Author : Gomez, Norma U.

Summary : This study applies the Just and Pope stochastic production function specification to value the agricultural productivity of groundwater use in rainfed lowland rice areas of shallow tube well farmers in four sample municipalities of the Cotabato portion of Pulangui River Basin (PRB). Using survey data, this study first establishes the demand for groundwater for irrigation agriculture per hectare of irrigated lowland rainfed area. The demand function reveals that the pumping cost is an important factor influencing positively the volume of groundwater extraction. The positive elasticity coefficient reveals that the demand for groundwater in lowland rainfed rice area is considered as a necessity input/good in both wet and dry season cropping. The pumping cost, which signifies well depth and water availability, is used as a water supply proxy variable input into the stochastic production function. The results of the estimated mean yield function show that cost of machinery, cost of pesticides, and pumping cost are the most important determinants of yield levels of rice grown during wet season cropping. The mean yield function reveals a diminishing marginal productivity for pumping cost. Nitrogen fertilizer is positively related to yield in the dry season cropping in the sample study area. The variance function of the stochastic production function provides empirical evidence that pumping cost (which is used as water supply proxy variable) reduces yield variability in the wet season cropping. This implies that risk-averse rainfed lowland rice farmers concerned with reducing income variability could use groundwater as source of irrigation as a means of reducing production risk. On the other hand, the use of potassium fertilizer in wet season cropping is yield risk reducing input. The cost of pesticides as well as cost of machinery increases exposure to risk. The variance function in dry season cropping shows that nitrogen fertilizer is a risk-increasing input.