The response of farmers to price incentives in sugar cane production in the south of vietnam

NATIONAL UNIVERSITY - HCMC

INSTITUTE OF SOCIAL STUDIES

COLLEGE OF ECONOMICS

THE HAGUE

VIET NAM

THE NETHERLANDS

VIETNAM - THE NETHERLANDS PROJECT ON DE.VELOPMENT ECONOMICS

THE RESPONSE OF FARMERS TO PRICE INCENTIVES IN
SUGAR-CANE PRODUCTION IN THE SOUTH OF VIETNAM

A thesis submitted in pa_rtial �lfillment o! the requirements for the degree of

MASTER OFARTS IN ECONQMICS OF DEVELOPMENT
BY
NGUYEN THANH NHAN

. HO CHI MINH CITY, DECEMBER 1997

11

patently false and harmful. Price policy based on it always impair the
efficiency of agriculture. "

And Behrman (1968) concluded his study on four commodities in Thailand

by saying that "strongly supports the . hypothesis that farmers in

economically ' underdeveloped' countries respond significantly and
substantially to economic incentives ... The burden ofproof thus now lies
with those who · maintain that the supply . behavior of farmers · in
undeveloped agriculture cannot be understood predominantly within the
framework oftraditional economic analysis."

Thus, many countries have introduced a positive price ·policy to give a

stimulus to agricultural output in general and to alter the composition of

agricultural output in particular. There is 'iri fact many evidences that

farmers respond positively to price changes, as economic theory would
predict. ·,

According to economics theory, an incr�ase in output price will gi�e the
farmers an incentive to Jncrease more 6utput by using more input factors.

'on the other hand, a decrease iri input price' will �lso encourage. the farmer .
use more ·input factors, then it causes

the . output in�rease.

In. terms of

policy; we see that reducing input prices will have similar effects to

increasing the output price, but the influential degree �ftwo effects will not
be the same.

'.c1. Effects of the changing·o�tput price

general '1evel of output price�,
s O 992) indicated that an increase in
: _?i1?
ceteris paribus, increase returns to. all inputs in' production, encouraging

th�