5. Alternatives for increasing

Production Increases in milkfish production can result from both expansion in area and intensification of production methods in a given pond. However, in the short run, the area available to each producer for growing milkfish is fixed. In the long run, individual producers can add to their area under production. While at the national level since 1952, hectarage expansion and production intensification have each contributed about 3 per cent growth annually to the industry (table 11), future growth will have to come from intensification because land area for expansion is limited.

TABLE 10. Tenure Status of Intensively Operated Milkfish Farms, 1978 (Percentages)

Hectarage Expansion

Although milkfish farmers cited several problems they face at present (e.g., inadequate capital, lack of technical assistance, and high fry mortality rate), more than half (56 per cent) showed strong inclinations to expand their present production area. Of the 56 per cent who were inclined to expand their operations, half had definite plans to do so.47 The other half stated that their plans for expansion would greatly depend on the availability of land, capital, time to attend to the milkfish operations, and technical know-how. About 34 per cent of the milkfish farmers intended to maintain their present level of operations, due primarily to the lack of land to expand and lack of capital; the remaining 10 per cent were either undecided or had no response.

TABLE 11. Total Area and Production of Milkfish in the Philippines, 1952-1979

Source: See note 1.

Production Intensification Methods

Besides expanding the physical size of operations (farm) which is becoming increasingly difficult to do, milkfish farmers can increase their output by means of production intensification methods; that is, substituting non-land inputs such as fertilizers and feeds for land.45 About 5 per cent of the country's milkfish farmers are interested in expanding their operations by this production intensification method. This revelation has disturbing implications. First, it reveals that not only are milkfish farmers at present using low levels of inputs, they are, by and large, not aware that production and profits can be increased by intensifying the use of inputs. Even in lloilo where milkfish producers are more progressive and innovative, only 12 per cent would adopt the use of more inputs. Note that the sample for this study included only those milkfish producers who use inputs. Based on the observed low levels of input use, one might be tempted to conclude that, given the prevailing prices of inputs and output, Philippine producers are already optimizing their returns. However, the production function analysis reported later in this chapter, indicates that milkfish producers could increase their profits by increasing input use. There is clearly an educational role for the extension service to play in contrasting the difference between increasing production through hectarage expansion or through intensification of input use.

A combination of factors appears to be at play here. Until the recent moratorium on conversion of mangrove areas to fishponds, land rental values were relatively low. With capital, not land, the limiting factor, it is hardly surprising that milkfish producers would favour hectarage expansion over production intensification. With the moratorium, however, land values can be expected to rise as it becomes relatively more scarce, thus encouraging producers to favour production intensification instead. Sociological factors also play a role in the producer's decision to favour hectarage expansion, as can be seen by the observed tendency to value highly visible or tangible attributes, such as expanse of land, over less tangible or less visible quantities such as gains in productivity per unit area.

Operators of small farms with low productivity, though evaluated as economically inefficient, are also guided in their production decisions by strong sociological factors.

The security and subsistence that is derived from land ownership, the family nature of many of these small farms, and the festivities that characterize Filipino family gatherings at harvest time all temper the goal of profit maximization. For example, it is not uncommon to find family-owned farms being managed on a rotational basis, or cases where absentee owners leave the management of the farms to relatives.