Chapter IV

2.2 Credit Risk. Table 5 illustrates the Tilapia Farmers and Tilapia Financiers’

assessment of the factors affecting the credit risk.

Table 5

Assessment of the Level of Financial Risks faced by Tilapia Farmers and

Financiers’ in terms of Credit Risk

Indicators Mean Standard Verbal Rank

Deviation Interpretation

Using my own capital for the 1.96 0.19 Disagree 1

whole operation will not strain
my resources and will not
reduce my ability to expand or
adapt to market changes.

Borrowing money from a 1.91 0.29 Disagree 3

friend or relative typically
involves paying interest that
wouldn't reduce my
profitability.

High-interest loans increased 1.96 0.19 Disagree 1

the overall debt burden,
making it possible for me to
meet financial obligations.

High inflation rate makes it 1.63 0.48 Strongly 7

easier for me to cover Disagree
increasing operating costs
and would not lead me to a
financial strain.

Over-reliance on credit can't 1.79 0.41 Disagree 4

make me heavily indebted
and wouldn't lead my
business into bankruptcy.
 Buying feeds on credit from 1.65 0.48 Strongly 6
suppliers would not give me Disagree
risk, especially when my profit
cannot cover my debt.

Selling fish on credit isn't 1.63 0.48 Strongly 7

risky for me, even though the Disagree
buyer might fail to give the
payment timely.

Not having a clear agreement 1.69 0.46 Strongly 5

with the creditor couldn't put Disagree
me at a financial risk in cases
like demanding for an earlier
payment.

Composite Mean and SD 1.79 0.41 Disagree

Legend: “Strongly Disagree (1.00 – 1.75)”, “Disagree (1.76 – 2.50)”, “Agree (2.51 –
3.25)”, “Strongly Agree (3.26 – 4.00)”

Table 5 shows that in terms of credit risk, respondents disagreed that using their

own capital for the whole operation will not strain their resources and will not reduce

their ability to expand or adapt to market changes and that high-interest loans increased

the overall debt burden, making it possible for them to meet financial obligations. The

following factors have a mean of 1.96. On the other hand, having a mean of 1.63, the

respondents strongly disagreed on the same factors that high inflation rate makes it

easier for them to cover increasing operating costs and would not lead them to a

financial strain and that selling fish on credit isn't risky for them, even though the buyer

might fail to give the payment timely.

The result indicates that it is risky for Tilapia Financiers and Tilapia Farmers to

acquire credit with high interest loans. A high interest rate means that there is accrued

interest when the debtor cannot pay his debt immediately on the due date, so it only
means that the debt is growing. Instead of this loan will help them extend and support

their business, it may even be the reason for the eventual collapse of their business,

which is their source of income. Moreover, the result also revealed that it is also risky if

they support the whole operation of their business with all their capital. It is shown here

that if they choose to expand their business and adapt to market changes using only

their money, and they don’t have enough capital, it is possible that they will find it

difficult to support the daily need of the tilapia, just like the feeds that is the main need

for raising tilapia, and maintain the business.

As indicated by Kharche (2021), credit risk comprises both the risk of default and

the risk of credit deterioration. Due to the inherent high level of risk that the agricultural

sector experiences, credit risk is often thought to be higher for loans to the industry.

Aside from that, Tamplin (2023) stated that there is also potential risk associated with a

line of agricultural credits such as changing interest rates, difficulties managing debt,

and the risk for asset (land or machinery) forfeiture if repayment obligations aren't

satisfied. Moroever, according to the study of Mitra et al. (2019), access to credit is

beneficial in the capital-intensive aquaculture sector since it enables the development

and management of farms in developing countries. Chen (2021) stated that credit is

essential for agricultural enterprises because it allows farmers to access capital that

they might not otherwise have. This kind of finance is customized specifically to the

financial requirements of farmers and enables them to acquire equipment, plant,

harvest, market, and carry out other tasks required to maintain and run productive

farms.
2.4 Liquidity Risk. Table 7 presents the Tilapia Farmers and Tilapia Financiers’

assessment of the factors influencing the liquidity risk.

Table 7

Assessment of the Level of Financial Risks faced by Tilapia Farmers and

Financiers’ in terms of Liquidity Risk

Indicators Mean Standard Verbal Rank

Deviation Interpretation

I don’t experience a decrease 1.75 0.43 Strongly 5

in sales when the demand for Disagree
saltwater fish is higher than
tilapia.

The existence of various 1.98 0.13 Disagree 2

competitors does not affect
the sales and profits of my
business.

Experiencing the inability to 1.69 0.46 Strongly 6

control and find the source of Disagree
unexpected illness does not
lead me to fail in meeting my
short-term debts.

The increase in the price of 1.99 0.12 Disagree 1

feeds and other operating
inputs does not disrupt me to
pay my operating loans and
periodic payments.

The emission of sulfur dioxide 1.17 0.37 Strongly 8

caused by the Taal Volcano is Disagree
not poisonous to fish so it
does not affect my financial
 profit.

Experiencing an oversupply of 1.97 0.16 Disagree 3

fish in my harvest will not
cause a decrease in price.

Due to unforeseen natural 1.63 0.48 Strongly 7

disaster/s the chance of Disagree
returning my capital and
earning profit is high.

Low quality of feeds may have 1.96 0.19 Disagree 4

no effect on the weight of my
harvested tilapia so it will not
result in financial loss.

Composite Mean and SD 1.77 0.42 Disagree

Legend: “Strongly Disagree (1.00 – 1.75)”, “Disagree (1.76 – 2.50)”, “Agree (2.51 –
3.25)”, “Strongly Agree (3.26 – 4.00)”
Table 7

Assessment of the Level of Financial Risks faced by Tilapia Farmers and

Financiers’ in terms of Liquidity Risk

Table 7 demonstrates the respondents’ responses to the liquidity risk. With a mean of

1.99, majority of the respondents disagreed that the increase in the price of feeds and

other operating inputs does not disrupt them to pay their operating loans and periodic

payments. In addition, they also disagreed that the existence of various competitors

does not affect the sales and profits of their business, with a mean of 1.98. Contrary

with the following results, having a mean of 1.63, the respondents strongly disagreed

that due to unforeseen natural disaster/s the chance of returning their capital and

earning profit is high. Moreover, they also strongly disagreed that the emission of sulfur

dioxide caused by the Taal Volcano is not poisonous to fish so it does not affect their

financial profit, with a mean of 1.17.

1st Paragraph- 2 highest and 2 lowest

2nd Paragraph- Analysis ( Bakit yun ang pinakamataas )

3rd Paragraph- Supporting Literature from RRL

1. Tilapia Farmers and Financiers’ Assessment in the Level of Benefits

attained by them in using Financial Risk Management Framework.

The succeeding tables below are garnered from the responses of the

respondents from the questionnaire that was distributed. The information presented

here relates to the level of the benefits that the Tilapia Farmers and Financiers may

attain by using a Financial Risk Management Framework.

3.5 Ensuring Long Term Sustainability

Table 12

Indicators Mean Standard Verbal Rank

Deviation Interpretation

I will be able to achieve 3.99 0.10 Strongly Agree

economic stability.

I will be able to help the 3.99 0.10 Strongly Agree

business to survive in the
competitive market.

I will be able to respond 3.99 0.12 Strongly Agree

effectively to price volatility.

I will be able to help achieve 3.99 0.12 Strongly Agree

long-term financial security.

I will be able to improve the 3.99 0.10 Strongly Agree

 productivity of the operation.

I will be able to provide 4.00 0.07 Strongly Agree

competitive and revenue
opportunities.

I will be able to improve the 4.00 0.00 Strongly Agree

development and retention of
work among my fellow
fishermen.

I will be able to ensure a going 4.00 0.00 Strongly Agree

concern approach to my
business that will give
confidence and trust to
stakeholders’.

Composite Mean and SD 3.99 0.09 Strongly Agree

Legend: “Strongly Disagree (1.00 – 1.75)”, “Disagree (1.76 – 2.50)”, “Agree (2.51 – 3.25)”, “Strongly Agree (3.26 – 4.00)”

As presented in table 12, with a mean of 4.00, the respondents strongly agreed that they

will be able to provide competitive and revenue opportunities, they will be able to improve the

development and retention of work among my fellow fishermen, and they will be able to ensure

a going concern approach to their business that will give confidence and trust to stakeholders’.

Moreover, respondents also strongly agreed that they will be able to achieve economic stability,

they will be able to help the business to survive in the competitive market., they will be able to

respond effectively to price volatility, they will be able to help achieve long-term financial

security and they will be able to improve the productivity of the operation, all the following

indicators have a mean of 3.99.

This implies that the respondents strongly agreed that the level of benefits in

using financial risk management framework in the pisciculture business can ensure their

long-term sustainability. Long-term sustainability is significant in terms of

competitiveness and revenue opportunities in agriculture because it can generate

revenues that help them sustain, expand their operation, and provide higher agricultural

productivity. Agriculture also provides essential and immediate employment, so if they

can maintain the fishing business, it will continue to provide employment to the

unemployed and at the same time maintain work for the farmers who have long been

their livelihood and serve as their primary source of income. It is very important for

those people that fishing is the most accessible and main occupation in the area.

Moreover, the going concern is one of the stakeholders’ always desired, the continuity

that symbolizes job and income security for farmers, retailers, and other stakeholders in

the field of agriculture sector. If the stakeholders can continue to be given confidence

and trust, they will surely continue to trust that farmers can overcome the risks they are

facing, and they may even invest more money so that the business can grow even more

and provide more benefits for everyone. Therefore, it can be concluded that the

financial risk management framework is significant to Tilapia Financiers and Farmers

that will serve as their guide.

According to Fred (2023), any successful farm needs to utilize good financial

management, which entails much more than just keeping track on its revenues and

expenses. It includes developing a budget, establishing financial goals, and allocating

the resources wisely and intelligently considering the data. They can improve their

farm's long-term sustainability, minimize danger and boost profitability by adhering to

best practices in financial management. Liu and Huang (2022) also stated that

management of financial risk is an all-inclusive metric for capital adequacy, asset

quality, and operating performance.

Encourage economic growth

1st Paragraph- 2 highest and 2 lowest

2nd Paragraph- Analysis ( Bakit yun ang pinakamataas )

3rd Paragraph- Supporting Literature from RR

2. Relationship between level of financial risk and the level of benefits

attained by the Tilapia Farmers and Financiers.

Table 17
Relationship of Level of Benefits in Ensuring Long-term

Sustainability on Level Financial Risks

Verbal
Pearso Decisio
Risks p-values Interpretatio
n-r n on Ho
n

Failed
Market -0.05 0.25 to Not Significant
Reject
Failed
Credit 0.04 0.27 to Not Significant
Reject
Failed
Operational -0.01 0.76 to Not Significant
Reject

Failed
Liquidity -0.09 0.17 to Not Significant
Reject

Significance level is 95% (<.05)

Using the Pearson-r correlation of coefficient that the level of financial risks of pisciculture in

market, operational and liquidity value of R=-0.05 or -5%, R=-0.01 or -1% and R=-0.09 or -9%,

respectively has very weak negative relation or association; and in credit value of R=0.04 or 4%,

respectively has very weak positive relation or association on level of benefits in ensuring long-

term sustainability. For the test of relationship: there is no enough evidence to conclude that the
level of benefits ensuring long-term sustainability of pisciculture in Brgy. Banyaga, Agoncillo

Batangas is significantly associates with level financial risks in market, credit, operational and

liquidity (r=0.02; p=0.25, 0.27, 0.76 and 0.17, respectively).

It was concluded that financial risks in market, credit, operational and liquidity does not

have a significant relationship as to the level of benefits in ensuring long-term sustainability.

1st Paragraph- copy paste

2nd Paragraph- Analysis ( Bakit yun ang pinakamataas )

3rd Paragraph- Supporting Literature from RRL

3. Significant difference between the characteristics of demographic profile and

level of financial risk faced by Tilapia Farmers and Financiers in Barangay

Banyaga, Agoncillo Batangas.

Table 19

Difference on the Assessment Level of Financial Risk of Pisciculture

in Brgy. Banyaga, Agoncillo Batangas on Number of

Ponds/Cages operated or financed

Mean
Sum of Squar
Square df e F Sig.
Between
Groups 0.02 2 0.02 0.48 0.62
Within
Groups 4.95 214 0.02
Total 4.97 216
There was no significant difference on the number of ponds/cages operated or financed of the
respondents of pisciculture in Brgy. Banyaga, Agoncillo Batangas on assessing the level of
financial risk at the p>0.05 [F(2,214)=0.48, p=0.62].

1st Paragraph- copy paste

2nd Paragraph- Analysis ( Bakit yun ang pinakamataas )

3rd Paragraph- Supporting Literature from RRL

Table 20

Difference on the Assessment Level of Financial Risk of

Pisciculture in Brgy. Banyaga, Agoncillo Batangas on

Financial Support or Consultancy

Mean
Sum of Squar
Square df e F Sig.
Between
Groups 0.13 2 0.07 3.09 0.04
Within
Groups 4.84 214 0.22
Total 4.97 216

There is a significant difference on the financial support or consultancy of the respondents of

pisciculture in Brgy. Banyaga, Agoncillo Batangas on assessing the level of financial risk at the
p<0.05 [F(2,214)=3.09, p=0.04].

1st Paragraph- copy paste

2nd Paragraph- Analysis ( Bakit yun ang pinakamataas )

3rd Paragraph- Supporting Literature from RRL