Iowa State University Capstones, Theses and Retrospective Theses and Dissertations Dissertations 1971 Some normative aspects of planning in the Maule region, Chile Francisco Jacinto Andrade Iowa State University Follow this and additional works at: https://lib.dr.iastate.edu/rtd Part of the Agricultural and Resource Economics Commons, and the Agricultural Economics Commons Recommended Citation Andrade, Francisco Jacinto, "Some normative aspects of planning in the Maule region, Chile " (1971). Retrospective Theses and Dissertations. 4867. https://lib.dr.iastate.edu/rtd/4867 This Dissertation is brought to you for free and open access by the Iowa State University Capstones, Theses and Dissertations at Iowa State University Digital Repository. It has been accepted for inclusion in Retrospective Theses and Dissertations by an authorized administrator of Iowa State University Digital Repository. For more information, please contact [email protected]. 71-25,841 ANDRADE, Francisco Jacinto, 1934- SOME NORMATIVE ASPECTS OF PLANNING IN THE MAULE REGION, CHILE. Iowa State University, Ph.D., 1971 Economics, Agricultural University Microfilms, A XEROX Company , Ann Arbor, Michigan 71-26,841 ANDRADE, Francisco Jacinto, 1934- SOME NORMATIVE ASPECTS OF PLANNING IN THE MAULE REGION, CHILE. Iowa State University, Ph.D., 1971 Economics^ Agriculturëil . University Microfilms, A XEROX.Company, Ann Arbor, Michigar THIS DISSERTATION HAS BED! MICROFILMED EXACTLY AS RECEIVI Some normative aspects of planning in the Maule region, Chile by Francisco Jacinto Andrade A Dissertation Submitted to the Graduate Faculty in Partial Fulfillmen The Requirements for the Degree of DOCTOR OF PHILOSOPHY Major Subject: Economics Approved: Signature was redacted for privacy. In Ch arge of Major Work Signature was redacted for privacy. Head; or Major Department Signature was redacted for privacy. Deâïy /graduate College Some normative aspects of planning in the Maule region, Chile by Francisco Jacinto Andrade A Dissertation Submitted to the Graduate Faculty in Partial Fulfillment of The Requirements for the Degree of DOCTOR OF PHILOSOPHY Major Subject: Economics Approved: Signature was redacted for privacy. In Charge of Major Work Signature was redacted for privacy. 3or Department Signature was redacted for privacy. raduate College Iowa State University Ames, Iowa 1971 ii TABLE OF CONTENTS Page CHAPTER I. INTRODUCTION 1 CHAPTER II. THE ECONOMY 9 The National Level 9 Regional Aspects: the Maule Region 25 CHAPTER III. PRESENT PLANNING PROCESSES AND ALTERNATE SOLUTIONS 66 Current Development Plan for the Agricultural Sector 67 pnU ^ % - -2 - t 82 Comments 91 CHAPTER IV. SOLUTIONS FROJXl THE PROGRAMMING MODEL 92 Replication 92 The Production of Crops in the Provinces 101 Data Requireirents 104 Programming GOVI lie Programming G0V2 136 1 = r\ Programming GOV3 Programming STOKl _L / U 176 Programming STCK3 Remarks and a Parametric Exercise \7 C'TVV"^ OV ' q r\\'a ^ ^ s.,. —^ ^ wO O uonc-usLons ii TABLE OF CONTENTS Page CHAPTER I. INTRODUCTION 1 CHAPTER II. THE ECONOMY 9 The National Level 9 Regional Aspects; the Maule Region 25 CHAPTER III. PRESENT PLANNING PROCESSES AND ALTERNATE SOLUTIONS 66 Current Development Plan for the Agricultural Sector 67 The Model 82 Comments 91 CHAPTER IV. SOLUTIONS FROM THE PROGRAMMING MODEL 92 Replication 92 The Production of Crops in the Provinces 101 Data Requirements 104 Programming GOVl 110 Programming G0V2 136 Programming GOV3 3-50 Programming STOKl 170 Programming ST0K2 176 Programming ST0K3 179 Remarks and a Parametric Exercise 181 CHAPTER V. SUMMARY AND CONCLUSIONS 194 Summary of Thesis 194 Conclusions 199 iii Page LITERATURE CITED 201 ACKNOWLEDGMENTS 20 7 APPENDIX 20 8 iii Page LITERATURE CITED 201 ACKNOWLEDGMENTS 20 7 APPENDIX 20 8 1 CHAPTER I. INTRODUCTION This Study deals with agricultural quantitative planning at the region level. The region under study includes the Curico, Talca, Maule and Linares provinces and is known as the Maule region. The region is located in the Republic of Chile. The generally depressed economic situation of the region poses a challenge to the ingenuity of the planner. It is to this challenge that this thesis addresses itself. In order to suggest a more flexible approach to present planning processes, a linear programming program is inçle- mented. The several hypotheses iitçlied in the Chilean national plan (41) are taken up one by one to observe how they affect the value of the criterion function in the different programs. The main hypotheses are related to technological change and investment and can be conveniently summarized in two parts. The first is the hypothesis of a steady change of yields during- the 1965-19 80 period. These increases or decreases in yields have been calculated on the basis of a more effective use of fertilizer and the results obtained in the experimental stations. Some of the crops are discontinued, or their yields diminish or stay at the same level during the 15 year planning period. In addition, the postulated increases have been examined in relation to the fertility of the soil in each of the four provinces chosen for this study. The second set of changes is concerned with the augmentation of the 2 irrigated areas in the region at the expense of the drylands. The investments required to reclaim drylands now occupied by cattle, sheep or crops will affect the production techniques now used by the farmers in these areas, since the avail­ ability of water will allow the use of more fertilizer and improved seeds and machinery. This study addresses itself to the problem of finding out the variations that occur with these two types of changes. The national plan also postu­ lated commodity price increases and decreases, and these are taken up in the different programs as indicated by the national plan. Additionally, the number of commodities is varied from period to period in the programs. The central objective of this thesis is to uncover, by use of linear programming methods, the best use of the scarce resources of the Maule region under the postulated conditions. To accomplish this end, data regarding prices of products and inputs was col­ lected. The technical coefficients for each of the crops and livestock activities were assembled and each of the restrictions was tested for consistency over the 15-year period of analysis. The assumption of a different production function for each of the four provinces is reflected in the calculation of cost data and yields. For exaitç>le, the yields of wheat were calculated for each of the four provinces in both irrigated and drylands. According to the national plan there were three levels of yields used, one each for 1965, 3 19 71 and for 19 80. In addition, a new set of yields was calculated, based on the 1965 yields and the mean and standard deviations of agricultural products at the national level over the period for which data are available. Table A.54b indicates this. To illustrate, we can indicate the number of wheat yields per province, each of which had a specific purpose according to the stated assumptions. For each of the four provinces there were 24 different wheat yields used. Scarce resources and prices are also changed in a similar fashion and the specific changes are described as they occur. These changes in the data were carried out using simple conputational programs developed for this purpose using the Omnitab programming language (10). In addition, the available linear programming routines permitted the formulation of pro­ grams that approximate the actual situation. The Maule region in Chile symbolizes the internal eco­ nomic challenges facing the Country. While Santiago in the North and Concepcion in the South have developed into highly urbanized centers with higher income levels, the Maule region remains relatively stagnant. This thesis examines certain aspects of planning that may evolve into detailed proposals at the region and province levels. Planning for the region is not a novel subject; the macro level has been studied by the Central Government (50) and has been related to other areas through its inclusion in the general country planning pro- 4 œdures (41). Micro studies are available in connection with agricultural production (39) and the multiple use of resources (49). The fact that there exist several ways to design an acceptable plan for the region inply the possibility of synthesizing the several approaches. This task is left to other researchers. The population of the Maule region is highly mobile but the region's economic performance has not been good enough to equalize it with the rest of the Country and in particular with the more active urbanized centers of Santiago and Con- cepcion. Salary differentials operate over the labor force in a stepwise fashion: the workers start their migration from the countryside to the loccil urban centers of Talca, Linares, Curico and Maule provinces, and from there new opportunities are sought to the North in Santiago or to the South in Concepcion. In the period 1952-1960 there was a net migra­ tion from the region of about 24,000 persons (50, p. 31). The connection between this movement of the labor force and the conditions restraining the development of the area from without seems obvious via the pricing system. However, it would be unfair to argue that the policies of the Chilean Government have been logically wrong since the conceptual framework is a sound one: the policies of the Government have had the purpose of increasing production mainly through controlled input pricing. The prices of agricultural commodities will 5 be increased slightly during the 15-year period of analysis (41, pp. 230-286). The profit incentives are assumed to operate on the input side while the prices of the main agri­ cultural products of interest are controlled. The logical nature of such an arrangement can be fully understood if the conditions of all-around well-behaved functions to obtain maxima are fulfilled.