Cost-benefit analyses of the adoption of irrigation on oranges in São Paulo, Brazil

Brazil contributes 55% and 60% of the world’s production of fresh oranges and orange juice, respectively. In recent years, increasing production costs and low orange prices reduced the citrus producers’ profitability. In this paper we investigate the potential for irrigation to improve the profitability of orange production, using data from a sample of 98 citrus producers in the state of Sao Paulo, 34 of whom had adopted irrigation. Based on a translog production function, we use 3SLS to estimate a system of equations comprising the production function and the inverse derived demands for inputs, to obtain the impact of irrigation adoption on productivity. Results show that adopting irrigation increases citrus production by 19%. We estimate production elasticities of capital (.16), labor (.21), land (.26) and fertilizers (.20). We found that by considering yield increases versus both fixed and variable costs of implementation, farmers could expect to break even by the fifth year of irrigation use

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JEL Codes:
D22; D24; Q16

 Record created 2017-04-01, last modified 2020-10-28

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