ESTIMATING THE SUPPLY RESPONSE OF MAIN CROPS IN DEVELOPING COUNTRIES: THE CASE OF PAKISTAN AND INDIA

The production of main crops in developing countries is an important factor concerning farmers, population revenues and economic development. To contribute to better knowledge on the synthetic parameters describing supply response, this article exploits annual data set following Pakistan and India over 42 years (1966 - 2008) to develop two classic translog models estimating the responses of areas for wheat, cotton, rice, maize, sugarcane, dry beans, rapeseed, soybeans, sorghum and millet to changes in their gross product per hectare. The coefficients of each crop’s equation in the system are estimated with the Full Information Maximum Likelihood. The own and cross gross product elasticities for each crop are calculated and compared to the data existing in literature, showing two results: firstly, the major crops areas are found to be weakly gross product-responsive as compared to minor crops, as well as to developed countries and secondly, Pakistani producers have responded weakly to gross product as compared to Indian producers. Policy reforms could help producers respond more easily to price changes, as well as to raise average productivity levels.