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Impacts of fertilizer subsidy reform options in Iran: an assessment using a Regional Crop Programming model
[Impacts des options de réforme de la subvention des engrais en Iran : une évaluation à l'aide d'un modèle de programmation régionale des cultures]

Author

Listed:
  • Mona Aghabeygi

    (UNIPR - Università degli studi di Parma = University of Parma, JRC - European Commission - Joint Research Centre [Seville])

  • Kamel Louhichi

    (UMR PSAE - Paris-Saclay Applied Economics - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Sergio Gomez y Paloma

    (JRC - European Commission - Joint Research Centre [Seville])

Abstract

The aim of this paper is to assess the potential impacts of different fertilizer subsidy reform options on the performance of the Iranian crops production sector. This is achieved using a Regional Crop Programming (RCP) model, based on Positive Mathematical Programming, which includes in total 14 crop activities and encompasses 31 administrative regions. The RCP model is a collection of micro-economic models, working with exogenous prices, each representing the optimal crop allocation at the regional level. The model is calibrated against observed data on crop acreage, yield responses to nitrogen application, and exogenous supply elasticities. Simulation results show that a total removal of nitrogen fertilizer subsidies would affect the competitiveness of crops with the highest nitrogen application rates and lead to a slight reduction of national agricultural income, at approximately 1%. This effect, which is more pronounced at the regional level, is driven by area reallocation rather than land productivity. The reallocation of nitrogen fertilizer subsidy to only strategic crops boost their production and income but increase disparity among regions and affects negatively welfare compared to the current universal fertilizer program. The transfer efficiency analysis shows that both target and universal simulated options are inefficient with an efficiency score below one.

Suggested Citation

  • Mona Aghabeygi & Kamel Louhichi & Sergio Gomez y Paloma, 2022. "Impacts of fertilizer subsidy reform options in Iran: an assessment using a Regional Crop Programming model [Impacts des options de réforme de la subvention des engrais en Iran : une évaluation à l," Post-Print hal-03738928, HAL.
    • Handle: RePEc:hal:journl:hal-03738928
    DOI: 10.36253/bae-10981
    Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-03738928
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    Keywords

    agricultural policy; fertilizer subsidy; land use effect; Regional Crop Model; Positive Mathematical Programing (PMP); Iran;
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