Rice Technology, Farmer Rationality, and Agricultural Policy in Egypt

Estimates of a homothetic translog cost function show that Egyptian rice farmers are economically rational and responsive to input price changes. Own‐price and cross‐price elasticities of input demand based on the cost function estimates provide insight into policies currently being pursued or considered by the Egyptian government. The analysis indicates a reduction in fertilizer trade restrictions could substantially reduce fertilizer prices and increase fertilizer use. Labor and mechanical power are not strong substitutes, indicating that subsidization of machinery is not an appropriate policy to reduce agricultural labor shortages.