Analysis of the Structure and Savings of the Potato Production Scale Using the Translog Cost Function (Ardabil County)

Abstract

The present study aimed at investigating the production costsand economic benefits of the potato production in Ardabil country, Iran. To do so, 183 potato producers were randomly selected and were asked to present their ideas concerning the production costs and benefits through a questionnaire and aninterview. A field study was also taken into consideration toenrich the data. The collected data were analyzed through measures of Chi‐square, Wald test, and Translog cost function.The results revealed that the cost function structure was non‐hemotetic with respect to the Chi‐square statistics (36.8) and results of the constant non‐returns and non‐homogeneous Wald test to the scale’s F‐ statistics (17.04) were non‐cobb Douglas. Allen cross replacement relationship was positive for the dichotomies such as workforce and machinery, machine and seed, workforce and seed, workforce and water, and finally seed andwater. However, it was negative for machinery and land inputs, machinery and water, land and machinery, land and labor force, land and seeds, and land and water. The calculated cost elasticitywas ‐1.5044 which indicated a decrease in the average costs foran output increase as the production cost was found in the downstream part of the cost curve. The economies of scale of 2.504 indicated a 2.5 percent increase in the yield for one‐percent increase in the cost.