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

I Sriratana and C L: Potchanasin. ()
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C L: Potchanasin.: Department of Agricultural and Resource Economics,Faculty of Economics,Kasetsart University,Thailand

No 201201, Working Papers from Kasetsart University, Department of Agricultural and Resource Economics

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.

Keywords: optimal production plan under risk; MOTAD risk model; linear programming model (search for similar items in EconPapers)
JEL-codes: C61 D24 D81 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2012-02
New Economics Papers: this item is included in nep-agr and nep-sea
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Published in ARE Working Paper No. 2555/1 (January 2012)

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