputs to the farmers and in turn buy the
vegetables produce by the farmers, and the farmers who own the land leased by the
respondents and acts as the input suppliers and at the same time buyers of the vegetables
produce by the farmers. The input suppliers and the farmers were related either as
relatives or “suki”.
There were types of input – output supply relationships that existed between the
input suppliers and the farmers. The first is the relationship between the farm supplies
establishments and the farmers. The farmers get the inputs from these establishments on
credit but the farmers are free to sell their vegetables to any trader then pay their credit
plus interest to the farm input suppliers. The second relationship was that traders buy the
inputs from the farm input establishments then supply it to the farmers on credit plus an
interest. The farmers in turn supply their vegetables to the traders at a discounted price.
The traders deduct the debt of the farmers then give the balance to the farmers. The third
relationship was the farmer suppliers buy inputs from the farm supplies establishments
and sell them to the farmers on credit. The later sell the vegetables to the former and the
former deducts first the credit of the farmer from the gross value of the product. What
ever is left as net, this is divided between the farmer supplier and the farmer.
Farm input suppliers also met problems on the collection of what they loan out to
the farmers. At times when the crops of the farmers were destroyed by natural calamities,
the farm input suppliers could not collect from the farmers.
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TABLE OF CONTENTS
Page
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
i
Abstract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
i
Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
iii
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Rationale of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Statement of the Problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
Importance of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
Scope and Limitation of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
REVIEW OF LITERATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
Locale and Time of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
Respondents of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
Data Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
Data to be Gathered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
Data Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
RESULTS AND DISCUSSION
10
Profile of the Respondents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
Types of Traders Providing Farm Inputs
to the Farmers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
Trader – Farmer Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
Selling Practices of Traders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14
iii
Pricing Practices of Traders. . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . .
15
Payment Collection Practices of Traders. . . . . . . . . . . . . . . . . . . . . . . .
15
Farm Production Area of Farmers . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16
Distance of Farm from Farmers’ Residence . . . . . . . . . . . . . . . . . . . . .
17
Sources of Irrigation and Topography . . . . . . . . . . . . . . . . . . . . . . . . . .
17
Sources of Farm Inputs of the Farmers. . . . . . . . . . . . . . . . . . . . . . . . . .
18
Mode of Buying Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
Input – output Supply Arrangement Between
Input Suppliers and Farmers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
Choice of Crop to be Planted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24
Number of Cropping per Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25
Contribution of Suppliers to Production
Marketing Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26
Market Outlet of Farmers’ Produce and
Mode of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27
Basis for Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28
Problems Encountered by the Traders
And Farmers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29
SUMMARY, CONCLUSIONS AND
RECOMMENDATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30
Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30
Conclusions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33
Recommendations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34
LITERATURE CITED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36
Appendix A. Survey Questionnaire . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36
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INTRODUCTION
Rationale of the Study
Farming is the major occupation of most families in Madaymen, Kibungan,
Benguet. They raise vegetables like potatoes, cabbage, radish and carrots in their farms
for commercial purposes. With the cool climate of the place, vegetable production has
become the major livelihood of the people in the place. Farmers are now expanding the
area planted with vegetables in order to produce higher volume of production.
Aside from expanding the area planted with vegetables, farmers use fertilizer to
increase the yield of their crops. It was traced that the use of inorganic fertilizer and
pesticides in this area started when farmers went into commercial vegetable production.
Vegetable farming requires a big amount of cash for the purchase of farm inputs
such as planting materials, fertilizer, pesticides and fungicides. Unavailability of cash and
poor access to financial institutions/support is one of their constraints in production; thus,
this is where agricultural farm input suppliers are of great help to the farmers.
The various sources of farm inputs where farmers of Madaymen obtain their farm
supplies were: private firms like Sunrise Farm Supplies, and Mt. Trail Farm Supply;
cooperatives operating in the municipality; trader/suppliers; and farmer suppliers. The
trader suppliers are those who supply the farm inputs to the farmers and at the same time
buy their produce. On the other hand, the farmer/suppliers are farmers who supply the
inputs to other farmers and at the same time buy their produce and sell them to the
traders. Since the trader/suppliers are also the buyers of the produce of the farmers, they
have an effect or they influence the decision of the farmers on the following aspects:
A Documentation of Traders, Input Suppliers and Farmers’ Input – Supply
Relationships in Madaymen, Kibungan / Nilo P. Yubos. 2006
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what crops to plant, what variety to use, and what cropping practices and methods to
follow. The decision of both the farmer and the trader-supplier depends on the agreement
made between them.
This study was conducted to find out the supply relationship that exist between
the trader/suppliers and the farmers in Madaymen and at the same time document their
practices in the production and marketing of vegetables.
Studying the supply relationships of agricultural suppliers to farmers and traders
in the vegetable industry allows us to weigh or determine the role and contribution of
each sector in the growth and improvement of the vegetable industry especially in the
highland areas of northern Luzon.
Statement of the Problem
There had been studies on marketing agricultural produce in Benguet and had
mentioned that farmers sell their products to particular traders because these are the
sources of farm inputs and it is an agreement between the two of them.
However, in-depth study on the basis of contract or agreement had not been done
or elaborated. Studying the relationship of agricultural suppliers, farmers and trader-
suppliers will answer the following questions:
1. Who are the agricultural suppliers, traders/suppliers and what are their
characteristics?
2. What are the agreement/terms that exist between agricultural suppliers, farmers
and trader/suppliers in terms of:
a. acquisition/supply of farm inputs
A Documentation of Traders, Input Suppliers and Farmers’ Input – Supply
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b. marketing and supply of farm products
c. share of income
3. What are the problems encountered by all parties (agricultural suppliers, farmers
and trader/suppliers)?
4. How are these problems solved?
Objectives of the Study
The objectives of the study were as follows:
1. To identify the agricultural suppliers, traders/suppliers operating in Madaymen .
2. To find out the characteristics of these agricultural suppliers and traders/suppliers.
3. To find out the agreement/terms that exists between agricultural suppliers, farmers and
traders/suppliers in terms of:
a. acquisition/supply of farm inputs
b. marketing and supply of farm products
c. share of income
4. To find out the problems encountered by agricultural suppliers, farmers and
trader/suppliers in Madaymen.
5. To find out how these problems were solved by the concerned parties.
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Importance of the Study
Studying the relationship of agricultural suppliers, farmers and trader/suppliers in
the vegetable industry is considered important because it could help both respondents to
develop good services that would fit their needs and wants, as well as provide
information for program/ project to agricultural agencies and maybe in the formulation of
policies that would address some problems of the vegetable industry.
Scope and Limitation of the Study
Although vegetable production is found in the whole province of Benguet and the
“supply system” is also practiced by farmers in other parts of Benguet, the study will only
concentrate in the barangay of Madaymen, Kibungan. It would look into the current
relationships between the agricultural suppliers, the trader/suppliers and the farmers in
terms of their agreement on the production and marketing of vegetables including the
problems they encountered. The respondents would be the farmers of Madaymen,
Kibungan and the agricultural input suppliers and traders catering to the needs of these
farmers.
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Relationships in Madaymen, Kibungan / Nilo P. Yubos. 2006
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REVIEW OF LITERATURE
According to Dagupen, et al. (2004), traders who had an agreement with the
farmers, wherein the traders known as “suppliers”, provided for all the farm inputs
needed by the farmers. The farmers sold their produce to the “suppliers” who deducted
the cost of the farm inputs from the value of the product and give the balance to the
farmer. Others borrowed cash from their relatives, cooperatives or banks.
Agricultural development mainly seeks to help farmers directly or indirectly.
Farmers play an important part in agricultural development but unfortunately some
farmers do not understand their role, PCAC (1979).
Guiwey (2002) stated that agricultural agencies are now implementing programs to help
farmers gain more knowledge from innovations to improve their techniques or ways, and
develop their skills in the way they practice proper land preparation and irrigation
management.
Among other uses, cost and return analysis is very helpful to farmers in making
decision. It can be used to determine the profitability of vegetable production, to know
the type of vegetable to be planted and the level of output before purchasing some
machines, Saguilot (1979).
Langadan (1977) found that most of the farmers who have been borrowing loan
from banks have made some improvement on their farm as well as their homes; and that
the farmers are able to increase their investment and other farm tools and equipment
because of the increase in their income through the modern practice of farming which
were introduced to them by the agricultural extension workers.
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According to Chandra (1983), farmers needs likely to fall into the following;
improving the present status of the industry in terms of crop production, and improving
the soil.
Marketing
As defined by Sim (1997) marketing is all around us. It affects man’s daily life.
The produce that people buy, the store where we shop, the advertising people we see and
hear are all part of marketing.
The difference between selling and marketing is that selling is concerned with
disposing of the product that has already been in stock, whereas marketing takes a much
wider view which means planning ahead profitable future. Marketing includes selling,
but selling alone is more than that. It embraces the whole concept of satisfying the needs
of the consumers at a profit.
As stated by Kohls (1972), marketing is the performance of all business activities
involved in the flow of goods and services from the point of initial agricultural
production until they are in the hands of ultimate consumers. The various form engaged
in doing the various marketing tasks are interested in the profitability of the their
particular business operation.
Pant (1984) also claimed that the traditional concept of agricultural marketing of
buying and selling farm product is no longer valid today. He said that marketing is now
more than this, it is a behavioral discipline and as much deals not only with buying and
selling goods but also with people and the flow of communication, though profit is the
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key element. In this sense, marketing is a multiplier, in the process of economic
development. But in the planning process what is neglected is the role of the agricultural
market and its urgency for its improvement. It is not treated as a directly productive
sector though its role is vital to stimulate agricultural growth.
Miranda (1986) stated that since merchants and businessmen purchase goods
primarily for sale, proper care, skills and good relationship should be exercised, the
marketing services are performed by the middlemen from the time the product leaves the
farm until they are finally purchased by consumers.
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Relationships in Madaymen, Kibungan / Nilo P. Yubos. 2006
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METHODOLOGY
Locale and Time of the Study
This study was conducted in Madaymen, Kibungan and included agricultural
suppliers and traders who maybe coming from other places but is catering to the needs of
the farmers in Madaymen. The study was conducted from December 2005 to January
2006.
Respondents of the Study
The respondents of the study were 60 farmers of Madaymen who has connections
to agricultural suppliers and a total of 20 agricultural suppliers and trader/suppliers
providing the inputs to the farmers and at the same time buying their produce.
Data Collection
A survey questionnaire was prepared and was used as a guide by the researcher in
interviewing the respondents.
Data Gathered
The data gathered included the following: a) profile of the farmers, agricultural
input suppliers and trader-suppliers; b) agreements that exist between the farmer and the
input suppliers regarding the choice of crop and variety, cropping schedule/season and
pattern, mode of delivery and payment of both farm inputs and product, marketing and
A Documentation of Traders, Input Suppliers and Farmers’ Input – Supply
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share of income; c) problems encountered in the implementation of the agreement; and d)
solutions to the problems as perceived by the respondents.
Data Analysis
The data collected were consolidated and analyzed using frequency, percentage,
and mean.
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RESULTS AND DISCUSSION
Profile of the Respondents
In this study, there were two types of respondents, traders and farmers. Table 1
presents the respondents’ profile according to their gender, educational attainment, civil
status and the number of years in farming, for the farmers and in the trading business for
the traders.
Gender. Table 1 shows that most (55%) of the trader respondents were male and
45% were female. Among the farmer respondents, 70% were male and the rest (30%)
were female. This finding implies that majority of the traders and farmers in Madaymen
are male.
Educational
attainment. The table shows that nine (45%) of the trader respondents
reached college level, 35% had finished college and 20% had graduated in high school.
As seen in the table the largest proportion of the farmer respondents 30% graduated from
elementary, nine (15%) were high school level, 13.3% were high school graduates, six
has no formal education, and 8.3% of the respondents finished vocational courses.
According to the respondents, education was not given importance in the area especially
if they end up as farmers.
This finding implies that all the traders had formal education compared to the
farmers where majority had below college level education. This is because some of the
farmer respondents believed that going to school is a least priority if they would end up
just the same being a farmer.
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Civil
Status. Majority of the trader respondents (95%) were married and one (5%)
was a widow. Therefore it implied that trading is considered as livelihood and
employment of the farm families in Madaymen. All these respondents were farm input
suppliers, at the same time buying the produce of the farmers and either transport them to
the trading post in La Trinidad or Baguio market.
Among the farmers, majority (70%) were married and 30% were single. This
finding implies that farming is not only for married people who have families to feed but
also for single individual who wants to earn an income.
Number or years in Business/Farming. The table also presents the number of
years the traders and farmers were in business/farming. Seven or 35% of the traders were
11-15 years in the business, 30% were 6-10 years, 15% were 1-5 years, another 15%
were in the business for 20 years and 5% were 20-30 years in business. Among the
farmer respondents, most (26.7%) of them had been farming for 6-10 years, eleven each
had been farming for 1-5 years and also 11-15 for years, eight (13.3%) had been farming
for 26-30 years, seven (11.7%) engaged in farming for 16-20 years, four (6.7%) for 21-
25 years and three (5%) had been farming for 31-40 years.
The finding shows that almost all the traders had been in the trading business for
less than twenty years . The same is true for the farmers except for some who had been
farming for more than twenty years.
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Table 1. Profile of the respondents
TRADER
FARMER
PARTICULAR Frequency
Percentage Frequency Percentage
A.
Gender
Male
11
55
42
70
Female
9
45
18
30
TOTAL
20 100 60 100
B. Educational Attainment
No formal education
0 0 6 10
Elementary graduate
18
30
High
school
level
0 0 9 15
High
school
graduate 4 20 8 13.3
College
level
9 45 8 13.3
College
graduate
7 35 6 10
Vocational
0 0 5 8.3
TOTAL
20 100 60 100
C. Civil Status
Single
0
0
18
30
Married
19
95
42
70
Widow
1
5
0
0
TOTAL
20 100 60 100
D. Years in business/ farming
1-5 3
15
11
18.3
6-10 6
30
16
26.7
11-15 7
35
11
18.3
16-20
3 15 7 11.7
21-25
0 0 4 6.7
26-30
1 5 8 13.3
31-40
0 0 3 5
TOTAL
20 100 60 100
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Types of Traders Providing Farm Inputs
Trader respondents were classified into three. These were farm input suppliers,
trader suppliers and farmer suppliers. Farm input suppliers are business establishments,
based in La Trinidad, who sell agricultural inputs to the traders. They also provide farm
supplies to the farmers on credit which they could pay after harvest and sell their
products. The trader suppliers who buy farm inputs from the farm input suppliers and
supply them to the farmers on credit basis. They also loan cash to the farmers and buy the
farmers’ produce. On the other hand, farmer suppliers were themselves farmers who get
inputs from farm input suppliers and sell them to their co-farmers on credit.
Nine (15%) of the trader respondents were trader suppliers, six (30%) were farm
input suppliers and five (25%) were farmer suppliers.
Table 2. Distribution of trader respondents as to type of business
PARTICULAR FREQUENCY
PERCENTAGE
Farm input supplier
6
30
Trader supplier
9
45
Farmer supplier
5
25
TOTAL 20
100
Trader-Farmer Relationships
Table 3 shows that majority (65%) of the trader respondents supply input to
farmers who are their relatives and 35% supply farm input to their “suki” farmers. This
A Documentation of Traders, Input Suppliers and Farmers’ Input – Supply
Relationships in Madaymen, Kibungan / Nilo P. Yubos. 2006
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finding implies that majority of the traders operating in Madaymen are from that place
and the farmers they are supplying with inputs are their relatives. On the other hand there
are also farmers who develop a special relationship, “ suki” which is usually based on
trust between the two parties. Each party feels that he is making the best bargain. Based
on this kind of relationship, the trader just provide the inputs to the farmer with a trust
that after harvest the farmer will pay the trader.
Table 3. Relation of traders with the farmers
PARTICULAR FREQUENCY
PERCENTAGE
Relative 13
65
Suki 7
35
TOTAL 20
100
Selling Practices of Traders
It can be gleaned from Table 4 that fifty percent of the trader respondents sold
farm inputs through credit, wherein the farmer would pay the selling price plus an interest
depending on the agree percentage upon selling his crops. The other 50% of the
respondents supplied farm inputs to farmers and in return the farmer will also sell/supply
his vegetable to the trader. This is the supply system.
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Table 4. Selling practices of traders
PARTICULAR FREQUENCY
PERCENTAGE
Credit 10
50
Supply System
10
50
TOTAL 20
100
Pricing Practices of Traders
Table 5 shows how the traders price their inputs. Though the farmers get the
supply in credit, some traders (45%) still base their price on the prevailing market rate.
(55%) use the market price plus additional percentage.
Table 5. Pricing practices of traders
PARTICULAR FREQUENCY
PERCENTAGE
Base of market price
9
45
Market price plus additional mark-up
11
55
TOTAL 20
100
Payment Collection Practices of Traders
Table 6 shows that 55% of the traders most especially farm input suppliers collect
the payment after the farmer sold their product, 30% collect payment during harvest time,
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Most of them were farmer suppliers. Fifteen percent of the trader respondents collect the
payment every 3-4 months.
Table 6. Time of collecting the payment of inputs supplied to the farmers by the traders
PARTICULARS FREQUENCY
PERCENTAGE
During harvest
6
30
After selling their produce
11
55
After 3-4 months
3
15
TOTAL 20
100
Farm Production Area of Farmers
Table 7 shows the area/size of farm being planted by the respondents, most of the
farmer respondents (45%) operated a half hectare area. Twenty six or 43.3% cultivate
one hectare and seven or 11.7% operates on two hectares of land.
Table 7. Farmers’ farm production area
PARTICULARS FREQUENCY
PERCENTAGE
Half Ha (5,000 sq m)
27
45
One Ha (10,000 sq m)
26
43.3
Two Ha (20,000 sq m)
7
11.7
TOTAL 60
100
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Distance of Farm From Farmer’s Residence
Table 8 shows the distance from the farm to the residence/house. Twenty six
(43.3%) of the respondents had a walking distance area of farm to residence at 20-30m,
fifteen (25%) of the respondents 50-100m far, eight (13.3%) were 500 m far, another
13.3% of the respondents almost 1 km. and the 5% are 2 km away from their residences.
For the farmers whose area is from 1 km to 2 kilometers away from their home use
vehicle in going to their farm especially in transporting produce.
Table 8. Distance of farm from the residence of the farmers
PARTICULARS FREQUENCY
PERCENTAGE
20-30 m (walking distance)
26
43.3
50-100 m
15
25
500 m
8
13.3
1 km
8
13.3
2 km
3
5
TOTAL 60
100
Source of Irrigation and Topography
For the source of irrigation, Table 9 shows that 54 (90%) of the respondents were
depending on the rain, 4 (6.7%) were getting from the spring and 2 (3.3%) of the
respondents get irrigation from the river.
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As for the topography of the farm most of the respondents 71.7% were operating
terraces and 28.3% of the respondents were planting on a flat or plain area.
As it was observed in the study, the respondents expanded their land by terracing
mountain shapes/slopes. Due to irrigation problems, their farm products were affected.
This implies that there is a great need for the agricultural supplier and the government to
support the farmers by providing water tanks for irrigation.
Table 9. Source of irrigation and topography
PARTICULAR FREQUENCY
PERCENTAGE
A. Irrigation
Rain
54
90
Spring
4
6.7
River
2
3.3
TOTAL 60
100
B. Topography
Terraces
43
71.7
Flat area
17
28.3
TOTAL 60
100
Sources of Farm Inputs of the Farmers
Table 10 presents the sources of farm inputs, and the reasons of the farmers for
getting from such source. From the table, 20 or (40%) of the farmers were getting their
A Documentation of Traders, Input Suppliers and Farmers’ Input – Supply
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19
input at the farm input establishments, 36.7% were getting from the farmer suppliers and
14 (23.3%) were getting from the trader suppliers.
With regards to the reasons of the respondents for choosing the source of their
inputs, 36.7% said that the supplier delivers the inputs to the area, 20% said that the price
of input is low, another 20% stated that their suppliers allow credit, 13.3% simply replied
that they were their relatives and 10% of the respondents replied that inputs were
complete and always available. Being a relative is also one of the reasons of traders in
supplying inputs to farmers.
Table 10. Source of farm inputs and reasons of farmers for choosing the sources
PARTICULARS FREQUENCY
PERCENTAGE
A. Sources
Trader supplier
14
23.3
Farm input establishments
24
40
Farmer supplier
22
36.7
TOTAL 60
100
B. Reason
Allow credit to farmer
12
20
Low price
12
20
Inputs are complete and always available
6
10
Delivers the input
22
36.7
Relative
8
13.3
TOTAL 60
100
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Mode of Buying Inputs
Table 11 presents that majority (64%) of the farmer- respondents buy their inputs
on credit basis from their suppliers. This means that they have to pay an interest on the
full value of the farm input they get from their suppliers. Some farmers (36%) mentioned
that they pay partial when they buy and pay in full after selling their produce.
Table 11 . Mode of buying farm inputs by the farmers
PARTICULARS FREQUENCY
PERCENTAGE
Credit with partial payment
22
36
Credit
38
64
TOTAL
60
100
Input – Output Supply Arrangement Between
Input Suppliers and Farmers
As earlier found, the farmers have three sources of farm inputs. There was an
agreement between the farmers and the input suppliers. This first agreement entered into
by 30 farmers (Table 12) was the payment of interest on the credit where 23 of them paid
30% interest and seven respondents paid 25% interest. The second agreement entered
into by 24 farmers was the net income sharing arrangement. Nine of them had a 50 – 50
sharing arrangement, 11 respondents had 40-60 sharing arrangement and 4 respondents
had a 30-70 sharing arrangement. Six respondents mentioned that they just pay their
credit on installment basis. Sharing of net sales depends on several factors such as the
contribution of each party on the production expenses.
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Based on the findings of this research, before both respondents (farmers and
traders) move on to their operation they must first have a clear agreement especially on
payments on farm inputs and division of net income.
The input supply and output supply flow is presented in the diagram below.
Figure 1 presents the flow of input from the farm supplies establishments directly to the
farmers. This shows that farmers buy inputs directly from the farm input establishments
in Baguio and La Trinidad on credit. As for their products, they sell them to local traders
at the trading post and in turn the local traders sell them to traders coming from Metro
Manila and other places in the lowland.
Figure 2 presents the input flow from the farm supplies establishments to the
trader suppliers then to the farmers. Under this flow, the trader suppliers buy the inputs
on cash basis from the farm supplies establishments then sell them to the farmers on
credit basis. On the other hand, the farmers sell their products to the trader suppliers at a
discounted price. The trader suppliers in turn sell the vegetables to the traders from Metro
Manila and other areas. As to the payment of the farmer’s products, the trader deducts the
credit of the farmer plus interest then give the balance to the farmer. For those who
entered into the sharing agreement, from the vegetable sales the trader deducts the cost of
the farm inputs used by the farmer then they divide the net income. The value of the
farmer’s labor is not even included in the cost to be deducted from the gross sales.
Figure 3 presents the flow of inputs from the farm supplies establishments to the
farmer suppliers then to the farmers. The farmer suppliers are the land owners whom the
farmers are leasing. The farmer suppliers buy the inputs on cash basis then sell them to
the farmers on credit. In this case, the farmers suppliers do not only provide the farm
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inputs to the farmer but also provide other credit (cash or basic necessities) to the
farmer’s family. The farmer then has to sell his vegetables to the farmer supplier and the
farmer supplier sell the vegetables to the local traders. From the local traders it goes to
the traders from the lowland. The farmer suppliers deduct the credit of the farmer then
give the balance to the farmer.
Table 12. Supply system arrangement between the farmers and the input suppliers
PARTICULARS FREQUENCY
PERCENTAGE
a. Value of input + interest
30
50
Price of farm input + 30%
23
77
Price of farm input + 25%
7
23
Total
30
100
b. net income sharing
24
40
50/50 share of net sale
9
37
40/60 share of net sale
11
46
30/70 share of net sale
4
17
Total
24
100
c. Installment basis
6
10
TOTAL 60
100
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FARM SUPPLY
ESTABLISHMENTS
Input flow Cash payment (value of input + interest)
Product flow (vegetables)
FARMER
LOCAL TRADERS
Cash payment
Product flow Cash payment
LOWLAND
TRADERS
Figure 1. Input flow between farm supplies establishment to the farmer
FARM SUPPLY
ESTABLISHMENTS
Input Cash payment
product
TRADER
LOWLAND
paym
SUPLLIERS
ent
TRADERS
Input vegetable sales (from the gross sales , credit of the farmer is
deducted)
FARMERS
Figure 2. Input flow between farm supply establishments to the trader supplier and to the
farmers
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FARM SUPPLY
ESTABLISHMENTS
Input Cash payment
product
FARMER SUPLLIER
LOCAL
Cash paym
( Land Owner)
ent
TRADERS
Input vegetable sales (from the gross sales , credit of the farmer is
deducted and net income is divided)
FARMER
Figure 3. Input flow between farm supply establishment to the farmer supplier and to the
farmers
Choice of Crop to be Planted
Table 13 shows that majority (73.3%) of the farmers make the decision regarding
the crop to be produced, 15% of the respondents allow the farmer suppliers to choose the
crop to be planted and 11.7% of the respondents follow the suggestion of the trader
suppliers.
As it was found in the study farmers will be the first to decide on what to produce
before the supplier because the farmers were more familiar on the crops that are best
suited on their farm.
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Table 13. Distribution of respondents as to who choose the crop to be planted
PARTICULARS FREQUENCY
PERCENTAGE
Myself/ farmer
44
73.3
Trader supplier
7
11.3
Farmer supplier
3
15
TOTAL 60
100
Number of Croppings Per Year
Table 14 shows how many cropping season do the farmer respondents have in one
year. The table shows that 88.3% of the respondents plant twice a year and 11.7% plant
in three croppings.
Results indicate that majority of the respondents plant two times in one year. The
respondents said that irrigation and seasonality of the crops were the barriers why they
cannot produce three times in a year.
Table 14. Distribution of Respondents as to number of cropping in one year
No. OF CROPPING
FREQUENCY
PERCENTAGE
Two cropping
53
88.3
Three cropping
7
11.7
TOTAL 60
100
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Table 15 presents who makes decision in cropping system/ method. Forty three or
71.7% of the respondents make decision in cropping method, 25% of the respondents
allow the farmer supplier to make decision and 3.3% of the respondents follow the
decision of the trader supplier.
Table 15. Distribution of respondents as to who decide the cropping system/method
PARTICULARS FREQUENCY
PERCENTAGE
Farmer himself
43
71.7
Farmer supplier
15
25
Trader supplier
2
3.3
TOTAL 60
100
Contribution of Suppliers to Production and
Marketing Expenses
Table 16 presents if supplies contributes expenses in harvesting, majority of the
respondents 68.3% mentioned that supplier do not contribute to the expenses in
harvesting, nineteen or 31.7% of the respondents mentioned that supplier contributes
expenses on harvesting. Findings show that most of the respondents were the ones
responsible for harvesting.
The table also shows that majority (53%) of the respondents mentioned that trader
supplier do not contribute to the marketing expenses, 11.7% of the respondents said that
trader suppliers contribute expenses in marketing.
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Most of the trader suppliers who contribute marketing expenses are also the buyer
of their produce. These trader suppliers have vegetable stalls at the La Trinidad, Trading
Post.
Table 16. Contribution of suppliers to harvesting and marketing expenses
PARTICULARS FREQUENCY
PERCENTAGE
A. Harvesting expenses
Yes
19
31.7
No
41
68.3
TOTAL 60
100
B. Marketing expenses
Yes
7
11.7
No
53
88.3
TOTAL 60
100
Market Outlet of Farmers’ Produce and
Mode of Payment
Table 17 presents the buyers of the produce of the respondents. Thirty nine or
65% of the respondents sold their product to any trader, 21.7% of the respondents sold to
the trader supplier, 10% of the respondents said they will be the one to sell it in the
market and 3.3% of the respondents allow farmer suppliers to buy their produce.
The findings show that respondents sold their produce based on the current price
and pre-arranged price.
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Table 18 shows the mode of payment of buyers. Majority (85%) of the
respondents get the payments when their produce immediately upon delivery of the
produce. Fifteen percent of the respondents were paid on consignment basis.
Table 17. Buyers of farmers’ produce and mode of payment
PARTICULARS FREQUENCY
PERCENTAGE
A. Buyer
Trader supplier
13
21.7
Any trader
39
65
Farmer supplier
2
3.3
Farmer who sell it on the market
6
10
TOTAL 60
100
B. Mode of payment
Pay cash when they purchase
51
85
Consignment basis
9
15
TOTAL 60
100
Basis for Pricing
Table 18 shows the basis for pricing their products. Most (51.7%) of the
respondents price their products based on current price and 48.3% of the respondents
based it on the pre-arranged price.
The respondents preferred to base their product on the current price because
prices of vegetables in the market fluctuates.
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Table 18. Basis for pricing their products
PARTICULARS FREQUENCY
PERCENTAGE
Current price
31
51.7
Based on the pre-arranged price
29
48.3
TOTAL 60
100
Problems Encountered by the Traders and Farmers
Problems encountered by farmers. Based on frequency counts the most common
problem identified by farmers were high interest of farm input and high deduction of
sales due to high interest of farm inputs. Other problems mentioned were; delayed
delivery of inputs by the traders (13.3%), suppliers cannot provide all the inputs for
maintenance (10%), high transportation cost of both inputs and products (10%) and
delayed payments of products (10%). Delayed payments were due to the high price given
by the traders to their buyers, thus, they pay- post dated checks. There were farmer
respondents (18.3%) who did not mention any problem (Table 21).
Problems encountered by traders. The major problem encountered by 60% of the
traders was difficulty in collecting payments. Bankruptcy is another problem as
mentioned by 35% of the trader respondents and lack of capital (5%) in order to provide
all the farm needs of farmers (Table 19).
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Table 21. Problems encountered by traders and farmers
PROBLEMS TRADERS
FARMERS
F
%
a.
Traders
1. Difficult to collect credit
12
60
2. Bankruptcy of farmers
7
35
3. Lack of capital
1
5
TOTAL
20
100
b.
Farmers
4. Suppliers cannot provide all inputs for
6 10
maintenance
5. High interest of farm inputs
13
21.7
6. High transportation cost
6
10
7. Delayed delivery of farm inputs
8
13.3
8. High deduction on sales due to high
10 16.7
interest
9. Delayed payments of products
6
10
10. No answer
11
18.3
TOTAL 60
100
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SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
Summary
This study was conducted to document the supply system agreement of traders
input suppliers and farmers of Madaymen, Kibungan, Benguet. A total of 20 traders and
60 farmers of Madaymen were taken as respondents of the study. A survey questionnaire
was used to collect the needed data. The data were tabulated and analyzed using
frequency tables and percentage.
Most of the respondents were male. All trader respondents were actively
supplying farm inputs to farmers. Majority of both the trader respondents and farmer
respondents were married. There was a higher percentage of traders that reached college
level than the percentage of farmers that reached the same level. A higher percentage of
the farmer respondents were elementary graduate. This is because according to them,
education is not given importance by people in their place specially if they would become
farmers.
As to the type of trading business the traders engaged in, majority were trader
suppliers. They sell farm inputs to the farmers and at the same time engaged in buying
the produce of the farmers. They also loan out cash to farmers for their family needs and
collect the payments when the farmers sell their produce. Majority of these traders supply
farm inputs to farmers. They prefer to supply farmers who are their relatives. They sell
the inputs to the farmers either on credit basis or on a supply system basis.
When it is on credit basis, the farmer has to pay an interest based on the total
value of the farm input or cash borrowed. The trader collects the payment after the farmer
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sells his produce. On the supply system arrangement, a net income sharing arrangement
is made between the farmer and the trader. The various arrangements used by the parties
were 50/50, 40/60, and 30/70 depending on how much was shared by the trader on the
expenses.
Regarding the production activities of the farmers, they follow the two cropping
pattern because of irrigation problem. The farmers were the ones deciding on the
cropping system/method. However, as the crops to be planted there were some farmers
that depended on the decision of the trader/supplier. In most cases the suppliers do not
contribute to harvesting and marketing expenses. Only those that buy the crop of the
farmers contribute to the expenses. Majority of the farmers sold their produce to any
trader or buyer who pays them immediately upon delivery of the product. Most of the
farmers based their price on the current market price.
Collection of receivables from the farmers was a problem of the majority of
traders. This usually happens when the farmer could not get a fair price for his produce
and when the farmers’ crops were destroyed by natural calamities. Another problem met
by the traders was the inability to supply the needs of farmers due to limited capital.
The farmers also encountered problems in paying their debts from their suppliers.
One of which is the high interest charged by the suppliers will leave very little cash for
their family use and for buying inputs for the next cropping. This practice tends to tie the
farmers with the suppliers because they do not have ready cash to buy their inputs thus,
they keep on depending on the suppliers for credit. Another equally pressing problem of
farmers who were into supply system was the outright deduction of all input cost plus
interest from the value of the produce. This leaves very little net income which is still to
A Documentation of Traders, Input Suppliers and Farmers’ Input – Supply
Relationships in Madaymen, Kibungan / Nilo P. Yubos. 2006
33
be shared between the farmer and the supplier. Other problems encountered were;
delayed delivery of farm inputs by the supplier, the supplier cannot provide all the inputs
for maintenance of the crops, high transportation cost of both inputs and products and
delayed payments of crops sold .
Conclusions
Based on the results of the study, the following conclusions were drawn:
1. Majority of the traders and farmers were male and married. The traders relatively had
higher level of formal education than the farmers.
2. Most of the traders in the study area were input suppliers and were relatives of the
farmers they are supplying with input or credit.
3. Most farmers in the study area get credit, either cash or farm input, from farm input
suppliers.
4. Most of the farmers sell their produce to any trader based on the current price.
5. Traders encountered problem regarding the collection of loans (cash loan and farm
input) from the farmers specially when the farm business incurs losses. There were
instances also when the traders cannot meet the demands of the farmers due to limited
capital. This becomes also a problem to the farmers because the input application is
delayed which affects their crop yield.
6. Farmers who entered into the supply system agreement are tied up to the traders
because they pay high interest on the loan. The high cost of the farm inputs plus the high
interest of the loan leaves a very small cash income to the farmers. This situation forces
the farmer to go back to the supplier and ask for another or even more credit. The same is
A Documentation of Traders, Input Suppliers and Farmers’ Input – Supply
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true for those who enter into the sharing arrangement. The trader deducts the value of the
inputs and still share with the net income. What would be left to the farmer may not even
be enough to pay for the cost of his labor used in the production activity.
Recommendation
Based from the problems encountered, the following recommendations were
made:
1. Farmers should look for a better alternative source of credit where the interest rate is
fair. It is also recommended that banks should not be very strict in giving loans to the
farmers, specially Land Bank. Farmers cooperatives in the place should also be assisted
by the CDA and other concerned organizations so that they could provided the credit
needs of the farmers.
2. The local government should provide irrigation facilities inorder to increase the
production of crops in the area.
3. The supply system is helping the farmers to be productive but the traders who are
supplying the inputs of the farmers should charge a fair interest rate on their credit.
Besides, they should deliver the necessary inputs on time so that the farmers could apply
them on time.
A Documentation of Traders, Input Suppliers and Farmers’ Input – Supply
Relationships in Madaymen, Kibungan / Nilo P. Yubos. 2006
35
LITERATURE CITED
CHANDRA, C.W. 1983. Introduction to Agricultural Economics Analysis. Department
of Agricultural Economics, U.P. Los Baños, Laguna. P.29.
DAGUPEN, MK, et.al. 2004. Agricultural decision making and farmers activities of
integrated pest management farmers field school, Graduate School in Bokod,
Benguet. National Agricultural and Resources Research and Development
System. P6.
GUIWEY, G. G. 2002. Adaptation pattern of agricultural technologies in selected
Barangays in Kibungan, Benguet. B.S. Thesis. Benguet State University, La
Trinidad, Benguet. P6.
KOHLS, R. L. 1972. Marketing of Agricultural Products. New York: McMillan
Publishing Co. P.17.
LANGADAN, T.E. 1977. Marketing practices of vegetable farmers in Atok, Benguet.
Highland Express. Vol. 8. P.39.
MIRANDA, S. G. 1986. Basic Marketing. Manila: R.M. Garcia Publishing House. Pp.
134 – 135.
PANT, T. N. 1984. Proceedings of the Second National Agricultural Marketing
Conference. Dec. 1984. Kathmandu, Nepal. P.23.
PRES. COM. ON AGRI. CRDIT (PCAC), 1979 Agricultural credit for rural progress
concept and procedures. PCAC. Manila. P.38
SAGUILOT, A.P. 1979. Cost and returns analysis of rice production in Lamut, Ifugao. P.
23.
SIM, J.M. 1977. Analysis on the marketing flows of potato. MS Thesis. Benguet
State University, La Trinidad, Benguet. P. 6.
A Documentation of Traders, Input Suppliers and Farmers’ Input – Supply
Relationships in Madaymen, Kibungan / Nilo P. Yubos. 2006
36
APPENDIX
Appendix A. Survey Questionnaire for Farmers
I.
General Information
1.
Name
(optional)
Gender: (F) ___ (M)___
2. Highest educational attainment
____ No forma education
____elementary graduate
____High school level
____high school graduate
____College
level
____college
graduate
____vocational
graduate
3. Civil status ______ single
_____ married
4. Number years in farming _________
II. Farm Production
1. Area planted/size of farm (Pls. Specify)
2. Distance from the residence (Pls. Specify)
3. Tenure
___ Owner
___ Leaseholder
___ others (specify)__________________
4. Source of irrigation
____rain ____spring
____ river
5. Topography
____
plain
____
terraces
6. Sources of farm inputs
____Trader-suppliers ____ farmer-suppliers
____farm input dealers
____
cooperative
____others
(Pls.
Specify)
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6. Reasons for choosing the source of input supplies
____ allow credit to farmers
____ low price
____ inputs are complete and are always available
____ delivers the input
____
others
(specify)
7. How do you pay the inputs?
____ cash
____ credit
8. If Credit, do you have an arrangement with your supplier? __ yes
___no
9. I yes, please describe the
arrangement.
10. Who choose the crops and variety to be planted?
____ myself ____ agricultural supplier
____trader-supplier
___
others
(Pls.
Specify)
8. What are the crops you produced
First Cropping
Second Cropping
___
cabbage
___cabbage
___potato
___potato
___carrots
___carrots
___others(specify)
___others
(specify)
_______________
________________
9. How many cropping do you have in one year?
___
one ___two ___three
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10. Who makes the decision in cropping system/method?
____ myself ____trader-supplier ____farmer-supplier __others(specify)
11. Do your suppliers contribute in the expenses on harvesting? ___yes ____ no
12. If yes, how do you divide the expenses? Please describe
13. Do you also divide the marketing expenses? ___yes
___no
14. How do you divide it?___________________________________________________
15. Who buy your produce?
____
trader-supplier
____
farmer-supplier
____ any trader
____ I sell it in the market
16. If the trader-supplier or farmer supplier, how are paid?
____ immediate cash when they buy ____ consignment basis ____ credit basis
17. If on consignment, how many days before you are paid ? (please describe your
arrangement)
18. If on credit, please describe the your arrangement
19. What is the basis for pricing your produce? ____ current price ____ base on a
pre-arranged price.
20. What are the problems you encountered with your suppliers?
21. How did you solve such problem?
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Appendix B. Survey Questionnaire for Traders
III. General Information
1.
Name
(optional)
Gender: (F) ___ (M)___
2. Highest educational attainment
____ No forma education
____elementary graduate
____High school level
____high school graduate
____College
level
____college
graduate
____vocational
graduate
3. Civil status ______ single
_____ married
4. Type of business
____ farm input supplier
____ trader supplier ____farmer supplier
4.Number years in the business _________
5. Who are you supplying?
____ Farmers ____ trader-suppliers ____ farmer-suppliers
6. What is your relation to your client
___ relative ___ “suki”
___ Others(specify)
7. How do you sell your input to your client?
____ cash
____credit
_____supply system
8. If on credit, how are paid?
____ anytime if they have money
____ when they sell their produce
9. If supply system, please describe your arrangement with your client
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10. How do you price you input?
___ base of market price
____market price + additional percentage (please
describe
how
you
actually
do
it)
11. How do you collect the payment? Please describe
11. What problems have you encountered with your clients?
12.
How
did
you
solve
it?
A Documentation of Traders, Input Suppliers and Farmers’ Input – Supply
Relationships in Madaymen, Kibungan / Nilo P. Yubos. 2006
YUBOS, NILO. P. MARCH 2006. A Documentation of Traders, Input Suppliers
and Farmers’ Input – Supply Relationships in Madaymen, Kibungan. Benguet State
University, La Trinidad, Benguet.
Adviser: Jovita M. Sim, MSc
ABSTRACT
This study was conducted in Madaymen, Kibungan, Benguet. The respondents
consisted of 20 input suppliers and 60 farmers. The input suppliers included the farm
supplies establishments in Baguio City and La Trinidad providing farm inputs to the
farmers on credit basis, traders providing inputs to the farmers and in turn buy the
vegetables produce by the farmers, and the farmers who own the land leased by the
respondents and acts as the input suppliers and at the same time buyers of the vegetables
produce by the farmers. The input suppliers and the farmers were related either as
relatives or “suki”.
There were types of input – output supply relationships that existed between the
input suppliers and the farmers. The first is the relationship between the farm supplies
establishments and the farmers. The farmers get the inputs from these establishments on
credit but the farmers are free to sell their vegetables to any trader then pay their credit
plus interest to the farm input suppliers. The second relationship was that traders buy the
inputs from the farm input establishments then supply it to the farmers on credit plus an
interest. The farmers in turn supply their vegetables to the traders at a discounted price.
The traders deduct the debt of the farmers then give the balance to the farmers. The third
relationship was the farmer suppliers buy inputs from the farm supplies establishments
and sell them to the farmers on credit. The later sell the vegetables to the former and the
former deducts first the credit of the farmer from the gross value of the product. What
ever is left as net, this is divided between the farmer supplier and the farmer.
Farm input suppliers also met problems on the collection of what they loan out to
the farmers. At times when the crops of the farmers were destroyed by natural calamities,
the farm input suppliers could not collect from the farmers.
ii
TABLE OF CONTENTS
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Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
iii
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Rationale of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Statement of the Problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
Importance of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
Scope and Limitation of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
REVIEW OF LITERATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
Locale and Time of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
Respondents of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
Data Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
Data to be Gathered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
Data Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
RESULTS AND DISCUSSION
10
Profile of the Respondents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
Types of Traders Providing Farm Inputs
to the Farmers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
Trader – Farmer Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
Selling Practices of Traders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14
iii
Pricing Practices of Traders. . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . .
15
Payment Collection Practices of Traders. . . . . . . . . . . . . . . . . . . . . . . .
15
Farm Production Area of Farmers . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16
Distance of Farm from Farmers’ Residence . . . . . . . . . . . . . . . . . . . . .
17
Sources of Irrigation and Topography . . . . . . . . . . . . . . . . . . . . . . . . . .
17
Sources of Farm Inputs of the Farmers. . . . . . . . . . . . . . . . . . . . . . . . . .
18
Mode of Buying Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
Input – output Supply Arrangement Between
Input Suppliers and Farmers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
Choice of Crop to be Planted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24
Number of Cropping per Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25
Contribution of Suppliers to Production
Marketing Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26
Market Outlet of Farmers’ Produce and
Mode of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27
Basis for Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28
Problems Encountered by the Traders
And Farmers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29
SUMMARY, CONCLUSIONS AND
RECOMMENDATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30
Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30
Conclusions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33
Recommendations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34
LITERATURE CITED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36
Appendix A. Survey Questionnaire . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36
iv
INTRODUCTION
Rationale of the Study
Farming is the major occupation of most families in Madaymen, Kibungan,
Benguet. They raise vegetables like potatoes, cabbage, radish and carrots in their farms
for commercial purposes. With the cool climate of the place, vegetable production has
become the major livelihood of the people in the place. Farmers are now expanding the
area planted with vegetables in order to produce higher volume of production.
Aside from expanding the area planted with vegetables, farmers use fertilizer to
increase the yield of their crops. It was traced that the use of inorganic fertilizer and
pesticides in this area started when farmers went into commercial vegetable production.
Vegetable farming requires a big amount of cash for the purchase of farm inputs
such as planting materials, fertilizer, pesticides and fungicides. Unavailability of cash and
poor access to financial institutions/support is one of their constraints in production; thus,
this is where agricultural farm input suppliers are of great help to the farmers.
The various sources of farm inputs where farmers of Madaymen obtain their farm
supplies were: private firms like Sunrise Farm Supplies, and Mt. Trail Farm Supply;
cooperatives operating in the municipality; trader/suppliers; and farmer suppliers. The
trader suppliers are those who supply the farm inputs to the farmers and at the same time
buy their produce. On the other hand, the farmer/suppliers are farmers who supply the
inputs to other farmers and at the same time buy their produce and sell them to the
traders. Since the trader/suppliers are also the buyers of the produce of the farmers, they
have an effect or they influence the decision of the farmers on the following aspects:
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what crops to plant, what variety to use, and what cropping practices and methods to
follow. The decision of both the farmer and the trader-supplier depends on the agreement
made between them.
This study was conducted to find out the supply relationship that exist between
the trader/suppliers and the farmers in Madaymen and at the same time document their
practices in the production and marketing of vegetables.
Studying the supply relationships of agricultural suppliers to farmers and traders
in the vegetable industry allows us to weigh or determine the role and contribution of
each sector in the growth and improvement of the vegetable industry especially in the
highland areas of northern Luzon.
Statement of the Problem
There had been studies on marketing agricultural produce in Benguet and had
mentioned that farmers sell their products to particular traders because these are the
sources of farm inputs and it is an agreement between the two of them.
However, in-depth study on the basis of contract or agreement had not been done
or elaborated. Studying the relationship of agricultural suppliers, farmers and trader-
suppliers will answer the following questions:
1. Who are the agricultural suppliers, traders/suppliers and what are their
characteristics?
2. What are the agreement/terms that exist between agricultural suppliers, farmers
and trader/suppliers in terms of:
a. acquisition/supply of farm inputs
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b. marketing and supply of farm products
c. share of income
3. What are the problems encountered by all parties (agricultural suppliers, farmers
and trader/suppliers)?
4. How are these problems solved?
Objectives of the Study
The objectives of the study were as follows:
1. To identify the agricultural suppliers, traders/suppliers operating in Madaymen .
2. To find out the characteristics of these agricultural suppliers and traders/suppliers.
3. To find out the agreement/terms that exists between agricultural suppliers, farmers and
traders/suppliers in terms of:
a. acquisition/supply of farm inputs
b. marketing and supply of farm products
c. share of income
4. To find out the problems encountered by agricultural suppliers, farmers and
trader/suppliers in Madaymen.
5. To find out how these problems were solved by the concerned parties.
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Importance of the Study
Studying the relationship of agricultural suppliers, farmers and trader/suppliers in
the vegetable industry is considered important because it could help both respondents to
develop good services that would fit their needs and wants, as well as provide
information for program/ project to agricultural agencies and maybe in the formulation of
policies that would address some problems of the vegetable industry.
Scope and Limitation of the Study
Although vegetable production is found in the whole province of Benguet and the
“supply system” is also practiced by farmers in other parts of Benguet, the study will only
concentrate in the barangay of Madaymen, Kibungan. It would look into the current
relationships between the agricultural suppliers, the trader/suppliers and the farmers in
terms of their agreement on the production and marketing of vegetables including the
problems they encountered. The respondents would be the farmers of Madaymen,
Kibungan and the agricultural input suppliers and traders catering to the needs of these
farmers.
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REVIEW OF LITERATURE
According to Dagupen, et al. (2004), traders who had an agreement with the
farmers, wherein the traders known as “suppliers”, provided for all the farm inputs
needed by the farmers. The farmers sold their produce to the “suppliers” who deducted
the cost of the farm inputs from the value of the product and give the balance to the
farmer. Others borrowed cash from their relatives, cooperatives or banks.
Agricultural development mainly seeks to help farmers directly or indirectly.
Farmers play an important part in agricultural development but unfortunately some
farmers do not understand their role, PCAC (1979).
Guiwey (2002) stated that agricultural agencies are now implementing programs to help
farmers gain more knowledge from innovations to improve their techniques or ways, and
develop their skills in the way they practice proper land preparation and irrigation
management.
Among other uses, cost and return analysis is very helpful to farmers in making
decision. It can be used to determine the profitability of vegetable production, to know
the type of vegetable to be planted and the level of output before purchasing some
machines, Saguilot (1979).
Langadan (1977) found that most of the farmers who have been borrowing loan
from banks have made some improvement on their farm as well as their homes; and that
the farmers are able to increase their investment and other farm tools and equipment
because of the increase in their income through the modern practice of farming which
were introduced to them by the agricultural extension workers.
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According to Chandra (1983), farmers needs likely to fall into the following;
improving the present status of the industry in terms of crop production, and improving
the soil.
Marketing
As defined by Sim (1997) marketing is all around us. It affects man’s daily life.
The produce that people buy, the store where we shop, the advertising people we see and
hear are all part of marketing.
The difference between selling and marketing is that selling is concerned with
disposing of the product that has already been in stock, whereas marketing takes a much
wider view which means planning ahead profitable future. Marketing includes selling,
but selling alone is more than that. It embraces the whole concept of satisfying the needs
of the consumers at a profit.
As stated by Kohls (1972), marketing is the performance of all business activities
involved in the flow of goods and services from the point of initial agricultural
production until they are in the hands of ultimate consumers. The various form engaged
in doing the various marketing tasks are interested in the profitability of the their
particular business operation.
Pant (1984) also claimed that the traditional concept of agricultural marketing of
buying and selling farm product is no longer valid today. He said that marketing is now
more than this, it is a behavioral discipline and as much deals not only with buying and
selling goods but also with people and the flow of communication, though profit is the
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key element. In this sense, marketing is a multiplier, in the process of economic
development. But in the planning process what is neglected is the role of the agricultural
market and its urgency for its improvement. It is not treated as a directly productive
sector though its role is vital to stimulate agricultural growth.
Miranda (1986) stated that since merchants and businessmen purchase goods
primarily for sale, proper care, skills and good relationship should be exercised, the
marketing services are performed by the middlemen from the time the product leaves the
farm until they are finally purchased by consumers.
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METHODOLOGY
Locale and Time of the Study
This study was conducted in Madaymen, Kibungan and included agricultural
suppliers and traders who maybe coming from other places but is catering to the needs of
the farmers in Madaymen. The study was conducted from December 2005 to January
2006.
Respondents of the Study
The respondents of the study were 60 farmers of Madaymen who has connections
to agricultural suppliers and a total of 20 agricultural suppliers and trader/suppliers
providing the inputs to the farmers and at the same time buying their produce.
Data Collection
A survey questionnaire was prepared and was used as a guide by the researcher in
interviewing the respondents.
Data Gathered
The data gathered included the following: a) profile of the farmers, agricultural
input suppliers and trader-suppliers; b) agreements that exist between the farmer and the
input suppliers regarding the choice of crop and variety, cropping schedule/season and
pattern, mode of delivery and payment of both farm inputs and product, marketing and
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share of income; c) problems encountered in the implementation of the agreement; and d)
solutions to the problems as perceived by the respondents.
Data Analysis
The data collected were consolidated and analyzed using frequency, percentage,
and mean.
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RESULTS AND DISCUSSION
Profile of the Respondents
In this study, there were two types of respondents, traders and farmers. Table 1
presents the respondents’ profile according to their gender, educational attainment, civil
status and the number of years in farming, for the farmers and in the trading business for
the traders.
Gender. Table 1 shows that most (55%) of the trader respondents were male and
45% were female. Among the farmer respondents, 70% were male and the rest (30%)
were female. This finding implies that majority of the traders and farmers in Madaymen
are male.
Educational
attainment. The table shows that nine (45%) of the trader respondents
reached college level, 35% had finished college and 20% had graduated in high school.
As seen in the table the largest proportion of the farmer respondents 30% graduated from
elementary, nine (15%) were high school level, 13.3% were high school graduates, six
has no formal education, and 8.3% of the respondents finished vocational courses.
According to the respondents, education was not given importance in the area especially
if they end up as farmers.
This finding implies that all the traders had formal education compared to the
farmers where majority had below college level education. This is because some of the
farmer respondents believed that going to school is a least priority if they would end up
just the same being a farmer.
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Civil
Status. Majority of the trader respondents (95%) were married and one (5%)
was a widow. Therefore it implied that trading is considered as livelihood and
employment of the farm families in Madaymen. All these respondents were farm input
suppliers, at the same time buying the produce of the farmers and either transport them to
the trading post in La Trinidad or Baguio market.
Among the farmers, majority (70%) were married and 30% were single. This
finding implies that farming is not only for married people who have families to feed but
also for single individual who wants to earn an income.
Number or years in Business/Farming. The table also presents the number of
years the traders and farmers were in business/farming. Seven or 35% of the traders were
11-15 years in the business, 30% were 6-10 years, 15% were 1-5 years, another 15%
were in the business for 20 years and 5% were 20-30 years in business. Among the
farmer respondents, most (26.7%) of them had been farming for 6-10 years, eleven each
had been farming for 1-5 years and also 11-15 for years, eight (13.3%) had been farming
for 26-30 years, seven (11.7%) engaged in farming for 16-20 years, four (6.7%) for 21-
25 years and three (5%) had been farming for 31-40 years.
The finding shows that almost all the traders had been in the trading business for
less than twenty years . The same is true for the farmers except for some who had been
farming for more than twenty years.
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Table 1. Profile of the respondents
TRADER
FARMER
PARTICULAR Frequency
Percentage Frequency Percentage
A.
Gender
Male
11
55
42
70
Female
9
45
18
30
TOTAL
20 100 60 100
B. Educational Attainment
No formal education
0 0 6 10
Elementary graduate
18
30
High
school
level
0 0 9 15
High
school
graduate 4 20 8 13.3
College
level
9 45 8 13.3
College
graduate
7 35 6 10
Vocational
0 0 5 8.3
TOTAL
20 100 60 100
C. Civil Status
Single
0
0
18
30
Married
19
95
42
70
Widow
1
5
0
0
TOTAL
20 100 60 100
D. Years in business/ farming
1-5 3
15
11
18.3
6-10 6
30
16
26.7
11-15 7
35
11
18.3
16-20
3 15 7 11.7
21-25
0 0 4 6.7
26-30
1 5 8 13.3
31-40
0 0 3 5
TOTAL
20 100 60 100
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Types of Traders Providing Farm Inputs
Trader respondents were classified into three. These were farm input suppliers,
trader suppliers and farmer suppliers. Farm input suppliers are business establishments,
based in La Trinidad, who sell agricultural inputs to the traders. They also provide farm
supplies to the farmers on credit which they could pay after harvest and sell their
products. The trader suppliers who buy farm inputs from the farm input suppliers and
supply them to the farmers on credit basis. They also loan cash to the farmers and buy the
farmers’ produce. On the other hand, farmer suppliers were themselves farmers who get
inputs from farm input suppliers and sell them to their co-farmers on credit.
Nine (15%) of the trader respondents were trader suppliers, six (30%) were farm
input suppliers and five (25%) were farmer suppliers.
Table 2. Distribution of trader respondents as to type of business
PARTICULAR FREQUENCY
PERCENTAGE
Farm input supplier
6
30
Trader supplier
9
45
Farmer supplier
5
25
TOTAL 20
100
Trader-Farmer Relationships
Table 3 shows that majority (65%) of the trader respondents supply input to
farmers who are their relatives and 35% supply farm input to their “suki” farmers. This
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finding implies that majority of the traders operating in Madaymen are from that place
and the farmers they are supplying with inputs are their relatives. On the other hand there
are also farmers who develop a special relationship, “ suki” which is usually based on
trust between the two parties. Each party feels that he is making the best bargain. Based
on this kind of relationship, the trader just provide the inputs to the farmer with a trust
that after harvest the farmer will pay the trader.
Table 3. Relation of traders with the farmers
PARTICULAR FREQUENCY
PERCENTAGE
Relative 13
65
Suki 7
35
TOTAL 20
100
Selling Practices of Traders
It can be gleaned from Table 4 that fifty percent of the trader respondents sold
farm inputs through credit, wherein the farmer would pay the selling price plus an interest
depending on the agree percentage upon selling his crops. The other 50% of the
respondents supplied farm inputs to farmers and in return the farmer will also sell/supply
his vegetable to the trader. This is the supply system.
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Table 4. Selling practices of traders
PARTICULAR FREQUENCY
PERCENTAGE
Credit 10
50
Supply System
10
50
TOTAL 20
100
Pricing Practices of Traders
Table 5 shows how the traders price their inputs. Though the farmers get the
supply in credit, some traders (45%) still base their price on the prevailing market rate.
(55%) use the market price plus additional percentage.
Table 5. Pricing practices of traders
PARTICULAR FREQUENCY
PERCENTAGE
Base of market price
9
45
Market price plus additional mark-up
11
55
TOTAL 20
100
Payment Collection Practices of Traders
Table 6 shows that 55% of the traders most especially farm input suppliers collect
the payment after the farmer sold their product, 30% collect payment during harvest time,
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Most of them were farmer suppliers. Fifteen percent of the trader respondents collect the
payment every 3-4 months.
Table 6. Time of collecting the payment of inputs supplied to the farmers by the traders
PARTICULARS FREQUENCY
PERCENTAGE
During harvest
6
30
After selling their produce
11
55
After 3-4 months
3
15
TOTAL 20
100
Farm Production Area of Farmers
Table 7 shows the area/size of farm being planted by the respondents, most of the
farmer respondents (45%) operated a half hectare area. Twenty six or 43.3% cultivate
one hectare and seven or 11.7% operates on two hectares of land.
Table 7. Farmers’ farm production area
PARTICULARS FREQUENCY
PERCENTAGE
Half Ha (5,000 sq m)
27
45
One Ha (10,000 sq m)
26
43.3
Two Ha (20,000 sq m)
7
11.7
TOTAL 60
100
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Distance of Farm From Farmer’s Residence
Table 8 shows the distance from the farm to the residence/house. Twenty six
(43.3%) of the respondents had a walking distance area of farm to residence at 20-30m,
fifteen (25%) of the respondents 50-100m far, eight (13.3%) were 500 m far, another
13.3% of the respondents almost 1 km. and the 5% are 2 km away from their residences.
For the farmers whose area is from 1 km to 2 kilometers away from their home use
vehicle in going to their farm especially in transporting produce.
Table 8. Distance of farm from the residence of the farmers
PARTICULARS FREQUENCY
PERCENTAGE
20-30 m (walking distance)
26
43.3
50-100 m
15
25
500 m
8
13.3
1 km
8
13.3
2 km
3
5
TOTAL 60
100
Source of Irrigation and Topography
For the source of irrigation, Table 9 shows that 54 (90%) of the respondents were
depending on the rain, 4 (6.7%) were getting from the spring and 2 (3.3%) of the
respondents get irrigation from the river.
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As for the topography of the farm most of the respondents 71.7% were operating
terraces and 28.3% of the respondents were planting on a flat or plain area.
As it was observed in the study, the respondents expanded their land by terracing
mountain shapes/slopes. Due to irrigation problems, their farm products were affected.
This implies that there is a great need for the agricultural supplier and the government to
support the farmers by providing water tanks for irrigation.
Table 9. Source of irrigation and topography
PARTICULAR FREQUENCY
PERCENTAGE
A. Irrigation
Rain
54
90
Spring
4
6.7
River
2
3.3
TOTAL 60
100
B. Topography
Terraces
43
71.7
Flat area
17
28.3
TOTAL 60
100
Sources of Farm Inputs of the Farmers
Table 10 presents the sources of farm inputs, and the reasons of the farmers for
getting from such source. From the table, 20 or (40%) of the farmers were getting their
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input at the farm input establishments, 36.7% were getting from the farmer suppliers and
14 (23.3%) were getting from the trader suppliers.
With regards to the reasons of the respondents for choosing the source of their
inputs, 36.7% said that the supplier delivers the inputs to the area, 20% said that the price
of input is low, another 20% stated that their suppliers allow credit, 13.3% simply replied
that they were their relatives and 10% of the respondents replied that inputs were
complete and always available. Being a relative is also one of the reasons of traders in
supplying inputs to farmers.
Table 10. Source of farm inputs and reasons of farmers for choosing the sources
PARTICULARS FREQUENCY
PERCENTAGE
A. Sources
Trader supplier
14
23.3
Farm input establishments
24
40
Farmer supplier
22
36.7
TOTAL 60
100
B. Reason
Allow credit to farmer
12
20
Low price
12
20
Inputs are complete and always available
6
10
Delivers the input
22
36.7
Relative
8
13.3
TOTAL 60
100
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Mode of Buying Inputs
Table 11 presents that majority (64%) of the farmer- respondents buy their inputs
on credit basis from their suppliers. This means that they have to pay an interest on the
full value of the farm input they get from their suppliers. Some farmers (36%) mentioned
that they pay partial when they buy and pay in full after selling their produce.
Table 11 . Mode of buying farm inputs by the farmers
PARTICULARS FREQUENCY
PERCENTAGE
Credit with partial payment
22
36
Credit
38
64
TOTAL
60
100
Input – Output Supply Arrangement Between
Input Suppliers and Farmers
As earlier found, the farmers have three sources of farm inputs. There was an
agreement between the farmers and the input suppliers. This first agreement entered into
by 30 farmers (Table 12) was the payment of interest on the credit where 23 of them paid
30% interest and seven respondents paid 25% interest. The second agreement entered
into by 24 farmers was the net income sharing arrangement. Nine of them had a 50 – 50
sharing arrangement, 11 respondents had 40-60 sharing arrangement and 4 respondents
had a 30-70 sharing arrangement. Six respondents mentioned that they just pay their
credit on installment basis. Sharing of net sales depends on several factors such as the
contribution of each party on the production expenses.
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Based on the findings of this research, before both respondents (farmers and
traders) move on to their operation they must first have a clear agreement especially on
payments on farm inputs and division of net income.
The input supply and output supply flow is presented in the diagram below.
Figure 1 presents the flow of input from the farm supplies establishments directly to the
farmers. This shows that farmers buy inputs directly from the farm input establishments
in Baguio and La Trinidad on credit. As for their products, they sell them to local traders
at the trading post and in turn the local traders sell them to traders coming from Metro
Manila and other places in the lowland.
Figure 2 presents the input flow from the farm supplies establishments to the
trader suppliers then to the farmers. Under this flow, the trader suppliers buy the inputs
on cash basis from the farm supplies establishments then sell them to the farmers on
credit basis. On the other hand, the farmers sell their products to the trader suppliers at a
discounted price. The trader suppliers in turn sell the vegetables to the traders from Metro
Manila and other areas. As to the payment of the farmer’s products, the trader deducts the
credit of the farmer plus interest then give the balance to the farmer. For those who
entered into the sharing agreement, from the vegetable sales the trader deducts the cost of
the farm inputs used by the farmer then they divide the net income. The value of the
farmer’s labor is not even included in the cost to be deducted from the gross sales.
Figure 3 presents the flow of inputs from the farm supplies establishments to the
farmer suppliers then to the farmers. The farmer suppliers are the land owners whom the
farmers are leasing. The farmer suppliers buy the inputs on cash basis then sell them to
the farmers on credit. In this case, the farmers suppliers do not only provide the farm
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inputs to the farmer but also provide other credit (cash or basic necessities) to the
farmer’s family. The farmer then has to sell his vegetables to the farmer supplier and the
farmer supplier sell the vegetables to the local traders. From the local traders it goes to
the traders from the lowland. The farmer suppliers deduct the credit of the farmer then
give the balance to the farmer.
Table 12. Supply system arrangement between the farmers and the input suppliers
PARTICULARS FREQUENCY
PERCENTAGE
a. Value of input + interest
30
50
Price of farm input + 30%
23
77
Price of farm input + 25%
7
23
Total
30
100
b. net income sharing
24
40
50/50 share of net sale
9
37
40/60 share of net sale
11
46
30/70 share of net sale
4
17
Total
24
100
c. Installment basis
6
10
TOTAL 60
100
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FARM SUPPLY
ESTABLISHMENTS
Input flow Cash payment (value of input + interest)
Product flow (vegetables)
FARMER
LOCAL TRADERS
Cash payment
Product flow Cash payment
LOWLAND
TRADERS
Figure 1. Input flow between farm supplies establishment to the farmer
FARM SUPPLY
ESTABLISHMENTS
Input Cash payment
product
TRADER
LOWLAND
paym
SUPLLIERS
ent
TRADERS
Input vegetable sales (from the gross sales , credit of the farmer is
deducted)
FARMERS
Figure 2. Input flow between farm supply establishments to the trader supplier and to the
farmers
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FARM SUPPLY
ESTABLISHMENTS
Input Cash payment
product
FARMER SUPLLIER
LOCAL
Cash paym
( Land Owner)
ent
TRADERS
Input vegetable sales (from the gross sales , credit of the farmer is
deducted and net income is divided)
FARMER
Figure 3. Input flow between farm supply establishment to the farmer supplier and to the
farmers
Choice of Crop to be Planted
Table 13 shows that majority (73.3%) of the farmers make the decision regarding
the crop to be produced, 15% of the respondents allow the farmer suppliers to choose the
crop to be planted and 11.7% of the respondents follow the suggestion of the trader
suppliers.
As it was found in the study farmers will be the first to decide on what to produce
before the supplier because the farmers were more familiar on the crops that are best
suited on their farm.
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Table 13. Distribution of respondents as to who choose the crop to be planted
PARTICULARS FREQUENCY
PERCENTAGE
Myself/ farmer
44
73.3
Trader supplier
7
11.3
Farmer supplier
3
15
TOTAL 60
100
Number of Croppings Per Year
Table 14 shows how many cropping season do the farmer respondents have in one
year. The table shows that 88.3% of the respondents plant twice a year and 11.7% plant
in three croppings.
Results indicate that majority of the respondents plant two times in one year. The
respondents said that irrigation and seasonality of the crops were the barriers why they
cannot produce three times in a year.
Table 14. Distribution of Respondents as to number of cropping in one year
No. OF CROPPING
FREQUENCY
PERCENTAGE
Two cropping
53
88.3
Three cropping
7
11.7
TOTAL 60
100
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Table 15 presents who makes decision in cropping system/ method. Forty three or
71.7% of the respondents make decision in cropping method, 25% of the respondents
allow the farmer supplier to make decision and 3.3% of the respondents follow the
decision of the trader supplier.
Table 15. Distribution of respondents as to who decide the cropping system/method
PARTICULARS FREQUENCY
PERCENTAGE
Farmer himself
43
71.7
Farmer supplier
15
25
Trader supplier
2
3.3
TOTAL 60
100
Contribution of Suppliers to Production and
Marketing Expenses
Table 16 presents if supplies contributes expenses in harvesting, majority of the
respondents 68.3% mentioned that supplier do not contribute to the expenses in
harvesting, nineteen or 31.7% of the respondents mentioned that supplier contributes
expenses on harvesting. Findings show that most of the respondents were the ones
responsible for harvesting.
The table also shows that majority (53%) of the respondents mentioned that trader
supplier do not contribute to the marketing expenses, 11.7% of the respondents said that
trader suppliers contribute expenses in marketing.
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Most of the trader suppliers who contribute marketing expenses are also the buyer
of their produce. These trader suppliers have vegetable stalls at the La Trinidad, Trading
Post.
Table 16. Contribution of suppliers to harvesting and marketing expenses
PARTICULARS FREQUENCY
PERCENTAGE
A. Harvesting expenses
Yes
19
31.7
No
41
68.3
TOTAL 60
100
B. Marketing expenses
Yes
7
11.7
No
53
88.3
TOTAL 60
100
Market Outlet of Farmers’ Produce and
Mode of Payment
Table 17 presents the buyers of the produce of the respondents. Thirty nine or
65% of the respondents sold their product to any trader, 21.7% of the respondents sold to
the trader supplier, 10% of the respondents said they will be the one to sell it in the
market and 3.3% of the respondents allow farmer suppliers to buy their produce.
The findings show that respondents sold their produce based on the current price
and pre-arranged price.
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Table 18 shows the mode of payment of buyers. Majority (85%) of the
respondents get the payments when their produce immediately upon delivery of the
produce. Fifteen percent of the respondents were paid on consignment basis.
Table 17. Buyers of farmers’ produce and mode of payment
PARTICULARS FREQUENCY
PERCENTAGE
A. Buyer
Trader supplier
13
21.7
Any trader
39
65
Farmer supplier
2
3.3
Farmer who sell it on the market
6
10
TOTAL 60
100
B. Mode of payment
Pay cash when they purchase
51
85
Consignment basis
9
15
TOTAL 60
100
Basis for Pricing
Table 18 shows the basis for pricing their products. Most (51.7%) of the
respondents price their products based on current price and 48.3% of the respondents
based it on the pre-arranged price.
The respondents preferred to base their product on the current price because
prices of vegetables in the market fluctuates.
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Table 18. Basis for pricing their products
PARTICULARS FREQUENCY
PERCENTAGE
Current price
31
51.7
Based on the pre-arranged price
29
48.3
TOTAL 60
100
Problems Encountered by the Traders and Farmers
Problems encountered by farmers. Based on frequency counts the most common
problem identified by farmers were high interest of farm input and high deduction of
sales due to high interest of farm inputs. Other problems mentioned were; delayed
delivery of inputs by the traders (13.3%), suppliers cannot provide all the inputs for
maintenance (10%), high transportation cost of both inputs and products (10%) and
delayed payments of products (10%). Delayed payments were due to the high price given
by the traders to their buyers, thus, they pay- post dated checks. There were farmer
respondents (18.3%) who did not mention any problem (Table 21).
Problems encountered by traders. The major problem encountered by 60% of the
traders was difficulty in collecting payments. Bankruptcy is another problem as
mentioned by 35% of the trader respondents and lack of capital (5%) in order to provide
all the farm needs of farmers (Table 19).
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Table 21. Problems encountered by traders and farmers
PROBLEMS TRADERS
FARMERS
F
%
a.
Traders
1. Difficult to collect credit
12
60
2. Bankruptcy of farmers
7
35
3. Lack of capital
1
5
TOTAL
20
100
b.
Farmers
4. Suppliers cannot provide all inputs for
6 10
maintenance
5. High interest of farm inputs
13
21.7
6. High transportation cost
6
10
7. Delayed delivery of farm inputs
8
13.3
8. High deduction on sales due to high
10 16.7
interest
9. Delayed payments of products
6
10
10. No answer
11
18.3
TOTAL 60
100
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SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
Summary
This study was conducted to document the supply system agreement of traders
input suppliers and farmers of Madaymen, Kibungan, Benguet. A total of 20 traders and
60 farmers of Madaymen were taken as respondents of the study. A survey questionnaire
was used to collect the needed data. The data were tabulated and analyzed using
frequency tables and percentage.
Most of the respondents were male. All trader respondents were actively
supplying farm inputs to farmers. Majority of both the trader respondents and farmer
respondents were married. There was a higher percentage of traders that reached college
level than the percentage of farmers that reached the same level. A higher percentage of
the farmer respondents were elementary graduate. This is because according to them,
education is not given importance by people in their place specially if they would become
farmers.
As to the type of trading business the traders engaged in, majority were trader
suppliers. They sell farm inputs to the farmers and at the same time engaged in buying
the produce of the farmers. They also loan out cash to farmers for their family needs and
collect the payments when the farmers sell their produce. Majority of these traders supply
farm inputs to farmers. They prefer to supply farmers who are their relatives. They sell
the inputs to the farmers either on credit basis or on a supply system basis.
When it is on credit basis, the farmer has to pay an interest based on the total
value of the farm input or cash borrowed. The trader collects the payment after the farmer
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sells his produce. On the supply system arrangement, a net income sharing arrangement
is made between the farmer and the trader. The various arrangements used by the parties
were 50/50, 40/60, and 30/70 depending on how much was shared by the trader on the
expenses.
Regarding the production activities of the farmers, they follow the two cropping
pattern because of irrigation problem. The farmers were the ones deciding on the
cropping system/method. However, as the crops to be planted there were some farmers
that depended on the decision of the trader/supplier. In most cases the suppliers do not
contribute to harvesting and marketing expenses. Only those that buy the crop of the
farmers contribute to the expenses. Majority of the farmers sold their produce to any
trader or buyer who pays them immediately upon delivery of the product. Most of the
farmers based their price on the current market price.
Collection of receivables from the farmers was a problem of the majority of
traders. This usually happens when the farmer could not get a fair price for his produce
and when the farmers’ crops were destroyed by natural calamities. Another problem met
by the traders was the inability to supply the needs of farmers due to limited capital.
The farmers also encountered problems in paying their debts from their suppliers.
One of which is the high interest charged by the suppliers will leave very little cash for
their family use and for buying inputs for the next cropping. This practice tends to tie the
farmers with the suppliers because they do not have ready cash to buy their inputs thus,
they keep on depending on the suppliers for credit. Another equally pressing problem of
farmers who were into supply system was the outright deduction of all input cost plus
interest from the value of the produce. This leaves very little net income which is still to
A Documentation of Traders, Input Suppliers and Farmers’ Input – Supply
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33
be shared between the farmer and the supplier. Other problems encountered were;
delayed delivery of farm inputs by the supplier, the supplier cannot provide all the inputs
for maintenance of the crops, high transportation cost of both inputs and products and
delayed payments of crops sold .
Conclusions
Based on the results of the study, the following conclusions were drawn:
1. Majority of the traders and farmers were male and married. The traders relatively had
higher level of formal education than the farmers.
2. Most of the traders in the study area were input suppliers and were relatives of the
farmers they are supplying with input or credit.
3. Most farmers in the study area get credit, either cash or farm input, from farm input
suppliers.
4. Most of the farmers sell their produce to any trader based on the current price.
5. Traders encountered problem regarding the collection of loans (cash loan and farm
input) from the farmers specially when the farm business incurs losses. There were
instances also when the traders cannot meet the demands of the farmers due to limited
capital. This becomes also a problem to the farmers because the input application is
delayed which affects their crop yield.
6. Farmers who entered into the supply system agreement are tied up to the traders
because they pay high interest on the loan. The high cost of the farm inputs plus the high
interest of the loan leaves a very small cash income to the farmers. This situation forces
the farmer to go back to the supplier and ask for another or even more credit. The same is
A Documentation of Traders, Input Suppliers and Farmers’ Input – Supply
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true for those who enter into the sharing arrangement. The trader deducts the value of the
inputs and still share with the net income. What would be left to the farmer may not even
be enough to pay for the cost of his labor used in the production activity.
Recommendation
Based from the problems encountered, the following recommendations were
made:
1. Farmers should look for a better alternative source of credit where the interest rate is
fair. It is also recommended that banks should not be very strict in giving loans to the
farmers, specially Land Bank. Farmers cooperatives in the place should also be assisted
by the CDA and other concerned organizations so that they could provided the credit
needs of the farmers.
2. The local government should provide irrigation facilities inorder to increase the
production of crops in the area.
3. The supply system is helping the farmers to be productive but the traders who are
supplying the inputs of the farmers should charge a fair interest rate on their credit.
Besides, they should deliver the necessary inputs on time so that the farmers could apply
them on time.
A Documentation of Traders, Input Suppliers and Farmers’ Input – Supply
Relationships in Madaymen, Kibungan / Nilo P. Yubos. 2006
35
LITERATURE CITED
CHANDRA, C.W. 1983. Introduction to Agricultural Economics Analysis. Department
of Agricultural Economics, U.P. Los Baños, Laguna. P.29.
DAGUPEN, MK, et.al. 2004. Agricultural decision making and farmers activities of
integrated pest management farmers field school, Graduate School in Bokod,
Benguet. National Agricultural and Resources Research and Development
System. P6.
GUIWEY, G. G. 2002. Adaptation pattern of agricultural technologies in selected
Barangays in Kibungan, Benguet. B.S. Thesis. Benguet State University, La
Trinidad, Benguet. P6.
KOHLS, R. L. 1972. Marketing of Agricultural Products. New York: McMillan
Publishing Co. P.17.
LANGADAN, T.E. 1977. Marketing practices of vegetable farmers in Atok, Benguet.
Highland Express. Vol. 8. P.39.
MIRANDA, S. G. 1986. Basic Marketing. Manila: R.M. Garcia Publishing House. Pp.
134 – 135.
PANT, T. N. 1984. Proceedings of the Second National Agricultural Marketing
Conference. Dec. 1984. Kathmandu, Nepal. P.23.
PRES. COM. ON AGRI. CRDIT (PCAC), 1979 Agricultural credit for rural progress
concept and procedures. PCAC. Manila. P.38
SAGUILOT, A.P. 1979. Cost and returns analysis of rice production in Lamut, Ifugao. P.
23.
SIM, J.M. 1977. Analysis on the marketing flows of potato. MS Thesis. Benguet
State University, La Trinidad, Benguet. P. 6.
A Documentation of Traders, Input Suppliers and Farmers’ Input – Supply
Relationships in Madaymen, Kibungan / Nilo P. Yubos. 2006
36
APPENDIX
Appendix A. Survey Questionnaire for Farmers
I.
General Information
1.
Name
(optional)
Gender: (F) ___ (M)___
2. Highest educational attainment
____ No forma education
____elementary graduate
____High school level
____high school graduate
____College
level
____college
graduate
____vocational
graduate
3. Civil status ______ single
_____ married
4. Number years in farming _________
II. Farm Production
1. Area planted/size of farm (Pls. Specify)
2. Distance from the residence (Pls. Specify)
3. Tenure
___ Owner
___ Leaseholder
___ others (specify)__________________
4. Source of irrigation
____rain ____spring
____ river
5. Topography
____
plain
____
terraces
6. Sources of farm inputs
____Trader-suppliers ____ farmer-suppliers
____farm input dealers
____
cooperative
____others
(Pls.
Specify)
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6. Reasons for choosing the source of input supplies
____ allow credit to farmers
____ low price
____ inputs are complete and are always available
____ delivers the input
____
others
(specify)
7. How do you pay the inputs?
____ cash
____ credit
8. If Credit, do you have an arrangement with your supplier? __ yes
___no
9. I yes, please describe the
arrangement.
10. Who choose the crops and variety to be planted?
____ myself ____ agricultural supplier
____trader-supplier
___
others
(Pls.
Specify)
8. What are the crops you produced
First Cropping
Second Cropping
___
cabbage
___cabbage
___potato
___potato
___carrots
___carrots
___others(specify)
___others
(specify)
_______________
________________
9. How many cropping do you have in one year?
___
one ___two ___three
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10. Who makes the decision in cropping system/method?
____ myself ____trader-supplier ____farmer-supplier __others(specify)
11. Do your suppliers contribute in the expenses on harvesting? ___yes ____ no
12. If yes, how do you divide the expenses? Please describe
13. Do you also divide the marketing expenses? ___yes
___no
14. How do you divide it?___________________________________________________
15. Who buy your produce?
____
trader-supplier
____
farmer-supplier
____ any trader
____ I sell it in the market
16. If the trader-supplier or farmer supplier, how are paid?
____ immediate cash when they buy ____ consignment basis ____ credit basis
17. If on consignment, how many days before you are paid ? (please describe your
arrangement)
18. If on credit, please describe the your arrangement
19. What is the basis for pricing your produce? ____ current price ____ base on a
pre-arranged price.
20. What are the problems you encountered with your suppliers?
21. How did you solve such problem?
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Appendix B. Survey Questionnaire for Traders
III. General Information
1.
Name
(optional)
Gender: (F) ___ (M)___
2. Highest educational attainment
____ No forma education
____elementary graduate
____High school level
____high school graduate
____College
level
____college
graduate
____vocational
graduate
3. Civil status ______ single
_____ married
4. Type of business
____ farm input supplier
____ trader supplier ____farmer supplier
4.Number years in the business _________
5. Who are you supplying?
____ Farmers ____ trader-suppliers ____ farmer-suppliers
6. What is your relation to your client
___ relative ___ “suki”
___ Others(specify)
7. How do you sell your input to your client?
____ cash
____credit
_____supply system
8. If on credit, how are paid?
____ anytime if they have money
____ when they sell their produce
9. If supply system, please describe your arrangement with your client
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10. How do you price you input?
___ base of market price
____market price + additional percentage (please
describe
how
you
actually
do
it)
11. How do you collect the payment? Please describe
11. What problems have you encountered with your clients?
12.
How
did
you
solve
it?
A Documentation of Traders, Input Suppliers and Farmers’ Input – Supply
Relationships in Madaymen, Kibungan / Nilo P. Yubos. 2006
Document Outline
- A Documentation of Traders, Input Suppliersand Farmers� Input � Supply Relationships in Madaymen, Kibungan
- BIBLIOGRAPHY
- ABSTRACT
- TABLE OF CONTENTS
- INTRODUCTION
- Rationale of the Study
- Statement of the Problem
- Objectives of the Study
- Importance of the Study
- Scope and Limitation of the Study
- REVIEW OF LITERATURE
- METHODOLOGY
- RESULTS AND DISCUSSION
- Profile of the Respondents
- Types of Traders Providing Farm Inputs
- Trader-Farmer Relationships
- Selling Practices of Traders
- Pricing Practices of Traders
- Payment Collection Practices of Traders
- Farm Production Area of Farmers
- Distance of Farm From Farmer�s Residence
- Source of Irrigation and Topography
- Sources of Farm Inputs of the Farmers
- Mode of Buying Inputs
- Input � Output Supply Arrangement BetweenInput Suppliers and Farmers
- Choice of Crop to be Planted
- Number of Croppings Per Year
- Contribution of Suppliers to Production andMarketing Expenses
- Market Outlet of Farmers� Produce andMode of Payment
- Basis for Pricing
- Problems Encountered by the Traders and Farmers
- SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
- Summary
- Conclusions
- Recommendation
- LITERATURE CITED
- APPENDIX