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Estimating Growth Rates and Decomposition Analysis of Agricultural Production in Iran (1970-2000)



Mohammad Taher Ahmadi Shadmehri
 
ABSTRACT

The main objectives of this study are to examine the trends in area, production and yield of Iran’s agricultural production especially food grains; the decomposition of output growth of main crops and systematically document the pre and post-revolutionary and pre and post-reform trends in agricultural growth in Iran. Compound growth rates of area, production and yield were estimated by fitting semi-log trend equation using data for 1970/71-1999/2000. Decomposition of output growth of main crops were examined by fitting component analysis model using data for the period 1970/71-1999/2000. The performance of agricultural sector was slightly better during the pre-revolutionary period than that of post-revolutionary period. Production yield per hectare of food grains grew during the 1970-78 at the higher rate than that of during the 1979-2000. During the post-revolutionary period, the total agricultural crops during the pre-economic reforms period grew at the higher rate than that of post-economic period, but the growth in yield during the post-economic reforms period was much better than that of during the 1979-89. The main source of growth of agricultural production during the period 1970-2000 has been the growth in yield per hectare and expansion in irrigated area.

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  How to cite this article:

Mohammad Taher Ahmadi Shadmehri , 2008. Estimating Growth Rates and Decomposition Analysis of Agricultural Production in Iran (1970-2000). Trends in Agricultural Economics, 1: 14-26.

DOI: 10.3923/tae.2008.14.26

URL: https://scialert.net/abstract/?doi=tae.2008.14.26

INTRODUCTION

Agriculture plays an important role in economic development, such as provision of food to the nation, enlarging exports, transfer of manpower to non-agricultural sectors, contribution to capital formation and securing markets for industrialization. Moreover, agriculture has strong, direct forward linkages to agricultural processing and backward linkages to input-supply industries (Johnston and Mellor, 1961). Because of these strong linkage effects, agricultural growth can lead wider economic growth in many countries; even open economies, during their early stages of industrialization (Fan et al., 2005; Barrett et al., 2003; Irz et al., 2001). It is known empirically that a large share of manufacturing in the early stages of development is agriculturally related (Pryor and Holt, 1999; Gemmell et al., 2000). Research by Gollin et al. (2002) shows the importance of agriculture in the early stages of development. The researchers find that growth in agricultural productivity is quantitatively important in explaining growth in GDP per worker.

Agriculture makes other important contributions to nutrition, food security and macroeconomic stability beyond the pro-poor growth (Timmer, 2002). Macroeconomic stability is especially sensitive to volatility in the agricultural sector (Timmer, 2005; Perry et al., 2005). In turn, volatility in the agricultural sector tends to be relatively high because of climatic shocks that reduce domestic production and unstable world prices of agricultural commodities. The implication is that these shocks in the agricultural sector, especially food crises, are often the major source of macroeconomic instability in the early stages of development (Barro and Sala-i-Martin, 1995; Dawe, 1996; Timmer, 1996, 2002). Agricultural growth combined with appropriate policies can mitigate the effects of these shocks, with benefits to the poorest and most vulnerable.

The dominant paradigm of structural transformation since the 1970s has seen agriculture as an engine of growth in countries in the early stages of development because of agriculture`s high share of economic activity and strong growth linkages with the rest of economy. This role of agriculture in structural transformation has been demonstrated in many Asian countries through the green revolution, which began in the 1960s and spread rapidly throughout the region in the 1970s and 1980s, especially in densely populated and irrigated areas (Datt and Ravallion, 2002; Ravallion and Chen, 2004).

Growth in agriculture contributes to rapid rises in agro-processing and processed food marketing, which not only provides new engines of growth but an opportunity to substitute for imports. The need for agricultural growth during the early stages of development has been examined in recent neoclassical literature. For example, Yang and Zhu (2004) use growth theory to capture the inter-temporal dynamics of the development process. The researchers demonstrate that, without agricultural productivity, a traditional economy cannot overcome the fixed supply of natural resources and thus, cannot generate sustained economic growth. Regardless of how fast the nonagricultural sector grows, stagnant agricultural production during the early stages of development prevents the structural transformation from a traditional to a modern economy. While early development economists saw agricultural growth as an essential component and even a precondition for growth in the rest of economy, the process by which this growth was generated remained beyond the concern of most development economists (Ruttan, 2002).

Keeping in view the importance of agriculture, quantitative assessment of the contribution of the various factors to growth of agricultural output is helpful in reorienting the programmes and priorities of agricultural development so as to achieve higher growth. There are so many factors, which affect the growth of agricultural output. Among these, area and yield are the major one (Singh, 1981; Cauvey, 1991). These sources of output growth have relevance in deciding programmes of agricultural development and priorities of investment in it (Ranade, 1980; Deosthali and Chandrahekhar, 2004). Thus, it becomes important to find why these growth rates differ from one another, so that the bottlenecks could be removed to achieve the speedy development of agricultural sector (Sikka and Vaidya, 1985).

Decomposition of growth in agricultural output has remained of active interest to researchers and policy makers. A breakdown of growth into various components, area, yield, cropping pattern, etc. facilitates output projection with alternative targets and policies (Jamal and Zaman, 1992). Thus, decomposition of agricultural growth among its constituent forces is of great importance. An analysis of the behaviors of agricultural production in the past and estimation of its growth rates can provide a basis for future projections of agricultural output (Lakshmi and Pal, 1988). Therefore, an attempt is made in the present study to analyze agricultural growth and the contribution of various components to the overall output growth of the Iran for the period from 1970-71 to 1999-2000.

The Iranian economy comprises of several important sectors, which contribute to total national product. But by far, agriculture is the main stay of Iranian economy and prosperity of agriculture can significantly contribute to the general prosperity of the nation. The growth of agricultural production in Iran since the 1970s has been one of the main accomplishments of the nation’s development policies. There are at least three causes for worry concerning the future development of the agricultural sector in Iran. First, in the past, the relatively high growth rate of the agricultural sector in Iran was achieved mainly through the expansion of cultivated areas. This pattern of growth can no longer continue due to the lack of adequate water resources. Therefore, a new strategy for agricultural development should be used with emphasis placed on increasing agricultural land productivity. Second, although, the contribution of technology inputs towards sustainable output growth has been recognized, yield in Iran’s agriculture has generally been rather low. Third, Iran’s agriculture differs regionally due, primarily, to the differences in geographical area, such as climate and natural resources and thus production characteristics.

MATERIALS AND METHODS

The present study is based on secondary data for the last 30 years i.e., from 1970-71 to 1999-2000. In the present study, compound growth rates of area, production and yield for the selected crops for each period were estimated to study the growth in area, production and yield of these crops. Both linear and Compound Growth Rates (CGR), were estimated. Linear rates of growth are found not very convenient for any comparison of growth between two period and two crops. It seems more appreciable to analyze the movement of agricultural crops in terms of compound rather than linear growth rate (Dandekar, 1980). However compound growth rates were used for the study. The Compound Growth Rate (CGR), are usually estimated by fitting a semi-log trend equation of the form.

In Y = a + bt

where, Y is the time series data of production, area and yield of main crops, t is the trend term and a is the constant coefficient. The slope coefficient b measures the relative change in Y for a given absolute change in the value of the explanatory variable t. If we multiply the relative change in Y by 100, we get the percentage change or growth rate in Y for an absolute change in variable t. The slope coefficient b measures the instantaneous rate of growth. We can calculate the compound growth rate r as fallow.

CGR (r) = [antilog b – 1] x 100

The above mentioned equation has estimated by applying OLS method. The t-test was applied to test the significance of b. This equation is generally used on the consideration that change in agricultural output in a given year would depend upon the output in the preceding year (Minhas, 1966; Dandekar, 1980; Singh and Rai, 1997; Deosthali and Chandrahekhar, 2004). Since the performance of agriculture has been affected by widespread drought and climate changes during the period under study, i have calculated the growth rate of area, yield and production based on triennium method.

To measure the relative contribution of area and yield to the total output change for individual crop component analysis model as given below was used. Several research workers used this model and studied growth performance of crops (Bastine and Palanisami, 1994; Bhatnagar and Nandal, 1994; Mundinamani et al., 1995; Gupta and Saraswat, 1997; Singh and Ranjan, 1998; Singh and Asokan, 2000; Siju and Kombairaju, 2001; Kakali and Basu, 2006).

ΔP = AoΔY + YoΔ A + ΔA ΔY

Change in Production = Yield effect + Area effect + Interaction effect

Thus, the total change in production can be decomposed into three effects viz. yield effect, area effect and the interaction effect due to change in yield and area.

The study was restricted to principal crops with the assumption that the excluded crops do not affect the cropping pattern and in turn would not vitiate the main conclusions of the study. The selection of crops for the study was thus dictated by the availability of data. All the important cereals, pulses, total food grains, oilseeds and commercial crops were selected for the present study. Selected crops accounted for more than 80% of the total cropped area. Minor pulses, sugarcane and other crops were not considered for lack of data on these crops. Thus, the study was restricted to principal crops.

The study has made use of data from secondary sources. The time series data on area, production and productivity of these selected crops and input use i.e., net irrigated area, gross irrigated area and fertilizer consumption were collected from the various Government Publications. The entire study period was split into three sub periods to evaluate the impact of agricultural policies on agricultural performance and assess the changes in relative contribution of different factors to the output growth over the period of time. The sub periods are Period I: 1970-71 to 1978-79; Period II: 1979-80 to 1990-91; Period III: 1990-91 to 1999-2000 and Overall Period: 1970-71 to 1999-2000.

RESULTS AND DISCUSSION

Pre-Revolutionary Period (1970-1978)
Table 1 shows the trend in production of main crops in period of 1970-78. Overall production of food grains has increased by 3.8% per annum during the trigennium beginning 1970 to the triennium ending 1978. Among the food grains, rice has recorded the highest growth rate at 4.02%, followed by wheat at 3.93% per annum during triennium beginning 1970 to triennium ending 1978. Among cash crops, potato has recorded the highest growth rate of 10.45% per annum, followed by oilseeds at the rate of 10.09% per year. Production of cotton, which is the major raw materials in Iranian agricultural crops mix, declined from around 5.1 million tones in the triennium beginning 1970 to 4.9 million tones in the triennium ending 1978 at the annual rate of -0.6%.

Growth in yield is the main source of the growth in production of agricultural crops. Table 2 shows the yield of main crops during 1970 to 1978. According to data reflected in this table the yield of wheat, rice and barely increased from 785, 3002 and 663 kg per hectare in the triennium beginning 1970 to 1035, 3736 and 1045 kg per hectare in the triennium ending 1978 at the annual rate of 3.5, 2.8 and 5.9%, respectively. It should be noted that wheat, rice and also barley have been selected because of their predominance in terms of the area under cultivation and as representatives of staple food products. Among cash crops, oilseeds have recorded the highest growth rate of 5.3% per annum. It is clear from Table 1 and 2 that the performance of production and yield per hectare for main food crops such as wheat, rice, sugar beet and oilseeds during the period 1970-77 has been notable. In this regards while the main source of growth for food grains has been yield per hectare that of regarding cash crops was expansion of arable land (compare Table 1, 2). This is obvious from Table 1 that the pattern of growth of cash crops and of food grains and even within cash crops is widely uneven. While the annual growth rate of oilseed is 10.09% that of for pulses and cotton is 1.2 and -0.6% per year, respectively.

Table 1: Production and compound growth rate of main crops (1000 tones)
# Annual compound growth rate based on own estimation, Sources: Ebrahim (1992), Central Bank of Iran (1979 to 2000, Various Reports), Government of Iran, Ministry of Agriculture (2000)

Table 2: Yield and compound growth rate of main crops (kg per hectare)
# Annual compound growth rate based on own estimation, Na: Not Available, Sources: Ebrahim (1992), Central Bank of Iran (1979 to 2000, Various Reports), Government of Iran, Ministry of Agriculture (2000), FAO (1998)

Table 3: Area and compound growth rate of main crops (000 hectare)
# Annual compound growth rate based on own estimation, Na: Not Available, Sources: Ebrahim (1992), Central Bank of Iran (1979 to 2000, Various Reports), Government of Iran, Ministry of Agriculture (2000), FAO (1998)

Given the fact that cash crops cover no more than 25% of the cultivated area and also given the regional concentration of cash crop and also food grains (like rice) productions, the unevenness of the regional growth of agricultural incomes due to this one factor alone must have been considerable. An interesting implication of the above detail is that, even within the crops farming sector itself, the pattern of output and productivity changes was uneven. In particular, the output of rice, wheat and barley, which together cover about three-quarters of the cultivated area, grew more steadily and their yields per hectare increased at significantly higher rates than those of pulses, cotton and sugar beet.

Table 3 reports the total area under cultivation of principal crops during the pre-revolutionary period of 1970-1978. Barley and cotton recorded decline in area as evident from negative rate of growth, however, area under food grains was almost constant. The largest decline in area has been recorded by barley at the rate of -2.24% per annum followed by cotton at the annual rate of -1.27%. A high rate of increase in area for oilseeds could be due to government policy of increasing production through expansion of area under cultivation. Potato recorded highest growth rate at 10.1%, which was evidently contributed by the high profitability from growing potato. While the sugar beet crop recorded significant increase in area, the growth rates of wheat and pulses were too much less. The higher growth in area of cash crops (sugar beet, potato and oilseeds) rather than food grains during this period was due to the fact that Government tried to keep low the prices of staple foods in order to keep low living cost of urban people and industrial workers.

Pre-Economic Reforms Period of 1979-1989

The pattern of growth of annual crops during post-revolutionary period of 1980-2000 is shown in Table 4. During pre-economic reforms period of 1979-89 production of food grains increased from 9.7 million tones in the TB 1980 to 11.9 million tones in the TE 1989 at the annual rate of 2.33%. Among food grains the largest increased has been recorded by barley at the rate of 7.02% per year. Production of cereals (wheat and rice) increased at the annual rate of only 1.04 and 1.57%,respectively. Among non-food grains largest growth has been recorded by oilseed, which was the highest rate in agricultural crops, at the rate of 8.9% per annum, followed by potato and cotton at the rate of 4.3, 3.03% per annum from TB 1980 to TE 1989. The production of sugar beet declined at the rate of -0.03% per annum, mainly owing to a fall in area under cultivation from 169 thousand hectare in 1980 to 149 thousand hectare in 1989.

Table 4: Production and compound growth rate of main crops (selected years)
# Compound growth rate based on own estimation, Source: The Agricultural Data Bank of Iran (2000), Ebrahim (1992), Government of Iran, Ministry of Agriculture (2000), FAO (1998)

Table 5: Area and compound growth rate of main crops (selected years)
# Annual compound growth rate based on own estimation, Na: Not Available, Sources: Ebrahim (1992), Central Bank of Iran (1979 to 2000, Various Reports), Government of Iran, Ministry of Agriculture (2000), FAO (1998)

Table 5 reports the total area under cultivation of annual crops, both irrigated and non-irrigated area during the post-revolutionary period of 1980-2000. During the pre-economic reforms period, total area under food grains increased from TB 1979 to TE 1989 at the annual rate of 1.4%. Among food grains, the largest increase in area has been recorded by pulses at the rate of 6.44% per annum followed by barley at the rate of 3.16%. At the same time, area under cash crops, except sugar beet which declined at annual rate of -0.9% and potato, increased at higher rate rather food grains. Among cash crops, the oilseed has recorded the highest growth rate at the rate of 6.41% per year followed by cotton at the rate of 1.55% per year.

Table 6: Yield and compound growth rate of main crops (selected years) (kg per hectare)
# Compound growth rate based on own estimation, Sources: Ministry of Agriculture, the Agricultural Data Bank of Iran (2000), Government of Iran, Statistical Center of Iran (2003)

Apart from expansion of area which is limited in Iran mainly due to limitation of water resources, another important factor in order to increase the production of agricultural crops is the improvement in yield per hectare. Table 6 shows the trends in yield per hectare in Iranian agriculture during the post-revolutionary period of 1980-2000. According to the data reflected in Table 6 during the pre-economic reform period of 1980-89, yield per hectare of food grains increased from 1096 kg ha-1 in the TB 1980 to 1192 kg ha-1 in the TE 1989 at the annual rate of only 0.9%. Among food grains while the yield of barley has increased at the annual rate of 3.59%, the yield of wheat and rice increased at very low growth rate of 0.5 and 0.32% per year, respectively. Moreover the yield of pulses has declined from 867 kg ha-1 in the TB 1980 to 542 kg ha-1 in TE 1989 at the annual rate of -5.08%. The pattern of growth in yield per hectare within commercial crops is much better than that of food grains. The yield per hectare of potato and oilseed increased at the annual rate of 2.57 and 2.1%, respectively during the TB 1980 to TE 1989. During this period the yield of cotton and sugar beet increased at the annual rate of 1.45 and 0.89%, respectively at the same time.

In sum, despite the government`s efforts during the pre-economic period in order to increase the yield per hectare, in particular in the case of food grains, by mechanization of production by wide utilization of farm machinery in agriculture at subsidized prices and granted loans, investment in agricultural infrastructure (World Bank, 2004), supplying inputs such as fertilizers, pesticides and seeds and pricing policy for several main crops, the yield per hectare did not increase at a reasonable and acceptable rate, particularly in case of food grains.

Post-Economic Reforms Period of 1989-2000

The economic reforms strongly affected the agricultural price policy in two ways. First, the foreign exchange system reforms resulted in increase in the prices of agricultural inputs such as fertilizers, pesticides and farm machinery. While the cost of inputs was kept more or less constant during the 1980s, but when the liberalization policy was introduced in the early 1990, their prices rose (Ali, 2001). Second, the economic reforms resulted in the significant increase and wide changes in the minimum guaranteed prices for agricultural crops.

The major characteristic of agricultural programs during this period (1989-2000) was the effort to equalize prices of domestic agricultural products with those of international markets in order to promote production incentives. However, the actual practice since the beginning of these plans was implementation of a guaranteed pricing system based on the cost of production and a 20% profit margin for the farmers (World Bank, 2004).

The pattern of growth of annual crops during post-economic reform period has shown in Table 4. During post-economic reforms period of 1989-2000 production of food grains increased from 13.2 million tones in the TB 1989 to 14.8 million tones in the TE 2000 at the annual rate of 1.03%. Among food grains the largest increased has recorded by pulses at the rate of 2.96% per year, followed by wheat at the rate of 2.12% per year. Production of barley declined from 3165.3 million tones in the TB 1989 to 2328.7 million tones in the TE 2000 at the annual rate of 2.75%. This was mainly due to widespread drought across country during the period of 1998-2000. During the post-economic reforms period the production of commercial crops has increased at a higher rate than that of food grains. Among non-food grains largest growth was recorded from oilseed (same as in pre-economic reforms period), which has the highest rate in agricultural crops, at the rate of 5.5% per annum, followed by potato at the rate of 5% per annum. Production of cotton increased at the annual rate of 1.08%.

In sum, despite the fact that the Islamic government has declared agriculture as the pivot of development and increased the minimum guaranteed price of major crops during the post-economic reforms period, increase in the production of major crops has not been remarkable. While, based on FAO`s data, the population growth rate during this period was 1.7% per year, the annual growth rate of food grains, rice, wheat, pulses and potato has been 1.03, 1.24, 2.12, 2.96 and 5%, respectively. It should be noted that the low level of growth rate of production has been mainly due to negative growth rate of net sown area during this period.

Table 5 reports the total area under cultivation of annual crops, both irrigated and non-irrigated area during the post-revolutionary period of 1980-2000. During the post-economic reforms period the area under food grains declined at the rate of -1.54% per annum. Among food grains, the largest decline in area has been recorded by barley at the rate of -4.39% per annum followed by wheat at the annual rate of -1.41%. This is mainly due to widespread drought across country after 1998 which declined the area cultivated under wheat and barley from 6180 and 1825 thousands hectare in 1998 to 5101 and 1376 thousands hectare in 2000. The area under agro-industry crops (cotton, oilseed and sugar beet) has increased at the annual rate of 0.48, 2.2 and 1.1%, respectively. Considering the low level of growth rate in area under cultivation during the post-economic reforms period, it seems that improvement in yield per hectare is the main factor to increase the production of agricultural crops.

Table 6 shows the trends in yield per hectare in Iranian agriculture during the post-revolutionary period of 1980-2000. According to the data reflected in Table 6, during the post-economic reform period of 1989-2000, yield per hectare of food grains increased from 1325 kg ha-1 in the TB 1989 to 1745.1 kg ha-1 in the TE 2000 at the annual rate of only 2.5%, which has been much higher than that of during the pre-economic reforms period. Among food grains the largest increase has been recorded in case of wheat at the annual rate of 3.5% followed by barley at the annual rate of 1.4%. The yield of rice also has increased from 3821.4 kg ha-1 in the TB 1989 to 4065.6 kg ha-1 in the TE 2000 at the annual rate of 0.56%. The yield per hectare of potato, cotton and sugar beet declined rather than previous period. Yield of potato increased from 17610.4 kg ha-1 in the TB 1989 to 21748.8 kg ha-1 in the TE 2000 at the annual rate of 1.94%, while that of regarding cotton and sugar beet was only 0.56 and 0.7%, respectively. Among commercial crops the largest growth rate in yield has recorded by oilseeds at the annual rate of 3.2%.

Table 7: Decomposition of growth in production of principal crops (%)
Sources: Own estimation

An examination of the performance of the agricultural sector during the post-revolutionary period indicates that the agricultural crops grew relatively at a low rate (Table 4). Moreover, the growth rate of yield has not also been considerable (Table 6).

Decomposition of Output Growth of Individual Crops
The pervious section presented an analysis of growth in area, production and yield of selected crops in Iran. An analysis of growth in area, production and yield of these crops indicated the general pattern of growth and the direction of changes in area and yield. But this does not evaluate the contribution of area and yield to the production growth. For that, it is necessary to examine the sources of output growth. The growth in output of selected crops was therefore apportioned to the various sources by breaking the change in production into three effects i.e., area effect, yield effect and interaction effect. The relative contribution of area, yield and their interaction to change in production of individual crops is presented in Table 7.

The decomposition analysis of growth of principal crops over period under study in Iran revealed that growth in production of wheat, barley, sugar beet and food grains was mainly on account of change in yield. About 60 to 98.9% growth in crop output was due to yield effect. Production of rice, pulses, cotton, oilseeds and potato, however, increased due to expansion of area. About 56.6 (for rice) to 206.7 (for cotton) percent growth in crop was due to area effect.

During pre-revolution period, increase in output was noticed in the case of wheat, rice and barley which was mainly due to increase in yield. The area effect was the major force of output growth of commercial crops (pulses, cotton, sugar beet and potato), mainly due to shift in cropping pattern in favor of cash crops, whereas yield and area had almost equal contribution to total change in oilseeds. In this period, as evidence from Table 7, the main source of growth in food grains was the yield effect mainly due to supplying modern inputs such as fertilizers, pesticides, farm machinery at subsidized price and granting loans by the government (Ali, 2001; Karshenas and Pesaran, 1995).

During post-revolution period of 1980-2000, while the yield effect was the main source of output growth of food grains, there has been negative contribution of area and yield factors to change in production incase of wheat and barley respectively. Among cash crops, while yield effect turned out to be the most powerful factor for increasing production incase of sugar beet and potato, area expansion was responsible factor to output growth incase of cotton and oilseeds. About 96% growth in oilseeds was due to area effect. During sub-period of pre-economic reforms area effect continued to be the most powerful factor in increasing the production of all the crops except barley and potato in which yield was responsible factor to output growth. The high share of area in increase in production during this period was mainly due to redistribution of land by the Seven-Member Committees which established after Islamic Revolution. It should be noted that area expansion in this period was possible because of implementation of government policy to provide water resources to farmers such as building new dams and expansion of tub wells in area which redistributed by the Seven-Member Committees (Ali, 2001). During sub-period of post-economic reforms while area effect was remarkably negative due to sharp decline in the total area under wheat and barley, yield effect turned out to be the most powerful factor for increasing production of food grains which contributed to 242.7%. This great achievement was due to sharp increase in yield of wheat which in turn was due to implementation of wheat self-sufficiency program. In the case of pulses the yield effect was negative, whereas yield and area had almost equal contribution to total change in rice. In this period growth of productivity was mainly responsible for growth of output of cotton, oilseeds and potato whereas area effect was the main factor of growth incase of sugar beet.

CONCLUSIONS AND POLICY IMPLICATION

From the foregoing discussion, it emerges that the main source of growth in production of main crops, especially total food grains, during the period 1970-2000 has been the growth in yield. It seems that the agricultural price policy, especially after economic reforms, by ensuring the remunerative prices to the farmers and supplying the significant amount of inputs, especially fertilizers at the subsidized prices, has been the most important factor to promote the farmers to increase the production of agricultural crops. Moreover, it is obvious that the performance of agricultural sector was much better during the pre-revolutionary period (1970-1978) than that of post-revolutionary period (1979-2000). Production and yield of total food grains grew during the 1970-78 at the higher rate than that of during the 1979-2000. In this period, the main source of growth in production has been the increase in the yield per hectare. This great achievement has mainly emanated from government support policies by supplying new inputs such as chemical fertilizers and pesticides at subsidized price as well as farm machinery and granting loans. Moreover, among non-food grains, except cotton, production other crops grew at the higher rate during pre-revolutionary period. The main source of growth in this period was area effect. This was mainly due to agricultural policies such as price controls and pricing policy for some staple foods which resulted in shift in cropping pattern in favor of cash crops.

During the post-revolutionary period, the production of total food grains in sub-period of pre-economic reforms (1979-1989) grew at the higher rate than that of post-economic period (1989-2000). Among non-food grains, production of cotton and oilseeds grew at the higher rate during pre-economic reforms period. However, the main source of growth in this period was area effect which was mainly due to expansion of arable land and redistribution of land by the government. Limitation of water resources, which restricted the expansion of arable land, resulted in low growth rate of production of principal crops during the post-economic reforms period. Despite the sharp decline in area under wheat, barley and total food grains, mainly due to shift in cropping pattern in favor of cash crops, increase in production of food grains was remarkable. Therefore, it is obvious that the main source of growth in production of total food grains, sugar beet and potato was increase in yield per hectare. The positive effects of policy reforms by the government on farm efficiency and productivity in the 1990s might have contributed to this structural change.

The decomposition findings have important policy implication for the simple reason that each of the growth components has a limited potential for expansion. For example, the land potential has already been exhausted due to limitation of water resources in Iran. When this potential is exhausted, assuming that current yield trends continue, the growth in crop production will decline after some years. Coupled with a growing population whereby some arable lands would be reduced to accommodation this population, this will imply a decline in per capita production. There is an urgent need to increase crop production, particularly the food grains production which will become inevitable in view of population growth. As such, efforts have to be directed toward further increasing the productivity of various crops. The future policy of the government will have to be cantered on the developing new high-yielding varieties in Iran. Research efforts therefore need to be intensified further to develop high yielding varieties of the crops suitable to agro-climate conditions of the regions.

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