The Impacts of Plantation Area Control Policy on Food Crop Production

Abstract

     The objective of this study was to project the impacts during 2012-2021 of energy crop production of cassava and sugar cane under the plantation area control policy on the production of food crops of rice, maize, and bean. A partial equilibrium model of energy crops was developed and estimated by the Two Stages Least Square method (2SLS) and Seemingly Unrelated Regressions (SUR). In addition, the model was applied to forecast the future effects under normal trend scenarios and government policy scenarios. The results of the study showed that under normal trend scenarios, cassava land use tended to expand at 4.10 percent per year whereas sugar cane, rice, maize, and bean tended to decrease. The prices of all food and energy crops increased. In the government policy scenarios, food crop land use increased compared to the normal trend scenarios. In the scenarios that immediately limited energy crop land use, rice, maize, and bean land use increased by 0.38, 2.48, and 2.72 million rai per year, respectively. In the scenarios where energy crop land use was continually limited, rice, maize, and bean land use increased by 0.14, 1.70 and 3.53 million rai per year, respectively. In addition, all prices of food and energy crops tended to increase in both scenarios. The results of the study suggested that government should enforce a land allocation plan to reduce impacts on crop price fluctuation.