Land Use and Agricultural Support Policies: Evidence from Iran’s Irrigated Wheat Planting

The self-sufficiency policy for wheat production in Iran has increased external costs for the country besides causing the destruction of water and land resources. Nevertheless, due to various political, economic, and socio-economic reasons, self-sufficiency in wheat production in Iran is a binding policy. According to statistics, an average of about 67 percent of wheat production across the different regions of Iran is irrigated wheat. Thus, in this study, the effect of a guaranteed price policy on the distribution of irrigated wheat land-use in Iran during the period 2001–2016 was evaluated with an emphasis on the role of the regional differences using the pooled mean group approach. The results indicated that, in the long run, the increase in the irrigated wheat land use in the country would be sensitive toward the increase in the guaranteed price of wheat and the yield per hectare. However, with the rise in the price of barley, in the long run, the irrigated wheat land use would decrease further. In addition, in the short run, the increase in the irrigated wheat land use in most of the western provinces is sensitive to the increase in the yield per hectare, and in most of the central provinces, it is sensitive to the changes in the barley prices. Finally, in order to have adequate land for irrigated wheat in the country, both in the short and long run, it is proposed that the farmers' expectations regarding the guaranteed price policy and improvement in the yield per hectare of this product be satisfied.