helping a small agricultural community in miyazaki

AsiaPacificBusiness&EconomicsPerspectives,Winter2016,4(2).

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HelpingasmallagriculturalcommunityinMiyazaki:Analysisandsuggestionsfor

furtherdevelopmentoftheirlocalprojectErikaHigashidaMiyazakiInternationalCollegeMiyazaki,Japanehigashida@sky.miyazaki-mic.ac.jpAndersonPassosMiyazakiInternationalCollegeMiyazaki,[email protected]

ABSTRACTThis research focus on the Mimatangoma project, developed by a small agriculturalcommunityinMimata,aruralareaofMiyazaki,Japan.Thecurrentsituationoftheregion,the prefecture and Japan is discussed in order to understand the actual situation of theMimatangoma project. The research follows with a quick research on Japanese basicmarketing strategies for development of rural areas and an analysis of the 4P’s ofmarketing in regards to theMimatangomaproject.Finally,pointsof improvementof theMimatangoma project are suggested. Although this research focuses on a smallagricultural community of a rural area in Japan, the analysis and suggestions presentedheremightbeapplicabletolocalruralcommunitiesindifferentplaces.Keywords:ruraldevelopment,agriculturalcommunities,4Panalysis

INTRODUCTIONNowadays, Japanese local agricultural communities, including ones in Miyazaki

(Figure 1), are facing challenges from globalization. In 2016, the Japanese governmentsignedanewinternationaltradeagreementcalledTrans-Pacific-Partnership(TPP)(MOFA,2016),whichresultsinlowertariffsandtradebarriersonJapan’simportsandexportswithother TPP countries. Due to the estimation of the declining sales as the result of TPP, aconsiderable number of Japanese farmers are strongly against the agreement. This hassignificantimplicationsfor localagriculturalcommunitiesinMiyazakiPrefecture.MiyazakiisoneoftheprefecturesinJapanwithalargenumberoffarmers,afastagingpopulation,and a declining amount of young labor (Miyazaki Prefecture Agricultural and FisheriesDepartment, 2015). The TPP has brought challenges to Miyazaki’s local industries andfindingwaystobecompetitiveinthenewenvironmentisthusimportanttothesurvivaloflocalcommunitiesinruralJapan.

InthefollowingsectionswearegoingtolookintothesituationofMimatainordertounderstandhow itsproject, calledMimatangoma,works,morespecifically,wewillbelooking into the problem of howwellMimata is prepared for changes thatmight comefrom future government policies (e.g. TPP) and how it can keep itself competitive. Our


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objectiveistogatherinformationpertainingtheprojectandthecommunitytounderstandhow some marketing strategies might be implemented in Mimata and keep itsMimatangomaprojectstrong.

Figure1.MiyazakilocationintheislandofKyushuinJapan

ByLincun-MapofJapanwithhighlightonMiyazaki-ken,CCBY-SA3.0,https://commons.wikimedia.org/w/index.php?curid=3916748

TounderstandthecurrentsituationofMiyazakiagriculture, it isenoughtosimplylookatMiyazaki’sprefecturebookletentitledMiyazaki-kenNougyou-NousonnoGenjoutoKadai(MiyazakiPrefectureAgriculturalandFisheriesDepartment,2015). Itgivesaclearpictureof the prefecture’s agricultural situation. The booklet contains not only data regardingMiyazaki’sagricultureproduction,butalsosomedatarelationshipssuchastheageratioofthefarmingpopulationandtrendsinfarmmanagement.

Lookingatthedataprovided,itisclearhowseriouslyweshouldthinkaboutthefutureofnotonlyMiyazakiagriculture,butalsomanyotherareasinJapan.AsshowninSource:MiyazakiPrefectureAgriculturalandFisheriesDepartment,2015,p.6Figure2, thedecreasingnumberof farmers,especiallyyoung farmers (Source:MiyazakiPrefectureAgriculturalandFisheriesDepartment,2015,p.6

Figure3), isa seriousproblembecause it leads to loweragriculturalproduction.Althoughthesituationseemsserious,thereport isnotsolelycomposedofnegativedata.ThenumberofagriculturalcorporationsinMiyazakiisincreasingyear-by-year.Thenumberoffarmsturningintocompany-likeorganizationscaneasilyexplainthistrend.Thenumberof the agricultural corporations (where farmers produce and sell their products like acompany) has increased year by year. Miyazaki prefecture is promoting this flow andnaming it “Food Business Promoting Plan”. In 2009, Miyazaki had 587 agriculturalcorporationsandin2014thisnumberwentupto732.

InordertoimproveMiyazaki’sagriculture,theprefecturehasintroducedseveralprojectslikesupportingfarmerswiththe6thmanufacturingandcreatingaMiyazakibrand,amongothers.

The6thmanufacturingmeansthatfarmersdotheirfarming,processingandsellingoftheirproductslikeacorporation.Thisprojecthasanothername:“IdeaofFood-BusinessPromotion”anditwasintroducedinMarchof2013.


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Source:MiyazakiPrefectureAgriculturalandFisheriesDepartment,2015,p.6Figure2.MiyazakifarmerpopulationSource:MiyazakiPrefectureAgriculturalandFisheriesDepartment,2015,p.6Figure3.AgerangeoffarmersinMiyazaki

Regarding the Miyazaki brand initiative, in the period of 1994 to 2015, theprefecturehadalready39productsregisteredandbeingadvertised.This isone ideathatcouldbeexploredbytheMimatangomaprojectsince,bythetimeofthiswriting;noneoftheirproductshavebeenregisteredwiththeprefecture.ThebiggestadvantageofhavingproductsassociatedwiththeMiyazakibrandisnotonlytobenefitfromtheadvertisement,but also the ability to sell products at a higher price. If farmers can sell them at higherpricesasabrand,theirprofitscanalsobehigher.

90205 78127 68612 61886 56195 50735 45804

157273

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8621077916

6624557076

1985 1990 1995 2000 2005 2010

"NumberofAgriculturalcommunities" "Numberoffarmers"


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JapaneseTraditionalBusinessConceptsThe first concept widely used by Japanese rural communities is the concept of

Michi-no-Eki(orroadsidestationinEnglish),whereproductsfromthatlocalruralareaaresoldtotravelingpeople(Yokota,2006).Thisapproachtriestoutilizethestopsnearbytheroadsassellingpointsfortheirproducts.Theconceptisverysimilartotheserviceareasinthehighway:Peopletravelingbycarorbuscanstopby,entertheshopsandenjoyawiderangeofofferings.Themaindifferencesbetweenthetwoconceptsarethattheroadsidestationprovidesamuchstrongerlinkbetweenthelocalcommunityandthepeoplepassingby.Usually, the roadside station offers awide-range of locally produced products,whilethe highway service areas might offer more common products that are sold in popularsupermarkets as well. Roadside stations have been created all over Japan and evenadoptedbyotherdevelopingcountriesnotonly inAsia (e.g.Thailand,China),butalso inotherregions(e.g.Turkey,Kenya,Mexico). It isrecognizedasoneeffectivewaytobridgethe gap between the city and the rural area at the same time it promotes community-drivendevelopment.

ThesecondstrategyusedbyJapaneseagriculturalcommunitiesistheOneVillageOneProduct (OVOP) concept, which has started in Oita prefecture, Japan (Igusa, 2006) withvery low incentive from government and has been used as a way to get Oita’s ruralcommunitiesoutofpoverty.Thisstrategylooksatthelocalresourcesthatthevillagehasand focuses on the development of local products. The initial objective is to produceproductsthataresimilartooutsideones,butwithbetterqualityandlowercost.Tostartdeveloping this strategy, the village first targets close bymarkets in order to build up areputation for its own brand. In the second stage, the village builds up the strategy onpreviously gained knowledge, and refinement of the available products takes place. Thecommunityisthenabletoexplorethemarketbetterastheyareabletosupplybetterandcheaperproducts,withadditionofnewproductseventually.Thiscreateshighprideinsidethecommunityandmayevenboosttourismintheregiondependingonthecase.

METHODSThe research method focus primarily on qualitative analysis, more specific content anddiscourse analysis. Through the literature review, the concepts of effective marketingstrategiesandthekeycomponentsofmarketingmix(inparticularthe4P)aresummarizedforempiricalinvestigation.Marketingconceptsandtheoriespresentedinthiswork(Ferrell&Hirt,2009)willbeusedwhenanalyzingtheregion’smarketingframework. InformationandstatisticsfromthewebsitesoflocalcommunitiesandtheJapanesegovernmentwillbegatheredandanalyzed.Thedatawill reflect thecurrentconditionandtheproblemsthatMiyazaki’slocalcommunities(inparticularMimata)arefacing.Table1.4PexplanationsandMimatangoma’sprojectsituation(Ferrell&Hirt2009)4P Points ActualsituationProduct Goodsorservice

Physical/emotionalcharacteristice.g.guarantee,promisesofrepairing

Theyhavebothphysicalandemotional

characteristicsPrice negotiationbetweenbuyer&seller

canbechangedquicklytostimulatedemandorrespondtocompetitors'actions

Highpriceandnonegotiation


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relatesdirectlytothegenerationofrevenue&profits

Place(Distribution)

physicalstoresvendingmachinesonlineservice

JustphysicalstoresNoonlineservice

Promotion advertising(medialikeTV,radio,news,magazine,digitalmedialikeweb,googleAdWords,Facebook)directsellingpublicity(publicrelation)salespromotion

NoTVcommercialsNopublicityinany

mediaNosalespromotion

Toanalyzethecurrentsituationoftheresearchobject,wewillusetheeconomical

conceptofthe“4P’sofMarketing”fromthebook“Business:AChangingWorld.9thRevisedEditionbyFerrel,O.C.,andGeoffreyHirt”.Lookingat

Table 1 we can see how each concept is translated into the reality of theMimatangoma project and it makes it easier to make suggestions to achieve a bettersituation.

Inordertocollectmoreinformationabouttheproject,afieldresearchhadtobeconducted.TheleaderoftheMimatangomaproject,Mr.Shimoishi,wasinitiallycontactedbye-mailand later interviewedathisoffice.Duringthe interview,Mr.Shimoishibroughtup some positive and negative points of growing and selling sesame fromMimata, andsoon the situation of the project became more complex than was expected. Theinformationprovidedintheproject’sInternetpagedoesnotreflectthecurrentproblemsitfaces.Table2.PositiveandNegativepointsofMimatangomaproject

Positivepoints Negativepoints1. lowcost2. easytogrowup3. canpromoteitasabrandproduct

1. smallproduction2. lowpopularity

RESULTS

Foreach“P”intheMimatangomapromotionstyle,ananalysisanddiscussionispresentedbelow.Product

TheMimatangomaprojectproducesthreekindsofunprocessedsesame,whichareclassified by color: black, white, and gold. The colors characterizewhich processingwasused in eachof theproducts. Black sesame is sold, as unprocessed,white sesame is thesesame,whichhasbeenboiled,andgoldsesameissoldaspaste.Processedsesameisalsosoldintheformofoil,tea,pastedcreamandmanyothers.

Asthemainproject’sproductisfood,thereisnoguaranteeandsupporttobegiven.Theproject’swebpagetriestoemphasizehowhighthequalityofMimatangomaproductsis.PackagedesignsandlabelsofMimatangomaproductsareverysimple.Thecolorsusedareblack,white andgold (just as theproducts themselves). This kindof stylishdesign isveryappealingtoyoungconsumers.


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PriceAsexplainedbefore,theprojectsellsnotonlyprocesseditemscontainingsesame

butalsotheseeds.Intheirlocalshop,packagesof20g,50gand100gcontainingrawsesamearesoldfor100,200and400yenrespectively.Table3liststhepricesofsomeoftheprocessedsesamegoodsfoundintheshopaswell.

Table3.Pricelistofprocessedandunprocessedsesameproducts

Product PriceSesameoil(95g) 2,000yen

Pastedcream(100g) 1,200yenSesameleaftea(30g) 550yen

Allproductsmentionedabovehaveahighpricetag,especiallywhenweconsider

thesesameoil,whichcanbeboughtatgrocerystoresfor300yenper100gbottle(7timesmoreexpensive).Thepromotionmodelcurrentlyinusecanjustifythehighprice.Bysellingthe products only in their local shop, theMimatangoma project tries to characterize itsproductsashighqualityanduniquetotheregion.Thefactthatproductsaresoldonly inthelocalshopalsomakesitimpossibleforbuyerstodoanypricenegotiationwithfarmers.

This promotion style is very similar to OVOP because theMimatangoma projecttriestocharacterizeitsownproductsasveryhighquality.TheproblemhereisthatOVOPisusuallyusedtopromotetheproductsashighqualityandlowcost(asdiscussedbefore).IftheMimatangoma project expects this approach to work, the administration needs toseriouslyrethinktheirpricingpolicies.Place

RegardingthedistributionofMimatabrandedproducts,theprojectoperatesalocalproduct shop inMimata called “Mimata-Cho-Bussanten-Yokamonnya”,wheremostof itsproducts are sold. As explained before, this approach is good when considering thatproductssoldintheshoparecharacterizedaslocal-foodandmayallowfarmerstosellitathigherprice(Michi-no-Eki).Still,businesswise, itgreatlylimitsthereachoftheirproduct.Basically,peoplewhowanttogetMimatangoma’sproductshavetogoallthewaytotheshopinMimata,whichforsomeconsumersmightbetroublesome.Expandingthesalesoftheirproductstootherareasseemsalogicalsteptobetakenhere,until we consider problems like shortage of labor and the production capacity of theregion.DistributionofMimatangoma’sproductscouldbedoneslowlytonearbyshopsandevensupermarkets.Ofcourse,itisdifficulttoimagineMimata’ssesamebeingsoldatchainsupermarkets,wheredailygoodsare likely tohaveapriceadvantage.Still,byexpandinggradually,Mimatangoma could start selling itsproducts in smaller local shops (andevenother Michi-no-Eki), and make use of periodical deliveries, which means that productcontinuitydoesnotneedtobekept.Deliveriescouldhappenonceaweekor indifferenttimesaccordingtopersonalavailabilityanddemand.

Inaddition,accordingtothewebpage,theydon’toffertodelivertheirproductstolocalorganizations like schools andhospitals.Byoffering localdeliveryof theirproducts,theMimatangomaprojectcouldcreateaconsistentsourceof incometo its farmersas itcreatesaconstantdemandfortheirproducts.So,atthispoint intime,nothavinga localdeliveringsystemcanbeseenasaweakpointoftheMimatangomaproject,onethatcaneasilyberemediatedbytheadministration.


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Theprojectkeepssomesmallpartnershipswithlocalrestaurants,coffeeshopsandbakeries.Thisshowsthepossibilityofexploringevenmorethisdirectpurchasingstylewithnomiddlemanintheprocess.Theproject’swebpagelistsmanyofthesepartnershopswithpictures,commentsandshop’saddresses.Promotion

TheprojectkeepsanactiveonlinepresencethroughtheirownwebpageandalsoaFacebook account where visitors can check the newest information about the project.Regarding theirFacebookpage, it lacks frequentupdates.At the timeof thiswriting, thelatest postwaswritten about threemonths ago. On theirwebpage, they promote theirnewprocessedsesameproductswithpicturesandinformationshowinghowtheirproductsareprocessedandproduced.

Althoughtheproject tries tokeepanactiveonlinepresence, theprojectdoesnotuse other conventional promotion methods like TV commercials that might be moreappealingtoconsumerswhoarenotusingFacebookornotusingcomputersatall.

STRATEGICPLANFORPROMOTINGMIMATANGOMAToproposegoodmarketingstrategiestoimproveMimatangomaproject,itis

necessarytousesomesuccessfulmarketingideasascasestudies.Asexpected,thearea,product,andmanyotherconditionsinthematerialanalyzeddifferfromMimatangoma.Therefore,weshouldanalyzeandcomparethemverycarefully.Strategy1:Directtoschoollunch

Selling andmarketingMimatangoma as local food looks easy, but according to areport(Martinez,2010),itisnotsoeasyforsmalllocalcommunitiestoselltheirproductas“localfood”.Theymayencountersomebarrierslikeshortageoffarmers’timeandlabor.

Nowadays, the word, “Chisan-Chishou”, translated as “Local production for localconsumption”, isalwaysusedpositively in JapanandevenbecameanationalprojectrunbytheMinistryofAgriculture,ForestryandFisheries(MAFF,2016).Bysellingagriculturalproducts in the local area, sellers can cut the cost of transportation and deliver theproducts with high freshness. This consuming style is also good for the environment,becausereducingthedistanceoftransportationmeansreducingtheemissionsofCO2.Usually, people associate the concept of local food with products sold at local grocerystores.Althoughnotwrong,thisisaverylimiteddefinition.Theconceptoflocalfoodalsoconsidersthewayofmarketinganddeliveringlocalproducts.Gettingordersanddeliveringtheirproductstolocalschools,hospitals,andotherorganizationscanbelargepartsoftheincomeoflocalfoodmarketing.TheMimatangomaprojecthasalreadyadirectdeliveringsystemwithsomerestaurants,andthis isdefinitelysomethingtheyshouldnotonlykeepbutalsoincreaseasmuchaspossible.

Some local schools already support the plan to use Mimatas’ sesame for theirschoollunch.AlthoughthisisreallygoodnewsforsesamefarmersinMimata,italsocomeswith some problems., The first problem faced by farmers is that the actual productionoutput isnotenough tocoverall schools located in thearea.Thesecondproblem is thehighpossibilityofstudentshavingallergicreactionscausedbytheingestionofsesame.Thecommunities in Mimata have already created some plans to solve both problems.Regarding the lack of production, the project management decided to give schools notsesame itself, butmarcof sesame.Whenprocessing sesame to extract its oil, extracting


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machines squeezes the sesame and the left over product is called marc of sesame.Originally, the marc of sesame was disposed, but by distributing it to schools, thecommunitywasable tohelp localschools financiallybyproviding lunchthat is financiallyaccessibleandalsosave farmers fromthe troubleofdisposing themarcafter sesameoilextraction.

Thisisveryinterestingasnotonlyseeds,butalsotheoilandleavesofsesamecanbe used in meals since they are also edible. According to the leader of the Mimatacommunity.Thecommunity isalsocooperatingwithMiyazakiUniversityand researchinghowtoprocesssesameleavesinawaythattheycanbeusedliketealeaves.

The allergy problem is more difficult to solve. The majority of Japaneseelementary schools have a school lunch system. At lunchtime, all students and teachershavethesamemeal,whichcomesfromcookingcentersorfromtheschool’scafeteria.Theidea of having the same menu for everyone in the school helps with the budget, butstudents(andsometimesfacultyandstaff),mayhaveanallergytosomekindsoffood,themostcommonbeingallergiestodairyproductslikeeggs,wheat,andothers.

Every year around Japan there are several cases of allergic reactions amongstudents due to mistakes during school lunchtimes (The Japan Times, 2016) (KanagawaShinbun, 2016). For instance, in 1988 a soba allergy shock caused the death of anelementaryschoolstudent inHokkaido(AsahiShinbun,2014).Althoughrare,sesamecanalso cause allergic reactions and Mimata’s strategy to provide school lunches mustconsider the possibility of allergies. Without strict checking and clear communicationbetweentheschools,studentsandcookingdepartment,thecommunityofMimatangomawill not be able to start a good delivery system of the sesamemarc for school lunches.Lookingatpreviousincidents,itisclearthatitisveryimportanttoavoidthesametypeofprobleminMimatasinceanyallergyincidentmayseverelydamagetheimageofthewholeprojectandeventheregion.Strategy2:DirectMarketingonInternet

TheMimatangomaprojectdoesnothaveanInternetorderingsystemyet;theyonlyhavethewebpageofrequestformwiththeiremailaddressandphonenumber.Thissituationcanbeconsideredasoneoftheweakpointsofthisprojectanditishighlightedin

Table1.WithanInternetorderingsystem,thelocalcommunityisabletosavetheirtimeandlabor(Michaela,Bryan,Jody,&Nicholas,2010).Moreover,consumerscangettheproductseasily,byjustclickingabuttononthescreenandthenwaitingforthedelivery.Inmostcases,itissafetoassumethatanincreaseinsaleswillcomeasaresultofintroducingsuch a system. Year-by-year, more and more people are using the Internet to makepurchases, not only young people but also mid-aged and elderly people. Large Internetshopping companies like Amazon and Rakuten have become very popular from Internetpurchasing in Japan,andmanyshopsandmakersareselling theirproducts there.SellingMimatangoma on that kind of website would be one way to quickly reach differentmarketsandcanboostsaleswithouttimeconstraint.

The possibility of keeping their products only on their web page is also analternative,butmakingaspecialpagefor itorusingsocialnetworkstopromote itmightmake a lot of difference. Nowadays, lots of small shops have some kinds of orderingsystems on their webpage, and most of them entrust the set up job to professional ITmarketing companies. These professionals have the know-how to protect customers’information and to set up effective pages. Such online ordering systemswill, of course,


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incur someexpenditure,but theMimatangoma project could startwitha simple systemandupgradeitassalesincrease.Themainideahereisthatfarmersreceiveanorderthatisreadytoship,withouttheneedtocommunicatemanytimesoverthephonetosetdetailsofthepurchasewithconsumers.ThisdirectInternetorderingserviceisverydifferentfromtheideaoflocal-food,butitwouldbeabletoexpandthereachofMimata’sproductsandbecomeknownbypeopleindifferentpartsofjapan.Strategy3:Agritourism

Setting a promotional tour can be another effective way to promote theMimatangomaprojectoutsideofMimataandMiyazakiarea.ThiskindoftourismiscalledAgritourism, a combination ofagriculture and tourism. Agritourism can have some goodeffects to theprojectas touristsbecomepotentialbuyers, farmerscanshowandtell thequalityoftheirproductinperson,andfarmerscanhavethechancetoheartheconsumers’thoughtsonwhat they really thinkabout theproducts.However, conductingagritourismoftenneedsthelocalprefecturaldepartment’ssupport,becauseitisdifficulttoconductitonly by a small local community. Moreover, it is difficult to think that people andcompaniescometoMiyazakionlytovisitsesamefarms.Itiseasierandmoreefficientthatfarmers offer the idea of agritourism to their local prefectures and then the prefecturaldepartmentsplanthetoursfortouristsothattheycangoandseesomefarmers’projectsand products in one tour or working and conducting the tour with other local farmers,communities,orbusinesses.

Inaddition,toinvitepeopleintothisagritourism,farmersandplannersshouldmakeupa tour-plan,whichwill give touristsanenjoyable feeling.Agritourism includesvariousevents: outdoor recreation, education, accommodation, and entertainment. Table 4 listssomeexamples,whichmaybewellsuitedtotheMimatangomaproject.Table4.Somerecreationsthatcanbeusedtopromoteagritourism(Burden,2016)

Farmtoursforfamiliesandschoolchildren.Children’seducationalday(camps)

Hands-onU-pick“self-harvesting”and“work-on-the-farm,”asina“pick-‘n’-pick”musicandharvestvineyardweekend.

Cornmazesandhauntedforests.

Whenthinkingaboutagritourism,oneadditionalideawouldbetoallowvisitorstoharvest theproducts themselves. Japanese families and tourists like the ideaof going toagriculturalareasanddoingfruitpicking.ThisisanactivitythattheJapanesegovernmentusestopromotetourisminJapan(JNTO,2016).Itiseasytoimaginethat,allowingpeopleto cook what they have just harvested can be transformed into a fun activity thatmayboostnotonlycommerce,butalsothehotelindustry,aspeoplewouldhavetosleepovertocookdinner.

SomeagriculturalareasinJapanhavealreadystartedagritourism,sowecanbringsome of their ideas to Mimata agritourism. In Sanpachi (south-east area in Aomoriprefecture), SanpachiAgricultural TourismPromotionAssociation is runningagritours forschool children with the support of the association of Aomori Green-tourism (AomoriPrefecture,2016).

During the interview in Mimata, Mr. Shimoishi said that there are two mainreasons why Mimata cannot do agritourism. First, Mimata lacks enough places to


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accommodate tourists. IfMimata starts receiving toomany people suddenly itwill be aproblem because there are not many hotels where people can stay. The second mainproblemistransportation.ItisverydifficulttogettoMimata’sagriculturalareasfromthecity.

Looking back at the example of Sanpachi, the Sampachi Agricultural TourismPromotion Association found a workaround for the accommodation problem by simplyaskinglocalfarmerswhowantedtojointhetour-projecttogetaqualificationforrunningsimpleaccommodationbusinesses.This simple ideawaswell receivedby thecommunityandnow75farmersareabletoofferroomswheretouristsvisitingtheregioncanstay.Intheory,thisideacouldbeimplementedinMimataaswell.

Regarding the transportation problem, we firmly believe that the city ofMimatashould give some incentives to promote easy access to the region. Bus companies havefixed schedules and routes for their buses, butwewould suggest that some specificbusrouteandtimetablecouldbecreatedinordertobringvisitorsfromMimata’strainstationto Mimata’s agricultural areas. The city administration should be able to take care offinancialdetailsorevensubsidiestobuscompaniestocreatesuchroute.Strategy4:Farmer-to-Consumer

The first idea would be to sell Mimatangoma products without a middleman.Without awholesaleor supermarket betweenproducers and consumers it is possible toofferproductsat lowerprices to consumersat the same timeas raising farmer’sprofits.This interesting idea is explained in the Farmer-to-Consumer publication series by theOregon StateUniversity (Burt andWolfley, 2009). There the authors explore the idea ofFarmer-to-Consumer marketing and argue that, because consumers tend to choosecheaperproducts,thismarketingstrategytendstobeveryeffectiveforsmallfarmers.Thereason is that without amiddle-seller, products tend to be cheaper and the amount ofsalesisexpectedtoincrease.

The easiest way to implement a Farmer-to-Consumer marketing strategy in theMimataregionwouldbetoincreasetheironlinepresenceandmakeonlineorderspossible.A simple ordering system would not be too expensive and would only require thatsomeone able to deal with email and computers to be in charge of receivingcommunicationfromthewebsiteandpassingittothefarmers.Thesamesystemshouldbeable to keep track of orders so theMimatangoma project administration could checkwhichordershavebeenshippedandwhichonesarestillpending.Thisonlinesystemcanbe implemented togetherwith the“Directmarketingon the Internet” strategydiscussedbefore.Strategy5:OrganicFarming

One of the strong sales points ofMimatangoma is their productionmethod. Thefarmers use no agricultural pesticides during their sesame farming, and this kind ofproducing style is called organic farming. Now, theword “organic” is very attractive forbuyersandconsumers.SomeforeignerssayJapaneseagriculturalproductsareusuallysafebecauseof their low-pesticideuse, andnotonly foreignersbutalso Japanese consumersnow want to choose low-pesticide or pesticide-free products. So how can theMimatangoma project promote their products’ organic sales pointmore effectively? Onthewebpageof theMimatangoma project, theyput someexplanationsofpesticide-freefarming and safe farming, but on the packages of their processed products, there is not


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suchkindofexplanation,sotheylostopportunitiestopromotethisimportantsalespoint.Accordingly, the first point is putting the word “organic” or “pesticide-free” on theirproducts’ packages. Moreover, nowadays, many organic farmed products are sold withfarmer’spicturesontheirpackages.Bynotonlyputtingtheinformationofproductionbutalsoputtingfarmers’namesandfaces,theprojectcouldencourageconsumerstobuytheproductsbecausetheyfeeltheyaresafe.

To implement this strategy, the Mimatangoma project just needs to startadvertising its products as “organic” andmake sure that this word is noticeable on theproducts’package(addingfarmer’spicturescanbeamoreeffectivewayofdoingit).Strategy6:ImprovetheirexistingMichi-no-Eki

MimatahasitsownMichi-no-EkibythesideofMimata’strainstation.InSeptember2016, I went there to observe and noticed thatmost peoplewho use thatMichi-no-Ekiseem to be local people and therewere few tourists.Oneof themain reasons to put aMichi-no-Ekinearastationoranationalhighwayistoinviteoutsiders.Theareabecomesaplacewherelocalfarmerscanpromotetheirproductstotourists.Weshouldn’tforgetthatthisstorealsoshouldbeaplaceforlocalpeopletocommunicate,buttodevelopMimata’sagriculture;thisMichi-no-Ekineedstobeamoreattractiveplaceforoutsiders.Inordertodothat, Iwouldsuggestmoreheavilypromotingaproduct thatcanattractmanypeopleeasily.OneideawouldbetouseMimata’ssesameflavoredicecream.ItisdifferentenoughtobringmanycuriouspeopletoMimataonlytotryit,andatthesametime,itisauniqueproduct.

Inshort,toimproveMimatangomaprojectandMimatacityisnotaneasytask.Byincreasingtheironlinepresence,investingininfrastructure,makingagreementswithlocalbusinessesandimprovingtheirMichi-no-Ekiisagoodplacetostart.

DISCUSSIONANDCONCLUSION

Inthesituationofagingsociety,sloweconomicgrowth,anddecliningyounglaborforceinruralareasofJapan,itisimportanttounderstandthesituationoflocalagriculturalcommunitiesandprovideabusinesssolutiontorevitalizethem.

DuringthisresearchwecametounderstandthatMimataisaregionthatwantstogrow, is supported by its people and has a good product, but that needs a little bit ofsupportfromoutsideforthingsthatthecommunityitselfcannotprovidetocustomersandvisitors (e.g. hotels for larger scale tourism). The lack of infrastructure is something thatregionalandnationalgovernmentsneedtoactivelyengage.

When the Japanese government signed the TPP agreement, many people inagriculturalcommunitieswereagainstitbecausetheybelieveditwasagainsttheinterestsofJapaneseproducers.LookingatthepossibleimpactsoftheTPPitiseasytounderstandwhysomanyJapaneseagriculturalcommunitiesfeltafraid.Still,atthetimeofthiswriting,theTPPagreementisatriskoffailing.TheUnitedStatesofAmericahaselectedtheirnextpresident, one that is against theTPPagreementand thathas already said in interviewsthattheU.S.Aisgoingtodropoutfromtheagreement(BBCNews,2016).

Tobe fair,without theUSA, in the agreement,manypeople say the agreementwill fail. Inouropinion, thismaybeachance for the Japanesegovernment to rethink itsstrategy ondevelopment of rural areas. If the TPP agreement really fails, Japanese ruralareas have the chance to prepare better for future agreements like the TPP as it is ourbeliefthatothersimilaragreementswillcomeinthefuture.Therefore,notonlyMimata,


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but also other communities should use this time to make themselves strongereconomically.

Lookingbackatourresearchproblem,wecannowunderstandthatMimata(andprobably many other agricultural areas in Japan) is not ready for big changes withoutsupport. In addition, our simple analysis of the 4P’s ofmarketing for theMimatangomaprojectwasenough topointoutmanyareasof improvement to currentpractices in theproject. Although the ideas presented here are only suggestions at this point, we hopethesecanbeastartingpointtoimprovetheregionandtheproject,Weexpecttoexpandthisanalysistothe7P’sofservicemarketinginfutureworks.

REFERENCESAomoriPrefecture.(2016).Aomorikengurīntsūrizumuukeirekyōgikai

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AsahiShinbun.(2014)Shokumotsuarerugīhifukaramo [FoodallergiesFromskinalso].Asahi.Com.Retrieved10December2016,fromhttp://www.asahi.com/area/hokkaido/articles/MTW20140709011110001.html

BBCNews.(2016).TrumpSaysUSToQuitTPPOnFirstDayInOffice-BBCNews.BBCNews.Retrieved10December2016,fromhttp://www.bbc.co.uk/news/world-us-canada-38059623

Burden,D.(2016).AgritourismProfile|AgriculturalMarketingResourceCenter.Agmrc.Org.Retrieved10December2016,fromhttp://www.agmrc.org/commodities-products/agritourism/agritourism-profile/.

Burt,L.A.,Wolfley,B.F.(2009).Farmer-to-consumermarketing,1:anoverview.OregonStateUniversity,ExtensionService.

Ferrel,O.C.,Hirt,G.(2000).Business:Achangingworld.TataMcGraw-HillEducation.JNTO.(2016).“FruitPicking-JapanNationalTourismOrganization”.Jnto.Org.Au.Retrieved

25November2016,fromhttps://www.jnto.org.au/fruit-picking/.Igusa,K.(2006).GlobalizationinAsiaandLocalRevitalizationEfforts:aviewfromone

villageoneproduct(OVOP)movementinOita.CollegeofAsiaPacificManagement,RitsumeikunAsiaPacificUniversity,Oita:Japan,58.

TheJapanTimes.(2016).AvoidingFoodAllergyTragedies.TheJapanTimesLTD.Retrieved20November2016,fromhttp://www.japantimes.co.jp/opinion/2013/05/20/editorials/avoiding-food-allergy-tragedies/.

KanagawaShinbun.(2016)Kyūshokudejidō17ninarerugīshōjōYokohamashinai13-kō [17childrenwithAllergic

symptomsafterSchoollunchin13schoolsinYokohama].Retrieved20November2016,fromhttp://www.kanaloco.jp/article/182627[Accessed10Dec.2016].

MAFF.(2016).Chisanchishōkokusannōrinsuisanbutsunoshōhikakudai:Nōrinsuisanshō”[Localproductionoflocal

consumption·Expansionofconsumptionofdomesticallyproducedproducts].Maff.Go.Jp.Retrieved20November2016,fromhttp://www.maff.go.jp/j/shokusan/gizyutu/tisan_tisyo/.


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Martinez,Steve,etal.(2010)“LocalFoodSystems:Concepts,Impacts,andIssues”,ERR97,U.S.DepartmentofAgriculture,EconomicResearchService.Retrieved20November2016,fromhttps://www.ers.usda.gov/webdocs/publications/err97/7054_err97_1_.pdf

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Yokota,T.(2006).GuidelinesforRoadsideStations“Michinoeki”MIRI,TheWorldBank35683.WorldBank.2005.WorldDevelopmentIndicators.Washington,DC:WorldBank.


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FactorsaffectingtransientandchronicpovertyinthePhilippines

CynthiaP.CudiaDeLaSalleUniversityManila,[email protected]

ABSTRACT

Thelevelsofpovertytakedifferentapproachestotackle.Povertyasaglobalproblemcanbeclassifiedintotransientandchronicpoverty.Thisstudyaimstoexaminethedynamicsofpoverty with some factors influencing it. Specifically, it measures the effect of someeconomic, demographic, and social factors on the poverty status of Filipino households.Using repeatedcross sectionanalysis fromthebaseline logisticmodel, results reveal thatthefactorsincludedinthestudysignificantlyaffecttransientandchronicpovertystatusofFilipinohouseholds.Keywords:transient,chronic,poverty

INTRODUCTIONThedevelopingworld,includingthePhilippines,hasbeendescribedintermsoftheirmostsignificantfeaturesandoftheirstateofpoverty.Theseeconomiesmeasurepovertyusingvariousmetrics,whichdefinetheirstateofunderdevelopment(TodaroandSmith,2011).

Across theworld,measuresofpovertyhavebeenbasedoneconomic indicatorssuchas incomeandconsumption(Arcillaetal.,2011;Estudilloetal.,2008;Mitiku,2014;Orbeta,2003,2005),andalsootherdimensionssuchascapacity(Atagubaetal.,2013)andothersocial inclusionprinciples(Marlier&Atkinson,2010;Waggle,2008).Rivera,Pizzaro,andAliping(2013),forinstance,notedthatinthePhilippines,povertyisofficiallymeasuredthroughthepoverty(percapitaincome)andfoodthreshold(minimumcostforfood).

Kakwani (2010) supported constructing a new model for poverty lines due todifferencesindemographicfactors.Forexample,whilethereisastandardcomputationforthecaloricrequirementperfamily,itwillnotbefairtospecifysimilarfoodbasketsforthepopulationgivendifferencesinfamilysize,regionalpricethresholds,andlocation,plusthefactorofinflation,thustheneedtodeterminedifferentfoodpovertylineperregion.Othernon-monetarymeasureswhichcoulddefinethepopulation’sstatuswhetherpoorornon-poorincludewaterandsanitation,health,education,andshelter(Chambers,2007).

The levels of poverty take different approaches to tackle. For example,Moreno(2011)suggestedthatonlytheenterprisingpoorcouldenjoythebenefitsofmicrocredittoengageinentrepreneurshipandnotthepoorestofthepoor,thehardcorepoor(Milgram,2001),or theabjectpoor (Alvarez&Barney,2013).Other studies (Aslanbeigui,Oakes,&Uddin, 2010; Boateng, Boateng, & Bampoe, 2014; Milgram, 2001; Shetty, 2010) alsoshowed that thosewho have had experience in starting or handling one’s own businessgained access tomicrocredit. Thosewho are enterprisingwould have anupper hand inaccesstoaresourcetogrowthebusiness.Thelattercouldbenefitmorefromcashtransferprograms(Moreno,2011),whichcouldhelpintheirday-to-daysubsistence.


28

Economic transformation, i.e.,moving households from low to high income is aconcern of development economics but the new viewof economics aims higher than toincreaseincomeandthatis,toeliminateorreducepoverty,inequality,andunemployment(TodaroandSmith,2011).

Of the poverty mobility options, poverty alleviation or eradication has beenamongthemoststudiedandperhapsthegoalasfaraspovertymobilityisconcerned.Afterall,asHulme(2009)stated inhischronicleoftheMillenniumDevelopmentGoals (MDG),povertyalleviationisamoralobligation.Atthecruxofdiscussionspovertyistheextremeinequalityofincomesthatstuntmacroeconomicgrowthandtheinequitabledistributioninsociety(Reyesetal.,2010a,b;VandenBerg,2012).TodaroandSmith(2011)statedwhyextreme income inequality should be a matter of concern. First, it leads to economicinefficiency, which leads to inefficient allocation of resources. Second, inequalityundermines social stability and solidarity. Generally, itmeans that the rich gain politicalpower that increases their bargaining power. Consequently, the outcomes of thesenegotiationsonlybenefittherich.Lastly,extremeinequalityissimplyunfair.

Importancerisestoexplorehowsomefactorswouldaffectthecontinuousbattleof an economy such as the Philippines against poverty. This study focuses not only onpoverty alleviation but other poverty mobility scenarios such as no change in status,movementtofurtherpoverty,orfromastateofpovertytonon-poverty.Hence,thisstudyanswerstheresearchproblem,“howdosomeeconomic,demographic,andsocialfactorsaffecttransientandchronicpovertystatusofFilipinohouseholds?” Itparticularlyaimstotest whether demographic (age, size, size, age, education), economic (wage,entrepreneurship, government support) and social (urbanity) factors affect the povertystatus of Filipino households. Furthermore, it aims to testwhether these factors lead totransient or chronic poverty in the Philippines. Once the relationships have beenestablished, thiswillbenefitnotonlythepeoplewhofallbelowthepoverty linebutalsothe policy-makers for economic development. Moreover, this will also benefit investorsandbusinessmen,theacademeandfutureresearchers.

REVIEWOFRELATEDLITERATUREPoverty studies would usually focus on factors onwhy someone becomes or is

poor. The literature pointed to demographic factors such as age (Estudillo, Sawada, &Otsuka2008;Heslop&Gorman,2002), family size (Arcilla,Co,&Ocampo,2011;Orbeta,2003, 2005; Son, 2013), education (Chatterjee, 2005; Hala & Ali, 2013; Kim & Terada-Hagiwara, 2013), gender (Kim, Lee,& Lee, 2010; Todaro& Smith, 2011; Dowling& Yap,2009), race (David & Gouws, 2013; Miller, 1968), and disability (Rahman, Matsui, &Ikemoto,2013)asdeterminantsofpoverty.Economicfactorslikewages(Hasan&Jandoc,2010),entrepreneurship(Alvarez&Barney,2013;Durrani,Usman,Malik,&Ahmad,2011;Mitiku, 2014), and access to credit (Huddon, 2008), as well as social factors such asinequalityofdistributionofwealth,forexample,betweenurbanandruralcenters(Koveos& Zhang, 2012; Islam, Islam, & Abubakar, 2012; Sawada & Estudillo, 2012), citizenship(Dowling&Yap,2009;Wagle,2008),andwar (Dowling&Yap,2009;Lim,2009)couldallcontributetopoverty.

Corollary to thediscussionontheMDGonpoverty is thearticulationofpositiveexternalities. As determinants of poverty such as demographic, economic, and socialfactors contribute to poverty, among those that persistently contribute to poverty areunemploymentandurbanity, i.e.,social factordictatingruralpoverty.Sulistyowati (2013)


29

discussed how investments on educational, health, and infrastructure expenditurecontribute to employment and reduced poverty. His study found that increased healthexpenditure contributes most to increased gross domestic product (GDP), all sectorworkforce (regardless if industrial or agricultural), and reduced poverty. Given thisincreasedinvestment,ithasapositivebenefitonindividuals,aswellasasocietaleffectofincreasedproductivitythroughemploymentandreducedpoverty.

Povertyasaglobalproblemcanbeclassifiedintotransientortransitorypoverty,andchronicorpermanentpoverty.Krishna(2010)classifiedtransitoryortransientpovertyasone inwhichpeople’spovertystatus isonly forashort term.For instance,CohenandTyree (1986) studied characteristicsof thepoorandnon-poor in theUnitedStatesusingthe Panel Study of Income Dynamics from 1967 to 1978. They found that sons anddaughters were able to escape poverty when their families have savings, a business orgood education. They also contributed new factors for mobility such as community oforigin (whether the community is affluent gauged by the median income of theneighborhood),andmarriage.Furthermore,Rahmanetal.(2013)intheirstudyofpovertyinBangladeshcategorizedpovertyasascendingpoorto includehousehold incomebelowthepovertyline10yearsagobutescapedpoverty.Thestudycitedthat76percentupwardmobility was caused by increase of work opportunity, diversified income sources, cropdiversificationandprogressinbusiness.

Ontheotherhand,chronicpovertyisacategorytowhichthosewhohavebecomepoor remain so for a long period of time, sometimes intergenerational (Krishna, 2010;Prowse,2009).Usingpaneldata,Rahmanetal.(2013)categorizedpovertyintochronicallypoor as thosewhose household income fall below the poverty line for a long period oftime; and found that such state of poverty was due to high family expenses, naturaldisasters, loss of money for employment abroad, and high treatment cost for illnesses.Moreover, Alvarez and Barney (2013) showed the other side of microfinance, in whichacquiringsmall loansforabusiness ledtofurtherpovertyofthebeneficiary.Theauthorsshowed that microfinance institutions were not discriminate in handing out loans topotentialborrowers,evenifall10wouldusetheloanforopeningasmallstoreinthesameneighborhood. In this scenario, some would thrive, and unfortunately, others would gobankrupt.Thosewhowentbankruptsecuredmoreloanstopayfortheinitial loan,whichledthemtofurtherpoverty.

Likewise,usingdatafromtheAnnualPovertyIndicatorsSurvey(APIS;2004,2007,and2008), Family IncomeExpenditureSurvey (FIES;2003and2006),andcombinedAPISand FIES five-year panel data set, Reyes, Tabuga, Mina, Asis, and Datu (2010) alsocategorized poverty status of Filipino households as chronic poor those who wereconsistently poor in each of the covered year; and transient poor thosewhowere poorduring a given period of time and non-poor for at least one year during the year understudy.

Thisstudycontributesindeterminingtheeffectofsomedemographic,economicandsocialfactorsonpovertymobilityinthePhilippines,especiallyinprobabilityresultssuchastransientandchronicpoverty.Likewise,thisalsolooksintofamilysize,education,wageasfactorsofpovertyandconfirmthefindingestablishedintheresearchofReyesetal.(2010b).


30

METHODOLOGY

Using data of Filipino households from Annual Poverty Indicators Survey (APIS)2008andAPIS2011with190,171and42,063householdsrespectively,thisstudyexaminedpovertystatusofFilipinohouseholds.Specifically, thisstudymeasurestheeffectofsomeeconomic, demographic, and social factors on transient and chronic poverty in thePhilippines.Toachievethisobjective,twophasesofmethodologywereemployed,namely,maximumlikelihoodestimation(MLE)andrepeatedcross-sectionanalysis.

The first phase MLE is an alternative approach that utilizes out of sampleinformationandprovidesmoreefficientestimates(Greene,2013,ascited inConchada&Rivera, 2013). The dependent variable, i.e., whether the household is poor or not, is adummyvariable that ismodeled as a standard logit probabilitymodel. Hence, a logisticmodelwasemployedwiththefollowingspecification:

(1)

wherepi/(1−pi)measurestheprobabilitythaty=1relativetotheprobabilitythaty=0,which is called the odds ratio or relative risk (Gujarati& Porter, 2009). For the logisticregressionmodel,thelog-oddsratioislinearintheregressors(Cameron&Trivedi,2005).In this study, poverty is measured in terms of per capita income based on the povertythreshold from National Statistical Coordination Board of PHP16,871.00 per year orPHP46.86perdayortheequivalentofapproximatelyoneUSD.Hence,householdshavingpercapitaincomeatpovertylineofPHP16,871.00peryearisconsideredpoor.

To measure the influence of the independent variables (i.e., demographic,economicandsocialfactors)ontheprobabilitythatahouseholdwillbepoorornon-poor,thelogisticspecificationisgivenby

=f(FSIZEi,AGEi,AGESQi,EDUCi,WAGEi,URBANi,ENTREPi,

GOVSi)+εi

(2)

where:piistheprobabilitythatahouseholdisconsideredpoorwhile(1–pi)istheprobabilitythatahouseholdisnon-poor.FSIZEi(familysize)isthenumberoffamilymembersinthehousehold.AGEi indicates theageof thehouseholdhead, reported in termsof thenumberofyearscompleted,thatis,his/herageasoflastbirthday.AGESQiindicatestheage-squaredofthehouseholdhead,whichisgeneratingaquadraticcurve.Positiveeffectofageandanegativeofagesquaredwouldmeanthatashouseholdgetsolder,theeffectofageislessened.EDUCi(education)isdefinedasthehighestgradecompletedbythehouseholdheadinanyeducationalinstitution.WAGEi refers to the gross basic salary or wage earned by the household head from allhis/herjobs.

εβ +=⎟⎟⎠

⎞⎜⎜⎝

⎛

−'

1ln x

pp

i

i

⎟⎟⎠

⎞⎜⎜⎝

⎛

− i

i

pp

1ln


31

URBANi(urbanity)isadummyvariableassigningthevalueof1ifthehouseholdisresidinginurbanareaand0inruralarea.ENTREPi (entrepreneurship) indicates whether or not the household is engaged inentrepreneurship.GOVS (government support) indicates whether the household received governmentsupportunderKalahi-CIDSSprogram,povertyreductionproject.

After employing MLE to determine whether the independent variables aresignificantontheprobabilitythatahouseholdwillbepoorornon-poor,weproceededtoexamine the mobility into and out of poverty in the Philippines using repeated cross-section analysis. For this purpose, we adapted the model from the derivation of Dang,Lanjouw,Luoto,andMcKenzie(2011),analternativestatisticalmethodologyforanalyzingmovements in andout of poverty basedon twoormore roundsof cross-sectional data.Household characteristics in round 2 that are observed in both round 1 and 2 provideslinearprojectionofround2income;andgivesestimationofthedegreeofmobilityintoandoutofpoverty.Forinstance,toestimatethefractionofhouseholdinthepopulationwhoare poor in round 2 after being poor in round 1 could be expressed after somemanipulations,as:

which represents the degree of mobility our of poverty for households over the twoperiodsinthestudy,where!!!and!!!represent vectors of characteristics of household i in survey round 1 and 2,respectively,and!! and!!denotethepovertylineintheperiod1andperiod2respectively.Diagrammatically, the relationships between the variables tested are structured in thesucceedingFigure1andFigure2.

Figure1.DiagramofChronicPoverty

!(!!! < !! − !!′!!!!!"#!!!! > !!! − !!′!!!)!


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Figure2.DiagramofTransientPoverty

RESULTSANDDISCUSSION

DescriptiveStatisticsforPerCapitaIncome

PresentedinthefollowingtablearethestatisticalinformationofthedependentvariablepercapitaincomeusingAPIS2008and2011datasets.

Table1.Descriptivestatisticsforpercapitaincome

As shown in Table 1, therewere130,135 (68.43%)poorhouseholds and60,036

(31.6%) non-poor households from the total 190,171 households included in 2008 APIS.Ontheotherhand,therewere22,920(54.49%)poorhouseholdsand19,143(45.51%)non-poorhouseholdsthatwereincludedintotal42,063householdscoveredby2011APIS.

Panel A (2008)

Observations Mean Standard Deviation

Minimum Maximum

Poor Non-Poor Overall

130,135 60,036 190,171

8,702.67 38,047.64 17,966.92

3,756.25 41,602.22 27,240.92

0 0

16,873.33

16,870 1,850,000 1,850,000

Panel B (2011)

Observations Mean Standard Deviation

Minimum Maximum

Poor Non-Poor Overall

22,920 19,143 42,063

9,707.272 44,706.18 25,635.38

3,656.132 49,160.65 37,561.96

0 16,871.20

0

16,870.67 1,905,000 1,905,000

!


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BinaryLogisticRegressionTable2.Marginaleffectsbasedonlogitestimates

2008 2011Y=poor:

Probability

.7416693

.51060522ExogenousVariables

FamilySizeAge

AgeSquaredWages

NoGradeCompletedElementaryGraduateHighSchoolGraduatePost-SecondaryGradCollegeGraduate

UrbanityGovernmentSupportEntrepreneurship

.1105319***-.0070555***.0000259***-6.76e-06***.1966439***.0987187***-.030664***-.1522777***-.3701875***.221244***-.0143485***-.1596564***

.1599913***-.0070898***.0000248***-8.69e-06***.302918***.1157421***-.0694932***-.2765478***-.3605692***.2911865***.1755928***-.1967397***

Note:*significantat10%,**significantat5%,,***significantat1%,

Results of marginal effects after the logistic regression analysis show that theindependent variables (i.e., demographic, economic and social factors) significantlyinfluencedthedecreaseinpovertyincidenceof74%in2008to51%in2011.

Demographic factors such as family size, age and education revealed to havesignificant influenceontheprobabilityof thehouseholdofbecomingpoor forboth2008and2011.Theresultsindicatethatfamilysizecontributestotheincreaseintheprobabilityof the household of becoming poor. This implies that the greater the number of familymembers, the higher the probability that per capita income of household is below thepovertythreshold.

The results also show that age and age-squared are significant to thedecline inpoverty incidence. Age suggests a positive effect as it decreases the probability ofbecoming poor for both 2008 and 2011. Age-squared has a reverse effect as familymemberswhoareveryyoungoroldrelyonthehouseholdheadswhoareattheiroptimumtotakeonwork,withtheircapacityandphysicalstrengthtoearnanincome.

Another demographic factor education as presented in Table 2 revealed to besignificant with a twisting effect. Household heads whose educational attainment arebelowhigh school (secondary education) increase the probability of being poor for both2008 and 2011 while those with higher educational attainment, i.e., higher levels ofeducation past the secondary education, reduces the probability of being poor for both2008 and 2011 at an increasing rate. This empirical result validates the importance ofeducation, i.e.obtaininghighereducationwouldtranslate intohighprobabilityofgreatercapacityforearning.

As shown in Table2, resultsof themarginal effectsbasedon logistic regressionanalysis reveal that wages, entrepreneurship and government support are significanteconomic factors that influence the household of becoming poor or non-poor for both


34

2008and2011.Wagesofthehouseholdheaddecreasestheprobabilityofthehouseholdofbeingpoorforboth2008and2011.Theresultsindicatethatthe74%probabilityofthehouseholds being poor in 2008 decreases by 0.0007%; while 51% probability in 2011decreasesby0.0008%. Wenotehowever thatalthough theprobabilitiesare statisticallysignificant,theyexhibitminimaleffectonpovertystatus.

Also,entrepreneurshipdecreasestheprobabilityof thehouseholdofbeingpoorfor both2008 and2011. Thismeans that if thehousehold is engaged in entrepreneurialactivities, the results indicate that74%probabilityof thehouseholdsbeingpoor in2008decreasesby16%;while51%probabilityin2011decreasesby20%.ThissuggeststhatthemoreFilipinosare involved inentrepreneurialactivities, the lesser theirchancesofbeingpoor.

Furthermore, government support to the households significantly decreases the74%probabilityofthehouseholdofbeingpoorby15.8%in2008while51%probabilityin2011 increases by 18% as shown in Table 2. The volatility of results implies that thegovernmentsupportreceivedbyhouseholdsfor2008and2011cannotpredictreliablytheeffecton theirpoverty status.Attempts shouldbemade to reevaluate this statementasanothersetofdatainthefuturebecomesavailable.

Resultsofthemarginaleffectsbasedonlogisticregressionanalysisshowthatthesocialfactorurbanitysignificantlyincreasestheprobabilityofthehouseholdofbeingpoorforboth2008and2011.Thismeansthatifthehouseholdislivinginurbanarea,theresultsindicate that74%probabilityof thehouseholdsofbeingpoor in2008 increasesby22%;while51%probabilityin2011increasesby29%.BoundsofMobility

Usingrepeatedcross-sectionanalysisof thehouseholddata,approachproposedbyDang,Lanjouw,LuotoandMcKenzie(2011)inestimatingthemovementintoandoutofpoverty,weobtainedtheestimatesasshowninTable3.

The results provide some bounds on the extent ofmovements into and out ofpovertybasedonthecharacteristicsofthecross-sectiondataofhouseholdssurveyed.ThelowerandupperboundsinthetableareestimatedusingtheexogenousvariableslistedinTable2.Table3.Boundsofmobility

StateoftheWorld LowerBound UpperBoundPoorin2008;Non-poorin2011Non-poorin2008;Non-poorin2011Non-poorin2008;Poorin2011Poorin2008;Poorin2011

.0399

.4122

.4918

.0499

.0429

.4152

.4950

.0531

PoortoNon-PoorResultsof repeatedcross-sectionanalysis,as shown inTable3, reveal thatproportionofFilipino households in 2011 that lies between the lower and upper bound estimates of3.99%and4.29%wasabovethepovertylinein2011afterbeingbelowthepovertylinein2008.


35

Non-PoortoNon-PoorEstimatesaspresentedininTable3showthatfractionofFilipinohouseholdsin2011thatrangesfrom41.22%to41.52%wasabovethepovertythresholdin2011and2008.Non-PoortoPoorResultsasshowninTable3revealthatproportionofFilipinohouseholdsin2011thatliesbetween the lower and upper bound estimates of 49.18% and 49.5% was below thepovertythresholdin2011afterbeingabovethepovertythresholdin2008.PoortoPoorEstimates aspresented in Table 3 show that fractionof Filipinohouseholds in 2011 thatrangesfrom4.99%and5.31%wasbelowthepovertythresholdin2011and2008.PovertyMobility

In furtherance of repeated cross-section analysis, we used the probabilities inTable3,estimatingthedegreeofmobilityintoandoutofpovertyforhouseholdsoverthetwoperiods2008and2011tocategorizethehouseholdsintotransientandchronicpovertyaspresentedinthesucceedingtable.Table4.Povertymobility

StateoftheWorld 2011Households CategoryPoorin2008;Non-poorin2011Non-poorin2008;Non-poorin2011Non-poorin2008;Poorin2011Poorin2008;Poorin2011

4.14%41.37%49.34%5.15%

Transient

TransientChronic

TransientPovertyResultsas shown inTable4 reveal thatamong theFilipinohouseholds in2011,4.14%ofthemwerepoor in2008butmovedoutofpoverty in2011,andthereforecategorizedastransient poor. Likewise, transient poverty includes 49.34% of households in 2011 thatwereabovethepovertythresholdin2008butbecamepoorin2011.ChronicPovertyResultsasshown inTable4reveal that5.15%ofFilipinohouseholds in2011werebelowthepovertythresholdin2011and2008,andhencecategorizedaschronicallypoor.

CONCLUSIONSVariousreasonsarefoundintheliteraturethatpointtodifferenttypesandlevels

ofpovertyleadingtodifferentapproachestotacklethem.Thisstudyfocusedondynamicsofpoverty,categorizedintotransientandchronicpoverty.

Theresultsofthisstudyshowedthattheeffectsofsomedemographic,socialandeconomicfactorsaresignificantinreducingpovertyincidenceinthePhilippinesfrom74%in 2008 to 51% in 2011. Furthermore, using repeated cross-section analysis, this studyexamined how demographic factors family size, age, and education; economic factorswages, entrepreneurship, and government support; and social factor urbanity influencepovertystatusofFilipinohouseholds involved in thestudyandcategorized intotransientandchronicpoverty.


36

Similartorelatedstudies,familysizewasfoundtohavenegativeeffectonpovertystatus.Familieswithlargefamilysizesufferfromfinancialissuesduetogreateramountofincomerequired for the caring of familymembers. It is expected that a larger family often hasmoreexpensesthanasmallerfamilyandahigheramountofincomemustbebudgetedtomeetthebasicnecessitatesoffamilymembers.Hence,largerfamiliesaremoresusceptibletochronicpoverty.

Age of the household head was found to have significant positive effect onpoverty mobility from 2008 to 2011 while age squared posits the reverse effect.Consideringthathouseholdheadsincludedinthestudyagedintherangeof41to50yearsof age, the results suggest that while household heads are at their optimumwith theirphysicalstrengthasafactortoearnincome,suchthatwhenhouseholdheadsgetsolderoriftheyaretooyoung,thereisadecliningcapacitytoearnincomesufficientlyforthefamily.Hence,familieswithhouseholdheadsbelowandabovetheprimeagearemoresusceptibletochronicpoverty,whilethosewithhouseholdheadsattheirprimeagearemorelikelytomoveoutofpovertyandbecategorizedintotransientpoverty.

Education as the last demographic factor in the study has been found to havesignificantpositiveeffectonpovertymobility.Educationalattainmentofhouseholds thatarepasthigh school (secondary school) contributes to thedecrease in theprobabilityofthehouseholdofbecomingpoorwhilehouseholdswhoseeducationalattainmentarehighschool andbelow revealed to increase theprobabilityofbeingpoor. This indicates thatthose with lower education would have more difficulty in moving out of poverty andsusceptible to chronic poverty compared to thosewith higher education,which posits agreatchancetobecategorizedintotransientpoverty.

Economicfactorswages,entrepreneurshipandgovernmentsupportarefoundtobesignificantindecreasingpovertyincidenceinthePhilippinesfrom74%in2008to51%in2011.Householdheadsthatlackearningpoweraretrappedtochronicpovertyduetolackofsustainable income.Thisstudyshowedempiricalevidencethattheseeconomicfactorsinfluencepositivelytotransientpovertyaswell.

Lastly, social factor urbanity suggests a negative effect on poverty mobility.Specifically, this finding indicates that household living in urban area decreases theprobabilityofmovingoutofpovertyor fromtransientpovertyandhence, susceptible tochronic poverty. This suggests thatwhilemore job opportunities are available in urbanareas,competitionisstiffthatresultsinthephenomenonofurbanunemploymentinmanydeveloping countries like the Philippines. The inability to avail of social services such aseducation,healthandsanitation,andhousingcapabilityaremostlikelytobecontributorsofchronicallypoorastheylacktheearningpowertoliftthemselvestoahigherstandardofliving.

REFERENCES

Arcilla,R.G.,Co,F.F.,&Ocampo,S.R.(2011).Correlatesofpoverty:EvidencefromtheCommunity-basedMonitoringSystem(CBMS)data.DLSUBusiness&EconomicsReview,20(2),33-43.

AsianDevelopmentBank.(2012).TheKalahi-CIDSSprojectinthePhilippines:Sharingknowledgeoncommunitydrivendevelopment.MandaluyongCity,Philippines:Author.


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