The Effect of Diversification and Irrigation Technology on Coping With Wheat Production Risk

  In this study the effect of irrigation systems and variety diversification on risk and productivity of wheat farms have been investigated. Data were collected from field survey in Shahrekord district in the south west of Iran in 2008-2009. Then stochastic production function was estimated to evaluate the effect of variables on the mean and variance of wheat yields. To perform this work, several form of production functions with several estimation procedures were used, and finally quadratic production function was selected. After that estimated coefficients were used to simulate the effects of variable.   Econometric evidence shows that variety diversification increases farm productivity. Variety richness also reduces yield variability but only for high levels of genetic diversity. Results also show the same relation with respect to irrigation systems and improved seeds; however, deficit irrigation tends to reduce the mean wheat production and increase risk. Simulations with estimated parameters illustrate planting more diverse wheat varieties contribute to reduce production risk and to improving farmer’s productivity and welfare.     JEL Classification: I3, D8, D1