Untitled - CGIAR Impact

STRUCTURAL CHANGES IN RICE SUPPLY RELATIONS 33
by opening new land for rice production. A “closing cultivation frontier,” or a
growing difficulty in expanding the area for cultivation in the Philippines and
Thailand should reduce the price elasticity of area response for more recent
years, as compared with the periods covered by Mangahas et al. and Behrman.
To test the two hypotheses, the first on the impact of MV irrigation developments
on the yield response, and the second on the impact of a closing cultivation
frontier on the area response, we estimated the simple regression models
of farmers’ responses for both pre- and post-MV periods in the Philippines and
Thailand.
The basic models of the area and yield response functions are, respectively,
A = F ( P, Pa, I, T, Ta, W )
and Y = g ( P, Pf, I, T, W )
where: A = area planted to rice,
Y = rice yield per hectare,
P = price of rice,
Pa = price of alternative crops,
Pf = price of fertilizer,
I = condition of irrigation,
T = rice production technology,
Ta = production technology of altrenative crops, and
W = weather condition.
A large number of regression equations can be specified for different sets of
data specifications, as explained in the next section. Both the simple model and
a distributed-lag model of the Koyck-Nerlove variety are tried for the area
response function, because an area change requires a longer adjustment
period, especially when it involves the shifting of cultivation frontiers. Only the
simple model is used for the yield response function, because the yield response
is essentially a short-run phenomenon involving adjustments in current inputs,
such as fertilizers, during a single production period.
The regression equations were estimated using the national aggregate timeseries
data. Although we conducted analyses for both whole nations, and separate
regions within the nations, we limit this report to the results of national
aggregate analysis.
Because farmers’ decisions on the allocations of land and other inputs to rice
production are made either before or during the production period, it is safe to
treat the prices affecting farmers’ production decisions as predetermined.
Therefore, we tried only the single-equation approach and applied the ordinary
least-sqaure method for estimation. Primarily for ease of computation and
interpretation, the log-linear form was used exclusively for our functional
specification.
DATA SPECIFICATIONS
Philippines. Aggregate time-series data used for the analysis of rice supply
relations in the Philippines cover the period from 1949-50 crop year to the