The Effect of Revenue Risk and Expected Profit on Wheat Supply in Fars Province

Z. Shokoohi , M. Bakhshoodeh(Ph.D.)
Abstract
Wheat and its products is one of the most important agriculture commodities in the consumption basket of households in Iran. Due to high nutrients, wheat is a strategic product and has a vital role in households' food security and therefore is focal of the agricultural policies. In this context, land under cultivation of wheat in the country has gone up in the recent years and Fars is a major producer of this product in the country. The aim of this study is to determine the effect of price and non-price factors such as income risk and relative expected profit on wheat supply in Fars province for which Nerlove partially adjusted methodwas applied to time series data of 1982-2008. The results showed that the relative expected profit have significant positive effects on wheat production and income risk does not have significant effect on wheat supply in Fars province. Also the positive impact of changes in technology indicates that the product supply is influenced by the increased level of technology use. Moreover, this impact can be raised by increasing awareness of farmers on the use of new technology and innovations.

JEL Classification: D8, Q12, Q21