A Study On Market Distortions And Its Effects On Rice Supply, Demand And Import In Iran
2007
Noori, K., Member of Scientific Board, Agricultural Research and Education Organization (AREO), Tehran, Iran.
Rice is a strategic agricultural product in Iran. There are many important distortions in supply, demand and import of rice. The main purpose of this study has been to analyze the distortions in rice market. To measure the distortions, the adjusted protection rate (APR) has been applied. The APR measures the total policy, which combines and 'direct' effect of sectoral price and trade policies and the 'indirect' effect of economy-wide policies, which affect the exchange rate. The results show that distortions have positive effects on domestic supply of rice, because the distortions create greater difference between domestic price and border price that is attractive for producers. The estimated demand function indicated that the distortions have negative effects on per capita consumption of rice, although subsidized rice distribution reduces the impact of the distortions on per capita consumption of rice. The distortions also have negative effects on the import of rice.
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