Analysis of Thai rubber price stabilization policies
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2019
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2562
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eng
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150 leaves
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b207801
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Soyfa Sertkaew (2019). Analysis of Thai rubber price stabilization policies. Retrieved from: https://repository.nida.ac.th/handle/662723737/6429.
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Analysis of Thai rubber price stabilization policies
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Abstract
This dissertation was aimed at 1) studying the process of Thai rubber price
policies, 2) analyzing the efficiency of price policies on the Thai economic system,
and 3) suggesting options for price policies affecting the efficiency of the economic
system. The process of rubber price policies related to price stabilization from 1991 to
2017 was studied using a mixed method of research in order to analyze each policy
process based on descriptive writing and to assess social welfare as a result of policy
implementation.
With respect to the development of rubber policies between 1991 and 2017,
rubber policies are classified into three types: upstream policies, midstream policies
and downstream policies. Policies have been developed in accordance with value
chains. In the beginning, upstream policies, namely production policies that increase
plantation area, increase productivity per rai, assist farmers and help domestic
markets, were emphasized. Midstream and downstream policies were formulated
when farmers could not sell their rubber at a reasonable price on the market. For
example, processing plants were constructed to add value, research and development
was increased, as was support of business operators and international cooperation, and
promotion of local rubber use. Rubber policies can be categorized into three types –
quantitative and qualitative production promotion, rubber production and sale control,
which had different practices in each period, and then Thai rubber market
intervention.
The policy process can be classified into three processes, namely policy
formulation, policy implementation and policy evaluation. Policy formulation involves the identification of problems, starting from individual problems concerning
low price rubber sales. These problems became public problems for farmers across
the country. This led to identification of options to solve short-term problems through
price intervention, which provided clear results and was uncomplicated. Regarding
policy implementation, it was found that factors leading to success include having
easy implementation of the policies, monitoring and control of those policies caused
by correct policy decisions, competency of the responsible agencies, and having the
needed resources for policy implementation, the implementation process and the
policy-related organizations. Based on policy evaluation, there are three policy
impacts: on rubber farmers, on rubber prices and on rubber quantity bought by the
project. These three impacts received few benefits from the policies, compared to the
total amount, while the impacts from policy implementation, namely unexpected
impacts, may encourage farmers to not produce rubber to meet market demand and
instead continue expanding plantation area because that’s the usual support offered by
the government to solve the price problem. In addition, there are two impacts on
present and future conditions: due to farmers’ habits, farmers have not adapted
themselves to competitive markets; and policy costs, which include budget and social
welfare lost.
Policy efficiency was considered in terms of social welfare. Five rubber price
stabilization policies from 1992 to 2016 were studied. They include the Thai Rubber
Market Intervention Scheme; Farmers’ Institute Supporting Project; Farmers’ Institute
Potential Development Project; Buffer Product Project; and the Public Sector’s
Rubber Utilization Promotion Project. Social welfare measurement was based on
changes in the producer surplus and the consumer surplus compared to the budget and
income from policy implementation. To measure producer surplus and consumer
surplus, Thai rubber demand and supply models were produced using secondary
information from 1987 to 2016. It was found that policy factors did not affect Thai
rubber demand and supply. It could be stated that the price intervention policy did not
affect Thai rubber markets. The consumer surplus decreased by 231.15529 billion
baht because rubber was bought at higher prices than the market, while the producer
surplus increased by 228.20244 billion baht because of rubber sold at higher prices than the market. The budget for policy implementation and operation loss amounted
to 21.02061 billion baht. Thus, social welfare lost due to policy implementation for 24
years accounted for 23.973.47 billion baht, or 998.89 million baht per year.
There are three recommended options for Thailand’s rubber price stabilization
policies: 1) production policies that decrease plantation area and increase product
quality (the plantation area increase promotion policy should not be adopted again
despite higher rubber prices in the future), 2) Farmer Strengthening Support, to serve
as a driving mechanism for managing price uncertainty and to add rubber value by
providing knowledge, innovation and technology to farmers; and 3) a public role
change - from the director to the operator, in particular regarding commercial policies
through previous public mechanisms, this would include a role in supporting business
operators and farmers to carry out their rubber business in accordance with market
mechanisms and implement dynamic policies according to constantly changing global
situations.
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Thesis (D.P.A)--National Institute of Development Administration, 2019