It is widely believed that current structure of protection and food subsidy in Iran is not suitable. Therefore, the government intends to reconsider food subsidy payment program. In this study, distribution of benefits of current subsidy system was investigated by emphasizing on bread, oil and sugar. The results of the study based on 2001 statistics indicated that benefits of bread subsidy in rural and urban areas in all provinces and also among different groups are more than oil and sugar. This indicated that government has spent more subsidies to bread, and per capita consumption of this commodity is high in Iran. On the other hand, subsidy distribution among different areas and income groups indicated that current system of subsidy is biased toward higher income groups. Therefore, it is not efficient and would lead to waist of resources. Based on findings of the study, to lessen these problems and decrease in government costs, targeting of food subsidy is recommended.
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