Supply response of cotton between the government and the growers in the Sudan

Abstract

Cotton is the single most important crop and plays a decisive role in the national economy of the Sudan. Besides being the largest source of the country's foreign exchange earnings, it contributes considerably to the growers' cash income. In the light of the economic importance of cotton this study has been conducted to investigate response behaviour in its production. The response analysis of the government on the one hand, and of the growers on the other, were carried out separately. This is justified by the assumption that the two partners, though functioning objectively, are operating according to different objective functions. Time series data for 19 years (1962/63-1980/81) were analysed to estimate the government's supply response of cotton. Response studies of total area under cotton and of the area under different cotton varieties were conducted. From the results it has been found that the government responds to the relative profitability of medium staple, short staple and aggregate total cotton. The elasticities of response were found to be 0.55, 0.38 and 0.13 in the short-run, and 0.92, 0.43 and 0.15 in the long-run, for medium staple, short staple and total cotton, respectively. For the growers' function, time series data for 15 years (1967/68-1981/82) were used for the estimation of the average yield response to price changes. The average yield was used as the response variable because the area planted to cotton is government controlled. Three major production regions, located in different parts of the country and growing different types of cotton, were selected for the analyses. The estimated results revealed the weak responsiveness of the average yield of cotton to price changes for all of the three types. In the light of the inadequate results obtained from the grower's function, concrete policy recommendations were not made in this study. Show more