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A Comparison of the Welfare Impacts of Thai Rice Price Support and Deficiency Payment Programs

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  • Duangbootsee, Uchook
  • Myers, Robert

Abstract

The objective of this study is to compare welfare impacts of the price support program (PSP) and deficiency payment program (DPP) by applying a computational model to calculate counterfactual values of quantity and price that would have occurred under alternative policy scenarios. The results indicate that replacing the PSP with DPP, while keeping the target price under DPP at the same level as the support price under PSP, results in an increase in total supply and a decrease in market price. The transfer to farmers in the form of an increase in producer surplus is more efficient under DPP while consumer surplus shrinks considerably under PSP. Deadweight loss accounts for as much as 11-13.6% of Government spending under PSP while it is less than 1% under DPP. Thus, DPP is more efficient because it results in a larger percentage increase in producer surplus and smaller deadweight loss than PSP.

Suggested Citation

  • Duangbootsee, Uchook & Myers, Robert, 2015. "A Comparison of the Welfare Impacts of Thai Rice Price Support and Deficiency Payment Programs," 2015 Conference, August 9-14, 2015, Milan, Italy 211580, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae15:211580
    DOI: 10.22004/ag.econ.211580
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    File URL: https://ageconsearch.umn.edu/record/211580/files/Duangbootsee-A%20COMPARISON%20OF%20THE%20WELFARE%20IMPACTS%20OF%20THAI%20RICE%20PRICE%20SUPPORT%20AND%20DEFICIENCY%20PAYMENT.pdf
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    Cited by:

    1. Zhiqiang Liu & Hejun Liang & Dongping Pu & Fei Xie & E Zhang & Qi Zhou, 2020. "How Does the Control of Grain Purchase Price Affect the Sustainability of the National Grain Industry? One Empirical Study from China," Sustainability, MDPI, vol. 12(5), pages 1-21, March.
    2. Kaittisak Kumse & Nobuhiro Suzuki & Takeshi Sato, 2020. "Does oligopsony power matter in price support policy design? Empirical evidence from the Thai Jasmine rice market," Agricultural Economics, International Association of Agricultural Economists, vol. 51(3), pages 373-385, May.

    More about this item

    Keywords

    Consumer/Household Economics; Food Consumption/Nutrition/Food Safety;

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