Agricultural Economics and Development

Agricultural Economics and Development

Investigating the Effects of Changes in the Calculated Exchange Rate of Customs Duties and Commercial Profits on the Agricultural Sector of Iran

Document Type : Original Article

Authors
O. Gilanpour 1
M. Rafati 2
1 Corresponding Author and Associate Professor, Agricultural Planning, Economics, and Rural Development Research Institute (APERDRI), Tehran, Iran
2 Assistant Professor, Agricultural Planning, Economics, and Rural Development Research Institute (APERDRI), Tehran, Iran
10.30490/aead.2022.357332.1410
Abstract
After abandoning the managed floating exchange rate regime to reduce the effects of the US withdrawal from the JCPOA nuclear agreement in 2018 and adopting a multi-exchange rate system, the border protection system for agricultural products distorted in two ways: first, due to allocating different rate currency to various goods; and second, as a result of calculating the customs duties and commercial profits with the appreciated exchange rate. In this study, assume that the import pattern is maintained constant like as in 2020, given no change in marketing margins, the effects of changes in the ‘calculated exchange rate of customs duties and commercial profits’ on the level of prices and also the efficiency of border measures for support of Iranian agricultural products were investigated by using the differentiation in the weighted average value of imported goods after clearance at two different exchange rates and the weighted average of import tariffs during the period 2016-2020. The results showed that the rate of increase in commodity prices resulting from the implementation of this policy was directly related to the average weighted tariff rate. So, it is estimated that the cost of imported agricultural products will increase by an average of 7.6 to 12.6 percent directly. Therefore, due to the increasing level of border protection, a pattern for selective linear reduction of a few tariff lines proposed in the 1400 budget bill is not enough to modify the agricultural products tariff system; and it is necessary to revise the commercial profit of agricultural products tariffs as well.
Keywords
Exchange Rate
Tariff
Agricultural Trade
Budget
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