| Summary: | This study was conducted to analyze the acreage response of maize with respect to price
and non-price factors in Khyber Pakhtunkhwa. The time-series data for the period of 35
years (1976-2010) pertaining to, maize area, maize price, rice price, maize yield, average
rainfall were collected from various published sources. Nerlovian adjustment lag model and
Vector Auto Regression (VAR) technique of estimation was employed for analyzing acreage
response of maize. The model explained more than 90 percent of variation in the dependent
variable. The expected maize price was unlikely found to be negative and statistically
insignificant. The regression coefficients for lag rice price and lag maize yield also appeared
insignificant. Area under maize in lagged year was found to be an important variable
influencing farmer’s decision on acreage allocation. Among the short run and long run
elasticities with respect to lag area that is 0.7155 and 2.5149, long run elasticity was more,
signaling that acreage adjustment would normally take place in the long run. The coefficient
of lag rainfall was found to be negative and significant indicating a negative relation
between maize acreage and rainfall. The short run elasticity of maize area with respect to
lag rainfall during the study period has been calculated at -0.0894 while the long run
elasticity comes to be -0.3142, indicate its inelastic nature and little effect on the decision of
farmers regarding allocation of land to maize. Small area adjustment coefficient (0.2845)
revealed low rate of farmers’ area adjustment to desired level because of more institutional
and technological constraints. Based upon the findings of this study it can be concluded that
farmers allocate land to maize crop mainly basing on their previous allocation pattern
rather than relative crop prices.
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