Optimization of Economic Decisions in Agricultural Sector with Regard to Drought Crisis
Posted: 16 Nov 2012
Date Written: November 15, 2012
Iran is placed in arid region. Also a little rainfall and continuous droughts have occurred in most regions of Iran from 15 years ago. Hence, minimization of water consumption is emphasized as main goal of government in recent years. On the other hand, with regards to high share of agricultural sector in GNP, policymakers have aimed cultivation of crops which makes maximum profit along with low water need. In other words, the main goal of managers is optimization of cultivation pattern in several periods so that both objects (including maximum profit and minimum water use) is provided simultaneously.
In this study, incorporation two method (Dynamic Programming and goal programming) was applied for next four periods (2012-2016) data relating 160 farmer and for six main crops (wheat, barley, cotton, cucumber, potato and tomato) was applied in Varamin plain. Totally, There are 42 variables and 29 restrictions. Restrictions include accessible stock, land, labor, fertilizer and self-use for wheat and barley. These restrictions repeat in each period. But stock restriction decrease in next periods.
The results show, the most extent of cultivation is for barley in first period. It is for barley and potato in second period, respectively. In third period, extent of barley cultivation is decreased and the most extent of cultivation is for wheat and potato, respectively. Also cucumber and cotton are cultivated in a few extent in first and second periods, respectively. Tomato cultivation is not recommended in any period. Calculation of opportunity costs shows, shadow price for land was zero in all periods except second period due to increasing of water opportunity cost.
Sensitivity analysis showed, variation range of profit is very high while changing of crops price and inputs restriction. In other words, provision of both goals (maximum profit and minimum water use) increase both price and production risk for farmers.
Keywords: Drought, Optimum Pattern of Cultivation, Maximum Profit, Minimum Water Use, Iran
JEL Classification: Q12, Q15, Q25
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