An Effective Model for Evaluating Wheat Supportive Government Policies: Error Minimization Approach

Supportive policies on wheat crops to achieve food security have always been considered by the concerned policy-makers, but only in the short term. The Iranian governments subsidize wheat consumption within a framework of the Affordable Food Policy as well as the supportive pricing policies, subsidizing production inputs, and insurance for wheat production. Presently, the government is also the sole buyer and seller of wheat in the country. This study aimed at evaluating the government policies in the wheat market during 2000-2016, considering the continuity and increasing costs of support programs for wheat producers and consumers. For this purpose, the modeling results showed that the supply and demand elasticity values in Iran market were invalid and had to be evaluated using a model error. The economists might only use supply and demand elasticity values with low errors to model the welfare and an acceptable market situation; otherwise, based on model error, welfare calculations, or production and consumption losses would be invalid. For solving this problem, a new model based on the complicated Iran market was investigated, analyzed and verified.