Estimating the Productivity of Wheat Production: An Implication of Stochastic Frontier Production Function Model

Production resources are limited, world’s population is growing. One way to increase the production is to increase the area under cultivation, but this solution is not possible in all situations. Besides, increasing the cultivation area does not guarantee an increase in production. Another way is to increase the production is using more advanced machinery and production techniques. Wheat is the most strategic agricultural product in Iran. It forms the significant portion of Iranian diet. Policymakers have always been interested in new methods that can make the country independent of importing wheat. T reach this goal, it is essential to evaluate the productivity of wheat production. Using data from surveys done by Agriculture ministry of Iran, this study estimates the productivity of wheat production using a Cobb-Douglas production function in Tehran. The proposed method to estimate the productivity is Stochastic Frontier Production Function Model. The result suggests Farm size shows the highest marginal rate of productivity.