Nature, Causes, & Sources Of Productivity Growth In The Livestock And Poultry Sub-sectors

Nature, Causes, & Sources of Productivity Growth in the Livestock and Poultry Subsectors

Sectoral Growth in agriculture GVA, Philippines Background 20 15

(Percent)

10 5

87-88

0

92-93

-5

Cereals

-10 -15 -25 -20

Source of data: NSO

Trad Exp

Oth Crops

Live and Poul

Total

97-98 00-01

Chicken Inventory

(000 head)

250000 200000 Philippines

150000

Thailand 100000

Malaysia

50000

Source: FAOSTAT

00 20

90 19

80 19

70 19

19

61

0

Chicken Exports Metric tons

350000 300000 250000 Philippines

200000

Thailand

150000

Malaysia

100000 50000 0 1980 Source: FAOSTAT

1985

1990

1995

2000

2002

Corn Producer Price 0.30

(US$/kg)

0.25 0.20

Indo

0.15

Phil Thai

0.10 0.05 0.00 1995 Source: FAOSTAT

1996

1997

1998

1999

2000

2001

Study 1. AssessObjectives production and supply chain operations of the livestock sector; 2. Collect evaluate commodityspecific data relevant to productivity growth analysis; 3. Describe the evolution of technical, institutional, and

•

Study Objectives Describe the role of the private and

government sectors in the development and introduction of livestock technology; and • Estimate sources of productivity growth in the livestock sector through appropriate methodologies using the available data set.

Operational Framework

AccomplishmentsCommodity Profile to-Date

• • Literatures (Approaches) Reviewed • Data Gaps • Analytical Model

Commodity Profile • Description of major time trends in production, consumption, imports, and prices • Discussion on the important segments of each of the sub-sector’s supply chain • Discussion on the relevant sub-sector trends • Sectoral performance viz other countries • Key issues in the sub-sectors

Literatures Reviewed

Available Data • Bureau of Animal Industry – Supply Chain Analysis for Hog (file: BAI Hog Supply Chain Analysis) COMPILED – Supply Chain Analysis for Poultry

• Bureau of Agricultural Statistics – Agricultural Employment Data by Sub-Industry Group COMPILED – Total Production, Philippines COMPILED – Swine Inventory, Philippines COMPILED – Chicken Inventory, Philippines COMPILED – Metadata for National Agricultural Statistics in the Philippines

• National Statistical Coordination Board – Employment Statistics – household-based data (file: NSCB PSIC Employment by Sector (1991 – 2000)) COMPILED

• International Food Policy Research Institute – Philippines, Smallholder Livestock Production Dataset, 2000-2001 COMPILED

• Dr. Robert Lo of Red Dragons Farms – From presentation on Philippine broiler industry at March 2006 poultry convention (will try to contact for source of estimate) COMPILED – Cost of production for broiler: unit cost, per head, per kilogram COMPILED

• Dataserve Management, Inc. – Potential data relevant to study (based on citations of other sources)

Analytical Model

• Stochastic frontier approach – Two stages:

• Stage 1: Estimation of production function and technical efficiency (TE) • Stage 2: Estimating the determinants of TE

– Exploit results to estimate changes in total factor productivity

• Stage 1: Single period, i = 1,…N firms or farms yi  f  xi  TEi ev or yi  f  xi  evi ui where : yi  output of farm i xi  vector of inputs of farm i vi  ui  composed error vi  error term, TEi  e  ui

• Transformed further… ln yi    xi   vi  ui where: xi  1xk vector of inputs (transformed),

  kx1 vector of parameters • Estimation approaches – Deterministic – Stochastic frontier model

• Deterministic – “deviation from an observed max is attributed solely to inefficiency of the firm…”(Greene, 1997, p 92) – corrected OLS

• Stochastic frontier model – “...maximum output that a producer can obtain is assumed to be determined both by the production function and random external factors such us luck or unexpected disturbances…” (Greene, 1997 p 92) – Assumes a distribution for ui…e.g. half-normal – Maximum likelihood

• Stage 1: Multi-period Revised equation: yit  f  xit , t  e

vit uit

i  1,...N farms; t  1,...T periods Measure of technical efficiency: yit TEit  e f  xit , t 

uit

• Stage 2: Determinants of uit

uit  z it  wit where: z = vector of explanatory variables  = vector of parameters w = error term

• Measuring Change in total factor productivity (TFP) – see Teruel (2007) – Change in TFP = scale effect + pure technological change + change in technical efficiency + input allocative effect

Scale effect =

 RTS  1   j j

where: RTS = returns to scale  ln yit RTS   j  ln xit f  xit , t 

j 

x j

RTS

x j



xj

Pure technical change: TCit 

f  xit , t  t

uit Change in technical efficiency: TECit  t Input Allocative Effect:

  j



j

 S j  xj

Issues

• Deterministic or stochastic? – Inclined to do both

• What functional form? – Prefer a translog but will depend on the number of observations….. – Will probably start with a Cobb-Douglas

• What are the xs (stage 1) and zs (stage 2) – Depends on available data…later

Data

• The dark side: Have time series data on outputs but no data on inputs! • A ray of sunshine: surveys used in the studies of Costales et al. (2003) and Costales et al. (2007) – Have access to the data – Can replicate survey (questionnaires and respondents) – Will be seeking permission from IFPRI

• Data collected – Output (y) – Inputs (x): labor, capital, feed consumption – Others (potential zs?): • Management characteristics: Years engaged in business, credit avail, land ownership, visits to vet, attendance in seminars • Household characteristics: marital status, age, years of schooling, household size, other potential sources of income

• Other info: – Costales et al. (2003) • Period: Nov 2002-Jan 2003 • Smallholder and commercial farms • Hogs: Central Luzon (59 obs), Southern Tagalog (76 obs), Northern Mindanao (72 obs) • Poultry: Central Luzon (61 obs), Southern Tagalog (55 obs)

– Costales et al. (2007) • Period: 2001-2 • 144 small-scale hog producers in Southern Tagalog

Issues

• Which sites to visit?

– Budget constraint – Status of farms…are they still in the business?

Work Schedule