This report presents results of a study directed toward specification of relationships which determine some important variables in the market for Thai kenaf and which provide empirical estimates of parameters in these relationships. The work has been undertaken in pursuit of two general sets of objectives.

First, the research forms part of a larger project in which a comprehensive model is being constructed to represent production, consumption, price determination, and interregional trade and competition for major commodities within Thailand's agricultural economy. The project is being conducted within the Division of Agricultural Economics, Ministry of Agriculture and Cooperatives (DAE), and staff from several of the branches of DAE are participating. The present effort to construct a statistical model of demand and price determination for kenaf is one of several commodity market studies now being conducted under this project.

Second, it is also intended that this work shall form part of the regular work program of the Demand Analysis Sub-Branch of DAE's Marketing Branch. Here there are two sub-objectives. One is to develop analytical structures and results which may be used independently for short-term demand and price forecasting. Although forecasts would rarely be based solely on results from a formal model, such models can provide valuable inputs into the forecasting process.

This study is one of a continuing series of empirical research studies that deals with the future production potential of Thailand's agriculture. Because of the important role rice plays in the nation's economy, the study estimates rice producing capacity for Thailand in 1981. More specifically, estimates are made of: (1) the national rice output at a range of prices, (2) the regional pattern of production of rice and other crops, and (3) the regional distribution of employment and farm income.

The empirical analysis summarized in this report is part of a cooperative research effort being carried out by the Division of Agricultural Economics (DAE) of the Ministry of Agriculture and Cooperatives, Royal Thai Government, and the Center for Agricultural and Rural Development, Iowa State University. The cooperative research effort is funded by the Agency for International Development and the Royal Thai Government. This study represents one part of a sector analysis project being undertaken to provide models and empirical analysis which can aid development and policies for agriculture in Thailand.

This report summarizes initial work in regional rural development as one phase of an agricultural sector analysis project being conducted in the Division of Agricultural Economics (CAE), the Ministry of Agriculture and Cooperatives, Royal Thai Government. The project is a cooperative one between the Division of Agricultural Economics and Iowa State University and is funded by the Agency for International Development.

The overall project has several phases including national and interregional programming models for analyzing policies and five-year plans, macro models of the entire Thai economy, models of the transport and market sectors, and others.

The report which follows explains the initial work completed on regional development of agriculture. Further work on regional economic development is now underway. The analysis in this report relates to the Northeast Region of Thailand. The Northeast Regional Model (NEREGON) includes the 15 northeast Changwats (provinces) of the nation. It also includes five of the Agro-Economic Zones used in constructing the national linear programming model for Thai agriculture. The Northeast was selected for initiating work on regional development since incomes are relatively low, soil and climate are less favorable for crop production, and underemployment of labor is greater than in other regions. This initial study relates to improvement of incomes and employment, mainly through the region's agriculture. Subsequent analyses will consider agribusiness possibilities, nonfarm industry, and human and public services. The current study revolves around a programming model since, in the short time after the overall project was initiated, data were more readily available for this approach. As other data are accumulated and verified, additional types of models and analyses may be included.

This report summarizes work completed to date on macro models of the Thai economy. The project is a cooperative one conducted by the Division of Agricultural Economics (DAE) of the Ministry of Agriculture and Cooperatives, Royal Thai Government, and the Center for Agricultural and Rural Development (CARD) and the Department of Economics of Iowa State University. Funded by the Agency for International Development and the Royal Thai Government, it is one phase of a sector analysis project being undertaken in the DAE to provide models which can aid development and policies, particularly for Thai agriculture.

A series of macro models for the Thai economy have been undertaken to supplement the various models being developed for the agricultural sector of Thailand. These activities were undertaken not only because of the importance of national economic policies on employment, prices, and other variables in agriculture, but also because various policies enacted in behalf of agriculture also impact on other sectors of the economy.

The model reported is the first generation of a set of macro economic models which may be specified and quantified for the Thai economy. The current model is now being linked with a national programming model developed for the agricultural sector.

A series of planning and analytical models is being developed and applied to Thailand's agriculture through the Division of Agricultural Economics (DAE) of the Royal Thai Ministry of Agriculture and Cooperatives. This work is assisted by a team of research workers from Iowa State University. This research report estimates the effects of improvements in truck transportation specifically on the rice subsector of agriculture and is just one step in developing a transportation submodel in the national and interregional programming model of Thailand agriculture. This research involved the development of a kingdomwide transportation model and applying it parametrically. Changes in trucking costs and the potential increase in farm revenue because of the changes in transportation models and costs are evaluated.

Other research will be forthcoming as specific studies are made of the markets for rice and other commodities. These market studies include the estimation of demand functions so that the impacts of export and other policies can be better evaluated.

This report summarizes several alternatives analyzed relative to Thailand's Fourth Five-Year Development Plan. The alternatives are analyzed relative to the agricultural sector.

The research summarized has been conducted in the Division of Agricultural Economics, Ministry of Agriculture and Cooperatives, Royal Thai Government under Director Somnuk Sriplung. It is a cooperative project on agricultural sector planning between the Division of Agricultural Economics, Ministry of Agriculture and Cooperatives, and the Center for Agricultural and Rural Development of Iowa State University. Earl 0. Heady serves as project director for Iowa State University. The cooperative project is financed by the Agency for International Development and the Royal Thai Government.

The report summarizes the alternatives analyzed and the results forthcoming from them for the year BE 2524 (1981). It does not provide documentation of the national and interregional linear programming model used in the analysis since the latter is being detailed in a separate publication. The national programming model, being used for various sector planning projects and policy analyses, is under continuing development.

This manuscript is written in cooperation with the following staff members of the Division of Agricultural Economics, Ministry of Agriculture and Cooperatives, and the Iowa State University Sector Analysis team. Major responsibility for writing fell on Charles F. Framingham while model development and application and data analysis were largely the responsibility of Arthur L. Stoecker and Kanak Khatikorn assisted by others of the DAE-ISU staff.

Computer simulation provides a useful tool to investigate alternative economic scenarios. In the present study, an attempt has been made to simulate a rice trade model with special reference to Thailand. An aggregative model is used in which the world is divided into two groups: (a) exporters and (b) importers. It is assumed that the importing group operates under constraints of resource restrictions and population pressure. Hence, there is very little opportunity for production adjustment. The exporting group is considered to have considerable surplus production capacity and is price responsive. Thailand is treated as a member of the exporting group, and a submodel for Thailand has been constructed with linkages to the main model. A set of structural equations is estimated and used to construct a recursive simulation model. Short period predictions of variables such as trade and export prices are made. A simple stochastic version of the simulation model also is formulated and used for prediction purposes. For Thailand, a number of policies are analyzed within the framework of a simulation experiment. A package program of the simulation method also is provided for convenience.

This report summarizes initial work completed to date on analyzing the interdependent nature of demand among several agricultural products in Thailand. Previous demand studies have focused primarily on a single commodity with little attempt to measure the overall relationships among demand quantities for all commodities. Interdependent demand relationships among 18 agricultural products are analyzed in this study. Direct cross-price and income elasticities are estimated for the individual commodities. An analysis of the farm retail price spread also is analyzed.

Consistent and comprehensive data series are a desirable requisite for implementation of interdependent demand analysis. Although the data available for this study were not as consistent nor as comprehensive as desired it was felt that sufficient data were available to support the empirical analysis of this initial study. As improved data series become available future studies of interdependent demand relationships among agricultural products in Thailand may benefit from the empirical methodologies and statistical procedures developed for this study. Summary discussions of empirical models of consumer demand and consumer behavior theory are presented in appendices of the report to assist researchers in carrying out further interdependent demand studies for agricultural products in Thailand.

The empirical analysis summarized in this report is part of a cooperative research effort being carried out by the Division of Agricultural Economics (DAE) of the Ministry of Agriculture and Cooperatives, Royal Thai Government, and the Center for Agricultural and Rural Development of Iowa State University. The cooperative research effort is funded by the Agency for International Development and the Royal Thai Government, and this study represents one phase of a sector analysis project being undertaken to provide models and empirical analysis which can aid development and policies for agriculture in Thailand.

This study presents the Northeast Regional Model (NEREGON) for northeast Thailand. It is the first in a series of regional models to be constructed and applied for Thailand. For the Northeast, the model is of the "first generation" and further model work will continue. Also, a larger demographic and economic data base is being built up in the region to facilitate improved models and analytical work.

Northeast Thailand was selected as the region for initiating regional studies because income in this agricultural region lags behind that of other regions. This fact has been recognized in the national interregional programming model developed in the Division of Agricultural Economics (DAE). The national model has been applied to develop five-year plans that focus special attention on the Northeast and in raising income of the region relative to other regions.

Other members of the DAE staff and the ISU research team also made large contributions to the research reported.

The papers included in this volume were presented by DAE-CARD staff members involved in sector planning at the Singapore seminar. The seminar on sector planning models was sponsored by the Agricultural Development Council in November, 1976.

The DAE-CARD sector planning activity is conducted in the Division of Agricultural Economics, Royal Thai Ministry of Agriculture. The models and analyses reported here represents a small part of the research work conducted in the Division of Agricultural Economics. Also, those reported represent only part of the model development and application work being conducted under the DAE-CARD program. This program is conducted cooperatively by the Division of Agricultural Economics, the Royal Thai Government and Iowa State University through a grant by the Agency for International Development.