Impact of Energy Subsidy Elimination on Canola Production Costs in Marvdasht District

Canola has experienced a growing cropping area in recent years in Fars province. The aim of this study is to examine the energy intensity sources and to evaluate the welfare impacts resulted from energy subsidy elimination in Fars province. For this purpose, data were collected from canola growers of Fars province in 1388 (2009). Then, the factors affecting demand for energy were estimated and energy intensity sources and impact of the reduction in energy subsidy were calculated. Energy as an input was regarded via using machinery. The results of the study indicated that machinery was inelastic with respect to own price changes. Machinery had a complementary relationship with pesticides and labor, while it was a substitute for water. The welfare analysis also showed that energy subsidy alleviation increased the production costs of the canola by more than 15 percent, and consequently, profit would decrease by more than 6 percent. The findings also showed that increase in using machinery, fertilizer, and water would cause increase in energy consumption while pesticides and labor had opposite effect