Agricultural and Rural Economics

Agricultural and Rural Economics

Explaining the Consequences of Exchange Rate Policies Misalignment on the Government's Support Indicators for the Pistachio Crop in Iran

Document Type : Original Article

Authors
1 PhD graduate, Department of Agricultural Economics, Faculty of Agriculture and Natural Resources, University of Tehran. Iran
2 Professor, Department of Agricultural Economics, Faculty of Agriculture and Natural Resources, University ‎of Tehran. Iran. ‎‏
10.30490/etr.2026.367631.1076
Abstract
Various policies have been adopted in Iran to support the agricultural sector, and their ‎evaluation has important policy implications. This research examines how these policies are ‎affected by macroeconomic policies, especially exchange rate policy. In Iran, various ‎exchange rate policies have been implemented, which has resulted in the misalignment of ‎the real exchange rate from its equilibrium value. In this research, the effects of the ‎exchange rate misalignment on the indicators of support for producers and consumers of ‎pistachio crop in order to analyze the government's support plans for the agricultural sector ‎in the first to sixth economic development plans. To calculate the exchange rate ‎misalignment, first, the equilibrium exchange rate was estimated using the vector error ‎correction model (VECM) and the real exchange rate was calculated based on the theory of ‎purchasing power parity. Then the effects of exchange rate misalignment on pistachio crop ‎support values were investigated. The findings of the research show in no year has the real ‎exchange rate been on the path of balance, and the application of different exchange rate ‎policies has caused it to be overvalued in some years and undervalued in other years. Other ‎results of the research showed that the policies of Iran's agricultural sector, based on the real ‎exchange rate and its equilibrium value in supporting producers through the pricing of ‎agricultural inputs and outputs and the regulation of exchange rate policies, have been ‎unsuccessful. The interests of pistachio consumers have been taken into account instead of ‎the interests of producers, leading to suppressed led to prices and hidden taxes in from ‎producers. However, the period under review has been accompanied by social pressure from ‎the activists of the agricultural sector, sectoral and exchange rate policies with the aim of ‎reducing hidden taxes from farmers. According to the findings of the research, it has been ‎suggested to review the way of applying the specific policies of the agricultural sector and ‎to improve the support of the beneficiaries of this sector, estimating the support of the ‎government's agricultural sector, the equilibrium exchange rate that shows Iran's long-term ‎balance and competitiveness should be considered and put on the agenda of policy-makers.‎
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