Estimating the Supply Response of Cured Tobacco at Barn Level in Khyber Pakhtunkhwa, Pakistan

Abstract

Various aspects of tobacco have been examined through different studies. However, input demand and supply response of tobacco at the barn level remains unknown. This study examines profitability, input demand, and supply response of tobacco in Khyber Pakhtunkhwa by employing a normalized restricted trans log profit function. The findings indicate that tobacco production is profitable, and barn owners in the province are responsive to changes in output and input market prices. The use of labor and fuel wood in the processing of green leaves is very important in resource allocation decisions. The demand for labor and fuel wood increases as the price of tobacco output rises at the barn level. Furthermore, higher input prices have anegative effect on the province's tobacco supply. This study suggests that the government should seek an alternative to fuel wood that wouldn't only help in reducing costs but also be beneficial to the environment and prevent deforestation.