Assessing the regional impacts of Iranian wheat support price policies

This study aimed at evaluating the regional and countrywide impacts of wheat support price regimes, using spatial price equilibrium model. The study results showed that increasing support price from 10 to 50 percent in five scenarios would lead to the increase in supply quantity by 1.68-8.1 percent and producer welfare by 109-555 percent as well as an increase in government outlay by 18-88 percent; in addition, these policies would decrease social welfare in the range of 51 to 228 percent, indicating the inefficiency of this policy approach. Also, the results revealed that provincial markets had different reactions to these policies in their mean prices, quantities and welfare changes. Therefore, adopting the same guaranteed price policies for wheat would not have suitable supportive effects across regions and the unique support price among provinces would be inefficient, rather these policies should be imposed relative to regional production elasticity’s.