Analysis of the Supply Trend and Response of Onion in the Ilocos and Central Luzon Regions in the Philippines, 1991-2014

This paper examined the nature of supply response of onion in the key onion-producing regions in the Philippines using price, rainfall, and production volume regional time series data for onion. From 1990 to 2014, onion showed positive growth rates in production and area harvested, with the Central Luzon region exhibiting larger growth rates than the Ilocos region. Using Prais-Winsten regression analysis, the study found that in the Ilocos Region, onion area negatively responds to higher rice prices while responding positively to higher squash prices. Moreover, onion supply responds positively to the increase in the prices of ammonium phosphate fertilizer (16-20-0) and technological improvement while responding negatively to higher complete fertilizer (14-14-14) prices. In the Central Luzon region, higher wage rate and prices of complete fertilizer restricted onion supply increases. Furthermore, the price of rice positively affects supply. The paper attributes the varying nature of supply response in the regions to the differences in the cropping patterns, which define the relationships of onion with related goods such as rice and squash. These findings suggest that development interventions should improve, not only the onion industry, but also the productivity and profitability of relay crops in each region.