Cocconut Production Essay Example

per year. With a copra price of P 10.00 per kilo, the average gross annual income of a coconut farmer from coconut production is only P100,000.00 per hectare or PAP a day. However, this income falls way below the poverty line, and it is concerning considering that 3.5 million coconut farmers and 25 million Filipinos are directly or indirectly dependent on the industry. Furthermore, at least twenty-five percent of coconut-bearing trees are senile or over sixty years old. Coconut production peaked in 1976, 1986, and 1995, while all other years experienced decreased production.

The coconut productivity has experienced a significant decline, dropping to 38 - 40 nuts per tree / year (840 keg/ ha copra equivalent) from the ideal target of 75 nuts per tree / year. Madonna's share of coconut production used to be 52%, but it has now risen to almost 60% due to decreased production in the Visas and Luzon areas. However, some perceive the industry as a sunset industry on the decline, as world market prices fluctuate, leaving those who rely on it without income. According to the Philippine Coconut Authority, coconut production in 2004 decreased by eight percent (8%) compared to the previous year, reaching a total of 2.4 Million Metric Tons. The estimated "best farm yield" is set at 2.5 tons per hectare, while the current average yield per hectare stands at just 0.8 ton.

The global demand for coconut water as a healthy and alternative sports drink has been growing rapidly, which is why the industry is often referred to as a "dollar earner and export winner". Currently, 80% of coconut raw materials are exported, while the remaining

20% are processed domestically. To ensure a sustainable supply, the Philippine Coconut Authority (PICA) has been allocated an increased budget of IPPP million for next year's replanting efforts, compared to only PAP million last year. Additionally, IPPP million has been reserved for fertilizing coconut plantations. Despite a decrease in coconut oil products this year, we remain the top exporter of coconut globally.

The study's main objective is to examine the impact of Land, Research and Development expenditures, and Subsidy provided by the government on coconut production. Its aim is to determine if these variables significantly influence coconut production and find the most profitable investment for increasing coconut yield while compensating for losses from land conversion. This research aims to assist coconut farmers in enhancing their coconut supply or production as innovation and creativity are vital for the survival of the coconut industry in a highly liberalized global trade environment (Bobcat, 1997). Currently, Indonesia is set to surpass the Philippines as the world's top coconut producer.

Indonesia's increasing share in the global coconut oil market is currently challenging the Philippines, endangering their position as the leading exporter. If the vulnerabilities and risks within their coconut industry are not resolved, the Philippines will continue to experience a decline in their market share. To maintain competitiveness on an international level, it is crucial for the Philippines to concentrate on enhancing coconut productivity, decreasing product expenses, improving copra and coconut oil quality, and progressing high-value downstream coconut products through technological research and development (Argon, 2000).

There are numerous research papers on the growth of the coconut industry in possession of government and private institutions. Despite the existence of various

coconut processing technologies, only a small number have actually been implemented in production areas. Presently, farmers still burn the more valuable coconut husks and shells to dry the less valuable copra. This practice is deemed disadvantageous (Faustian 2006). Enhancing the competitiveness of an industry can be achieved by producing a product that the country has a clear advantage in. The Philippines, as one of the largest coconut producers, should consider investing in capital-intensive industries such as the production of coco-11 chemicals, activated carbon, or desiccated coconut (Auguries).

India and Sir Lanka dominate the labor-intensive coir industry, while Malaysia and Thailand have expanded their coconut industry with non-traditional products like coconut cream, creating a unique market for coconut food products. With potential for growth in production and diversification of products, the coconut industry faces development challenges. Policy implications include the need for technological support programs to sustain competitiveness and benefit both farmers as price takers and society.

To address the deficit in coconut supply, there are three key actions that can be taken: Firstly, increase government subsidies for items such as fertilizer. This will boost the supply of nuts. Secondly, provide farmers with land suitable for planting coconut trees. This will enhance productivity and efficiency in the industry. Lastly, it is crucial to focus on land rehabilitation. This includes rejuvenating old coconut trees and implementing fertilization and bio-control methods. According to Kumara (2007), land plays a vital role in determining the success of coconut farmers and has a positive relationship with productivity.

According to Unguent Van SKU (2009), farmers consider rights to agricultural land use as an important asset that holds significant value and meaning. This

is because it serves as a means of production, generating income for them. Conversely, Symposiums (2008) argue that the majority of increases in aggregate crop production are due to the expansion of cultivated land rather than investments in production technologies for higher crop yields per unit area. In Kraal, Kumar's (2005) study, a "coconut (coco nuclear) and rubber (have brassiness) boom" led to a 106% increase in coconut land area from 1955 to 2000, resulting in increased coconut production. However, this expansion came at the expense of rice and cassava cultivation. Similarly, Martial et al. (2011) found in Sri Lanka that the conversion of agricultural and forest land to coconut and urban uses has caused a decrease in land area over the past 30 years and is expected to continue. Despite the continued conversion and fragmentation of coconut land in prime areas, the overall coconut land area has not experienced a significant decrease. This fragmentation and land conversion predominantly occur near urban centers and on less productive lands.Spatial analysis provided additional evidence of the positive trend of converting coconut land into urban areas near urban locations. Conversely, in China, Zigzagging Eden et al.(2005) utilized satellite imagery to examine changes in cultivated land area and its potential agricultural productivity. They discovered that from 1986 to 2000, China experienced a net increase in cultivated land, which nearly offset the decrease in average potential productivity. However, Yang et al. (2008) argued that although the newly cultivated lands compensated for losses from urban expansion, their contribution to production was insignificant due to low productivity. Nevertheless, Sonatas et al. (2005) noted that for the time being, China still had the

capacity to enhance agricultural production through further conversions from other land uses and increased yields from cultivated land. Denying et al. (2009) emphasized that arbitration significantly transformed the land surface in China, greatly impacting the regional ecosystem by destroying fertile cropland and original forests. Their CASE modeling indicated a considerable decrease in estimated mean Net Primary Productivity (NP) for cropland, forest, and wetland between 1999 and 2005 due to increasing urban land conversion.

Arbitration significantly affects the regional Net Primary Productivity. Faustian (2006) reported that coconut plantations in the Philippines make up almost one-third of the country's agricultural area, comprising 3 million hectares. However, available statistics indicate that the Philippines' share in total coconut hectares has decreased due to extensive tree cutting and land conversion. Conversely, Indonesia has increased its contribution to global coconut production and is now ahead of the Philippines in terms of coconut production. Proposition #1: Increasing (Decreasing) the area dedicated to coconut production through land conversion and tree cutting either promotes or hinders coconut productivity.

Chin (2010) defines government subsidies as benefits provided to industries through direct transfers of funds, potential transfers of funds or liabilities, forgone government revenues, provision of goods or services, payments to funding mechanisms or private bodies, or income and price support. These subsidies aim to improve farmers' incomes and national food security in Sub-Saharan Africa by increasing food production through the use of fertilizers. The effectiveness of these subsidies in raising total fertilizer use depends on the extent to which they displace farmers' purchases of commercial fertilizer. Another study by Gilbert et al. (2010) also emphasizes the importance and attention given to fertilizer subsidies in Sub-Saharan Africa.In

2010, he expressed the belief that the government should enhance the fiscal management system and increase the efficiency of capital. This would guarantee scientific and standardized investment decisions.

Quant and Lie (2002) emphasize the need for the government to increase investment in fiscal agriculture and improve asset management to attract more funds in ecological agriculture. This will lay a strong foundation for restructuring agriculture and promoting industrialized operation in ecological agriculture. According to Quant and Lie (2002), agricultural growth depends on increased investment as well as farmers' income, while reducing income disparities between rural and urban areas is crucial for social stability. The government can play a role by providing infrastructure and technical support, which will enhance productivity, reduce environmental damage, and improve market access. Ultimately, this will create better opportunities for farmers to increase their income. Shah et al. (2007) highlight the important role of political economy considerations in the rapid growth of agricultural subsidies.

There is a prevailing belief that, while certain subsidies may be justified, wealthier farmers have disproportionately benefited from them. Yuba and Affair-Safe (2009) support this view and argue that these projects have positively impacted productivity. They suggest prioritizing efficiency in the design, management, and monitoring of rural development projects in agricultural policy. Additionally, they found that project impact varied depending on implementation location. Therefore, policymakers should focus on implementing small-scale projects to effectively address development challenges faced by target beneficiaries, especially the poorest individuals. Aquatic et al.(2007) agree with this perspective and argue for careful planning of subsidy distribution to maximize benefits for farmers and encourage growth in a privately accountable and responsive seed industry. In contrast, they caution against

catering solely to the government's needs instead of those of farmers. This is why Amanita and Dade (2007) emphasize that credit subsidies for farmers offer limited benefits but come with high costs.

According to previous research, a large majority (82%) of government loans given to rural banks at discounted rates were not paid back on schedule. This led to substantial arrears, with many of them also being unconvertible. The Department of Agriculture claims that around 85% of subsidized agricultural loans have not been repaid because people perceive these government loans as handouts.

Toward (2009) suggests that improving the efficiency and effectiveness of the input subsidy programmer contributes to increased agricultural productivity, food security, and wider nonagricultural development and structural change. It also emphasizes the need to find ways to reduce fertilizer use through greater field efficiency and complementary soil fertility management practices, as well as reducing supply costs. Additionally, Chippewa and Fisher (2011) conducted a study on the impacts of the Farm Input Subsidy Program on farmers' cropland allocation decisions. They used a two-step regression strategy to control for endogenous selection into the program and found positive correlations between program participation and the amount of land planted with maize and tobacco. Moreover, the results indicate that participating households simplified crop production by allocating less land to other crops.

Proposition #2: Government support through projects promotes and encourages an increase in coconut production. According to Henderson et al. (2009), their research and development (R) used an equilibrium displacement model to analyze the consequences of investments in farm productivity and product development within the industry. They found that the farming sector would benefit the most from these improvements

in productivity and product quality, generating producer surplus. Therefore, economically viable programs for these improvements could receive additional funds from the farm sector. This is supported by Falcon and Battalion (2008) who stated that government support can contribute to the growth of coconut production.

The coconut industry's goal is to use technology development to enhance farm productivity and income. Its objective is to efficiently create a range of valuable products from coconuts, intercrops, and by-products. Despite its significant contribution to the Philippine economy, the coconut industry receives less research funding compared to other sectors. To remain competitive on a global scale, it is crucial to ensure a steady supply of high-quality raw materials from the production sector. Therefore, improving coconut production and productivity is highly important.

Aquatic et al (2007) argued that in the long run, it is crucial to remember that increased farmer knowledge of advanced production techniques, such as the significance of clean and healthy seed, is more likely to drive sustainable productivity growth rather than government subsidies. On the other hand, Gaga et al (2008) advocated for government support in promoting research in economically and food security important sectors/subsectors using this analytical framework. They suggested that the government should encourage and facilitate innovative strength among farmers and the private sector by implementing favorable policies such as patenting and reward systems as incentives.

Policy makers should thoroughly analyze the institutional context of any innovation in order to promote it effectively, while extension workers should incorporate this information into technology packages for farmers. In Indonesia, Invariants and Warlock (2005) state that coconut research has focused on increasing productivity of coconut palms and farms, with

the aim of improving coconut farmers' income. The Indonesian Coconut and Palmate Research Institute (COPRA) has been involved in the development of various coconut technologies from the early 1980s to 2005. These technologies include high-yielding varieties, cultivation methods, integrated farming systems, pest and disease management, research on tissue culture, post-harvest activities, equipment processing, and studies on the social economy.

The future development goals for the coconut agribusiness include the establishment of the international Coconut General for South-East and East Asia (ICC-SEA) and the utilization of these technologies. In the United States, Olsson et al. (2010) discovered that agricultural R;D has resulted in a high rate of return, with both marginal and average benefit-cost ratios exceeding 1.0. This suggests that there would have been profitability in investing more, and even greater profitability in investing more extensively.

Alone and Cyclically (2008) stated that agricultural research in sub-Sahara Africa (AS) plays a significant role in enhancing productivity. The payoffs from such research are also remarkable, with a 55% aggregate rate of return. By adopting more efficient and cost-effective farming techniques, farmers can not only increase productivity but also alleviate poverty by increasing their income.