Sustainable Agriculture and Agribusiness in Iran

Inhaltsverzeichnis

1. Frontmatter

2. Chapter 1. Introduction to Sustainable Agriculture and Agribusiness in Iran

   Masoomeh Rashidghalam

   Abstract

   Iran is a transitional society in which the agricultural sector has an important role to play in meeting basic needs of society. The country requires a dynamic and sustainable move for optimizing the available resources and increasing the quality and quantity of agricultural products with an emphasis on maintaining or enhancing the quality of these resources. Considering the importance of sustainable agriculture in Iran, this book examines different aspects of this issue in the country. The core purpose of editing this book is to identify situations and problems of sustainability in Iran’s agricultural sector. This volume is a collection of ten selected empirical studies on agricultural economics and agribusiness of Iran. Chapters of this volume are grouped into three domains: risk management and climate change; natural resources and environmental economics; and agricultural prices and commodity market analysis. The studies talk about main challenges of Iran’s sustainable agriculture and agribusiness and suggest policy recommendations to decision makers and government agencies.

3. Risk Management and Climate Change

   1. Frontmatter

   2. Chapter 2. Agricultural Risk Management Through Weather-Based Insurance in Iran

      Esmaeil Pishbahar, Sahar Abedi, Ghader Dashti, Ali KianiRad

      Abstract

      Agricultural production is inherently a risky business. Farmers face a variety of risks and natural disasters such as weather risks, pests, and plant diseases. Risks are inevitable but are also controllable. One effective risk management tool is agricultural insurance. However, traditional insurance plans have some problems such as high transaction costs and asymmetric information challenges such as moral hazard and adverse selection. Therefore, in this study weather-based crop insurance (WBCI) is presented for rainfed wheat as an efficient approach for risk management as it does not have the problems of traditional insurance. We collected details of weather variables (e.g., temperature and precipitation) and yields of rainfed wheat (‘Sardari variety’) during the period 1987–2013. Of late, the vine copula functions have been very successful in the dependence structure for measuring and expressing joint distribution functions. We measured the dependence structure between weather indices and wheat yields using the vine copula functions; we also calculated the indemnity function and premium amounts. Our results show that the D-vine model is better than the C-vine model for describing joint distribution. Hence, we used this model to compute the premium for rainfed wheat. The premium was calculated in four levels of coverage (50, 80, 90, and 100%). Our results show that its amount at the 80% coverage level was 588,320 Rial. The computing premium in WBCI is less than current insurance premium which is reasonable.

   3. Chapter 3. Determining Conditional Value at Risk (CVaR) for Food Industry Companies’ Stocks Portfolios in the Tehran Stock Market

      Sahar Abedi, Esmaeil Pishbahar

      Abstract

      The main objective of this study is determining the value at risk (VaR) and conditional value at risk (CVaR) of food industry companies’ stock portfolios on the Tehran stock market. The application of traditional tools in VaR and CVaR estimations is limited, especially when the returns show extreme and time-varying behavior. Therefore, we applied the DCC-GHARCH-EVT model to capture the tail distribution of portfolio risks and time-varying behavior. In addition, we used the Vine copula to describe the dependence structure between dairy and sugar portfolios’ returns. Based on the simulation method, we measured VaR and CVaR to determine the two portfolios’ risks. Our results show that the returns are dependent and that the two markets experienced extreme events. The sugar portfolio’s returns were more volatile, and extreme losses were more likely than extreme rewards in this portfolio. In addition, the VaR and CVaR results also indicate that the dairy portfolio is less risky as compared to the sugar portfolio.

   4. Chapter 4. Assessing Climate Change Impacts on Land Use in Iran: The Spatial Fractional Multinomial Logit Modeling Approach

      Khadijeh Alefi, Mohammad Ghahremanzadeh

      Abstract

      This study assesses the effect of climate change’s variables on the land share of annual crop groups including cereals, legumes, vegetables, cucurbits, forages and industrial crops in Iran. We analyzed four climatic parameters—temperature, precipitation, wind speed and humidity. The study also estimates two spatial fractional multinomial logit models using agronomic and climate data from 336 counties for two periods, 2006–2007 and 2012–2013. Our results show that the crop groups responded to climate change and this response has increased over time. This increase is more obvious in temperature changes. For example, in 2006–2007, temperature changes only impacted legumes’ land share, while in 2012–2013 it impacted all types of crops except industrial crops. This is because changes in climate have accelerated in recent years and farmers are also more aware of these changes through observations, the media and other communication channels. It is expected that with continued climate changes in the future the agriculture sector’s response to these changes will include changing the land share of different crops, thus changing their production. Therefore, we recommend predicting farmers’ responses to climate change in various scenarios and providing the basics for necessary policies through a comparison of potential production levels and the nutritional needs of society in the future. Moreover, since this study only focuses on land allocations between annual crop groups, it is recommended that other studies be done which consider the effects of climate change on land allocations in other agricultural sub-sectors such as horticulture and livestock.

4. Natural Resources and Environmental Economics

   1. Frontmatter

   2. Chapter 5. Estimating the Non-use Values and Related Compensative Surplus of Arasbaran Forests in Iran: An Application of the Choice Experiment Method

      Maryam Haghjou, Babollah Hayati, Esmaeil Pishbahar, Morteza Molaei

      Abstract

      Given the importance of forest resources and the fact that a significant part of the value of natural resources including forests, is their non-use value, this study estimates the non-use value of Arasbaran forests in Iran using the choice experiment technique. We employed data from 334 visitors and citizens in ten cities in three provinces of Iran: East Azerbaijan, Wes Azerbaijan, and Ardabil. These were chosen using the two-stage cluster sampling method. Our results show that the total non-use value of Arasbaran forests is about 1704.199 billion rial (about 40.57 million USD) in which 76% is the “option” value and 17 and 7% are existence and bequest values, respectively. Moreover, the results of the estimation of compensating for the surplus non-use value show that this would be worth about 16038182 rial (about 381.86 USD) per month. Our results also show that factors like respondents’ educational levels, income, number of annual visits, and favorable attitudes toward Arasbaran forests, have positive and significant effects on their willingness to pay (WTP) for the non-use value of the forests. The results of this study can serve as a guideline for decision makers and for planning forest protection programs which can help attract public participation in the conservation and sustainable use of this valuable natural resource in Iran.

   3. Chapter 6. Optimized Reservoir Management for Meeting Conflicting Stakeholder Preferences: Methodological Innovations with Evidence from Iran

      Omid Zamani, Hemen Nader, Masoomeh Rashidghalam, Frank A. Ward

      Abstract

      An ongoing challenge the water policymakers facing is to allocate water supplies controlled by reservoirs among competing uses. Despite many methodological advances in recent years, there is little agreement on the best method to meet the water demands of competing stakeholders. This study aims to fill that gap by the development of a multi-objective model defined as simple maximization of discounted net present value while meeting a minimum food and water security objective. In this region, as other part of Iran, irrigation is the largest use of water, followed by domestic use. Since the 1990s, Urmia Lake Basin containing the Mahabad Dam and reservoir has experienced a series of water shortages. Therefore, water distribution between different users has become more challenging for policymakers. The results of this study showed that the economic value of water for irrigated agriculture has major influence on the most economically efficient method to allocate reservoir water. Nevertheless, food security goals have an important influence on reservoir allocation. The optimized cropping pattern showed that the price of wheat cultivation was an important determinant of how reservoir water should be allocated for improved economic efficiency.

   4. Chapter 7. Willingness to Pay for IPM: An Application of the Heckman-Copula Approach

      Esmaeil Pishbahar, Javad Hosseinzad, Sahar Abedi, Pariya Bageri

      Abstract

      Integrated pest management (IPM) is a product protection system that is used for coordinated sustainable agriculture development. This paper uses the Heckman-copula approach to study Iranian farmers’ willingness to pay for IPM. IPM, which matches sustainable agriculture, is one of the best ways of protecting agricultural products. Therefore, the application of IPM can minimize the negative impact of pesticides on human beings and natural resources including wildlife. Heckman-copula is an efficient method to cope with the invalid assumption of joint normality in the maximum likelihood estimation of the sample-selection model. The copula approach frees us from this wrong assumption, so we can select appropriate marginal distribution for error terms in selection and outcome equations leading to more reliable results. The results of our study show that the logistic distribution of the selection equation and student’s t-distribution for the outcome equation are suitable. Moreover, the number of used IPM operations and knowledge of chemical pesticides’ risks have a positive and significant effect on the probability of WTP for IPM to avoid the negative effects of pesticides.

5. Agricultural Prices and Commodity Market Analysis

   1. Frontmatter

   2. Chapter 8. Testing the Law of One Price Under Nonlinearity: An Application to Iranian Broiler and Egg Markets

      Mohammad Ghahremanzadeh, Fatemeh Faryadi, Ghader Dashti

      Abstract

      This study tests the validity of the law of one price (LOP) in Iranian broiler and egg markets. It uses daily retail prices in West Azerbaijan, East Azerbaijan, Ardebil, Tehran, and Zanjan provinces for the period 2006–2014. Our results confirm the existence of nonlinear behavior in the different series. Emmanouilides and Fousekis’s (Agric Econ 43(6):715–723, 2012) nonlinear unit root test, which is an auxiliary regression for the ESTAR model, shows that both broiler and egg markets are well integrated and LOP holds in all market pairs. For the broiler market, a strong version of LOP holds for Tehran-West Azerbaijan, Tehran-Ardebil, Tehran-Zanjan, West Azerbaijan-Ardebil and the West Azerbaijan-Zanjan pairs, and a weak version of LOP holds for the Tehran-East Azerbaijan and West Azerbaijan-East Azerbaijan pairs. In the egg market as well, a strong version of LOP holds for all market pairs except for Tehran-Ardebil. Hence, the study recommends that managers and policymakers need to be careful while adopting stabilization policies and market management for these two products because the related markets in the other provinces are integrated and the effects of these policies in each province will influence producers and consumers in all the other provinces as well.

   3. Chapter 9. Assessing the Relationship Between Marketing Mix and Customer Satisfaction: Evidence from Iranian Dairy Companies

      Esmaeil Pishbahar, Roya Ferdowsi, Babollah Hayati

      Abstract

      The aim of this study is threefold: identifying the effective factors of customer satisfaction with dairy products based on marketing mix elements, using the DEMATEL-ANP integrated techniques to determine the relative importance of each of these factors and using the TOPSIS to rank seven Iranian dairy companies based on the level of their customer satisfaction. We collected data from 500 dairy products’ consumers in Tabriz County. Our results show that the product and promotion criteria were ‘effective’ and between them, the ‘product’ criterion had a greatest impact on the other criteria, while the price and the location criteria were the ‘affected’ criteria. Also, the sub-criterion ‘product diversity’ in the product criteria, the ‘appropriate price’ sub-criterion in the price criteria, the sub-criterion ‘coordination of the distribution channel and timely delivery’ in the criteria place and the sub-criterion ‘advertising and promotional and incentive measures’ in the criteria promotion were more important. The results following the TOPSIS method show that PEGAH Company got the first place based on customer satisfaction, while MIHAN and KALE were in the second and third places. RAMAK, KOHSARAN, SUTICH and PAK were ranked next in terms of customer satisfaction.

   4. Chapter 10. Testing for Neutrality and Super-neutrality of Money: Evidence from Iran’s Agricultural Sector

      Esmaeil Pishbahar, Zahra Rasouli

      Abstract

      This study uses the Fisher–Seater (FS) approach to test long-run neutrality (LRN) and long-run super-neutrality of money (LRSN) in Iran. The data used is quarterly real and nominal GDP, real and nominal agricultural product, and M2 for 1988–2008. The data was collected from the Central Bank of Iran. To formulate LRN and LRSN and to extract the restrictions required by them, the study first introduces the long-run derivative. FS assumes a log-linear bivariate system of the stationary and invertible ARIMA models. To use the FS approach, the integration order of variables should be known. Hence, the study uses different unit root tests (DF-GLS, ADF, KPSS, and HEGY). In addition, it also does the Zivot-Andrews test, which includes a structural break in the data. The results show that M2 is neutral with respect to real GDP and real agricultural output. However, for nominal agricultural output, neutrality of M2 is rejected. The neutrality results for the nominal GDP vary depending on the unit root test’s results. The findings indicate that the super-neutrality of M2 is confirmed with respect to real GDP.

   5. Chapter 11. Effects of Oil Prices and Exchange Rates on Imported Inputs’ Prices for the Livestock and Poultry Industry in Iran

      Esmaeil Pishbahar, Parisa Pakrooh, Mohammad Ghahremanzadeh

      Abstract

      Iran’s agricultural sector has bilateral relations with world markets because it is an exporter of major products and it is an importer of inputs for its poultry and livestock industry. It is clear that due to the large volume of such exchanges the sector is influenced by global prices and global developments. After the ‘2000s Energy Crisis’ or the ‘Third Oil Crisis’ started in 2003, the intensity and type of relationships between oil prices and exchange rates in many countries changed and affected world prices, especially in the agricultural sector. Iran’s poultry and livestock industry has also been impacted as this sector is an importer of most of its inputs. Therefore, this study examines the correlation between oil prices and exchange rates with input prices for the livestock and poultry industry for two periods 1995–2004 (pre-crisis) and 2005–2014 (post-crisis), using the Vine copula ARIMA-MGARCH approach. The results show that due to a change in the intensity and type of correlation between oil prices, exchange rate, and inputs in the second period as compared to the first period, inputs had a positive and high correlation with oil prices and a negative correlation with the exchange rate. Therefore, imported inputs in the poultry and livestock industry were impacted by global developments, the starting of the shocks in oil prices due to the 2005 Iraq–US war, the ongoing global financial crisis, and the increase in global prices for agricultural inputs.

6. Backmatter