Rice Advantages And Disadvantages
The Kingdom’s military government is trying to encourage the diversification of crops amongst Thai farmers, especially those producing rice as prices are drastically falling. Farmers can substitute the rice for other crops that require less irrigation such as corn, sugarcane, peas and fruit trees.
The Thai government has offered interest free loans and has guaranteed prices for corn to persuade farmers to make the switch from rice to corn production. Diagram 3 shows that this price floor is $180, $35 dollars above market equilibrium. This price support will increase farmer’s income’s and effectively solve most of the problems that arose from falling rice prices.
The advantages of this government intervention include, greater incentive for farmers to make the switch from rice to corn quickly, this long term diversification is good for the government as they no longer have to pay subsidies or buy excess supply of corn. Another benefit would be price stabilisation of rice due to the diversification of crops, the supply of rice will reduce and hence the price of rice will increase as seen from Diagram 2, when the supply of rice shifts inwards from 11 million to 9 million tons, increasing the price by $170. Although this is only true assuming that the Thai government will ban
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This could potentially create pressure on the cities infrastructure or lead to overcrowding as the population increases, this is very possible as one third of the Thai workforce work in agriculture, income inequality will also exist more prominently in Thailand between rural and urban areas as manufacturing jobs earn more than those in the agricultural sector. This could lead to nine million household’s being unhappy, these household hold a lot of political weight and this could have negative effects for the
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