Supply response of cereals in Tunisia

The objective of this study was to evaluate the responsiveness of Tunisian cereals producers to price and weather variables. The price elasticities of supply thus developed could be useful in the evaluation of alternative pricing policies. Acreage, yield and marketed output responses were estimated using aggregate time series data for the period covering Tunisia's independence 1955-1980;The acreage response functions were formulated along the lines of Nerlove's lagged adjustment model. Price expectations were first formulated as in Nerlove's model. In view of the price fixing tradition of the Tunisian government, the simple Cobweb type of expectations formation, i.e., P(,t)('e) = P(,t-1), was used in most of the equations. The two model types had in general comparable results;For the northern region, acreages show a significantly positive responsiveness to own prices. Total cereal acreages in the North have response elasticities of .29 to .65 in the short run and of .61 to 1.04 in the long run. Lamb show as a competitive activity while beef seems to be rather a complementary one. Rainfall in the planting season affects somewhat planted acreages;For the combined central and southern regions only barley's acreage show a significantly positive price responsiveness to barley price. Lagged acreages and rainfall during the planting season explain most of the variation in acreage;Yields for all three cereals respond negatively, with high significance levels to the current ratio of nitrogen to own price. The phosphate to own price ratio seems to affect durum wheat alone. Rainfall in the three major growth seasons shows more of an impact on yields in the combined central and southern regions while price ratios are not as much of a factor;Marketed output responses for durum wheat, soft wheat and for all cereals have a very strong reaction to both the level of total output and to own price, with significance levels generally in the one per ten thousand range. The derived marginal propensities for autoconsumption out of total output were .59, .51, .71 and .64 respectively for durum wheat, soft wheat, barley and all cereals;The magnitudes and significance levels of the price elasticities of supply, developed here, appear to indicate a good potential for the use of real prices as incentives for increased cereals production and marketings in Tunisia.