Document Type : Research Article

Authors

1 Department of Economics, Isfahan (Khorasgan) Branch, Islamic Azad University, Isfahan, Iran

2 Department of Economics, University of Isfahan

3 Associate Professor, Department of Economics, Isfahan (Khorasgan) Branch, Islamic Azad University, Isfahan, Iran

Abstract

 
Introduction: One of the most efficient methods of demand management that leads to the regulation of water consumption pattern is amendment of pricing system based on total price of water in agriculture sector. In fact, one of the best policies and methods to maintain water resources through proper water pricing in different regions is to utilize an optimum pattern of water consumption. Evaluating common systems of irrigation in Khouzestan (Dez network) has indicated that the functions of most of them have been decreased because of defect in design and implementation, inappropriate maintenance, delaying in repair and lack of proper management. Economically, the costs of investment and projects construction has been considerably more than the predicted amount; moreover, the projects construction mostly lasts longer than the due date. In terms of management and utilization, decimation of water leads to stagnant water and salinity problems. Therefore, inappropriate utilization causes injustice in water distribution and discrimination among utilizers.
Materials and Methods: This study aimed to calculate the total cost of agriculture water considering funding costs, utilization costs and maintaining the costs of facilities from the perspective of Water Organization of North Khuzestan district and determining the total cost of agriculture water in irrigation network using Activity-Based Costing (ABC) method in the crop year 2018. Activity based costing is a cost-finding system that uses cost stimulants of activities to assign overhead costs of products. In fact, it is a resource consumption model that can provide proper information to help making decision about the improvement of product process. Statistics and required data were collected from agricultural Jahad organization of Khouzestan province and water affair organization of North Khouzestan district.
Results and Discussion: The price of water per cubic-meter in each activity based on costing method for wheat and corn products are 1445 and 1519 Rials respectively. It can be concluded that the quantities calculated by the Water Organization for both wheat and corn are much less than the quantities of agriculture water provision cost that is equal to 1231 Rials. Thus, the prices paid by the farmers for the products, wheat and corn, which are 142.1 and 201.3 respectively, are less than the cost of water supply. Therefore, the paid price of water could not compensate the cost of water supply. In general, it is revealed that the activity based costing (ABC) system can be one of the management solution to achieve the accurate decision making to resolve the informational requirements of the management and to benefit the company by implementing and planning this system. In addition, the results show that using ABC method in computing total cost of agriculture water in North Khuzestan leads to more accurate overhead costs dedication that causes not only to obtain accurate and correct data but also to acquire simple implementation of costing system that can benefit the managers strongly.
 Conclusion: The study finds that ABC system is more accurate and correct to compute overhead costs and leads to accurate and correct data beside simplicity in executing a cost finding system that can have many profits for the managers. Considering the total cost of water, it is necessary to amend the water assignment and increase the water price gradually to decrease wasting water and prevent from overuse of water. Moreover, it is necessary to expand the area under cultivation and increase the farmers' income to improve the output of irrigation.
As water is the essential element to produce agricultural crops, costing policy based on the real cost of water should be executed gradually. It should be noticed that pricing water based on the real water price is not enough. The total costs obtained from the farmers should be applied to improve the water resources of agricultural sections and efficient management of water supply plan.

Keywords

1- Agricultural Ministery. 2000. The report of producing agriculture crops cost. Programming and budget assistance statistics and information administration. (In Persian)
2- Agriculture Ministery. 1997. Statistics and information center. (In Persian)
3- Garrido A., and Calatrava J. 2014. Agricultural water pricing: EU and Mexico, this is one of the background reports supporting the OECD study. Sustainable management of water resources in agriculture. Available at www.oecd.org/water.
4- Aminian F. 2009. Determinatin of agriculturalwater’s economic value: A case study underground water sources of damghan. M.S. thesis, University of Tabriz, Iran. (In Persian)
5- Cooper R., and Kaplan RS. 1988. Measure costs right: make the right lesisions. USA: Harward Business Review; pp: 96-103.
6- Chifamba E., Nyanga T., and Gukurume S. 2015. Irrigation water pricing and cost recuperation for sustainability of irrigation projects in Nyanyadzi, Zimbabwe. Russian Journal of Agricultural and Socio-Economic Sciences 3)15(.
7- Doppler W., Salman A.Z., Al-Karablieh E.K., and Wolff H.P. 2002. The impact of water price strategies on the allocation of irrigation water: The case of the Jordan Valley. Agricultural Water Management 55: 171-182.
8- Ehsani M., Hayati B., Dashti Gh., Ghahremanzadeh M., and Hosseinizadeh J. 2011. Calculating economical value of water in barleycorn production in irrigation network of Ghazwin plain. Journal of Water and Soil Science 22(11):187-200. (In Persian)
9- Hosseinzadeh J., and Kazamiyeh F. 2016. Place of water resource management in agriculture development: A case study in Tabriz plain. Journal of Economic Research and Agriculture Development of Iran 44(3): 369-377. (In Persian)
10- Khajavi Sh., Hallaj M., and Sheikh A. 2016. Studying effect of function total water price of system based on management belief of relevance and efficiency of resulted data of the system: A case study petrochemical industry of Iran. Journal of Financial Accounting 8(29): 156-139. (In Persian)
11- Mansouri M., and Ghiasi A. 2011. Computing total price of agriculture water of cistern dams based on economical engineering: A case study in Mahabad and Barun cistern dams in Western Azarbiajan. Journal of Economy Agriculture and Development 10(37): 171-192. (In Persian)
12- Montazeri A., and Mirshafiee S. 2012. Development and application of multi standard phase modulation of water pricing in irrigation networks. Journal of Irrigation and Drainage of Iran 6(3): 226-237. (In Persian)
13- Namazi M. 2008. Introducing second generation of cost finding based on activity (TDABC). Journal of Accountant 22(192). (In Persian)
14- Rahnamaei Rudposhti F. 2008. Management accounting based on value creating cost management. Islamic Azad University Publication, Science and Research Branch. (In Persian)
15- Rezania A., Meshkizadeh M., Zibanchi M.H., and Sharifipour M. 2006. Optimization of irrigation networks design and drainage using value engineering. Fourth National Value Engineering Conference, 10th January 2009. (In Persian)
16- Venot J.P., Molle F., and Hassan Y. 2013. Irrigated agriculture, water pricing and water savings in the Lower Jordan River Basin in Jordan. Colombo, Sri Lanka: International Water Management Institute. 61p.
CAPTCHA Image