Fertilizer Expenditure and Overseas Remittances: Evidence from the Philippines

An important factor that enhances agricultural productivity is land fertility. While the benefit of using fertilizer is well known, its level of adoption and use is relatively low among farmers in developing countries. Several constraints are identified in the literature to explain the lack of use of fertilizer among farmers, which includes liquidity and credit constraints. In this paper, we investigate whether remittances have the potential to remove these constraints by promoting fertilizer use among Filipino farmers. We use a unique periodic farm household survey data spanning 50 years that began in the Green Revolution in a key rice bowl of the Philippines to undertake a study using panel data. The farm household survey was conducted in the wet and dry seasons every four to five years from 1966-1967 to 2015-2016. We find that remittances recipient families invest more in fertilizer to enhance rice productivity. Furthermore, overseas remittances have a significantly more positive impact on fertilizer investment than domestic remittances. The impact of remittances varies with the level of household expenditures on fertilizer and the size of the farm. The results indicate that remittances can partially remove credit and liquidity constraints and promote fertilizer use among rice farmers in the Philippines.