Agricultural policy and performance in Iran: The post-revolutionary experience

Abstract

The agricultural sector of Iran has experienced low growth rates since the 1979 Revolution. This has happened despite remarkable increases in the use of inputs such as fertilizers and farm machinery, and despite the post-revolutionary government's proclaimed emphasis on agricultural development and self-sufficiency in food. In search of the causes of this weak performance, we examine the trends in agricultural prices and investment expenditures. Our analysis of the available data shows that increased labor costs have reduced the profitability of agricultural production as a whole, and that the government's lopsided control of agricultural prices has turned production incentives against food grains. Also, between 1978 and 1982 agricultural investment and research and development expenditures, especially the infrastructural and basic research parts, have been significantly cut. These shortcomings have impeded agricultural growth in the early 1980s. The post-revolutionary development institutions have helped increase input use and redirect government resources toward smaller investment projects that benefit small farmers and the rural poor. The more recent changes in the investment and research policies of the government seem to be favorable; however, the continuing war effort and the decline of oil revenues have severely restrained the overall availability of development funds in the Iranian economy.