An Economic Study of the Most Important Variables Affecting Cotton Production in Egypt

Economic indicators are crucial for assessing the efficacy of production activities and determining their economic success. The results of this study, covering the period from 2003 to 2022, reveal that cotton production costs in Egypt followed a significant upward trend, increasing by USD 30.4. This rise represents 3.77% of the annual average production cost for the period.A detailed analysis of the cost structure shows that Land Rent was the largest component, with an annual average of USD 273.8, accounting for 34% of total costs. Human Labour ranked second, with an annual average of USD 265.7, constituting 32.97% of costs. Agricultural Machinery costs placed third, averaging USD 84.7 and representing 10.51%. The remaining inputs comprised Chemical Fertilizers (USD 70.7, 8.77%), Pesticides (USD 25.4, 3.16%), Organic Fertilizers (USD 21.7, 2.69%), Seeds (USD 14.7, 1.82%), and Animal Labour (USD 0.2, 0.02%).A comparison with competing crops indicates that the average farm price of Egyptian cotton was higher than that of summer tomatoes and maize but lower than that of rice. Furthermore, the average Net Revenue for Egyptian cotton was greater than that for maize but less than the net revenues for both rice and summer tomatoes. The analysis also shows that the average net return per dollar invested in Egyptian cotton was lower than the returns for maize, rice, and summer tomatoes.The statistical estimation of a Cotton Production Value function identified significant relationships between inputs and output. Positive coefficients for Organic Fertilizer costs (0.44), Human Labour costs (0.42), and Land Rent costs (0.77) indicate a direct relationship; a one-dollar increase in any of these inputs is associated with an increase in production value by USD 0.44, USD 0.42, and USD 0.77, respectively. Conversely, a negative coefficient for Seed costs (-0.38) reveals an inverse relationship, suggesting that a one-dollar increase in seed expenditure is associated with a USD 0.38 decrease in production value.Finally, the statistical estimation of a Supply Response Function for cotton and its competing crops determined that the most influential factors on the cultivated area of cotton in the current year are the net revenue of the cotton crop from the previous year, the production costs of the summer tomatoes crop from the previous year, and the net revenue of the maize crop from the previous year.