Estimation of Wheat Supply Revisited: A Case Study

This paper examines the wheat supply response in the Kurdistan region of Iraq using simple OLS models and the Nerlovian partial adjustment approach. The study provides estimates on wheat production, acreage, and productivity, exploring short-run and long-run elasticities and growth rates from 1990 to 2013. Production estimates are influenced by variables such as wheat prices, acreage, rainfall, seed prices, fertilizer, pesticides, fuel prices, and labor costs, along with a binary variable to account for the impact of war and economic blockades. Acreage supply includes lag variables and other parameters similar to those in production estimates. The productivity model also contains lag variables and shares common factors with the previous models. Statistical analyses reveal the significance of all variables at an alpha level of 0.10. The short-run and long-run supply elasticities are found to be 0.68% and 0.79%, respectively. Acreage elasticities are 0.46% in the short run and 0.84% in the long run. Productivity elasticities for short-run and long-run are 0.24% and 0.37%, respectively. The coefficient of adjustment for production, acreage, and productivity are 0.009%, -0.02, and 0.03%, respectively, indicating an annual production growth rate of less than 1%, which is very low. The negative acreage growth rate suggests a decline, possibly due to increased fertilizer and pesticide use, and rural migration to urban areas caused by war. Finally, the annual productivity growth rate shows a modest increase.