Welfare Impacts of Chemical Fertilizer Subsidy Elimination on Bread Consumers
Subject Areas : Agricultural Economics Research
B. Najafi
1
(استاد اقتصاد کشاورزی دانشگاه آزاد اسلامی واحد مرودشت)
Z. Farajzadeh
2
(دانشجوی دکتری اقتصاد کشاورزی دانشگاه شیراز.)
Keywords: wheat, Welfare Impacts, Consumers, Chemical Fertilizer Subsidy, Bread,
Abstract :
With respect to impact of chemical fertilizer subsidy elimination on wheat production costs, this study aimed at evaluating welfare impacts of reduction in chemical fertilizer subsidy on bread consumers. To achieve this objective, supply and demand of bread was estimated using data for period of 1353-85 (1974-2006). Then, welfare effects of subsidy reduction were determined. Findings of study showed that due to lack of sensitiveness of bread consumers to price changes, the increase in cost of wheat production would transfer to consumers via bread price increase. As a result, consumers would loose 661.8 billion Rials as chemical fertilizer subsidy was eliminated. Meanwhile, government expenditure decreased by 3927.6 billion Rials, and overall impact was 3265.8 billion Rials gain for the society. The results also indicated that the removal of chemical fertilizer subsidy is expected to increase the bread retail price by 6.72 percent. Finally, gradual reduction of chemical fertilizer subsidy and targeting subsidy paid to bread consumers is recommended.
