Willingness to sell wheat to the government: a case study in Golestan province of Iran

Abstract

In Iran, especially after the revolution, there has been extensive support for the self-sufficiency in wheat production, including government procurement. If this trend continues, the market mechanism will be inactive. In this study the factors influencing the increasing tendency of producers to sell the products have been studied in Golestan province. For this purpose, the wheat supply function in an Autoregressive Distributed Lag (ARDL) model was estimated utilizing collected data from 252 wheat producers in this area. In this model, the sale to production ratio was used instead of sale quantity which normally used in literature, because the production quantity is a dominant variable and could eliminate the effect of other variables. The results showed that growth in production does not have any important effect on this tendency. On the other hand, relative prices, selling customs and self-consumption rate, have meaningful effect on this willingness to sell tendency. Also there has been no significant difference between large and small producers. Based on these results, the producers' behavior can be interpreted by price signals even in the semi-traditional agriculture. Also by transition from self-sufficiency based economy to a market based economy, this variable becomes more effective.