Effects of Agricultural Land Dispersion and Fragmentation on the Cost of Agricultural Products (Case Study: Rainfed Wheat in Province of Guilan)

It is believed that land fragmentation and small size of the farms causes low productivity and, high cost of production and results in a decrease in the farmers’ net income. Thus, it is worth to study empirically the effects of lands fragmentation on the cost of production. Guilan province is one of the areas where agricultural land Fragmentation is widely observed. Therefore, the main goal of this study is to estimate the effect of agricultural land fragmentation on the production cost of rainfed wheat in Guilan province. To this end, production and cost data of wheat and barley was collected for the crop year 2014-2015 through questionnaires from Deylaman and Malakut regions in the Guilan province. An indirect cost function approach was utilized and the best functional form was chosen using econometric criteria. Based on the estimated parameters of the chosen model, the cost elasticities of all variables including numbers of land fragments were estimated. Results indicate that, the Translog functional form is most appropriately represents production technology of wheat and barley in the study regions. Also, result confirms that fragmentation of land causes increase in the average cost of production and demand for labor input in these two crops. In addition, the estimated scale elasticities reveal an increasing returns production technology in the studied crops. Accordingly, land consolidation and augmentation policies are suggested to reduce average cost of production.