Economic evaluation of alternative rough rice marketing and storage strategies

The alternative rough rice marketing and storage strategies were evaluated using three methods of analysis. The methods used in this study were MOTAD, simulation, and stochastic dominance. Historical rough rice prices from 1980/81 - 2000/01 was used and tested for trends and seasonality in order for the methods to be formed properly. SAS was used to verify that the data used in this study did not follow any time trend or reflect seasonality. MOTAD, simulation, and stochastic dominance were used to determine the most efficient marketing and storage strategy that will enable rice farmers to make the best decisions and earn the highest average net returns. Results from the MOTAD analysis suggest that producers should take 100% of their loan deficiency payment in August. This study defined loan deficiency payments and storage usage as a type of marketing strategy. Once the statistical results clearly showed that loan deficiency payments were best taken in August, it was not utilized as a marketing strategy in the simulation analysis. The simulation analysis utilized fixed and flexible marketing strategies that incorporated storage usage. The fixed strategies were modeled and gave the lowest average returns. As more and more flexible strategies were incorporated into the study, average returns increased. When world export, production, and ending stock flexible strategies were incorporated, the average net return increased dramatically. The results of the simulation analysis were tested using first degree stochastic analysis. The stochastic analysis and simulation analysis both chose the same marketing strategy as the most efficient strategy a farmer should adopt. Results of this study indicate that farmers who store rice earn higher average net returns when they pay attention to monthly marketing year prices. Farmers that do not store rice should sell 100% of the rough rice in August. The study also suggests that average net returns are higher when loan deficiency payments are taken in August. These results are consistent with a similar study conducted on rice marketing strategies