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Does Microfinancing improve Farm Productivity? Empirical Evidence on Rice farming in San Francisco, Agusan del Sur, Philippines

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  • Manzano, Gianne Francis Alfred E.
  • Ellson, Adela G.
  • Traje, Adonis
  • Romo, Glory Dee A.
  • Sarmiento, Jon Marx P.

Abstract

Poverty remains to be the highest in agricultural areas in the Philippines. To alleviate this problem, capital empowerment through microfinancing was among the government’s program in the rural areas including the municipality of San Francisco, Agusan del Sur. A total of 95 rice farmers with a 10% margin of error were interviewed to draw conclusions on the impact of microfinancing to farm productivity. Econometric modeling was employed. The production data were fitted using five standard production functions namely; (1) neoclassical, (2) neoclassical with interaction, (3) Cobb-Douglas like, (4) Transcendental and the (5) modified transcendental models. Transcendental function best fits the data with Microfinancing significantly improving farm productivity by 39%. Despite this positive impact, only 34% of these farmers were availing from formal institutions and only 18% took advantage during the last cropping. Nonetheless, it is highly recommended to strengthen the microfinance program in the Philippines by offering extension works on the benefit of Microfinancing, offering less stringent application procedure, and ensuring agricultural credits are used on its purpose, thus, improving the plight of the rural farmers.

Suggested Citation

  • Manzano, Gianne Francis Alfred E. & Ellson, Adela G. & Traje, Adonis & Romo, Glory Dee A. & Sarmiento, Jon Marx P., 2011. "Does Microfinancing improve Farm Productivity? Empirical Evidence on Rice farming in San Francisco, Agusan del Sur, Philippines," 2011 ASAE 7th International Conference, October 13-15, Hanoi, Vietnam 291326, Asian Society of Agricultural Economists (ASAE).
    • Handle: RePEc:ags:asae11:291326
    DOI: 10.22004/ag.econ.291326
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