Aggregate demand for fertilizer in the coconut industry in Sri Lanka

Abstract

This study attempts to identify the major determinants of fertilizer consumption in the coconut industry in Sri Lanka.The author identifies two groups of cultivators;namely,small holders (those who own less than 20 acres)and estates(those who own 20 acres or more).It is argued that each group of cultivators pursues its own objectives with respect to input-use and production.Estates are expected to be mainly profitoriented whereas small holders are mainly consumption-oriented.The author constructs a simple model to explain fertilizer consumption of each group and estimates the parameters of the model,using time series data for the 1956-75 period.According to the results obtained,there is empirical evidence to support that each group reacts to bad weather spells,prices and level of produce in the same direction,but with different intensities.The author also finds that the price elasticities of demand for fertilizer are in the range of 0.4 to 0.7 and output elasticities with respect to fertilizer consumption in range of 0.8 to 0.9.