The Impact of Input Price Volatility on Wheat Production

This study examined the impact of fluctuations in agricultural input prices on wheat production in Egypt, focusing on the implications of the exchange rate liberalization decision issued in 2016. The research aimed to analyze changes in wheat production, input costs, and efficiency of agricultural resource utilization during two time periods: before exchange rate liberalization (2010–2016) and after exchange rate liberalization (2017–2023). The results showed that the exchange rate liberalization decision resulted in sharp increases in input costs, with variable costs per feddan rising by 168.97% at current prices. Despite increases in both total revenue and net return per feddan in absolute terms, economic efficiency indicators witnessed a notable decline. The return on invested pound decreased from 0.68 pounds to 0.36 pounds, while both production and price break-even points increased, and both production and price safety margins declined. Therefore, the study concluded that exchange rate liberalization, despite achieving nominal increases in returns, contributed to the erosion of economic efficiency in wheat production and increased the degree of risk borne by farmers, as a result of the significant rise in input costs.