Acreage response of paddy in Malaysia

Abstract

This study investigated the relative impacts of various factors on acreage response of paddy by analyzing time series data of 1961-2007 via first difference logarithmic functional form of linear nerlovian expectation model. it is apparent that future paddy price can be identical like previous year. Farmers, therefore, do not have additional incentives to adjust to desired paddy planted area. This scenario is further illustrated by farmers' inelastic response to government supports (incentives). Paddy planted area is not likely to be responsive to the incentives. Paddy price is found associated with higher production cost and may result in a shrink of paddy planted area in Malaysia. All the emerging findings from this study provide an important message for an imperative need to correct paddy related policies so as to reduce the distortions and increase economic efficiency.