Modeling the Supply Response of Garlic Crop in Syria Using the Nerlove Model and Vector Autoregressive (VAR) Models

Abstract

    Vegetables represent a critical component of the nutritional requirements for the Syrian population. Nevertheless, garlic production faces continuous fluctuations in both prices and output. This research aims to investigate the supply response of the garlic crop in Syria to ascertain the impact of price volatility and production input costs on farmers' agricultural decisions. To achieve this, a quantitative econometric approach was employed using the Nerlove Model Partial Adjustment Model in its double-logarithmic form, based on official time-series data, as well as the Vector Autoregression (VAR) model to analyze shock dynamics and volatility drivers.

     The research revealed several pivotal findings, most notably an over-responsive and rapid reaction by farmers to market fluctuations, with a partial adjustment coefficient of (1.27), illustrating sudden supply disruptions. The results indicated the statistical insignificance of the lagged wholesale price as a catalyst for production decisions, confirming a lack of price efficiency and the monopolization of profits by intermediaries. Conversely, the coefficients showed a positive and statistically significant elasticity regarding production input costs (seeds and fertilizers), confirming that the determination to increase production is predominantly influenced by the farmer's financial capacity at the beginning of the season to purchase these essential inputs.