Ph.D. - Agricultural and Resource Economics

Permanent URI for this collectionhttps://hdl.handle.net/10125/584

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Agricultural efficiency and dependency on forest resources: an economic analysis of rural households and the conservation of natural forests in Sri Lanka
(University of Hawaii at Manoa, 2006) Illukpitiya, Prabodh M.P.
Simulating the economic impacts of water reallocation on an irrigation system in Hawaiʻi
(University of Hawaii at Manoa, 2005) Potapohn, Manoj
Patterns of energy use, energy cost increases and their impacts on crop production on the Big Island of Hawaii: a linear programming approach
(University of Hawaii at Manoa, 1982) Koffi-Tessio, Egnonto N.
In recent years, drastic changes have occurred in input prices, output prices and in the institutional structure within which agricultural producers operate. These changes are largely the upshot of sharp increases in energy prices that are directly or indirectly translated into higher production costs for the farmers. The main objective of this study is to examine the interrelationship between the energy sector and the production of three agricultural crops (sugar, macadamia nut and coffee) by small growers on the Big Island of Hawaii. Specifically, it attempts: (a) to explore the patterns of energy use in agriculture; (b) to determine the relative efficiency of fuel use by farm size among the three agricultural crops; and (c) to investigate the impacts of higher energy costs on farmers' net revenues under three output price and three energy cost scenarios. To meet these objectives, a linear programming model was developed. The objective function was to maximize net revenues subject to resource availability, production, marketing and non negativity constraints. The application of the model to sugar, macadamia nuts and coffee yielded the following results. With respect; to sugar, indirect energy (fertilizer and herbicide) use appears to be an increasing function of farm size. Direct energy (gasoline, diesel and electricity) does not lead to a specific conclusion. In the case of macadamia nuts, both direct and indirect energy use, with the exception of gasoline and electricity, appears to be a decreasing function of farm size. With respect to coffee, the results indicate that direct energy use is a decreasing function of farm size. However, the relationship between fertilizer use and farm size is not conclusive. Findings also reveal that sugar, with only 10% of energy cost, appears to be more vulnerable to higher energy costs than macadamia nuts and coffee with 16% and 18% of energy cost, respectively. In addition, higher energy costs tend to have differential impacts depending upon the output price. Some of the major conclusions emerging from this study are: (a) higher energy costs have not significantly impacted on farmers' net revenues, but do have a differential impact depending on the resource endowments of each crop grower; (b) low output prices tend to reinforce the impacts of higher energy costs, whereas high prices tend to negate them; (c) farmers are faced with many constraints that do not permit factor substitution. In terms of policy formulation, it was observed that policy makers seem to be overly concerned with the problems facing growers at the macro level, without taking into account the constraints that growers face at the micro level. These micro factors play a dominant role in the context of resource allocation. They must, therefore, be incorporated into a comprehensive energy and agricultural policy at the county and state level.
An aquacultural development decision support system (ADDSS)
(University of Hawaii at Manoa, 1995) El-Gayar, Omar F.
Nowadays, aquaculture development is considered as a viable source for providing high quality cheap protein, particularly for developing countries where protein shortage already exists. Complexities in such development planning can be difficult without the aid of modern decision-making technologies such as decision support systems (DSS). DSS are already in wide use in the business and manufacturing sectors. However, their use in agriculture is limited and their use in aquaculture is almost nonexistent, The objective of this work is to design and implement a decision support system that would systematically aid the decision maker or the planner in making choices regarding the development planning of the aquaculture industry for a given region. Moreover, due to the lack of multiple criteria decision making (MCDM) models for regional planning for aquaculture development, it is also the objective of this work to develop such models. The system is composed of three main components: a model base containing all relevant models which are essentially multiple objective in nature, a data base containing all relevant data, and a dialog component providing a user interface to the other two primary components of the system. The MCDM model representing the core of the modeling component seeks the optimal allocation of resources and activity levels that would strike an acceptable balance among the various developmental goals under consideration subject to resource constraints, market constraints, and pollution constraints. To accommodate different decision situations. three different MCDM solution techniques are implemented, namely, multiple objective programming (MOP), compromise programming (CP), and weighted goal programming (WOP). The system allows the planner to specify the model by selecting the developmental goals, the decision variables (activities), and the constraints to be considered in the model. The system, which generates a user-specified model based on the data stored in the database, would answer questions such as, what species to grow? what technology to use? how much to grow of each species and/or technology? The recommended policy is generated in both text and graphics formats for ease of reference. Finally, the applicability of the prototype system is demonstrated through applying it to a case study from Egypt.
Spatial water allocation under conjunctive use
(University of Hawaii at Manoa, 1995) Umetsu, Chieko
This dissertation studies the optimal allocation for conjunctive use of surface and groundwater. The optimal model defines economic principles which determine the spatial allocation of surface and groundwater, the level of conveyance expenditure, the level of on-farm investment in water conservation, and shadow prices of surface and groundwater. The static spatial model identifies the economic principles which govern water allocation for conjunctive use of surface and groundwater. Two models, seepage in the canal and seepage in the canal and on the field are considered. The optimal water allocation is examined with fixed on-farm investment in water conservation and with different canal loss rates. The static base model is extended to incorporate endogenous on-farm investment in water conservation and to consider the effect of the seepage rate on choice of technology, conveyance expenditure, water allocation and land rents. Analytical results are obtained for endogenous crop choice when land quality is homogeneous and shadow price of water is spatially increasing. The study compares the effects of heterogeneous land quality, changes in output price, pumping cost, uniform price for groundwater, and uniform prices for water such as the marginal cost of water generation at the source. The spatial dynamic model of conjunctive water use defines conditions which govern the intertemporal and spatial optimal allocation of water. Five important results are as follows: (i) When seepage is small, the conjunctive use model does not make a significant difference, and the surface water model is a good approximation of the conjunctive use model. (ii) Additional seepage from the field generates a positive externality to water consumers and the resulting optimal shadow price of water is less than the shadow price of the utility. (iii) An output price increase, heterogeneous land quality, and a fixed price for water generate huge aggregate land rents. (iv) Spatial inequity of land rents is worsened by heterogeneous land quality. (v) Temporal allocation of water resources is governed by the Hotelling rule variant similar to the optimal allocation rule for exhaustible resources.
Optimal harvesting eco-economic model for integrated farming systems
(University of Hawaii at Manoa, 1994) Clark, Kimberly D.
The evaluation of alternative decision models: a case of crop rotation in Northern Thailand
(University of Hawaii at Manoa, 1994) Suppapanya, Pramote
Economic evaluations of multi-location testing results at the Thailand Farming Systems Research Institute have not been sufficient in terms of whole-farm decision planning. If no risk is involved in farm decision planning, farmers should act as profit maximizers. since risk is inherent in agriculture, farmers should be concerned with risk when they make decisions on farm investments. Therefore, it is hypothesized that risk decision making models predict northern Thai rice farmers' behaviors better than profit maximization models. Two elements in the mean-variance (E-V) decision analysis are farmer's risk preferences and risk perceptions. A quadratic function is used to represent farmer's attitudes to risk. Farmer's risk perceptions concerning crop production are measured by farmer's expectations of yields and prices. The expected mean-variance (E-V) efficiency frontier for each farmer is derived by a quadratic programming algorithm. The E-V efficiency frontier together with the utility function are used to derive optimal farm plans. The Target MOTAD model, using a linear programming algorithm, is included as an alternative decision model, which involves safety-first considerations (i.e., cash cost and variable cost as a target income level). The results show that the expected utility maximization model predicts actual farmers' behavior more accurately than the expected profit maximization model. Moreover, the Target MOTAD model performs quite well and better than the expected profit maximization model in predicting actual farmers' behavior when the selected target income level portrays their risk preferences and goals, such as variable cost of farm investment. The results suggest the importance of risk in farm decision making. Investment decisions of farmers concerning the amount of land allocated to mungbean production preceding the rice crop in the yearly rotation are significantly affected by competition from alternative crops for limited farm resources, such as land, labor and cash capital. Therefore, formulation of programs or policies, such as the integration of a new crop into farmer's existing cropping systems, should take risk and interdependency among cropping enterprises into consideration.
Economic development and income inequality: empirical evidence
(University of Hawaii at Manoa, 1993) Zhang, Mingsheng
Kuznets's inverted U-curve hypothesis regarding the relationship between economic development and income inequality has not been rigorously tested due to the unavailability and quality of data, problems with sample composition, and concept formulation. Likewise, the relationships between institutional factors and income inequality have been largely untested. This study has made an attempt to address these concerns by employing a more sophisticated approach and updated and more consistent data for a relatively long time span. In terms of methodological issues in testing the hypotheses, this study differs from previous studies mainly in the following ways: first, economic development is studied as a multiple-dimension concept and then measured by both real gross domestic product per capita and physical quality of life index; second, measurement errors of indicators for income inequality and economic development, resulting primarily from income concept variations among countries, are incorporated into the LISREL measurement model; third, a blend of time-series and cross-country approaches is employed. The research results strongly support the inverted U-curve hypothesis. This finding suggests that as economic development takes place, income inequality increases first and then decreases after it reaches a turning point. The assessment of the relationship does not explain what brings about this change. Since it is neither intuitively nor deductively obvious why economic development alone should promote income equality, the second part of this study introduces political, demographic and sociological factors for a fuller explanation of the relationships between economic development and income inequality. The study shows that population growth, economic growth, and primary education increase income inequality while health and secondary education tend to decrease it. However, it fails to find support for the hypotheses that freedom, political rights, and civil liberties are negatively associated with income inequality. It is concluded from all evidence that economic development is a necessary but not a sufficient condition for reduction of income inequality. Economic and non-economic measures have to complement each other to translate economic development into more equitable income distribution.
Optimal aquafarm structure and size: a case study of shrimp mariculture
(University of Hawaii at Manoa, 1993) Tian, Xijun
Aquaculture is a relatively new industry particularly in the Pacific region. As with any new industry, not much research has been done on the optimal farm size, structure, minimum operation scale and operating strategies. For this paper, farm size refers to the land area used to culture sea animals, farm structure refers to the production phases carried out in a farm, minimum operation scale refers to the number of tanks or ponds necessary for economic profit and operating strategy refers to the make-or-buy decision on the intermediate products and stocking-harvesting scheduling. Almost all aquacultured animals go through four stages of growth in a life cycle after being hatched: nauplii, postlarval, juvenile and adult. The corresponding operation phases are maturation, hatchery, nursery and growout. An aquafarm may operate any combination of operation phases if markets exist for all stage animals. If no markets exist for intermediate-stage animals, an aquafarm whose target is to produce adult animals would have to operate all operation phases. This study attempts to determine optimal aquafarm size, structure and operating strategy using a nonlinear programming technique. The theoretical nonlinear programming models are developed by incorporating all operation phases under two assumed market conditions: (1) markets for all stage animals exist, this production system is referred to as the open system; (2) only markets for adult animals exist, and this production system is referred to as the closed system. To analyze the economies of size on shrimp production in Hawaii, hypothesized shrimp farms based on Hawaii's production experience are designed. Optimal farm size, structure and operating strategies are derived. Results indicate that, for Hawaii, hatchery operation is the most profitable operation, followed by maturation, nursery and growout in descending order based on profitability, for the open system. On-farm production of broodstocks from productive female spawners is economically preferable. Under the closed system, small farms are not economically feasible. Medium size farms in the closed system should adopt a biweekly stocking schedule while large farms should stock growout ponds weekly. With different assumptions on output prices, the minimum operation scales for each of the four production phases are also derived.
Computable general equilibrium analysis of external and policy shocks on the Malaysian agricultural sector
(University of Hawaii at Manoa, 1992) Yeah, Kim Leng
Scale economies, technological change and capacity factor: an economic analysis of thermal power generation in Japan
(University of Hawaii at Manoa, 1991) Iinuma, Yoshiki
This study basically attempts to determine the technological characteristics which are responsible for productivity changes in thermal power generation in Japan over the period of 1964-1988. Specific objectives are to estimate the magnitude of scale economies, technological change, capacity factor effect, elasticity of substitution between input factors and movements of total factor productivity in thermal power generation in Japan and derive policy implications regarding thermal power in the future generation mix. To achieve the objectives, a translog cost function incorporating variable representing technological change and capacity factor, in addition to the basic four variables, is used. Several major findings and conclusions are: (1) There exist economies of scale in thermal power generation in 1964-1988, although the magnitude of economies of scale is very small. (2) The rate of technological improvement clearly declined after the period 1971-1975. (3) The capacity factor is critical in determining movements in total factor productivity. (4) Findings of this study suggest that the outlook for thermal power generation is dim, which calls for much broader policy options to revamp the Japanese electric power industry.
Extraction cost, scarcity rent and institutional choice: three reflections of resource scarcity
(University of Hawaii at Manoa, 1990) Dale, Larry L.
Resources are provided by nature and they may be very scarce or very abundant relative to the quantity demanded. When resources are scarce, scarcity may be reflected in rising extraction costs and high rents. When resources are abundant, that may be indicated by common property or other non-traditional arrangements to govern resource use. As production of both scarce and abundant resources accumulates over time, economists are challenged to predict changes in costs, rents and institutions. This dissertation proposes models and empirical analysis, of specific mineral and water resource industries, to begin to improve the understanding of resource price trends and the ability to forecast events based upon those trends. The logic explaining the sequence of chapters in this dissertation is as follows. A model of institutional choice, in California water districts, takes priority in Chapter Two. Given the institutional background, resource extraction costs are most directly affected by the characteristics of resources being extracted and by resource prices. Accordingly, a mine investment model is presented in Chapter Three which emphasizes the impact of an important resource attribute, deposit volume; upon project cost and outputs in U.S. copper mines. This model is then used as one component of the rent model in Chapter Four. The rent model ~elates long run changes in extraction costs to mineral scarcity rents. Each chapter may also be read as an independent analysis of a specific public policy problem. Chapter Two addresses the impact of proposed legislation to end flat rate water sales in California water districts. Chapter Three forecasts the impacts of a trade embargo upon U.S. copper production. Chapter Four evaluates copper, coal and oil extraction cost trends and suggests that these trends are not a cause for policy concern.
Transaction costs and choice of petroleum contract
(University of Hawaii at Manoa, 1989) Wirote Manopimoke
Petroleum contracts are very complicated in their share structure. This makes it difficult to generalize explanations on choice of petroleum contract. Current contracts are classified into four major types: concession, production-sharing, joint-venture, and service contracts. Two existing explanations on choice of contract--fisical regime and risk sharing--explain in terms of physical risk. They are inadequate for the purpose because the industry is also inherent with behavioral risk as shown by the existence of various mitigating terms in every type of contract. Behavioral risk here refers to the opportunity of the contracting parties to deviate from the original promise. This study proposes that a contract is selected not only to moderate physical risk but also to minimize ex-post opportunism. The theories of agency and self-enforcing contract are used in constructing a contractual choice model. It shows that types of contracts are distinguished by incentive payment terms, which are designed to minimize opportunism. When the country has little information on petroleum reserve, a high incentive payment contract will be selected, and vice versa. Also, if the circumstance changes ex post, new terms or a new type of contract are adopted to maximize the contracting parties' mutual benefits. The available evidence supports this hypothesis. The high incentive contract--concession contract--is always granted in newly oil exploration countries. Other three lower incentive contracts are drawn in countries which have high commercial quantity of petroleum reserve. A one-way analysis of variance test shows that means of oil-field size among the three groups of countries that adopted different types of contracts at a particular time differ significantly at the level of 90%. The Less Significant Difference (LSD) test confirms that means for the group of countries employing the production-sharing or the joint-venture differs significantly from the group of countries that employs the service contract. When oil prices change, new terms or a new type of contract are adopted without interventions from the third party. In conclusion, empirical evidence is consistence with the model for choice of petroleum contract developed in this study. The model can be more vigorously tested if additional data and information are available.
Choice of rice production technique in Thailand, 1890-1940
(University of Hawaii at Manoa, 1989) Supachit Manopimoke
This study analyzes the choice of rice production technique in Thailand during 1890-1940. It focuses on two techniques: transplanting and broadcasting. Although transplanting has been the traditional rice growing method in Thailand at least since the seventeenth century, most cultivators in the newly developed areas of the commercialized Central Plain during the period adopted broadcasting. The two conventional explanations for choice of rice production technique--Iocal water conditions and factor prices--cannot consistently explain this choice. The water conditions necessary for transplanting rice did exist in the area, and factor prices during the period moved in favor of transplanting. Because the two techniques differ both in terms of variable input per unit of land and fixed capital input, a choice of technique model is formulated using the theory of production and the theory of investment to explain the choice of broadcasting. The model is a neoclassical production relation modified to incorporate fixed capital input and the firm's planning horizon. In this regard, the model allows a simultaneous analysis of the firm's short-run production decision and long-run capital investment. Empirical evidence regarding rice farming during the period is consistent with theoretical constructs. The main findings reveal that the choice of broadcasting during the period is a rational decision. The outcome was caused by uncertainty in land ownership and prices, which were consequences of increased external demand for rice and economic changes in Thailand at the time. Under uncertainty in land ownership, a short planning horizon and consequently a technique such as broadcasting which requires less fixed capital input minimizes expected losses. Under price uncertainty, broadcasting provides greater production flexibility and, consequently, higher profits for large landholding firms. This study contributes to conventional knowledge regarding factors affecting choice of rice production technique and, thus, improves the understanding of a firm's choice of technique. Although the model is simple and empirically oriented, it is adequate to analyze a firm's decision making process. The findings also illuminate relationships between external trade, internal institutions, and agricultural development. While the empirical results presented are specific to Thailand, the process employed here can be applied elsewhere.
Political macroeconomy of agricultural policy: rice policy adjustments in Korea
(University of Hawaii at Manoa, 1989) Kwŏn, Yŏng-dae
Agricultural policies are likely to respond to political economic interactions rather than to the necessity for correcting market failures. Political economic approaches have gone beyond the horizons of traditional market analyses to explore why and how agricultural policies have evolved to their present forms. Meanwhile, in the formal modeling for policy analysis, it has gradually been recognized that the political economic forces associated with macroeconomic changes are sources of primary influences of government actions in the agricultural sector. In this context, this study attempts to provide a political macroeconomic analytical framework to address how agricultural policies are functionally adjusted to the changes in the macroeconomy. Two working hypotheses guide the study: 1) agricultural policy decisions are endogenous responses to political influences of relevant interest groups rather than exogenous actions of government, and 2) macroeconomic changes affect the variation of political influences by interest groups which are transmitted to the agricultural policy making process. The Korean rice price policy from 1961 to 1985 is modeled to specify empirically testable hypotheses, and three major interest groups (consumers, producers, and government) are assumed to exert political influences on rice policy making. A political preference function is specified for testing the first hypothesis. The results successfully confirm the existence of differentiated political influences on rice policy making among the three interest groups. Korean policy maker in the rice sector, accommodating the aggressive pressure from the farmers, shows more favorable political preference toward the rice producers than to the other groups. In order to test the second hypothesis concerning the relationship between agricultural policy and the macroeconomy, an econometric model consisting of 12 simultaneous equations is constructed. The major empirical findings are summarized as follows: 1) Increasing deficits in both the Grain Management Fund and the general government budget represent a reduced political position of the government in rice policy making. 2) The parity price ratio and the rural-urban income ratio are positively related with the policy maker's rising political preference toward rice producers, while declining agricultural share to total output causes rice producers to exert political efforts to influence rice policy. 3) As per capita income increases, consumers are found to make less political efforts to influence the process of rice policy making. 4) Through a simulation of the macroeconomic impact experiments, rice policy in favor of farmers is expected to remain as long as the Korean economy continues to advance.
Optimal resource allocation, pricing, investment and market structure under a spatial externality: the case of irrigation
(University of Hawaii at Manoa, 1989) Chakravorty, Ujjayant
This dissertation develops the economic principles for spatial water allocation, pricing and Investment in water conveyance and on-farm technology for large-scale irrigation systems. Although Irrigation Is emphasized, the results obtained are applicable to other public utilities such as electricity, natural gas and transportation. The effect of marginal cost pricing on the welfare of farmers located at various distances from the water source Is examined, and a1tematlve taxation mechanisms are proposed. The study examines the differential Impact of private and public Irrigation Investments on resource rents accruing to beneficiaries, as well as on Irrigated acreage and aggregate output. Performance of purely decentralized Irrigation systems are compared to socially optimal and monopolistic regimes, under a range of plausible assumptions of demand elasticity, The theoretical results are Illustrated with secondary data from California and Pakistan.
A conceptual framework for the economic evaluation of water harvesting
(University of Hawaii at Manoa, 1989) Scrimgeour, Francis Gordon
Water harvesting technologies capture runoff and recycle it for productive use. Recently there has been renewed interest in the use of this technology in arid and semi-arid areas of the world. Despite the long history of water harvesting it has not been widely adopted. A conceptual framework was developed for the economic evaluation of water harvesting. The framework included all relevant agronomic, engineering and economic factors along with the necessary daily meteorological data to incorporate the effect of the different size and timing of weather events. The framework developed was used to investigate the economic feasibility of water harvesting for sorghum grain production at two locations in Texas. The results show large variations in profit from year to year. Two of the three technologies are shown to be more profitable than dryland farming at the two sites studied. The framework was found to be well suited to the task as it adequately dealt with the complexity of the issues and was simple to use. This will aid future users in identifying their data requirements and research agendas. Water harvesting was found to be another complex technology which has benefits in some locations. Adoption of the technology is constrained by the limited profit potential of water harvesting, the variability of water harvesting profits and the knowledge required to successfully use the technology. The profits from water harvesting can be increased by the production of higher value and more water responsive crops, the development of cheaper technology and the development of techniques to make better use of the rainfall in wet years.
The optimal mix of electricity-generating sources for Japan in the year 2000: a multiple-criteria decision making analysis
(University of Hawaii at Manoa, 1989) Amagai, Hisashi
This dissertation describes an alternative approach for determining the optimal mix of Japan's electric power sources through a multiple-criteria decision making (MCDM) analysis. The present priority of Japan's electric power industry is to attain the optimal mix of power sources. In determining such an optimal mix, the electric power industry recognizes the significance of an approach that considers security of power supply in the future and environmental aspects, but the emphasis has still been placed on economic aspects only. Most of the fuels used for generating power in Japan are imported from overseas. In other words, future power supply depends heavily on overseas sources. Emissions from the thermal power plants have caused the "greenhouse effect" and "acid rain." Recently, the agitation against nuclear power development is accelerating throughout the country, concerning the safety of nuclear power plants. Therefore, the electric power industry should consider security of power supply (strategic aspect), emission problems (environmental aspect), and public opinion on safety (social aspect) in addition to the economic aspects in determining the optimal mix of power sources. In this study, a multi-objective programming model is developed for the determination of optimal mix of power sources with special attention to economic, technological, and institutional conditions. Since it is difficult to predict future conditions due to uncertainties such as changes in technology, natural disasters, changes in values, and other unforeseeable changes, scenario analysis is utilized in this study. As this problem belongs to the domain of public decision making which contains a wide range of interest groups (decision makers), it is desirable that the optimal solutions satisfy the conditions of equity as well as efficiency. In this study, the Rawlsian equity criterion and the utilitarian equity criterion are considered to attain the optimal mix of power sources. Empirical results determined by the MCDM analysis are compared with the results of two major studies on electric power sources - one by the Ministry of International Trade and Industry, and the other by the Japanese Institute of Energy Economics.
The role of minerals in the economic development of China, 1949-2000
(University of Hawaii at Manoa, 1987) Dorian, James P.
An econometric analysis of economies of scale and optimum size of independent sugarcane farms on the Hilo coast
(University of Hawaii at Manoa, 1987) Hoffman, Robert G.
The number of independent non-plantation farms in the State of Hawaii significantly following the expiration of the 1948 Sugar Act on December 31, 1974, from 510 farms in 1974 to 141 in 1985. Because of concern regarding the decline in the number of sugarcane growers and the substantial variation in costs of production among them, a research project on estimating economies of scale and optimum size of independent sugarcane farms on the Hilo Coast was undertaken. It was assumed that a study comparing the performance of farming operations among growers might enhance the decision making process, lead to an improvement in overall efficiency and increase opportunities for viable farming operations. The objectives of the study are to estimate, analyze and evaluate various aspects of economies of scale and optimum farm size of the independent sugarcane growers. Several econometric models are used in the study. The translog cost function measures scale economies as a relationship between total cost, output and prices. This function under its restrictive form and various assumptions of homotheticity and unitary price substitution effects identifies both economies and diseconomies of scale. The Cobb-Douglas production function with variable technologies explains economies of scale as it relates output to labor, land and capital inputs. By investigating the effects of capital on output and selected factors of production, it was found that capital expansion could benefit larger producers through economies of scale. As anticipated, smaller producers are less responsive to capital expansion and diseconomies of scale occur at lower levels of production. The quadratic function shows increasing and decreasing economies of scale between average cost and increasing output and identifies the optimum level of output and farm size at which independent sugarcane growers could operate their farms efficiently. This function shows that average costs decrease as farm size increases, thus also indicating economies of scale. It also provides a basis for estimating optimum farm size by means of differentiating the equation. The results of the quadratic function indicate that shifts in minimum cost and optimum production levels make it difficult for larger producers to remain in business. Many smaller sugarcane growers, on the other hand, can continue production even though marginal losses occur through the utilization of unpaid family labor and subsidies from off-farm employment. The results of the empirical analyses indicate that economic efficiency can be attained by expanding farms to higher levels o£ production up to specified sizes, depending on the econometric £unction utilized. In recommending ranges of economic efficiency as defined by economies of scale, the translog cost £unction was found to be more acceptable than the quadratic function in the analyses. Since the translog cost £unction shows that economies o£ scale are present for £arms of up to 50 acres in size, independent sugarcane growers producing less than 50 acres could consider expansion to increase efficiency. The research findings indicate, on the other hand, that expansion o£ farms of 50 acres or greater would probably not result in greater efficiency. Since no one method provides conclusive information on all possible explanations of economies of scale and optimum £arm size, it is recommended that further research be carried out on comparative studies o£ these and other types of econometric models. Objectives for further research should focus on determining which methodologies and types of data are best suited for estimating economies of scale and optimum farm size.

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