Juan Apolinario C. Reyes
When two events are observed to come together often, those events are said to be correlated. Correlation should be a topic of interest for anyone who keeps track of nation's economic affairs. It deserves a deeper reflection now more than ever because the national government released two batches of important statistics since Noynoy Aquino (P-Noy) delivered the SONA.
If one were to do a google search on world poverty statistics, one will discover that many of those who are classed poor belong to the farming sector. If one were to collect all the data that had been published for the last 100 years, you will find the same thing. Poverty seems to go hand-in-hand with farming. In statistics, and I am happy to say I teach one this semester, these two events are said to be correlated. Correlation indicates probabilities of joint occurrence. When two events are correlated, they are "often" observed to appear together. How often they come together is indicated by one measure called the correlation coefficient.
Why are farmers poor?
Farmers plant, harvest and sell their grains. Consumers buy those grains, cook and eat them. That is our food. But there is an average quantity of grains we need in a day. In nutrition terms, we call this the daily calorie requirement. If all we shall eat is rice (hypothetically speaking), then all we need is 10 cups of rice a day. This is the average calorie requirement for young adults. It is around 2200 calories.
Since consumers need only a specific range of calories from rice in a day, this sets a LIMIT to the income farmers can obtain from farming. Their income is likely to be correlated to our daily calorie requirement, in particular, to our daily carbohydrate requirements which is around 800 grams.
To produce more grains seems like the way to go. But if a farmer chooses to produce more, those extra grains go to waste. Again because people in general do not need more than 2200 calories. But by producing more, the farmer makes himself a fool in fact, because an abundance of grains in the market depresses its price.
Why is GDP not reflected on farmer's income?
When people earn more, they do not spend more on calorie consumption. But interestingly, when they earn more they change where and how they consume food. A cup of cooked rice costs only around 7 pesos in most carinderias around schools. But a professional like myself, who earns good money, eats his rice in fancy places like Mcdonalds, Gerry's Grill or Shakeys. A cup of rice in these places cannot be had for mere 7php. Its likely to be in the range of 55 to 65php.
This is where we see the sad fortunes of a farmer. His rice is priced very expensively in these restaurants, but the extra mark-up in revenue went to the food crew, the chef, the manager, and owner of the restaurant. Its people who added VALUE to rice who profited from the earnings of a man who makes good money.
This leads us now to the question often broadcast in mass media. Why is the phenomenal GDP growth of our country not reflected in the economic situation of farmers? This is because the "extra" wealth people earn is not devoted to acquire more food. It is spent to acquire the non-essential goods and services we see around us: CPs, Laptops, fancy restaurants, jewelries, concerts, bikes, cars, etc. Everybody seems to profit from this national wealth except the farmer.
The poverty of a farmer has to do with the mode of life he chose to make a living. Farming and poverty come together often but that has less to do with systematic exploitation often dangled in public consciousness, although I must agree they had been and are being exploited in various degrees. The core of their poverty has to do more with peoples' calorie requirements, in particular carbohydrate requirements, the Law of Supply and Demand, spending habits, and with the transformation in consumption patterns that come with improvement in income.
Word for today is correlation.
When two events are observed to come together often, those events are said to be correlated. Correlation should be a topic of interest for anyone who keeps track of nation's economic affairs. It deserves a deeper reflection now more than ever because the national government released two batches of important statistics since Noynoy Aquino (P-Noy) delivered the SONA.
If one were to do a google search on world poverty statistics, one will discover that many of those who are classed poor belong to the farming sector. If one were to collect all the data that had been published for the last 100 years, you will find the same thing. Poverty seems to go hand-in-hand with farming. In statistics, and I am happy to say I teach one this semester, these two events are said to be correlated. Correlation indicates probabilities of joint occurrence. When two events are correlated, they are "often" observed to appear together. How often they come together is indicated by one measure called the correlation coefficient.
Why are farmers poor?
Farmers plant, harvest and sell their grains. Consumers buy those grains, cook and eat them. That is our food. But there is an average quantity of grains we need in a day. In nutrition terms, we call this the daily calorie requirement. If all we shall eat is rice (hypothetically speaking), then all we need is 10 cups of rice a day. This is the average calorie requirement for young adults. It is around 2200 calories.
Since consumers need only a specific range of calories from rice in a day, this sets a LIMIT to the income farmers can obtain from farming. Their income is likely to be correlated to our daily calorie requirement, in particular, to our daily carbohydrate requirements which is around 800 grams.
To produce more grains seems like the way to go. But if a farmer chooses to produce more, those extra grains go to waste. Again because people in general do not need more than 2200 calories. But by producing more, the farmer makes himself a fool in fact, because an abundance of grains in the market depresses its price.
Why is GDP not reflected on farmer's income?
When people earn more, they do not spend more on calorie consumption. But interestingly, when they earn more they change where and how they consume food. A cup of cooked rice costs only around 7 pesos in most carinderias around schools. But a professional like myself, who earns good money, eats his rice in fancy places like Mcdonalds, Gerry's Grill or Shakeys. A cup of rice in these places cannot be had for mere 7php. Its likely to be in the range of 55 to 65php.
This is where we see the sad fortunes of a farmer. His rice is priced very expensively in these restaurants, but the extra mark-up in revenue went to the food crew, the chef, the manager, and owner of the restaurant. Its people who added VALUE to rice who profited from the earnings of a man who makes good money.
This leads us now to the question often broadcast in mass media. Why is the phenomenal GDP growth of our country not reflected in the economic situation of farmers? This is because the "extra" wealth people earn is not devoted to acquire more food. It is spent to acquire the non-essential goods and services we see around us: CPs, Laptops, fancy restaurants, jewelries, concerts, bikes, cars, etc. Everybody seems to profit from this national wealth except the farmer.
The poverty of a farmer has to do with the mode of life he chose to make a living. Farming and poverty come together often but that has less to do with systematic exploitation often dangled in public consciousness, although I must agree they had been and are being exploited in various degrees. The core of their poverty has to do more with peoples' calorie requirements, in particular carbohydrate requirements, the Law of Supply and Demand, spending habits, and with the transformation in consumption patterns that come with improvement in income.
Word for today is correlation.