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Simulating the Impacts of Credit Policy and Fertilizer Subsidy on Central Luzon Rice Farms, the Philippines
Author(s) -
Rosegrant Mark W.,
Herdt Robert W.
Publication year - 1981
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1241208
Subject(s) - subsidy , production (economics) , fertilizer , consumption (sociology) , economics , agricultural economics , dual (grammatical number) , business , natural resource economics , microeconomics , agronomy , market economy , art , social science , literature , sociology , biology
The effects of credit policy and fertilizer subsidy on farmers' input choices, production, and income are examined with a multiseason decision‐making model. Stochastic production technology, risk‐neutral and risk‐averse decision rules, short‐term savings/consumption behavior, and a dual financial market are considered. Results indicate the risk‐neutral rule is more consistent with actual choices than risk‐averse rules. Estimated yields increased 21% to 30% from joint credit and fertilizer subsidies. Benefits are greater on irrigated than on rainfed farms. A substantial default rate in the institutional market reduces credit program benefits.