An Analysis of Supply Response for Natural Rubber in Cambodia

Abstract

In this paper, a partial adjustment and adaptive expectation mechanism are applied to analyze the supply response of natural rubber in Cambodia. The planted area and average yield are set as the supply response. Data from 1990-2008 were used in the analysis. The factor that had the most positive influence on the supply was rubber prices followed by rainfall and lagged dependent variables. However, the supply negatively responded to prices of alternative crops. In terms of elasticities of rubber supply with respect to its own price, they were inelastic in the short run and elastic in the long run. The long-run supply elasticities were relatively greater than the short run by five to twenty times. That indicates rubber farmers adjust their production planning in the long run more frequently than in the short run.

Keywords : natural rubber, supply response, Cambodia

JEL Classification : C12, C22, C32, 024, Q11