Socio-Economic Evaluation of Replacing Wheat Cultivation with Saffron (Case Study: Halilrud Riverside)

 
Introduction: Kerman Province is one of the most important agricultural hubs in Iran. However, in recent decades, it has faced a growing water scarcity crisis due to severe declines in rainfall, falling groundwater levels, and excessive extraction of water resources. This crisis has had significant impacts on agricultural productivity, food security, and the livelihood sustainability of rural communities, particularly in regions like the Halilrud Riverside, where the local economy heavily depends on agriculture. Traditional cultivation of high-water-consuming crops such as wheat, which have relatively low economic value compared to potential alternatives, is no longer economically or environmentally viable under these conditions. Saffron, on the other hand, as one of Iran’s most valuable agricultural products, is a promising and strategic substitute for water-intensive crops. Its low water requirements, suitability for semi-arid climates, resistance to environmental stress, and potential for value addition throughout the production chain make it a favorable option. Since in today's world, agriculture is no longer viewed simply as a traditional livelihood activity, but rather as a strategic economic sector that plays an important role in sustainable development, food security, and income generation for rural communities; in this regard, economic and social analysis of cultivation patterns, especially in areas with limited water resources and specific climates, becomes doubly important. Therefore, this study evaluates the socio-economic feasibility of substituting wheat cultivation with saffron in the Halilrud Riverside.
 
Materials and Methods: The Policy Analysis Matrix (PAM) method was employed for this research; a practical tool used to analyze comparative advantage and assess the impact of government support policies and interventions on the profitability of agricultural production. PAM allows comparison between private (market) prices and social (shadow) prices, providing precise economic indicators. Data were collected through structured questionnaires, in-depth interviews, and field studies. The target population included two main groups: wheat farmers in the Halilrud region and saffron growers in Dashtkhak, a village in Zarand County selected due to its similar climatic conditions. Data collection focused on production costs, yields, market prices, input use, labor wages, and received subsidies. The economic indicators were calculated using PAM models in Excel. Additionally, sensitivity analysis was conducted regarding exchange rate fluctuations to assess the resilience of saffron profitability under economic uncertainty and enhance the generalizability of results.
 
Results and Discussion: The findings indicate that saffron has a clear economic comparative advantage in the study region, while wheat does not. Wheat production without government support leads to financial losses in the free market, making it economically unsustainable. Conversely, saffron demonstrates strong profitability under both private and social pricing scenarios, confirming its economic sustainability. Sensitivity analysis revealed that the breakeven exchange rate for saffron is IRR 319,500, underscoring its relative stability against market volatility. From a social perspective, expanding saffron cultivation could increase household incomes, reduce unemployment, and prevent rural-to-urban migration. Environmentally, the transition to saffron significantly reduces water consumption compared to wheat, aligning with sustainable resource management goals.
 
Conclusion: The results of this study clearly show that replacing wheat with saffron cultivation in the Halilrud Riverside is more economically viable. Saffron offers high comparative advantage and can thrive in competitive markets without the need for government subsidies, while wheat production is not economically justified without state support. Accordingly, agricultural policymakers are advised to adopt a comprehensive, multidimensional strategy to facilitate the sustainable development of saffron farming. Key recommendations include providing technical training for farmers, offering low-interest agricultural loans, strengthening market and processing infrastructure, and implementing smart, targeted support policies to ease the transition. Finally, successful implementation of this crop substitution policy requires inter-institutional coordination among the Ministry of Agriculture, regional water authorities, agricultural banks, private sector stakeholders, and local institutions. Only through such integrated efforts can the shift toward saffron cultivation occur in a gradual, realistic, and sustainable manner.