The Effect of Cultivated Area and the Prices of Buying the Rice on Its Production in AL- Qadisiyah Province-Iraq During (1990-2014) by Using VECM.

Abstract

The study aims to determine the effect of the cultivated area and the purchase price on the production of rice in the province of Al-Qadissiya - Iraq for the period (1990-2014). Johansen and Juselius method is used to test the co-integration between the variables. Vector Error Correction Model (VECM) is employed to determine the direction of the causality between production and price of rice, as well as between the production of rice and the area cultivated in the short and long run. The analysis of the results shows that there is a co-integration among the variables, and the direction of the relationship is a directional move from cultivated area to production of rice, and from price to production of rice in the short and long run. The study recommends to expand the cultivated area along with maintaining the farm and not to converted to other crops, in addition of determining the purchase price of the crop at the beginning of the agricultural season to ensure a good income for farmers in order to motivate them to increase production.