Maize Supply Response in Vietnam

This study used a supply response model to determine factors affecting maize supply in Vietnam. It estimated response coefficients from semi-annual time-series data for the period 1986-2011. Using three criteria, it chose the rational expectation hypothesis supply response model (Model I) with the separated price expectation formation hypothesis according to the information set at time (t-1) to estimate the supply response model for maize. Farmers used the available information set to form their expected price. Estimated parameters’ results in Model I indicate that the farmers' supply had a positive response to the expected price of maize, but was negative to that of cassava. This means that maize and cassava are close substitutes in the supply response models. Maize production also positively responds to the amount of fertilizer per hectare, maize area, one-period lagged investment, irrigation, trend variable, and agricultural extension policy.

Recommended policies include: enhancement of the judicious use of fertilizers and possible establishment of local factories; increase in maize area by changing the crop structure and multiple cropping with long-term industrial trees like perennials and fruit trees; improvement of the irrigation system in two deltas and in high production regions; increase in government support to farmers; increase in government spending on research and development of new maize varieties; and improvement of the extension system to provide farmers the needed market and technological information.