A Panel Data Study on Factors Affecting Rice Production in the Philippines

Abstract

Rice output in the Philippines appears to be influenced by a wide variety of factors. Apart from considerations related to production, the variable nature of the environment may have started to make inroads into the relatively poor performance of the rice sector. This is concerning given that the rice industry is an economic driver of the many provinces across the country. The purpose of this study was to investigate the catalytic influence that climate variables and selected economic variables have on rice production in the six rice-producing areas of the Philippines from 2006 to 2019 by utilizing panel data estimates and the augmented Cobb-Douglas Production function. The effects of each explanatory variable on the dependent variable were empirically verified using OLS, Fixed, and Random Effect Regression methods. Fixed effect regression is determined to be the most suitable estimation method for the study among the three. For irrigated farms across regions in the Philippines, regression results showed that an increase in Land Area (LA) and application of Urea (Ur) would increase Rice production. Subsequently, a decrease in rice production is obtained when Average amount of Rainfall (ARF) increases and Minimum Temperature (Tmn). The application of Complete (Ct) as fertilizer has negligible effects on production. For rainfed areas, Land Area (LA), the application of Urea (Ur), and Complete (Ct) fertilizers exhibited an increase in rice production; whereas Average Amount of Rainfall (ARF) exhibited negative effects on rice production in the Philippines. Results would show us that in order to maintain the country’s access to rice security, a long-term agricultural strategy should be institutionalized to increase land area devoted to rice production, irrigation and use of other inputs aside from inorganic fertilizers. Aside from this, proactive climate variability adaption measures are required to mitigate the long-term effects of changes in temperature and rainfall on rice production in the Philippines.