The study aimed to identify the cost structure for wheat and cotton crops,
the weights of different cost items, profit per pound, the statistical estimates of
cost functions in the short- run, net revenue for producer and the production
level that minimize the cost, and maximize the profit. The choice of wheat and
cotton was due to their economic importance since wheat represents a strategic
nutrition crop which carts the government a great amount of money to import it
which cause negative effect an the payment balance. Cotton, an the other land,
is a cash crop which has appreciable effect an the payment balance, in addition
to importance for textile industry, ail, soap manufacture and animal feed.
Studying the economic parameters of wheat crop indicated that the
average area of wheat, through the period (2005-2007), was about 2539
thousand and feddan, the average yield was about 18.55 Ardab, the form gate price was L.E 170/ardab, the average cost was L.E 2190/feddan, the total
revenue was L.E 4049/feddan, the net revenue was L.E 1859/feddan, and the
net return per pound was L.E 0.44.
As for cotton, in the same period, it was found that the average area was
about 569 thousand feddan, the average yield was about 6.73 Kantar, the form
gate price was L.E 728/kantar, the average cost was L.E 3428/feddan, the total
revenue was L.E 5022/feddan, the net revenue was 1594/feddan and a one
pound return was L.E 0.43
The analysis of variance for cost of production for one feddan showed a
significant difference among the cost averages in the governorates which
produce wheat and cotton at 0.01% and 0.05%, restively. By using the L.S.D
test, the governorates were separated in similar gropes with reapest to the cost
of production per feddan.
The linear equation model of cost function showed a significant increasing
relation between the production per feddan and the cost production for crop.
The cost function was also significant in the short-run in the quadratic form.
The minimum costs were achieved at 17.59, 18.86, 19.72, 19.83A/F for the four
gropes, respectively. The minimum profit was achieved at 25.3 A/F. The least
costs were achieved in Sohag, Albehera, Almonofia and Giza governorates.
As for cotton the estimation model has shown an increasing relation
between the production per feddan and the cost of production. The marginal
cost per kantar was estimated at L.E 325. The cost function was also significant
in the short run, in the short run, in the quadratic form. The minimum costs
were 5.57, 6.32, 7.12, 7.79 Kentar/feddan for the four groups. The maximum
profits was achieved at 8.2 K/F. The least costs were achieved in Kafr elshaa,
Gharbia, Asuit, Sohag and Elmeniea governorates.
Most governorates, which produce the two crops, did not reach the
optimum size of production with minimum cost or maximum profit. The needs
more efforts in order to increase productivity, and this, in turn, helps to achieve
more efficient use of the limited land resource.