Determinants of Paddy Market Participation and Intensity in Iran: Evidence from a Generalized Two-Part Fractional Regression Model

Document Type : Research Article-en

Authors

F. Habibinodeh ¹

A. Firoozzare ¹

M. Ghorbani ²

F. Boccia ³

¹ Department of Agricultural Economics, Faculty of Agriculture, Ferdowsi University of Mashhad, Mashhad, Iran

² Center for Remote Sensing and GIS Research, Faculty of Earth Sciences, Shahid Beheshti University, Tehran, Iran

³ Department of Economic and Legal Studies, Parthenope University of Naples, Naples, Italy

https://doi.org/10.22067/jead.2026.96839.1407

Abstract

 Rice, as the second most important crop after wheat, plays a central role in sustaining rural livelihoods and generating income for farmers in Iran. Despite its importance, structural, institutional, and market-related constraints continue to limit effective commercialization among paddy producers. This study aimed to identify the determinants of both the participation decision and participation intensity in the paddy market of Golestan province. Data were collected during the 2023–2024 cropping season from 150 paddy farmers using a structured and validated questionnaire. The analysis employed a generalized two-part fractional regression model (GTP-FRM), which jointly estimates the binary participation decision and the value-based share of paddy marketed while accounting for the bounded nature of the dependent variable and potential interdependence between stages. The explanatory variables included human capital characteristics (education and household size), asset endowment (cultivated area and mechanization) and institutional and market access variables (milling services, storage facilities, market information, and marketing channels). The results show that 64% of farmers participate in the paddy market, and on average 49% of the gross value of production is sold. Education is negatively associated with paddy market participation, reflecting a strategic shift toward value addition, as more educated farmers tend to process paddy into rice rather than sell raw paddy. In contrast, larger farm size and greater surplus significantly increase participation probability and participation intensity. Institutional and market factors also play differentiated roles: access to market information enhances participation probability, while access to milling facilities encourages rice marketing instead of paddy sales. Overall, the findings suggest that commercialization in Golestan province is shaped not only by production capacity but also by value-addition strategies and transaction-cost considerations within existing policy and market structures. Policies aimed at improving rural processing infrastructure, strengthening market information systems, enhancing surplus generation, and reducing institutional barriers can more effectively support market-oriented behavior and sustainable commercialization among paddy producers in Golestan province.
 

Keywords

Fractional model

Institutional constraints

Market participation

Rice

Transaction costs

Subjects

• Agricultural Economics

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Authors retain the copyright. This is an open access article distributed under Creative Commons Attribution 4.0 International License (CC BY 4.0).

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