Investigating the effects of guaranteed prices and production costs on the cultivated area of agricultural strategic crops

Document Type : Research Paper


1 Professor, Department of Agricultural Economics, Faculty of Agricultural Economics and Development, University of Tehran, Karaj, Iran

2 MSc. Student, Department of of Agricultural Economics, Faculty of Agriculture Engineering and Rural Development, Agriculture and Natural Resources Khozestan University, Ahvaz, Iran

3 PhD. Student, Department of Agricultural Economics, University of Tehran, Karaj, Iran


One of the issues faced by policy makers of the agricultural sector is determining the production strategy of the country as well as choosing between either relative advantage or self-sufficiency as a strategy for producing the crops in agricultural sector. The relative advantage strategy is based on economic principles, and on the other hand, the self-sufficiency in strategic agricultural crops, although it is an uneconomic goal, But it is politically important. In this research, the factors affecting the cultivated area of rain-fed barley, irrigated barley, rain-fed wheat, irrigated wheat, irrigated corn, sugar beet, cotton, potatoes and onions with guaranteed prices will be assessed during the period 2006-2014 in the form of a dynamic panel econometric model using Arellano–Bover/Blundell–Bond estimator. The results showed that variables of guaranteed price and lag in cultivated area had a positive and significant effect, but the production cost variables had a negative and significant effect on cultivated area of strategic crops. According to the results, with a 1% increase in the guaranteed price, it is expected that the cultivated area would increase by 0.135%, provided that other conditions are constant. Also, 1% increase in production costs per ha would result in a 0.14% decrease in the cultivated area if other conditions to be constant.


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