Analysis of the competitiveness of wheat and orange in Tunisia under water shortage scenarios

Increasing water shortage results in higher food prices which may affect the competitiveness of small irrigated farming systems. The purpose of this paper is to evaluate the effects of water shortage on the competitiveness of orange and wheat commodities in Tunisia. Stochastic production functions were used to estimate changes in the opportunity cost of water which will be utilized in the calculation of domestic resource cost (DRC). Primary data used for the empirical analysis were collected from 170 wheat and 51 orange farms located in the major irrigated areas of the country. Empirical results indicate that, in the current baseline situation, Tunisia has a comparative advantage in the production of orange but not for wheat production. Results of sensitivity analysis show that the competitiveness in wheat and orange production has been deteriorated due to a decrease in water availability at the farm level. DRC ratio increases from 0.91 to 1.13 for orange, and from 1.24 to 8.27 for wheat with 50% decreases in water availability. However, improving irrigation water use efficiency led to a significant decrease in DRC for both commodities. This finding urges decision-makers to put more efforts to optimize irrigation management at field and farm levels through dissemination of better irrigation scheduling techniques and implementing deficit irrigation strategies especially that the country is under a critical water shortage.