Reforming Turkish agriculture

For years, we have been criticizing the Ministry of Agriculture and Rural Affairs for failing to develop a sensible long-term strategy for Turkish farmers and businesses involved in food and agro products. Unfortunately, it did not matter much whether the ruling party was from the center-left or the center-right. Any reasonable policy proposed by bureaucrats and technocrats became a victim of political debates, as farmers constituted a significant voting block in elections.

I heard the same complaint last week when I was a guest of Ömer Görener, the CEO of Bandırma-based Banvit, the largest poultry company in Turkey. Görener, who has launched a major bid to export the company’s products to European Union countries, is an ardent critic of government bureaucrats in Ankara. “They really do not know much about what is going on in the world,” he said, criticizing the country’s lack of a long-term agriculture policy.

There are strong signs, however, that the bureaucracy in Ankara is finally catching up with world trends and is determined to shape Turkish agriculture to conform with basic laws of supply and demand in the global market economy. They have done a great job over the last year, when food prices for staples and rice skyrocketed around the world. The Ministry of Agriculture and Rural Affairs imported rice, despite the existence of sufficient amounts of rice in stock, to fight against suspicions raised by speculators who wished to capitalize on the situation.

After an hour-long sit-down last week with Ministry of Agriculture and Rural Affairs Undersecretary Vedat Mir Mahmutoğulları, I felt more optimistic than ever in looking forward to a “makes sense” approach with new policies. He explained that the ministry mapped out farming land across the country in detail and identified which products are better suited to specific geographic locations.

As a result of this comprehensive study, the government, through local offices of agriculture and rural affairs, is able to recommend and even subsidize crops most suitable for local conditions as opposed to traditional ones that yield low profit to farmers and hence contribute less to the national economy.

According to the detailed opportunity costs analysis in what Mahmutoğulları described as a revolutionary strategy for Turkey, farmers would be better off if they decide to switch to other crop options. For example, a farmer would make a net TL 25,600 profit per 1,000 square meters if he switches to growing cut flowers versus just TL 249 for hazelnut production.

It is important that this new strategy succeed in Turkey, as critics say Turkey is currently shooting itself in the foot by overproducing hazelnuts and creating excessive supply in the market, where Turkey is the global leader. The government on many occasions has been forced to purchase extra supply from farmers at prices exceeding world prices, leading to instability in prices.

Hazelnut farming has been a major headache for this country for a long time. If you talk to peach growers in the west and the south, they rightly complain that hazelnut farmers were singled out for government subsidies. They say it amounts to taxation without representation. I tend to agree with them, not because my family origins are located in peach and rice growers’ regions but because it is simply not fair to subsidize one crop or one region. It also runs counter to the rules and regulations of the World Trade Organization, which monitors liberal international trade.

We had the same problem in the past with tobacco producers and finally overcame with that by phasing out subsidies to tobacco growers. Now it is time for the hazelnut farmers to manage their crops on their own. There will be a transition period over three years, during which farmers will still get the subsidy.

Unfortunately, unlicensed hazelnut farms in the country have spread over a total of 236 million square meters, resulting in excess supply. Some of these farms were establish through the deforestation of government lands. The government intends to remove already-planted hazelnut saplings on unauthorized land. What’s more, the government will require new hazelnut farmers to register for production licenses.

I think we are finally turning the agricultural industry in this country around and bringing it in line with world standards.

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