TURKEY & KURDISTAN : An Agricultural Reform & Its Aftermath

Ceren Hic, MSc, Humboldt-Universität zu Berlin  – October 18, 2013

Agricultural policy is an old debate during where interventionist and anti-interventionist sides are determining the evolution of agriculture. The latter being the last triumphant, shapes agricultural policies according to neoliberal principles. Turkish case is no exception.  For the agricultural policy scene in the last 10 years in Turkey is characterized by inconsistency and unstability, this paper aims to recall the biggest single policy reform as a significant case of engagement with neo-liberal policies in the agricultural sector, also manifesting a backpedalling by the policy makers who admitted that poverty, migration and unemployment exacerbated after the  reform (Oral, 2012) and have been trying to patch the destruction created in agriculture through neo-liberal transformation.

Reform project ended in 2009 without realizing any of its original goals (Akder, 2010). Agricultural support, that was meant to be gradually abolished, continued after then, also during the process, recovering its original elements. Besides placing the neoliberal logic in agricultural sector agenda, Turkey has achieved much on institutional grounds, helping the transformation under the guidance of US and Western dominated institutions and global capital. This essay argues that even though agricultural support is recovered and been increased every year, the details of support policy demonstrates a damage control effort far from rightly targeting the persistent problems in the sector, mainly employment, poverty and creation of agricultural value. What Turkey needs are effective domestic policies that are in line with its peculiar rural character, invest in human capital and knowledge with rural development strategies and give weight to the small and medium-size farms that employ a significant number of people relieving social problems in the rural areas and produce valuable crops in terms of self-sufficiency and export revenues.


Although the share of agriculture in output and employment declined with economic development in years (Ilkkaraca and Tunalı, 2010), the share of employment in agriculture is 24% of total employment in Turkey (WB Stats, 2011), creating 9% of value added GDP (WBStats, 2011). 30% of the population lives in rural areas and agricultural activities are the biggest source of income with 60% share (Turkstat, 2009). Nearly half of the total land is dedicated to agricultural production in the country; however, the average farm size is 6 ha, which is a striking difference with EU, where the average farm size was16 ha in 2007, only to decrease by 28% to 11.5 ha when Bulgaria and Romania were admitted(EC, 2009). This indicates that semi-subsistence and subsistence farming are realities of Turkish agriculture.

The major share in total value of agricultural production belongs to crop production with 75%, in comparison with livestock production. However, livestock production is still heavily supported, with a given 83 million lira in 2002 that culminated in 2.2 billion in 2012, as well as 6.7 billion lira of credit (Yıldırım, 2012). However; export-oriented products are the ones with higher shares in total production; though are given less importance; such as fruits and vegetables (Cakmak and Dudu, 2010: 66). Also, “the ratio of exports to imports has been declining fast since 2005” with a declining share in total foreign exports and increasing share in total imports for agricultural sector (Cakmak and Dudu, 2010:67).


1970s and 1980s signal the start of new world order in Turkish agricultural policies. The 70s’ yield increases with ‘green revolution’ that was brought by high pesticide and fertilizer use, supplemented with subsidized fuel prices and support purchases (Köymen, 2008: 291). In the 1980s, international organizations and agreements were central to the institutional transformation. The European Common Agriculture Policy (CAP) of the then European Economic Community (EEC) envisaged a turn from agricultural crop based support policies to others shaped by criteria such as rural development, food safety, animal health, etc. (Aydın, 2004: 88). Consequently, when taxes and fees on imported food products were reduced in 1984, an increase was observed in food imports. In addition, the public administration in agriculture was reorganized and the ministry lost managerial capacity to other units in public administration, making agricultural management even less effective (Tarım 2004).

In the mid 1990s, Turkey was a full participating member state in the Agreement on Agriculture (AoA) when it came into effect with the completion of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) and establishment of the World Trade Organization (WTO). Thereupon, Turkey committed to reduce tariffsby (at least) 10% for each agricultural product and 24%, on average, for all products, within a period of ten years. Turkey’s deregulation process has been formed by EU alsothrough the Custom’s Union, providing external framework for the sector, as well as the strategy for privatizations together with WTO agreements (Öztürk, 2012: 68).

The policy reform program was initiated in 2000. It was the deepest point of a domestic economic crises and the main objective was to ensure financial stabilization by eliminating all input subsidies and output price supports under IMF and World Bank’s guidance. Treasury, along with the World Bank and Ministry of Agriculture and Rural Affairs, was one of the main actors of the program since it was the most concerned with the financial burden brought by generous subsidies and supports to the agricultural sector (Akder, 2010). The reasoning was that agriculture was heavily subsidized in the form of input (fuel, fertilizer, machinery) subsidies, support purchases by the sales cooperative unions, deficiency paymentsand all create negative effects on the economy with a net inflow of resources to agriculture from the government (Nash, 1998:1). The OECD figures suggest that although Turkish support is below the OECD average, the level is substantial and one of the highest among the countries in question (OECD,2011, p. 78). This fact is also related to the growing WTO pressure on the need to reform the support system for many of the subsidies were seen as trade-distorting, “amber box” subsidies. Instead, they are to be replaced with trade-neutral “green box” measures, that include no, or at most minimal, trade-distorting effects or effects on production, and no transfers from consumers to producers (WTO, 2012).

Amajor expectation from the reform program was fiscal stabilization. Agricultural policy changes occur rather frequently in Turkey. Akder suggests that public choice model is able to explain this frequency, as well as inefficient and inconsistent government practice, without achieving a comprehensive reform (Akder, 2007: 516). Multiple actors and players in agricultural policy-making create inefficiency in the system. Together with the lack of innovative policies and political leadership, there is a vacuum filled by political stakeholders that primarily seek their own interests. Farm votes, which comprise at least one-third of total, are the main reason of rises in agricultural support levels in times of municipal and parliamentary elections (Akder, 2007). Political concerns related to significant policy changes render substantial paradigm shifts difficult, therefore transfer policies are thought to be the only available option (Cakmak and Dudu, 2010: 66). However, consumer support estimate (CSE) (Cakmak and Dudu, 2010: 71) shows that consumers as tax payers are the major financiers of transfers to agriculture. Added to producer support, the share of general services support estimate was very high until 2003, which signifies the cost of agricultural state and parastatal agencies. Most of the transfers to agriculture were not budgeted, institutions were in debt and state banks had financial problems due to higher interest rates, generous credits and unbudgeted funds, creating another burden on the total budget (Akder, 2007:523). Therefore fiscal stabilization by making the support budget transparent and predictable was a crucial objective. The reform was also about increasing efficiency in agricultural policy implementation, in addition to better targeting of support, taking poor farmers into consideration and ensuring predictable income for farmers. Akder argues that expected benefits did not include measures targeted towards farm problems except “Direct Income Subsidies” which is the foremost component of ARIP (Akder, 2010:49).

Direct income support (DIS) is a universal and incentive-neutral tool to compensate for the income lost by the removal of subsidies. The payments would be per-hectare, independent of crop choice and production. As for the other components, “farmer transition” – alternative crop program aimed at switching production from overproduced crops, tobacco and hazelnut, to desired alternative crops, that Turkey is a net importer of or has a comparative advantage in, such as oilseeds. “Agriculture Sales Cooperative Unions Restructuring” is related to parastatal sales cooperative unions and state economic enterprises (SEEs). Associated with inefficiency, excess staff and wages above private sector levels, once the subsidies were removed, these institutions would be pointless and they would either be liquidated or turned into private autonomous organizations, serving their members (Akder, 2010).


Last component of the reform was a public information campaign, with which one may start the assessment. It did not start at the beginning as it should have, and this delay paved the way for misinformation and “immediate dilution of the project goal” (Akder, 2010:54). Due to resistance within the state, where even the agricultural minister had a negative stance, and opposition from the farmers’ organizations and agricultural chambers, the reform did not find much support. It was directed to support policies; therefore, it hardly addressed the underlying structural problems of Turkish agriculture. Moreover, there was not enough policy effort to design a long-term national strategy that includes the promotion of rural entrepreneurship, efficiency and innovation (Akder, 2007: 515).As put by Rausser (Rausser, 1992: 133), neither the Turkish policy agenda nor ARIP objectives could be classified as “productive”, since the main tool is redistribution in the former and the latter aims to achieve liberalization of agriculture, decrease in state intervention and achieve fiscal stability rather than addressing efficiency issues (Cakmak and Dudu, 2010: 63).

Consequently, ARIP stimulated an immediate elimination of all subsidies and brought direct income support to compensate farmers’ loss. The DIS payments were to be distributed through a farmer registration database where all farmers who want to benefit from them must register. This way Turkey almost completed its cadaster (Akder, 2010). This would also help Turkey better target the recipients of support. First the upper limit was 20 ha. However; the payments did not even amount as high as the costs of registering in chambers of agriculture, for which they have to pay fees. The targeting also failed because until the upper land size limit was increased to 50 ha, the land owners had already split their land among family members in order to benefit from the payment, causing further land fragmentation, also decreasing the credibility of farmer database (Akder, 2010: 54).

Although direct payments were planned to be decoupled from production, the original composition of payments was thinned by each subsidy added to agenda (Akder, 2010:47). Starting from 2003, there were land based fuel and fertilizer subsidies paid from the unified DIS budget (Akder, 2010:55). In the Agricultural Strategy Paper for 2006-2010, DIS component was pulled to 45%, in 2009 it was completely abolished. The premium payments also survived the reform, with differentiated rates for each crop (Akder, 2010:56). Therefore, due to product differentials among regions, reform didn’t have any effects on regional differences (Cakmak, 2003:5). The highest income regions, West and South coasts, received the highest share due to their more intense fertilizer and fuel use (Cakmak, 2003:5). In addition, the reform was neither helpful in decreasing regional differences, nor sensitive to differences between small, medium and big farms in accommodating change. Istanbul Chamber of Commerce’s (ITO) analysis conclude that big farms benefited from the payments more than small farms which presents a worsening effect in income distribution (ITO, 2004: 97), for small farms (

From 2001 on, the amount of agricultural exports in total exports decreased 3 points to 3.2 %.  Also the agricultural value added, which showed an increase during the period before the reform, had a decreasing trend then on (ITO, 2004: 96; Cakmak and Dudu, 2010:70). According to Turkstat data, in the last ten years, wheat production was stagnant, barley production decreased. Also decreased is the production volume of industrial crops, mainly tobacco and cotton; dry pulses such as chick peas, dry beans and lentils, and tubers and roots like potatoes and onions. An increase could be observed only in corn, rice and sunflower production, mainly due to increased support and high quality re-usable seeds (Oral, 2012). DIS payments worked more like a social aid, in order to keep the farm income at higher levels, not exhibiting any welfare increasing effects in a cost/benefit analysis (ITO, 2004:97). The reform cost $600 million in total, which is to be repaid by taxpayers (Akder, 2010:61) and payments compensated only around 50% of the total income loss (Olhan, 2006:46) for input prices rose by 100% between November 2002 and July 2005, and product prices declined by 30-80% (Talas, 2009:115).

Another important impact of the reform is a decrease in agricultural employment to 6.1 million after 5 years of implementation until 2006, from an average of 8.7 million in 1990s, when the state subsidies were at their peak (Ilkkaracan and Tunalı, 2010:107). During the ARIP period, rural unemployment almost doubled, which is compatible with the first phase of reform, releasing low-productivity family labor. However, two problems arise: First,  overemployment in agriculture helps alleviating social and economic costs of crisis (Cakmak, 2004:6). Second, the absorption capacity of urban labor market and non-agricultural employment opportunities in rural labor market are not enough to employ the surplus labor, also because of the human capital impediments (Ilkkaracan and Tunalı, 2010).

Cakmak and Dudu (2010) argue that there is a positive relationship between agricultural income and efficiency. Moreover, capital with output elasticity close to 0.4 is the most important production factor for efficiency. With ARIP, credit support decreased dramatically, from 57.4% in 1999 to 2.6% in 2004 (Olhan, 2006). Considering that efficiency is a critical problem of Turkish agriculture, reform efforts should have been complemented with efforts to increase efficiency through technical assistance, training, infrastructure and investment in human capital besides financial support, in order to achieve competitiveness in the sector and increase welfare in the rural areas (Cakmak and Dudu, 2010; Aerni, 2010; Adaman and Özertan, 2010).


In order to better comprehend the transformation period, Caliskan and Adaman suggest that we need to recall the reasons why support and intervention in agriculture were originally regarded as essential. Firstly, stabilizing the market, considering its dependency on rather less predictable natural conditions. Secondly, being able to keep a certain level of food supply for both food security and self-sufficiency concerns. Moreover, bringing technical progress to increase productivity and efficiency on the farm level requires that producers are provided with guidance and support. Equity considerations also deem intervention necessary; to keep a fair standard of living in the country side and not leave the rural community at the hands of market conditions (Çalışkan and Adaman, 2010). This basic reasoning is enough support these policies, however not for the Turkish way. Agricultural and rural policy must go hand in hand to sustain the rural livelihood. Complementary to support policies, someelements were incorporated into government agenda with various official papers. In 2004, Turkey announced Agricultural Strategy Paper for 2006-2010. Akder argues this was the first official deviation from ARIP, in terms of support policy (Akder, 2010). The government declared that a minimum of 1% of GDP would be dedicated to agriculture; DIS payments would to be 45%, deficiency payments 13% and rural development support 10% of that budget (Agricultural Strategy Paper, 2004:5). The first agricultural law of Turkey (2006), 9th Development Plan (2007-2013),National Rural Development Strategy and Plan (2010-2013), IPARD Strategy and Plan followed the strategy paper.

What all these documents emphasize is the need for measures towards efficiency enhancement and producer welfare and aim to develop a sustainable agricultural production, ensure product quality, food safety and security, and achieve competitiveness and rural development (EC, 2011:3). Main principles of the strategy consist of compliance to WTO and EU commitments, along with market principles and furthering the reform with an integrated and participatory approach (Turkish Grain Board, 2004). The neoliberal path, that had already been determined, is followed, stressing that state needs to withdraw. Existing support policies have caused and still cause tensions with the European Commission. Even though there is the EU pre-membership assistance that encompasses new areas such as human resources and rural development, consistent with EU’s recent reform shift towards the second rural development pillar of CAP, half of the investment costs are to be covered by the beneficiary and the other half would be repaid after the project is completed, as the co-financing principle of the funds implies (Bakirci, 2009:75). Considering the insufficient financial resources of small producers, there needs to be a serious professional mentoring about project creation, finance and management. So, credit continues to be a problematic issue in Turkish agriculture. Moreover, increasing number of informal merchant lenders in the country side is an obvious result of decreasing credit options (Çalışkan and Adaman, 2010). However, as the situation in livestock shows, contradictory and uncontrolled intervention of the government made Turkey an importer of livestock. The feed prices rose dramatically after the drought in 2007-2008 and domestic production fell, causing a wave of imports. The domestic sector also was supported with no interest credits starting from 2010, which raised the demand and doubled the prices of imports because there were actually no animals in the domestic market. Farmers who got credit incurred a loss with prices going back to its normal levels after 2 years (Yildirim, 2012).

In order to understand and create effective solutions to farmers’ problems; democratic collective action, farmer initiatives and producer groups need to be strengthened. With the reform, an institutional vacuum in agricultural sales cooperatives was created where, neither farmers nor cooperatives were had total control of their rights (Akder et al, 2004:6). The cooperatives are impoverished, many went bankrupt, as they debt mounted with elimination of state support. Although cotton producer groups are recognized on the EU level as competitive and well-organized (Ekmen, 2006), Cukurova Cotton Agricultural Sales Cooperatives Union (Cukobirlik) for instance, which attained an autonomous status with the reform, lost its influential position in price making, retail and manufacturing, as well as the trust and cooperation of the farmers. It had to shut down its plants and undersell its property, corruption swept the union. Its massive integrated textile plant, 3rd biggest worldwide was also shut in 2003 (http://www.adanamilletvekilleri.com/?p=420, March 1, 2010).

Turkish policy makers need to start serious rural policy making, emphasizing production, human capital development and equity concerns, in order to keep the livelihood of the country side, prevent deepened rural poverty, mounted rural unemployment and massive immigration to cities. Agriculture is still the sector with the lowest income; the poverty rate of households working in agriculture is 35% (Turkstat, 2009). An extended social policy definition should be adopted, including substantive policies regarding education, health care, infrastructure and social services (Keyder and Ustundag, 2006). For example, Aerni suggests that instead of direct payments, Turkey could use a “…cross-compliance scheme that links payments to the condition that farmers send their children to school” (Aerni, 2007:434). The problems with vocational training should be solved and they should be functional as well as appealing to students (Keyder and Ustundag, 2006:5; Akder, 2007:530).


Turkish agriculture suffers from critical structural problems as well as flawed and ill-fated neo-liberal policies, mainly as a result of political concerns and under EU and World Bank influence. The latest reform process started with ARIP in 2001, with financial assistance from WB. Overall, its impacts on production, producer income and organizations are negative and it ended without any significant achievement. Yet, commitments to liberalization of agriculture keep the country on its path. With elections in 2014, we see wave of increasing subsidies and supports this year; however what Turkish agriculture needs are substantive, production-based policies, complemented with rural development measures, formed according to thorough analysis of the rural problems.

Ceren Hiç , MSc, Humboldt-Universität zu Berlin

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