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I. The Introduction

One of the important data sets that are highly demanded by the clientele and stakeholders is the costs and returns incurred in producing agricultural commodities.  It has been gaining more attention because of its varied uses and applications for the policy analysts, national accounts compilers, farmers, and other entrepreneurs in the agricultural sector.   They can use these data in selecting the most profitable set of crops to plant during a particular season.

The survey generates benchmark costs and returns structure and estimates.  Meanwhile, for the non-survey years, costs and returns data are updated using the current levels of production and yield, and prices of inputs and outputs.

The Production Costs and Returns of Selected Agricultural Commodities report presents the estimates of updated production costs and returns of selected agricultural commodities at the national level.  It contains 26 agricultural commodities classified into Fruits, Nuts, Root Crops, Vegetables, Legumes, Commercial Crops, and Fisheries. For the selected commodities, the following are the survey years:

 Commodity

Survey Year/s

Commodity

Survey Year/s

Calamansi

1998

Cassava

1998, 2014

Durian

1997

Sweet Potato

1997, 2014

Mango

1996

Onion (Red)

1997, 2002, 2006, 2013

Papaya

1999

Onion (Multiplier)

1997, 2002, 2006, 2013

Pineapple

1999

Garlic

1997, 2002, 2006, 2013

Watermelon

1999

Ampalaya

1999

Cashew Nut

1996

Cabbage

1996

Pili Nut

1997

Carrot

1996

Cauliflower

1996

Mongo

1997

Eggplant

1998

Peanut

1997

Habitchuelas

1996

Coffee

1998

White Potato

1996

Milkfish

2001, 2006

Stringbeans

1999

Tilapia

2002, 2011

Tomato

1998, 2017

 

 

The costs of production of temporary crops are the total expenses incurred in production during the current season.  For permanent crops like calamansi, durian, mango, papaya, coffee, cashew nut, and pili nut, costs of production refer to maintenance costs of the farms.

The complete cost structures and profitability measures are presented by nature of costs incurred i.e., cash costs, non-cash costs and imputed costs.

II. Data Sources

Variable

Sources

Volume of Production and Area Harvested for:

Crops

Fisheries

PSA
CPI by itemsPSA
Prevailing Investment RatesBSP
Dealer’s Price of Fertilizer and PesticideFPA
Nominal Wage RatesPSA

III. Methodology

Data on the costs and returns are updated using a given set of assumptions and procedures. These are summarized in the following tables:

III.1 Other Crops

ITEMBASIS/PROCEDURE
1.  Cost of seeds/planting materials

 

 

 

movement of the farmgate price

      (Cash, Non-cash and Imputed)
2.  Irrigation fee
3.  Lease rental
4.  Rental value of owned land
5.  Landlord's share
6.  Harvester/thresher/sheller's share- movement of the gross value of yield
7.  Cost of fertilizer- quantity used from the survey results multiplied by the current retail price of fertilizer by grade
8.  Cost of pesticides 

Solid

- movement of the retail price for selected pesticides

Liquid

- quantity used from the survey results multiplied by the current retail price of pesticides
9.  Soil ameliorants- movement of the retail price of fertilizer
10.  Cost of mulching materials- movement of the retail price of fertilizer
11.  Labor costs (hired, unpaid operator, family and exchange labor)- number of mandays from the survey results multiplied by the current agricultural wage rates
12.  Rentals (tools, equipment, machine, and animals)- movement of agricultural wage rates
13.  Food cost- movement of CPI for food
14.  Transport cost- movement of CPI for transport
15.  Fuel and oil- movement of CPI for fuel and oil
16.  Repair cost- movement of CPI for minor repairs
17.  Electricity cost- movement of CPI for light
18.  Interest on crop loans- increase of 10.0 percent per annum
19.  Other production costs- movement of CPI for all items
20.  Depreciation cost- increase of 10.0 percent per annum
21.  Interest on operating capital- based on Average Lending Rates from BSP
22.  Land tax- increase of one (1.0) percent per annum

III.2 Milkfish and Tilapia

ITEM

BASIS/PROCEDURE

 
1. Stocking materials (fry, fingerlings)(Cash, Non-cash and Imputed)- movement of farmgate prices

2. Fertilizer

         Organic

         Inorganic

- movement of the average retail prices of all fertilizer types

- quantity used from the survey results multiplied by the current retail price of fertilizer by grade

3. Feeds- movement of CPI for all items
4. Pesticides, other chemicals, other inputs- movement of the retail prices for all types of pesticides
5. Land tax- 1.0 percent per annum
6. Rental: Land Machine, tools and equipment- movement of farmgate prices
7. Labor cost (hired, unpaid operator, family and exchange labor)- movement of agricultural wage rates
8. Fuel and oil- movement of CPI for fuel and oil
9. Transport cost of inputs- movement of CPI for transport
10. Irrigation fee- movement of farmgate prices
11. License/permit- movement of Fishpond Lease Agreement (FLA) rates
12. Interest payment on crop loans- increase of 10.0 percent per annum
13. Electricity- movement of CPI for light
14. Food expense- movement of CPI for food
15. Repairs- movement of CPI for minor repairs
16. Other expense (containers, etc)- movement of CPI for all items
17. Other laborer's share- movement of agricultural wage rates
18. Landlord's share- movement of farmgate prices
19. Harvester's share- movement of gross value of yield
20. Lease rental- movement of farmgate prices
21. Depreciation- increase of 10.0 percent per annum
22. Interest on operating capital- based on Average Lending Rates from BSP
23. Rental value of owned land- movement of farmgate prices

The measures of farm profitability are as follows:

  • Gross Returns = Total production x Farmgate price

  • Returns above cash cost = Gross returns - Cash cost

  • Returns above cash and non-cash cost = Gross returns - (Cash cost + Non + cash cost)

  • Total Cost = Cash cost + Non-cash cost + Imputed cost

  • Net Returns = Gross returns - Total cost

  • Net profit - Cost ratio = Net returns/Total cost

IV. Concepts and Definition of Terms

Cost Classification

Cash Costs – are direct cash outlays or cash payments for the use of different factors of production such as labor, fertilizers and chemicals.

Non-Cash Costs – are expenditures that are paid in kind. Valuation of cost items makes use of the prevailing prices in the community. Generally, these non-cash costs represent the portions of the farmer's production that serve as payments for the use of particular factors of production.

Imputed Costs – are expenditures that do not involve actual outlays in cash or in kind; they represent the opportunity costs of using owned resources in a particular activity and are computed using the values of the best alternative uses foregone.

Total Costs – refer to the sum of cash costs, non–cash costs and imputed costs.

Indicators of Profitability

Gross Returns – refer to the gross value of production. It is derived by multiplying the total volume of production by the farmgate or producer price.

Gross Returns = Production x Farmgate Price

Returns Above Cash Costs – returns after deducting the total cash outlays from the total value of production.

Returns Above Cash Costs = Gross Returns - Cash Costs

Returns Above Cash and Non-Cash Costs – returns after subtracting the cash and non-cash costs from the total value of production.

Returns Above Cash and Non-Cash Costs = Gross Return - (Cash Costs + Non-Cash Costs)

Net Returns – refers to the net profit after subtracting all expenses incurred from the total value of production.

Net Returns = Gross Returns – Total Costs

Net Profit-Cost Ratio – determines the rate of return to the farmers (the amount earned by the farmer for every peso spent in the production).

Net Profit-Cost Ratio = Net Return ÷ Total Costs

Return on Investments – measures the amount of return on an investment, relative to the investment costs. The result is expressed in percentage.

Return on Investments= Net Profit-Cost Ratio x 100

Specific Cost Items

Seeds/Planting materials – are plant materials used for sowing purposes for the production of food, fodder, oil, industrial crops, vegetable, fruit flower, lawn and tree crops and include vegetative parts and/or organs used for propagating the crops/species.

Fertilizers – refer to any substance, solid or liquid, inorganic or organic, natural or synthetic, single or combination of materials that is applied to the soil or on the plant to provide one or more of the essential elements to improve plant nutrition, growth, yield or quality, or for promoting a chemical change that enhances plant nutrition and growth.

Soil ameliorants – are elements placed or mixed into the soil to replenish depleted soil nutrients for better plant growth.

Pesticides – refer to chemicals used to control/eradicate insects, pests and weeds.

Mulching materials – refer to the layer of material applied to the surface of an area of soil to conserve moisture, improve the fertility and health of the soil and reduce weed growth.

Paid Labor

Hired labor – is labor provided by a person who is paid by the farm operator. Payment of wages is either in cash or in kind (as agreed). Hired labor includes a man, eventually in combination with an animal or machine in the case of custom services (wages as well as in-kind payments have to be considered).

Unpaid Labor

Operator labor – is labor contributed by the farm operator.

Family labor – is labor provided by the farmer's family members who take part in any production activities.

Exchange labor – is work done by farm laborers in exchange (or as payment) for the work done by the farm operator and family members outside the operator’s own farm.

Mandays of unpaid labor are valued at prevailing wage rate in the locality.

Land tax – is amount of tax paid by the owner-operator for the farmland.

Rentals – refer to payments for the use of land, machine, animal, tools, and farm machineries.

Fuel and Oil – refer to the cost incurred for the use of gasoline, oil, and other related inputs.

Transport costs of inputs – are expenditures incurred in transporting farm inputs to the production sites.

Transport costs of produce from farm to first point of sale – refer to expenditures incurred in transporting farm produce to the first point of sale. In this case, the farmer receives a price upon delivery of his product from the farm to a specific location (first point of sale).

Interest payment on crop loan – refers to payment for the interest on borrowed capital used in the farm operations.

Landlord’s/Landowner’s share – is the portion of farmer’s production that goes to the owner of farmland based on the agreed sharing arrangement. The valuation is based on the price at which the produce is sold or would be sold in the market.

Financier’s share – is the portion of farmer’s production that goes to the financier of the farm operations based on the agreed sharing arrangement.

Repairs – cover all repairs and improvements made on tools and equipment and other facilities used in the production process.

Food expenses – expenditures incurred in providing food to exchange and hired laborers.

Harvesters’ share – refers to the portion of farmer’s production that serves as payment to farm laborers who perform the harvesting.

Water expense – is the payment in cash reported by farmers for the water consumed in the production process during the reference period.

Electricity cost – is payment for electricity consumed in the production process.

Storage fee – refers to the payment in storing the produce in a suitable place for a period of time before disposition or distribution.

Depreciation – refers to the cost of wear and tear of farm tools and equipment, machinery and other farm facilities and structures. It is computed as cost of acquisition divided by the estimated lifespan of farm equipment.

Interest on operating capital – is the cost of capital foregone for the purchase of seeds, fertilizers, chemicals and payment of wages for hired labor. This is derived by multiplying the total cash outlays by the prevailing lending rates from the Bangko Sentral ng Pilipinas (BSP).

Rental value of owned land/animal – is the imputed cost for the use of own farmland or animal which is derived by asking the farmer how much would be the annual value of the land or value of the animal per cropping if it will be rented out.

V. Dissemination of Results

TitleSchedule of Release
Production Costs and Returns for Selected Agricultural CommoditiesOctober of the Current Year

Statistical tables and publication report are included in the web release.

VI. Citation

Philippine Statistics Authority. (2022). Technical Notes on Production Costs and Returns of Selected Agricultural Commodities. https://psa.gov.ph/statistics/technical-notes/node/167182

VII. Contact Information

Ms. Manuela S. Nalugon 
(Supervising Statistical Specialist) 
Officer-in-Charge 
Agricultural Accounts Division 
(02) 8376-1954 
m.nalugon@psa.gov.ph

For data request, you may contact:

Knowledge Management and Communications Division 
(02) 8462-6600 loc. 820 
info@psa.gov.ph | kmcd.staff@psa.gov.ph

Attachment Size
Word document 2022 CRSAC Technical Notes 52.29 KB