I. The Introduction
The 2022 Survey on Costs and Returns of Palay Production is conducted by the Philippine Statistics Authority (PSA) in collaboration with the Department of Agriculture-Bureau of Agricultural Research. This generates data on the cost structure of palay production and average use of materials and labor inputs, measures of profitability, and other socio-economic characteristics of palay farming in the country. It also serves as benchmark data which are needed in the annual updating of the database on costs and returns of palay production.
The data generated from this survey will be disseminated through a press release, publication, and statistical tables posted at the PSA website and OpenSTAT portal.
Objectives
The general objective of the survey is to generate data on costs and returns of producing palay. Specifically, the survey aims to:
a. establish an up-to-date production costs structure;
b. determine indicators of profitability such as gross and net returns, returns above cash costs, returns above variable costs, etc.;
c. come up with benchmark/updated data sets on average use of material and labor inputs; and
d. generate other related socio-economic variables.
Uses
Data on production costs and returns had been gaining more attention because of its varied uses and applications for the policy analysts, national accounts compilers, farmers, and other entrepreneurs in the agriculture sector.
For palay farmers, data on production costs and returns can serve as basis for their planning and programming activities. They can use these data in selecting the most profitable set of crops to plant during a particular season.
For both government and non-government planners and policy makers, data on production costs and returns can be used in designing appropriate programs and projects to boost the growth and development of the palay industry. Also, other important applications of data on production costs and returns are in the financial and insurance markets. In particular, financial institutions require feasibility studies in every investment portfolio. Doing a feasibility study needs data on production costs and returns. On the other hand, this data can serve as a solid basis in determining appropriate insurance premium rates.
II. Coverage
Coverage
The survey covers palay farmers who harvested palay during the reference period. The survey was conducted in 81 palay producing provinces nationwide in two rounds to account for farming operations in January to June 2022 and July to December 2022.
III. Methodology
Sampling Frame
The list of samples from the 2022 Palay Production Survey (PPS) serves as the sampling frame in the selection of palay farming households who harvested palay.
Sampling Design
The domain of the survey is the province. The SCR employs a one-stage sampling with selection of palay farming households that harvested palay from the list of samples of the 2022 PPS. The PPS on the other hand employs a two-stage sampling design with palay producing barangay as the primary sampling unit (PSU) and palay farming household as the secondary sampling unit (SSU). Since the sampling frame of SCR is also a survey, the survey weights of the PPS were considered in the estimation of final weights for the SCR, which is further discussed in this section.
Sample Size Determination
Fifty (50) percent of the total samples from the first quarter of 2021 PPS per province is the sample size of the SCR.
Sample Allocation
If the number of palay farming households that harvested palay is less than the target sample size in a province, all the palay farming households with harvest in the province is selected. Otherwise, the following allocation of samples is used:
All palay farming households that harvested palay in each sample barangay were selected if the number of palay farming households with harvest is less than or equal to ten (10).
Ten (10) palay farming households that harvested palay per sample barangay were selected if the number of palay farming households with harvest is greater than ten (10).
Sample Selection
Palay farming households with harvest during the reference period from the list of samples in the 2022 PPS are selected using simple random sampling.
Estimation Procedure
A. Survey Weights
1. Base Weight of SCR
The base weight 
of SCR is computed as follows:
2. Adjustment Factor 
for Non-response
The computation of the adjustment factor, is given below.
Eligible households are those with interview status of:
1. Interview Completed
2. Refused to be Interviewed
3. Temporarily away/Not at home
4. Area temporarily not accessible
On the other hand, ineligible households are those with interview status of:
1. Resides outside the sample barangay
2. Unknown in the locality / cannot be located
3. Deceased (no other member in the household)
3. Final Weight 
The final weights is computed as the product of the Base Weight and the adjustment factor. That is:
B. Estimation of Total and Ratio
1. Total
The total estimator for the domain total 
is computed as:
2. Ratio
The estimator for the ratio is given by:
C. Estimation of Variances
1. Variance of a Total
The estimator for the variance of the total is computed as:
2. Variance of a Ratio
The estimator for the variance of the ratio is computed using the Taylor series linearization method. The formula is given as follows:
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.
Returns Above Cash Costs – returns after deducting the total cash outlays from the total value of production.
Returns Above Cash and Non-Cash Costs – returns after subtracting the cash and non-cash costs from the total value of production.
Net Returns – refers to the net profit after subtracting all expenses incurred from the total value of production.
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).
Return on Investments – measures the amount of return on an investment, relative to the investment costs. The result is expressed in percentage.
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.
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 the amount of tax paid by the owner-operator for the farm land.
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.
Irrigation fee – payment for irrigation services utilized.
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.
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’/Shellers’ share – refers to the portion of farmer’s production that serves as payment to farm laborers who perform the harvesting and/or shelling activities.
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
The 2022 Survey on Costs and Returns of Palay Production report will be released on 15 September 2023.
Press release, statistical tables, infographics, and publication report are included in the web release.
VI. Citation
Philippine Statistics Authority. (2022). Technical Notes on 2022 Survey on Costs and Returns of Palay Production. https://psa.gov.ph/statistics/technical-notes/1684061665
VII. Contact Information
Manuela S. Nalugon
(Supervising Statistical Specialist)
Officer-in-Charge
Agricultural Accounts Division
Macroeconomic Accounts Service
Sectoral Statistics Office
Philippine Statistics Authority
Email Address: m.nalugon@psa.gov.ph
For data request, you may contact the:
Knowledge Management and Communications Division
(632) 8462-6600 locals 839, 833 and 834
Email Address: info@psa.gov.ph