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An optimal production plan under risk in Muang Pam Village, Pang Ma Pha district, Mae Hong Son province

Author

Listed:
  • Panthasu I.
  • C. Potchanasin.

    () (Department of Agricultural and Resource Economics,Faculty of Economics,Kasetsart University,Thailand)

Abstract

This study analyzes the optimal production plan under price risk condition of Karen ethnic groups in Muang Pam village, Pang Ma Pha district, Mae Hong Son province. Two groups of household samples regarding land holding types are: 1) paddy and upland arable land, and 2) upland arable land only. The time series data of crop prices in crop year 2003/04-2008/09 were used. The data of crop production obtained from the research project entitled Village and Regional Model for Sustainability of Highland Agricultural Systems in Northern Thailand in Year 2005 were also used in the analysis. The optimal production plans considering price risk were analyzed through the risk programming model called MOTAD (Minimization of the Total Absolute Deviation). The results suggest various optimal production plans with respect to the individual farmers’ expected income levels. High expected income level indicates high risk-taking behavior, and vice versa. In the case of high expected income level, the optimum plan suggests farmer grow a high return crop such as garlic or peanut. In opposite, in the case of low expected income level, a crop with relatively low price variation such as maize or rice is suggested.

Suggested Citation

  • Panthasu I. & C. Potchanasin., 2012. "An optimal production plan under risk in Muang Pam Village, Pang Ma Pha district, Mae Hong Son province," Working Papers 201201, Kasetsart University, Department of Agricultural and Resource Economics.
  • Handle: RePEc:kau:wpaper:201201
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    File URL: http://agri.eco.ku.ac.th/RePEc/kau/wpaper/are201201.pdf
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    More about this item

    Keywords

    optimal production plan under risk; MOTAD risk model; linear programming model;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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