SUPPLY RESPONSIVENESS OF RICE FARMERS IN LAGUNA, PHILIPPINES

The supply response and input demand by farmers using modern rice technology in Laguna, Philippines were estimated using profit function analysis. The results indicate that farmers do maximise short‐term profits and respond to price changes efficiently. The supply elasticity of rice with respect to its own price was approximately unity. Changes in real wages were estimated to have a greater impact on rice profit and supplies than changes in the real prices of mechanised land preparation, fertiliser or pesticides. Production elasticities derived from the profit function were consistent with those estimated directly from the underlying production function.