Identification of Factors that Influence the Technical Inefficiency of Wheat Production in Egypt

A Reddy

The IUP Journal of Agricultural Economics, 2005, vol. II, issue 3, 48-62

Abstract: Wheat is the main staple food crop of Egypt. Egypt imports more than half of its domestic wheat consumption. There is limited arable land available for cultivation of wheat crop, which makes increasing productivity and efficiency of wheat production an important objective of the policy. In this background, this paper tries to assess efficiency of wheat production and factors determining efficiency. Different variants of production functions were tested for robustness and stability of efficiency estimates of the fitted production functions. The mean efficiency in wheat production ranges from 0.76 to 0.81 among different models. All models were reasonably similar in estimating efficiency, as the rank correlation coefficients between technical efficiencies of farms from different models were sufficiently high. The minimum reported rank correlation was 0.95. Two variants of production functions were estimated-one with total production as dependent variable and other with output per unit area as dependent variable. The best fit models were translog with technical efficiency effects. The wheat production in Egypt is operating under increasing returns to scale (1.138) and elasticity of production with respect to input area (0.856), nutrient (-0.038), seed (0.013), pesticide (0.018) and labor (0.288). The marginal value productivity of land, nutrient, seed, pesticide and labor are 1.42, -0.36, 0.20, 1.06 and 1.26 respectively. The paper also estimated Allen Elasticity of Substitution among inputs. The elasticity of substitution between area-nutrition; area-seed; nutrition-seed and pesticide-labor were significantly higher than one, which indicates high substitutability among these inputs. The efficiency of wheat production in Middle and Upper Egypt were significantly higher. Canal irrigated farms also had significantly higher efficiency, but sandy soils were less efficient than clay soils. Subsistence farms were less efficient than market-oriented farms. A legume crop in the preceding season increased efficiency of wheat production by 22%, however, if the preceding crop was grain legume, efficiency of wheat increased by as much as 52%. These findings demonstrate how incorporation of legumes enhances productivity of wheat-based cropping systems especially in African countries.

Date: 2005
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