The social benefit of price support and fertilizer subsidy policy for soybean production in Thailand

Abstract

This study aims to compare the effectiveness of price support and fertilizer subsidy policies for the soybean productivity improvement in Thailand by comparing the net social benefit. The macro data of soybean production was utilized in the study. The price of soybean, the price of feed corn, irrigation and the area of soybean production are calculated by Eviews version 3.0 program in linear, semi-log, inverse-semi-log and double logarithmic equation. It is estimated by Ordinary Least Square (OLS) method and Seemingly Unrelated Regression Estimator (SURE). The study result indicated that the net social benefit obtained from both measures is a negative value. The fertilizer subsidy policy gains net social benefit about -14,957.76 billion Bath. Meanwhile, the producer surplus equal to 90.93 billion Bath and the burden of government in term of the implementation cost of such policy equal to 15,048.70 billion Bath. The price support policy gains net social benefit about -42.69 billion Bath. Meanwhile, the producer surplus equal to 128.29 billion Bath and the burden of government of such policy cost equal to 170.99 billion Bath. Therefore, the price support is more appropriate than the fertilizer subsidy for enhancing soybean domestic production due to the net social benefit of such policy was greater than and the burden of government in term of implementation cost was less than that of the fertilizer subsidy policy.