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

Uchook Duangbootsee and Robert Myers

No 211580, 2015 Conference, August 9-14, 2015, Milan, Italy from International Association of Agricultural Economists

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.

Keywords: Consumer/Household Economics; Food Consumption/Nutrition/Food Safety (search for similar items in EconPapers)
Pages: 21
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:ags:iaae15:211580

DOI: 10.22004/ag.econ.211580

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