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The declining profitability of litchi orchards in northern Thailand: Can innovations reverse the trend?

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Listed:
  • Schreinemachers, Pepijn
  • Potchanasin, Chakrit
  • Berger, Thomas
  • Roygrong, Sithidech

Abstract

Litchi is an important crop in the mountainous part of northern Thailand yet its profitability has declined during the last 15 years. The replacement of litchi fruit orchards for seasonal flowers and vegetables has external costs related to increased levels of soil erosion, pesticides, and irrigation water use. Using a combination of financial analysis and agent-based modeling, the paper ex-ante assesses the impact of four technologies—artificial flower induction, small-scale cooperative fruit drying, post-harvest treatments to extend the shelf-life of fresh fruits, and greater irrigation efficiency—in terms of profits, farm incomes, litchi acreage, soil erosion, and pesticide use. The model was calibrated to one watershed in Chiang Mai province where economic development has been rapid. Although each technology substantially increases the profitability of litchi growing, scenario analysis shows that this is not enough to stem the decline in litchi orchards in the study area. To achieve this, the innovations would have to be combined with an increase in the fresh fruit price from about 9 baht/kg at present to at least 12 baht/kg. The sensitivity of the results is tested for variations in the irrigation water supply and liquidity. We report about farmers’ discussions about these results and discuss the implications for other areas in northern Thailand.

Suggested Citation

  • Schreinemachers, Pepijn & Potchanasin, Chakrit & Berger, Thomas & Roygrong, Sithidech, 2009. "The declining profitability of litchi orchards in northern Thailand: Can innovations reverse the trend?," 2009 Conference, August 16-22, 2009, Beijing, China 50954, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae09:50954
    DOI: 10.22004/ag.econ.50954
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    References listed on IDEAS

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    1. Sunding, David & Zilberman, David, 2001. "The agricultural innovation process: Research and technology adoption in a changing agricultural sector," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 4, pages 207-261, Elsevier.
    2. Binswanger, Hans P & von Braun, Joachim, 1991. "Technological Change and Commercialization in Agriculture: The Effect on the Poor," The World Bank Research Observer, World Bank, vol. 6(1), pages 57-80, January.
    3. Pepijn Schreinemachers & Thomas Berger & Aer Sirijinda & Suwanna Praneetvatakul, 2009. "The Diffusion of Greenhouse Agriculture in Northern Thailand: Combining Econometrics and Agent‐Based Modeling," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 57(4), pages 513-536, December.
    4. Schreinemachers, Pepijn & Berger, Thomas & Aune, Jens B., 2007. "Simulating soil fertility and poverty dynamics in Uganda: A bio-economic multi-agent systems approach," Ecological Economics, Elsevier, vol. 64(2), pages 387-401, December.
    5. Berger, Thomas, 2001. "Agent-based spatial models applied to agriculture: a simulation tool for technology diffusion, resource use changes and policy analysis," Agricultural Economics, Blackwell, vol. 25(2-3), pages 245-260, September.
    6. Willard W. Cochrane, 1985. "The Need to Rethink Agricultural Policy in General and to Perform Some Radical Surgery on Commodity Programs in Particular," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(5), pages 1002-1009.
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    Cited by:

    1. Leblond, Jean-Philippe, 2019. "Revisiting forest transition explanations: The role of “push” factors and adaptation strategies in forest expansion in northern Phetchabun, Thailand," Land Use Policy, Elsevier, vol. 83(C), pages 195-214.

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