International Journal of Food and Agricultural Economics (Jul 2014)
ACREAGE RESPONSE ANALYSIS OF MAIZE GROWERS IN KHYBER PAKHTUNKHWA, PAKISTAN
Abstract
This study was conducted to analyze the acreage response of maize with respect to price and non-price factors in Khyber Pakhtunkhwa. The time-series data for the period of 35 years (1976-2010) pertaining to, maize area, maize price, rice price, maize yield, average rainfall were collected from various published sources. Nerlovian adjustment lag model and Vector Auto Regression (VAR) technique of estimation was employed for analyzing acreage response of maize. The model explained more than 90 percent of variation in the dependent variable. The expected maize price was unlikely found to be negative and statistically insignificant. The regression coefficients for lag rice price and lag maize yield also appeared insignificant. Area under maize in lagged year was found to be an important variable influencing farmer’s decision on acreage allocation. Among the short run and long run elasticities with respect to lag area that is 0.7155 and 2.5149, long run elasticity was more, signaling that acreage adjustment would normally take place in the long run. The coefficient of lag rainfall was found to be negative and significant indicating a negative relation between maize acreage and rainfall. The short run elasticity of maize area with respect to lag rainfall during the study period has been calculated at -0.0894 while the long run elasticity comes to be -0.3142, indicate its inelastic nature and little effect on the decision of farmers regarding allocation of land to maize. Small area adjustment coefficient (0.2845) revealed low rate of farmers’ area adjustment to desired level because of more institutional and technological constraints. Based upon the findings of this study it can be concluded that farmers allocate land to maize crop mainly basing on their previous allocation pattern rather than relative crop prices.
