Problems,
Issues and Constraints
Small Farm
Size. Of the 4.61 million
farms counted in 1991, 78% of these are less than 3 ha. Also from
1991 to 2002, the number of farms decreased by 2.36% (BAS, 2004).
Reduced number of farms is due to land conversion to meet the
housing, industrial, and recreational needs of the population.
Small
farm size is a big issue in agricultural mechanization because it
is against the principle of “economies of scale.”
In land preparation and harvesting operations, mechanizing
small and non-contiguous parcels of land might be inefficient.
Decreasing
Supply of Hired Labor in the Farm. Hired
labor in the farm is decreasing owing to preference of labor to
employment opportunities in the urban centers and abroad and high
level of education and literacy in the labor force.
In rice production, labor costs represents around 60% of
the total input costs in rice production. Farmers therefore have
to mechanize in order to lessen costs and dependence to the
unreliable supply of hired labor in the countryside while
increasing crop productivity at the optimum (Bautista, 2003).
Innovative
Machines vs. Market-Driven Machines.
The overriding issue in developing commercially successful
machines is meeting the market demands within acceptable price
levels. The industry must be able to come up with marketable
machines, which could meet farmers’ operational needs at an
affordable price.
While private
local manufacturers are apt at developing commercial machines, the
institutional approach to technology development is quite
different. Apparently, machinery development efforts at public
research institutions are geared towards satisfying the farmers’
functional needs rather than meeting the market demand for new
machines. According to Khan, farmers need a variety of machines or
mechanized services, which may be beyond their purchasing power.
Research institutions have a tendency to be preoccupied with
innovations rather than be propelled by a clearly perceived market
demands.
Other marketing
constraints are: seasonality of demand; prohibitive trucking and
shipping rates; keen competition from imported products;
irrational taxes, duties for raw materials and fabrication
machines; and lack of volume of demand (AMMDA, 2003) .
Inadequate
Technology Transfer Mechanisms.
According to Khan (1991), efforts to mechanize agriculture in many
developing countries have been directed towards introducing a
variety of imported farm machines. This import-based technology
transfer strategy has not been successful to small farm holdings.
One reason could be the inappropriateness of the technology to
local farming conditions as most of these machines were developed
in countries with large farm holdings.
Extension
workers are the key persons in technology transfer.
They need not only interpersonal communication skills, but
technical qualifications as well. With a very limited number of
extension staff for a big number of client-farmers, the result
would likely end-up in non-adoption of some technologies.
Besides, these workers might be lacking the capability to
integrate the mechanization technology in the total farming
system. They too, might be lacking in trainings particularly
dealing with agricultural mechanization (Paras, 2005).
Inadequate
Support Services.
The lack of support services to ensure machine’s
acceptability to farmers has been a continuing constraint in
promoting agricultural machineries. These include limited access
to credit, and ineffective marketing systems.
Prices of
acquiring and maintaining durable farm machines continue to stay
at levels unaffordable to most farmers. One of the reasons is the
high tariff rate levied by government on imported agricultural
machinery and parts. Imported farm machinery are still levied a
10% value added tax. Note that locally manufactured machineries
have high import content.
The only means
available for farmers to access machineries are credit facilities,
common ownerships through cooperatives and associations, and
custom-hire arrangements with private entrepreneurs. However,
employing these means continue to be minimal because of the
limited cooperativism and small number of entrepreneurs who engage
in the business (AMMDA, 2003).
Policy
Constraints. One of the
reasons for the proliferation of imported equipment in the
Philippines is the adoption of liberal import policies and lack of
import restrictions on agricultural machinery. This is in addition
to unstructured tariff and taxation systems, which had negative
effects on the viability of the local agricultural machinery
manufacturing industry.
“Import
duties on agricultural machinery in the Philippines range from 10%
to 30% for completely built-up (CBU) engines, 10% for completely
knocked down engines (CKD) and 50% for raw materials. As stated in
a National Emergency Memorandum, tariff of machinery and equipment
was pegged at 10% and none for engines. The lowering of tariff was
reported to effect changes in output prices and increases in
production. The agriculture sector appears to be a net gainer in
output as a result of the tariff reform” (Cruz, 1990).
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