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Muhammad Zulfiqar and Anwar F. Chishti

procurement prices’ at the time of wheat sowing, the practice of wheat procurement, and the size of wheat stocks procured positively affect the area under wheat production and level of wheat production.

Despite the fact that the wheat crop contributes significantly toward the economy of Pakistan, there has been little analytical research carried out on its supply and demand determinants, with the exception of some research on the cost of production, supply response, and demand elasticities. Even studies carried out on cost, supply, and demand do not provide a complete picture; for instance, most of the studies carried out on the cost of production provide different estimates for the same crop and year due mainly to over- or underestimation (Arifullah, 2007). Studies on supply response in Pakistan include Falcon (1964), Cumming (1975), Tweeten (1986), Ahmad and Chaudry (1987), and Ali (1988). However, these studies do not provide econometrically estimated full production or supply functions, which are expected to reflect the major determinants of supply. On the demand side, fewer studies are available; these include Cornelisse and Kuijpers (1987), Ahmad, et al. (1987), Hamid, et al. (1987), Alderman (1988), and Ashfaq, Griffith, and Parton (2001).

For quantitative and analytical research, one needs at least four econometrically estimated supply and demand functions (domestic supply, domestic demand, export or import supply, and export or import demand functions). Since little systematic research work has been carried out on the development of econometrically estimated functions, there have been few mentionable research studies on price and policy analysis, government interventions, and associated welfare effects.

The aforementioned discussion necessitates carrying out a comprehensive research study of Pakistan’s wheat crop with the objective of developing supply and demand functions that will facilitate policymakers in evaluating government interventions and improving resource use efficiency in wheat crop production.

2. Material and Methods

Econometric Model

This section presents a methodological and analytical framework for carrying out the research at hand. The following general model of supply and demand was specified.



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