Employment and technological change in Philippine agriculture

The initial steps toward the mechanization of the rice sector, stimulated by government policies and the introduction of the new rice technology, have not as yet resulted in any major labor displacement. Reduced labor requirements for land preparation have been more than offset by increased labor requirements for weeding and harvesting and threshing. Several policies adopted by the Philippine Government over the past decade have influenced relative factor prices and credit availability and, through these, the rate of mechanization. The adoption of the floating peso exchange rate in 1970 has helped to restore the balance between labor and capital costs. However, the higher minimum wage introduced after the adoption of the floating rate is likely to provide a further impetus for mechanization and to have a negative effect on employment. Mechanization strategy can complement desired institutional changes such as the transfer of land to small private owners or it can have an opposite effect. The stated objective of Philippine government policy in providing credit for mechanization is to assist small farmers. The credit however, has been used principally to finance the purchase of tractors by large landowners, and a review of credit policies in this regard may be warranted.