Agricultural economic zones in Thailand

The Thai government introduced agricultural economic zones (AEZs) to mitigate risks for farmers from variations in crop price stability and increase production productivity, but the zone policy contradicts other policies, resulting in its limited success. This paper identifies the factors affecting farmland owners’ decisions to allocate farmland to different crops in order to analyse the root cause of the failure of the AEZs programme in Thailand. The study area was Khon Kaen province, where a total of 745 farmland parcels were selected as samples for the research. The optimisation method based on duality production theory and simultaneous Tobit estimation was used for this study. The study identified the factors not covered by the government when AEZs were established, including crop prices, input prices and property right. The findings indicate that farmers do not consider physical and environmental characteristics of their parcel as a top priority when making a decision to allocate their farmland use. Instead, their top priorities are economic factors. Therefore, the government should reconsider the AEZs programme in order to prevent further loss of government budget spending on the programme. By recognising the root cause of the failure of the AEZs, the government should be able to better manage their agricultural policies more appropriately.