RESPONSE OF PEANUT PRODUCERS TO MARKET CHANGING CONDITIONS BY USING COST FUNCTION

Abstract

The production increase is not achieved if the economic resources used in the production function have a cross effect on the function in the long-run, when all Variables and not able to manage efficiently, hence the importance of using a cost- function in the analysis after include the prices of the resources with over the impact of economic factors, so the research aimed to conduct an econometrics analysis of Production Cost Functions for Peanut and use them to find efficiency of productive, cost and profit by using the questionnaire from 54 producers in Diyala province, in 2012, the results showed that the formula Cubic is most suitable for the analysis of the relationship between the cost and production Peanut. The optimal size of production reached 42.08 tons and the production efficiency reached 0.30, it is a low value because the farmers use classical pattern, the cost elasticity show that the production increase by 10% Requires increase in costs by 3.7%, the efficiency of the profit amounted to 1.5, 4.2 and 2.2 at actual, optimization and profit maximization for the production, while net income was 8452.8, 32721.7, 40243.5 thousand dinars respectively. results also showed that the supply elasticity amounted to 0.03 which is incompatible with the nature of the supply of agricultural goods and not to respond to price changes, the area achieved of economic efficiency reached 44.8 donom, by knowing producers response to market conditions and to clarify the possibility of bridging the national needs of the crop at the different strategies show that the alternative vertical expansion is more realistic