I. Introduction
Data on the costs and returns incurred in producing agricultural commodities is in high demand among Philippine Statistics Authority (PSA) clientele and stakeholders due to its various uses and applications among policy analysts, national accounts compilers, farmers, and other entrepreneurs in the agriculture and fishery sector.
The Production Costs and Returns of Palay is released annually by the PSA. It contains the updated costs and returns incurred in palay production at the national and regional levels. It also includes indicators of profitability, such as gross returns, returns above cash costs, returns above cash and non-cash costs, net returns, and net profit-cost ratio. The cost of production structure is disaggregated by cropping season (January to June and July to December) and by ecosystem (irrigated and non-irrigated). The input structures are based on benchmarks generated from the Survey on Costs and Returns (SCR) of Palay Production in 2022.
II. Data Sources
In updating the costs and returns of palay production, the assumptions are based on current levels of production/yield and prices of inputs and outputs. These data are being sourced from the following:
III. Methodology
The costs and returns data are updated using the following assumptions and procedures:
The indicators of profitability are derived using the following computational procedures:
Gross Returns
Returns Above Cash Costs
Returns Above Cash and Non-Cash Costs
Net Returns
Net Profit-Cost Ratio
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.
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 – any substance, solid or liquid, inorganic or organic, natural or synthetic, single or combination of materials 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.
Pesticides – 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 – labor contributed by the farm operator.
Family labor – labor provided by the farmer's family members who take part in any production activities.
Exchange labor – 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.
Land tax – amount of tax paid by the owner-operator for the farmland.
Rentals – payments for the use of land, machine, animal, tools, and farm machineries.
Fuel and Oil – the costs incurred for the use of gasoline, oil, and other related inputs.
Transport costs of inputs – expenditures incurred in transporting farm inputs to the production sites.
Irrigation fee – payment for irrigation services utilized.
Interest payment on crop loan – payment for the interest on borrowed capital used in the farm production.
Landowner’s share – portion of farmer’s production that goes to the owner of farmland based on the agreed sharing system.
Repairs – costs incurred for all minor repairs and improvements made on the farm investments.
Food expenses – cash expenditures incurred in providing food to farm laborers.
Harvester’s share – portion of farmer’s production that serves as payment to farm laborers who performed the harvesting activities.
Depreciation – cost of wear and tear of farm tools and equipment, machinery and other farm facilities and structures. The straight-line method is used in computing for depreciation where the cost of acquisition is divided by the estimated life span of above cited items.
Interest on operating capital – 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.
Rental value of owned land – is the imputed cost for the use of own farmland which is derived by asking the farmer how much would be the annual value of the land per cropping if it will be rented out.
V. Dissemination of Results
Press release, statistical tables, and infographics are included in the web release.
VI. Citation
Philippine Statistics Authority. (2024). Technical Notes on Production Costs and Returns of Palay. https://psa.gov.ph/content/production-costs-and-returns-palay
VII. Contact Information
Ms. Maria Clarinda E. De Guzman
(Senior Statistical Specialist)
Officer-in-Charge, Agricultural Accounts Division
(02) 8376-1954
c.deguzman@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
