Net revenues per hectare from rice is more than four times that from corn and the net revenue to cost ratio is about three times that of corn farming. With generally less land devoted to cultivation of other crops and much less costs involved, annual net incomes realized by households from farming of other crops are comparable, if not higher than corn. All the other crops—abaca,banana, coconut and other non-traditional crops have remarkably much lower costs, yielding net revenues to cost ratio of more than one. With the exception of coconut, net returns per hectare from all other crops are greater than that from corn. Survey data indicate that despite relatively high gross revenues from corn farming, vertical farming racks substantial costs diminish net returns/income.Data from the Philippine Statistics Office reflect an improvement in the profit to cost ratio of corn farming in the Philippines from 0.25 in 2010, to 0.63in 2015, and to 0.78 in 2018 .
Survey results from this study suggest that corn farming profitability in Lake Sebu has remained on the 2010 level of the Philippines.Welfare indicators, such as aggregate household income, poverty incidence,food consumption vulnerability and self-reported happiness are presented in Table 3. Welfare measures for households whose main income source is farming as well as for households that are dependent on other livelihood sources such as tourism, tilapia aquaculture and others are provided so as to show the relative socio-economic conditions of farming households in the Municipality. Table 3 reveals that households who are mainly dependent on agriculture are worse-off than other households in the Municipality. On the average, annual income of other households is about30-100% larger that income of farming households. Poverty incidence and hunger incidence are substantially higher among farming households than other households.Further, the average happiness score is lowest for farming households.
Interviews and focus group discussions with farmers in Lakes Sebu that allowed more in-depth investigation on their conditions revealed farming households’ vulnerabilities arising from limited financing and marketing options.Although most of the FGD participants claimed that they own the land that they cultivate, all of them have no savings to fund their farming livelihood activities and hence,vertical rack system depend on financiers to cover farming costs from seed sowing to marketing. Some acquire cash financing from informal loan sharks at interest rates of 5% – 10% per month . But most farmers enter into a financing contract with agricultural traders who normally provide them with all farm inputs—seedlings, fertilizers, herbicides,and pesticides. The prices of the farm inputs are set in the contract at levels that are much higher than market prices. All contract prices are fixed such that even if the market price of a farm input falls, the price set in the contract is not changed. For example, a bag of fertilizer that costs PHP950 in the market is provided by the financier to the farmer at PHP1,500. There have been instances that the market price of fertilizer falls to as low as PPH650, but the PHP1,500price set in the contract is not amended. In most cases, the agricultural traders who provide the farm inputs are also the buyers of the crops.
While they set very high input prices in the contract, they buy crop harvests at very low prices. Further,they charge transportation costs of PHP1.80 for every kilogram of the crop,leaving the farmers with very little net income for their harvests.It is very difficult for the subsistence Lake Sebu farmers to bring their produce and sell directly to the market to get a fairer price for their produce due to the absence of concrete farm to market roads. Roads are hardly passable during rainy days. World Bank notes that transportation costs can rise by an additional 71% during the rainy season. Produce from upland farms has to be transported using horses or motorcycles to lowland areas. Apart from higher transportation costs, the shortage of drying facilities and transport difficulties result in high spoilage and further losses to the farmers during the rainy season. In the Philippines, the Department of Agriculture, in partnership with the local government units, is mandated to provide the support services necessary to make agriculture and agriculture-based enterprises profitable.