Study of effective factors on rice import in iran

In Iran rice is second only to wheat in the economy. However, Iran is also one of the largest rice importer countries in the world due to its rising population and recent growth in GDP. This paper presents an analysis of a cointegration test between rice import and its effective factors over the period 1984-2009, employing Engle-Granger model. Initially, the Dickey-Fuller test shows that all variables are non-stationary at data level, so their first difference (that are stationary series) are used. Secondly, the Engle-Granger testing reveals the existence of a long-run relationship between rice import and its effective factors including population, rice production, foreign exchange rate and domestic price. Finally, the rice import model was estimated using OLS method, which proves that all independent variables are significant at high levels and the sign of coefficients are consistent with theoretical expectations. The import of rice is positively correlated with population, GDP, domestic price and negatively correlates with foreign exchange rate. With regard to the rising demand for rice, domestic protection such as input subsidy for using high yield varieties and new irrigation system should be considered in order to improve the balance between national supply and demand. Government should also maintain existing trade protection level and take serious actions against money depreciation