Analysis

In 2011, price floor for rice in Thailand, from 12,000 Baht a tonne to 15,000. 10 Billion bahts allotted to this.

Evaluation

Short Run

• Increase in income for farmers.
• Surplus in rice, costing money to purchase, and store.
• Spoiled Rice.

Long Run

• Overproduction of rice in the following season leading to waste of resources.
• Dependence on government support, hindering development of competitive and efficient rice industry.

Assumptions

• Farmers have the capacity to respond to higher price by increasing production.