Economic analysis of the effects of government intervention on cotton pricing in Iran

In recent decades, the policy of government intervention in the pricing of agricultural products has been common in the most of developing countries. Accordingly, the agricultural and livestock products in Iran have mainly been influenced by the interventionist policies. The research intends to investigate the application of Protection Rate Index so as to measure the price intervention policies which have affected the agricultural prices in general and that of cotton in particular during 1983-2008. The model was firstly put into the practice by a group of researches in one of the World Bank project aimed to achieve an economic analysis of agricultural price intervention of government in eighteen countries located in different regions around the world. This research is particularly going to prove that direct price intervention of government in the cotton market has had positive implications. According to this research, these positive effects, more importantly, may differ dependent upon the fact that nominal or implicit rate of protection is calculated and that what exchange rate is applied for the border price evaluation. Considering the above and given the fact that the change in the pricing policies in 1990 has been in favor of the production, it is strongly recommended, for the sake of comparison among probable protective structures of different agricultural products, to focus on calculation of Protection Rate in other sort of significant animal husbandry and agricultural products such as wheat, rice, meat and milk.