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Production costs of Soft Wheat in Italy

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  • Tiberti, M.

Abstract

This paper investigates production costs of soft wheat by applying the FACEPA cost of production model to the Italian data (RICA) for 2005-2009. Estimates are obtained by carrying out a SUR, allowing for correlated errors between the set of equations and for imposing constraints to coefficients The main aim of this study is to provide a robust analysis of the cost, per hectare and per quintal, of soft wheat in order to analytically support a negotiation bargain on the contractual price for soft wheat within the industrial bread marketing chain. Since RICA, unlike EU FADN, reports some costs related to specific production processes (i.e. related to specific farm outputs), this study reports results of an alternative estimation strategy: the GECOM is carried out by taking into account only those costs that are not ascribed for the specific farm output, but are related to the whole production process. Estimates, per hectare and per quintal, related to such input costs are combined with those costs that are directly observed by farmers, so that we obtain a “hybrid” estimation. This method is carried out in order to confirm results obtained with the “complete” estimation. Outcomes of both methods are reported for Italy and for macro-regions. Costs related to machinery and buildings upkeep represent the most important costs, although a remarkable decline is observed from 2005 onwards. Expenditure in land rent and taxes on land and buildings shows a similar trend, but with smaller values. As a whole, there was a shift expenditure patterns: in 2005-2007 fixed costs prevailed, while in 2008-2009 variable costs became predominant. Anyway, estimates reveal that there are important differences, at geographical level, in production costs.

Suggested Citation

  • Tiberti, M., 2013. "Production costs of Soft Wheat in Italy," 2013 Second Congress, June 6-7, 2013, Parma, Italy 149898, Italian Association of Agricultural and Applied Economics (AIEAA).
  • Handle: RePEc:ags:aiea13:149898
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    File URL: http://purl.umn.edu/149898
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    References listed on IDEAS

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    1. Griffiths, William E. & O'Donnell, Christopher J. & Cruz, Agustina Tan, 2000. "Imposing regularity conditions on a system of cost and factor share equations," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 44(1), March.
    2. P. Midmore, 1993. "Input-Output Forecasting Of Regional Agricultural Policy Impacts," Journal of Agricultural Economics, Wiley Blackwell, vol. 44(2), pages 284-300.
    3. Peeters, Ludo & Surry, Yves R., 2003. "Farm Cost Allocation Based on the Maximum Entropy Methodology - The Case of Saskatchewan Crop Farms," Economic and Market Information 54461, Agriculture and Agri-Food Canada.
    4. Bahta, Sirak Teclemariam & Berner, Anja & Offermann, Frank, 2011. "Estimation of Commodity Specific Production Costs Using German Farm Accountancy Data," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114233, European Association of Agricultural Economists.
    5. Griffiths, W.E., 2001. "Bayesian Inference in the Seemingly Unrelated Regressions Models," Department of Economics - Working Papers Series 793, The University of Melbourne.
    6. Mack, Gabriele & Mann, Stefan, 2008. "Defining elasticities for PMP models by estimating marginal cost functions based on FADN Data - the case of Swiss dairy production," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6694, European Association of Agricultural Economists.
    7. Nathanaël Pingault & Dominique Desbois, 2004. "Estimation des coûts de production des principaux produits agricoles à partir du RICA," Post-Print hal-01072921, HAL.
    8. Yves Léony & Ludo Peeters & Maurice Quinqu & Yves Surry, 1999. "The Use of Maximum Entropy to Estimate Input-Output Coefficients From Regional Farm Accounting Data," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(3), pages 425-439.
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    More about this item

    Keywords

    multi-output; outlier detection; production costs; seemingly unrelated regression; soft wheat; Agricultural and Food Policy; Crop Production/Industries; Demand and Price Analysis; C39; Q12;

    JEL classification:

    • C39 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Other
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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