Demand and supply analysis of soybean and soybean products in Thailand

Study deals with an economic analysis of the demand and supply of soybean and soybean products in Thailand during the period 1978-1994. The main objective of the study is to examine and assess the impacts of changes in trade and production policies on the demand and supply of soybean and soybean products, through an econometric modelling of demand and supply system and simulation technique. The results of the simulation analysis on policy changes provide the following conclusions: (1) The abolition of import taxes and quota and an extremely low import price situation (4.71 baht/kg) of soybean meal are found to have the most adverse impacts on domestic production of soybean; (2) A high production support budget (1,354.52 million baht/year), an extremely high import price of soybean meal (8.13 baht/kg), and a high farm gate price situation (9.36 baht/kg) of soybean, each is found to enhance the expansion of soybean production. However, only the cases of high production support budget and high farm gate price of soybean are found to enhance the expansion of soybean production up to self-sufficiency level; (3) Thailand's policy alignment on soybean under WTO Agreement is found to benefit soybean growers and soybean processing industries; and (4) The implementation of internal support measures to soybean sector are more effective than the trade policy measures in enhancing domestic soybean production. The policy recommendation is that, to promote effectively the soybean production, while self-sufficiency target is hardly achieved, the policy alignment along with WTO Agreement should be an appropriate policy choice and should be kept continued. At the same time, the internal support measures, particularly the subsidized seed varieties and rhyzobium should be expanded through greater budget support up to the ceiling permitted by WTO Agreement.