Cost Structure Analysis of Corn in Iran

Document Type : Research Paper

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Abstract

Corn is the third important strategic crop in the world after wheat and Barley. Iran uses this product as basic source for providing energy in Poultry Nutrition. Therefore, in this study, in order to estimate the production elasticities and effects of inputs in production of corn, a translog cost function was estimated. Moreover, advantages of using cost function instead of production function in analyzing the productive technology presented. Restricted non linear maximum likelihood method was used to estimate the model. The Allen partial cross elasticities for each pair of inputs confirm the substitution relationship among labor with fertilizer, seed and water. The results also indicate that machinery is as a complement for labor and substitute for fertilizer, water and seed. The amount of own price elasticity which is less than one indicating inelastic demand of labor input. The results also show that production of corn has decreasing return to scale (SE= 0/39).

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