The economics of pump-irrigated palay production in Batangas Province, Philippines

Abstract

The analyses of this study are based on a sample of 50 pump units and 63 pump users in San Juan and Rosario. It was found that on the average 4-inch pumps had greater pump discharge than 5-inch pumps even at lower revolutions per minute. It was also revealed that both 4-inch and 5-inch pumps had actual pump discharges substantially lower than their rated capacities. These findings suggest the hypothesis that the pump units were not properly installed and that the wells were not satisfactorily developed. The author has therefore suggested that an engineering study be conducted to test this hypothesis. Although there seem to be some engineering problems with pump irrigation in the study area, there were also radical innovations triggered by its introduction to lowland rice farming. The most notable innovation is the adoption of the new rice technology. Other favorable effects of the adoption of pump irrigation are the provision of additional income for the tenant and hired agricultural worker, and increased demand for agricultural inputs like fertilizer, insecticide, etc. The study showed that for a typical year, all the farms realized substantial net revenues. The study also showed that the existing sharing arrangement is quite fair and does not indicate exploitation of the tenant by the landlord. Although the tenant earned inadequate income from rice farming, he remained a tenant because his opportunity cost as a hired laborer is less compared to what he earned as a tenant. The study also revealed that recent increases in prices of farm inputs and palay resulted in greater net revenues. Using typical yields, the increases in net revenues were considerably greater. Simulation analysis was used to trace the build-up of farm net worth and to determine the profitability of lowland rice farming. The analyses showed that pumped water should be used efficiently to maximize the terminal net worth. This therefore implies that pump design and cost should be given careful consideration. The simulation also showed that the investment strategy be one that generates income early in the pump's life. The analyses also showed that both 5-hectare and 2-hectare farms are profitable as reflected by the positive NPV's and B/C ratios greater than one. The simulation also revealed that 2-hectare farms are riskier than 5-hectare farms with regard achieving the terminal net worth. This suggests that for a given pump size, a minimum area that would be economically viable under the current rice technology and economic environment be determined. The B/C ratio and NPV analyses suggest that 2-hectare farms stand a greater chance of making a loss. It is therefore suggested that farmers issued pumps be required to adopt the new rice technology. The simulation also revealed the growing disparity in the expected terminal net worth between small and big farms. It is therefore suggested that small farmers be given priority to the ISU pumps.