Investigating comparative advantage and supporting policies of pomegranate in Fars, Iran

Production of any commodity should be profitable not only for producers but also for the country as a whole. In other words, production cost of a commodity should be less than income earned from its export or cost of import of that commodity. If these conditions fulfilled, one can say that the country enjoys social profitability and comparative advantage in production of commodity under consideration. As Iran has production and export potential in horticulture products, planning for production and export of these commodities are very important. This study used Policy Analyses Matrix (PAM) and Domestic Resource Cost (DRC) for calculating the comparative advantage of pomegranate in Fars province and PAM indices were used in order to investigate supporting policies. Amount of DRC index for pomegranate is 0.42 that demonstrates a strong comparative advantage for this product. Nominal Protection Coefficient (NPC) index is 0.49 that indicates domestic policies have reduced farmer's income to the level which is less than international prices. Furthermore, these policies are against production of this commodity and government receives implicit tax from producers. Nominal Protection Coefficient of Input (NPCI) index shows the effect of government policies on input prices. This index is 0.44 for Fars pomegranate that shows government pay input subsidy to the farmers. Effective Protection Coefficient (EPC) index is an index which shows the outcome of government policies regarding both input used by the farmers and farmer's income. This index is 0.49 for Fars pomegranate that indicates government does not support this product as far as input used by the farmers and their income is concerned.