Credit intermediation as affected by different factors in two rice ecosystems at Central Luzon, Philippines : A comparative analysis
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Date
1990
Authors
An Singh Bhandari
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Abstract
This study asserts that there is a significant difference in irrigated (favorable) and rain fed (unfavorable) rice ecosystem due to the prevailing credit factors and intermediation of credit for rice farming activities which ultimately affected rice yield. This was attributed to some socio- economic, technological, infrastructural, natural calamity factors which influenced credit factors; and to some socio- economic and technological factors which influenced credit intermediation activities in rice farming.
Data were gathered from 240 (40%) borrower-farmer respondents from Sto. Cristo Norte and Tanejo with irrigated rice ecosystem and Mahipon and Calawitan with rain fed rice ecosystem in the provinces of Nueva Ecija and Bulacan. Frequency count, percentage, mean, standard deviation, linear correlation, chi-square, F-test and t-test were used to analyze the data.
The t-test results revealed significant differences in the two environments. The demand of the credit was significantly high and the utilization of the credit was also full in irrigated areas. The interest rate charged on the credit was significantly high in rain fed areas where credit requirements were also tough in comparison to irrigated areas.
The intermediation of credit for each of the rice farming activities like purchase of seeds, seedbed preparation, land preparation, transplanting, fertilizer application, plant protection, harvesting and threshing were also significantly high in irrigated rice ecosystem when compared thru t-tests.
The t-test results likewise indicated that the rice yield in wet and dry seasons was significantly higher in irrigated rice ecosystem.
The F-test showed that the economic status of the respondents in irrigated areas was much better than in rain fed areas.
The F-test further revealed that the input availability was higher in rain fed areas than in irrigated areas where a supply of more inputs is needed.
The availability of the rice mils when compared thru F-test showed that the availability and the proximity of the rice mills were favorable in irrigated rice ecosystem.
The F-test results also indicated that the occurrence of typhoons affected irrigated rice ecosystem more, whereas the occurrence of drought affected more the rain fed rice ecosystem.
The chi-square and the correlation tests reflected that the socio-economic characteristics and technological factors significantly affected credit borrowing behavior and intermediation of credit for specific rice farming activities in two rice ecosystems, especially in irrigated areas.
The presence of infrastructures (rice mills and warehouse) and the occurrence of the natural calamities (typhoon and drought) also significantly affected credit factors both in irrigated and rain fed areas.
Credit factors like amount, source, demand, availability, interest rate, utilization and requirements had significant association with the intermediation activities in rice farming both in irrigated and rain fed areas except the source of the credit and the demand in rain fed areas which did not have effect on given intermediation activities.
Rice yield is influenced thru the intermediation of the credit for specific rice farming activities, particularly seedbed preparation in wet season and land preparation in dry season in irrigated rice ecosystem.
The significant problems encountered in irrigated areas in rice farming were low price of farm output, high cost of fertilizer and an inadequate water supply during dry season. In rain fed areas, high interest rate, occurrence of natural calamities, lack of water and prevalence of tungro virus disease were the primary problems.
Suggestions made were reduction of the cost of farm inputs and increase of the price of farm outputs in irrigated areas whereas the reduction of the interest rate or provision of subsidy by the government on interest rate and the building of irrigated system were the suggestions.
The study recommended policy implications to widen the irrigation facility, management of water by looking for alternate sources, minimizing the gap of input-output prices, regularization of reasonable interest rate even from informal sources, the conduct of programs to control rats and plant diseases like tungro virus, reinforcement of land reform and strengthening of crop insurance programs.