Agriculture and Food Policies in Iran Toward Achieving Food Security

Abstract

Since the 1970s, agriculture has been central to Iranian's development strategy. In order to achieve food security, many policies and programs have been initiated by the Iranian government to face scarce resources (notably land and water), low productivity compared to other sectors, limited market access, lack of technologies, insecure land tenure, climate change, etc. Five-year development plans are formulated at the national level to achieve strategic priorities along to gain economic and political goals such as increasing economic growth and decreasing poverty. On 19 March 2017, the “Law on the Sixth Five-Year Economic, Cultural, and Social Development Plan for 2017– 2021(1396-1400)” (the “Sixth Development Plan”) was approved by the Iranian Parliament. The development plan sets out the goals and objectives to be achieved by the country over the next five years. In a notable change to previous plans, the Sixth Development Plan places less emphasis on achieving hard targets and attempts to provide guidelines for the Iranian government to deal with certain shortcomings facing the country. Some of the key guidelines and goals for the Iranian Agriculture Sector (IAS) as set out in the Sixth Development Plan has been translated into a range of programs with strong emphasis; increased use of inputs and extension packages through an input subsidy program, promote agricultural production and commercialization, rural infrastructure development, project management, building extension capacity, strengthening of cooperatives, better use of water resources, education and agricultural R&D and increasing consumer and producer welfare. In this thesis via presenting three papers was tried to assess the agriculture and food policy toward achieving food security in Iran through different levels of the agriculture supply chain for this aim mathematical programming and econometrics approaches were used. The main questions and findings of papers in summary are expressed below. Questions and findings: To consider the success and efficiency of agriculture policy programs, in particular increasing agriculture production, we have started from agriculture supportive policies in the frame of input subsidies program at the farm level. We tried to answer whether current fertiliser subsidies policies are efficient or not? using a regional crop programming model. Simulation results show that total removal of nitrogen fertilizer subsidies would affect the competitiveness of crops with the highest nitrogen application rates and lead to a slight reduction of national agricultural income, at approximately 1%. This effect, which is more pronounced at the regional level, is driven by area reallocation (crop-substitution) rather than land productivity. The reallocation of nitrogen fertilizer subsidy to only strategic crops boost their production and income but increase disparity among regions and affects negatively welfare compared to the current universal fertilizer program. Also, the transfer efficiency analysis shows that both target and universal simulated options are inefficient with an efficiency score below one. The inefficiency of input subsidy policy could have an impact on food prices. In this regard in the second step, we answered this question that how raising maize price would affect egg price. For this aim, we used the econometrics approach via Threshold Autoregressive (TAR) model. As shown that in the long run, owing to price transmission, any price shocks on maize price will be transmitted to the egg price. This research dealing with price transmission has been concerned only with applying time-series modelling techniques to price data. The main focus of this approach has been to characterize vertical price relationships by the extent, speed, and nature of the adjustments through the supply chain to market shocks generated at different levels in the marketing process. Thus, it complements the marketing margin models, which are mainly concerned with testing for market imperfections and calculating the price transmission. Besides these points, particular importance has been given in this research to the question of symmetry of price adjustments. Achieving food security goals are not limited to domestic policies at the farm, market, and consumer levels. Regardless of the sanctions, the impact of global food price shocks, along with the inefficiency of domestic agriculture policies, has put additional economic pressure on Iranian households. The third question of this thesis was expressed based on the impact of global food price shock on vulnerability of urban Iranian households. Using AIDS model and CV shown that after increasing global food prices, based on the poverty line, 41% of urban households were observed to be below the poverty line and the number of poor households increases by 10.63%. To enable food security, the Iranian policymakers should compensate for the welfare losses by supportive policies for vulnerable households. This thesis has the potential to consider policymakers' point of view in various manners. First, the topic of the papers is policy-relevant and may stimulate the debate regarding the relevance of price support policy instruments currently implemented in many developing countries. Second, to the best of our knowledge, this is the first thesis in the literature that provides a comprehensive analysis of the price support policies in Iran and its potential impacts on crop mix, production, agriculture income, and government revenue at both national and regional levels. Third, the results of symmetry transmission of input price on market products could be an alarm for policymakers in terms of revising their policy implementation systems at the farm level and change their priority from less costing to more efficient policies. Fourth, this thesis shown that paying direct subsidies (fixed cash subsidy payment) to the household is not a helpful policy that has been implemented for years to support low-income households. Since domestic efficient agriculture and food policies, along with considering the effects of global food price changes, can help improve Iranian household livelihoods. Finally, since the methodologies of each paper designed with econometrics and mathematical programming models using databases and surveys, the results of this thesis for policymakers are practical pilot samples that could be extended at the national level.