Impact of Policy of Purchasing Wheat on Welfare of Producers and Consumers in Iran

Document Type: Research Paper

Authors

1 Department of Industrial Engineering, Karaj Branch, Islamic Azad University, Karaj, Iran.

2 Department of Industrial Engineering, Karaj Branch, Islamic Azad University, Karaj, Iran

3 M.A. Manufacturing System Engineering, Putra Malaysia University, Serdang, Malaysia

Abstract

Wheat is one of the most strategic agricultural products, which has always been a significant issue for the government. The main purpose of this study is to review the policy of purchasing wheat on the welfare of producers and customers in Iran. Due to the significance of wheat in consuming model of Iranian families, this product has been permanently under consideration. The government grants a subsidy to wheat consumption within the framework of inexpensive food policy and implements price setting support policies, a subsidy to products and insurance for wheat production. Furthermore, it is the exclusive buyer and seller of wheat in the country. Considering endurance of performance and ever-increasing expenses for the supporting plans for wheat producers and consumers, our goal in this paper is to evaluate and study the impact of such policies on the welfare of producers and consumers. To gain such objective, a mathematical model has been developed. The fulfilled policies in the period from 2005 to 2016 were the basis of the present study. The results of this study demonstrate that less role of government in the arrangement and context of wheat supply chain and broader support for production may lead to more solidarity of wheat production. Therefore, we should move toward privatization and liberate wheat market. However, this point should be regarded that it is better to conduct market to the more dynamic condition by appropriate policies rather than consuming energy and resources of the government. For instance, the government should forecast price of wheat in the next year by making use of comments and researchers of experienced economists instead of specifying the price of wheat for trades, and announce a price slightly less than this price as a guaranteed price. 

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