THE COMPETITIVENESS BETWEEN WHEAT AND CLOVER BY USING ITS SUPPLY RESPONSE FUNCTIONS

Abstract

The objectives of present study are: 1-Statistical Estimation of time trends of cultivated area, yield, and production for both wheat and clover: 2-Statistical estimation of supply response functions for wheat and clover to help estimating supply response elasticity that enable decision-making processes on both government and farmers levels; 3-Developing a simultaneous competitiveness model that can be used for prediction. Main findings of present study are: 1-The study's period, 2001-2012, showed an increasing annual time trend in wheat production of 160 thousand ton and decreasing trend of 970 thousand ton in clover. This is an indicator for inverse relationship between the mentioned two crops. 2-Increased time trends of farm gate prices, cost of production per unit of land, and net return per feddan for wheat and clover are shown during the above-mentioned period as follows: LE 16.4, LE 167.5, LE 135.2, LE 50.1, LE 243.5, LE 598.2 respectively. 3-Estimated supply response functions for wheat showed significant effects of farm gate price in previous season and value of net return per feddan on cultivated area in current season. Increasing farm gate price for wheat by one LE in previous season leads to an increase in wheat area in current season by 6.4 thousand feddan. Similarly, an increase of value of net return per feddan for clover in previous season by one LE leads to declining wheat area by 100 feddan.therefore by estimated supply response elasticity for wheat was very law at 0.5 indicating how necessary wheat is for Egyptian population. 4-Estimated clover supply response function showed the effects of explanatory variables on current cultivated area of clover. Increasing farm gate price ratio between wheat and clover by 1% leads to an increase of clover area by 10 million feddan in total country. Increasing cultivated area of wheat in previous year by one million feddan leads to a decline in clover area of 550 thousand feddan. therefore by estimated supply response elasticity for clover reached very law level at 0.2 indicating the necessity of clover for farmers who rely on feeding at least one animal farm unit. 5-Using simultaneous response model, the predicted area of wheat and clover will be 3.33 and 1.28 million feddan in 2015 for wheat and clover respectively and will reach 3.66 and 1.04 million feddan in 2020 for both crops respectively by growth rate of 1.8% for the period (2015-2020), which may be due to price policies currently are supposed introduced in the near future using the style of the price of the warranty with growers of wheat to encourage them to be planted, which will be reflected naturally decreasing cultivated area than expected Clover which will be up to about 1.28 million feddan in 2015 and continue to decrease to about 1.01 million feddan in 2020 at the rate of decrease of 4% for the same forecast period because any unexpected increase in wheat area will come at the expense of a decrease in the clover area and that the nature of the competitive relationship Replacement and between those crops, especially since each of them is growing very necessary for the requirements of the Egyptian market.