Rubber Acreage Supply Response in Thailand: a Cointegration Approach

This paper estimates the acreage supply response of natural rubber in Thailand using cointegration methods. Results show that a unique long-run relationship exists between area planted, the rubber price and the replanting subsidy, and the rubber price is weakly exogenous. The short-run own price elasticity of acreage response is low at 0.04 whereas the corresponding long-run elasticity is 2.24, and the use of pricing policy takes a long lead time to take effect. The acreage elasticity in response to a change in the subsidy is 1.17 and the replanting subsidy is a key driver for increasing rubber production.