Investigating Effects of Gauranteed Purchasing Policy on Land Cultivations and Yields of Cotton, Potatoes and Onions in Fars Province

Evaluating different aspects of government policy in terms of their indirect and welfare effects has been always of interest. In this study, the effects of gauranteed purchasing policy on land under cultivation and yields of cotton, potatoes and onions were investigated in Fars province. For this purpose, a Nerlove model was applied to time series data of 1972-02 after testing their stationary to estimate the cultivated lands and yields functions of these products. The use of protection rates as explantory varrables is one of the interesting characteristic of such a model. Although the results were not similar for all the products, the indication is that the policy has not had significant influence on the land areas and yields of cotton, potatoes and onions. However, taking into account that the policy has been recentely commenced in Fars, and that the policy takes time to become effective, the policy may result in different outcomes in the long run.