ESTIMATING PROFIT AND COST FUNCTIONS AND ECONOMIC AND TECHNICAL EFFICIENCIES OF WHEAT PRODUCTION NEJAF PROVINCE – AL-ABBASSI TOWNSHIP (A CASE STUDY) FOR SEASON 2016

Abstract

Wheat is one of the most important cereals, occupying a discrete economic position worldwide as a main source for human nutrition due to its content of essential nutrients. Therefore, wheat has a strategic trait in international economic relationships, and most developing countries, including Iraq, are seeking for achieving self-sufficiency from this crop. This study aimed to estimate the profit and cost functions as well as economic, price, cost, and technical efficiencies beside the other economic indices at actual, optimal and profit-maximizing production of wheat. A random sample of 45 wheat farms in Nejaf province was selected during the agricultural season 2016. From efficiency scales of profit function, it was shown that the average production costs had the greatest impact on the profit compared to other variables (product price and yield). According to the cost function, the optimal cost-minimizing production size was 49.40 tons. Both technical and economic efficiencies were 61.96%, while price and cost efficiencies were 35.1% and 0.53 respectively. From these data, it can be concluded that the actual production uses only 62 % from economic resources and it affords 38% extra cost. The study recommends following a production policy which increases the economic efficiency and achieves the optimal exploit for available resources.