Philippines - Agricultural sector survey (Vol. 2 of 4) : Annexes 1-5 : Physical environment, forestry, irrigation, livestock, and fisheries

CIRCULATING COPY ILE COPY TO BE RETURNED TO REPORTS DES DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATOIVN Not For Public Use 39 Vol. 2 RETU RN TO Report No. 39a-PH r , AGRICULTURAL SECTOR SURVEY PHILIPPINES (in four volumes) VOLUME II ANNEXES 1 - 5 May 2, 1973 Regional Projects Department Asia Regional Office This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report. PHILIPPINES AGRICULTURAL SECTOR SURVEY VOLUME II ANNEXES 1 - 5 ANNEX 1. PHYSICAL ENVIRONMENT ANNEX 2. FORESTRY ANNEX 3. IRRIGATION ANNEX 4. LIVESTOCK ANNEX 5. FISHERIES ACRICULTURAL SECTOR. SURVEY PPILIPPINES AINEX 1. PHYSICAL ENVIRONMENT FOP, AGRICULTURE ANNEX 1 Page 1 PHILIPPINES AGRICULTURAL SECTOR SURVEY PHYSICAL ENVIRONMENT FOR AGRICULTURE TABLE OF CONTENTS Page No. Introduction and Overview ................................... 1 A. Major Geographical Regions ............................. 2 Region I - The City of Manila .......................... 4 Region II - Ilocos ..................................... 4 Region III - Cagayan Valley ............................ 4 Region IV - Central Luzon .............................. 5 Region V - Southern Tagalog ............................ 6 Region VI - Bicol ...................................... 7 Region VII - Western Visayas ........................... 7 Region VIII - Eastern Visayas .......................... 8 Region IX and X - Mindanao Island ...................... 9 B. Climate ................................................ 11 Temperature ............................................ 11 Rainfall ............................................... 11 Classification of Climate Types ........................ 12 Relative Humidity ...................................... 13 Solar Radiation ........................................ 13 Typhoons ............................................... 14 C. Soils .................................................. 15 General Features ....................................... 15 Soil Surveys in the Philippines ........................ 16 Soil Fertility Studies ................................. 18 D. Effect of Physical Environment on Crop Distribution and Production ............................................. 18 Present Crop Distribution .............................. 18 Agricultural Constraints ............................... 19 Low Productivity of the Lowlands ....................... 19 Low Productivity of Upland Crops ....................... 20 ANNEX 1 Page 2 Appendix 1. Regional Soil Features of the Philippines Tables 1: Classification of Provinces, by Geographical Regions 2: Population, Land Area, Percent Change, Density and Percent Distribution of Population by Region and Province 3: Normal Monthly Average Temperature of Selected Stations 4: Normal Monthly Rainfall 5: Criteria of Classification of Climatic Regions 6: Normal Relative Humidity of Selected Stations 7: Monthly Distribution of Typhoons in the Philippines 8: Frequency of Passing of Typhoon Centers 9: Correlation Between the Soil Units; FAO/UNESCO Soil Haps of the World, 1938 USDA Soil Classification and Unedited Text of Soil Taxonomy. MAPS Mean Monthly Rainfall 1951- 1970 (IERD 10132) Climatic Regions (IBRD 10133) Philippine Soils (IBRD 10396) ANNEX 1 Page 1 PHILIPPINES AGRICULTURAL SECTOR SURVEY PHYSICAL ENVIRONMENT FOR AGRICULTURE Introduction and Overview 1. The Philippines has complex physiographic and climatic patterns. With 7,100 islands, it is the largest archipelago in the world. Forty-five larger ones account for 98% of the land area, leaving 2% for roughly 7,000 islets. The entire country sits on a series of stress lines along which numerous faulting, folding, and volcanic activities have taken place. These extensive earth movements have resulted in numerous mountain ranges, which divide the islands further into small watersheds with short and usually rapid rivers and isolated alluvial plains bound by mountains, hills or sea. 2. This geographical setting makes transportation and distribution of agricultural inputs and products expensive and difficult to manage. 3. The islands also lie under the influence of the monsoon and in the path of tropical typhoons. The generally north-south alignment of mountain ranges shadow part of all islands from either the north-east or south-west monsoon. Complicated further by typhoons and local tropical thunderstorms, the Philippines' rainfall varies regionally from distinct dry/wet seasons to even monthly distribution, from summer summation to winter summation. Typhoon frequencies increase generally from south to north; only southern Mindanao is relatively free from their havoc. 4. One unifying element is temperature which provides the whole Philippines with year-round growing season for both crops and forests from north to south. 5. Having only limited area of alluvial plains, farming on hill and mountainside is widely practised; i.e., coconut, corn, sugarcane, upland rice, sweet potatoes and smallholder bananas. Soil erosion is widespread. Abandoned farms on slopes are taken over quickly by cogon or other grass weeds with strong runners that are difficult for animal plows to remove. The extensive hillside culture is one of the basic causes of low crop yields, and improvements are difficult at the present level of technology. A "one-way" pattern of exploitation has taken hold: forest clearing, subsistence cropping with declining yields, and the final takeover by the almost useless grass weeds. This pattern poses a threat to the Philippines' natural resources. ANNEX 1 Page 2 6. The physical environment signifies the importance of improving transportation, forest management, soil conservation, efficient use of the lowlands, and close adjustment of crop cultural practices to regional climatic patterns. With rational planning, administration, investment and effective extension, most of the constraints can be overcome or at least minimized. In spite of the typhoons, the physical environment of the Philippines can sustain a development of rich forest, livestock, and fisheries industries, and a wide range of staple and commercial crops with good prospects for expanded production. Regional development planning is more important for the Philippines than most other Southeast Asian countries. 1/ A. Major Geographical Regions- 7. The country is divided into 65 provinces which are administrative entities with a Governor and a Provincial Assembly (Table 1). Under the provinces, the country has over 1,400 municipalities and over 30,000 barrios. In most literature and statistical reports of the Department of Agriculture and Natural Resources (DANR), the 65 provinces are grouped into 10 major geographic regions (Table 1). MAJOR GEOGRAPHIC REGIONS Regions Name of the Region I City of Manila II Ilocos III Cagayan Valley IV Central Luzon V Southern Tagalog VI Bicol VII Western Visayas VIII Eastern Visayas IX North & East Mindanao X South & West Mindanao 1/ References: (a) Robert S. Huke, et al. Shadows on the Land: An Economic Geography of the Philippines. Bookmark Inc., Ianila, Philippines. Second Printing, 1972. (b) Various reports of Bureau of Soils/UNDP Soil Fertility Survey and Research Project (1964-1969). ANNEX 1 Page 3 Agricultural.agencies usually establish their field offices on a major regional, provincial and municipal pattern, such as the Bureau of Plant Industry (BPI), Bureau of Soils (BS), Agricultural Productivity Commission (APC), Bureau of Agricultural Economics (BAEcon), etc. On the other hand, irrigation agencies, such as the National Irrigation Administration (NIA) and Irrigation Service Unit (ISU), have their own regionalization of field offices which is different from the usual grouping. 8. The Regions do not necessarily represent well defined geographical entities, except Central Luzon, Ilocos and Cagayan Valley. More than anything else, the Regions reflect perhaps major dialect groups; thus, Ilocano is spoken in Ilocos and Cagayan Valley; Tagalog is generally spoken in Central Luzon and Southern Tagalog; Bicol in Bicol; and Visayan in Visayas. Inhabitants of Mindanao are mostly immigrants from different islands who maintain their native dialects, and the line between the two Regions there is drawn rather arbitrarily. 9. Excluding the City of Manila, the number of provinces grouped to form the Regions varies from only four in the Cagayan Valley to as many as 10 in North and East Mindanao (Table 1). Area varies from about 62,000 sq km of South and West Mindanao to 17,600 sq km of Bicol; population from about 6.8 million of Southern Tagalog to 1.5 million of Cagayan Valley; and population density from 216 persons per sq km in Central Luzon to only 55 in Cagayan Valley (Table 2). 10. The island of Luzon is the biggest of the Philippines. It contains the whole of three Regions--the Ilocos, the Cagayan Valley and the Central Luzon--a large part of the Bicol Region and the Northern part of the Southern Tagalog Region (Map 1, Volume I). The Regions are defined by three major mountain ranges on the island. 11. Along the east coast, Sierra Madre stretches nearly unbroken from the very northeast tip of the island to midpoint of the Quezon province at a point east of the Laguna de Bay. The mountains abut directly on the Pacific Ocean, leaving little agricultural land on the east side. The bulk of the Northern Luzon and to the West of the Sierra Madre is occupied by a massive mountain block collectively called Cordillera Central which extends from the northern coast of the island over a distance of about 270 km to join Sierra Madre in the province of Nueva Vizcaya, where it is called the Caraballo Mountain. 12. Forked in by Sierra Madre on the east, and Cordillera Central on the west, is the Cagayan Valley. Compressed by the Cordillera against the China sea on the west coast is the finger-like Ilocos. 13. On the southwest coast, for about 200 km between the Lingayen Gulf and Manila Bay, is the third mountain range, the Zambales Mountains. Lying east of the Zambales, south of the Cordillera Central and the Caraballo Mountain, and west of Sierra Madre, is the Central Luzon, the largest single Plain of the Philippines. ANNEX 1 Page 4 14. The area southwest of Manila Bay up to the southern portion of the Sierra Madre Mountain which from Quezon Province are lumped together to form the northern portion of the Southern Tagalog Region. Further southwest, the Bicol Peninsula forms the bulk of the Bicol Region. Region I - The City of Manila 15. Manila is situated on the east coast of Manila Bay, on flat land, and transversed by the Pasig River. This river connects the Laguna de Bay to the southeast and Manila Bay to the west. Although Manila adjoins the swampy coastal area of the Plain of Central Luzon to the northwest, it is not a part of it; instead, it is the product of watersheds of the Southern Tagalog. Geographically, it is surrounded on three sides by Rizal Province, the northernmost province of the Southern Tagalog Region. 16. Manila Bay, with an area of some 1,800 sq km, is bounded by the hilly Bataan Peninsula on the west, the marshy coast of the central plain on the north, Greater Manila on the east, and the rolling Cavite province of the Batangas to the southeast. The famous Corregidor rock stands guard at the mouth. The channel north of the rock is used by international shipping, the south channel by smaller vessels. The channel is claimed to be able to provide anchorage for ships of all sizes. Region II - Ilocos 17. The lowland of Ilocos is limited to narrow irregular coastal plains which grade eastward to low rolling north-south ridges and then to rugged mountains. Exceptions are the small valley of Abra River in the Abra Province, which is sandwiched between the Ilocos Range, an offshoot of the Cordillera, and the Cordillera mass itself. Another small interior low- land is found east of Laoag City in Ilocos Norte Province. The bulk of the Ilocos Region is occupied by the Cordillera Central, which forms the so-called mountain provinces. These provinces have very little agricultural land of economic significance, except the Trinidad Valley in Benguet at the southern edge of the Mountain Provinces. Benguet is well known for the terraced farming of vegetable and fruits (supplying Manila) and for the popular resort city of Baguio. 18. Related to the smallness of cultivable land in the Region, Ilocanos are the best farmers in the country. The Region is also a major source of migratory sugar plantation workers and emigrants to Mindanao, Palawan, even Guam and Hawaii. Region III - Cagayan Valley 19. In this mountainous Region, agricultural land is concentrated in the Cagayan Valley. The valley measures some 200 km from south to north and 30-80 km in width. The main drainage way, the Cagayan River, flows from the Caraballo mountain of the Nueva Vizcaya province northward into the Babuyan Strait. The river has four main tributaries: Chico, Magat, ANNEX 1 Page 5 Siffu and Pinacawayan. The gradiant of rivers decrease sharply as they leave the surrounding mountains. The valley floor is rolling. True flood plain is found along only the river and its tributaries; the Isabela plain of Isabela Province, 40 km by 25 km and bounded by Magat and Ilagan Rivers, is the largest. It has a potential rice land area of about 200,000 ha. In the Cagayan Province, the flood plain is limited to a coast strip. The Nueva Vizcaya has a small intermountain alluvial basin of Bayombong. Region IV - Central Luzon 20. The Plain of Central Luzon extends unbroken from Manila Bay to the Lingayen Gulf on the west coast. It is mostly extremely flat. It measures some 80 by 160 km and about 750,000 ha in area. The drainage divide--be- tween the Bay and the Gulf--extends through the eastern part of Tarlac on a south-southwestern direction, and along the border of the Pangasinan and Nueva Ecija Provinces. The divide is only about 50 m high and the flat part of the Plain is only a few meters above sea level. Due to the flatness of the Plain, drainage is extremely slow and extensive swamps form near sea level elevation. The low divide separates the Plain into two river basins: on the northwest, the Agno River and, on the southwest, the Pampanga River. 21. The Agno River originates from the southern slope of the Cordillera Central Mountain northeast of the Baguio City, emerges onto the Plain at the Pangasinan Province, where it turns northwest and enters the Lingayen Gulf near the Lingayen City. It is joined by four tributaries originating from the Zambales Mountain, the O'Donnell, Bulsa, Camiling and Pila. The Poponto Swamp is at the confluence of the Agno and O'Donnell. Along the Gulf, extensive marsh land has been developed into brackish water fish ponds. To the northwest of the Agno River, a small river, Tobay, originates from the foothills of the Cordillera and flows directly into the Lingayen Bay at the Dagupan City. 22. The Pampanga River's main stream starts from the southern slope of the Caraballo Mountain and flows the whole len gh of the Central Plain before entering Manila Bay. Along the way, it is joined on the west side by Rio Chico and Talavera River, on the east side by five major tributaries, all originating from the Sierra Madre Mountain Range: the Pantabangan, Digmala, Coronel, Penaranda and Angat. At the confluence of the Pampanga and its tributaries on the west is the San Antonio Swamp. Along the east bank of the Pampanga, before it meets Angat River, lies the Candaba swamp, measuring some 32 km in length and 3-10 km in width. Along Manila Bay, the marsh land has also been developed into a large area of fish bonds. 23. Many irrigation projects have been built for paddy irrigation by utilizing water from these rivers. Storage reservoirs have been built on Agno and Angat Rivers for power generation, flood control, and irrigation. A storage dam is under construction at the Pantabangan site of the upper Pampanga River for irrigation and flood control; a Bank loan (637-PH) is involved. The feasibility of installing power units at the dam site is being studied. ANNEX 1 Page 6 24. The physiographic picture of the Central Plain can thus be summarized as follows. It is a big flat plain of about 750,000 ha in area and only a few meters above the sea level, divided lengthwise by a low divide of about 50 m high. Either side of the divide is transversed by a fairly big river, each with a number of tributaries. These tributaries and the main course of the rivers form levees, which give the plain minor reliefs. Along the rivers and at the esturies, several large swamps receive floods from the rivers during the wet season. At the rim of the plain are rolling foothills of the surrounding high mountains. (The flatness of the Plain itself is broken only by a number of extinct volcanic peaks in different provinces; one is the Mount Arayat in northeast Pampanga Province.) With most of its land arable and level, a high concentration of irrigation facilities, and easy access to Manila, Central Luzon is undoubtedly the most developed among all regions. Region V - Southern Tagalog 25. This Region is composed of three main parts: (a) the part of the Luzon Island west and southwest of Manila up to Quezon Province; (b) the Mindoro Island; and (c) the Palawan Island. 26. The portion on the Luzon Island is also highly developed, next only to Central Luzon. The southern portion of the Sierra Madre mountain is reduced to a series of low hills (some 400 m high) in the Bondoc Peninsula. These mountains and hills form the Quezon Province which divides the Southern Tagalog Region from the Bicol Region to the southeast. West of the mountains is a mixture of rolling land, plains, volcanic hills and great lakes. The western part of the Rizal Province is flat to gently rolling, and has been developed into suburbs of Manila (Quezon City, Makati, Pasig, etc.). The southern part of the Province falls to a 40 km wide lake, Laguna de Bay, which has shores dotted with towns and barrios based on lake fishing. Laguna Province borders the south shore of the same lake with an equally thriving fishing industry. The land of the Laguna Province is hilly and rolling, with small plains. Around Los Banos, where the College of Agriculture and IRRI are located, are some of the best managed lowland paddy fields. The Batangas Province contains the Taal Lake and the still active Taal Volcano as an island in the lake. Around the lake is undulating upland, but along the southern shores of the Province are flat plains along the Balayan Bay in the west, Batangas Bay in the middle, and Tayabas Bay on the east. The Province of Cavite is divided from the Batangas by the Tagaytay ridge, from which land slopes gradually northwest to reach Manila Bay. 27. In contrast to southern Luzon ,and only some 20 km across a strait, Mindoro Island is relatively undeveloped. A rugged mountain rangp--averaging 1,500 m in height, with peaks reaching 2,500 m--runs from the northwest tip across the entire 160 km length to the south tip of the island, and divides the island into two provinces; Oriental Mindoro and Occidental Mindoro. Communication between the two Provinces is completely cut off; roads go around the north and south tips. Rivers are short and swift. Much forest ANNEX 1 Page 7 is still left on the coastal plains and rolling foothills along both east and west coasts (totalling about 230,000 ha). Agriculture in general is extensive. 28. Further southwest to Mindoro, and straddling diagonally between Mindoro and the northeastern tip of North Borneo, is Palawan Island. The island measures 425 km long but only 20 to 40 km wide. Like many islands of the middle Philippines, Palawan is divided by a rugged mountain backbone (peaks ranging from about 1,500 m to 2,100 m high). Numerous short and swift rivers and streams run directly from mountains to sea. Emptying into Saint Paul Bay on the west coast is a 7 km long subterranean river flowing under limestone mountains. Few pockets of level to near-level land are found amid the generally rolling land at the northern end of the island; after which mountains begin to rise high. There is practically no plain along the west coast, excepting some swamp land along the Imuran Bay in the north. Along the east coast, there are small intermountain valleys in the north and a narrow coastal strip south of Puerto Princess comprising of level to near level plains, swamps, small valleys, rolling and hilly terrains. Agricul- turally, the island is even less developed than Mindoro. It still has an unspoiled forest cover, and in recent years has become one of the areas of Government sponsored settlement program. Good and safe harbors are found on the east coast. Region VI - Bicol 29. The Bicol Region consists of three parts: (a) the Bicol Peninsula of the Island of Luzon; (b) the Catunduanes Island province on the east; and (c) the Masbate Island province on the southwest. Only the portion on Luzon will be described. The Bicol Peninsula has low hills on both the east and west sides. Those on the western side are structural, while those on the east are volcanic. In the center is the Bicol Plain (about 90,000 ha), which straddles the Camarines Sur Province (75,000 ha) and Albay Province (15,000 ha). The Plain is poorly drained and subject to annual flooding from the Bicol River. The most active volcano of the Philippines, the 2,421 m ft Mt. Mayon, is a prominent landscape of the Albay Province. The west coast of the Peninsula consists of a number of small watersheds with steeply descending streams and small narrow coastal plains. The Camarines Norte Province is divided by a series of hills from the Camarines Sur Province. The hills descend to the small Daet Plain (27,000 ha) along the sea to the north. Only small scattered coastal plains are found in Sorsogen Province and the Catanduanes and Masbate Islands. Region VII - Western Visayas 30. The Western Visayas Region consists of two large important islands, Panay and Negros, and two small islands, Romblon and Iloilo. 31. The Panay Island has a triangular shape with its base faciig west in a straight shore line. There are two mountain ranges running from the north to south across the island. The western range runs the whole length ANNEX 1 Page 8 of the western coast, completely isolating the Antique Province from the three other provinces on the east. The eastern range cuts across near the tip of the triangle. Between the two ranls lies the Central Plain of Panay (about 150,000 ha) which transverses the island from north to south. The Iloilo Province in the southern part of the Plain is the rice bowl of the Visayas. On the seaward sides of the western and eastern ranges, the coastal plains are small and agriculturally unimportant. 32. Negros, the fourth largest island of the Philippines, is divided into two provinces, the Oriental and Occidental, by a series of mountains running from north to south. The range consists of four volcanic mountains; three in the north (one is still active) are connected to a fourth one in the south by a series of low structural mountains running close to the east shore of the island. Another series of mountains occupy the southwestern part of the island. The important agricultural land, therefore, is concen- trated on the flat to gently rolling coastal plains along the northwestern, northern, and northeast shores (about 150,000 ha). The fertile volcanic soils there form the major sugarcane producing area of the country. Region VIII - Eastern Visayas 33. The eastern Visayas Region includes four major islands, Samar, Leyte, Cebu and Bobol. Samar is the third largest island of the country. It has neither high mountains nor large plains, but is an island of low rounded hills from 300 to 550 m high. Forest and tree crops, i.e., coconut, abaca, cassava and smallholder banana, dominate the agriculture. 34. Leyte Island is separated from Samar by the narrow Juanice Strait, but its physiographic feature is similar to other Visayas islands to the west. A rugged mountain range divides the island into east and west sides. The backbone (peaks of 700 - 1,100 m) is broken at about half way across the island, allowing an east-west highway to pass through. Along the northeast coast facing the Juanico Strait, down to the west of the capital city Tacloban, is another north-to-south, 30-km-long mountain range. Between the two mountain ranges and in the northern portion of the island is the largest plain of Leyte (about 120,000 ha). West of the backbone, small plains are found on both north and south of Ormoc City on the west coast. 35. Cebu extends south-southwest in the shape of a cigar. The island has two well-defined lengthwise anticline mountain ranges which are separated by a linear synclinal valley running almost the entire length of the island. The southern half of the island has prominent limestone topography; i.e. sink holes and underground caves. Although the mountain ranges are low (400 - 900 m) they have fairly steep slopes, leaving the island with only scattered small plains along the east and west coasts. The largest plain stretches in a narrow strip north and south of the Cebu City on the east coast, measuring some 55 km in length and a few kilometers wide. Although the island has only limited arable land, it has a high density of population. This has caused extensive hill and mountainside culture of corn, coconut, smallholder bananas, other fruits, cassava, peanuts and recently even sugarcane. Erosion problem is widespread. Many hills are already barren. ANNEX 1 Page 9 36, Bohol is a round island with a diameter of roughly 65 km. Parallel and close to the southeastern shore is a range of low mountains (peak: 870 m) extending toward the northeast. Land descends from this divide steeply in a southeast direction to the Mindanao Sea about 10 km away, but more gently to the Bobol strait in the northwest over a distance of about 55 km. Over the latter slope are numerous Karst features; i.e. sink holes and caves. The loss of surface water through the subterranean drainage ways makes vegetations of the island less luxuriant than the rainfall would normally support. Regions IX and X, Mindanao Island 37. Mindanao, the second largest island of the Philippines, contains two Regions: north and east Mindanao, and south and west Mindanao. The physiography of the island, however, is best explained in its entirety. 38. The island has three long structural mountain ranges and two groups of volcanoes. The eastern ranfp runs along the entire length of the east coast from one tip to the other. The mountains are low (250 to 450 m) in its mid portion west of the Bislig area, but high in both the north and south portions (peaks from 1,500 to over 2,000 m). This range sets provinces Surigao del Sur and Davao Oriental apart from the rest of the island. A road passes through the low middle portion. 39. The second structural mountain range (containing also three active volcanoes) also runs across the entire province from north to south along the western border of Agusan, Davao del Norte and Davao del Sur Provinces. The range is high in north and central portions (2,000 - 2,500 m) but becomes lower (1,100 - 1,800 m) south of Mount Apo. 40. The third structural mountain range forms the Zamboanga Peninsula on the west coast. 41. A chain of volcanic mountains form an arc through Lanao del Sur, Northern Cotabato and western Bukidnon Provinces in north central part of the island. Six of the peaks are still active and a second chain of volcanic mountains runs along the west and southwestern border of Cotabato and south Cotabato provinces. 42. Three major plains and one plateau area are delineated by these mountains. Between the first two structural mountain ranges mentioned above lie the valleys of Agusan and Davao. The two valleys together measure nearly 180 km long and vary from 30 to 50 km in width. At about 56 km north of the northernmost tip of the Davao Gulf is a divide, about 260 m, which forms the boundary of Agusan del Sur and Davao del Norte provinces. North of the divide, the Agusan River flows northward into the Mindanao Sea. South of it, rivers run into Davao Gulf. The plain area of the Agusan Valley is about 160,000 ha, and that of the broader Davao Valley, about 250,000 ha. The large modern banana plantations developed in the recent years are in the Davao Valley. ANNEX 1 Page 10 43. The two volcanic mountain ranges on north and southwest, and the second structural mountain range mentioned above (on the east), shape the broad Cotabato Valley. The, valley attains a maximum width of 160 km at its midportion, but is constricted to only 20 km at the Illana Bay on the west coast (Port City, Cotabato City). The valley floor is not all flat. Rolling hills descend from mountains on all sides. At the valley bottom is the Cotabato River, the longest in the Philippines--it is navigable from the Cotabato City by motor launch 65 km upstream to the town of Buluan. Large tributaries from surrounding mountains subdivide the valley into subvalleys with low broad ridges in between. The lowland plain area of the valley is estimated to be around 500,000 ha. But included are huge marsh areas totalling some 70,000 ha: the two largest are Liguasan Marsh in the middle of the valley along the Bulvan River, and Libungean Marsh along the main course of Cotabato River further west. One well known sub-valley in the south is called Koronadad Valley; a low divide exists near the town of Tupi, about 35 km northeast of the northern most tip of the Sarangani Bay, and only its northern portion is drained by the upstreams of the Buluan River, a large tributary of the Cotabato River. South of the divide, the Koronadad Valley is drained by small rivers running southward into the Bay (Port City, General Santos) and, therefore, is not a part of the Cotabato Valley. The Stanphilco Banana (Standard Fruit Co.) and Dole Pineapple Plantations spread over this divide, and uses the port of General Santos for direct overseas shipping. 44. The upland plateaux in Bukidnon (about 500,000 ha) and Lanao del Sur provinces is the third largest single land unit in the Philippines. It is level to gently rolling. They originated from lava flows from the northern group of volcanoes, and are imbedded with volcanic ash and tuff. The average elevation of the plateaux is 650 - 700 m. Around their periphery, erosion has cut deep canyons, with several spectacular waterfalls, which hold promise for hydropower development. The Del Monte Pineapple Plantation is on the northern part of the Bukidnon Plateau. 45. Minor plains are numerous along the long coast line of Mindanao. All along the east coast, on the seaside of the eastern mountain range, are many small coastal plains isolated from each other by mountains protruding to the sea. Rough seas make interplain communication by sea difficult from October to March. All along the northern shore extends a rolling coastal plain of varying width. Along the narrow bay, between the Misamis Occidental and Lanao del Norte Provinces on the Misamis side, is a lowland plain of some 10 - 15 km wide, descending to low lying mangroves along the Bay. Small scattered coastal plains as well as intermountain basins are present on the Zamboanga Peninsula. 46. Region IX, Northern and Eastern Mindanao, includes Agusan, Surigao, Bikidnon, Lanao and Misamis; Region X, the Davao, Cotabato and the Zamboanga provinces. ANNEX 1 Page 11 B. Climate- 47. The Philippine Islands span the low latitudes from 5*N to 20*N. Its climate is characterized by uniformity of temperature, diversity of rainfall, (including monsoons) high relative humidity, low solar radiation, and high frequency of typhoons. Temperature 48. The temperature range, whether between north and south, or between the coolest and hottest months of any one place, is extremely narrow. The January mean temperature ranges from 230 C in the northern tip of Luzon to 26*C in the southern part of Mindanao. That of July ranges from 27*C in south Mindanao to 29*C in north Luzon. Between the coolest and hottest months, the ranges are 3.8*C in North Luzon (Laoag), 2.6*C in Visayas (Cebu) and southeast Mindanao (Davao) , and only 1.9*C at islands south of Mindanao (Jol). 49. Temperature decreases somewhat with altitude. The coolest recorded place in the country is Baguio (1,690 m) , where the mean temperature stays around 18 - 20*C throughout the year, with mean minimums of 14 - 16*C and mean maximums 22 - 250C. The absolute minimum temperature ever recorded in the Philippines is 10*C, at Baguio. The next coolest area is around Malaybalay on the Bukidnon Plateau (about 700 m) in north Mindanao, where the mean temperature is 23 - 26*C. 50. The Philippines has a year-round season for both crops and forests. The relatively minor variation of temperature from place to place is largely influenced by altitude and distribution of rainfall. Table 3 gives the mean monthly temperature of selected stations. Rainfall 51. Philippines is a country of high rainfall. Table 4 gives the monthly rainfall and number of rainy days of 48 selected stations covering all Regions and major islands. Except three stations, all others register from more than 1,500 mm or annual rainfall. Map IBRD 10132 gives monthly isohyets cof the Philippines. It shows that from November through April, rainfall is high on the east coast and reduces toward the west coast, while from June through September the reverse is true. May and October being months of transition, the isohyetal lines do not show as clearly an east-west grading as in other months. 1/ Reference: Data and maps supplied by the Philippine Weather Bureau and Typhoon Committee Secretariate, Weather Bureau/UNDP. ANNEX 1 Page 12 52. The rainfall pattern is caused mainly by the generally north to south alignment of mountain ranges on almost all islands. From November through April, the prevailing wind is easterly, i.e., the Pacific northeast trade winds and the northeast monsoon. From June to September, it changes to a southwesterly direction. Since the Philippines are surrounded on both the east and west shores by moisture-laden warm ocean currents, whichever direction the wind prevails, it brings rain to the windward side of the mountains, but leaves little on the leeward side which is shadowed. This causes the distinct dry seasons of the western portion of Luzon and some other islands during the winter and spring. From June through September, the southwestern monsoon piles up rain on the western coasts, but the leeward side is not dry, because of the high frequency of typhoons which is east-southeasterly, and tropical thunder- storms resulting from local convections. 53. Given the complex physiographic features mentioned previously, the amount and monthly distribution of rainfall of the Philippines varies from place to place in the same region and on the same island as shown in Table 4. Classification of Climate Types 54. As rainfall is the most variable single element, it has been used as the main criterion for classifying climate types in the Philippines. The classification is mainly based on the presence or absence and duration of a dry period. For many years, the climate of Philippines was classified into four types (based on a 1945 investigation). 1/ In 1971, the Philippine Weather Bureau classified the country's rainfall tyDes by a quotient of number of dry months/number of wet months. 2/ In 1972, Huke refined the old climate classification by dividing the country into seven climate types. 3/ The criteria used in the three classifications are shown in Table 5. The original classification map which has been widely used in the Philippines and Huke's maps are reproduced as Map IBRD 10133. 55. Any of the classification maps, of course, is but a generalization. As may be expected, there are pockets in areas covered by each type that are untrue to the given type. But these classifications bring to focus the importance of adjusting land use pattern and cultural practices to the rainfall pattern in the Philippines. 1/ R. G. Hainsworth and R. T. Moyer, Agricultural Geography of the Phili- ppines Islands, USDA Office of Foreign Agricultural Relations, December, 1945. 2/ Handbook of Philippines Agriculture and Natural Resources, Vol. 2, page 11, DANR, 1971 Edition (Mimeographed). 3/ Robert S. Huke et al, Shadows on the Land: An Economic Geography of the Philippines. Bookmark, Inc., Manila, Philippines. Second Printing 1972. ANNEX 1 Page 13 Relative Humidity 56. The mean monthly relative humidity of all parts of the Philippines remains above 70% throughout the year, except in the heart of the Central Luzon Plain and the northern Batangas, where it goes down to 65 - 66% from March and April. From June through November, practically the whole country has relative humidity of 80% or more. Eastern Bicol, Eastern Visayas and Eastern Mindanao have over 80% the year round. Mean monthly relative humidity of selected stations are given in Table 6. 57. The generally high humidity and temperature throughout the year make storage of many crops and their seeds prone to deterioration. They work particularly to the disadvantage of the small farmers who do not possess good storage facilities and are forced to sell their produces to middle men soon after harvest. Solar Radiation 58. Solar radiation is positively related to crop yield levels. IRRI experiments at IRRI and Malagaya Experiment Stations demonstrated that total solar radiation during the last 45 days before harvest is perfectly correlated to the paddy yield of IR8. Basically, solar radiation should be high between the spring equinox in late March and Autumn equinox in September, and low from October to March, but its actual value is reduced by cloudiness and rainy days during the high sun months. Thus in Quezon City, near Manila, where data is available, the solar radiation is the highest in April and May as shown in the following table: AVERAGE SOLAR RADIATION, QUEZON CITY Months Item Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec /1 No Rainy Days- 4 2 4 4 12 19 23 24 23 17 14 9 Sunshine dur- ation /2 6.0 7.2 7.5 8.3 7.2 5.3 4.7 4.7 4.1 5.6 5.6 5.6 Solar radi- ation /3 3.10 3.80 4.37 4.69 4.46 3.88 3.56 3.59 3.49 3.45 3.15 2.94 /1 Average of 1961-70. /2 Average hours per day, 1960-71. 2 /3 Average solar radiation in g-cal/cm /day, 1960-61. Source: Weather Bureau, Quezon City. ANNEX 1 Page 14 59. While data are not available for other stations, it may be surmised that in areas where rainy days are numerous in many months of the year, the solar radiation would be low the year round. The year-round low solar radiation in some areas and wet season low radiation over the whole country must have contributed to low crop yields in the Philippines. Typhoons 60. Over the past quarter century (1948-1971), the Philippines averaged 20 typhoons per year (medium 19, mode 18). It may occur in any one month, but the highest frequency in July through November (Table 7). 61. Regional distribution of frequencies of typhoons was reported in the 1945 study and adopted by many papers published ever since. A recent tabulation "on regions hit by typhoon center from 1948 to 1970", by the Typhoon Committee Secretariat, Weather Bureau (UNDP Project), gives a somewhat different picture. A comparison is given in Table 8. COMPARISON OF DATA ON TYPHOONS Frequency of Typhoons Frequency of Typhoon Center Hansworth & Moyer Typhoon Committee (data prior to 1945) Secretariat Weather Bu/UNDP (1948-1970) Batanes Islands 25% 29.8% Ilocos & Cagayan Valley 32% 36.9% Central Luzon 16% 10.6% Bicol & northern part of Tagalog 19% 19.7% Visayas (north of 11*N) 19% 24.7% Visayas (south of 11*N) & Palawan 7% Northern Mindanao 7% 11.1% Southern Mindanao 1% 0.1% 62. Recent data (Table 8) shows further that while the frequency of passing typhoon centers is higbest in months from July through November in the Ilocos and Cagayan Valley Regions, it is highest in months from October through December in Bicol, Southern Tagalog, Visayas, Palawan and Northern Mindanao. It also shows that Central Luzon has a relatively low typhoon center frequency. Such information is important for planning the adjustment of crop calendars in different regions. ANNEX 1 Page 15 C. Soilsl General Features 63. Frequent structural movements and volcanic activities have given most of the Philippines a young topography. Also, the natural weathering processing is intense and rapid under high temperature and rainfall in conjunction with the limited coverage of protective forests. 64. Plains and valleys have deep alluvial deposits, and receive new deposits each year. Unweathered particles of the parent material are frequently found in lowland soils. In areas with volcanoes, the lowland soils have mixtures of alluvial and volcanic ash or tuff material. Active volcanoes are still adding new ejecta to soils of the surrounding area. Plains which have been cultivated for a long time under rice and corn have developed plowsoles, and the subsequent high runoff aggravates the seasonal flooding and waterlogging of lowlands in the wake of tropical storms. typhoons and monsoon rains. Prolonged waterlogging induces reduction action in the paddy soil, and causes loss of organic matter and nitrogen. 65. Properties of soils on hills and mountains vary with parent rocks from which they are formed, i.e. sedimentary, igneous, or volcanic. Generally speaking: (a) residual soils derived from sedimentary rocks, mostly shale and some sandstone, are not very fertile. Those derived from shale are heavy clays which tend to be sticky when wet and crack when dry, and are generally difficult to work. Water permeability of such soils is slow and erosion on unprotective cultivated land is severe. Productivity of soils derived from shale, however, is better if the parent rock is calcareous shale; (b) soils developed from limestones are friable, easy to till, and more fertile, but they are usually shallow and susceptible to drought and erosion when row crops are grown; (c) soils developed from igneous rocks (in Philippines, the common ones are audesites, basalts and agglomerates) usually are initially deep, have good drainage, consequently often have a reddish tinge. Many of them tend to be acidic due to the low calcium content of parent rocks coupled with the leaching of heavy rains. The high acidity also makes them low in available phosphorous. Liming is often necessary; (d) soils developed from volcanic tuff are fine textured and plastic in consistency. They can be shallow or deep, depending on softness or hardness of the parent rock, and the rate of erosion. 1/ References: Various reports of Bureau of Soils, and BS/UNDP Soil Fertility Survey and Research Project (1964-1969). ANNEX 1 Page 16 66. In summary, the Philippine has young soils, and change is still taking place. In general, the soils are potentially productive if properly managed. Salinity occurs only in very small areas in Mindanao. Cat clays have not been reported. But the prevailing soil management practices-- widespread hill and mountainside culture without soil conservation, continuous monoculture with little or no fertilizer application, and the lack of proper drainage systems to handle run-off--have not been conducive to efficient utilization, nor to proper conservation of the natural agri- cultural resources, of which the Philippines is richly endowed. Soil Surveys in the Philippines 67. The Bureau of Soils started reconnaissance surveys in the early thirties, and most of the 65 provinces, have by now been covered. For each province, the Bureau publishes a report and a map. But so far, no generalized soil survey report has been published for the nation as a whole. The provincial report contains descriptions of the morphological and physical properties of soils in the various soil series, particularly those of the top soils, but give little information on their chemical properties. As such, the reconnaissance soil maps have been found un- satisfactory as a basis for planning fertilizer experiments or extension guidance. 68. These shortcomings were recognized by the Bureau when it started to conduct the Bureau of Soils/UNDP Soil Fertility Survey and Research Project in 1964. Under the project, an intensive field study was carried out in 1955-66 to check the soil series and types previously classified and mapped by the Bureau. The study uncovered numerous errors. By examining detailed morphological descriptions and laboratory analytical results of 135 horizon samples, from 33 carefully selected Benchmarch Soil profiles, the Project did what it could (1) to validate or reclassify the soil series and types previously reported, (2) to group them into categories of the FAO/UNESCO Soil Man of the World, and (3) to correlate the soil survey information with findings of the soil fertility field experiments conducted under the same project from 1964 to 1969. A national soil map showing the classification of Philippine soils in the higher cate- gories was prepared by the Bureau of Soils in August 1972 (Map 10396), based on the USDA-SCS Comprehensive System of Soil Classification (also called "7th-Approximation" by soil survey specialists) of 1970 (as amended September 1971). Since this classification system is new, and the terminology used, such as those given in the legend of map number, is not familiar to many readers, a correlation table prepared by the Bureau of Soils is given in Table 9, to show the corresponding great soil groups as named under the old USDA soil classification system and the soil units as named under the FAO/UNESCO Soil Maps of the World. The Bureau also prepared a brief report entitled "Classification of Philippine Soils in the Higher Categories," which gives very brief descriptions of the morphology, chemical characteristics and agri- cultural possibilities and limitations. ANNE X 1 Page 17 69. Under the new system, soils are classified, in order of decreasing level of abstraction, into categories, orders, sub-orders, great groups, sub- groups, families, series and types. The new national soil map is presented on basis of great groups. The previous provincial reconnaissance soil survey reports and maps were presented on basis of soil types. The provincial reports also give information on topography, climate, water supply and drainage, land use and general agricultural conditions in each province. In August 1972, the Bureau also published a land use map (see General Report, Map 10397). The mission feels that it would be most useful if the Bureau could compile the available information, data and maps on regional basis, i.e., Central Luzon, Cagayang Valley, Ilocos, Bicol, Agusan, Davao, Cotobato, etc. For medium sized islands, it would be better to organize the material on Island basis, i.e., Panay, Negros, Leyte, Cebu, Samar, Palawan, Mindoro, etc. By so doing, the distribution and extent of great soil groups, sub-groups, families, series and types in each region or islands may be related to the alignment of mountains and rivers, the basic rocks from which they were derived and topographic and climatic patterns. Such regional inventory of information will facilitate better interpretation of the present land use pattern and crop performance, and pinpoint natural constraints which must be dealt with in regional development planning. In absence of compiled regional information the mission made an attempt to form some regional view of soils by extracting from the Bureau's provincial reports and other available sources of information (Appendix 1). The information is admittedly incomplete, even inaccurate in places. It is hoped that the Bureau of Soils would authenticate and expand it into a solid document. 70. The above proposed compilation will provide a good inventory of Philippine soils and place its land and soil base into clear region perspec- tive. For planning of specific irrigation, drainage, and land settlement projects, more comprehensive land classification (US Bureau of Reclamation system or modified version of it) will be necessary. The irrigation projects inherited or built by the National Irrigation Administration (NIA) in the past did not require land classification. Only since the construction of the Upper Pampanga Irrigation Project in Central Luzon (Loan 637-PH) has NIA conducted a semi-detailed land classification of the project area, with the help of an USBR team (Report December 1971). Another USBR Team is assisting NIA in preparing a feasibility study of the Magat Irrigation Pro- ject in the Cagayang Valley, for which a land classification has also been conducted. Both the Bureau of Soils and NIA are now aware of the importance of land classification for planning of irrigation and land settlement projects. Since it is NIA's policy to upgrade the sophistication of irriga- tion projects to be built in the future (Annex 3), the Bureau of Soils obviously will need to train more survey, laboratory and cartographic staff to cope with the growing need of this new line of work. In order to economize limited trained man-power, it would not be advisable for NIA to develop its own land classification staff. ANNEX 1 Page 18 Soil Fertility Studies 71. Under the Bureau of Soils/UNDP Soil Fertility Survey and Research Project (March 1964 to March 1969) , 5,467 field experiments on crop response to fertilizer application were carried out in the Philippines: 3,909 on rice, 1,340 on corn, 196 on other annuals, and 22 on perennials. In addition, 335 demonstrations of fertilizer-variety interactions on rice were performed. Based mainly on the results of these experiments, but taking into considera- tion also the findings of fertilizer experiments conducted by the Bureau of Plant Industry, Universities, and the IRRI, the DANR has announced official recommendations for fertilizer application for rice, corn, sorghum, tobacco, soybean and other crops. The Philippine Sugar Institute makes recomemdations on sugarcane manuring. D. Effect of Physical Environment on Crop Distribution and Production Present Crop Distribution 72. The present crop distribution pattern in the Philippines is influenced by land topography, soil, market availability, and climate, in that order. It may be generalized as follows: (a) Lowland alluvial plains where soils have heavy texture are used almost exlusively for paddy rice. Where the soils have medium to coarse texture, corn, sugarcane and tobacco share regional importance with rice; where a market is available, vegetables and pulses; where rainfall distribu- tion is even and the land is protected from wind, abaca and plantation bananas. (b) On rolling land and gentle hill slopes, the same crops are grown, but paddy rice is replaced by upland rice; except where land is terraced, vegetables are replaced by root crops; bananas become smallholdings. To the list should be added pineapple on acid soils and fruit orchards on neutral soils. (c) On steep slopes, corn, upland rice, and smallholding bananas survive in scattered patches. (d) Coconut is omnipresent, on alluvial lowland, rolling land, hills as well as steep mountain slopes. 73. Cogon and other grassland represent rolling land, hills and mountain slopes that had been planted to annual crops before. This huge nonproductive land area is continuously expanding by Kaingin of the logged over forest land. Generally speaking, Kaingin culture on slope land soils derived from igneous rocks and soft volcanic rocks last longer, because the ANNEX 1 Page 19 soils are deeper. Those on soils derived from limestone and shale last but a few years because limestone is usually shallow, and shale has low initial fertility and is highly erodible. Agricultural Constraints 74. Some 1.2 million ha, nearly 50% of total lowland paddy cropped area, have been planted to high yielding varieties as of 1970/71 (the initial extension began in 1966). About 315,000 ha of high yielding synthetic corn varieties were planted as of the same year, occupying about 13% of the total corn area. But the average yield of lowland crops, in- cluding rice and corn, remain persistently lower in the Philippines than most other Asian countries. Sugar yield has steadily declined from about 8 m tons/ha in 1960 to about 6 m tons/ha in 1970/71. In addition to the functional causes commonly attributed--such as inadequate credit, market- ing, pricing, supply of inputs, etc.--low crop yields are caused by natural constraints of the environment and the inadequate land use pattern. The land use pattern threatens further deterioration of the Philippines' natural resources. Low Productivity of the Lowlands 75. The lowland soils are basically productive. There are no real problem soils, except small spots of saline soils in Mindanao. The low crop yields of lowland is essentially caused by either too little or too much water. 76. The need for irrigation in areas with distinct dry season, i.e., Central Luzon and Ilocos, has long been recognized. Since after the Second War, the Philippines has stepped up effort to expand its irrigation facilities. But as of 1971/72, less than 30% of the paddy land area, and only about 20% of the total rice land area (including upland rice area) is under irrigation. The balance is rainfed. Of the irrigated paddy land area, only about a third have enough water during the dry season for growing a second crop. (See Annex 3 on Irrigation.) Moreover, because of lack of control facilities, even some of the irrigated land does not have adequate water supply during the west season; some suffer from short periods of water shortage, others suffer from seasonal flooding. 77. Corn and tobacco do not receive irrigation at all, even in areas with distinct dry season. Only 7% of the sugarcane area receives irrigation. Vegetables receive hand-watering. By and large, irrigation in the Philippines is almost exclusively for paddy rice; some of the large plantations are exceptions to the rule. 78. Lack of sufficient drainage is an equally important factor. The plains of the Philippines, large or small, are criss-crossed by creeks, streams and rivers. But given the high intensity of rainfall and the large watershed area in proportion to the area of the plains, these natural drainage ANNEX 1 Page 20 ways are not sufficient to dispose the huge amount of water descending into the plains at once, resulting in frequent seasonal flooding and waterlogging of the lowland during the wet season. The damage may be total destruction of crop or lowering of the yield. None of the completed irrigation projects includes a drainage component. No information is available on volume or cost of crops damage by flooding or waterlogging, but their effects are well known and must have been considerable. 79. The use of fertilizer and other inputs on rice and corn is related to (in addition to a host of technical, social and economic reasons) the uncertainty of water supply, which results in highly fluctuating yields. In fact, increased use of chemical fertilizers in recent years occur mainly on better irrigated land growing HYV's. Hope that rice farmers may use fertilizers close to the recommended level would firstly be in areas where crop yield is made reliable by substantial improvement in irrigation and drainage. 80. Excessive rain during the growing period depresses lowland crop yield by affecting flowering and fertilization, by causing lodging, by increasing loss during and after harvest, and by lowering solar radiation. Almost the entire country's west season crops are affected to varying degrees. 81. Typhoons cause direct mechanical damage to standing crops in addition to creating conditions which can lead to great difficulties. 82. Other factors unfavorable to crop yields on lowland are further discussed in relation to individual crops (other annexes). Low Productivity of Upland Crops 83. Because the productivity of lowland is insufficient to meet the needs of agriculture, farmers cultivate on a wide scale the rolling land hills, even steep mountains, to augment the production. The cultivation is done without regard for soil conservation practices; serious erosion ensues; crop yields decline. The average yield of upland rice or corn on slopeland averages only some 0.7 m tons/ha, which pulls down the national averages of rice and corn yields. 84. Good statistics on areas of crops that are being grown on slope land are not available. The upland rice is reported to be around 400,000 ha. The current cropped area of corn in the country is about 2.4 million ha. The proportion of area grown from January to June to that grown from July to December is about 3:2. Thus the land area planted to corn may be assumed to be around 1.6 million ha. Assuming that 20% 1/ is on slope land, one gets 320,000 ha of land area. The sugarcane area of the Visayas increased from 136,000 ha to some 250,000 ha from 1959/60 to 1969/70; the majority of this expansion was on rolling land and hill slopes, replacing corn and upland rice. ANNEX 1 Page 21 A sizeable portion of the quarter million hectares of root crops are on slope land. Thus the area of annual crops on slope land adds up to at least 1 million ha. To this must be added the smallholder bananas, which are widely grown on hills or even steep mountain slopes. 85. Most of the 170,000 ha of abaca and a large porportion of coconuts (total area, 1.8 million ha) are on hills and mountains. But they are less conducive to erosion because of less soil disturbance once planted. 86. The widespread erosion not only ruins the cultivated slope land; it also adversely affects the lowland in many areas by silting irrigation systems and, when far advanced, by depositing unweathered and less fertile subsoil material on the lowland. 87. Slope land statistics are further complicated by shifting cultivation. New land is opened up every year by Kaingin; worn out land is continuously being abandoned to cogon or other grass weeds. Today there are over 4 million ha of such nonproductive grassland in the Philippines. This is already more than twice the total slope land area under cultivation, and the trend is toward more land under cogon. 88. Ironically, in the absence of an effective soil conservation program, abandoning slope land to cogon is now the only effective means of checking further soil erosion. It is obvious, however, the ongoing process is a one-way street leading in the wrong direction: logging, kaingin, declining yield, abandonment to grassland or secondary brush--leading to rapid deterioration of the country's forest and land resources. ANNEX 1 Appendix I Page 1 REGIONAL SOIL FEATURES OF THE PHILIPPINES 1. Region II-/ - Ilocos. The coastal and intermountain plains of Ilocos have fairly deep recent alluvium of high to moderate fertility, with textures ranging from dune sand, sandy loam to clay loam, and clay. The most widely distributed series are San Manuel and San Fernando. The San Manuel series is considered the best agricultural soils of the Philippines, with high natural fertility, ease of tilth, and adaptability to a wide range of crops. San Fernando soils are deep, fine textured and fairly fertile, but heavier than San Manuel soils. Excepting San Manuel, other soil series have fair to poor surface and internal drainage. Seasonal flooding is common on lowland. The lowland crop is predominantly rice. On lighter textured soils, tobacco, corn, vegetables, and beans are grown in the dry season, in rotation with rice. The gently undulating low land is planted to tobacco, corn, sugarcane and some maguey. Tobacco is a leading economic crop of the Region. 2. Rolling and hilly land have residual soils developed from igneous, shale, sandstone, conglomerates, and coralline limestone. Those derived from igneous rocks prevail in Ilocos Norte Province, and those from shale and sandstone dominate in Ilocos Sur and La Union Provinces. While their texture, depth, and natural fertility vary, there is a common problem of excessive runoff and erosion, as a result of very extensive hillside cultivation of upland rice, corn, sugarcane (for brown sugar), vegetables, bananas, maguey, etc. Even the dune sands along the coast are planted to sugarcane, cassava, or sweet potatoes. Many hills have already been abandoned to cogon grasses. The steep mountain slopes of the broad Mountain Provinces are still occupied by forests. Their soils have not yet been surveyed. 3. Region III - Cagayan Valley. The important lowland areas in this Region are from north to south: the Aparri coastal plain of the Cagayan Province, Isabela Plain of Isabela Province, and Bayombong Basin of Nueva Viscaya Province. The relatively level agricultural land of the Region totals about half a million hectares. 4. The Aparri coastal plain is formed by recent alluvium, of which the Quingua and Umingan soil series are most important. The former has friable surface soil of silt loam, loam to fine sandy loam, and heavier subsoil of silty clay loam to clay loam. In many respects, it is simillar to the San Manuel series, except that it drains slower. The latter it also similar to San Manuel but has a layer of stones and gravels in the lower subsoil. It is therefore well drained and dries out faster than the Quingua series in the dry months. Lowland rice is the maincrop, while corn, tobacco, peanuts, vegetables, and sugarcane are also grown. 1/ Region I - The City of Manila is omitted. ANNEX 1 Appendix 1 Page 2 5. The Isabela Plain is the largest plain and rice bowl of the Region. It has good potential for further development when the Magat Irrigation Project is built. The main soil series here are Sta. Rita, Cauayan and Bago. The west portion of the Plain mainly consists of the Sta. Rita series, a deep and fairly fertile clayey soil with poor drainage. The soils of the eastern portion of the Plain is mainly the Cauayan series, situated on older terraces and developed from older alluvium. The topo- graphy here is not as flat as in the western side of the plain, and the soils are heavier. Internal drainage is poor, while surface drainage varies from poor to excessive, depending on topography. Crop yields are generally lower than those on the Sta. Rita soils. The soils of the central and southern portion of the Plain belong mainly to the Bago series, developed also from old alluvial deposits. Soils of this series are characterised by the abundance of large iron concretions on the surface and a very compact layer in the substratum which impedes drainage. The soil becomes very hard when dry and is difficult to plough. Rice yield on these soils is generally low. Unless irrigated, dry season cropping is difficult. In general, soils of the Isabela plain are planted to lowland rice, corn and tobacco, while peanut, root crops, vegetables, etc., are found only on better drained soils. 6. The small Bayambong Basin of the Nueva Viscaya Province has fairly good soils. The center and north of the Basin have soils of Maligaya and Bantog series, which have heavy texture, dark color, and poor drainage, but are rather fertile. In the southern part of the Basin, along Magat River, are the Aningua and the fertile San Manuel series. 7. The Cagayan Valley Region has the highest typhoon frequency in the whole country. Flooding of lowland is frequent; damage to crops is ex- tensive. Because of the frequent and heavy storms, excessive erosion, and a relatively low population density, hill and mountainside cultivation is less extensive than in the Ilocos Region, but upland rice, corn, coconuts, bananas, coffee and cacao are planted in more protected areas. In the Region, also are extensive cogon and talahib grassland which supports nothing more than the most extensive type of ranching. The eastern side of the Sierra Madre Mountain Ranges still have good forest cover. The mountain soils are residual soils derived from igneous rocks and sandstone. Soils on lower hills are derived from old alluvium, containing sometimes rocks washed down from mountains underneath the soil mantle. The bed rock is mostly sandstone. 8. Region IV - Central Luzon. The broad plain of Central Luzon is primarily a lowland area. Its soils may be divided generally into five groups according to their terrace positions: (a) Most recent alluvial terrace soils - These are soils formed on the low flood plain terraces bordering the two rivers and their tributaries which run across the Central Plain. They are mostly flooded during the wet season but are among the ANNEX 1 Appendix 1 Page 3 most productive soils for irrigated diversified crops during the dry season. Most of these new soils have not yet been surveyed by the Bureau of Soils, but are known to contain a high proportion of clays and silts. (b) Recent alluvial terrace soils - These soils are at the main level and comprise the bulk of the central Plain of Luzon. Where the soils are medium to heavy in texture, i.e. Quingpa and San Fernando series, wet season rice is the predominant crops, and when irrigated, a second rice is planted. On better drained and fertile soils, a small area of diversified crop is grown. Most land is, however, fallowed in the dry season. Where the soils have light textures, i.e. Angeles, Luisita and La Paz series of Tarlac and Pampanga, sugarcane shares with lowland rice as dominant crops. (c) Natural levee soils - These soils are natural levees deposited by the main rivers and their larger tributaries adjacent to the present stream channels. Elevated a few meters above the most alluvial terraces, such deposits are relatively coarse textured, and have fair to good surface and internal drainage characteristics. They include the San Manuel series which is well suited for diversified crops, i.e. corn, sugarcane, tobacco. (d) Old alluvial terrace soils - These are soils on old terrace positions farther away from the main streams, close to the edge of the Plain, and elevated a few meters above the recent alluvial terraces. They belong mostly to Maligaya and Bantog series, and are planted to lowland rice in the wet season, and melons, corn etc., in the dry season. (e) Residual terrace soils - These are residual soils located on lower footslopes of hills at the fringe of the Plain, with elevations higher than all alluvial terraces mentioned above. They belorg mostly to Prensa series. Lowland and upland rice, corn, vegetables, melons, some sugarcane and bananas are grown. Some erosion is in evidence, but not serious. 9. Special mention should be made of the vast swamps. The swamp soils do not fit into any of the groupings mentioned above which are based on terrace positions. The swamps act as regulators of the Pampanga and Agno Rivers, receiving water from them in the wet season and discharging water into them in the dry season. The soils of the Candaba swamp are classified as Candaba clay loam and Candaba silt loam. Proportionally speaking, mountain soils in the Central Luzon Region are agriculturally unimportant. ANNEX 1 Appendix 1 Page 4 10. Region V-Southern Tagalog. The scattered plains of this Region, on the southern part of the Luzon Island, have soils of recent alluvium, with good to poor drainage conditions, or mixtures of alluvium and =volcanic ash. Lowland rice is the main crop. 11. The rolling land and hill soils are mostly derived from volcanic ejecta, which have been classified into Tagaytay, Guadalupe, Magallanes, Taal, Lipa, Prersa, Serieses. The guadalupe soils have a dense substratum and are terraced for lowland rice culture. Plastic and sticky, they are workable by animal power only under paddy conditions. Without irrigation, a second rice crop in the dry season is impossible, as the soil is hard to plough when dried. The other soil series of volcanic origin have developed somewhat deeper soils than Guadalupe. Soil texture ranges from sandy loam to clay loam. Drainage is good to fair. In Cavite, Batangas, and Laguna Provinces, these soils are used for upland crops. In Batangas Province they are widely used for citrus orchards. Soil erosion has become a problem. 12. On Palawan Island, lowland rice is grown only in small areas of Bay clay loam west of Puerto Princesa; and on Busuanga loam on the Busuanga Island north of Palawan. They are both alluvial soils formed by runoff from the surrounding mountains. The former has high water table and is being used for growing vegetables during the dry months. The latter is a valley soil, where the upper terraces are being used for growing upland rice, cassava and sweet potatoes. The most widespread alluvial soil series on the coastal plains or valley bottoms are the Brook's clay loam and San Manuel clay loam. Although these soils occupy flat to gently undulating land, all are being used for coconut and upland rice. Some San Manuel soils are planted to corn, and much of the Brook soils have been taken over by cogon, indicating the low intensity of land use on the island. Potentially, both of these soils can be planted to lowland rice, and San Manuel, especially, can support a wide range of crops of much higher value. Transportation limits better land utilization on the island. 13. The upland soils of Palawan are developed from mainly two types of parent rocks, igneous and limestone. Coron clay loam, derived from igneous rocks, has the largest area which is concentrated in the northern part of the islands. It has, however, low agricultural value because of its usually steep slopes and droughty characteristics. The soil is mostly occupied now by a native grass called paray-pasay; the grass was preceeded by Kaingin upland rice cultivation. Upland rice is still the dominant crop of this soil. Tree crops adaptable to the soil include cashew, jackfruit and mango. Other common upland soils are Tagburos clay and Tapul clay loam, both derived from igneous rocks on more genelt slopes. The former, a sticky clay difficult to cultivate, is found on hills on north and south sides of Puerto Princesa and in the south tip of the island. Upland rice and corn are dominant crops, cassava and sweet potato are also commonly grown; erosion is severe. The Tapul clay loam, found along the east coast opposite the Dumarana island, north of Puerto Princesa and along the Island Bay, is the best upland soil of the Island. Much dense forest still remain. Upland rice is the dominant crop. ANNEX 1 Appendix 1 Page 5 14. The dominant limestone upland soils are those of Sibul clay and Faraon sandy clay. The Sibul clay derived from massive limestone, is found mainly along the southwest coast of the island. It is a black iplastic clay that compacts on drying. The relief is hilly. The dominant crop is coconut, although some upland rice is grown. The Faraon clay, derived from porous coralline limestone, is found mainly on small islands south of Palawan with a rolling topography. Corn, upland rice, coconut and citrus fruits are grown. 15. Soils of the higher mountains, which form the bulk of the central mountain ranges, have not been surveyed. They are still under forest cover. 16. Region VI-Bicol. Soils of Bicol Peninsula, predominantly of volcanic origin, are quite fertile. The soils of largest plain of the Region, the Bicol Plain, is dominated by the Pili series, an alluvial soil developed from water transported volcanic ash mixed with other material. It has a fine texture (40%) clay, and a pH range from 5.5 to 6.4. When the Plain enters the Albay Province, the soil forming material becomes more dominated by volcanic ash, giving rise to soils such as Libon fine sandy loam, which has low clay content, low bulk density, high organic matter content (10%), and a pH range of 5.6 to 6.2. Double cropped lowland rice is prevalent on the Plain, as rainfall is even the year round. 17. The soils of the uplands, hills and mountains on the western side of the Bicol Peninsula are derived from volcanic debris, lavas or igneous rocks, mostly basalts and andesites. Those on the western side are derived from shale, sandstone or limestone. The lower slopes and rolling areas are planted extensively to coconuts and, where protected from wind, abaca. Annual crops grown on hillsides include sweet potatoes, cassava, corn and upland rice. Soils on the Masbate island are derived mainly from shale and sandstone. On the Cantanduanes island, soils on western portion of the island are derived from shales and sandstones; while those on the eastern side, from igneous rocks. 18. Region VII - Western Visayas. Panay Island's main lowland agricul- tural area is the Central Plain of Panay, especially the portion on the Iloilo Province. Here the dominant soil series is Sta. Rita, recent alluvial deposits with texture of either clay loam or clay. Up to about 65 to 70 Cm depth, these soils are plastic and soft when wet and hard when dry. Further below, the lower subsoil becomes silty clay and silt loam with fairly good granular structure, giving the soils fair to poor drainage. Yield of lowland rice is fairly good. Dry season rice can be planted only when irrigation is available. Otherwise, mung bean is planted quite extensively after rice. Along the river and at a lower elevation than the Sta. Rita clay, sme most recent alluviums have developed; they are classified as Umingan fine sandy loam where corn and sugarcane are main crops. 19. In Capiz and Aklan Provinces, small alluvial plains have soils of various series, where the rice yield is generally lower than that of the Central Plain of Panay. ANNEX 1 Appendix 1 Page 6 20. The main upland soils are clay loam or clay developed from sand- stone shale and igneous rocks. Coconut is the dominant crop. In recent, years, sugarcane planting has expanded on rolling land and hills (three new sugar mills went into operation in 1969/70 crop year). Soil erosion is widespread. 21. Negros Island's agriculture is dominated by sugar. The main sugar- cane area is the coastal plains of the northwest, north and northeast part of the island, where soils are alluvium which washed down from the volcanic mountains in the middle of the island. These soils, classed as Juimaloan clay loam, Luisiana clay and Antipolo clay, are fairly deep and permeable. But since the land is mostly undulating, rolling or hilly, localized impeded drainage and erosion are problems. These soils are mostly acidic in reaction. Liming has become a regular extension item of PHILSUGIN. They are also low in nitrogen and phosphorous, and to a varying degree, potash. 22. Farmers in Negros Island used to grow sugarcane on level and gently undulating or rolling land, corn or upland rice on hillsides, and lowland rice on low lying plains along the coast. Since 1960, sugarcane began to expand onto the paddy fields as well as the hills. Today, small areas of paddy and corn remain, but the rural scene is close to a monotony of sugar- cane on plain, rolling land and all over the hills. Since soils are fairly deep, the loss of topsoil often escapes the plantation owner's notice. But most farmers have exoerienced a gradual decrease of cane yield on the hill- sides, and old timers have noticed stones and pebbles now appearing in their hill soils. The Victoria Sugar Central, largest of the Philippines, estimate no less than 85% of its 30,000 ha sugar district is subject to soil erosion problem. Worse still, the declining yield of cane has forced the plantation owners to further expand the area of cane onto the hills, to make up for production losses on old plantations, and thus a vicious circle of declining yields is in motion. Yellowing of sugarcane is commonly observed in Negros, due either to drought of the undulating or rolling land during the dry spells or to poor drainage of the former rice field. 23. Region VIII - Eastern Visayas. Samar is an island with rounded low hills and few level plains. The soils of the island vary according to the parent rock of the hills. The base rocks of the northern end of the island are igneous or volcanic, of the middle portion and the area facing the Leyte Strait, sandstone and shale, the southern end, igneous rocks, and the remaining midsection, limestone. Drainage is not a general problem because of the topography. Erosion is less serious inspite of the hilliness, because soils are less disturbed under the dominant crops, coconut over all parts and abacca in areas facing the Leyte Strait. 24. Leyte Island is more diversified in agriculture than Samar. The major plain is the Plain of Leyte in the northeast portion of the island. Narrow coastal plains are along the west coast, to the north and south of the Ormoc City. Because of the high rainfall and the mountainous topography, the lowland generally has poor drainage, becoming increasingly so as elevation ANNEX 1 Appendix 1 Page 7 decreases. The lowest flood plain is of most recent alluvium of fine sandy loam planted only to rice. Corn and coconut began to appear a few feet higher but grow poorly. Further up are the recent alluviums, and numerous creeks and small rivers provide some drainage. The major soil series at this elevation are the fertile San Manuel and Umingan clay loam. Here a wider range of crops are grown in addition to rice. On the Plain of Leyte, corn, sweet potatoes, and peanuts are grown in rotation with rice; coconuts and orchards are common perennial crops. Around Ormoc City, where sugar centrals are located, sugarcane is the main crop; peanut, vegetables, sweet potatoes, coconut and orchards are also found. 25. Soils with good drainage are found on gently undulating lowland closer to the edge of the Plain, and on river levees. Here the dominant soil series are Umingan clay loan, and the Obando and Taal sandy soils. The former supports corn, cassava, sweet potatoes and some lowland rice; the sandy soils are planted mainly to coconuts. 26. Rolling uplands are also widely cultivated in Leyte. The important soil series of this category includes: (a) The Guimbalaon clay, which occurs in different parts of the island, is of volcanic origin. It is well granulated, well drained and acidic in reaction but sticky when wet. In the Ormoc area, this soil is used widely for sugarcane; in other areas, for corn, upland rice and coconut. (b) The lugo clay developed from calcareous shale is a black heavy clay found in the northwestern corner of Leyte. The soil is sticky and plastic when wet and crumbly to friable when dry. It is widely planted to corn, and severely eroded. (c) the Maasin clay in the southern part of Leyte is also a heavy clay derived from shale. With physical properties otherwise similar to those of Lugo, the soil is strongly acidic because it is formed from noncalcareous shale parent rock. Upland rice is widely planted, other crops include corn, coconut and bananas. Sheet and gulley erosion are widespread. (d) The Faraon clay, found in large area in southern end of Leyte is derived from limestone. The soil is well granulated and well drained. The slope of the land is steeper than the other series mentioned above. Much of the previously cultivated land has been abandoned and now taken over by secondary growth trees and shrubs. Crops grown at present include coconut, fruit trees on steeper slopes, and corn, sweet potatoes, etc., on gentler slopes. ANNEX 1 Appendix 1 Page 8 27. Cebu Island is dominated by limestone mountains with only small coastal plains. The main alluvial soil for the limited areas of lowland rice is the Mandaive clay loam, which has moderately developed profile underlain by unconsolidated material. The surface soil is friable and easily workable when ploughed on the right moisture content, but tends to harden when dry. The subsoil is more dense and compact, the soil thus tends to be water logged during wet season. 28. The dominant rolling upland soils, on which corn and coconut prevail, are the Lugo clay and Bolino clay. The former, already mentioned under soils of Leyte, is developed from calcareous shales. The latter is a well drained red clay developed from hard and compact limestones. It is sticky when wet but friable when dry. Other common soils are Faraon clay and Modellin clay. Faraon clay, also mentioned under soils Leyte, is derived from porous and soft limestones. Due to its susceptibility to erosion, corn is seldom grown. Instead, the gentler slopes are planted to coconuts and cassava; the steep slopes are taken over by cogon and secondary growth trees. The Medellin clay, found on more gently rolling land and developed from calcareous weathered material, has a heavy texture throughout its fairly deep profile, and poor drainage. It is being used mainly for sugarcane in Cebu. 29. Region IX - North and East Mindanao. The Agusan Valley and Bukidnon Plateau are in the North and East Mindanao Region. In the Agusan Valley, the lowland soils are dominated by the Butuan loam and San Manuel clay, clay loam and loam. The former prevails in two areas, (1) surrounding the large swamp area in the upstream of the Agusan River, and (2) surrounding another swamp area at the mouth of the River at the Butuan Bay in the north. It was developed by deposition of old alluvial terrace material on low-lying places along the river. The soil is deep, medium to fine textured, plastic and sticky, and very poorly drained. Lowland rice is grown on flat parts of the soil; corn, vegetable and coconuts on slightly undulating land. Because of the poor drainage, rice makes good vegetative growth, but yield is poor because of excessive wetness during the grain maturing period. 30. The San Manuel series is found along the midsection of the Agusan River where natural drainage is much better. It is the best soil of the Philippines, and is used for growing a wide range of crops besides lowland rice, i.e., corn, abaca, tobacco, vegetables, coconut, sweet potatoes, and banana. 31. On the rolling and hilly land of the Agusan Valley, the dominant soils are those of the Camansa series and Kadapawaw loam. The Camansa series covers by far the largest area, between the lowland soils and the high mountains. They are residual soils derived from a mixture of weathered shale or sandstone, and gravels. These soils are friable and easily penetrable by roots. On gentle slopes, they have been opened up for planting corn, coconut and abacca. The steeper slopes are still under primary forest cover. ANNE X 1 Appendix 1 Page 9 32. The Kidapawan loam is found on hills to the west of the midsection of the Agusan River, at the foot of the high mountains of the Surigao. Derived from igneous rocks, mostly andesite, it has a deep friable loam surface soil, a clay subsoil, and good drainage properties. The gentler slopes are planted to upland rice, corn, sweet potato, cassava, bananas, coffee, cacao, abaca and coconut. The steeper slopes are under forest or grasses. 33. The Bukidnon Plateau includes the highland plateau of the Bukidnon and Lanao del Sur Provinces. The soils on these plateaux are dominated by the Adtuyon clay derived from volcanic rocks and Kidapawan clay loam from igneous rocks. The Adtuyon clay has the most extensive area. Being a latosol derived from volcanic rocks, the soil is charac- terized by rapid leaching, excessive permeability, high acidity (pH 5.3), and deficiency in nitrogen and available phosphorous. With even monthly rain, however, it is planted to a wide range of crops with good yield when proper liming is practiced. The large DelMonte Pineapple Plantation is on this soil type, pineapple being an acid tolerant crop. 34. The Kidapawan clay loam has the second largest area. It is associated with higher elevations and has generally steeper and shorter slopes than the Adtuyon soils. Moreover, it does not have as good a soil structure, nor generally give a lower crop yield as Adtuyon. Jasaan clay, another soil derived from igneous rocks, is located mainly on the rolling upland in the Misamis Oriental Province, where abaca, sugarcane, upland rice, corn, tobacco, coconut, vegetables and fruits are grown. Below the highland in the Misamis Oriental are plains, vallies and undulat- ing areas of alluvial soil. The main soil series are Mambajao clay and San Manuel loam. Lowland rice, corn, coconuts, root crops, fruits and vegetables are grown. 35. Region X - Southern and Western Mindanao. The main agricultural areas in this Region are the Davao Valley and the Cotabato Valley. In Davao Valley, the most important alluvial soils on the coastal plain and inter- mountain valleys are the San Manuel silty clay loam (135,000 ha) and Cabangan clay loam (110,000 ha). The former has been repeatedly mentioned before as the best soil of the Philippines. In Davao, it supports the widest range of crops possible, including lowland rice, corn, sorghum, peanuts, vegetables, coconuts, bananas, other fruits, abacca, on both small farms or large plantations. The Cabanga clay loam, a recent alluvium of sedimentary rock origin, is heavier in texture than San Manuel. Its surface soil is sticky and plastic when moist and hard when dry; subsoil is compact. Poorly drained, it is planted mainly to rice and coconut; some corn and some root crops are grown on somewhat higher land. 36. The best upland soils in the Davao Valley are considered to be the Tugbok clay (88,000 ha). It is a lateritic soil of igneous rocks origin developed in areas of gently undulating to rolling land to the east of Mount Apo. Abaca, corn, upland rice, banana and coconut are the main crops. The ANNEX 1 Appendix 1 Page 10 most extensively distributed upland soil however is the Bolinao clay (107,000 ha), which is developed from coralline limestones. It is sticky and plastic when wet but friable when dry. Shallow and susceptible to erosion it is generally less productive than Tugbok clay. Coconut, corn and upland rice are dominant crops. 37. In the Cotabato Valley, the lowland is situated along and in between the main tributaries and along the main course of the Cotabato River. The largest single body lies in the Allah River Valley between the Buluan River and the southern group of volcanic mountains. The Banga sandy loam comprises the bulk of this area (93,750 ha) in one single block. It is a recent alluvium with a medium textured surface soil, a sandy, gravelly structureless subsoil, and good drainage properties. Such soils would have been drought if not for the evenly distributed monthly rainfall. Rice, corn, and coconut are grown as main crops, and mung bean, vegetables, cassava, sweet potato, banana and fruits as minor crops. On the other hand, a large area of this soil has been invaded by cogon and talahb grasses. To the north of the Banga soil and the south of the Buluan River and the two big marsh areas, is another alluvial soil in one large block, the Timaga clay loam (62,550 ha). Because of its closeness to the marshland, it has very high water table and is very poorly drained. Lowland rice is by far the predominant crop; corn, coconut, and some vegetables are grown on some- what higher patches. 38. To the east of the Liguasan Marsh and south of the town of Mlang, a block of San Manuel loam (41,000 ha) exists. Here a wide range of crops are grown, including intensive commercial production of tomatoes. 39. Between the Liguasan and Libungan Marshes and the north bank of the Cotabato River, the Kabacan clay is found; bordering the north bank of the Liguasan Marsh is the Kabacan clay loam (total area of Kabacan series 65,600 ha). Both soils have clay loam to clay subsoil and substratum, but the Kabacan clay has a deeper and heavier surface soil. Around the town of Midsayap, at the eastern border to the Libungan Swamp, is an important year-round corn producing area. On the rest of the Kabacan series, rice is the main crop. Coconut is present in all parts of the area. 40. From west of the Libungan swamp to the estuary of the Cotabato River is a narrow strip (30,000 ha) of low-lying riverside alluvium, the Tamontaka clay; this is deep soil with a high content of organic matter. A considerable portion of the land along the bank is under water part of the year, and these areas are used exclusively for rice. Crop losses from flooding and waterlogging are frequent and heavy. Drainage is a perpetual problem. On the more elevated portions away from the rivers, vegetables, corn and coconuts are grown. Much of the land is overgrown with marsh vegetation. 41. A 14,000 ha strip of relatively elevated land, classified as the Dalican clay loam, exists south of the Tamontaka clay area. It is formed as ANNEX 1 Apndix 1 Page 11 natural levees: of the Cotabato River to the north, and to the south a small river, Tatayan, which runs directly into the sea. The land is well drained because of the elevation. Lowland is planted to rice, and higher terraces to coconut, corn, vegetables, bananas and fruits. But the area is agri- culturally much less developed than the main body of the Cotabato Plain, due to the complete lack of land transportation. Potentially, it is a highly productive area. 42. In spite of the availability of broad plains and the relatively thin population, upland farming is widely practiced in Cotabato--by local farmers, immigrants from other islands, and squatters on logging areas. Kaingin has ruined-vast areas of rolling lands, especially along the west coast. Erosion is a severe problem. 43. The most widely distributed upland soil is Faraon clay (125,000 ha), a soil of coraline limestone origin. It is found in large blocks in two areas, along the west coast south of the estuary of the Cotabato Province. The soil is shallow and susceptible to erosion. Upland rice, corn, bananas, fruits and vegetables are grown on gentle slopes. Previous Kaingin has ruined much of the hillside which are now covered by cogon weeds. The soil, though large in area, is limited in its contribution to agriculture. 44. The upland soil type with the second largest area is the Parang clay loam formed from igneous parent rocks. It appears also in two large blocks, one on the west coast surrounded by the Faraon clay. Upland rice, corn, abacca, coconuts and fruits are being cultivated around the town of Nuro and along the main roads. Virgin forests still cover the higher and steeper slopes, but are being exploited rapidly. Where the land had previously been cultivated, cogon and secondary brush have taken over the land. The second area of this soil is located in the northwest corner of the Cotabato Province to the last of the port town of Parang Achorage. Around the town of Parang and Bugason on the harbor, upland rice, corn and coconut are grown. Coconut is the main crop, and Durian fruit, a special product of the area. The rest of the area is still covered by primary and secondary forests. 45. The soil type with the third largest area is Tupi fine sandy loam, derived from boulders and deposits of gravel and sand. It comprises the bulk of the northern two thirds of the Koronadal Valley in the south. The surface soil is loose and friable; the subsoil, sandy; and the sub- stratum, a mixture of course sand, gravel, and stones. The soil has good to excessive drainage. Topography varies from steep slopes, to rolling and undulating, and to almost level near the valley bottom. Because of the easy tilth of the soil and even monthly distribution of rainfall, the soil is used for a wide range of common crops, plus such high value crops as Irish potato, onions, and cabbage. Large plantations of banana (Standard Fruits), pineapple (Dole), cassava, abacca and coffee (local capital) are developed in the area. ANNEX 1 Appendix 1 Page 12 46. Other soil types of considerable area include the Kidapawan series (56,000 ha), Quilada sandy clay loam (52,000 ha), and others. 47. The soils on high mountains have not been surveyed by the Bureau of Soils. They mostly still have forest cover and have not been used to any significant extent for agricultural purposes. ANNEX 1 Table 1 PHILIPPINES AGRICULTURAL SECTOR SURVEY Table 1: CLASSIFICATION OF PROVINCES, BY GEOGRAPHICAL REGIONS - 1972 I. CITY OF MANILA II. ILOCOS 1. Abra 5. Mountain Province 2. Ilocos Norte 6. Benguet 3. Ilocos Sur 7. Ifugao 4. La Union 8. Kalinga-Apayao III. CAGAYAN VALLEY 9. Batanes 11. Isabela 10. Cagayan 12. Nueva Vizcaya IV. CENTRAL LUZON 13. Bataan 17. Pangasinan 14. Bulacan 18. Tarlac 15. Nueva Ecija 19. Zambales 16. Pampanga V. SOUTHERN TAGALOG 20. Batangas 25. Mindoro Oriental 21. Cavite 26. Palawan 22. Laguna 27. Quezon 23. Marinduque 28. Rizal 24. Mindoro Occidental VI. BICOL 29. Albay 32. Catanduanes 30. Camarines Norte 33. Masbate 31. Camarines Sur 34. Sorsogon VII. WESTERN VISAYAS 35. Aklan 38. Capiz 36. Antique 39. Negros Occidental 37. Iloilo 4O. Romblon VIII. EASTERN VISAYAS l. Bohol 45. Eastern Samar 42. Cebu 46. Negros Oriental 43. Northern Leyte 47. Northern Samar 44. Southern Leyte 48. Western Samar- IX. NORTHERN & EASTERN MINDANAO 49. Agusan del Norte* 54. Misamis Oriental 50. Bukidnon 55. Surigao del Norte 51. Lanao del Norte 56. Surigao del Sur 52. Lanao del Sur 57. Agusan del Sur* 53. Misamis Occidental 58. Camiguin* X. SOUTHERN & WESTERN MINDANAO 59. Cotabato 63. Sulu 60. Davao del Norte 64. South Cotabato 61. Zamboanga del Norte 65. Davao del Sur 62. Zamboanga del Sur 66. Davao Oriental Not shown in map. PHILIPPINES AGRICULTURAL SECTOR SURVEY Table 21 POPULATION, LAND AREA, PERCENT CHRGE, DENSITY AND PERCENT DISTRIBUTION OF POPULATION BY REGION ATD PROVINCE, 1948-1970 Percent of total Population Land Area Percent Chtn,e Density Population Region and Provinces 1970 1940 1968 Sq/koa % of 190 1948- 1970 1960 1948 1970 1960 1948 (May 6) (Feb 15) (Oct 1) total 1970 1960 Philippines 36,684,486 27,087,685 19,234,182 300,000.0 100.00 35.4 40.8 123.1 90.8 64.1 100.00 100.00 10O.o, Region I - Manila & Suburb! 1,330,788 1,138,011 983,906 38.3 .01 16.9 15.7 34,746.4 29,728.7 25,689.4 3.63 4.20 5.12 Region 11 - Ilocos and Mt. Province 1,833,154 1,469,753 1,129,793 25,765.6 8.59 24.7 30.1 71.1 57.0 43.8 5.00 5.43 5.87 Region III - Cagayan Valley and Batanes 1,462,723 1,035,750 669,086 26,837.7 8,95 41.2 54.8 54.5 38.6 24.9 3.99 3.82 3.8 Region IV - Central Luzon 5,100,095 3,690,996 2,774,680 23,646.1 7.88 38.2 33.0 215.7 156.1 117.3 13.90 13.63 14.43 Region V - Southern Luzon and Islands 6,827,377 4,231,973 2,543,602 46,118.7 15.37 61.3 66.4 148.o 91.8 55.2 18.61 15.62 11.22 Region VI - Bicol and Masbate 2,966,881 2,362,707 1,666,459 17,632.5 5.88 25.6 41.8 168.3 134.0 94.5 8.o9 8.72 8.66 Pegion VII - !estern Visayas 3,785,408 3,209,963 2,639,334 21,579.1 7.19 17.9 21.6 175.6 148.8 122.3 10.32 11.85 13.72 Region VIII - Eastern visayas 5,414,128 4,563,768 3,884,078 36,383.1 12.13 18.6 17.5 148.8 125.4 106.7 14.76 16.85 20.19 Region DX - Northern Mindanao 3,016,865 2,111,291 1,376,034 39,844.9 13.28 42.9 53.4 75.7 53.0 34.5 8.22 7.80 7.16 Region X - Southern Mindanao and Sulu 4,947,067 3,272,873 1,567,290 62,153.9 20.72 51.2 108.8 79.6 52.7 25.2 13.48 12.08 8.15 Suburbs are included in their mother province. Sourcet Bureau of Census and Statistics. А.'�1NEX 1 Tab1e 3 PHILIPPINES AGRICULTURP;L SECTOR SURVEY ТаЬ1е NORMAL MONTHLY AVERAGE TEMPERATURE OF SELECTED STAxIONS (1��50-1970) (in degree Ce�atigrade) веаееп ,пд тисlоп J 9 ■ ь Негеh AnrlL Мг Jия 7и1г Аияи,е Вгпгетаег ОгглЕгг Ro.ember Dесгтьег Аппи,l вгб�ип [ ссгУ о[ непеlг лге Агг. �а.о 3ь.б v.т г9.1 39.ь ха.7 гв.о пs n.s п.е n.: гь.э n.ь r•,сьег еите,и Fоггиегtпв Gocsr zs.э х5.9 n.a хе.9 х9.ь хе.ь v.e г7.s к7.б v.x 3а.ь a.a 3т.э ы{еоп ег - 1lогог ь.о,е си7 xa.s ха.е хь.б 3е.о :е.9 ге.3 п.г 3г.а n.z гг.к гб.б n.a za.s 9у.л xs.♦ хь.о v.x ге.о 7е.9 х7,е v.з хь.е 2ь.е хг.э :ь.а кь.х хг.о вгаеоп г1г седеуоп valler Аvвтгl кз.з хь.о ь.9 r,ь 39.г г9.г гв.я 7е.� кт.9 хб.9 a.s хб.: хь.т т,гjигев.г.и ц.ь 3s.e n.ь х9,а w.ь г9,а к9.б х9.о ге.ь п.ь хь:о гs.о хг.г вгаеоп w сгпсг,е w:on с.а,п,си.п cecr а.в гь.з л.г г9,х г9.ь xes кв,о :rs zг s п.г хь.: гь.х хт.ь о.вирп сегу кь.к хь.ь хв.а zя.ь г9.т хе.в ка.х 27.а хг.9 ге.х z7.з га.ь ze.o Ча1ип 4 5ouchern T,Aelolt Ааьиlепв. е,с.пв•е :ь.о zь.9 х7.9 z9.к к9.э :е.з п.т гг.з гт.с хг.ь хг.2 гь.э гг.ь оиеа,п, ог:.:лл сlгг 3а.9 ls.к гг.о хв.з га.е л.ь гь.е хь.ь 7ь.а :ь.а zs,.9 гs.г гь.з с,г,Реп, миаого ь.ь xs.e м.е хв.1 гв.ь ка.о г�,а v.a v.a n.o гыо xs.e хг.о виегсо пгiпгя,,, ры ,�,п хь.а х7.о гт.е ге.ь v.ь х7,ь п.х v.z n.2 v.ь v�з хг.х n.s в<аеоп vг etro3 в,.с х3.з ц.ь 3ь.б п.а 3вл хе.ь кв.х lе.в n.e vs :ые кь.о v.x {�tmeyl 33.3 l3.7 36.{ I7.a 2В.2 2В.2 27.В 37.В г7.6 27.2 261.7 I6.0 х7.0 мааЬесе 26.а хб.б х7.3 хВ.1 l9.6 z9.i 2в.В хе.б 28.6 2в.2 к7.е 36.9 28.0 д[ton u{I У, У1алв• во,ае acr. г,п,7 хб.7 га.я n.т х9,о г9.в х9.б гв.а га.а хе.а :в.: п.9 п.х 2е.е noaio. e.ner xs.7 2s.9 3ь.s lе.о lв.с хг.е 2г.ь n.x n.z v.z хь.е гь.х v.o оия.ви.с., гкаго. тд.ь 3е.7 n.ь :е.в :в.е 3е.з хг.а 2в.о za.o v.e п�,а n.z n.e вгв7оп У[7L С. У1е,Уи ас.гнл, s.a,r zs.2 х3.б xs.e м.6 п.ь х7.ь n.э zт.ь zь.е хб.в xs,a zs.s кб.ь ась,7оа,п, s.m.r гь.3 хь.к п.о х7.9 ге.ь ге.s хе.г гв.б :га v.7 гь,ь zь.а n.s плеь,п, c.rc• хь.о lь.в гь.г хг.ь ха.а га.о х7.е :е.х :в.к v.в x7.i гь.s n.x агви еес7. сеьи 26.а гв.ь п.л 2е,а гв.е хе.к г7.ь r.6 д.ь пs v.з кь.в л s вгс.оп гх н. а г. мгпл.пк Sur/{ео 23.6 23.6 26.! 27.0 ]7.7 27.6 27.а 27.В 37.В 3Т.7 Iь.б 26.0 2Ь.9 С,{егеп ег Dra 23.9 х6.0 хб.) 2).6 7а.1 77.6 27.э 77.7 гТ.6 г7.3 I7,.0 26.6 3Т.0 дееоеее кьл n.o п.7 геs хе.а :т.9 l7.ь хг.ь п.7 n.7 v.ь v.z n.ь цеаоп д т. ь и. мапе.п.о w.м zб.з кь.а кг.а n.a хг.е х7.э гг.о хг.2 хг.х гт.а z7.з :б.е х7.� iавЬовпвв ttq хь.ь хь.е к7.х n.s хт.ь lг.1 кь.е хь.в гт.а 7ь.э гг,о хь.е хг.о conr:a s.пт, гь.е гт.о х7.1 хе.в , п.3 ке.е хв,♦ кь.з гь,б гь.в v.o xr.a xr.o .ro1o, sип zь.х гь.: кьл хь.е v.г :г.г v.1 n.x п.г хь.е кь.е 3ь.s гь.е 5оигст о[ Dасв: ГЬtllрРlпв WecMr Ьапаи, м,п4lа PHILIPPINES (D AGRICULTURAL SECTOR SURVEY H F-J Table 4: NORMAL MONTHLY RAINFALL (mm) AND NUMBER OF DAYS WITH RAIN (1951-70) Region Climate Jan- Feb- March AULI nX June July August Sept- Oct- N___ Dec- Annual station Type ua ruary - embe r ober ember ember Total 1. City of Manila Wea. Bu. central Off B 13.3 7.0 12.6 23.7 129.4 286.9 354.3 473.9 401.0 181.9 144.2 61.3 2089.5 (4) (3) (4) (4) (9) (16) (22) (22) (22) (17) (12) (9) (144) wea. Bu. Fore- casting Cen. B (A) 15.5 6.1 5.4 20.9 104.5 255.6 306.3 410.4 348.7 172.7 120.5 60.8 1837.4 (4) (3) (3) (3) (8) (16) (20) (22) (22) (15) (12) (9) (137) II. Ilocos Lasag A 6.4 2.1 6.3 24.8 122.2 436.0 404.3 565.8 389.6 65.6 59.5 16.6 2099.2 (2) (1) (2) (2) (8) (15) (19) (21) (18) (7) (6) (2) (103) Vigan A 2.0 5.5 14.2 29.2 127.8 420.1 474.3 704.3 407.0 83.5 45.0 17.9 2330.8 (1) (1) (1) (2) (8) (17) (20) (22) (17) (6) (5) (2) (102) Baguio B 12.2 15.6 38.7 104.8- 288.4 476.3 576.8 817.5 670.9 257.4 142.5 29.6 3430.7 (4) (3) (5) (10) (19) (23) (26) (27) (25) (17) (9) (5) (173) Dagupan B 5.7 16.6 28.0 91.1 211.5 346.5 433.9 541.6 370.3 140.6 64.9 24.6 2275.3 (2) (3) (3) (7) (13) (18) (22) (24) (21) (11) (6) (3) (133) III. Cagayan Valley Aparri D 148.3 88.8 39.7 41.0 86.3 183.3 201.8 259.3 306.9 331.6 409.0 224.0 2320.0 (15) (11) (7) (5) (8) (13) (12) (15) (16) (18) (20) (19) (159) Tuguegarao D (B) 21.5 20.8 37.4 54.3 103.6 172.8 211.5 248.1 220.4 226.3 280.7 105.4 1702.8 (6) (4) (5) (5) (10) (24) (24) (25) (25) (29) (25) (21) (203) IV. Central Luzon Cabanatuan A 5.8 11.4 17.2 44.7 148.0 267.6 272.4 394.2 317.9 149.5 130.6 46.4 1805.7 (2) (2) (3) (4) (12) (17) (20) (24) (22) (12) (10) (6) (134) Iba A 4.4 3.4 13.5 38.0 261.0 602.9 717.1 1039.1 733.6 163.7 75.0 33.7 3675.4 (2) (2) (2) (5) (12) (18) (23) (25) (22) (13) (7) (4) (135) cont I d PHILIPPINES AGRICULTURAL SECTOR SURVEY Table 4: RAINFALL (cont'd) Region Climate Jan- Feb- March April May June July August Sept- Oct- Nov- Dec- Annual Station Type uary ruary - ember ober ember ember Total IV. Continued Tarlac-T A (3) 10.0 10.0 25.0 99.0 190.5 254.0 419.0 406.4 304.8 177.8 94.0 38.1 2029.0 (2) (1) (2) (5) (15) (18) (22) (23) (22) (13) (10) (4) (137) V.Southern Tagalog Casiguran E 230.8 180.5 198.6 143.13.t 239.3 226.5 239.3 266.8 265.0 351.7 637.5 1 457.3 3436.6 (18) (15) (15) (15) (16) (15) (17) (18) (18) (18) (19) (20) (205) Baler E (G) 181.2 151.7 193.4 236.6 311.7 247.7 230.7 262.0 259.3 362.0 467.7 303.4 3207.4 (16) (16) (17) (19) (19) (18) (18) (19) (18) (18) (18) (18) (214) Infanta E (G) 375.4 241.6 183.5 192.0 199.3 216.7 236.6 227.7 297.3 503.5 572.8 537.4 3783.8 (25) (20) (16) (17) (16) (17) (18) (19) (19) (25) (24) (27) (243) 2/ Aurora D (C) 65.7 24.0 33.8 28.9 89.7 164.3 234.5 202.5 191.3 253.7 204.1 148.7 1641.2 (11) (7) (7) (4) (8) (14) (19) (17) (17) (18) (20) (19) (161) Calapan D (C) 113.6 60.0 57.7 85.9 172.8 201.3 205.9 222.7 180.4 272.3 247.8 207.0 2027.4 (18) (12) (10) (9) (13) (17) (16) (17) (16) (18) (19) (21) (186) Lucena City D (C) 89.3 60.3 42.5 54.7 90.0 160.3 184.6 198.9 225.5 336.2 305.4 235.2 1982.9 (16) (10) (9) (7) (8) (14) (16) (17) (17) (20) (18) (21) (173) Coron D (B) 27.1 9.6 7.0 25.0 180.2 380.3 489.8 562.3 456.1 276.0 177.9 121.4 2712.7 (3) (2) (2) (2) (9) (19) (21) (22) (21) (16) (10) (7) (134) Ambulong B 26.4 16.9 16.2 35.3 139.3 220.1 241.4 287.8 268.5 206.8 156;6 95.5 1710.8 (6) (5) (3) (4) (10) (17) (19) (21) (20) (16) (13) (11) (145) Puerto Princesa B 36.5 26.1 59.0 46.8 151.8 168.6 185.2 205.5 189.9 182.2 215.1 125.7 1592.4 (3) (3) (4) (6) (12) (15) (16) (17) (15) (15) (13) (8) (127) Diliman, (Quezon City) B (A) 21.1 8.3 14.1 20.4 184.3 394.1 444.3 488.1 424.0 130.0 138.4 52.9 2310.0 (4) (2) (4) (4) (12) (19) (23) (24) (23) (17) (14) (9) (155) cont'd o T-- PHILIPPINES AGRICULTURAL SECTOR SURVEY Table 4: RAINFALL (cont'd) Region Climate Jan- Feb- Sept- Oct- Nov- Dec- Annual Station Type uary ruary March April May June July August ember ober ember ember Total VI.Bicol Daet E 361.8 191.7 165.3 131.7 137.2 163.9 206.1 275.7 270.3 494.7 614.1 537.6 3550.1 (24) (18) (14) (14) (13) (15) (17) (19) (19) (23) (24) (27) (227) Virac E 231.9 138.3 119.2 131.6 188.1 183.1 214.0 203.1 226.8 374.2 484.4- 430.7 2925.4 (21) (16) (16) (17) (16) (16) (18) (16) (17) (21) (22) (23) (219) Legaspi E (G) 301.6 176.2 207.6 172.7 182.2 205.4 229.9 282.9 247.3 307.3 478.3 466.3 3257.7 (22) (17) (17) (17) (14) (15) (19) (20) (20) (20) (21) (23) (225) 6/ 4/ 4/ Naga City E 114.3 81.3 68.6 83.8 144.8 205.7 279.4 188.0 297.2 299.7 304.8 276.9 2344.5 Masbate D 170.9 74.9 64.3 42.5 105.6 141.4 179.5 205.2 181.2 224.8 239.1 227.9 1857.3 (15) (11) (10) (6) (8) (14) (16) (17) (15) (16) (16) (16) (160) VII.Western Visays Romblon E (C) 118.6 41.2 66.9 68.6 133.3 199.8 258.8 258.1 230.3 326.0 260.7 207.4 2169.7 (15) (11) (10) (9) (12) (16) (19) (19) (17) (21) (18) (17) (184) Roxas E (C) 107.4 52.7 57.5 43.5 167.1 227.0 280.6 249.3 234.6 354.1 239.4 176.8 2029.9 (15) (10) (9) (5) (12) (17) (18) (18) (17) (20) (18) (17) (176) 6/ Binalbagan Estate B 58.4 40.6 45.7 53.3 210.8 203.2 393.7 309.9 322.6 284.5 198.1 99.1 2209.9 Dumaguete D 81.3 52.0 66.8 40.6 82.6 134.8 157.9 111.5 112.9 163.2 176.4 126.4 1306.4 (14) (10) (8) (6) (9) (15) (16) (15) (13) (17) (15) (16) (154) 6/ Lucena (Panay) E (D) 71.1 53.3 48.3 48.3 142.2 218.4 297.2 269.2 208.3 254.0 213.4 99.1 1851.7 Iloilo City C (B) 42.0 21.0 33.7 38.6 137.7 258.7 280.1 332.9 242.6 212.9 184.0 95.4 1879.6 (8) (6) (6) (5) (12) (18) (19) (20) (19) (17) (15) (12) (157) VIII.Eastern Visayas Tacloban G 246.5 201.2 131.1 115.5 149.4 137.5 151.6 128.9 135.8 172.4 243.0 288.0 2100.9 (20) (18) (17) (16) (15) (15) (17) (15) (15) (17) (20) (22) (207) cant' d PHILIPP INES AGRICULTURAL SECTOR SURVEY Table 4: RAINFALL (cont'd) Region Climate Jan- Feb- March ApRil MaY June July August Sept- Oct- Nov- Dec- Annual Station Type uary ruary ember ober ember ember Total VIII.Eastern Visayas (Continued) Tagbilaran G 104.2 90.5 87.5 63.5 72.0 149.5 130.1 110.1 104.6 167.6 204.2 110.9 1394.7 (10) (8) (7) (6) (12) (18) (19) (19) (17) (15) (12) (12) (155) Catbalogan G (E) 214.7 113.4 125.2 107.4 192.1 178.4 236.0 263.7 238.1 323.2 335.7 324.6 2662.5 (18) (15) (15) (15) (16) (17) (19) (18) (17) (20) (21) (22) (213) Catarman E 394.1 226.5 205.6 161.3 156.7 155.4 202.9 177.6 195.4 421.6 548.3 490.0 3335.4 (22) (19) (16) (15) (14) (16) (17) (15) (15) (20) (23) (25) (217) Borongan E 605.9 414.7 306.5 265.2 332.5 220.3 210.9 209.2 190.7 305.3 512.7 670.5 4244.4 (25) (22) (22) (22) (20) (18) (17) (15) (15) (20) (22) (26) (244) Cebu City D 100.3 70.3 53.9 58.3 114.8 178.2 208.7 189.5 178.1 191.1 161.9 133.3 1638.4 (13) (11) (11) (8) (12) (16) (18) (17) (16) (20) (15) (15) (172) IX.N. & E. Mindanao 5/ 5/ Malaybalay F 108.4 98.1 91.4 98.0 232.2 327.9 323.5 324.8 343.8 313.8 185.5 152.5 2605.9 (15) (13) (11) (12) (20) (23) (24) (24) (23) (22) (18) (17) (222) 5/ 5/ Hinatuan E (F) 714.2 542.2 450.6 323.7 285.6 267.9 209.2 193.3 208.8 207.7 337.4 619.7 4360.3 (25) (24) (24) (21) (20) (18) (18) (16) (16) (17) (19) (24) (242) Surigao E 606.0 479.4 369.4 247.1 188.1 133.8 177.7 155.6 170.7 267.6 411.5 607.3 3814.2 (26) (22) (22) (19) (15) (13) (16) (14) (14) (18) (21) (26) (226) Cagayan de Oro C 95.1 71.3 45.6 33.6 118.7 204.3 219.0 207.3 215.6 169.7 127.7 119.5 1627.4 (10) (8) (7) (6) (12) (18) (19) (19) (17) (15) (12) (12) (155) X.S. & W. Mindanao Davao G 124.7 109.9 86.0 139.6 226.0 162.2 195.5 153.0 171.5 171.3 149.9 114.7 1804.3 (13) (12) (11) (12) (18) (17) (17) (15) (15) (15) (14) (14) (173) Jolo G 95.5 94.4 93.2 163.3 249.6 258.0 205.4 146.6 181.8 240.9 202.9 144.6 2076.2 (9) (8) (9) (11) (17) (17) (17) (15) (14) (17) (17) (14) (165) N C Z cont 'd PHILIPPINES pd AGRICULTURAL SECTOR SURVEY Table 4: RAINFALL (cont'd) Region Sain Climate Jan- Feb- Mac ue Jl uutSept- Oct- Nov- Dec- Annual SainMarch April Ma June JuyAugust A __ ___ Sain Type uary ruary ember obeber er mber Total X.S. & W. Mindanao (Continued) 4/ 2/ 2/ Cotabato City F (E) 91.4 86.4 88.9 154.9 215.9 243.8 279.4 223.5 218.4 284.5 188.0 106.7 2181.8 General Santos B (D) 65.5 69.5 44.3 51.1 103.3 104.5 101.1 82.0 78.4 85.9 88.2 70.0 943.8 (9) (8) (7) (7) (12) (14) (14) (13) (12) (12) (11) (11) (130) Zambaoga City B 48.8 29.1 43.5 58.5 94.7 142.9 122.7 147.3 144.0 177.7 118.9 84.5 1212.6 (7) (6) (7) (9) (14) (15) (15) (15) (13) (14) (14) (10) (139) 1/ Basic data is from Weather Bureau, Department of Commerce and Industry, Quezon City, Philippines, May, 1972, unless otherwise stated. Dry months are regarded as those with rainfall below 61 mm (2.4"), a criterion used by Huke in Table 5. 2/ Climatic Type - capital letters represent climatic types A through G when the locations of the stations are fitted to the Climatic Regions by Robert E. Huke in Map 3. Letters in brackets represent revisions by mis- sion when the monthly rainfall data of the stations are checked against the criteria used by the same author for classifying the climatic types. 1/ Taken from Water Resources Development Program of the Philippine Sugar Institute, Philippine Sugar Institute Quarterly, Volume 17, Number 2, July 1971. 4/ See Table 5 - Criteria of Classification - Type E, Huke. 5/ See Table 5 - Type F, Huke. 6/ Taken from Agricultural Geography of the Philippine Islands by R. G. Hainsworth and Raymond T. Moyer, USDA, Office of Foreign Agriculture Relations, 1945. PHILIPPINES AGRICULTURAL SECTOR SURVEY Table 5: CRITERIA OF CLASSIFICATION OF CLIMATIC REGIONS Hainsworth and Moyer, 1945 Huke, 1972 Philippines WB 1971 A. Dry winter and spring, A. Long low sun dry season; 5 or 6 months Type A (Wet) - Rainy throughout wet summer and fall with less than 2.4" rainfall per month. the year with at most 1-1/2 B. Intermediate low sun dry season; 4 months dry months. Q less than 0.143 with less than 2.4" of rainfall per month. B. Short dry season of C. Short low sun dry season; 1 to 5 months Type B (Humid) - Rain well or 1 to 3 months with less than 2.4" rainfall per month. evenly distributed throughout D. Short high sun dry season; 1 to 3 months the year with at most 5 dry with less than 2.4" of rainfall per month. months. Q = 0.143 or more C. No dry season, pronounced E. All months with 2.4" or more rainfall; or less than 0.333 winter rainfall wettest low sun month with at least 3 Type C (Moist) - Rain sufficiently times the rainfall of dryest high sun distributed with at most 4-1/2 month' dry months. Q = 0.353 or more D. No dry season and no pro- F. All months with 2.4" or more rainfall; but less than 0.600 nounced maximum rainy wettest high sun month with atlleast season three times the rainfall of dryest low Type D (Dry) - Rain not sufficiently sun month. distributed with at most 6 dry months. Q = 0.600 or more but G. All months with 2.4" or more rainfall.; less than 1.00 wettest month has less than 3 times the Type E (Arid) - There are more dry rainfall of the dryest month. than wet months at most three 4-1/2 wet months. Q = 1.00 more but less than 1.670 Type F (Barren) - Dneficient rainfall with less than 3 wet months. Q = 1.670 or more Number of dry months Number of wet months (DX PHILIPPINES AGRICULTURAL SECTOR SURVEY Table 6: NORMAL RELATIVE HUMIDITY OF SELECTED STATIONS Region Jan- Fe- March ARKl May June July August Sept- ct- Nov- Dec- Annual Station Uary ruary -ember ober ember ember Total I.Citv of Manila Western Bu. Forecasting Center 73 73 68 66 70 79 82 85 86 84 82 81 78 II.Tlocos Vigan, Ilocos Sur 72 74 74 74 76 81 84 86 85 79 75 73 78 tII.Cava.n Valley Tuguegaras, Cagayan 81 77 74 70 70 75 78 79 81 83 85 85 78 Aparri, Cagayan 83 82 81 78 79 79 79 81 83 84 84 85 82 IV.Central Luzon Cabanatuan, Nueva Eciya 72 70 65 66 70 80 83 85 85 81 79 74 76 V.Southern Taalag Arbulong, Batanvas 78 75 71 71 75 81 84 84 86 84 81 81 79 Infanta, Quezon 88 87 85 83 83 81 82 82 83 86 86 87 84 VI.Bicol Legaippi City, Albay 83 82 81 80 81 82 83 83 85 84 84 84 83 VII.Western Visavas Roxos City, Panay 81 80 78 76 78 81 82 82 83 83 82 82 81 Iloilo City, Panay 81 78 76 73 78 81 83 83 84 84 84 83 81 VIII.Eastern Visavas Catbalogan, Samar 83 83 81 81 81 82 81 80 82 84 85 85 82 Cebu City, Cebu 72 75 73 72 75 77 78 77 78 79 79 78 77 IX.N. & E. Nindanao Malayibalay, Bikidnon 82 81 80 78 82 85 86 86 86 85 85 84 83 Surigno, Surigao del Norte 88 87 86 86 85 84 81 80 81 84 87 89 85 X.S. & W. Mindanao Davas City, Cavao 82 79 78 79 82 84 83 83 83 82 83 83 82 Cotabato, Cotabato 80 79 77 79 82 83 84 84 84 83 83 82 82 Source of Data: Monthly Average Relative Humidity in the Philippines, Weather Bureau, Department of Commerce and Industry, Manila. Years of Record: Range from 10 to 71 years, ending 19C0. PHILIPPINES AGRICULTURAL SECTOR SURVEY Table 7: MONTHLY DISTRIBUTION OF TYPHOONS IN THE PHILIPPINES TOTAL OR AVERAGE OF 24 YEARS, 1948-1971 Annual Jan Feb Mar Arr M3y Jun Jul Aug Sep Oct Nov Dec Total Total 11 9 7 11 24 36 80 82 69 59 56 30 474 Average per year 0.5 0.4 0.3 0.5 1.0 1.5 3.3 3.4 2.9 2.5 2.3 1.2 19.8 Median 0 0 0 0 1 1.5 3.5 3.5 3 1.5 2 1 19 Mode 0 0 0 0 1 2 4 4 3 2 3 0 18 % of annual 2.3 1.9 1.5 2.3 5.1 7.6 16.9 17.3 14.6 12.4 11.8 6.3 100.0 Source: Typhoon Committee Secretariat, Weather Bureau/UNDP Project. PHILIPPINES AGRICULTURAL SECTOR SURVEY Table 8: FREQUENCY OF PASSING OF TYPHOON CENTERS, 1948-70 (23 YEARS) % of Annual Total Regions Jan. Feb. Mnr. Apr. tay June Jl Aug. Sept. Oct. Nov. Dec. 23 Years Average (198) Batanes (Islands north of Cagayan, Luzon) 0 0 0 0 3 5 12 14 17 2 4 2 59 2.6 29.8 North Luzon (Ilocos and Cagayan Valley) 0 0 0 2 2 4 13 12 17 9 11 3 73 352 36.9 Central Luzon 0 0 0 0 2 3 1 4 2 3 5 1 21 0.9 10.6 S. Taglog (Luzon Island) and Bicol 1 1 0 0 3 2 2 2 4 7 12 6 39 1.7 19.7 Visayas and Palawan 2 0 3 2 5 4 2 1 0 5 16 9 49 2.1 24.7 Northern Mindanao 2 0 1 1 1 1 0 0 0 2 9 5 22 1.0 11.1 Southern Mindanao 0 0 0 0 0 0 0 0 0 1 0 1 2 0.1 0.1 Source: Typhoon Committee Secretariat, Weather Bureau/ UNDP Project. PHILIPPINES AGRICULTURAL SECTOR SURVEY Table 2: CORRELATION BETWEEN THE SOIL UNITS FAO/UNESCO SOIL MAPS OF THE WORLD (1970), 1938 USDA SOIL CLASSIFICATION AND UNEDITED TEXT OF THE SOIL TAXONOMY (1970) AS AMENDED ON SEPTEMBER 1971 Unedited Text of the Soil Taxonomy (1970) Soil Units FAO/UNESCO Order Great Group 1938 USDA Soil Classification Soil Maps of the World (1970) Alfisols Tropudalfs Latosols Eutric Nitosols Entisols Fluvaquents Alluvial or Low-Humic Gley Eutric Fluvisols I Tropaquents Alluvial Eutric Fluvisols I Troporthents Regosole Dystric Regosols i Tropopsamments Regosols Eutric Regosols Histosols Troposaprists Bog Soils Eutric Histosols Inceptisols Dystropepts Alluvial (Latosols as Dystric Cambisol modified in 195o) It Eutrandepts Reddish Prairie (Ando soils Humic Andosols as modified in 1949) I Eutropepts Gray-Brown Podzolic Soils Eutric Cambisols t Tropaquepts Low-Humic Gley Eutric Gleysols Oxisols Arcorthox Laterite and Latosols Rhodic Ferralsols Ultisols ITopudults Red-Yellow Podsolic and Red- Dstric Nitosals dish Brown Lateritic Soils Vertisols Chromusterts Grumusols Chromic Vertisols ( " Pellusterts Grumusols Pellic Vertisols '0 F-J Source: Bureau of Soils, Manila. 1� 1BRD 10132 PГ1�L�PP�NES 5ЕРIЕМВЕRЮ]2 MEAN MONTHLY RAINFALL, 1951-1970 ��� -150НУЕТ5 1N пт а ioo юо зоо аао Mi1e° JANUARY FEBRUARY MARCH APR1L МАУ JUNE iooi �i лоо � ni �/па aI� Еоо ю; qiop �ооо _�1оо/зо зо0� .Еоо Е г11 lC � \� . 11 �'.. . аоо� о ((('''�����:РАКR1 Т`�АР71р1 _уц�Рд<�121 � '• RR1 1 0.6PARR1 1�� ДI1iRR1 � J` `{ 1}�, l� � � и 1 о Ii/ Р а с i! i с е з Р л с i f� г о Р л с i! i с � е Р а с i! i с о ` ао Р л г i! i г Р л с/! i с / 0 � �/ Осеоп Й i Оселп Й Освлп И � Оселп Й �0 --юо Осеап °,° Е� Освлл /� � юо / ё мдиl ! а� с .S` С7tч . ` S�' о А Q�; с юо� Зоо•а Ео о лоо м а `?а � � \( .ю°�оо � 1оо с ,� .о _у..�` _�У�д�S(7 ,С �. �.1-д. �,` к д S.n _ ; у\г�` ,� о h r ��рΡ �'� '� р'• p зооtl р � ^ � ТΡ � 1\ '�н._�s,b�7,��•х,�'n0 �' S0 � U.� `�1 ! г00°°° � 'h� �,��и� � � � �`�U эоо lз яоbУ."'�-s �l1 `U•�.эоо V � `U ` �',.°о _ "rf ` �-�-�j�' о/ О� / , Ф,; О° (� тм з д СР U.Ф Зао ''`` � _ о ,`, \ �7"�.� у М 1,..Г {)'% f��,`, \ о ��'�/м �'��:. о ��`�'6 �F: � о �a�,4F.'� �rt�'., ; �у._-�_ (I °`з'\ р\'.. q`�. v`i 45' v vS ��'`� �O � 7 ЗОО б"С �`l и п� ' 1 q И ю �\ ?`' ь�9 и }� }� о эоо уΡ�/,/))1� �-,� , � � ) ГЕΡ`� .°J�Д� U• , ``, и F / J �` .°. 1 И .� 1 �° � •�l 9°� �° ��°��',,s ��° 1/ID7///�/�{(//J/��/l���Iq� w��V )(/ /�,/ .� ;'�° __ а�в � � о�_`_'� вСЕЯ \Д• /• PUERTO �i 50 РUЕКТО � р 1 100 rPUETHO ,� V a� ( i00 �P11ERT0�'�_�1 Г 1Л t� ) .°i1 1 РоЕRГ0 �� `�� 1 РО �( У{\ � РдWСЕSА ioo ! 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'® `1 5р0 ь0а ,� � ЧС°°��.;�`"�' j 1 � �'v°° j/��- r C� 'Э�` V°`\`j м���j ��'� и о\ Ф.• оо и 'Q°о }уΡ �0-L1 и q,Q � аро��� i е,�S +�'�ii а 'ар��1 Р i " юр а юо 6�` �\ ��1.�,1" �':.� f zoo � ���СΡ�� ��.. рСа. �С с " �'t :.•.� а . о зоо и1 о еор-.л__ �\, 1 � 1 j �л�. _ �',а V° ��;�' �``` 1�(} ь' �� S� И з0 , i�f�1с л Й -�i ; �-д Й {),�уΡ 1'оо,� `\ � iao Ор , io- s0o о и °` i {i C/ с�в • / �й '� � 'л c��ull а ` г/ b в 20D ЕОО. о `�(�/ • ' И : ;' � ;° ',�R! Ео��\ \_i iJ / f1. �'9 �6��� _ �) /� 9 ���.-' R � �/1 _° хо0 `,. _ . ( у�Л 6 /i0o' ��v 111��� �ц /•уΡ�ERTOT /( „f� � ' i� ЕСО �PUERTO �"�!( � q� / Н$О i' �� У � PuERTO � О PUERTO�� __� 1 В''ц UERTO 1 _-_� /P�NCESL � �1(.J � 5о /� PRINCESA (� Q PRINCES?--' \l J4� ' PRINCESA 8� �-� вр0 1 \i���� ` � \ � l � �/l 'Е� I '/� � ��/ `�\`'____` ___ ,у� р0 ` � PRINCESA��` PRINCESA�� ��� [�///` 5v/и i,.' Sи/и 1////1Vдур Su/и люi�i 5u7L.___ Y0-°'%' а � аоо - > 5ел `-fee� ' ` ioo 5еа д,� з00 � 5вл 'з0°� ` гоо ;. 5и/�ел зт,% з� q 5е/и с 5� �'%7� oawu �оо �• \ о А f `1+1= oavAO 5е а оо V 1 ' � J о vn0 зоо а % � Q М� р ._ � ' _ � еи о а �l Г� -����ioo а ;�д'^� о �р ° /i� - гоо � // Еоо � л.�'_ � <:��с�;� '`� ioo .. � а_.:. �� „1 •, °'�.г� iao�`г ioo ,. 1 . � е т 1д ° ро- ✓ 1 . ""((// _ л. � 1 " с5 °°- \1 �Ет ,• 1sa Е� > / `-ioo •�' � !' � А ^ G-' G� �юо lioo р � �ао� PHILIPPINES CLIMATIC REGIONS 20° 125° - 20° 25° c20°-20 NEW SYSTEM 20° ORIGINAL SYSTEM (Huke1972) g t (Hainsworth & Moyer 1945 1. LONGLOWSUNDRYSEASON,50RRMONTHS --- .. . . - WITH LESS THAN 2.4 OF RAINFALL PER rUN °ApMONTH. DRYWINTERANDSPRING,WET INTERMEDIATE LOW GUN DRY SEASON; 4 SUMMER AND FALL ,..MONTHS WITH LESS THAN 2.4OF RAIN- SUME W LESL THAN2FALL PER MONTTH HOR DR SEASON RON1OU R SHORT LOW SUN DRY SEASON: 1 TO 3 MONTHS MOMONTH -UNO JORSS A . A WITH LESS THAN 2A OP RAINFALL PER MONTH. -O -OAMRAV N SEASONONEWTRU ESHORT HIGH SN DRY SEASON TO 3 MONTHS RAINFAL WITH LESS THAN 2.4- OF RAINFALL PER U NOORY EASO ANONO PONOUEEGALL MONTHS WITH 2.4- OR MORE RAMNFALL: MAXIMUM RANY SEASON TMES TH E RAINFALL OF DRYEST HIGHSUN MONTH. ALL MONTHS WITH 2.4"OR MORE RAINFALL; WETT-EST HIGH SUN MONTH WITH AT LEAST THREE TIMES THE RAINFALL OF DRYEST LOW SUN MONTH. u~~s~ ALL MONTHS WITH 2.4'OR MORDERAINFALL; - M LWETTEST MONTH HAS LESS THAN 3 TIMES C- AN LA THE RAINFALL OF THE DRYEST MONTH. 0: o- 0 CePr ncesa Ns Sulu Sea J'Sul e __ 0 50 00 150 200 - __ ____-O 50 100 150 200 0 lo 00 ooMILE S 0 I0 20 20 100to 200 300 > KIOMETERS KiOETR ur - MAL AYSIlA v Ce/eb es Sea MALAY SIA ø Ce/eb es Se.a 25° -125°C Eli Ceu eb Puerto rinceI 1Е0• 1�о• Q !а1• 1�ь• РН � �� РР� N ES � CLAS5kF1CAT10N OF PROVINCES д q ВУ GEOGRAPHICAL REG10N5, 1972 S О �� S �° � т С�Ту оР мАи�иА и В1осЕ (А5 OF 1972) `_--� ' 6 II aocOS ю АЕ.ьру ! р0Вр зд сАмаВЕи0s rowre д 1� у'>� I 1WCO5NORTE 31 СААIАRIИЕВЬиВ D15TN1BUT10NOFORDERSANOPNINCIPALSUBORDERSANOGREATGROUPS ) _у � 3lсаiдИDиАиЕ0 0. ALFISOLS � 5oi1s wrtM1 гиЬ,игlагв horiгona of сlву дпитиlmion апд те]ium [о M1igh г' ' '? > itoco5 sин Ьаге шррlу, еппег ишвllу moisa ог moist 1лг 90 тпsвгиЧVе deys дигт9 в г., � ё� �` #'� 3 а w ииi0и � МА50АТЕ 5. YOUNTAiN гиоУ�госЕ 50R5�GON !0� рвгiод when tempere[ure И гтФпlа 1ar пlдт 9rowM д Аъ идвlк - ног впа иивиv тд�.г � i/, �%'�` '' 0 � в. eF нсиет уп wESrERи иsaras _� твориоАЕFS wrrн rnoPEPrs у Т� . ., г � осао эь. акии Е EN;ISOLS � 5оi1г withoua редо мвг,:впг: мthвr uwelly wег, ишд11 _ & кд�iиМ�аРАVАо 3В, qNTiOUE ряпт v пдьа Г /� 1. � _� ш 1II сасрчаи vаиеи ог uwaiH drr. {�-/ Зе о тЕо ТΡ'� �} /' д ` � иЕ0 Е1" Aeuents � SеМопвllу ог регвптвllу ьvet. 11 ttIf `F(, Г "� �R�а� = caGavaЧ 39. NEGBOB OCCIOENTAL �- FEUVAOUENTS n1TM HYOPAOUENTS, TflOPAOUENTS AND THOPSдPH16TS. l.E l Г/~` /`, _. �- гг. iSлвЕЕд <о- номвЕ0И � 5 � �� NuEVa vЕ2СдТА }78[ Еа5ТЕ0.Ч v15АУд5 - твОРдОиеиrS wсти нуовд0иеит5 З� 1 ��Лjj�333 1 _ _ IY сеитнаг wти дг Воно[ ���\��� у s с0Ви Е]- Paammvms - 50М вг Еавту впд генгиrок. � � f _ ' - t]. вагы.и � 1� СрЧ в3 ЧОВТЧ£RN LEYTE 1il ����a1U'1- TBOPOPSAMMENTS W1TH ТИОРОНТНЕИТS � } �' � дл. ОиТИЕ0.И LEVTE ИUEPVawNECMA Е 1NCEPTf50L5 � 5о,6 wnh редоеппiс M1orizone о1 а1[егвЬдп ог canwntreИOn Ьи[ ���г� � r � � В vaN GA +5. ЕАSГЕRИ SАМАп wпмаи[ аttитиhивп в1 ггвтlоав4ед materie6 olher гЬвп cernonвte5 М �+ 111ГГГ ) P4NGA51NAN +R NECROS ORIENTAL гiЬт, иштlу тат ог тоiп br so сдпгеа,г,.в лауг дш,пв в рвгтд wмвп � �2 �f , !в. тд0ЕАс +: иоптнЕ0.и sarм6 Ь:трвгв4го is кт(аЫа 1вг plont groиth � f � tr 1В. 2АИВАLЕS +3 WESTERN SАМдР 16, n- Апать " дтогРмои afev о..�мг .oi<впИ дгм ог пипил. } ) у sоитнЕпи тасАЕос � нопгнЕви в ЕАSгьви . �. _ Еитвди0Ертs wпн ЕитеОРЕгтs � ��� } `� хо. вАтаисаs мЕноанао 1а lриври � 5евюпдllу wвг �, г� ь. ичпЕ as acusan оЕЕ гюИТЕ �� п. wдииА w. виюо� оЕ ®- тыОрдnиЕРтs wпн ЕитдоРЕетs �% 18 гз мАиwоиоиЕ ss гли Е иоагЕ гэ- тмРдрв � Сдпг,пиввиму тдгт ог мвг. ряИвиv тд,п. � I z. м�,ноопо оостеитАЕ . Аиа0 оЕЕ suN -EUT90PEPT5WITHDYSiAOPEPTS. Y5.MINODBOONiEЯTAL 53.м15дМ100С[1DENTAL \\�. д PALдWAN 5в И15АМi50В1ЕИТдL о охЕ50Е5 - sлдг мт роал0вид мог�:опг твг дгд т«гигвг ргтоЕрвпч о1 � }�� � / п. Оиегои ь0. suBicAO аЕЕ иовгЕ мом, lrvдгвте О.тег, впа Иивг[:, впд ыг !вw Еп у.ввгм.гвы в т�петЕ, ,0 • � � :в 0.цА[ ье BuNieao оЕЕ 5ив аг� ытпк � ноя, пвамr в[.удуг то�я[. л 27 �� ы аеиsаи оЕЕ аин __ACROPTHO%WITHTBOPUDULTS с,�уг • \ - ье.сАмlGUiw _1•г MOnif 8 � � х мйтиЕИиньчЕSтЕ0.и и иЕ.л5аЕ5 - 5o�ia wИм шЬгрпвов моп:впг о1 гiдч лыитв�вг,вп дпд iow ы,в ( оахао mppW, игивВу твгяг ог тв�п fог so wпяесип.в ддvг диппе в репве � р�S�Ii- 1 ь0. сотават0 иhеп гвтрегаtигв i5 5uitoЫe 1ог рlап[ gеоиlИ. �,У`�г � 80. 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SOUTH PHILIPPINES � \�� 1 -�ц74��.,�``` 1 VIETNAM у• � д\ � i �� д' gCt;^ � Г 1��Т7Д А � / �5о/и м!"°р' а+ � о sa !оо iso zoo zso pU ,5еа мrиод ао /� � кiEOмeTeRS � _ MALAY5IAJ'�, ,V/„о�-( о so !оо isa т��г в„п,�п,п.ь,ь.,.п „ОГп.,, ,��`„ д, пУг ё°' .с ` гпиге г,тг,,;г,пгдг с � ы n,e � о BRUNE ' MILES ivыиlНдпk��,л,г>пUrlигггп� ` �_ � т rn � О � WC10NE$1A 1zo• 1хУ fz1• 1т• w AGRICULTURAL SECTOR SURVEY PHILIPPINES ANNEX 2. FORESTRY ANNEX 2 PHILIPPINES AGRICULTURAL SECTOR SURVEY FORESTRY TABLE OF CONTENTS Page No. Introduction and Overview ............................. 1 A. The Forest Resource Base ................................... 3 The Basic Facts ....................................... 3 Future Use of the Forest Lands ........................ 9 B. Forest Industries .......................................... 13 General ............................................... 13 The Lumber Industry ................................... 20 The Veneer and Plywood Industry ....................... 23 Pulp and Paper ........................................ 27 Fiberboard, Particleboard and Blockboard .............. 33 Other Forest Industries ............................... 34 C. Organization ............................................... 15 D. Research and Education ..................................... 36 E. Development Strategy ....................................... 36 F. Project Possibilities ..................................... 39 ANNEX 2 Page 1 PHILIPPINES AGRICULTURAL SECTOR SURVEY FORESTRY Introduction and Overview 1. Forestry and forest industries have long been major contributors to the Philippine economy. Exports of logs and wooden products have been earning on the order of US$250 million annually in recent years, and forestry and forest industries are directly employing about 200,000 people. Log exports account for some 78% of the commercial cut, and supply some 17% of the world trade in logs. 2. Of the 30 million ha of land in the Philippines, about half are still under forest. Much of the present forest area is in the hills and the mountains, where forestry probably is the most reasonable use of the land. Clearing of forest land has been going on for some time. The valleys and the gently rolling hills, which are suitable for farming and where access is easy, were the first to be cleared. As population pressures increased, large areas of the hill and mountain forests have recently been invaded by squatters from the lowlands, usually following commercial logging. The cleared areas are usually abandoned after a few years of cropping, and a number of serious problems result. 3. Fears are being expressed in the Philippines that the forests will not be able to sustain the present rate of felling, let alone supply the nation's increased needs. Serious concern is also being expressed about the effects of erosion from the denuded forest areas on the progress of the country's developing hydroelectric and irrigation projects. On the other hand, the forest industries, and with them the Philippine Government, are concerned about setbacks in volume and prices on the export markets, and are asking how they can become more competitive. The economists and planners are also concerned that a large volume of logs are being exported for processing in other countries at a time when there is considerable unemployment in the Philippines. 4. Despite these concerns, the world market for wood in general is expected to increase steadily. The prospects for improved markets and prices for Philippine wood and wood products appear good. The best prospects for increased competitiveness and profitability lie in making further use of the economies of scale which can be achieved by granting longer-term licenses, by grouping industries together so they can specialize and can utilize each other's byproducts, and by servicing these bigger operations with adequate port facilities. ANNEX 2 Page 2 5. Earnings from the forest resource can be increased in the shorter term through a higher degree of processing in thecountry and a fuller utilization of wood resources. A variety of products in the particleboard, fiberboard, and pulp-and-paper categories can be produced from the inferior trees in the mixed forests, from thinnings and felling residues, and wastage from the traditional wood processing industries. The economics of the exploitation modes need much more careful study. 6. In the longer run, improved standards of silvicultural management can increase the sustained yield capacity of the forests well beyond their present limits. Plantation forestry or tree farming also appears to be promising, technically and economically. It must be recognized that the financial rewards from new ventures are not likely to equal the handsome returns from the present style of logging operations. However, the returns to the national economy may be very considerable in terms of employment, foreign earnings, and reduced costs of wood-based materials on the domestic market. 7. The regeneration of trees on cut-over forests and abandoned farm- lands needs to be speeded up dramatically. The great numbers of squatters, the so-called kaingineros, should be removed from those parts of the forests unsuited for permanent farming and the influx of more kaingineros stopped. The new Forestry Reform Code has recently provided authority to accomplish these measures. 8. One of the main obstacles to fast progress is the capacity of the Government Forestry Services to manage their 17 million ha of public forest land for the maximum sustained benefit of the nation. It has been recognized that a drastic reorganization is needed and a consolidation of the various agencies into a Bureau of Forest Development is underway. Also required are improved staffing and funding, as well as more efficient methods bf operation. To bridge the knowledge gap, a vigorous silvicultural research program should be started as soon as at all possible. The program should cover the biology, growth rates, and regeneration of the indigenous forest types, as well as the problems of establishing timber plantations on grassy, eroded, and other denuded forest sites. 9. Contribution to Public Coffers. Forestry and forest industries are among the largest contributors to the public coffers in the Philippines. The income of the Bureau of Forestry from the public, through a range of assessments, charges, and fees, has more than trebled during the preceding five years. It amounted to r 84.7 million (over US$14 million) in the 1970/71 fiscal year. A Government charge of r 2 per m3 is levied as a wharfage on all wood shipped, whether from private or public piers; this charge amounted to something like r 18 million. An export tax of 8% on alll exported wood or wood products, and an equivalent 7% sales tax on local sales, probably brings in another V 20 million. In addition there are company license fees, company taxes, and income tax from this subsector. The total contributions from forestry and wood industries to public finance may be estimated at about V 400 million (US$60 million) per year. The Government expenditure on forestry and forest industries appears to be of the order of 1 35 million (US$5 million). ANNEX 2 Page 3 A. The Forest Resource Base The Basic Facts 10. The tropical climate and high rainfall favor plant communities of the mixed tropical rainforest. As exceptions mangrove forests are found along some coasts; so-called mossy oak forests find favor on the mountain tops; and in some rather limited mountain areas in the northwest, where there is a pronounced dry season, pines are the natural climax species because of their ability to survive forest fires better than the hardwoods. In the rest of the country, the mixed hardwood forest is the only type. A total of about 3,000 tree species have been counted. But only a few are commer- cially important. The forests are heavily dominated by species of the dipterocarp family, which supplies practically all commercial wood in the country. This family is dominant over a wide area of East Asia, from the northern Philippines through Borneo and Indonesia to western Malaysia and southern Thailand. 11. Two pine species are indigenous, the Benguet pine (Pinus insularis) in northwestern Luzon and the Mindoro pine (Pinus merkusii) in the Zaimbales mountains in west-central Luzon and the island of Mindoro. The Mindoro stands are not now exploited commercially. Benguet pine has been exploited on a limited scale, mainly for timber by the local mining industry but also, quite recently, as a source of oleo-resin. From the total area of 200,000 ha of pine forests, about 60,000 m3 were cut in 1970/71. Another conifer called almaciga (Agathis philippinensis) is found scattered throughout the hardwood forests, but is slightly more abundant on the island of Palawan; it gives off copal, a resin used in varnishes, and this species is now fully protected against cutting. 12. Various species of mangroves, accounting for a total of about 290,000 ha, are used mostly for firewood and charcoal (in some countries, mangrove bark has been used for tanning of leather). In recent years some mangrove wood has been exported. There is an increasing interest in using cleared mangrove swamps for the establishment of intensive fish culture. 13. The "mossy oak" forests on mountain tops have little commercial value, but are important as ground cover. They include several oak species, which are draped with hanging mosses, and root in deep layers of spongy organic soils. These forests and the associated soil characteristics are important for the regulation of the many streams which originate in the high mountains. Squatters have found these hilltop sites to be well isuited for growing temperate vegetables like cabbages; large areas of the mossy forests have been cleared, with predictable effects on soil erosion and stream flows. 14. Dipterocarp species, which supply most of the wood volume exported from East Asia, are usually marketed under collective trade names, such as Philippine mahogany, lauan, or meranti; all three of these ANNEX 2 Page 4 well known names, incidentally, materially cover the same group of species. Ten species make up the bulk of the volume in the hardwood forests and the bulk of what is cut: Dipterocarpus grandiflorus Apitong Parashorea plicata Bagtican Pentacme contorta White Lauan Shorea agsaboensis Tiaong S. almon Almon S. negroensis Red Lauan S. polysperma Tangile S. squamata Mayapis S. astylosa Yakal S. guiso Guijo The group known as lauan, or Philippine mahogany, in the trade is composed mainly of the first five Shoreas listed above, plus Parashorea and Pentacme. These species have woods which are very similar in most respects, and have such similar ecological requirements that they are found growing together. 15. The apitong is found in particularly heavy concentrations in Palawan, an area where dipterocarps are not the major part of the hard- wood forests. Although apitong has the disadvantage of being inclined to sink in water, it is favored for construction timbers, transmission poles, etc., because the wood is strong and straight, and takes pressure impreg- nation very well. 16. From a biological viewpoint, perhaps the most important feature of the dipterocarps is their irregular but abundant seeding and the short viability of the seeds. Once the seedlings have become established, how- ever, they can survive for up to seven years under low light intensities on the forest floor without losing their ability to respond vigorously to an opening in the canopy. In 1971, the total forested area in the Philippines was estimated at 15.9 million ha, or 53% of the land area. Of this, 12.7 million ha are classified as Public Forest land and 3.1 million ANNEX 2 Page 5 ha as Alienable and Disposable land -1. The Bureau of Forestry is in principle responsible for the management of the Public Forest land, including some 4.6 million ha of nonforested land. A forested area consists of 1 ha or more which is at least 10% stocked with forest trees, including seedlings and saplings, wild palms, bamboo or brush. The 1971 estimates of forested areas, by forest types, as well as for nonforested areas, for the main forest regions are shown in Table 1. 17. About 14.1 million ha are described as productive, or commercial, forest land. Some 96% of this is covered with dipterocarp forests. Only 0.3 million ha are under mangroves and 0.2 million ha are under pines. 18. A further 1.8 million ha are classified as unproductive, or noncommercial, forests. These consist mainly of dipterocarp type forests on sites so poor that an average of less than 5 meters of merchantable sawlog can be expected at maturity. Such stands are usually found on mountain tops. Mossy oak forests and bamboo forests account for 0.3 million ha and are also classified as unproductive. 19. Of the four main regions, Mindanao has the biggest commercial forest area and an even bigger proportion of the old dipterocarp forest. Luzon accounts for over half of the balance. 20. There are few major untapped blocks of forest land left in the Philippines. Most of the worthwhile productive forests are under cutting license of one kind or another, although not all are being very actively exploited. In 1971, about 75% of the commercial forest area was under license. Some smaller areas in the Sierra Madre mountains in northeastern Luzon are still to be fully developed. Here the mountains are partly inaccessible and the forests are inhabited by primitive tribes. Other less-developed forest areas are found on some of the smaller islands and, in particular, on the island of Palawan. This island has nearly 1 million ha of commercial forests and at present is producing only about 100,000 cu m per year; however, since only 14% of the standing volume is made up of dipterocarps, the development of the Palawan forests will depend on new outlets for the less-popular species. 21. The standing volumes of sound trees of at least 15 cm diameter at breast height (dbh) are also shown in Table 1. The commercial forests are estimated to contain nearly 1,900 million cu m of sound wood, a very impressive figure. Of most immediate concern are the volumes still left in the old-growth dipterocarp forests, as they will be cut first: and should not change materially before then. They are estimated at 1,300 1/ Alienable and Disposable Lands, also often referred to as alienated lands, are all land areas that have been classified as A & D by the Bureau of Forestry. In more recent classifications of Public Forest Land, the main criteria used have been that A & D land is arable land *ith a slope of less than 18% and occurring in.centinuous blocks of least 250 ha. PHILIPPINES AGRICULTURAL SECTOR SURVEY Table 1: LAND USE, FOREST RESOURCES, AND STANDING TIMBER VOLUMES Distribution of Land Area Commercial Forests Noncommercial Forests Non-Forest Land Dipterocarps Open Urban All Regen. Man- Diptero- Culti- and and Forests Total Old Young & Brush Pine grove Total carps Other Total vated Pastures Other ------------------------------------------------------------area in '000 ha----------------------------------------------------------------- Luzon 6,005 5,080 1,529 832 2,463 214 42 925 762 163 6,1o4 4,358 1,396 350 Palawan 1,340 994 534 108 308 - 44 346 313 33 150 75 69 6 Visayas 2,342 2,185 686 318 1,103 - 78 157 130 27 3,859 2,589 1,078 192 Mindanao 58188 5,831 2,104 2,131 1,473 - 123 357 233 124 4,012 2,802 933 277 Philippines 15,875 14,090 4,853 3,389 5,347 214 287 1,785 1,438 347 14,125 9,824 3,476 825 Standing Volume of Wood Sound Trees of All Specios of Diameter Over 15 CM Commercial Forests Noncommercial Forests Dipterocarps All Regen. Man- Diptero- Forests Total Old Young & Brush Pine grove Total carps other --n------n cu------------------------in million cu m------------------------------------------- Luzon 534 505 372 87 30 15 1 29 27 2 Palawan 150 127 108 11 4 - 4 23 17 ; 6 Visayas 253 247 126 103 17 - 1 6 6 - Mindanao 1,031 1,010 690 278 38 - 4 21 16 5 1,968 1,889 1,296 479 89 15 10 79 66 13 Philippines Source: Bureau of Forestry, Philippine Forestry Statistics, 1971 ANNEX 2 Page 7 million cu m. The young dipterocarp forests contain 480 million cu m. Mangroves account for 10 million cu m, and pines for 15 million cu m. Table 2: VOLUME OF SOUND COMMERCIAL WOOD IN THE OLD DIPTEROCARP STANDS (million cubic meters) Non- Average, All Dipterocarps Dipterocarps Total Volume Species in cu m/ha d,b,h in cm: 55 up 15-54 55 up 15-54 55 up 15-54 Luzon 178 83 22 89 200 172 243 Palawan 11 4 27 65 38 69 201 Visayas 56 21 11 38 67 59 184 Mindanao 373 127 49 141 422 268 328 Philippines 618 235 109 333 727 568 268 Source: Philippine Forestry Statistics, 1971. 22. The heaviest concentration of commercial, mature dipterocarp timber is also in Mindanao (Table 2). During felling operations, a large part of the nondipterocarps and of the smaller trees will be wasted. If areas are carefully logged, these trees will be left standing. In either case, what is of prime commercial importance to the license holder is the recoverable volume of dipterocarps of over 55 cm dbh. Allowing an arbitrary 30% for logging loss and hidden defects, the estimated average recovery of commercial dipterocarps for the main region is: cu m/ha Luzon 81 Palawan 15 Visayas 57 Mindanao 124 All Philippines 89 In 1970/71, logging operations in Mindanao supplied 74% of the total registered commercial log production for the country. The utilization of the licensed allowable cut is also much higher in Mindanao than in the rest of the country. In 1968/69, utilization was 99% of the allowed cut in Mindanao and only 66% in the rest of the country. 23. The statistical base for forestry estimates is provided by inventories taken by the Bureau of Forestry. A survey of the whole 1 country has fairly recently been accomplished using sample strips of laerial photographs (the most recent ones taken in 1968), and stand data from measurements on the ground. The sampling design and interpretation could perhaps be improved, but the area and standing volume estimates appear reasonably acceptable. ANNEX 2 Page 8 24. The annual allowable cut for an area is based on the so-called sustained yield concept -- that cutting be limited to a unit fraction of the regeneration period. However, in the Philippines there is little reliable information on how fast the forests do grow or could grow. It is assumed somewhat arbitrarily that it takes 100 years for a lauan stand to reach maturity. And as a rule of thumb, the allowable cut has been set at 1% of the average standing volume of commercial timber, or at about 1 to 1.5 cu m/ha per year. 25. The task of calculating growth rates is complicated by the maturity or overmaturity of the old forests on which actual current growth is negligi- ble or often even negative. As a matter of fact, the quantity of logs with rotten or even hollow centers is a problem in some areas, suggesting that higher commercial yields could have been had at a younger age. The Bureau of Forestry now has a net of permanent sample plots scattered through the main forest areas, partly in cooperation with some of the leading concession holders. However, relatively few have been measured more than once and a clear picture of growth rates has not emerged yet. On the basis of experience so far with some immature stands in Mindanao, net growth rates of 3-5 and sometimes up to 7 cu m/ha per year of wood have been attained. 26. The growth rate of the natural forests and its response to selective thinning should be considered key points in forest management plan- ning in the Philippines. A special and early effort should be made to collect sufficient information on this for sound conclusions to be drawn. 27. It is difficult to visualize that the yield of sawlogs and veneer logs from the natural lauan forests could be increased beyond 10 cu m/ha per year, even under intensive management. However, it is presently being demonstrated in commercial timber plantations in the Philippines that wood yields of up to at least 50 cu m/ha can be achieved with exotic tree species like Albizzia falcata under favorable conditions. Average yields of this magnitude could not be expected from major commercial plantations. But with suitable silvicultural techniques, the following average yields are estimated to be likely in suitable conditions. Cu m/ha Rotation Per year Years Albizzia falcata 30 7 Eucalyptus deglupta, bagras 25 10 Pinus caribaea 20 15 28. If these estimates are reasonable for extensive areas, and should it prove profitable to grow such plantations, the future wood yields from the Philippine forests may well make far bigger contributions to the national economy than today. Indications are that, with present prices, gross receipts could be of the order of US$90 - 135/ha/year. High priority should be given to the collection and analysis of data from already existing ANNEX 2 Page 9 plantations in the Philippines and also to comparisons with results from other countries, to determine the profitability of plantation forestry in the Philippines, the best species, varieties and silvicultural techniques to be chosen, and the best locations for and extent of such plantations. 29. A special point should be made of comparing the value product per hectare per year with that from other plantation crops and annual agricultural crops to determine what place timber farming might have amongst the activities of the small private farmer. 30. The concept of sustained yield does not apply to areas which are not reverting back to commercial forests. So, before estimates can be made of the likely future rate of timber removals, the future of the lands now under forests must be considered. Future Use of the Forest Lands 31. The division of land in terms of Public Forest land versus "Alienated Lands" is tabulated in Table 3. Land is classified as alien- able when deemed better suited to farming, urban development, etc., than to forestry, so this breakdown has a bearing on the likely future development of the forest areas. Table 3: ESTIMATED LAND USE IN THE PHILIPPINES, 1971 (million ha) Public Forest Alienated Land Land Total Commercial Forests 1. Dipterocarps 10.6 3.0 13.6 Regeneration-Brush 3.1 2.2 5.3 Young growth 2.8 0.6 3.4 Old growth 4.7 0.2 4.9 2. Mangroves 0.2 - 0.2 3. Pines 0.2 - 0.2 Total Commercial Forests 11.0 3.0 14.0 Noncommercial Forests 1.7 0.1 1.8 Total Forests 12.7 3.1 15.8 Nonforests Open & Pasture 1.8 1.7 3.5 Marsh & Water 0.1 0.1 0.2 Cultivated 2.4 7.4 9.8 Urban and Other 0.3 0.3 0.6 Total Nonforest 4.6 9.5 14.11 Total Land Area 17.3 12.6 29.9 Source: Bureau of Forestry: Philippine Forestry Statistics 1971 ANNEX 2 Page 10 The estimates are approximate only, and one set of estimates -- the areas listed under "Regeneration-brush" -- appears to require a major revision downward if it is meant to reflect the expected future availability of timber. 32. For about 15 years, selective logging has been the prescribed standard practice on land which was not being cleared for agriculture. Selectively logged stands by definition go straight into the "young category. Also, seedling stands regenerated to commercial species after clear-felling will nearly invariably have grown into a "young growth" stand in less than the 15 years which have passed. Consequently it may be assumed that very little of the 5.3 million ha listed as "regeneration-brush" are young dipterocarp stands under development. It will probably be generous to assume that 1 million ha will actually grow into commercial timber stands. 33. It seems reasonable to assume that remains of commercial forests on alienated land will not be allowed to grow back into commercial stands. It can also be assumed that further areas of forest land now exploited will be declared alienable and permanently cleared of forest. However, this will probably not happen on a major scale, and may be counterbalanced by the rehabilitation to permanent forestry of some lands now classified as "open and pasture". As a very rough estimation, the commercial dipterocarp forest area in the country, which now is listed as 13.6 million ha, may in the future drop to some 8 million ha, all on Public Forest land. 34. The rate at which the forest area has been diminishing, from legal as well as illegal felling and clearings, has been studied by the Philippine authorities. The most recent estimate of current land use changes are given in Table 4. ANNEX 2 Page 11 Table 4: ESTIMATED AVERAGE ANNUAL CHANGE IN LAND USE IN THE PHILIPPINES ('000 ha per year) Luzon Palawan Visayas Mindanao Philippines A. Forests 1. Dipterocarp Reg.-brush - 7 + 3 + 4 -68 - 68 Young growth + 13 + 4 + 1 +49 + 67 Old growth - 80 -10 -36 -72 -198 2. Mangrove - 1 - 1 - - 1 - 3 3. Pine - 1 0 0 0 - 1 4. Noncommercial 0 0 0 0 0 All Forests - 76 - 4 -31 -92 -203 B. Nonforests 1. Cultivated & Urban +123 + 2 +67 +95 +287 2. Managed Pasture + 6 0 + 2 + 7 + 15 3. Open Land - 51 + 2 -37 -10 - 96 4. Marsh & Water - 2 0 - 1 0 - 3 Source: Bureau of Forestry: Philippine Forestry Statistics 1971 The most important changes appear to be the approximately 200,000 ha of forest land and the 100,000 ha of open grassland and swamps which annually are turned into cultivated lands and pastures. 35. Nearly 200,000 ha of old commercial dipterocarp forests are estimated logged every year; but about one third of this becomes reclassi- fied as young growth, corresponding, more or less, to what is logged,selec- tively by licenses in the permanent forest areas. A balance of 131,000 ha of old dipterocarp forests appears to be lost to forestry annually, and the approximately 13 million cu m of commercial timber on that land doesinot appear to be used. Part of this unexplained loss can be accounted for by alienation. On average over the last 10 years the Bureau of Forestry has been reclassifying some 50,000 ha per year of Public Forest land, ana pre- sumably there have not been long lags in clearance and settlement following reclassification. But the major part of the unexplained balance would ap- pear to be clearances by squatters and shifting cultivators (usually' refer- red to as kaingineros). 36. In the Philippines, it is permissible for a landless citizen to settle on public land suitable for farming activities and register an area not exceeding 24 ha in his name. He will be charged tax on the use of ANNEX 2 Page 12 the land. When he has lived on the property for 10 years and has brought one fifth under cultivation, he can obtain title at a fairly nominal cost. Courts have ruled that all Public Forest land which has not specifically been declared a forest reserve is to be considered a "- nr settl=--n*. -his has made it very difficult for the forest authorities to defend their forests, since so far only 4.9 million ha have been declared as reserves. Prosecution of squatters even found inside the fore-f reserves has been s4ngularly unsuccessful, as they are usually backed by the local authorities (the retention of tax payments is one motive). The new forestry Reform Code prohibits the further encroachment of squatters in the public forests and provides for relocation of existing squatters on lands whinh -re unsuitable for cultivation. 37. Mounting pressures on the Public Forest land have generated a crash program for the final classification and demarcation of the 8.6 million ha not yet classified. The classification is being pushed in those provinces where land hunger and political unrest are the highest. The program will include some reclassification of areas classified earlier and is not expected to be comoleted until 1974 at the earliest. -8. The Forestry Reform Code provides authority to the President, upon recommendation of the Director, Bureau of Forest Development with concurrence of the Secretary DANR, to declare all lands in the public domain 18% in slope or over as permanent forests or forest reserves. 39. To be deemed "alienable and disposable", land must be generally suited for farming activities, have slope of less than 18%, and occur in blocks of at least 250 ha. Smaller flattish areas may be used for reset- tlement of squatters or cultural minorities already living within the bound- aries of the permanent forest area. Pressures to allow aericultural settle- ments beynnd these established limits will undoubtedly arise. However, the present criteria appear quite reasonable. 40. When Public Forest land is classified as alienable, it is handed over to the Bureau of Lands which is responsible for its subdivision and proper settlement. In practice, however, most of the land released to the Bureau of Lands is already occupied by kainginero. A clear indication of this is the 2.4 million ha of Public Forest land (Table 3) which are classified as already under cultivation. There are an estimated 60,000-100,000 kainginero families in the Philippine forest areas, clearing an estimated 0.7 ha of forest per family per year, or 40,000-70,000 ha. 41. Generally, it is not through legitimate logging operations that the forests are getting depleted, or that soil erosion arises, but through unauthorized and illegal clearings. This has a direct bearing on exploi- tative policy. There are about 8.5 million ha of potentially permanent, commercial dipterocarp forests which should be able to sustain a log pro- duction somewhat in excess of the present rate of 10-11 million cu m per year. Thus, overall the presently allowed cut should not be increased. Perhaps, it should be reduced in Luzon which has the greatest loss of old growth dipterocarp forests, the greatest population pressure, and the greatest water catchment problems. ANNEX 2 Page 13 42. There is a great need to put to use the perhaps 5 million ha of denuded forest lands that have been invaded by noncommercial brush and cogon grasses. Much of it is in hills which meet the permanent forest criteria, and much is also in important watershed catchment areas. Such conversion -- be it to farmland, pastures, or timber plantations -- would make a con- siderable contribution to the national timber production. The technical difficulties are also considerable. Getting the process of conversion going should be one of the top priorities of forestry policy. B. Forest Industries General 43. Philippine forest industry is strongly oriented towards log exports. The large, accessible, and heavily concentrated reserves of valuable timber, combined with a fairly cheap and relatively skilled labor force, have pro- duced a thriving industry which has contributed much to the economy. Nature has also been generous in providing numerous natural facilities for loading and shipping logs along the coasts. In addition, reasonable proximity to the major markets of Japan and strong ties with North America have been positive factors. 44. The rather slow development of wood-processing industries is due in part to policies of successive governments which have not provided adequate incentives for the further processing of the export product. A major factor has been the short-term nature and relatively small scale of most cutting licenses. Without the economies of scale and the security of continued supplies, investors have preferred the low risks and low capital reouirements of logging for export. As another factor, the local market for processed wood products (other than lumber) has not been sufficient to gener-te wood processing industries of a size big enough to make them competitive in export-markets -- even now only about 14% of the total. log cut is consumed in the Philippines. The lack of adequate infrastructure, and in particular adequate road, port and loading facilities, has also been an obstacle to the development of successful wood-processing industries. 45. The Philippine wood industry now consists of over 700 individual firms. It has generally reached a highly mechanized, relatively integrated, and commercially oriented level of operation. The types and number of firms/plants in the wood industry are shown in Table 5. In order of importance to the Philippine economy, the various forest industries are: (1) logging, (2) lumber, (3) veneer and plywood, (4) pulp and paper, (5) fiber board and particle board, (6) miscellaneous wood industries, and (7) other forest products. ANNEX 2 Page 14 Table 5: COMPOSITION OF THE WOOD INDUSTRY, 1971 Type of Firm Number Logging Firms 353 Sawmills 349 Veneer Mills 18 Plywood Plants 31 Reconstituted Wood Mills 3 Wood-Based Pulp and Paper Plants 3 46. The official forestry statistics do not account for a large quantity of timber, mostly illegally cut, which is used for firewood, charcoal, fence poles, hut poles, and the like. Directly consumed small wood may be assumed to amount to something on the order of perhaps 4 million cu m per year at present. This will usually be wood which is of little interest to the proper wood industries. It has not been possible to make reasonable estimates of the volume of illegally cut timber, but discrepancies between reported inputs and outputs of the various branches of the wood industry suggest that this volume may at times run in excess of half a million cubic meters per year. 47. Cutting Licenses. Timber cutting licenses fall under three categories: (a) License agreement. This is the longest term license, of a duration of 10 to 25 years, and is specially aimed at supplying large wood industries. It may be renewed at the end of the first period. (b) Ordinary timber license. Duration four to 10 years. This is the usual license for the small- to medium-sized logging operations. (c) Special timber license. This is a license for a short time span and is more tied to the removal of a specific parcel of timber than to the logging of an area. The Reform Code states as government policy that the major portion of com- mercial timber should be under long term leases of 10-25 years. The distri- bution of license arrangements (as of June 30, 1971) is given in Table 6, broken down to the four main regions. More than 10.5 million ha of the national total of some 14 million ha of productive forests were licensed, probably leaving little of commercial interest unaccounted for. However, only 66% of the 16.1 million cu m allowed were recorded cut. The wood volumes actually supplied under the different forms of licenses are shown in Table 7. ANNEX 2 Page 15 Table 6: NUMBER AND KIND OF LICENSES WITH CORRESPONDING AREA AND ANNUAL ALLOWABLE CUT, BY REGION (AS AT JUNE 30, 1971) Kind of License Unit Mindanao Palawan Visayas Luzon Philippines License agreement Number 43 1 6 13 63 A.C (cu m) 3,905,000 200,000 522,000 1,150,000 5,777,0'00 Area (ha) 2,314,000 99,000 334,000 823,000 3,570,000 Ordin. timber license Number 126 12 43 86 267 A.C. (cu m) 5,051,000 313,000 996,000 2,076,000 8,436,000 Area (ha) 2,777,000 335,000 857,000 2,298,000 6,267,000 Special timber license Number 63 3 6 59 131 A.C (cu m) 1,175,000 118,000 34,000 528,000 1,855,000 Area (ha) 541,000 43,000 28,000 148,000 760,000 All licenses Number 243 16 55 158 461 A.C. (cu m) 10,131,000 631,000 1,551,000 3,754,000 16,067,000 Area (ha) 5,633,000 476,000 1,219,000 3,269,000 10,598,000 Source: Philippine Forestry Statistics 1971. Table 7: ACTUAL LOG PRODUCTION BY LICENSE CATEGORY (1970/71) % of % of Cu m Cut Allowed Cut National Cut License Agreement 5,347,000 92 50 Ordinary Timber License 5,234,000 62 49 Special Timber License 99,000 5 1 /1 Total 10,680,000 66L- 100 11 f nF r1k Pxnort demand only 47% of the allowed cut was produced in 1971/72. ANNEX 2 Page 16 48. The special timber licenses have given rise to many problems and have often been used as a guise for illegal logging in reserved areas or on other licenseholder's territory. In consequence, the government is in the process of reducing their numbers considerably. Out of the 131 special licenses, 124 were cancelled or suspended in early 1972. 49. Over the past decade, there has been a substantial increase in the areas under cutting licenses and in the volumes allowed cut (Table 8). Table 8: AREA UNDER LICENSE, ALLOWABLE CUT, AND ACTUAL PRODUCTION, 1961-71 Fiscal Allowable Actual Log Year Area Cut Production ('000 ha) ('000 cu m) ('000 cu m) (%) 1960/61 5,553 8,739 6,596 75 1964/65 4,441 6,149 6,175 100 1965/66 6,745 9,359 8,047 86 1966/67 8,302 10,899 7,843 72 1967/68 8,335 11,603 11,114 96 1968/69 8,979 13,205 11,584 88 1969/70 9,357 15,491 11,005 72 1970/71 10,598 16,068 10,680 67 Source: Philippine Forestry Statistics 1971. The average volume allowed per hectare per year has remained fairly steady at about 1.5 cu m. 50. Log Exports. From 1958 to 1967, log exports showed an average annual growth rate of 16.2%. Since then they have stagnated. Even so, in recent years, log exports have been bringing in foreign earnings of the order of US$225 million per year. The trend of wood volumes cut and the use of the logs can be seen in Table 9. Table 9: VOLUMES OF LOGS CUT, 1956-71 Year Volume Cut Exported as Logs Locally Processed (Mm3) (Mm) 3%M (Mm) 1955/56 4.3 1.5 35 2.8 1960/61 6.6 3.0 46 3.6 1965/66 8.0 5.5 69 2.5 1966/67 7.8 6.6 84 1.2 1967/68 11.1 7.5 68 3.6 1968/69 11.6 8.6 74 3.0 1969/70 11.0 8.6 78 2.4 1970/71 10.7 8.4 78 2.3 Source: Philippine Forestry Statistics, 1971. ANNEX 2 Page 17 51. Japan has traditionally been the dominant export market for Philippine logs (Table 10). Some 80-85% of the Philippine log export still goes to Japan, with the remainder going mainly to Korea and Taiwan; these two smaller countries largely reexport the wood as plywood and lumber, partly in competition with Philippine exports. Table 10: COUNTRIES OF DESTINATION FOR PHILIPPINE LOG EXPORTS, 1965-69 (million cu m) Year Japan Korea Taiwan Others Total Volume % 1964/65 2.9 83 0.2 0.2 0.2 3.5 1966/67 5.5 83 0.4 0.4 0.3 6.6 1967/68 6.0 80 0.8 0.3 0.4 7.5 1968 /1 7.3 85 0.5 0.7 0.1 8.6 1969 Tl 8.2 83 0.9 0.6 0.2 9.9 /1 Based on statistics from the importing countries which often do not agree with the corresponding figures for Philippine exports. Source: Bureau of Forestry Statistics and FAO Yearbook of Forest Products Statistics 1970. The Japanese log market has lately been successfully challenged, first by Malaysia, which now runs more-or-less equal to the Philippines, and even more dramatically, by Indonesia's log exports, which have increased from 0.2 million cu m in 1966 to 8.5 million cu m in 1971. While the Philippines and Malaysian log exports to Japan reached their peak in 1969, the total Japanese imports continued to rise considerably -- Indonesian increases much more than made up for Philippine and Malaysian shortfalls. It can be post- ulated that Indonesia must have some considerable advantages as a supplier, seen from a Japanese point of view. Disregarding quality differences, price is one such advantage. As is apparent from Table 11, the CIF Japan prices for Indonesian lauan logs are traditionally lower than Philippine or even Malaysian logs. Another important reason is that Japanese companies have moved into logging in Indonesia on a large scale, and at least some of these companies are closely connected with Japanese shipping concerns as well as with Japanese wood-processing industries. If this is the main reason, Philippine log exporters are likely to face difficulties for some years to come. This is likely to be true despite the fact that practically all Japanese imports of the so-called South Sea logs are of the dipterocarp family, predominantly of the lauan group, and Philippine lauan logs are still considered to be superior in quality to those of her competitors. However, the medium term outlook is better than the short term, which reflects the recession in business activity in Japan. ANNEX 2 Page 18 Table 11: CIF PRICES FOR SOUTH SEA LOGS (LAUAN/SERAYA/MERANTI) IN JAPAN 1955-70 (US$ per cu m) Country of Origin Weighted Year Philippines Malaysia Indonesia All Sources 1955 28.80 25.00 19.30 28.40 1960 26.30 23.90 18.40 25.70 1965 27.40 25.30 19.80 26.60 1966 29.90 27.40 23.60 28.80 1967 32.00 29.30 24.90 30.70 1968 31.80 28.80 25.20 30.30 1969 31.70 29.80 28.30 30.20 1970 33.70 32.00 29.70 31.80 Source: Japan, Ministry of Finance, Annual Return of Foreign Trade. 52. All regions in the Philippines have been increasing their log production considerably over the last 10-12 years, but Mindanao a little faster than the average; its share of the national total is now about 75% (Table 12). Mindanao's share in wood exports is even higher than this. Table 12: PRODUCTION OF LOGS BY MAIN REGION Year Mindanao Palawan Visayas Luzon Philippines 1958/59 3.74 - 0.55 1.16 5.45 1960/61 4.45 0.01 0.64 1.50 6.60 1962/63 5.26 0.03 0.85 1.53 7.67 1964/65 4.34 0.07 0.47 1.29 6.17 1966/67 5.74 0.06 0.45 1.59 7.84 1968/69 8.64 0.09 0.82 2.03 11.58 53. Economics. The typical cost of log production in the Philippines, available from consultant reports, appear to be reasonable as compared to costs from other tropical countries. Updated to mid-1972, it can be estimated that typical costs per cubic meter of salable log would be about US$18 for an average-size operation and US$13 for a large operation, reflecting the considerable advantages of large-scale operations. A comparison of cost elements with average operations in Indonesia (Table 13) suggests that Philippine log producers have a small advantage over their Indonesian competitors. The total costs and expenses shown should allow a reasonable return for both sizes of operations when compared to the average FOB price for 1971 of about US$23 per cubic meter. ANNEX 2 Page 19 Table 13: ESTIMATED TYPICAL COSTS OF LOGS FOB, THE PHILIPPINES AND INDONESIA (US$ per cu m saleable log, mid 1972) Philippines Indonesia Average Large- Average Operation Scale Operation Production Costs Felling and Bucking 0.70 0.60 0.80 Yarding, Skidding, Swinging 2.40 1.90 1.90 Loading on Trucks 1.10 0.90) Hauling 5.40 2.60) 6.40 Unloading 0.90 0.70) Trimming 1.00 0.80 0.70 Grading and Sorting 0.70 0.50 0.60 12.20 8.00 10.40 Export Expenses Tow to Shipside 1.00 0.80 1.40 Grading and Inspection 0.80 0.70 1.10 Loading on Ship 0.30 0.20 0.40 Other Selling Expenses 3.60 3.30 6.00 5.70 5.00 8.90 Total Costs and Expenses (US$) 17.90 13.00 19.30 54. Market Outlook. Whether profitable markets will be available for the 15-20 million cu m of dipterocarp saw logs and veneer logs which could be produced annually during the next decade hinges, as now, mainly on the markets in Japan and the United States. From a number of market analyses and projections, it is concluded that a steady increase in profitable markets should be expected for the Philippine dipterocarps, in particular the lauans. The presently depressed sales volume and price situation is thought to have passed its worst, 1/ and a steady increase in demand can be expected from both main markets. In the Japanese market, a trend towards a stabilization of log imports is likely, but demands for imported lumber and veneers (but not plywood) are expected to increase materially in the medium term, thus creating a better market for logs for local processing in the Philippines. The United States' market for Philippine veneer and plywood, and to a lesser 1/ Actual Japanese imports of South Sea logs for first quarter 1972 were only just over 4.0 million cu m from all sources, the lowest for some years and probably the bottom of the trough. Since then, prices and volumes are thought to have improved a little, but 1972 is definitely not going to be a good year for Philippine log exports. ANNEX 2 Page 20 extent for lumber, is also expected to improve in the shorter term, but to show a slower rate of growth in the longer term. 55. Shipping of Logs. The shipping of logs and other forest products is often claimed to be one of the bottlenecks for a further development of the forest industries. For logs, however, it appears that the Philippines are not in any materially different position from that of her main competitors, Indonesia and Malaysia. Because she is nearer to Japan, the Philippines actually has a slight advantage. 56. Export logs to Japan are usually sold on a FOB basis, and shipping is handled by Japanese ships, usually on charter. Typical freight rates from well-established Philippine export points to Japanese ports during 1970/71 were about US$7 per cu m. From outports without proper facilities the rates were about US$1 higher. For comparison, the rates from as far as New Guinea were about US$10 per cu m. 57. Log imports to Japan as well as the U.S.A. are free of import tariffs. The Lumber Industry 58. The Philippine lumber industry is characterized by a great number of mainly small sawmills with a very low degree of utilization. Of the 350 or so active mills in mid-1971, less than a dozen accounted for almost a quarter of the production which was exported. Traditionally, the lumber industry has been oriented predominantly towards the local market (Table 14). Table 14: SAWMILL CAPACITY, PRODUCTION AND EXPORT, 1965-71 Number Capacity at Actual Capacity Year of Mills 300 days/year Production Utilization Export (mill. bd ft) (mill. bd (mill. ft) bd ft) % 1964/65 266 975 531 54 49 9 1965/66 321 1,164 376 38 48 13 1966/67 369 1,269 322 25 44 14 1967/68 373 1,698 433 25 43 10 1968/69 366 2,398 621 26 71 11 1969/70 352 2,267 568 25 85 15 1970/71 349 2,190 365 17 85 23 Source: Bureau of Forestry. The reason for the large number of poorly equipped, underutilized sawmills was a government requirement, since abolished, that wood-processing plants had to be installed in all logging concessions of over 20,000 ha. These mills were the cheapest way of complying with the regulation. ANNEX 2 Page 21 59. Lumber Exports. The percentage of lumber exports from the Philippines rose from 9% in 1965 to 23% in 1970/71. The USA's share in 1965 was 90%, dropping to 53% in 1969. With new and larger band mills gradually replacing the old circular-sawmills, production can now better meet export quality standards. With the expected lower costs in the modernized mills, the lumber industry should be able to compete increasingly successfully on quality as well as price in the export markets. 60. Philippine lumber production and export statistics from various sources do not agree well with each other. However, for the years 1968 and 1969, on average, lumber exports appear to have been going 53% to the United States, 21% to Japan, 11% to Australia, and 8% to South Africa, while only 7% went to all other countries combined. 61. The future of Philippine lumber exports hinges on how soon and to what extent lumber exports will replace Philippine log exports to Japan. Once a major lumber enterprise has been organized for the Japanese market, the economy of scale will make it easier to compete in other markets as well. 62. A major hurdle is that it appears to remain more profitable to export round logs than to cut and export lumber. This was found in a comparative cost analysis in 1971. On the one hand, a high return to scale was found in sawmilling, and sawmilling operations were found to be profitable when connected with concessions. But the analysis also indicated that, irrespective of scale of operation, more net profit could be made from exporting saw-logs with the ruling costs and prices, than from milling the same logs and exporting the lumber. The figures used may not be exactly precise, but they appear reasonable enough to conclude there is little extra profit to be had from turning exportable logs into lumber for export. 63. There are a number of basic, economic advantages for the consumer country, in this case Japan, to import the round logs rather than the lumber. The first is utilization of the entire log. Japan has an increasing deficit of wood for pulp and paper, fiberboard, and particleboard. Suitable qualities of wood for these uses presently arrive in Japan at a landed cost of about US$15-20 per cu m. Consequently, the whole or nearly all of the imported log can be utilized profitably, whereas in the Philippines only the 44P of the log which is turned into lumber is usually marketable. It is difficult for outsiders to supply the Japanese lumber market because of hundreds of local units of measurements and building traditions in various parts of the country. Furthermore, the approximately 25,000 Japanese sawmills claim to have higher average recovery rates than in the Philippines (although actual rates are difficult to assess. And saw-logs are imported free of duty, whereas lumber carries a 7.5% duty ad valorem; this was, however, reduced from 15% on August 1, 1971. ANNEX 2 Page 22 64. For these reasons, and in spite of their higher labor costs, the Japanese sawmillers can afford to pay a log price which the Philippine export millers cannot. And for the same reasons, a penetration of the Japanese market with Philippine lumber to replace present log exports will be slow and difficult. 65. The main domestic outlet for hardwood lumber is in housing con- struction. As a result of the fast population growth and high rate of urbanization, there is now a large housing backlog. Large-scale housing schemes, especially for low-cost housing, are in various phases of planning and implementation. Consequently there is reason to expect a steady increase in local demand for lumber. A rate of increase in demand of about 4% per year has been estimated up to 1975, rising to perhaps 6% between 1975 and 1980, even allowing for some inroads into traditional lumber fields from plywood and reconstituted wood panels such as fiberboards and particleboards. New household formation will also bring about an increase in the demand for furniture and fixtures, providing another major domestic outlet for hardwood lumber. 66. Shipping of Lumber. Lumber, as well as plywood and veneer, is usually sold on a CIF basis. Shipping is thus very much the exporter's concern. In the Philippines, it is also very much his worry. Shipping costs fluctuate widely from time to time, and often they take a very major slice of the landed value of the product. 67. The shipper can minimize these costs per ton by organizing his production and shipping in such a way as to present the carrier with large volumes of packed parcels in line as closely as possible with vessel loading and handling requirements. It is noted the most recent Philippine freight rates for lumber, plywood and veneer offer special discounts with increasing quantities, for fast loading, and for loads which have been brought in from outports to major collecting points like Manila and Davao. Compared to processors and shippers in Singapore, Taiwan and Korea, their major competi- tors, most Philippine shippers rightly feel at a disadvantage because of the generally inadequate port facilities in the Philippines, and the relatively small scale of operation of the wood-processing industries. 68. Rationalization of the wood-processing industry should greatly ease the shipping problem, since present policy is to encourage the amal- gamation of smaller concessions into larger ones, and to encourage the concentration of wood-processing industries into a relatively few major centers which can be serviced by adequdte modern port facilities and other infrastructure. however, rationalization will require considerable capital investments and will take considerable time. The quick establishment of major new industrial centers would make redundant a number of existing plants which have not exhausted their useful lives. A gradual transition is thus called for, and preferably in step with moves towards increased total production. ANNEX 2 Page 23 69. The possibility of establishing one such new wood industry center at Casiguran Sound on the northeast coast of Luzon is being studied at present, and a further four to seven centers are in the tentative stages of planning. Three of these may be at or near the already well-established ports of Mariveles (Bataan), Davao and Cebu. The Veneer and Plywood Industry 70. The 1969 world consumption of plywood was estimated at 31 million cu m, corresponding to roughly 62 million cu m of round wood input. FAO predicts a 5.6% rate of increase in plywood consumption up to 1975 and 4.5% between 1975 and 1980. The slowdown of growth is due to expected inroads in the plywood markets from other wood-based panel products, mainly particle- board. However, most plywood is made from conifers, and the hardwood plywood consumption is known to have increased faster than the average rate. This enhances the prospects for Philippine exports. 71. Philippine hardwood logs are well suited for the manufacture of veneer and plywood, and they present no particular technical difficulties during peeling, slicing, drying, or glueing. Accordingly, an expanding veneer and plywood industry has grown up in the Philippines, based on the lauans, mainly located in Mindanao, and mainly directed towards export to the United States. 72. Over 95% of all veneer produced in the Philippines is rotary cut, also called peeled; the balance, which is sliced, is consumed locally. The slicing process makes the natural grain of the wood show to its best advantage, but being more costly, sliced veneer is used only for face veneers. 73. Unlike most countries, production and export statistics for plants that sell veneers are kept separate in the Philippines. Statistics are usually amalgamated because peeled veneers are usually used only for plywood, and thus veneer is usually considered an integral part of the plywood industry. However, considerable quantities of Philippine veneer are produced for other uses such as lightweight packaging (e.g. tomato boxes in Australia) -- often the thicker, so-called core-stock veneers. 74. The separate statistics on veneer and plywood present some diffi- culty. For instance, part of the veneer production is apparently sold to other local firms and, it is assumed, this is included in their statis- tics for the production of plywood. This, incidentally, is one of the sources of confusion in the statistics when output is compared to log intake. Another is the returns from mills which produce plywood as well as veneers for sale, and a third is the many different thicknesses of veneers and plywoods produced. Production is usually recorded on the basis of the surface area of the sheets and conversion to the common denominator, volume, appears often to have been done wrongly. Still, it is reasonable to discuss plywood and veneer separately. ANNEX 2 Page 24 75. Plywood. From a modest start, the Philippine plywood industry really got going after the middle fifties. Production went from 48,000 cu m in 1955 to 348,000 cu m in 1970/71, with exports increasing from 2,000 cu m to 194,000 cu m. The number of operating plywood factories has recently increased from about 25 to 31, with an output capacity of 1.4 million cu m. The typical plywood factory has an annual output capacity of between 20,000 and 50,000 cu m. However, one large plant on Mindanao has an annual capacity of about 300,000 cu m, or nearly enough to supply the total produced in 1970/71. 76. About two thirds of the plywood production has been exported, with the United States consistently being the main market. According to FAQ statistics, the Philippines exported 263,000 cu m of plywood in 1968, of which 259,000 went to the USA and 3,000 cu m went to Hongkong. In 1969, of a total export of 250,000 cu m, 246,000 cu m went to the USA and 3,000 to Hongkong. It may safely be assumed that at least 90% of the Philippine plywood exports go to the USA at present. 77. Estimates of the production and exports of Philippine plywood are given in Table 15. The apparent consumption is arrived at as a residual, which fluctuates considerably. However, the magnitude of domestic consumption appears to be of the order of 80,000-100,000 cu m per year, or just over 2 cu m per year per 1,000 inhabitants. This is slightly higher than 1 cu m per year in Thailand, but considerably lower than the 3 cu m in Taiwan, 7.7 cu m in Hongkong (1965 figures from FAO's 1968 Yearbook of Forest Products). Table 15: PRODUCTION, EXPORT AND 0ONSUMPTION OF PLYWOOD IN THE PHILIPPINES 1961-69 Year Production Export Apparent Consumption (cu m) (cu m) (cu m) 1960/61 153,000 66,000 87,000 1961/62 187,000 86,000 101,000 1962/63 236,000 114,000 122,000 1963/64 277,000 237,000 40,000 1964/65 270,000 191,000 79,000 1965/66 319,000 234,000 85,000 1966/67 285,000 235,000 50,000 1967/68 410,000 254,000 156,000 1968/69 309,000 195,000 114,000 Source: Bureau of Forestry and FAO's successive Yearbooks of Forest Products. It is apparent that there are good prospects for increases in the domestic consumption of plywood. ANNEX 2 Page 25 78. Increasing quantities of plywood are being overlaid with thin layers of other materials, usually simulating high-value hardwoods like teak or rosewood. Sometimes these surfaces are even "embossed" to give a very deceptive impression of real wood grain. These techniques have been developing fast in recent years, especially in North America, but very little of this is done yet in the Philippines. Most Philippine plywood is used in con- struction, and a fair amount in furniture and fixtures. 79. The prices for plywood panels have been dropping since 1955 (in current as well as constant dollar values). Representative prices are shown in Table 16. Table 16: AVERAGE FOB EXPORT PRICES FOR LAUAN PLYWOOD, TO U.S.A. 1960-69 (In US$/'000 sq ft) Year From Country In Constant 1966 Dollars Philippines All Countries Philippines All Countries 1960 66.78 56.30 70.15 59.14 1961 55.75 52.92 58.81 55.82 1962 67.79 57.54 71.28 60.50 1963 62.94 51.55 66.39 54.38 1964 60.40 48.71 63.58 51.27 1965 58.61 45.22 60.50 46.67 1966 55.95 45.54 55.95 45.54 1967 50.22 44.38 50.07 44.25 1968 49.56 45.30 48.30 44.15 1969 52.96 45.89 49.63 43.01 With the present large volume of new log production from Indonesia, it is not likely that prices will improve materially in constant dollar terms, at least, during the next three to five years. However, a study in 1970 indicated a typical total cost FOB in the Philippines of from US$39 to US$46 per 1,000 sq ft at a time when the average value was about US$58, even when the logs were charged out at their net export value as veneer logs. 80. Market Veneer. The general level of market veneer output appears to be similar to plywood, fluctuating in the range of 200,000-300,000 cu m per year, although in recent years veneer production appears to have been dropping. The vast majority of the veneer is exported, more than 90% of the exports going to the USA and the balance to Japan and Australia. 81. At the end of June 1971, there were 19 active market veneer producers with a total capacity of 350,000 cu m per year. The degree of utilization of plant capacity, although unsatisfactory, is thus somewhat better than for plywood. ANNEX 2 Page 26 82. The cost-of-production study referred to previously also covered market veneer. It was estimated that, in 1970, typical veneer costs were between US$11.60 and US$16 per 1,000 sq ft FOB from the Philippines, depending on the scale of operation. This cost assumed the charging out of log costs at production cost. If log inputs were charged at net export value, the veneer costs were estimated to be between US$21 and US$24. This cost leaves little or no profit for the veneer manufacturer when compared to the 1970 average FOB price of lauan veneer exports to the USA of US$24 per 1,000 sq ft. Due to a recession in the USA, veneer prices dropped from 1969 through at least the middle of 1971, but they are reported to be improving again. 83. Since export veneer and plywood are made from the same raw materials and aim at covering many of the same basic demands, the market opportunities are related. It appears that the real attraction lies in exporting plywood and that the export of veneer should be considered an intermediate step towards this. The making of plywood from imported veneer must of necessity cost more than the direct conversion into plywood in the country of origin, especially if factor endowments are considered. For these reasons, the trend can be considered in favor of expanding plywood exports at the expense of veneer exports. But obstacles to trade must also be considered, since the leading processing countries levy differential tariffs on plywood and on veneer; for Japan, it is 20% on plywood versus 5% on veneer; for the USA it is 20% versus 10%. 84. Veneer Log Supply. As discussed, the present level of log production could be kept up in the foreseeable future and probably even increased moderately. However, there is likely to be a slight reduction in log quality which means fewer veneer logs relative to saw-logs -- i.e., the most valuable stands in each concession area will tend to be logged first. however, veneer log production is not likely to drop materially until the old growth forests have been logged over. With suitable regeneration and thinning, the second-growth forest can be made to produce as good or better logs than the old forest, and in a reasonable number of years. 85. The possibility should be explored of producing small peeler logs in intensively managed timber plantations with species like Albizzia falcata or even more valuable species like Swietenia, the true mahogany. If the logs are sound to the center, modern veneer lathes can peel them down to a 10-cm core. This usually makes even a 35-cm diameter log a good commercial proposition. A physical shortage of suitable peeler logs is thus not unavoidable. 86. Veneer and Plywood Market Prospects. A significant market factor has been the sustained growth in exports of hardwood plywood from a few "in transit" processors of imported tropical logs. Japan, which pioneered this development in the 1950's, has shipped mainly to the US markets. From a peak level of about 320,000 m3 in 1959, Japan's exports have dropped drastically, however, mainly due to fast-increasing domestic consumption in Japan. In ANNEX 2 Page 27 1971 only some 5-10% of Japan's production of lauan plywood was exported. More recently, Hongkong, Singapore, Korea and Taiwan have likewise built up considerable export-oriented plywood industries, based on imported tropical logs from the Philippines, Indonesia, and Malaysia. 87. Philippine plywood does not appear to have been doing too well on the US market during the last few years. This may partly be due to the gradual loss of a preferential tariff edge under the Laurel-Langley trade agreement. The tariff on plywood went up from 4% to 8% in January 1971, and to 12% in January 1972. In January 1973, it will increase to 16%, and in January 1974 the full tariff of 20% will be applied. These adjustments are putting the Philippines at a disadvantage to the GATT membership countries following the Kennedy Round tariff negotiations. For exports of veneer to the U.S.A., the GATT tariffs will be 10-12% versus the 16-20% to be charged the Philippines. 88. The Philippines is at a competitive disadvantage compared with Singapore and Malaysia when exporting to the U.K., Australia, and Canada because of the Commonwealth preference agreements. Whether this would change if the U.K. enters into the EEC is not known. 89. Freight rates from the Philippines to the U.S. appear to have been 18-30% higher than those from Japan, Taiwan, or Korea, corresponding to a disadvantage of about US$2 per 1,000 sq ft (or US$6 per cu m). This problem was discussed under lumber. 90. Also, Philippine imports of supplies, materials, and machinery used in the veneer and plywood industry are subject to several kinds of duties and taxes. Together with the preferential tax advantages given to the plywood exporters of Taiwan, Korea, and Japan, these Philippine charges handicap the Philippine veneer and plywood industry in the international competition for markets. Pulp and Paper 91. The pulp and paper field appears to be very promising for Philippine wood industries, yet it involves considerable amounts of capital and entre- preneural risk. 92. The FAO anticipates that an increasing proportion of total world demand for wood will be going into pulp. In Northwestern Europe, more than 50% of all industrial wood demands are already for pulpwood; for the 'USA, the proportion is over 30%. In Japan, the projections for wood demands for 1975 indicate a need of 42 million cu m of wood for pulping, or 38% of the total projected wood requirements. On a global basis, there are very, large present and potential demands for pulpwood and rather restricted possibilities for sustained supply. ANNEX 2 Page 28 93. The pulp and paper industry typically works with a small profit margin on a very large turnover. Its high fixed costs make a continued high utilization an economic necessity. For the last few years, pulp and paper prices have been somewhat depressed on the world market, but the longer term outlook for demand is optimistic. 94. The Philippines' domestic demand for pulp and paper is relatively low in absolute figures, and by world standards very low per head of popu- lation. Thus the base for a worthwhile local pulp industry has been small. As one result, some paper products have been manufactured mainly from imported pulps and wastepaper. Some estimates of past consumption of paper products of all kinds are given in Table 17. Table 17: PHILIPPINE CONSUMPTION OF TOTAL PAPER 1960-68 Year Metric Tons 1960 108,000 1961 146,000 1962 123,000 1963 141,000 1964 167,000 1965 170,000 1966 177,000 1967 199,000 1968 217,000 Source: Board of Investment. The reported supply in 1968 was 270,000 tons, of which 155,000 were imported and 115,000 produced locally, according to the Board of Investments. 95. FAO statistics show a Philippine production in 1968 of 75,000 tons of writing and printing papers and 60,000 tons of other papers, making a total of 135,000 tons. In 1969, it was up by 5,000 tons. For the same years, a production of 50,000 m tons of bleached kraft pulp was listed and an importation of 25,000 tons of chemical pulp. Import of paper was listed as 140,000 tons per year: 68,000 of newsprint, 12,000 of writing and printing papers, and 60,000 of other papers. Based on FAO figures therefore, the total supply came to 275,000 m tons in 1968 and 280,000 in 1969. 96. The domestic market in the Philippines for paper products is principally for newsprint, printing papers, and corrugated box materials for the greater anila areas. Together they account for about 70% of total domestic demands. Import figures for newsprint for 1950 to 1967 indicate a steady growth rate of 8% p.a. while containerboard showed a growth rate of over 10%. Using this as a basis for all paper products, the projected total demand is estimated at just over 400,000 tons by 1975 and increasing by more than 30,000 tons per year after that. ANNEX 2 Page 29 97. There are now 19 pulp and paper mills, 10 of them making at least some of their own pulp. Two of these are based on bagasse and have a capacity of 27,000 tons of paper. Two are pulping abaca, with a total annual capacity of 8,000 tons; one of these mills is making cigarette paper. The Bataan Pulp and Paper Mills, at Samal, Bataan, is producing writing and printing paper from mixed hardwood residues, and the Rustan Pulp and Paper Mills, at Baloi, Lanao del Norte, makes about 25,000 tons of kraft paper, linerboard and corrugating medium from lauan wood waste. However, there is only one plant of a reasonable size: in late 1971 the first major pulp and paper factory, the PICOP mill at Bislig Bay, Mindanao, came on stream. It is based on lauan wood and has an annual capacity of about 120,000 m tons of newsprint, bleached kraft, and linerboard. In May of 1972, its linerboard machine was already working at 85% of capacity and its newsprint machine, which had only been going for five months, at 45% of capacity. A new mill is under construction on Luzon to produce 18,000 tons per year of cement sacks from bagasse. 98. Two further pulp and paper projects are still under study: one to make 66,000 tons per year of abaca pulp, and another to produce 33,000 tons of pulp per year from Benguet Pine in Northwestern Luzon. 99. The locally manufactured supply of paper products has been projected by the Board of Investment as follows: 1972 233,000 tons 1973 282,000 tons 1974 284,000 tons Even should these figures be achieved they will still leave a material shortfall of about 90,000 tons of paper products in 1974, and much more in terms of pulp supply. 100. The economics of paper and pulp manufacture have led the government to a policy of very high protective tariffs for pulp and paper products. On a value basis they were being considered earlier this year at: Cigarette paper 10% Newsprint 25% Bookpaper 30% Mimeograph paper 40% Bond and tissue papers 60% Kraft papers 80% Most other papers 65% On the strength of the resulting high domestic prices, the Board of Investments has estimated the smallest size mill would have to be only about 30,000 tons per year. Investment would be about US$18 million (with estimated return of 18.5% before interest payments and before tax). In contrast, paper experts currently consider that without tariff protection the economic minimum size of a mill is well over 100,000 tons per year. ANNEX 2 Page 30 In North America, few new mills are being built with a capacity of less than 200,000 tons per year. The high Philippine tariffs may thus have the effect of permanently saddling the country with high cost paper products and an uncompetitive pulp and paper industry. Considering the rich possi- bilities for supply of local raw materials, this is neither desirable nor warranted. 101. If an economic plant is to be installed -- with a capacity of 100,000 tons or more - the investment would be at least about US$50 million. A decision on such a venture must look years ahead. The construction of a plant in itself will usually take two years. Prior to this, there would have to be complex studies of technical, marketing and financing possi- bilities. From the start of prefeasibility studies and until a pulp and paper mill comes on stream, a good five years will usually elapse, and it may well be one or two more years after that before the full, rated capacity of the plant can be achieved. The relevant time horizon is consequently five to seven years hence. 102. By 1978, the total domestic demand for pulp and paper will probably be of the order of 500,000 tons per year, and the local supply probably of the order of 300,000 tons, leaving enough margin for one or two economically sized plants. The planning of these should consequently be initiated as soon as possible. 103. In addition to domestic possibilities, the export possibilities appear interesting. Here the major opportunity lies in the Asian markets, particularly in Japan. Possibilities may also arise for supplying Taiwan, Korea, and mainland China, but these are so uncertain that they can be disregarded for the time being, as can the possibilities of marketing in Europe or the U. S. A. 104. Japanese Market Expansion. The Japanese consumption of paper products has been increasing at the astonishing rate of 12.6% since 1953. In tandem, Japan has become the world's number one paper manufacturer and number two paper consumer. In 1969, the nation used about 19 million cu m of pulpwood from a variety of sources. Projected needs for pulpwood, excluding domestic mill residues, are 34 and 60 million cu m, respectively, for 1975 and 1980. 105. A large and increasing volume of Japan's needs are covered by waste from sawmills and veneer plants, partly originating from imported logs. Substantial volumes are also imported specifically as pulpwood, increasingly in the form of chips. A recent projection of a supply and demand balance is given in Table 18. ANNEX 2 Page 31 Table 18: JAPAN's NEEDS FOR PULPWOOD 1975 and 1985 (million m3 roundwood equivalent) Actual Estimated 1969 1975 1985 Demand 19.4 34.2 60.0 Domestic Supply 14.8 23.9 35.0 Import Needs 4.6 10.3 25.0 Sources: U. S. A. 3.8 1.9 1.9 U.S.S.R. 0.5 1.0 2.0 Australia - 1.4 2.4 New Zealand - 0.5 1.0 Malaysia 0.3 0.9 0.9 Total 4.6 5.7 8.2 Maximum Deficit - 4.6 16.8 Possible Additional Sources U. S. A. - 1.0 - Australia - 1.0 1.0 Minimum Deficit - 2.6 15.8 Sources: Unpublished report by Tuolumne Corporation, 1971. 106. Hardwoods for Pulp. Major technological developments have been taking place in the pulp and paper field. Perhaps the most important is the increasing use of hardwoods in a great variety of paper products. Until recently, conifer (softwood) pulps were the only ones thought to be good enough, in particular for newsprint. The pulps were predominantly made from the extra-long-fibered spruce and hemlock, and to some extent from true fir species. The traditional sources of supply were Northein Europe and North America. With the development of the Kraft process, the shorter fibered pine pulps came strongly into the market, and even young tropical pines are now being widely used for pulp. 107. Improvements in pulping methods have helped hardwoods to find increasing acceptance for pulp and paper, not only as a tolerable substitute for softwoods, but actually as superior raw materials for many grades of paper products. Although there are still some technological difficulties with use of the tropical hardwoods, the use of hardwood pulps is now increas- ing even faster than softwood pulps. This could be quite important for many ANNEX 2 Page 32 developing countries, with reference to their own paper needs as well as export prospects. The Philippines is geographically and climatically par- ticularly well suited to take advantage of these trends in the industry. 108. The dramatic change that has taken place in Japan's hardwood pulps is the best illustration of the changes taking place (Table 18). Taking newsprint as an example, the proportion of hard to soft woods has changed from 14-86 in 1955 to about 50-50 in the early 1970's. Since Japan has been one of the pioneers in this development, a similar transition has yet to occur in many other countries. Table 19: RELATIVE I1PORTANCE OF HARDWOODS AND SOFTWOODS IN JAPAN'S PULP AND PAPER INDUSTRY high-grade Medium-grade Printing Printing Bleached Year Newsprint Paper Paper Kraft Paper Kraft Paper Soft- Hard- Soft- Hard- Soft- hard- Soft- Hard- Soft- Hard- wood wood wood wood wood wood wood wood wood wood S % % % % 1955 86 14 64 36 92 8 76 24 89 11 1960 79 21 18 82 48 52 74 26 73 27 1965 62 38 6 94 38 62 71 29 38 62 1970 55 45 - 100 30 70 60 40 30 70 1975 50 50 - 100 20 80 50 50 30 70 Source: Japan Pulp and Paper Association, Timber Problems in Paper Industries, 1968. 109. A considerable difference exists in pulping qualities between the various hardwood species, but it has become increasingly possible to pulp mixtures of several species together. Even the Philippine lauans, which until recently were considered a very poor pulping prospect, are now being pulped in mixtures at the new PICOP factory: kraft papers as well as news- print are manufactured, and the products are accepted on the market. 110. Chips. Where forest areas are too isolated to support an economic size pulpmill, or where sufficient capital is not available, the export of pulpwood may well be advantageous. Wood chips offer the best means of exporting pulpwood in bulk. Japan's imports of chips increased from 3.8 million cu m (roundwood equivalent) in 1969 to 5.9 million cu m in 1971. A general shift from round pulpwood consumption to chip consumption has taken place there, including large volumes coming from remote chipping opera- tions from sawmill and veneer mill residues. ANNEX 2 Page 33 111. The main supplier to Japan of pulpwood chips is the USA, which supplies chipped softwoods, as does New Zealand. Hardwood chips are presently being shipped from Australia (eucalypts) and Malaysia (mangrove and rubber tree wood). Negotiations, or project studies, are being undertaken to increase the supply of chips to Japan from numerous countries including Indonesia, New Guinea, Brazil and Mexico. The minimum acceptable size of a chip export operation is considered to be 150,000 - 200,000 cu m roundwood equivalent annually. 112. Information was received that a chip export venture was under way in the Philippines, aimed at shipping 580,000 cu m annually to Japan. But the fact remained unconfirmed. It was further stated that a quantity of mangrove wood was being exported to Japan, and that this might be exported as chips in the future. The official statistics for 1970/71 show 62,000 cu m of man- grove wood to have been cut, but whether this was exported to Japan was not ascertained. There is also speculation that part or all of the recorded export of 220,000 tons of firewood in 1970/71 was pulpwood going to Japan. 113. There is no established market price for wood chips as yet. Chips are supplied on contract for a period of years and are usually paid for on the basis of an FOB price per bone dry ton, called BDU (Bone Dry Unit), which normally corresponds fairly closely to 2.0 cu m of roundwood. 114. Prices on the North American west coast have been around $10 - $13.50 per cu m for Douglas fir chips, and hemlock chips have been selling at $13 - $15 cu m. Australian contracts for eucalypts have been signed for as high as $15 cu m even with escalation clauses. 115. An operation in the Philippines to produce about 200,000 cu m of chips per year is estimated to cost about $7 - $8.50 per cu m (FOB) at current prices - assuming that about one third of the wood volume would come from mill residues. Thus, within the range of present prices, chip export ventures from the Philippines should be economically attractive. Japan has a projected shortfall of 4.6 million cu m of pulpwood for 1975, presumably not yet covered by contracts of anticipated supplies. The Philippines may well be in a position to supply a material part of this. Fiberboard, Particleboard and Blockboard 116. In the world as a whole, and particularly in Western Europe, reconstituted wood boards of various kinds have been enjoying considerable popularity. With plywood, they have been competing in construction aTnd furniture markets which used to belong to lumber. Expansion of the world market is estimated at about 5.5% for fiberboards and 10.6% for particle- boards. These two products also compete against each other and have many similar properties. The main differences are technical: fiberboards are made from wood fibers which have been bonded together by the plasti- cizing effect of high temperature and pressure; particleboards are made from bundles of fibers or even coarser chips bonded together by adhesives of the kinds used for making plywoods. Blockboards are a special form of ANNEX 2 Page 34 glued product: narrow strips of wood are glued together to form solid squares or boards, which are usually covered with veneer or thin plywood on both sides; these are frequently used for flush doors, table tops and other furniture components. There are only a few small factories making blockboards in the Philippines. As a whole, the use of the various reconsti- tuted boards has not been developed very far in the Philippines. 117. At present, there is one fiberboard plant in operation, in Min- danao, which has recently expanded its annual capacity from 60,000 tons to 90,000 tons of hardboards, made from veneer and sawmill waste in a fully integrated, balanced operation. Related fiberboard products are made from bagasse in two small plants which work intermittently and are not competitive in price. One further bagasse fiberboard mill, to produce 33,000 tons per year, is projected. The recorded hardboard production in 1968 and 1969 was about 47,000 tons per year. 118. Two particleboard plants have been built in the Philippines. One, at Zamboanga on Mindanao, has a capacity of about 7,500 tons per year based on sawmill waste; it closed for some time due to lack of markets, but is reported to have opened again. A second plant has just been completed, for the National Housing Corporation, in the Greater Manila area, with a capacity of 15,000 tons per year. A Philippine production of only 1,500 cu m per year of particleboard was recorded in 1968 and 1969. 119. It thus seems clear that, over the next five - ten years, reconstituted boards are not likely to absorb a large proportion of the Philippine wood production. Nevertheless, there is a large latent demand for these products in housing, perhaps particularly in low-cost housing, and it may be possible to develop export markets for such boards. A fiber- board or particleboard plant may prove an attractive investment in situations where there is insufficient waste wood and pulpwood-type wood available for a pulpmill or for a chip export venture. Production can be on a small scale and the capital per cubic meter per year is materially lower than for a pulpmill. Other Forest Industries 120. Wood Preservation Plants. Wood treatment plants have been in operation in the Philippines for a number of years and their products are fairly well accepted. However, with the electrification of the country, the extension of the telephone system, and the expansion and maintenance of the railway system, strongly increased demands on the treating plants can be expected. Industry observers believe there is likely to be a shortage of suitable wood for impregnation, in particular for power and telephone poles. Supplies from apitong, a species extensively used for poles, will have to be augmented from other sources. For one reason, the present minimum diameter of 60 cm at breast height severely restricts the output of poles of suitable sizes, as another, apitong is not abundant in most of the provinces. For this special market, plantation-grown timbers, per- haps eucalyptus on an 8-15 year rotation, may be able to meet the local demands most efficiently. ANNEX 2 Page 35 121. Charcoal. This product is being made but not on as large a commercial scale as might be warranted. The possibilities of major industrial charcoal manufacture should be looked into more closely. First of all, hard- woods are particularly well suited for this and the expanding metallurgical and chemical industries may have a need for charcoal. Secondly, in some parts of the world charcoal is being trucked and shipped for distant markets, e.g., from the interior of Kenya and the Persian Gulf to the U.K. 122. Resin. Copal, called almaciga, is the resin collected from the scattered stands of the Agathis conifer. In 1970/71, nearly 800 tons of this were collected for the trade, mainly on Palawan. To protect this activity, cutting the Agathis tree is prohibited throughout the Philippines. An infant industry which could develop to an important size is the tapping of oleo-resin from the natural Benguet pine forests in north-western Luzon. This activity supplies a domestic need for the products, appears quite profitable for the local inhabitants of the forests, and has furthermore apparently given them a considerable incentive, previously lacking, to protect these very vulnerable forests from being destroyed by cutting or fires. As the area in question is an important watershed area for large hydroelectric schemes, the phasing out of logging in favor of resin tapping should be considered. The timber needs of the local mines, now covered by these pine forests, could probably be supplied by modest areas of timber plantations. C. Organization 123. Government has recently undertaken a comprehensive reorganization of the forestry agencies. A new Bureau of Forest Development with wider powers supersedes three former agencies: The Bureau of Forestry which con- trols the exploitation of forests; the Reforestation Administration which is charged with reforestation and rehabilitation of cutover lands; and the Parks and Wildlife Office which is responsible for protecting the National parks, game refuges and bird sanctuaries. These administrative changes should allow for better coodination of strategy and programs for pursuing the objective of maximum sustained benefits consistent with protection of the forest resource and environment. A particular problem has been the slow progress in replanting degraded sites, of which there are some 1.4 million ha of important watershed lands. Over the last 10 years, an average of less than 10,000 ha has been replanted per year. 124. Under the new Forestry Reform Code, all lands of 18% slope or more which have not been titled can be declared in the Permanent Forest or Forest Reserve; the further inroads of kaingin are prohibited and activities of existing squatters controlled; most of the licensed area for logging is to be converted to long term leases to provide incentive for more effective use and protection of the forests, along with the requirement that supporting wood processing industries be established; watershed management is to be strengthened; and research activities substantially increased. ANNEX 2 Page 36 D. Research and Education 125. Silvicultural research is the responsibility of the Bureau of Forest Development, while forest products research is done by the Forest Products Research and Industries Development Commission, FORPRIDECOM, under the National Science Development Board. The FORPRIDECOM laboratories are located on the campus of the University of the Philippines at College Laguna and appear reasonably well equipped and funded and also seem to produce good work. The silvicultural research work, however, is severely hampered by lack of funds and facilities and should be given materially more support to work on "objective-oriented" problem areas. From experience in other countries, it appears that something of the order of US$1-2 million could profitably be invested in forestry and forest products research and development annually in the Philippines. 126. Training of professional foresters takes place at College Laguna Forestry Faculty, which also carried out a very limited amount of research. The number of forestry graduates appears adequate for the present needs. E. Development Strategy 127. The forestry resource represents a great natural asset. It could be made to produce considerably more profits for the country than is the case at present. Properly protected and managed, it can sustain the present level of log production of 10-11 million cu m per year. and in additio- -ould probably be made to sustain an additional output of perhaps 50 million cu m ner year of pulpwood, enoueh to produce, say, 10 million tons of pulp per year at a FOB value of some US$1,200 million. 128. Vast cut-over areas. now practically unproductive, could be made highly productive under tree cover. At the same time, thps- plantations woulA -rotect important watershed areas which feed irrigation schemes and hydro- electric plants. 129. The establishment of timber plantations on presently denuded forest lands would also generate a great deal of work of a kind suitable for the cruatcers, and help to motivate them to cooperate in protecting the youne plantations. Some plantations would probably justify themselves in denuded watershed area- simply by their presence. Where developed as part of an integrated forest industry complex, plantations would likely yield a satisfactory return on private investment. From the social point of view, they would generate considerable employment, generate nuclei for rural industriali- zation and development, increase foreign earnings, help reduce the local market prices for paper products and wood products, and thus increase the effective purchasing power of the pooulation generally. A"NEX 2 Page 37 130. It is essential that the Forestry Reform Code be enforced to eliminate further unauthorized squatting, kaingin, and illegal logging which are destroy- ing as much forest again as is being logged over by legitimate operations. Large amounts of commercial timber apoear to be destroyed in the process of clearing the land. Furthermore, the clearings take place in areas that are most prone to erosion. Abandonment is followed by growth of cogon grasses, and the lands are left in a state where the commercially important timber species are unable to reestablish themselves. 131. The selective cutting of mature stands appears profitable and successful where the residual stand is left in peace. However, these regenerated stands, as well as many stands successfully regenerated after clearfellings, would materially benefit from two or three improvement thinnings during their lifetime. Such thinnings would mainly remove fast- growing species other than the dipterocarps; would increase the number of commercially useful stems in the final cut; would materially accelerate the growth of the individual tree; and would thus shorten the length of the rotation. The wood removed would be likely to be technically suitable for use as pulpwood or for fiberboard or particleboard. If industries were established to use this wood, the thinning operations could give a cash surplus additional to the other advantages. Furthermore, the high need for hand labor in the forests would create employment for squatters and kiingineros already living there. 132. There is now a substantial wastage during forestry and milling operations. Large volumes of wood are usually left behind during felling operations from tops, broken and defective stems, undersized trees and undesirable species. In clearfellings, this residue often amounts to as much as what is removed. The major part of this could be recovered and used for pulping if processing plants were available within a reasonable distance. Another rich source of pulping material is the milling waste from sawmills and veneer mills, which amounts to about half of the log intake. In most cases this wood is not utilized or at best is used as boiler fuel. 133. An outstanding issue is whether export of processed wood products, rather than logs, would be to the national advantage. In the case of ply- wood, evidence is available that it could be more profitable. However, there seems to be little profit incentive for the log exporter to becomne a veneer manufacturer, and less so to become a sawmiller. A good deal of analysis still needs to be done on the economics of the various modes of exploitation. If pulp and paper mills or other industries consuming similar types of wood were established. these rculd provide a profitable outlet for the millwaste and thus support the millers. On the other hand, disini:entives to log exports might have the effect of reducing the total export volinie and value from the subsector and, if so, would be undesirable. 134. For the next five and perhaps 10 years, logs are likely to remain the main form of wood export, and Japan is likely to remain the major customer. If sufficiently profitable for the sawmiller. lumber exports should increase at a steady rate. in particular to Japan, but also to the U.S. and other markets. Plywood exports should go ahead well in the USA and perhaps Europe, while the veneer market will only show modest progress. ANNEX 2 Page 38 135. It is well recognized that all exported wood products would benefit from better port facilities, from being produced in greater con- centrations, and from bigger factories in order to benefit from the con- siderable economies of scale. It is becoming recognized that wherever large wood industries exist or a number of medium-sized plants are located near each other, it becomes economically possible and profitable to utilize the waste wood from these industries. It is also becoming recognized that the Philippines main species can be used not only for fiberboard and particleboard but also for pulp and paper. It seems less well recognized that there appear to be good prospects for pulp and paper made from Philip- pine wood, both domestically and for export. 136. The forested land areas can be divided into four fairly distinct classes which will reauire separate consideration in the future: protected forest, normal production forests, public timber plantations, and private timber plantations. Protected forests should include not only forests in water catchment areas and soil conservation areas but also areas reserved for preservation of special values (scientific, cultural, scenic, etc.) -- the common denominator is that any profits or revenues from such areas should be regarded as incidental to the protection function. These protected forests could be directly managed by the Bureau of Forest Development, which could build roads, log, and deliver the wood to processors outside the protected forest. 137. For the production forests, the emphasis should be on the building up of long-term industrial units or concentrations big enough to ensure economies of scale in processing, and with enough throughput to justify an integrated operation. Such operations should make use of their own industrial wood waste, the residues now usually left as logging waste, and also thinnings from the young-growth stands (purchase of thinnings could be made obligatory as part of 'packaged deal" arrannements). It is an open question whether concessionaires should be responsible for the regeneration and protection of their license areas. However, if their processing facilities were built to accommodate the full productive capacity of the area, and they had to pay for the pulpwood whether they took it or not, they would have a very strong incentive to utilize it all. 138. Public timber plantations would perhaps mainly be in watershed areas and would, as such, largely come under protected forests. However, denuded land in areas without serious erosion problems could be offered on long leases to forest industries prepared to plant and manage reasonably large blocks in suitable locations. Here again, sound cultiva- tion techniques and a full utilization of the productive capacity of the land will have to be ensured. In some cases it may be possible to form a concession area containing enough old-growth forest to tide the operator over until his plantations start coming to maturity. As another example of flexibility, export of logs and chips might be pursued while a pulp mill is being built. ANNEX 2 Page 39 139. Plantations on private land usually involve small farms which find it profitable to have a few hectares of fast-growing timber species. Obviously, the extent of this kind of plantation depends on the alternatives available to the farmer. . face of it, timber-growing cnild bring in roughly V 500--1,000/ha/year, and could well be a competiti" enterprise if a wood-consuming industry is in the v4cinity. The government would probably have to supply extension services and finance somewhat along the lines of the pilot plant scheme adopted by the DBP for the Bislig Bay area on M4indanao. F. Project Pogsibilities 140. Reiabilitation of Open Lands. There appear to be about 7 million h- of open land and brush land in the Philippines, more than half of it on Public Forest Land. This land is very unproductive, with large areas uInder the so-called cogon grasses (Imperata species). These grasses aggressively invade and take over eroded lands in the hills. And where cogon takes over, cultivators are forced to abandon the land as their cultivating techniques cannot cope with it. It is of little or no value for grazing livestock. Establishment of trees in cogon is difficult, and this is hampering the reforestation of many denuded watershed areas. 141. Finding out how best to deal with these problems is of high priority. A study project is therefore recommended. If material areas of cogon land could be economically reclaimed for agriculture, pressure on the forest lands could be lessened along with the benefits accruing from increased food production. If reclaimed for forestry, timber pro- duction will be increased. 142. Forest Industrialization Plan for Mindanao. Mindanao, the current focal point for forest activities in the Philippines, has exceptionally good growing conditions for trees. To make use of these and, at the same time, avoid a major deterioration of the forest resource, a program of intensive forestry should be prepared for the whole island. Plantations should aim at full use of currently unproductive lands which are unsuitable for agriculture. The plan of action should include intensive repeated thin- ning operations in the young-growth dipterocarp forests. The possibility of timber-growing by smallholders should be taken into account, as well as the complete utilization of logging waste and milling waste. The potential volume of pulpwood from these sources may be built up to as high as SO mil- lion cu m annually over a 15-20 year period. But to make even a minor part of the program possible, large-scale pulpwood-consuming industries must be available within a reasonable distance from any intensively managed forest area. A study project Is needed to identify in a preliminary' way the possibilities of realizing such a coordinated program, to sketchl out the most suitable locations for processing centers, the best size ofi supply areas, the approximate quantity and quality of wood supplies from each, and how the existing concessions and industries might fit into the picture. AN2NEX 2 Page 40 143. Thinning of Young-Growth Lauan Forests. There are over 3 million ha of young-growth dipterocarp forests in the Philippines and this area is increasing by 60,000-70,000 ha per year. Little is known about how these stands respond to various methods of thinning and what the economics of thinning would be. However, it is thought that thinning operations would not only pay for themselves in the value of the removed wood and thus create productive work for squatters and kaingineros living in the forests, but that they would materially increase the volume of high-value logs and the growth rate of the individual tree in the thinned stands, thus reducing the length of rotation and strongly increasing the value of the forests. The scattered information and experience that is available should be accumulated and interpreted by an experienced silviculturist-mensurationist, if possible supplemented with measurements taken in various types of stands by the investigator. Recommendations should be made for preliminary policies as well as for what further research would need to be done. Since Mindanao has 75% of all youno-growth dipterocarp forest in the country and 75% of the annual increase in this class of forests, it would seem advant;geous to concentrate the investigations there. A rough estimate is that perhaps 4 million cu m of thinnings could be made available annually in Mindanao (assuming efficient operations and outlets). 144. Smallholding Timber Farming. The possibilities for timber crops are attractive as an alternative enterprise for the small farmer. Unfor- tunately, the relative economics of timber farming are not well known. Plantations of candidate tree species such as Albizzia falcata, EucaLIptus delupta and Pinus caribaea have been growing in Hindanao for some years and could supply the basis for growth, yield and cost estimates. A study project is indicated to determine the relevant economies for say 10 ha holdings of which 2 ha are reserved for subsistence crops and 1 ha a year planted to trees for 8 years. Areas suitable for softwoods include Bataan- Zambales, Agusan Valley and Bukidnon. 145. Oleo-resin Production from Benguet Pine. There are 214,000 ha of natural Benguet pine forests in northwestern Luzon, mainly located in the hills which are part of the Agno and Cagayan catchment areas. These forest areas are being denuded by logging operations to supply local mines with timber -- and by squatters and runway fires. Erosion and siltation have become serious problems. The tapping of the Benguet pine for oleo- resins is capable of providing inhabitants with a satisfactory income, and it has been found that the incidence of runaway fires is much reduced in areas where tapping takes place. A study should determine the implications of reserving the major part of these forests for resin tapping, paying special attention to the likely profitability, the quantities likely to be produced, markets, processing, and how to minimize the damage to tapped trees, which appears unnecessarily high at present. Since resin tapping is still proving economic in developed countries (e.g., the southern United States) where minimum pay rates are perhaps 15 times higher than in this part of Luzon, and since the Philippines imports pine oleo-resin derivatives, there should be fair prospects for success. The study should also cover the question of timber supplies for the local mines. AN4NEX 2 Page 41 146. NeW Wood Export Center at Casiguran Sound. Several government agencies, are studying forestry possibilities in the rather undeveloped (hut scenic) Casi,-uran Sound on northwestern Luzon. The road systems, port facilities, and electricity supply necessary to turn Casiguran into an important integrated wood-processinF and woodl-exportin- center are being studied. The objective is a scheme that would be capable of handling over 1 million cu m of wood annually and at the same time-serving as t:he export outlet for the extensive hinterland in the Cagayan Valley which at present is hampered by very high transnort costs. A major problem is that tynhoons and other factors may linit use oF the bay as much as 6 months in the year. 147. Imnroved Port Facilitips in the 'Davao Area, Mindanao. A private group of wood processing industries is investi.gating' the possibility of inproving the port facilities in the Davao area as a means of reducing their shippinc,. costs. External financial assistance. would probably facilite this desirable development. AGRICULTURAL SECTOR SURVEY PHILIPPINES ANNEX 3. IRRIGATION ANNEX 3 Page 1 PHILIPPINES AGRICULTURAL SECTOR SURVEY IRRIGATION TABLE OF CONTENTS Page No. Summary .................................................... 1 Recommendations ............................................ 7 Present Develop8ent ........................................ 8 Organization of the National Irrigation Administration (NIA) ..................................... 10 Operation and Maintenance (0 ) ............................ 15 Rehabilitation ............................................. 18 Project Development and Design ............................. 24 Water Management ........................................... 26 Potential of New Project Areas ............................. 27 Irrigation of Sugarcane .................................... 29 Table 1. Pump Information 2. Present Irrigation Area Potential of NIA Gravity System According to Regions Used by Department of Agricultural and Natural Resources 3. Irrigable Area Potential - New Land Areas 4. Cropping Intensity Factors to be applied to Potential Irrigable Areas 5. Potential Irrigable Areas - Regular and Palagad Crop Areas 6. NIA On-going Schemes - Probable Cropped Areas 7. ISU Pumps by Sizes 8. Communal Systems Completed by NIA Regions - Probable Cropped Areas 9. Summary Data of National Irrigation Schemes Managed by NIA - Number of Projects/Potential Area 10. Basic Data, Equipment and Cost Estimates by Irrigation Model for Sprinkler Irrigation ANNEX 3 -2 - Page 2 Figures: IBRD 7016 The Proposed Organization of the Cabanatuan Irrigation District 7017 Proposed Scheme of Combining Rotational Areas for Operation & Maintenance Maps: IBRD 10219 NIA Irrigation Systems and ISU Pump Project 10220 Upper Pampanga River Project ANNEX 3 Page 1 PHILIPPINES AGRICULTURAL SECTOR SURVEY IRRIGATION Summary 1. The objective of the irrigation aspect of the survey was to review the present status of irrigated agriculture and to determine its development potential. 2. Official estimates placed the total land area commanded by existing irrigation facilities at 958,000 ha and the total crop area served in both regular and off-seasons at 1,109,000 ha. After taking into account 'the deterioration of the irrigation systems and reporting inaccuracies, the mission estimated that only about 883,000 ha were actually irrigated. Almost all of the irrigated area is devoted to rice cultivation. Details are as follows: Total Irrigated Area Total Mission Estimate Designed Official Off-Season Type of Projects Command Area Estimate Total Regular Crop ,Crop ---------------------------ha--------------------------- Gravity Systems: NIA 407,000 470,000 441,000 305,000 136,000 Communal 312,000 391,000 294,000 214,000 80,000 Pump Systems: NIA/ISU 239,000 248,000 148,000 110,000 38,000 Total 958,000 1,109,000 883,000 629,000 254,000 Sources: Tables 2, 6 and 8. 3. Gravity irrigation systems account for about 0.7 million ha of the cropped area and fall into two main groups. One group is operated and maintained by the National Irrigation Administration (NIA) and covers approximately 0.4 million ha. The other group consists of the communal systems operated by private farmers. Two-thirds of the communal systems have either been built or rehabilitated by the NIA. ANNEX 3 Page 2 4. The pump irrigation schemes, which serve a cropped area of about 150,000 ha, were developed and supervised by the Irrigation Service Unit (ISU) formerly under the Bureau of Public Works and now under the adminis- trative control of the NIA. Inadequate maintenance of the pumps and water shortages appear to be amongst the major causes of the disappointing per- formance of these projects. 5. Subsequent to the flood of 1972, NIA prepared revised goals for development of irrigation for fiscal years 1973-76. For the 4 years, the goals included about 344,000 ha under gravity systems and 126,000 ha under pump systems. During the 3 years, FY 1973-75, 187,000 ha were to be brought under gravity systems and 96,000 ha under pump systems. Details are shown below: FY 73-75 FY 73-76 FY 73 FY 74 FY 75 FY 76 Total Total --------------------------ha----------------------------- Gravity: Rehabilitation/6 /1 /1 1,000 1,000 1,000 2,000 New and On-going Projects Local Funds 26,740/2 12,300/3 26,300/4 48,700/5 65,340 114,040 Foreign Assisted 9,230-- 7,635"-- 36,080-- 92,30-- 52,945 145,245 Communal (NIA) 27,400 25,085 15,00 15,000 67,485 82,485 Subtotal 63,370 45,020 78,380 157,000 186,770 343,770 Pump Projects 27,440 34,400 34,050 30,000 95,890 125,890 Total 90,810 79,420 112,430 187,000 469,660 282,660 Source: NIA /1 Rehabilitation is aimed at the restoration of flood damages. /2 Includes 8,930 ha of the Cotobato Project and 300 ha NIA-UNDP. /3 Includes 7,415 ha of the NIA-NEA Project and 220 ha NIA-UNDP. /4 Includes 28,000 ha of the NIA-NEA Project and 780 ha NIA-UNDP. /5 Includes 77,000 ha of the Upper Pampanga Project (31,000 new and 46,000 improved area). /6 Increase in cropped area due to rehabilitation not included. 6. Based on past performance and considering staff and other constraints, the mission believes that performance will likely fall short of these goals. ANNEX 3 Page 3 FY 73-75 FY 73-75 FY 72 FY 73 FY 74 FY 75 Total Total ---------------------------- Gravity: Rehabilitation - - 1,000 1,000 2,000 2,000 New Projects: Local Funds 10,000 10,000 10,000 10,000 30,000 40,000 Foreign Assistance - 9,000- 8,000L2 60,000/3 77,000 77,000 Communal (NIA) 5,000 5,000 5,000 5,000 15,000 20,000 Subtotal 15,000 24,000 24,000 76,000 124,000 139,000 Pump Projects 14,000 14,000 14,000 14,000 42,000 56,000 Total 29,000 38,000 38,000 90,000 166,000 195,000 /1 8,930 ha Cotabato, 300 ha UNDP. /2 8,415 ha NIA-NEA project, 220 ha UNDP. /3 28,000 ha NIA-NEA project, 780 ha UNDP, 31,000 ha UPRP. The mission estimates that for the 3 years, FY 1973-75, about 124,000 ha are likely to be brought under gravity irrigation (as compared with t:he NIA goal of 187,000 ha) and 42,000 ha under pump systems (as compared with the NIA goal of 96,000 ha). 7. However, such performance, even though substantially below NIA goals, would be sufficient to attain marginal self-sufficiency in rice by FY 1975 if potential improvements in yields of rainfed rice are also realized. It should be noted further that improved systems under gravity irrigation as in the Upper Pampanga and Cotabato projects enable a much higher cropping intensity than has been the case heretofore. Thus, the addition of 195,000 ha under irrigation in the 4 years FY 1972-75 is expected to increase the irrigated cropped rice area by 282,000 ha; 169,000 ha in the regular crop and 113,000 ha in the palagad crop. (See Table 4 in this Annex and also Table 16 in Annex 6, Rice Production.) 8. The mission estimates that to maintain self-sufficiency in rice between 1975 and 1980 will require an expansion in irrigated crop area of some 360,000 ha roughly the same rate of expansion on an annual basiis as is anticipated for 1972-75. Perhaps two-thirds of this requirement could be accommodated by expansion of the Magat system and a program to rehabilitate and improve the existing NIA gravity systems to increase cropping intensity. 9. Rehabilitation of existing systems offers the most economilc way of increasing output by irrigation. The data below simulate the increase in output per ha under progressively intensive stages of gravity irrigation: ANNEX 3 Page 4 Additional Cropping Additional Cost of Stage Yield Intensity Output Output System cavans/ha % cavans/ha cavans/ha P/ha Rainfed lowlands 40 100 40 - - Run-of-river irrigation 55 108 60 20 1,500 Rehabilitation and Improvement 70 150 105 45 800 Rehabilitation, Improvement and Storage 87 190 165 60 2,200 Thus, to convert rainfed to run-of-the-river irrigation without control and water management as has been the practice, would involve an investment of r 75/cavan for the additional annual output; to add on rehabilitation and improvement would cost V 18/cavan; and to add water storage thereon would require a further investment of I 37/cavan. To go from rainfed to an improved system either with or without storage would require an investment of about / 35/cavan. While investment costs per cavan of annual output may be roughly the same with or without built-in water storage, storage may be essential in some cases - as, for example, in expansion of the Magat irrigated area. Also storage provides other advantages. The reduction of flooding in wet season and assurance of water supply in dry season would reduce the risks of farming. With assured water supply equitably shpred, the collection of water charges would be considerably enhanced. Further, in most cases there is usually a power component of the dam project which reduced the investment cost attributable to irrigation. At the same time, unless these considerations clearly outweight the benefits obtained without storage, investment priorities should go to the latter since it would affect almost twice as many farmers for the same investment. 10. There are 104 NIA gravity systems, varying in size from 130 ha to 30,000 ha. They are usually run-of-the-river schemes with insufficient control structures in the canals, inadequate drainage and little provision for access. Even when the project is new, water distribution is uneven during the regular season and very limited during the off-season. Main- tenance has been minimal due to shortages of staff and funds and the lack of access for maintenance machinery. A vicious circle has developed by which the lack of maintenance discourages farmers from paying O&M charges and the lack of the latter precludes further maintenance. 11. The traditional form of rehabilitation consists of cleaning the silted canals and turnouts and replacing lost or broken gates. It is in effect deferred maintenance and will not improve cropping intensity much above the present average of 108%. More sophisticated forms of rehabilita- tion have been tried out and are expected to expand. These are: ANNEX 3 Page 5 (a) A minimal improvement to the traditional standard of rehabilitation by the addition of new control structures within the existing delivery system, in order to distribute the wet season flow more evenly and to raise the cropping intensity somewhat over 108%. (b) A complete refurbishing of the system by rehabilitation of all existing canals and structures, the addition of new ones, the provision of drainage and roads and the introduction of water management and rotational irriga- tion practices. It has already been demonstrated that such a package of improvements will bring crop intensity to 150% with existing water supplies. (c) Maximum improvement will be obtained where a project subject to the type of program outlined in (b) can be supplied with additional water. Cropping intensity could thus be raised up to 200%. 12. NIA is responsible for 104 gravity schemes of which 64% are of less than 3,000 ha and account for only 18% of the area. Due to their small size and wide geographic distribution they put an inordinate burden on NIA's O&M capability. Urgent consideration should be given to trans- ferring responsibility for the schemes to properly organized irrigation associations. Such a step would also provide valuable experience for the longer term future when irrigation associations are expected to assume responsibility for larger projects. 13. Minimal rehabilitation should be carried out on the smaller projects prior to or immediately after their transfer from NIA. After elimination of the small schemes under 3,000 ha and after making adjustments for areas requiring only deferred maintenance, the mission estimates, that approximately 200,000 ha of the NIA gravity systems will require intensive rehabilitation. A realistic phasing of the program would cover a period of 15 years. More funds, staff, training facilities and equipment will be required. An estimate of the rehabilitation cost at 1972 price levels follows: V Million (a) Small Project Program 3.7 (b) Deferred Maintenance Program 6.9 (c) Intensive Rehabilitation Program 210.4 Total 221.0 14. The present NIA staff is adequate for the ongoing program, but is not sufficient to undertake a greatly expanded O&M program or to pre;pare feasibility studies for the long term. Financial and staffing provisions will have to be augmented to handle the increasing work load. ANNEX 3 Page 6 15. The major emphasis after the Upper Pampanga River Project will be on the Magat Project, for which the feasibility study will be completed in June 1973. The project would cover 40,000 ha at a cropping intensity of 200%. A reconnaissance report on the Casecnan River Project has been completed. The project involves the trans-basin transfer of water from the Casecnan river to the Pantabangan Reservoir. The report estimates that sufficient water could be diverted to irrigate between 50,000 and 70,000 ha in Central Luzon, while leaving enough water to supply 100,000 ha in the Casecnan Valley. 16. There is the possibility of developing a package project consisting of several small schemes in Mindanao near Davao. Partial information is available, but complete feasibility studies need to be done. The projects are in close proximity to each other. Projects Area Tagum 4,000 ha Sang 5,000 ha Compostella 3,000 ha Bunawan 6,000 ha 17. Assuming that feasibility studies are completed, the Mission estimates that the following projects could be available for construction between 1975 and 1985: Area Cropped (ha) Project Regular Season Off-Season Total Magat River Irrigation /1 /1 /1 System (RIS) 40,000-- 40,00G- 80,00G'- Tago RIS 15,000 10,000 25,000 Tandag and San Miguel 15,000 10,000 25,000 Cotabato Basin: Labu Labu 11,000 6,000 17,000 Ampatuan 7,000 4,000 11,000 Casecnan River: Central Luzon 50,000 40,000 90,000 Cagayan Basin 100,000 70,000 170)000 Total 238,000 180,000 418,000 /1 Recent estimates place the cropped area in each season at 100,000. 18. Beyond these possibilities, there would still be a large potential for future development of new irrigated land. The Mission estimates that, with 1972 as a base, an additional 1.35 million ha could be brought under irrigation (Tables 3 and 5). ANNEX 3 Page 7 Recommendations 19. The NIA should turn over to irrigation user's associations all existing projects of less than 3,000 ha. The program should be phased to transfer schemes of less than 1,000 ha in the first stage, followed by a second stage for schemes up to 2,000 ha and a final stage for those up to 3,000 ha. The projects should be programmed for minimum rehabilitation before or soon after transfer. The NIA should be responsible for planning, executing and bearing the cost of improvement on the 75,000 ha that are involved. Thereafter the 0&M cost should be borne by the Association and paid out of water charges collected from its members. 20. Existing projects over 3,000 ha, covering a total of 263,000 ha, should be subject to full rehabilitation, including water management practices, in order to raise the cropping intensity from the present 108 to 150%. Upgrading should be carried out as quickly as possible in a period no longer than 10 years and preferably within this decade. 21. New projects should be designed to the same standards of water control, project and farm drainage and infrastructure used at UPRP. Storage may or may not be necessary. The objective should be a cropping intensity of from 150 to 200%. Projections made in this Annex assume that no new schemes would be built on traditional "run-of-river" criteria. 1/ 22. There is not enough information on the pumping schemes on which to frame a development program. The existing schemes appear to suffer mainly from inadequate maintenance and uncertain water supplies. The NIA is investigating the present status of the pumping schemes with a view to formulating a realistic plan for future development. Consideration should be given to the transfer of the supply, installation and maintenance services to the private sector. NIA, however, should build up the technical capability to supervise private suppliers and be responsible for the granting and policing of water rights. At this point in time, the mission recommends that the program continue at its present level of adding 1,000- 1,200 pumps a year. But after the reasons for failure are determined and corrective action taken, pump irrigation could well be expanded faster than indicated. 23. Data on groundwater resources are lacking. The immediate emphasis should be on a program aimed at locating and evaluating productive aquifers as a basis for future development. 24. If newly constructed or rehabilitated projects are to avoid rapid deterioration adequate and timely provisions for O&M must be made in terms of staff and equipment. The SGVC 2/ recommendations for the determination 1/ The mission recognizes that NIA may have to continue building some conventional schemes in the near future for social reasons, but as a matter of policy, construction of such schemes should be gradually phased out. 2/ Sycip, Gorres, Velayo and Co. ANNEX 3 Page 8 and collection of water charges should be implemented. The present legal limit on the water rate should be removed. 25. Urgent consideration should be given to the creation of a coordinating body responsible for all water resources development and planning, including all types of irrigation, drainage, flood control and multipurpose projects. 26. To facilitate the identification and preparation of a larger number of more sophisticated projects, NIA's work on stream gauging, aero- photography, contour-mapping and the collection of meteorological data will have to be increased. Reconnaissance land classification and agro-economic surveys of potentially irrigable areas should be carried out. 27. The existing NIA staff and funding are only adequate for ongoing programs. They are not sufficient if NIA is to build, operate and maintain new, sophisticated projects, upgrade existing projects and prepare new pipeline projects to a higher level of quality and at a quicker pace. The provision of an adequate program of O&M for new and rehabilitated projects will put the greatest burden on NIA staff. Sufficient financial provisions will have to be made to permit NIA to recruit and retain the required number and quality of staff to meet the demands of the program. 28. The increased staff requirement will necessitate a review and expansion of existing training facilities in order to produce the varied types of personnel needed at the appropriate times. Present Development 29. Almost all of present irrigation development is devoted to the production of palay (rough rice or paddy). The designed area and the cropped area for the land now irrigated are shown below: ANNEX 3 Page 9 Reported Designed Area Reported actually Reported designed served, 1971 Category area, FY 1972 Regular Palagad Total --------------------------ha------------------------ NIA 407,000 314,000 156,000 470,000 ISU 233,000 (10,321 pumps) 165,000 83,000/2 248,000 Communal (NIA) 222,000 133,000-- 78,000-- 211,000 Communal (Private) 130,000 50,000- 180,000 742,000 367,000 1,109,000 /1 Estimated at 60%. /2 Estimated by NIA. /3 Mission Approximation. Probable Cropped Area Probable Cropped Reported Potential Area Category Area, 1972 Regular Palagad Total ------------ - ------ - ------ NIA 407,000 305,000 136,000 441,000 ISU (10,321 pumps) 239,000 110,000 38,000 148,000 Communal (NIA) 222,000 133,000 53,000 186,000 Communal (Private) 90,000" 81,000 27,000 108,000 958,000 629,000 254,000 883,000 /1 Estimated to be less than 100,000 ha by Mercado of NIA. 30. The gravity irrigation systems are of two types. One group is operated and maintained by National Irrigation Administration (NIA) and the other group is communal. The NIA has constructed or rehabilitated a pro- portion of the communal group, while the remainder has been developed and is operated entirely by private enterprise. 31. The pump irrigation schemes were developed and supervisediby the Irrigation Service Unit, formerly under the Bureau of Public Works.! This section has now been placed under the administrative supervision of NIA. The cropped area on pump lands is considerably smaller than the designed area, as a number of pumps is out of operation and there are significant differences between rated capacities and delivered quantities of water. During the palagad (dry) season, many pumps function on a very limited basis or not at all (see Table 1). ANNEX 3 Page 10 32. The entire program for pump irrigation (ISU) needs to be reviewed. Until such times as a new plan is worked out the program should be maintained at its present actual level of 1,000 to 1,200 new sites per annum. In formulating a new approach consideration should be given to the role of the private sector in the provision of equipment and installation and maintenance services. NIA should evolve and enforce a system of water permits for pump users and it should maintain a technical capability to supervise private supplies. 33. The UNDP tubewell project has not been able to achieve its objectives. It would therefore be premature to plan future development in this field. As an immediate step, the program should be re-oriented to gather information on the location, extent and productive capability of aquifers. Organization of the National Irrigation Administration (NIA) 34. Republic Act No. 3601 of January 28, 1963, created the National Irrigation Administration. The President issued Executive Order No. 91, on August 17, 1964, implementing R.A. No. 3601. NIA is a corporate body which is directly supervised by the Office of the President. It is governed by a Board of Directors composed of seven members, of which the Secretary of Public Works and Communications is the Chairman. The management of NIA is vested in an Irrigation Administrator. 35. The enabling legislation is broad in scope, giving NIA the power: (a) to investigate, study, improve, construct and administer all national irrigation systems; (b) investigate all available and possible water resources for the purpose of utilizing the same for irrigation; (c) to collect from users of each irrigation system fees as may be necessary to finance continuous operation of the system and to reimburse in not less than twenty- five years the cost of construction; and (d) to transact all such business and to do all such other things as are directly or indirectly necessary, incidental or conducive to the attainment of the above objectives. 36. The policies, powers and duties of NIA are set forth in bylaws. The NIA is now responsible for the irrigation activities previously under the supervision of the Bureau of Public Works and Communications (BPW) and the Friar Lands irrigation systems, formerly under the Bureau of Lands. The NIA has recently taken over from BPW the Irrigation Service Unit (ISU), responsible for irrigation by pumps. ANNEX 3 Page 11 37. BPW has retained responsibility for the Flood Control and Drainage Division, which is charged with the construction, improvement and maintenance of flood control and drainage facilities. BPW is also responsi- ble for the coordination of water resources surveys for the development of seven large river basins. 38. The irrigated area of the Philippines is classified according to the following systems: (a) NIA Gravity Systems (normally run-of-river projects). (b) ISU Pump Systems. (c) NIA Communal Systems. Systems constructed or rehabilitated by NIA, but turned over to landowners for operation. (d) Communal Systems. Those constructed by private enterprise. It is estimated that 77% of the gravity systems and 83% of the pump systems are on the island of Luzon. Systems - Gravity 39. NIA operated 104 existing or non-going irrigation schemes in the principal islands as follows: Island No. of Schemes Potential Area % of Total Luzon 74 312,000 ha 76.7 Leyte 8 7,000 ha 1.7 Panay 6 32,000 ha 7.9 Negros 3 21,000 ha 5.1 Mindanao 9 32,000 ha 7.9 Other 4 3,000 ha 0.7 104 407,000 ha 100.0 Source: NIA, See Table 6. 40. The administrative problems of the 104 schemes vary by siz!e of project, the latter ranges from 130 ha to 77,000 ha (Upper Pampanga still under construction). 41. The distribution of the projects by area is shown below. IProjects of 3,000 ha or less represent 64.4% of the schemes and only 18.4% of: the potential area of existing schemes. ANNEX 3 Page 12 No. of Accts. % of Areas by No. of % of Aver. Area based on Total area Total Group Size Schemes Schemes Size Aver. 2.5 ha Potential /1 Area (ha) Less 1,000 ha 36 34.6 515 200 18,500 4.5 1,000-2,000 ha 23 22.1 1,580 600 36,000 8.9 2,000-3,000 ha 8 7.7 2,360 1,000 20,500 5.0 3,000-5,000 ha 14 13.5 3,880 1,600 54,000 13.3 5,000-10,000 ha 13 12.5 7,950 3,000 103,000 25.3 over 10,000 ha/2 10 9.6 17,480 8,000 175,000 43.0 Total 104 100.0 407,000 100.0 Source: NIA. /1 Potential area is used throughout the report because it represents an unconfirmed accounting of area which ultimately may be irrigated. The actual irrigable area within most systems has not been defined. /2 Includes 46,000 ha of Upper Pampanga Project. Systems - Pump Irrigation 42. Until April 1972 responsibility for pump irrigation systems lay with the Irrigation Service Unit of the BPW. Much of the material for pumping installations, e.g. the pumps, motors, etc., was supplied through war preparations from Japan. As a result of a scarcity of funds and qualified personnel, the pump program has suffered from a lack of detailed planning, supervision, maintenance and administrative accounting. In some areas field supervisors have only one employee to install, supervise and maintain up to 1,000 pumps. The pumping schemes are classified as follows: No. Area a) Deep wells (300-700 feet or more) 91 4,000 ha b) Shallow wells (80-300 feet) 3,684 50,000 ha c) Low lift pumps (Less than 80 feet) 6,591 185,000 ha 43. In order to secure a loan for the purchase of a pump the farmer applies to ISU. The application must identify the land owned by the applicant. The securing of a loan does not necessarily require that the land be free and clear of all encumbrances. The loan requirement is 10% down and nine additional years to pay. If the loan is acquired from ISU, the interest rate is reported to be 6% per annum. 44. For those farmers who secure a loan from the Development Bank of the Philippines, the terms are 10% down and seven additional years to repay the balance at the rate of 12% per year. The number of pumps financed by ANNEX 3 Page 13 DBP is reported by ISU to be in the neighborhood of 40% of total pumps although DBP does not verify this figure. 45. The ISU reports that on March 31, 1972, a total of 10,321 pumps had been installed serving an area of 239,000 ha. One month later the total number of pumps was reported to have risen to 10,507 and the area irrigated to 243,000 ha. These figures are of very limited use for the following reasons: (a) The area shown as irrigated by each pump refers to the gross land area owned by the farmer and does not necessarily reflect the net area receiving water. (b) No allowance is made for obsolescence. All pumps over 12" in diameter (5% of the total) are at least 15 years old and only between 20 and 25% are probably still operational. The number of pumps more than 6 years accounts for 14% of the total. The ISU estimates that only 74% of the pumps are functional (Table 1). (c) No provision is made for reductions in designed water deliveries due to variations in head or water supply. (d) There is probably a degree of double reporting of cropped areas by NIA and ISU where pumps are used to draw water from canals. The Mission estimated that, after making allowances for the above-mentioned factors, the total cropped area served by pump systems amounted to 149,000 ha or 61% of the 243,000 ha reported by ISU. 46. A well has no priority date and therefore no controls are being enforced to prevent the depletion of the aquifer. No groundwater studies are made other than to observe an existing well which is used for domestic purposes. A general rule requiring a spacing of one kilometer between wells is not rigidly followed. 47. No priority by date of installation is set for pumps located on rivers, streams or small creeks. This may seriously jeopardize the invest- ment of farmers. GOP recognizes the need for regulation and control, but enforcement is impeded by lack of funds and personnel and by sociolo- gical and political factors. ANNEX 3 Page 14 48. Pumps installed by principal islands are shown below: No. of Reported Island Pumps Area Reported Area (ha) (% of total) Luzon 9,115 199,000 83 Leyte 78 2,000 1 Panay 173 6,000 3 Negros 267 13,000 5 Mindanao 156 5,000 2 Other 532 14,000 6 10,321-- 239,000 100 Source: ISU. /1 As of March 30, 1972, as compared to 10,507 reported April 30, 1972 (Tables 8 and 1), covering an estimate of 243,000 ha. Systems - NIA-UNDP Groundwater 49. The groundwater project was established to assist the Government of the Philippines in: (a) improving crop production by demonstrating irrigation techniques based on ground and surface water in the pilot areas in Central Luzon; and (b) a pre-development survey of groundwater potential in selected areas on other islands. 50. While the program was envisioned or a pilot basis as covering an area of 3,000 ha, it was subsequently re-programmed to cover 2,000 ha as follows: (a) Modification of Lateral "C" of the Penaranda Irrigation system for pump irrigation on the Penaranda pilot area. The design is for pumps to provide a 24-hour supply at 1.5 liters/sec/ha for 1,000 ha. (b) The same design criteria was set up for 1,000 ha in the Guimba pilot area. (c) It was estimated that 48 water points (well locations) would be required for this project. (d) The project was programmed over a four-year period ending June 30, 1974. GOP was to contribute f 4,800,000 and the UNDP contribution was to be US$2,102,700. ANNEX 3 Page 15 51. Drilling operations in the Nueva Ecija Province before April 1972 had not been successful; the wells were of low yield. Based on the recommendation of a June 1972 FAO/TNDP Review Hission, the drilling was moved to Laguna Province in July 1972. Since then 10 good wells have been drilled as of December 1972. The revised plan is to use about 12,000,gpm from the developed wells to demonstrate field water management and double cropping through integrated use of surface and groundwater on a 1,280 ha pilot farm, and to prepare a feasibility report for irrigating 10,000 ha with groundwater in the Laguna Province. 52. The project has produced valuable information on irrigation agronomy and water management by conducting rotational irrigation and crop rotation experiments. The findings will be demonstrated in the Upper Pampanga project area. 53. With drilling difficulties now behind it, the project has started various hydrological, agricultural and economical studies necessary for implementing the pilot farm plan and for preparing the feasibility report. It has also made a preliminary field groundwater survey of the Bicol Peninsula of the Luzon Island. 54. For planned development of groundwater resources in the Philippines, however, the present UNDP project should be supplemented by a separate project whose main objective is to gather information on the location, extent, productive capacity and quality of aquifers. Operation and Maintenance (O&M) 55. There is a three-fold problem in Operation and Maintenance (0&M) of the projects: (a) operation and control; (b) maintenance of the system; and (c) payment of costs. 56. The need for establishing water user or irrigation associations is urgent. The associations would communicate with the farmers and would take over the 0&M of at least some of the projects. To be effective, an irrigation association has to be established by law with powers to levy and collect irrigation charges, to have perpetual succession, to file on and acquire to the use of water for domestic and irrigation purposes, to acquire sites for reservoirs, to acquire rights of way for ditches, canals, laterals and drains, to exercise the power of eminent domain, and to sue and be sued. Associations should have commissioners elected by the land owners who should have the power to adopt by-laws, manage and conduct the affairs and business of the association, establish equitable rules and regulations for the distribution and use of water to and upon lands of ANNEX 3 Page 16 the association and generally to perform all such acts as are necessary to carry out the purposes of the association. 57. There appears to be an inconsistency of policy between NIA gravity systems and government-assisted communal projects. In the latter NIA has constructed or rehabilitated irrigation systems, covering about 222,000 cropped ha (Table 9), and turned them over to farmers. While the law permits collection of capital costs, no collection has been made from the landowners. On the other hand, on the NIA gravity systems costs of projects and O&M costs are being assessed against the lands. 58. The large number of small projects supervised by NIA increases its administrative burden significantly. About 64% of the on-going schemes are under 3,000 ha in size and represent 18.4% of the total area. These schemes should be taken over by water users or irrigation associations. There is no way that the government can operate the small projects at a cost that farmers can afford, but an irrigation association can. Acquisi- tion of these small projects by associations should be programmed over a period of years, as shown below: No. of Accts. % of Area by No. of % of Aver. Size Based on Aver. Potential Total Group Schemes Schemes of Schemes 2.5 ha Area Area Step 1 Less 1,000 ha 36 34.6 515 200 18,500 4.5 Step 2 1,000-2,000 ha 23 22.1 1,580 600 36,000 8.9 Step 3 2,000-3,000 ha 8 7.7 2,360 1,000 20,500 5.0 59. Irrigation fees are now charged under three major groups: (a) Although 0&M charges on NIA gravity systems are levied for projects constructed under provisions of Act 2152 as amended, collections of such charges rarely exceed 60%. The fee rate is: First Crop: Rice 25 pesos/ha Other than rice 10 pesos/ha Second Crop: Rice 35 pesos/ha Other than rice 20 pesos/ha ANNEX 3 Page 17 Third Crop: Rice 30 pesos/ha Other than rice 20 pesos/ha Crops standing during the year such as sugarcane shall be charged 25 pesos per ha per annum, but the annual irrigation charge shall not exceed 60 pesos per ha. (b) For irrigation service to Friar Lands Irrigation Systems, the fee rate shall be 80% of the above schedule. (c) For irrigation service rendered by NIA for systems constructed under the provisions of Republic Act 3601, the irrigation fees shall equal the construction costs of the system divided by 50 plus the annual cost of the system including insurance. 60. Fees are collected for each crop harvested between April 1 of the preceding year and March 31 of the current year. The penalty for non- payment after April 30 to December 31 of the current year is an additional 10% and 20% thereafter. 61. A report prepared by Sycip, Gorres, Velayo and Co. (SGVC) 1/ states that most of the difficulties in billing for and collection of fees are due to the multi-rate system. The introduction of improved rice varieties capable of producing three crops and the existing maximum limit of 1 60 per annum has caused administrative difficulties. The variation in rates applied to different crops has resulted in inequities. SGVC recommends that, pending a re-evaluation of the fee levels, a uniform rate of r 30 per ha be charged regardless of the kind of crop. 62. Prior to the construction of the Upper Pampanga River Project (UPRP) access for system maintenance and to the farmer's field was not provided for and drainage was not considered. Inadequate O&M led to rapid deterioration of the systems and gave the farmer grounds for non- payment of O&M charges because of lack of water. Many of the farm turnout gates are missing and lack of sufficient control structures within the system makes water delivery at low flows unavailable to some areas. Re- sistance to the collection of O&M fees will continue until operation and maintenance problems are under control and the Government accepts that land owners have to bear at least the cost of operating and maintaining the system. 63. Deterioration of the systems is accelerated by the amounts Of silt entering the streams as a result of deforestation. Despite regula- tions governing commercial cutting of forest lands, uncontrolled erosipn 1/ Titled "Report on the Study of the Integral Management of the National Irrigation Administration", Three Volumes. ANNEX 3 Page 18 is caused by squatters farming denuded land. A somewhat similar problem occurs near Baguio in Benguet Province where mine tailings are discharged in the Agno river. The mining companies' catch basins are silted up and do not function. Any proposed mining development on the Agno should be delayed until the tailing problem has been resolved. 64. The basic organization of the irrigation schemes places emphasis on operations or the distribution of water. Assuming that farmers will maintain the farm ditches and that the balance of the system is the responsibility of the project organization, most projects do not have sufficient equipment for adequate maintenance. This situation is partly due to the large number of small projects. If NIA continues to be responsible for their operation, area or regional equipment pools will be required. The UPRP is adequately provided with maintenance equipment, but no consideration has been given to a maintenance section in the organization chart (IBRD 7016). The estimate of the annual O&M cost was given as ? 80 per ha, of which f 57 was for personal services. Based on the organizational chart for operations (IBRD 7017) the following personnel requirements have been estimated for the entire UPRP of 77,000 ha: Ditch tenders at 1/100 ha 770 Watermasters at 1/500 ha 154 Division Supervisors at 1/2,500 ha 31 Zone Superintendents at 1/10,500 ha 5 Administrative and Technical Staff 150 Manager 1 Total Operation Requirement 1,111 = 1/69 ha Additional maintenance personnel, including operators, oilers, truck drivers, specialists, mechanics, etc., would add another 100 people for a total of 1,211 employees equivalent to 1/64 ha. This would require an O&M budget of g 90-100 per ha. Rehabilitation 65. NIA recognizes the need for rehabilitation of existing schemes which includes the need for a water management program. Rehabilitation should include repair of existing structures, addition of control structures within canal and lateral systems, project drainage, acquisition of sufficient right of way to construct roads on canal and lateral banks, in order to provide access to systems and roads for farmers, replacement of missing farm turnouts and establishment of water management rotation units within irrigation schemes. Funds programmed for rehabilitation for the next four years cover only 1,000 ha per year which is less than 1/4 of 1% of the potential rehabilitation per annum area. ANNEX 3 Page 19 66. There are several factors involved in rehabilitation which have discouraged effective programs. The purchase of right of way from farmers has been difficult to negotiate. Methods of reconstructing canals and laterals with provisions for roads are complicated. Rehabilitation programs require closing of certain sections of projects for construction and consequent loss of crops. The programs are not at the same level of intensity on all projects. 67. The strategy after 1975 should be based on a critical review of potential land and water resources available for development. The estimate of 1,350,000 ha as the potential for irrigation development suggests that NIA should evolve a long-range plan for maximum use of land and water. Limitations of land and water emphasize the need to have projects that are fully developed as soon as possible. Among the considerations should be the importance of storage reservoirs to firm up water supplies on projects. Maximum utilization of resources must include existing projects and this will require a review of their condition. The need for rehabilitation will be related to the cropping intensity and effectiveness of the system. A policy should be developed to determine the extents and rate of rehabilitation of existing projects. 68. There are two types of rehabilitation program that could be developed: (a) A minimal program which would provide additional control structures within the delivery system, repair the existing structures and clear the system. This type of program would be less effective than a full program, but would increase the cropping intensity and the areas cropped during the palagad (dry) season. (b) A fully developed rehabilitation program utilizing the water management aspects of the pilot projects. The cropping intensity could reach a higher level (148%) with no increase in the present water supply. 69. The program beyond 1975 should place more emphasis on rehabilitation of projects which are larger than 3,000 ha; the total area is 331,000 ha. Age of the projects should determine the priorities for rehabilitation, such as shown below: ANNEX 3 Page 20 ~P/1i~ /1 /1 First Priorit- Second Priority- Third Priority!-- NIA Region 1910-45 1946-50 1951-60 /1 I 6 projects/17,700 ha-- 1 project/3,100 ha 9 projects/47,000 ha II - 3 projects/29,200 ha III 4 projects/60,500 ha 4 projects/17,500 ha 16 projects/30,300 ha IV - 7 projects/7,600 ha /1 V 3 projects/14,500 ha 1 project/500 ha /1 3 projects/13,900 ha VI - 7 projects/5,600 ha VII - 1 project/1,800 ha /1 VIII -_- 2 projects/2,500 ha /1 Totals 13 projects/92,700 ha 6 projects/21,100 ha 48 projects/137,900 ha /1 Rehabilitation of projects under 3,000 ha should have special review and justification. 70. In order to improve existing projects, the following steps should be considered: (a) All newly completed projects should take immediate steps to establish an adequate O&M program. Sufficient funds, qualified personnel and equipment should be supplied for O&M. (b) Establish a phased program for turning over existing projects with area less than 3,000 ha to irrigation associations with minimal rehabilitation performed. (c) The rehabilitation program should be accelerated to provide for coverage of existing systems in the next 10 years and preferably by the end of this decade. 71. New projects should be constructed as a complete cperation unit with provisions for adequate maintenance, using water management practices. There should be an expenditure balance between rehabilitation of existing projects and construction of new projects. In the field, it is generally estimated that a "run-of-river" type project (basically a diversion dam type) can be constructed for P 1,200-1,500/ha without the construction problems involved in rehabilitation of older projects. However, these costs are only the actual field costs and do not reflect total costs of the project. A thorough rehabilitation will cost 0 800 per ha. 72. For the Philippines to maintain their existing systems, rehabilitation is necessary in order to increase the overall efficiency of the use of water. The system efficiency has been estimated at 50% and the farmer efficiency at 30% which gives an overall efficiency of 15%. Even though construction problems are encountered on rehabilitation projects, the systems must be reworked in order to be viable. If an irrigation scheme is rehabilitated on the same level of the UPRP, the present NIA potential ANNEX 3 Page 21 of 305,000 ha of regular crop and 136,000 ha of palagad crop could be increased about 10% (30,000 ha) during regular season and by 90% for the palagad season (122,000 ha), providing a water management program is followed. 73. Construction costs since 1950 have risen over 200% and to construct a project to UPRP standards, with a reservoir and water management type of operation, would cost in the vicinity of f 4,500 per ha. If 200% cropping intensity can be achieved, the cost will be reduced to I 2,250/ha. The construction of the Cotabato Project in Mindanao is estimated to cost US$4.75 million, including the power plant. The cost assignable to irrigation is US$4.5 million for 8,930 ha, equivalent to US$504 or f 3,246 per ha. It is estimated that 170% cropping intensity can be achieved at an average cost of 1 1,909 per ha. This is a direct run-of-river type of construction, involving water management practices, a more sophisticated type of irrigation system and feeder roads. 74. The total costs per ha of existing schemes with the additional costs of a rehabilitation program follow: Date of Original Rehabili- Construc- Average + tation = Total tion Cost/ha Cost/ha Cost/ha 1951-60 577 pesos 800 pesos 1,377 1960-70 784 pesos 800 pesos 1,584 1970 1,465 pesos 800 pesos 2,215 The weighted original construction and rehabilitation costs would be as follows: 1951-60 137,900 ha x 1,377 pesos = 189,888,300 pesos 1960-70 130,000 ha x 1,585 pesos = 205,920,000 pesos 1971 4,000 ha x 2,215 pesos 8,860,000 pesos 271,900 ha 404,668,300 pesos The weighted per ha cost = 1,490 pesos. Source: Table 10. With a full scale rehabilitation and water management program, the present estimated cropped area of 305,000 ha regular season and 136,000 ha pal.agad season (Table 5) could be increased to 335,000 ha regular season and 257,000 ha palagad season or an increase of 151,000 ha. Based on NIA potential of 407,000 ha for the 104 on-going schemes, the cropping intensity without rehabilitation is only 108% of the potential areas, whereas, under the rehabilitation program the cropping intensity would be 146% to 148% of the potential area. This would be an increase of 38% to 40%. ANNEX 3 Page 22 75. Reports from farmers on the Pilot Projects indicate that a water management program with the rehabilitation program would increase yields from an average of 55 to 70 cavans of palay per ha. This would be an increase of 27% in yield. 76. Without rehabilitation, the average weighted construction cost of projects since 1950 is f 689 per ha with a cropping intensity of 108%, or V 637 per ha. These projects were constructed with minimum design standards, without provision for roads, adequate control structures, drainage and normal levels of maintenance. With rehabilitation and an average cropping intensity of 146% the cost would be f 1,017 per ha. Consideration must be given to the fact that, without rehabilitation, delayed maintenance costs could average f 300 per ha without any of the attending benefits of the rehabilitation program. 77. To determine the extent of a rehabilitation program, it is assumed that new projects would be designed to meet at least the water control criteria used on UPRP. This would not necessarily include a reservoir. The magnitude of work that is needed is estimated below: (a) Total Project Potential January 1972 407,000 ha (b) Deductions Upper Pampanga Rehabilitation -46,000 ha Projects less than 3,000 ha in size -75,000 ha Project re-vitalized with maintenance only (5.5%) -23,000 ha (c) Gross Area Requiring Rehabilitation 263,000 ha (d) Based on 263,000 ha the following systems and structures are estimated: Feature Rate Length or Number Canals and laterals 1/53 ha 4,960 km Division boxes 1/10 ha 26,300 Turnouts 1/40 ha 6,580 Farm ditches 1/23 ha 11,430 km Feeder roads 1/70 ha 3,760 km Drains 1/260 ha 1,020 km End checks and farm diversion structures 1/3 ha 87,700 ANNEX 3 Page 23 (e) Total field costs using 1972 prices are estimated as follows: (i) Projects less than 3,000 ha in size 75,000 x 50 pesos = 3,750,000 (ii) Revitalized main- tenance 23,000 x 300 pesos = 6,900,000 (iii) Rehabilitation 263,000 x 800 pesos = 210,400,000 Total # 221,050,000 (f) The costs per cropped hectare can be estimated as follows: (i) Projects less than 3,000 ha = 3,750,000: (75,000 ha x 1.08 cropping intensity) = f 46/ha (ii) Revitalized Maintenance Projects = Y 6,900,000: (23,000 ha x 1.15 cropping intensity) = 1 261/ha (iii) Rehabilitation = 1 210,400,000: (263,000 ha x 1.48 cropping intensity) + 1 541/ha Constraints 78. Lack of funds precludes the application to small projects of the same criteria of preparation and evaluation used for the larger projects. The UPRP is receiving major attention, while several small, locally-financed projects are being constructed with inadequate information. Beyond the IBRD financed UPRP, the NIA-ADB Cotabato Project and the NIA-UNDP groundwater projects, the newly selected projects in "Category C" of Table 2 are limited to 20,000 ha per annum. The limitation of funds is reflected in the "pipe-line" project possibilities such as the trans-basin diversion scheme of the Casecnan River Project, the enlargement of UPRP by addition of the Canchi (12,000 ha) and Talavera (10-12,000 ha) rivers, enlargement of the Cotabato Basin (20,000 ha) and the Allah Valley Basin (35,000 ha). 79. Of particular interest in the UPRP, on which construction for 77,000 ha is proceeding, would be the addition of the Canchi and Talavera River projects. Under present funding, rehabilitation of existing scheme cannot achieve increased efficiency of water use. 80. The staff of NIA is only large enough to handle the existing program any expansion would require recruitment. Competition for personnel with private enterprise is sharp. As programs are enlarged so are the design, construction and O&M staff loads. The pay rates are not such as to attract and retain the necessary quality of personnel. Training of field staff will have to be included as a continuing process in order to keep O&M staff abreast with the desired program targets. ANNEX 3 Page 24 81. Because of the many agencies involved in utilization of water resources, it is difficult to have an orderly development without a great many conflicts and overlapping of interests. Recently (May 1972) the Irrigation Service Unit of the Bureau of Public Works and Communication has been placed under the supervision and administrative control of NIA. Flood control and drainage work is still under a separate agency (BPW). There is a need for one central agency to have administrative and technical control of water resource development. Land Classification and Water Resources 82. With the exception of the UPRP, there is virtually no detailed land classification to delineate the irrigable lands of the Philippines. There is no accurate accounting of the actual irrigated land and, therefore, design criteria for diversion and water requirements are hampered. It is essential that irrigable lands and water resources be identified and located. Land classification would permit assignment of proper priorities for development. If self-sufficiency in rice is attained in the future, other crops can be raised on lands properly identified. The standards for land classification are more detailed than for soil classification. Again, cooperation between agencies is needed to avoid duplication of efforts and field work. 83. There is an acute need to identify, locate and quantify sources of water in rivers, underground aquifers and trans-basin exchanges and to determine the quality of water. There has been, over the years, a program of stream gaging but in many areas this has been deleted from the program. To determine the land development possibilities, whether by gravity irrigation, pump irrigation or trans-basin exchange, an inventory of available water should be undertaken and documented. Project Development and Design 84. New projects should move away from the typical "run-of-the-river" type of construction to a system which will permit a more substantial improvement in cropping intensity, access for movement of farm products and improved operation and maintenance. Substantial improvement can be accomplished through design of a more reliable water supply, including sufficient control structures within the system, water management on the farms, adequate access for maintenance and proper control and operation of the systems. 85. In the design of new irrigation systems and the rehabilitation of existing systems, the control structures for both rice production and row crop production would remain the same. The water needs for a row crop would normally be smaller than for rice. During the palagad (dry) season when water supplies are restricted, a larger area of crops could be planted to row crops than to rice. ANNEX 3 Page 25 86. If existing systems are not rehabilitated, the same areas which are now irrigated under rice production could be row cropped. The main problem with the existing canal and lateral systems during low flows is the lack of sufficient control structures to maintain water at a level which can be diverted. With a minimum rehabilitation of control structures in canal and lateral systems, water could be delivered to the farm ditches. This would provide the control within the main system, but would not provide access for operation and maintenance. Two of the factors preventing good operation are the lack of access for maintaining control and lack of understanding by farmers that the turnout gates must remain in the structure. 87. Farm drainage would be required if row crop areas were to be developed. This would be a surface drainage system to remove any standing water. In rice fields where the land may be "dead-level," provisions would be required for removal of the ponded water rather than running it from field to field. 88. At the moment first priority is being given to UPRP and a few small projects. In view of the limitations of funds and personnel and of the political need for a geographic spread of projects, there is no other program the NIA can follow. In order to ensure an orderly future development of land and water resources, there is an urgent need to upgrade to feasibility standards the existing reconnissance-type reports on the major new basins in Mindanao, Luzon and Negros. 89. NIA recognizes the urgent need for both new projects and the rehabilitation of existing projects. Funds available for rehabilitation amount to only 2% of the total annual program, whereas projects having foreign assistance loans require 78% of the funds. Project in FY 1972 to 1974 include foreign loan assistance which varies from 37.5% to 62% of the total annual program. 90. Construction of new schemes along traditional lines should cease. Up-grading of existing schemes should be concurrent with the construction of new schemes. The proportion of rehabilitation in the development program should be increased and new projects should be designed on sophisticated criteria to attain maximum output. 91. The cost per unit of incremental output for rehabilitation is lower than for new projects. If rehabilitation raises cropping intensity from 1.08 to 1.48 (para 70) additional output would be about 880 kg of palay per ha. New schemes would increase output by about 1,540 kg per ha. However, the cost per ha of ? 800 for rehabilitation would give an inirest- ment of about V 0.9 for each additional kg of production, compared with r 1.4/kg for new construction at an investment cost of r 2,200/ha. 92. NIA was recently charged with the responsibility for developing a long-range program, but has not as yet had an opportunity of doing o. The only project beyond 1975 that has been considered for development is the Magat Project now under study. The ISU (NIA) pumping program has relied ANNEX 3 Page 26 upon the initiative of the farmer. The ISU program has not been systemati- cally organized, but has depended on farmers' applications for loans to purchase pumps and motors. Thereafter, field supervisors have advised on O&M of the pumps. 93. By doubling the present engineering staff the rehabilitation of existing projects could be increased from the present rate of 1,000 ha per year, to 13,000 to 15,000 ha. If the staff increase were to be accomplished within FY 1973, the effects on the program would only become apparent in FY 1976. 94. Unless staff is expanded, new construction should be reduced and relatively more emphasis should be put on rehabilitation. The problem of maintaining projects must be coordinated with O&M and rehabilitation prog- rams. Unless an effective O&M program is established immediately after rehabilitation has been completed, the funds will have been wasted. Water Management 95. The NIA water management program is divided into two groups. The first group is in the area where there is an even distribution of rainfall (Cagaycay, Binahaan and Libungan RIS) and the second group where there is a distinct difference between the rainy season and the dry season (Penaranda, Angat, Magat, Sta. Cruz and Jalour RIS). 96. Water management experiments were conducted by the UNDP ground- water project. Two pilot water management schemes were laid out at Angat River Irrigation System (ARIS) and Penaranda River Irrigation System (PRIS) under an ADB grant. The water management program required improvement of existing facilities, such as control gates, check gates, turnouts and embankments, farm ditches and drains. The program makes rotational use of water. The 140 ha Pilot farm at Angat RIS was designed for a 6-1/2 day irrigation interval during the dry season at 12 mm daily water consumption use. The rotational use during the rainy season is computed at 10 mm per day. The plan on the Upper Pampanga River Project is to have rotational areas of 50 ha with 5 rotational units, each having approximately 10 ha per unit. The proposal is to have a common irrigator for each 10 ha. There would be 3-4 farmers per 10 ha. The 10 ha unit would be irrigated on the first day and on the sixth day the water would be returned to the unit. The design is 1.5 lt/sec/ha. The water would be measured onto the rotational area through a Parshall flume. 97. A comparative water-use study was carried out on the 140 ha pilot area on the Angat RIS. The actual water applied in the pilot area was only 38% of the application to the control area, indicating that, with rotation of water and drainage, the area during the spring season (dry) could be doubled with no increase in the present rate of water diversion. The results of the trial are shown below: ANNEX 3 Page 27 Control Area Pilot Area Irrigation Water Supplies 1,125 mm 427 mm Effective Rainfall 534 mm 534 mm 1,659 mm 961 mm 98. Transferring the water use program from pilot projects to large blocks of land involves large scale training of water management technicians, rigid operational controls and education of farmers. The recommended density of farm ditches is 70 meters per ha and 25-30 meters per ha for farm drains, a reduction from non-management areas. 99. Rehabilitation of the irrigation system constitutes the major cost in a water management scheme. Whereas 0 800 has been used as the estimated cost per ha of a rehabilitation program, including water management procedures, the cost of the latter from the rotational area turnout to the individual rotational unit is estimated to be about 15% of the total. The balance involves providing controls and access which should have been included at the time of initial construction of the project. The cost for a water management program involving rehabilitation should be properly categorized to assess the benefits of water management, as compared to placing major emphasis on con- struction of new "run-of-river" diversion projections. Potential of New Project Areas 100. There is a possibility of adding two areas to the UPRP as exten- sions: (a) Canchi River Project 12,000 ha and (b) Talavera River Project 10,000 ha. The work could progress without interfering with the present work and would fit ideally with construction work on the UPRP. The prepara- tion work for a feasibility study was not completed in detail at the time of the Mission review. 101. The Magat Project in Northern Luzon is the next major undertaking of NIA, it is scheduled to take advantage of the phasing out of construction work on the UPRP. The Magat Feasibility Study is scheduled to be completed in June 1973. It is estimated that it will require 1-1.5 years to negotiate a loan and 1-1.5 years for pre-construction and design activities. NIA's plan is, hopefully, to move into construction in FY 1975. 102. The Magat Irrigation System is located in Isabela, Cagayan Valley, Northern Luzon. The system covering a potential area of 20,000 ha was com- pleted in 1957 and extended in 1967 by another 12,000 ha. The scope of the Magat Project as estimated by NIA, PES and ADB (Asian Development Bank) is as follows: ANNEX 3 Page 28 Net Irrigation Area ha Potential Area Regular Palagad Annual As of 1972 32,000 32,000 22,000 54,000 Improved water manage- ment 10,000 10,000 New expansion /1 8,000 8,000 8,000 16,000 Total after project /1 40,000 40,000 40,000 80,000 /1 Recent estimates place expansion at 68,000 ha with cropped area each season at 100,000 ha. 103. The ADB is initiating an Angat-Magat Irrigation Improvement Project. 104. The Tago River is the largest river in the province of Surigao del Sur, Mindanao. Only minimal information is available. There is a possible reservoir potential with a multipurpose benefit. A development potential of 30,000 ha (San Miguel, Tago and Tandag) is envisioned. The Tago area itself is estimated to be 15,000 ha. 105. With the exception of the Cotabato Project, being constructed with ADB assistance, the Cotabato Basin has had only reconnaissance-type surveys. The two areas on the Maganoy River which have been mentioned as future projects are: Labu Labu covering 11,000 ha and Ampatuan 7,500 ha. 106. The Cotabato Basin lies in the central part of Mindanao. About 70% of the basin is located in Cotabato Province, 23% in Bukidnon Province and remaining 7% is divided between Agusan, Lanaos and Davao Provinces. The Liguason and Libungan Marshes cover extensive portions of the lower basin. The Mindanao River is the primary drainage, with the Libungan and Pulangi Rivers in the north and Allah River in the south as the main tributaries. The gross area of the basin is in excess of 2,000,000 ha. Of this, about 1,000,000 ha are cultivated. The Cotabato plain contains about 500,000 ha. 107. Information for the basin is deficient and the irrigable areas are not defined in detail. A conservative estimate is that 100,000 ha of land could be placed under irrigation, involving flood control and reclama- tion. Sufficient water supplies appear to be available for considerably more land, but detailed studies are needed. 108. The areas of the Agusan River Basin for which feasibility studies could be completed within a relative short period are Bunawan 1/ with 6,000 ha and Compostella 1/ with 2,000 ha. It is reported that hydrology, dam 1/ NIA Program FY 74. ANNEX 3 Page 29 site, definition of canal locations and related information has been com- pleted in this area. The Sang River and the Libungan River, Mindanao,, have two project areas, reportedly with hydrology, dam site, canal locations, definition of areas and related information available, that would allow for the rapid completion of a feasibility study for Tagum 1/, covering 5,000 ha, and Sang 1/ covering 3,000 ha. A combination of Tagum, Sang, Compostella and Bunawan would provide a 16,000 ha package project. 109. A reconnaissance report has been completed on a scheme to transfer water from the Casecnan River in the Cagayan Valley to the Central Luzon Basin through a trans-basin tunnel. The NIA Board of Directors has author- ized another 1 200,000 for further study to bring additional water into Central Luzon. Reconnaissance surveys indicate that the Central Luzon basin has 875,000 ha suitable for irrigation, of which 508,000 ha do not have limitations and the Cagayan River Basin has 788,000 ha suitable for irriga- tion, with 387,000 ha with no limitations. 110. Central Luzon is considered the bread basket of the Philippines. The maximum development for potential irrigation projects within the ;area is about 300,000 ha. The trans-basin scheme would provide water for an additional 50,000 ha in Central Luzon using the Pantabangan Reservoir. A list of projects identified by NIA for seeking international financing is given in the General Report. Irrigation of Sugarcane 111. The Philippine Sugar Institute (Philsugan) and Presidential Eco- nomic Staff have made some studies of irrigation of sugarcane by gravity and by sprinklers. Emphasis has been on location of sources of groundwater and development of irrigated sugarcane. The main islands where sugarcane is grown are: Island No. of Mill Districts Luzon 9 Panay 5 Negros 15 Cebu 2 Leyte 1 Mindanao 1 112. Over the years, sugarcane yields have had a downward trend. This is mainly due to the expansion of the areas under cane in to marginal lands. The latter consist of the steeper uplands with poorer soils and less favor- able water supplies. 1/ NIA Program FY 74. ANNEX 3 Page 30 113. The area under sugarcane has risen from 216,000 ha in 1961-62 to 406,000 ha in 1970-71, an increase of 88%. During the same period, the yield per ha has declined 18%. The President's Economic Staff (PES) has proposed a project aimed at providing sprinkler irrigation for farms larger than 10 ha on Negros Occidental. This would involve 1,930 farms covering 100,000 ha. The main objective of the project is to promote high yields of cane in the low lands by providing an assured water supply, thus lessening pressure on the marginal lands. The latter would be encouraged to return to their natural state or to be developed for more suitable crops. 114. At present, only 7% of the 406,000 ha of sugarcane are irrigated and much remains to be studied before the potential for irrigation of sugar- cane can be determined. The use of sprinkler irrigation in place of gravity irrigation has the following advantages: (a) less water is required; (b) it is more suitable on rolling topography or in shallow soils; (c) costly land development is not required; (d) there is no loss of crop from ponding of irrigation water; and (e) the rate of application can be adjusted to the intake rate of the soils. 115. The annual operating costs would be in the range of V 350-700 per ha. This would include depreciation which would vary from as high as 65% of annual operating cost on small areas to 40% on larger areas. The estimated cost of systems using gasoline or diesel power for various size portable sprinkler systems are as follows (Table 12): Annual Costs per Hectare (in pesos) Size of Area Cost of System Depreciation /1 Operation Total 10 ha 37,100 Pesos 247 387 634 25 ha 53,400 Pesos 142 274 416 50 ha 88,450 Pesos 118 273 391 /1 Based on 15 years depreciation. PHILIPPINES AGRICULTURAL SECTOR SURVEY Table 1: PUMP INFORMATION (as of 4-30-72) Total 4"0 5'0 6"0 8"0 10"0 12"0 16"0 18"O 20"0 42"0 Ha % No. of pumps 4,530 2,585 2,508 602 58 41 146 23 4 10 10,5071/ 100 No. pumps older than 10 yrs 53 68 85 72 35 41 146 23 4 10 537 5.11 No. pumps 6-10 yrs old 205 237 232 203 12 - - - - - 889 8.46 No. pumps less 5 yrs old 4,272 2,280 2,191 327 11 - - - - - 9,081 86.43 Average pumps 12"0 or greater - - - - - 16.5 18.5 18.5 15.5 19 - - Estimated No. pumps operational older than 10 yrs 5 6 8 7 3 5 4 4 3 4 - - Estimated No. pumps operational 5-10 yrs (60%) 103 119 116 102 6 - - - - - - - Estimated No. pumps operational less than 5 yrs (80%) 3,418 1,824 1,753 262 9 - - - - - - - Estimated total operational pumps 3,526 1,949 1,877 371 18 5 4 4 3 4 7,761 73.86 ISU rated capacity of pump GPM 300 600 900 1,200 2,400 4,000 6,800 8,400 10,000 40,000 - - Head losses and pump-motor eff. 75% GPM 2,250 450 675 900 1,800 3,000 5,100 6,300 7,500 30,000 - - Ha/pump @35 GPM 6.4 15.75 23.6 25.7 51. 4 85.7 145.7 180 214.2 1,050 - - Est hail served per pump 6 12 19 24 50 65 120 150 180 1,000 - - Potential area served by pump size - ha 21,156 23,388 35,663 8,903 900 325 480 600 480 4,000 95,8963/ Source: Irrigation Service Unit. I/ Most probable cropped area making allowances for ditches, dikes and other related losses. 2/ Compares with 10,321 used in report as of 3-30-72. 3/ Regular crop 95,896 x 115% = 110,280 ha Palagad crop 95,896 x 40% = 38,358 ha 148,638 ha ISU Four-Year Program: FY 72 FY 73 FY 74 FY 75 Totals Number of pumps 4,697 5,422 5,589 6,088 21,787 Area in Hectares 140,910 162,660 167,670 182,310 653,610 PHILIPPINES AGRICULTURAL SECTOR SURVEY (DI~ Table 2: PRESENT IRRIGATION AREA POTENTIAL OF NIA GRAVITY SYSTEM ACCORDING TO REGIONS USED BY DEPARTMENT OF AGRICULTURAL AND NATURAL RESOURCES Estimated Percentage ofl/ Area Percent Plains Uplands Mountains Regions 1972 of Total Soil Soil Soil I City of Manila - - - - - II Ilocos 17,840 4.38 10 20 70 III Cagayan Valley 56,500 13.88 20 25 55 IV Central Luzon 186,310 45.78 65 15 20 V Southern Tagalog 40,323 9.91 20 35 45 VI Bicol 13,560 3.33 10 85 5 VII Western Visayas 52,730 12.96 25 25 50 VIII Eastern Visayas 7,680 1.89 15 40 45 IX Northern & Eastern Mindanao 6,100 1.50 15 10 75 X Southern & Western Mindanao 25,900 6.37 10 20 70 Total 406,943 100.00 Source: NIA 1/ Estimated from soils map Philippines "Map of the Republic of the Philippines," showing soils of plains, uplands and mountains. Estimation to closest 5%. PHILIPPINES AGRICULTURAL SECTOR SURVEY Table 3: IRRIGABLE AREA POTENTIAL - NEW LAND AREAS Projected Projected Intensification Program Achievement FY 72-75 Goal Program Achievement FY 76-80 Goal Balance Estimated Potential NIA NIA NIA NIA NIA NIA to Gravity Communal Pump Total Gravity Communal Pump Total Gravity Communal Pump Total Complete ha ha ha ha ha ha ha ha ha ha ha ha ha I City of Manila - - - - - - - - - - - - - II Ilocos 20,000 10,000 12,151 42,151 3,700 6,464 1,784 11,948 9,000 6,464 1,784 17,248 12,955 1/ 5 III Cayagan Valley 280,000 20,000 23,955 323,955- 4,000 2,326 3,523 9,849 15,600- 2,326 3,523 21,449 292,657 IV Central Luzon 150,000 30,000 18,475 198,4751/ 36,000-V 2,302 2,713 41,015 25,6002/ 2,302 2,713 30,615 126,845 V Southern Tagalog 80,000 20,000 33,821 133,821-/ 6,000 2,302 4,973 13,275 6,900 2,302 4,973 14,175 106,371 VI Bicol 25,000 5,000 37,130 67,130 560 1,328 5,466 7,354 4,700 1,328 5,466 11,494 48,282 VII Western Visayas 60,000 20,000 52,967 132,967 9,500 470 7,788 17,758 5,700 470 7,788 13,958 101,251 VIII Eastern Visayas 20,000 5,000 61,241 86,241 7,300 728 9,012 17,040 6,100 728 9,012 15,840 63,361 IX Northern & Eastern Mindanao 40,000 10,000 56,831 106,831 3,400 1,154 8,360 12,914 24,900 1,154 8,360 34,414 59,503 X Southern & Western Mindanao 140,000 30,000 88,470 258,4703/ 12,390Y- 2,926 13,016 28,332 26,600 2,926 13,016 42,542 187,596 Sub-Total 815,000 150,000 385,041 1,350,041 82,850 20,000 56,635 159,485 125,100 20,000 56,635 201,735 998,821 6/ NIA-NEA Projects - - - - 35,400 - - 35,400 35,400 - -- 35,400 - Total 815,000 150,000 385,041 1,350,041 118,250 20,000 56,635 194,885 160,500 20,000 56,635 237,135 918,021 Source: Mission estimates. 1/ Includes 300,000 ha of level land in Cagayan Valley. 2/ A portion of-tiese -ands wil require interbasin exchange of water. 3/ Includes development of 100,000 ha in Cotobato Basin through flood control and reclamation of marsh lands. 7/ Includes 31,000 ha of new land on upper Pampanga, 8,930 ha of Cotobato, 3,000 ha of UNDP. 5/ Includes 8,000 ha new land on Magat, Cagayan Valley; 4,600 ha new and reclaimed laud on Angst in Central Luzon. 6/ Japanese loan projects, 35,400 ha to be completed before 1975. Assume same area will be completed from 1976 to 1980. PHILIPPINES AGRICULTURAL SECTOR SURVEY Table 4: CROPPING INTENSITY FACTORS TO BE APPLIED TO POTENTIAL IRRIGABLE AREAS Probable Cropped AreA Total Potential Cropped Cropped Area + Type of Development Area Regular Palagad Area Potential A. NIA Gravity 1. Developed prior 1-1-72 406,943 305,2072/ 135,5283/ 440,735 1.08 2. Developed 1-1-72 + FY 72-75 525:1931/ 393,895- 216 208- 610,103 1.16 3. (1+2 above) + FY 76-80 685,693_4/ 514,2705 348,84O 863.138 1.26 1/ 406,943 + 82,850 ha + 35,400 2/ 525,193 x 75% 3/ 135,528 + 46,000 UPRP + (48% of 72,250 34,680) 1 525,193 + 125,100 + 35,400 5/ 673,893 x 75% 6/ 216,208 + 40,000 Magat + 4,600 Angat + (48% of 114,900=55,152) + (48% of 68,500 rehab=32,880) Note: Under footnote 3, the area computed to reflect 118,250 - 46,000 = 72,250 ha and in the same manner footnote 6 to reflect 160,500 - 45,600 = 114,900. B. NIA Pump (ISU) 4. Developed Prior 4-1-72 239,3541/ 110,280 38,358 148,638 0.62 5. Developed 4-1-72 + FY 72-75 295,989- 175,410-/ 61,012-1/ 236,422 0.80 6. (4+5 above) + FY 76-80 352,624- 240,540 83,756 324,296 0.92 1/ Increase of 56,635 2/ 110,280 + (1.15 x 56,635) 3/ 38,358 + (.4 x 56,635) 4/ Increase of 56,635 Note: Pump areas computed on increase or 56,635 x 1.15 factor for fall crop and a factor of .4 for spring crop to reflect water supply and natural attrition of pumps because of age, repairs and efficiencies. C. Communal NIA 7. Developed prior 1972 222,2101/ 133,3402/ 53 3373/ 186,677 0.84 8. Developed 1-1972 + FY 1972-75 242,2101/ 148,3402/ 62,937 3 211,277 0.87 9. (7+8 above) + FY 1976-80 262,2101 163,34?-/ 69,537- 232,877 0.89 Source: Mission Estimates. 1/ Increase of 20,000 ha 2/ Increase of 75% of 20,000 3/ Increase of 48% of 20,000 D. Communal Private 10. Developed private 1972 90,000 81,000 27,000 108,000 1.20 11. FY 1972-75 Constant 108,000 1.20 12. FY 1976-80 Constant 108,000 1.20 E. Total 13. Developed Prior to 4-1-72 959,000 630,000 254,000 884,000 0.92 14. Developed 4-1-72 + FY 72-75 1,153,000 799,000 367,000 1,166,000 1.01 15. (13 + 14) + FY 1976-80 1,391,000 999,000 529,000 1,528,000 1.10 ANNEX PHILIPPINES Table AGRICULTURAL SECTOR SURVEY Table 5: POTENTIAL IRRIGABLE AREAS - REGULAR AND PALAGAD CROP AREAS (ha) Added Area FY 72 - 75 Added Area FY 76 - 80 Areas NIA NIA NIA Totals NIA NIA NIA Totals As of Gravity Pump Communal Columns Gravity Pump Communal Columns Region Jan. 1972 21 1/ 1 - 4 3/ 1/ 5 - 9 I Manila - - - - - - - - - II Ilocos - Potential 82,866 3,700 1,784 6,464 94,814 9,000 1,784 6,464 112,062 Regular Crop 52,828 2,775 2,052 4,848 62,503 6,750 2,052 4,848 76,153 Palagad Crop 18,715 1,776 714 3,102 26,307 5,912 714 3,102 36,035 III Cagayan - Potential 128,721 4,000 3,523 2,326 138,570 7,600 3,523 2,326 152,019 Regualar Crop 85,437 3,000 4,051 1,745 94,233 5,700 4,051 1,745 105,729 Palagad Crop 43,012 1,920 1,409 1,116 47,457 7,648 1,409 1,116 57,630 IV Central Luzon - Potential 387,685 36,000 2,713 2,302 428,700 33,600 2,713 2,302 467,315 Regular Crop 253,670 27,000 3,120 1,727 285,517 25,200 3,120 1,727 315,564 Palagad Crop 97,168 41,200 1,085 1,107 140,560 46,128 1,085 1,107 188,880 V Southern Tagalog - Potential 102,003 6,000 4,973 2,302 115,278 6,900 4,973 2,302 129,453 Regular Crop 64,801 4,500 5,719 1,727 76,747 5,175 5,719 1,727 89,368 Palagad Crop 26,195 2,880 1,989 1,107 32,171 9,312 1,989 1,107 44,579 VI Bicol - Potential 45,937 560 5,466 1,328 53,291 4,700 5,466 1,328 64,785 Regular Crop 27,434 420 6,286 996 35,136 3,525 6,286 996 45,943 Palagad Crop 12,867 269 2,187 637 15,960 2,256 2,187 637 21,040 VII Western Visayas - Potential 93,469 9,500 7,788 470 111,227 5,700 7,788 470 125,185 Regular Crop 66,142 7,125 8,956 352 82,575 4,275 8,956 352 96,159 Palagad Crop 20,845 4,560 3,115 225 28,745 8,736 3,115 225 40,821 VIII Eastern Visayas - Potential 25,409 7,300 9,012 728 42,449 6,100 9,012 728 58,289 Regular Crop 17,638 5,475 10,364 546 34,023 4,575 10,364 546 49,508 Palagad Crop 7,436 3,504 3,605 349 14,894 2,928 3,605 349 21,776 IX Northern & Eastern Mindanao - Potential 42,586 3,400 8,360 1,154 55,500 24,900 8,360 1,154 89,914 Regular Crop 26,943 2,550 9,614 865 39,972 18,675 9,614 865 69,126 Palagad Crop 12,293 1,632 3,344 553 17,822 11,952 3,344 553 33,671 X Southern & Western Mindanao - Potential 49,831 12,390 13,016 2,926 78,163 26,600 13,016 2,926 120,705 Regular Crop 34,934 9,292 14,968 2,144 61,338 19,950 14,968 2,194 98,450 Palagad Crop 15,692 5,947 5,206 1,404 28,249 20,768 5,206 1,404 55,627 Source: Mission Estimates. 1/ In pump areas for fall corp, pumps were computed to supply water to 115% of designed area. 2/ For spring crop in some regions the area exceeds the potential area as result UPRP. 3/ For spring crop in some regions the area exceeds the potential area as result of Magat, Angst and rehabilitation. 4/ Does include the following areas: In addition to NIA Gravity Fall Crop Spring Crop Potential Pump Areas Developed Prior 4-1-72 110,280 ha 38,358 ha 239,354 Communal Systems NIA 133,340 ha 53,337 ha 222,210 Communal Systems Private 81,00 ha 27,000 ha 90,000 324,620 ha 118,695 ha 551,564 PHILIPPINES AGRICULTURAL SECTOR SURVEY Table 6: NIA ON-GOING SCHEMES - PROBABLE CROPPED AREAS (ha) 2/ No. of Estimated Probable- Spring Total Potential Irrigation Cropped Area Crop % of Columns Regions Area Schemes Regular Palagad Potential 3 - 4 I City of Manila - - - - - - II Ilocos 17,840 12 13,380 3,304 18.9 16,684 III Cagayan Valley 56,500 8 42,375 27,231 48.2 69,606 IV Central Luzon 186,310 28 139,733 57,329 30.8 197,062 V Southern Tagalog 40,323 17 30,242 13,788 34.2 44,030 VI Bicol 13,560 11 10,170 6,671 49.2 16,841 VII Western Visayas 52,730 9 39,547 10,638 20.2 50,185 VIII Eastern Visayas 7,680 10 5,760 3,128 40.7 8,888 IX Northern & Eastern 6,100 3 4,575 3,513 57.6 8,088 Mindanao X Southern & Western 25,900 6 19,425 9,926 38.3 29,351 Mindanao Total 406,943 104 305,2075 135,523 33.3 440,735 Source: Mission Btimates 1/ This compares to 1971 Annual Report of 313,000 ha fall crop and 130,400 ha of spring crop. i/ Allowance for roads, villages, homes, irrigation systems, drainage and non-irrigable areas, PHILIPPINES AGRICULTURAL SECTOR SURVEY Table 7: ISU PUMPS BY SIZES No. of units installed regorted by ISU as of April 30, 1972 FY 4" 5" 6"0 8"0 - i" 12"O 16" 18'0 0"w 42" Total 51-52 2 3 35 6 1 47 52-53 50 10 60 53-54 17 42 17 76 54-55 10 12 20 26 68 55-56 6 20 13 10 49 56-57 5 5 3 4 2 19 57-58 8 12 11 4 35 58-59 13 9 2 5 5 1 35 59-60 15 22 23 9 6 75 60-61 20 22 18 13 73 61-62 62-63 63-64 12 21 14 9 56 64-65 28 35 28 31 5 127 65-66 165 181 190 163 7 706 66-67 33 14 12 19 1 79 67-68 604 295 395 275 10 1,579 68-69 575 332 1,314 2,221 69-70 470 470 70-71 2,590 1,639 470 33 4,732 Totals 4,530 2,585 2,508 602 58 41 146 23 4 10 10,507 % of Total- 3. 5.7 0.6 0.4 1.4 8.2 .004 .01 Source: ISU M 1/ This compares with 10,321 as of 3-30-72. -, PHILIPPINES AGRICULTURAL SECTOR SURVEY Table 8: COMMUNAL SYSTEMS COMPLETED BY NIA REGIONS - 12-31-71 PROBABLE CROPPED AREAS No. of Irrigated Est. Probable Est. Probable Region NIA Island Systems Area Regular Cron Palagad Crop (ha) (ha) (ha) 1. NW Luzon 386 71,810 43,100 1/ 17,240 2. NE Luzon 119 25,840 15,504 6,202 3. Central Luzon, Mindaro 139 51,140 30,684 12,274 4. SE Luzon, Masbate 45 14,760 8,856 3,542 5. Panay, Negros, OCC 38 5,240 3,144 1,258 6. Negros, OR Samar Cebu 53 8,100 4,878 1,944 7. Western Mindanao 28 12,830 7,698 3,079 8. Eastern Mindanao 37 32,490 19,494 7,798 Total 845 222,210 133,358 53,337 Source: Mission Estimates 1/ Based on 60% of potential area because communal systems are to lesser degree irrigable than NIA gravity systems which was computed at 75%. Area for communal system reduced for same reasons as gravity systems with additional problems of layout of system, greater areas of non-irrigable land with average size system of only 263 ha. 2/ Est. at 40% of probable fall season area. ANNEX 3 Table 9 PHILIPPINES AGRICULTURAL SECTOR SURVEY Table 9.: SUMMARY DATA OF NATIONAL IRRIGATION SCHEMES MANAGED BY NIA - FEB. 1972 Number of Projects/Potential Area - ha (Average cost - f/ha) Area 1910-45 1946-50 1951-60 1961-70 1971 Total Region I 6/17,670 1/3,100 9/46,980 7/20,130 - 23/87,880 (323) (264) (710) (744) Region II - - 3/29,200 4/26,800 - 7/56,000 (-) (-) (681) (798) Region III 4/60,511 4/17,522 16/30,300 10/26,950 - 34/135,283 (169) (372) (585) (851) Region IV - 1/450 7/7,610 3/6,250 - 11/14,310 (-) (367) (1165) (821) Region V 3/14,510 - 3/13,880 2/24,100 - 8/52,490 (169 (-) (633) (768) Region VI - - 7/5,580 3/2,100 10/7,680 (-) (-) (755) (924) Region VII - - 1/1,800 1/4,300 2/6,100 (-) (-) (889) (827) Region VIII - - 2/2,500 4/19,400 1/4,4000 7/25,900 (-) (-) (982) (699) (1465) Total Projects 13 6 48 34 1 102 1/ Area 92,691 21,072 137,850 130,030 4,000 385,643 % of Total Area 24.0 5.5 35.8 33.7 1.0 100% Total Cost 2/ 18,384,065.81 7,506,147.65 98,854,977.74 101,970,900 5,861,700 229,577,791.20 Average Cost per hectare 2/ 198 356 577 784 1215 Source: NIA 1/ 2 projects with no date of completion record are not listed, Friar Lands 2/ Current prices. PHILIPPINES AGRICULTURAL SECTOR SURVEY Table 10 Table 10: BASIC DATA, EQUIPMENT AND COST ESTIMATES BY IRRIGATION MODEL FOR SPRINKLER IRRIGATION A. Basic Data and Information First Model Second Model Third Model Fourth Model Fifth Model 1. Land area, shape and 10 ha, rectangular 25 ha, rectangular 50 ha, rectangular 100 ha rectangular 200 ha, rectangular dimension 1,300 x 800 ft 1,800 x 1,500 ft 2,378 x 2,290 ft two of 2,378 Two of 2,378 x 2,290 2. Crop Sugarcane Sugarcane Sugarcane Sugarcane Sugarcane 3. Peak Water Requirement 0.30"/day 0.30"/day 0.30"/day 0.30"/day 0.30"/day 4. Irrigation application 75% 75% 75% 75% 75% Efficiency 5. Amount of water available 4.0" 4.0" 5.0" 5.0" 5.0" between irrigation 6. Irrigation interval 14 days 14 days 17 days 17 days 17 days 7. Depth of water required 5.33" 5.33" 6.67" 6.67" 6.67" Irrigation 8. Operating time/day 13 hours 13 hours 17 hours 17 hours 17 hours 9. Rate of flow required 350 GPM 820 GPM 1,280 GPM 1,280 GPM 1,280 GPM 10. Required HP 13.40 HP 28.3 HP 45 HP 45 HP 45 HP 11. BHP of Engine 20 HP 40 HP 65 HP 65 HP 65 HP 12. Pumping lift 151.65 ft 136.5 ft 185 ft 185 ft 185 ft 13. No. of irrigation/year 4X 4X 4X 4X 4X 14. Manhours required/year/ha 40-64 hours 40-64 hours 40-64 hours 40-64 hours 40-64 hours B. Equipment Requirements 1. Engine Diesel, 20 GPM Diesel, 40-45 BHP Diesel, 65 HP Diesel, Two HP Diesel, Four 65 HP 2. Pump Centrifugal, 6" Centrifugal, 6" Centrifugal, 6" Two centrifugal 6" Four centrifugal 6" 400 GPM, 75% eff. 900 GPM, 75% eff. 1,280 CPM, 75% eff. 1,280 GPM 75% eff. 1,280 GPM, 75% eff. 3. Pipes (Aluminum) Aluminium Aluminium Aluminium Aluminium Aluminium Mainline Portable Portable Portable Portable Portable 4. Sprinklers 50 72 112 224 448 5. Pipe lateral 10 lengths, 30's 4"0; 24 lengths, 4"0 96 lengths, 4"0 40's; 192 lengths, 4"0 40'S; 384 lengths 4"0 40'S; 40 lengths, 30's 3"0, 48 lengths, 3"O 16 iengths 5"0 40'S, 32 lengths 5"0 40'S, 64 lengths 5"0 40'S with couplings and with couplings and with couplings and with coupling and with couplings and outlet for riser of outlets for riser outlet for riser of outlets for riser of outlets for riser of 3/4" size of 3/4" size 3/4" size 3/4" size 3/4" size C. Cost Estimates: Equipment & Accessories: 1. Pump & engine $3,472 $4,010 $4,472 $8,944 $17,888 2. Pipes a) Mainline 42 141 123 266 532 b) Lateral 811 1,237 2,479 4,958 9,916 3. Sprinklers 431 1,396 4,170 8,340 16,680 4. Miscellaneous fittings, etc. 1,015 1,500 200 10,000 Total $5,771 $8,104 $13,754 $27,508 $55,016 (P37,108) (P53,395) (P88,438) (P176,876) (P353,752) Annual Operating Cost Per Model: 1. Interest on Loan - P4,453 P6,407 P10,613 P21,225 P42,450 2. Fuel-lubricant 680 1,650 4,550 9,100 18,200 3. Labor 12 570 1,425 2,850 5,700 11,400 4. Repair & Maintenance 560 800 5,400 Total F6,263 P10,282 P19,363 P38,725 P77,450 Source: Prudential Economic Staff. 1/ 12% interest for loan over a period of 10 years. 2/ Fuel consumption - 0.185 itr/HP/hour/PO.30/liter:: Oil consumption - 0.3 ltr/HP/hour/P2.00/liter 3/ Manhours at P0.80 4/ 1.5% of acquisition cost THE PROPOSED ORGANIZATION of the CABANATUAN IRRIGATION DISTRICT CABANATUAN IRRIGATION DISTRICT 27,500 HAS. IRRIGATION DISTRICT MANAGER ADMINISTRATIVE TECHNICAL STAFF STAFF ADMINISTRATIVE ASSISTANT IRRIGATION ENGINEER IRRIGATION ZONE -I IRRIGATION ZONE - Il PAMPANGA BONGABON EXTN. PAMPANGA BONGABON PAMALDAN CINCO - CIN(*O PROPER 10,050 HAS. DIVERSION CANAL NO. 2 BICAL - BICAL AREA ALIAGA AREA IRRIGATION ZONE SUPERINTENDENT L WATER MGT. DIV. 2,000 TO 2,500 HAS.- DIVISION SUPERVISOR WATERMASTER' S SECTION 500 HAS. I WATERMASTER L DDITCHTENDER'S AREA 100 HAS. DITCHTENDER World Bank - 7016 Proposed Scheme of COMBINING ROTATIONAL AREAS for OPERATION & MAINTENANCE 2 Rotational Areas 50 50 One Watertender' s HAS. HAS. Area (100 has.) 5 Watertenders' Areas 100 HAS. 100 100 One Watermaster' s HAS. HAS. Section (500 has.) 100 100 HAS. HAS. 5 Watermasters' Section 500 HAS. 500 500 HAS. HAS. One Irrigation Supervisor' s Division (2,500 has.) 500 500 HAS. HAS. World 'Bank - 7017 1BRD 10219 г18, 120, 1 2, 124, 1 6, оЕсЕмыгп гэ�z �? РНlUPPlNES CLASSIFICATION OF PROVINCES, g � г� `� g а �`� Nw1A 1RR1GAT10ryN SYSTEMS ВУ CEOGRAPHICAL REC10N5. QрΡ /"'�ND ISU PU� 1 PROJE�TS i8° 1В° 19)2 ' '_'-"-". BOlO R.l S j�SЛ� 1 C1TY OF MANILA V11. WES7EPN VISAVAS 850 г,%`.� � (/l 35, Амаn \ ��� t''?аг�'J и,посоВ 36 м[гчив 7` " ь '� о� �АвчсОсл.ст 1$U PUMP PROJECT i Аыа зг iю�io � г е ' --�--� 2 1locosNorte Зв. Capiz CUAAR.1.5���� �8dг'�® � 72� В18--'NUmbe.of.umpp.olac�sl 3 liocos5ur 39 иеугогОстдетаl 13оо ', ,,' _ i, 7 ( 1921В--- А�еп1Ма[1� д La UmOrf ао. 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И . иетидМ zamбoanga0 � МдlдтиА г s. ��•. // � Q POCiJiC 4.� �-��� � / ) �)�CUPONR.I.У Q - 1 ( ?,50в Освоп 3' n;c.1.vE , �`-�-.�клвлса_ k./.S. � о� 5оигп Л � � 7st1p � I а,э0о\U) г lt Cnina ЮUPPINE5 VP � "'- - адЕ Гд� м Рдл <i.г • • 5 5ео U ��J�'S/ 7О О С1 h �� I �SVIE АМ �1 � г�\ (7 Q �' `Г V ,^ / �� 1г Q Q�Jo�,Vr-� о р о п G� 4} ор Сеlebes Sea ' ввии 1 `�- р� МА L А У S 1-А��� ��(-(� � (��.,� � )i G�� � 1 1NDONESIA 120° 122° 124° 16° , IBRD 10220 DECEMBER 1972 PHILIPPINES UPPER PAMPANGA RIVER PROJECT TALAVERA DIVERSION DAM OPSDPNABNARA PROPOSED PANTABANGAN DAM N RIZAL DIVERSION DAM KILOMETERS RIZAL 'llH GUJIMBA MPANGA - BONGABON -' ODVERSION DAM Irrigation Districts 2__San Jose - 25,800 has. Talovero - 23,700 has. Cabonotuan - 27,500 hos. @District Off oces AlIAGA - Main Conols ABANAT Canals 153-- - Canals Under Construction Roods -t Raoilroods 0 Purnp ZARAGOSA O Prp ··z SOUTH PROJECT AREA C 5NOwN ON MAP CHINA b..tCT SEA JAEN 0 3,ply -~~ r creTeby h. SEA 12 1CA AN * AGRICULTURAL SECTOR SURVEY PHILIPPINES ANNEX 4. LIVESTOCK ANNEX 4 Page 1 PHILIPPINES AGRICULTURAL SECTOR SURVEY LIVESTOCK TABLE OF CONTENTS Page No. A. The Setting ................................................... 1 Introduction and Overview ................................ 1 Consumption Patterns ..................................... 2 B. Carabao and Cattle ............................................ 6 Dairy .................................................... 12 C. Swine, Poultry and Ruminants .................................. 15 Swine .................................................... 15 Poultry .................................................. 18 Goats and Sheep .......................................... 21 D. Livestock Marketing ........................................... 22 General .................................................. 22 Prices ................................................... 23 Poultry Marketing ........................................ 24 Conclusions .............................................. 25 E. Feed Resources ................................................ 26 Current Sources .......................................... 26 Conclusions .............................................. 29 F. Institutional Support ......................................... 30 Livestock Development and Promotion ...................... 30 Research ................................................. 31 Extension ................................................ 32 Veterinary Services ...................................... 32 Breeding Services ........................................ 32 Credit ................................................... 33 ANNEX 4 Page 2 ANNEXES Tables 1: Projected Growth Rates of Demand for Livestock Products 2: Livestock on Farm: Animal Population 3: Grazing Resources and Utilization 4: Total Number and Area of Pasture Leases and Permits. 5: Sugar By-Products for Fattening Steers - Estimated Financial Statement 6: Livestock and Poultry on Farms, by Region 7: Foreign Exchange Savings by Import Substitution of Canned Milk 8: Price Indices for Poultry on Farms, by Region 9: Shipping Costs for Hogs from Outlying Islands to Manila 10: Total Losts of Transport of Live Cattle to Manila from Mindanao and Visayas Region 11: Summary of Costs in Shipping Live flogs and Savings through Shipping Carcasses 12: Summary of Costs in Shipping Live Cattle and Savings through Shipped Carcasses 13: Average Price of Hogs per Kilo Liveweight 14: Importations of Baby Chicks 15: Production of Commercial Poultry and Swine Feeds and Estimated Corn used by Feed Mills in Philippines 16: Trends in Feed Supplies in the Philippines 17: Projected Feed Requirements for Additional Poultry and Pig Production 18: Credit Requirements for Livestock Development ANNEX 4 Page 1 PHILIPPINES AGRICULTURAL SECTOR SURVEY LIVESTOCK A. The Setting Introduction and Overview 1. The livestock subsector accounts for about 20% of the gross value of agricultural production. However, domestic meat production has not kept pace with population growth. In the current four-year agricultural devel- opment program (FY 1971-74), the Government emphasizes expansion of livestock production with initial priority on pigs and poultry as the most rapid means of increasing meat supply. The planned targets for annual growth are poultry 8.2%, pork 8%, beef 6%, and eggs 7.3%. 2. The emphasis is in line with recent developments. There has been rapid modernization of the poultry and pig industries while beef production, for the most part, has remained characterized by inefficient land use and poor management. 3. Pork is a favored meat, accounting for about 60% of total meat consumption. Total pork production is estimated at about 305,000 tons (1970). Commercial piggeries are expanding and currently account for 10% of pork production with the balance from small backyard operations. The pig population is estimated to be in the range of 6.9-8.8 million. 4. The poultry industry is moving rapidly to large commercial production units which now account for over 65% of the total chicken population. An increasing number of growers are making contractual arrange- ments with large semi-integrated feed and hatchery firms. 5. Beef production has remained rather constant over the past few years at around 100,000 tons and supply has been supplemented by imports of about 6,000-8,000 tons of frozen and canned beef. Beef is produced largely on leased Government-owned grasslands. Individual ranchers lack financing for improvement of pastures and facilities because the banks do not recognize pasture lease agreements as collateral for credit. The beef animal population is estimated at around 1.7 million cattle and 4.4 million carabaos. 6. Milk consumption is largely in the form of filled and reconstituted milk products made from imported milk powder. Demand for dairy products is increasing and value of imports rose to US$38.4 million in 1971. ANNEX 4 Page 2 7. There is no organized marketing system. Livestock marketing is predominantly handled by middlemen. Live animals are transported long distances by sea from the producing areas to Manila, resulting in excessive losses. The trend in pig and poultry marketing is towards contractual arrangements. 8. Sustained growth of meat and egg production will require expanded feed grain production. Increased yellow corn and sorghum production is given priority in the Government's agricultural development plans. 9. The Bureau of Animal Industry (BAI) within the Department of Agriculture is in charge of the Government's livestock development programs and provides veterinary services. Livestock extension and training are joint responsibilities of BAI and the Agricultural Productivity Commission (APC). Applied research is conducted by the Colleges of Agriculture and the Universities. The National Food and Agricultural Council (NFAC) coordinates and implements all Government food programs for self-sufficiency. 10. Credit for livestock development is provided by the Development Bank of the Philippines (DBP), the Private Development Corporation of the Philippines (PDCP), and the Rural Banks. Consumption Patterns 11. Meat. Except for some small minority groups, the Philippine people have no religious or ethnical restrictions on eating meat. The Filipinos are basically consumers of fish and pork. Domestic production of red meat and poultry is nearly sufficient in terms of effective demand at current prices (Table 1). Meat consumption, however, is below the require- ments for an adequately balanced diet. Table 1: FRESH MEAT SUPPLY IN THE PHILIPPINES, 1970 ('000 m tons) Local Imported Total % Beef 105.7 1.7 107.4 21.0 Pork 305.6 .2 305.8 59.7 Poultry 93.2 - 93.2 18.2 Others 5.2 .2 5.4 1.1 509.7 2.1 511.8 100.0 Source: OSCAS National Food Balance Sheet. 12. Imports of beef have been rising in recent years because of increased demand from the supermarket and restaurant trade for higher quality cuts and the shortage of fat beef trimmings to mix with local lean beef for ANNEX 4 Page 3 hamburgers. Pork sides are imported to supplement local supplies for processing into bacon. Acceptance of frozen or chilled meat is growing, but for all meats there is a strong preference for the fresh product. Table 2: AVERAGE RETAIL PRICE TRENDS IN MANILA (Pesos per kilo) % Increase 1965 1967 1969 1971 1965-71 Beef 4.58 4.96 5.18 7.17 56.5 Pork 3.76 4.27 4.41 6.45 71.5 Poultry /a 3.78 4.37 4.79 5.81 53.7 Fish /b 1.46-2.90 1.78-3.50 1.79-4.85 3.02-6.07 105.5 /a Prices per head liveweight. lb Range between lowest and highest priced species. Source: Central Bank. 13. Fish is still cheaper than meat despite a significantly faster rate of price increases compared to beef, pork and poultry. Price is the dominant influence on meat consumption among the low income groups which represent the vast majority of the population. The widening gap between fresh meat prices and income levels of the poor people has resulted in sharply increased sales volume of fish, edible slaughter by-products, and canned preparations combining meat and cereals. Table 3: FRESH MEAT AND FISH CONSUMPTION TRENDS Consumption per Capita Share of Total Consumption (kilos) (%) 1960 1970 1960 1970 Beef 2.7 2.9 8.5 6.4 Pork 10.8 8.3 34.0 18.5 Poultry 2.0 2.5 6.3 5.6 Other Meats /a .4 .5 .2 .1 Fish 15.9 30.8 50.0 68.4 Total 31.8 45.0 100.0 100.0 /a Includes horsemeat, Chevon and Mutton. Source: Mission estimates based on OSCAS National Food Balance Sheet. 14. Total meat consumed per capita appears to have increased nearly 50% in the past decade, with fish accounting for the additional consumption. Consumption of poultry meat rose at the expense of pork as poultry became ANNEX 4 Page 4 more competitive with pork in terms of availability and price. Chilled and frozen dressed broilers are rapidly gaining consumer acceptance. Poultry is expected to account for an increasing share of total meat consumption in the future. Further expansion in commercial broiler production along with improving efficiency of production and marketing can result in lower prices in relation to other livestock meats. Urban consumers are becoming more quality conscious as a result of modern supermarket merchandizing techniques. This has implications for the beef and pork industries. 15. Milk. The very limited fresh milk consumption is confined to the largest urban centers and to some rural areas where carabao milk is available. Otherwise, canned milk is consumed. Filled milk (reconstituted dry skim milk with added vegetable oil) is widely accepted because of its keeping qualities and lower price in relation to whole milk products. The country is heavily dependent on imported dairy products for direct use and for manufacturing locally into filled and reconstituted milk products. Table 4: TOTAL MILK SUPPLY ('000 m tons of fluid whole milk equivalent) 1960 1969 1970 1971 Local Production Fresh Milk 11.9 24.6 25.2 26.0 Imports Evaporated Milk 94.6 126.2 74.2 56.5 Condensed Milk 35.6 22.3 19.3 13.9 Powdered Whole Milk 33.0 222.5 217.8 189.1 Dry Skim Milk 148.1 174.0 225.4 282.0 Cheese 8.1 38.7 38.0 45.1 Other Dairy Products 2.5 22.6 11.0 11.6 Total 333.8 630.9 610.9 624.2 (kilos) Per Capita Consumption 12.2 17.6 16.6 16.4 Source: Central Bank and OSCAS. 16. It is reported that total consumption of evaporated and condensed milk dropped some 16% from 1969 to 1971 as a result of a 40% rise in milk prices during the period. 1/ Retail price ceilings were reduced by the Price 1/ "Drop in Processed Milk Demand Noted," Economic Development Foundation, Inc., Manila Times, Oct. 10, 1971, p. 16. ANNEX 4 Page 5 Control Commission in early 1972, and local dairy manufacturers report that sales of sweetened filled condensed milk are rising again. Table 5: AVERAGE YEARLY RETAIL PRICES, MANILA, 1969-71 (Pesos) - Selected Brands of Condensed and Evaporated Milk 1969 1970 1971 Condensed Dutch Boy (Local) 14 oz. 0.59 0.83 0.94 Condensed Bear Brand (Import) 14-1/2 oz. 0.75 1.03 1.25 Evaporated Darigold (Local) 14 oz. 0.50 0.64 0.69 Evaporated Carnation (Import) 14-1/2 oz. 0.77 1.00 1.06 Source: Central Bank. 17. Consumption of animal products can be expected to grow rapidly in the Philippines over the next decade. Population is assumed to grow at about 3% annually until 1975 and to average about 2.7% during 1975-80; growth of per capita income is projected at 6.4% (constant dollars). Growth rates are expected to be higher for pork and poultry meat than for beef because of the prospects for more rapid expansion in supply (Table 6). Table 6 : PROJECTED CONSUMPTION OF ANIMAL PRODUCTS, 1970-80 Consumption per Capita Total Demand (kg per capita) ('000 m tons) 1970 1975 1980 1970 1975 1980 Beef 2.9 3.3 3.8 107.4 141.0 185.5 Pork 8.3 9.6 11.3 305.8 410.1 551.5 Poultry 2.5 3.0 3.7 93.2 128.2 180.6 Eggs /a 3.0 3.4 3.8 112.3 145.2 185.5 Milk Products-16.1 18.5 20.8 610.9 790.3 1,015.1 /a Whole fluid milk equivalent. Source: Mission estimates. See Annex Table 1. 18. Protein foods of animal origin are quite sensitive to both,income levels and price. In the projections of Table 6, it has been assumed that the supply of animal products, from either domestic production or imports, will be sufficient to maintain prices at approximately current levels. For poultry, eggs and pork, it has been assumed that future expansion of supply will be from commercially oriented production and that improvements in production and marketing efficiency could have a stabilizing effect on prices. ANNEX 4 Page 6 B. Carabao and Cattle 19. Carabaos (water buffalo) are kept by small farmers for plowing rice paddies, transportation, and emergency sources of cash. The animals are maintained by grazing on fallow fields and adjacent areas with supplemental feeding of rice straw. The population was estimated at 4.4 million in 1970 (Annex Table 2). They are distributed throughout the country, with highest concentration on the Island of Luzon. Carabaos account for approx- imately two-thirds of the beef supply. Slaughter numbers are reported to have slightly increased since the recent lifting of the Government ban on slaughter of carabao under 20 years of age. Official carabeef production figures are not reliable because butchers merchandise the cheaper carabeef as cattle beef. Philippine carabaos weigh about 500 kg at maturity. The females are usually milked with average yields of around 1.5 liters per day. 20. Beef, with few exceptions, is still produced under traditional systems which are characterized by inefficient land use and poor management. The three main systems of beef production in the Philippines are: ranching on grass lands; grazing under coconuts; and backyard cattle raising. The cattle population is estimated at 1.7 million in 1970 (Annex Table 2). Cattle numbers declined drastically during the World War II period, and in 1950 were only 0.7 million, against 1.4 million before the war. Government statistics showed annual increases of 5-6% from 1954 to 1960 and 4-5% from 1961 to 1967. The figures appear high in view of the average weaning rate of around 50% and mortality rate of 3-4%. 21. The native cattle have been crossed with Indian breeds, particularly Nellore, for over three decades. American Brahmans and Indu-Brazils, introduced in recent years, are now used extensively for upgrading local crossbreds. According to one rancher who keeps performance records (on improved pasture), yearling weights averaged 135 kg for Nellores, 230 kg for Brahman and Nellore Crossbreds, and 280 kg per purebred Brahmans. Relatively small importations of Santa Gertrudis, Charolais, and Shorthorns have been made from the U.S.A. and Australia; however, upgrading with these breeds has not been successful except under improved nutrition, health and management conditions. Limited use is made of artificial insemination, and the impact on breed improvement has been negligible because of poor conception rates and lack of specific breeding programs. 22. The cattle health situation in the Philippines is relatively favorable in comparison to many tropical areas, and does not present a serious restraint to production. Rinderpest and contagious bovine pleuropneumonia are non-existent. The last incidence of foot-and-mouth disease was reported in 1956 on the Island of Luzon. The Government officially declared the Visayas and Mindanao as foot-and-mouth free areas in May 1972. Animal disease surveillance is simplified by the island structure of the country and concentration of animal movements to a northward route. Tick-borne diseases and internal parasites are prevalent. Vaccines for the other common diseases are available to the producers and are widely used. ANNEX 4 Page 7 23. The improved Zebu breeds are well adapted to the hot humid climate in the Philippines. Amount and distribution of rainfall is favorable for pasture development with the exception of the western edge of the archipelago. Average monthly rainfall in this area ranges from under 0.4 cm during January-March to over 30 cm during June-August when dry matter content of the lush grass is too low for efficient weight gains. 24. Cattle-raising in the Philippines at present is based largely on grazing native grasses and fallow cropland. The Government owns 3.5 million ha of natural grasslands, of which about 956,000 ha have been surveyed and are available solely for grazing purposes (Annex Table 3). Formation of grasslands follows clearing of forests and cropping on hill land until soils are exhausted. Vegetation consists primarily of Imperata cylindrica, Imperata exaltata and Saccharum spontaneum. Fiber content of these species increases rapidly as the vegetation matures with corresponding loss of digestible nutrients. Thus the range is burned periodically to stimulate young vegetative growth for grazing. Centrosema and other perennial legumes have been successfully established by broadcasting seed on the ashes, but the plants are usually destroyed by subsequent burning. 25. Ranching. In the Philippines, ranching consists of maintaining breeding herds for production of weaners or grassfed steers. Although some ranchers own their land or lease it from private owners, the more common practice is to utilize government-owned marginal hill land under two types of pasture grants: (a) Pasture permits for one- to two-year tenure, covering less than 100 ha, granted by the Director of Forestry after public bidding. This arrangement is now being phased out (Annex Table 4); and (b) pasture lease agreements for 10 to 25 years' tenure over areas from 100 ha up to a maximum of 2,000 ha, approved by the Secretary of Agriculture and Natural Resources after public bidding. The lease agreement is renewable for a combined period not to exceed 50 years. Public bidding is also required when leases are considered for renewal. 26. The rental fees per ha vary according to the classes of land from r 0.3 to 1 1.0 for the first three years and from ? 0.6 to f 2.0 for the succeeding years. The leaseholder is required to maintain at least one head of cattle for every 5 ha of grazing land and must not exceed the carrying capacity of the land. 27. Pasture leasing in principle should provide incentive for ranch development as capital investment in land is not required. Weaknesses in the present system and other problems, however, present serious constraints to investments in pasture improvement and equipment for increased efficiency. Leasehold agreements are not recognized as collateral for security of credit ANNEX 4 Page 8 by the banking institutions. The lack of assurance that leases will be re- newed serves as a further deterrent to investment in permanent improvements. A Livestock Industry Bill now under consideration by Congress includes provisions for recognition of lease agreements on public grazing land as collateral for credit and for automatic renewal of leases to holders upon their compliance with regulations. 28. Cattle rustling is a serious problem in certain regions, partic- ularly on ranches under absentee ownership. Squatting is also a problem on pasture lands which are not fully utilized. 29. Ranch operators may be classified under four categories. First, there are what might be called bona fide cattle raisers who depend on ranching for their living. Their holdings usually range from 200 to 1,500 ha, and are generally under-capitalized and poorly managed. Many are receptive to improved techniques but lack the collateral to secure the required credit. 30. Second, there are numbers of professional or commercial people who enjoy cattle as a hobby and invest in ranching as a hedge against inflation and to obtain tax exemption. This dynamic group is receptive to new ideas and their operations are reasonably well managed. They frequently lack experience in cattle raising and thus are vulnerable to unsound advice and to sales pressure for over-capitalizing on equipment. 31. Third, there are a number of corporations which operate large holdings up to 10,000-15,000 ha. Access to credit is not a problem for these, because many cattle companies have title to their land and usually have close association with the business community. This group is profit-oriented, and their ranches are well managed and equipped. Improved bulls are widely used and some have purebred breeding herds of Brahmans, Indu-Brazils and Santa Gertrudis. Many cattle corporations also operate crop enterprises or agri-businesses which enable them to spread some of the overhead costs. 32. Fourth, land speculators are active as holders of pasture leases, the objective being sale to cattle raisers for a profit. Cattle numbers and investment are kept at the minimum required to hold the lease. Such speculators now control about 75% of the public grazing lands under lease. The Government is very concerned about this situation, and has taken steps to cancel leases on lands which have not been reasonably developed. 33. Grazing under Coconuts. This is a rather common practice on Southern Luzon, Samar, Cebu and Mindanao. The bulk of the coconut plantings are under 50 ha each. The growers maintain small herds of cattle or carabao primarily for weed control. Calves are customarily sold at one year to 18 months of age. Some operators buy calves or yearlings for grazing and sale as three-year-olds. Little attention is given to proper management of animals, as they are considered incidental to coconut production. 34. The bulk of the grass undercover consists of coarse indigenous species. Little fertilizer is used, and average carrying capacity is a half ANNEX 4 Page 9 to one animal unit per hectare. Under these conditions, coconut production is reduced by grazing animals. 35. However, there are some cattle/coconut operations that show increased yields from coconuts as well as profitable returns from the cattle. The mission observed some holdings of 10-90 ha that were subdivided for rotational grazing. Vegetation under the coconuts consisted of para and guinea grasses overseeded with Centrosema. Annual fertilizer applications varied from 250 to 500 kg/ha and stocking rates from two to four animals per hectare. The clay loam soil was plowed annually for aeration to correct effects of tramping. Both trees and animals were in excellent condition. 36. Backyard Cattle Raising. Many small farmers throughout the country keep one to several head of breeding and/or fattening stock. Backyard fattening is highly specialized in the provinces of Batangas and Pangasinan, where many small farmers fatten one to three animals at a time. With funds from the Central Bank, local rural banks provide special short-term loans to small farmers in this endeavor. 37. "Batangas" beef has a reputation for quality in Greater Manila, where it is sought by the select meat trade. The animals are handfed with rice bran, home-grown corn, pigeon peas, ipol-ipol and napier grass or sugarcane tops. The steers are frequently used for light draft during the fattening period. They are sold at 18-24 months of age with liveweights of 325-350 kg. Weekly cattle markets are held in the two provinces. 38. Feedlot Fattening. A recent development is the fattening of cattle by agri-business corporations to utilize by-products and waste materials from their primary enterprises. The feedlots are located on the islands of Luzon, Cebu, Negros and Mindanao. The total numbers of cattle on feed at a given time is estimated to be about 6,000 head. Conclusions 39. The Government's target of a 6% annual growth in beef production appears to be in line with expected growth in demand. However, attainment is doubtful unless immediate and vigorous efforts are employed to develop a viable beef industry. Since expansion of breeding herds will be a,rela- tively slow process, a temporary increase in beef output could be obtained by slaughtering over-age, nonbreeding and cull animals, with carabaoiprobably providing the major share. Beef production will need to move to use of im- proved pastures for more efficient use of land resources. 40. Creation of a favorable climate for investing in beef development will be fundamental. There appears to be a general feeling of frustration and discouragement, particularly among larger growers, although present farmgate prices are at relatively high levels. Poor management, transport- ation difficulties, land policies, credit restriction, and various legal ANNEX 4 Page 10 and semi-legal marketing obstacles imposed by local authorities appear to be major factors underlying this situation. Proposed livestock industry legislation focuses on these problems. 41. Backyard operators and small farmers have the potential for expanding production and will do so if provided the incentive. Substantial impact on the total beef supply, however, will depend on development of viable commercial breeding herds. 42. The additional beef supply will be produced mainly from grass, cultivated forages, and waste products from other agricultural enterprises. Growing requirements of grain for human consumers and the poultry and pig industries will limit its use in beef production. The economics of fattening cattle on grain in the Philippines are not optimistic. 43. As pressures for cropping the grasslands increase, cattle enterprises will have to make do in steeper and less productive areas. Thus there is urgent need for revision of leasing and credit arrangements to provide incentives for improving productivity of hill grasslands. Research on practical techniques for managing and improving hill pastures should be initiated. Cogon grass is an aggressive competitor of the desirable species. The economics of high-cost eradication on the steeper shallow soils is questionable. The possibility of rotational burning of cogon grass to lengthen the grazing season should be investigated. Recent experiments on the use of cogon lands overseeded with legumes poses a possibility that these lands could be used for grazing under strict management. But more information is needed on management of tropical legumes to maintain stands in cogon sward. The economics of establishing relatively small improved pasture areas for supplementary grazing on the more favorable sections of hill ranches should be explored. 44. The 1.8 million ha of coconut plantings represent the greatest potential increasing total beef supply. Coconut growers, in general, hold title or long-term leases on private lands. They have more incentive for improvement than leaseholders of poor range land. The dual return from the cattle/coconut combination justifies heavy applications of fertilizer to maintain high productivity of both beef and nuts. Development and fattening of weaners on improved pastures by the predominantly small- holders of coconut lands would enable ranchers and the larger coconut growers to specialize on breeding operations. Selling of weaned calves instead of carrying steers to three-five years of age on ranches would release these lands for expansion in breeding cows. 45. Over 750,000 ha of commercial coconuts, representing 40% of the nation's total, are located on Mindanao. The Island also has extensive ranching operations in the highlands with favorable rainfall distribution for grass and legumes. Concentration of coconuts along the coast would facilitate collection of market cattle for the three new processing plants planned at Davao, General Santos, and Cagayan de Oro. A pilot cattle association composed of both ranchers and small coconut growers, is being organized in the Cagayan de Oro - Northern Bukidnon area. The rancher ANNEX 4 Page 11 members will sell their weaners to the smallholders for grazing under coconuts. The Association will coordinate the operation and handle the marketing. The plan appears to have considerable merit. 46. The second most important commercial coconut region is Eastern Visayas, with 387,000 ha in bearing trees. Distribution of rainfall in the Region is favorable for pastures. The island of Masbate is a source of steers for the Manila market. Extensive type ranching on the natural grasslands is widely practiced. Masbate appears to have potential for development as a source of weaners for the coconut growers in nearby Leyte, Samar and Bicol. 47. Extensive-type cattle ranching is established on the hills of Mindoro. Weaners and thin steers are transported across the Straits to nearby Batangas for backyard fattening or direct to the Manila market. The rainfall pattern is less favorable for pastures than most other grassland areas. Thus, sale of weaner calves would appear to be more feasible than growing two to three-year-old steers. 48. Negros appears to have potential for development of cattle production in conjunction with the sugar industry. Sugarcane plantings increased by 101,000 ha since 1965. Assuming that roughly half of the additional plantings were on marginal sugar lands, there are around 50,000 ha that could be more profitably utilized for intensive beef production. The soils are among the best available for improved pasture development in the Philippines. Competition from obnoxious grasses would be minimal as these species have been largely eliminated on sugar lands. The sugar corporations own machinery for land preparation and, in some cases, overhead irrigation equipment, thus reducing pasture development costs. One sugar grower is carrying up to seven animal units per ha on fertilized African Star grass, with overhead irrigation during the dry season. 49. By-products of the sugar industry in Negros could be utilized for fattening the yearlings before marketing. The Victorias Milling Company has conducted steer-fattening trials with molasses, cane tops, yeast cream, and copra meal. Average daily gain per steer during the 60-day feeding periods was 0.566 kg. The Corporation is expanding its feediots and estimates profit at 1 50.00 per steer (Annex Table 5). 50. Official designation of the Visayas and Mindanao as Foot-and-Mouth Disease-Free Areas in May 1972 opens the door for exporting purebred breeding cattle and swine. Enquiries from several Southeast Asian countries indicate that a sizeable market for breeding stock can be developed. It also suggests the possibility of exporting frozen pork and beef during periods of surplus production which could develop if the potential for feedgrain and forage production is fully developed. ANNEX 4 Page 12 Dairyv 51. Fresh milk production was reported to be about 25,000 m tons in 1970. 1/ The .3 kg per capita consumption as estimated by NEC, suggests that less than half of the production was consumed as fluid milk. 52. Fresh milk producers are classified into two categories - small farmers and relatively large commercial dairies. Small farmers generally milk one or two carabao or zebu cows for home consumption. Excess milk is sold to middlemen or converted to cottage cheese and milk sweets. Average production is about 1.5 liters per day, with butterfat of carabao milk in the range of 8-12%. Milking is done under very unhygienic conditions. The animals are maintained by grazing and supplemental feeding of rice straw. 53. A number of commercial dairies have been established during past years, but only a few are still in operation because of lack of market and high production costs. Fresh pasteurized milk is consumed almost entirely by upper income families in the urban centers. 54. The Magnolia Dairy, owned by San Miguel Brewery, is supplying the demand for fresh cows milk in the Greater Manila area. The daily production of about 5,000 liters is sold in cartons to supermarkets. The Del Monte Corporation near Cagayan de Oro produces about 500 liters daily for their employees, the U.P. Agricultural College at Los Banos pasteurizes and distributes their output to the University employees. Some of the other cities are served by local dairies with average daily output of 150-250 liters. Commercial dairy herds consist of Holsteins, Jerseys, Brown Swiss and their crosses with native Sindhis and Sahiwals. Yields per lactation ranges from 800 to 4,500 liters. Artificial insemination is becoming more widely practiced. Most of the commercial dairies have milking machines and pasteurizing equipment. 55. Milking cows in commercial dairies are usually fed a mixture of pre-mixed dairy concentrate, rice bran and ground corn, in addition to grazing or green chopped Napier grass. There is no evidence of feeding silage or hay. Feed costs are reported to be r .40-.50 per liter. The brewery and pineapple cannery firms are reducing their feed costs by utilizing by-products of their processing operations. 56. BAI operates a cooperative dairy plant at Santa Maria for pasteur- izing carabao milk for sale in cartons to supermarkets in Greater Manila. The Cooperative operates trucks for collection of milk in cans from its 300 members in Bulacan province. The plant is currently operating at 25% capacity. Volume varies from 800 liters a day during the season when carabaos are working in the fields to a peak of 3,000 liters when the animals are idle. Farmers receive ? 1.30 per liter and the milk is sold in 1/ Source: OSCAS National Food Balance Sheet. A4NEX 4 Page 13 1/2 pint cartons at 1 0.50 wholesale. Butter and cheese is made from the weekend collections. The plant manager advised that the plant was operating at a loss except during the peak season. 57. A subsidized carabao milk collecting scheme is operating in Laguna Province. The milk is pasteurized in the U.P. Dairy Plant in Los Banos and is sold locally as toned milk 1/ for Y 1.00 per pint. 58. Retail prices for pasteurized fresh cows milk in pint carEons were noted as follows for the following cities (May, 1972): Manila f 1.15, Cebu City 1 1.00, Bagui V 0.80 and Davao 1 0.90. 59. Over 90% of the total milk consumed is in the form of canned filled, 2/ reconstituted, 3/ or condensed milk. In 1970, it was estimated that about 20% of the canned milk was imported and the balance was manufactured locally from imported ingredients. About 25% of the locally manufactured milk was condensed milk and the balance was filled and reconstituted evaporated milk. 60. The first filled milk plant in the Philippines was established .in 1955. This product has now gained wide acceptance because of its relative low price and storage life without refrigeration. Seventy-five percent of the filled milk market is supplied by Darigold Milk Company under license and supervision of Consolidated Dairy Products Company of the USA. Other local manufacturers of filled milk are General Milk Co. (Liberty brand), an affiliate of the Carnation Company, USA; Milk Industries, Inc. (Dutch Baby brand), which operates under agreement with Cooperative Condesfabrick of Netherlands. A fourth plant (financed by Dutch interests) is expected to begin operations in June 1972. 61. Government policy has been to encourage consumption of locally manufactured canned milk by tariff constraints on imported evaporated and condensed milk and price controls on the local products. The result has been a widening of retail price differentials (Table 5) and shifts in demand towards the local products. This is further reflected by a reduction of 52.6% in volume of imported evaporated and condensed milk from 1969 through 1971 (Table 4). Although dried skim milk imports increased 62% during the period, it represents a net import savings of US$8.3 million at present CIF prices (Annex Table 7). 1/ "Toned milk" is whole milk to which reconstituted skim milk powder is added so as to reduce the fat but not the protein content. 2/ "Filled milk" is reconstituted skim milk powder with vegetable oil added. 3/ "Reconstituted milk," as used here, refers to reconstituted skim milk powder with butterfat added. ANNEX 4 Page 14 62. Ice cream consumption is growing in Manila and Cebu City. Magnolia Dairy is supplying these markets from its new modern plant near Manila. Efforts in the past to promote commercial dairying have not been successful. A dairy bill 1/ enacted by Congress in 1964 empowered the Development Bank of the Philippines (DBP) to allocate Y 110 million (US$27.5 million) in credit to be dispersed over a 10-year period, for development of dairy farms and processing plants ; the National Treasury to provide 1 15 million (US$3.75 million) as a revolving fund for dairy development under the administration of BAI; the National Treasury to provide ? 1 million in support of a UNDP/SF Project establishing and maintaining a Dairy Training and Research Institute. Only V 3,000 has been dispersed to farmers and under Y 1 million has been released from the revolving fund. This reflects a lack in demand for dairy production credit. 63. The government is reviewing its policy on dairy development. The dairy herds on the Government's stock farms have been converted to beef crossbreeding with the exception of the purebred Jersey herd at Baguio. Drafting of a new Dairy Promotion Bill began in May 1972. One approach under consideration is to expand the carabao milk collecting program through- out the country. The final outcome of this renewed effort to promote domestic fresh milk production is uncertain at this time. Conclusion 64. Imports of dairy products will continue to increase in response to growing consumer demand. Continued tariff protection to encourage local manufacture of milk from imported dry skim milk and domestic coconut oil appears justified. Filled milk is widely accepted and provides a wholesome and relatively cheap source of milk proteins. Based on 1971 export price of coconut oil (US$260/ton) and CIF value plus tariff on dry skim milk (US$380.70/ton), the competitive price of 3.5% fresh milk would be V 0.32/liter for manufacturing evaporated and condensed milk. Producers are now receiving Y 1.30/liter ex-farm for carabao milk. 65. BAI estimates that the current population of female carabaos, if milked, could supply the nation's milk requirements. Theoretically, this may be true, but the collection of milk from owners of one to three carabaos scattered over the islands presents practical problems which would confine production to the more concentrated areas. Experience with the present carabao milk collecting stations shows that wide seasonal fluctuations of supply may be expected. Toning the high butterfat carabao milk offers possibilities for extending supplies of fluid milk or the excess butterfat could be processed for butter. 66. The 7 commercial dairy farms in the Philippines today appear to be satisfying the limited effective demand for pasteurized fresh milk from moderate and high income people. Development of an expanded market for 1/ R. A. 4041, "An act to Develop the Dairy Industry." ANNEX 4 Page 15 fresh milk would require reduction in retail prices and intensive promotional campaigns. Promotion of large commercial dairy units in the past have been unsuccessful because of high production costs in modern dairies and a limited market. An approach with more likelihood of success would be a supervised colony of small family-operated dairies. Production costs could be minimal and collection would be simplified. The Thai-Danish Project in Thailand has been successful because it provided intensive training of the dairy colonists, competent technical assistance and supervision, and credit. C. Swine, Poultry and Ruminants Swine 67. Various estimates of the swine population for 1971 range from 6.4 million to over 8 million heads. The National Economic Council (NEC) estimated that 308,500 metric tons of pork were produced in 1970. Government statistics (Annex Table 2) indicate that pork production has fluctuated widely since 1960 and that pork supplies are currently below requirements. 68. The Government's swine development program plans average rates of growth for pork production of 8% per annum. The fiscal targets are listed Table 7. Pigs are distributed throughout the islands. The most important production regions are Eastern Visayas, and North and Eastern Mindanao. Pigs have traditionally been raised by backyard producers and small farmers. It was estimated in 1969 that 98% of the pigs were in herds of under 50 head. 1/ Roast suckling pig is a popular food among Filipinos. It is reported that 20-25% of the pigs farrowed in backyard operations are sold for this purpose. Table 7: PORK PRODUCTION ('000 m tons) 1968 1971 1972 1973 1974 1975 (actual) (estimates) Pork 374 391 423 456 493 532 69. There is a growing trend towards large-scale specialized hog production units. The feed milling industry estimates that 10% of the hogs marketed in FY71-72 were produced in large commercial units. Many of these units are operated by feed mills and other business firms. 70. This development is occurring most rapidly near the population centers and the sources of premixed feed. Annex Table 6 reveals some significant regional shifts in hog numbers. Central Luzon and Southern 1/ Source: BAEcon. ANNEX 4 Page 16 Tagalog made substantial gains since 1966 although most of the other regions, particularly Mindanao and Eastern Visayas, showed losses. The latter situation could be attributed to shortage of local corn and rice bran during the past two years. An implication is that the bulk of the decreased production is in the backyard production in the outlying areas. 71. Commercial hog production units range from 50 to 2,000 sows. Some of these units were established in connection with milling and other agricultural enterprises to utilize the by-products for feeding pigs. Hogs are raised in confinement on concrete under sanitary conditions and in modern housing with modifications for the tropical climate. Advanced tech- nology and management systems are practiced. 72. Rations are generally well-balanced, although some of the outlying regions have recently suffered shortages of essential additives and feedgrains. Rice, bran, corn, corn by-products and fishmeal are basic ingredients for feeding hogs in both large and small piggeries. Although pre-mixed pig starter and grower mash is rather widely used, most of the hog raisers mix their own fattening rations. Commercial piggeries usually have a hammer mill and grind corn purchased from middlemen or direct from shelling plants in the area. Many pig growers buy sun-dried fish from local sources and grind it for feeding. 73. Feed accounts for 75-85% of hog production costs. Consensus of the commercial hog growers that were visited was that production costs to market weights at present range from 9 2.95 to f 3.15. The current hog prices of 9 4.50 in manila and 9 3.60-3.70 in Visayas and Mindanao provide margin incentives for expanded production. Hogs are generally marketed at 7 to 7-1/2 months of age weighing 80-100 kg. One piggery reported that they are marketing 90 kg hogs at 6 to 6-1/2 months. 74. Hog cholera, swine plaque, swine influenza and baby pig enteritis are the most serious swine diseases. Losses from hog cholera are high except in the better managed units, where strict health measures are main- tained. BAI conducts preventative vaccination campaigns, but is hampered by shortage of field personnel for effective area control. Incidence of swine plaque has declined in recent years. Influenza is a constant hazard among closely confined pigs. Baby pig enteritis is prevalent in all types of operations and the causative agent is still unindentified. 75. Purebred boars of the improved temperate zone breeds are used to produce crossbred market hogs. The Large WhiteXDurocXLandRace triple cross is the most popular. Many of the large units maintain purebred breeding herds to produce parent stock for crossbreeding and depend on direct imports from U.S.A., Europe and Australia for improved bloodlines. Small growers obtain purebred breeding stock from the Government Breeding Stations and from large commercial growers. Data on performance of breeding boars and sows, except for some records on litter size, are non-existent in the Philippines. ANNEX 4 Page 17 76. Pork production, the most important sector in the livestock economy of the Philippines, is moving rather rapidly towards becoming a modern efficient industry. The government has wisely placed priority for development of pig and poultry production as the most rapid means of filling the meat supply deficit. The target of 8% annual growth rate for pork pro- duction is reasonable, considering that yearly fluctuations up to 8-10% in national hog numbers have occurred in the past. Achievement of the projected growth rate will depend on profit margins being available for growers and improvements in production and marketing efficiency to hold retail pork prices in line with consumer demand. 77. Pork is universally accepted with consumption limited primarily by retail price levels, availability of supply and consumer purchasing- power. The geography of the Philippines is uniquely favorable for elimin- ation of some swine diseases on an area basis. The country may have the potential for achieving self-sufficiency in feedgrains to support a greatly expanded pork industry. 78. The most critical constraint to growth in pork output is a lack of dependable sources of basic feeds accompanied by rising feed prices. Early progress in the Government Feed Grain Program, along with improvement in grain handling, storage and distribution in the outlying areas, will be essential. Additional sources of by-products and substitute feed crops for pigs should be explored and fully utilized. The alternative is rising imports of feedstuffs, which the Philippines can ill-afford in view of its foreign exchange situation. 79. Priority areas for pork development should coincide with the development areas for yellow corn and sorghum. The plains of Southern Cotobato in Mindanao appear to offer an ideal situation for relatively low cost production. Mindanao normally produces about four times its current requirements of corn and is a principal source for the Manila mills. Corn prices at General Santos City are usually 1 5.00 to ? 7.50 per cavan lower than in Manila. Corn growers experience frequent periods of depressed prices because of transportation bottlenecks during periods of favorable crop years. On the other hand, local pig growers experience difficulty in securing corn between harvests because of lack of storage facilities. Expansion of commercial pork production in the area would help to stabilize the local corn market and provide outlets for increased production. Devel- opment of a large viable swine industry in Southern Cotobato would require adequate drying, storage and distribution facilities, and availability of pre-mixed additives and feedgrain supplements. 80. Commercial pork production has now advanced to the point where a performance testing program is needed to identify superior boars for the A.I. Service and private breeding herds. This is essential for further improvement of breeding efficiency and the carcass quality and yield of market hogs. BAI should take the leadership in providing supervision and facilities for official boar testing stations. ANNEX 4 Page 18 81. Large commercial piggeries are expected to supply an increasing share of the pork market in the future and to exert a great impact on improvement of pork quality. There is opportunity, however, for many small producers with units of 25 sows and over if they are provided credit and technical assistance. Poultry 82. Most families in the rural area keep a few native chickens to supply meat and eggs, and any surplus is sold. From a level of around 50 million prior to the mid-1960's, numbers expanded to over 68 million following the development of commercial poultry production. A national Survey conducted in 1969 showed that about 90% of the chickens on farms were in units of over 500 birds. Commercial poultry farmers with 1,000 to over 20,000 birds are now distributed throughout the islands. 83. The large commercial poultry firms are now growing rapidly. The 1970 population estimate of 94.4 million birds includes 37.4 million on nonfarm operations. One of the firms has expanded its broiler housing capacity to 270,000 birds. Eleven large firms are now engaged in broiler and egg production. One firm owns a completely integrated complex of feed mill, breeding farm and hatchery, production units, processing plant, and retail outlets. Most of the other large firms operate feed mills and have integrated their operations to various degrees. The larger firms employ full time nutritionists and veterinarians. Many broiler and egg farmers now have contractual arrangments with feed mill-hatchery firms for feed and chick supplies, and in some cases sell their broilers to the mills. The firms give priority to contract growers in distributing feed and chicks during periods of short supply. 84. The common poultry diseases--with the exception of Newcastle disease--are effectively controlled by vaccination and management. Despite widespread preventive vaccination, mortality from the virulent oriental strain of Newcastle remains high. Since effective control measures have been developed in the United States, where this strain was introduced, the quality of vaccine and handling procedures used in the Phillipines should be investigated. 85. Nineteen commercial hatcheries are reported to be in operation at the present time, with an estimated total incubator capacity of 14 million eggs. 1/ Some of the hatcheries operate breeding farms under franchise with the best breeders of broiler and egg strains in the United States and Canada. Breeder chicks for grandparent and parent stock are imported regularly (Annex Table 14). Prices for local hatched chicks are V 1.20-1.25 for hybrid broiler chicks and r 1.25-1.75 for sexed day-old egg strain pullets. Sexed leghorn cockered chicks are retailed to backyard operators for V 0.26. 1/ Source: Hatchery Association of the Philippines. ANNEX 4 Page 19 86. The larger hatcheries are located around Manila. Chicks are shipped by air from Manila, Cebu City and Bacolod to Visayas and Mindanao. Poultry farmers in the outlying provinces report frequent heavy losses in air shipments due to careless handling enroute and difficulty in securing chicks during the peak demand periods. 87. It is estimated that commercial broiler production now accounts for about 30% of the nation's poultry meat. Commercial production is heavily concentrated near the feed mills in Central Luzon, Southern Tagalog and Cebu. Cebu is now a surplus producer and is shipping dressed frozen broilers to Manila and Cagayan de Oro. 88. High standards of housing, feeding and management are maintained on most commercial broiler farms. The birds are marketed at eight weeks, weighing about 1.3 kg liveweight. Feed conversion ranges from 2.2 to 2.5 kg of feed for 1 kg of liveweight. Production costs are closely tied to feed prices. Growers interviewed reported total broiler production costs of V 3.40-3.80 per kg liveweight. 89. Egg production in the Philippines is highly developed. Specialized production units now supply an estimated 75% of the nation's eggs. Commercial egg production is distributed throughout the islands with heaviest concentra- tion near Greater Manila and in Cebu province. The small island of Bantayan near Cebu island is referred to as "the egg-basket" of Visayas. 90. The best foreign production strains of white leghorns are represented in the commercial flocks. Layers are housed in wire cages under open sheds with insulated roofs. The latest improved equipment and manage- ment systems have been adopted. Layers are replaced at 18 months of age and provide an important source of poultry meat. 91. Expanded commercial egg production has exerted a great market impact through quality control, price reduction and narrowing of seasonal supply fluctuations, particularly during November to February when production of native birds is lowest. Commercially produced eggs now dominate the city markets and are moving into the smaller towns. 92. There is a strong demand from fish farmers and vegetable growers for poultry droppings. Present prices average V 50.00 per ton ex-farm. This is reported to be sufficient to cover the labor costs of poultry pro- duction. Some of the larger poultry units use mechanized scrapers under slatted floors and power loading devices for loading droppings. 93. Over 2 million ducks are kept in small flocks for meat and eggs primarily in the rice production areas. Duck eggs are being supplanted by hen eggs and accounted for only 6.9% of the total egg supply in 1970. 94. Turkeys are of little importance at present, but have potential for expanded production using methods similar to commercial broiler units. ANNEX 4 Page 20 The yield of actual meat per kilo of carcass is the highest of all live- stock, including chickens, and the feed-conversion rate is second only to broilers. Marketing initially would be oriented to the hotel and restaurant trade. 95. A large commercial quail farm near Davao is raising Japanese and California quail in batteries. The firm is shipping 70,000 quail eggs by air twice weekly to Manila supermarkets and wholesale distributors. Whole- sale price of quail eggs is f 5.00 per 100 eggs and for dressed quail meat is r 8.80 per kilo. 96. The government's poultry development program planned average rates of growth for poultry meat and eggs are 8.2% and 7.3%, respectively. The physical targets are listed in Table 3. Table 8: POULTRY MEAT AND EGG PRODUCTION ('000 tons) 1968 1971 1972 1973 1974 1975 (actual) (estimated) Poultry Heat 88 89 96 104 112 121 (dressed wt) Eggs 104 106 114 122 131 141 Conclusions 97. Poultry production in the Philippines is going through stages of development similar to those experienced in the more advanced production areas of the world. Commercial production began with enterprising farmers who developed and expanded specialized production units and utilized traditional marketing channels. The trend here as elsewhere is towards larger production units, contract production, and integration of services under centralized management. The motivating force is the feed industry-- a highly competitive business that depends on large volume and small margins to survive. In order to meet competition, the mills offer various services to attract and hold customers. Creation of feed mill - hatchery - process- ing plant complexes enables the firms to spread their financial risks, and when coupled with inputs and marketing contracts with growers insures a scheduled outlet for their products. 98. Similar developments in other countries show that integrated firms rapidly gain control of the poultry meat and egg market and that independent growers generally have to secure contractual arrangements with a firm in order to market their output. This situation will likely occur in the Philippines. The alternative is producer cooperatives with their own input, processing and marketing facilities. It is doubtful if such ventures would achieve the required management expertise and scale of operations to successfully compete with the highly organized and efficient integrated firms. ANNEX 4 Page 21 99. The right kind of contracts with reliable firms can provide pro- ducers with technical assistance, dependable supply of quality inputs, and marketing security. They should be flexible so that growers who wish to limit feed mill purchases to supplements for home mixing of feed grains may participate. 100. The commercial sector has the leadership and the technical and financial resources to expand production to meet the targets set forth in the Government's expansion program. It is reasonable to expect they will be achieved if cost/price margins for growers remain favorable and retail poultry and egg prices are at levels conducive to growth in real demand. Availability and prices of feed grains will be the critical factor. 101. Poultry meat prices have risen 54% and egg prices 78% since 1965 compared to poultry feed price increases of 90% during the same period (Annex Table 8). Commercial producers have partly offset the narrowing margins by improving their production efficiency. Goats and Sheep 102. An estimated 772,000 goats are distributed throughout the islands with the greatest concentration in Southern and Western Mindanao, Central Luzon and the testern Visayas. Goat numbers are slowly increasing but they are not keeping pace with demand. Chevon (goat meat) is popular among many low income fami'ies. 103. Native goats are small hardy animals which are raised primarily for meat by villagers who keep up to 8-12 does. They are tethered and subsist on natural forage, weeds and crop residues. Goats are usually slaughtered at one-year of age averaging 15 kg liveweight. Current price for live goats is Y 35-40 per head. Production of chevon averages about 3,500 tons per year. 104. There is opportunity for expansion in backyard production of goats to increase the income of low income families. Case inputs would be confined to purchase of foundation breeding stock. Feed requirements would not compete with products for consumption by other livestock and humans. Twelve does and an average of 1.5 kids provides over ? 600 extra income per family. Upgrading the small native goat with a larger breed would increase returns per doe. The Alpine dairy breeds have not proven adaptable to local village conditions. Research is needed to test adaptability and performance of heavier breeds from other tropical countries and to determine the optimum crosses with native goats for local conditions. 105. Data on sheep numbers were discontinued after 1967, when the popu- lation declined to under 1,700 from 22,500 in 1962 (Annex Table 2). |Sheep are vulnerable to disease, parasites, and stray dogs. The hot, humid climate (with the exception of limited and relatively inacessible high altitude areas) is unfavorable for sheep production. ANNEX 4 Page 22 D. Livestock Marketing General 106. The Manila area, with its 1.4 million people and high per capita income, is the most important meat-consuming center. Here, livestock marketing is dominated by market forces, with the availability and price of pork of special importance. 107. There is no organized livestock marketing system. As a general rule, farmers sell livestock by the head at the farmgate to traders or middlemen, who provide transport to the consuming centers for resale to butchers or other middlemen. Fattened cattle from the backyard operations on Luzon are traded at the main cattle markets in Lemery and Taal (Batangas) and Urdaneta (Pangasinan). These markets also handle weaned calves from the ranches of Northern Luzon and the nearby island of Mindoro. Some of the larger farmers and livestock companies handle their own transport arrangements and sell direct to processors in the Manila area. 108. shipments of livestock from the Visayas and Mindanao to Manila involve sea shipments of up to 1500 km on inter-island general cargo vessels. The Manila price advantage justifies the transportation cost. However, loading is commonly done with large nets suspended from a hoist, and excess- ive bruises, injuries and mortality, particularly of hogs, result from this crude procedure. Some of the larger pig growers now provide their own loading crates. The larger consignors employ caretakers to accompany their hogs. Small shippers frequently pool their animals for employment of a caretaker. Liveweight shrinkage of hogs enroute is 5.5 - 20% and for cattle about 7%. 1/ This represents a substantial share of the total shipment costs (Annexes 9 and 10). 109. Slaughterhouses are located in all provisional capitals and muni- cipalities. The majority are inadequately equipped for efficient sanitary operations. The largest slaughter facility within the City of Manila (Manila Abattoir) 2/ has a daily capacity of 250 bovine animals and 2,000 hogs. The Delta Manufacturing Corp. in Makati has a capacity of 40 cattle and 150 hogs per hour, but due to financial difficulty is slaughtering only 40-50 cattle and 200 hogs per week. The Corporation formerly paid for livestock 30 days after purchase. A recent additional loan from DBP will provide a revolving fund for cash purchases which is expected to increase the volume of slaughter. The National Stockyards operated by the Greater Manila Terminal Food Market is currently slaughtering 50 head of cattle and carabaos and 4,000 hogs per week. 1/ Source: "Some Legal and Economic Aspects of Livestock Marketing," Dept. of Economics, U.P. Staff Paper Series 103, October 1970. 2/ Temporarily closed by a butchers' strike during the mission's visit. ANNEX 4 Page 23 110. Some privately owned small modern abattoirs are in operation or are being planned in the Visayas and Mindanao. The Del Monte Corp. is slaughtering cattle and hogs for its 9,000 employees in Bukidnon province. Aguinaldo Development Corporation is transporting frozen pork and beef by air from their farm near Davao to Manila at a cost of ? 0.65 per kilo. Private enter- prise in Cebu City plans to construct a modern abattoir to replace the present antiquated municipal slaughterhouse. 111. The Government is emphasizing improvement of livestock marketing as a priority for overall livestock development. A special committee set up by the National Food and Agricultural Council recommended, among other initial steps, the establishment of pilot auction markets and a study of the financial and economic feasibility of constructing small modern slaughtering and chilling facilities in the major livestock production areas. The findings of the feasibility study 1/ were published in 1971 and included recommendations for establishment of modern processing plants in nine selected locations. The recently approved IBRD Livestock Development Project includes construction of plants at three of the recommended locations - Cagayan de Oro, Davao City and General Santos. 112. Prior to Presidential Decree No. 7 (October 1, 1972), marketing of livestock and meat was characterized by numerous regulations and fees imposed by various jurisdictions which impeded the movement of livestock and meat and increased marketing costs. 113. Decree No. 7 established the National Meat Inspection Commission to provide a national meat inspection service and prescribe standards at the same time the Decree voids the inspection, licensing and other activities of sub-jurisdictions and eliminates the fees which were previously levied for these purposes. Prices 114. BAEcon collects and disseminates market prices of livestock and poultry. BAI compiles farmgate prices. A marketing unit has been established in DANR. 115. Farmgate prices frequently vary wiuhin the same province, but in general are influenced by distance from shipping points, number of middle- men involved, and availability of contracted outlets in the urban centers (Annex Table 13). The mission noted farmgate prices of live two- to three- year-old steers during May 1972 ranging from V 1.80/kg in Davao to Y 2.95/kg in Southern Tagalog. Dressed beef carcasses varied from ? 6.00/kg in Davao to ? 8.00-9.00 in Manila with Choice Batangas cuts bringing f 16.00. Live 90-100 kg market hogs ranged from r 3.60 in South Cotabato to ? 4.50 in Manila and dressed pork carcasses from ? 5.50 in Davao to P 7.50 in Ianila. 1/ "Optimum Locations and Sizes of Livestock Processing Plants in the Philippines," Dept. of Agriculture Economics, U.P. Staff Paper 108, October 1971. ANNEX 4 Page 24 116. There are no official quality grades for live animals or meats. Buyers, however, consider the condition of animals and estimated dressing yield in their negotiations with producers on per head prices. 117. The bulk of the beef and carabeef is retailed as fresh meat with or without bones with no price differential for the different cuts. The back- yard fattened "Batangas" beef usually commands a premium of f 0.6-0.7 per kilo above the retail price of grass fattened beef. Poultry Marketing 118. Poultry has traditionally been sold as live birds in public markets. The trend is toward dressed poultry, which now account for at least 40% of the sales in the larger cities. Availability of improved broilers is beginning to create consumer appreciation for quality. 119. The broiler industry is moving towards integration of the hatching, growing, processing, and marketing functions under centralized management. One firm is now completely integrated, including operation of its own retail outlets. Other large firms are operating complete production units in addition to handling the marketing of broilers from their contract growers. An even flow of birds to the processing plants is essential for successful plant operation. Contract production provides a means of coordinating pro- duction and marketing schedules among growers. The economies of scale and marketing efficiency achieved through integration should eventually result in lower prices to the consumer provided that feed prices are kept in line. 120. Poultry meat prices are normally lowest during April to June when temperatures are highest and reach their peak during November to January. 121. There are three major systems of marketing eggs: 1. Performance of all the marketing services and sale directly to consumers. Commercial producers in this category are located near urban centers and have from 500 to 6,000 layers. Prices received are usually f 0.10 - 0.25 per dozen above wholesale prices; 2. Performance of a large share of the marketing services and direct sale to supermarkets, other retail stores, and restaurants. These flocks may range from 1,500 to over 20,000 layers; and 3. Sale to wholesale buyers who pick up the eggs at the farms at regular intervals. The buyer cleans, grades and packages the eggs. Producers using this system range from small growers to large farmers with over 100,000 layers. Although prices received by producers are lowest in this system, it provides the only outlet for many producers located far from urban centers. ANNEX 4 Page 25 122. Eggs are divided into five grades according to size. Some proces- sing plants break out and freeze cracked and undergrade eggs for the in- stitutional trade. Demand for eggs and prices are highest during the cooler season from November to February, which also coincides with the period of lowest production from native chickens. Expanding commercial production is tending to narrow the seasonal price and supply fluctuations. Conclusions 123. Marketing procedures have been working reasonably well considering the long distances involved in transporting livestock and the lack of modern facilities outside of Manila. Middlemen are performing essential services at apparently reasonable commissions. In order to continue to do so, adjust- ments in the marketing system will be essential in developing an efficient livestock industry to meet the growing needs for animal products. The com- mercial poultry and pig industries are beginning to by-pass traditional mar- keting channels through direct marketing and various contractual arrangements. 124. The most critical constraint to development of an efficient live- stock marketing system is transportation. Both land and sea transportation facilities must be improved before significant progress can be made towards efficient marketing. Excessive marketing costs result from transportation charges and weight shrinkage associated with long-distance live animal move- ments. 125. The most efficient system is the transport of meat from the major production areas to the large consuming centers, with live animal movements restricted to local consumption requirements (Annex Tables 11 and 12). This will require stratigically located modern slaughter and processing centers coordinated with improved highway and sea transport. A recent survey has provided some relevant data for planning such a system. 1/ 126. Planning to date has been premised on shipment of chilled carcasses in refrigerated storage units to be installed in existing general cargo vessels. While remodeling may work out, this approach appears to have cer- tain weaknesses which should be noted. First of all, most existing ships are over-age vessels designed for general cargo. Installation of refrigerated storage would entail major reorganization of cargo space, less than desirable efficiency of loading and unloading and probable undue delays at port stops enroute. Second, chilled pork has a short life before deterioration. Present shipping time from southern Mindanao leaves a narrow margin for safety. Third, air space is required between chilled carcasses. Thus they do not make efficient use of storage space. And fourth, This method requires a minimum of three loading and three unloading operations. 1/ "Optimum Locations and Sizes of Livestock Processing Plants in the Philippines," Department of Agriculture Economics, U.P. Staff Paper 108, October, 1971. ANNEX 4 Page 26 127. Containerized refrigerated units offer some distinct advantages for interchangeable meat movements by land, sea, or air. Frozen meat can be quartered and stacked for economy of space. Container units need only to be loaded at the processing plant and unloaded at destination. The units could be transported initially on the top decks of existing ships. The feasibility of this system using new shallow draft ships designed for con- tainerized refrigerated cargo on scheduled runs should be investigated. 128. Livestock growers need opportunities to sell their animals on a liveweight basis in a competitive market. Open auction markets are being set up in 4 markets in Batangas which serve large numbers of small farmers. Trading will be on a weight basis. Urdaneta (Pangasinan) also appears to be a logical location for such markets. 129. Municipal abattoirs will be remodeled or replaced to improve sani- tation and efficiency of operations. This will be accompanied by tighter supervision of butchers to improve sanitation. The National Meat Inspection Commission will prescribe standards. 130. The feasibility of livestock marketing associations should be explored as a means of concentrating sufficient livestock volume to provide bargaining power for small growers and reduce marketing costs. E. Feed Resources Current Sources 131. Poultry and swine feeds in the Philippines are basically domestic corn, by-products of local flour, rice, corn and copra mills, and imported high protein meals. Imports of animal feedstuffs, predominately protein meals, were 71,110 tons in 1971. Rising imports are inevitable unless domestic resources are substantially increased. 132. There were 27 mixed feed manufacturers operating in 1971. The larger mills offer complete lines of feeds and employ nutritionists for ration formulation and quality control. They are owned by big corporations and, with the exception of one large mill in Cebu, are located in and near Manila. Some of them also operate hatcheries, and poultry and pig production units. This concentration of the feed industry has encouraged rapid expansion of commercial poultry and pig production, particularly in Central Luzon and Southern Tagalog (Annex Table 6). 133. Installed mill capacity was reported to be about 435,000 tons in 1967 1/ (based on 300 eight-hour working days per year). There has been 1/ "Study of the Role of The Feed Mill Industry in the Development of the Swine & Poultry Industry in the Philippines," by Quizon and Bandong, 1967. ANNEX 4 Page 27 some plant expansion since that time. Utilization of plant capacity has fluctuated according to availability of raw materials, and there have been large variations in ingredient ratios. Some of the mills are now operating 16 hours per day due to recent imports of PL 480 corn. The industry claims that under-utilization of plant capacity is a result of critical shortages of corn and rice bran, rather than demand constraints. Thus, mixed feed prices have increased and frequent shortages occur at the expense of livestock growers. 134. Poultry consume about 80% of the prepared feeds and pigs account for most of the balance. Total sales volume of mixed feeds expanded from 2.7 million bags in 1961 to 6.3 million bags in 1971 (Annex Table 15). The bulk of the grain component is shipped to Manila from Mindanao and Visayas. Mixed feed for producers in these areas is backhauled at extra costs ranging from one to two pesos per bag (including sea-transport and handling charges). 135. Manufacture, importation, labelling, advertising and sale of feed are regulated by BAI (Republic Act 1556). 136. Many large poultry and swine growers mix their own rations with the exception of starters. Prepared feeds are available to small growers through dealers and cooperatives near population centers. The bulk of the small growers, however, depend on local corn and corn by-products and rice bran, and find it difficult to secure essential ingredients for balanced rations. 137. Corn. This is the basic grain constituent of feed formulations for the BAI recommended ratios, corn accounts for 52% of poultry rations and 32% of swine rations. In practice, however, the proportion of corn in rations is influenced by relationships with substitute materials. White corn is primarily used for human food and manufacture of starch; the feed industry also utilizes white corn when available. The current shortage of local corn is most acute in the yellow type, which is consumed by livestock. Imports of United States yellow dent corn under PL 480 agreements were expected to total 225,000 during calendar year 1972 for use by the feed mills and some large commercial livestock producers. Of the 143,000 tons of local corn estimated by BAI to be consumed by livestock in FY 1972-73, the feed industry claims that mills are using 63,000 tons. Current average quotations for a ton of local corn are / 450 in Cotabato, ? 550 in Cebu and Y 600 in Manila. Imported PL 480 corn is priced at ? 400 delivered at ports of entry on the major islands. The Government recognizes that feedgrain shortages will become more acute in the future and initiated a Feed Grain Expansion Program during 1970. This Program and the corn situation are discussed in the Crops Production and Marketing Annexes. 138. Sorghum. Production of sorghum was only 588 tons in FY 1971-72 and supplies are too dispersed to establish a market. Output of smallholders is purchased by local poultry and pig producers at current per kilo prices of V 0.40-0.45 in Mindanao and V 0.30 in Central Luzon. Sorghum is a new crop in the Philippines and offers great potential for closing the feedgrain ANNEX 4 Page 28 gap through adoption of new high-yielding and disease-resistant varieties. The Government is emphasizing sorghum in its Feed Grain Expansion Program. Price and Market incentives are needed to encourage farmers to raise this crop. 139. Corn Bran and Gluten Feed. These are by-products from the manu- facture of corn grits and starch. The mission estimates that the 1971 total production of corn by-products for animal feeding was 386,000 tons (based on average recovery rates for milled corn). The shortage of rice bran and corn has led to increased demand for corn by-products as a source of energy feed. Current price is f 0.40/kg, nearly double the 1970 price. 140. Rice Bran. While rice bran is the most widely used concentrate for animal feeding, statistics are not available on total production. The main reason is that bran recovered in kiskisan rice mills does not enter the commercial trade but is returned to palay growers for feeding or local sale. A reasonable estimate for total supply in FY 1970-71 is 730,000 tons (based on average milling yields and reported palay production). Rice bran normally represents 14-15% of commercial mixed-feed tonnage. Feed millers report they are using very little rice bran in 1972 because of scarcity and high prices. This situation is the result of a combination of circum- stances - reduced availability of local palay, large importations of polished rice and increased demand in the outlying areas for a substitute for scarce corn. Rice bran prices per kilo at present are f 0.41-0.47 for first grade and 35-40 for second grade. 141. Wheat Bran and Pollards. These are by-products of the modern local flour mills. Total production of 77,000 metric tons is estimated for 1971 (based on reasonable recovery rates from reported tonnage of wheat imports). An estimated 10% was exported as pollard pellets to Japan and the balance was used principally by the mixed-feed industry. 142. Soybein Meal. This is the most important source of high-protein concentrate in commercial poultry feeds and pig starters. All soybean meal is imported. Thus local prices are closely tied to world prices. Prior to 1967, soybeans were imported under the Namarco Trade Assistance Program for processing in two oil extraction plants. Local extraction ceased in 1967 when soybeans became subject to a Tariff of 60% CIF value. This is reflectel in the sharp rise of annual imports to about 65,000 tons beginning in 1968. Total import volume of all protein meals and cake has remained fairly constant during the period 1969-71. This indicates that the increasing requirements have been partially met through greater use of local protein feeds and also suggests that the protein content of home-mixed rations may have deteriorated. Local production of soybeans is neglegible and is used for human consumption. 143. Fishmeal and Meat & Bone Heal. These are the principal sources of animal proteins for poultry and pig feeds. Imports of fishmeal from Peru via Japan and meat and bone meal from Australia and New Zealand total about 10,000 m tons per year. Current price of imported fishmeal is r 1.60/.g, ANNEX 4 Page 29 and 9 1.05 for New Zealand meat and bone meal. The only sizeable fishmeal plant is operated by a tunafish cannery in Bacolod to utilize the fish waste. Fifty tons of fishmeal is produced annually at a cost of f 0.73/kg and sold locally for I 1.50/kg. 144. Many pig farmers and some poultrymen purchase local sun-dried fish for grinding and feeding. The quality varies greatly-and the supply is irregular. Prices for trash fish range from f 0.50 to ? 1.30/kg dependent on species and supply. This source is unavailable to growers in the Manila area where trash fish are used for manufacture of fish sauce. 145. Copra Meal. This is widely used as a protein concentrate by pig farmers and to a lesser degree by poultry and cattle producers. It is estimated that about 241,000 tons of copra meal and cake was available for consumption by livestock in 1970. The local product is variable in quality. Improvement in processing standards is needed to insure preservation of protein and to minimize aflotoxin content. 146. Ipil-Ipil Leafmeal. This is produced from dried leaves of Lucaena leucocepholia, a widely distributed indigenous small tree. It is comparable in protein content to alfalfa-leaf meal which it replaces in poultry rations. Current prices are t 0.25-0.27/kg for dried leaves delivered at the mills and 9 0.73/kg for the processed leafmeal. Ipil-ipil forage is used in some areas as a protein supplement for fattening cattle. The dried forage contains about 12.5% crude protein. 147. Molasses. This constitutes about 4% of the commercial mixed feed output. Present use of molasses in home-mixed rations and for cattle feeding is very limited, largely because of distribution and storage difficulties and high price in relation to feeding value. Current price is about f 450/m ton. Negros is the major production area. One of the largest sugar corporations is distilling 41% of their molasses for alcohol and yeast production. They are producing semi-solid yeast containing 9% protein at a cost of P 0.10/kg. Conclusions 148. Achievement of the Government's targets for poultry and pork production will be determined by the availability of feedgrains and mill by-products. Bran and pollards from the food grain processing mills accounted for about 80% of the grain component in concentrate feeds during 1970 (Annex Table 16). Growth prospects for production of these by- products indicate that these sources will supply only 62% of the grain requirements in 1975 and 49% in 1980 (Annex Table 17). The deficit will have to be met with corn or its equivalent if expected growth in demand for pork, poultry and eggs is to be satisfied. 149. Expanded pig and poultry production will also require increasing imports of soybean meal, fishmeal and meat and bone meal. Prospects for significant increase in domestic supplies of these protein meals during the ANNEX 4 Page 30 next few years are not bright. Quality improvement and further utilization of domestic copra meal is a possibility, but the meals with higher protein contents will be required to balance rations for poultry and young pigs. One large sugar corporation in Negros Occidental has produced dried yeast containing 45% protein from molasses on a trial basis at a cost of f 0.50 tc 0.55 per kilo. This appears to offer a reasonably priced local source of high quality protein feed. 150. The local feed milling industry has the sophistication and capacity to meet future needs for commercial feed formulations if the ingredients are available. The bulk of the feeds, however, will continue to be mixed on the farm with an increasing number of growers purchasing ready-mixed protein supplements and additives to combine with the grain components. Feed mills are better organized than individual producers to locate available supplies of ingredients. This points up the need for the establishment of regional feed mills and improvement in the grain handling, storage and dis- tribution system. F. Institutional Support Livestock Development and Promotion 151. The Bureau of Animal Industry (BAI) in the Department of Agricul- ture is in charge of the Government's livestock development and promotional progress. The National Food and Agricultural Council (NFAC) coordinates and implements all Government food programs for self-sufficiency. 152. Presidential Decree No. 7 (October 1, 1972) makes progress possible on a number of reforms which were previously under consideration. Some of the more important elements include: (a) Mandatory extending of medium- and long-term loans by government-owned or controlled lending institutions for development of livestock farms and facilities for processing and marketing animal products, including provision for suspension of repayments and restructuring of loans under certain natural disaster situations; (b) Recognition of lease contracts on pasture lands as col- lateral for medium- and long-term loans; (c) Transfer from the Bureau of Forestry (BF) to a Commission of Animal Industry of the following lands for administra- tion and control: "All leased pasture lands 180 or less in slope; All lands not yet declared as alienable or disposable which are found by BF to be 180 or less in slope; and All leased pasture lands over 180 in slope provided, that upon expiration of the lease contract the said pasture lands shall automatically revert to the ANNEX 4 Page 31 jurisdiction of BF." A special Land Classification Board will be created to classify the above lands and those lands classified as suitable for agricultural crops will be turned over to the Bureau of Lands; (d) Automatic renewal of present 10 year lease contracts for 25 years to leaseholders who have complied with contract terms. After the inventory, all new lease contracts will be for an initial term of 25 years and renewable for another 25 years; (e) Establishment of Marketing Districts upon petition of a majority of producers within areas for the purpose of improving and coordinating livestock marketing and transportation; (f) Promotion of multi-purpose cooperative societies of small livestock producers; (g) Licensing and organizing all livestock breeders by areas and breeds for operation of breeder banks. No breeder shall deal with or dispose breeder stocks not certified as breeders by the Commission; (h) Transfer of all regulatory and inspection controls on move- ment and handling of livestock and meats from local govern- ments to the Commission; and (i) Establishment of an Animal Industry Development Fund for financing livestock development and market stabilization. The Fund is to be administered in trust by the Central Bank of the Philippines. Research 153. The College of Agriculture, University of the Philippines at Los Banos, and other Universities are conducting some basic animal nutrition research. The results are published periodically in the Journal of the Philippine Society of Animal Science. The UPCA Animal Husbandry staff is well-qualified but is handicapped by inadequate research facilities. A series of economic studies in livestock marketing, recently completed by the Department of Economics, UPCA, provide useful data for use in planning development programs. 154. Research on improvement of cultivated pastures and forage crops is conducted at the BAI livestock stations and by several Universities, principally UPCA and Central Mindanao. BAI operates eight stock farms totaling about 6,500 ha. They are located on the islands of Luzon, Masbate, ANNEX 4 Page 32 Negros, Bohol and Mindanao. The station cattle are used mainly for pro- duction of breeding stock for distribution to farmers, although some cross- breeding trials are conducted. Applied research should be initiated on the BAI farms to provide much-needed data on grass fattening of steers and practical systems of herd management under local conditions. 155. Trials have been conducted on adaptability and seeding techniques for pasture legume species, but little research attention has been directed to the technical and economic problems related to improvement and utiliza- tion of natural grasslands. Intensified basic and applied research in this field will be vital for development of a viable beef industry. 156. Basic animal health research is conducted by the College of Veterinary Medicine, University of the Philippines at Quezon City, and the results are published in the Philippine Journal of Veterinary Medicine. Applied research trials are carried out by BAI. Extension 157. Most of the livestock and forage extension work is done by BAI. A little is performed by the Agricultural Productivity Commission (APC). 158. The 240 BAI livestock extension technicians operate from provincial and municipal offices and from the Government livestock farms and breeding centers. Supervisors are located in the 11 BAI regional offices. Heavy demands for the limited staff for animal health activities leave little time for assisting livestock raisers to improve their production practices. Veterinary Services 159. The Bureau provides Veterinary Services to livestock raisers through its field offices located throughout the country and diagnostic laboratories located at the regional Offices. Many of the large commercial livestock now employ full-time graduate veterinarians or call on local veterinary practitioners. 160. The manufacture, sale and importations of vaccines, serums, and related products are strictly controlled by BAI. The Bureau maintains a laboratory for preparation of certain vaccines and for testing of all commercial biological products for animal use. The veterinary services are reasonably adequate for the present situation, but will need to prepare for increased and more sophisticated needs of the growing commercial. livestock sector in the years ahead. Breeding Services 161. Artificial breeding services for pig and cattle raisers are pro- vided by BAI from 52 breeding centers distributed throughout the islands. Boars and bulls of the major breeds are maintained for semen collection. Demand for A.I. service is greatest from semi-commercial producers. Some private breeders are also importing limited quantities of semen from Europe and the United States. ANNEX 4 Page 33 Credit 162. Credit for livestock development is provided by the Development Bank of the Philippines (DBP), the Private Development Corporation of the Philippines (PDCP), and the rural banks - DBP and PDCP loan to the commercial livestock producers and related agri-business firms and the rural banks supply short-term credit to small livestock growers. 163. As a general rule, the lending institutions demand hard collateral and/or chattel mortgages on machines, equipment and livestock. Livestock growers report that the amount of credit extended in relation to collateral under existing institutional policies is insufficient to finance viable livestock projects. There is a general lack of competent technical assistance to help borrowers avoid costly mistakes in planning their live- stock projects. 164. The IBRD loan agreement of US$7.5 million, in support of the US$15.5 million Philippines Livestock Development Project, was signed in May 1972. The Project is designed to provide development credit for small livestock and poultry growers under the administration of DBP. 165. The mission estimates that additional credit requirement for livestock development to supply the projected growth in demand for meat and eggs in 1977 would be US$133 million, including US$127 million of long- term credit and US$5.9 million of short-term loans. Based on the current IBRD loan, the foreign exchange component would be about 30%. PHILIPPINES AGRICULTURAL SECTOR SURVEY Annex Table : PROJECTED GROWTH RATES OF DEMAND FOR LIVESTOCK PRODUCTS 19/0-1980 1970-75 1975-80 Annual Change Annual Change 1970 Consumption Income Elasticity in Per Capita 1975 Consumption in Per Capita 1980 Consumption Per Capita Total of Demand Consumtton Per Capita Total Consumpt on Per Capita Total (1) (2) a (3) (4) .(5) (6) (7) 11 (8) ..- (9)]v (kg/year) ('000 m tons) (%) (kg/year) ('000 m tons) (%) (kg/year) ('000 m tons) Beef 2.9 107.4 0.71 b/ 2.41 3.3 141.0 2.63 3.8 185.5 Pork 8.3 305.8 0.87 1! 2.95 9.6 410.1 3.22 11.3 551.5 Poultry 2.5 93.2 1.09 1 3.71 3.0 128.2 4.03 3.7 180.6 Eggs 3.0 112.3 0.67 ./ 2.28 3.4 145.2 2.48 3.8 185.5 Milk Products 16.6 610.9 0.63 I/ 2.14 18.5 790.3 2.33 20.8 1,015.1 (Fluid Milk Equiv.) a/ 1969 population = 35,772,000 b/ Col. (4) = (Annual % change in per capita GDP from 1970-75) x (income elasticity) = 3.4 x Col. (3). c/ Col. (5) = Col. (1) x growth factor obtained from Col. (4). d/ 1975 population is estimated at 42,718,000. e/ Col. (7) = (Annual % change in per capita GDP from 1975-80) x (income elasticity) = 3.7 x Col. (3). fI Col. (8) = Col. (5) x growth factor obtained from Col (7). j/ 1980 population in estimated at 48,804,500. h/ Coefficients based on Consumption Surveys conducted by Department of Economics, University of the Philippines, 1971. i Coefficients based on the judgment of the Mission. Source: Mission estimates. PHILIPPINES AGRICULTURAL SECTOR SURVEY Annex Table 2: LIVESTOCK ON FARM: ANIMAL POPULATION, BY KIND, 1960-1970 (Number) Year Carabao Cattle Horse Hog Goat Sheep 1960 3,696,300 1,110,500 217,400 6,572,6oo 617,100 14,800 1961 3,452,000 l,o4,700 197,300 6,191,400 532,300 20,100 1962 3,471,800 1,094,400 210,000 6,725,700 628,300 22,500 1963 3,323,100 1,197,200 220,200 6,233,700 483,500 13,600 1964 3,190,700 1,382,900 242,100 6,616,400 557,500 4,400 1965 3,345,600 1,559,9oo 264,300 6,938,500 605,500 3,300 1966 3,633,000 1,582,500 256,900 6,914,100 616,400 2,000 1967 3,926,100 1,574,8oo 243,800 5,496,700 599,000 1,700 1968 4,173,400 1,643,800 281,700 6,090,200 623,500 - 1969 4,368,700 1,628,900 295,300 6,349,700 698,300 - 1970 4,431,5oo 1,678,700 294,500 6,455,6oo 771,600 - NOTE: The reference date of animal population on farm from 1960 to 1966 is March 1; as of January 1 for the years 1967 to 1970. The series of data on sheep has been discontinued since 1968. bource: BAEcon, DANR. PHILIPPINES AGRICULTURAL SECTOR SURVEY Annex Table 3 GRAZING RESOURCES AND UTILIZATION - 1971 ('000 hectares) Luzon Mindanao Palawan Visayas Total Natural Grasslands 1/ urazing Leases 215.3 205.6 5.3 59.4 485.6 Other Open and Pasture Lands 1,180.7 727.4 63.7 1,018.6 2,990. Subtotals 1,396.0 933.0 69.0 1,078.0 3,476.o .Coconut Land Currently Grazed 2/ lo.o 331.0 6.o 441.0 Non-Grazed 491.o 428.0 524.0 1,h3.0 Subtotals 3/ 595.o 759.0 530.0 1,884.0 Totals 1,991.0 3,683.0 69.0 5,291.0 5,360.0 1/ Source: Land Uses Division, Bureau of Forestry 2/ Mission estimates based on sample survey - Barker & Nyberg, "Coconut-Cattle Enterprises in the Philippines," The Philippines Agriculturist, 52, 1, pp. 49-60, 1968. 3/ Source: BAEcon. CD PHILIPPINES AGRICULTURAL SECTOR SURVEY Annex Table _: TOTAL NUMBER AND AREA OF PASTURE LEASES AND PERMITS r: 1970 and 1971 LEASE PERMIT TOTAL 1970 1971 1970 1971 1970 1971 No. Area No. Area No. Area No. Area No. Area No. Area ha ha ha ha ha ha Mindanao 115 ),7,535 312 205,546 175 25,660 1 66 290 73,195 313 205,612 Palawan 17 4,790 15 5,286 73 8,617 - - 90 14,479 15 5,286 Visayas 87 19,6h7 127 59,431 602 28,070 1 20 689 47,717 128 59,b51 Luzon h6 129,578 520 215,306 1,126 3,371 5 314 1,572 192,949 525 215,620 PHTLIPPINES 665 201,550 974 485,569 1,976 125,718 7 400 2,641 327,268 981 485,969 Source of Data: Land Uses Division Compiled by: Forest Economics Division ANNEX 4 Table 5 PHILIPPINES AGRICULTURAL SECTOR SURVEY Annex Table 5: SUGAR BY-PRODUCTS FOR FATTENING STEERS ESTIMATED FINANCIAL STATEMENT REVENUE Sale of 228 kg Pat Steer @ 2.00 per kg liveweight 566.00 (Feeding period 120 days - av. daily gain 0.4 kg) COSTS Purchase of 180 kg thin steer @ P1.50 per kg liveweight / 270.00 Transfer certificate 2.00 Transportation 14.70 Handling 5.00 Veterinary 8.00 Labor 14.00 Depreciation and taxes 13.35 Overhead 21.95 Feed costs: 1800 kg cane tops 9 .005/kg Y 9.00 360 kg molasses @ .06/kg 21.60 24 kg copra meal @ .475/kg 11.40 120 kg yeast cream @ .10/kg 12.00 Sh.00 406.oo Net return per steer ; 50.00 Source:. Prepared by Victorias Milling Co. Based on steer-feeding trials on their sugar plantation at Victorias, Negros Occidental. PHILIPPINES AGRICULTURAL SECTOR SURVEY Annex Table 6: LIVESTOCK AND POULTRY ON FARMS, BY REGION 1966 and 1970 ('000 heads) Cagayan Central Southern Western Eastern Ilocos Valley Luzon Tagalog Bicol Visayas Visayas S & W N & E Philip- II III IV V VI VII VIII Mindanao Mindanao pines Carabao 1966 146.8 380.3 401.2 260.2 402.9 558.6 485.0 710.5 287.5 3,633.0 1970 136.7 418.8 517.1 402.7 490.1 632.2 566.5 945.2 322.2 4,431.5 Percent change -7% 10% 29% 55% 22% 13% 17% 33% 12% 22% Cattle 1966 69.6 46.3 223.8 174.1 135.8 146.8 139.5 503.9 12.7 1,582.5 1970 73.1 96.2 207.6 223.5 163.3 159.4 118.4 462.6 174.6 1,678.7 Percent change 5% 1o8r4 -7% 28% 20 9% -15% -8% 22% 6% 1966 158.1 598.9 571.3 791.2 717.3 657.5 1,b5.4 553.3 1,421.1 6,914.1 1970 124.5 609.3 713.3 925.3 755.5 753.0 1,083.3 5o6.2 985.2 6,455.6 Percent change 21%v 2% 25%o 17% 5% 15% -25% -9% -31% -7% Goats 1966 34.6 14.6 110.9 61.4 31.4 109.6 21.7 189.4 hhb8 618.4 1970 4o.7 25.5 186.8 64.1 37.6 120.6 33.2 22h.9 38.2 771.6 Percent change 18% 75% 68% 4% 11% 10% 531o 19% -15% 25% Chickens 1966 664.o 3,501.5 7,795.5 9,673.6 3,965.3 10,869.9 9,564.1 16,180.7 5,907.1 68,121.7 1970 568.2 1,748.4 9,760.7 11,719.5 2,991.0 9,228.0 6,324.0 11,571.8 3,087.2 56,998.8 Percent change -14% -50% 25% 21% -25% -15% -34% -29% -46% -16% Source: BAEcon, DANR. ANNEX 4 Table 7 PHILIPPINES AGRICULTURAL SECTOR SURVEY Annex Table 7: FOREIGN EXCHANGE SAVINGS BY IMPORT SUBSTITUTION OF CANNED MILK 1969-1971 (U.S. Dollars) 1971 Prices Condensed Milk (CIF) = $315/Ton or $0.315/kg- Evaporated Milk (CIF) = $281/Ton or $0.281/kg a Dry Skim Milk (CIF) = $353/Ton or $0.353/kga/ 1 Ton Reconstituted (3.5% BF) Milk requires 90 Kg Dry Skimkl @ $0.353 = $31.77 1 Ton Condensed Milk (Conversion 2.5) = 2.5 x $31.77 = $79.43 Cost of Dry Skim/Ton $315.00 - $79.43 = $235.57 Savings/Ton 1 Ton Evaporated Milk (Conversion Factor 2.0) = 2.0 x $31.77 = $63.54 Cost of Dry Skim/Ton $281.00 - $63.54 = $217.46 Savings/Ton Condensed Evaporated Tons Imported 1969 8,910.1 63,079.3 Tons Imported 1971-a/ 5,569.7 28,252.0 Decline in Quantity 3,340.4 34,827.3 $ Savings/Ton x $ 253.57 x $ 217.46 Totals 786,898 7,573,544 Total Import Savings $8,360,442 Source: Central Bank of the Philippines Foreign Agriculture Report No. 84, Foreign Agricultural Service, U. S. Department of Agriculture. ANNEX 4 Table8 PHILIPPINES AGRICULTURAL SECTOR SURVEY Annex Table 8 PRICE INDICES FOR POULTRY FEED, POULTRY K:T,AND EGGS, -96,-1971 (1965 = 100) Poultry Poultry Year Feed Meat Eggs 1965 100 100 100 1966 117 111 105 1967 133 116 105 1968 135 126 104 1969 139 127 101 1970 140 137 132 1971 190 154 178 Source: Mission Computations based on price data from Central Bank of the Philippines. ANNEX 4 Table 9 PHILIPPINES AGRICULTURAL SECTOR SURVEY Annex Table 9 SHIPPING COSTS FOR HOGS FROM OUTLYING ISLANDS TO MANILA Mindanao Cogayan, General Cebu - Iloilo Cotabato- de Oro 2 Davao-/ Santos Bacalod5/ Masbate Transport to Highway 3.54 2.00 to Corral or Plant 6.13 0.85 0.57 to Dock 1.38 0.42 0.76 1.10 1.34 0.91 Tong 0.08 0.16 0.17 0.02 Loading 1.14 1.88 0.42 0.98 0.50 0.64 Ship Transport 10.58 6.14 10.74 10.58 5.14 4.44 Feed Enroute 1.81 1.11 2.22 6.25 1.27 0.17 Convoy 0.53 0.94 1.19 1.34 0.72 0.54 Unloading 0.50 0.66 0.29 0.40 0.50 0.50 Delivery 0.50 0.70 1.07 1.48 0.67 0.85 Fees, Permits 0.70 1.16 0.69 0.29 0.29 1.40 Shrinkage 11.82 10.98 28.24 14.56 13.61 10.53 Total 29.04 33.66 48.63 37.15 24.04 20.57 P/kg - Manila - - Liveweight 0.44 0.49 0.76 0.43 0.32 0.39 Dressed Weight 0.63 0.70 1.09 0.62 0.46 0.55 1/ Live hog: 73 kg at farm, 66 kg in Manila. Dressed weight: 46.2 kg. 2/ Live hog: 75 kg at farm, 69 kg in Manila. Dressed weight: 44.3 kg. 3/ Live hog: 80 kg at farm, 64 kg in Manila. Dressed weight: 44.8 kg. 4/ Live hog: 91 kg at farm, 86 kg in Manila. Dressed weight: 60.2 kg. 5/ Live hog: 79 kg at farm, 74 kg in Manila. Dressed weight: 51.8 kg. 6/ Live hog: 58 kg at farm, 53 kg in Manila. Dressed weight: 37.1 kg. Source: Alunan, J. A. and Darrah, L. B., "Some Legal and Economic Aspects of Livestock Marketing"; Staff Paper Series (Survey of 18 Hog Shippers), Department of Agricultural Economics, U.P.C.A. October 1970. ANNEX 4 Table 10 PHILIPPINES AGRICULTURAL SECTOR SURVEY Annex Table 10: TOTAL COSTS OF TRANSPORT OF LIVE CATTLE TC MANILA FROM MINDANAO AND VISAYAS REGION (Desos per head) Mindanao l/ Visayas Region Transport to dock 10.09 10.00 Loading 3.39 0.52 Ship Transport 39.71 21.48 Feed en route 3.23 1.74 Conveyance 3.94 2.22 Unloading 0.83 1.26 Delivery 4.14 2.52 Fees, permits 7.15 4.26 Shrinkage 37.19 38.26 Total Cost 109.67 (US$17.13) 82.26 (US$12.85) Shipping Cost per kg - Manila Liveweight 0.36 0.34 Dressed weight 0.72 0.67 1/ Live animals of 327 kg ex-farm and 304 kg in Manila. 2/ Live animals of 263 kg ex-farm and 244 kg in Manila. Source: Alunan, J. A. and Darrah, L. B., "Some Legal and Economic Aspects of Livestock Marketing"; Staff Paper Series (Survey of 18 Hog Shippers), Department of Agricultural Economics, U.P.C.A. October 1970. AN1EX 4 Table 11 PHILIPPINES AGRICULTURAL SECTOR SURVEY Annex Table 11: SUMARY OF COSTS IN SHIPPING LIVE HOGS AND SAVINGS THROUGH SHIPPING CARCASSES Live Increased Hogs Carcasses Savings Weight P cost per kg of Carc&sR Location dressed weight 2Lk& .- (kg) Davao 1.09 0.45 0.64 59 7.7 General Santos 0.62 0.36 0.26 42 1.8 Cotabato 0.63 0.36 0.27 43 2.8 Cagayan de Oro 0.70 0.45 0.25 36 2.1 Cebu - Bacolod 0.46 0.31 0.15 33 1.4 Iloilo - Masbate 0.55 0.30 0.25 45 1.6 Source: Alunan, J. A., Collado, G. M., and Darrah, L. B., "Feasibility of a Modern Livestock Processing Plant in General Santos City," Staff Papers Series, No. 109, Department of Agricultural Economics, U.P.C.A. August, 1970. AIP7NEX 4. Table 12 PHILIPPINES AGRICULTURAL SECTOR SURVEY Annex Table 12: SUMMARY OF COSTS IN SHIPPING LIVE CATTLE AND SAVINGS THROUGH SHIPPED CARCASSES Live Increased Cattle Carcasses Savings Weight ? cost per kg of P/kg % Carcasses Location dressed weight (kg) Mindanao: with Weight Data 0.72 0.46 0.26 :36 4.3 Visayas: with Weight Data 0.67 0.41 0.26 39 4.0 Source: Alunan, J. A., Collado, G. M., and Darrah, L. B., "Feasibility of a Modern Livestock Processing Plant in General Santos City," Staff Papers Series, No. 109, Department of Agricultural Economics, U.P.C.A. August, 1970. ANNEX 4 Table 13 PHILIPPINES AGRICULTURAL SECTOR SURVEY Annex Tablel3 : AVERAGE PRICE OF HOGS PER KILO LIVEWEIGHT MAY 1970 - JULY 1971 Selected Towns Below 100 100 - 149 150 and and Cities Kilograms Kilograms Over Isabela P 1.80 P 2.60 P - Cabanatuan City 2.50 2.39 2.15 Dagupan City 2.06 2.12 2.03 Calapan 2.00 2.17 - Cebu City 2.24 2.08 1.77 Tacloban City 2.10 2.10 2.09 Cagayan de Oro 1.80 1.66 1.47 Davao 1.69 1.59 1.49 Legaspi City 1.98 1.60 - Naga City 1.78 1.92 2.09 Bacolod 2.18 2.24 2.24 Iloilo 2.00 2.20 2.18 Cotabato 1.56 1.69 1.55 San Pablo City 2.29 2.23 2.45 Tarlac 2.50 2.50 2.50 Sta. Cruz 2.33 2.50 2.52 San Fernando - 2.60 2.70 Tuguegarao 2.10 1.90 1.70 SOURCE = Bureau of Agricultural Economics (ANNEWS) ANNEX 4 Table 1 PHILIPPINES AGRICULTURAL SECTOR SURVEY Annex Table l4 : IMPORTATIONS OF BABY CHICKS, 1963-71 ('000 heads) Year Egg Type Meat Type Others Total 1963 45.2 37.6 82.8 1964 83.5 39.7 123.2 1965 76.6 31.9 108.5 1966 118.9 119.1 238.0 1967 144.0 175.0 319.0 1968 166.7 403.9 1.2 571.8 1969 102.8 217.1 2.5 322.4 1970 93.9 281.6 .1 375.6 Jan-Oct 1971 52.8 249.7 .1 302.6 Source: BAI PHILIPPINES AGRICULTURAL SECTOR SURVEY Annex Table 15: PRODUCTION OF COMMERCIAL POULTRY AND SWINE FEEDS AND ESTIMATED CORN USED BY FEED MILLS IN THE PHILIPPINES,1961-1971 Year Total Sales Volumeh/ Estimate Cor% Total In orts Net Domestic Corn (No. 45 kg Bags) (M/Tons) In Mixed Feeds- of Corn- Used By Feed Mills (OOC M/T) (OOOM/T) (000 M/T) 1961 2,759,577 124.18 48.18 2.17 46.01 1962 3,649,270 164.22 63.72 11.53 52.19 1963 3,825,584 172.15 66.79 5.41 61.38 1964 3,783,360 170.25 66.06 1.47 64.59 1965 4,506,510 202.79 78.68 .36 78.32 1966 5,115,400 230.19 89.31 .18 89.13 1967 6,067,377 273.02 105.93 6.99 98.94 1968 5,877,689 264.50 102.63 4.73 97.80 1969 7,947,933 357.66 138.77 24.94 113.83 1970 6,961,778 313.28 121.55 .06 121.49 1971 6,330,467 284.87 110.53 39.19 71.34 1/ Source - BAI 2/ Based on 38.87, Average corn component in total commercial mixed feed during 1961-65 as determined in "Study on the Role of the Feed Mill Industry in the Development of the Swine and Poultry Industry in the Philippines" by quizon and Bandong, Bai 1968. 3 / BAEcon PHILIPPINES AGRICULTURAL SECTOR SURVEY r7- Annex Table 16: TRENDS IN FEED SUPPLIES IN THE PHILIPPINES ('00 metric tons) 1960 1969 1970 Produc- Imports Total. Produc- Imports Total Produc- Imports Total tion tion tion ---------------------------------------000 metric tons---------------------------------------- Corn 263.4 263.L 280.6 280.6 272.7 .1 272M8 Corn By-Products 245.2 245.2 312.0 312.0 333.7 333.7 Rice Bran 29.2 29.2 565.5 565o5 618.0 618,o Wheat Bran and Pollards 1/ 18.9 18.9 68.5 68.5 7.0 74-0 Other Feed Grains 2.2 2.2 1.1 1.1 1.3 lo3 Copra Meal 378.0 378.0 277.1 277.1 241.2 241_2 Other Protein Meal 4.4 21.0 25.4 3.3 68.1 71.4 3.5 72.3 75.8 Molasses 7.0 7.0 15.0 15.0 16.o 16.o Ipil-Ipil 3.5 3.5 7.1 7.1 8.0 8.0 Mongo .3 .3 .2 .2 .2 .2 Coconuts 3.3 3.3 1.4 1. 1.6 1.6 Sweet Potato 62.7 62.7 35.9 35.9 34.3 34,3 Cassava 55.7 55.7 27.9 27.9 26,o 26,o Gabi 7.1 7.1 4.6 4.6 h5 4o5 Other Roots 6.2 6.2 2.7 2,7 2.6 2.6 Milled Rice 45.5 45.5 22.8 22.8 25_ 25.1 Totals 1111.5 42.1 1153.6 1556.1 137.7 1693.8 1587., 147.7 1735.1 Sources: OSCAS National Food Balance Sheet for Domestic Production of Basic Products. Central Bank Import Statistics. Mission estimates on domestic by-products based on average recovery rates. 1/ By-products of imported wheat milled in the Philiopines. PHILIPPINES AGRICULTURAL SECTOR SURVEY Annex Table 17: PROJECTED FEED REQUIREMENTS FOR ADDITIONAL POULTRY AND PIG PRODUCTION 1975-80 ('000 metric tons) 1 9 75 1 98 0 Added a/ Added - Animal Feed Components- Animal Feed Componentsb/ Products Total Corn Products Total Corn Over Feed Incl. Rice Copra Over Feed Incl. Rice Copra 1970 Required By-Prod. Bran Meal Otherc/ 1970 Required By-Prod. Bran Meal Other-c/ Poultry Meat 35.0 87.4 Broilers (33.0) (107.3).!/ (82.9) (269.4)-/ Cull Layers (2.0) (4.5) Eggs 32.9 73.2 Layers (102.4)e (227.7)Y Growing Pu lets (25.2)L/ (51.7) Breeders.& (15.0) (36.8) Total Poultry Feed 249.9 129.9 42.9 77.1 585.6 304.2 100.7 60.4 120.0 Pork 104.3 667.5 213.6 307.0 23.4 123.5 245.7 1,572.5 503.2 723.4 55.0 290.9 Total Incremental Feed 917.4 343.5 349.9 23.4 200.6 2,158.1 807.7 824.1 115.4 410.9 1970 Feed Consumption I 1,735.1 606.5 618.0 241.2 269.4 1,735.1 606.5 618.0 241.2 269.4 Total Feed Required 2,652.5 950.0 967.9 264.6 470.0 3,893.2 1,414 2 1 442.1 356.6 680.3 Projected Production 421.51. 738.0 275.5 491.8i/ 850.0 318.5 Net Balance -528.5 -229.9 10.9 -922.4 -592.1 38.1 Additional Corn Req'd 758.4 1,514.5 (Incl. Rice Bran Deficit) Source: Mission estimates based on assumption that future expansion in production will be from semi-commercial & commercial farms. a/ See Table 6, "Projected Growth Rates of Demand for Livestock Products" b/ Based on BAI formulate for poultry & pig feeds. c/ Includes high protein meals, flour & sugar mill by-products, minerals and various minor local crops. d/ 2.5 kg, feed/kg. Liveweight = 3.25 kg feed/kg dressed weight. e/ Average annual production of 225 eggs per hen. 40 kg of feed per layer/year. f/ 9 kg feed per pullet to laying age. g/ Includes both broiler and laying strains. h/ See Table 16, "Trends in Feed Supplies in the Philippines'e i/ Corn by-products only. PHILIPPINES AGRICULTURAL SECTOR SURVEY Annex Table 18 : CREDIT REQUIREMENTS FOR LIVESTOCK DEVELOPME1NT 1973 - 1977 a/ b/ Net Credit/Tonc Total Credit Requirements Additional Projected Additional Annual Capacity Long Short Production Production Production Long Short Term Term Total Required IBRD Project Required Term Term Total US$ US$ US$ Product ('000 Tons) ('000 Tons) ('000 Tons) (US$) (US$) (US$) (Millions) (Millions) (Millions) Beef 38.1 1.1 37.0 993 50 1,043 36.7 1.9 38.6 Pork 118.2 3.2 115.0 628 25 653 72.2 2.9 75.1 Poultry 40.4 5.8 34.6 Broilers (27.7) 352 19 371 9.7 .6 10.3 Cull Hens (6.9) Eggs 37.0 8.7 28.3 301 17 318 8.5 .5 9.0 Total 127.1 5.9 133.0 Sources: a/ Mission estimates of additional consumer demand for 1977 over 1972 computed from data in Livestock Annex Table 1. b/ Appraisal Report of Livestock Development Project, IBRD, April 26, 1972. c/ Mission estimates based on IBRD Livestock Development Project Costs & Production Projections. AGRICULTURAL SECTOR SURVEY PHILIPPINES ANNEX 5. FISHERIES ANNEX 5 PHILIPPINES AGRICULTURAL SECTOR SURVEY FISHERIES Table of Contents Page No. A. Present Situation ........................................... 1 Introduction ........................................... 1 Role in the Economy .................................... 1 Recent Trends in OUtput and Productivity ............... 2 B. Structure of the Commercial Fishing Industry ................ 5 Fishing Methods, Fish Types and Grounds ................ 5 Landing Facilities and Marketing ....................... 7 C. Domestic Demand Projections, 1970-80 ........................ 8 D. The Resource Base ........................................... 9 Marine ................................................. 9 Inland Fisheries ....................................... 11 E. Development Strategy ........................................ 13 F. Government Organization and Administration .................. 15 G. Investment Opportunities .................................... 17 APPENDICES Table 1: Trade in Fish and Fish Products Table 2: Number of Commercial Fishing Vessels By Tonnage Table 3: Production of Commercial Fishing Vessels by Types of Fish and Fishing Grounds Table 4: Fishponds Area and Production and Potential Area MAP Territorial Waters and Major Fishing Grounds (IBRD 10221) ANNEX 5 Page 1 PHILIPPINES AGRICULTURAL SECTOR SURVEY FISHERIES A. Present Situation Introduction 1. The Philippines Fisheries Commission (PFC) recognizes three main components of the industry: the marine fishery is divided into commercial and municipal (sustenance) fishing, and thirdly there is the inland fishpond subsector. 2. Commercial fishing involves the marine operations of vessels over 3 tons GRT mostly beyond the three-mile limit and has shown considerable progress in the past decade in increasing output by improving equipment and methods of fishing. However, the catch in recent years has fallen off and some territorial waters are apparently being overfished. 3. Municipal (and sustenance) fishing includes the activities of most engaged in the industry. They generally use traditional craft (bancas) up to 3 tons, mostly nonmechanized, and traditional methods usually within the three-mile limit. This category, which operates at low levels of produc- tivity, supplies most of the fish produced in the nation but very largely for subsistence and local consumption. At the present intensity of fishing near shore, it will become increasingly difficult to absorb more fishermen without impairing the livelihoods of those already engaged. There is some fishing using stationery traps (fish corrals). 4. Fishpond activities provide less than 10% of fish production, very largely from brackish as distinct from fresh water fishponds. The catch inland in rivers and lakes, which is largely for subsistence, is not measured by the Philippines Fisheries Commission. A rough adjustment to account for production from this source is made in the Food Balance Sheet prepared by the National Economic Council. This component has a very large potential for increasing output both by improving technology of existing fishpond culture and by development of extensive swamp areas throughout most of the Philippines. Role in the Economy 5. During the past decade, fishing output of the Philippines more than doubled (Statistical Annex, Table 3.2). Per capita consumption increased almost 50%. In contrast, output of meat (beef, pork and poultry) lagged slightly behind growth of population. In recent years, fish and ANNEX 5 Page 2 other marine products have provided about half of the animal protein con- sumed in the Philippines--as much as meat, eggs, milk and milk products combined. 6. Despite rapid increases in fish production, domestic demand has outpaced supply. Retail prices of fish have risen faster since 1960 than any other component of the retail price index of foodstuffs in Manila. The price advance in 1971 was also greater for fish than for other food categories (Statistical Annex, Table 8.2). Even so, retail prices of fish are only about half those of meats, a favorable aspect in consumer markets. 7. The Philippines run a trade deficit in fish. In 1971, exports were valued at P 40 million (about US$6.1 million) and imports at P 144 million (about US$22.2 million). Exports consist mostly of some shrimp to Japan and the U. S. - a growing item but still in quite small volume - and tuna to the U. S. Net imports represented less than 4% of the total fish supply. The heaviest imports include canned mackerel from Japan, favored because of low prices and keeping quality. Similarly, low priced imports of fishmeal from Peru have taken up most of the Philippine market for this animal feed product (Appendix Table 1). 8. Fisheries accounted for about 4% of the Gross National Product in recent years (measured in constant 1967 prices), and roughly 13% of the contribution of the agricultural sector. Employment in fisheries has been estimated at about 700,000 persons, approximating 5-1/2% of total employment. But most are small fishermen engaged in other activities such as farming and logging during considerable periods of the year. Recent Trends in Output and Productivity 9. Between 1960 and 1970, fish production increased from 445,000 tons to 989,000 tons, an overall growth rate per annum of about 8-1/2%. The relative importance of commercial fishing increased substantially over the decade, although its share actually receded in the last half of the decade as the growth rate for this component fell from 20% a year to about 5% (Table 1). In fact, production of commercial fishing vessels in 1969 and 1970 was below 1968; concurrently, the fishing fleet continued to expand in numbers and average size. The overall rate of growth for fisheries was maintained at over 8% in the 1965-70 period by acceleration of fishpond activity and municipal fishing. 1/ 1/ Although improvements are being made, fishery statistics are far from satisfactory. Municipal fishing is difficult to measure since it is substantially a subsistence activity involving large numbers of parti- cipants. Consequently, a large but unknown margin of error is involved. Even in the case of commercial fishing, for which fish catch reports are required by the Philippines Fisheries Commission and upon which fees are collected, the commission compensates for under-reporting by a factor of 4, a somewhat arbitrary procedure. ANNEX 5 Page 3 Table 1: SOURCE OF FISH OUTPUT AND GROWTH RATES (%) Fishing Percentage of Output Annual Growth Rate Category 1960 1965 1970 1960-70 1960-65 1965-70 Commercial 27.0 45.0 38.6 12.3 20.1 4.9 Municipal 59.5 45.5 51.6 6.8 2.8 10.9 Fishponds 13.5 9.5 9.8 4.9 1.0 8.8 All Fisheries 100.0 100.0 100.0 8.4 8.5 8.2 10. Most measures of productivity in commercial fishing showed significant advances during 1960-70 (Table 2). Output per fisherman rose 38% with most of the gain in the last five years. Average catch per vessel more than doubled, as compared with an increase in the average size of vessel of some 60%. Output per gross ton of vessel rose sharply between 1960 and 1965 but dropped slightly in the more recent period. This indicates that, on present fishing grounds, much of the gains in production that come from shifting to larger vessels have been realized. Further, the capacity of commercial fishing to absorb further labor is also quite limited. While employment in 1970 was twice that in 1960, there has been little increase since 1965. Table 2: PRODUCTIVITY OF COMMERCIAL FISHERIES, 1960-70 Average Thousand Number of Gross Output per Year Fishermen Vessels Tonnage Fisherman Vessel Gross Tonnage (ton) (ton) (ton) 1960 15.5 1,499 24.4 8.9 80 3.3 1965 29.9 2,393 27.6 10.0 125 4.5 1970 31.0 2,284 39.3 12.3 167 4.3 Source: Fisheries Statistics of the Philippines, 1970, 1965 and 1960. 11. It is estimated that some 500,000 persons are engaged in Municipal (and sustenance) fishing. 1/ This is not a full time occupation for most, who also engage in farming, logging and other activities. 2/ Thus, per-man 1/ Annual Report of the Commissioner of Fisheries, 1969. 2/ Russek; FAO/UNDP Fishery Project in the Philippines estimates the full time equivalent at about half, or 250,000 persons. ANNEX 5 Page 4 output in 1970 was approximately 1 ton compared with over 12 tons per man in the Commercial fishery. Although data are not available to evaluate changes in productivity in the municipal category, it is unlikely that significant changes have occurred, inasmuch as methods and equipment continue largely traditional. Apparently, there has been some increase in the number of bancas motorized, but these account for less than 50,000 of the 280,000 craft engaged in sustenance fishing. 12. Both the area and productivity of fishponds have increased, largely in the period 1965 to 1970. Table 3: AREA, YIELD AND PRODUCTION OF FISHPONDS Area in Index of Index of Index Df Year Fishponds Area Yield Yield Production Prod. ('000 ha) (kg/ha) ('000 tons) 1960 123.3 100.0 487 100.0 60.0 100.0 1965 137.2 111.3 460 94.5 63.1 105.2 1970 168.1 136.3 574 117.9 96.5 160.8 Source: Fisheries Statistics of the Philippines, 1970, 1965 and 1960. This yield compares favorably with those obtained in other countries, particularly in Indonesia, where yield runs about half that of the Philippines. The increase in yield since 1965 has been quite widespread; this is revealed by the gains in all five provinces with the largest fish- pond areas (Table 4). Table 4: YIELD OF FISHPONDS Province and Region 1965 1970 (kg/ha) (kg/ha) Iloilo, Western Visayas 504 800 Bulacan, Central Luzon 802 901 Quezon, Southern Tagalog 95 500 Zamboanga del Sur, Southwest Mindanao 96 304 Capiz, Western Visayas 503 598 Sources: Fisheries Statistics of the Philippines, 1970 and 1965. The bulk of fishponds are of brackish water--perhaps 6,000 ha are fresh- water. Output consists largely of milkfish (Bangos) and shrimp (5-10% of ANNEX 5 Page 5 the total output), both of which are favored in the market. Thus, the average value of fishpond output was P 3,350 per ton in 1971 compared with P 2,290 per ton for marine fisheries. B. Structure of the Commercial Fishing Industry Fishing Methods, Fish Types and Grounds 13. In the last 10 years, there has been a substantial reduction in the number of small vessels (less than 10 tons) and an increase in the number of vessels 70 tons or more (Appendix Table 2). Most of the fish is now caught by this latter group. Table 5: CATCH BY SIZE OF VESSEL 1970 Size of Vessel Share of Reported Catch (Tonnage) (%) 3 10 11.0 10 30 14.3 30 70 17.5 70 and over 57.2 Total 100.0 Source: Fisheries Statistics of the Philippines, 1970. 14. Most fish are caught by trawl, bagnet and purse seine, methods common to all sizes of vessels. The beach seine, gillnet and round haul are fairly well restricted to the smaller vessels, as is most fishing by hook and line. The muro-ami, a mother ship and fish carrier operation, involves the larger vessel category. Table 6: CATCH BY FISHING METHOD Fishing Method Share of Reported Catch (%) Trawl 35.5 Bagnet 32.9 Purse Seine 22.7 Muro-Ami 4.4 Hook and line 2.2 Beach Seine 1.2 Round Haul Seine 0.9 Other 0.2 Total 100.0 Source: Fisheries Statistics of the Philippines, 1970. ANNEX 5 Page 6 It should be noted that average production per vessel employing purse seine, otter trawl and bagnet declined 4%, 12% and 14%, respectively, between 1968 and 1970, although there was a distinct trend toward larger vessels using these gears. 15. The Fisheries Commission publishes production data for some 68 types of fish, but five species represent two-thirds of the total catch by commercial vessels: (a) Round scad accounted for almost 40% of the total catch in 1970. Of the increase of some 82,000 tons in total fish catch since 1965, this variety contributed 51,000 tons or almost two-thirds; (b) Slipmouth and sardines each represented 9% of the total, but in both cases the tonnage reported in 1970 was much the same as five years earlier; (c) Chub mackerel accounted for 5-1/2% in the recent year, representing an increase in production of over 15,000 tons in the 5-year period; and (d) Nemipterid catch increased about 5,000 tons between 1965 and 1970, accounting for 4-1/2% of the total in the latter year. The reported catch by principal species in the three most important fishing grounds, for 1965 and 1970, is given in Appendix Table 3. 16. Commercial vessel production of shrimp, which has a very favorabli export potential, was about the same in 1970 as in 1965. The catch of croaker, lizard fish, and anchovy recorded declines. 17. The territorial waters of the Philippines and principal fishing grounds are shown in MAP (IBRD 10221). The Sulu Sea (along Palawan Waters), the major source of round scad, provided 58% of the total fish catch in 1970 (Appendix Table 3). Production rose from 136,000 tons in 1965 to 222,000 tons in 1970. Catch in the Visayan Sea increased from 70,000 tons to 90,000 ton:, and in 1970 represented 24% of the total. Production of Manila Bay was essentially the same in 1970 as in 1965, and in the recent year accounted for about 5% of the total catch. Together, these three fishing grounds produced 87% of the total catch. 18. Most of the other fishing grounds produced less in 1970 than in 1965, with the most pronounced reductions in the relatively small area of Guimaris Strait between Panay and Negros, and in most of the waters around Luzon (particularly Sibuyan Sea, Tayabas Bay, Ragay Gulf, Lingayen Gulf, Laman Bay and San Miguel Bay). On the other hand, the fish catch increased off Southern Mindanao (Davao Gulf and Sibuguey Bay). ANNEX 5 Page 7 Landing Facilities and Marketing 19. Most of the commercial fish catch is landed in the Manila area. Navotas in Rizal alone received 70% of the total catch in 1970. Adding adjacent landings in Magallanes, North Harbor (Manila) and Malabon, the total landings in the Manila area are brought to 75% of the total catch. Navotas was the receiving point for almost 90% of the catch in the Palawan Waters of the Sulu Sea, almost 85% of the catch in Manila Bay, and about 45% of the catch in the Visayan Sea. Almost half of the Visayan catch was also landed in Iloilo City (Iloilo) and Cadiz City (Negros Occidental). 20. In addition, there are some 100 other landing sites--usually without wharf or other landing facilities. These individually handle small amounts for local consumption. 21. There has been a complete lack of specialized fishing port facili- ties. Even at Navotas, which handles the bulk of landings, fish are brought in by amphibious vehicles from vessels anchored about two miles off shore. A project is underway to develop Navotas as a fishing port, involving dredging an approach channel, anchorage reclamation of the foreshore area, and construction of break waters, piers, wharves, quay walls and a fish market building. The facility is expected to be operational in 1975. Finance is being provided by a loan of US$5.6 million from the Asian Development Bank. 22. Marketing. Since the major source of supply is the Sulu Sea, most fish are transported considerable distances. Transport is usually in the fishing vessel itself, though some large operators use specialized carriers fitted with insulated holds. PFC has recently assigned three vessels as fish carriers and is planning to order two refrigerated vessels to provide such service. Most fish are marketed in fresh condition, as preferred by consumers; where fish are iced, the ice is removed at the retail stall prior to sale. There is ample ice-making capacity at Navotas, although substantial relocation of plants will be required as the port is developed. But present ice-making facilities in other areas are inadequate, particularly in the more remote areas. PFC has a number of small ice-making plants at scattered places throughout the Islands with very limited capacity for ice making and storage; some are not operating. In Luzon, much of the transport is by nonrefrigerated truck. 23. Under these conditions, plus the very limited storage capacity, left over fresh fish are sold immediately at considerable discount for drying, the main form of consumption in inland areas. Attempts to establish cannery operations have not been able to obtain raw material at prices which would enable them to compete with imports of canned mackerel from Japan. Small, low-priced fish are processed into fish sauce (patis) and fish paste (bagoong) . With these outlets, and in the face of low-priced fishmeal imports from Peru, there is little fishmeal produced in the Philippines. 24. In Navotas, a form of auction system prevails under which bids are "whispered" to sellers by commission agents, so that actual transaction prices are closely held. It is likely that this method of sale is to the ANNEX 5 Page 8 distinct disadvantage of the individual fisherman. The method of open market auction is prevalent in other islands. 25. The wholesale markets for fish are quite sensitive to changes in supply. In 1970, the catch of round scad in the heavy fishing season, the half year from March to August, averaged twice as much as in the other six months of the year; and wholesale prices averaged less than half as much. A more evenly distributed supply would come about if consumers would accept frozen fish more readily. This holds more promise over the long run than for the immediate years ahead. C. Domestic Demand Projections, 1970-80 26. Demand for fish in the Philippines is expected to continue to rise very substantially in the decade ahead. Projections based on best assumptiDns as to population growth, and the effect of rising incomes on consumption of fish, are summarized in Table 7. Table 7: DEMAND PROJECTIONS FOR FISH A. Annual Rate of Growth (percent) Per capita/ Total Period Population Consumption-- Consumption 1970 - 1975 3.0 1.9 4.9 1975 - 1980 2.7 2.0 4.7 /a Assumes increases in per capita real income of 3.4% in 1970-75 and 3.7% in 1975-80. Income elasticity of fish is estimated at 0.55 based on calculations of Z. Russek, FAO/UNDP Fishery Project in the Philippines. B. Projection of Domestic Demand Year Total Demand Per Capita Demand ('000 tons) (kg) 1970 1,040 28.3 1975 1,320 30.9 1980 1,660 34.0 Increases in requirements, averaging some 56,000 tons a year in 1970-75 and 68,000 tons a year in 1975-80, are substantially above increases in output in recent years. Most of the increase in output since 1968 has ANNEX 5 Page 9 come from municipal fisheries, where only a small proportion enters com- mercial trade and for which the production statistics are highly questionable. If imports of canned fish, which have shown no distinct trend in the past five years, remain at about 50,000 - 60,000 tons a year, production would need to rise about 5% a year to meet projected demand. 27. If the added supplies would be forthcoming to meet demand, they would be equivalent to closing about half the nutritive deficit in animal protein which presently exists in the Filipino diet. More likely there will be a shortfall and prices will continue upward. D. The Resource Base Marine 28. The territorial waters of the Philippines, shown in Map 6, encompass some 1.6 million sq km within an area 540 nautical miles wide (118*E to 127oE) and 1,640 nautical miles long (21*25'N to 4045'N). Only a few commercial fishermen operate outside of these limits--mainly in the South China Sea--and their catch makes only a small contribution to the total. The Philippine Islands are marked by an extremely narrow continental shelf and a precipitous continental slope, so that most of the sea area is deep water (over 100 fathoms). Far more suitable for fishing are the shallower waters which cover an area of only about 185,000 sq km (of which about 100,000 sq km are shallow areas in internal waters). The largest: shallow water areas are the Sulu Sea (68,800 sq ku.), the China Sea (36,100 sq km), the Pacific (34,800 sq km), and the Visayan Sea (12,000 sq km). The marine fishery is mainly concentrated in these areas. 29. The FAO/UNDP/SF Deep Sea Fishing Development Project estimates the potential annual catch within Philippine Territorial Waters at about 1.65 million tons, almost double the actual catch in 1970. The potential consists of 700,000 tons of demersal fish (bottom associated species) and 950,000 tons of pelagic fish (water column associated species). 1/ 30. According to the FAO project estimates, the municipal catch in 1970 represented 80% of the potential in the waters dominated by this category, and the commercial catch about 40% of the potential (Table 8). 1/ E.R. Kvaran, Marine Fisheries Potential in the Philippines and South East Asia. ANNEX 5 Page 10 Table 8: POTENTIAL AND ACTUAL CATCH IN PHILIPPINE WATERS ('000 m tons) Item Municipal Commercial Total Fish Potential-- Demersal 350 350 700 Pelagic: Inshore 300 350 650 Pelagic: Offshore - 300 300 Total 650 1,000 1,650 /b Fish Catch 1970--- Demersal 306 172 478 Pelagic 205 210 415 Total 511 382 893 Source: /a Data from Z. Russek (FAO). /b Kvaran estimates that perhaps 60% of the municipal catch and about 45% of the commercial catch consist of demersal species. The latter figure is based on the catch of vessels fitted with gear appro- priate for demersal fishing; the otter trawl, muro-ami and hook and line. 31. It must be emphasized that these estimates of potentials are not based on physical surveys of fish resources in Philippine waters (which are lacking). Rather, they are judgments based on information for other areas, more particularly the Gulf of Thailand on extensive shallow sea, which seems ecologically different from conditions in the Philippines. The recent decline in commercial fishery output, despite some further expansion in fleet numbers and a trend toward larger and better equipped vessels, would introduce a further element of uncertainty as to the potential of the resources. It is widely recognized that Manila Bay, the third largest fishing ground, is overfished. 32. Be that as it may, the rough figures suggest two conclusions: (a) municipal fishing is approaching its potential catch; and (b) exploita- tion of the remaining potential for commercial fishing will involve moving into deeper and more distant waters. The potential in extraterritorial waters that might be realized by Filipino fishermen is also subject to considerable uncertainty. The adjacent international waters are being fished by many nations, and the relation of their activities to the potential sea catch is unknown. Some reports indicate the Western Pacific is fished fairly intensively. 1/ 1/ P.A. Moiseev, The Living Resources of the World Ocean (translated from Russian); U.S. Dept. of Commerce, 1971, pp. 205-206. ANNEX 5 Page 11 33. The FAO/UNDP/SF Project states that the most productive fishing areas to exploit are the southern part of the Sulu Sea, the northern side of the Celebes Sea, the South China Sea off Luzon, and the Pacific off Bicol and Samar. 34. Municipal-Commercial Fishing Conflict. The Philippines Fisheries Commission licenses vessels over 3 gross tons to fish in waters beyond three miles offshore. Coastal municipalities have jurisdiction over waters within the three-mile limit and are empowered to issue licenses for vessels of up to 3 tons. However, there is considerable cross-over, particularly on the part of commercial vessels fishing within the three-mile limit. Russek (FAO) estimates that 40-45% of the commercial catch comes from these waters. To exclude commercial vessels from near-shore fishing would make room for more municipal fishermen or, conversely, improve the catch and incomes of those presently engaged by widespread mechanization of bancas. While at the present time this would bring difficult times to small commercial vessels whose capabilities to fish beyond are quite limited, the numbers of this latter group are declining fairly rapidly. Inland Fisheries 35. Fishponds. While fishponds account for only 10% of total fish output, production has risen quite rapidly in recent years. Between 1965 and 1970, fishpond production increased over 50%, with extension of fishpond area and higher yields per hectare making roughly equal contributions. 36. In 1970, fishponds covered some 168,000 ha, almost all of brackish water (perhaps 6,000 ha are in fresh water ponds). About half is leased from Government under long-term arrangements (up to 25 years, renewable for another 25 years) and the remainder is privately owned. The area of the former has been more or less unchanged since 1965, whereas the latter area has expanded by over 30,000 ha. 37. Appendix Table 4 shows the distribution of the present fishpond area and productivity by fishing region 1/ and the swamplands still available for development. Potentially, the fishpond area could be expanded about threefold. At present, some 60% of the area and over 70% of the output are concentrated in Regions III and V where yields rank high. 2/ More than half of the swamplands available for development are in Regions VI and VIII, 1/ The eight Fishery Regions administered by the Philippines Fisheries Commission are shown in Map 6. These differ from the regional boundaries delineated for agriculture. 2/ Area and production are largely in Bulacan, Quezon and Pampanga Provinces in Region III and in Iloilo, Capiz and Negros Occidental in Region V. ANNEX 5 Page 12 where present yields are among the lowest. 1/ The latter region has most of the potential area for fresh water fish ponds. There is also considerable room for further expansion in Region III (Palawan, Quezon and Pampanga Provinces). 38. In looking toward large-scale development of swamplands, it is noted that much of the potential new areas is not presently accessible. Thus the lack of roads will be a major obstacle. 39. There is a further large production potential by increasing yields of fishponds. Although milkfish yields in the Philippines approach 600 kg/ha, compared with 300 kg/ha in Indonesia, they are far below the 2,000 kg/ha obtained in Taiwan. Such high yields are made possible by the use of fertilizers (and manure), pesticides, supplemental feed, and scientific stocking and harvesting. Soil, water and climatic conditions of Philippine ponds are extremely favorable to growth of milkfish and its natural food organisms. Based on Taiwan experience and research underway in the Philippines, a program of fertilization and pest control could raise yields in brackish waterponds to 1,000 - 1,200 kg/ha and in fact some Philippines fishponds have attained his level. With supplemental feed and intensive management of fish populations, additional yields could run up to 2,000 kg/ha and over. 2/ 40. Milkfish is favored by the Filipino consumer. Retail prices in Manila reflect a significant premium over marine species: 3/ Item 1970 1971 --Pesos per kg-- Milkfish (Bangos) 3.22 4.18 Slipmouth 2.68 3.42 Round scad 1.61 2.34 41. Fresh-water pond culture is not yet common in the Philippines, and the technical base and management are not as well advanced as for brackish water ponds. However, experiments on catfish in the Philippines have yielded as well as milkfish in brackish water ponds. Potentially, the Chinese Carp in fresh water could also yield as well. A constraint is the fact that the Filipino considers the carp as inferior to milkfish, and discounts it in the 1/ Particularly Northern Samar in Region VI and Agusan del Sur and Davao del Norte in Region VIII. 2/ Yun-An Tang, Improvement of Milkfish Culture in the Philippines, Indo-Pacific Fisheries Council Current Affairs Bulletin No. 49, August 1967. 3/ Philippines Fisheries Commission, average of four markets in Manila. ANNEX 5 Page 13 market accordingly. Nevertheless, about one-fourth of the areas available consist of potential fresh water ponds, and large areas could be developed in Cotabato and Agusan del Sur on Mindanao and in Pampanga on Luzon. 42. The technical base for intensive shrimp culture is not available, although recent developments in research provide some encouragement that it will be in the next four or five years. The principal problems are in the production of fry under controlled conditions, and in nutrition and disease control. 43. Communal Waters. There are perhaps 400,000 ha of rivers and lakes which are being fished, mostly for subsistence. This area is not covered in the production statistics. The Philippines Fisheries Commission produces and distributes fingerlings for these waters, particularly to Laguna de Bay, Taal Lake, San Pablo Lakes, Angat Dam, Candaba Swamp, Pampanga River and Caliraya Reservoir--all in Region III on Luzon. The largest area (over 90,000 ha) is Laguna de Bay, which has been the subject of study by UNDP. Some 7,600 families are engaged in fishing at very low levels of production and income. The UNDP study revealed that the lake is seriously off-balance in species and feed utilization; four recommendations were made: (a) the introduction of new species having higher market values; (b) more extensive production using fish corrals and floating cages; (c) establishment of fish- ery cooperatives; and (d) establishment of a fisheries research center for limnological investigations and breeding of new fish species. Assistance is being provided by UNDP, USAID and the Asian Development Bank. Within all this, however, it is important to recognize that an aspect of appropriate balance of the fish and feed resources of Laguna de Bay relates to the extensive duck farming in the area whereby ducks fertilize the waters and in return are fed small fish. This enterprise should not be jeopardized. E. Development Strategy 44. Development Plan, 1972-75. The current four-year plan projects a 5.8% annual growth in fish output. 1/ If realized, fish output as offi- cially measured would increase from 989,000 tons in 1970 to 1.3 million tons in 1975. In the latter year, production would be approximately in balance with projected demand (para 26). Within the fisheries sector, the pfojected annual increases are: Commercial 5.8% Municipal 2% Fishponds 18% 1/ Four-year Development Plan FY 1972-75, pp. 110-111. ANNEX 5 Page 14 45. Previous plans have fallen short of realization, particularly in commercial fishing and fishpond output and the current plan may well prove to be no exception. The projected growth for commercial fishing is somewhat higher than was obtained in the last five years (para 9). The projection for fishponds involves more than doubling the growth rate of the past five years and the current level of production. The growth rate for municipal fishing, which contributed most of the increase in production since 1965, appears modest in relation to that performance, although admittedly there is considerable uncertainty attached to municipal data. 46. The emphasis on increasing output of fishponds seems quite appro- priate in view of the large unexploited potential areas of swamplands. But the anticipated expansion of some 9,000 ha of freshwater fishpond and 18,000 ha in brackish water areas would increase the area in fishponds by only about 10% by 1975. This implies that yields per hectare for the entire fishpond area would have to double by then if the production target for this category were to be realized--a quite unlikely development in view of an increase of some 12% from 1965 to 1970. 47. Recent performance of commercial fisheries also casts some uncer- tainty on the likelihood of attaining the projected growth rate. In view of the drop in fish catch since 1968, the realization of the target would appear to depend on exploitation of more distant fishing grounds, for which there is little information on the opportunities for Philippine fishermen. Further, there is a lack of market and other infrastructure to support a large-scale effort in distant waters. 48. The slow growth rate projected for municipal fishing would provide very little improvement for the large numbers involved in municipal fishing. This emphasizes again the need to establish and implement a national fishing plan which progressively reduces the participation of commercial vessels in municipal waters. 49. Development Strategy. Given the uncertainty as to the extent of marine resources, the clearest priority relates to improving fish farming as rapidly as possible--both the yields of existing fishponds and the develop- ment of new fishpond areas. Most of the increase in demand for fish in the next 10 years could be met by a program to develop about half of the avail- able swampland area (25,000 ha a year) and by a program to double yields per hectare by extensive use of fertilizers and other improved practices in fish- pond culture. Such activities have much to offer in development of lagging regions, since large swampland areas are particularly available in Mindanao, Samar, Bohol, and Palawan. Much of these latter areas have very limited access, and a coordinated program of roads and market facilities would be required for their development. 50. Most of the commercial fishing vessels are over 10 years and the need for replacement as well as improvement of existing vessels with modern equipment and machinery is becoming pressing. Beyond this, experimental exploitation of more distant fishing grounds by larger vessels seems called for, pending development of information on the fish resources that would ANNEX 5 Page 15 be available. The experience gained in a modest effort would provide a more secure base for evaluating the physical and economic potential of extending the fishing area than is now available. There does not appear to be a significant advantage to increased production from present waters by the trend toward larger vessels. 51. As noted in Table 8, there appears to be some scope for increasing pelagic fishing in municipal waters. Mechanization of bancas increases the catch per vessel to about 2 tons per year, as compared with 1 ton for non- motorized bancas, thus bringing a substantial improvement to the small fisherman. Even so, the resource is limited; a large program for mechaniza- tion could have serious effect on the more traditional fishermen. It is not clear that new types of fishing for mechanized bancas such as long line fishing for tuna is economically feasible, although again some modest effort in this direction may prove rewarding. If, however, there should be a move to restrict near-shore fishing to municipal fishing, there might well be opportunities for considerable expansion in mechanization of bancas. 52. Substantial development of the supporting infrastructure and services would be required if the fishery industry is to grow rapidly. There is a clear need for more extensive research, especially for exploration of marine fish resources and developing fish pond culture, particularly the technology for shrimp. Extension services will need to be very substantially strengthened both in quality and in manpower if fishpond activities are to be expanded. Roads, fishing ports, and shore facilities in remote areas will be required to support the move of commercial fishing to more distant waters and the development of fishponds in areas which are presently not accessible. 53. At present, prospects are not promising for development of domestic industries for canned fish and fishmeal to replace imports because of the relatively high cost of raw materials locally. An earlier venture to can fish could not compete with imported low-priced canned mackerel from Japan. This situation may change as rising labor costs and adjustments in exchange rates increase the costs of imports from Japan. Even though the supply of fishmeal from Peru is impaired, the availability of other protein foodstuffs indicates little likelihood of developing a viable fishmeal industry in the Philippines. F. Government Organization and Administration 54. Resource Management. Most of the governmental functions in ad- ministering the fisheries industry (marine and inland) are vested in the Philippines Fisheries Commission (PFC), which is directly under the Secre- tary of Agriculture and Natural Resources. These functions include research and extension as well as administration and regulation. The major functions outside of the PFC include the extension of credit for fisheries (see para 60 below) and vocational training under the Bureau of Vocational Education. ANNEX 5 Page 16 55. While the organizational framework for effective administration is largely in place, performance is not as effective as it someday must and should become. Present difficulties relate to availability of expertise, inefficient use of research facilities, and coordination of the various agencies related to fisheries. 56. Nevertheless, significant moves to improve this situation are underway. The numerous fishing schools are being strengthened, under a general education program with UNESCO/IBRD assistance, to turn out more and better qualified technicians particularly for extension activities. 1/ USAID is providing assistance in research on fishpond culture and FAO/UNDP, having terminated the Deep Sea Fishing Development Project, has turned to assist in establishment of a Deep-Sea Fishing Training Center. Research and training in shrimp culture is being assisted by SEAFDEC. 57. Presidential Decree 43 provides for a tighter coordination of activities through a Fishery Industry Development Council. The Decree also provides for the large-scale transfer of lands available for fishpond development from the Bureau of Forestry to the PFC for administration and disposition (rather than on the case-by-case transfer presently in effect) extension of long-term leases for fishpond development, provision of credit, establishment of ice plants and cold storage and organization of district fishing cooperatives. 58. One disturbing provision of the Bill proposes that commercial vessels be permitted to fish in waters more than seven fathoms (42 feet) deep regardless of whether or not these are in municipal waters. This would have serious implications for employment and incomes of small fish- ermen by further restricting the fish resources available to them. 59. Credit Institutions. In the case of credit for fishermen, the institutional forms have also been established; however, they are not yet making much of an impact. The main institutional credit sources are the Rural Banks (supervised and financed by the Central Bank) and the Develop- ment Bank of the Philippines. The clientele of the Rural Banks is limited to small enterprises, whether farm, fisheries or industry. Most credit extended to the fishing industry has been short-term. However, an IBRD loan to the Central Bank in June 1969 for distribution through the Rural Banks was partly for the purpose of providing medium- and long-term credit for fisheries development: US$1.9 million for fresh and brackish water fishponds and US$0.6 million for the purchase of small fishing vessels (up to 5 tons). By late January 1972, loans had been released totaling t 635,000 (about US$100,000) for fishponds and some ? 69,000 (less than US$10,000) for boats and equipment. In addition, the Central Bank estab- lished a small Fishermen's Credit Fund of P 5 million for channeling through 1/ PFC established additional positions for 440 fisheries technicians in fiscal 1972 over the 677 personnel on the rolls at the beginning of the fiscal year (Expanded Fish Production Program FY 1971-72 PFC Table 26). ANNEX 5 Page 17 the Rural Banks to municipal fisherman (boats less than 3 tons) who are members of cooperatives (a restrictive limitation in view of the low stage of cooperative development in municipal fisheries). 60. The Development Bank of the Philippines (DBP) has been financing fishpond development for some years, but for lack of funds the program has diminished to financing less than 2,000 ha annually. Most credit goes to operations of above 40 ha. Loans for marine fishing facilities have also suffered because of lack of funds. DBP is well staffed with fishing tech- nicians for handling fishpond loans but not so with respect to handling deep-sea fisheries loans. G. Investment Opportunities 61. Major investments will be required to support an expansion in fishing output of some 600,000 tons a year by 1980. There are opportunities in each of the segments of the industry in the immediate future. 62. Some modernization of the existing fishing fleet which is becoming increasingly obsolete is in order. Also there might well be some additions to explore and exploit more distant fishing grounds although such investments should be kept in bounds until the extent of the marine resources and their economic feasibility are better known. Some further mechanization of bancas would increase the catch and the livelihood of small fishermen who partici- pate but this should be pursued cautiously to avoid an ill-effect on those fishermen who are not mechanized. A large program would not be feasible unless near-shore waters are reserved for municipal fishing. 63. Improvement and expansion of fishponds appear to offer the clear- est possibilities for meeting most of the rising demands for fish in the future. To do so, however, would require a much larger program of fishpond development than is contained in the latest plan (27,000 ha in four years). Costs for developing fishponds run about P 5,000/ha. Thus a program to develop about half of the swamplands available, perhaps 250,000 ha in the next decade, would require investments totaling some P 1,250 million (about US$190 million). The Philippines are ill-equipped at this time by organiza- tional and manpower deficiencies to undertake such a massive program. It should, however, do better than the plan envisions and build up its capabilities to carry on a program of 25,000 ha a year by mid-1975. 64. It is also evident that, to support increased production, heavy investments will be required in port and marketing facilities, especially in extended fishing areas such as Mindanao, Panay and Negros. 65. IBRD presently has under appraisal a credit project to provide financing for: ANNEX 5 Page 18 Marine Fisheries 15 larger vessels (130 GT) 45 smaller vessels (70 GT) 10 fish carriers (120 GT) 3 Ice-making facilities 2 Slipways Improvements on existing vessels Inland Fisheries 7,600 ha fish pond development In addition, the project would provide support for preparation of future projects in fish marketing and smallholder fish ponds. In the case of the commercial fishing fleet, the proposal would increase the number of vessels (70 tons and over) by about 13%. Area in fishponds would be expanded by less than 5%. The total cost of the project has been tentatively estimated at US$18.75 million of which US$10 million is foreign exchange cost. 66. The project is estimated to add some 30,000 tons to annual fish output at full development, 23,000 tons from sea fishing and 7,000 tons to fishpond production. At that time, the increase in output from the full impact of the project would be equivalent to the increase in demand of less than one year. 67. Such a program provides only a beginning and well within the administrative capabilities of the PFC at present. It would appear that in the future development of fishponds should proceed more rapidly and that the PFC should enlarge its capabilities in that direction in order to handle a much larger program. 68. An FAO reconnaissance mission to identify potential sites in the Philippines for fishery ports and terminal facilities has filed its report. The mission has made a judgment that sites at General Santos and Zamboanga in Mindanao and Bauan in South Luzon should be developed as fishing harbors at a cost approximating US$6-8 million. This does not include a number of other sites which are needed if suitable locations could be found. The mission also recommended investigation studies which would lead to determi- nation of suitable sites. ANNEX 5 Appendix Table 1 PHILIPPINES AGRICULTURAL SECTOR SURVEY Table 1: TRADE IN FISH AND FISH PRODUCTS, 1965-1970 1965 1966 1967 1968 1969 1970 - - - - - - - - - - - Tons - - - - - - - - - - Exports Fish, live - - - 34 79 142 Fish, frozen 318 1,064 1,083 721 917 1,016 Shrimp, frozen 35 32 115 179 244 574 Crabmeat, frozen - - - 2 4 - Processed fish: Dried 5 4 11 17 7 29 Sauce 20 18 17 5 69 80 West (salted) 102 77 119 101 180 164 Miscellaneous - - - 58 3 7 Imports Canned 42,418 41,588 53,913 66,590 58,267 52,987 Fresh 23 19 30 151 38 7 Fishmeal 8,983 7,976 13,383 21,005 12,423 9,614 Dried, salted, smoked, etc. 307 538 363 545 306 137 Source: Bureau of Census and Statistics PHILIPPINES - > AGRICULTURAL SECTOR SURVEY ( X Table 2: NUMBER OF COMMERCIAL FISHING VESSELS BY TONNAGE, 1965-1970 Tonnage (Gross) 1965 1966 1967 1968 1969 1970 3 to less than 10 941 955 832 711 677 666 10 to less than 15 322 352 384 355 341 356 15 to less than 20 108 149 150 121 128 122 20 to less than 30 143 161 200 191 212 202 30 to less than 50 187 184 211 230 202 224 50 to less than 70 124 124 129 125 146 146 70 to less than 100 240 235 287 312 334 332 100 tons and over 121 133 156 162 182 192 Unspecified 207 251 12 18 51 44 Total 2,393 2544 2,361 2,225 2,273 2284 Source: Philippine Fisheries Commission PHILIPPINES AGRICULTURAL SECTOR SURVEY Table 3: PRODUCTION OF COMMERCIAL FISHING VESSELS BY TYPES OF FISH AND FISHING GROUNDS, 1965 AND 1970 Sulu Sea Visayan Sea Manila Bay Other Total 1965(Palawan)1970 1965 1970 1965 1970 1965 1970 1965 1970 Type of Fish - - - - - - - - - - - - - - - - - - - - - - - Tons - - - - - - - - - - - - - - - - - - - - - - Round Scad 77,064 126,655 9,206 14,940 3,619 1,620 10,050 7,498 99,939 150,713 Sardines 24,768 22,313 1,609 3,751 821 1,359 5,410 5,460 32,608 32,883 Slipmouth 2,806 6,802 15,074 16,924 3,507 3,645 9,779 5,883 31,166 33,254 Chub Mackerel 1,519 10,605 878 4,325 768 3,121 2,334 2,959 5,499 21,010 Nemipterid 2,971 7,570 5,083 4,669 2,428 2,750 2,259 2,165 12,741 17,154 Big-eyed Scad 39 4,409 6,465 7,921 8 217 4,052 1,826 10,564 14,373 Lizard fish 1,446 2,094 7,971 7,778 2,114 1,061 4,720 1,345 16,251 12,278 Bonito 1,056 3,733 306 1,171 267 56 1,401 2,287 3,030 7,247 Anchory 270 905 615 582 785 1,062 10,931 6,692 12,601 9,241 Shrimp 812 2,513 3,529 3,646 1,326 1,354 4,824 2,865 10,491 10,378 Croaker 755 1,685 755 6,590 814 458 8,877 1,340 11,201 10,073 Other 22,207 32,386 18,657 17,696 3,226 3,518 9,893 9,673 53,983 63,273 Totals 135,713 221,670 70,148 89,993 19,683 20,221 7h,530 49,993 3CC,C7) 3`1,877 Sh Source: Philippines Fisheries Commission M Z M. Ii ANNEX 5 Appendix Table 4 PHILIPPINES AGRICULTURAL SECTOR SURVEY Table 4: FISHPONDS AREA AND PRODUCTION 1970 AND POTENTIAL AREA Swamplands available for Development Fresh Region Area Production Yield Water Mangroves Total 1,000 ha '000 tons kg/ha 1,000 ha 1,000 ha 1,000 ha I 12.4 8.7 706 2.5 6.3 8.8 II 0.5 0.1 200 2.9 13.4 16.3 III 56.9 41.9 737 23.5 58.8 82.3 IV 10.8 3.8 348 - 38.3 38.3 V 42.8 27.9 652 - 33.8 33.8 VI 14.4 4.3 297 9.7 141.6 151.3 VII 18.3 5.9 322 1.0 45.4 46.4 VIII 12.1 3.9 322 86.6 32.3 118.9 Total 168.1 96.5 574 126.2 370.1 496.3 Source: Fisheries Statistics of the Philippines 1970. 18RD 10221 ил• пе• 1ю• iaa• iю• 1sы г�ег�иееп�� I PHILIPPINES " � I FISHERIES I в�Р�сАТ�пи вг РапЧ�исЕS, TERRITORIAL WATERS AND оvвсЕоовАУюсА1. аЕтоиs. 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