The Impact of Guaranteed Price on Response Supply Function for Rice

One of the most important and notable agricultural subjects even in the developed countries is supporting the agricultural sector in different reasons such as food security, increasing the farmer’s income, sustainability of the environment and etc. One of these supportive policies in Iran is guaranteed price that is determined by the government. According to the highconsumption of ricein Iran, Rice is one of the most current and basic daily needing in the country and as a necessary good in commodity basket of Iranian households. The purpose of this study is evaluating the impact of guaranteed price on response supply function for rice in Iran. Therefor we use Auto Regression Distributing Lag (ARDL) approach for the relations. The resultsindicate that the guaranteed price of the rice in short run is the most effective factor on the supply of the rice and in long run,the factor has a slight impact on the supply of the rice in compare with the other variables. Inefficient policies in Iran could be the reason. Also the error correction mechanism has shown that if a shock imposes to the system, the primary equilibrium will be back in less than one year later (about 5 months).

Guaranteed Price, Rice Supply Function, ARDL, ECM