Journal of Economics, Finance and Management Studies ISSN (print): 2644-0490, ISSN (online): 2644-0504 Volume 07 Issue 01 January 2024 Article DOI: 10.47191/jefms/v7-i1-13, Impact Factor: 7.144 Page No: 105-116 JEFMS, Volume 07 Issue 01 January 2024 www.Ijefm.co.in Page 105 Random Forest Analysis of Exogenous Variables Impacting Rice Production in the Philippines Vicente E. Montano 1 , Maria Teresa S. Bulao 2 1,2 Faculty of Business Administration Education, University of Mindanao, Davao City, Philippines ABSTRACT: This research examines the relationship of rice production as the endogenous variable in a production function theory that considers key exogenous factors such as fertilizer consumption, irrigation water use, agricultural machinery, poverty rate, and agricultural land area. The study reveals the interdependencies shaping rice production in the Philippines. Applying the Cobb- Douglas function enhanced through the random forest regression algorithm establishes fertilizer consumption's focal role, focusing its essential impact on rice yields. Proper allocation of irrigation, access to agriculture machinery, poverty alleviation, and effective land use appear as significant contributors to overall production, defining 98% of the variability in rice production in random forests in both the in-sample and out-of-sample results. The findings emphasize the necessity for holistic strategies in agricultural planning, aiming for targeted interventions in fertilizer management, irrigation infrastructure, mechanized farming, poverty alleviation, and land-use. KEYWORDS: Production function theory, Rice production, Cobb-Douglas Model, Random Forest, Philippines I. INTRODUCTION From 2002 to 2022, rice production in the Philippines experienced significant changes and challenges for the past two decades. The annual production was 26 million tons, with an average yield of 3.83 tons per harvested hectare (Global Yield Atlas). The Philippines produced approximately 3% of the world's rice during this period. Over the years, rice production has steadily increased, with the area under cultivation expanding by 50% during the second half of the 20th century. However, due to geography and international policy pressure, the Philippines still imports around 10 percent of its marketed rice per year (Stuecker, Tigchelaar & Kantar, 2018). In the years 1966 to 2021, rice farming in the Philippines underwent several changes. In contrast, despite the adoption of labor-saving technologies and improvement in agronomy practices during the period, rice yields stagnated and became more variable (Kajisa, Moya & Gascon, 2022). The Green-Revolution-type agricultural development is at a crossroads, with increasing rural labor scarcity caused by its success. Also becoming increasingly rampant are contemporary challenges of disasters and infectious diseases. The Central Luzon Loop Survey, one of the longest-running and ongoing household surveys in the Philippines is tracking changes in rice farming since 1966, revealed that rice yields have stagnated and become more volatile despite a prompt and significant increase in the utilization of labor-saving technologies (Kajisa, Moya & Gascon, 2022). It indicates the need to adapt new strategies and technologies to overcome challenges in rice farming practices. Rice production is a vital sector in the Philippine economy, providing food and income for millions of Filipinos. Rice farmers confront various challenges affecting their productivity and profitability, such as irrigation, which is a critical factor influencing rice output, as it allows farmers to cultivate more land area and use more fertilizer. Unfortunately, only about 60% of the potential irrigable regions in the Philippines are irrigated, attributed to inadequate infrastructure, high maintenance costs, and poor water management (Launio & Abyado, 2022), (Selva, 2023). Due to evaporation, traditional methods of flooding rice fields also waste a lot of water. Several alternative methods that conserve water and boost rice production are drip and solar-powered irrigation (Teves, 2018). It takes 1,432 liters of water to produce 1 kg of rice in an irrigated lowland production system (Palash, Rahman, Amin, Mainuddin & Jalilov, 2019). The average production of rice in the Philippines is among the world's lowest, with an average of 30 cavans per hectare or 1.32 metric tons per hectare due to high prices, limited availability, and lack of knowledge on proper application (Buresh,