Investigating Tariff Escalation Along Iranian Vegetable Oil Supply Chain

Tariff policy along agricultural products supply chain has been always a challenge of policymakers of this sector. In this study, different policy formulations of tariff rate on raw material in upstream chains and processed products in downstream chains were investigated. Due to market integration along the chain, a multi-market partial equilibrium model was employed to simulate the scenarios. Our findings show that with 20 percent (40 percent) increases in oilseeds import tariff, the production increases by 169 percent (189 percent) and the import of raw oil decrease by 89 percent (99 percent). Nevertheless, increases in vegetable oil tariff by 20 percent (40 percent) will reduce consumer surpluses by 32 percent (56 percent). Moreover, vegetable oil tariff has avoidable impacts on downstream chains including oilseed and raw oil. According to the study results, it is recommended that cross-cutting impacts of these policies on vegetable oil chain should be considered in order to improve effectiveness and efficiency of market policies.