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© 1987 Oxford University Press and the Foundation for the European Review of Agricultural Economics

other

A cost function analysis of wheat production in India

SATYA PAUL*

Planning Commission New Delhi, India

Received September 1, 1985;

Summary

In this study, two types of cost functions that capture the heterogeneity of farms are estimated for the mechanised and the non-mechanised farm groups of Ferozepur (Punjab), Muzaffarnagar (West U.P.) and Deoria (East U.P.) which represent ‘developed’, ‘semi-developed’ and ‘underdeveloped’ regions in India, respectively. In one type of cost function, the scale elasticity varies stochastically with output; in the other, it varies only randomly across sample farms. Based on the estimates of scale elasticity, the sample farms are classified into the categories of ‘optimal’ and ‘sub-optimal’ farms, and their characteristics are discussed. Lastly, the problem of fixing support/procurement prices on the basis of average cost of production is briefly discussed.


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