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- Analysis of Demand for Fertilizer in Thailand
Analysis of Demand for Fertilizer in Thailand
Dissertation Abstract:
Main objectives of the study were to determine fertilizer demand and the factors affecting it, and to estimate price elasticity of fertilizer demand and cross elasticity of factors affecting demand.
Two models, the traditional and the adjustment models, both expressed in log-linear form, were used in the study.
Findings showed that fertilizer demand did not respond much to fertilizer price in 1954-1972. Price elasticity of demand indicated that 1% increase in fertilizer price, other things being equal, would decrease total fertilizer demand by 3%. Cross-elasticity demand showed that 1% increase in insecticide price would decrease total fertilizer demand by about 0.9%
Cross-elasticity demand with respect to crop price was 1.196; that is 1% increase in crop price, other things being equal, would increase the total fertilizer demand by about 1.2%.
Other factors found significantly related to total fertilizer demand were area planted, crop yield lagged on year, number of water pumps, and time variable, with respective elasticities of 0.580, 0.911, 0.454, and 0.660. Increase in these factors would increase the demand for total fertilizer.
Projected total fertilizer demand for 1976 is about 493 thousand tons; in 1980, 630 thousand tons; and in 1985, 809 thousand tons. The average annual increase in the use of total fertilizer is about 35,000 tons.
A big increase is predicted for fertilizer demand by the rice sector. Projected fertilizer demand for rice in 1976 is about 320 thousand tons; in 1980, 432 thousand tons; and in 1985, 580 thousand tons. The average annual fertilizer use by the rice sector is about 29 thousand tons during the projection period.
Price elasticity demand for rice fertilizer is about 0.4 for the short-run and 0.9 for the long-run. The elasticity indicated that 1% increase in rice price, other things remaining constant, would increase rice fertilizer by about 0.9% for the short-run and about 2.3% for the long-run.
It was also found that 1% increase in rice yield the previous year would increase rice fertilizer demand in a given year by about 1.5% for the short-run and about 3.8% for the long-run.