Vegetable farmers in Benguet realize a higher annual net income per hectare than those farmers in Laguna - P261,050 in the former against P35,696 for the latter. Such was the major finding of a study conducted by Dr. Eden S. Piadozo, Associate Professor of the Department of Agricultural Economics, College of Economics and Management, University of the Philippines Los Baños. The research that was conducted in Natubleng Village in Buguias, Benguet, an established production area, and Bukal Village in Nagcarlan, an emerging highland vegetable farming area in Laguna, involved 100 farmers (50 per village) and 52 traders as respondents.

Piadozo explained that the huge disparity in profit in the two study sites reflected variations in farm size, production cost, and productivity due to technology and price levels. She noted that in Laguna, the variability in profit is highly attributed to technology. In both sites however, the farmers considered vegetable production as risky.

Farmers from both areas also pointed out other dominant risk factors that affect the level of profitability, such as inclement weather, attack of pests and diseases, and environmental problems. Soil erosion and too much application of agricultural chemicals were found to be the major environmental problems in both study areas. While soil conservation in the form of terracing was observed for Benguet, the slopes in Laguna have been traditionally cultivated. Generally, agricultural chemicals were considered necessary to enhance productionand were used in large quantities in Laguna, while integrated pest and disease control methods were primarily practiced in Benguet.

An examination of the vegetable marketing system in the study areas showed that using multiple distribution channels and having distributors at various stages in the marketing greatly increased the distribution costs. In Benguet, farmers could bring their produce to wholesale trading centers for bulking vegetables and their products were being sold to either financier-wholesalers with whom they had credit marketing arrangements, commission agents, or other wholesalers in the market. On the other hand, the wholesale market does not exist in Laguna, being a new and a small-scale production area; hence most of the traders’ marketing margins and profits reflected their edge in setting the price. The lack of capital additionally contributed to the problem of producing highland vegetables in both study areas.

The result of the analysis of the actual marketing behavior of producers in both study areas showed that the traders were the price-givers, affording them big margins that are likewise affected by a number of factors.

First, the farmers, particularly in Laguna, lacked access to price information. Unlike in Benguet where there are trading posts and radio information, Laguna farmers had no other sources of information except their buyers so they were totally reliant on the buyers for price information. The relatively low production capacity in Laguna restricted traders’ competition, the inflow of information and technology dissemination. Second, the volume of production sold was relatively small. Since buyers always seek large volumes, selling a few baskets of vegetables weakens the farmers’ bargaining power. Third, the vegetables were sold from within the village and were not brought to far markets. The lack of competition in the village characterized by few traders and inadequate price information leave the farmers at the mercy of middlemen. Oligopsony, which is characterized by few buyers and numerous sellers, is evident in both markets.

The poor road system and absence of storage facilities had resulted to big losses not only at the farm level, but also at other levels as well. Without trucks to transport their produce to other markets, farmers were constrained to accept the low prices offered by the traders operating in the Laguna village.

Analysis of price fluctuations and consumption/buying areas in Benguet showed that the farm price did not fluctuate severely but its difference from the retail prices as a whole had widened. On a daily basis, however, wholesale buying prices in the wholesale market in Benguet exhibited wide variation. In spite of the widening margin, Benguet markets are nonetheless fully integrated with central Manila outlets. The presence of communication facilities made price transmission easy for traders conducting business in Benguet and Manila markets.

Based on the above analysis, the challenge for the continuous development of the small–scale, new production area in Laguna can be addressed by introducing environmental preservation technology and a guaranteed just price. This study pointed out the importance of group action for small-scale producers. The approach is basically the empowerment of highland vegetable farmers to gain market access and introduction of production and marketing innovations. Access to markets implies the ability of the farmer group to satisfy market demand in terms of correct product, required volume, and the reliability of supply. These call for integrating the entire chain from production inputs to primary production towards post harvest and marketing of the crops. (Rita M. Fabro, S&T Media Services)