Welfare Implication of Paddy Price Support Withdrawal from Malaysian Rice Sector: Partial Equilibrium Method Approach

Abstract

The study was designed to analyze societal welfare implication of paddy price support withdrawal, as an alternative policy, from rice sector in Malaysia. Time series data (1980-2012) were collected and analyzed through different stages of analyses. The first stage of analysis involved time series econometric model namely, Auto Regressive Distributed Lag (ARDL), which was used in coefficients estimation. Estimated coefficients were subjected to, and passed the relevant diagnostic tests. The estimated elasticities were then used for the second stage of analysis- scenario simulation. Finally, the generated simulation results were further used in estimating the societal welfare changed through appropriate estimation technique. Results show producer welfare loss of about RM189 million, and RM198 million was saved as revenue. The net gain or societal welfare improvement was about RM9 million. Simulated results show up to 10% reduction in paddy producer price or farm income; this could serve as disincentive to rice producers. Since the country is concerned about achieving rice self-sufficiency and rice food security, necessary precautionary measures have to be instituted to prevent farmers exit from paddy farming, by putting a concerted effort towards channeling the trickle-down benefit of societal welfare improvement, resulting from policy option, to rice producers particularly the dominant smallholder group.

Elasticidad en el comportamiento del productor, según oferta de arroz en Perú

“…Desde que Nerlove (1956) publicó su trabajo sobre la estimación de la elasticidad de la oferta para los productos agrícolas tales como algodón, maíz y trigo, se han realizado innumerables trabajos de investigación no solo para productos agrícolas transitorios sino también para productos agrícolas permanentes. De la misma manera, para el cultivo arroz cáscara también se han realizado muchos trabajos, entre ellos se tiene investigadores que consideran como variable dependiente la serie de tiempo superficie (Prasada et al, 2018;Vikas et al, 2018;Shende et al, 2017;Tanko y Alidu, 2016;Briceño et al, 2005;Ramírez Gómez et al, 2004;), algunos utilizan la producción (Khan et al, 2019; L Elasticidad en el comportamiento del productor, según oferta de arroz en Perú Quintero Peña y López Naranjo, 2011; Ramírez y Castillo, 1986), y otros emplean el rendimiento (Umar et al, 2015;Boansi, 2014).…”

Competitiveness and Efficiency of Rice Production in Malaysia

“…For these reasons rice production will continue to receive significant attention from policymakers. The Malaysian government has provided considerable support to rice producers, and some economic analysts argue that without this support rice production could not compete internationally Umar et al 2014;. Some of these analysts find that the price support scheme has increased rice outputs and the income generated from them by more than 50%, and that repealing this policy would render the rice sector uncompetitive.…”