Article 3: Aggregate Supply Response in Algerian Agriculture

Mohamed Benmehaia, the author of this article, claims that for the past half a century,
the agricultural industry has played a significant role in the economic growth of Algeria
(Benmehaia, 2021). Due to this, this country’s agricultural production has been boosted
through subsidy and pricing policies that have not measured to the anticipations. The
poor performance of this sector for such a long period has been caused by the
government’s action of altering agricultural production’s incentive structures. The most
imperative aspect is that the volatility of price has a great impact on food security and
affects the small-scale farmers’ performance. The author establishes that an in-depth
examination of agricultural activities in Algeria is required. To achieve this objective, he
also realizes that supply response modeling is an important tool in evaluating the
success and effectiveness of pricing policies as far as allocation of farm resources is
concerned.
Benmehaia (2021) goes ahead and scrutinizes the aggregate supply reaction of
nineteen chosen crops in the agricultural sector of Algeria from the period of 1966-2018.
He employed Error Correlation Model and cointegration analysis in his study. These two
tools aimed to test whether there had been a long relationship between prices and
outputs of agricultural products. The results showed that the elasticities of the chosen
crops in relation to the prices were mostly low and statistically significant. Furthermore,
the results showed lower short-run elasticities, which begged for the adjustment of the
economic incentives. The Error Correlation Model results positively responded to
differentially rated prices in the chosen crops. This outcome ruled out the application of
a reputed obstinate supply rejoinder in this country’s agricultural sector.

Benmehaia, A. M. (2021). Aggregate supply response in Algerian agriculture: The error

correction model applied to selected crops. New Medit: Mediterranean Journal of
Economics, Agriculture and Environment= Revue Méditerranéenne dʹEconomie
Agriculture et Environment, 20(1).