Analysis of the Effect of Price Liberalization Policy on Production of the Main Crops Grown in New Halfa Agricultural Corporation

The study was conducted to measure the extent of instability and analysis of sources of changes in mean production of the main crops grown in New Halfa Agricultural Corporation before and after the adoption of liberalization policy. The study used time series data covering the period before the adoption of liberalization policy (1970/71 to 1991/92) and the period after the adoption of liberalization policy (1992/93 to 2007/08). The main crops included in the study were sorghum, cotton, wheat and groundnuts. The instability of area, yield and production were measured, in addition to the analysis of different components of the sources of change in the mean and variance of production of crops. The findings of the study showed that sorghum and wheat witnessed a continuous increase in instability during the two periods. The instability in groundnuts was high during the pre-liberalization policy and less during postliberalization policy. The instability in cotton decreased during post-liberalization policy. The decomposition analysis of sources of change in mean production indicated that the main contribution of change in mean production was change in mean area in wheat, cotton, groundnuts and in sorghum was due to change in mean yield. The change in the variance of yield accounted for large shares of the changes in the variance of production of cotton. The changes in the variance of area accounted for large shares for wheat and sorghum. The change in the area and residual term were important in explaining the changes in the variance of production of groundnuts. Programs and policies such as rehabilitation of irrigation system, adoption of improved technologies, strengthening of agricultural research and extension can play a vital role in achieving stability in agricultural production in New Halfa Agricultural Corporation.