Investigating the determinants of cassava domestic supply in the Philippines

Abstract

Cassava is a significant crop in the Philippines because of its many uses and increasing demand from feed milling industries. However, the supply for this crop in the country, compared to other ASEAN countries, remains low and relatively less competitive. There are studies suggesting the need to review factors affecting agricultural supply in the Philippines to support policy initiatives, but only a few studies were conducted specifically targeting the cassava subsector. This study tried to address these gaps. Using time-series regression analysis, this study measured the extent of the effects of the price, area, agricultural R&D expenditure, tariff rate, and weather occurrences. Results from this study suggest that farm gate price as well as area, agricultural research and development spending, and tariff rate significantly determine supply. In contrast, extreme weather occurrences such as El Niño and La Niña have negative but insignificant effect on supply. In addition, this study has also proven that the identified determinants have long run relationship with cassava domestic supply, which suggests that cassava supply cannot readily adjust to changes in these determinants. These results provide insights into how each variable would affect supply, which have certain implications to policy such as the adoption of specific price policy intervention like price support schemes that safeguard farmers’ income against price fluctuations.