Investigating the effectiveness of government support policies on total factor productivity in rural and pastoral systems of small ruminant husbandry in selected provinces of Iran

The small ruminant husbandry is one of the most important and the most experienced activities in the agriculture sector that this has an important role in the establishment of public health and provision of food security, making employment and also lateral industrial affluence. There are two rural and pastoral systems for small ruminant husbandry in our country. During the last years, the government has been done many efforts for elevating and optimizing the Total Factor Productivity (TFP) of this economic activity. In this context, the purpose of this study was to investigate the effectiveness of the government support policies on total factor productivity in two rural and pastoral systems of the small ruminant husbandry during 1997-2013 in four selected provinces including Lorestan, Kermanshah, Hamedan, and Ilam. In order to estimate the amount of government support, the Producer Support Estimate (PSE) was used based on the indexes of the OECD and so, the TFP was calculated by Divijia Index. Then, the Im–Pessaran–Shin (IPS) unit root test is used to test the stationary of variables in panel data sense and the Pederonic's panel data cointegration test was applied to check existence of the cointegration relationship. The long run relationship was estimated between PES and TFP in both systems by Generalized Method of Movement (GMM) producer in both pastoral systems of small ruminant husbandry in selected provinces of Iran. Also, the Sargan test was carried out. The required data were gathered from Agricultural Bank, Agricultural Organizations, Office of Tribal Affairs, Central Bank of Iran and OECD over 1997-2013. Findings of this study showed that Producer Support Estimate (PSE) in the rural system is more than the pastoral system, because in some way receives more protection of government based on the indexes of the OECD. Ranking of provinces from point of view of government protection in rural system based on the index of PSE is Kermanshah, Hamadan, Lorestan and Ilam and in pastoral system are Lorestan, Kermanshah, Hamadan and Ilam. Also the amounts of the growth rate of TFP based on Divijia index are calculated in both systems. From the point of view of the average of TFP as compared with the base year, 2004 ranking of the selected provinces in case study in rural study include Ilam (100.73), Lorestan (100.4), Kermanshah (100.3) and Hamadan (99.84) and in pastoral system include Ilam (100.89), Kermanshah (100.59), Lorestan (100.54) and Hamadan (10084). Im-Pessaran-Shin (IPS) method was used for determining the stationary of variable in panel data that showed total variable were I (1). Pedronic test was applied for determining of cointegration and showed long-run relationship among variables. Generalized Method of Movements (GMM) was applied for estimating the long-run relationship among endogenous variable (Total Factor Productivity) and exogenous variable (PSE, amount of labor and capital). Findings indicated that amounts of impact partial elastic of the Total Factor Productivity from the producer supporter estimates (PSE) labor force and capitals in rural system were 0.1691, 0.1998, and 0.9269 and in the pastoral system were 0.6190, 0.16 and 1.041, respectively. Thus, the coefficient of effectiveness of government support policies on Total Factor Productivity (TFP) in pastoral system is more than rural system. The reason of pastoral system superiority, from the point of view of the government support policies can conceive in this system characteristic such as less fixed and variable cost, more using of the growth season, concentration producing management, expansion of the market, and efficiency of product's capability in various markets and learning more experiences skill by producers for working skillfully. The results of the study indicated that the factors of productivity and its growth in the rural and pastoral system are low. Also the both systems have empty capacity of production. Therefore, it is suggested that the government made the suitable policies to promote productivity in line with relative advantages and existence capacities. Based on the results, it is suggested that to form a new system by the name of summer migration by integration of these two systems. It is evident that the result of this study can help government support politics’ aim to increasing Total Factor Productivity in this field of activity and at last the increase of international wealth and sources. Since the effect of government support on total productivity factors in pastoral system is less, it is suggested that the amount, composition and timing of government assistance should be improved.