Cost Structure, Economies of Scale, and Sustainable Use of Irrigation Water: A Study of Kurdistan Province Farms, Iran

Agriculture is one of the responsible sectors for adequate food production and contribution to food security. However, due to the rapid population growth and increasing demand for food, this responsibility is becoming more and more challenging. The consequence of this challenge is the excessive exploitation of natural resources and destruction of the environment. This study aimed to investigate the cost structure, economies of scale, and inputs elasticities for the major farm crops of the Qorveh-Dehgolan Plain, in Kurdistan Province, through a translog cost function. The needed data were collected through a multi-stage cluster sampling survey in the 2017-2018 cropping year. The results showed that the average share of water input in the total production cost of the studied products was 12%. Results also showed that all ordinary own-price elasticities of demand for inputs were negative and smaller than one. However, the results of Allen-Uzawa’s own price elasticities showed that demands for inputs could be elastic. Ordinary and Allen-Uzawa own price elasticity of water input were -0.76 and -6.7, respectively. The results also showed that wheat, tomato, barley, and alfalfa farms in the area under study were facing economies of scale, on average, while potato, cucumbers, and sugar-beet farms were facing diseconomies of scale.