Studying the effects of agricultural input subsidy elimination on selected agricultural production in Iran

  The main objective of this study is to examine the effects of agricultural inputs subsidy on production using a Computable General Equilibrium and General Equilibrium Growth Accounting Approach for 1972­­-2008. The results indicate that the elimination of subsidy for wheat and barley seeds have no significant effects on changes of agricultural products. Also, elimination of nitrogen subsidy would increase the production of rice and cotton and decrease the productions of sugar beet, barely, corn, cotton, potato and other selected agricultural products. A reduction in phosphate fertilizer subsidy increases productions of sugar beet, barely, corn, cotton and potato, and a decrease in the production of other products. The elimination of potassium fertilizer subsidy will cause an increase in sugar beet, wheat, corn and potato productions, with no effect on barely production. According to the results, the elimination of herbicide subsidy will increase the productions of rice and sugar beet, and decrease the others. The elimination of fungicides subsidy will increase the quantities of rice, sugar beet, wheat, and corn and decrease the outputs of others. Finally, the elimination of insecticides subsidy will increase the production of rice, sugar beet, corn and potato and has no effect on barely production. The current general subsidy payment method for agricultural inputs is simple to execute, however is accompanied with irregular and non optimized consumption of inputs, and is biased toward the farmers who have larger land. As conclusion, we showed that the present subsidy payment system needs to be revised to achieve a more fair solution.