The Effect of the Government\'s Subsidizing Policy on Wheat Production

The goal of the present study is to survey the Effect of Government Subsidizing Policy on Wheat Production. In addition, with utilization of economic methods and utilizing serial and periodical data belonging to 1984-2006 years concerning inputs of chemical fertilizers, seeds, toxins, work power and water supplies, at first wheat production function was estimated with ARDL approach and then farmers sensitivity to price changes of these inputs were specified after having production attraction of the inputs calculated simultaneously with estimation of cost dependents and supply of production dependents applying ISUR method. Results obtained from analysis of State Subsidy Policy showed that granting subsidy to toxins has caused irrational supply of the inputs and decrease of the production of the wheat as much as 3.133% as a result of flexibility of supply of this input in proportion with price. In addition, granting subsidy to fertilizers and seeds have had trivial impact on production of wheat because of low attraction of demand of these inputs in a way that wheat production rate increased 0.306 percent with fertilizers' subsidy and 0.2 percent with seed subsidy.
JEL Classification: C4