Research: Commercialization of Yields in Crop Production

Researcher:   Consolacion A. Talisik
                    CVS - December 2011

Background of the Study

Commercialization of the yields in Agri-crops is considered a cornerstone of successful economic development. It allows increased participation of individual students or households in the domestic exchange economy. Through realization of comparative advantages, it is supposed to benefit not only individual students or individual rural families but also the agricultural sector and the whole economy.

Commercialization may have many facets in this context. Generally speaking, it describes an individual’s or a household’s economic transactions with others. These may both in cash and in kind, the latter playing a considerable role in many communities. Transactions may relate to agri-crops produce, indicating that a certain proportion of a farm’s output is not produced for subsistence but for sale. They may also relate to inputs, indicating that a farm’s production technology depends to a certain extent on external inputs. Finally, a student or household may also be commercialized by earning off-farm income.

The location of the study is in the Concepcion Vocational School Campus and is among the agricultural schools in Concepcion, Tarlac. The study site also is undergoing agricultural commercialization induced especially by the introduction of vegetable production and the expansion of peanut production for the market. While vegetables and peanuts play important roles in the overall commercialization of students or households via product and labor markets, other important forces identified by the survey are nonagricultural off-farm employment and home production activities.

This study highlights the potentials of agricultural development for the employment, entrepreneurship, income, and consumption of the students and households but also stresses that nonagricultural rural growth and employment expansion are key to improved food security setting. It shows that the delivery of public goods has to move ahead in order to maintain and improve the human capital foundation in this stressed environment.

Objectives

1.    What is the mechanism used by CVS in marketing its products in crop production?

2.    How does commercialization of crop production yields contribute in developing the entrepreneurship skill of the trainees?

3.    How effective is the marketing strategy used in the total yield vis-à-vis the total sales?

Discussion of Findings

The study is based on detailed primary crop production data utilized in innovative ways to assess the student’s and household’s behavior in the subsistence economy vis-à-vis options for specialization. A number of interesting statement findings emerge, such as the poor being too poor to capture the gains from efficient specialization because they need to take care of subsistence-based insurance against food security.

While generally favorable effects of commercialization of Agri-crop products for entrepreneurship are manifested by this study and draws attention to the need for concern about land rehabilitation when the stimulus for agricultural commercialization is given in a land-scarce environment.

One aspect of this research is to identify and explain the procedures and steps in marketing the yields in crop production. It is very important for an agricultural project to visualize and foresee where to market the harvest. A good agricultural project can be defined as successful and effective if it generated income based from the production report.

Various aspects can affect the outcome of the project that is why everything has to be properly monitored by the project manager to assure good yield and for the project to continue. This aspect has been meticulously planned by CVS particularly the project-in-charge to contribute to the income generating projects of the school and to justify the utilization of grounds and other facilities.

Since the project has just started, it was not difficult to market the products to CVS employees, students and walk-in clients of the school.

The students were given opportunities to develop their marketing and entrepreneurial skills not just in mere teaching but in practicing it. This approach was used to make each trainee aware that it is equally important to have knowledge and skills in planting and making a business out of it. Also, it is clearly stated in the CVS curriculum that each student has to be given training in entrepreneurship so to make them ready if they fall on having their own business later on.

CROPS PRODUCTION
Production Report
Item No.	Qty	Unit	Materials Inputs	Unit Price	Amount
1	1	Unit	irrigation system	1500.00	1500.00
2	5	sacks	organic fertilizer	50.00	250.00
3	10	pcks	seeds	50.00	500.00
4	1		miscellaneous	1500.00	1500.00
			TOTAL		3,750.00
Yield	123	bundle	eggplant	10.00	1,230.00
Yield	90	bundle	camote tops	5.00	450.00
Yield	5	kgs	radish	15.00	75.00
Yield	27	kgs	peanuts	35.00	945.00
Yield	18	pck	tomato	10.00	180.00
Yield	87	bundle	String beans	10.00	870.00
Yield	158	bundle	okra	5.00	790.00
Yield	43	bundle	malungay	25.00	1,075.00
Yield	69	bundle	mustard	5.00	345.00
Yield	9	pck	Hot pepper	5.00	45.00
			TOTAL		6,005.00

Return of Investment = 6,005.00  X 100%

          3,750.00

                                    =1.60%

The Agri-Crops Production System

This section makes extensive use of the detailed farm-and plot-specific information, including yield. Farm size is 300 square meters. The farming systems prevailing in the study area are exclusively based on smallholder agriculture with the students.

According to climatic conditions of the study area – mainly pattern of rainfall distribution – two agricultural seasons are to be distinguished: the first season starts with the onset of the rains in mid-June and ends in late October or early November, while the second season covers the rest of the year. The agricultural production systems of the study area are almost entirely based on food-crop production. Land use is dominated by the main vegetables. The area is both in sole stands and under mixed cropping, account for almost half the total farm size, followed by vegetables and papaya. Crop rotation is considered that can help reduce pests or soil quality problems with their traditional crops.

Students practice both mixed cropping and sole-stand cropping for the main vegetables and legumes, but the system of mixed cropping is preferred. The agri-crops production technology is almost exclusively based on manual labor, with hoe, rake, shovel and pick mattock being the most important and sometimes the only agricultural tools. The only exception to this is the employment of knapsack sprayers to treat vegetables against leaf blight, but such spraying is limited to the cultivation of peanuts in the area. Apart from that, no pesticides are used in food crop production.

Strategies or models for crop commercialization should:

1.    Allocate risks and rewards equally among students/participants in the crop production-marketing chain;

2.    Avoid the boom-bust cycle of overproduction, market saturation, and price collapse;

3.    Provide supply chain management so that sufficient product is available at a time and price when buyers want it;

4.    Leads to products of higher quality and/or lower price than products they are replacing in the marketplace;

5.    Respond to demand “pulls” for the crop and/or product;

6.    Incorporate public-private partnerships with business and organizational plans, resulting in appropriate and sustainable roles for each partner in the commercialization effort.

Significance of the Study

An important research undertaking is to identify the measures that farmers take to increase returns to land and labor on their increasingly limited land base as well as the role that new crop technology. Also, the important nonagricultural income sources that largely determine the degree of commercialization at the location need to be better understood in order to identify ways to induce the expansion of productive employment in the nonfarm sectors.

This study gave a concrete idea and evidence to the project manager in crop production on how to better implement a marketing strategy for its products.  

Definition of Terms

Agricultural crops - cultivated plants or agricultural produce, such as grain, vegetables, or fruit, considered as a group

The term commercialization defines the volume of produce and household resources that enter the exchange economy. This may include sales or barter of farm products not used for subsistence and off-farm employment of labor and capital.

A market economy is an economy in which decisions regarding investment, production and distribution are based on supply and demand.

Entrepreneurship a process through which individuals identify opportunities, allocates resources, and creates value.

Income Generating Project (IGP) for income generating projects the abilities of people to secure an income, the two key factors are the quantity that can be sold (i.e. that will be purchased), and the price that the buyer will pay.  

Marketing - "the process by which companies create value for customers and build strong customer relationships, in order to capture value from customers in return".

Mix cropping system is a system of sowing two or three crops together on the same land, one being the main crop and the others the subsidiaries.

Production report a process costing document that details all operating and cost information.

Yield - is the income return on an investment. This refers to the interest or dividends received from a security and usually expressed annually as a percentage based on the investment's cost, its current market value or its face value.

Conclusion

The group was optimistic about the benefits of crop production, but realistic in assessing the barriers and challenges to be overcome in commercializing Agri-crops. Effective business planning and organizational development are essential to crop production success. Participation is necessary in most commercialization efforts.

Recommendation

·         Agri-crops can provide much benefit to Filipino agriculture and to society.

·         Development, including through policy change and institutional support.

·         Agri-crops need to contribute products of greater value or lower cost.

·         Sufficient demand must exist to help pull the crop into the market place

·         Equitable allocation of risk and reward among students/participants in the commercialization process

·         To avoid a boom-bust cycle of overproduction and collapsing prices