The effect of alternative product prices on production balance: Empirical findings on the production of oilseed crops in Türkiye

Abstract

Objective: The canola and oily sunflower products, which are similar in terms of cultivation areas, techniques, and conditions, are alternatives to each other. It is believed that product prices play an important role in deciding to cultivate these two products. Hence a study was conducted and the objective of this study was to this study was to examine the long and short term effects of product prices, especially alternative product prices, on production. Materials and Methods: The data for the study included the years 2002-2021 and were analyzed using the ARDL boundary test. Findings: According to the findings of the ARDL boundary test, a 1% increase in canola prices increases canola production by 4.72% in the long term, while a 1% increase in the prices of sunflower, an alternative product, decreases canola production by 5.37%. The error correction coefficient (-0.96) was found to be negative and statistically significant, indicating that imbalances in the short term will return to equilibrium levels approximately 1.04 years later. Conclusion: Changes in the prices of these two alternative products affect the increase or decrease in production. In this context, regulations can be made on production through price policies. Additionally, the findings of the study can contribute to production planning and increasing welfare.