Measuring Returns to Scale for Rain fed Barley Production in Iran

Awardness about structure of production technology and its characteristics is a usefull tool for planning in agricultural sector. In this regard، this study aims to determine some effective parameters of structure of production technology in rain fed barley production. Before estimating these parameters، we examine the aggregation consistency condition for barley fields using the mean scaling theory. Then translog cost function and inputs cost share equations have estimated using seemingly unrelated regressions. Used data is cross-section data of 2006-2007 crop years، gathered by the Iranian Ministry of Agriculture through questionnaires of 1641 producers across provinces of Iran. The results suggest that there exist an increasing return to scale in rain fed barley farms and numeric value of scale elasticity is 1. 52. This means that production costs reduce by increase in the size of rain fed barley farms. Estimated elasticity of substitution also suggests that there is a weak substitution relationship between the raw materials input with rent، land and machinery inputs. However there is a complementary relationship between labor input with land and machinery inputs. Estimated price elasticity of demand for inputs indicates a low elasticity for all inputs which means producers doesn’t have flexibility against input prices increase.