Study Shows Philippine Poultry Producers Are Risk-Averse, Not Risk Takers

Uncertainty in the prices of poultry products may weaken the poultry industry in the Philippines.

This was stressed by Dr. Raquel Balanay during her discussion of the Price Volatility and Supply Response of Poultry in the Philippines at SEARCA’s Agriculture and Development Seminar Series on May 3, 2011. Dr. Balanay is a SEARCA scholar who just recently received her Ph.D. in Agricultural Economics from the University of the Philippines Los Baños (UPLB). The study she presented was awarded the Best Ph.D Thesis in Agricultural Economics by the College of Economics and Management, UPLB.

Price volatility is an estimate of the range within which prices can vary in the future. Dr. Balanay’s study showed that since poultry prices in the country are volatile, poultry producers tend to avoid risks (risks aversion) in making production decisions. This could lead to opportunity losses. Price volatility in poultry may also affect other markets because of its size and influence.

Dr. Balanay explained that chicken producers are risk-averse and not risk-takers because of the short-term changes in the price of poultry products. Price changes affect the behavior of poultry producers towards the use of expectations in planning and decision-making.

To counter the effects of and lessen price volatility in poultry, Dr. Balanay recommends the     improvement of market coordination and hedging options, the establishment of a monitoring system for price volatility, as well as upgrading the Government’s information network capability. The government should also provide support for easy access to inter-connected information systems. For stakeholders who do not have access to online database, extension services for transmission of relevant market information should be improved.

Additionally she offered that statistical agencies should improve data collection and the organization of online databases. Further research on price volatility and supply response in poultry and other commodities, as well as on the improvement of poultry breeds, should also be conducted.

Dr. Balanay’s study focused on poultry production because of its importance to Philippine agriculture. According to the Philippine Country Report of the United States Department of Agriculture – Foreign Agriculture Service, poultry production in the Philippines accounts for 14% of the entire agricultural production in the country. (Genie dela Cueva and Regine Joy P. Evangelista)

The point of view taken by this article is entirely that of the presenter's and does not reflect in any way, SEARCA’s position.


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