Agricultural Economics

Lecture 6: Turkish Agricultural Policies

Goals of Policy
 From the social goal of saving family farm to the “economic goal
of providing tools by which farm business can reduce risk”
 From the goal of adjusting production to market to the “goal of
expanding demand, remaining competitive, and achieving open
markets internationally”
 From the goal of soil conservation to the goal of “sustainable
production in the utilizaton of land, air and water.
 From the goal of maintaining adequate food reserves into the
goal of “food security, food safety, and homeland security”.
 From the goal of domestic demand expansion into eating wisely
and in moderation
 From the goal of expanding the use of agriculture’s production
capacity to help meet energy needs
The Role of the Economists: Four distinct
approaches used by the economists in policy
analysis
 Scientific approach: Most frequently used in

science journals. Defining the problem,

reviewing the literature, hypothesis, testing
and drawing conclusions.Value judgements
as well.
 Analytical approach: Consequences are

devided into two columns: pro and cons,

advantages and disadvantages, costs and
benefits. Depends on one’s perspective.
 Evangelistic approach: Used to make the case for
particular solution and to crusade for its adoption.
Activists. Most compelling arguments. Opponents as
well. Activists and advocates on both ends of the
farm policy spectrum.
 Educational aproach: Alternatives/consequences
method. Objectivity. Problem clearly defined,
alternative solutions and probable consequences
are analyzed.Emphasizes the consequences of the
alternatives.
Crucial Policy Process Questions

 What is?: Based on scientific and empirical

observations.
 What can be?: Political elements..
 What will be?: Forecast
 What should be?: Value judgements
Goals of Policy Analysis
 Reducing uncertainty and providing
information for decision makers in the
public arena
 As systematic evaluation of the technical
and economic feasibility and political
viability of alternative policies, strategies
for implementation, and consequences for
policy adoption.
Policy Analysis Process
 approach to problems that is logical,
structured, valid, and replicable
 generation of feasible courses of action
 a search for information and evidence of
benefits and other consequences of
courses of action
 in order to help policy makers choose the
most advantageous policy action.
 Evaluating
Alternative Policies or
Programs
Policy Analysis Process
 Ex-Ante  Ex-Post
 (rational model)  (program evaluation)
Evaluating Alternative Policies
or Programs

 Ex-ante evaluation:
projecting future states
with and without policy or
program
Evaluating Alternative Policies
or Programs
 Ex-post evaluation:
 Did policy or program achieve its
objective?
 Was policy or program efficient,
equitable, and politically acceptable?
Policy Analysis
Framework
Policy Analysis. . . .

will involve a
RESEARCH PLAN
RESEARCH PLAN
 Background research:
legislative history
political environment
previous policy efforts
relevant information
RESEARCH PLAN
 Research design:

specification of research objectives

outline of informational needs

specifications of methods to be used

RESEARCH PLAN
 Research implementation:

data collection

data tabulation

results presentation

 Conclusions and recommendations

Turkish Agricultural Policies
 Turkish agricultural policy dates back to 1930s.
Protectionist policy.
 In certain periods, in 1980-1984 and again in 2001,
there has been strong reduction in support and
protection.
 Since 2001, mainly under pressure from IMF and
WB, some important changes have been
introduced. ARIP project
 Policies dealing with food safety and quality.
 Rural development policies as well..
 Policy process:
 Interest groups:
 Government and leading party. Granted market
power to SMEs and the cooperative unions.
MARA; Ziraat Bank; ASCs
 Number of SEEs. E.g. Türkşeker, Tekel, TMO
nearly full market power
 Agricultural sales cooperatives (ASCs). 16 unions.
 Chambers of Agriculture; semi public institutions
 Functioning of Agricultural Policies
 Closed and domestically oriented sector
 Policy was strongly supportive to agriculture via
price supports and input subsidies
 Gradual increase of real budget outlatys
 Strong protectionist policy – however declining
trend in output and GVA of agriculture.
 Price support
 Input subsidies were two important parts of
Turkish ag. Policy.
 The development of rural areas and agriculture has
been impeded by heavy government intervention in
the sector – often counterproductive.
 Trade controls, government procurement, strong
government involvement in marketing, input
subsidies and heavy investment in irrigation
structure on a fully subsidised basis have created a
net inflow of resources from the government to
agriculture..
 State budget, and implicit transfers from consumers.
 ASC/ASCU
 Law to implement ASCUs for government
programs rather than member owned
cooperatives.
 Dominance of government control prevented
the ASCUs from developing as organisations
providing services for their members.
 Inefficient system for the ASCs.
ARIP
 IMF and World Bank promoted major change
in macroeconomic and agricultural policies as
part of recovery package.
 Reduction of Price support
 Restructring SEEs and ASCUs
 Decrease input subsidies
 Introduction of direct income support
 Restructuring agricultural production
 Observibg effects of policy changes in a
household survey
Reduction of Price Support

 Phasing out of price support. Linking up to

world market prices and reducing import
tariffs.
 Procurement payments have been reduced.
Some reduction in export tariffs. Not all
export subsidies were abolished.
 Price supports are short term. Easier than
institutional changes.
Restructuring

 SEEs. Complete resstructuring of SEEs by

either privatisation or discontinuation.
 State owned organisations still exist and
many restructuring steps still remain to be
taken.
 Water, seed, and pesticide subsidy still exist.
Decrease Input Subsidies

 Abolution of fertilizer subsidy, reduce seed

pesticide and water subsidy. Reduce credit
subsidies.
 Fertilizer subsidies reduced..
 Water, seed, and pesticide subsidy still exist.
Introduction of Direct Income Support

 Small delay due to land registration problems

 Slow payments due to delays in registration
system.
Restructuring Agricutural Production

 Relocating hazelnut and tobacco production.

 However, not successful.
 Destroying capital goods for financial
compensation is difficult with high inflation
rates and free rider behavior.
Notes from:
SCREENING CHAPTER 11
AGRICULTURE and RURAL DEVELOPMENT
AGENDA ITEM 1: TURKISH AGRICULTURAL
POLICY (January 23-26, 2006).
 Some Major Policy Documents:
– Five-Year Development Plans;
– Annual Programs
– Government Programs
– 2000; Agricultural Reform Implementation Program
(ARIP);
market orientation
– Agricultural Strategy Paper (2006 – 2010); EU
Accession and WTO Reform Process
further market orientation
 Policy Making Bodies:
1) Ministry of Agriculture and Rural Affairs (MARA)
2) State Planning Organization (SPO)
a) High Planning Council
b) Money-Credit Coordination Council
3) Undersecretariat of Foreign Trade
4) Undersecretariat of Treasury
5) Committee on Restructuring and Support in
Agriculture
Some Policy Tools and Instruments
 Market based policies
• Market Regulation; SEE’s, ASC’s
• Agricultural Insurance
• Support Schemes
• Rural Development Activities
 Structural Measures (e.g. Land Consolidation)

• Research and Extension Programs

• Foreign Trade Mechanisms
• Producer Organizations
Traditional Policy

 Objectives;
a) self-sufficiency
b) import substitution
c) rural development
d) nutritional level
e) raw material supply for industry
Instruments
 a) market stabilizationintervention (1932 –

2001)
 b) input supply

 c) credit supply
Agricultural Reform Program - 2000

 1-Abolition of administered prices

 2-Abolition of input and credit subsidies

 3-Restructuring of agricultural SEE’s and

agricultural
 sales cooperatives

 4-Introduction of DIS Scheme

 5-Restructuring of agricultural production

Basic Objective: Market Orientation

2006-2010 Agricultural Strategy
Paper:
 Objectives and Priorities (in line with the EU
Accession and WTO-AA):
1. Sustainable development, product quality
2. Food security and safety
3. Competitiveness of agricultural holdings
4. Agricultural markets and marketing
5. Rural development
6. Producers’ organizations
Support Schemes in the Strategy
 1) Direct Income Support
 2) Deficiency payments
 3) Livestock supports
 4) Rural development supports
 5) Alternative crop support
 6) Crop insurance premium supports
 7) Environmentally based agricultural land protection
 support (ÇATAK)
 8) Other supports
Common Elements in CAP Reforms and
Policy Change in Turkish Agriculture
 a) Basic reasons;
External: WTO Reform Process
Internal : Efficiency, Taxpayer and Consumer
Concerns
 b) Overall Sectoral Change;

Market Orientation,
Higher Competitiveness
 c) New Objectives; food safety, environment, rural
development
 d) Procedural; Registration and Control Mechanisms
 AGRICULTURAL PAYMENTS UNDER THE BUDGET
Agricultural payments covered under National Fiscal Budget are;
 • Payments for General Services
 • Operating Expenses
 • Investments (related with annual investment program) and
 • Agricultural Support Payments

Agricultural payments, which are explained in detail in the

 presentation for State Aids, are dispersed between the budgets
of three
 different institutions:
 • Ministry of Agriculture and Rural Affairs (MARA)
 • Ministry of Environment and Forestry (MEF)
 • Undersecretariat of Treasury (Treasury)

Main agricultural supports are placed under MARA and Treasury