Supply Response of Thailand’s Rice to the Price of Biofuel Crops*

Abstract The increasing cost of rice production and the increasing price of energy crops in Thailand, both abetted by the energy crisis in the last 4 years made the rice farmers decide to switch to energy crops. In the long term, this could reduce Thai rice production. This paper mainly examines the supply of rice production in response to the changes in biofuel crops price and other related factors. The study forecasts a negative response in rice supply to the change in biofuel crops price as well as in the cost of chemical fertilizers. In contrast, the price of rice, irrigated area, public rice research budget and mechanization are positive significant factors affecting rice supply. The price policy would distort the market mechanism, which would reduce the competitiveness of Thai rice in the world market. The findings suggest that the government should apply non-price policies in order to increase rice supply and reduce its cost of production. Further development of the irrigation system and increasing support to research and developmen