The Impact of Iranian Subsidies Targeted Plan on Agricultural Sector (Regional Agricultural Sector Modeling)

In order to study the effects of subsidies targeted plan on Iran agricultural sector، a regional agricultural sector model is made. For this purpose، Iran is divided into 9 equal radar regions agro-climatologically. Then agricultural sector is modeled within 14 commodity groups and 23 production activities using positive mathematical programming (PMP) method and applying generalized maximum entropy (GME) approach. The results indicate that making subsidies targeted by increasing prices of inputs (irrigation water، fertility، pesticide and machinery)، escalating energy prices for poultry and dairy farms and raising transportation cost، leads to decrease total surplus of agricultural sector، decrease in many crop and livestock activity levels in different regions، increase in prices، decrease in consumption and exports and increase in imports of some agricultural products. According to the results، if subsidies targeted policy is mixed with support payments to producers، dependent on amount of support payment، the social surplus of agricultural sector may decrease or increase. A support payment equal to 25 percent of production costs can compensate losses of producers due to targeted subsidies، transmit loss of social welfare to zero and decrease volatility of economic variables such as activity levels، price and quantity of consumption of commodity groups.