Some Economic Effects of Fertilizer Subsidy Removal in Onions Crop (Case Study in Tabriz Plain Area)

Abstract

Removing subsidies of agricultural inputs such as fertilizers and pesticides have been regarded, because of their unintended consequences such as inputs non-optimal usage, increasing of administrative costs and decreasing in economic growth of countries. With regards to producing about 200000 tons onions in Eastern Azerbaijan, this study has been carried out with the aim of evaluating the removing of fertilizer`s subsidies in Tabriz plain. For this subject, necessary data were collected by completion of 200 questionnaires of local farmers in farming crop year of 2008-2009. Data were analyzed by using of quadratic generalized production function approach. The result of fertilizer demand elasticity showed that the price liberalization decreases the fertilizer's usage, but does not make significant effect on its usage. Removal of fertilizer subsidy may cause to reality of its price, so regarding the fertilizer's non-economic usage, this policy can help to decrease in fertilizer's consumption and finally help to production process to be more economic. The results showed that fertilizer is an essential input in the producing of onions in Tabriz plain, and even with the price liberalization policy, farmers did not decrease obviously in fertilizer consumption. Because of its over-optimized usage, removal of subsidy will cause decrease in its use, and finally it could help to more economical of production

Keywords

• Fertilizer
• Input subsidy
• Liberalization
• Onions
• Production function
• Tabriz plain