Abstract
There is a strong fear that the competitiveness of the Thai sugar industry in the world market may decline, due to the rise of labor wages and land prices.
The objective of this paper is to investigate the possibility of cost reduction in Thai sugarcane agriculture. For this purpose, we examine the following subjects; 1) the extent to which the production cost of sugarcane can be reduced by relocating production, 2) whether production cost can be reduced by expanding farm size, 3) whether productivity can be raised by improving biochemical technology, developing irrigation systems and mechanizing the harvesting operation.
We first show the current situation of sugarcane farming and the sugar industry in Thailand, on the basis of our field survey. We then estimate the production function of sugarcane to test the existence of scale economy in sugarcane production and to calculate the numerical effects of biochemical technological progress on productivity improvement. Finally, we compare the harvesting cost of machine-using technology with that of laborusing technology to investigate the possibility of cost reduction by mechanization.
