This empirical work aimed at examining the supply response of peaches in Tunisia. The methodological approach followed takes into account characteristics pertaining to perennial crops, on the basis of the analytical framework suggested by French and Mathews (1971). Some adaptations were made to the model when formulating price expectations.
The supply response model was represented by three equations. The first two are re- moval and new plantings, which were used to simulate the area variation and the third was that of yield variation. In spite of some limits related to the availability and quality of the statistical data used in the empirical analysis, the estimation of the various equa- tions led to significant results.
Indeed, the increase in expected prices leads to a growth in planted areas through the renewal of plantations which recorded a significant decline of production and the devel- opment of new investments. This increase in the areas of new plantations leads to a competition of these fruit crops with the other fruits and vegetables crops particularly in the use of the production factors.
Farmers’ decision to invest depends on the age distribution of plantations. Thus, the increase in planted areas is due primarily to expectations made by farmers about the future age distribution of plantations and the need for renovating their orchards. It should be noted that the decisions of investment are slowed down by many factors re- lated to the fact that most of fruits production is made by small and medium farms who generally face financial problems and difficulties in accessing to credit. On the otherhand, the decision of removal seems to be carried out more quickly than that of renewal of the plantations.
Several factors contributed to limit the programs of new plantations during the last few years. It is worth noting that the directives of the X th plan aimed at limiting new plantations in order to prevent the emergence of large excess production and to support fruit crop diversification. Yields improved in a remarkable way as a consequence of a better control of cropping techniques. However, they still remain dependent on rainfall. On the other hand, supply response to price shows that elasticity is slightly positive, in line with several studies carried out on the analysis of supply response to variations in expected prices. Long run price elasticities are about 0.13.
Finally, assumptions behind the model specification as conducted in this empirical work are to be considered in a context of incomplete information, where individuals perceive market signals and partially integrate them in their decisions. However, in- vestment decisions are conditioned by the decision maker environment. Hence, it is im- portant to consider the possibility of extending this work in a way that allows risk inte- gration into farmers’ decisions.