DEVELOPMENT OF SUPPLY AND DEMAND FUNCTIONS OF PAKISTAN’S SUGARCANE CROP

Sugarcane is one of the major crops of agricultural economy of Pakistan. Although, major crops are contributing almost half of the share of agricultural GDP, there has been no analytic research on supply and demand determinants particularly of sugarcane crop. The available researchers mainly concentrated on cost of production, supply response and demand elasticity. This necessitated for conducting detailed research of Pakistan’s sugarcane crop with the objective to develop supply and demand functions. The simultaneousequations recursive econometrics model of supply and demand functions developed for sugarcane crop reflects that domestic supply of sugarcane (Sdsc) is determined by domestic price of sugar (Pdsr), nutrient-fertilizers used (FNT) and water available (WAT). The domestic demand (Ddsc) is determined by price of sugar (Pdsr) and Pakistan’s GDP (GDPP). Unlike other crops, sugarcane is not imported into Pakistan. We have therefore, converted white sugar imports into its cane equivalent; consequently, we have a cane import supply (Issc) function, which is determined by Pakistan’s predicted import price of sugar (P^isr) and Pakistan’s predicted supply and demand of sugarcane (S^ dsc and D^ dsc). In light of results, it is recommended that (i) supply of various nutrient-fertilizers, their availability at appropriate times and their use on crops in recommended proportions should be given due attention in future input use policy. (ii) efforts should be made for irrigation water conservation and application of irrigation water to its optimal requirement on sugarcane crop for improved productivity of this crop. (iii) Government should invest more on research and development and extension activities to optimize resource use in production of sugarcane crop.