Assessment of factor condition that affect the growth and competitiveness of the banana industry in the Philippines

The project was conducted mainly to analyze the nature, quantity and other characteristics of the various factor conditions affecting small hold banana production, and recommend necessary policy interventions to enhance their production efficiency. The specific objectives were: 1) to characterize the factor conditions of banana production systems in the major producing regions of the country, 2) to determine the efficiency of producing the commodity, 3) to determine the relationship between the various factor conditions and the efficiency of banana production, and 4) to provide recommendations as inputs to policy advocacy and interventions to enhance the efficiency of the small hold banana production. The study used primary and secondary data. Primary data were collected through farm survey of four major banana producing provinces of the Philippines, namely: Oriental Mindoro, Quirino, Davao del Norte and Davao Oriental. Data collection was carried out during the period Sept 2005 to Feb 2006. A farm survey with the used of pre-tested questionnaires was conducted in three provinces namely Mindoro Oriental, Quirino and Davao del Norte. The survey gathered wide ranges of data regarding production activities at farm level of small-hold banana farms. This characterization of the factors affecting productivity of small-hold banana farms was done with the use of stochastic frontier production function. However, the stochastic frontier production function was not applied to lakatan and latundan due to lack of observation. In determining the efficiency of producing banana, capital, land and labor efficiencies were computed. To attain the other objectives, descriptive analysis, and costs and returns analysis were done in the study. Measures of profitability such as net farm income and net cash income were computed. The results of the study showed that small-hold banana farms in the study areas were marginally managed. The results show that banana farms used minimal inputs. In most cases, they applied fertilizers and pesticides to their banana plants only if there were quantity left from their main crops. The results of the stochastic frontier model show that the mean technical efficiency of saba farms in the study area is roughly 45.47 percent, which means that the sample provinces, on the average, could increase their banana output by 54.53 percent without the use of additional resources but proper use of existing input and technology. In addition, the result shows that labor affect the yield of banana significantly. The parameter for fertilizer is significant at 5 percent in the model without inefficiency variables. Likewise, the results show that the tenure affects the efficiency of banana production. The results also show a decreasing return to scale of small hold banana farms. The cost and returns analysis showed that among the different banana cultivars planted in both provinces, latundan farms generated the highest net farm income followed by lakatan and then saba. Quirino farms were the most profitable in terms of saba production, while Davao del Norte farms were the most profitable in lakatan and latundan cultivars. Lakatan farms in Davao del Norte were the relatively more efficient in utilizing capital and land and labor in banana production.