Can production inputs play the role of insurance in wheat production process?

Wheat production, as production of other agricultural crops, deals with a set of risks of which one is input risk. In other word, many inputs on first emerge or after periods affect the variance of production and bring risk along. On the other hand, some experts believe that some inputs reduce the risk of reduction. By the model Just and Pope (1978) suggested, this paper studies 163 wheat producers of Khorasan province within 2003-2004 to investigate the effects of inputs on production risk. Results reveal that inputs like nitrate fertilizer and irrigation reduce the risk of production. Thus inputs could be insured. Finally with respect to the results, a pattern is suggested in order to investigate such effects.

JEL Classification: D21, D24, D81