Evaluation of the Effects of Input Subsidy Policy versus Direct Payment on the Cropping Pattern of Agricultural Products (Case Study: Dehgolan Plain, Kurdistan Province)

Document Type : Research Paper

Authors

1 Agricultural Economics Department, Tarbiat Modares University, Tehran. Iran.

2 Agricultural Economics Department, Tarbiat Modares University, Tehran, Iran.

10.22059/ijaedr.2026.408943.669413

Abstract

Governments can influence agricultural production levels and cropping patterns through a range of policy instruments, including direct payments, input subsidies, export subsidies, and other support measures. Such policies may alter cropping decisions and improve farm income. In this study, using a Positive Mathematical Programming (PMP) model, the effects of a change in government support policy were examined under four scenarios— (1) continuation of the current input subsidy policy, (2) full removal of input subsidies, (3) implementation of direct payments to farmers, and (4) simultaneous implementation of direct payments with cropping pattern adjustment—on farm profitability and resource allocation during the 2023–2024 crop year. The results of the policy scenarios show that, in response to the change in the support regime, the cultivated area of irrigated wheat, irrigated bean, rainfed bean, and rainfed barley increased. In contrast, the cultivated area of rainfed wheat, irrigated barley, potato, cucumber, alfalfa, and onion declined. These changes indicate a shift in the cropping pattern toward crops with higher economic returns, lower production risk, and greater compatibility with resource constraints and the framework of the direct payment policy, suggesting that a change in support policy can guide farmers’ production behavior toward more efficient resource allocation. The scenarios also led to a reduction in chemical fertilizer use, which is environmentally important. Moreover, replacing input subsidies with direct payments was found to be an effective and efficient approach in terms of both economic performance and environmental sustainability, as it supports farm income while reducing the use of chemical fertilizers, pesticides, and fossil fuels. This, in turn, improves environmental conditions and enhances the sustainability of natural resources in the study area.

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Main Subjects

References

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Iranian Journal of Agricultural Economics and Development Research
Volume 57, Issue 2
July 2026
Pages 277-297

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