Farmers goals and efficiency in the production of sugar cane : the case of the Philippines

Abstract

This research evaluated the link between Philippine Sugar cane farmers' goals, values and attitudes, and some selected efficiency-related variables with production efficiency.

The analysis was based on both information from informal interviews and formal primary data collection. The Data Envelopment Analysis technique was used to determine the relative efficiencies of individual farmers and to identify the major factors that influence the efficiency of production. Pure technical, scale, overall technical, allocative and economic efficiency measures were derived for a sample of sugar cane farmers in the Central Negros area, The Philippines. Under the specification of variable returns to scale (VRS), the mean pure technical, scale, and overall technical, allocative and economic efficiency indices were 0.7580, 0.9884, 0.7298, 0.7941 and 0.6025.

The study was able to contrast small, medium and large farms' overall technical and economic efficiency. The results show that the median overall technical efficiency levels between small and large farms were significantly different from each other but, between medium and large farms, they were not significant. In terms of economic efficiency, only the median economic efficiency levels between small and large farms were significantly different from each other. The larger ones are more economically efficient, while medium and large farms appear to be equally economically efficient. Thus, this study does not support the assumption of constant returns to scale in land size, but supports economies of scale in sugar cane production.

As an initial study, the farmers' characteristics and their associations with goals and attitudes were determined. The result show that ‘per cent of land owned’ is correlated with farmers' decision-making and thus their production efficiency.

The study was unique in that it incorporated the farmers' values and attitudes towards farming and production efficiency. The Bootstrap regression method was used to determine the factors affecting the variations in farmers' efficiency. Factors positively associated with production efficiency include farm experience, exposure to extension and off-farm work; for goals and attitudes - the intrinsic independence goal (RGOAL5), the instrumental aspects of farming (RGOAL2), leisure orientation (GOAL5), optimistic attitude (ATTI3), and risk consciousness (ATTI4) were all associated with efficiency.

The key policy options that must be considered for addressing inefficiencies include education and extension advice, giving importance for the instrumental aspects of farming, formation of block farming as well as farmers' and millers' cooperatives, access to credit and improved technology (with emphasis on soil and fertiliser management and the use of improved varieties).