An economic analysis of traditional soybean processing in the Philippines

• Main Author: Soliven, Maria Luisa R.
• Format: text
• Language: English
• Published: Animo Repository 1987
• Subjects: Soyfoods > Economic aspects; Economics
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/1156
• Institution: De La Salle University

This study highlights on the economic efficiency gain/loss in domestically processing soybeans into soy sause, soybean curd ( taho ) and soybean cheese ( tokwa ). Incentive measures on output and input use and their impact on the financial and economic profitability were evaluated. The domestic resource cost (DRC) per unit of foreign exchange earned or saved was used to determine the degree of comparative advantage for the three commodities considering two scenarios namely: import substitution (IS) and export promotion (EP). The analysis revealed that the Philippines has a relative comparative advantage in the local processing of soy sauce, taho and tokwa. Under the IS scenario, the DRC coefficients are 11.73 3.62, and 2.43 and the corresponding resource cost ratios (RCR) are 0.53, 0.16, and 0.11, respectively for the three products. Under the other scenario, export promotion, the DRC coefficients are 15.50, 4.66, and 2.58 with the corresponding RCRs of 0.70, 0.21, and 0.12. In both scenarios, the DRC values were lower than the shadow exchange rate of the peso implying comparative advantage. The net financial and economic profits were positive which means that there were economic gains from these activities. The net economic profits were found to be higher than the financial profits. This phenomenon may be explained by the generally low wholesale prices of output and highly priced inputs at the domestic level. While there are favorable results in terms of economic efficiency, the study also revealed that the local soybean processors did not receive any government incentive. This was signified by the negative effective protection rates (EPRs) obtained except for soy sauce processing which is slightly a positive value (EPR = + 3 percent) under export promotion scenario. Finally, based on the favorable findings of the study, a recommendation was made that the local processing of soy sauce, soybean curd and soybean cheese should be promoted and be given incentives to expand.