Jackie D. Urrutia ¹, Joseph Mercado ¹, Katherine Eve E. Ebue ¹, Faila S. Raymundo ¹, Bernadeth G. Nobles ¹

Affiliations
1 Polytechnic University of the Philippines Sta. Mesa, Manila, PH

Abstract

Objectives: This paper aims to identify the factors influencing agricultural productivity which is measured by the real gross value added in agriculture and provide suggestion. Specifically, how Agricultural Land Area, Employment in Agriculture, Government Expenditure on Agriculture, Agriculture Raw Material Export, and Electric Consumption per Capita affects Real Gross Value Added. Taking account, the agricultural production function of the three basic factors of production – land, labor and capital together with the raw material export and electric consumption. Methods/Statistical Analysis: The Philippine Agriculture is at risk causing poverty and employment, as reported year 2013, compared to how it boosts the economy decades ago. Through multiple regression analysis, the relationship between factors Agricultural Land Area, Employment in Agriculture, Government Expenditure on Agriculture, Agriculture Raw Material Export, and Electric Consumption per Capita and Real Gross Value Added has been established. Pearson Correlation test was used to check to what is the relationship between the Agricultural Gross Value Added and the independent variables. Since the data available for land area is in percent of the total land area, the data for Agricultural Land Area were converted into square kilometres to attain best result. The data always went through Test of Individual Significance, Granger-Causality Test and Paired-T Test. Findings: The dependent variables Agricultural Land Area, Employment, Government Expenditure on Agriculture, Agriculture Raw Material Export, Electric Consumption per Capita have p-values of 0.0008, 0.0014, 0.0042, 0.0000, and 0.0002, respectively. Hence, the individual factors stated were found to contribute significantly to the Agriculture Real Gross Value Added. The correlation of coefficient of Agricultural Land Area, Employment, Government Expenditure on Agriculture, and Electric Consumption per Capita show a strong positive correlation to Real Gross Value Added, whilst, the correlation coefficient of Agricultural Raw Material Export implies a strong negative correlation. In line with the existing values about production, an additional unit for inputs would create an additional output. The conversion of agriculture lands into industrial and commercial space, and the likes, greatly affect in the decrease of agricultural production. The more agriculture raw materials Philippines would export, obviously, the lesser production. But, what if Philippines lack the ability to turn those raw materials into a new product? And, it is better to export it to generate an income. Then, it would be great if Philippines will also invest in agriculture raw materials processing. Application/Improvements: Real Gross Value Added contributes to Gross Domestic Product, which is a measurement of how well an economy of a certain country is. In other words, it affects the economy as a whole. Today’s Philippine administration has been promoting boost in agriculture. In line with this paper’s findings, the government pours sufficient financial support in Agriculture sector to address its needs. This paper will be more useful if it the data available would be up-to-date, since, data availability depends on the scheduling of census and funds as well.

Keywords

Agriculture Gross Value Added, Agriculture Production, Macroeconomics, Multiple Linear Regression, Philippine Agriculture, Time Series

Full Text