Analyzing Agricultural Sustainability Indicators,Under Energy Subsidy Reduction Policy(Case Study of Qorveh Plain)

مجله اقتصاد و توسعه کشاورزی

Article 5, Volume 29, Issue 2, July 2015, Pages 150-158   

Document Type: Research Article

DOI: 10.22067/jead2.v0i0.35577

Authors

H. Balali^* ; M. Mantashloo

Bu- Ali Sina University

Abstract

Introduction: Generally, subsidies are the amounts of government payments in order to provide all society members with minimum well-being. In several countries such as Iran, the agriculture sector is supported by different methods to achieve goals such as increasing farmers' income, supporting domestic producers and eliminating dependence on imports, preserving employment and reducing poverty. A significant part of agriculture subsidies has been allocated to energy resources, chemical fertilizers, seeds, agriculture machines, vaccines, animal toxins, the interest on bank loans, insurance fees, certain airplane services, distributing young saplings, and government guaranteed purchase of products. However, examining the subsidies system in Iran reveals that most government payments are in the agriculture sector and more specifically on energy resources. Recently, the extra low cost of energy in the agriculture sector, which has had certain government supports, has resulted in low productivity and environmental damage, and has resulted in increased demand for agricultural products due to population growth, changes in life pattern, deviation in energy cost in agricultural sector, environment destruction and influences on sustainable agriculture indicators. Moreover, among different production units, agriculture has the closest relationship with the environment. This relationship is a mutual.On the one hand, erosion and destruction of the environment along with pollution growth and shortage of water resources negatively influences the production and efficiency of agricultural products, and on the other hand, agricultural pollutants and irregular use of chemical fertilizers in this sector impose indispensable damages to the environment.This study aims to apply a partial equilibrium model in order to examine direct and indirect effects of reduction of energy subsidies on economic and environmental indicators of agricultural sustainability in the Qorveh region, situated in the West of Iran.
Materials and Methods: The statistical sample of this research includes all irrigated land of Qorveh as the studied area. A partial equilibrium model has been applied by mathematic programming approach in order to analyze the economic and environmental effects of reduction of energy subsidies for the agriculture sector in the studied area. For this purpose, through a survey, questionnaires were used in order to identify production coefficients of agriculture products and farmers' behavior during 2012-2013. Then relevant equations were used in mathematical programming framework with the aim of maximizing gross margin of agriculture activities in planning horizon by using GAMS 22.9.
Results and Discussion: The results showed that by increasing energy price in policy scenarios of ES1 to ES7 the gross margin of agriculture activities decreases. Also, the results indicate that by implementation of scenarios SE1 and SE2, most economical and environmental indicators of agricultural sustainability will be improved and increasing energy prices as the mentioned policy scenarios has the most effect on GM_ELEC , GM_GAS, and NIT_H indicators and reduces them by 10.7%, 0.97% and 1.48%, respectively. In scenarios ES3 to ES5 with respect to scenarios ES1 and ES2, there is only 7% decrease in the NIT_H index. In scenario ES6, which grows electricity cost by 2.25 times and diesel fuel cost by 1.98 times, GM_ELEC, and GM_WA have the maximum decrease, namely 12.66% and 14.47%, respectively and WA_H has reached 9010 which shows an increase of 6.47%. In scenario ES7, with the exception of WA_H, GM_ELEC and GM_GAS other indicators decreased and this shows that the closer we keep to real energy prices, the more improvement we observe in the environmental indicators.
Conclusions: Consequently, results showed that the reduction of energy subsidies leads to reductions in economic indicators of the study area, as total gross margins. Also, the results showed that by increasing energy prices toward its real value, the consumption of energy will be reduced and environmental indicators including nitrate and potash fertilizers consumption per hectare of land will be improved.

Keywords

Agricultural Sustainability; Energy subsidy; Mathematical programming; Partial Equilibrium

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