Agricultural Economics
F. Fathi; M. Behnam
Abstract
IntroductionThe growing virtual water trade globally reflects economic principles associated with international trade, particularly the Heckscher-Ohlin theory. Each nation tends to export products that utilize relatively abundant and inexpensive production factors while importing those that necessitate ...
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IntroductionThe growing virtual water trade globally reflects economic principles associated with international trade, particularly the Heckscher-Ohlin theory. Each nation tends to export products that utilize relatively abundant and inexpensive production factors while importing those that necessitate scarce and costly resources. The strategic use of virtual water in the management of water resources is a critical issue, mainly, considering that a significant portion of Iran experiences arid and semi-arid conditions, leading to severe and increasing water shortages. Among the agricultural products that Iran requires are oilseeds, such as soybean and sunflower, which the country produces and imports in substantial quantities annually. Materials and MethodsThe present study aims to assess the trend of importing virtual water from oilseeds through trade partners and determine the effects of economic and environmental factors influencing their import during 2005-2020, utilizing the generalized gravity model. Economic and trade variables such as the ratio of Iran's GDP to other countries, import tariff ratio, real exchange rate growth, country risk index, distance between countries, and sanctions are considered. Environmental variables such as area under cultivation, access to water, and lack of access to water per capita are also included. The variables related to access and lack of access to water consist of four environmental factors: total water withdrawal, total renewable water, agricultural water withdrawal, and total freshwater volume. Results and DiscussionThe virtual water trading model is considered a scientific model and a practical solution to address the water shortage crisis in countries, especially Iran. In this research, through gravity models, the determinants affecting the volume of oilseed imports to Iran were identified. The variables of the ratio of Iran's GDP to the trading partner country and the access to water of the trading partner country were effective in both estimations, while the variable of the import tariff ratio was not effective in any of them. The risk variables of the countries have also been effective in importing virtual water. The variables of access to water and lack of access to water are environmental variables that influence the model, similar to economic variables. Therefore, the import of oilseeds is affected by economic variables; however, since the importation of oilseeds is supported to meet the country's needs and government currency has been utilized during the studied period, the variable of real exchange rate growth has less effect on imports. On the other hand, the variables of access and lack of access to water, which consist of four environmental factors (total water withdrawal, total renewable water, agricultural water withdrawal, and total freshwater volume), play an important role in the import of virtual water through oilseeds to Iran.The following suggestions can be made: Considering the significance of the variable distance between countries in the estimation, instead of meeting the demand for oilseeds from producers located at a large geographical distance, it is suggested to exchange these products with neighboring countries and regional markets if they are capable of producing these products. In other words, the Iranian government should accept the risk of importing oilseeds from neighboring and regional markets that are closer, rather than necessarily from the production hub. This may reduce the cost of importing this product by choosing these countries. Additionally, based on the role of the risk index, it is expected that countries with lower risk will be chosen as trading partners. Although the area under cultivation may be associated with a reduction in virtual water imports, considering the state of Iran's water resources and the need to import these two types of oilseeds, increasing the area under cultivation may not be feasible. Importing virtual water can play an important role in the sustainability of water resources while simultaneously meeting domestic needs. Based on the significance of access to and lack of access to water in the estimated relationships for soybean and sunflower production, certain countries have a relative advantage in cultivating these crops. Therefore, to enhance the management and sustainability of water resources, it is recommended to import from countries with greater water availability and higher production capacity. As a result, importing more virtual water supports the conservation of local water resources while ensuring the cultivation of these crops.
Agricultural Economics
F. Fathi; E. Ghorbanian
Abstract
Introduction: Iran imported 9 million tons of corn, from Switzerland, Emirate, England and, Netherlands in 2017 so these regions are now the major sources of corn import for Iran. Among the multiple risks, Iran's corn imports encountered systematics and unsystematic risk. Systematic risks are the risks ...
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Introduction: Iran imported 9 million tons of corn, from Switzerland, Emirate, England and, Netherlands in 2017 so these regions are now the major sources of corn import for Iran. Among the multiple risks, Iran's corn imports encountered systematics and unsystematic risk. Systematic risks are the risks carried by entire assets within a system and cannot be diversified. They are also called non-diversifiable risks, beta risks, and market risks. Specific risks are risks that are unique to an individual asset. In a portfolio, specific risks can be mitigated by using a diversification strategy. Terms or phrases which can be used conterminously with specific risks are diversifiable, unique, unsystematic, or idiosyncratic risks. International price fluctuation and internal policy comprise the risk of Iran's corn imports. Risk specification and management of Iran's corn imports are important since corn, as an input of livestock production, makes the risk of these industries and hence the price of red meat and poultry. The corn imports systematic risks refer to the risks caused by global corn price fluctuations. The systematic risks usually result from the unpredictable fluctuation of global corn demand or a concerted action taken by major corn exporters. All corn importing countries are liable to these risks. Global corn prices fluctuate when the global consumption of corn grows quickly and an imbalance of supply and demand ensues. Worldwide fluctuation is the risk brought about which cannot be avoided by diversification; all the corn importing countries will be affected by this risk. The specific risks to corn imports refer to the risks resulting from corn exporting countries. When a corn exporting country stops its exports due to the policies, climate, production decrease as a result of disease and the other production risk, or other factors, it will bring losses to the corn importing countries. These failures result in a specific risk to corn imports. Since such failures cannot take place in all countries at the same time, and most of them have delayed effects on global corn prices, diversification can be adopted in order to reduce the specific risks to corn importing countries.This paper tries to answer the following questions: What risks will Iran face in terms of corn import systematic or unsystematic risk? What is the relationship between global corn prices and the import prices of Iran's corn imports? Can diversification really minimize Iran's corn import risks?Materials and Methods: This paper applies an improved portfolio model and diversification theory to quantify the risks for Iran's corn import risk during 2000-2019. Diversification theory often applied to the analysis of Iran's corn risks, is considered as a powerful instrument in this field of study. Firstly, for considering the systematic risk like the relationship between Iran's corn import prices and global corn prices is estimated. The Ease of Doing Business Index grading system is employed to represent the risk weight relative to each of source country, which should be able to better reflect the extent of each country's influence on Iran's corn risk. Secondly, the diversification index will be calculated and then the systematic and unsystematic risk is estimated. Finally risk index as an import ratio from source countries in order to replace the volume of imports from a country is used to solve the rapidly increasing risk as well as increasing import volume. Results and Discussion: Empirical results show that ever-increasing global corn prices, price fluctuations, and the increasing volume of imports are the root causes of the growth of Iran's corn import risks. The systematic risks are the primary risks to Iran's corn import risk, which the highest systematic risk accrued in 2011. The diversification indexes remain between 0.4 and 0.5, with no evidence that a linear relationship exists between the diversification index and the specific risk index. Therefore, it is not enough to just reduce the specific risks by increasing the number of source countries. It is of equal importance to import corn from countries with low-risk weights and to strike a balance among countries and regions with similar risks. From 2006 to 2011, Iran's corn import risk index remained steady, between 2.8 and 11. As the Ease of Doing Business Index grading system indicates, Iran should import less from countries with low Ease of Doing Business Index grades such as Singapore and import more from those with higher Ease of Doing Business Index grades, maintain balanced imports from countries with similar risks.
F. Fathi; M. Bakhshoodeh
Abstract
Introduction: Policies of the Fifth Five-year Socio Economic Development Plan on Iran emphasize on improving factors such as air quality and food security, reduction of the risks and infections that threatens health as well as to change dietary patterns by improving food composition and safety. To this ...
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Introduction: Policies of the Fifth Five-year Socio Economic Development Plan on Iran emphasize on improving factors such as air quality and food security, reduction of the risks and infections that threatens health as well as to change dietary patterns by improving food composition and safety. To this end, the government required to support measures to increase production of animal protein obtained from livestock and poultry. The Iranian targeted subsidy plan started in 2010 which increased energy prices significantly. The increase in energy price after start of targeted subsidies included gasoline (3.6-6.2 times), Kerosene (5.4 times), gas oil (8.1-18.9) and fuel oil (18.8). In terms of supply of animal protein, meat has an important role in nutrition and a major share in family food expenditure so that the willingness to consume it has been obvious in the country's consumer culture. On the other hand, according to international standards, every individual needs 70 grams of protein a day (for average body weight of 70 kg). About one-quarter of this amount (about 25 g) should be animal protein. With commence the second phase of a targeted subsidy plan, it is important to get familiar with the effects of this policy on the livestock and poultry industry. A change in livestock prices due to increased production and transport costs have increased the consumer price and have led to changes in the intake of animal protein and calories. With introduction of this plan and recognition of its need in the country, there has been a need to investigate the effects of increasing energy prices on the livestock and poultry industries and to quantify the effects of these policies. This study is trying to investigate the effects of the increase in energy prices for beef, sheep and poultry meat prices, including on a farm and retail prices under various scenarios, the amount of demand and supply and ultimately the effects on food security in Iran.
Materials and Methods: Equilibrium displacement models (EDMs) have used in applied economics. EDM allows the researchers to focus on result of various supply and demand shifter. In this study,to decide the effects of elimination of energy subsidy policy on meat producers and consumers. The model comprises horizontally linked beef, sheep, and poultry demands at the retail level as well as vertical linkages between the farm and retail sectors.
Results and Discussion: Scenarios for energy price rise are created following three steps. First, a 38 % increase created in prices of energy carriers. Then change in balance, an increase of 50 % considered as the second stage. Up to this point we have about 88 % rise in energy prices, which must raise by another 300 % to reach the global prices which created in the third scenario. Alongside policies for elimination of energy subsidies, there has been a policy of cash subsidies in the country. In this study, to calculate the effect of cash subsidy, it was necessary to calculate the increase in family expenditures in exchange for a certain percentage of increase in the meat price. Therefore, with increase of average meat price, the average family expenditures for meat were also calculated. This average is the value which will pay to families in cash. Like assumptions used in the demand model, if all income rise spent on food, the percentage of increase in expenditure can be calculated. Using this percentage and income elasticity elements, the effect of cash subsidies on increasing meat expenditure can be calculated. Though accepting the premise that all families spend their income rise to buy meat is difficult, it helps us take a general attitude about paying cash that increases demand and shocks the retail demand. Therefore, an increase of 2 and 5 % considered for the average family expenditure. A 2 percent increase in the family expenditure increased the demand for poultry, sheep, beef by about 0.63, 1.13 and 0.92 percent and a 5 percent increase in the family expenditure increased the demand, by 1.57, 2.82 and 2.29respectively.
Conclusion: The results show that if the increased demand is not proportional to the increase in production, it does not have a positive impact on families' food intake. The increases in prices of energy carriers have different effects on meat production. Increased prices of energy carriers encouraged sheep production, because the increase of energy price does not induce a significant effect on the industry which uses pastures as a main feeding resource. Moreover, increased poultry and beef and sheep prices in some scenarios led to substitution with sheep leading to changes in animal protein intake. Because the meat market is competitive, increased demand arising from cash subsidies will not lead to an increase in animal protein intake. To this end, production should increase, so that the price should be reduced and the family protein and calorie intake get close to international standards. In other words, the supply shock effect should neutral and the increase in retail demand cannot help the consumer. It is recommended that the amount of money being paid to families to increase retail demand, be paid to the manufacturing sector to modernize production industry, for example heating devices that help to save energy. Moreover, to counter the negative effects of the increase in the prices of energy carriers, poultry production system that consumes a large share of energy should be modified to increase productivity. Investigating ways to increase productivity and find its effect on the transfer of demand function in an Iranian meat market requires separate study.
F. Fathi; M. Bakhshoodeh
Abstract
Demand for farm output is theoretically consistent with consumer demand and marketing performance. Many studies have focused on demand interrelationships at the retail level, but not on the demand for farm output. In this study, derived demand elasticities of sheep, beef and chicken were estimated in ...
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Demand for farm output is theoretically consistent with consumer demand and marketing performance. Many studies have focused on demand interrelationships at the retail level, but not on the demand for farm output. In this study, derived demand elasticities of sheep, beef and chicken were estimated in a complete system of demand functions by seemingly unrelated regression estimator (SURE) for the years 1984-2012. Sheep, beef and chicken are considered as inputs for food processing and marketing and so their corresponding derived demands are related to consumer demand and marketing performance. Based on findings of this study, the elasticities of substitution are estimated to be 0.26 for sheep, 0.38 for cattle and 0.32 for poultry. The results showed that derived demand elasticity is more sensitive than the one measured by the traditional method. The price elasticities of the derived demands for the three types of meat were calculated-0.922, -0.775 and -0.716 for sheep, beef and chicken, respectively. This presents that demands at the farm level are less elastic than the associated demands at the retail level. Therefore, policies that change meat price at farm or retail level affect marginal markets of other meat products. According to the results of this study, it is necessary for policy makers to have information on the derived demand elasticity.
F. Fathi; M. Zibaei
Abstract
AbstractLevel of groundwater is decreased which is mainly because, withdrawal of groundwater is increased, because of lack of right management. Economics of rural based farming and farming is dependent of water so decreasing of groundwater effects social welfare. In this study decrease of welfare measure ...
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AbstractLevel of groundwater is decreased which is mainly because, withdrawal of groundwater is increased, because of lack of right management. Economics of rural based farming and farming is dependent of water so decreasing of groundwater effects social welfare. In this study decrease of welfare measure by reason of reduction of groundwater level considered. This study investigated the impact of withdrawal on a measure of social welfare with using econometric model. Production function and social model was estimated. Data were obtained for semi-deep and deep well, so 130 farmers were chosen at 2007-2008 in Firoozabad plain with a random sampling method. Results show that value of marginal product is more than cost of withdrawal of water. Social welfare decrease 924110 and 431210 tomans by decreasing of one meter in level of groundwater for semi-deep and deep well, respectively. The result indicated that loss of social welfare is estimated to be 8.1 and 3.8 tomans per cubic metric reduction in groundwater for semi-deep and deep well, respectively.
F. Fathi; M. Bakhshoodeh
Abstract
AbstractSoil nutrient management with efficient fertilizer use has an important role on maximizing yield and environmental effects. In this study game theory is applied to identify the nutrient proportion for corn production in Kooshkak in Fars province, Iran, in 2008-2009. Cost of fertilizer combinations ...
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AbstractSoil nutrient management with efficient fertilizer use has an important role on maximizing yield and environmental effects. In this study game theory is applied to identify the nutrient proportion for corn production in Kooshkak in Fars province, Iran, in 2008-2009. Cost of fertilizer combinations and production of corn are the players of the game. A goal programming was applied to obtain the optimum fertilizer combination and then these combinations were used as payoffs of the game analysis. Based on the maxi-min criteria, the fertilizer combination of 395.07 kg/ha, was found as game solution, including 395.30kg/ha of nitrogen, 195.60 kg/ha of Super Phosphate and the mentioned combination of fertilizers contains 1050000 rials/ha and the yield is 102000 kg/ha.
