Production of animal protein has a major role in the human nutrition and health and a large share of economic value-added in agricultural sector. Given the importance of dairy industry, it is essential to determine the positive and negative impact of Iranian Subsidy Reform Plan (ISRP). The aim of this study is to analysis the temporal effect of ISRP in 2009 and 2011 on dairy farms. Data was collected from a survey of 65 members of Isfahan Industrial Dairy Farms Cooperation through face-to-face interviews based on a structured questionnaire. The calculation method of efficiency, productivity and comparative advantage respectively are data envelopment analysis (DEA), Malmquist index and policy analysis matrix (PAM). The results indicate a decrease and an increase in the technical and allocative efficiency of farms. In spite of the increasing input prices, the dairy farms still have a comparative advantage in production. Furthermore, assessing the farmers' willingness to continue working in this business shows a loss of interest after implementing ISRP. In order to improve the dairy farm profitability and the farmer’s motivation, it is important to removal of the output price distortions and enhancing farmers' access to input markets . Key words: subsidy, dairy farm, efficiency, productivity, comparative advantage
