Document Type : Original Article


1 Ph.D. student in the Department of Agricultural Economics, University of Sistan and Baluchistan, Iran

2 Assistant Professor, Department of Agricultural Economics, University of Sistan and Baluchistan, Iran


Subsidy is a tool used by governments as a form of financial aid to support specific economic sectors. Today subsidy is common in several countries such as Iran due to different political and economic reasons. This study has examined the effects of changing agricultural subsidies on, production and exports. For this purpose, a computable general equilibrium model (CGE) for the year 2012 was used in social accounting matrix form in 2001 as the statistical basis. For the extraction and transportation of nonlinear programming model "mixed complementary problem" (MCP) was used. Social Accounting Matrix was divided into main sectors: agriculture, oil and gas, textiles, energy, industry and services.  Then, the effect of agricultural subsidies and its effect on endogenous variables were investigated. Results showed that reducing agricultural subsidies, decreases the level of agricultural production by 21.3 percent and increases prices which in turn causes deviation of real exchange rate from equilibrium that prevents the exports in this sector. Moreover, by reducing subsidies the unemployment rate increases and welfare decreases.

Graphical Abstract

Effects of Changing Agricultural Subsidies on Production and Exports in Iran


  • Social Accounting Matrix was divided into six main sectors: agriculture, oil and gas, textiles, energy, industry and services
  • Effects of Changing Agricultural Subsidies  and Computational general equilibrium
  • Examined the effects of changing agricultural subsidies on production and exports Iran a computable general equilibrium mode


Main Subjects

Abassi, Shavazi, S. (2011). Effect of agricultural subsidies on agricultural production and exports. Master's Degree in Agricultural Economics. Department of Agricultural Economics,  University of Zabol, 33-40 (In Persian).

Akbari Moghaddam, B. (2008). Computable general equilibrium (a standard form.) Under the first-., Qazvin: Scholars Press (In Persian).

Hosseini, S. M., Shahraki, J., & Khazaee, P. (2016). Analysis of the effects of agricultural targeted subsidies on Iran's agricultural sector (generalized computational balance model). Journal of Agricultural Economics Research, 8 (32), 61-78.

Jansooz, P. (2009). Fertilizer subsidy policy perspective wheat farmers in the Sistan region. Unpublished thesis Agricultural Economics Master's thesis. Faculty of Agriculture, University of Zabol , 45-47(In Persian).

Karimi, S., Jafari Samemi, A., & Mohntafer Y. (2007). Assess the impact of the fuel subsidy on increasing inflation in Iran: an empirical analysis (2005-1350). Journal of Economic Research, 43: 1 - 57.

Lofgren, H., Harris, R., & Robinson, S. (2002). A standard computable general equilibrium (CGE) in GAMS, Microcomputers in Policy Research, vol.5. International Food Policy Research Institute, Pp79.

Mabugu, R., & Chitiga, M. (2008). Is increased agricultural protection beneficial for South Africa? Journal of Economic Modeling, 26:, 256-265.

Meyer, R. L. (2011). Subsidies as an instrument in agricultural finance: a review. Washington: World Bank Documents - World Bank Group.

Najafi, bB., & Shooshtarian, A. (2004). Targeted subsidies and eliminating food insecurity: A case study Arsanjan. Journal of Business Research, 127: 31-151.

Qin, C., Jia, Y., Su, Z., Bressers, H., & Wang, H. (2012). The economic impact of water tax changes in China: (A Static Computable General Equilibrium Analysis). Water International. 279-292.

Riafard, A. (2010). Examine the effect of tariff rate reductions on the economy of Iran using a computable general equilibrium modeling. Finishing a Masters in Economic Sciences. Department of Management, Islamic Azad University of Arak. (In Persian).

Sabouhi, M., & Ahmadpour, M. (2015). Investigating the effect of targeted subsidies on agricultural sector in iran (regional modeling of agricultural sector). Quarterly - Journal of Economic Research (Sustainable Growth and Development Research), 15. , 157-182.

Tayeb Nia, A., & Foladi, M. (2009). Examine  the effects of rising world prices on domestic prices level , exchange rates , trade balance , using a computable general equilibrium model ,. Journal of Economic Research, 157:, 89-184.