Transformation of Agriculture in Turkey
Gökhan Dilek
Canan Satır
Beste Gün Aslan
Melis Semerci
Rüveyda Nur Arslan Candas Torun
AGENDA
- An overview
- Historical development of agriculture in Turkey
- Future expectations in Turkish agriculture
Long-term trends in Turkish agriculture since 1870
During the period between 1870-2000;
-Total agricultural output in constant prices increased
about nine times
-GDP per capita increased about six times
Agricultural development in Turkey
It would be best to examine between the years 1870-2000 in two subperiods, before and after 1950;
Before;
After;
Despite the scarcity in agriultural techniques
and the large disruptions caused by both the
First and Second World Wars
Rate of growth of agricultural output initially
rose above 3 per cent per year
The growth of agricultural output from 1880
until 1950 at an annual rate slightly above 1
per cent
Mostly due to the expansion of inputs, land
and labour
Thanks to
-Marshall plan
-The introduction of high yielding varieties of
seeds, fertilizers, irrigation, agricultural
machinery and equipment (tracktors)
Two Main Issues Regarding Agriculture
Whole historical development of agriculture in Turkey can also be discussed around
these two main issues;
1. Scale of the production units
Small scale family businesses or large scale “professional” firms?
1. Creation and transformation of agricultural surplus
Via taxation or internal terms of trade between sectors?
Historical Development of Turkish Agriculture
There are 6 main periods that are needed to be examined;
- The Early Republic: 1923-1929
- The Great Depression: 1929-1939
- Second World War: 1939-1945
- First and Second Republic: 1946- 1976
- Fall of the Second Republic and Third Republic: 1977-1988
- 1989 and onwards
The Early Republic: 1923-1929
-Principle agricultural product is wheat, thus the pace of agriculture was set by wheat
production
Why?
-It is suited to Turkish growing conditions
-urgently needed by Turkish postwar economy
The Early Republic: 1923-1929
Technology in Agriculture;
Rain-fed cultivation
-using animals for draft power
-human labor
-unimproved land
WHY?
Traditional technology was
sufficient to support
agricultural expansion from
1923 to World War II
It actually helped because revival of production
after 1923 did not have to wait upon new capital
or the inputs of nonexistent sectors
The Early Republic: 1923-1929
4 main developments that help agricultural production flourish;
-Abolishment of Ashar in 1925 : since farmers do not have to give 1/10 of their harvest
to state any more, there is an incentive for farmers to produce surplus for the market
-Improvement of transport infrastructure ( railway extensions)
-Transport pricing is changed so that farm products could reach coastal markets
-Government support such as the expansion of credit to farmers through the stateowned Ziraat Bank
Debate over Ashar Tax
*The abolishment of Ashar was a critical decision in 1925, considering 22% of total
government revenues in 1924 is financed by Ashar Tax. After abolishment, the burden
of taxation has levied on basic consumption goods of urban consumers.
**There is also another line of reasoning in terms of this tax:
As the abolishment of Ashar had left the agriculture sector out of taxation, causing
industrialization process to be lack of accumulated capital. Thus, it would be
reasonable not to abolish it completely but implement it after reforming it. However,
during the Great Depression years, due to internal terms of trade, there were
favourable conditions for industry to accumulate capital.
The Great Depression: 1929-1939
Great depression (1929) hit Turkish
economy, the terms of trade turned
against agriculture
Government’s price supports were of
little avail
Peasants did not react by producing
less because other alternatives were
not developped
1929-1939
Effects of Great Depression;
-The sharp decline in the prices of agricultural commodities
-Prices of wheat and other cereals declined by more than 60 per cent and remained at
those levels until the end of decade
-Prices of the leading export crops (tabocco, raisins, hazelnuts and cotton) also
declined by around 50 per cent
The result was a sharp decline in the real incomes of agricultural producers
1929-1939
1929-1939
1
Availability of marginal
land
Despite the sharp
deterioration of the
intersectoral terms of trade,
there is still an increase in
agriculture output during the
period.
Thanks to
2
Demographic recovery of
the countryside after a
decade of wars lasting
until 1922
1929-1939
-Farmers responded to the lower cereal prices after 1929 by working harder to
cultivate more land and produce more cereals in order to reach certain target levels of
income
-Increases in land under cultivation per household and per person in the agricultural
labour force would support this explanation as well as the argument for the
demographic and economic recovery
Second World War: 1939-1945
-Weak GDP growth combined with high inflation rates
-Increase in wartime defense spending
-The negative effect of withdrawal of manpower for army on agricultural
production
-Weakening of world relations due to war negatively affected exports and
imports
-Negative growth rates for most of the 1940s ⇒ Agricultural sectors in
economic slump
1939-1945 Legislations on Agriculture
-Milli Korunma Kanunu(1940): introduced forced labor, compulsary sales of
agricultural products to the state, money tax. Agriculture was the sector most heavily
affected
-Agricultural Produce Tax Act (1943): “Revival of ashar”: in kind taxation of almost all
kinds of agricultural products, (cereals and legumes 12%, others 8%.) After the
implementation of tax act, 10% for all agricultural products
These repealed after 45, and state began to apply policies in favor of rural population
such as:
-Land Reform (1945-73)
First and Second Republic: 1946- 1976
-Increased attention paid to agriculture in development policies
-New factors were appearing on the economic scene
Military and economic aid to Turkey
by the United States (Marshall Plan)
An increase in the flow of
resources available
Very favorable weather conditions
prevailing between 1948 and 1953
An unprecented expansion in
agriculture
1952 Nato Membership (Korean
War 1950-1953)
Increase in Turkish
agricultural exports
First and Second Republic: 1946- 1976
Marshall Plan;
-Of the total $184.5 million dollars supplied between
the years 1948 and 1952, $38.282 million was
reserved for the agricultural sector
-The aids brought about a number of significant
contributions;
agricultural mechanization
the farmers’ taking over the modern agricultural
production techniques
Turkey received a total of $184.5 million dollars as part of the Marshall Aids between the years of
1948-1952.
The received aids particularly encompassed agriculture, transportation, security,
mining and private sector.
-These funds were particularly implemented
for mass motorization in agriculture
-A significant amount of the Marshall Plan
Aids was invested in the infrastructures of
public works and transportation.
-This helped the agricultural production to
reach the markets, and thus had an indirect
impact on the development of the agricultural
sector
Marshall Plan (1948-1952);
Thanks to the developments in the agricultural sector;
-The proportion of agricultural sector in gross national product was 38.4% in
1947, it rose to 45% in 1953.
-The per capita income increased 28% in this four years period
Fall of the Second Republic and Third Republic: 1977-1988
Import substitution period required higher internal demand
However, in order to achieve export-led growth, internal demand should be repressed
and cheap production should be achieved for global price competitiveness
The export-led growth path consists of wage suppression, depreciation of the domestic
currency, and extremely generous export subsidies
Decline in support of state to agricultural sector ( subsidies and support purchases)
can be the rationale behind undermining SEEs in agriculture
February 24, 1980 Decisions
Marks the starting of a new period in agriculture;
Leaving import substition growth, open economy based on exporting industrial
goods that are product of cheap labor and low technology
Shrinking the share of state in the economic activities: Especially in support and
credit mechanisms in agricultural products, as well as privatising KİTs (State
Economic Enterprises).
We observe the effects of neoliberal policies and structural adjustments with the
world in agricultural sector, as well. After 1980, a “reorganization” of state
instutions marks an era in which it is hard to regulate agriculture with private
regulating agencies.
State Economic Enterprises (KIT)
The effects of gradual removal of KIT as follows;
State economic enterprises supported agricultural production for a long time
Without support that KIT provides, it can be said that development of agricultural
sector in Turkey slowed
Removing KIT without making necessary adjustments (such as a replacement of it
with another strong substitution) decreases the functionality of agricultural market,
because agricultural sector consisted of small scale family businesses which are
vulnerable to fluctuations
Demographic Effects of Agricultural Policies in 1980s
After the military coup of September 12, first implemantation was the limitation of
support purchases of agricultural products
In this period both price supports and credit possibilities are substantially decreased
These interventions resulted in huge domestic migration from rural areas to urban
areas
In the census of 1985, rural population dropped to 23,1 million from 25 million and
urban population increased to 33,3 million from 19,6 milion
1989 and onwards
1995-2005 “Restructuring in Agriculture”
Based on a report by The Ministry of Agriculture and Rural Areas, financed by
World Bank, the targets of agriculture is set as:
-Integration of agriculture and industry
-End of state-control in agriculture sector
-Sustainable agriculture
-Land consolidation and planning
-Production in line with EU and GATT agreements, to be controle by demands in
external and internal market.
GAP ( Southeastern Anatolia Project )
The aims of the project are the increase in irrigation possibilities in South Eastern
Anatolia and energy production;
- Expected area that is irrigated is around 1,8 million hectar
- Expected production of electricity is around 22 billion kwh per year
A significant increase in the production of agricultural products is expected
-
Cotton 118%, oil seed 73,5%, rice 84,4% etc
Future Expectations in Turkish Agriculture
Future of agriculture ⇒ GMO crops
-What may be the adverse effects of GMO regulations on agricultural sector in future?
Common agricultural policy (a system of European Union agricultural subsidies and
programmes)
-What may be the effects of applying the CAP to Turkey?
GMO crops;
Turkey’s GMO regulation came into force in September 2009 with the aim of
controlling the importation and use of GMOs
So far, no GM crops have been granted approval for food use in Turkey and only three
GM soybean lines and 13 maize lines have been approved for feed use
➔Does GMO regulations cause any cost in Turkish economy?
-Yes, in fact the negative impact is likely to get progressively worse
Adverse effects of GMO regulations
Looking forward, continuation of no approvals for food use of any GMO in Turkey and
based on 2011 prices of cereals and oilseeds, the estimated on-going annual cost is between
$0.4 billion and $0.46 billion
The net effect is a loss of competitiveness, both in the domestic market and export markets,
relative to suppliers who have greater flexibility on GMO products
Agri-food processing and manufacturing businesses may decide to re-locate away from
Turkey to countries/regions with a more competitive, flexible and less risky business
environment
Common Agricultural Policy;
Rationale behind CAP;
Abolishment of legal institutional and fiscal pillars of populism
Inefficiency argument regarding State Economic Enteprises
Without any intervention to the agricultural market, social transfers are supposed to
be made through direct income support programmes
Common Agricultural Policy;
In regard of CAP, through Agricultural Reform Program, EU suggested Turkey to
make following adjustments;
Abolishment of price ceilings
Abolishment of subsidies in raw materials and credit
Reconstruction of agricultural State Economic Enterprises and sales cooperatives
Transformation to Direct Income Support program
Recontruction of agricultural production
Thank you for listening