Evaluating Effects of Removing Fertilizer Subsidy and Direct Payment Polices on Cropping Pattern and Inputs Use (Case Study: Agronomy Subsector of Sabzevar Township)

Document Type : Research Paper

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Abstract

In this study, the potential reactions of farmers to removing fertilizer subsidy and applying direct payment policies, that may be applied by the government in order to increase the efficient use of fertilizer input and improvement of the quality of environment regarding the water and soil, were analyzed through the application of Positive Mathematical Programming (PMP) model and related simulation analysis under the framework of several scenarios. Scenarios considered are: decreasing 50 and 100 percent in the amount of fertilizer subsidy along with direct payment per hectare. The results show that the mentioned policies have different impacts on the group of farmers, on one hand, and the amount of land cultivated, on the other hand such that the complete removal of fertilizer subsidy leads to decreasing of fertilizer use to 102.85, 111.89 and 125.39 kg per hectare in first, second and third group of farmers, respectively.  Also, decreasing planted areas in mentioned groups are 5.85, 4.71 and 6.08 percents. Results indicated that when removal of the subsidy policy is combined with the direct payment program, while increasing the efficiency of fertilizer input use, it may also give incentive for more production of strategic crops such as wheat, barely and cotton. Therefore, the hectares of land devoted to strategic crops for mentioned groups will increase between 1.5 and 5 percents. This study suggests applying direct payment policy along with removing fertilizers subsidy whenever future agricultural planning and policies are under consideration.

Keywords

Agricultural Economics
Volume 4, Issue 2 - Serial Number 2
September 2010
Pages 185-207

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