Assessment of Potential Value-Added of Agricultural Subsectors in Iran: A Comparison between Modern and Traditional Approaches

Assessment of potential value-added of agricultural subsectors and the gap between the potential and actual value-added plays a significant role in setting the policies related to the growth of agriculture sector. This study aimed mainly at estimating the potential value-added of agricultural subsectors in Iran. For this purpose, Hodrick-Prescott, Baxter-King, and Christiano-Fitzgerald filters were applied on the annual statistical data for the period spanning from 1991 to 2014. Once finished with the assessment of the potential value-added and the gap between potential and actual value-added, the research went for an investigation on the effects of production level, price, facilities and subsidies on the value-added gap across the subsectors. The results indicated a significant difference between potential and actual value-added during the considered period, pointing out unused capacities across the agricultural sector. Regression analysis results also confirmed significant and positive contributions of production level to the gap in livestock and fishery subsectors. Accordingly, it was recommended to pay further attention to the provision of required infrastructures and credits for using potential capacities in different subsectors.