Evaluation of Iranian Government Protection Policy in Wheat Market

Governments often intervene in agricultural markets to form income protection, optimal allocation of resource and equal income distribution. Evaluating optimal combination of policy instruments on Iranian wheat market, including consumer's subsidy scheme, guaranteed price, input subsidy and insurance are the main objectives in this paper. We applied the Minimization of the Net Social Loss Function method to the data of 2005 as the base year in this study. The results show that the Average Transfer Efficiency Index is about 87 percent for current policies. Applying producer’s protection policy has the less deadweight loss in comparison with applying cheap food policy or applying cheap food policy and producer’s protection policy simultaneous. Also, the results show that applying the producer’s protection policy significantly reduces the government’s expenditures and increases the Taxpayers’ welfare.