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## 3. Analysis of Food Production Systems

### Theoretical Perspectives

#### Output-Price Relationship

##### Figure 3-6. The Relationship between Farm Output of Rice Supplies and the Price of Rice

Note: The farm area planted in rice is held constant.

### Estimating Farmer Supply Response

#### A Synthesis of Supply Elasticities for Cereal Grains

Note: Unless otherwise noted, elasticities are short run.
a. Long-run elasticity.
b. Short- and long-run elasticity.
c. Pre-World War II.
d. Post-World War II.
Source: Assembled from Hossein Askari and John T. Cummings, Agricultural Supply Response:A Survey of the Econometric Evidence (New York: Praeger, 1976)

### Describing the Agricultural Sector

#### Farm Size Distribution

Note: The numbers illustrate general trends; they are not specific data representing actual conditions.

#### Price Comparisons

a. F.o.b. U.S. Gulf port (no. 2 yellow).
b. F.o.b. Bangkok (25 percent brokens).
c. Rice equivalent at farm gate.
d. F.o.b. Near East (bagged).
e. Subsidized rate of Rp 72 per Kilogram.
from the United States; rice prices seem significantly lower than the potential cost of landing Thai rice in Indonesia. Urea prices are less than half the world price, indicating very large subsidies.

#### The Constraints Framework

##### Figure 3-9. Agricultural Development Activities Appropriate to Raising Techinal and Economic Ceilings and Achievement Distributions

Source: Arthur T. Mosher, An Introduction to Agricultural Extension (Singapore: Agricultural Development Council, Singapore University Press, 1978), p.73.

### Modeling Farmer Response with a Farming System Tableau

Maximize ->the objective function = net revenue
The objective function is the sum of the output for each crop activitv times the net revenue per unit of output for producing it. If no cash costs are incurred, net revenue per unit is equal to the price of output.
##### Table 9: Inputs for an Illustrative Farming System in East Java, Indonesia
- Crop activities
1 2 3 4 5 6 7 8
- Paddy rice - - - -
-- Technique Technique Technique Technique - - - -
Inputs 1 2 3 2 Soybeans Peanuts Cassava Corn
Land (hectares) - - - - - - - -
Season I 1 1 1 - - - - -
Season II - - - 1 1 1 1 -
Season III - -- - - -- - 1 1
Labor (days per hectare) - - - - - - - -
Season I 340 400 435 - - - - -
Season II - - - 400 200 175 100 -
Season III - - - - - - 150 120
Fertilizer (kilograms per hectare) - - - - - - - --
Season I 0 500 1,000 - - - - -
Season II - - - 500 0 0 500 -
Season III - - - - - - - 0
Yield (tons per hectare) 2 3 3.5 2.5 0.5 0.4 20 1.0

### Social Profitability Analysis

#### COMPARING PRIVATE AND SOCIAL PROFITABILITY.

Notes:
Column 1: Private profitability per hectare as shown in table 3-6.
Column 2: Commodity price effect, assuming the social opportunity price of rice (paddy) equals \$250 per ton and the cassava price equals \$20 per ton.
Column 3: Fertilizer subsidy effect, assuming an international price of \$0.50 per kilogram of fertilizer as opposed to a domestic price of \$0.25 per kilogram.
Column 4: Wage effect, assuming an opportunity wage of \$0.75 per day as opposed to a market rate of \$1.00 per day.
Column 5: Social profitability per hectare, assuming social prices and the physical coefficients of table 3-6.

### Bibliographical Note

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