Investment appraisal and risk assessment of protected vegetable cultivation under Leyte conditions

Abstract

Protected cropping technology has been introduced to address the inability of farmers to achieve a successful year-round vegetable production. However, small scale farmers are reluctant to adopt this technology due to huge investment costs and the risk associated with extreme weather conditions. Hence, this study was conducted in some parts of Leyte, to evaluate the profitability and assess the risk of protected and open-field cultivation during the occurrence of extreme weather conditions such as tropical cyclones and strong wind phenomena. Results show that protected cultivation generates higher yields compared to open field cultivation. In Baybay site, investment on steel-type high-strength-tunnel covered with polyethylene plastic is the most viable option as it attained the highest net present values (NPVs), benefit-cost ratios (BCRs) and internal rate of return (IRRs). It also has the earliest payback period across different climatic scenarios. At the Cabintan site, the low-tunnel-structure is the most viable when a high-end market is established. This implies that market outlet is one of the critical factors affecting profitability and pricing. Given the potential of protected cultivation in minimizing crop failures, it is recommended that the government and private sector shall extend financial and technical assistance to farmers. Investors shall be covered with crop and structure insurances as risk of crop failures and loss of capital is high during inclement weather conditions.