Supply trend and response analysis of selected semi-temperate and tropical vegetables in the Philippines

This paper examines the supply trend and response of selected tropical and semi-temperate vegetables in the Philippines to various explanatory variables using direct and indirect methods of supply estimation. From 1990 to 2007, cabbage, the country's leading semi-temperate vegetable, exhibited a positive growth in production, area and yield. Despite the declining trend in area planted, domestic production of tomato, a widely-grown tropical vegetable in the country, grew positively due to improvement in yield. At the national level, results of both the direct and indirect supply estimation methods reveal that rising real farmgate price of cabbage the previous year could encourage Filipino farmers to increase production of this vegetable. On the contrary, lagged real wage rate and price of fertilizer have constricted production and area planted to cabbage. Tomato production has responded positively to nominal price of inorganic fertilizer, suggesting that with an increase in price of inorganic fertilizer, tomato growers extensively used organic fertilizer as a substitute to inorganic fertilizer. Using pooled regional data, results of the direct method show that for cabbage, its real farmgate price and technology have positive effects on production while in the indirect method, a negative relationship between real wage rate and cabbage yield was found. For tomato, nominal wage rate and price of fertilizer, rainfall, technology and region dummy D4 representing Region 10- significantly affected tomato yield. Four region dummies representing Region 1 and 10 were highly significant in the area supply response function for tomato. These region dummies have positive sign reflecting upward production trend and share to national output of selected vegetables compared to the reference region