Supply Response of Unirrigated Wheat in Khyber Pakhtunkhwa, Pakistan: ARDL Approach

Unirrigated area under wheat crop in Khyber Pakhtunkhwa, Pakistan remains larger (55.6%) as compared to irrigated area (44.4%) for the last four decades. This study therefore analysed supply response of unirrigated wheat in Khyber Pakhtunkhwa during 1981-2017. Data was obtained from Agricultural Statistics of Pakistan, Pakistan Bureau of Statistics, Development Statistics of Khyber Pakhtunkhwa and Pakistan Meteorological Department, Peshawar. ADF and PP tests of stationarity suggested that three variables are stationary at level and four variables are stationary at first difference. Therefore, auto regressive distributed lags (ARDL) approach was used to model long and short run elasticities. AIC, HQ and FPE proposed 3 lags, therefore model was estimated up to 3 lags. Bound test confirmed the existence of long run relationship among the variables. ARDL results indicated that long and short run elasticities of unirrigated wheat production in response to wheat price were 0.447 and - 0.116, respectively and statistically significant. Long and short run elasticities due to chick pea price were - 0.19 and - 0.15, respectively and statistically significant. Long and short run elasticities in response to area under unirrigated wheat were 1.10 and 1.79, respectively and statistically insignificant. Elasticity of unirrigated wheat production in response to minimum temperature was 0.764 in the long run and 0.23 in the short run. Long and short run elasticities in response to seasonal rainfall were 0.60 and 0.34, respectively. It is recommended that government needs to devise appropriate policies about unirrigated land and use different methods to make it arable for wheat production. Government also needs to make large reservoirs in unirrigated areas in order to store rainfall water for irrigation of unirrigated land for higher wheat production.