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This paper investigates the key decision parameters of farmers related to the allocation of land between wheat production and pasture for sheep (wool) production. Wheat area supply response, is estimated across the Australian wheat-sheep zone using data for the period 1991 to 2004. Statistical results reveal that wheat growers in Western Australia are more price responsive than growers in the eastern states. Area adjustment is not significantly different between the regions. Rainfall has a positive influence on wheat production while time-related exogenous factors such as technical progress seemed to have little influence on the wheat yield over this period.


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