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Turkey - Agricultural Policy
By 1980 Turkey was self-sufficient in food, and agricultural output was growing at a respectable rate, albeit more slowly than the economy as a whole. Starting in the early 1970s, crop intensification resulted from a reduction of fallow areas and increased use of fertilizer, fuel, and pesticides. The livestock industry, however, showed little improvement in productivity, and the later years of the decade saw the stagnation of all agriculture. Although production became less dependent on the weather as a result of irrigation and high-yielding varieties of seeds, these methods required adequate supplies of fertilizers, chemicals, equipment, and fuel, much of which had to be imported.
Nearly all farm produce except livestock and fresh fruits and vegetables has support prices, which became more effective when the ministry started announcing them in the fall, giving farmers time to choose which crops would be most profitable. For most crops (except tea, sugar beets, and opium, for which the state is the only buyer), farmers can choose between selling to private buyers or to the state. Supports stabilize crop prices and improve aggregate farm income but add to the disparities of income between large and small farmers. Support prices grew slowly in the 1980s and did not keep up with inflation. However, in the summer of 1991, in anticipation of the forthcoming elections, Özal's Motherland Party government raised all support prices by 60 to 70 percent. Subsequent governments under Demirel and Çiller maintained increases in support prices roughly in line with the high inflation rate. During 1994, however, these increases were not maintained. In addition, the Agricultural Supply Organization provides many farm materials at subsidized prices, including fertilizers, pesticides, and insecticides.
Despite the turn toward liberal agricultural policies, government intervention in agriculture remained pervasive in the mid-1990s. Many of the institutions established between 1930 and 1980 continue to play important roles in the daily life of the farmer, and many old attitudes and practices remain. A large number of ministries, agencies, SEEs, and banks administer government price supports, credit measures, extension and research services, and irrigation projects. In the past, overlapping responsibilities and lack of coordination had often diluted the effectiveness of government activities. Some progress was made in the 1980s, however, when the Ministry of Agriculture, Forestry, and Rural Affairs reorganized its eleven departments into five general directorates. Subsequently, the ministry was divided into the Ministry of Agriculture and Rural Affairs and the Ministry of Forestry.
Productivity shortcomings, along with the new export-oriented development strategy, led to the adoption of different agricultural policies after 1980. Under the new approach, the government switched from promoting food self-sufficiency to maximizing agriculture's net contribution to the balance of trade. The incentive system was partially dismantled, fertilizer and pesticide subsidies were curtailed, and the remaining price supports were gradually converted to floor prices. The tight monetary policy limited agricultural credit, but real interest rates on loans to farmers remained negative. Nonetheless, a high proportion of defaults by farmers occurred on loans with high interest rates. In some cases, this led to the confiscation of land, tractors, or other property by the state, prompting one Turkish daily, Milliyet , to run an article entitled, "Bailiff Officer: The New Lord of the Peasants." The elimination of export licenses and minimum export prices, along with currency devaluation, an export-incentive system, and flat domestic demand, encouraged agricultural exports. In addition, a wider range of food imports was permitted, providing competition for domestic products.
The Agricultural Bank of Turkey (Türkiye Cumhuriyeti Ziraat Bankasi--TCZB) provides most loans to farmers and cooperatives and closely watches agricultural credit. Although the TCZB was intended to favor small farmers in the distribution of credit, its loan requirements restrict credit for the many small farmers who either rent or lack a secure title to land or other properties needed as collateral. Much of the bank's lending consists of short-term loans extended to cooperatives for commodity price support. Farmers also obtain credit from merchants, wealthy farmers, and money lenders, often at extortionate interest rates. Much of the World Bank's lending for agricultural projects in Turkey is channeled through the TCZB.
After 1980 the government reduced budget transfers to agricultural SEEs and decreased the level of price supports, but the state still controlled most markets in the sector. Public marketing agencies and marketing or credit cooperatives administered prices and handled a large share of exports. Several of the SEEs involved in agricultural production had been slated for privatization in the early 1990s. The Meat and Fish Board, the Fodder Industry (Yem Sanayili), and the Milk Industry Board (SEK) were targeted for immediate privatization when they were placed under the control of the Public Participation Administration. However, officials in 1994 stated that they lacked sufficient funds to pay the sizable debts these organizations had accumulated, a necessary step before privatization.
The government's hope of rapidly increasing agricultural exports was slow in materializing, and total values fell sharply in the mid-1980s. This decline reflected both softer demand abroad (especially in the Arab oil-producing countries) and Turkey's own attempts to increase the share of agricultural products processed prior to export. Still, by the early 1990s agricultural exports had risen, with the most dramatic increase occurring in textiles and clothing, which depend on indigenously grown cotton.
Agricultural extension and research services are poorly organized and generally inadequate because of shortages of qualified advisers, transportation, and equipment. Well-trained personnel willing to work in the field are difficult to find, and agricultural research is fragmented among more than ninety government and university institutes. Research is organized by commodity, with independent units for such major crops as cotton, tobacco, and citrus fruit. Observers note that coordination of the efforts of different research units and links between extension services are inadequate. During the mid-1980s, the government attempted to strengthen and rationalize research and extension services, but the organizational complexity of the entities involved made reform difficult.
You can read more regarding this subject on the following websites:
Evaluation of Agricultural Policy Reforms in Turkey - OECD
Turkey Country Studies index
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